My Investment Strategy for This Year's Florida Tax Lien Certificate Auctions

Larry Aiello
A free video tutorial from Larry Aiello
"Il Professore"
4.3 instructor rating • 5 courses • 7,459 students

Lecture description

In this lesson I will discuss my investment strategy for the upcoming auctions for the tax lien certificates that I want to purchase for this year.

Learn more from the full course

Investing in Real Estate Tax Lien Certificates: Case Study

An actual case study looking at Florida tax lien certificates as an alternative investment to bank CD's and bonds.

02:20:33 of on-demand video • Updated May 2020

  • Learning the ins and outs of investing in Florida Tax Lien Certificates by way of a case study.
  • The difference between a tax lien certificate and a tax deed.
  • We will look at two of the main websites that host the auctions for the Florida tax lien certificate auctions (Grant Street and Real Auction).
  • County-Held certificates are also an investment option where the counties will sell their certificates at an 18% interest rate.
  • We will go over the tax deed application process if a property tax owner does not pay their tax liability within the redemption period.
English [Auto] Welcome back. This is Larry Aiello. In this lesson I will outline my strategy for investing in tax liens certificates for this coming year with the auctions for Florida happening in the next week or so. My approach this year will be to learn the system and the bidding process and to try to focus on conservative low risk properties. I'm not looking to use tax lien certificate investing as a means to acquire that property. I don't want to own any properties from this endeavor. This is what my approach will be. It may not be appropriate for you and your particular situation. That is what you will have to determine with your financial advisor. I am not a financial adviser nor am I an attorney or a real estate professional but I'm doing what I think will work for me and my particular situation and hopefully I will be right. My main goal will be to earn a modest return that will be better than leaving it in a bank or a certificate of deposit and depending on the result of this year I may decide to fine tune my strategy next year and continue investing perhaps even in other states and get more aggressive or I may decide not to invest any more funds at all. This is a learning process for me that I am documenting in this course. Not only is it important to earn a return on my investment but I also want to make sure that I get a return of my investment. There is a risk of loss with this potential investment. Just like most other investments and I want to minimize that risk to the best extent possible by doing the due diligence on these properties and the selection criteria criteria that I use I'd like to make the analogy that every dollar that I invest is like a lion and I want that lion to come back safe and sound with some food for me and then I want the lion to go back out and get more. If you are a vegan then you may want to think of your money as giraffes going out and getting vegetables. Whatever the case is safety of principle is important for me as an investor and every single certificate that I win will be tracked and will determine the return on investment and whether it was good bad or ugly. I will post updates to this course as time progresses. So here is the main part of my investment strategy. Number one I want to focus on single family residences and on number two condominiums. I want properties that people are using as their primary residence or in other words homesteaded properties that are not in a bankruptcy status. These will hopefully be properties that have good underlying land value. That way if the house burns down the land is still worth enough where the property owner would still want to pay the property taxes. I want to exclude mobile homes and vacant land along with any business property. I would consider these more to be high risk. So I am avoiding them for this year but I think there could be some lucrative niches in these types if you really understand the market because I think I'm not sure but I think you'll face less competition in these niches especially in the rural areas counties located in the middle of the state. The next factor is that there I want there to be no prior outstanding certificates although I may change my mind on this one as I dive into the data but I will start here first. The next item I want to look at is the lean amount or the face value of the amount. Do being less than 4 percent of the assessed value I would want this to be as low as possible. It makes sense if a property is worth ten thousand but the amount of tax due is five thousand or fifty percent value. No one in their right mind would pay that. And the counties can make mistakes. Some looking for a low ratio so my collateral. The property has value just in case I need to file a tax deed application and take it to foreclosure to get my money back. And finally I want to look for certificates that cost between 500 dollars and one thousand two hundred and fifty dollars. That will be the budget that I start out with at this year the total budget. I want to allocate is ten thousand dollars. So 5 buy them all at five hundred dollars and I will expect to get about 20 certificates to equal the amount that I want to invest so that in a nutshell is my plan of attack for this year's auctions. We will see how successful this turns out to be after the auctions and we'll evaluate it when it is all said and done. This is Larry Aiello. Thank you for joining me on this lesson. And we will continue on in the next lesson. Thank you.