Equity Trust Client “Hooked” on Taking
Control of His Savings

John D. recently traded in his business professional salary for a higher calling of sorts. The CPA from Indiana took a pay cut to become the business manager and Jack-of-all-trades for his church.

The reduced salary might limit the flow of what his wife terms “now money,” but John has a side venture that is earning plenty of “later money.” He has discovered the impressive returns that tax liens can bring to his self-directed IRA.

At his first tax lien sale, John picked up a vacant lot for $5,000 using funds from his self-directed IRA.

“I ended up getting the deed to that property a year later and sold it for $20,000,” John shares. “I was hooked.”

A Small-Dollar Investment that Can Yield Big Results

John D. is one of a growing number of investors becoming aware of the advantages of this self-directed investment option. Generally, counties auction the tax liens they hold against properties, leaving those who acquire the liens to collect payments and interest from the property owner or, like John, end up with the deed to the property.

Tax liens are an attractive option for many types of investors because of the variety of price points. Even investors with smaller portfolios can find liens that work for them and multiply their assets in a short amount of time.

“It’s happened for me time and time again,” John says. “I ended up with a house I paid $25,000 for at the tax lien sale. I put another $25,000 into it and I sold for $130,000. I netted $120,000 at the sale. So I had a $50,000 investment, it took a year and a half, and I turned another $70,000 gain.”

Those gains seem like mere pennies compared to a transaction he completed involving a tax lien on a public company’s property. After he won a local court hearing, the company made him a generous settlement offer. After dropping the initial $15,000 and another $10,000 in legal fees into the deal, John ended up with a settlement price of $450,000.

“With that one property alone, when I think about how many years it would take me to make contributions to an IRA to put the equivalent of $425,000 additional into my account…it’s just mind boggling.”

John Took Matters into His Own Hands…and Achieved Amazing Results

John could talk all day about the fabulous tax lien deals that are building up his retirement fund, and he couldn’t be happier with his reversal of fortune. After losing close to 50 percent of his IRA in the catastrophic stock market collapse in 1987 known as Black Friday, John isn’t about to place his future in the hands of unknown factors again.

“With all the things going on in the stock market, which you have absolutely no control over, at least with the IRA and dealing with property and so forth, I’m able to control and be hands-on,” he says. “If something bad happens, it’s my doing – not Greece, or Japan, or an earthquake.”

To those who are interested in self-directing their retirement funds into tax liens but are hesitant to jump in, John says you might find it’s not as intimidating as it seems. While he is a CPA and well-versed in tax law, he says you don’t have to be quite at his level to get into tax lien investing.

“I’m no rocket scientist; a lot of people show up at the tax lien sale,” he says. “My brother does it; he doesn’t ask me for advice.”

John found that when he needed to enlist the help of a tax attorney, the fee represented only a small fraction of the return that went back into his IRA. In addition, lay people can begin to understand the different types of alternative investments with webinars and materials from Equity University.

“When it fits in my schedule, I will always hop on and listen to a webinar,” John says. “Knowledge is power. New things happen, and new things come along. If I go to seminar and I can walk away with one new thing, one new bit of information, then it’s not a waste of my time. So I catch every (Equity University) webinar I can.”

By taking these few steps now, John is securing a comfortable supply of “later money.”

Disclaimer: Equity Trust is a passive custodian and does not provide tax, legal, or investment advice. It does not endorse or recommend any contributor, company, or specific investments. Any information communicated by Equity Trust Company is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your legal, tax, and accounting professionals.