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| The 16% Solution: How To Get High Interest Rates in a Low Interest World with Tax Lien Certificates | 
 enlarge | Author: Joel S. Moskowitz
Publisher: Andrews McMeel Publishing
Category: Book
List Price: $26.99
Buy New: $4.46
You Save: $22.53 (83%)
Buy New/Used/Collectible from $4.46
Avg. Customer Rating:  (50 reviews)
Sales Rank: 15978
Languages: English (Original Language), English (Unknown), English (Published)
Media: Hardcover
Number Of Items: 1
Pages: 208
Shipping Weight (lbs): 1.3
Dimensions (in): 9.1 x 7.3 x 0.6
ISBN: 0836280849
Dewey Decimal Number: 332.6324
EAN: 9780836280845
ASIN: 0836280849
Publication Date: November 23, 1994
Availability: Usually ships in 1-2 business days
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| Customer Reviews:
 not practical at all August 10, 2007
48 out of 50 found this review helpful
I give this book 1 star because the author does a good job of explaining the whole process of buying tax liens, but doesn't mention that you probably won't be able to do this profitably.
I have been to more than a few tax lien sales. The interest rates vary by state, some are 14%, some are 16%, some are 19%, so it sounds like a good deal. then the auction begins and that 16% rate gets bid down to 15%, 14%, 10%, etc. Until nobody is willing to accept less. I sat at an auction where the rate was bid down to 1%. Thats a pretty poor return for my money. I spoke with one of the bidders who told me that his organization will sometimes bid as low as -3%. That means they pay 3% interest for the privilege of buying the lien. Obviously they are hoping to take this to foreclosure.
The problem is many large organizations send representatives to these auctions because they view it as an easy, cheap investment. They are happy to get 5% on a few hundred thousand dollars invested because they hope a few of these will progress to foreclosure, or they will start the foreclosure proceedings so they can recover the entire house and property as payments. Its a numbers game. they know they will get paid eventually, and they hope for a bigger score.
We go in there hoping to pay off the debt and get 16%, but they are playing by different rules. We can't compete with that unless we have tons of cash and are willing to take less. Usually much less.
Another thought to think about is lets say you buy the tax lien. The homeowner continues his pattern of not paying taxes, now you have to continue to buy his future tax liens to keep someone else from buying them and starting their own foreclosure process. because they will get the house and all they have to do is pay you your principal and interest. Which isn't too bad, at least you did not lose money. But they get the big score.
You also need to be aware of the condition of the house. Lets say you buy the tax lien for $5,000 and then you end up foreclosing to recover your money. The house may not be worth $5,000 or it may need $75,000 worth of work to get it into saleable condition if you want to make a decent profit.
You also need to be aware that if you foreclose on a property and there are problems or contamination issues (leaking underground oil tanks, etc) you are now responsible to pay for the clean-up of that contamination. Yes, you can legally go after the previous owner to try to get the cost of clean-up from him, but if he could not pay his taxes what makes you think he has hundreds of thousands of dollars laying around to pay for clean-up costs? Theres probably a good chance that he would not waste money on insurance coverage either. So you are pretty much on your own.
Before you think about buying tax liens you need to do a little research and planning. Go to a few tax lien sales. You can call your local govt to find out the dates. Sit in and see how they work. You also need to have extra money. You need money to buy the tax lien. you need money to start foreclosure proceedings to get your money back. You need to inspect the house and property BEFORE you buy the lien. Don't buy someone elses headache. Maybe they stopped paying taxes to try to get someone to foreclose and take away their nightmare? You need to check the town records. Are their other liens on this property? Are there easements?
I think this was a good way to earn money years ago. before the larger organizations jumped on the tax lien bandwagon. It sounds good in theory, but unless you are in the middle of nowhere, in a tiny town that a large organization has never heard of, the chances of making this a large money making investment are going to be slim. You may get lucky, but in my experience it will be tough.
If you do decide to start buying tax liens, if you can get some at a profitable rate, I recommend you do it far away from where you live. If you start foreclosure proceedings on someone who lives in your own community, there will be some bad blood. people have a tendency to hate other people that start foreclosure proceedings against them. I guess thats why the large organizations do it, they are faceless and don't care about others.
You also need to understand that some people that stop paying taxes are horrible people and who wouldn't want to profit from them? But some of these people will be single mothers trying to keep their children fed and clothed. Do I buy food or pay property taxes?
Good Information A little Outdated July 19, 2007
1 out of 3 found this review helpful
This book is a great book to get you in tune with the idea. The book is a little outdated though. I read about this book in Rich Dad Poor Dad. Good Idea will be looking for more updated information.
16% Solution March 29, 2007
3 out of 4 found this review helpful
Very quick read. Well written, and for those with no experience - or even those with experience - with real estate investing, this book is one to have on hand. Though written during a different economic swing than now (2007), the info is still quite relevant. Provides loads of information for even the most novice investor to analyze risk. I've recommended the book several times.--Hope the author update the info soon.
 A view from the sterling area March 8, 2007
4 out of 5 found this review helpful
This book is specific to US. It woudl be difficult to work the system from outside US.
I phoned a number of local councils and found that they all had one auction per year. In these days of low interest rates, there was no debt left over.
For Californians who are happy to be in a sinking dollar, a better alternative is to lend to individuals against their property. There are many brokers will get you 14% secured against the whole property, and you are not tied to one auction a year.
Nevertheless, it is an excellent and well-written book. The seciton giving details of who to phone was correct when I used it. I learned a lot.
outdated and not useful November 11, 2006
4 out of 8 found this review helpful
This book was a giant disappointment. Very outdated - virtually no information on how to do this kind of investing electronically. A waste of $.
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