THE VALUE OF TIME: A SLOW COOKED APPROACH TO INVESTING LINDA PLIAGAS AND HANNAH ASH
"We
offer
a
conservative,
high-yield
opportunity that is backed by government
regulations,” Sells shares, saying, "we try to
take all the hype out of the water.” The
partners find opportunities for investing in a
segment most find too marked by red tape to
even consider. It’s a niche market - and for
those that know what they’re doing within it it’s overwhelmingly a safe one. The market?
Property taxes - unpaid ones, that is. What do
Fullman and Sells do, exactly? They buy tax
liens, not property. They acquire tax liens and
deeds when property owners neglect to fulfill
their tax obligations.
there are more investment opportunities
than there is cash to put into them
Fullman explains, “we look nationwide for tax sale opportunities that will fill the high-yield investment
objectives of our clients. Our target areas can change due to a large number of factors, including but not
limited to changes in the economy, the real estate market and the laws of a state. What is opportune today,
may not be tomorrow. The market is very dynamic, and thus PIP needs to be dynamic to meet our clients’
needs.” At the moment, Fullman and Sells are focused on two states: Georgia and Illinois. They scout out tax
auctions to find deals and get the ball rolling. For example, says Sells, "in Illinois, what we buy is a tax lien to
the property. In 2013, we would be buying 2012 delinquent taxes." Illinois gives delinquent taxpayers a period
of redemption of two and a half years during which they can pay back owed taxes (plus interest). “The bid
rate starts at 18 percent - and it can be bid down to as low as zero. Whatever your bid rate is, in Illinois, it
doubles every six months,” Sells states.
By doubling, Illinois brings a significant ROI to savvy investors. "So if you bought it at 15%, you're actually
gaining a net annualized return on a paid-off certificate of 30%," said Sells. Once the redemption period ends,
if the lien is not paid off, the lien holder (or the investor) can then initiate the foreclosure process on the
property. That’s where the red tape comes in.
Where some see red tape, Sells sees opportunity. Acquiring property from tax liens isn’t a get rich quick
scheme. The process can be drawn out, taking as long as a year. There are attorney fees. Court fees. Back
taxes to be paid. Things to be sorted out. This is the slow-cooking part of their approach. The return on time,
and the return on investment, are substantial. At the end of the process, you’ve acquired the clear and quiet
title to that property: a meal worth waiting for.