Ted Thomas - Arapahoe County, CO
ON-LINE COURSE Session #8
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Ted Thomas - Arapahoe County, CO
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TED THOMAS: Was today the busiest day? Does everybody register today or can I come in anytime and do this. TAX CLERK: We’d rather that you came in before the tax sale to register. It’s quite busy on the day of the sale. I’ll just tell you that anything greater than $100 or less than $2,000 is in rotation buyer-number order. Anything under that or over that amount is open-floor bidding. The highest bidder will get the certificate. TED THOMAS: Do I sign this? TAX CLERK: That’s right. We offer safekeeping. We would keep your certificate of purchase, rather than you taking it home with you. Here’s how that works. When we receive the redemption payment, we have your certificate here and we can automatically cut you a check and send it out to you. If you have the certificate yourself, a redemption notice will be mailed to you. Then we Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 need to receive the certificate and, in return, we will cut the check and mail it out to you. TED THOMAS: I can just leave it here, then, so I don’t have to worry about it. TAX CLERK: Yes, you can; but you would need to fill that out. TED THOMAS: Alright. I’ll do that. TAX CLERK: This is a letter that tells you what will happen after you purchase your certificate. You need to read that. This is the RTC and FDIC Statement of Policy regarding the payment of state and local property taxes. TED THOMAS: Alright. So these are two different ones that I have. TAX CLERK: But they’re identical. out?
TED THOMAS: What else would you need back from me? Just this one thing filled
TAX CLERK: That filled out, and this other form saying that you don’t have any relatives working for the county. This is the form that you already filled out. TED THOMAS: For the safekeeping one, I’m just going to have you keep the certificate here. TAX CLERK: That’s correct. TED THOMAS: Do I need a Social Security number on this one? TAX CLERK: Exactly how you are filed with the IRS. I’ll go into bookkeeping and validate your deposit. I’ll come back and give you your deposit slip. TED THOMAS: Okay, that’s great. So, we’re finished and that’s all there is to registering here at the Arapahoe County sale. All you have to do is come in and do the few documents I did. Most of the documents are even federal documents. This was from my taxes. I have a bidder’s number. She was kind enough to give me a list of all the properties and explain the rotation bidding. Finally, here are the rules of the sale. There are two other things that were included. One was a statement from the FDIC and the last one was from the RTC.
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Ron and Sue Hibbard Interview
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RON: I was formerly a schoolteacher, Ted. I made more money in one summer in real estate than I did in a year of teaching. I got out of the teaching business and started buying properties. I’ve been buying properties for years. I’ve bought over 400. Sue and I work together. She helps me out.
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ON-LINE COURSE Session #8 TED THOMAS: You guys have kind of a family business, then. RON: Sure. She does a lot of my in-house research for me and tells me what needs to be researched at the courthouse. I do the courthouse work. Then when it comes to renting it, we hold some for retirement. Others we turn for cash. They all have excellent equity. TED THOMAS: Does “turn” mean you sell it? RON: Yes, we sell it. Sue takes care of a lot of the rentals and preparing the leases. TED THOMAS: So you’re kind of in the business of buying and selling real estate for your own account. RON: That’s correct. right?
TED THOMAS: I understand that you’ve gone to tax sales from time to time. Is that RON: Yes. TED THOMAS: Tell me about what a tax sale is.
RON: We’re from Ohio. In Ohio, we buy the actual property at the tax sale and we get some fantastic buys.
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TED THOMAS: Give me an example of that.
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RON: We’ve done two within the last year and a half. One was a $55,000 house. We’ve got approximately $3,000 invested and it’s free and clear. Another one is a $57,000 house. We’ve got about $2,300 invested, free and clear. TED THOMAS: Wow. You’re telling me you bought a $57,000 house for $2,300? RON: That’s correct. TED THOMAS: Tell me how you do it. Just kind of walk me through the mechanics. How did you find out about it?
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RON: Basically, these are advertised in the local paper, which is The Daily Reporter. Sue does a lot of my initial research at the office to see when the property was procured and what the value of the property is. TED THOMAS: Would there be 100 people at the sale when you get there at this kind of bargain? RON: No. It’s not that competitive. Unless you know where to look in the paper, they’re scattered around. Once you get a system, it’s very easy. TED THOMAS: Would it be fair to say it’s fun, it’s easy, and anyone can do it? Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 RON: That’s correct. I recently expanded. Ohio has 88 counties. We’ve got another gentleman who is working with us. I’m going in and doing the groundwork, learning the counties’ procedures, and having him go in to do research. Right now, we’re probably working six to eight counties. Hopefully, we’ll be working 60-70 counties within the next year. TED THOMAS: Let’s talk about the little guy. The little guy only has $1,500. Can I get in this business for $1,500 or $2,000? RON: Sure. TED THOMAS: I could actually buy a house for that? RON: Sure.
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TED THOMAS: Did you ever buy a house for $1,500? RON: I bought a house for $900, Ted, free and clear.
TED THOMAS: No. Where did you buy that house? It’s not to live in. Nobody could live in it? RON: Sure. It’s occupied and people pay me rent. I bought it and they paid me back. This happens very often because people cannot pay their taxes or their mortgages. I will buy the property and let them just stay in it. That way, I don’t have a vacancy. If I buy a property that I’ve only got $900 in, and it’s worth $30,000, rather than going in, painting it, and cleaning it up… TED THOMAS: Let me stop you. You’re telling me you bought a house that had a value of $30,000 for $900? Give me another example like that. Did you buy another one like that? This is unbelievable.
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RON: We’ve bought several. I’ve got a property right now which I have no money invested in. When the woman passes away, I’ve got the option for $25,000; and it’s worth $90,000 today. TED THOMAS: Wow. RON: A lot of these are no-money-down transactions and a person with a credit card can buy them. TED THOMAS: Let’s go back to the sale. I go to the sale and I have an opportunity to buy a property that is ten cents on the dollar. Is that fair? RON: Sure. TED THOMAS: If I buy it for ten cents on the dollar, I get it and it doesn’t have any more mortgage on it, right? RON: That’s right.
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 TED THOMAS: And it doesn’t have any of those – what do you call those – encumbrances? RON: Liens. TED THOMAS: Liens and encumbrances. So it doesn’t have any of those things. Then, could I move into it?
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RON: Sure, you can do anything you want to with it. In Ohio, we always get what’s called title ins urance. That’s a guarantee of title. It’s a title insurance policy, and I recommend it for anyone. Not only do we get the house free and clear and get a deed, we’ve got a national company that stands behind it. If anyone ever comes in and says, “We’ve got a lien on the property,” or “We’ve got an interest in it,” they will come in and they will defend our free and clear property. TED THOMAS: Wow. That’s good. Does anybody have the ability to do this? What does it take to do this? Is this hard work? SUE: No. It’s really easy. Anybody could. TED THOMAS: Have you seen other people do it. SUE: There are some. TED THOMAS: Not too many, though. SUE: No. TED THOMAS: Why? Is it just because they don’t know what to do?
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SUE: Yes.
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TED THOMAS: How hard a job is it? Tell me how hard it is. Do you work 14 hours a day or anything like that? SUE: Maybe an hour. TED THOMAS: It takes an hour? How much would it take you to do a whole deal? From the time you found it until the time you sold it, would that take you maybe 100 hours? SUE: He takes care of that. TED THOMAS: How many hours did that take? RON: Ted, I’ve had some that take three or four hours. We’ve had some that we buy in areas we don’t care about. We will pick them up for pennies on the dollar. We’ll sell them at a discount and never get in the property. We just buy them reasonably and resell them to make a quick $5,000 to $10,000. TED THOMAS: How quickly could I make $5,000 in this business? Could I do it in a Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 month? RON: You probably could. If it’s anything under about $10,000 or $15,000, we don’t even look at it anymore because they’re out there. TED THOMAS: Could I make $10,000 a month doing this if I really studied? RON: Sure.
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Ted Thomas Interviews Lee Lineberger TED THOMAS: Lee, I understand this is a property that you bought at a tax sale. LEE LINEBERGER: That’s correct.
TED THOMAS: Can you kind of describe it to me? What are we looking at here? It looks like a lot of woods to me. LEE LINEBERGER: Basically, this is a wooded lot in its natural state. It’s a little over an acre. It’s a lake-access lot. That means about a mile from here is a boat launching ramp, where you can go down, put your boat in, and go fishing, picnicking, and swimming. You get all the use of the lakefront lot, but you don’t have to pay lakefront prices. That’s the reason this is an affordable lot. TED THOMAS: You say affordable. What would this sell for in the retail market? What’s this worth? LEE LINEBERGER: About $4,900. That’s what I sell them for. TED THOMAS: You sold that for $4,900 and you paid how much at the tax sale? LEE LINEBERGER: I believe it was $266. TED THOMAS: You paid $266 for that lot. That’s amazing. Do people just come in, clear this off, and put a home on it? LEE LINEBERGER: Yeah, they can clear it off and put a manufactured home on it, a stick-built house, or whatever they want to do. TED THOMAS: You’ll sell this to me for zero down payment and I can just own this property? How many years is it going to take me to buy it from you? LEE LINEBERGER: I’ll finance it for up to 20 years. TED THOMAS: Wow. That sounds great to me. Thanks.
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ON-LINE COURSE Session #8
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Ted Thomas Interviews Polk County, Iowa Tax Collector
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TAX COLLECTOR: The tax sale is delinquent taxes that we have unpaid at the time of the tax sale. We sell those liens to anyone who has any interest in buying. That way, we can collect the taxes that all the taxing bodies in Polk County need to cover their budgets. Our fiscal year ends June 30 and our annual tax sale is the third Monday of June. We bring in most of the money before the fiscal year ends. TED THOMAS: Basically, if a person like Ted Thomas didn’t make the tax payment on his house, you’ll do what in response to that? TAX COLLECTOR: I will sell your delinquent taxes. TED THOMAS: So that one of these people out here can buy those taxes. TAX COLLECTOR: Yes. What they’re buying is the taxes; not the property. TED THOMAS: Good. I refer to that from time to time. I make that mistake and I say “properties.” Remember that you’re only buying a certificate, which is like a piece of paper. What does that authorize them to do then? Do they just hold onto that piece of paper? TAX COLLECTOR: They hold that through a period of time. Our redemption period is two years. In that period of time, then, the delinquent taxpayer can come in and redeem. We are, at that point in time, a middleman. They come and pay the delinquent taxes plus the interest rate to us; and then we in turn give that money to the tax sale buyer. TED THOMAS: How much is the delinquent rate at this time? TAX COLLECTOR: The rate in Iowa is two percent a month.
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TED THOMAS: So that’s 24% a year. Who buys at these tax sales?
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TAX COLLECTOR: Anyone who has an interest in purchasing. An agent can purchase for a group of people. We have some people who put some of these certificates in their children’s names. What we require is a W-9 filled out with the Social Security number and the information for tax purposes, because we do have to have some 1099 filings. Basically, that’s what they need and they then have the opportunity to bid at the tax sale. TED THOMAS: A person buys the certificate at the tax sale and then they take it home. Let’s say they go back to Kansas, California, or wherever they go. Now they’re holding that certificate and the person here in Des Moines comes in and pays. What happens at that point?
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TAX COLLECTOR: That’s called a redemption. At that point in time we will communicate with the tax sale buyer. We have probably, in the meantime, mailed their certificate to them. We are not able to produce them right at the tax sales, so we mail them out to the certificate buyers. They send their certificate back to us and then we send them their money. Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 TED THOMAS: I see; and they get a 24% return, or at least two percent per month for the months it’s owned. TAX COLLECTOR: Right; and there’s a $10 certificate fee. TED THOMAS: Simply for doing the paperwork.
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TAX COLLECTOR: Yes.
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TED THOMAS: If I wanted to find out about these tax lien certificates, how do I go about finding out about it? TAX COLLECTOR: Every year we publish a delinquent tax list in one of the official publications in Iowa. We publish this delinquent tax listing. That is those delinquent taxes as of this year, May 31. The tax sale is June 20. By the time we get to the tax sale, other people have paid, so there are some of these that are published that won’t be offered at the tax sale because people have paid. TED THOMAS: If you’re a viewer and you’re seeing this, this is a 60-page document and there are maybe 50 per column here. What you would do is get a paper similar to this and you’d look up the different properties. What it shows in here is basically the parcel number, the person’s name, and how much the tax is. TAX COLLECTOR: This year, we’ve published approximately 4,500 parcels. TED THOMAS: There are 4,500 parcels in this material. There are 60 pages here so that will take a little reading and a little research.
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TAX COLLECTOR: The tax sale buyer then will be given a certificate of purchase at tax sale, which details a legal description of the property that they bought, the taxes, the assessments, and the interests in cost that were involved in the taxes that they bought. It has the official seal of the Treasurer and has both my signature and that of the Second Deputy of our Tax Division. This one also has been redeemed because there is a statement attached to it that it’s been paid. This is surrendered by the tax sale buyer and then we forward their money to them. TED THOMAS: This could all be done in the mail. TAX COLLECTOR: Yes. TED THOMAS: If someone was in another place, they just mail it.
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TAX COLLECTOR: Yes.
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TED THOMAS: Once you came to the sale and bought, you’d get a document like this in the mail a little later on. Would it be fair to say that more than 90% are redeemed, or paid for? TAX COLLECTOR: I would say that during that two-year period, yes. With the last
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 tax sale, we just started accumulating some different statistics that we hadn’t in the past. We had over 70% redemption on last year’s tax sale and that particular sale has another whole year to go. TED THOMAS: Won’t those be interesting numbers to see? I’m going to talk just a little bit about the process of this redemption; basically, paying for the property. If I bought this mythical certificate, and then in six months the person comes in and redeems the certificate, now I get paid. You’ll send me a check. Is there any possibility I could invest that money for the rest of the year somewhere else in this state?
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TAX COLLECTOR: We have subsequent sales. If anything is left over from the annual sale, tax sale buyers come in. A lot of times they take the money that they’ve gotten from other redemptions and plow it right back into buying some more certificates if they’re available. TED THOMAS: Would you have any information – certainly not detailed information – about how the other counties do it? Do they have the same situation? TAX COLLECTOR: With the way the law is, it really leaves it up to the discretion of the Treasurer in how they do subsequent sales. With some Treasurers in smaller counties, anytime somebody comes back in, if there’s something available, they’ll probably open the sale, sell it to them, and close the sale again. TED THOMAS: That’s kind of smart. TAX COLLECTOR: It’s adjourned because we basically open it again, sell whatever is available, and close it again. It’s adjourned from the annual sale. TED THOMAS: You used the word “adjourned.” It’s just adjourned temporarily until the next month. Could the person call the office here and find the information about when the next one is going to be? TAX COLLECTOR: Yes. We would also re-offer anything that a tax sale buyer neglected to pay for something that they bought. TED THOMAS: Or if the check wasn’t good? TAX COLLECTOR: Something like that. Then we would re-offer those. They have to have been advertised for us to be able to sell them.
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TED THOMAS: That gets back to our newspaper then, doesn’t it? That’s a publication. We talked about paying for it. Do I have to pay cash for this? TAX COLLECTOR: No, we will take a personal check. TED THOMAS: Wow. That’s nice. TAX COLLECTOR: We also accept any other form of guaranteed funds. We do require settlement at the end of the day of the tax sale. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 TED THOMAS: Whatever is left over, they could come back to an adjournment sale next month and bid on it then. TAX COLLECTOR: Yes. TED THOMAS: Okay, so there’s an opening. If you missed the sale, wait until next month and then come back. They might have ten, one hundred, or whatever properties are available. Once again, they’ll open the bidding process, so that’s something that a person should keep in mind.
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Susan Clark - Profit Centers
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We’ve got wholesaling. Many of you know what this is. Wholesaling is as simple as you’re going to give a bargain. It is bargains for bargain hunters. It can be an ugly house; but do you know what? Do you know you can take a 1. Wholesaling: pretty house and you can wholesale it to another investor because you want Bargains to Bargain Hunters some quick cash right now?
Profit Centers
2. Retailing: Buy Low - Sell High
Maybe you’ve got $40,000 in that house and you don’t want to take the time to put in new paint, carpet, and lighting, and hold and market it. You just want $5,000 or $7,000 out of it right now and then you’ll give them the other $33,000. Is that not a good deal for them? Sure. Is it a good deal for you? Can anyone think of any marketing costs they might be able to cover if they suddenly got $5,000 or $7,000 in? Can anybody think of any empty vacancies? What’s the most expensive thing in our business? Holding costs. Vacancies. You got a great deal. You’ve got all these properties that have a $200 positive cash flow. Wow! We are making it now! What happens when one of them goes vacant? It sucks the other 15 or 20 right into that to pay those bills. Wholesale is a great way to cover that.
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In retailing, you buy low and sell high. That’s the standard way everyone thinks of real estate. You have to retail it. You buy it low, you turn around and retail it, sell it high, and someone cashes you out. However, there’s owner financing. You can finance these things instead of the bank.
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Owner financing is nothing more than you getting them in the home without making them go to the bank and get a new loan. It does not mean you personally have to have $150,000 to loan them and tie up for years and years and years. Owner financing is a way. When they have a large enough down payment, you can go ahead and sell them that house, but you’re
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ON-LINE COURSE Session #8 going to do it in a way that’s easy for them to get in. We’re going to talk in just a minute about who your market is. You need to make it as easy as you can for them to get into this house.
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Lease option is a great way to go. Ted referred earlier to holding properties. We do hold properties but we don’t ever rent them. Did you hear 3. Owner Financing: that? We hold properties, but we do not You finance instead of Bank rent them. If you’re not sure, a lease 4. Lease Option: option is nothing more than giving Lease Until Buyer Get A Loan them the option to purchase that house at a later date. What they are paying for in their option is the agreement staying open for that period of time. It’s so that you can sell them that house under those agreed terms, which are the terms that you put in your contract.
Profit Centers
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A lease purchase is different. In a lease purchase, you have to sell them that house. They’re leasing it and they’ve already agreed to purchase. With a lease option, though, they have the option – yes or no – whether to buy it. Do you know why that’s important? It’s because that fee they give you is a non-refundable option fee. Everybody say, “Non-refundable.” Get that it because that’s the big, big difference. That’s non-refundable. If they choose to move out for whatever reason or, heaven forbid, if they have to move out because they just forgot to pay the lease for a little while, then you keep that option fee and you keep it completely legally. That was their fee for you to hold that agreement open and take that house off the market while they were making up their mind. You keep it. The difference is that we’re not landlords. What happens if you have 20 homes with a $200 positive cash flow on each home and one goes vacant? You don’t only have to cover the mortgage. What else do you have to do when someone moves out of one of your homes? You have to clean it up, paint it, usually put in new carpeting, and update it. You have to get all the dog and cat stuff off the carpet and the crayons off the walls. That pretty quickly sucks up any positive cash flow you had. However, if you had your option fee on it, then who do you think is really paying for you to go back in and make that house gorgeous again? The people who just moved out. You may not make $5,000 on that option fee if you took that, but it’s going to pay for all that renovating until you’re not down. You truly did make $200 cash flow each month while they were in the house because you don’t have to turn around and pay it all back to get it fixed up. Those are the lease options.
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There’s another thing about lease options that’s really important to understand. Remember that we were saying that you need cash right now and you need your payday – your cash – later. By putting lease options in, here’s what that’s going to do. Picture a long tube – like what your Christmas wrapping paper comes in – and you’re filling it with ping-pong balls. Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 What’s going to happen eventually? It’s going to fill up. What happens when it fills up? It pops out the other end, doesn’t it? It can’t hold them. We’re doing the same thing with our lease options. We’re filling that pipeline with lease options. Eventually, you’re going to get enough in there and somebody down the line is going to say, “I don’t want to lease anymore. I’m ready to purchase this,” and they pop out. You say, “Okay. No problem,” and you get your big, equity payday. If you’ve constantly got them in the funnel, then you’re going to have three things. You’re going to have your payday right now, because you’re going to have your option fee; so this month you took in that cash. You’re going to have a passive income over those months of your positive cash flow because you never let them in the house for the exact same thing that you’re going to pay. You’re always going to have it up a little bit, so you’ve got a positive cash flow over the month. Then, guess what? You get a phone call that they’re ready to go ahead and get their mortgage; and you get another payday. So, there’s a big difference. Hold properties? Absolutely. You have to in order to build your portfolio and have it for later when you’re ready to really feel like you don’t ever have to check another voice mail message again. However, in the meantime, you need to make sure you cover your monthly cash flow by getting those option fees.
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Ted Thomas Interviews Dorothy Vogt, Arapahoe County, CO Treasurer
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DOROTHY: Proceeds of this sale will be distributed like this. The base amount of tax and the delinquent interest will be distributed to the various taxing authorities for whom we collect. Therefore, they’ve gotten their money. it.
TED THOMAS: Now you can run the government because you’ve got the money to do
DOROTHY: They can pay their bills. We’ve taken this final step in the collection process.
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county.
The bonus bids – those amounts that are bid above the base amount – belong to the TED THOMAS: It’s a bonus to the county.
DOROTHY: Those dollars are retained by the county and go into the county’s general fund. They are important dollars for the county. Those bonus bids pay some bills for the county.
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We would hope that everybody who attends our sale would have taken advantage of reviewing our publication which lists far greater detail, as far as legal description and situs address are concerned.
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 TED THOMAS: Good. Were there 1,200 or 1,500 of those this year? DOROTHY: We advertised 1,287 this year. Then, when the publication goes out, it carries on the back a brief of our sale procedures.
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Then, on the day of the sale, every buyer is provided with a list to use during the sale. This advertised list does not, of course, reflect payments that have been received between the point of advertising and the day of the sale. This list has all of those deleted. TED THOMAS: Excellent. DOROTHY: So, this list is much more efficient for people to have to try to follow through the newspaper to keep up with the sale. TED THOMAS: Let me ask you a difficult question. For the outside world – the people who are looking at this – there’s sort of a hidden viewpoint that this is some kind of get-richquick thing and that they’re going to end up buying properties. What percentage of people really end up with a property?
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DOROTHY: The vast majority of liens that we sell are redeemed. We probably have less than one percent that will ever go to deed. TED THOMAS: So this really is something that’s good for investors who are looking for – I guess we can’t use the word “guarantee” – a much higher return than they could get in the bank. DOROTHY: Given rates as they’ve been in recent years, this rate is certainly very, very attractive to investors. I’m never going to say that this has no risk. There is no such thing. Anyone who thinks there is a totally risk-free investment is being misled. Everything carries a certain amount of risk; and we make no guarantee of the condition or the marketability of any piece of property that may ultimately be acquired via a Treasurer’s deed. TED THOMAS: For a person coming from the outside who would like to come to Colorado and do this anywhere in the state – not necessarily in this county – is this really difficult to learn? Is it something that takes hours of study? Or is it something that, in a few hours, a person could at least get a basis for so they could invest and feel comfortable? DOROTHY: Oh, I think it wouldn’t even take a few hours. I think that a person could get a feel for it and understand the process very quickly. In my opinion, the best way for someone who’s new to this to acquire some knowledge about it, is first of all to call their County Treasurer – be it in this office or any other – and ask for a copy of their publication. They should look that over, familiarize themselves a bit with that, and try to figure out what they need to know from that point forward. Then they should go to that Treasurer’s office or call that Treasurer’s office and ask questions. Then, they should attend a sale. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 TED THOMAS: Observe what we observed today. DOROTHY: Yes. Perhaps someone attending a sale for the first time might just sit there. I’ve seen this happen. They just sit there and hang back for a half hour or an hour. They could just watch what’s going on, and then jump in and begin to participate. It isn’t something that’s terribly scientific and difficult to understand. TED THOMAS: Dorothy, you’re an outstanding interview. Thank you.
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Ted Thomas - Closing Remarks
Well, folks, it’s time to button it up. We started out learning about tax certificates. You could earn 16%, 18%, or 24%. That sure sounds good, but it sounds even better to be able to buy properties for 10, 20, or 30 cents on the dollar. This is a great thing. Do you have to be cautious? Yes, you have to be cautious. You don’t want to buy things that you haven’t seen. You don’t want to buy things that you haven’t researched. This is an easy business, though. It’s not difficult. It’s available in all 3,300 counties. Anybody can do it. You can start out with $40. You can use $400, $600, or you can use thousands of dollars. It’s going to be up to you. I’d attend a few auctions and have a little fun with it. Don’t feel like you have to get out there and make a million dollars right away. Go to a few auctions; watch and observe. If you want to be the online person doing it, that’s okay with me. However, remember to get someone to go, take a picture, and look at the property. Again, be cautious. It’s not a difficult way to make money. It’s an unusual way to make money. I’ve seen people start out with a few hundred dollars and end up with hundreds of thousands of dollars. I’ve seen other people who just chugged along and bought those tax certificates again and again. They were happy making 16%, 18%, or 24%. I’ve seen people who started out using their IRA, which I recommended earlier. If you get involved, put your IRA in there. It’s nice and safe and secure. It’s the only business I know where you pray people don’t pay their taxes so you can end up with property. You’re on your way, now. You have a lot of Resource information. You want to take
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ON-LINE COURSE Session #8 advantage of that. Sure, there’s some risk but it’s very, very low. I think it’s really wealth without risk if you just use your head a little bit. Review the course again when you have time and use your Resource materials. Congratulations on finishing the course! I know there’s a ton of information that you’ve just digested. The best thing you can do right now is start making some calls and gathering information for your first tax lien auction. I’m looking forward to signing your $500 check and sending you a graduation certificate!
Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8
Intentionally left blank
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 Index
Subject Nbr
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Transcript Track Elapsed Page Nbr Time
1
Ted Thomas - registering to bid in Arapahoe County, CO auction
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1
0:00
2
Ted Thomas - interviews Ron and Sue Hibbard
2
2
0:00
3
Ron and Sue - purchased a $55,000 home for $3,000
3
2
1:05
4
Ron - auction ad in newspaper
3
2
1:35
5
Ron - buys house for $900
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2
2:40
6
Ron - option to purchase
4
2
3:35
7
Ron - buy title insurance for title protection
5
2
4:15
8
Ron and Sue - how hard of a job s this?
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2
4:55
9
Ted - interviews Lee Lineburger
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2
5:50
10
Ted Thomas - interviews Polk County, Iowa Tax Collector
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3
0:00
11
Tax Collector - who can buy tax certificates
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3
1:45
12
Tax Collector - redemption
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3
2:40
13
Tax Collector - where you can find about tax lien auctions
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3
3:20
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Tax Collector - form of documentation proving purchase
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3
4:35
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Tax Collector - redemption rate
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3
5:30
16
Tax Collector - unsold certificates, subsequent sales
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3
6:20
Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 Index
Subject Nbr
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Transcript Track Elapsed Page Nbr Time
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Tax Collector - form of payment
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3
7:55
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Susan Clark - Profit Centers - wholesaling
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3
8:35
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Susan Clark - Profit Centers - retailing
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3
9:35
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Susan Clark - Profit Centers - owner financing
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3
9:45
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Susan Clark - Profit Centers - lease option
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3
10:25
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Susan Clark - Profit Centers - lease purchase
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3
11:05
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Susan Clark - Profit Centers - equity paydays
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3
12:50
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Ted Thomas - interviews Dorothy Vogt, Treasurer, Arapahoe County CO 12
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0:00
25
Treasurer - bonus bids
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4
0:25
26
Treasurer - review publications prior to sale
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4
0:50
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Treasurer - list at sale of properties available
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4
1:25
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Treasurer - most properties will redeem
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4
2:15
29
Ted Thomas - review
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4
4:45
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Ted Thomas - Arapahoe County, CO
1
TED THOMAS: Was today the busiest day? Does everybody register today or can I come in anytime and do this. TAX CLERK: We’d rather that you came in before the tax sale to register. It’s quite busy on the day of the sale. I’ll just tell you that anything greater than $100 or less than $2,000 is in rotation buyer-number order. Anything under that or over that amount is open-floor bidding. The highest bidder will get the certificate. TED THOMAS: Do I sign this? TAX CLERK: That’s right. We offer safekeeping. We would keep your certificate of purchase, rather than you taking it home with you. Here’s how that works. When we receive the redemption payment, we have your certificate here and we can automatically cut you a check and send it out to you. If you have the certificate yourself, a redemption notice will be mailed to you. Then we Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 need to receive the certificate and, in return, we will cut the check and mail it out to you. TED THOMAS: I can just leave it here, then, so I don’t have to worry about it. TAX CLERK: Yes, you can; but you would need to fill that out. TED THOMAS: Alright. I’ll do that. TAX CLERK: This is a letter that tells you what will happen after you purchase your certificate. You need to read that. This is the RTC and FDIC Statement of Policy regarding the payment of state and local property taxes. TED THOMAS: Alright. So these are two different ones that I have. TAX CLERK: But they’re identical. out?
TED THOMAS: What else would you need back from me? Just this one thing filled
TAX CLERK: That filled out, and this other form saying that you don’t have any relatives working for the county. This is the form that you already filled out. TED THOMAS: For the safekeeping one, I’m just going to have you keep the certificate here. TAX CLERK: That’s correct. TED THOMAS: Do I need a Social Security number on this one? TAX CLERK: Exactly how you are filed with the IRS. I’ll go into bookkeeping and validate your deposit. I’ll come back and give you your deposit slip. TED THOMAS: Okay, that’s great. So, we’re finished and that’s all there is to registering here at the Arapahoe County sale. All you have to do is come in and do the few documents I did. Most of the documents are even federal documents. This was from my taxes. I have a bidder’s number. She was kind enough to give me a list of all the properties and explain the rotation bidding. Finally, here are the rules of the sale. There are two other things that were included. One was a statement from the FDIC and the last one was from the RTC.
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Ron and Sue Hibbard Interview
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RON: I was formerly a schoolteacher, Ted. I made more money in one summer in real estate than I did in a year of teaching. I got out of the teaching business and started buying properties. I’ve been buying properties for years. I’ve bought over 400. Sue and I work together. She helps me out.
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ON-LINE COURSE Session #8 TED THOMAS: You guys have kind of a family business, then. RON: Sure. She does a lot of my in-house research for me and tells me what needs to be researched at the courthouse. I do the courthouse work. Then when it comes to renting it, we hold some for retirement. Others we turn for cash. They all have excellent equity. TED THOMAS: Does “turn” mean you sell it? RON: Yes, we sell it. Sue takes care of a lot of the rentals and preparing the leases. TED THOMAS: So you’re kind of in the business of buying and selling real estate for your own account. RON: That’s correct. right?
TED THOMAS: I understand that you’ve gone to tax sales from time to time. Is that RON: Yes. TED THOMAS: Tell me about what a tax sale is.
RON: We’re from Ohio. In Ohio, we buy the actual property at the tax sale and we get some fantastic buys.
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TED THOMAS: Give me an example of that.
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RON: We’ve done two within the last year and a half. One was a $55,000 house. We’ve got approximately $3,000 invested and it’s free and clear. Another one is a $57,000 house. We’ve got about $2,300 invested, free and clear. TED THOMAS: Wow. You’re telling me you bought a $57,000 house for $2,300? RON: That’s correct. TED THOMAS: Tell me how you do it. Just kind of walk me through the mechanics. How did you find out about it?
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RON: Basically, these are advertised in the local paper, which is The Daily Reporter. Sue does a lot of my initial research at the office to see when the property was procured and what the value of the property is. TED THOMAS: Would there be 100 people at the sale when you get there at this kind of bargain? RON: No. It’s not that competitive. Unless you know where to look in the paper, they’re scattered around. Once you get a system, it’s very easy. TED THOMAS: Would it be fair to say it’s fun, it’s easy, and anyone can do it? Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 RON: That’s correct. I recently expanded. Ohio has 88 counties. We’ve got another gentleman who is working with us. I’m going in and doing the groundwork, learning the counties’ procedures, and having him go in to do research. Right now, we’re probably working six to eight counties. Hopefully, we’ll be working 60-70 counties within the next year. TED THOMAS: Let’s talk about the little guy. The little guy only has $1,500. Can I get in this business for $1,500 or $2,000? RON: Sure. TED THOMAS: I could actually buy a house for that? RON: Sure.
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TED THOMAS: Did you ever buy a house for $1,500? RON: I bought a house for $900, Ted, free and clear.
TED THOMAS: No. Where did you buy that house? It’s not to live in. Nobody could live in it? RON: Sure. It’s occupied and people pay me rent. I bought it and they paid me back. This happens very often because people cannot pay their taxes or their mortgages. I will buy the property and let them just stay in it. That way, I don’t have a vacancy. If I buy a property that I’ve only got $900 in, and it’s worth $30,000, rather than going in, painting it, and cleaning it up… TED THOMAS: Let me stop you. You’re telling me you bought a house that had a value of $30,000 for $900? Give me another example like that. Did you buy another one like that? This is unbelievable.
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RON: We’ve bought several. I’ve got a property right now which I have no money invested in. When the woman passes away, I’ve got the option for $25,000; and it’s worth $90,000 today. TED THOMAS: Wow. RON: A lot of these are no-money-down transactions and a person with a credit card can buy them. TED THOMAS: Let’s go back to the sale. I go to the sale and I have an opportunity to buy a property that is ten cents on the dollar. Is that fair? RON: Sure. TED THOMAS: If I buy it for ten cents on the dollar, I get it and it doesn’t have any more mortgage on it, right? RON: That’s right.
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 TED THOMAS: And it doesn’t have any of those – what do you call those – encumbrances? RON: Liens. TED THOMAS: Liens and encumbrances. So it doesn’t have any of those things. Then, could I move into it?
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RON: Sure, you can do anything you want to with it. In Ohio, we always get what’s called title ins urance. That’s a guarantee of title. It’s a title insurance policy, and I recommend it for anyone. Not only do we get the house free and clear and get a deed, we’ve got a national company that stands behind it. If anyone ever comes in and says, “We’ve got a lien on the property,” or “We’ve got an interest in it,” they will come in and they will defend our free and clear property. TED THOMAS: Wow. That’s good. Does anybody have the ability to do this? What does it take to do this? Is this hard work? SUE: No. It’s really easy. Anybody could. TED THOMAS: Have you seen other people do it. SUE: There are some. TED THOMAS: Not too many, though. SUE: No. TED THOMAS: Why? Is it just because they don’t know what to do?
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SUE: Yes.
8
TED THOMAS: How hard a job is it? Tell me how hard it is. Do you work 14 hours a day or anything like that? SUE: Maybe an hour. TED THOMAS: It takes an hour? How much would it take you to do a whole deal? From the time you found it until the time you sold it, would that take you maybe 100 hours? SUE: He takes care of that. TED THOMAS: How many hours did that take? RON: Ted, I’ve had some that take three or four hours. We’ve had some that we buy in areas we don’t care about. We will pick them up for pennies on the dollar. We’ll sell them at a discount and never get in the property. We just buy them reasonably and resell them to make a quick $5,000 to $10,000. TED THOMAS: How quickly could I make $5,000 in this business? Could I do it in a Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 month? RON: You probably could. If it’s anything under about $10,000 or $15,000, we don’t even look at it anymore because they’re out there. TED THOMAS: Could I make $10,000 a month doing this if I really studied? RON: Sure.
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Ted Thomas Interviews Lee Lineberger TED THOMAS: Lee, I understand this is a property that you bought at a tax sale. LEE LINEBERGER: That’s correct.
TED THOMAS: Can you kind of describe it to me? What are we looking at here? It looks like a lot of woods to me. LEE LINEBERGER: Basically, this is a wooded lot in its natural state. It’s a little over an acre. It’s a lake-access lot. That means about a mile from here is a boat launching ramp, where you can go down, put your boat in, and go fishing, picnicking, and swimming. You get all the use of the lakefront lot, but you don’t have to pay lakefront prices. That’s the reason this is an affordable lot. TED THOMAS: You say affordable. What would this sell for in the retail market? What’s this worth? LEE LINEBERGER: About $4,900. That’s what I sell them for. TED THOMAS: You sold that for $4,900 and you paid how much at the tax sale? LEE LINEBERGER: I believe it was $266. TED THOMAS: You paid $266 for that lot. That’s amazing. Do people just come in, clear this off, and put a home on it? LEE LINEBERGER: Yeah, they can clear it off and put a manufactured home on it, a stick-built house, or whatever they want to do. TED THOMAS: You’ll sell this to me for zero down payment and I can just own this property? How many years is it going to take me to buy it from you? LEE LINEBERGER: I’ll finance it for up to 20 years. TED THOMAS: Wow. That sounds great to me. Thanks.
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ON-LINE COURSE Session #8
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Ted Thomas Interviews Polk County, Iowa Tax Collector
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TAX COLLECTOR: The tax sale is delinquent taxes that we have unpaid at the time of the tax sale. We sell those liens to anyone who has any interest in buying. That way, we can collect the taxes that all the taxing bodies in Polk County need to cover their budgets. Our fiscal year ends June 30 and our annual tax sale is the third Monday of June. We bring in most of the money before the fiscal year ends. TED THOMAS: Basically, if a person like Ted Thomas didn’t make the tax payment on his house, you’ll do what in response to that? TAX COLLECTOR: I will sell your delinquent taxes. TED THOMAS: So that one of these people out here can buy those taxes. TAX COLLECTOR: Yes. What they’re buying is the taxes; not the property. TED THOMAS: Good. I refer to that from time to time. I make that mistake and I say “properties.” Remember that you’re only buying a certificate, which is like a piece of paper. What does that authorize them to do then? Do they just hold onto that piece of paper? TAX COLLECTOR: They hold that through a period of time. Our redemption period is two years. In that period of time, then, the delinquent taxpayer can come in and redeem. We are, at that point in time, a middleman. They come and pay the delinquent taxes plus the interest rate to us; and then we in turn give that money to the tax sale buyer. TED THOMAS: How much is the delinquent rate at this time? TAX COLLECTOR: The rate in Iowa is two percent a month.
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TED THOMAS: So that’s 24% a year. Who buys at these tax sales?
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TAX COLLECTOR: Anyone who has an interest in purchasing. An agent can purchase for a group of people. We have some people who put some of these certificates in their children’s names. What we require is a W-9 filled out with the Social Security number and the information for tax purposes, because we do have to have some 1099 filings. Basically, that’s what they need and they then have the opportunity to bid at the tax sale. TED THOMAS: A person buys the certificate at the tax sale and then they take it home. Let’s say they go back to Kansas, California, or wherever they go. Now they’re holding that certificate and the person here in Des Moines comes in and pays. What happens at that point?
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TAX COLLECTOR: That’s called a redemption. At that point in time we will communicate with the tax sale buyer. We have probably, in the meantime, mailed their certificate to them. We are not able to produce them right at the tax sales, so we mail them out to the certificate buyers. They send their certificate back to us and then we send them their money. Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 TED THOMAS: I see; and they get a 24% return, or at least two percent per month for the months it’s owned. TAX COLLECTOR: Right; and there’s a $10 certificate fee. TED THOMAS: Simply for doing the paperwork.
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TAX COLLECTOR: Yes.
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TED THOMAS: If I wanted to find out about these tax lien certificates, how do I go about finding out about it? TAX COLLECTOR: Every year we publish a delinquent tax list in one of the official publications in Iowa. We publish this delinquent tax listing. That is those delinquent taxes as of this year, May 31. The tax sale is June 20. By the time we get to the tax sale, other people have paid, so there are some of these that are published that won’t be offered at the tax sale because people have paid. TED THOMAS: If you’re a viewer and you’re seeing this, this is a 60-page document and there are maybe 50 per column here. What you would do is get a paper similar to this and you’d look up the different properties. What it shows in here is basically the parcel number, the person’s name, and how much the tax is. TAX COLLECTOR: This year, we’ve published approximately 4,500 parcels. TED THOMAS: There are 4,500 parcels in this material. There are 60 pages here so that will take a little reading and a little research.
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TAX COLLECTOR: The tax sale buyer then will be given a certificate of purchase at tax sale, which details a legal description of the property that they bought, the taxes, the assessments, and the interests in cost that were involved in the taxes that they bought. It has the official seal of the Treasurer and has both my signature and that of the Second Deputy of our Tax Division. This one also has been redeemed because there is a statement attached to it that it’s been paid. This is surrendered by the tax sale buyer and then we forward their money to them. TED THOMAS: This could all be done in the mail. TAX COLLECTOR: Yes. TED THOMAS: If someone was in another place, they just mail it.
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TAX COLLECTOR: Yes.
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TED THOMAS: Once you came to the sale and bought, you’d get a document like this in the mail a little later on. Would it be fair to say that more than 90% are redeemed, or paid for? TAX COLLECTOR: I would say that during that two-year period, yes. With the last
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 tax sale, we just started accumulating some different statistics that we hadn’t in the past. We had over 70% redemption on last year’s tax sale and that particular sale has another whole year to go. TED THOMAS: Won’t those be interesting numbers to see? I’m going to talk just a little bit about the process of this redemption; basically, paying for the property. If I bought this mythical certificate, and then in six months the person comes in and redeems the certificate, now I get paid. You’ll send me a check. Is there any possibility I could invest that money for the rest of the year somewhere else in this state?
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TAX COLLECTOR: We have subsequent sales. If anything is left over from the annual sale, tax sale buyers come in. A lot of times they take the money that they’ve gotten from other redemptions and plow it right back into buying some more certificates if they’re available. TED THOMAS: Would you have any information – certainly not detailed information – about how the other counties do it? Do they have the same situation? TAX COLLECTOR: With the way the law is, it really leaves it up to the discretion of the Treasurer in how they do subsequent sales. With some Treasurers in smaller counties, anytime somebody comes back in, if there’s something available, they’ll probably open the sale, sell it to them, and close the sale again. TED THOMAS: That’s kind of smart. TAX COLLECTOR: It’s adjourned because we basically open it again, sell whatever is available, and close it again. It’s adjourned from the annual sale. TED THOMAS: You used the word “adjourned.” It’s just adjourned temporarily until the next month. Could the person call the office here and find the information about when the next one is going to be? TAX COLLECTOR: Yes. We would also re-offer anything that a tax sale buyer neglected to pay for something that they bought. TED THOMAS: Or if the check wasn’t good? TAX COLLECTOR: Something like that. Then we would re-offer those. They have to have been advertised for us to be able to sell them.
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TED THOMAS: That gets back to our newspaper then, doesn’t it? That’s a publication. We talked about paying for it. Do I have to pay cash for this? TAX COLLECTOR: No, we will take a personal check. TED THOMAS: Wow. That’s nice. TAX COLLECTOR: We also accept any other form of guaranteed funds. We do require settlement at the end of the day of the tax sale. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 TED THOMAS: Whatever is left over, they could come back to an adjournment sale next month and bid on it then. TAX COLLECTOR: Yes. TED THOMAS: Okay, so there’s an opening. If you missed the sale, wait until next month and then come back. They might have ten, one hundred, or whatever properties are available. Once again, they’ll open the bidding process, so that’s something that a person should keep in mind.
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Susan Clark - Profit Centers
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We’ve got wholesaling. Many of you know what this is. Wholesaling is as simple as you’re going to give a bargain. It is bargains for bargain hunters. It can be an ugly house; but do you know what? Do you know you can take a 1. Wholesaling: pretty house and you can wholesale it to another investor because you want Bargains to Bargain Hunters some quick cash right now?
Profit Centers
2. Retailing: Buy Low - Sell High
Maybe you’ve got $40,000 in that house and you don’t want to take the time to put in new paint, carpet, and lighting, and hold and market it. You just want $5,000 or $7,000 out of it right now and then you’ll give them the other $33,000. Is that not a good deal for them? Sure. Is it a good deal for you? Can anyone think of any marketing costs they might be able to cover if they suddenly got $5,000 or $7,000 in? Can anybody think of any empty vacancies? What’s the most expensive thing in our business? Holding costs. Vacancies. You got a great deal. You’ve got all these properties that have a $200 positive cash flow. Wow! We are making it now! What happens when one of them goes vacant? It sucks the other 15 or 20 right into that to pay those bills. Wholesale is a great way to cover that.
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In retailing, you buy low and sell high. That’s the standard way everyone thinks of real estate. You have to retail it. You buy it low, you turn around and retail it, sell it high, and someone cashes you out. However, there’s owner financing. You can finance these things instead of the bank.
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Owner financing is nothing more than you getting them in the home without making them go to the bank and get a new loan. It does not mean you personally have to have $150,000 to loan them and tie up for years and years and years. Owner financing is a way. When they have a large enough down payment, you can go ahead and sell them that house, but you’re
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ON-LINE COURSE Session #8 going to do it in a way that’s easy for them to get in. We’re going to talk in just a minute about who your market is. You need to make it as easy as you can for them to get into this house.
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Lease option is a great way to go. Ted referred earlier to holding properties. We do hold properties but we don’t ever rent them. Did you hear 3. Owner Financing: that? We hold properties, but we do not You finance instead of Bank rent them. If you’re not sure, a lease 4. Lease Option: option is nothing more than giving Lease Until Buyer Get A Loan them the option to purchase that house at a later date. What they are paying for in their option is the agreement staying open for that period of time. It’s so that you can sell them that house under those agreed terms, which are the terms that you put in your contract.
Profit Centers
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A lease purchase is different. In a lease purchase, you have to sell them that house. They’re leasing it and they’ve already agreed to purchase. With a lease option, though, they have the option – yes or no – whether to buy it. Do you know why that’s important? It’s because that fee they give you is a non-refundable option fee. Everybody say, “Non-refundable.” Get that it because that’s the big, big difference. That’s non-refundable. If they choose to move out for whatever reason or, heaven forbid, if they have to move out because they just forgot to pay the lease for a little while, then you keep that option fee and you keep it completely legally. That was their fee for you to hold that agreement open and take that house off the market while they were making up their mind. You keep it. The difference is that we’re not landlords. What happens if you have 20 homes with a $200 positive cash flow on each home and one goes vacant? You don’t only have to cover the mortgage. What else do you have to do when someone moves out of one of your homes? You have to clean it up, paint it, usually put in new carpeting, and update it. You have to get all the dog and cat stuff off the carpet and the crayons off the walls. That pretty quickly sucks up any positive cash flow you had. However, if you had your option fee on it, then who do you think is really paying for you to go back in and make that house gorgeous again? The people who just moved out. You may not make $5,000 on that option fee if you took that, but it’s going to pay for all that renovating until you’re not down. You truly did make $200 cash flow each month while they were in the house because you don’t have to turn around and pay it all back to get it fixed up. Those are the lease options.
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There’s another thing about lease options that’s really important to understand. Remember that we were saying that you need cash right now and you need your payday – your cash – later. By putting lease options in, here’s what that’s going to do. Picture a long tube – like what your Christmas wrapping paper comes in – and you’re filling it with ping-pong balls. Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8 What’s going to happen eventually? It’s going to fill up. What happens when it fills up? It pops out the other end, doesn’t it? It can’t hold them. We’re doing the same thing with our lease options. We’re filling that pipeline with lease options. Eventually, you’re going to get enough in there and somebody down the line is going to say, “I don’t want to lease anymore. I’m ready to purchase this,” and they pop out. You say, “Okay. No problem,” and you get your big, equity payday. If you’ve constantly got them in the funnel, then you’re going to have three things. You’re going to have your payday right now, because you’re going to have your option fee; so this month you took in that cash. You’re going to have a passive income over those months of your positive cash flow because you never let them in the house for the exact same thing that you’re going to pay. You’re always going to have it up a little bit, so you’ve got a positive cash flow over the month. Then, guess what? You get a phone call that they’re ready to go ahead and get their mortgage; and you get another payday. So, there’s a big difference. Hold properties? Absolutely. You have to in order to build your portfolio and have it for later when you’re ready to really feel like you don’t ever have to check another voice mail message again. However, in the meantime, you need to make sure you cover your monthly cash flow by getting those option fees.
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Ted Thomas Interviews Dorothy Vogt, Arapahoe County, CO Treasurer
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DOROTHY: Proceeds of this sale will be distributed like this. The base amount of tax and the delinquent interest will be distributed to the various taxing authorities for whom we collect. Therefore, they’ve gotten their money. it.
TED THOMAS: Now you can run the government because you’ve got the money to do
DOROTHY: They can pay their bills. We’ve taken this final step in the collection process.
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county.
The bonus bids – those amounts that are bid above the base amount – belong to the TED THOMAS: It’s a bonus to the county.
DOROTHY: Those dollars are retained by the county and go into the county’s general fund. They are important dollars for the county. Those bonus bids pay some bills for the county.
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We would hope that everybody who attends our sale would have taken advantage of reviewing our publication which lists far greater detail, as far as legal description and situs address are concerned.
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 TED THOMAS: Good. Were there 1,200 or 1,500 of those this year? DOROTHY: We advertised 1,287 this year. Then, when the publication goes out, it carries on the back a brief of our sale procedures.
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Then, on the day of the sale, every buyer is provided with a list to use during the sale. This advertised list does not, of course, reflect payments that have been received between the point of advertising and the day of the sale. This list has all of those deleted. TED THOMAS: Excellent. DOROTHY: So, this list is much more efficient for people to have to try to follow through the newspaper to keep up with the sale. TED THOMAS: Let me ask you a difficult question. For the outside world – the people who are looking at this – there’s sort of a hidden viewpoint that this is some kind of get-richquick thing and that they’re going to end up buying properties. What percentage of people really end up with a property?
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DOROTHY: The vast majority of liens that we sell are redeemed. We probably have less than one percent that will ever go to deed. TED THOMAS: So this really is something that’s good for investors who are looking for – I guess we can’t use the word “guarantee” – a much higher return than they could get in the bank. DOROTHY: Given rates as they’ve been in recent years, this rate is certainly very, very attractive to investors. I’m never going to say that this has no risk. There is no such thing. Anyone who thinks there is a totally risk-free investment is being misled. Everything carries a certain amount of risk; and we make no guarantee of the condition or the marketability of any piece of property that may ultimately be acquired via a Treasurer’s deed. TED THOMAS: For a person coming from the outside who would like to come to Colorado and do this anywhere in the state – not necessarily in this county – is this really difficult to learn? Is it something that takes hours of study? Or is it something that, in a few hours, a person could at least get a basis for so they could invest and feel comfortable? DOROTHY: Oh, I think it wouldn’t even take a few hours. I think that a person could get a feel for it and understand the process very quickly. In my opinion, the best way for someone who’s new to this to acquire some knowledge about it, is first of all to call their County Treasurer – be it in this office or any other – and ask for a copy of their publication. They should look that over, familiarize themselves a bit with that, and try to figure out what they need to know from that point forward. Then they should go to that Treasurer’s office or call that Treasurer’s office and ask questions. Then, they should attend a sale. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #8 TED THOMAS: Observe what we observed today. DOROTHY: Yes. Perhaps someone attending a sale for the first time might just sit there. I’ve seen this happen. They just sit there and hang back for a half hour or an hour. They could just watch what’s going on, and then jump in and begin to participate. It isn’t something that’s terribly scientific and difficult to understand. TED THOMAS: Dorothy, you’re an outstanding interview. Thank you.
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Ted Thomas - Closing Remarks
Well, folks, it’s time to button it up. We started out learning about tax certificates. You could earn 16%, 18%, or 24%. That sure sounds good, but it sounds even better to be able to buy properties for 10, 20, or 30 cents on the dollar. This is a great thing. Do you have to be cautious? Yes, you have to be cautious. You don’t want to buy things that you haven’t seen. You don’t want to buy things that you haven’t researched. This is an easy business, though. It’s not difficult. It’s available in all 3,300 counties. Anybody can do it. You can start out with $40. You can use $400, $600, or you can use thousands of dollars. It’s going to be up to you. I’d attend a few auctions and have a little fun with it. Don’t feel like you have to get out there and make a million dollars right away. Go to a few auctions; watch and observe. If you want to be the online person doing it, that’s okay with me. However, remember to get someone to go, take a picture, and look at the property. Again, be cautious. It’s not a difficult way to make money. It’s an unusual way to make money. I’ve seen people start out with a few hundred dollars and end up with hundreds of thousands of dollars. I’ve seen other people who just chugged along and bought those tax certificates again and again. They were happy making 16%, 18%, or 24%. I’ve seen people who started out using their IRA, which I recommended earlier. If you get involved, put your IRA in there. It’s nice and safe and secure. It’s the only business I know where you pray people don’t pay their taxes so you can end up with property. You’re on your way, now. You have a lot of Resource information. You want to take
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Want to know more? – ask for Ted Thomas’ Reference and Learning Library • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 advantage of that. Sure, there’s some risk but it’s very, very low. I think it’s really wealth without risk if you just use your head a little bit. Review the course again when you have time and use your Resource materials. Congratulations on finishing the course! I know there’s a ton of information that you’ve just digested. The best thing you can do right now is start making some calls and gathering information for your first tax lien auction. I’m looking forward to signing your $500 check and sending you a graduation certificate!
Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
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ON-LINE COURSE Session #8
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #8 Index
Subject Nbr
+ + + + + + + + + + + + + + + +
Transcript Track Elapsed Page Nbr Time
1
Ted Thomas - registering to bid in Arapahoe County, CO auction
1
1
0:00
2
Ted Thomas - interviews Ron and Sue Hibbard
2
2
0:00
3
Ron and Sue - purchased a $55,000 home for $3,000
3
2
1:05
4
Ron - auction ad in newspaper
3
2
1:35
5
Ron - buys house for $900
4
2
2:40
6
Ron - option to purchase
4
2
3:35
7
Ron - buy title insurance for title protection
5
2
4:15
8
Ron and Sue - how hard of a job s this?
5
2
4:55
9
Ted - interviews Lee Lineburger
6
2
5:50
10
Ted Thomas - interviews Polk County, Iowa Tax Collector
7
3
0:00
11
Tax Collector - who can buy tax certificates
7
3
1:45
12
Tax Collector - redemption
7
3
2:40
13
Tax Collector - where you can find about tax lien auctions
8
3
3:20
14
Tax Collector - form of documentation proving purchase
8
3
4:35
15
Tax Collector - redemption rate
8
3
5:30
16
Tax Collector - unsold certificates, subsequent sales
9
3
6:20
Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
17
ON-LINE COURSE Session #8 Index
Subject Nbr
+ + + + + + + + + + + + +
Transcript Track Elapsed Page Nbr Time
17
Tax Collector - form of payment
9
3
7:55
18
Susan Clark - Profit Centers - wholesaling
10
3
8:35
19
Susan Clark - Profit Centers - retailing
10
3
9:35
20
Susan Clark - Profit Centers - owner financing
10
3
9:45
21
Susan Clark - Profit Centers - lease option
11
3
10:25
22
Susan Clark - Profit Centers - lease purchase
11
3
11:05
23
Susan Clark - Profit Centers - equity paydays
11
3
12:50
24
Ted Thomas - interviews Dorothy Vogt, Treasurer, Arapahoe County CO 12
4
0:00
25
Treasurer - bonus bids
12
4
0:25
26
Treasurer - review publications prior to sale
12
4
0:50
27
Treasurer - list at sale of properties available
13
4
1:25
28
Treasurer - most properties will redeem
13
4
2:15
29
Ted Thomas - review
14
4
4:45
18
Want to know more? – ask for Ted Thomas’ Reference and Learning Library • 321-449-9940 Phone • 321-449-9938 Fax
