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 talking about funding ideas. Specifically funding ideas for those you don’t have any cash. Tax Sale Investing, is, well, investing. That means that you’re investing in real estate. In most cases, it means that you’re investing capital with the intention to get your original capital back plus more. That’s why we invest. But as you’ll see in today’s episode there are a number of different ways you can invest despite what your bank account says.
I want to be very clear and upfront with you however. If you have $100,000 to invest you’re going to have a much easier time getting into this business than someone with $100. With that said, it’s frustrating on my end that people with lots of money will usually put in much more effort than someone with no money. Maybe that’s the reasons their finances are where they’re at in the first place.
So understand this . . . the investor with little to no funds must be prepared to work substantially harder than everyone else. They must not just become tax sale investors, but now that must become investors, as well as someone who is capable of finding capital. It’s essentially two new skills to learn. But it’s not twice as hard. It’s 5 or 10 times more difficult. And I’ll touch on this more as we move forward . . .
Another thing to note is that the area you invest in will have a huge impact on you’re financial ability to invest there. If you’re buying a tax lien in a rural area, you can find them for less than $100. If you’re buying a foreclosed mansion in a large city you might need a million bucks or more. Remember when I said you’ll have to work harder just a few seconds ago? Yes, this is one of those things you’ll have to work harder on. People ask me all the time, where can I find the cheap stuff at? My answer, LOOK. Do you own research. Put in your own effort. Search all 2200 counties until you find exactly what you want. Put in the work. If you can’t find the properties you can afford, then you don’t need to be in this business.
Alright let’s get back to some strategies that will help you invest even if you’re currently broke.
The first one is to make more money. And this is the one that everyone always rolls their eyes at. But here’s the deal, the easiest way to come up with the capital required to invest in tax sale properties is to make more money. It’s that simple. Need more money, go make it. Again, you don’t need $50,000. You CAN start with $100 or maybe even less depending on your area and objectives.
What can you do to make money? Start a weekend or evening business mowing yards, pressure washing, shoveling snow, babysitting, tutoring, working a second job, driving uber or whatever else you can come up with. What about an online business? Go to Fiverr, or Upwork, Etsy, eBay or any of the other million plus places that provide services or products. If you can provide a service, then offer it. If you can’t find stuff from Craiglist or elsewhere to flip on eBay.
Right now is the easiest time in the history of the world to make more money. It’s time to humble yourself. Too many people think they are too good for a second job or think they’re too good to actually do anything I just mentioned. And those are just a few. Alright, I’ll move on from this one, but I really want you to understand that if you’re willing to work, you can find the money necessary. It might not be enough to buy every single tax sale property you want, but it’ll be enough to get you started.
The next option is to utilize your credit. If you have average to good credit, this one will be useful for you.
Did you know that in some areas you can actually use a credit card to buy tax liens and tax deeds? Yep, that Visa or Mastercard that you own can be swiped at checkout, just like you’re buying your groceries. This is actually one of the ways that I got started. I’d use my visa to buy a tax deed property, sell it a short time later, repay the card and then put the profit in an account I had set aside. I did this until that account had enough money for me to invest without the credit card. You can check with your county or their auction company to see if they accept credit cards directly. If not, you could always use a cash advance to fund your purchase. And if you’re credit is good enough, you can even take advantage of the various promotions offered by credit card company, such as a 0% term or balance transfers, that kind of thing. Obviously, you must have a solid plan to resell the property quickly so your profits don’t get eaten up with the high interest rates. And if you don’t have the self control to repay the credit card the moment you sell a property, this approach probably isn’t the best for you.
Other options involving your credit can include a signature bank loan, a home equity loan if you have real estate with equity, peer to peer lending clubs and a variety of other possibilities.
The last one is might be the most beneficial for your situation and that’s to find a partner. Before I go into detail, let me lay it out for you. You’re the new tax sale investor who has no money. You find someone to partner with. They loan you the money and likely even have the property in their name. You do everything. Find the property, put in the work, sell the property, everthing. Then you take a small percentage of the net profit. That’s the arrangement in a nutshell.
This partner could be someone as familiar to you as a friend or perhaps a family member. It could also be someone who’s completely unknown to you prior to seeking him out. Depending on the person, you’ll likely need to utilize slightly different strategies to make the deal happen. First and foremost, if you’re going to be using a partner and you’re providing the sweat equity, it’s time to understand what you’re providing. You’re the one who MUST know everything possible about this business. You don’t want to use other people money, or OPM as we refer to it, as a way to learn or try to figure out what you’re doing. That’s a great way to get yourself in a lawsuit.
Instead, do everything you can to learn what you’re doing. There shouldn’t be anything that is unexpected to you or any situations that you can’t solve. Even if that means you need to first invest in some sort of formal education. Once you have become as close to a tax sale expert as possible, it’s time to review previous results, come up with viable and conservative numbers and projections and develop some sort of presentation for potential partners to insure them that you know what you’re doing.
Then once someone agrees, work out some sort of arrangement with them. Understand that you probably won’t and shouldn’t get 50% of the profits as a new investor. The partner has much more risk in their eyes when you’re just starting out. Even if you accept 10% you’re still going to come out much better than if you didn’t have a partner in the first place.
The end goal is to get to the point where you can increase your split and eventually make your own investments without outside capital if that’s your motive. I did a complete episode on working with partners that I highly suggest you take the time to listen to. It’s episode 79 in my podcast.
The best thing about tax sale investing, outside of the lucrative returns, is that this isn’t a business just for the big players. Yes, some are involved in it. But I started with very little money. I’ve had students who also started with very little money – many had no money and used the exact strategies we discussed today to get started. I don’t want you to get discourage because of your perceived lack of capital. The money is there for you to invest – it might not be in your account, but it’s there. You just have to find it.
The strategies that we discussed today are just a few. There are many many others. Part of being successful in this business is learning to be creative. That’s one of the big things I always teach about. Find a way to be creative, to do it your way. We need creativity in what we buy, how we buy it, how we market it, how we sell it. We need creativity in how we grow our business.
But at the beginning of this podcast where I told you it would require additional effort if you start with little or no money . . . that applies so much. Put forth a crazy amount of effort to find a way to come up with the funding, to be creative, to seek out whomever you need to loan you the funds, or call your credit card companies, or make extra money. Whatever your solution is to this problem, put forth the effort to figure out a way around it. The opportunities in this business are there for the taking. It’s now your job to find a way to take advantage of those opportunities. Go out there and do it!
Thank you so much for joining me today. I’m so thankful for the opportunity to teach you about this incredible business. I’ve got countless resources available for you in the show notes below this episode. If you’re looking to get started right now, you can head to taxsaleacademy.com – grab your free copy of tax sale playbook or click that join button to take advantage of our most comprehensive step by step training.
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Thanks again for listening, and we truly hope this has helped.