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Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m Casey Denman, a tax sale veteran, the leading tax sale expert and trainer, author of the tax sale playbook, founder of the tax sale academy and your host here on the tax sale podcast.
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.
Today, we’re talking online investing. This is such a popular topic, but is also one that many people just don’t understand how to execute properly. If you’re familiar with me, I live in the North Central Florida area. But the truth is that most my investments are NOT in the North Central Florida area. Of course, you also probably know that I teach other tax sale investors which takes up quite a bit of time. And of course, I have a young son, which can also take up quite a bit of my time. Add of these things up and by now you probably know that I don’t spends months and months on the road going from auction to auction. I can thank the usefulness of the internet for this.
Now, it didn’t use to be this way. If you’ve ready Tax Sale Playbook (if not, get your free copy, link in the show notes). But if you’ve read the book, you know that I used to go from auction to auction on the road. I spent more than month straight away from my home one year. Actually closer to a month and a half. Drove thousands of miles and stayed in lots of hotels. And this actually wasn’t really all that long ago.
But in recent years the tax sale industry has started going more and more online. We’re talking tax lien auctions, tax deed auctions, OTC properties, the entire industry. Thank goodness, right?
Now I’m a fan of in person auctions because it limits competition and some things you just need to be there for. But I can’t be in more than one place at a time. If I’m sitting at an auction, then I’m at one auction. If I’m in front of my computer screen, then I can attend multiple auctions at once and I frequently do.
So the question always gets asked, can you really invest in tax defaulted real estate using ONLY the internet. The answer is Yes. We’ll get to the caveats and limitations momentarily, but the answer is yes.
First off, bidding online is easier than ever. You can create an account, logon, perhaps make a deposit or provide a credit card number and submit a bid. These might be proxy bids or they could even be live bids. I’ve even been at many auctions where I’m bidding online against people who are sitting in an actual auction room bidding in person. So, from a buying and bidding standpoint you can absolutely do it only online. Obviously, you’re going to be limited to those counties that do allow online bidding, but if they allow it, it’s easy.
So that leaves us with the next most important question. Now that we know you can bid online, can you do everything else that’s required online only? You can sell, that’s for sure. Heck, most people selling properties that are in their same city turn to the internet when they really want to get properties sold. So buying and selling online are easy. We’ve established that.
What else is there?
Research. The bulk of this business is built around research. It’s the key factor for the easy stuff. It’ll tell you what you should buy and it’ll tell you how much you can sell for, or even if you can sell it at all. Your research = your results. So, is it really practical to be able to do everything online?
It’s important to understand that the initial research we do is online no matter where the property is even located. This helps us weed out the large percentage of properties we’re not interested in and helps us to focus on the small percentage we might be interested in. Once we’ve cut down the initial list, we start digging deeper . . . online, of course. We do this to be efficient and to make sure we are wasting time viewing properties that we wouldn’t want in the first place. So, the largest portion of your research is online.
But, from here is where we start meeting limitations. You can do a lot online. But eventually you’ll meet limitations. Some counties will simply have lousy online resources. And that could be the first limitation you face. There could be some specific properties you just can’t locate enough pertinent information on. So, there are certainly limitations. Regardless of how much information you find online, you’re eventually going to want more information.
You’re going to need to verify that information somehow, of course. Online records are occasionally inaccurate and must be verified in other ways. And there are a number of ways this could apply. For example, in many areas it can be extremely difficult to determine if a property is low lying. You can’t tell if that otherwise beautiful property has ten dumptruck loads of trash dumped on it. You can’t tell if that house is still standing there or if it burned to the ground last week, I’ve had that happen before, by the way. There are just so many things you can’t tell by looking at the computer screen.
Essentially, all we do with this research is attempt to tip the scale in your favor. That’s all we do with any investment – the more we know about it, the more confident we are investing in it. When we start, we know absolutely nothing about the property, which means it’s incredibly risky. Then we start learning more and more. And as we learn more and more and start to like what we see, we start to mitigate that risk every step of the way. Online research is definitely a large portion of mitigating that risk.
But eventually, in order to eliminate that risk entirely you’ll need to get eyes on the property.
Now, many investors can and do invest without physically seeing the real estate. And if you factor in the risk to reward of this situation and if it meets your objectives, I’m certainly not here to judge. For some investors, the online research that they’re capable of doing meets their risk tolerance. They’re perfectly fine with it. There are also plenty of situations where you believe you’re investment in the property is so minimal, that there isn’t too much risk. Let’s say your buying a $1,000 tax lien on someone’s primary residence that is worth a few hundreds grand. Odds are that the lien will get redeemed, you’ll earn your interest and you can move on. So, if you’re confident with the risk, then that’s your prerogative.
My suggestion of course, in order to eliminate as much risk as possible is to get eyes on the property. There are two ways to do this. This first one still requires a little risk – that’s because you’ll be hiring someone to help do this. I’ve got a workshop on this in the academy, but essentially you’re hiring a local scout to help out. You’d pay them a very nominal amount, which could be as low as $5 and in exchange they’d take a look at the property for you and give you a summary report back. So you start reducing the risk. If there’s something on the property like trash, or if it’s under water or the house burned down, or whatever, they SHOULD be able to spot it for you and tell you.
Should being the key word there. And that’s where the risk lies. Depending on the scout you locate you’ll still have some risk. The only other option is to view the property yourself. I know it doesn’t sound all that appealing, but that’s the only way to eliminate the most amount of risk after you’ve done the other research. Your own two eyes are always the best. Of course, it will likely be cost prohibitive in many situations so make sure you’re strategic about it.
So there it is, there’s your guide to online only tax sale investing. It can 100% be done. The fact is that you can easily buy and sell properties online. It’s convenient. It’s easy. It’s cheap since there’s no travel. And you can watch 20 times the numbers of properties get auctioned off. As we mentioned though, the research side, will require some some planning and potential risk tolerance depending on what you’re looking to do.
Hopefully this has helped you out today. Obviously, this is just a brief overview of a much more complicated topic. When you’re ready for me to help fill in the gaps, I highly suggest picking up The Tax Sale Playbook at TaxSaleAcademy.com, the book is free, just cover shipping. And of course to learn the step by step comprehensive approach with every single detail, you’ll want to take advantage of The Tax Sale Academy. And you can join by going to TaxSaleAcademy.com and clicking on join.
And as always guys, if you did enjoy this episode we’d really appreciate it if you take a few seconds to leave us some positive feedback and a five star rating. We read and notice every positive comment and are so thankful for those who have taken the time to do so already.
I really hope this has helped you out today. Take care. See you.