Transcript:
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, 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.
I’ve got an awesome episode for you guys today. It’s an episode I truly hope you listen to and take to heart. This is one of those episodes that will save you thousands or potentially tens of thousands of dollars.
We’re talking about beginner mistakes. I’ve mentioned it before, but I always attract beginners who have made mistakes. This usually puts me in a very difficult position. Don’t get me wrong, I love helping others. I’ve devoted much of my life to the service of other people in this business. And there is nothing wrong with seeking help. That’s actually a very wise decision. But for the ones who come seeking a solution to a difficult problem, it really puts me in the position of being the bad guy.
I get emails all the time about mistakes made by complete strangers. I’ve heard stories from other investors. I’ve heard stories from auctioneers. I have made mistakes myself. But at the end of the day, when I really sit back and analyze all of these mistakes, they really fit into three categories that closely resemble one another, and all of it revolves around the failure to understand something.
So, let’s talk about those three categories. We’ll call these the three P’s that contribute to the poor performance in this business. These have been used throughout the years in a variety of busineses, so I’m not talking credit for them by any means. But as you’ll see, when we twist them to tax sale investors, everything becomes extremely clear.
The first P is process. Within a few minutes, you can probably gather some sort of idea about what tax sale investing IS. When you google tax sale investing, tax lien, tax deed or you stumble across maybe a video or post, it’s easy to figure it out. It’s easy to learn that tax sale investing is the business of investing in properties that are tax foreclosed. An owner doesn’t pay their taxes, they lose the property. It’s easy to find out what tax sale investing is . . . . or is it? And therein lies the problem.
One of the biggest beginner mistakes involves those you THINK they understand the process, but don’t. They don’t know what they don’t know . . . and that’s pretty darn scary to be honest. Let’s me give you an analogy. My five year old has a hot wheels truck. You know, the little battery powered kid size vehicle you charge up and they drive around. He’s pretty good at driving it, I guess? I mean he doesn’t run into anything most days. So, he thinks he can drive. That’s driving to him. So a few weeks ago we were in the mountains for vacation. From time to time I’ll let him sit on my lap and turn the steering wheel on our private drive. He thinks he’s driving my truck. A few days into vacation my son asks me to sit in the passenger seat so he can drive without help. He insures me that he knows how to drive. He can’t even reach the peddles, right? But he thought that driving his hot wheels is equivalent to driving a full size, real vehicle. Now, to an adult it seems silly. To a child, why isn’t it the same? Both vehicles. Both accelerate and slow down. Both steer. It’s the same to them.
This is where it comes full circle. To an experienced investor, we know that tax sale investing is more than just buying and selling tax defaulted real estate. But to a new investor, that’s ALL it is.
I’ve published a few books about tax sale investing, and one is book I complied called The Tax Sale Law Guide. Laws are just one factor of the tax sale process, ok. But, let me explain this to you. Every state has their own set of laws to follow. The delinquent tax payer follows them, the county follows them, the investor follows them; everyone in this process must follow these laws. Single spaced, and in fairly small font, this encyclopedia of laws makes up 1,200 pages worth of laws and process that must be followed. 1,200 pages! Almost 7 pounds worth of paper that outlines this process. Now, that’s just the laws. We can add in strategy, marketing, auctions, funding, selling, titles, and about a million other things that must also be understood.
Many people tend to do this for a variety of things in their life. We have those that “know” what the doctor is going to say when they don’t feel good – they know that they’ll get an antibiotic and get some rest. Others are experts at golfing, although they’ve never had a lesson and are fairly lousy. One of my favorites are the at home DIYers that think they are experts in stuff, that, well, people like me have to hire contractors to go in and repair after the fact.
Now, there’s no problem trying your hand at something. Especially if there are no serious repurcussions. If you want to try your hand at gardening or golfing, or whatever, go for it. But when there are serious repurcussions, financial repurcussions, it’s best to really know what your’re doing.
Just as my son would wreck a real vehicle and potentially hurt himself and others, if you fail to fully understand what goes on in this business, if you fail to educate yourself beside the one sentence definition of tax sale investing, you’ll likely wreck your investment or, worse, your finances in general.
Solution: Learn. Take the time to read the laws in the area you’ll be investing in. Ask questions, watch videos, read books, listen to podcasts, go to the county, get information, attend an auction, find a mentor, gain experience by practicing. These are the ways you can learn what you’re doing. These are the ways you can get past the one sentence definition of tax sale investing. These are the ways you can push forward confidently and armed with the required understanding of the process.
Now, let’s talk about the second reasons for a beginner mistake. They lack an understanding of the product , the asset they’re investing in, the real estate. And oh, my goodness, this one runs rampant. I did a video a few months back on YouTube where I analyzed a mistake that a tax deed investor made. This gentlemen thought he was purchasing a villa worth a couple hundred grand, when he was actually only purchasing a 1 foot strip of land. I did a case study and pointed out a number of major red flags that this investor should’ve caught. This particular story received national and even international coverage and thousands of comments across many different news sites. I personally received dozens of emails and DMs asking for my opinion, which is why I did the video analysis.
But, here’s the reality behind it: This happens EVERY SINGLE DAY. MULTIPLE times a day. For whatever reason, this story had some media traction. But this happens daily. I can’t stress that enough. Every single day, a 1’ strip of land is sold somewhere in the US. Or maybe it’s a retention pond. Or a landlocked parcel. Or a contaminated parcel. Or something that is otherwise seemingly useless.
This is NOT Realtor.com or Zillow. Where you can browse to the site, and buy something based on a description or what you THINK you see. And then if you screw up, you can just blame someone else and sue them. This is a business that follows a process. That process, as we discussed is dictated by state law. This means that the county or state will sell whatever they’re required to sell. It also means that their job, their responsibility to the tax payer is to follow state law in selling that property. And I have yet to see any state laws that require a state or a county to market a property in a way to make it easy for the investor. In fact, every single state law is designed to protect the county, the state, and the process. It’s not designed to protect YOU as the investor. You benefit from it on a secondary level.
So it is your responsibility to take a parcel number or legal description and determined what it means. They county sells the legally described real estate or a lien attached to it. The same legally described real estate that is tax delinquent. That’s about as far as it goes. From there, you get the privilege to decipher what it means. This means that regardless of what they do provide, even if it’s nice colorful pictures, you start from ground zero. You take the basics, you take what state laws requires them to sell and research it.
I have a saying in The Tax Sale Academy; Your research = your results. The accuracy of your research is the surest way to either fail or succeed in the tax sale business. And this is the most time consuming part of it. This is not something to take lightly. I say that you should never buy a property unless you know everything possible about that property and, most importantly, what you do know about that property is, in fact, accurate. It’s not based off of a picture on a property assessor’s report like our friend who purchased that strip of land.
So, here’s the solution: Learn. Learn how to research properties. Drive around where you live, match what you see with your eyes to the online research you see. Do this every where you go. Then learn about online research some more. Find all the different resources that are at your disposal and learn how to use them. Then look at real estate listings to begin to understand valuations, see what’s sold, what’s on the market, what’s moving, what’s stagnant, learn the area and the market. Then, continue learning every single day how you can better understand everything about your asset, about the real estate you’re buying.
The last one we’ll be discussing is, well, you. And this one has more of an impact than you think. There are a number of different directions we can go with it that all revolve around you. Your mindset, your intentions, your effort.
Let’s discuss effort. YOU will be required to put forth effort. This is not a lazy person’s business. You don’t just roll out of bed, stumble into an auction and make $30,000. It doesn’t work like that. It requires effort and many new investors either don’t want to put forth that effort or they grossly underestimate that effort. And when they do this, it doesn’t just mean that they won’t be able to buy anything, it actually leads to bad decisions like, the things we’ve already discussed. They research is garbage and they end up buying garbage. Or they don’t understand the process and laws and they end up in a bad spot.
What about your intentions? If you intend to make seven million dollars and you intend to do it in the next 30 days, that’s fantastic and all, but it isn’t realistic. I had a brand new investor once tell me that his goal was to make $100,000 in the first month. He had to make $100,000 in the first month or he wouldn’t get into this business. Then he went to tell me that he also had a full time job, so he could only invest in tax defaulted real estate part time. So, you want to make $1.2m per year in a part time role? Yeah, right. If your intentions are off as much as this guys, then you won’t see success, probably every. The same can be said for those you rush, rush, rush, to get started. They want to start right now. Let’s go, let’s buy something, anything. Then suddenly, they find themselves stuck owning a second story condo in a building that was burned to the ground ten years ago.
What about your personality? Yes, this one actually plays a major part too. I’ve told the story before about a friend of mine who wouldn’t listen. He had a set max bid, and when he reached it he kept bidding and bidding. His, in quote, alpha status go thte best of him. He didn’t want someone he referred to as the other guy, to beat him bidding. The end result is that he grossly overpaid for something because he let his ego get the best of him. Stupid, right? But it happens, all the time.
Solution: Set realistic goals. Reflect on the business and your strategies. Dial in the process you’ll use, understand the product, the real estate you’re investing in. Make smart decisions based on facts and facts alone. Don’t leave anything to chance or emotion. Continue to strive to be a better investor every single day.
The process, the product and the people (that’s you) are what matter. And here’s the frustrating part. You need to perfect all three of these to maximize your business. All three. But, if you want to screw up. If you want to lose money. If you want to put yourself out of business, you only need to fail at ONE of these. That’s right. Perfect process, perfect product, perfect people and you’ll succeed, all 3 are required. Screw up any of those, just one, and you’re toast.
I provided the solutions to each of these problems. If I could summarize every single solution, it’s this: Know what you’re doing. There are plenty of ways to learn. I’ve produced more training on this topic that anyone else in the world. I have a crazy amount of resources available for you. Millions of visitors have learned from those resources. My Youtube channel, this podcast, my facebook page, and so many other resources are available to you, for free, right now.
If you want a more systemized approach, grab the tax sale playbook. I bought the book for you, just cover shipping which is hardly anything. TaxSaleBook.com. If you want the most advanced training I offer, then join the academy. There are links to all of these resources down below in the show notes.
And this is not a sales pitch, guys. Most of these resources are free. As in, you don’t pay a dime. I obviously recommend you get into the academy, find a mentor or do whatever you have to do. But PLEASE, PLEASE understand that learning what you’re doing is everything in this business. I’ve seen far too many new investors screwup because of their lack of knowledge. I don’t want you to email me asking for help AFTER you’ve screwed up. Instead, I want you to email me to share you most recent success with me after you’ve deposited that check.
That’s it for today. I truly hope this episode has helped you. If it has, it will mean so much to us if you take a few second to leave positive feedback on whatever podcasting platform you’re listening or watching us on.
Thanks for listening. Take care guys and make it a successful day.