Transcript:
Hey there, it’s Casey Denman w/ TaxSaleAcademy.com and welcome to this week’s tax sale tip video. Before we get started with this week’s tip, if you are looking to learn more about investing in tax defaulted real estate don’t forget to check out the links in today’s show notes and also don’t forget to subscribe to our channel right here on YouTube.
Alright, this week I want to discuss the most competitive tax sale areas. What were about to discuss does vary of course, but if you follow this advice you’ll likely be able to avoid the most competitive areas.
So I’ll get emails, messages and comments from time to time telling me how competitive a tax sale was. They’ll tell me how the properties sold for near market value and then they’ll tell me how disappointed they are. Then I’ll do some probing and I’ll figure out exactly where they went wrong. Usually, they’ll have gone to the most competitive sales in the country.
I have two guidelines that I focus on which will usually clue me in ahead of time on exactly how popular an auction will be.
First, I don’t invest in overly popular areas.
The more popular the county, the more competitive the county will become. Here’s a test that I do. I’ll ask myself, if I was to go across the country and ask someone to name a few cities or counties in the state that I’m looking to invest in, what would they say? Those are obviously going to be the popular cities. So I’m from Florida. If I think about California, I think Los Angeles, San Francisco, San Diego. And I don’t’ invest in those areas, but I can guarantee that their sales indicate a substantial amount of competition.
If I was to ask someone from California to name few cities in Florida, they’d likely mention the most competitive areas which would be Miami-Dade and surround counties, Orange County which is where Orlando is, and Hillsborough and surrounding counties which is where Tampa is. It’s pretty much common sense, the most popular areas will drive the most competition.
Instead of focusing on the areas that you have most likely heard about, focus on the secondary or tertiary (ter-she-airy) markets. Generally speaking, the smaller the market the less competition. I’ve been to some very rural areas where it’s been me, one other bidder and the auctioneer. Now obviously, you need to find balance between avoiding competition and investing in a market where there is some sort of buyer demand so you can exit your investments successfully. But avoid those competitive areas.
Now, the second thing I focus on are the areas that aren’t all that convenient. And I mean convenience in a few different ways. First off, how about research? If I have to really dig to find websites to use and if it takes some creativity to figure out the most efficient ways to research the properties, then I have automatically weeded out the majority of my competition – who, typically, are going to be slightly less motivated, or might I even say, “lazy?” Another form of convenience is the entire preauction process. If I go to a small market and they require a $10,000 deposit, as well as two forms of ID and a two week pre auction registration . . . while it’s annoying, that’s actually fantastic. Again, it weeds out a lot of people. And then finally the convenience factor when it comes to auctions. I’m a huge fan of online auctions. I really believe they are the future. BUT, if there is an inperson auction that’s difficult to get to, I can guarantee you that the competition there is going to be far less than an online auction in a similar county.
At the end of the day, the easier it is for YOU, the easier it is for everyone else. And again, I want this business to be as easy as possible. But when we deal with competition, human nature is to take the easy way out. The easiest way to bid is through a big city or county auction with tens of millions of dollars in online resources that we can research from with a process that is incredibly convenient. Definitely easy. But, probably not profitable.
So I urge you to find that balance for yourself, between the perfect size market combined with the convenience factor you must have, based on your specific investment objectives.
I truly hope that this week’s tax sale tip helps you to identify where the most competitive markets will be so that you can avoid them moving forward.
For more information on tax sale investing, be sure to check out the links below or just head to taxsaleacademy.com for the primary site.
Take care and we’ll see you next time. Bye bye!