With real estate prices falling as much as 50% in the last two years, many real estate investors, as well as many trust deed investors lost a significant part of their principal. The real estate investors that used leverage ended up in an even worse position, sometimes losing their entire investment. Many trust deed investors ended up foreclosing on property and having to take large losses in order to sell in the current market environment. But it did not have to be this way. If these trust deed investors had followed simple common sense rules their principal would be intact today.
Which States is the best to invest in?
The best State to invest depends upon your goals. If you are interested in a return on your investment than a Lien State is the way you want to go. Iowa is a great Lien State to invest in because it pays currently 24% interest with a 2 year redemption period. If you are more interested in trying to acquire property, a Deed State is the best choice. Texas is possibly the best Deed State to invest in with a 6-month or a 2-year redemption period. To redeem property in Texas the owner must pay a 25% penalty, which you as the investor receive.
Not too long ago I received a question from one of the subscribers to my Tax Lien Tips newsletter. He was confused because he saw a tax lien for sale on eBay that sold for over $4,000. The face value of the lien was only $228.28 with 5% interest on the lien amount. This was a Florida tax lien, so instead of having the opportunity to foreclose on the property, you would apply for the tax lien to go to a deed sale if the lien was not redeemed during the 2 year redemption period.