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Hey Everybody,
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m Casey Denman, a tax sale veteran, expert, and trainer, author of the tax sale playbook, and founder of the tax sale academy.
Thanks for joining me on today’s podcast, and as always, at the conclusion of this podcast, if you’re looking to learn more about investing in tax defaulted real estate head to taxsaleacademy.com. That’s taxsaleacademy.com.
On today’s episode, it’s story time. The story I’m about to tell you will intrigue you, excite you and will probably lead to lots of questions. And maybe even some doubts.
First off, if you’ve followed me for any period of time, you probably know that I won’t tell you that there is an in quote “best” state. Because there isn’t. Every state is different for every person. The best area for me isn’t necessarily the best area for you.
You’ll also probably notice that I won’t list the areas that I am actively investing in or have in the past. And the reason might surprise you. This has absolutely nothing to do with limiting competition. There are plenty of properties to go around. The reason goes back to the fact that what works for me might not work for you and I don’t want anyone to flock to the the areas I bid in or have previously bid in, just because of me. Again, what works for me might not work for you.
Likewise, what worked at one specific time for me, might no longer work for me. And we’re talking about bidding strategies, specific counties, property types, that kind of thing.
In fact, the story that you’re about to hear occurred in a state that made minor tweaks to their laws a few years after this took place and I haven’t invested there since.
So listen to the following story with the intention to hear about an incredible situation and to learn, not with the intention to go there and wait for it to happen to you, because it probably won’t.
Alright, let’s go back to September 2011. Almost seven years ago to the day.
Let’s start with a few of the basics first . . .
In one specific state I invest in, they offer properties with no reserve on occasion. So if anyone bids the minimum bid, then the properties will sell. And that minimum bid isn’t taxes, insurance and penalties like many other states. The minimum bid in this area is $20, $50 or $100. It’s a nominal amount.
This particular county also offers hybrid bidding. So you can bid by mailing in an absentee bid form, you can bid by sitting in the room and you can bid through online bidding. Attending the auction in person, if possible, is always a preferred method of bidding. It allows me to get a feel for the room, the properties, listen to chatter, talk to the auctioneer and county staff, and just gives me a better feeling of what’s going on.
So, that’s exactly what I did. There were quite a few auctions in the area that week, so I rented a waterfront condo for the week about 30 minutes away from this specific auction.
This county had gone through some economic challenges a few years prior and had loads of tax foreclosures available for sale. I was confident that it was on the rebound and found twenty different properties that I was interested in purchasing. They ranged from small lots to a 3 acre tract, to a bunch of single family homes that needed to be rehabbed.
Since I was in the area and so close, I drove to and registered for this auction. It was being held in the conference room of a local two star hotel, which wasn’t uncommon for the area. Because there were so many foreclosures to be auctioned off, when you registered, the county had you choose the top three that you were interested in.
I attended the auction with another investor friend of mine who was in the area and after we registered, we took our seats in the nondescript conference room.
It was a noon auction that began like most auctions do. The auction began by the rule being read. There were quite a few people in the auction room, and there were several questions. By the time the actual auction began, it was around 12:20.
The auction started with the most popular properties, based on those that were circled during the registration process. These were 25 or 30 properties that it seemed like 90% of the room came for. These were the properties that had loads of action and went from $20 to $20 and $30 thousand dollars. It seemed like everyone in the room had bid on these properties and each one took 5-10 minutes to auction off.
He structured it this way so that bidders would be able to bid on the properties that they wanted and then they could leave. There was no reason for everyone to sit through 10 properties being read aloud with no bids for every one property that someone might have been interested in.
So by around 2:45 or so, we had gone through all the popular properties and the room had started to clear to about 20% of the original crowd size.
After he had auctioned off the popular or circled properties, he asked which other properties the remaining bidders were interested in. The other bidders shouted out some numbers and he started to write them down.
My approach was somewhat different however, as I ignored his requests. I wasn’t concerned one bit about how long I’d be at the auction and I didn’t end up requesting a single property to be auctioned off. My hope was that by the time all the popular and requested properties were auctioned off that the room would be nearly empty and then whatever remained that I wanted I’d have virtually no competition.
I knew that after he auctioned off the popular properties, he’d work his way down the list to sell the remaining properties as a formality. And I was fine with spending all day there if I had to, if it meant little competition.
As luck would have if, a good portion of the properties I wanted were still available.
After he went through the first round of the most popular properties, then the second round of the special requests from the bidders, he started from the top of the list and worked down.
By this time there were less than a dozen bidders in the room.
I purchased a few properties from $100 to $150 each. I had hit the jackpot with these properties. I started to make calculations and couldn’t believe the deals I had gotten on those properties from my little strategy. And we had ONLY just gotten started!
Then, just as I was really getting into it, everything seemed to change. I see a member of the hotel staff in a black uniform with a tie walk into the room. You could tell by the way he was dressed that he was a manager of some sort and you could also tell he was quite nervous.
He walked up to the auctioneer’s assistant and pulled him aside for a few minutes. And you could see what looked to be a heated conversation.
Then the auctioneer’s assistance whispers something to the auctioneer. Then the auctioneer says he is going to take a water break. Then the auctioneer, followed by the auctioneer’s assistant and the hotel manager file out of a door into what appeared to be back room of some sort.
About five minutes later the auctioneer walks back in. He tells us that there had been a scheduling issue with the conference room. The auction company has inadvertently booked the room for just three hours. By now it was 3:30, they were 30 minutes over their allotted time and there was a wedding scheduled that evening and they needed to prep the room. The auctioneer apologized and said that he had hoped everyone was able to bid on the properties they wanted and that they had to end the auction early. He didn’t seem like it was that big of a deal to them, since all of the requested properties had been previously offered after all. Then without any explanation or saying much else, they stopped the auction and started to break everything down. At this point, I realized I didn’t even get to bid on the majority of the properties I wanted – my plan of ignoring them when they asked for requested properties, I guess had backfired. I thought I wouldn’t ever get a shot at these properties.
As I was sitting there as the room was being broken down around me, with I’m sure a very confused look on my face, I began to wonder what would happen to the rest of the properties. Would they reschedule or what? If so, when would they reschedule it for? Maybe I could attend that auction? But I was leaving the state in just a few days and maybe I’d miss them. So many questions were running through my head.
However, the properties were published and advertised as required by state law as being sold that specific day, and I knew it’d be such a nightmare for them to reschedule and republish them. As I started to gather my stuff I over hear the auctioneer telling his assistant that they have to sell the properties today and since they can’t use the conference room to just sell them to the online bidders. By this time, the auction has been stopped for more than 20 minutes. After some back and forth that I couldn’t hear, the general impression that I got was they were going to auction the properties online once they could figure out a place they could do it from since they were being kicked out of their room.
Since there were a number of properties I still wanted that had not yet been auctioned and since I knew they were going to auction off the properties online, I knew I had to bid online somehow. But I left my laptop in the rented condo 15 minutes away.
So, I hopped into my rental car, which oddly enough happened to be bright yellow. That’s a story for another day, but once I hopped into my bright yellow rental, I drove as quickly as I could, safely of course, back to my rented condo.
I ran into the door, opened my laptop and then realized that the auction hadn’t even started back up yet. In fact, the only thing on the auction dashboard was a “we’ll be back soon” message that looked to have been posted when the auction was originally paused.
So, I left my screen open and assumed I had missed the auction or something changed with how they’d finish the auction off.
After I had been at the condo for about 30 minutes the auction suddenly started back up. It had now been over an hour since the auction had been paused – all without any messages or warnings besides “we’ll be back soon.”
The first few properties weren’t of any interest to me. But I did start to notice something. There was no one bidding . . . on anything and all the properties were going unsold. I thought it was odd and that perhaps the bidding software wasn’t functioning as a result of the auction being moved around.
This continued until we reached a property that I wanted. The bidding opened at $20 and I clicked the Bid button. I saw the screen flash, the leading bid box said $20 and it had my name listed as the high bidder. Then it flashed Going Once, Going Twice, Sold. I bought the property for $20.
I couldn’t believe no one had bid against me. It was just unreal and really didn’t make any sense.
Then a few more properties I wasn’t interested in were offered, there were no bids and they went unsold. Then another one was offered that I wanted and I was the first bidder at $20 and like before, I was the only bidder and won the property for the opening bid of $20.
Then a message appeared on my screen. Whoever was running the auction software typed my name specifically and asked what properties I was interested in. I responded with a bunch of the properties I wanted and then he began to offer those in order. I’d place a bid, then the property would near instantly be posted with Going Once, Going Twice, Sold to Casey Denman for $20. It was like he pressed the Going One button as soon as I placed my bid.
Then it donned on me. That’s exactly what he was doing. I was the ONLY person bidding. In fact, I was probably the only person that was logged into the software from the way it was turning out. Apparently after the auction ended and there was a long gap of time with no activity and every other bidder left. Yet, they still had to sell the properties or at least go through the motions and offer them for sale in order to follow state laws.
The rest of the properties that I wanted came up for auction, I was the only bidder and paid $20 for each one and could not believe what was happening. After the last property on my list was offered, he posted another comment: “Any more, Casey?”
I responded with no, but thank you and have a great evening. The rest of the properties went through the motions and were offered but went unsold. These were the ones I didn’t want anyway, but I still left my screen open to see if anyone else would login to bid and not a single person ever did.
By the end of the auction I walked away owning 20 of the 20 properties that I was interested in. A few were purchased before this, technical/delay/whatever you want to call it issue. My purchase prices were four properties for $100 each, two properties for $150 each and fourteen properties for $20. This $980 investment consisted of about half vacant lots and half homes in less than stellar condition.
It was the single biggest day to that point and since in my tax sale investment career. I had never acquire so many properties at one time for so cheap. In fact, a $20 property has only happened once or twice in my career up to that point.
It was an absolutely incredible day. It was the type of day where you didn’t know whether to celebrate endlessly or if something crazy was going to happen and you’d lose all the properties on a technicality. In the end, it was a highly profitable day . . . to say the least.
I tell you this story not to brag. The truth was, it was a complete fluke. That day was the result of me being it the right place at the right time and I saw the right opportunity. I wish I could tell you how much strategy I used, but besides listening and being there, it was just a matter of being in the right place at the right time.
And I don’t want you to ever expect this in your business. Because odds are, it will never happen again. It didn’t happen to me in the hundreds of auctions I attended before that day, and it hasn’t happened to me in the hundreds of auctions I’ve attended since that day. It was a one in a million type opportunity.
But a lot of what we do in this business is being prepared to take advantage of opportunities when they arise. It’s putting yourself in the right place at the right time with the ability to pounce on an opportunity. This was the specific opportunity I got that day.
Hopefully, what you get out of this story is not a cool story or a “you’re so lucky” type attitude, but hopefully what you realized is that I was in the right place at the right time. And what I’ve come to realize is that the more you put yourself in these types of situations where opportunities might arise, the better. Obviously, you can’t control that the auction company gets kicked out and everyone leaves the online platform so you’re the only bidder. But you can control the fact that you were there. Prepared. Ready to buy.
My suggestion is to get involved. Research properties. Attend auctions. And most importantly learn. Look at every single situation as a learning opportunity. Then, be ready. And when an opportunity comes up, take advantage of it.
Get up, show up and be ready.
That’s all I’ve got for you today folks. I hope you enjoyed my story of the Best Day of My Life As a Tax Sale Investor.
As always, if you’d like more information on buying and selling tax defaulted real estate, head on over to TaxSaleAcademy.com. That’s TaxSaleAcademy.com – and while you’re there be sure to grab your free copy of my new book, Tax Sale Playbook.
Take care folks. Bye bye.