Transcript:
The Roadmap to Starting
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m Casey Denman, a tax sale veteran and expert, the leading tax sale trainer, author of the tax sale playbook, founder of the tax sale academy and your host here on the tax sale podcast.
As always, I wanted to thank you for joining me on today’s podcast. It really means a lot to me. I’d like to also ask you to take a few second to leave a 5 star rating on whatever podcast platform you’re listening on or click that thumbs up button if you’re watching the video version on YouTube. 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, I want to talk a little about the path to get started. There are so many people who are intrigued by this business. They want to do it, but just don’t know the process. So I want to provide you with the basic roadmap that will help you start. The roadmap that will give you the actionable process you can follow to go from just learning about this business to actually investing and making money. My goal is to make it where you won’t get stuck at the starting line, not knowing which direction to head.
So, essentially this is a five primary step process. There is quite a bit to each part of the process, but it’s important to follow these basics.
The first step is to learn about the tax sale process. When you first hear about tax sale investing, you might get excited, but when you start to dig in you could very well be overwhelmed with a process that is completely greek to you. This is not something to take lightly. I always tell everyone to study a few different states and learn about the process that they use. There are a few different types tax foreclosure processes to become familiar with. A tax lien is where you’re investing by paying the taxes to the county in exchange for earning a nice interest rate and possibly fees and having the possibility to claim a property since the lien is backed by real estate. Then we have a tax deed system – this is where the owner of the property has failed to pay the taxes for a number of years – in these areas, the county doesn’t sell a lien but instead they basically hold it in house, then they foreclose the lien themselves and auction the property. As the investor, you’re buying the property. Beyond that you have hybrid states, which combine the two systems. And lastly we have redeemable deed states, where the property is sold, but the owner is provided one last opportunity to redeem or cancel the sale provided they pay the high interest and fees to the investor. That’s it in a nutshell, but obviously there is a lot more involved. Learn about the details behind these different processes. Learn what happens from the moment an owner pays their taxes late, until you can invest in it as a tax sale investor. So important to understand this.
Once you understand how the process works you can make an educated decision on determining how you’d like to proceed. Based on this decision it will direct you to certain areas, investment types, strategies and will really be the guide to your approach. I always say that if you decide to invest in tax liens, you can typically expect a slightly lower return, but you’ll also have less work since you won’t usually be required to market and resell the properties as most are redeemed and you’ll earn that interest on your money. When you invest in tax deeds, you’ll make more money but it will require more effort as you have to deal with the property, market it and sell it to realize that return. Redeemable deeds are basically a mixture of the two. So, right off the bat you should know which one peaks your interest more. Or maybe it’s even a mixture of both, which is ok as well. In most states, whatever process one county uses will be like the rest of the state. Based off of this information, you should be able to select a specific area that suits you best. I’ve got episodes about this specifically, but there really isn’t a so called best state. Everyone has different objectives so choose the best state and area that works for you. If it’s local, fantastic. If not, that’s perfectly fine as well!
The next part of the roadmap is to really understand the local area. And I’m referring to this in two different ways. The first way is to understand the process used in that specific area. Sure, it might be tax liens, tax deeds, or whatever else. But dig in deeper. What’s the exact process. When are the auctions, how are properties sold (online or in person), what types of properties are offered, what’s the competition like, what do they require. Read the county’s website, look at previous auction results, review the FAQs, ask questions to the county, become an expert on how they operate.
The second way I’m referring to understanding the area is to know the local market. I’ve said it before, but the most successful people in anything are the ones who know whatever that thing is the best. If you’re a real estate investor, your product is real estate. Knowing everything possible about real estate and the market in your specific area, is a surefire way to generate success. Just messing around here and there and guessing values just won’t work. Knowing the market, knowing the values, knowing the supply/demand . . . knowing what you’re doing when it comes to that real estate market is key. Additionally, it’s time to dig into the various research tools to begin familiarizing yourself with them as you’ll be using them in the future.
After this, it’s time to practice. And I’ve got episodes on this as well but what I want you to do is really start to go through the motions here. Locate a tax sale list and begin to analyze it. Study it, find answers to your questions about that list. Then research the properties on it. Research them as if you’re researching when you are ready to buy. Dig in, get all of the information required to make informed decision. It’s likely you’re going to be inefficient in this process at first. And it’s likely that you’re going to come across something you don’t understand or something that doesn’t make sense. And that’s ok. Determine how to figure it out. That’s the entire reason for the practice step. It allows you to go through the motions without committing money when your knowledge level might not be right where it needs to be yet.
After you’ve researched that list, go to the auction. Attend, sit down or watch online. Take notes of what stuff is selling for, what the auctioneer says, the questions asked, the interactions, determine what you can learning just by being present. This is a huge part that I really want people to participate in – go to an auction with the sole intention to learn, not to buy. If you do this, you will approach it in a manner where you’re going to pay much closer attention to what’s going on instead of worry about bidding on something. In turn, this will help to educate you just by being in the moment.
The last step is to begin. I sent out an email last week that really drove this point home – I compared it to my five year old starting kindergarten. No matter how much you try to prepare a kindergartener, that first day of school can be difficult for them. The truth is that getting started is often the hardest part for many people. And in this business, so many people get paralysis by analysis. In other words, they just study and study. Learn and learn. And I’m here to tell you that learning is such a crucial step. I’ve dedicated my life to teaching, so if anyone will talk about the importance of learning, it will be me. So yes, absolutely spend the time necessary to learn what you’re doing. But in this business, we must do more than just learn. We must start. So, once you’ve gone through the steps we’ve discussed push yourself to get started. Do the research, learn about the properties, CONTINUE learning, but start. Go to an auction ready to buy a property. Be prepared to invest. And if it sells for too much or you just get a bad gut feeling, that’s ok. The point is that you must start at some time. Even if it takes you a year before you buy your first property, start. Don’t be the person who just learns and learns, but NEVER applies anything. Learn, apply what you’ve learned by actually starting, all while you continue to learn even more and refine your knowledge and investment strategies.
Guys, I really hope this episode has helped you out. So many people become interested in this business, but their interest fades away rather quickly for a variety of reason. Write these steps down and follow this roadmap. Learn about the process, determine how to proceed, learn about the local area, practice, then begin.
Obviously, again, there is a lot to each one of these steps. This is a 30,000 foot view of what’s required, but follow this path and you’ll be well on your way.
I really hope this episode has helped you out. If you found this episode or any of our other episodes helpful, please take a few minutes to leave us a five star rating or some positive feedback comments on whatever podcast platform you’re listening to us on. Or if you’re watching the video version, please be sure to subscribe to our channel and click on that thumbs up button.
If there’s anything we can do to help you, including going into detail on each one of these five steps, be sure to visit taxsaleacademy.com. You can grab a free copy of Tax Sale Playbook while you’re there or for all the detailed, step by step information, go to that same website, taxsaleacademy.com, click on join and become a member of the academy.
See you on the next episode! Take care, bye bye.