RG 108 – U.S. Tax Lien Investing 101 with Ted Thomas
About Ted
- Ted used to be an airline pilot
- Ted retrained after the 1986 market crash
- Ted cycles 10 miles each morning
Nuts and Bolts
Ted is a tax lien authority and tax deed specialist, he has published over 40 books on the topic and published guidebooks on real estate in over 4 countries. Ted made his first dollar delivering newspapers in junior high school, the morning and evening edition. Ted was bored at school and always wanted to be a pilot, he spent time in the military as an air traffic controller doing flight simulators in his spare time, then he learned to fly and became an airline pilot based in Hawaii. When in Hawaii he discovered real estate and resigned from the airline. He moved to San Francisco and made a fortune, unfortunately he lost most of it in 1986 after the market crash closed 2000 banks. He lost everything and ended up in a small apartment. In his 30’s he worked in real estate doing apartments and offices and learned more about foreclosure then he ever wanted to know, so he wrote a book on foreclosure. After this he transitioned into tax certificates.
Every property in the country has to pay property tax, usually between 1-3% of the worth of the property, and it’s due every year. This money goes to local government revenue to pay for school and roads. 2-3% of all property in the US will go into property tax default and how this is dealt with depends on the state. Benevolent states like Florida will sell the tax certificate to a third party but you can buy it back and pay an 18% penalty. Other states like California will kick you out when you go into default and the government will sell the property for the cost of the back taxes only.
Some states don’t sell the whole property, only the tax lien certificate which is just a piece of paper. They publish a list online of all the certificates available and you can buy them at auction. Once purchased you don’t need to do anything, just go home and wait for the property owners to pay you back within 2 years, and if they default then you can buy the property without a mortgage. 90% of the time there won’t be anyone in the house and for the other 10% there’s due Process of Law and the residents receive a notice letter.
Top tips
- Habit – Wakes up and says ‘if it’s to be it’s up to me’, then gets on bicycle to do 10 miles
- Person – Warren Buffett
- Tool – the telephone
- Website – tedthomas.com