Welcome to another episode of the Dwonderful Real Estate Podcast, hosted by the dynamic and seasoned investor, Dwan Bent-Twyford. In this episode, Dwan invites a long-time friend and tax lien expert, Ted Thomas, to share invaluable insights into the lucrative world of tax liens. With decades of experience in real estate investing, Dwan and Ted explore their journey through big stages, tax lien strategies, and actionable tips for both seasoned and new investors.
Let’s dive into the highlights of their engaging discussion!
From Foreclosures to Tax Liens: Ted’s Journey
Ted Thomas is a renowned figure in the real estate industry, with over 30 years of expertise in tax liens. Starting his career in foreclosure real estate, Ted transitioned to tax liens when foreclosure markets became oversaturated.
“You could buy foreclosures for 30-50 cents on the dollar, but then prices skyrocketed. I asked myself, ‘How do you make money paying 80% of the value?’ That’s when I shifted to tax liens.”
This shift was a game-changer, as tax liens offered a stable, profitable, and scalable investment opportunity. Today, Ted is a leading educator in the field, helping others navigate and succeed in the tax lien market.
What Are Tax Liens and Why Are They a Smart Investment?
For newcomers, tax liens might seem complex, but Ted breaks it down simply:
Every property in the U.S. is taxable, and when property owners fail to pay their taxes, local governments issue tax lien certificates.
These certificates represent the unpaid taxes and can be purchased by investors.
Investors earn high interest rates—up to 24% in states like Iowa or 18% in Florida.
Ted emphasizes that tax liens are a safe investment because your money goes directly to the government. Most property owners eventually pay their taxes (97% of the time), and when they do, the investor gets their money back, plus the interest penalty.
Getting Started with Tax Liens
Dwan and Ted agree that tax liens are an ideal entry point for new investors. Here’s why:
Accessibility: You can participate in tax lien auctions both in-person and online.
Affordability: You don’t need a fortune to start—some certificates cost as little as a few hundred dollars.
Simplicity: Unlike other investment strategies, tax liens don’t require extensive property management or renovations.
Ted shares a critical tip:
“Do your research on interest rates and state regulations. Each state has its own rules, so knowing the specifics can maximize your returns.”
Why Tax Liens Are Perfect for New Investors
Dwan points out that tax liens are often overlooked despite being highly lucrative. For someone new to real estate investing, wholesaling is a popular choice, but tax liens are an equally beginner-friendly option with less hands-on work.
Ted adds, “With tax liens, you’re not buying properties—you’re buying opportunities. It’s low-risk and high-reward.”
Ted Thomas’s Online Presence
If you’re interested in diving deeper into the world of tax liens, Ted’s online resources are a great starting point:
Website: TedThomas.com
YouTube Channel: With over 55,000 subscribers and thousands of daily visitors, Ted’s YouTube channel is a treasure trove of educational content for aspiring tax lien investors.
The Dwanderful Legacy
Throughout the episode, Dwan and Ted reminisce about their days on grand stages, sharing knowledge alongside industry icons like Donald Trump, Tony Robbins, and Suze Orman. They also reflect on how their shared passion for teaching continues to empower countless investors today.
“The motto at Dwonderful is people before profits. If you resonate with that, you’re in the right place,” Dwan reminds her audience.
Why Tax Lien and Deed Auctions are a Goldmine
Ted Thomas highlights the immense value these auctions hold, where properties can be acquired for 30-40 cents on the dollar with no mortgage or deed of trust involved. These auctions often feature thousands of properties in a single event. For example, a recent auction in Los Angeles County listed over 2,000 properties, ranging from multimillion-dollar estates to affordable land parcels. Neighboring San Bernardino County often doubles that number.
The allure? Investors can score deals on properties in high-demand areas like Los Angeles, where the median home price exceeds $900,000, or even uncover opportunities in other states like Texas and Georgia, where unique laws favor investors with high returns and quick acquisition processes.
Lessons Learned from the Field
However, success in tax lien and deed investing requires caution and education:
Research is Critical: Both experts stress the importance of inspecting properties before bidding. Buying unseen could leave you with unusable swamp land or parcels in undesirable locations.
Understand Local Laws: Each state has its rules for bidding and redemption. In South Carolina, for instance, winning bidders receive a deed without foreclosure if the original owner fails to redeem the property. In Texas, investors can earn up to 25% returns in just 180 days or acquire the property outright.
Beware of Overbidding: The excitement of auctions can lead to overpayment. Thomas cautions against bidding more than the property’s worth, as it could eliminate any chance of profit.
Training is the Key to Success
The biggest mistake newcomers make is jumping into auctions without preparation. As Thomas puts it, “You wouldn’t marry someone without meeting them—why buy property without seeing it?” Both experts advocate for proper training to master the process, avoid costly errors, and maximize returns.
For those willing to invest time in education, the rewards can be significant. Stories abound of individuals earning $25,000 to $50,000 per deal by following a proven system. These strategies turn tax lien and deed investing into a reliable business model rather than a risky gamble.
Who Benefits Most?
Interestingly, the demographic most drawn to this type of investment includes seasoned adults, typically aged 45 to 105, as younger investors often lack the resources to participate. These experienced investors value the step-by-step guidance and systems that seasoned professionals like Thomas and Bent-Twyford offer.
The Revolution in Tax-Defaulted Property Auctions
Over the past decade, technology has transformed how investors participate in tax-defaulted property auctions. With most counties moving their processes online, the barriers to entry have never been lower. “You can do all the research on the property, know everything you need to know about it, and even buy it—all from your home office,” Ted shared.
However, one golden rule remains non-negotiable: never buy a property you haven’t physically inspected. Ted emphasizes, “Get your shoes dirty. Rain or shine, you need to know what you’re buying. If you skip this step, you’re setting yourself up for trouble.”
Why Women Excel in Tax Lien Investing
Ted highlights that women often excel in this space due to their methodical approach to online research and decision-making. They can buy certificates—documents representing unpaid property taxes—and simply wait for redemption. When the property owners pay their taxes, the certificate holder earns interest, often as high as 18% per year. For those seeking long-term returns without heavy lifting, buying and holding tax liens can be highly lucrative.
One inspiring story involved a client who invested $11,000 in a tax lien, which eventually turned into ownership of a $150,000 waterfront condo. When the original owner failed to pay the taxes, the investor sold the property, netting a $160,000 profit—a testament to the incredible opportunities in this field.
Navigating International and Seasonal Ownership Gaps
Foreign and seasonal property owners are a surprising source of opportunities in tax-defaulted property investing. Many fail to understand local tax laws, leading to forfeited properties. “We’ve seen people lose beautiful beachfront condos simply because they didn’t know they needed to pay taxes,” Ted explained. This phenomenon is especially prevalent in areas with a high concentration of vacation homes or international buyers.
A Business with Room for All
Ted reassures aspiring investors that there’s ample room in this industry for everyone. From flipping undervalued properties for quick profits to accumulating a portfolio of income-generating tax liens, the opportunities are endless. His advice? Sell low enough to attract rehabbers who will do the heavy lifting, allowing you to focus on building your investment strategy.
Balancing Life and Legacy
Beyond the mechanics of investing, Ted’s personal philosophy on life and legacy is inspiring. Having faced health challenges, including a stroke, he remains committed to teaching and helping others achieve financial freedom. His ultimate goal? To leave a lasting impact by donating his life’s work to Habitat for Humanity.
For those eager to learn from a master, Ted offers a virtual six-hour class designed to equip participants with all the knowledge they need to get started. Using the promo code DWAN50, attendees can join the session for just $23—a small investment for a lifetime of potential returns.
Conclusion
The articles above provide insightful guidance for individuals exploring homeownership, real estate investment, and the intricacies of the housing market. Dwanderful serves as a valuable resource for aspiring real estate investors and first-time homebuyers, offering practical advice and actionable steps to navigate the complexities of real estate.
As a seasoned real estate investor and podcast host, Dwan, the founder of Dwanderful, combines her wealth of experience with a passion for helping others achieve their real estate goals. The website not only provides comprehensive resources but also offers tools for deeper learning, such as a free book titled Real Estate Lingo, which simplifies industry jargon for newcomers. For those seeking to delve further into successful investing strategies, Dwan also offers her paid book, Five Pillars of Real Estate Investing, a guide to building a solid foundation in real estate.
Dwanderful stands out as a hub for inspiration and education, empowering individuals to take confident steps toward owning a home or starting their real estate journey.
