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.
Alright today, I’m basically providing an expanded answer on one of the most common questions I get. And this is actually something I discussed a couple of days ago on YouTube. We’re talking about budgets. But in this episode, we’re talking about small budget investing. Now, the word “small” here is subjective. It might mean one dollar to you. It might mean a thousand dollars to someone else. It could be a hundred thousand dollars to another person, so just keep that in mind.
Just to set the record straight, I want to address a few videos I have on YouTube where I provide examples of ridiculously cheap properties. There’s a video about a 1 cent property I purchased. An video about a $20 house. And then there’s an video and podcast both about the best day of my tax sale life, where I purchase multiple properties for less than $100. These are absolutely 100% verifiable transactions and show up in public records as such. There is no denying that. And I 100% did amazing with these transactions. BUT, do not, ever expect to buy real estate this cheap at tax sale auctions. Because it doesn’t happen. These transactions were the result of being in the right place at the right time and were the result of, at the time, more than a decade of attending hundreds if not thousands of auctions and watching billions of dollars with of real estate sell. I didn’t just walk into these transactions at my first auction.
With that said, I do routinely buy properties for very little money. In fact, the majority of my purchases, to this day, I’d considered properties that would fit low budgets. Just because I’ve been in the game for many years now, doesn’t mean I have changed my objectives all that much. So the deals are absolutely out there.
So, you’re starting with a small budget. What should you do? Where should you start? What do you need to do?
In this episode, I’m going to layout five steps that will help insure you’ll be able to turn your budget into something much larger.
1. Be realistic. Understand that a small budget limits your property selection. If you have $500, don’t think you’re going to be able to go to an auction and buy the nicest house there. Understand that with a small budget, you’ll likely be limited to vacant lots and/or the homes in the poorest condition. BUT, that’s perfectly fine. These types of properties can still bring in HUGE returns for you. And also understand that however much you have might not even be enough to get your started in some areas of the country.
2. Which brings us to our second point which is exposure. And what I mean by this is to watch as many properties as possible get auctioned off. Whether that’s in one area or preferably multiple areas, the more properties you see auctioned off the higher the likelihood you’ll be able to find a good one within your budget. Don’t plan on attending one or two auctions, with very little money to start, and walking out being able to triple your money. The truth is that it might take 5, 10 or even 20 auctions to get auctions before you find a property that’ll fit your objective and budget.
3. That brings us to number three, which is patience. An inpatient investor is an unsuccessful investor. The rushed investor makes mistakes. You MUST sit back and wait for the right opportunity. And again, it might take 5, 10 or 20 auctions which could mean months of research and waiting for that opportunity to pop up. And that’s ok, because you should be using everything during this time as a learning opportunity. But, especially, with a small budget, you don’t want to rush yourself into an investment that might have issues!
4. And guess what? That brings us to number four on our list. Small budgets mean small problems become big ones. If you have $500 and you spend $400 of that on a property, then you have a $500 problem, guess what? You’re out of luck trying to fix it. A lot of beginners think that just because the property is cheap means that it’s easy. Ever heard the saying don’t put all of your eggs in one basket? Well…when you start with a small budget, that’s EXACTLY what you’re doing. And it’s ok, because you have to. BUT the research you perform and the decisions you make are so, so incredibly important to you. You likely have zero margin to screw up. The fact is that this can actually MAKE you perform great research – kind of like a burn the boats type scenario. So understand everything you do, the research, the bidding, the property has huge implications for you.
5. And that brings us to number five. Learn. Learn what you’re doing. You can get started for very little out of pocket. But in the end, you can’t make a single mistake. There is no learning by doing for you since, a mistake means the end. And mistakes in this business usually aren’t easily fixable. Especially when you consider that many of the cheapest properties are cheap for a reason, like slivers of land, or have some sorts of other issues. I highly suggest learning, in great detail, what you’re doing before you invest a single dime of your money. Listen to all my podcasts, watch all my videos (close to 500 of them on YouTube), join the academy….learn what you’re doing. You absolutely can’t afford not to when you have a small budget.
So recapping, you must be realistic, go to many auctions, be patient, understand the important of your choices and learn. Again, you can get into this business with a small budget, but you must be careful on what you’re doing in the early stages to make it work for you.
That’s it for today’s podcast… if you haven’t done so yet, be sure to pickup your copy of my free book, Tax Sale Playbook, which you can get at TaxSaleAcademy.com. The book itself is free, we just ask for your help covering the nominal shipping costs.
And as always guys, if you found this episode helpful it will mean so much to us if you take a few second to leave positive feedback.
Take care guys and make it a successful day.
See ya!