Investing in Tax Liens: What if I'm in a Deed State?

Frequently I get asked this question: "I really want to start investing in tax liens, but I live in a deed state. Should I look into investing in tax liens in another state, or try to invest in tax deeds in my own state." In this article I'll give you what I recommend for investors want to invest in tax liens, but find that in their state they only sell tax deeds. It's not a one-size fits all answer, it really depends on what your goals are and on your particular state.

You really have two options, either find a way to invest profitably in your state, or look at some of the online tax lien sales; you may even want to do both. First, find out what goes on in your state. Are there many deed sales? How often are the tax sales? How many properties are available and how competitive are they? You will actually have to go to some tax sales and see what they are like.

Some states just don't have very much available, if that's the case; you may want to try the online tax lien sales. Other states may be very competitive and properties may get bid close to market value. If that's the case there is still a way that you may be able to profit from tax deed sales in your state. Some counties give the excess proceeds - that's the amount that's bid in excess of the minimum bid amount, back to the owner of the property.

Here's how the excess proceeds strategy works in a nutshell. Instead of waiting for the tax sale you contact the owner of the property before the sale and see if they are going to let their property go for back taxes. If they have already decided to walk away from the property, perhaps they would be willing to give you a quitclaim deed to their property for a small fee. You record the deed with the county clerk a few weeks before the tax sale. Let the property go to tax sale and after it is sold you apply for the excess proceeds.

This strategy only works in a few deed states that give the excess proceeds back to the owner of the property - not all deed states do this. So before you try this strategy check with the county tax collector or county treasurer and make sure that the owner of record of the tax delinquent property can apply for the excess proceeds from the sale. Also you do have to check for any other liens, since you are buying the property from the owner and not purchasing the deed at the tax sale, you will be held responsible for any other liens on the property.

Joanne Musa is a tax lien and tax deed investing expert who helps investors buy profitable tax lien certificates and tax deeds. You can find out more about the excess proceeds strategy of tax deed investing and get a Free mini-course at http://www.TaxForeclosureFortunes.com.

The Laws of Attraction and Finances

What if you didn't have to live payday to payday? What if you had all the money you wanted instead of overwhelming debt? Maybe that sounds too good to be true. However, the Laws of Attraction can change your financial outlook forever.

One part of the Laws of Attraction is that you get things according to the energy you put out into the world. The universe will respond to it and send it back. For example, one person might go to the mailbox and say, "I hope I don't get too many bills today." Another person might say, "I wonder who's sending me money today."

Who do you think will have a better mail day, on the average? The Laws of Attraction say that the person who sends out the negative energy of worry and fear will get more to worry about and fear in return. The person who is positive will get things to be joyful about, according to the Laws of Attraction. In this case, he/she has a certain likelihood to actually get money in the mail.

That's where the Law of Attraction BEGINS. But, the way it actually WORKS is through action. However, you won't take action unless you first have the right outlook.

Money itself may be one of the more difficult things to get through the Laws of Attraction. This is not because the Laws of Attraction don't work as well. It's just because it's hard to be passionate about money itself. It is easier to get excited about the things money buys and begin to take action toward that.

The Laws of Attraction work hundreds of times better if you are very passionate about something. This translates into a high level of positive energy, or vibration, that you are emitting into the universe. It works to make things happen quickly. If you can get that excited about money itself, then the Laws of Attraction can bring you the money you desire.

If you want to use the Laws of Attraction, one way to intensify your desires is to find some visual way to make them real. Take pictures of the things you want. Post them around your house where you will see them often. Because the Laws of Attraction will bring you more of the energy you send out, make sure the images in your home are conducive to a positive outlook.

Only when you are clear about exactly what you want and begin to take some kind of action toward it can the Laws of Attraction work for you. Sometimes, you can't actually take a picture. Sometimes it is easier to go through magazines and find pictures and descriptions of what it is you want. Cut them out and hang them up. The more, the better. The Laws of Attraction in the universe will respond to your desires.

Then, too, you can seek out your dreams by going on homes tours and test driving cars. Whatever you can do to put yourself in contact with the reality of your dreams helps. It makes the Laws of Attraction work for you. People say that money doesn't buy happiness. It's true that money alone can't make you happy. However, if you use the Laws of Attraction to improve your financial situation, that can only be a good thing.

Pros and Cons of Timeshares

Everything in life has pros and cons. While pros may be important to some and to some cons. It depends on how you evaluate the benefits of buying a timeshare with your lifestyle and financial condition. For some it might be a miniscule portion of their wealth but for some it can be hard earned savings of their life. In either case, a smart person will always look into pros and cons before investing his/her money.

Let us discuss the pros first. To begin with, timeshare properties are more economical compared to buying a piece of real estate property for life and only using it once a year. Compare this you buying a property for lifetime for $200,000 with timeshare which may be only $10,000 plus annual maintenance cost of $500 for the life. If we assume the lifetime period of 30 years the calculation will be as follows:

$10,000+30 years x 500 = $25,000 for the lifetime.

Compare it with buying a real estate property for lifetime you will save $175,000. Isnít that a lot of money? Is it wise to invest that much extra money for once a year use?

Let us compare this with the cost of Hotel. Suppose if you spend $1,200 every year on a hotel, let us consider the cost for 30 years:

$1,200 x 30 years = $36,000 which is still more than $25,000 you pay for timeshare for the lifetime.

Apart from saving money you get the comfort of your home. In a hotel you might get only a suite. But a typical timeshare condo has two or three bedrooms, one or two bathrooms, a kitchen, a dining room and even a laundry room. Also timeshare units are usually fully furnished. Most of the timeshare properties have an indoor or outdoor pool also these days. In addition to that you also get resort facilities. What more somebody might want when they get all these facilities and comfort of home?

If you have a timeshare you don't have to worry about the upkeep and maintenance of the condo. It is taken care of by the developer. Now compare this with buying a real estate property for the life, you have to do all the maintenance.

Not to forget, if you or your spouse is a person who takes vacation lightly, this is for you. If you have a timeshare, you definitely make it a point to go for a vacation at least once a year. You are also saved from the hassles of planning a vacation every year.

Most of the timeshare companies are associated with other timeshare companies. This allows the exchange of timeshare. This is one of the many reasons why people prefer timeshare.

Now talking about the Cons of timeshare, timeshares has become an avenue for many scammers and frauds. The timeshare industry has been plagued with variety of scam and fraud related problems. People are invited to attend a ninety minute presentation completely free and then they are subjected to the techniques of pressurized buying which is unethical in any sense. Do not fall prey to these tricks. Always read the documents carefully specially the fine prints before signing any agreements. Research the timeshare company well and know their reputation.

By paying a huge upfront fee your money is tied up for a long time which means you are losing moneyís worth in addition to paying interest if you have taken a loan for the rest of the amount. Also you have to pay regular maintenance cost.

One of the major cons is the appreciation. The timeshares donít appreciate much. They may be stagnant or even depreciate with time. They are also difficult to resale compared to a real estate property.

And last but not the least; timeshares may not be flexible enough for you to use it every year at a specific time. Although some companies offer flexible timeshares but it is only on first come first serve basis many other timeshare owners might also be planning to do that.

Why Buy Now?

"Why buy now?" Today, this very valid question is being asked by just about every buyer that comes through a builder’s sales office. The answer is simple: People buy for the same reasons that they always have. Better life style, better schools, nicer neighborhood, more convenient shopping, need for a bigger or smaller home, job transfer, tired of paying rent, tax benefits …. There are endless reasons why people choose to buy new homes.

In addition to all of the usual reasons, there is an incredible benefit to buying right now as we are in a “Buyers’ Market”! Buyers no longer have to sit helplessly on the sidelines while prices spiral out of their reach. Now, with home prices having dropped to levels that haven’t been seen since 2003, and all kinds of incredible incentives being offered, the buyer is in control.

But buyers still ask, “Why buy now?” Well, here is why:

As we all know, housing prices are controlled by the basic law of supply and demand.

In 2006, the sub-prime lending market began to implode. As a result, buyers could no longer afford to purchase homes that were now made unaffordable as a result of the lack of loans available to the average Buyer. Demand for new homes plummeted while supply was high as a result of the large number of already built unsold homes. We entered a Buyers’ market.

As the market changed, builders have come under intense pressure to sell the homes they have on hand. Unlike a homeowner that can wait to sell their existing home until the market improves, builders need their unsold homes off of their books today. This is why we are seeing the prices of new homes at a lower level then the prices for used re-sale homes. In fact, today buyers are often purchasing new homes for less then it cost to build them.

But Buyers’ markets (as we have recently learned with Sellers’ markets) do not go on forever.

California’s last Buyers’ market occurred in the early 1990’s. People who bought homes in that Buyers’ market were told by friends, family and work associates that they were making a huge mistake. They were told that the “sky was falling” and that home prices would continue to drop.

However, those that bought in the early 1990’s are known today as savvy and sophisticated buyers. Today, those buyers have huge amounts of equity in their homes. That same thing will be said about the buyers taking advantage of today’s Buyers’ market… that they were savvy investors that took advantage of a very temporary market condition.

Smart buyers know that at some point home prices always stop dropping. The savvy buyer knows that long term population growth will always cause increased demand for new homes. California’s population is forecasted to expand from 34 million in year 2000 to 43 million by 2020 (per U.S. Census reports). California population growth caused by new births alone is very significant. This is a huge 25% increase in population in California. These new California residents will need to buy homes to live in. As supply decreases, demand will increase.

We can all see what is happening on the supply side. Builders are no longer building, and construction lenders have stopped making loans to builders. Therefore, supply is now shrinking, not growing.

Now that affordability has returned to home buying with home prices having moved to below market value levels, financing is the key to homeownership. Many potential buyers are not aware that over the past several months many new loan programs have been created, and some great old ones have returned, with minimal or no down payments, and low interest rates.

Homebuilders are beginning to report increasing sales rates every week. The reason is that buyers are able to buy their dream homes well below market value, and are now able to get the financing they need. As in the early 1990’s when the last Buyers’ market ended, we are again beginning to see the pendulum starting to swing back towards a neutral market.

In the not to distant future, we will be reading headlines that proclaim that home sales are up, supply is down, and guess what… builders and banks are no longer selling homes at a loss as they are back in the business of building homes to make a profit.

In addition, interest rates for the past five years have held at 25-year lows. However, we cannot expect interest rates to stay low forever as there is ever increasing pressure for the rates to rise significantly. Buyers that procrastinate may find themselves shut out of the market with such an increase.

Also, buyers should keep in mind that the next generation of new homes will be built to the affordability of each local market, and not for investors or speculators. As a result, the next generation of new homes will probably not be built with all of the extra features which we have become accustomed to, such as beautiful granite countertops, upgraded cabinets, moldings, and stainless steel kitchens. The buyers of those next generation homes will have to pay for those extras.

Remember, California housing cycles come and go. But even with the up and down of the cycles, over the last 34 years, median home values have appreciated 7% per year. On a compound interest basis, this equates to homes almost doubling in value every 10 years.

Smart home buying is about taking advantage of the convergence of supply, demand, financing and interest rates. Right now, supply of new homes is quickly diminishing, demand is still sluggish, new home prices are at their lowest point in years and financing is again becoming available. At the same time, interest rates continue at 25 year lows! We’ve been in this Buyers’ market for over two years. The signs are clear that the pendulum is swinging. Now is the time for savvy buyers to take advantage of this “perfect storm,” and purchase a beautiful new home which provides them with the life style that they desire and their families deserve.

How a Charitable Remainder Trust Avoids Capital Gains

Charitable remainder trusts can increase your income, avoid capital gains taxes, lower or eliminate estate taxes, serve as another type of retirement plan, serve humanity and put a warm feeling in your heart. Here is an example that applies to anyone contemplating selling a highly appreciated asset.

In the Path of Progress

Clarence and Mildred had a farm that has been in the family since 1930. They raised corn and had a few cattle. However, the farm has been inactive since Clarence died 10 years ago.

The farm used to be out in the country. Over the years, the neighboring city has expanded to the point that its boundaries have almost reached the farm.

A real estate development firm with an offer she finds difficult to believe has recently contacted Mildred. They want to build a giant shopping mall on her property. Moreover, they are willing to pay 14 million dollars for her 80 acres.

As much as Mildred is tied to her home of 40 years and the lifestyle, this is an easy decision. The farm was originally homesteaded and has no basis. How can she minimize the capital gain tax?

The procedure would call for her to gift the farm to a charitable remainder trust. The trust would then sell the property to the real estate developer. She should employ an estate planning attorney to assure that the gift to the trust and the subsequent sale to the real estate developer are not construed as a pre-arranged series of transactions.

Using a charitable remainder trust gives Mildred the following benefits:

1. She does more than minimize the capital gain tax; she avoids it altogether. If the capital gain rate is 15%, this saves $2,100,000 in capital gains taxes. Mary is frugal. She has saved every button that has ever come off a shirt, blouse or shirt. She is also leery. She figures she can put that $2,100,000 to better use than the people in Washington D.C.

2. A charitable remainder trust mandates an annual payout of at least 5%. That’s $700,000 a year. She is set for life and can take all the grandchildren to Disneyland every year.

3. She will get a huge tax deduction based on her charitable contribution to the trust. It will be so big that the IRS will let her carry the unused portion forward for a total of six years. It's a good bet she will pay no income tax for the next six years.

4. She can name any number of charities to receive the 14 million in the trust when she dies. Ultimately, she could have a new church building, a wing on the hospital or scholarships named after her and Clarence for her generosity. The number of people who would benefit in the future is too many to count.

5. If she is concerned about disinheriting her heirs, she can use some of the income to buy a life insurance policy and name her children and grandchildren beneficiaries. She could also gift up to (currently) $12,000 per year to as many people as she wants without any gift tax implications.

6. No estate tax will be due at her death.

7. The 14 million will be professionally managed inside the charitable remainder trust. She has no investment worries and can set the trust up so she has a guaranteed income. Downturns in the economy, weather catastrophes or world events will have no effect on her income.

It's true that Mildred could simply sell the farm and pay the capital gains tax. Aside from the capital gains tax, coming into this large sum of money could create more problems.

She would have to invest it while fending off suggestions from well-meaning relatives. She would have some estate planning to do to avoid half of her estate going to the government in taxes when she dies.

When you put the charitable remainder trust on the table as an option, most of these problems vanish and many additional benefits appear.