As a first order of business, I want to address some comments I received from some of you because I believe honesty is always the best policy.

Over the last several months, some of you have called me and asked if I would ever offer a course on tax lien/tax deed investing. At the time, I was not planning on starting a tax lien/tax investing course, but I try to listen to my customers so it got me thinking.

After much discussion, my partner and I decided to start preparing course materials. What we learned from phone and email correspondence with you was that most of our customers read the Rogue Real Estate Investor Collection and start investing on their own. In fact, that is why my partner and I wrote Rogue Real Estate Investor. To give you the information you need to start investing in real estate, including tax lien certificates and tax deeds, on your own. If you have questions after reading the course materials, I provide phone and email support, something few other authors are willing to do.

However, not every person is the same. Some of you still wanted me to take you through the process on a hands-on basis, so I thought I would meet some of your needs by offering the course.

My partner and I have been working hard over the last month preparing the course and hope it meets the expectations of those of you who signed up. Compared to what you have been telling me – typical tax lien/tax deed courses that cost $2,000 to $4,000, I wanted to provide a quality course at a bargain price.

While the response to the course has been favorable, I received two emails from customers complaining that they thought I was trying to just make more money by offering the course.

Nothing could be further from the truth. I decided to offer this course because some of you called me and specifically asked if I would offer a course. I never expected that a few customers would take exception to a course offering that was provided on a completely voluntary basis in response to feedback from customers.

However, I want to make it clear that if I have offended anyone with this course offer in any way, I apologize.

Overall, I have found that sometimes it is impossible to please everyone.

With that order of business completed, I want to introduce you to a subject I have been focusing on for the last several months: negotiated sales lists. Also called over-the-counter sales lists, these lists are properties that did not sell at auction. Although many of the properties on these lists are garbage, occasionally there are gems. This is because in some areas not enough people came to the auction to buy all the properties. Some areas also have weird sales dates, strange properties that are difficult to value, and miscellaneous issues that may have prevented bidding for reasons that do not affect the value of the property.

To help you better review negotiated sales lists, I want to let you in on a little secret I have learned:

In many cases you should focus on the properties that have the highest yearly taxes due.

These properties are valued more highly by the county and are likely good investments. You would think the opposite was true: bid on the lowest priced properties. However, on negotiated sales lists, cheap properties that are decent are usually sold at the auction. So the best properties on negotiated sales lists are usually the most expensive.

This newsletter's feature sale is the Champaign County Tax Sale that I attended on November 7, 2003.

I occasionally do environmental assessments in Champaign County, so this year I decided to attend their tax sale. Overall, I was not impressed with the sale. As I expected, since the city of Champaign is a college town located near Chicago and is currently a hot real estate area, many professional investors were at the sale. In most cases they bid the interest rate from 18 percent every six months to 1 to 3 percent. Their goal was to bid on a lot of properties, with the hopes that a few of the properties would go to deed. However, when properties located in smaller towns around Champaign were offered, less bidding occurred and the winning interest rate was occasionally as high as 10 to 15 percent. This demonstrates what I keep telling all of you tax lien certificate and tax deed investors to do: focus on undiscovered and unpopulated areas. You will have less competition and find many more bargains.

I also noticed something very interesting. None of the investors would bid the interest rate below 1 percent. However, if you have done your research and located properties with a high likelihood that they will go to deed, you do not care about the interest rate. After all, what is the difference between 1 percent and 0 percent, especially if the property goes to deed and you do not get paid any interest at all?

Therefore, at these more popular sales, one strategy is to go through the tax sale list, find properties that look decent by inspecting them, and then evaluate if they are likely to go to deed. Look for properties that have been in tax default for a long time and/or the amount of taxes owed is high while otherwise the property appears in good condition. These properties are the best candidates for going to deed. All you need is one property that goes to deed and you can make 7 to 10 times your money.

Another interesting twist in Illinois is that you, the buyer of the tax lien certificate, must notify the tax delinquent property owner by mail, following state-mandated procedures, if you want to take possession of the property if it goes to deed. The requirement is three separate mailings by the purchaser of the tax lien certificate. What a pain in the neck! However, always remember this requirement if you are investing in Illinois tax lien certificates.

Next year I am going to attend another unpopulated county in Illinois because I want less competition and more bargains. But I am glad I went to the Champaign County tax sale because it gave me a good example of what some of you are facing when you go to highly populated areas having tax sales.

Special Bonus Information

Finally, to give you something to cheer about, my partner Michael Williams has been researching real estate self-directed individual retirement accounts, or self-directed IRAs as they are often called. We both believe this is going to be a hot area and here is why.

Most of you have probably heard of self-directed IRAs. You roll your 401k into a self-directed IRA or start one with a little cash you have and then you can invest in stocks, bonds or mutual funds. However, what is just becoming a big deal is the way the regulations regarding self-directed IRAs are written. When you review the regulations governing self-directed IRAs, your investing options are not limited to stocks, bonds or mutual funds. That is just what banks, brokers and mutual funds want you to think. Actually, you can buy tax liens and tax deeds and just about any other form of real estate with a self-directed IRA. You can even buy limited partnerships with a self-directed IRA. The only problem is that few companies offer these investing options with an IRA.

Fortunately, things are starting to change. Imagine being able to purchase tax liens or tax deeds and never paying any taxes on the earnings you make. You can do this with a Roth self-directed IRA that includes real estate investing options. Over the next month, Michael will continue researching this investing option and give me updates on his knowledge/progress.

I want to thank all of you for a wonderful year and wish you a Happy Holiday Season!

Bryan Rundell