Transcript:
6/8/20
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.
Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.
On today’s podcast episode I want to discuss finding your niche or niche, however you want to pronounce it. So, I’ve discussed this many times before but the strategy of getting into this business solely to buy properties at one price and to sell at another price is vague at best and useless at worst. I’ve mentioned numerous strategies used by a number of different investors.
If you’ve listened to my story, you probably know my niche. It’s evolved over the years, but a good majority of my business has been from me going from one auction to the next in multiple states. And when I use the term going, this used to mean physically traveling from one auction to the next, but now is really a mixture inperson and online auctions. So, I’d go from one auction to the next, and I’ll typically only buy a property or two, if that. I’ll cherry pick the best properties based on my objectives. Those objectives will pinpoint the property I should buy to allow me to facilitate the goal of selling the property very quickly to someone on my buyer’s list. This list, curated over many years, allows me to eliminate the time and cost expense of marketing every single tax sale property. Usually the properties I purchase will be vacant land, although I do have buyer’s prearranged in some areas for smaller homes. These buyers are investors that don’t have the effort, experience or knowledge when it comes to tax sales and my selling prices to them are below market value. This allows that quick sale, while providing them with instant equity. It’s a win-win situation. That’s the basics behind the niche I operate in.
Others do only owner financed deals in one county, some will travel the country buying only commercial structures, some only want mobile homes, there are a number of different niches. There is a saying that, although cheesy that I’m constantly reminded of: The Riches are in the Niches.
The truth is that if you’re chasing every single property type looking for anything and everything that can make money, then you’re probably going to be chasing for a while. Sure, you’ll find something at some point. But your business likely won’t grow until you narrow down your focus.
So let’s talk about a few ways to help you narrow your focus.
The first thing I suggest is that you start backwards. Personally, I like the idea of doing a higher quantity of properties, with possibly slightly lower margins that I can sell very quickly. Now, this means that I have to handle everything myself. Curating a buyer’s list, marketing to them, closing it, the whole nine yards. Others might want to just hand it to a Realtor and let the Realtor handle everything. Either way can be successful. Figure out how you want your investment to end . . . first.
By doing that, you can begin to narrow down your niche based on the requirements to sell the way you want to. For example, if I’m selling everything myself, that means the prices are usually lower than those sold with Realtors. If I’m closing it myself, that means title insurance isn’t available. Which means there is no suit to quiet title to pay for or wait on. All of this equates to lower valued properties with some title issues. The person willing to buy these is not going to spend $150k. Instead, they want the cheaper properties. And they’ll usually be at least some what risk tolerant. On the flip side, if you are selling through a Realtor with a hands off approach, you’re going to clear the title, you’re going to get market value and you’re likely going to sell to an end user. That’s a different ballgame. That’s a property type that might be a little more expensive, that might require more capital, but could produce larger returns.
When we go back another step, let’s look at the property type based on what we’ve discussed so far combined with your available capital. This is where we start getting extremely realistic with your approach. If you’re expecting to get top dollar through a Realtor, you’ll need a property that has potential, that has had the title cleared and possibly something you have remodeled. If you’re starting with $500, then that becomes just about impossible. If you’re expectations up to this point don’t match the reality of your budget, go back and adjust. If you have $500, you’ll need to start with cheap properties, which require a slightly different skill set and method to sell. Nothing wrong with that at all though.
It’s also time to start looking at what’s available in the areas you’re thinking about investing in. If your desired property type doesn’t exist you have one of two options. You can change your desired property type and modify your selling objectives. Or, you can find another area to see what you can find that fits your selling objectives. In my case, I wanted to find the best properties for my buyers list in one area. When I realized that amounted to just one or two properties a month, I also realized my income was capped. This required me to go to another market and another. Eventually, I realized I could do this all around the country. I changed the areas I purchased properties, to meet my selling objectives.
Frequency is something else many people tend to struggle with. Some states have auctions once a year. Once. If you miss the auction, no problem, just wait another 365 days and you can catch the next one. If you’re only comfortable investing in your local area and the auctions are not held but once a year, no problem. Just learn to deal with that battle. But if you’re looking to get into this business on a fairly regular basis, you’ll need to develop some sort of schedule of auctions you can attend to fit with all of your other objectives.
Once you have all of this figured out, we also need to discuss time. How much time do you really have. I’m not going to sit here and tell you that you can invest as much as I invest with two hours per week. It’s not physically possible. The way we sell properties often revolves around the time we have available to us. Now, many people will want to start part time and then merge into a full time business. And that’s a phenomenal idea, but the way you approach your business when your just stating and when you do get into it full time is going to be different. We’re talking about online auctions vs in person auctions, traveling vs hiring local scouts, using realtors vs selling ourselves . . . and these are all fine ways to operate, don’t get me wrong, but these are the considerations you must make after you factor in the true amount of time you have.
Now, when we combine all of this, your time, capital, available areas, property types, selling prices and selling methods, we can come up with a niche that works for. Now obviously, there is a little bit of a personal favoritism that must be factored in on your part so you don’t hate your business, but at the end of the day, if you’re able to go through these factors one by one, you’ll quickly have yourself the niche that fit you best.
From there, we can work to narrow it down even farther. Maybe you have a skill you could incorporate. If you’re contractor, then go after the ones that need remodeling for example. If you’re a marketing, work on the marketing and selling aspect of whatever property type you find has the best margin for you. If you don’t have any skill, then study the market. See what’s selling, and ask yourself, based off everything we’ve discussed, what property would be best for you.
In the end, you might need to adjust from niche to niche to determine what you prefer and is most profitable for you. BUT by using the process we’ve discussed on today’s podcast, you’ll certainly be on your way to narrowing down the exact niche that’s best for you!
I truly hope that this episode has helped you out. If this episode or any of our other episode have helped, it will mean so much to us if you take just a few seconds to leave positive feedback on whatever podcasting platform you’re listening to us on.
And as always, if we can help in any way we are ready to be of service. There are numerous links in today’s show notes that can help you get started including many that are completely free.
We’ll see you next time on The Tax Sale Podcast.
Take care and make it a successful day. See ya!