Tax Lien 101: The Step By Step Guide To Tax Lien Investment With Cynthia Spirlin, JD

Tax Lien 101: The Step By Step Guide To Tax Lien Investment With Cynthia Spirlin, JD

MCFA 28 | Tax Lien Investment


With all the conspiracies circulating the media, a lot of people are having second thoughts when it comes to dealing with the government. However, tax lien investments have been proven time and time again to showcase a high return with little risk involved. Business consultant Cynthia Spirlin, JD, joins Athena Paquette Cormier to share her vast knowledge and experience in tax lien investing. Cynthia provides real life scenarios and examples that she has gone through herself while learning the ins and outs of this business. Don’t miss this episode to learn and understand the finer details of tax deeds and liens, and how you can use it to your advantage in achieving financial freedom.

Listen to the podcast here:

Tax Lien 101: The Step By Step Guide To Tax Lien Investment With Cynthia Spirlin, JD

I have Cynthia Spirlin, JD joining me, and she’s going to be talking a little bit or a lot about tax liens and how to make profits out of tax liens and tax deeds. Welcome, Cynthia. Thanks for joining us.

Thank you so much. I’m excited to be here.

I can’t wait for you to share. I’m going to try and pace us so we don’t let the cat out of the bag all at once. Usually, I love to hear people’s backgrounds, where did they grow up? What family they had? Were they born in their mother’s arms? “You will be a tax lien investor.” Is it something that comes out of our funny curvy journey? Mostly it’s the curvy journey answer. I love to hear the story. Can you tell us a little bit about who you are? Where’d you grow up? Share your story a bit.

I was born in Los Angeles. My mom and dad were self-employed. My dad worked hard as a barber. My mom had a home-based business, she started daycare because they realized it was too expensive for her to continue working and afford daycare at the same time. She’s like, “That’s an idea. I’ll start a daycare.” She did. They believed in education, they pushed that a lot. It was work hard, get a good education. My parents were working hard and they weren’t getting any further.

A friend had moved away and said, “We can’t handle our property anymore.” She was telling my mom, “Do you know anyone that will be interested in buying our property?” She called all of her friends with money, doctors, lawyers, nurses, different people, and they all said, “No. I wouldn’t be interested in that property. Are you kidding? Do you know where that property is located?” My mom called her friend at the end of the day and she said, “I’m sorry, but no one’s interested in the property.” The lady said, “My husband and I, we were talking and we think that would be a perfect thing for you and your husband to invest in.” My mom said, “What?” I witnessed my first creative deal. My dad took insurance policy, removed the cash value and used it as a down payment to buy that property that they still own.

I watched how it changed my parent’s lives, they worked hard every day. When the income from the property started rolling in month after month, it was amazing. It was three storefronts and a single-family home. Not just my parents were working, but I saw four streams of income coming into our household and I said, “Are you kidding me? Let’s get some more of this.” I said, “Dad, why don’t you get some more income property?” He said, “I don’t like being a landlord.” I’m like, “Are you kidding me? When I grow up, I’m going to do this at least ten times.” After that, they didn’t want to hear anything about real estate. That was as far as they were going with it. They’re like, “You study. You get your books.” I did.

I went on to USC. I worked for the government for a couple of years as a contract negotiator before going to law school. I loved law school every minute. There was a recession when I graduated from law school, so I had to be entrepreneurial and even though my parents had said, “Get your education. You can rely on education.” I have to knock on doors and say, “Hi, my name is Cynthia. I’m looking for a job.” I want to do real estate law. I finally broke into this real estate law firm and went to work for them, but they were the huge commercial building, class A type of thing, large negotiations and then that firm dissolved.

Eventually I went to work for an entertainment firm in Beverly Hills and that was exciting. I love that but still kept thinking about the real estate. I started reading every book I could get my hands on in my spare time, but I was afraid to become an investor. I kept going to meetings and I met someone and they said, “Why aren’t you investing? You have all these skills in negotiation. We need to start buying some property.” I’m like, “I’m too busy.” I had a million excuses. It was fear. He put an ad in the newspaper and I came home, and this was back when you had actual voicemail machines and I’m like, “Who are these people on my phone? Who are these people calling me?” They were saying, “Yes, I want to buy a property.” He put an ad in the paper saying, “Investor buying property.” The other ad was to my phone number, “Do you want to buy a home in this area?” They were calling and saying, “I have money saved. I have bad credit. I want to live here.” I would turn them down. We found a property that was in foreclosure, negotiated the short sale, and we put value back in the deal. We already had buyers lined up. We sold it within 30 days. My portion was $20,000.

You’re an attorney. You got a bachelor’s degree. You got the maybe Master’s and JD combination. How long of schooling did you go through to get that JD?

It took some time. Two things happened when I was thirteen. I wanted to go into real estate because I love that. At thirteen years old I was like, “I’m going to law school.” I knew that, I was in moot court. I was always involved in things through high school. I was in student government. I like rules and contracts and all that. When I was growing up, my parents were different. They have their business. At the dinner table, we talked about our day and it was like, “This happened in the business. Did we handle that right?” It was a family business, we all had input. As a young person, I felt my opinion was valuable.

I love to read since I was a kid. My parents gave me books when I was young and I would fall asleep reading the books in the bed to myself. My parents didn’t have time for that. They gave me the book and they said, “Here.” I was like, “Okay.” I started asking them questions like, “How do the clouds do this? How does rain come?” They’re like, “We don’t know any of those questions.” They bought me these Childcraft encyclopedias and they’re like, “Here are all the answers to all the questions you have. Go and find the answer.” I love to learn and I love to read. Eventually they kept saying, “Education.” The answer to everything was education.

When I was in high school, I went to a private school and I said to my mom, “I’m not going to be ready for college. You keep saying I go to college but these people are graduating, they’re not going to college at this private school.” My mom goes, “What do you want to do?” I said, “I want to go to Pilgrim.” My mom said, “Pilgrim is expensive.” There were ten people in my graduating high school class because I took a chance, I got into Pilgrim and it was amazing. I graduated. I did that. I went to USC. My admissions letter was dated my birthday, April 13. I was like, “How does it get better than that?” I went to USC. I pledged a sorority. It was founded by seven Jewish women. I lived on the row on 28th Street, which is a big deal at USC. I’m a huge Trojan fan. I love the marching band. There’s no better music than the Trojan marching band.

Parents always advise you to get your education since you can rely on that, but in reality, you still need to knock on doors. Share on X

I was curious about the background. Your first job ended up being in commercial real estate. Did you like that? You mentioned A class building. Did you like that corporate environment? It sounds like it was a big commercial business.

No, I didn’t like it because I had grown up with the idea of working in the family business. You set your hours, you set your income, and I like the freedom and flexibility of having your own business. They thought that it was insecure, and they didn’t see the benefits of being it. It was something they had to do.

That’s what it is. They did what they had to do being business owners, not the entrepreneurial spirit so much as the survival spirit. They worked hard and got you a lot of opportunities. That’s amazing.

I see all the benefits of it. I’m like, “I don’t understand.” When I was a kid, I would look at them and their business and my mom had a daycare. At some point, she built up this huge reputation because she loved children. She loved the people in the community. She would go overboard. I picked up clues to success as I was going. My mom, she didn’t have business hours. She didn’t say, “I’m open from 9:00 to 5:00, or 8:00 to 6:00.” She was open 24 hours a day.

We lived near the airport. If you worked at the airport and you had to be at work at 4:00 AM, then you come on your way to work and drop your kid off at 3:30 in the morning. We live ten minutes from the airport, LAX where my dad used to go to work. We live near hospitals. If you’re a nurse and you work double shifts, your kid stays all day until you get off and you pick them up. Whatever it took, that’s what they did. My mom, she’s from Louisiana, so they cooked our breakfast before we left for school. My dad left at a different time, he packed a lunch. She made his breakfast separate, his lunch separate, then the kids had their breakfast, lunch, all day.

It sounds like you learned a huge work ethic and “do what it takes” attitude. Let me ask you. Your first spark was in childhood but then after that second job, did you lose the job in the entertainment business? Did you quit? When did that end?

I started to realize that I didn’t like the law at all. What does a thirteen-year-old know about deciding on a career, seriously?

You’ve got a solid foundation. We would advise our students, if they could stomach it, to read every contract through and through, study it, research it before signing it, and nobody does. You’ve got those basics that most realtors, let alone investors have. We’re headed in ways in life for a reason. After you did that deal with that newfound friend from an REI club meeting, did you wholesale that? You guys weren’t licensed but then you’re licensed because you’re a JD. You’re automatically licensed.

Yes, I wouldn’t have to take the real estate exam. I always operate the business as an individual. We didn’t wholesale it. We had a buyer. We bought the property. We had a buyer come in and we sold it.

You did the whole transaction FSBO style, For Sale By Owner style.


You’re in real estate investing career. You’ve done your first deal. What was your process to getting to your second deal? Did you go to every single REI club? Did you go back to your answering machine and call those people? What was the process that happened to that and then what led you to the tax lien business?

MCFA 28 | Tax Lien Investment
Tax Lien Investment: You’d want to invest in tax liens because every state has a code that allows tax liens to be sold, and the municipalities need this money to operate their cities.


I was working full-time. I knew I didn’t want to practice law but I love the legal community. I was selling software to law firms in San Francisco. I worked with litigators and preparation for trial. I was doing that and then at night, I would go and look for homes from 6:00 to 9:00 PM. Every night, I would go and look for properties to invest in. The next month, we had run into another couple at an REI meeting and they said, “My neighbor is in foreclosure. I took this three-day course. I don’t know what to do now. I have all this information in these books. You guys have done a deal. The four of us come together and do something.” We did. That was the second deal. Because there were more hands in the pot, it was a smaller take home but it was still cash again, and next month, the same thing. By the fourth month, people were saying, “I know what propelled this.” Robert Allen was giving a seminar in our area every month.

For people who don’t know who Robert Allen is, the No Money Down guy, been an inspiration to many investors, whether you believe everything in his book or not. He’s an inspiration.

He saw the ad, real estate investor buys properties. He called the ad that my partner was running and said, “Can you come to our class on Sunday, the last day? I’ll introduce you to the class and tell them if they find a property, you’ll buy it.” That’s what happened. We went over there. We met the students and they said, “We’ll call you when we find a property.” I said, “Yes.” They did. The phone starts ringing off the hook the day after Sunday. There were leads everywhere. It was crazy.

Was that an overwhelming feeling? You’re tentative, you’re pairing up with these guys that you meet in an REI class. You’re brave enough right there. Robert Allen, no less, puts you up on stage. Did you feel overwhelmed? What did you guys do?

We were overwhelmed. We said, “We need an office now. Where are these people going to come?” We rented an office space and we said, “Meet us here at this office.” They came in droves to the office. We’ve got the phone turned on and we were in business. At that time, we didn’t have all the property radar where the information was a click away. You went to the courthouse and would dig for information.

You mean foreclosures. You were looking for distressed property.

Pre-foreclosure properties. That’s how we started from that point. We had an army of people that wanted to door knock. They didn’t have the experience. They didn’t have the knowledge. I became the voice. I could talk to the bank, whereas the other people they were door knockers. They were different things but they weren’t, like, “I don’t want to call the bank.” I was like, “I don’t want to knock on doors.”

It’s a match made in heaven. These people that were coming to you were trying to learn the business the way you had done it. You were, in a sense, coaching them or walking them through your system.

What we had learned, we taught them. They started knocking on doors and they would find people in distress. I started learning as I went along. I didn’t have a book on how to do short sales or anything. I called the bank and I said, “I have this situation. What do I do?” They said, “I’m going to fax you a sheet of paper and it’s going to tell you what to do.” I used that information of what they were looking for and my law background to make a case. I would always prepare an airtight case that they couldn’t argue with. It would usually go through, there might be a little back and forth, but it was a good offer. It was a solid offer and we started doing multiple deals. We went from doing one a month to multiple a month. More people came and said, “I want to learn how to do this.” They kept coming, more and more people. Eventually, we started doing two-day weekend classes. We never charged for the classes. What was more important than the actual class to profit from the sale of the material was the relationships that we created by sharing this information freely. We would have about 80 people. Some people will become investors.

Like your bird dogs or your boots on the ground, you had your little army going.

It worked out well. At that time, it wasn’t popular. It had always been professed in the books to always look for a property that had some equity in there. In post-2000, they were starting to leverage homes. You didn’t have to put as much down. You could go in with a little down. A lot of the homes are 95% leveraged and a lot of investors would walk away from those. We loved those and we would get referrals because when they were turned away from other investors, they’d say, “These guys came by knocking and left a card. Let’s call them.” That was our recipe that was successful.

Did you have hard money investors to buy the properties? Because they’re upside down, you’re negotiating the short sales. Did you pay cash? Were those private investors? You had three groups, your boots on the ground, door knocker people, your investors who want to invest and then maybe your money people.

In real estate, you always operate your business as an individual. Share on X

One of the shrewd things that we had going for us was a big market of people that wanted to buy. We always had a pool of buyers. They never wanted to take on these properties. The other ones, we would sell to investors, like a wholesaling type of thing. We’d have meetings with people that wanted to buy properties. We had some properties that we didn’t have time to move through that process. It was going to sell quicker or the deal was great we couldn’t let it slip through our fingers.

For example, I have this property where the owner had bought the property and lost his job that paid $10,000 a month. That was a good income. He had a mortgage of $550,000 on his first and there was a second for $80,000. He had bought a duplex and he wanted to combine it into one large home. He lost his job in the midst of that and he had about $60,000 worth of supplies to refurbish the home. When he lost his job, he couldn’t replace it and sadly, he was forced into foreclosure.

At the end, I was working with the bank and the second had agreed to take $5,000 cash instead of the $80,000. I was working with the first with an offer of $350,000 instead of the $550,000 they were owed. It went on months and months. The bank said, “No.” “Are you kidding?” “No.” First, taking less than what we’re owed. We sent pictures. They didn’t believe the pictures. The bank said, “We’re going to send an agent out.” The agent came to walk the property and her foot went through the floor because there was no floor, it was a floorboard. That was it. After that report came back, the bank said, “We’ll take the $350,000.” I was like, “Dang it.” We bought the house for $355,000. We sold it to a contractor for $550,000. We cleared under $200,000 for that. The supplies, he was able to, in turn, sell the property for a good profit as well.

It was fixed up. That’s a great story. It sounds like you have a great foundation for what’s coming next. When did you first discover the whole tax lien world?

After the market crashed in 2008, 2009, the handwriting was on the wall and I had a lot of consulting clients on the short sale and they said, “Cynthia, do you see the changes?” I said, “Yes, but I didn’t think it was going to be that bad.” I’m like, “Hang on. Let’s wait and see. Let’s keep looking for good deals.” The crash obviously, it swept everything away. The landscape was completely changed. I call it the tsunami. I started looking for safer investments. I was fortunate. I didn’t have a lot of loss myself. I’m conservative on my investments. I made good deals. I didn’t have any mortgages on my property. I either had bought for seller financing, those are my favorite hands down, or negotiated a good price. I didn’t have a problem with that. I like controlling more so than the flat-out ownership. With the crash, I said, “What can I do?” I was knocked down to my knees. It was frightening to me and I said, “I don’t know what to do next.” I started looking for safe investments in real estate and I decided that the tax lien was a safe option.

How did you discover tax liens? Was it an ad, an REI class, apartment association? A lot of people have never heard of this. How did you hear about it?

I was looking. I’m a researcher. I kept looking for books and looking for different strategies and different things, reading blogs and different things. It was something I came across. At first I was intimidated, frankly, even with the law degree. It’s like, “It sounds too good to be true. People bought this for pennies on the dollar.” There was a lot of debate back and forth about the tax lien and I said, “My first introduction to it, I was comfortable with a distressed property. I knew that we were getting some homes for good value.” I even bought two homes for $1. I knew that world. It was foreign.

What further helped boost my confidence in the tax lien was I worked with the 1031 exchange. I started looking more at codes and the law around. The 1031, that opened my eyes to the power of using the law to invest. In 1031, I don’t know if everyone’s familiar. A perfect example, I had a client that had bought a property in California in the ‘70s for $65,000. Time had passed. He moved away. He’s retired to Las Vegas. He had moved around the country for his job and he continued to rent that house out that he bought originally for $65,000. He’s ready to sell the property and it was worth unlisted for $540,000. They got that and the net after all the taxes and commissions were paid was $505,000. There’s a federal tax which is an amalgamation, let’s say 25% to 30% of the capital gains which is the difference between the $505,000 and $65,000. At that point, there’s also the state tax in California which is about 13%. He’d have a tax burden of 35% to 40%.

That’s a lot.

That’s a huge amount. Instead, the 1031 code allows you to take all the gain, the entire $505,000 and invest that in other real estate, whether it’s raw land, commercial or residential property. He had three sons, and he took that money and bought three properties. That means that at his death, he not only has deferred that capital gains tax completely, the property will go to his heirs tax-free. Once they start using the property, they’ll accumulate their own capital gains, but that $100,000 that would have been paid in taxes stays in the family. I love how you understand the tax code and have that wealth. Then when I started exploring again, digging deeply into the tax lien, and I became convinced that it was the way to go, because who was investing in tax liens?

Hardly anyone back then but banks.

The banks took the money from the bailout and used that to invest in tax liens. They were the largest investors in Pima County, Tucson, Arizona, at the 16%. While they’re taking the money, they pay the depositor 1% to 2% in their money market CD. They take those same monies and the bailout money and put it over in Pima County as 16%. You get 2% and they get 14%.

MCFA 28 | Tax Lien Investment
Tax Lien Investment: A mortgage is subject to the laws of the state where it’s in. Some companies don’t do mortgages in certain states because they don’t like the law.


I don’t think they were giving 2% back then either. It was 0.05% or something. They worked their way up to 2%. Could you describe to us why would someone invest in a tax lien and more importantly, the difference between a tax lien and tax deed and who might want one or the other?

The reason you want to invest in tax liens is every state has the code that allows for tax liens to be sold. The counties, the municipalities, they need the funds to operate their city. When someone doesn’t pay their taxes, that money was designated and budgeted for services like police, fire, etc. When those monies aren’t collected, that’s going to create a deficit and problem, hardship for the city maintenance, county maintenance. They allow for this, they say, “If someone doesn’t pay their taxes, then a lien can come onto the property, that lien can be sold and secured against the property, and the person has the right to redeem that property in a period of time.”

To clarify, redeem means pay their delinquent tax so that they don’t lose their property.

That’s the reason that the government does that. Keep in mind that the government owns everything. For example, I’m in Nevada. In this jurisdiction of Nevada, they are sovereign to decide what happens in this. When someone buys a home and they have a mortgage on it, everyone is subject to the laws of that state, and that’s why some companies don’t do mortgages in certain states. They only offer in certain places.

They don’t like the laws.

When someone buys a home here and there’s a lien on it, the Bank of America, whomever, they’re saying, “I’m willing to be subject to the tax lien.” That’s why they make such a big deal about impounding the money, especially when the mortgage problem hit. When they did the HAMP and took people through the saving of their home, they had to impound the taxes because if they fell behind, it creates a big problem.

If I’m hearing you right or maybe to clarify, if someone has a mortgage on their house and obviously they’re paying tax bills, if they fall behind on the tax bill and don’t pay it, that tax lien is superior or before or more important than the mortgage company. In other words, the government takes precedence or is more important than the loaning people.

That’s why it’s a low-risk investment on behalf of the investor. The person that puts the money up for this loan for the homeowner, the bank failed to sketch this or whatever. Usually, the properties are free and clear, but in the event that there are any liens on the property because the state is sovereign, then it takes the superior position above all others. In that case, the bank or whoever is below, it’s their obligation to get that property back under control. If they fail to do that, then the person that made the investment can receive their money back.

Let’s say its $1,000 for the tax lien and the interest on there could be 10%. They will get the $1,000 that they invested plus the 10% as well as any penalties that are due under that code. If the person does not, for whatever reason, pay this money owed, then they will lose the property. We’re talking about a tax lien and in that case, then the person that made the investment of $1,000, they would move forward and petition for the foreclosure so then they would take possession of the property and start to treat it as their own. The distinction between a lien and a deed, if you ask me, the lien is the tax itself. In this case, like we’ve been talking about, it can be $1,000, it could be $5,000 of back taxes.

On the other hand, some states skip ahead and say, “We’re not fooling around with that. It’s a deed. We’re auctioning this property. You’ve foreclosed on it and it’s going to auction.” The difference is if you buy a deed, usually you’ll need more money because you’re buying the house. They’ll have the opening bid for a certain amount of money and this is where the other part of the tax lien business comes in where they talk about overages.

If the debt was, let’s say $50,000 for it to buy the property and people at the auction bid it up to $100,000 instead of the $50,000. It’s overage of $50,000. There are some tax courses out there that you can purchase that will teach you how to help get that $50,000 back to the original owner, that overage portion. For a fee, you can negotiate with them up to 30% to help them get that money back. There are some limitations. Some states limit how much you can receive in that overage negotiation. Some people find that portion appealing as well to do the overage business.

There’s no greater profit than the relationships you build by giving information freely. Share on X

To backtrack so we’re clear. If someone owns a home and their tax bill is not impounded or escrowed, they’re responsible for paying their own property tax bill. They don’t pay it and like here in California, I’m sure in Nevada, if we don’t pay our tax bill on time, day one there’s a 10% penalty and then it’s 1% per month. It adds up. There are some late fees and penalties when you don’t pay your tax bill. It sounds like the tax lien buyer, the investor, the government says, “We can’t wait for this guy to pay whenever, however. We need the money now to operate the services that we offer.” They want the money. They sell the tax lien to investors like us. We buy the tax lien for $1,000, if the guy shows up six months later and pays, our investment pays us back our $1,000. The government says, “This guy walked in with this money. It’s not ours anymore because we sold it. Mr. Investor, we’re going to give you the $1,000 that you gave us, plus we’re going to give you all these late fees.” Is that correct?

That’s right.

The investor is benefiting from the penalties and late fees. It’s most likely that these homeowners are going to come in now you’re saying these other states. Some states are tax lien states and some states are tax deed. The tax deed states, they don’t want that money up front. They’re rich, they can run their county without that money and you’re saying that they wait until the homeowner is at a point of no return and they sell that deed. It sounds like you’re saying most of them are at auction, like a bidding situation. It sounds like if someone wants cashflow, they’re probably going to go for the tax lien one because you get interest or you get the penalty money, but if you want the property, you’re probably going to do the tax deeds.

You can take both strategies. Maybe you can pick and choose, cherry-pick the homes that you want to hold on and use those as a rental income and the ones that you want to get the interest because different states, for example, Chicago and Illinois, they have high interest, it’s 18% every six months. In a year, you could earn 36% potentially on a property. In some places, it’s not quite as high. In Arizona, that’s 16%.

It’s still good though, you’re getting 16% for giving the government your money for a little bit.

I lived in Birmingham, Alabama for several years. I’m familiar with that area and I love the southeast. Looking at different areas and those laws vary from state to state. I’m a little partial to the southeast, Florida, Georgia and Alabama because they have a little longer period of the waiting, but they give you possession of the property while you’re waiting for that redemption period and they allow you to collect rent.

Even though you don’t own the property, right?

Yes. It’s a sweet deal because the taxes are low there, we’re talking about $5,000, $2,000 for taxes and you’re able to collect on average, let’s say it’s $500 for the rent. If you put in $2,000, $2,500 on a tax lien, in less than six months, you’ve earned your money back. The redemption period in Birmingham or Alabama in general is three years. That means that anytime along the way, they can redeem that property. Let’s say they don’t. Let’s say two years, in 24 months, you have $500, that’s not bad.

We’ll use this as an example. You bought the tax lien for $2,000. You’re collecting $500 in rent. If we’re in California, you need a property manager. Who insures your property? If you’re not on title, who’s insuring this property?

You buy insurance. You get insurance for the property to protect your interests. It’s not that expensive. Keep in mind, you’re right, it’s not just the $2,000 that you put down because it is three-year redemption, you will have to pay the subsequent years of the taxes on there. You paid insurance on the property. The person that moves in, you make them responsible for the maintenance of the property itself.

Like mowing the lawn and shoveling the snow if there’s snow. I don’t know if Alabama has snow. Let’s say you’re making $150 after all that. That tenant is paying to maintain this property or for you to maintain the property until you can have it. What happens if the homeowner all of a sudden wins the lotto and catches up the tax bill? What happens then?

At that point, you would only have your client on a month to month. There’s some paperwork that has to go through, they couldn’t come in and take it over at the same day. You couldn’t go into a three-year lease with these renters. Until the three years expired, they have the right to their property again. In the meantime, to me, it’s a safe bet because my money is saved and I’m likely to make my full investment back and go and put that on another property. Sometimes the properties are vacant from the start. There’s no one in there. Those properties need some repair. You also have the ability to do habitable rehab on the property. You can’t put granite countertops and anything excessive but you can make it livable. In that case, not only does the homeowner would have to redeem the actual lien and penalties, etc. You keep your receipts and they would have to pay those improvements as well.

MCFA 28 | Tax Lien Investment
Tax Lien Investment: With tax liens, your money is safe and you’re more likely to make your full investment back to put on another property.


You’re not owed any money. If the homeowner comes back and pays everything up, does that mean that you’re getting your original $500 back to you?

You get your investment back.

Whatever you’ve collected in the meantime, you don’t owe that, that’s yours. We’re liking Alabama. Do you do both tax liens and tax deeds? What have you bought mostly?

No. I’m conservative. I’m a lien girl, for sure. I’m staying in that area. I took a trip back and flew into Atlanta. I made a trip of it. I want to dive deep into it. I made appointments and create a conversation with people before I went out there. I would go out with a tax lien person that was invested in Georgia and Atlanta area.

To learn from them?


Also, scope it out.

I did the same thing in Birmingham. I contacted people along the way as I explored and learned online. What’s interesting, I had four contacts there in Birmingham. Some people I met, and even though we had a great talk on the phone, when we met in person, it didn’t go as well. Some people I’ve discontinued and then some people I’ve continued, delved in deeper friendship. It’s popular there for people to buy tax liens and make that their full-time job because obviously the cost of living is less.

We have a property that we purchased through a tax lien for $1,700 and the property is worth $50,000 as is. The people that live there have no intention of moving out of the property they inherited and they’re irresponsible ne’er-do-wells. They said that they don’t want to pay the rent. It doesn’t go smoothly all the time. You have your penciled-out idea and then you have the reality. They don’t want to pay. They said that we could pay them out, they would move for $10,000. We said, “No.” We’re waiting to start the ejectment process that’s allowed in the state. Because you’re given possession, that means that you can move for an ejectment, but it takes six months. We haven’t reached that process yet. It will be a while before we can do that process and see how that goes. I had an interesting conversation with the lien investor in Atlanta. He was going to be the rehabber and his girlfriend was going to be the purchaser of the liens. She bought six liens and shortly afterward, she was diagnosed with cancer and died.

Her name is on the liens. Did she put it in her trust?

She didn’t have a trust so it went to probate and this was 2015. They came out of probate. In the meantime, because he didn’t have any right to the property, the liens or anything, they sat there and collected more debt. A couple of the properties, two of the six have another investor that’s bought subsequent delinquent taxes. He asked me, I’m on the West Coast and he says, “Cynthia, do you know a good tax attorney in Birmingham?” I said, “I sure do.” I gave him the name of the best tax lien attorney in Alabama. It’s good to be a resource and it’s interesting, the different challenges that can come up and things that can happen during that time. What that taught me, if you do work with someone and you’re investing, you want to have your ducks in a row as far as that goes because they never saw that coming and happening to her.

She probably didn’t think of it. You should have a trust. She probably didn’t think of it as an asset. People don’t think about these things.

With investing, always start with your comfort level. Share on X

When you’re young, you feel like nothing like that’s going to happen to you.

What’s the cheapest tax lien you ever bought?

I try to keep my range. My sweet spot has been between $1,000 and $5,000.

Why did you choose that?

That’s what I’m finding where I look. The taxes are low. I choose places that have a low tax basis so that they don’t get excessive. I want to spread the wealth. I don’t want to lock my money into just one property.

You want to diversify.

That lowers my risk as well. The other thing you can do, like I mentioned, the people that I talk to in Birmingham, you can buy tax liens yourself and wholesale those and sell it to another investor.

Tell me how that would work.

That means that you do the research. Let’s say you bought multiple liens, you bought ten liens. After you look through them, you’re like, “I only like these four. I’m not too crazy about these other six.” You put them up and you make an ad on Facebook and you advertise them to your network of investor friends and that you’ll sell them to them.

How much do you add? Are you wanting to get paid for doing this or are you trying to offload them? In other words, if you paid $1,000 for a tax, are you adding money to it and selling it for $1,200 or $2,000? How do you determine what you’re going to sell them for?

By adding $1,000 or $2,000 to it, you’re looking at the fact that the interest, they’re not going to make their money back. They’re going to be looking at the fact that they can collect the interest on there. For example, the lien was at $2,000 and you bought the tax lien at $4,000. You’re going to be looking at, “Will this property bring me a return on my investment as a renter through the cashflow?” It makes sense plus you think about, “I’m busy. I make more money doing X.” The cashflow would be good for me, but taking the time to look for the deed itself, it’s tedious, the research and all that. That’s the real key thing.

MCFA 28 | Tax Lien Investment
Tax Lien Investment: You don’t have to be a US citizen to invest in tax deeds and liens. People in foreign countries buy tax deeds and liens all the time and profit from this opportunity.


Florida is the same way, you can rent those out. For example, what if you found a property like a condo in Florida that you could rent out as Airbnb through a tax lien? You have that two-year window while you’re waiting for the person to possibly pay back the debt and do Airbnb off of Florida like Cocoa Beach. In Arizona, they have a motor home trailer park space, $1,200 dollars for this space. If that retails on the market for $9,000 and you bought it for $1,200, that property by itself is a great opportunity right there. It depends on what your particular niche is and in real estate in general. Some people like that RV-type of mobile home situation. Some people like to buy condos because it’s easy to maintain. You want to start with your comfort level. Some people love raw land and they understand. I worked for a developer a few years ago. I learned a lot of the ins and outs of what to look for and how to talk to the people in the planning department.

Honestly, what I’ve learned, if I haven’t learned anything else in all these years, is to ask questions. A lot of times you don’t have to pay for expensive courses. You can learn by simply asking questions. I mentioned that I had worked for the real estate law firm. The first assignment they gave me when I went to the firm was a case, a motion of quashing. They wanted the summary judgment, make it go away and they said, “No one in the office, no one was able to get the motion quashed.” They said, “Can you do this?” I said, “I got my foot in the door and they’re giving me the hardest thing in their whole office, their biggest property.”

They’re testing you.

What I did is I meditated on it. I’ve always been a meditator. I got the inspiration to call the court. I called the court and I said, “The office has been trying to get this motion quashed a period of time. What do you want?” The clerk said, “We want to see blank,” whatever that was. I went to my computer, typed up exactly what they told me and we got it. It was approved. The motion was granted. The whole office, they wrote this beautiful letter saying, “Cynthia, our new staff member. She’s awesome.” The same thing, when I was doing the short sale, I never did a short sale in my life. I called the bank I said, “How do you do a short sale?” They said, “This is how you do the short sale.” I gave it to them. There you go, just ask.

Let me ask you this. If an investor wants to invest in taxing, where do you find these tax liens? Do we go online? Do we have to get down to the county with our little briefcase? What do we do to find these things? I’m sure people are chomping at the bit for the 16% and 18%. I heard Texas is 25%. You can foreclose fast on the deed. Once someone has figured out where they want this property to be that they’ve got the lien on, what do they do? How do they find these?

The first step is to go to the county. A lot of them have their websites up. You click on there, you go into the tax and they tell you what they pay, when they offer their auctions, what’s required. Some places, they require that it’s in person. They do it the old-fashioned way. They require that you have so much money available liquid to make your investment. Some of them require payment upfront to participate in the auction. You have to go to that county and pull up their county webpage and start poking around and clicking on things. You can’t break anything. You read whatever it says. It’s plain English. It’s not like in the logbooks where it’s confusing to read the cases from time past. They spell it out for you. They mean what they say. You can count on its 16% or 24% or whatever they’re offering and then you will follow that to the letter. That’s all you do. Many places offer it live. In fact, you don’t even have to be a US citizen to invest. People in foreign countries buy properties and they’ve never seen it, step foot on it, anything. They buy tax deeds and liens all the time from other countries and profit from this opportunity to make a high return on a low-risk investment.

Something that came to mind is if you invest in a tax lien, you’re depending on that homeowner to come in and pay their payment to get your late fee. You might have dead money until they pay. The county or the government, they’re not paying you monthly just because you gave them money for the tax lien. I wanted to be clear about that. You’re waiting for that homeowner to pay up. You get a lump sum of your original investment, the interest, the penalties, whatever the government is paying you.

The reason that you put up the money as a person, they don’t have it, they need the money. You have to wait until they come to redeem the property or you move forward in the process to foreclose and make the property your own. If you’ve been doing your homework, research is the key thing and that’s why a lot of people aren’t interested in tax lien simply it’s a matter of not wanting to do that detailed work and the reading and what’s required. If you’re willing to take that 1 or 2 hours a week and the evening time on the weekends a couple of hours and dig into it, you can do well on the return of your time spent.

On the tax deeds, it’s the same thing. Your money is dead until you can take possession, unless you buy in a state like Birmingham, and getting the rental income so it’s not dead money while you wait.

That’s why those areas are attractive to me, for sure, because I like the idea that you can have that. A lot of people are going after those properties and when they’re vacant. My original thought was, it would be great to have people already in the property and go in and talk to them, but I’m finding that it might not be the best way to go. It’s a 50/50 shot if someone’s already in there. If you invest on a lien on a vacant property, then you go in with the minimal amount, but you’ll still need money. A rehab, it’s going to cost you $10,000 depending on what the rehab requires, but let’s say it’s $10,000 plus the $2,000 lien, you’re up $12,000. Those are factors to weigh but at least you can go right in and start collecting.

Once you get a tenant, you can start collecting the rent and recouping some of your money in the interim. It’s not likely that a person that abandons the property and lets it go to the state that it’s in, that they’re going to come back. If they couldn’t afford the $2,000, it’s not 100%, but it’s a high probability that they would not be able to come up with the $10,000 of the repair. I’m trying to re-evaluate my approach to those areas in 2020 to go and not have to deal with the negotiations with the occupant.

Another thing that’s cool when you have a corporation out LLC, you’re investing not in your own name. If you partner with someone, you can buy more and leverage your joint venture as well. You can spread your money further over different properties and increase your ability to win more property down the road. They have homes in Birmingham that cost $30,000, $40,000, $50,000 on up to $500,000 and more. Your average home is going to be under $100,000 or in that range. If you invest in a home for $2,000 to $5,000 and it’s worth $50,000, that’s a huge spread. Even if you didn’t go, you could wait and you’ve already waited three years possibly. What if you waited another three months and sold it for the full $50,000 or you can sell it for $40,000 and move on to the next deal?

You’re invested in the southeast, that’s where you’ve been focusing. I wanted to ask the due diligence. What is the due diligence that you do once you’ve determined where you’re going to be and you’ve got your list? You must do due diligence before you buy the lien because you’ve got to know whether you’re going to want that property. The end result might be that you own this property so it seems like you would want to do at least a minimum of what I call flyover due diligence to make sure it’s something you want.

One thing, obviously with the technology, you can use Google Earth and ways to look down on a property, that’s one way. The other way is if you decide to focus on an area like Birmingham or Tuscaloosa, you’d find people by going into different meetups like Birmingham, Alabama, for example, you can go on there and poke around and see members of that group and you message them and say, “Hi.” You try to find a friend through Facebook groups or through, where you can create a relationship with someone, that’s the other way.

You can contact a realtor. You take some time to dig in and find a realtor that you say, “I’m going to be buying multiple of these properties. Over time I need someone to help manage these properties. My intention is to buy twenty of them,” for example. Obviously, that’s going to be an opportunity for them to profit from managing the property or being your eyes and boots on the ground for that. You have to decide which tax you want to take if you want to go with the professional agent or appear that’s in real estate as well. Whether that person is how novice level they are because if they’re savvy, you might give them a lead, like, “Here’s this property. I didn’t know about it.” You have to fill that out. You’re safer if you own it already after the fact, but if you’re in the due diligence stage, I would go with a professional to have that fiduciary relationship going. The other thing to look for is the subordinate liens. They are extinguished or extinguishable like the first loan, second loan from the bank. However, there may be other liens on the property like SIDs. I don’t know in California if there are SIDs.

What is that?

It’s a Special Improvement District. Summerland, for example, they have some areas that are SIDs. They didn’t have any water or whatever services going out there so they had to build those services out and they charge overage. Everyone pays, for example, $35 a month because of this. In that case, they sell those. The properties are vacant here because of the crash that happened and no one paid the taxes, no one paid the SID, all these things. Those municipality liens like a SID or blight, the city has to come and cut the grass or do whatever. They put a lien on there. All the other city liens are still due. Your lien that you paid for, that the others aren’t paid. When it comes time for you to get this property, you may have other leads that are paid. That’s where the real due diligence comes in.

This one guy, I was talking to an investor and he was looking at buying unpaid SIDs here in Las Vegas, $30,000 for several, but they told him that they changed the law in Las Vegas, Nevada, and he would have to pay all the SIDs before him. Even if you bought this SID, there could be other SIDs and he got to pay those SIDs so he said, “I don’t know what they’re doing with the law. I’m not involved in that.” That’s why, for me, I love the law and reading that stuff isn’t hard for me. You have to anticipate and read the fine print where things are happening or go to the planning committee and where your property is, what’s going on around there, particularly if it’s raw land as opposed to a developed community. Obviously, there’s not going to be a lot of changes there.

I heard you said that you do Google Earth but then sometimes those pictures are old. You must always have someone at least drive by to make sure this house is still there because it could burn down in the meantime.

That was a thing I’ve learned. I chose Birmingham and Georgia because I know people that live there. I have friends and family, relatives, dear friends from the past that have moved there and I can say, “Can you go by blankety-blank and look at this for me?” They will. My dear friend, her husband is an officer, “Can you send your husband by this property?” Those helps if you have an area that you have an affinity for. That gives me a greater comfort level to go there. I was looking at some resell liens, assignable liens.

You mean that someone else owns that you would take over?

He had sent me some and when I got to Birmingham, I drove around to look at these places and all of them looked good. Let’s say he had six. I went to look at them and the last day, I flew into Atlanta so I needed to get back to Atlanta. Something said, “Don’t leave without seeing this property.” All the homes looked gorgeous, they were fine. I had no clue. The one I was looking for turned like a dogleg street. When I went on that street, that’s where the house was and all the homes are great except for this street where it had 3 or 4 homes and they were all trash. The picture never gave that away. When I passed to the community, I have the right address, everything. I don’t know why his picture, that I saw, looked like a decent home and when I saw it for myself, I couldn’t believe my eyes.

Thank God you did that. Buyer beware and don’t rely so much on, “Google this and google that,” and all those things.

Trust your gut. That’s why I love meditation because I had a feeling that I had to see this. It’s worth it. If you think this is a great deal and you’re willing to put your money on it but you have a question mark, pay someone $50, Venmo or whatever to go and look at it for you.

There’s so much we could have covered and in Cash flow Academy’s modules, my basic training for new investors, I spend maybe ten minutes describing this, this has helped a lot. I’m covering everything in real estate. If someone would like to get into this type of investing, what would you recommend that they do in the first month? What is the first thing they should do if they think this could be the thing for them?

I would encourage them to look at the county that they would think they would want to buy or look at a couple, make a list of 3 to 5 counties that you have curiosity, you have some familiarity with it or some affinity for it and you grew up there, you live there in the past or if you have friends that live near there. That’s the first thing, I’d make that list and I will look at what it says and the county itself because these courses are expensive, a couple of thousand dollars. From our page, you can go into the county. You could go into the county without going through their page. They’re not the portal to the county. The county is the county. Go direct. There’s a tax lien association, they have 7 or 8 free videos. You can go to their website. Don’t get tricked into signing, paying for anything.

I heard their coaching is $30,000.

They start to often say, “Here’s a free five-day course,” and then they say, “Buy this for $99.” They keep edging you up the $2,000 course so they finally try to pull down the whole thing. You don’t need any of that. It’s straightforward. Look at other people that are investing. There’s a girl in Georgia. She’s called Georgia Tax Lien Boot Camp. She’s straightforward. She has some free videos online. Look at people that have been doing it for a long time because you’re going to get the truth of their hands-on experience.

YouTube videos are great and then try to go in and do it yourself. I have a group and I say, “The information is available. It’s straightforward.” This is how the taxes come to have a lien on the property. This is where you can profit from it. It’s the research. We sit together with a mastermind. I have an in-person group meeting and I have a virtual meeting. People that aren’t here in Las Vegas, virtually they come on and we’re able to dig into a property. I have a virtual class. In the evening time, you come on, you have a question and we’ll go into that county and dig in together as a group. That’s the best way to learn by getting in there, hands-on, and looking at it for yourself.

I wanted to ask if any of the people reading have any burning questions that they want to ask. In the meantime, if someone wanted to follow you, join your Facebook page, what’s the best way to get ahold of you?

I have a Facebook page. Tax Lien Mastermind. Also, they can call me (702) 335-2099, that’s my mobile number. Text or call me.

Cynthia, you graciously agreed to come to my women and investing class, so that will be hands-on, you’ll get to meet Cynthia live if you’re a woman. It’s going to be here in the South Bay. I’m waiting for confirmation that we can use the space that I want to use. We usually have either sandwiches and salad or cheese and wine. There’s always wine. We have an opportunity to network and then we’re going to do like we’re doing here but we’re going to do that live and maybe you can bring some examples to show. Visuals are always cool to see how it works.

I’m looking forward to that.

Thank you to everyone who joined us. I hope this was informative, enlightening and inspiring hopefully. I love meeting other women who are doing real estate and doing it well and with integrity. Thank you for that. Lots of kudos coming in for you. Thank you very much for doing this for us. Thank you, Cynthia, again for doing this. I look forward to seeing you again.

Thank you.

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