The Preauction Process

Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.

Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.

On today’s episode I wanted to go over my preauction process. I mentioned in a previously episode when we compared Veteran Investors to New Investors that one of the major differences the veterans have are their processes.

What I’ve found over the years is that many new investors have a haphazard approach to investing, whether they know it or not. In some cases, they know better but think having an actual process is a little overkill. In other cases, they just simply don’t know what they don’t know – they have to learn the hard way. On a side note, I’m a huge proponent of having and using a process for everything. Don’t get me wrong, I’m a pretty spontaneous guy but I’ve got processes I follow for sure.

We’re going to discuss my preauction process in today’s podcast. With a few minor tweaks here and there, this is a process that I’ve used for over 17 years now and is one that I’ve taught about. It’s a simple five step process I want to walk you through.

The first step is to figure out where the heck you’re going to invest. Before we can start this process and before we can buy the first property we must know where we’ll be investing. I’ve discussed this before but here’s the general process to use when decidied where to invest: Figure out if you’re more of a tax lien or tax deed investor or perhaps a combination of both. If your in the United States, figure out if your local market has any opportunities for you. If so, that’s a great place to start. If there isn’t any local, perhaps not the system you want to invest in or maybe properties are just too much money, then start venturing out.

I’m frequently asked which state is the best. I’ve invested in more than a dozen states for various reasons. There are probably enough couple of dozen I’d invest in if I physically could. Figure out your investment objectives, how much money you want to invest, how much time you want to invest, what you’re looking to make, your risk tolerance, your time value, all of that stuff and then make a decision where to invest. If you’re looking to find out information about the states, a great resource is the state guide on my website.

For me personally, I’ll attend auctions as they fit my schedule which dictates exactly where I’ll be investing. Some sales are held once a week and others are held once a year. I also travel quite a bit and I have different trainings I hold for The Tax Sale Academy so that factors into it to. But ultimately, I attend auctions where I’m able to. This could mean two a month or it could mean 30 or 40 in a month. It just depends.

After I find the area information I find the actual sale information. Every county is slightly different. Even if they must follow the rules of that particular state, one county will be different from the next county. Sometimes it’ll be very minor differences and other times the entire system they use could be different – take Nassau County NY for example where they sell tax liens and much of the rest of the state sells tax deeds. This is the time to go page by page through the tax collector or treasurer’s website who is handling the sale. Figure out exactly how the sales process will operate. Read the rules, the laws, the frequently asked questions. Read everything involved with the auction. After that, get the auction list. Make sure there are a decent number of properties available – no one wants to travel for three days to watch one tiny lot get sold.

I’ll get that list and I’ll also typically print it out. You might prefer to leave it in a digital format, but I prefer to print it out so I can look over it and make notes as necessary. Just a personal preference and I guess I’m a little old school like that.

The next step is to begin researching those tax sale properties. I’ve frequently said that your research equals your results. The quality of your research will determine the quality of your results. Do good research and get good results. Do lousy research and your results will be lousy. Now, this is not a research episode, so I’m not going to go over each step of the research process. Be sure to check out our other episodes on the research process, but please make sure you know without a doubt what you’re bidding on!

This will undoubtedly be the most time-consuming part of the process, so learn to do it efficiently. Here’s the process I use for efficiency: I’ll do an initial scan of the auction list. Right away I’ll cross off the properties out of my budget for that county. Then I’ll go through and see if I recognize any of the subdivisions or areas and I’ll cross off the ones I don’t want to invest in. Then, if there are multiple properties for sale in one subdivision or area that I don’t recognize, I’ll immediately do research on that area or subdivision. This allows me to determine right away if this is an area I should skip – if so, I’ll cross all of those properties off to. From there, I’ll start working my way down the list researching property by property. Sometimes you might get to the end of the tax sale list and there isn’t a single property that you want to place a bid on and that’s ok. Other times there will be numerous properties you’ll want to bid on.

The next step almost runs in parallel to the research step and that’s to organize your research. I personally use a spreadsheet and many of the academy members use the same spreadsheet as well, since it’s provided with membership. This allows me to go property by property writing down a few basic notes and that all important max bid amount into an easy to read and identify location. It’s also convenient to have so that it doesn’t match exactly what the guy sitting to you at the auction has. If you both print out the auction list and you handwrite your max bid next to everything, then your nosy neighbor seated beside you is going to know what you’re paying.

Now, with that said, I do still print the auction list out as I mentioned and I take it with me to auction. This applies for both in person and online auction as it’s crucial to be organized. I take the original list just incase they change the order properties are being auctioned off, skip some properties or announce them in a manner that my spreadsheet doesn’t reflect. It’s just a backup tool more and anything else.

So I have my spreadsheet and my auction list. These two things will go into a small ½” three ring binder. This does numerous things to help me – first it keeps the auction list in order and in an easy to read format. Instead of flipping through stapled pages or out of order pages, I simply flip to where I want to flip. In the front of the list will be my spreadsheet print out. This provide my max bids and other pertinent info in an easy to read format. The folder itself allows me to have something hard to write on. It also is something tangible to hold onto besides just a stack of papers, which could easy be blown area or left behind. And lastly, it provides some privacy for my papers.

This leads directly into the last part of my preauction process. I’ll have my binder ready to go and then I’ll start the final prep. While reading the auction information it should have told me the specifics about registration. Make sure you have read all of this well in advance of the auction – in some cases, they’ll want a signed affidavit from the county tax collector that states you don’t owe any delinquent taxes and that affidavit could take some time to get. They might also require a wired deposit, preregistration and a variety of other things that can’t be done the day before the auction so keep all of this in mind.

But once all of that stuff is taken care of, I’ll load my binder up with a couple of pens to take notes and record winnings bids, my identification, my deposit if required and maybe a business card or two. The evening before hte auction all of this is put next to the door with my keys on top of it so I don’t forget it. If I suspect a long auction I’ll consider carrying a water and a snack or maybe some change for a vending machine, depending on what is allowed at the auction. I’ll arrive early, I’ll sit as close to the auctioneer as possible with a direct line of site and then I’ll stay for the duration of the auction.

So, there it is. That’s the preauction process I’ve used for 17 years now. We obviously go into deeper detail inside the tax sale academy, but feel free to use my process and modify it as you desire and hopefully this helps you get the success you desire.

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If we can help in any way, there are a number of incredibly useful links down below in today’s show notes, including one that will take you to our primary website which is TaxSaleAcademy.com. When you get there you can get a free copy of my book, The Tax Sale Playbook, we’ll ship you that free copy if you cover the nominal shipping cost. Or if you’re ready to learn in a detailed and step by step manner we highly suggest joining The Tax Sale Academy.

Thanks again for listening.

Take care and make it a successful day.