Transcription:
Hey Everybody,
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m of course Casey Denman, a tax sale veteran, expert, and trainer, author of the tax sale playbook, and founder of the tax sale academy.
Thanks for joining me on today’s podcast, and as always, after this podcast, if you’re looking to learn more about investing in tax defaulted real estate head to www.taxsaleacademy.com. That’s taxsaleacademy.com.
Ok, there’s a question that I get on a VERY regular basis. It’s a question that there is no correct answer too. The question is, what is the best state for a tax lien investor? Or what is the best state for a tax deed investor?
Here’s the deal guys . . . spoiler alert. This questions has no correct answer. I can’t tell you that you need to go to smith county, Oklahoma and invest all your money there.
Answering this question is kind of like someone asking a cook, what’s the best way to cook? Or asking a baseball player how to play baseball. It’s like asking a millionaire, the best way to make a million dollars. There is absolutely no correct definitive answer. And I’ve shot videos on this exact subject before. In fact, many of those videos have thousands of views.
The deal is that everyone wants the easy way out. They want a specific state, a specific city. It isn’t that easy. It isn’t a matter of me saying invest here and you’ll make millions. Invest there and you’ll waste your time. There is so much more to it and if you can’t understand that, then perhaps tax sale investing is not for you.
The truth is that every state has pros and cons. Lots of areas profitable. Other areas can be traps.
There is no best state for tax liens or tax deeds for everyone. The truth is that it varies depending on a variety of different factors. In this video we’ll be discussing these factors, which should help you determine which state is the best state FOR YOU. And of course, as you’ll soon see, the best state for YOU is NOT might not be the best state for me. And that’s ok.
But, let’s go over a few of these factors and determine how you can choose the best state for you! You’ll notice that a lot of these factors will blend together some. The point is that you need to take a look at each of these factors, we’re about to discuss, when determining the best area for you.
System – The first step is to determine the type of system you want to invest in. Liens, deeds, hybrid states or redeemable deeds. There are pros and cons to each of these systems and we’ve discussed each of them in previous episodes. But this will always be the first step you need to figure out. Obviously, once you figure out the system you want to invest in then it’s time to narrow down your search to those type of systems.
Next – location. Specific geographic location. Where are you located? If you’re in an areas that has a viable system to use, then start there. You know the market. You know how to get around your area. You have contacts in that area. It’ll be much easier for you than remote investing. Now, if the area you’re located in isn’t conducive to profitable tax sale investing, then start looking into other areas. Perhaps nearby counties, nearby states, or areas that can be traveled to easily. Once you start doing this, be sure to factor in the cost of your time and travel to the different areas you might invest in. Then see how this factors in to your overall expected profit margins.
Along with the location is the specific auction format. Do you need to attend online auctions only? Or can you attend in person auctions? Online auctions typically have more competition, but can be very viable for many investors. If you must attend online, then you obviously will need an area that offers online auctions, right? So find those areas, if that’s what you’re looking for.
Alright, the next factor is Capital.
How much money to you have available to invest? This matters for a few different reasons. The first is that some areas might just be out of your price range. You need to look through the opening bids and determine which area best suits your available capital. Secondly, the more money you have, the more valuable the property you can purchase obviously. So, while you might need to focus on the vacant lots if you have less than $5,000 to start, if you have $1m to start you probably want to focus on the improved properties instead of the vacant lots. Browse auction listings in different areas to determine which areas fit the best for your budget.
We also need to talk about the amount of time you can devote. Someone who is retired and can go into tax sale investing full time can do it differently than someone who is actively working. If you’re actively working and you need to take time of work to travel to some auctions, it costs you money. But can you make more money than the money you lost from not being at your normal job? This is something I can’t answer, and it also depends on the previous factor which is money or budget. If you make $2,000 a week, but you only have $500 to invest and you need to spend another $800 to travel somewhere to invest that $500, it just doesn’t make sense for you to skip out of work. Before you make the first investment you’ll be down $2,800. Odds are that you won’t turn the $500 into $2800 on your first investment. So find an area that fits the amount of time you’re able to invest along with your budget.
Next is your risk tolerance. Maybe you are very risk tolerant and don’t mind investing in areas that others might shy away from. I’ve made a substantial amount of money from areas that the outside world saw as “depressed.” And I’m completely ok with that. Of perhaps you want the safest investment as possible, so you need areas where the return might not be as great, but will be guaranteed. Take these factors into consideration.
Now, let’s talk experience. There’s a good chance that you have minimal experience. And that’s perfectly fine. If you have minimal real estate experience, the last thing you want to do is invest in an area that requires substantial effort in order to make money. You don’t want an area that is full if city ordinances. You don’t want an area that time months and months to sell something. You don’t want an area that is a nightmare to operate in. You want an area that is easy. Something where you can make a few dollars and move on. And then of course, if you do have loads of experience, maybe you do choose an area where you can apply that experience and hopefully make more money. Check out everything about the area and see if you feel it’s new investor friendly.
And the final factor, Comfort Level – Are you comfortable investing there? And I’m talking about this on many levels. Do you have a good feeling about the area? Maybe it’s an online auction only county – are you comfortable investing online or are you old school and only want to bid in person? Are you comfortable in the area? Can you drive through there, if necessary, and feel comfortable? I mentioned it in Tax Sale Playbook, but I’ve definitely invested in areas that I didn’t feel comfortable driving through. I wouldn’t invest in those areas looking bad. So in short, are you comfortable with your decision to invest in an area? If not, move on!
So, if you recall, the original question I wanted to answer with this podcast is what is the best state to invest in? The answer is based on your answers to the factors we just discussed. Again they are the system used, location, auction format, capital, time allowance, risk tolerance, experience and comfort level. Figure out the answers to all these questions and then your answer to the best state, will become fairly obvious after a little research.
One great resource we offer is our state guide. You can take a look at it by going to www.taxsaleacademy.com/state-guide . . . again that’s tax sale academy dot com, forward slash, state hyphen guide. It’ll certainly help to answer many of the questions we asked in this episode and will help get you pointed in the right direction.
That’s it for this episode. I really hope you’ve enjoyed it. As always for more information, you can head over to tax sale academy.com for more information on tax sale investing. While you’re there, be sure to snag your free copy of my brand new book, tax sale playbook. Just let me know where to ship it and we’ll get it out in the mail to you.
I’d also like to ask a favor. This podcast is completely free, and I love providing strategic and actionable training and strategies for you guys. If you can go ahead and rate this podcast, we would certainly appreciate it and it’ll definitely help continue to motivate us to provide the best training for you through this specific platform.
That’s it for today guys. As always, I hope you have a wonderful day and I wish you lots of success in your tax sale business.
Take care, bye bye.