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  • US Tax Leins

    Is the tax lien product being promoted by Phil Jones / Richmastery any good, or is it just snake oil?

  • #2
    Hi Bigcat,

    Welcome to the forum!

    There has been some discussions about this in a Richmastery thread on this forum. It's quite a long thread, but the Tax Lien discussions start around post #4027 onward.

    http://www.propertytalk.com/forum/sh...liens&page=202

    Happy reading!
    Lisa

    Comment


    • #3
      Tax Liens Are Snake Oil For Sure

      Hey Bigcat

      I'm only a little cat but I hope this helps....

      Tax liens are fundamentally an investment in money lending; you buy unpaid rates from American municipal authorities, and get the face value interest rate offered. The defaulting rate payer has to pay you back the money, plus the interest , or their house can be foreclose on. If there is a banker with a registered mortgage, the lien ranks in front of it. If the money is paid by the ratepayer on time, you get the money plus interest. If its not paid by the redemption period stated, - then the owner of the tax lien can force the bank to pay, and if they don't you can take the title of the property and strike off the mortgage. So says Richmastery - I went to their event and listened to the that ignoramus Phil Jones for two days.

      Most interesting was the accountant, Matt Gilligan. Matt's my accountant and sharp as a tack. He looked none too pleased with the tax issues presented when I bailed him up outside. He said that he had significant concerns about the tax structures pushed by Jones. He further ventured that the exchange risk was a matter of significant concern that an investor had to be wary of. He had no comment about whether he liked the investment, but said he was looking into them before GRA would endorse the product. Now he is an RMite, so its a big call for him not to support their stuff.

      Anyway I have been looking into it as I do not want to part with my hard earned cash, - without a decent business case.


      This is why I have decided its snake oil:-

      1. There is significant exchange risk that can grossly exceed the return on investment. Example: Invest $10K in tax liens, get $1600 interest at redemption time(maturity). Say it takes 12 months, and over that time the NZ dollar rises 20%. You lose $2000 in exchange loss, to make $1600. You have to pay tax in the US of say 30% ( or whatever the tax rates are) and therefore only get say $1150 after tax return, so you lose $2000 to get $1150. Given the volatility of the Kiwi dollar, - I think this is a massive and untenable risk to take.
      2. But it gets worse: Out of your $1150, you have to pay $1500 to file tax returns and pay local people to look after your company. And this is a minimal estimate - I have inquired and checked out the cost of compliance from RM's recommended tax attorney.
      3. The initial cost of getting setup is outrageous. RM want US$1200 for the LLC, that can be setup on line for US$295. Moreover an LLC company according to the accountant will trap losses in the USA.
      4. So if you lose money in the USA via an LLC, - you don't get it back.
      5. But it gets worse: they want to charge me several thousand US to teach me to lose all this money.
      6. Complexity - you end up with complex tax issues when you invest in these types of things.
      7. Location/separation - if something goes wrong, you need to travel to America to sort it out, or pay a fortune to have someone do it for you. The cost of sorting the mess will likely exceed your investment in the particular lien. EG Buy a debt of $2k, have to spend $5k foreclosing and fighting with the deed owner.
      8. This is hilarious - Brad Sugars is reported to have heavily criticized Tax Liens calling them ( and I quote) 'Shit' and saying he would not touch them with a barge pole. Apparently Phil Jones choked on his gin and tonic when Brad coughed that up to 1000 people on the webinar - I bet its edited out of the Webinar by the time it hits the RM web !
      9. Richmastery's pet accountant does not appear to trust the product. That is saying something. They are not liking this product it seems. I have a call into Matthew and intend to get his latest on it, as he said he was going to look into the commercial risks, which he had yet to form a view on.
      10. Their main speaker was prevented from leaving the US by Customs. So says their ex-mentoring coach, Sean Woods. Now why would you not be allowed to leave the country ??? Fraud, bankruptcy, flight risk to unresolved litigation, or what ?
      11. So the key professionals around this with RM don't support it.
      It is a huge pile of stinking, smelly snake oil, wasting your time and money. ( I already wasted a weekend.)

      A mountain of poo. I'm not going near it.

      Don't waste your time or money.
      Last edited by FUPJ; 08-03-2009, 11:28 PM.

      Comment


      • #4
        Thanks for your informative post FUPJ - I went to the info. evening but was not sucked into the 2 dayer - boy those guys are good at a hard sell!

        Please keep us posted when you get Matthew's report on whether he gives the thumbs up or down on Tax Liens.

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        • #5
          I've spoken to people here and in the USA, they are snake oil, complete with white shoes and wagons :-).
          Last edited by [email protected]; 09-03-2009, 12:31 AM.

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          • #6
            Did this course about 8 years ago and it is very old news guys. There are merits but dont pay for a NZ based course. It would be a 1 percenter course.

            Comment


            • #7
              Originally posted by pooomba View Post
              I've spoken to people here and in the USA, they are snake oil, complete with white shoes and wagons :-).
              I followed this with interest - went to the info evening (I would never consider doing the 2dayer) and among PJ's hype thought there was some merit in the idea. I have read the reasons against but still think there could perhaphs be something in it. I am not suggesting a big outlay only a small dabble.

              I am interested in your reasons for it being 'snake oil' as the scheme has been around for years and I have been on US forums similiar to PT and there are people on there doing it successfully.

              Comment


              • #8
                Other than this is what everybody has said, high risk, money can be tied up for years, no guarantee of profitability etc., you also have to look at what is said and what happens.

                In PJ's latest blog he says that they showed students 3000 properties for sale at 5 to 10% of their value, then says that their students deal is fantastic at 22% of valuation.

                Why wouldn't they buy such a bad deal?? Probably because the good ones don't exist.

                And the discount is off the valuation, which means nothing at the moment, and there is no mention of the taxes required etc. to hold the property. Yet this is all being talked about as "profit" instead of paper only equity, which may equate to zero in real dollars.

                It is therefore logical to conclude that the "profits" from the liens may be paper only also.


                In many states you require about a 22% yield to actually be cashflow positive.

                I can find no evidence whatsoever of Eckelman being involved with Trump as their Number 1 gloabl trainer and Tom was stopped at customs because of proceedings against him.

                Would you trust the words of these people?

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                • #9
                  Lots of tax liens for sale on Ebay.
                  http://shop.ebay.com/items/?_nkw=tax...iens&_osacat=0
                  "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

                  Comment


                  • #10
                    Or try this one for example.
                    http://cgi.ebay.com/4500-SQFT-5-Bedr...3%3A1|294%3A50
                    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

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                    • #11
                      Looks like snake oil, smells like snake oil must be snake oil.... Thanks everyone for the warnings!

                      Typical RM/Jones product - oversold and over hyped. Does anyone know whether Jones has made any investments in these himself? He has bragged about his success and the millions made investing in property but I understand he never actually did what he preached. Are these liens any different?

                      You may be interested that I went to a RM event a couple of weeks ago where PJ made a point that he was the property god as he wasn't suffering in this slump. Maybe that's because he never exposed himself to the leverage he banged on about.

                      I'm a Withers Tsang client (although I'm about to change). Spoke to them about RMs Lein product and they said run a mile - Davidson's in Newmarket said the same but they are a little backwards.

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                      • #12
                        Actually Davidsons are great. Assuming that his ratio of investing in liens is similar to property he may have as much as 5 or ten grand tied up in it :-)

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                        • #13
                          Originally posted by bigcat View Post
                          Looks like snake oil, smells like snake oil must be snake oil.... Thanks everyone for the warnings!

                          Typical RM/Jones product - oversold and over hyped. Does anyone know whether Jones has made any investments in these himself? He has bragged about his success and the millions made investing in property but I understand he never actually did what he preached. Are these liens any different?

                          You may be interested that I went to a RM event a couple of weeks ago where PJ made a point that he was the property god as he wasn't suffering in this slump. Maybe that's because he never exposed himself to the leverage he banged on about.

                          I'm a Withers Tsang client (although I'm about to change). Spoke to them about RMs Lein product and they said run a mile - Davidson's in Newmarket said the same but they are a little backwards.
                          He said that night that he had invested himself - and also repeated it in the Sunday Times post - look on Richmastery thread.

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                          • #14
                            All unprovable though mjm. After this one can be forgiven for being cynical.

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                            • #15
                              Originally posted by pooomba View Post
                              All unprovable though mjm. After this one can be forgiven for being cynical.
                              Yes agree - I was just quoting what had been said - I did not say I believed it!

                              Would like comment from anyone on ebay auctions put up - see you can pay by paypal.

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