07/05/2020
When times change so will your investment strategy. The month of May was the highest month of foreclosures EVER in the history of the US. The numbers have not come in for June yet, but June may likely surpass May with even more foreclosures. Also, while the country has tried to open up too soon and there are more spikes in cases around for country with Covid. The economy will tumble more. When economies tumbles, the stock market declines, real estate market declines as well.
Keeping in mind that the real estate market will most likely decline because of record number foreclosures. We have to change our investment strategies too. Where WBD mainly invested in properties that were easily foreclosable in order to get the property owned and clear. Some of these properties were abandoned properties that were in up and coming neighborhoods. It might not be in our best interest to get some of those properties. It may be better to invest tax liens into very strong high retail value markets where the risk to investing is much less.
So some of the tax lien investments that I recommend will be $3000-$6000 tax liens in very good neighborhoods. Where home values are $300,000+. So we are investing 1% to 2% of the home value to secure the investment more. In case the real estate declines, there should still be plenty of equity when we attempt foreclosure. We will be going for the interest rate instead of ownership of the property (except exceptionally good cases). Some of these properties will therefore be homes owned by home owners and the interest rate of the tax lien will be less. Homes that are occupied primarily the tax lien rate is 1% per month or 12% per year. Normally we get 1.5% per month or 18% per year on properties owned by investors or (non owner occupied). Why is this still safe, even if the real estate market experiences a 50% reduction, which I don't think it will be that much. That $6,000 tax lien on a $300,000 house is now a $6,000 tax lien on a $150,000 house. It is still a superb investment, otherwise earn 12% on your $6,000 if the home owner or mortgage company redeems the tax lien.
Our dedication to make sure that the tax lien investment remains the most secure investment available. Those who have mastered day trading in the stock market are making a killing. The long term investor in the stock market and retirement accounts should be worried of the future of the stock market. Tax lien investors who take this approach as I mentioned previously are in very good shape.
Added that once the foreclosure start to hit the market. Banks will allow some properties that have mortgages to foreclose to tax liens. The banks will not pay off the back taxes of properties because they need to keep a maximum of 10% of foreclosures in their assets. Any more than 10% of non performing notes they will have to let those mortgages go, in order to be in regulation so that they can still lend money. This has happened in 2007 and will likely happen again in 2020 and beyond. It will be very trying times ahead. There will be a vast wealth transfer in this country. This time around, which side do you want to be on?
