Transcript:
3 Brutal Mistakes I Have Made
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.
Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.
Alright, on today’s podcast episode I want to discuss three big mistakes that I have personally made. The importance behind this episode is learning from the mistakes of others so you can avoid these mistakes yourself. Fortunately, these happened fairly early in my career and I was able to weather them, learn from them and come out a much smarter investor. Things happen and that’s ok, but you must learn from them when they do. But if you can avoid them entirely in the first place, that’s even better and that’s the reason I’m recording today’s episode.
Alright the first is a story about buying a house that was offered at a tax sale. Sounds simple so far. Right? Well it began that way. In one of the first areas that I started investing in that was out of town, I really went all in. I had traveled there many states away from my home, I’d do my diligence, then I’d go from auction to auction buying properties, I’d sell many of these properties while still on the road and I’d keep doing it over and over again. I did extremely well, but there were periods when my schedule was very tight and looking back, I realized that my diligence lacked. It was also a time when I was learning and didn’t have the systems in place that I do now. So, back to the story.
This particular house was a very basic, non descript home in a very average neighborhood. It was not much different than many of the other homes I had been buying. Nothing special, nothing out of the ordinary. But it was a solid money maker. I drove by the property shortly after the auction and confirmed I was able to purchase this property at an incredible price. A few weeks then went by and I had a friend who was coming to town. This was likely going to be the most profitable house I had purchase so far on my trip and I wanted to brag about it a little bit. It also happened to be very close to the route we were driving. So, I decided I’d swing by to show it off.
I can vividly remember turning down the street for the house. And then counting the house numbers out loud. This was house number 1026. I remember counting 1022, 1024 . . . . and then I saw 1028. I was a little confused, so I circled the block just to make sure I was on the right street. I was infact on the right street. Unfortunately, house number 1026, my house was nowhere to be found. Instead there was a huge back hoe sitting on my lot. It struck me that the city had demolished the house I purchased. That little house that was going to make me quite a bit of money was now gone. Forever.
As I began to look into it, I realized I failed to review the code enforcement records for the property. The house apparently had some sort of foundation issues, was deemed unsafe and was put on the city demolition list prior to my purchase. It just so happened that I purchased it and it was scheduled for demolition the following week. PLEASE let this be a lesson to you to make sure your diligence isn’t rushed, that it’s thorough and that you make sure to review the county’s code enforcement records or whatever similar department exists in your area.
The next story also involves a similar house. I had a fairly busy schedule during this time and took a drive by the home a few weeks before the auction. It looked just about like every other house in the neighborhood – pretty basic, but one of those that I knew would be an easy sell. When I drove by, I actually saw the neighbor to this property outside. She was curiously looking at me as I had pretty much stopped directly in front of her house at this time. I got out to introduce myself and speak to her. Her curiosity turned to friendliness, and I asked her if she knew anything about the house next door. She told me a few basic things about the house, then told me it was occupied by someone she wasn’t really a fan of. Neighbors have disputes all the time, so I didn’t really think too much of it.
A few weeks later I purchased the property at the auction. I got a fantastic deal and knew it would be sold in no time. I left the auction and started to head towards the house. I was going to go discuss the situation with the occupant and former owner – likely offering them some sort of cash payment for them to peacefully move from the property. Unfortunately, when I arrived to the property I was greeted by some nice yellow deportations in the form of crime scene tape. Apparently, the owner of the property knew of the upcoming auction and decided that if he couldn’t live there then no one would live there. He poured gasoline on the house, lit a match and left. My house that would’ve been easy to flip was now a burned out house with very little left.
The issue here is that I did my driveby much too early in the process. A lot can change in 3 or 4 weeks, especially when people are in volatile situations. While there is always the risk of property damage, you can help to mitigate it’s impact on you by performing a final driveby as close to the time of the auction as possible. I certainly wish this is something that I would have done for this particular property.
The last of the three brutal mistakes I’ve made involves my failure to adjust. When I got into real estate and ultimately the tax sale business it was in the early 2000s. I was doing extremely well and the money came very easily to me. I thought that I could do no wrong and had a few strategies that I worked over and over again. Then 2007 and 2008 hit me, along with the recession. Those strategies that had worked so well for me, stopped working altogether – seemingly overnight. The problem was that those were the only strategies I knew. So, well into 2008 I was still trying to take the strategies that had worked in a booming market and apply them to a down economy. Unfortunately I didn’t realize that this wouldn’t work until I had burned through quite a bit of cash, experienced quite a bit of stress and gone through a lot of aggravation.
A couple of years into the recession, however, I started to make adjustments. They were minor at first, but I began to gradually modify my strategies more and more. The result is the system that I use to this day that allows me to do well no matter the current economic conditions. That situation is also a very constant reminder to make adjustments quickly, follow systems and operate a business that can thrive in any economic climate. It’s 100% possible and is something I’ve been doing ever since.
I truly hope that these three stories have helped you out. As tax sale investors there are going to be times where we are put in situations of adversity. Where we face challenges that seem, in some instances, to be career ending. What I urge you to do is to use each of these stories, and stories of your own that you find yourself in, as opportunities to learn. Focus on what you can do differently, what you can do better, how YOU can grow from every point of adversity that you face.
If you’re able to approach every potentially negative situation, big or small, as a learning opportunity, you will discover that you can do much more than you thought possible and you’ll see success much faster as a tax sale investor.
Again, I truly hope these stories have helped you. Each one of these stories is discussed, in much more depth, inside The Tax Sale Playbook. If you’d like to get a free copy of the book, just head to taxsaleacademy.com, all that we ask is you cover the nominal shipping cost.
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We’ll see you next time, right here, on The Tax Sale Podcast. Take care. Bye bye.