Tax Lien Investing Explained: How to Buy Properties for Pennies on the Dollar

Ken Letourneau (00:00)
Well, okay, so tax deeds is when we’re going to be buying the property, the tax liens are the you’re gonna be being a lien holder on the property. Okay. I believe right now it doesn’t matter if the market is good or the market is bad. Because in there’s always gonna be people who don’t pay property taxes for some reason. Okay. And you’re either gonna get a great interest rate, which could be up to like a twenty five percent.

interest rate, or you could possibly get a property on pennies on the dollar.

Scott Bursey (02:02)
Welcome back to the Real Estate Pros Podcast, powered by Investor Fuel. I’m your host, Scott Bursey. Glad you’re with us. Today we’re delighted to be joined by Ken Letourneau, widely recognized in the real estate world as the Tax Sale Master.

With over twenty five years of experience in the industry, Ken has spent the last fifteen years hyper focused on the ins and the outs of tax sales, tax liens, and tax deeds. Listeners, you can expect to walk away with a clear understanding of how to navigate these often misunderstood investment vehicles to build real wealth. Ken, welcome to the show.

Ken Letourneau (02:36)
Thank you very much for inviting me, sir. Thank you.

Scott Bursey (02:38)
It is awesome. Awesome having you here, Ken. And to help our listeners get up to speed, please give us the ninety second highlight reel of how your career ignited and where you’re pouring your fuel now.

Ken Letourneau (02:49)
Well, like said, I’ve been doing real estate investing since the nineteen nineties. And I was one of the success students of Carleton Sheets and the Robert Allen, which is a no money down gentleman. Okay. And I’ve flipped houses, I’ve bought and hold houses, I’ve wholesale houses, I’ve talked done all those types, but I’ve really been hyper focused in the tax lien and tax deed business for the past fifteen years and really detailed in the past probably two years specifically.

Scott Bursey (03:19)
What really caught my attention about you was the way you’ve been able to explain such a complex niche and turn it into a repeatable process for so many investors. And building off that, Ken curious to know, regarding your strengths in the tax sale market, what is the one specific skill set that has consistently kept you ahead of the competition over the last fifteen years?

Ken Letourneau (03:42)
I think probably one of the things is being focused and getting and being very focused of my niche because tax lien and tax deeds is a niche that most people heard about, but they don’t know how to do. So that’s been really myself, I would say.

Scott Bursey (03:57)
Thank you for highlighting that. And digging into potential weaknesses. Many new investors struggle with the due diligence phase of tax liens. What is the most common mistake you see them making in those early stages?

Ken Letourneau (04:10)
I probably believe that they, I don’t like to say most people believe that you can go to an auction with no experience or watching the basics and expect to compete with people who’ve been doing it for 10 or 15 years. Okay, or the large hedge funds, because hedge funds are very, very big in the tax lien and tax deed investing.

That’s one big thing that I see is the lack of knowledge and jumping into something before having the knowledge to do it.

Scott Bursey (04:44)
And Ken, we’re interested in the opportunities you’re seeing right now. With the current market shifts, where do you see the most untapped potential for someone just starting to look at tax deeds?

Ken Letourneau (04:56)
Well, okay, so tax deeds is when we’re going to be buying the property, the tax liens are the you’re gonna be being a lien holder on the property. Okay. I believe right now it doesn’t matter if the market is good or the market is bad. Because in there’s always gonna be people who don’t pay property taxes for some reason. Okay. And you’re either gonna get a great interest rate, which could be up to like a twenty five percent.

interest rate, or you could possibly get a property on pennies on the dollar.

So it really doesn’t make effect about if real estate is going up, if real estate is going down, if real estate going sideways. You’re buying them so low that anybody would purchase the property from you.

Scott Bursey (05:39)
Ken, looking at the threats, how are you advising your students to protect their portfolios against changing legislative landscapes or sudden tax sale policy shifts in your view?

Ken Letourneau (05:51)
Well, the big key that you have to understand is that you’re always gonna know what type of laws that could be coming up that could affect the industry. That is the big thing. They’ve had some current laws that came up that did affect the industry, but right now I tell people I said, look, if you’re gonna buy a tax deed on a property, you’re gonna own the property at the end of the auction.

End of the auction, you’re going to own the property. So it doesn’t matter if they change the laws, two weeks later or three weeks later or a month later, whatever, because you you own the property. Okay. Lien could be a big difference because you could wait six months, a year, two years, three years, possibly to get the property, or to get your interest rate if the owner does that. So that’s the key. If you do infer deeds, you really don’t have to worry about it because you’re going to own it right now. Liens you do have to have concerns or redeemable deeds. You have the concerns.

Scott Bursey (07:31)
Ken, regarding your tactic for long term growth, what is the biggest pivot you’ve made in your strategy that allowed you to scale your success in the tax sale niche?

Ken Letourneau (07:41)
Well, I think what I’ve realized here is everybody wants something tomorrow. And most people do not want to wait for the long term. And I always tell people, I say, look, if you want to make money tomorrow or the week, you understand you’re going to make only a certain amount of money. But if you put your money in the right property for the longer term,

Two years, three years, because as values have been going up, your property taxes really haven’t been going up that much. Okay. And so your return is going to be significantly much higher if you are willing to wait for a longer period of time than just to go in there and say, okay, I need something in 24 hours or 48 hours or something.

Scott Bursey (08:27)
That Ken, if you could walk us down this path, what does your professional network look like right now?

Ken Letourneau (08:33)
Professional network. Well, I network with a lot of business owners, you could say, So I do go to a lot of Chamber of Commerce events. I’m a member of like four different chamber committees, one in Bellflower and Paramount and Whittier, okay, in Norwalk. So I do that. I do attend real estate investment club organizations, but I do a lot of social media. Okay. In other words is I do five videos every day on my platforms of education. And I post pictures of education of about the tax sales. So I post one or two of that. And then a lot of times I’ll go live for 30 minutes, like on a on a social media platform to do education.

Okay, to my audience. So that’s really where I’m communicating a lot in those little areas. Okay.

Scott Bursey (09:28)
Appreciate you highlighting that. Ken, if someone came to you today with a clean slate and a modest amount of capital, what is the very first step you would have them take to secure their first, let’s say, profitable tax sale deal?

Ken Letourneau (09:42)
I probably would tell them, ask them two factors, okay, which is what people always ask me all the time. One, how much capital do you have? Okay. Because if you come with say, well, I have some capital, well, how much is some capital? Is some capital 500 bucks or is some capital $50,000? That makes a big difference. Okay. And if you have the lower amount of capital and you don’t have maybe investors or somebody else.

To come in, you’re gonna do a tax lien auction. You’re gonna go there and you’re gonna pay 200 bucks, which is what I just did in the state of Mississippi. I paid $300 for properties that are worth $250,000. Okay, but I’m just a lien on the property. I don’t own the property right now. Okay. But if I’ve got more money, $30,000, $40,000, $50,000, or if I want to do that.

Then I can go to a deed auction, which is what we did in the state of Kansas, Then we bought the property that day. And then 30 days later I get the deed. So now I bought a property for maybe $2,000 that might be worth $150,000 on a deed auction, but I had more capital than $500. Okay. That’s the big, big thing that I have people ask me all the time. And I said,

What is your capital? Are you willing to invest? And two, are you willing to go to auctions in person or do you only want to do it online?

Scott Bursey (11:49)
That is some solid advice for anyone ready to take the leap. And Ken, you have given us a tremendous amount of solid advice here today. But is there any additional words of wisdom or golden nugget or two you could leave with our listeners?

Ken Letourneau (12:04)
I always tell people this,

There’s two things that will happen to you tomorrow. And this is my advice to everybody. One, you will live, or two, you will die. Those are two things that will happen to every single person somewhere in the world. And you make your decision. Do you want to continue to grow or you want to stay where you are?

Okay. And most people are going to stay where they are. And there’s no hard feelings about that. But my my wisdom is basically saying, hopefully tomorrow is a new day. You wake up, your eyes open up, and you can make a decision. Which way do you want to go that? So that’s my big advice there.

Scott Bursey (12:44)
Ken, thank you for that. And for those of our listeners that want to keep this conversation moving, stay in your lane or collaborate with you, what is the best way for them to reach you?

Ken Letourneau (12:53)
They can go on our social media platforms, okay, which is under The Tax Sale Master. (@thetaxsalemaster) Okay. So I’m on Facebook, I’m on Instagram, I’m on TikTok, I’m on YouTube, I’m an X, and that is the best way to follow us, subscribe to us, reach out to us, communicate with us, get some education, get knowledge about us.

Scott Bursey (13:14)
Ken, thank you for joining us today on the Real Estate Pros Podcast.

Ken Letourneau (13:18)
Thank you very much for inviting me.

Scott Bursey (13:20)
This has been an absolute master class. And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests, just like Ken, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.

Ken Letourneau (13:40)
Thank you.