How To Build Wealth Through Tax Lien Investment

Hey, it's Mark Panoski, the land geek with your favorite niche real estate website, www.thelandgeek.com. and this week's podcast guest is going to take us all through tax lien investing to build wealth. I'm very excited about it. We have not had a tax lien investor on in quite a while. However, I'd be remiss if I didn't properly introduce my co host. You know him, you love him. Scott. Todd. Scott todd.netlandmodo.com if you're not automating your Craigslisting, your Facebook postings. Postingdomination.com TheLandGeek Learn anything but anything. Investorninjas.com Scott Todd. How are you, Mark? I'm great.

How are you?

I'm great, I'm great. Just a little reminder, today's podcast is sponsored by flight school. If you want to go up the mountain of land investing, have Scott's hobby or Sherpa, the brain, the professor. He'll take you up there quickly, efficiently, safely, over 16 weeks. Learn more. Just go to the landgeek.com training and see how flight school can literally transform your life. Today's guest is Melanie Finnegan. If you're not familiar with Melanie, she is the person that manages the daily operations of her company, tax lienwealthsolutions.com she handles a portfolio management, portfolio consulting. She's been in investing, educating and assisting clients in becoming successful in the tax lien investing industry for over 10 years. And she's also the founder and CEO of Tax Lien Wealth Solutions. Melanie Finnegan, Welcome.

Hey, thanks so much, you guys. How are you today?

You know what, I gotta say, Pulse is still normal. Desperation is fine. I can't complain. Melanie Finnegan.

That's awesome.

Melanie Finnegan. Of all the real estate niches, why tax lien investing?

Oh, you would ask that one, right? So I did it because I was 12 years ago faced with just, you know, personal. I was going through a divorce, needed a job kind of thing, and I found the. I happened upon a company that was near my home and connected with them and they taught me about tax liens. I'd never heard of them in my life. And I fell in love with the investment process. So my son's involved in it now. He, Gosh, I think 10 at the time. Yeah, or eight at the time. I started there. Gosh, he's 21 now, but he, you know, we just, I just dug in and learned everything I could about it. I quickly advanced, became a certified tax lien professional with a certification and created some strategic moves and things like that that I saw was assisting and helping people as an alternative asset class. You know that they're making money with their 401ks and self directed IRAs and I fell in love with it. So. So it's kind of a Cinderella story, if you will.

Okay, Scott, Todd, your thoughts?

Well, Mark, as you know, I'm not sure if the listeners know or not, but you know, it like before I was doing land investing, I was doing some tax lien investing and to this day I still do some tax lien investing. And it's, it's. I like it.

Right?

Like I've always liked it. I will admit that the yields are not as high as what I get on my land. It could be depending on the right play. But essentially it really is like, you know, you do the work one time and you put it over here on the shelf and it comes to you. What I don't like about it is that I really don't control when I get paid off. Right. Like to some extent it's not, there's not a lot of liquidity to it. And that's the one thing that like I gotta be careful because I will geek out on that and it's really about the data behind it too. So I'll geek out on it. But man, it is nice having some predictable income as well. So maybe Melanie can solve that problem for Melanie.

Can you solve the problem?

Yes. And Scott, no offense to you or anything like that, sounds to me, you know, just enough to get in trouble. Maybe. Yeah. And maybe that is it. You're saying you're advanced. I'm a data analyst too. I run our data analyst and I run data and things like that. But there are, there are, you know, things that give you a little bit more control in tax lien investing. Being prepared for foreclosures. One, being able to initialize that foreclosure and for, and shake the money loose there, send it to which states go to deed auction before you get the deed to the property, knowing each state's intricacies. Also there's little incentives. Like we focus mainly, I live in Utah, but we focus mainly in Florida because there's incentives there for the investor where we capitalize. There's also a ramp up period. I tell everybody, you know, give it a few months and as you're investing, continue to reinvest and you'll create your water flow which creates your cash flow.

Yeah, well, I mean like, so we do have some things in Common like I'm, I'm in Florida and so every tax ever bought is in Florida. So there's the start. I do know the 5%, you know, bump. When you buy the note, you get the 5% bump. I have gone in and purchased some older like county health tax lien certificates so that I could really control the process of when it kind of goes to auction. I've done that. You know, at that point, you know, you're still probably six months. Even if you filed for foreclosure on it, you're probably still six months to get your money back. Can I get it back faster?

So that is a great question. So I understand what you're saying, number one, and I'm not controversial or being controversial, but everybody be very careful with over the counter tax liens. They're over the counter for a reason. They weren't sold at auction because the desire is less. It's significantly less than the ones sold at auction. You know the 5% secret, but you don't know the tax deed application secret. It sounds like to me when regardless of what your certificate interest is stated, if it's a 0.25%, 5 up to 18%, whatever, once, whenever you file foreclosure, your certificate automatically in Florida triggers 18% per month, regardless of that initial certificate. So that's the TDA strategy. I use the tax deed application. Now you're asking about the six month return. Think about this. Think about it like this. No, you're absolutely right. A single certificate will not redeem the. It could. I mean I get redemptions all the time, right. But I'm in the ebb and flow. So I have created my waterfall. So I'm at the moment I get redeemed on a significant or a single certificate. I immediately reinvest. Right. And that's what I do for my clients. So then we constantly are getting redemption. So if you're looking at a single certificate performance, I believe you're looking at it the wrong way. I think it is a portfolio performance. If you're wanting to create cash flow, it's going to take cash. It's not something that you can jump in with thousand dollars and automatically just be, you know, waterfalling cash flow to you constantly. That's an expectation I think that a lot of people have. It's just not there. But I, but I appreciate your candor, but there is a way to create that water flow and stream of cash flow and tax liens is a way to do that.

Yeah.

All right, let me just jump in.

Here before you want to fight women.

Mark, hold on. See now I really have to throw a curveball at Melanie.

Oh great, I got one more.

Wait, wait, wait. Scott, before you throw the curveball because you two are really geeking out now.

We're such nerds.

On tax lien investing. I want to just basically walk the listener through the process so that we're all sort of understanding your terminology and why this is such an effective strategy. So Melanie, you know, Scott's in Florida and guess what? He's not paying his property taxes on his single family residence. Then, then what happens?

So poor Scott. And I tell everybody, anybody, any one of us who are not paying our property taxes, I swear it's playing Russian roulette with your property. It is a problem. So Scott, number one, that's a no, no. You should have paid your tax bill because now the following year you are. Because why do we need tax these property tax money? The purpose of tax lien investing and tax lien certificates is to support our police officers, our government entities, our fire departments, our schools, our parks. Potholes. They have monthly budgets, they have to meet that. So back in the 1800s they came up with the tax lien investing program that hasn't really been tweaked. And what they do is they put up a certific for sale for an investor to come in. And the minimum bid is starting at whatever Scott owes. That's called the face amount. It's his tax bill. So it's his tax bill and then it gets bid down in Florida in quarter percent increments. The higher the property is, the more highly desired property it is the lower interest rate you're going to receive. But that communicates to you non verbally that you're, you're investing on a premier property. The lower that interest rate is. So it goes for sale. You have a period of time. In my office at Taxing Wealth Solutions, we call it a grace period and it's called the redemption period where you're stymied a bit for having any control over the investment. But you are accruing interest on paper and you at two years in day one in Florida, you can easily initialize the foreclosure and shake the money loose. That way my company buys on the secondary market so we can foreclose immediately when we get that transferred into our name because we buy outside of the redemption period.

So let's just real quickly define the secondary market. So Scott's certificate has gone through the tax lien auction, correct?

Correct.

And let's say Mark's hedge fund buys his certificate.

Okay, so go ahead. Sorry.

Now. So I hold the certificate, but I don't really want the asset. So then what do I do?

So you're the hedge fund. So I'm so glad you said hedge fund because as many people know, and Scott, I'm sure you know, being a single individual entity and investor or just a single person going out there and bidding is. It's very difficult because it's an institutionalized. It's so it's a, it's monopolized by institutions such as Deutsche bank or bank of America. Huge hedge funds, they gain wealth from doing tax and investing like this. And then what happens is they're not in the business of acquisition, foreclosure or anything of that nature. So I have a broker and belonging and because I belong to the National Tax Lien association and I'm a member there, then we can actually go in and purchase off that secondary market where our brokers facilitate deals with the hedge funds and sell them off to us in. I buy them in bulk, I get a small, small bulk discount and then, and then splice them up between portfolio portfolios for my clients. So the secondary market just gives us a little bit more access. Right. Like people like my clients who are just regular people can, can capitalize utilizing, you know, self directed IRA money or just regular entity money. It doesn't matter any wherever you want your liquid to come from. But really I like to focus on retirement retirement funds because we are a alternative asset class that can be so promising, especially for what our 401ks are doing right now. And tax lien investing is recession proof. Okay, I said the magic words.

Well, I think that that really gives the listener a really good, you know, view of the tax lien investing strategy from 30,000ft. Now Scott, if you want to geek out, go ahead and ask Melanie other questions.

Let's do this.

Look, I'm about to freak her out. I'm sure it, I'm sure of it, Mark. All right, Melanie, let me ask you a question. Not only am I buying it over the counter, I'm buying it on land. What do you think?

What do you mean vacant land? Just vacant land? Absolutely, I think. I'm not freaked out. That's what I promote because I was raised by blue collar family. That was the, the whole Mark Twain saga is by land. They're not making any more of it. My grandparents taught me at a very young age how important land is. The dirt is the dirt. What you get is what you what you see is what you get. I love land and I think that inside of a, any type of investment portfolio, let's say you get acquisition on that property. If it's, you know, as long as you've done your due diligence and that you see that that land is in a development that's up and coming, hang on to it for five years if you need to because that's the more that that land around it gets saturated, the more valuable that lot gets. So good job, Scott. I think you're awesome.

I didn't freak her out, Mark?

Nope. Okay, try again.

The hedge funds don't want it though.

Okay, when you get the land on tax deed auction, what are you doing with it?

So right now, in fact, so let's say you, you send it to tax deed auction, or excuse me, you file the tax deed application. Property owner Scott, who was delinquent in the first place, doesn't have the funds to bring that to free to fruition. So before my me, the investor gets the acquisition of the deed and takes over, it has to go to a tax deed auction in Florida. So it goes to auction for local real estate investors in the area. If that's not something, if it's not something that they bid on and nobody wants that, then you actually then get the deed to the property. And what do I do with the property? So at Tax Lien Wealth Solutions, what we do is we facilitate the sell. Right now I'm working on 130 properties that sell been acquired via probably the last eight years and I have about 130 package. We just sent out the purchase contracts today. I have a single buyer that buys them and he capitalizes on that man. He comes in, he pays my clients, makes a little profit. He makes a little profit and they start the building.

All right, Melanie, you answered it wrong. You're supposed to call Mark and I. Oh, dang it.

Sorry.

You know that Melanie.

You guys, it's okay. I'm a follower on your Facebook and I always, I sometimes make comments on your Facebook, but very, very seldom. But I do. I should have known better. I'll call you next time.

It's all right, we'll forgive you.

It's okay. No worries. But next time you get, you know, a tranche of raw land, we want it.

I think I. Oh, do you know what, Tisk, Tisk. I did contact you, Mark. I actually contacted you about this package I have and you sent me to your Facebook page. That's what you did. You didn't want to get on the phone with me.

Oh, no, that's impossible.

I have the email in my inbox.

So I would never do that. I'm sure. I forwarded to Scott, and Scott was.

Like, no, because I was referred to you. I was referred to you by somebody. I can't remember. I want to say maybe another podcast. I did. I do quite a few, but it had to be in. Maybe in Best Florida. I can't remember which one. But somebody referred me to you and did an intro email to us, and you were too busy to talk to me. Mark.

Oh, Mark, you're killing me.

That's insane now.

What?

That's really hard to believe, but it's possible.

I think maybe it was a foreign language to you because they were tax deeds rather than maybe warranty or quick claim or anything like that. Been a foreign language. Could have been. I don't know a lot of people that I have that are. And not to disregard your. Your knowledge by any means. I don't do that at all. But I'm just. I don't know if maybe that's what it was because you were. You were very receptive to me. You weren't disrespectful or anything. You just were like, okay, yeah, here, start following us. Here, show the deeds to my. These people. The list of deeds to these people on our Facebook page. I know. I see your question mark. I see.

It's weird. It doesn't sound like me.

After this meeting, I'll forward you the email.

All right.

Yeah.

All right. Sounds good. All right. So nobody's in trouble.

Nobody's in trouble. It just happened the way it's supposed to happen. It worked out well.

But here you are now.

I know. I'm so. I love this. Thank you, guys.

No worries. No worries. So, Melanie. Oh, Scott's playing with his background now. Oh, man.

Nice sharks, bro.

Sorry. Sorry. Because that's.

Nice beach balls.

I'm sorry.

Oh, my gosh.

He's loving this story right now.

You'll find out why. Like, I gave it away. Dog it. I'm sorry. Okay.

You didn't.

Right now.

I don't even know. This podcast is devolving. What is the worst advice you see or hear given in tax lien investing.

Oh, my gosh. That anybody can do it or that people. I see so many education formats out there that do the coaching and promise that they can get tuition for education back in one month, and people just fall for that trap. And I think it's just like, you have to either have somebody mentor you, you have to have some sort of experience in analyzing data and know which data to analyze so that you're understanding your certificate performance and prediction. There's a lot, there's a lot of moving parts. Scott, do you agree with that?

Yeah, I mean, you know, I think, I mean, like, there's many times where I've gone down and looked at properties. When I say gone down, I mean, like, sit online, look at it. You know, you start to do. You got to do your due diligence, right? Like, you got to know what you're buying even if you don't get it, right? Like, so you got to do some due diligence there. And there's many times where you do the due diligence and then you either at the tax deed auction, you don't get it, or you find something that's like, ah, that's a problem. And you know, the, the other problem with even a house, for example, is, you know, you're taking a snapshot in time. Like right now, okay, it could be the house could be pristine and they just didn't pay their taxes, and you're like, oh, that looks like a good deal. But by the time you go to do the foreclosure on it, which could be six months later, well, the value of that home could have gone down. Because for all you know, they set the place on fire, right? Like, you don't, you don't know. Next thing you know, you're like, I got this beautiful house and you send somebody out to look at it. It's like, dude, a tree fell through it. Now I got a mess on my hands, okay? So I didn't get an asset. I overpaid for a destroyed house and I have no insurance on it. So it's not easy. It sounds easy, but it's like a lot of work and there's risk involved in it too.

You're so right. And anybody that says there's not risk inside of a tax lien certificate is completely not being full disclosure. So there is risk. One of the things that we, that we are, that's really important to us, how to analyze data. We have an exit strategy that is the assessed value and emotional distress. And I call it emotional demolition. Happens all the time to structures. We'll get concrete in the restroom, we'll get. Or in the toilets, people destroy it. That's why I love land. That's why I love land. It doesn't bite us in the behind as much as this of structure properties. And to be completely clear, there's not Any I very rarely have seen a white picket fence with a smiling family, you know, out in the front yard of houses. If they're going to tax deduction or to tax certificate sale, there's some distress there in advance. Very rarely is it somebody just forgot to pay their taxes. However that does happen. Once they understand that a certificate's been sold then they'll almost immediately pay. There's tax lien gamblers and things like that that play with it. But yeah, there's a lot of data that you need to have and that's why I provided my company is because I wanted that concierge hand holding service and education so that they, they knew what they were going to get into. I require they get a certification through my portal before they can buy out of my inventory. They can't even buy my inventory and they, until they've gone through my, my learning portal education.

Fantastic. Fantastic. So Melanie, why would anybody that is not, you know, in some like, just like in your type of situation where you know there's been some type of life change and they want to start something new, you know, Scott or myself, we have a, you know, these businesses and our listeners might have full time jobs. Why on earth would anyone want to start learning how to do this themselves when they could just deploy self directed IRA money or QRP money to a professional and what type of yield would they look to get versus going through the headaches of the due diligence game of trying to learn an entire new business themselves.

Yeah. So let's talk about today's time, right? We are in some Crisis with this. COVID19 right. Our economy is struggling. There's things that are struggling out there that we don't even know yet. But we know we can see the writing on the wall, what's happening in the market and what's happening. And earlier today when I said that tax liens are recession proof, we've never been busier than the last two weeks. I've never been so busy because they unfortunately, and I don't even like to say this, but they thrive in a down market. And that's the reason that people are calling us right now. Because one thing that our 401k does for us is tuck us in at bed, tuck us in bed at night, you know, makes us feel good. But at the end of the day when we're retiring, that bed tuck in is just a nightmare because we don't have enough funds that we've been working all our lives. We felt good about it up until that point. Of retirement. And there's people going, now what? What do I do now? Because they want to utilize that, those funds and be able to live the life they've been living, whereas just being a straight 401k investor playing the volatility of the market may not lead to that. And I believe, and I've seen tax liens personally change my life. I spoke at several times. I was totally the stereotype single mother that didn't know where I was going to get the next meal. And I figured it out and took an opportunity that I got and ran with it. And so tax lien investing is for people who are willing to get into something new rather than not. You know, it's like, if it ain't broke, don't fix it. Well, it's broken right now, guys. It's broken. Things are happening right now and it needs to be fixed. And this isn't a real estate recession. This is something different. We haven't seen this before. So I think right now, capitalizing on tax liens is exactly where you guys need to be. And alternative asset classes, of course.

Yeah, yeah. I mean, you know, Scott and I are so thankful that we're in the business that we're in right now.

Yeah.

For sure. So we're at that point now, Melanie, where your mentorship has been invaluable. And I think you and Scott geeking out on tax liens has been extremely entertaining. But now we're going to ask you for your tip of the week. A website, a resource, a book, something actionable for the art of passive income listeners to go improve their businesses, improve their lives. What have you got?

So I love the book, Dale Carnegie book, How to Win and Influence Friends. Is that what. I may be saying the name wrong, but it taught me how to be a good leader. I guess that's something that I think in business that we Forget sometimes as CEOs or presidents of big companies, we forget that everybody's human. We forget the accountability part and that factor. And anything that I've done and where I've succeeded is my biggest success is where I've been accountable to my mistake or being able to learn and grow from a mistake. That's some of the greatest and most beautiful learning. I don't panic like I used to when something comes up or, you know, in the beginning, I would panic. I'd never run a business before. As I said, I come from blue collar. Like, it just became. It just became something I was accustomed to. I didn't know what to do. And this or that happened. And now I learn and grow from that and make people feel important. As Dale Carnegie says, it's the most important thing we can do. It's our number one need as people. We want to feel important and that. I think that as a leader, that's the number one thing you need to do is when you have the right team in place is, you know, make them feel important and you will have a dynasty. I believe that with my heart and soul.

I love it. Scott. Todd, what's your tip of the week?

All right, Mark, my tip of the week is this. It's in the video. It's. Check this out. Meeting, Zoom meeting backgrounds, dot com. You can get like all kinds of zoom meeting backgrounds. Like here I'm with Katy Perry and like the Sharks, you know, like, oh, my gosh, I can change it up. I don't know. Make life fun while you're working from home. Make life fun when you're on these Zoom meetings.

Heck yeah.

This is extremely annoying, I gotta tell you. Like that one. But look, man.

You and Leo are buds.

Yeah, who says we can't have.

But Mark's using it too, isn't he? I see the ocean behind him.

I am.

He pretends he's not. He's all, oh, gosh.

Well, no, no, mine's just cooler.

Oh, yeah, I was gonna say that too.

Yeah.

Mark, come on. You can't beat the Sharks, man.

You can't beat. Look, I agree. Katy Perry is in a league of her own and you can't beat the Sharks, but I do like my beach.

I like your beach, too.

I thought about saving it. I'm gonna save it. I'm gonna save it for another. Another podcast.

Maybe today that doesn't hurt my feelings.

By the way, Melanie Finnegan, you're in trouble.

Why?

Oh, I found the email thread.

Here we go, here we go.

Here it is. And it says, Jack Haas from housedudes.com. i said, Jack, thanks so much for the intro. Much appreciated, Melanie. Let's talk. Please click the link below to schedule a 15 minute consultation with me.

And then I did. Now it's my turn.

Okay, now that's all I see on my. On my thread.

So I'm so glad that I have this. I hope I don't eat crow, but when I do, I'm going to own it, right? We just talked about it, Mark.

I'm sitting by anxiously.

Somebody.

Yeah, so I. Okay. This is okay.

Hopefully it doesn't have my name on it.

Let's see.

Well, hang on.

No, no, no.

She's looking for it. I want to thank the listeners and just remind them that, well, first of all, I want to do my tip of the week, which is going to be tax lien wealth solutions.com taxingwealthsolutions.com Hopefully I'm not going to eat crow on this one and learn more about tax lien investing. I want to thank the listeners, remind them the only way, the only way we're going to quality guests like Melanie Finnegan from Tax lienwealthsolutions.com is if you do three little things. You gotta subscribe, get a rate, you gotta review the podcast, send us a screenshot of that review. To support thelandgeek.com, we're gonna send you for free the Passive Income launch Kit, which is normally $97, as well as the latest wholeting course, how to double youe money, 30 days or less. Scott, Todd, are we good?

We're good, Mark.

Melanie, Finnegan, are we good?

We are so good. Sorry, I'm still going through my emails. Yes, we're still.

Melanie, I think you didn't call with me anyways.

I did. Okay.

Anyways, you can apologize later. No worries. But that's where the, that's where for me, the email string ends.

Okay.

Nevertheless, I want to thank the listeners. And ready, one, two, three, let freedom ring.

Word.

All right. Pretty good.

Sorry, man.

So now, now we're going to get a discount, Scott, on the next tranche. All right, thanks, everybody.

Okay, thanks so much, you guys. All forward to that email. Mark, thanks.