Transcript:
Hey there, it’s Casey Denman from TaxSaleAcademy.com. Thanks so much for joining me today for our weekly question segment.
This week’s question comes to us from ………Billy. He says . . . I’ve been watching your videos about due diligence and how important it is. What happens if someone just entirely messes up and buys the wrong thing?
Hey Billy and thanks for your question. So there are definitely varying levels of screwing up. If you mess up by say, overpaying a little bit, then you just wouldn’t make as much money as you thought you should. If you screwed up by buying an old factory that is on an EPA watch list and has been contaminated for 30 years with all sorts of poisonous chemicals, then you have a much bigger issue on your hands that will likely involve attorney’s, and lots and lots of money. And quite possibly jail time if you fail to work with the county.
So there isn’t a one size fits all “this is what you should do” type approach since it’ll vary based on the property.
Here are a few steps that I would take.
The first is to step back some. Sure, you screwed up. It’s not the end of the world. Everyone makes mistakes – some larger than others, but we all make mistakes. It’s time to get over any emotional disappointment or anger you might have and figure out what’s going on. It’s easy to get all wrapped up in the moment and get down because we bought a bad property. When we do that we often over exaggerate the real issue, so it’s time to move past this and figure out what really happened. Take a look and figure it out. It’s likely not as bad as you think.
Once you’re able to take an objective look at the issues, it’s time to figure out potential solutions. If you bought a property where you’re going to lose money, think of alternative ways to make it back. Maybe just hold onto the property for longer so you can sell at a higher price point. Perhaps you sell it with owner financing and the interest rate will hopefully make up your difference. Maybe you just cut your losses, lose money, write it off and move on to other properties. If you bought a property that has some sort of bigger problem, like maybe a condemnation or demolition order, or perhaps code violations, go ahead and figure out what to do. Call the county and ask for help. They want you to be responsible. They want you to seek their help in resolving any issues. They want you to do what’s right. They don’t want you to simply ignore the fact that there are potential issues.
The next step is simple, handle it as soon as possible. Whatever your plan is to solve the problem, put it into action immediately. I’ve told the story before where I received citations in the mail. I’ve received them for weed violations and for now clearing snow off of sidewalks – of course this guy from Florida didn’t even realize such a requirement existed. But anyhow. I got the citations and ignored them. And guess what? The problem doesn’t just magically go away. It gets bigger and bigger. And the person on the other end will continue to push. It’ll easily put you in a bad situation. If it’s a margin issue, just deal with it right away. Do whatever you have to. If it’s a property issue, call the county and tell them you’re working on it. Get locals to help. Whatever the problem is, procrastination will not help solve it. If anything, it’ll make it much worse.
So you’ve handled the problem. It probably wasn’t as bad as you once thought it would be. Now, it’s time to go back and figure out what happened. What went wrong. Usually this is the easiest part of the entire thing. In the case of those ordinance violations, I simply failed to take the time to learn the local ordinances that would have an impact on me. That was a huge learning lesson for me early in my career when I first started investing out of area. Maybe your valuation was just plain wrong and you can go back and rework your numbers to see what happened. Whatever it is, take the time to reflect on what went south. If you do this, I promise you’ll never make that mistake again.
Which is the last step, don’t do it again! If you truly went back and analyzed what went wrong, if you learned which steps you overlooked or just didn’t do correctly, then you’ll have a constant reminder of what not to do. SO DON’T DO IT AGAIN! Don’t let you mistake or learning lesson be forgotten after four or five years. Learn from it and don’t do it again.
Ahh….Billy, I hope this super rough process has helped you out. If someone makes a mistake it’s not the end of the world. There is a process to get out of it. Obviously, I’m in the business to make sure people don’t make mistakes, and to help them learn what they’re doing, but hopefully this outline has helped you or anyone else that watches this video.
If you have a followup question or anyone watching has a question, feel free to leave it below this video or any of our 600 plus videos here on YouTube.
As always, thanks for watching, make sure to subscribe so you don’t miss out of future tax sale training videos, and if you’d like more information on tax sale investing, just head to TaxSaleAcademy.com. Again, that’s TaxSaleAcademy.com.
Take care.
Bye bye!