Low Competition Areas

Transcript:
Hey there, it’s Casey Denman with taxsaleacademy.com and welcome to our weekly tax sale tip. Before we get to this tip, just as a reminder, if you’re interested in investing in tax defaulted real estate go ahead and make sure that hit that subscribe button so you don’t miss out on all of our future training videos.

Last week I discussed the areas that have the most competitive tax sales. And I did this as a way for you to know which areas to avoid, of course. As I mentioned, far too often, new investors flock to the most competitive areas only to walk away disappointed.

This week I want to discuss the areas that have the lowest competition. And this is not theory or anything like that. I’ve been at auctions with more than a thousand other people bidding. I’ve also sat quite literally in an office with myself, the county office and one other bidder who was ONLY interested in one property. No auction room, no auction staff, none of that stuff. Just a formal reading of the rules, a formal bid and I was on my way with the properties I wanted.

This isn’t every auction of course, but my preference is going to be to attend the auctions with much less competition. That’s what we all desire. So how exactly is this done?

So, be sure listen to my entire answer and explanation.

The auctions that have the least competition involve auctions that are extremely difficult to attend in areas that are extremely unknown. Everyone, tax sale investors included, like easy. They want everything to be easy. And while that’s great, the easier it is for you, the easier it is for everyone else.

The auction that I mentioned where there were three people in the room was four hours from the nearest airport of any size in a very small county. I had to call the county a month ahead of time, send a money order to prepay for postage so that the tax sale list could be mailed to me – this county didn’t use internet. Then I had to pay for plat maps from some sort of weird website I happened to find, compare those to aerial maps, and then go to the county to perform more diligence. I also had to register the week before the auction or I couldn’t bid. Then the auction started at 7:30am. I flew in the night before and had to stay about two hours away at the closest decent hotel, which meant I was up super early, driving to this so called auction. Of course I didn’t know that virtually no one else would be there. Afterwards I had to spend another four hours driving back to the airport to fly home.
Talk about a HUGE hassle.

When you compare that to simply logging on to a large, multimillion dollar auction platform that easily connects to all of my due diligence by clicking one link, you can probably imagine why the larger areas have the competition they do.
Now, for the smaller county mentioned with no competition I had a very specific strategy to sell those properties and it worked flawlessly. And that’s often what it takes in those very small, rural areas. A well defined plan.

And for the sake of this video, the smaller more rural counties are also usually the counties that have the most barriers to invest – properties more difficult to research, auctiosn more difficult to attend, that kind of thing.

The issue is that the smallest, most rural counties are also usually the less desirable from a buyer’s standpoint. As investors we don’t make our money until we sell, rent or otherwise use the property. If it’s in an undesirable area, then we face a huge challenge in trying to figure out a way to profit. The last thing you want to do is end up with a bunch of cheap properties in an area that you and most of the rest of the world has no desire in.

So there are really two keys to doing this successfully:
The first is go in with a very specific strategy in place. And this is something I’d probably reserve for the more experienced investors. Your strategy can be to buy properties in this somewhat less desirable area, but you must know without a doubt that you have bulletproof plans to sell them with. And that’s tough to do for brand new investors.

The second key is to find a balance between the areas that are big enough to generate buyers, but small enough that they’re overlooked by much of your competition. Usually, if you’re looking at say a graph it will be a steady tilt when you compare size to competition. The less desirable it is, the lower the amount of competition. The more desirable, the higher the competition.

People will inevitably ask what’s the exact population size I should be looking for. And the answer is that it varies substantially. Usually, you want an area in the low to mid population range when you compare it to the rest of the state. This is something for you to figure out on your own. If an auction has too much competition, go to perhaps a less desirable area. Play around with it some, review auctions results, make adjustments and then determine where that perfect sweet spot is for you.

So hopefully this video helps you out. If you haven’t yet watched last week’s video about the most competitive tax sale areas, be sure to watch that one as well so you can compare the two and identify the best market for you.

Thanks so much for watching today. If you’re looking for more information on tax sale investing, there are a bunch of links down below in today’s video description. One of those links will take you to our primary site at taxsaleacaemy.com. Take care and make it a successful day. See ya!