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 the cheapest real estate sold at tax sale. And this is an incredibly popular subject. My most viewed and listened to training videos are always about these cheap tax sale deals – but it’s always difficult to fit in as many details as I’d like on those quick videos so I wanted to devote an entire podcast episode to it.
So, first off, let’s define what I mean by this. I’m talking about properties where you’d look at them and think “Wow. That’s a steal.” This could mean cheap as in they cost one dollar or this can also mean cheap as in relation to their value. $20,000 isn’t necessarily cheap until you realize the property is worth $1 million, for example. So, I just wanted to make that clear before moving forward.
It’s also important for me to really emphasize that you don’t need ONLY cheap properties to be successful in this business. And we’ll touch on this again shortly.
But understand that it is still very possible to acquire extremely cheap real estate as a tax sale investor. In today’s episode we’re going to go into more detail than I ever have before when it comes to these cheap properties.
The fact is that for properties to sell for such little money, you need low opening bids combined with little or no competition. Tax sale properties can be sold for extremely little money. And this is not a marketing gimmick or tactic. If you’ve followed me for any time you know that this is not a get rich quick scheme. I don’t believe in inflating numbers or telling lies in an effort to get more views. I teach the real world tactics I’ve learned over 15 years.
With that said, you’ve probably seen a few of my videos or listed to a couple of podcasts that you raised your eyebrows at. I’ve got a video on my YouTube channel about a house that I purchased for $20, another on how I turned $2,000 into $24,000, another on a one cent transaction, and I’ve got a podcast episode on my best day ever as a tax sale investor where I purchased multiple properties for less than $100.
These deals are not exaggerations. These are the result of being in the right place at the right time at different points of my 15 plus year tax sale career in which I’ve seen billions of dollars of real estate auctions off.
And that’s the largest part of what it takes to get great properties at cheap prices. Setting yourself up for success well ahead of time. Essentially, putting yourself into a position to be in the right place at the right time. By the time I bought my first ridiculously cheap property, I had probably already attended a couple hundred auctions. Of course prior to that point, I was still seeing success as a tax sale investor. I was flipping properties non stop, when I finally stumbled across my first “wow” transaction.
And the fact is that most of the people who are successful in this business are buying 50 properties or more for every one of those one cent or opening bid type properties. Right? So, your focus should NEVER be on just cheap properties, but should instead be on solid investments.
My suggestion to you as a new investor or even an experienced investor is to continue doing what you’re doing. Continue to learn everything you can about this business. Continue to commit to attending as many auctions as possible and seeing as many properties as possible get auctioned off. Continue to invest in yourself. Continue to press forward and grow your business.
And as you’re doing all of that, the cheap properties will come. If you attend every auction with the only intention of getting that incredible deal and nothing else, you’re going to be bored, burned out and depressed after a couple of months. But, if you attend every auction looking for that solid investment, that investment that is a sure thing, but perhaps not quite a homerun, then eventually you’ll come across that incredibly cheap property that you might consider a homerun. So in order to get these properties, be patient and put yourself in the right place at the right time.
Alright, we’ve talked about the possibility of these incredibly cheap properties. Now, let’s discuss the actual property some.
First off, understand that for a property to sell for very little money your curiosity should be piqued. Ask yourself why? Why would a property sell for so little? Did you stumble across an incredible deal or is there a reason it’s so cheap?
As we mentioned earlier, the cheapest properties are sold with a combination of a low opening bid and little or oftentimes no competition.
So exactly why is the opening bid so low? Well, most opening bids are based around the amount of past due taxes, interest and penalties. Of course, the taxes are based off the value of the property, and a low opening bid amount could mean that the tax assessed value of the property is minimal, which could indicate that the property’s fair market value isn’t much either. So, that’s hurdle number one. Low opening bid, because of low taxes, because of low value. Of course, the tax rate might just be low in that area, but it’s worth digging into figure out why the taxes are so low.
The property could have also been previously offered but went unsold and the opening bid amount was reduced and the property is being reoffered. This means that an entire room full of bidders had the opportunity to bid on the property at the initial auction and no one placed a single bid. Could the opening bid have been too much? Quite possibly. Could it be a junk property? Quite possibly.
On that same note, let’s talk about the lack of competition that leads to the incredibly cheap properties. In order to get a property at the opening bid, no one needs to bid against you. Ask yourself, WHY are you the ONLY person who wants this property? It could be a diamond in the rough, of course. Or perhaps you’re the only one who’s showed up at the auction – been there and love it when that happens, by the way. But there could be a reason that no one else is bidding on it. The large majority of the properties that I see go unsold or sell for nearly nothing are junk properties. Landlocked parcels, tiny strips of land, swamp land, that kind of stuff. So you MUST perform your due diligence and you should NEVER buy of price alone.
Something I want to add here is that when you buy a property, you’re also buying a responsibility. You’re buying the responsibility to yourself and your business to make a wise investment, and you’re also buying the responsibility to take care of that property, pay the taxes and hopefully be able to resell it one day. So don’t ever buy something just because it’s cheap. One of my students once told me that an investor told them that you buy every property you can that sells for less than $100. This has got to be the most ridiculous advice that I’ve ever heard. This will lead to stacks of tax bills on worthless properties, lots of maintenance expenses you’ll never recoup and possibly even some criminal issues.
Now, I don’t say all of this to scare you away. I tell you this to remind of the importance of making sound, solid investments based on the price and the asset both not just the price. As I mentioned earlier, these so called cheap properties that are the result of being in the right place at the right time. You can never, ever buy off of price alone. Your investments instead, should be made off of your research combined with the sales price. And if that research shows a solid invest combined with an extremely cheap sales price, then more power to you!
The best way to get the cheapest properties, to create your own best day of my tax sale life type stories are to attend auction after auction, all while building your business off of solid, sound investments in the mean time and ultimately to be in the right place at the right time to scoop up that incredible deal.
That’s it for today’s podcast guys. If you’d like more information on investing in tax defaulted real estate, including trainings on to solve all title issues, be sure to visit us at TaxSaleAcademy.com. That’s TaxSaleAcademy.com, and don’t forget to get your FREE copy of my newest book, Tax Sale Playbook. Just cover shipping and we’ll get it in the mail to you.
And before I end, I’d like to ask for a quick favor from you. We provide lots of completely free training for you guys. All we ask is that you’ll subscribe to us and provide a like or positive rating to let us know you’re enjoying the content and you find it useful.
Take care guys and make it a successful day.
See ya!