For months and months, I’ve been watching John Beck’s late-night infomercial on tax-selling properties. Having been in the tax sales industry for almost 10 years, I can tell you that I have occasionally seen deals as good or better than the deals you see on television for John Beck’s Free and Clear system. But let’s look at some of the realities that accompany investing according to the John Beck system.
To obtain property from the tax sale, you will have to invest in a tax lien or a tax deed. Your state will offer one or the other, or sometimes both.
If you buy a tax lien, you will generally wait a period of time from 6 months to 5 years while the owner has a chance to settle the lien. Only after that time expires can you apply for a title deed. I think most of the examples in John Beck’s Free and Clear System are of properties that were purchased through a tax link. What the commercial doesn’t tell you is that the student probably had to wait a long time and purchase more than a dozen links for the property to appear on television. This is because most bonds with good properties pay for themselves during the waiting period.
You also have to research dozens or hundreds of properties to establish a property to buy a link. This is because many properties that are offered in tax lien sales are not even worth the amount owed in taxes, especially considering the time you have to put your money down and possibly pay subsequent taxes.
I highly doubt that any of the properties purchased for less than $ 1000 in John Beck’s Free and Clear system commercial were purchased at a tax deed sale. Tax deed sales offer immediate ownership of the property at the time of sale. These sales are therefore well supported by investors and the bidding process drives final purchase prices well above the minimum amount and often close to retail. So you won’t see many $ 20,000 + properties for less than $ 1000.
But John Beck’s Free and Clear System has its merits. If you have an IRA or other money that you want to invest at above-market rates, tax liens may be a good investment for you. Just don’t plan on acquiring a lot of properties.
Plus, it at least identifies tax sale properties as one of the most profitable niches in real estate investing. So how do you make money acquiring cheap property through tax sales, if most of the links work and tax deed offers are rare?
Easy! Identify tax sale property owners who are about to lose their property to a tax deed sale or who are running out of time to pay their tax bond. Then contact them by mail or phone and offer them a token amount for your property, or work out another arrangement with them so they don’t lose it. Avoid waiting for tax links to mature and avoid the bidding process on sales of tax deeds. The payoffs can be huge. When someone decides to move away from your property and stop paying taxes, you will know!