Buy or control real estate when owners are under pressure. Post 88

Delinquent Tax Trends

news – press.com 5/11/2008

Property owners failed to pay taxes this year on more land parcels than ever. However, the number of parcels paid after the deadline but before the tax certificate sale has remained very high.

Table gotten from:   http://www.news-press.com/apps/pbcs.dll/article?AID=/20080509/RE/80509084/1076

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Coach Mitch’s REFLECTIONS 

Look at the % of Parcels Sold Prior To Sale

I added this column to the grid. This is the telling number. On average, 34% of the tax delinquent properties were sold prior to the tax auction. That tells me that a very high percentage of the properties are in play. Any time that something is in play, there is a good chance that a deal can be made.

58,000 tax delinquent properties

And that is only in one county. With that many properties at risk, do you think that you can find just one that can be gotten at a very good price? If you started looking, I am sure that many would raise their hand and say, “Pick me, pick me.” There are soooo many available properties that you must have a system in order to keep things straight.

What if you set a goal to purchase one?

Let’s make believe that you decided to try to buy one tax delinquent property. What would you need to do?

Let’s figure it out

In Florida, you have two years from the tax lien auction until the earliest time that a property can be sold in a tax deed auction. Therefore, 58,000 properties / 730 days = 80 properties to be seen per day. Can you do that? Investigate 80 properties a day? Of course not. Not on our best day.

That’s what I mean when I say, “There are soooo many properties to choose from that you must have a system.”

Coach Mitch’s “Ridiculously Simple System…”

Step 3 in the system is: Determine the type of property that you are interested in.

Since it is likely that every type of property will be tax delinquent, you must narrow your focus to only those property types that are of to interest you.

If you like Single Family Homes, (like me) then focus on them. If you like multifamily properties, (like me) then focus on them. If you like vacant lots in a development, (like me) then focus on them. Do you get the point?

Let’s say that your choices amount to 10% of the total. In this case that is 5800 properties. That’s still too many but let’s keeps going; 5800 properties / 730 days = 8 properties to see each day. Imagine seeing 8 properties every single day? It’s hard.

Step 4 in the system is: Market to your prospect properties.

If you were to send out 50 postcards per week and if you got back a healthy 8% response, then you will have 4 properties to see that week and the owners will have indicated that they want to see you. Four properties are a good number to see because the due diligence can be accomplished and the inspections and negotiations will not be overwhelming.

Coach Mitch’s “famous $1 Option.”

The probability is that you will Option at least 2 of the 4 properties that you see. This is great! You are adding to your inventory of properties. At the end of one month, 4 1/3 weeks, you will have seen 17 properties, Optioned 8 and probably purchased 1 for all cash or some small amount of cash and some other consideration, like a note.

Now you can start marketing

When you advertise, you can say, “Investor has too many properties – throughout the county. Must sell now. 555-1234″ When people call, they will ask, “What do you have?” You answer, “What are you looking for?” They will ask, “Where are they located?” You will ask, “Where do you want to live?” They will ask, “What’s the price?” You can ask, “What amount are you comfortable with each month?” This lets you back into the selling price by doing advanced mortgage calculations which translates to the price a prospect can afford. The key is to acquire useful information – in a way that the prospect is willing to give it to you and not be offended that you did not answer their question directly.

Remember

The phone will ring from your marketing and you will be able to make deals relative to the pricing that you got from the seller.

Coach Mitch’s “famous $1 Option.” has a clause that allows you to change the price you give the owner. This is so powerful! I regularly role play with my coaching students and practice negotiating conversations, so when this issue occurs, they are ready to take advantage of the situation. Mental preparation is the key. Real estate investing and chess have many similarities. In both, to be successful, you must look several moves ahead.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

See you at the top,