Date post: | 26-May-2015 |
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Economy & Finance |
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TAX LIEN INVESTING IN NJCREATIVE INVESTING IN 2013
Tax Lien Investing 101
• Initial Buy: 0 to 18% depending on lien amount and municipality
• Subsequent Taxes: 18% per redemption
• Some municipalities have a year end tax penalty to the homeowner between 2-6% depending on township
• Buy at auction
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How are Tax Liens Created?
•A tax lien is a lien on a property for non payment of tax.
•Each and every year, owners of real estate that fail to pay their property taxes have a tax lien created on their property.
•This is a financial obligation to pay overdue taxes.
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Why Invest in Tax Liens
• Income
• Tax Liens accrue finance charges of up to 18 percent
• Safety of Investment Capital
• Liens are secured by their first priority on real estate so investment will be returned
• Diversification
• Liens are diversified as there is little correlation to other investment markets
• Investment Capital
• Initial investment can be as small as $100 for a lien but must make further financial commitments to maintain lien after purchase
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What are the Risks?
• Length of Investment
• Can take greater than 2 years to recoup your investment if homeowner does not redeem
• Reduced Return on Invested Capital
• If Homeowner declares Bankruptcy then Judge can just provide your investment capital back with an adjusted lower return
• Liquidity
• No organized second market so cashing out position is hard but this is starting to change with websites such as www.bigbidder.com and www.lienlog.com
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How to Find out about Tax Liens
• Each municipality in the state of New Jersey has a specific tax lien auction date. This auction is municipal rather than county based
• Each municipality tax collector must setup a tax list prior to tax sale auction with legal property description and amount due on the lien
• You can find out about tax liens by calling the tax collectors office of each municipality or you can get a subscription to list compiling sites such as: www.liensource.net or www.njtaxlieninvestor.com
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Auction Process
• Tax lien auctions will use one of the following five methods to determine the successful bidder:
• Bid Down
• Interest Premiums Paid
• Randomly Selected Winners
• Rotating Winners
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Steps before coming to the Auction
• Downloaded the Tax Lien List for Your
Target Township
• Due Diligence on the Tax Lien You wish
to buy:
• Picture of Subject Property
• Mortgage/Other Lien Search
• Analysis of Market Value of Property
• Complete target interest rate and/or
premium analysis prior to auction date
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• Anbar is a boutique investment firm geared toward creative investing in tax liens
• Anbar primarily deals in the housing and commercial tax lien markets across key markets
• Anbar has deployed capital in tax liens on real estate assets valuing over $1MM over the past 4 months
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Ask Us
Thought of a Question:
@Ankit_RER
Appendix 1: Sample NJ Tax Lien Certificate
• Initial Buy: $2,622 including taxes and water charges
• Initial Return: 0-18% per annum
• Subsequent Redemptions: All at 18% per annum
• Some municipalities have a year end tax penalty to the homeowner between 2-6% depending on township
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Appendix 2: Anbar Management TeamAnkit DuggalInvestment Director
• Investment Director for Anbar Holdings & Managing Partner for RER LLC
• Over 9 years of experience in the NJ Real Estate Market
• Experienced Realtor, Mortgage Banker, Title Officer & Private Investor
• Experienced in Tax Liens, Buy and Hold Properties, and Rehab Properties
Jahanzeb JabbarOperations Director
• Operations Director for Anbar Holdings & Marketing Manager for American Express
• Over 2 years of experience in financial services marketing and valuations
• Experienced Marketer & Private Investor
• Experienced in Tax Liens & New Product Development