Usually I write about business in the Philippines and making money in the Philippines on Fridays and/or Saturdays, but this one has a short lead time … it’s an opportunity that will be gone by Friday. Will you look at this and say, “Yeah, right , Dave” and then move on to something else? … or will you take advantage of professional education to teach you about something that you can earn from, at no risk, whatever your nationality and wherever you live.
If you prefer a J.O.B. (Just Over Broke) way of life, this is not for you … but if you want to learn how the big boys do it, join in … the entire cost is you giving up an hour of watching TV drivel or playing on your Facebook page for yet another hour … we all can afford an hour less of that stuff.
There is nothing like ‘free’ to catch my attention. What about yours?
After the word ‘free’ catches my eye, I then look to see what what the source is … and when it’s Trump University, I generally take advantage and see what ‘the Donald’ has to say. (by the way, Donald Trump is bullish on the Philippines, I’ve written about it here before) Stop chasing imaginary dreams and thinking of reasons why you can’t and instead dig in and make your own future.
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I think it would be timely to remind people of your over-arching golden rule: if it sounds too good to be true, it probably is.
If there was such a thing as a government-guaranteed, risk-free way to make consistent above-market returns on investment, the big institutional investors would have taken it over years ago.
Ingat, Ken
One also has to consider the ethics of getting rich from other people’s financial misfortune.
A Tax Lien is a property tax debt owed by some poor soul who obviously can’t afford to pay his taxes to the local Government authority.
There are 2 ways to make money by purchasing the Tax Lien from the local Govt authority:
1) the property owner pays you the debt, with interest factored in
2) the property owner defaults and you get the property
Most investors are obviously hoping for the second scenario.
Hi Laurence. Yes an interesting point you have as well. But here’s the issue. One can easily make an ehtical argument that taxation of property is ‘wrong’. I beleiev you and I haver even discussed the proper role of government in providing services in the past. But based on the fact the average person in both our countrries doesn’t want to go back to pioneer days when title to land and home was insured strictly by Winchester or Remington, we ant governemtn to provide certain services and wuality of life.
To do this, government’s main source of income is property taxes. There are other ways, of course. In China, for example, property taxes are very low. The Army and the various police forces provide a lot of their own income by owning and running bars, gambling, and who knows what all else. Perhaps the Chinese model is better, but most of us wouldn’t want it.
Given that property taxes are a necessary eveil, it’s also agiven that a number of people may fail to pay them. The reeasosn they go unpaid will range from sad stories tof misfortune to out and out greed or stupidity. It’;s not always people’s ‘misfortune’, but just for argument’s sake, let’s say it almost always is.
So Dave Starr gets down on his luck and his property goes up for tax sale. Under the law as it exists, Dve is going to lose his property, no matter what the reason his obligation wasn’t met. Now, of course, the government could just say, “Oh too bad Dave, don’t bother paying, we’ll take more from Laurence to make up for your default”. I don’t think most people would care for that model .. except Dave who would then be profiting from Laurence’s diliogence and responsibility in paying his debts..
Or the government entity could just say, “You lose Dave, we take your property and any investment you made is lost”. A lot of people would hate that model. Everyone deserves asecond chance.
Or they could set up the common system whereby if Laurence wans more return on his investment than he can get from a bank, he pays Dave’s taxes and grants Dave a period of time to get back on his feet and pay back the loan .. at an agreed upon rate of interest to compensate Laurence for keeping him afloat. If he still fails to make the payment, Laurence becomes the owner. Sad for Dave, but what else can be done … he was afforded every opportunity.
Is that unethical? I don’t think so, unless we want a total welfare stae, where no one has to pay his bills and those who work and earn get to give their money free to those who don’t … but, of course, everyone is entitles to their own view.
Dave,
I wasn’t making the point that Property Tax is “unethical”. Some of your readers may not know what Tax Liens are and I think that anyone who invests money ought to know the true nature of their investment, aside from just the potential of high returns.
The other condiseration is that Tax Liens, or Property for that matter, are hardly what you would call productive resources. Playing “pass the debt” is what got the world into the mess that it’s in now.
Well I’m not arguing the ‘ethics’ of either property tax or tac kienbs any further either … like beauty the ethics are in the eye of the beholder.
One reason I threw the post up, though, is indeed many may not know about them and I thought this was a fast, free way to get aquainted. Of course the presenter is going to sell some follow-on product, but if nayone is so unsophisticated they can’t recognize and make their own decison on a sales pitch, they are beyond my help. I feel the Trump University series is more ethical than about 90% of the schlock being peddled out there today, but they are salesmen and of course caveat emptor applies.
I get frequent inquires regarding ’safe’ places to park money (hende my write up a few weks back on the Treasury Bills). While tex certificates may not be as ’safe’ as FDIC savings, they are certainly highly secure, if the property has sufficient intrinsic worth, and when redeemed (as many are) pay an interest rate far in excess of what any bank offers on time deposits. If not redeemed the investor is in the position of then owning property, which can be good, bad or indifferent in today’s world, to be sure.
So absolutely you are right in stating they produce no income, but then again neither do CD’s and most bonds, at least in noticeable amounts in the small investor price range. But investing $10k in tax certificates certainly could yirls 20% of more after a 5 year redemprion period … and the more types of investments one makes the better the chance that the whole house of cards can’t tumble in the case of a Bernie madoff event. Thaks for sharing your thoughts, Laurence, valuable insight as always.
Hi Ken,
You make some good points but
a., buying tax certificates from a government agency is virtually as risk free as anything gets. You either get the property at the end of the redemption period with a clear tirle, or you get back every penny of your investment, plus interest (in most jurisdictions, the amount of interest you charge is set by you). This is not a money for nothing deal, you pay the taxes, waitr out the redemption (tying up your own money during that time), and then either make the money back in cash from the redeeming owner or make your mocney from the sale and use of the property.
b., As far as the ‘little guy’ having no chance against ‘big corporations”? I don’t share that view. My balanmce sheet is ahell of alot better than General Motors right now, for just one example of millions. Just becuase they are big doesn’t mean they aren’t stupid or greedy.
It’s like any other investment/profit scheme, there will always be properties that are too small for big guys to be interested in, or that an astute investor finds on his own and beats the big guy too the punch. Based on your thought, there’s no reason to make any sort of investment as an individual, becuase the ‘big guys’ will always kick butt.
A huge percentage of real eastae, world-wide is in private hands, and a huge percentage of US business is ’small business’, the idea that only the big guys make money is perhaps a bit self-defeating. Oe so Dave opines.
this was yesterday dave ?
Hi Tommy, the webinar was to be live about 22 hoiurs from when I posted it. Not much notice, but it was the amount of notice I had myself.
If you were interested and wanted to attend but missed it, you might go and look id they have a recorded session available, typically those things are archived to the ‘Net for later viewing.
what had me confused Dave was yo had mentioned “it’s an opportunity that will be gone by Friday.” but the webinar was on wednesday lol no biggie ! thanks for passing this information along though
Yes I see that now. There must be agood explanation for why I typed that, but darned if I know what it is. Hate when that happens, sorry.
With what the ROI is on so called safe investments in the .5 to 1% range Tax lien certificates seems like a no-brainer.
.-= tax lien investing´s last blog ..Tax Lien Foreclosure =-.
Hi Philly, thanks for sharing this. I really liked how you explained how an investor can come in and pay the taxes and buy some time for the property owner (Dave in your example) to settle it. This is also how I look at it and when I do try to invest in tax foreclosures here in the Philippines, it is not my goal to get the property.
I wish I had found your site sooner as I missed the webinar. I might have learned some useful stuff I can use for upcoming tax foreclosure auctions here in the Philippines. One is at Antipolo City on September 30, 2009, and another one would be at Quezon City on October 8, 2009.
Anyway, I registered at Trump University so that I can be notified if they have any new webinars about tax lien investing. Thanks again for sharing!
.-= Jay Castillo´s last blog ..Antipolo Tax Delinquent Properties public auction =-.