Review
“On my scale of one to 10, this well-written, well-researched book rates an off-the-chart 12” — Robert J. Bruss, nationally syndicated columnist.Chosen as one of Robert J. Bruss’ 10 best real estate books of 2005! — Robert J. Bruss, nationally syndicated columnist
–This text refers to an out of print or unavailable edition of this title.
Profit by Investing in Real Estate Tax Liens introduces an investment alternative that is safe, secured by real estat…
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This book gives a great description of the procedural nuts and bolts of purchasing tax certificates, with a lot of emphasis on my own home state of Florida. Unfortunately I learned this week from attending a local auction that it is extremely difficult for the average investor to compete with the institutions in actually purchasing certificates, much less in obtaining anything greater than the absolute minimum available rate of return.
After reading this book, I attended the first day of my own county’s auction with high hopes. Unfortunately I found that there were approximately 125 or so other persons attending it. In our State the maximum rate of interest is 18% and bids can go all the way down to 0.25%, with the statute providing that when redeemed, the purchaser is still paid at the rate of 5%. At our auction whenever a certificate was offered, at least half of the people present would immediately raise their buyer cards and shout out their willingness to accept the absolute minimum rate of 0.25%. Frankly I did not know how the auctioneer could legitimately determine which of the 50 or so people had actually bid first, but I did see that many of the certificates seemed to have been awarded to those sitting in the seats closest to the auctioneer.
After returning home in total disgust, I decided to review the day’s results online. I discovered that in only the first hour, approximately 100 different buyers had been awarded certificates. One might assume that there had been a fair distribution of the available certificates among everyone who had been present. However, when reviewing the mailing addresses of these 100 different buyers, I discovered that about 70 of them shared only six or seven different mailing addresses. Each of the entities sharing those six or seven addresses had sent up to 15 individuals to bid on their behalf. You do the math and you can see that one lone individual has very little chance of even getting a certificate under such a scenario, not to mention ever getting a higher rate of return than the bare minimum. The proceeding that I attended hardly justified being called an “auction” and it certainly didn’t seem fair.
Overall, the book is a good resource on the mechanics of tax liens/tax deeds, how they are auctioned off, and strategies for investing through liens/deeds. Loftis’ descriptions of how to successfully bid on lien/deed auctions is a very useful resource, as is his descriptions of how to calculate rates of return.
However, the book has an overabundance of photos of Loftis at various auctions, photos of liens and deeds Loftis successfully bid on, and photos of houses with liens and deeds that Loftis successfully bid on. The section on how tax liens and deeds are better investments than stocks and bonds is way too “rah rah.”
Although Loftis gives many good pointers about how to successfully bid on tax liens/deeds, the biggest problem is that banks and deep-pocketed investors already know the “secret” of tax lien/deed investing. If you go to an auction, you are likely to see a sizeable number of people all working for the same bank/investors’ group. That makes it pretty tough for a small investor to effectively compete in those auctions.
This book is one of the best ones in explaining in everyday terms the concepts and principles behind tax liens and tax deeds. It’s shortfall, however, is two-fold: 1) the large number of cheesy pictures; and 2) the fact that at most auctions, one investor is very likely to be outmatched and outbid by banks and professional investors groups.
Without question, this is the best book on both tax liens and tax deeds on the market. Two things are clear from this book. First, this stuff does work in most states of the country. I’ve been able to buy both liens (last year at rates of 15-17% in Florida) and deeds. By utilizing the techniques illustrated in the book, I was able to compete effectively against the so-called “institutional” investors. Mr. Loftis teaches how to invest in their “gaps”, and how to go where they don’t go. (On that note, I recently saw an article in the Wall Street Journal online Real Estate Journal that mentioned getting 24% in Iowa, 18% in D.C., and 16% in Arizona. They also mentioned a guy who was making a killing in tax deed foreclosures). Second, it’s clear from this book that Loftis really knows his stuff and has tons of personal examples in his book (he’s not just doing academic research or trying to coax you into going to an expensive seminar or “boot camp”). I’ve read a lot of real estate books and about half of them are really just ads for attending their seminars. Refreshingly, this book isn’t an ad – it just teaches you how to do it. How nice.