Transcript:
Hey there, it’s Casey Denman here with TaxSaleAcademy.com. Thanks so much for joining me on today’s video – I’ve got a quick tip I wanted to share with you.
So, as Tax Sale Investors we are always looking for the best deal, right? And with tax sale investing there are many many incredible deals sold on a daily basis, it’s just finding what works best for us.
But at the core of tax sale investing is the purpose of the tax sale itself. We must remember that these properties are tax defaulted – that means the owner of the property couldn’t or didn’t want to pay the taxes. When we compare the list of available properties on a tax sale list to those on any other type of for sale list like a foreclosure list or simply Zillow, you must understand that there is a substantially higher concentration of properties to avoid on a tax sale list.
In today’s video I want to discuss three properties that you should probably run from, especially if you’re new. Now, it’s not to say that you can’t make money in some of these, but as a new investor you should probably run from these starting out. And truth be told, most veterans should too unless they’re prepared for quite a bit of effort.
The first one are contaminated properties. You probably understand that buying the old chemical plant at a tax sale is a bad idea. But there could be something a lot less assuming than that. It could be that empty corner lot where the community gas station was up until it was demolished ten years ago. Unknown to you are the leaking underground tanks that you’ll have to take care of for your friends at the EPA. With a little bit of research and digging into county records you can easily determine if a site has the potential to be contaminated. If it is, the remediation could fall on your shoulders and might be in the hundreds of thousands of dollars or even the millions. And depending on the state and how aggressive they are, citations, fines, lawsuits and other fun stuff can follow. Unless you have deep pockets or own a contamination cleanup company, it’ll be best to run.
The next one is a severely dilapidated properties. These will most likely be properties with an outstanding demolition or condemnation order. Depending on the area, the severity of this order and requirements behind it can vary substantially. Certain areas will allow you to pull a property off of either of these lists with the appropriate repairs. Others won’t, so be sure to check on your specific area. Here’s where it can really blind side new investors: I’ve driven by properties before on a demolition list or condemnation list that looked perfectly inhabitable. I didn’t see anything wrong with them. And then I come across a little piece of information that says a section of the roof in the back is missing, or the foundation is sagging, or there is an active sinkhole on the property. So be sure to do your research. Now, again, it’s not to say that you absolutely can’t make money with these properties. But as a new investor, you’ll likely be biting off more than you can choose. If you’ve ever seen the repair bill for a foundation repair for example, you probably know what I’m talking about. There’s no reason to put yourself into this type of situation starting out. My advice is to run from these properties until you have the budget, experience and man power to take them on.
The last one are the unbuildable properties. There are a variety of these, including physically or legally inaccessible properties, properties that are under water, properties described as wetlands, the lots that are too small to build on or are strips of land and the properties designated as greenspace or for any purpose other than building. There’s a time and a place and a purpose for investing in these properties – but that’s a much more advanced strategy than a new investor should take on. Often times what happens is new investors will come across these properties, and then hone in on them because the competition and cost is minimal for obvious reasons and then they’ll buy something with the plan to figure out what to do with it after they buy it. As a new investor, don’t go after the unbuildable stuff. These are the types of properties that become frequent flyers, which is a term we in the business use to describe stuff that goes through a never ending cycle of tax foreclosure. Someone buys it, can’t sell it, they get foreclosed and this happens over and over again. If you’re a new investor run from unbuildable property.
So, there are three of the properties to run from. Contaminated, dilapidated and unbuildable properties. Obviously, there are many classifications to these and there are a number of others to watch out for, but hopefully this video has opened your eyes to some of the properties that can create huge issues.
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Take care!