Only tax delinquent property investing allows a minimum of 200% ROR!!! Post 24

Mitch Goldstein | Coach Mitch | May 26th, 2007

Coach Mitch’s REFLECTIONS™

Investing in tax lien certificates may result in a better than average rate of return, however the real deal is NOT the 18% that you may get in NJ. Consider the ROR if you went after the Tax Deed, not the TLC.

If you purchased or optioned the property prior to the tax sale from this motivated seller, then you have an excellent chance at getting a healthy return of 200% or more.

Example:

The Fair Market Value (FMV) of the property is $70K. The outstanding taxes are $40K. Because the tax auction is looming, the tax delinquent owner accepts $1200 for the interest in his property. The minor clean up and fix up costs are $800. As the investor, you have $42K invested. You market the property, selling it for $70K in this strong market and get your money back within 90 days (one calendar quarter).

Figure the Rate Of Return (ROR)?

$70K sale – $42K cost = $28K profit

$28K profit / $42K = 66.7% (the % profit) X 4 quarters ( you must annualize the % profit) = 267% ROR

If it took 120 days to sell, then the annualized ROR = 201%

If it took 180 days to sell, then the annualized ROR = 134%, still not too bad

If it took 365 days to sell, then the annualized ROR = 66.7%, and your $28K profit was equal to the after tax wages of the average NJ worker. Imagine if you did one transaction, and it resulted in a profit equal to the wages of the average worker for an entire year!

The key is to be able to get the property for well under the market value so that you can sell at a price that will move the property quickly, while still allowing you a healthy profit. The most motivated of sellers are owners of tax delinquent properties where the tax auction is looming.

BTW, this was a real live example from one my students. It was his first transaction. It occurred within 60 days of his having engaged my services as a Coach.

The average first transactions profit of a student is currently over $20K.

I do not even consider investing in a property unless I feel that I will make at least a 200% annualized Cash On Cash return.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Good luck in your investing,