Sign up for my FREE Passive Income Masterclass https://www.mikewolfmastery.co/masterclass if you want to learn my unique system to creating true passive income with real estate, reduce your financial risks, and remove the day-to-day hassles of being a landlord – How To Buy Tax Lien Properties – USA vs Canadian Tax Deed Auctions
If you want to know where and how to buy tax lien properties, watch this video and listen to my USA vs Canada tax deed auctions comparison
Hi, this is mike wolf again and thanks for tuning in. This morning, I get a question from somebody named Felice from Red beer, Alberta, Canada. She heard that there is a real estate tax deed taking place in Canada and she asked why I go to Texas all the time. The answer is there are many reasons why I go to Texas all the time. Firstly, the banking system in Canada is much more conservative than the banking system in Texas. What it means is that during the boom time, the United States banks were doing what we called ninja loans, no income no job, approved. But Canadian banks were not doing that; they were a lot tighter even though they came out looking like heroes.
At any rate, how do you buy tax lien properties? What happens is that when a delinquent taxpayer fails to pay their property tax as at when due, the first thing that happens is that before it gets to the auction, the county will notify everybody that this property will be in the auction block. Anyone who has an interest in the property has the right to bail it out before it goes to auction. In Canada, if there is a two hundred thousand dollars mortgage on a property, the mortgage owner will not want to lose the property over five or six thousand dollars.
So, what they will do is that they will pay it off and go after the homeowner to collect it, but if the homeowner is unable to redeem the property, the mortgage holder will foreclose it and not the county. Because if these mortgages get wiped out in these auctions, the mortgages disappear. In the US, we have got banks that are still looking for local owners and got tons of foreclosure on their plate. They have got a lot of short sales and dealing with a lot of things at the same time. Most times what they do is called sell them notes by selling mortgages back and forth to each other.
For example, maybe the local owner originated with the bank of America, Bank of America sold it to chase, Chase sold it to Wells Fargo. This property is transferred three to four times, and somewhere along the line with all the paperwork, it doesn’t get appropriately recorded at the tittle office. The county will send notice to the bank which is not the current owner of the mortgage, and that bank will not have interest in that mortgage anymore. To shorten the long story, in most cases in Canada, the bank is going to bail it out, but in a lot of cases in the US, banks are not going to deal with it. The number one reason is that it involves a lot of work and because they are getting bailed out by the government, and the fact that they sell note.
Also, the US prices have dropped significantly on real estate which means the mortgage is worth much more than what the property worth, so the bank does not have any money for it. They know they have lost a lot of their money and they are not going to deal with it. Another thing is that when homes are going for auction in both Canada and USA, these homes are going to be advertised in the newspaper. What happens in most cases in Canada is that by the time the auction takes place, most of these properties would have been bailed out there are few properties left while many people show up.
In the US, there is a much different environment as opposed to that of Canada. That is, we have a small percentage of auction relative to the number of properties in the USA. However, in Canada, we see lots of people bidding on very few properties which up their bid to as close as market value, and it doesn’t make sense to go through all the troubles and buy these properties at market value. So, these are the reason you cannot use that strategy to buy properties in Canada. And that is why I created tax deed course which takes place in Houston, Texas, where I take not only Canadians but people all over the world and teach them how to invest appropriately in that market.
Therefore, if that is something that interests you, please let me know. I will be happy to tell you more about this course and also give you a free strategy session. And, if you find this video helpful, please subscribe to my YouTube channel. And please if you have more questions, send them to me. Because I always try to create videos to answer your questions and help as many people as possible. Thanks for tuning in and I look forward to seeing you soon.