There are a lot of strategies an investor can look at to succeed in real estate. Investing in tax liens is one of these strategies, which you can actually use to make money on interest, acquire property, or diversify your portfolio. Joining Monick Halm on the show, Marijo Wilson gives tips on using tax liens to achieve your goal, whether passive income or property acquisition. After a series of careers ranging from a faculty member in the Entomology Department of the University of Kentucky to over twelve years as a residential real estate investor, Marijo has been running her own business, Dr. Tax Lien, since 2015. With years of experience investing in multiple asset classes herself, Marijo also talks about the importance of diversifying your portfolio if you are to survive market cycles as a real estate investor.
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Tax Lien Investing – Interview With Marijo Wilson, Dr. Tax Lien
We interview successful real estate investing women goddesses that have been crushing it in real estate. At Real Estate Investor Goddesses, we know that real estate investing is not one size fits all. There are a lot of strategies for being successful in real estate and our guest may have tried all of them. She’s done a lot and trains a lot. She focuses on tax lien investing and she’s going to share why. Marijo Wilson, otherwise known as Dr. Tax Lien, started her career far outside of real estate investing. She has a Bachelor’s in Science and Biology from Western Illinois University, a Master’s of Science in Entomology, a PhD in Microbiology from Kansas State. That doctor in front of her name isn’t cute. She earned it. She was the first female faculty member in the Department of Entomology at the University of Kentucky. She’s impressive and smart.
She then became a business owner and national franchise trainer. From 2004 to 2017, she was a mentor and trainer for Rich Dad Education. Many of our guests have become investors because they read that little purple book, Rich Dad Poor Dad. She worked for them. She’s been running her business, Dr. Tax Lien, since 2015. She teaches a couple of classes including Tax Treasure Training, which she’s going to have one in San Antonio. If you’re interested, you can find out more about that. We’ll talk a little bit about that. She also teaches Fund Finder Fortunes. I’m thrilled to have her here. Welcome, Marijo.
Thank you very much, Monick. Thanks for having me. I’m looking forward to being able to share a little bit about this exciting investment opportunity to your readers.
I’m excited as well. Personally, I’m excited to learn more about it because it’s not an asset class that I invested in yet. I’m excited to find out more about that. Before we get into tax lien, in particular, I would like to start at the beginning with my guests and find out how you got started in real estate investing. You had a PhD in Microbiology and teaching Entomology. What got you into real estate investing?
My mom and dad invested in real estate. In fact, they’re still living, which is a blessing. They still own some properties that they purchased back in 1953. Those properties have been paid for and they’re providing great cashflow to help them in retirement. As a young man, my dad recognized opportunities by buying real estate. What they say, “Do what I say, not what I do.” As parents, we try to give our kids the best advice. Their advice to me, as I’m sure many of your readers have heard as well, is get a good education and a good job.
That’s something that used to work but the rules have changed since that point in time. Getting a good education and a good job doesn’t ensure that we’re going to have a great life and have plenty of money to retire on and be able to have the freedom that we want to be able to enjoy. We’ll be able to go where we want to go when we want to go with whom we want to go for however long we want to go. That’s what a lot of people want to be able to do, but that American dream is not working for them.
As I went to school, each time I got another degree, I would then ask the question, “Can I get a job?” They would say, “No. You can’t get a job with a Master’s Degree in Entomology.” I’d say, “What do I need to do?” “You need a Doctorate Degree.” I never set out to do that. I never envisioned myself having a Doctorate, but I went with the flow because I love to learn. I’m a lifetime learner. I’m like, “I’ve got to get a Doctorate Degree.” Years later, I got my Doctorate Degree and I asked the same question, “Can I get a job?” Their answer was, “No. You can’t get a job with a Doctorate Degree in Entomology. You need to do postdoctoral work.”
I went to the University of Idaho and I did two years of postdoc. I learned how to do genetic engineering and cloning and DNA sequencing. If you guys ever need somebody to explain to you what’s going on CSI Miami on the old reruns, I’m the person you want to watch that show with because that’s the stuff I did in the lab. By the way, I’ll put a postscript that if I had been smart, I would have asked the question about would I be able to get a job before I went and got all those degrees instead of waiting until I got them and then asking the question.
Finally, after doing twelve years of school, after I graduated high school, they’re in there saying I’ve got to get through my senior year of high school. I started out four years of college plus another year, plus two years of my Master’s, plus four years, plus another two years of postdoc, and I’m finally in a position to get my first job. It’s crazy. I became a faculty at the University of Kentucky. What I realized as soon as I had that first job, I don’t want a job. It’s like, “What have I been working hard all these years and studying this stuff all this time? Now I have a job and I don’t want a job.”
I started looking at some other alternatives. I’m never going to get where I want to be working for somebody else, so I became a business owner. While I was a business owner, I started a pest control company. I bought two national franchises, one for animal control and one for pest control. During that timeframe, I started investing in real estate. My first house I bought is when I was in graduate school in Kansas. I started buying real estate in Lexington, Kentucky where I was living at the time.
The first property, was that out for you to live in or was that an investment property?
The first property I bought when I was in school was for my residence.
What was your first investment property?
My first investment property was a property that I decided to keep instead of selling. When I bought my second property, when we moved up into our new office space, we decided instead of selling, it we would keep it as a rental. I progressed from there and continued to add rental properties to my portfolio. My strategy initially was buy and hold.
At this point, you have your businesses and you’ve been doing buy and hold. Now you’re Dr. Tax Lien, you’re all about tax liens. Tell us a little bit about what got you into that.
Back in the ‘70s, which might be a little bit before a lot of your readers were even born, my sister was working for a bank. She was working in the trust department. The bankers noticed that there was one particular trust account that was increasing. Investment returns were high. They started as being curious as to why that was happening. At that point in time, regular passive savings were making about 5%, which now sounds phenomenal since we’re under 1%. At that time, this account was making about 36% in return. That’s amazing. The bankers were looking at what is the trustee of this trust account doing to get those returns? It turns out that the trustee was investing in Illinois tax lien.
I’d like to say that as soon as my sister was sharing this with me, I jumped right on that opportunity when people didn’t know about delinquent tax certificates at that time at all, but I wasn’t that swept. I found out about them. I was aware of them. At that time, of course, we had no infomercials. We had no late-night TV. We had nobody writing books on it. There are no brokers that make money by tax lien being sold. It remains a hidden area in real estate that people don’t tell other people about it. If they’d go to the auction and they’re getting 36% on a tax lien, they’re not going to tell all their friends and neighbors, “Come down and compete with me so that I have to get them for less.” There are not a lot of people who share it with others.
When did you go from finding out about this to doing it?
I started investing in tax liens. When I was with Rich Dad Education, I started out as a mentor in 2004. I’m sure part of your readers will be able to relate to this. I ended up getting a divorce in 2001 and was trying to figure out what direction I was going to go. I was lost. I’m trying to feel my way through it. I was a single mom of two sons. What I decided at that point in time is that since I had a real estate portfolio, I went to training. I decided that I was going to move forward into real estate investing because as a business owner, I had employees. They wouldn’t show up on Monday mornings because they partied too much on the weekend. They would use our company trucks. They would run and get in an accident or fall off of the roof. We were up on ropes, trapping animals. I was looking for something that would be lucrative and I didn’t have all the hassle of employees. Real estate looked attractive to me.
I decided in 2002 that I wanted to learn the real estate investing aspect because buying and holding real estate is great, but there are many more different types of strategies with real estate that I wasn’t familiar with because I had never been trained in investing. I became a student and learned about wholesale, mobile homes, lease options, about other ways of creating and financing deals and getting the seller security to finance and back and that sort of thing. I started implementing the information on tax liens and some of the other strategies that I knew about and I was learning about. In 2008, I started teaching the tax lien class for Rich Dad Education.
What do you like specifically about tax liens? There are a lot of different strategies out there. What drew you particularly to tax liens?
You can get started with tax liens with a small investment amount of money. I have one tax lien that I bought for a penny. It happened to be on a condo that hadn’t been built yet and it was the property taxes. That’s not normal. There are a lot of tax liens out there for $20, $50, $100. If you had $1,000 and you wanted to go in and buy a few tax liens, you could get started. I like to share with people a lot of times that if they have even a small amount of money inside of a retirement account, I encourage people to get a self-directed Roth IRA. They can start using tax lien to grow that retirement account so that when they get to retirement, they have the money that they’re going to be able to either supplement retirement or to be able to retire with as they build that up. That provides them also an ability to get around the one disadvantage of tax liens, which is that they’re not liquid.
If you’re buying tax liens, which are delinquent property certificates inside of your IRA, if it takes them 2 or 3 years to redeem, in other words, for the seller to pay you back your money that you invested plus the interest rate that you earned on this, if they’re in a long-term retirement account, it’s not a problem. In fact, it’s a benefit because it means as soon as that tax lien is redeemed and the money comes back into your retirement account, you’ve got to figure out where else you’re going to get that money invested or sitting there not making anything so if it stays invested for 2 or 3 years, that’s beneficial.
By investing in liens inside of a retirement account, we’re able to get our money invested in something that is collateralized. In other words, it’s backed by real estate. If the lien doesn’t pay us back the interest rate, that’s what we get the real estate. We’re not just investing in mutual funds or stock where we don’t have any collateral. Here we have a great interest rate return. If we don’t get the interest rate return, we get the property. It doesn’t get much better than that.Equity doesn’t pay your bills. Click To Tweet
It probably varies a lot, but what returns can you get with tax liens?
A lot of people are investing in the big four. The big four, they sell more tax liens than any of the other states combined. The big four in tax liens is Florida, Illinois, Arizona and New Jersey. In all four of these states, they have an auction process and it’s called a bid down interest rate. For example, in Florida, they start at 18% and then different investors bid down the interest rate that they’re willing to accept to pay the property taxes for the homeowner until the homeowner can pay you back. A tax lien is like a loan to that property owner, but it’s given directly to the tax collector. The property owner has a certain length of time to pay that money back. That’s called the redemption period. In Florida, for example, it’s two years. The property owner has that timeframe to pay back the taxes.
Here’s the cool thing, the tax collector now works for you. When the people go in to pay the taxes, the tax collector collects your money for you plus the interest. You don’t even have to know how to figure out what they owe you because the tax collector does all that for you. You don’t even have to be good at math. The tax collector collects your money back plus the interest earned and sends you a check. In fact, some high collectors will even immediately do a direct deposit back into your account. That’s cool. You have the tax collector working for you.
It depends competitively how far you bid that down. There’s an advanced strategy called buying over the counter, which I love to train people on. You can buy tax liens that were left over from the tax sale that nobody bought. Is there going to be a lot of junk on those? Yes, there will be. I teach people how to do their due diligence to figure out what’s going to be a good tax lien to purchase. Those over-the-counter tax liens in Florida, for example, pay 18%. Eighteen percent beats 1% every day, all day long or 0.1%. The tax liens in Iowa, I love Iowa sales, they pay 24%. In Nebraska it’s 14%. Every state has state statutes that will define whether they’re going to sell tax lien, which is one way of dealing with delinquent properties. Other states like Texas sell tax liens. In that situation, the tax collector holds onto the tax liens. They don’t sell them. They wait a certain timeframe. The county forecloses on the liens that sell the houses with courthouse steps. For those people who are looking for a way to build or run a portfolio or buy a property that they can fix up and sell, that’s a great strategy for finding discounted properties also.
You teach people how to do this. You have a class in San Antonio. What are some things that you share in that course?
What we’ll do is we’ll start with a definition of the different terms that they’ll run into. For example, we’ll define, like what I’ve shared with you, what is the definition of a tax lien. It’s a loan given to the property owner. We’ll talk about the redemption period. We’ll talk about buying properties at the bid sale. We have some states that are called redeemable deeds like Texas and Georgia. We have a big list. For example, at one point in Maricopa County in Phoenix, Arizona, one year they had over $100,000 tax liens on their tax sale in February. Arizona always has their tax sales in February. You have to know how you take this huge list of $100,000 tax liens. It’s how you narrow that list down to a manageable number that you can do the due diligence on it.
We talk about taking a big list and how we narrow it down. What are the items we’re going to look for? What are we going to look at to determine if that is a good property we want to buy a tax lien on? What I share with people is you have to go into this strategy and you have to know, are you looking to buy tax liens for an interest rate? That’s what the banks and the large hedge funds are looking for. They want to buy tax liens to get a rate of return. They don’t want what I call the four T’s. They don’t want tenants, toilets, trash, and termites. They want a good interest rate on their money.
On the other hand, if you want to use tax lien as a way of acquiring properties, then you would do your due diligence in another way. Let me share with you an example if that would work for you, Monick. Let’s say we have a property out there and that property is vacant. We’re only going to know if the property is vacant if we go on a drive-by. One of the due diligence things is we have to drive and look at the property. Either we do or we hire somebody to look at the property because we can’t look on the internet and determine if it’s vacant or not. Wouldn’t that be great if we could do that?
It would be.
When we find the property vacant, do we buy the tax lien or do we not buy the tax lien? What do you think?
You buy it. It depends.
What does it depend on?
I’m not sure.
That’s one of the things we talk about.
If there’s a tenant there, then perhaps there’s income that the owner can rely on to pay you.
Go ahead with your thought because you’re right on target.
If it’s empty, there’s no income so they’re not as likely. If you want to get the property to own it, I would assume if it’s empty, you have a better chance of getting it at the end.
You are smart. That is exactly right. Whether you keep something on your list to potentially purchase that lien or not, it’s what you want your outcome to be. If you want to use the acquisition of tax liens for getting a good rate of return, you would take that tax lien of that property that’s empty and you would eliminate it from your list. The likelihood is it’s going to be higher that it’s not going to redeem and you won’t get your interest rate. On the other hand, if you want to buy a tax lien portfolio that you’re more likely to get the property, then that vacant property would go to the top of your list to try to acquire the tax liens up to the properties that are vacant. It’s the same piece of data. Depending on what you want your outcome to be, you’re going to use it in 180 degrees different manner based on what you want your outcome to be. There’s a whole bunch of those different parameters we talk about based on what you want your outcome to be.
Switching gears slightly, because this is a question that I ask all of our guests. I have found in my life, I know most people learn a lot more when things go wrong than when things are going right. It’s often through our mistakes and failures that we learn the most. What would you say was your biggest mistake in your real estate investing career and what did you learn from it?
My biggest mistake was not diversifying my portfolio. It was buying primarily single-family homes and not having enough cashflow on each of those properties every month to be profitable. What was happening is, although I had a lot of assets on paper, I had a lot of equity on paper. Remember folks, equity doesn’t pay your bill. That’s the biggest challenge that I had and the biggest mistake. It makes me a good coach and a mentor because I want to be able to share that information. I want to let people learn through the mistakes I’ve made so they don’t have to create and learn through those mistakes on their own.
This is something I teach my students too, to go for the income and the cashflow. You can find yourself land rich and cash poor and that’s a problem. You still have to pay the mortgage and the taxes. It’s hard to make all the ends meet. That’s great advice.
Keeping your eye on economic factors that are happening in your marketplace that are major key indicators of what’s happening to your market cycle so that you can try to make adjustments. When we had the downturn in the market in 2008, it happened fast. Real estate is not a liquid asset. It caught a lot of investors in a difficult position. Even though you recognize what was happening, you couldn’t move quickly enough to liquidate the real estate. You need to learn how to look at those indicators so you can see the market trends and start making adjustments in what you’re holding and what you’re keeping.
How did you fare during that 2008 downturn?
I didn’t fare well with some of them. We had an issue. I don’t know if you experienced this in your market. There was not a lot of tenants because of people that were able to breathe to get loans. We had a low quality of tenant pool to choose from. It was a real challenge. We were squeaking by from month to month, breathing a sigh of relief that we can create cashflow. I was using cash from other types of avenues of income to pay those mortgages every month in order to stay current. That was a tough time. At least I wasn’t in land development situations like some friends of mine that were in Florida, where people were speculating and going in and having properties built six months later. When the house was built, they had $30,000 or $40,000 in equity and then selling it. All of a sudden when the market turns, they’re in the middle of building a house and the house isn’t worth what they have it under contract for. A lot of people got caught in that difficult situation.Surround yourself with people that have the same mindset. Get yourself mentors who can help propel you a lot more quickly. Click To Tweet
I came out a little bit more fortunate than others, but it was a difficult time. I know that there are a lot of people that got caught up in that. That’s one of the reasons it’s important to diversify. When you’re going into single-family homes, I teach people that you’re going into those for only a 3 to 5-year hold. You need to make sure that your bond is on the upswing of the market and not as we’re hitting the peak and the market is starting to go down. It’s important to know that. I also teach about the circle of wealth about earned income strategy, passive and portfolio, and to build up your earned income strategies using a number of different manners to do that and then eventually moving into passive and then into portfolio income. It’s important that you understand the different cycles and where you are.
For example, with portfolio real estate, let’s say that would be land development. Often I hear brand new investors that say, “I have this piece of land. It’s amazing. I’m going to go in and develop that.” They have no cashflow. That land development project is going to take a long time before it starts bringing you any income. You wouldn’t want to go into a land development project until you have about $1 million of cashflow so that you can withstand the ups and downs and the delays of getting that project off the ground. Many times, nobody explains to beginning investors about moving through the circle of wealth from earn to passive to portfolio and which strategies work well and the various circles of wealth.
I want to ask you, what advice would you give for a woman starting out in this field? What would you tell her?
I would tell her that she can do it. When I started out, I was a single mom in Kentucky with two boys. There was no local real estate investment group, no podcasts, no support. I felt like an island and I still did it. The key was I was plugged into an educational program where I was surrounded. Occasionally when I go to those trainings with like-minded people, I was able to go and get recharged. You need to surround yourself with people that have the same mindset, the same goals that are positive. If at all possible, get yourself mentors and trainers in your life that can help to propel you a lot more quickly than trying to do it by yourself. It’s not fun doing it by yourself. It’s a lot more fun when you can do it with people that you like and that have the same type of mindset that you do. Usually, you don’t find that with your friends and family. It’s like a bucket of crabs. You try to get out up where you are, your circumstances and your situation. When you tell all your friends and family about it, they’re the ones that pull your dreams and try to grab you back into the bucket.
That is why I’ve created Real Estate Investor Goddesses. We have this sisterhood of women doing real estate. We can support one another. You’re right, you can’t do this alone. It helps to have others that are on the journey with us that are positive and have the same mindset and that are supportive and get it. A lot of people don’t get this. They think you’re a weirdo.
It’s a lot easier to get encouragement from each other to keep going because we’re all going to have our ups and downs. It’s like, “You made this decision. You’re going to go walking every day in your neighborhood.” The first day it rains, you decide, “I’m not going to get out of bed and walk.” If you’ve got a partner that knocks on your door and says, “We’re going,” you’re going to get up and go walking. It allows you to stay better on track when you surround yourself with people who are doing this.
Before we get into our famed end of show trinity, what is the best way for people to reach you and find out more about what you do?
Dr. Tax Lien, you’re well-branded. You can find her everywhere. For the trinity, it’s a brag, a gratitude and desire. What is a short brag? What’s one thing that you’re celebrating?
I’m going to be in a chapter in a book called Wealth for Women. It’s conversations with the team that creates the dream. One of the chapters will also be one of my students, Chimene Van Gundy that you had here in the past. She was one of my students and has branded herself as the Queen of Mobile Homes. I’m proud of her. I’ll brag about the book and I’ll brag about Chimene.
I brag that I’m putting this book together. I’m excited about the amazing women that are in it, like Marijo and Chimene, who are amazing. I’m sharing that brag. What’s one thing you’re grateful for?
I am grateful for all the blessings in my life. If you’re grateful for what you have, more things will come to you. One of them is my family. I got married to the most amazing man. He is the love of my life. I’ve been looking for him for 1,000 years though.
That is a brag as well. What’s one thing you desire?
I desire to be able to train and mentor women and men who can change their family’s lives as well as pay it forward where they continue to make a bigger ripple. I like to think that I’m a stone being thrown in the water and I touch people and then they touch people and we create this wave. My desire is for my wave to get bigger.
So shall your desire be or better than you can imagine.
Thank you, Monick.
Thank you. That was amazing. You can find Dr. Marijo Wilson at DrTaxLien.com, on Facebook, and on LinkedIn. You can connect with me at RealEstateInvestorGoddesses.com. On there, you can access investment opportunities. You can also join our incredible sisterhood of real estate investing women. There’s no reason to feel alone. There are lots of us out there to support you. Thanks again for being here and join us next time where we have another amazing real estate investor goddess interview.
- Marijo Wilson – LinkedIn
- Rich Dad Education
- Rich Dad Poor Dad
- Dr. Tax Lien – Facebook
- Wealth for Women
- Chimene Van Gundy – past episode
About Marijo Wilson, Dr. Tax Lien
Keynote Speaker, Author, Trainer and Mentor. Expert in Tax Lien and Deeds. International Trainer/Mentor in real estate investing. Subjects include Wholesale, Lease Option, Mobile Homes and MHPs, Creative Financing, Discount Notes and Mortgages, Factoring, Probate, Foreclosures and short-sales, Commercial Real Estate, Land Development, Back-flipping, Skip-tracing, Marketing, Outsourcing, and Fund Finding.