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.
Today we’re discussing my primary suggestions for new tax sale investors when it comes to specific property types. The problem is that many new tax sale investors get grand visions in their heads. They see the TV shows, the huge projects, the deals that make take years and make millions, they see the complicated stuff.
One of my favorite tips is the KISS method. Keep it simple stupid. While that might just sound a little aggressive, it’s the truth. Keep it simple.
The deal is that yes, you can make lots of many with the extremely difficult transactions. Sure, I’ve gutted and remodel homes, subdivided properties, bought unusual commercial projects, bought unfinished construction projects and I’ve even flipped entire subdivisions all from tax sales. But, guess what, they also take lots of experience, that takes years and years to accumulate and of course they all come with lots of risk. These were projects that would have bankrupted me if I tried them early in my career. These are projects you WILL absolutely see from time to time and projects that might even pique your curiosity.
But, as a beginner, these are not the properties for you. The properties for you should absolutely be the simple projects.
So I wanted to provide my suggestions on what to look for and what to avoid when it comes to your first few investments and how to get your hands on one of the simpler projects.
First, off, I’ll talk about the two primary property types I highly recommend for beginners.
The first one is a standard sized, standard shaped, standard everything vacant lot in an area with some new construction. I know . . . that is not exciting, whatsoever, right? Ya, I get it. It’s not exciting. But it’s simple. It doesn’t get much more simple. For the first half of my career 99% of every single one of my investments was a standard vacant lot. And even to this day, vacant lots continue to be a driver in my business. They’re not exciting, they’re not in quote “sexy” but they work. They work time and time again and they work in all areas.
The deal is that they’re generally very easy. There is no remodel, no structure to worry about, no dealing with occupants, no real issues after you’ve completed the property diligence. You just need to insure that the diligence you do complete is going to be thorough. And this diligence means you have to make sure you’ll be able to find a buyer in the area you’ll be building in. If you choose an area with new construction activity, whether that means actual homes being built or perhaps just homes that have been completed in the last few years, you’ll have a leg up on just buying random vacant lots.
Just remember that builders don’t have the time or effort to to go tax sales to buy lots to build on. And of course, most consumers, who buy with plans to build either now or in the future probably don’t even know about tax sales. So, if you can get some vacant lots in the right area, you can definitely see success rather easily comparatively speaking.
The second type of property I recommend for beginners is the home that is near move in ready. Well, the truth is that you won’t find any homes at tax sales that are move in ready, but for your first few investments, you should only go after the homes that require as minimal work as possible. If you can get by with just carpet and paint, then that’s great. What you don’t want to do is get into a project that is going to require you to rip out walls, rebuild foundations, and all sort of other major repairs that require huge budgets, lengthy time commitments, and leave open the possibility to find all sorts of hidden problems. Now the property in fair or even good condition that you won’t have to do quite as much to is going to sell for much more money then the properties that need to be gutted. But, at the end of the day, if you can get in, get out and make some money in a safe manner, that’s what your first few properties should be all about.
Alright, so vacant lots and the easy homes.
Beyond that, I’m going to provide eight tips on specifically what to avoid for your first few deals. Eventually, you might want to ignore these tips for the riskier investments, but again, when you’re first getting started, here are my suggestions on things to avoid . . .
– Undeveloped areas. Make sure those lots have new construction somewhere nearby or you’ll never be able to sell them.
– Irregular shaped and sized lots. Some neighborhoods have leftover parcels that are too small or are shaped in a way that they can’t be built on. Go after the normal stuff.
– Low lots. Don’t chance it that a lot can be filled in.
– Occupied homes. It can be easy dealing with occupants, and you’ll have to eventually, but don’t force yourself to deal with them before you have to.
– Homes in disrepair. I’ve already addressed this, but you don’t want to bite off more than you can chew.
– Homes with City/County Issues. Dealing with a property is one thing. Dealing with a city or county is another. Avoid homes with condemnation or other pending actions.
– Don’t invest in bad areas. Sure you can make money there. But if you’re worried about your safety or your investment not being vandalized, then it’s wise to stay away from the bad areas on your first few investments.
– What’s your gut telling you? Sure, you’ll have butterfies with your first few investments, but if your gut is saying no, then you need to pass on it.
So there you have it guys. My two primary suggested properties types for beginners are vacant lots and the simple homes. Beyond that you need to stay away from undeveloped areas, irregular lots, low lots, occupied homes, homes in disrepair, county issues, bad areas, and always listen to your gut!
That’s it for today’s podcast guys. If you’d like more information on investing in tax defaulted real estate, including trainings on how YOU can cherry pick the best properties, be sure to visit us at TaxSaleAcademy.com. That’s TaxSaleAcademy.com.
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Take care guys and make it a successful day.
See ya!