The Land Geek Podcast #8

Welcome to the Land Geek Podcast, your resource for information and tips to making money by buying and selling land. Let the Land Geek show you how to make a passive income by working smart, not working hard. Learn strategies and tricks to make money buying and selling raw land today. And here is the man that's going to help you do that, the Land Geek.

Hey, it's Mark Podolski, the Land Geek. And today I'm really excited to share with you someone really special, really big in the world of tax lien investing. In fact, she is the world's most trusted authority on tax lien investing. I am delighted and privileged and honored that I am getting to spend a precious 30 minutes with Joanne Musa, the tax lien lady this morning.

Wow.

Taxleanlady.com Joanne, how you doing?

Wow. I'm doing great. Thank you, Mark, for that great introduction. You made me sound really good.

Well, you are. So you've been doing this a long time. And how did you go from being the most, you know, like a mom and a wife to becoming the world's most trusted authority on tax lien investing?

Well, I'll tell you, I'll tell you a little bit about my background because I just want people to know that if I can do this, anybody can do this, because I don't have a background in real estate. I don't have a background in finance. I went to school for biochemistry. I got my degree from Rutgers University in biochemistry. And then I went on, I thought I was going to go on and get a master's in nutrition, but then I got married and had kids and then I became a personal fitness trainer. And I was a personal fitness trainer for a few years, but we lived in a two bedroom condo and I had three growing boys. And we bought our condo in 1989 and the following year the bottom dropped out of the housing market pretty much like it did back in around, you know, 2007, 2008, around now, you know, recently. And it took about 13 years for the market to come back and us to have, we had for those years what I termed negative equity in our condo. So when we finally had some equity and, you know, now we have, when we moved in, we had one baby, one newborn baby. Now I had three growing boys. So we decided it was time to sell the condo. We, we weren't going to buy right then we decided we'll rent for a while, we'll find a place to rent right in the same place where we lived so we don't have to take our kids out of school. Or anything like that. Well, we couldn't find a place to rent. We couldn't find a three bedroom house to rent where we lived. So we decided, okay, well if we can't rent, maybe we'll buy. So we looked at places to buy. The problem was we could not afford what the house that we wanted. A three bedroom house, not only, but there wasn't one in our area anyway. We would have to move out of the area we lived in into another county just to find a place available.

Right?

There wasn't much available. And then when we did find a place, there wasn't much that we could afford. We didn't back then we didn't have the credit. Now we have excellent credit, but back then we didn't, we had some money to put down. But like it is now, things were pretty tight with mortgages back then and you had to have a lot of money down you, you had to have good credit pretty much the way it is now.

And there were programs were higher than right.

Well, we weren't first time home buyers anyway, but actually we might have been considered first time homebuyers now because we lived in our own condo for a while but there weren't the programs out there that there are now either. So we decided, well, and my husband was going to go on disability because he was having both hips needed to be replaced. And my dad owned a home town that I grew up in and we rented half of that house from him. My brother lived downstairs, we lived upstairs. Now we went from a two bedroom condo with three growing boys to a little two bedroom apartment.

Whoa.

Yeah. So. And we couldn't even take all our furniture with us. So but we decided since we, if we weren't going to buy a property to live in, at least we could invest our money. And I figured, well, and at that time I thought real estate was the way to wealth. So I went to, we went to real estate seminars. I bought these real estate programs and I thought, well, you know, we'll, we'll do a pre foreclosure. I didn't have any luck with that. Sent letters out, just got nasty, a nasty phone call or letter back and decided, well, okay, if I can't do pre foreclosures. At that time what was happening was this was the thing to do. So people were getting a lot of letters from people that wanted to basically buy their house before it went into foreclosure real cheap. And at the time people weren't going to do that because they could just refinance and Get a loan and pay it off. At that time, you were able to do that. So. And with all the letters they were getting, if people were very annoyed that people like me that were trying to do this, especially if you didn't know the right thing to do, the right thing to say to make it advantageous for the seller. But then I thought, well, if I can't do that, that's okay. I'll go to the foreclosure sales. I'll buy a foreclosed property. Okay. I went to a couple different counties in my state. Now, I should mention I lived in New Jersey and that. And. And that property values there were. Are very high. At the time I was looking, I was prepared to spend, to bid up to $300,000 for a foreclosed, you know, for a property that was going through foreclosure. This is a distressed property, not a very big property. Right, right. I could not touch foreclosed property for $300,000. This is back in 2005, let's say, you know, okay, could not. Could not do that between. Well, let me qualify between 2001 and 2004. All right, okay. So that didn't work out for me. So I figured, well, I'm going to invest this money somehow. I started going to tax lien sales in New Jersey and investing that money little by little. At the same time, we started looking out in Pennsylvania for property, which was cheaper, and we were able to purchase a house out in Pennsylvania. Now, at the same time we purchased our house, we also purchased a tax deed from a deed sale out here in Pennsylvania. And I was building a tax lien portfolio.

Okay, so you purchased a tax deed or tax lien.

I purchased tax deed out here in Pennsylvania on a land on land.

Okay, so let's. Let's tell the listeners, what's the difference between a tax deed and a tax lien?

Oh, yeah, okay. Well, with a tax lien, you're not purchasing the property. You're actually paying the back taxes on the property and putting a lien on the property. And you're doing that because, you know, the one thing I learned from this business, Mark, is pay your taxes before anything else, because if you don't pay your taxes, the county is going to charge you a lot of interest, a lot of money. Now, the reason why you would want to buy a lien, you know, pay somebody else's taxes and put a lien on that property is because you get that interest instead of the county getting it. The investor gets it. Not only that, but you're in first position to get paid ahead of everybody else. You're ahead of the mortgage. So if. If the property owner doesn't pay you because you don't get paid until the property owner decides to redeem the lien. But there's a redemption period. They only have a certain window to do that, window of opportunity, which can be anywhere between six months to three years, depending on the state. And if they don't do it in that amount of time, then you, as the lienholder can foreclose on the property and you are the first one to get paid. You're ahead of the mortgage. You're ahead of any other judgments and liens except for government.

Oh, okay. Let me ask you this. Have you ever done this with raw land or only homes?

Oh, yes, I've bought liens and both liens and deeds on raw land. And as a matter of fact, well, you do have to do a little more due diligence with raw land. You have to make sure it's buildable. But it's a little less competitive than bidding on homes because everybody wants those liens on homes. They think they're going to get the property, which really doesn't happen.

Right. Right. Now, is it true I read somewhere like 90% of liens on homes get redeemed?

Yes. In most states. Yes, that's true. In New Jersey, where I invested, it was more like 99%.

Oh, wow.

Get redeemed. Yeah. And the difference between a lien and a deed is that when you buy a deed, you are actually purchasing the property.

Right, Right. Which is what I. Which I like to do. I've never bought a tax lien, but it'd be great because it's not competitive. And what could I make on my money if I just bought the tax lien?

Okay, well, it is competitive, but not as competitive as if you're buying a lien on a property. Okay. But I have been able to get a lot of my liens at the default rate, which in New Jersey is 18%. It. Now, in many states in New Jersey, that's been down. People even pay premium for liens. But I've managed to average 14% over the last few years on my tax lien portfolio.

14%?

Yeah. On most of my tax lien portfolio. I'm not counting the mistakes that I made when I first got involved, you know, the mistakes that I help other people not make.

Right, right.

I learned how not to make them. So that's what I teach my clients how to do, is how to do it properly so that you don't make those mistakes.

Now, do you want the actual underlying asset, the land or the house, or do you just want to get paid your 1460?

I really specialize in liens. I want to get paid, I want to get my money. How? There, there are people that do more deed investing and they want the land, they want the property. Really, if you want the property, tax lien investing is not a good way to do that. Tax deed investing is the way to go. Or redeemable deeds. There are some states that are what they call hybrid states that are kind of in between. You buy the deed at the sale, but the owner has a right of redemption. In those states, the percentage of you actually foreclosing on the property goes up quite a bit. Because these deeds are bid up at the time, same sale.

Right.

And the owner, in order to redeem them, has to pay a huge penalty on what you bid at the sale. For these properties, which, you know can be quite high, they have to come up with more money to redeem, so it makes it tougher for them to redeem the property.

Interesting, interesting. I think Texas, is Texas a redeemable?

Yes, Texas is redeemable. The two biggies are Texas and Georgia. Texas is the one that most people like because it has a redemption period of only six months and the penalty is 25% per six months for homesteaded non agricultural properties. Now people think, well, you could get 50% a year. Well, not on those type of properties. You can on homesteaded properties. But on those type of properties, after six months you just receive the deed to the property. The property properties yours.

I see. So what do you mean by homesteaded properties? Were the homes on there?

Well, no, it's where the owner lives in the house and has applied for a homestead. You know, most states have some kind of a homestead application that you can do to either reduce your taxes and it's just a way of saying that it's, you live in that property.

I see.

The owner lives in the property, but you have to apply for it. Like even in Texas, if you buy a deed on a property but the owner and the owner lives there, but they didn't apply for that in the year when you purchase the deed, then it's still considered a non homesteaded property.

Okay, I get it, I get it. So who are your people who comes to you and says, Joanne, make me 14%, what do they look like?

Are they okay? They don't come to me and say make me 14% because if they do I refer them to others who I know can make the. I don't invest for people. What I do is I teach people how to do it. Yeah, I teach them how to do it themselves. Now I can connect them with, you know, I do have connections and people that I trust that do this in different states. So. But you have to have a certain amount of money to be able to give, give your money to somebody else and have them do it for you. If you just have, you can't get started with only a couple thousand dollars and have an agent do it for you. It's just not profitable for the agent. So for people that have less than $25,000 to get started, they really have to do it on their own. And, and that's where I come in. I teach them how to do it on their own.

Okay. Okay. But typically, who are these people that want to learn how to do this? Are they looking for. They've got money in the bank and they're saying, this is better than having my money sitting in the bank, or are they investing for retirement? Why are they coming to you?

Well, I actually get different types of people. I get people that are young, just starting out. They don't want to invest in the stock market. They want to know what to do with their money to make a good return, and they don't want to chance it in the stock market. So they want to know how to invest in tax liens. Now those people don't have a lot of money to start. So those are the people that I teach how to do it themselves. Then I have people that are older, maybe they're middle aged like myself, and they're, they're looking at retirement in the next 10 or 20 years and they want to do something else with the money in their IRA or money that they have saved. They don't want to chance that to the stock market. They want a safe alt either. And these come in two flavors. There's those who just want the return. They want a safe alternative to the stock market. And that's what I specialize in. I either teach them how to do that or help them find a place to put their money that, like a tax lien investing fund or with a tax lien investing agent that will do that for them. Because some of these people, quite frankly, don't have the time to invest and they want somebody to do it for them. I see they might be doctors, lawyers, you know, they don't have extra time to do it. So that's, you know, one type of person Then I have others who, maybe they've done some real estate investing. They want to get into redeemable deeds or tax deeds. And again, I can hook them up with the right people and also help them find the best places for them to invest and teach them how to do it themselves. So I have clients that are doing it themselves and at the same time are putting their money with somebody else to do it for them in another state. So they're diversifying their interest in tax deed properties in different states.

What's, what's the biggest risk in tax lien investing? I mean, it can't just be that easy to make 14%. There's gotta be some risk, right? Risk return, risk return ratio.

There, there is some risk, and the risk is not knowing what you're doing. Buying a lien on the right. Like, like in your business, Mark. Okay, you're the land geek, right? You buy land and you sell it.

Right.

And what if you don't do your due diligence on the land that you buy?

Yeah, it's terrible. You can really get burned.

Absolutely the same thing. For instance, I told you that I kind of specialize in land when I buy liens. So if I buy a lien on a piece of land and I don't do my due diligence and I don't find out that it's a buildable piece of land, you know, I mean, it could be a swamp if I don't, if I don't look at it. Or, or it could be desert, depending on what state you're investing in. Well, if I don't find that out and I buy that lien, I might be getting the default rate. And let's say I buy a piece of desert in Arizona at 16%. Well, sure, I can foreclose on that property. And then what am I going to do with it? I'm not going to get my money back. I'm not going to be able to sell it.

I see.

You see what happens? And it's the same thing like out here in New Jersey. If I buy a piece of land that is not buildable, maybe it's an undersized lot so it can't be built on. Maybe it's in a wet area where it can't be built on. Maybe it has an EPA problem and I didn't check that out. Yes, I can foreclose on that property because the owner is not going to pay me. In that case, I can foreclose on the property, but then the EPA can come after me, right? For. For thousands of dollars more than that property is worth, depending on what the problem is. So those are the things, and these are the things that I teach people how to check out before they buy the lien.

Okay, that's really good to know. Okay, so I'm a tax deed guy. What strategy could I use to incorporate tax liens so I could actually get the property? I want the property to sell.

So you. So in other words, you want to buy tax liens, but you want to get the property?

Well, I will. Yeah, exactly. But is it just better to just go to the tax deed sales?

Oh, definitely. First of all, even if you do, even at that, depending on which state it is, let's say you're in a state where the foreclosure rate is maybe 10% of the liens, which is very high. The state that I invest in, it's really close to 1%. Okay, okay, but. But let's say you do get to foreclose and you also can raise that. When you invest on land, you have a better chance of foreclosure, foreclosing. When you invest in the inner cities, you have a better chance of. But you could see where you need to do more due diligence there.

Right, right.

But even if you get one of those properties, it could be years before you actually get the property because the redemption period in a lot of states is two or three years. And there are some states that have shorter redemption periods. So you can increase your chances by investing there. There are lean states that have one year or even six month redemption periods. But your best bet if you want the property is to go with the redeemable deed states. Georgia, for instance, is a redeemable deed state that really acts like a lien in that you have to foreclose. If it doesn't redeem, the redemption period is only one year. So it's not real long. And that would be where. That would be where I would go if I wanted to. And there about 50% of the time, you're going to end up with the property.

Wow.

Probably more for land.

Interesting. Interesting. Well, what if I. Okay, let's say I buy the lien and I go to you and I say, hey, Joanne, I know you're having a tough time with the taxes. I own the lien on your piece of property. How about we just do a deed in lieu of foreclosure and I get it tomorrow? Can we do that? Or does the county say, no, that's not kosher.

You have to check on the state laws in some states, you're not allowed to do that. And here's the bad thing. In New Jersey, for instance, somebody else can come and make that offer, and that's fine. But you being the lien holder and you make that offer, there might be laws against that, that you as a lien holder are taking advantage of the homeowner. And there might be a certain percentage of the value of the property that you have to offer, like 80% of the value of the property. So it's tricky in different states. You have to check with the state laws first.

Yeah. Tax lien investing, I find to be much more involved than tax deed investing. It's great that you're out there teaching people how to do this, because I tell you what, 14% of your money is not bad if you just learn how to do it correct. It's just a due diligence game. And that's fascinating. Unbelievable. How long have you been doing this?

I've been doing this since 2002, when I first got started. What happened? Well, I was telling you the story before that, I found the real. I just couldn't get involved in real estate, so I started doing the tax liens instead. I found that easier. And I think the reason why is. And I don't know, being a woman might have something to do with it, but I did not like negotiating. And with tax liens, I didn't have to negotiate. You know, you just go to the sale and buy the lien.

Yeah.

That makes you the tax collector, takes care of a lot of the work. You don't have to do anything. And, you know, I'm a little bit lazy with that kind of stuff. So, I mean, there are certain things you do have to do. You do have to keep track of things. You know, you do have to keep track of your portfolio.

Right.

But the tax collector in the state I serve started investing in, does all the notifications where, you know, until you actually foreclose. Some states, it's not like that. Some states put that on the lien holder, but in a lot of states, the tax collector does everything. They're the ones that collect the money from the, from the homeowner or, or the property owner. So you really don't have to be involved with that. So that's what I liked about it. And then I found out, well, well, first of all, I met somebody who was. Had a lot more money than I did to invest. And we kept meeting each other at tax sales, and so he asked me to work for him. So when I first started. I did invest for someone that had a lot more money to invest. I helped him build a big portfolio. And really it's a medium sized portfolio, not a big portfolio, because there's fund companies that have huge portfolios and his would be small compared to that. But I had to hire five people and teach them how to do it. Because in New Jersey, tax sales are done on the municipal level. So there's hundreds of tax sales a year. And on any given day there can be a few tax sales all at the same time. So I hired. We only went into five counties, otherwise I would have had to hire more people. And I hired about five people. I had to teach them how to do due diligence, how to bid at the tax sale. And. And then while I was doing this, I noticed that there were. There was a need for information about tax sales. A lot of people wanted to learn about it. There wasn't at this time, there wasn't much available. There was one book in print when I started, the 16% solution. That was the only book. And it was at. It was at least 10 years, 10, 15 years old at that time. It's since been reprinted. But the problem with these books is that because it's so different in every state, the books are kind of general. They can't be specific unless it's written about a specific state. There is one book now about New Jersey that's been written by a New Jersey attorney, Mike Pellegrino, which is a good book. I recommend that. And really the best books have been written by attorneys. There's a few books out now, there's quite a few, but they really don't give you a lot of. Not only do they not give you specific information, but the people that wrote these books are really not taxing investing experts. They may have invested in one area, had a little success, and then decided they could make money by selling a book about it or, you know, selling information online about it. But what I did when I started is I saw there was a need for this information. So I started kind of doing what you're doing, Mark. I had podcasts and I interviewed. I had teleseminars, actually, and I interviewed experts from around the country and got to learn what it was like in different areas of the country. Because anybody that tells you that they're an expert all over the country on tax lien investing is lying.

It's just too big, it's just too broad, too many laws, it's too complex for one person to know everything about every county, every State.

Right. And every state is just so different. So what now? I do have clients in different states and I do learn about different states. I do have information that I keep updated on different states, but I wouldn't consider myself an expert in every state. I know more about some states than others. Quite frankly, some states are just not worth learning about.

As long as you're making the return you want, does it really matter what state? I mean, I live in Phoenix, but I can still invest in New Jersey, right?

Yes and no. That's not. You know, other gurus make it sound like you could do this anywhere. You can't. Unless. Unless you're. Well, one of my clients is a pilot. He can, because he could just fly anywhere he wants at no cost.

Right.

But here's the thing. All states do not have online tax sales. Now, you asked me, can you. You're in Arizona. Can you invest in New Jersey? You can only in about four towns in New Jersey that have online sales. But in order to do so, you will need at least $100,000 because they want a deposit of $10,000 for the online tax sales in New Jersey. And there's, by the way, there's only four, four towns that do this in over 500 in New Jersey. But only four of them have. And this is new. This is only this past year that they've had online sales. They want a deposit of $10,000, and that is taken to be 10% of your budget. So you need to have $100,000 in your account to do this in New Jersey. Now, not all states have online sales, and even the states that do, not all counties are online. In Arizona, for instance, in your state, only about half the Arizona counties have online sales.

Right. Arizona's big, big tax lien state.

Yes.

Very, very competitive here.

Yeah. Probably the most popular online sales are in Maricopa County, Arizona.

Maricopa county, that's where I live. Because people love the real estate here.

Yes.

And the market's been volatile, but it's getting better now. So I know we're short on time and I'm going to put you on the spot. I don't mean to, but every podcast, we give a tip of the week. It can be a website, it can be a resource, whatever you feel like. What would be your tip of the week?

Oh, I have a good one for you.

Oh, good.

My blog, tax lien investing tips.com. tax lien investing tips investingtips.com has a lot of good information. There is categories down. If you scroll down on the Right side of the blog. You can look up all the, or you could do a search on anything that you're interested in. And I have tons of articles on tax lien and tax deed investing there on the blog. The. And I also somewhere on that blog you can sign up for a free report for tax tax lien investing on that blog. So that will be my tip of the week.

All right. Fantastic. Fantastic. So are we out of time? How are we doing on time?

Yeah, we're just, we're just about out of time. I have one more, you know, if you have one more question for me or want to wrap this up, that's fine.

Sure. So I'm interested in tax lien investing. I go to your site, I start getting information. What is the best next step?

Oh, if you really want some training, some valuable training that is really a good value. My membership site, tax lienlady members.com and if you go to taxlanelady.com forward/membership.htm you can find out more information about that. But basically what I do is I give a training every month for my members and it's an in depth training on some aspect of tax lien investing. Our last training was on the Maryland tax sales, which are going on now, by the way. That's why I did that. Did a training on Maryland tax sales. Before that we did a training on secondary liens. So each month it's a different training that I do for my members and they also get some of my courses as bonuses for free.

So this is such a complex subject. We're going to have to do another podcast. I mean, you just brought up secondary liens.

Oh, that's a whole. I've got, I could do a whole podcast for you on secondary liens on redeemable deeds. The best. I just, it's not even on my, my tips blog yet, the tax lien investing tips blog, but I just finished writing an article. It will be there probably by tomorrow. Just finished writing an article on the three most profitable tax lien investing states. Two of them are redeemable deed states and the other is a tax lien state. So. And I could do a podcast on each of those.

Well, great. I'm gonna hold you to it because I think, you know, my tax deed people would be really interested in that redeemable deed strategy because we want the property typically at least that's, you know, that's what I preach. But I know there's a percentage of people that probably look at the Lane geek site and think, oh well, you know, wouldn't it be great to just make 14, 16% on your money and without really not that much risk and not that much work? Once you get the education and understand how to do the due diligence, because I mean, tax deed investing, you've got the due diligence, then you've got to make your offers and have your deal flow coming in, then you've got to market that property, then you've got the follow up with your customer service. I mean, it's a business. It's not just do your due diligence, go to the tax lien sale and collect your checks on that lien from the. The person who owes you the taxes. Right?

Yeah, from the county, actually.

Yeah, from the county, yeah. So I understand that.

I use it as a safe alternative to the stock market.

Yeah, I mean, I think it's a great niche and something that everybody should learn about because you never know, you just never know. What's your plan B? And this is a great, you know, plan A, plan B, plan C, whatever it's going to be in your situation. So Joanne, I really appreciate it. I know your time is so valuable and everybody out there, go to taxleanlady.com, check out the blog, check out the membership site and you're going to learn so much. And Joanne, thanks again.

You're welcome, Mark. It was my pleasure. I had a great time. So I look forward to the next one.

Yeah, yeah, we're gonna do the next one. We're gonna talk about redeemable deeds and secondary liens.

Okay, great.

All right, thanks, Joanne. So that was Joanne Musa, the leading and most trusted tax lien authority in the country. And I'm really just privileged and honored that she spend a few minutes with me today to educate everybody out there about tax liens. I think it's a great alternative. It's not going to be my niche. I'm really not going to be teaching anyone about tax lien investing. However, I do think it's important that you have options and I do think at some point you do need to have a plan B in this business. And Joanne is a phenomenal resource. Anyways, let's get back to tax deeds. So my tip of the week is going to be a great due diligence tip. I definitely recommend a company called expertgps.com but it costs money. So Expert GPS allows you to just put in the township range and section of any property and get the GPS coordinates and then it seamlessly takes you into Google Earth and it's really a nice way to create your maps, but when we first start, I really want you to keep your overhead low and focus on marketing first and not spending a lot of money on tools. So this is a great free resource to find the GPS coordinates for the 17 Western states and it's TRS data, but the actual website is esg.montana edu gl trs data HTML. If you do a Google search for TRS data, it'll come up. I'm going to put this on the blog anyways for for the website so you have that tip of the week. Anyways, this is Mark Podolski, the Land Geek. Go ahead. Go to thelandgeek.com like me on Facebook, shoot me out a comment, feedback. I love it. Whatever you have to say. And here's to making your day and the rest of your week extraordinary. We'll see you again next week.

Thank you for listening to another episode of the Land Geek. Join us next week. Time for more tips, secrets and information that will help you succeed. Stay connected with the Land Geek on facebook@facebook.com thelandgeek.