[Music] brought to you by the every dooll app start budgeting for free today I have uh very close son of mine who has done a lot of good work as an electrician um doesn't have a lot of debt but he is uh asking about tax lean investing um I guess his goal is obviously to make some more money but also to get into real estate uh I guess a little easier in a way but I just kind of wanted to know your take on tax lean investment okay he's asking you about it well he okay so he's telling me what he's thinking about doing okay how old how old is he he's 24 okay all right um This falls in I can explain to you what it is and how it works and I'm happy to do that for the especially for the benefit of our audience but it let me tell you where he found it he found it on Tik Tock with the getrich quick easy nothing down real estate people okay that that's where he found it because that's the only place anybody talks about this subject and they do it to get clicks and Views because it sounds amazing and it sounds too good buy their course for $3,000 on how to get rich buying foreclosure real estate and doing tax leans okay right and by the way this is the same exact line they used uh wait a minute Kristen how old are you I am 43 okay you're barely old enough to remember infomercials you remember those I do okay it's the same line they were using back then the only difference now is it's cool because it's on Tik Tock okay and it's on Instagram and it's on whatever but it's still the same genre of stuff can you buy a piece of real estate at foreclosure at a bargain yes I used to do it for a living in my 20s and I bought a lot of real estate since then that was distressed in one way or another at a deal it is however one property out of 200 we consider 200 properties to buy one okay it's not like I walked out my back door and the sun came out and I looked over there and there was a foreclosure and I bought it it is actual hard work expertise needle in a hay stack okay can you buy tax leans and turn them into real estate and into profit yes the likelihood of your 24y old doing it is really close to zero it's really complicated it only works in a couple of States here's the way it works some States will sell if someone's behind on their property taxes the state or the municipality the local Village or city takes a lean on the property for back property taxes they sell that to someone in some states my state they do not do that you can't buy tax leans in Tennessee okay but they they so if I lived in Tennessee I'd have to be buying them somewhere other than where I live problem number one okay problem number two is you're buying a tax lean okay now let's say that you foreclosed on the tax lean and the people that owe the pro that own the property do not pay off the tax lean and you end up with the property the property is worth $250,000 and they have a $270,000 mortgage you know what you got nothing honey nothing you got a $250,000 property with a $270,000 lean on it you don't want that it has no value okay so you would have to find a property tax lean that is delinquent on a property that actually has Equity oh now we've really made this difficult oh and wait a minute almost all of these states with property tax leans have a two-year or a one-year right of redemption now let's take this a state further you find a piece of property needle in a Hy stack that actually doesn't have a lean on it probably not in your state of Texas I'm pretty sure Texas does not sell them and so um then you've actually buy this $250,000 property maybe it's only got a $100,000 mortgage on it um now you've got $150,000 in equity but you got to pay the $100,000 mortgage to keep the property that you just became the owner of or they'll foreclose on you follow me oh wow okay this is a problem and then on top of that you become the owner of it but the the old guy that didn't pay his taxes has one year or two years to come back and redeem it for by paying the taxes plus 10% or 15% interest so you can do absolutely nothing with that property except pay this mortgage payment for the next year and a half to two years and you're 24 years old this is suicide oh yeah absolutely okay can it be done yeah you need a real pile of money a lot of patience a lot of expertise and the ability to do a lot of work work to actually find this needle in a hay stack um and so can you do it I've actually bought two of these in my life I've owned about 2,000 pieces of real estate in my life and I have actually bought two of these and as you can tell I've done it I know how it works it's a freaking nightmare I'm not buying one ever again haven't done it since no thank you too much trouble too much RIS too much time frame I hope I explained it well enough that it sound didn't sound like a bar Fish Hooks George so Texas has redeemable tax deeds so it's different than you're right there are no you can't buy tax leans but you can get these redeemable tax deeds and you're right there's a Redemption period they can come back okay they do sell the deed then so it's a little yeah it's a little different but it does not clean the title people meaning if there's a mortgage on it it stays there property tax foreclosures in zero States clean the title if a first mortgage forecloses the second and third mortgage are now wiped out it cleans the title you get a clean title if you buy a foreclosure in a second mortgage position you inherit the first mortgage if you buy a property at a tax lean sale or create a tax lean sale you inherit all the mortgages including the IRS leans from the goober who also didn't pay his IRS taxes because he didn't pay his property taxes you think these things might walk hand in hand you can bet they do I'm guessing the house could be in disrepair as well think we haven't paid any of our taxes or our mortgages and we're so far behind that and and then I'm going to sit there and maintain the house pay all these bills for two years and then he can come back and redeem the thing for 10 cents over what I paid for it no thank you and if this was a money-making scheme there's going to be Banks head fund managers Real Estate Investors with Deep Pockets going after these got some competition it's been going on for years people and people I will say again it is possible to go down this rabbit hole and get out with a handful of money but it's just it's juice ain't worth the squeeze 24-year-old got on Tik Tok and thought he found a way to make easy money and I'm just here to say no you You' be better off delivering pizza you'd end up with more create your free every dooll budget today the simplest way to budget for your life