Ted Thomas and the Bidding Process
ON-LINE COURSE Session #5
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Ted Thomas and the Bidding Process
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TED THOMAS: Okay. Let’s talk about the bidding process. This is confusing at first, but let’s see if we can simplify it. The easiest one to talk about is the reverse bid. I’m going to use the State of Arizona as my example; but many other states also use the reverse bid. In Arizona, the mandated maximum rate is 16%. If two people bid for the same certificate, the next bid must be less. For example, the first bid is 16% for the certificate. The next bid must be something less: 15½ , 15, 14½, 14, 13½. In other words, the auction is going down; it’s reversing. The lowest bidder gets the tax certificate in the State of Arizona. Let’s repeat that process. It’s a reverse bid process. It starts at 16% and then it goes down. Any time there are multiple bidders, the lowest bidder gets it. Bidders could bid all the way down to 1% or ½% or whatever. The lowest bid gets it. That’s called a reverse auction. There are many states, like Florida, that do the same. They start at 18%. The next bid is 17½ , 17, 16½, 16, 15½, and so on. The bid goes down. That’s a reverse auction process. It’s Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 very simple. Once you see it take place, it’s easy to do. The lowest bid gets it. The county and government process there is to reduce the cost to the property owner. The property owner had a 16% mandated rate. If you bid less, the property owner gets to pay less. It’s a punitive system. However, even though it’s punitive to the homeowner, the government tries to mitigate it as much as they possibly can. We’re calling that Bidding Process 1 or Option 1.
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TED THOMAS: Here’s Option 2. This one confuses people, so we have to try and work our way through it. This is a process where the interest rate always stays the same. I’m going to use the State of Iowa. In the State of Iowa, the bid is 24%. That means they will pay 24% on any certificate and it doesn’t matter what the size of the certificate is. What you bid on in the State of Iowa is what portion of the property you are willing to take. Let’s think of the property as being one square mile on each side. When they start the bidding, they’ll say, “XYZ property,” and they’ll call out that parcel number we learned about. Let’s say the tax on that property is $10,000. The tax will not change. The interest rate will not change. What will change is the portion of the property that you’re willing to except. If you were to raise your hand and bid on that property, you know you’re going to earn 24%. That won’t change. However, you might be willing to accept 99% of the property. That means that if it went to foreclosure, you would only get 99% and the property owner would get to keep one percent. Someone else could bid 75%. They would get 75% of the property and property owner would keep 25%. Someone else might want to bid one percent, meaning the property owner could keep 99% and they would only get one percent. What would they get paid? They would still get paid the 24% on the $10,000 that they paid. In other words, they pay the tax and purchase the tax certificate, and they would still earn 24%. The problem would arise if the property went to foreclosure. If it went to foreclosure, they would only get one percent. Keep that in the back of your mind.
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Is that a good process? You’ll have to decide. If you go to the auctions like I’ve done many times in Iowa, you’ll see many people will bid down to less than 100% of the property because they want to assure that they’re going to get 24% on their money. They’re really after 2
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ON-LINE COURSE Session #5 the percent on their money. They don’t care about the property. They know – just as you know because you learned that in our first lessons – that 95-97% of all the property owners will pay their taxes. When they pay, it is usually within that 24-month period, so keep that in mind. That’s called A Portion of the Property bidding.
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Let’s review. The first one was a Reverse Auction. A Reverse Auction is very simple. It starts at 16%, 18%, or whatever number is mandated by the state; and then it continues down. Some auctioneers are required to go down to one-quarter to one-half percent. It’s going to depend upon the auctioneer. You can’t bid it down by eighths of a percent or anything like that. The challenge there is to just think of how low you’re willing to go because that’s all the interest you’re going to get. Now we’ll go back to Iowa. In Iowa, the interest rate stays the same, the tax stays the same; the portion of the property that you’re willing to accept stays the same.
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The next state that I’m going to talk about is Colorado. I just talked about Iowa; but let’s talk about Colorado because I want you to learn to be careful. In Colorado, they use a different approach to bidding. If you decide to buy there, Colorado is going to allow the bidder to overbid. If they overbid, that’s going to be a problem. For example, in the State of Colorado, they use an interest rate which is nine percent above a Fed Fund rate. Don’t ask me which Fed Fund rate. You need to go there and get the rules. Let’s say that the Fed Fund rate is three percent right now. They’re willing to pay nine percent above that. The rate, then, in Colorado would be 12%. Don’t hold that to the exact number yet, because when you’re watching this, they might have changed the Fed Fund rate. Let’s say the Fed Fund rate today as we talk is three percent. Since Colorado pays nine percent above that, if there was an auction today it would be 12%. Let’s say the certificate they’re trying to sell sells for $2,500. They will allow bidders to bid in excess of $2,500. If you do that, it’s a huge mistake because when the taxpayer comes to pay taxes, they only have to pay on the amount that they owe. In this case, they owe $2,500. If you bid $2,700, you’re only going to get your $2,500 plus the interest rate. Let me say that again. They’ll start the auction at whatever the tax is that’s past due. Let’s say that tax was $2,500. Multiply $2,500 by whatever the rate is and that’s what you’re going to earn. The tax is $2,500 and the Fed Fund rate was three percent. When you add the nine, the total interest is 12% if it stayed outstanding all year. If someone in the room bids over $2,500, they will award that person that tax certificate. Let’s say that person bid $2,700. What if the taxpayer comes in within one day and pays off their tax? They only have to pay $2,500. The person that bid $2,700 just lost $200. I used a very simple example. When you go and see this, you’ll see that people bid way over because they don’t know what they’re doing. They haven’t been through a course like this. They haven’t gone to the Resource area, pulled out this information, and reread it. They go in and bid $5,000. The person comes in and pays $2,500. They lose $2,500. That’s one thing to be 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 #5 cautious of in Colorado.
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There’s another thing to be cautious of. All bidding is done according to the local county and many of those counties will use what’s called “rotational bidding.” They could decide that everybody gets a number and they start with Number 1. If that person wants it, great. If that person doesn’t, it goes to Number 2. Does the Number 2 person want it? No? Then it goes to the Number 3 person. Therefore, the auction could take eight or ten hours and they might only auction off 30 or 40 properties. Rotational bidding could be a challenge. It’s not bad if you’re waiting for a property to come and nobody else wants to bid on it. Then it’s great; but rotational bidding can take forever.
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Some states will actually use ping-pong balls. They reach in and pull out a ping-pong ball with a number on it. If you’re number is on it, you’re the one who gets to bid. Some states will use a draw of the cards. They put all the cards in a hat and then reach in and take one out. You never know what the auction rules are going to be. You need to go to your Resource area, get that information, call that state, and find out what the rules are.
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What other processes do we have here? Let me review. We have a Reverse Auction. You all understand that now. We have the Portion of the Property Auction and you understand that now. You probably understand a regular auction. A regular auction is when they set the price today and then the price can go up. That’s usually how they sell property. When they auction off deeds, the first thing they do is say that the tax due is $4,000. That’s where the bidding will start. All bids will go above that. That’s at tax deed auctions. We’ve had four different types, then. We had Rotational Bidding in Colorado; but they have overbidding in Colorado, so I really want you to watch your step there. We had a regular auction that starts wherever they set the auction, and then it goes up. We had the Reverse Auction, and then we had a Portion of the Land. Those are the four different types that are generally used.
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Could that state or county that you’re going to use a different rule? Yes, so you need to go there and find out. If I listed them all here, it would take us hours to get through it, but you have the basic set of rules that you need to get started.
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Here’s just a reminder. The bidding process varies from state to state. Let’s go to Texas, for example. In Texas, they actually auction off the 4
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ON-LINE COURSE Session #5 deed to the property. When you buy that deed to the property, it has a redemption value with the deed.
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That means the property owner can come in and redeem that. That makes it very much like a tax lien. However, when they do redeem it, they have to give you all your money back, plus 25%. That’s basically how it works in the State of Texas. After 181 days, if they haven’t redeemed or paid their property tax to get the deed back, you’re going to end up owning the property.
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The same situation takes place in the State of Georgia. We call Georgia and Texas “penalty states.” That means that those two states will sell you the deed; however, it comes with a right of redemption. That means the property owner can come in and redeem it. However, they have to pay a penalty. It’s not interest. In Georgia, they’d have to pay you 20% for any day from Day 1 to Day 365. In Texas, they have to pay you 25% from Day 1 to Day 180. Those are called penalty states. In other words, the property owner can come in and redeem their property.
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In the State of Michigan, it’s now a deed state. It formerly was a tax lien state. In Michigan, they’ll sell you the deed. You’re going to end up owning the property. Immediately after the auction, you own the property. There is no right of redemption that I’ve ever heard of there.
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What is this redemption? Redemption simply means that the property owner still has rights. They can come in and pay off their tax lien – or in the case of Georgia and Texas, they can pay off their tax deed – and they can get their property back. They just have to pay the penalties or the interest rate that was due. Redemption rights are not unusual. All of those redemption rights are going to be listed in the auction rules or in the state statutes. They’re not trying to trick anybody here. It’s just that they aren’t universal rules. We have 50 states to contend with and we have over 3,000 counties and about 2,000 municipalities. They’re all allowed to have their own rules. Is it complicated? No. All you have to do is look in your particular area. It’s complicated to teach it because we have so many different rules. The only thing I can tell you is that you’ve got to check the rules before you go to any auction or before you buy any tax lien or deed. Each state will have its own rules with regard to dollars and cents. They’ll also have their own rules regarding timing. It’s just going to be up to you to learn how to do that. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5
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If you own a tax certificate, just take it home and keep it. You don’t have to do anything with it. It’s a passive investment. The county will let you know when that certificate has been redeemed; in other words, when someone comes in and pays their taxes and all the interest due. However, I’m going to remind you of what I said earlier. You need to check with the county and make sure that you get your notice that it has been paid. You don’t want the county sitting on your money; in other words, someone has come in and paid their tax but the county hasn’t called you. You want to make sure that they do call you.
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TED THOMAS: Let’s talk a little bit more about those tax deeds. A tax deed could end up as a Treasurer’s deed. In other words, you went to the auction, you purchased a property at the auction, and they issued a tax deed. It could be a Treasurer’s deed, it could be a county deed, or it could have a different name on it. Basically, though, that means you’ve taken ownership of the property. A little less than half of the states sell tax deeds. Another whole group of states will sell tax liens. I’m going to give you a list on that in just a minute. What you need to do is understand that the county lists those. They can change the list; it will change every single day from the day you first see it until the day the auction takes place. Sometimes it starts out with 400 or 500 properties. Then by the time you get to the auction, it’s down to 100. You need to understand that it’s going to change. You just need to check with the county.
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Who keeps those lists? Sometimes it’s the Assessor, sometimes it’s the Tax Collector, and sometimes it’s the Revenue Officer. I don’t know who’s going to keep the list, but they will post it at the County Records. 18
Who’s going to conduct the sale? The same thing: it’s going to be a county official in almost all cases; although some counties will hire an auctioneer. Most of the counties are just interested in getting rid of the property.
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ON-LINE COURSE Session #5
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I’m going to give you a handy list of all the different states that sell tax deeds. That’s coming up right now. These are all the states that sell tax deeds. Tax deeds means they’re going to auction the deed to the property. When you get the actual deed it might say, “Tax Deed” on it; it may say “Sheriff’s Deed” on it; or it might say “Treasurer’s Deed,” but it’s going to show that you have ownership on that particular property.
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IRS Liens
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Let’s talk about priority liens. There’s one lien that nobody can ever change and that is an IRS lien. That’s a federal lien. All the land belongs to the federal government. If you’ve taken a real estate course, you know that we’re all allowed to have this land. We can buy it, we can sell it, and we can do anything we want with it; but it is all basically owned by the federal government. The federal government allows the state to parcel it out to counties and we’re allowed to pay tax. As long as you pay tax, that’s great. However, there’s one lien that can never leave the property and that’s an IRS lien. When the auctions take place, all other liens will fall off the property; but one priority lien will always be there and that will be the IRS lien. Don’t panic when you see an IRS lien on the property. As a matter of fact, that’s a good time to e-mail my office and say, “Hey, Ted. I found one with an IRS lien.” I’ll guarantee you nobody else will bid. I like to bid on the ones that have IRS liens on them. If that happens, just let me know about it.
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There could be some other very minor liens on the property. For example, in California, they have a tremendous fire hazard problem, so they put liens on properties to cut the grass. If people haven’t cut the grass, the local community will put a little lien on there to cut the grass. Places in the east like Cleveland and Buffalo have people wasting water, so they put water liens 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 #5 on properties. There could be some little minor liens like that on the property. Generally speaking, however, when a tax auction takes place, all of the liens are wiped off the property with the exception of the IRS. There’s no way to get an IRS lien off the property without either negotiating it off the property or paying it to get it off the property. That kind of gives you a rundown of those liens. Generally speaking, in this business we say all liens are wiped off the property. Know, however, that the IRS will always be there. Also know that if you get an IRS lien, call Ted because he likes to bid on those properties.
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Let’s review. Everyone isn’t doing this because they don’t know the rules; so get to know the rules. Beware of the state rules and beware of the county rules. The county rules are the most important ones because that’s where you’re going to bidding. You want to know what that county rule is, although the states will have rules.
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Bidding Stategies
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What are the different strategies? Don’t worry about it if you get there and there are 400 people. I’ve been to auctions with 400 people and there are only four bidders. Most of the people don’t have a clue, so they just sit there and watch the whole thing take place. If the room is empty and they have thousands of certificates, just be picky and choosy. Get the exact ones that you want. Remember that when the interest rates are low, you’re going to need to think about that. Do you want to take low interest on your money? If you want to do that, that’s okay with me. Some people bid all the way down to one percent because they just want to have a position on the property in case it does go to foreclosure. I want you to think about that. I’m not a low bidder at those kinds of auctions.
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ON-LINE COURSE Session #5 Let’s take a trip to California and visit with Terry and Susan EVERSOLE. This is a great story. Tell me about what you guys have been doing over the past year. First of all, we met about nine months ago. Tell me what happened.
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Terry & Susan Eversole - Success Story
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TERRY EVERSOLE: We met you in Florida. You were one of the guest speakers at a convention. You introduced us to your tax program. We came back to town the following week and we found out there was a sale in our particular county. SUSAN EVERSOLE: One week later. TERRY EVERSOLE: We started reading and going through your material and we just followed your material. We participated in that sale and consequently were able to be successful in purchasing two pieces of property. Of course, neither of us had a real estate background. One week into the material, we just got right in and followed your program and… SUSAN EVERSOLE: It worked! This was very easy and enjoyable, and we had fun doing it together. TED THOMAS: Oh, you did it together? TERRY EVERSOLE: Yeah. You get to go out and see your community; go look at houses and properties you haven’t seen before. That’s not too bad a day right there. Then, to be successful like we were in actually purchasing property and to realize the profit margins that we did was pretty astonishing. SUSAN EVERSOLE: In the business I had before, I’d have to go to the county offices to investigate a little bit of information on properties. That’s all you have to do with this also. It’s the same thing. You have to get off the couch, drive your car to the office, make your way to the people who can best help you in whatever office it is, and ask for the information. They hand it to you and you’re off and running. TED THOMAS: That sounds too easy. TERRY EVERSOLE: It is. TED THOMAS: It really is too easy. SUSAN EVERSOLE: It’s very enjoyable. TERRY EVERSOLE: I believe anyone can be successful. All you have to do is try, with just very little effort. You look at a piece of property and you kind of know what the values are in your area, in a subdivision, or in your neighborhood. You know what the houses sell for. If you don’t, you go get comparables. A realtor will provide them to you for free. You can look at Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 the Tax Assessor’s assessment value, which is usually a little less than the true value, but it will give you some guidelines to go by. TED THOMAS: You didn’t like the stock market? SUSAN EVERSOLE: Not me.
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TED THOMAS: Why?
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SUSAN EVERSOLE: That’s too unstable for me. It feels like gambling. There is absolutely no gambling for me in the real estate; but the stock market? Forget it. TERRY EVERSOLE: We didn’t make a whole lot of money in the stock market. We had probably the top broker in the country. I don’t know where he was when I needed him, but I’ve had enough of that one. SUSAN EVERSOLE: And we know the real estate is very stable. TERRY EVERSOLE: With real estate, you get to write things off legally – not doing illegal things – doing legitimate, legal things. The risk is far less and is secured by real estate instead of a piece of paper that you never see. We make money there, and we lose money in stocks, so it’s kind of a no-brainer.
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TED THOMAS: I understand you guys bought a property in Redding, California. Tell me about it. TERRY EVERSOLE: We purchased two properties at the first tax sale we went to. One of the parcels was a three-bedroom, two-bath home. Here’s a picture of it here. We also bought a bare piece of property for future development: either a modular home or a house to build on. TED THOMAS: I have no idea what a property in Redding, California is worth. This is nice looking. You said it was a three-bedroom, two-bath house? SUSAN EVERSOLE: It is. It’s a three-bedroom, two-bath, and it’s on a half-acre. TED THOMAS: What do you think this property is worth? SUSAN EVERSOLE: Approximately $110,000. TED THOMAS: And what did you guys pay at auction? TERRY EVERSOLE: Thirty-one thousand… SUSAN EVERSOLE: And change. TED THOMAS: Someone out there looking at this picture right now would not believe that you bought this property for $31,000. Is that really true? SUSAN EVERSOLE: Yes. TERRY EVERSOLE: With only a week of knowing how to do it, too!
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ON-LINE COURSE Session #5 TED THOMAS: Really? So you made a profit right away. TERRY EVERSOLE: I think that’s a profit. TED THOMAS: Yeah. It’s a huge profit. What did you do with it? SUSAN EVERSOLE: We’re renting it now. We’ve put approximately $2,000 or $3,000 into it with fresh paint. Very little. TED THOMAS: Some little cosmetic fixer-upper kind of thing? SUSAN EVERSOLE: Yes, and we’re renting it now for over $800. TERRY EVERSOLE: Residual income. TED THOMAS: Let me ask you about that. You said you get $800 a month. So you invested $30,000 and you’re getting $800 a month. That comes out to almost $10,000 a year on a $30,000 investment. TERRY EVERSOLE: That’s a lot better than we did in the stock market. It’s secured by real estate, too, Ted. TED THOMAS: Wonderful. SUSAN EVERSOLE: When we went through your program, we learned what we needed to have. It was very, very simple. These papers that we have here are documents that are easy to obtain. This is the Assessor’s list on the numbers on how to locate a property. TED THOMAS: Is this the list of the properties that are available? SUSAN EVERSOLE: Yes. TED THOMAS: This looks like a pretty comprehensive list here. It looks like there were a lot of properties on there. Do you have any idea of how many properties are available? TERRY EVERSOLE: It started out with over 200 properties on that list and it narrowed down to maybe 60 parcels. TED THOMAS: When you went to this auction, there were 60 parcels available? TERRY EVERSOLE: Approximately, yes. TED THOMAS: How do you know which one to pick? TERRY EVERSOLE: Hopefully, you’ve done a little homework. I have a description of the properties here and then a map of how to get to the properties. You just go and look. to buy?
TED THOMAS: There were 60 available. How did you decide which ones you wanted
TERRY EVERSOLE: We only had a week because we had just learned your program. We had just heard about it the week before. We picked out the ones that we thought – just by 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 #5 looking at the numbers – we could afford; that were in our price range and budget. They were ones we thought we might be interested in. We had the descriptions of the properties pulled up, as well as a map of how to get there. We went and looked at them, and decided what we thought we could pay for them. SUSAN EVERSOLE: He might have had about 10 properties. I had 10 properties. We both went in different directions. We’re using our cell phones: “What do you think? Which one are you looking at? What do you think?” We were having a great time. Even though we were pressed for time, it was a lot of fun. TERRY EVERSOLE: We were driving quite a few miles and looking at a lot of parcels real quick. The numbers we were putting on those, Ted – as you teach – we were going low value so if we did buy them and didn’t see everything in the property, we would still be buying them for just pennies on the dollar. Within one week of having your program, we made more money on one deal than most people make in a year’s wages. SUSAN EVERSOLE: Seventy to eighty thousand dollars on this one. TERRY EVERSOLE: In equity. And then we get a monthly income on top of that. That’s not a bad deal.
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SUSAN EVERSOLE: We invested $30,000+ and it’s worth $100,000+.
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TERRY EVERSOLE: They kind of make it real simple. You go in and register. As soon as you walk in the door, the Tax Collector or someone in that office is there. They assign you a bidding number – a paddle – in the case of our auction, and they give you an information sheet telling you how to bid. They explain to you whether you need to have the cash right then at the auction. In some counties, you can pay them at a later date with just a deposit. If you need a cashier’s check, personal check, or whatever, it’s all explained by the Tax Collector prior to the auction. SUSAN EVERSOLE: And they give you the most recent list, because it changes over time from when they begin until the actual date of sale. TED THOMAS: Why didn’t you guys do this before? TERRY EVERSOLE: We didn’t know about it! TED THOMAS: You didn’t know about it? TERRY EVERSOLE: Just like everybody else, we weren’t informed that this was available.
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do it.
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Ted Thomas and Craig Talkington CRAIG: It’s hard to believe that it actually happens, but I’m living proof that you can Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 TED THOMAS: Tell me a little bit about it. First of all, what is a tax sale and what happens? CRAIG: In a tax sale, people for one reason or another don’t pay their taxes. The county needs their money to run their schools and their government. To make people pay their taxes – if they don’t pay their taxes – they put it up for sale. TED THOMAS: They actually sell it? They put a notice on your front door that says a tax sale is going to take place? CRAIG: You would think they would want to publicize it more than that. Actually, it’s a governmental function and they just run it in their Treasurer’s office. Once a year, they have these sales of all these parcels – hundreds of parcels – of people who don’t pay their taxes. TED THOMAS: Have you bought any of these? CRAIG: I’ve bought several. TED THOMAS: Give me an example of one. I would imagine this costs a lot of money. You buy houses, right? CRAIG: In my case, I didn’t have a lot of money to start with. I had a very small budget and I had noticed people who were doing it. They were buying houses and whatnot and they were making the big money; but I didn’t have the money to get started.
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I bought agricultural land: lake lots, unimproved acreages. In Oklahoma, agricultural land is taxed really low. So, for a little bit of money, you can buy maybe ten unimproved deals, where you could have just bought one house deal. You can spread it out and get volume going. TED THOMAS: Did you buy agricultural land where someone was tilling the land? CRAIG: I’ve got several deals here. I’ll give you some examples; some of the ones that worked out. Of course, you don’t get every deal you buy. You might buy ten deals, buy ten tax certificates. Eight or nine of them get redeemed which, in Oklahoma, is eight percent interest.
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TED THOMAS: What’s this redeemed business? Does that mean that a person comes in and pays for it? Is that what that means? CRAIG: Right. They don’t just take people’s property away. They let you pay the taxes and give the people a chance to come in and redeem their property, pay the taxes. The great thing about that is the interest. I can’t think of another no-risk place to put your money. Here I give the county government $300, $400, $500, or whatever, and they guarantee that when this owner comes in and redeems their property, they’ll send me all my money back and all my costs, plus interest. TED THOMAS: That’s a great deal. Is that as good as CDs? CRAIG: I would think it would be better than CDs. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 TED THOMAS: Does it pay better than CDs? CRAIG: In Oklahoma, it’s eight percent. What are CDs paying now? Five or six? TED THOMAS: That’s better than CDs. CRAIG: I understand that in other states it’s quite a bit more. TED THOMAS: Oh, yeah, I know. In Texas, it’s 25%. That’s really pretty high. That’s about five times the CDs. CRAIG: That’s amazing. People just don’t think it’s real, but I’m living proof. TED THOMAS: Give us an example of a property that you bought. CRAIG: Here’s a piece of property that I paid $357 for. It’s a 10-acre tract of agricultural land. Here’s my check that I sold it for 30 days later. TED THOMAS: Six thousand dollars? CRAIG: Six thousand dollars. I paid $357 for it. TED THOMAS: No! You couldn’t have sold it for $6,000. CRAIG: Here’s a picture of it right here, Ted. Beautiful trees. Wouldn’t you want to own a piece of property like that? TED THOMAS: That’s a great piece of property. Could I cut those trees down and sell the trees if I wanted? CRAIG: I guess you could. TED THOMAS: So I could make money right away on that. CRAIG: If it’s your property, you can do what you want. TED THOMAS: And how much did you pay for this? CRAIG: I paid $357. sell?
TED THOMAS: That’s incredible. How did you go about selling it? Was it hard to
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CRAIG: Not at all. I used the strategy of selling to the neighbors. If I buy a five-acre or ten-acre tract of land and get the deed to it, I call all the surrounding neighbors who had no idea that this sale was going on. Here they live right next to the property and they don’t know. TED THOMAS: Everybody wants to own the land next door. All I want to own is the one next to me! This sounds like it’s pretty tough. CRAIG: You can’t believe how easy it is. You cannot believe.
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ON-LINE COURSE Session #5
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TED THOMAS: Have you done any others like this?
32
CRAIG: Let me show you some others. Here are some lake lots. There are a lot of lakes in Oklahoma. There are really pretty lakes. I always wanted to own property on a lake. Of course, you can’t up and buy from someone: it costs too much money. If you don’t have any money, you can’t buy. I’ve got an RV. I like to travel and camp. This way, you could buy several different lots on different lakes, pull your RV up to them, and have a place to camp at every lake you go to. Here’s a picture of one. Look at how close to the lake that it. TED THOMAS: Wow. What’s a lot like that worth? That looks like a pretty big lake. It’s got some lake here and then there’s a little island in the middle here. Is that what that is? CRAIG: This is a road right here in front. The lake is right on the other side of this. This one actually came with a boat dock. I don’t have a boat yet. TED THOMAS: But you’re going to get one, I’ll bet. CRAIG: I’ll get one now. These I paid about $300 for. I bought two of them in here. I have them listed for sale at $15,000 apiece. TED THOMAS: Wow. Is that what lakefront lots would sell for? CRAIG: Yes. TED THOMAS: That’s tremendous.
CRAIG: Now the problem is, which ones do you sell and which ones do you keep? You can’t keep them all. TED THOMAS: No. You sell one and keep one, and you’ll have all your money back, won’t you? CRAIG: That’s right; and then some! TED THOMAS: Again, how much did you spend for this lot? CRAIG: About $300 for each one of them; I bought two of them. TED THOMAS: Who did you buy those from? CRAIG: I bought them from the county. TED THOMAS: From the county Tax Assessor? CRAIG: Yes. Somebody didn’t pay their taxes on there. If you can imagine, I’m sure people are saying to themselves, “Why would somebody be so irresponsible to not pay their taxes on there?” Every one of them has a different story. Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
15
ON-LINE COURSE Session #5 TED THOMAS: You have a whole stack of these here! CRAIG: There are stacks and stacks and stacks of them. There are so many. There are more out there than one person could ever buy. TED THOMAS: How many could I expect if I went to a county? The first city that comes to my mind in Oklahoma would be Oklahoma City, Tulsa, or something like that. Could I go there and find properties just like this?
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CRAIG: You could go there tomorrow and have a stack of computer paper this thick with thousands of properties that you could pick from. There are thousands of properties. There are so many properties, one person could never even make a dent in them. TED THOMAS: Why isn’t anybody doing this? CRAIG: They don’t know about it. When I first got started, nobody would tell me how to do this. I saw people doing it. TED THOMAS: It’s kind of a hidden market. know.
CRAIG: It’s a hidden market. The people who are doing it don’t want anybody else to
TED THOMAS: So the attorneys really do know about it, but don’t want to tell anybody. CRAIG: They don’t tell anybody. If I had had your tapes, it probably would have saved me a year’s worth of stumbling and making mistakes, figuring out how this works. I was the biggest skeptic in the world. There wasn’t a bigger skeptic than me. I didn’t have a lot of money and I put my hard-earned money up. It was the idea that it was guaranteed by the county. TED THOMAS: That was great.
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CRAIG: I could talk myself into that. TED THOMAS: Did you keep your job while did all this? CRAIG: Full time. TED THOMAS: You just kept your job and did this part time?
CRAIG: Once you learn the system of how to do it in your particular county, it doesn’t take but one day a month you can go down there. It just depends on how many you want to buy. Maybe twice a year I’ll spend three or four days going down and picking out which ones I want. Once you learn the system, you do it over and over and over. TED THOMAS: Certainly, in something like this, if you bought it for $300, even if you sold it and put it up for sale for $15,000... Would you sell it for $5,000 if I offered you $5,000 16
Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 this afternoon? CRAIG: Have you got your checkbook? TED THOMAS: You probably would sell it for $5,000 this afternoon! You’d still make 1,000% on your money, wouldn’t you? CRAIG: And that’s not the best deal. I’ll show you another one. TED THOMAS: Show me the best one. I want to see the best one. Look at this: file after file. This is incredible. Folks, why aren’t you doing this? Probably because you don’t know about it. It’s time to learn. Let’s get another lesson from the professor.
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CRAIG: Here’s a really quick one that was quick and fun. I bought a 20-acre tract that had a big mortgage on it. A lot of people would be afraid of that: “There’s a big mortgage on it.” I bought it. I think I had about $200 in this. The bank gave me this. How much is that check for? TED THOMAS: That check is for $1,000. CRAIG: They gave me a $1,000 to go away. They called me and said, “You have ownership of this property and we have a mortgage on it. We’ll give you $1,000 to go away.” Of course, I said, “Sure. I’m gone.” They get a good deal, I get a good deal, and everybody’s happy.
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WOMAN: Show me another one.
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CRAIG: Okay. This is probably my best one. This one actually was a mobile-ready five acres. It had a septic system and everything ready for a mobile home. WOMAN: So it was all ready to go to put a mobile home on it. CRAIG: I paid $200 for this one and sold it for $20,000. WOMAN: You spent $200 and you sold it for $20,000? How long a period of time did you hold onto it? CRAIG: This was about two months. WOMAN: In two months time on a student’s salary and paying $200, you sold the property for $20,000. Here’s a picture. Check it out. For $200. CRAIG: I found a young couple to move their trailer on there and I financed their note. I get $300 a month off of that every month for the next ten years.
Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 Index
Subject Nbr
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Transcript Track Elapsed Page Nbr Time
1
Ted Thomas - Bidding Process - Bid Down Interest rate
1
1
0:00
2
Bidding Process - Bid Down Portion of Property- Iowa
2
2
0:00
3
Iowa - good process? - High Interest Rate, High Redemption Rate
2
2
2:00
4
Review first two processes
3
2
2:25
5
Bidding Process - Overbid Process -
3
2
3:05
6
Rotational Bidding - sequential numbers
4
2
5:40
7
Rotational Bidding - random numbers - ping pong balls
4
2
6:15
8
Bidding Process - Regular auction - bid up
4
2
6:40
9
State/County Bidding Process - Get the rules
4
2
7:30
10
Reminder - bidding process varies by state and county
4
2
7:45
11
Redemption - Texas
5
2
8:00
12
Redemption - Penalty states
5
2
8:25
13
No right of redemption - Michigan
5
2
9:10
14
Right of Redemption
5
2
9:25
15
Tax Certificate - safe keeping until redeemed
6
2
10:25
16
Tax Deeds
6
3
0:00
18
Want to know more? – ask for Ted Thomas’ Reference and Learning Library • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 Index
Subject Nbr
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Transcript Track Elapsed Page Nbr Time
17
Where do you find lists of defaulted properties?
6
3
0:50
18
Who conducts sale?
6
3
1:00
19
Tax Deed States
7
3
1:15
20
Priority Liens
7
3
1:35
21
Minor Liens
7
3
2:30
22
Beware state and county rules before you bid.
8
3
3:20
23
Bidding Strategies
8
3
3:35
24
Ted Thomas - Interviews Terry and Susan Eversole
9
3
4:15
25
Susan - stock market is like gambling
10
3
7:00
26
Terry and Susan - three bedroom two bath home in Redding CA
10
3
7:25
27
Terry and Susan - registering in tax office
12
3
12:00
28
Ted Thomas - Interviews Craig Talkington
12
4
0:00
29
Craig - bought agricultural lands
13
4
1:00
30
Ted - redemption
13
4
1:45
31
Craig - selling to neighbors
14
4
3:25
32
Craig - waterfront lots available
15
4
4:00
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 #5 Index
Subject Nbr
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Transcript Track Elapsed Page Nbr Time
33
Craig - thousands of properties available
16
4
5:45
34
Ted - What about your regular job?
16
4
6:40
35
Craig - bank bought the property back
17
4
7:40
36
Craig - best deal - lot ready to build on, fantastic profit
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4
8:20
20
Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
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Ted Thomas and the Bidding Process
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TED THOMAS: Okay. Let’s talk about the bidding process. This is confusing at first, but let’s see if we can simplify it. The easiest one to talk about is the reverse bid. I’m going to use the State of Arizona as my example; but many other states also use the reverse bid. In Arizona, the mandated maximum rate is 16%. If two people bid for the same certificate, the next bid must be less. For example, the first bid is 16% for the certificate. The next bid must be something less: 15½ , 15, 14½, 14, 13½. In other words, the auction is going down; it’s reversing. The lowest bidder gets the tax certificate in the State of Arizona. Let’s repeat that process. It’s a reverse bid process. It starts at 16% and then it goes down. Any time there are multiple bidders, the lowest bidder gets it. Bidders could bid all the way down to 1% or ½% or whatever. The lowest bid gets it. That’s called a reverse auction. There are many states, like Florida, that do the same. They start at 18%. The next bid is 17½ , 17, 16½, 16, 15½, and so on. The bid goes down. That’s a reverse auction process. It’s Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 very simple. Once you see it take place, it’s easy to do. The lowest bid gets it. The county and government process there is to reduce the cost to the property owner. The property owner had a 16% mandated rate. If you bid less, the property owner gets to pay less. It’s a punitive system. However, even though it’s punitive to the homeowner, the government tries to mitigate it as much as they possibly can. We’re calling that Bidding Process 1 or Option 1.
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TED THOMAS: Here’s Option 2. This one confuses people, so we have to try and work our way through it. This is a process where the interest rate always stays the same. I’m going to use the State of Iowa. In the State of Iowa, the bid is 24%. That means they will pay 24% on any certificate and it doesn’t matter what the size of the certificate is. What you bid on in the State of Iowa is what portion of the property you are willing to take. Let’s think of the property as being one square mile on each side. When they start the bidding, they’ll say, “XYZ property,” and they’ll call out that parcel number we learned about. Let’s say the tax on that property is $10,000. The tax will not change. The interest rate will not change. What will change is the portion of the property that you’re willing to except. If you were to raise your hand and bid on that property, you know you’re going to earn 24%. That won’t change. However, you might be willing to accept 99% of the property. That means that if it went to foreclosure, you would only get 99% and the property owner would get to keep one percent. Someone else could bid 75%. They would get 75% of the property and property owner would keep 25%. Someone else might want to bid one percent, meaning the property owner could keep 99% and they would only get one percent. What would they get paid? They would still get paid the 24% on the $10,000 that they paid. In other words, they pay the tax and purchase the tax certificate, and they would still earn 24%. The problem would arise if the property went to foreclosure. If it went to foreclosure, they would only get one percent. Keep that in the back of your mind.
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Is that a good process? You’ll have to decide. If you go to the auctions like I’ve done many times in Iowa, you’ll see many people will bid down to less than 100% of the property because they want to assure that they’re going to get 24% on their money. They’re really after 2
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ON-LINE COURSE Session #5 the percent on their money. They don’t care about the property. They know – just as you know because you learned that in our first lessons – that 95-97% of all the property owners will pay their taxes. When they pay, it is usually within that 24-month period, so keep that in mind. That’s called A Portion of the Property bidding.
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Let’s review. The first one was a Reverse Auction. A Reverse Auction is very simple. It starts at 16%, 18%, or whatever number is mandated by the state; and then it continues down. Some auctioneers are required to go down to one-quarter to one-half percent. It’s going to depend upon the auctioneer. You can’t bid it down by eighths of a percent or anything like that. The challenge there is to just think of how low you’re willing to go because that’s all the interest you’re going to get. Now we’ll go back to Iowa. In Iowa, the interest rate stays the same, the tax stays the same; the portion of the property that you’re willing to accept stays the same.
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The next state that I’m going to talk about is Colorado. I just talked about Iowa; but let’s talk about Colorado because I want you to learn to be careful. In Colorado, they use a different approach to bidding. If you decide to buy there, Colorado is going to allow the bidder to overbid. If they overbid, that’s going to be a problem. For example, in the State of Colorado, they use an interest rate which is nine percent above a Fed Fund rate. Don’t ask me which Fed Fund rate. You need to go there and get the rules. Let’s say that the Fed Fund rate is three percent right now. They’re willing to pay nine percent above that. The rate, then, in Colorado would be 12%. Don’t hold that to the exact number yet, because when you’re watching this, they might have changed the Fed Fund rate. Let’s say the Fed Fund rate today as we talk is three percent. Since Colorado pays nine percent above that, if there was an auction today it would be 12%. Let’s say the certificate they’re trying to sell sells for $2,500. They will allow bidders to bid in excess of $2,500. If you do that, it’s a huge mistake because when the taxpayer comes to pay taxes, they only have to pay on the amount that they owe. In this case, they owe $2,500. If you bid $2,700, you’re only going to get your $2,500 plus the interest rate. Let me say that again. They’ll start the auction at whatever the tax is that’s past due. Let’s say that tax was $2,500. Multiply $2,500 by whatever the rate is and that’s what you’re going to earn. The tax is $2,500 and the Fed Fund rate was three percent. When you add the nine, the total interest is 12% if it stayed outstanding all year. If someone in the room bids over $2,500, they will award that person that tax certificate. Let’s say that person bid $2,700. What if the taxpayer comes in within one day and pays off their tax? They only have to pay $2,500. The person that bid $2,700 just lost $200. I used a very simple example. When you go and see this, you’ll see that people bid way over because they don’t know what they’re doing. They haven’t been through a course like this. They haven’t gone to the Resource area, pulled out this information, and reread it. They go in and bid $5,000. The person comes in and pays $2,500. They lose $2,500. That’s one thing to be Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
3
ON-LINE COURSE Session #5 cautious of in Colorado.
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There’s another thing to be cautious of. All bidding is done according to the local county and many of those counties will use what’s called “rotational bidding.” They could decide that everybody gets a number and they start with Number 1. If that person wants it, great. If that person doesn’t, it goes to Number 2. Does the Number 2 person want it? No? Then it goes to the Number 3 person. Therefore, the auction could take eight or ten hours and they might only auction off 30 or 40 properties. Rotational bidding could be a challenge. It’s not bad if you’re waiting for a property to come and nobody else wants to bid on it. Then it’s great; but rotational bidding can take forever.
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Some states will actually use ping-pong balls. They reach in and pull out a ping-pong ball with a number on it. If you’re number is on it, you’re the one who gets to bid. Some states will use a draw of the cards. They put all the cards in a hat and then reach in and take one out. You never know what the auction rules are going to be. You need to go to your Resource area, get that information, call that state, and find out what the rules are.
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What other processes do we have here? Let me review. We have a Reverse Auction. You all understand that now. We have the Portion of the Property Auction and you understand that now. You probably understand a regular auction. A regular auction is when they set the price today and then the price can go up. That’s usually how they sell property. When they auction off deeds, the first thing they do is say that the tax due is $4,000. That’s where the bidding will start. All bids will go above that. That’s at tax deed auctions. We’ve had four different types, then. We had Rotational Bidding in Colorado; but they have overbidding in Colorado, so I really want you to watch your step there. We had a regular auction that starts wherever they set the auction, and then it goes up. We had the Reverse Auction, and then we had a Portion of the Land. Those are the four different types that are generally used.
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Could that state or county that you’re going to use a different rule? Yes, so you need to go there and find out. If I listed them all here, it would take us hours to get through it, but you have the basic set of rules that you need to get started.
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Here’s just a reminder. The bidding process varies from state to state. Let’s go to Texas, for example. In Texas, they actually auction off the 4
Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 deed to the property. When you buy that deed to the property, it has a redemption value with the deed.
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That means the property owner can come in and redeem that. That makes it very much like a tax lien. However, when they do redeem it, they have to give you all your money back, plus 25%. That’s basically how it works in the State of Texas. After 181 days, if they haven’t redeemed or paid their property tax to get the deed back, you’re going to end up owning the property.
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The same situation takes place in the State of Georgia. We call Georgia and Texas “penalty states.” That means that those two states will sell you the deed; however, it comes with a right of redemption. That means the property owner can come in and redeem it. However, they have to pay a penalty. It’s not interest. In Georgia, they’d have to pay you 20% for any day from Day 1 to Day 365. In Texas, they have to pay you 25% from Day 1 to Day 180. Those are called penalty states. In other words, the property owner can come in and redeem their property.
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In the State of Michigan, it’s now a deed state. It formerly was a tax lien state. In Michigan, they’ll sell you the deed. You’re going to end up owning the property. Immediately after the auction, you own the property. There is no right of redemption that I’ve ever heard of there.
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What is this redemption? Redemption simply means that the property owner still has rights. They can come in and pay off their tax lien – or in the case of Georgia and Texas, they can pay off their tax deed – and they can get their property back. They just have to pay the penalties or the interest rate that was due. Redemption rights are not unusual. All of those redemption rights are going to be listed in the auction rules or in the state statutes. They’re not trying to trick anybody here. It’s just that they aren’t universal rules. We have 50 states to contend with and we have over 3,000 counties and about 2,000 municipalities. They’re all allowed to have their own rules. Is it complicated? No. All you have to do is look in your particular area. It’s complicated to teach it because we have so many different rules. The only thing I can tell you is that you’ve got to check the rules before you go to any auction or before you buy any tax lien or deed. Each state will have its own rules with regard to dollars and cents. They’ll also have their own rules regarding timing. It’s just going to be up to you to learn how to do that. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5
15
If you own a tax certificate, just take it home and keep it. You don’t have to do anything with it. It’s a passive investment. The county will let you know when that certificate has been redeemed; in other words, when someone comes in and pays their taxes and all the interest due. However, I’m going to remind you of what I said earlier. You need to check with the county and make sure that you get your notice that it has been paid. You don’t want the county sitting on your money; in other words, someone has come in and paid their tax but the county hasn’t called you. You want to make sure that they do call you.
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TED THOMAS: Let’s talk a little bit more about those tax deeds. A tax deed could end up as a Treasurer’s deed. In other words, you went to the auction, you purchased a property at the auction, and they issued a tax deed. It could be a Treasurer’s deed, it could be a county deed, or it could have a different name on it. Basically, though, that means you’ve taken ownership of the property. A little less than half of the states sell tax deeds. Another whole group of states will sell tax liens. I’m going to give you a list on that in just a minute. What you need to do is understand that the county lists those. They can change the list; it will change every single day from the day you first see it until the day the auction takes place. Sometimes it starts out with 400 or 500 properties. Then by the time you get to the auction, it’s down to 100. You need to understand that it’s going to change. You just need to check with the county.
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Who keeps those lists? Sometimes it’s the Assessor, sometimes it’s the Tax Collector, and sometimes it’s the Revenue Officer. I don’t know who’s going to keep the list, but they will post it at the County Records. 18
Who’s going to conduct the sale? The same thing: it’s going to be a county official in almost all cases; although some counties will hire an auctioneer. Most of the counties are just interested in getting rid of the property.
6
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ON-LINE COURSE Session #5
19
I’m going to give you a handy list of all the different states that sell tax deeds. That’s coming up right now. These are all the states that sell tax deeds. Tax deeds means they’re going to auction the deed to the property. When you get the actual deed it might say, “Tax Deed” on it; it may say “Sheriff’s Deed” on it; or it might say “Treasurer’s Deed,” but it’s going to show that you have ownership on that particular property.
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IRS Liens
20
Let’s talk about priority liens. There’s one lien that nobody can ever change and that is an IRS lien. That’s a federal lien. All the land belongs to the federal government. If you’ve taken a real estate course, you know that we’re all allowed to have this land. We can buy it, we can sell it, and we can do anything we want with it; but it is all basically owned by the federal government. The federal government allows the state to parcel it out to counties and we’re allowed to pay tax. As long as you pay tax, that’s great. However, there’s one lien that can never leave the property and that’s an IRS lien. When the auctions take place, all other liens will fall off the property; but one priority lien will always be there and that will be the IRS lien. Don’t panic when you see an IRS lien on the property. As a matter of fact, that’s a good time to e-mail my office and say, “Hey, Ted. I found one with an IRS lien.” I’ll guarantee you nobody else will bid. I like to bid on the ones that have IRS liens on them. If that happens, just let me know about it.
+ 21
There could be some other very minor liens on the property. For example, in California, they have a tremendous fire hazard problem, so they put liens on properties to cut the grass. If people haven’t cut the grass, the local community will put a little lien on there to cut the grass. Places in the east like Cleveland and Buffalo have people wasting water, so they put water liens Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
7
ON-LINE COURSE Session #5 on properties. There could be some little minor liens like that on the property. Generally speaking, however, when a tax auction takes place, all of the liens are wiped off the property with the exception of the IRS. There’s no way to get an IRS lien off the property without either negotiating it off the property or paying it to get it off the property. That kind of gives you a rundown of those liens. Generally speaking, in this business we say all liens are wiped off the property. Know, however, that the IRS will always be there. Also know that if you get an IRS lien, call Ted because he likes to bid on those properties.
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Let’s review. Everyone isn’t doing this because they don’t know the rules; so get to know the rules. Beware of the state rules and beware of the county rules. The county rules are the most important ones because that’s where you’re going to bidding. You want to know what that county rule is, although the states will have rules.
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Bidding Stategies
23
What are the different strategies? Don’t worry about it if you get there and there are 400 people. I’ve been to auctions with 400 people and there are only four bidders. Most of the people don’t have a clue, so they just sit there and watch the whole thing take place. If the room is empty and they have thousands of certificates, just be picky and choosy. Get the exact ones that you want. Remember that when the interest rates are low, you’re going to need to think about that. Do you want to take low interest on your money? If you want to do that, that’s okay with me. Some people bid all the way down to one percent because they just want to have a position on the property in case it does go to foreclosure. I want you to think about that. I’m not a low bidder at those kinds of auctions.
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Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 Let’s take a trip to California and visit with Terry and Susan EVERSOLE. This is a great story. Tell me about what you guys have been doing over the past year. First of all, we met about nine months ago. Tell me what happened.
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Terry & Susan Eversole - Success Story
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TERRY EVERSOLE: We met you in Florida. You were one of the guest speakers at a convention. You introduced us to your tax program. We came back to town the following week and we found out there was a sale in our particular county. SUSAN EVERSOLE: One week later. TERRY EVERSOLE: We started reading and going through your material and we just followed your material. We participated in that sale and consequently were able to be successful in purchasing two pieces of property. Of course, neither of us had a real estate background. One week into the material, we just got right in and followed your program and… SUSAN EVERSOLE: It worked! This was very easy and enjoyable, and we had fun doing it together. TED THOMAS: Oh, you did it together? TERRY EVERSOLE: Yeah. You get to go out and see your community; go look at houses and properties you haven’t seen before. That’s not too bad a day right there. Then, to be successful like we were in actually purchasing property and to realize the profit margins that we did was pretty astonishing. SUSAN EVERSOLE: In the business I had before, I’d have to go to the county offices to investigate a little bit of information on properties. That’s all you have to do with this also. It’s the same thing. You have to get off the couch, drive your car to the office, make your way to the people who can best help you in whatever office it is, and ask for the information. They hand it to you and you’re off and running. TED THOMAS: That sounds too easy. TERRY EVERSOLE: It is. TED THOMAS: It really is too easy. SUSAN EVERSOLE: It’s very enjoyable. TERRY EVERSOLE: I believe anyone can be successful. All you have to do is try, with just very little effort. You look at a piece of property and you kind of know what the values are in your area, in a subdivision, or in your neighborhood. You know what the houses sell for. If you don’t, you go get comparables. A realtor will provide them to you for free. You can look at Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
9
ON-LINE COURSE Session #5 the Tax Assessor’s assessment value, which is usually a little less than the true value, but it will give you some guidelines to go by. TED THOMAS: You didn’t like the stock market? SUSAN EVERSOLE: Not me.
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TED THOMAS: Why?
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SUSAN EVERSOLE: That’s too unstable for me. It feels like gambling. There is absolutely no gambling for me in the real estate; but the stock market? Forget it. TERRY EVERSOLE: We didn’t make a whole lot of money in the stock market. We had probably the top broker in the country. I don’t know where he was when I needed him, but I’ve had enough of that one. SUSAN EVERSOLE: And we know the real estate is very stable. TERRY EVERSOLE: With real estate, you get to write things off legally – not doing illegal things – doing legitimate, legal things. The risk is far less and is secured by real estate instead of a piece of paper that you never see. We make money there, and we lose money in stocks, so it’s kind of a no-brainer.
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TED THOMAS: I understand you guys bought a property in Redding, California. Tell me about it. TERRY EVERSOLE: We purchased two properties at the first tax sale we went to. One of the parcels was a three-bedroom, two-bath home. Here’s a picture of it here. We also bought a bare piece of property for future development: either a modular home or a house to build on. TED THOMAS: I have no idea what a property in Redding, California is worth. This is nice looking. You said it was a three-bedroom, two-bath house? SUSAN EVERSOLE: It is. It’s a three-bedroom, two-bath, and it’s on a half-acre. TED THOMAS: What do you think this property is worth? SUSAN EVERSOLE: Approximately $110,000. TED THOMAS: And what did you guys pay at auction? TERRY EVERSOLE: Thirty-one thousand… SUSAN EVERSOLE: And change. TED THOMAS: Someone out there looking at this picture right now would not believe that you bought this property for $31,000. Is that really true? SUSAN EVERSOLE: Yes. TERRY EVERSOLE: With only a week of knowing how to do it, too!
10
Want to know more? – ask for Ted Thomas’ Reference and Learning Library • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 TED THOMAS: Really? So you made a profit right away. TERRY EVERSOLE: I think that’s a profit. TED THOMAS: Yeah. It’s a huge profit. What did you do with it? SUSAN EVERSOLE: We’re renting it now. We’ve put approximately $2,000 or $3,000 into it with fresh paint. Very little. TED THOMAS: Some little cosmetic fixer-upper kind of thing? SUSAN EVERSOLE: Yes, and we’re renting it now for over $800. TERRY EVERSOLE: Residual income. TED THOMAS: Let me ask you about that. You said you get $800 a month. So you invested $30,000 and you’re getting $800 a month. That comes out to almost $10,000 a year on a $30,000 investment. TERRY EVERSOLE: That’s a lot better than we did in the stock market. It’s secured by real estate, too, Ted. TED THOMAS: Wonderful. SUSAN EVERSOLE: When we went through your program, we learned what we needed to have. It was very, very simple. These papers that we have here are documents that are easy to obtain. This is the Assessor’s list on the numbers on how to locate a property. TED THOMAS: Is this the list of the properties that are available? SUSAN EVERSOLE: Yes. TED THOMAS: This looks like a pretty comprehensive list here. It looks like there were a lot of properties on there. Do you have any idea of how many properties are available? TERRY EVERSOLE: It started out with over 200 properties on that list and it narrowed down to maybe 60 parcels. TED THOMAS: When you went to this auction, there were 60 parcels available? TERRY EVERSOLE: Approximately, yes. TED THOMAS: How do you know which one to pick? TERRY EVERSOLE: Hopefully, you’ve done a little homework. I have a description of the properties here and then a map of how to get to the properties. You just go and look. to buy?
TED THOMAS: There were 60 available. How did you decide which ones you wanted
TERRY EVERSOLE: We only had a week because we had just learned your program. We had just heard about it the week before. We picked out the ones that we thought – just by Ted Thomas is the guy entrepreneurs go to when they want to invest in Tax Liens & Deeds & make Big Money Deals
11
ON-LINE COURSE Session #5 looking at the numbers – we could afford; that were in our price range and budget. They were ones we thought we might be interested in. We had the descriptions of the properties pulled up, as well as a map of how to get there. We went and looked at them, and decided what we thought we could pay for them. SUSAN EVERSOLE: He might have had about 10 properties. I had 10 properties. We both went in different directions. We’re using our cell phones: “What do you think? Which one are you looking at? What do you think?” We were having a great time. Even though we were pressed for time, it was a lot of fun. TERRY EVERSOLE: We were driving quite a few miles and looking at a lot of parcels real quick. The numbers we were putting on those, Ted – as you teach – we were going low value so if we did buy them and didn’t see everything in the property, we would still be buying them for just pennies on the dollar. Within one week of having your program, we made more money on one deal than most people make in a year’s wages. SUSAN EVERSOLE: Seventy to eighty thousand dollars on this one. TERRY EVERSOLE: In equity. And then we get a monthly income on top of that. That’s not a bad deal.
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SUSAN EVERSOLE: We invested $30,000+ and it’s worth $100,000+.
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TERRY EVERSOLE: They kind of make it real simple. You go in and register. As soon as you walk in the door, the Tax Collector or someone in that office is there. They assign you a bidding number – a paddle – in the case of our auction, and they give you an information sheet telling you how to bid. They explain to you whether you need to have the cash right then at the auction. In some counties, you can pay them at a later date with just a deposit. If you need a cashier’s check, personal check, or whatever, it’s all explained by the Tax Collector prior to the auction. SUSAN EVERSOLE: And they give you the most recent list, because it changes over time from when they begin until the actual date of sale. TED THOMAS: Why didn’t you guys do this before? TERRY EVERSOLE: We didn’t know about it! TED THOMAS: You didn’t know about it? TERRY EVERSOLE: Just like everybody else, we weren’t informed that this was available.
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do it.
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Ted Thomas and Craig Talkington CRAIG: It’s hard to believe that it actually happens, but I’m living proof that you can Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 TED THOMAS: Tell me a little bit about it. First of all, what is a tax sale and what happens? CRAIG: In a tax sale, people for one reason or another don’t pay their taxes. The county needs their money to run their schools and their government. To make people pay their taxes – if they don’t pay their taxes – they put it up for sale. TED THOMAS: They actually sell it? They put a notice on your front door that says a tax sale is going to take place? CRAIG: You would think they would want to publicize it more than that. Actually, it’s a governmental function and they just run it in their Treasurer’s office. Once a year, they have these sales of all these parcels – hundreds of parcels – of people who don’t pay their taxes. TED THOMAS: Have you bought any of these? CRAIG: I’ve bought several. TED THOMAS: Give me an example of one. I would imagine this costs a lot of money. You buy houses, right? CRAIG: In my case, I didn’t have a lot of money to start with. I had a very small budget and I had noticed people who were doing it. They were buying houses and whatnot and they were making the big money; but I didn’t have the money to get started.
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I bought agricultural land: lake lots, unimproved acreages. In Oklahoma, agricultural land is taxed really low. So, for a little bit of money, you can buy maybe ten unimproved deals, where you could have just bought one house deal. You can spread it out and get volume going. TED THOMAS: Did you buy agricultural land where someone was tilling the land? CRAIG: I’ve got several deals here. I’ll give you some examples; some of the ones that worked out. Of course, you don’t get every deal you buy. You might buy ten deals, buy ten tax certificates. Eight or nine of them get redeemed which, in Oklahoma, is eight percent interest.
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TED THOMAS: What’s this redeemed business? Does that mean that a person comes in and pays for it? Is that what that means? CRAIG: Right. They don’t just take people’s property away. They let you pay the taxes and give the people a chance to come in and redeem their property, pay the taxes. The great thing about that is the interest. I can’t think of another no-risk place to put your money. Here I give the county government $300, $400, $500, or whatever, and they guarantee that when this owner comes in and redeems their property, they’ll send me all my money back and all my costs, plus interest. TED THOMAS: That’s a great deal. Is that as good as CDs? CRAIG: I would think it would be better than CDs. Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 TED THOMAS: Does it pay better than CDs? CRAIG: In Oklahoma, it’s eight percent. What are CDs paying now? Five or six? TED THOMAS: That’s better than CDs. CRAIG: I understand that in other states it’s quite a bit more. TED THOMAS: Oh, yeah, I know. In Texas, it’s 25%. That’s really pretty high. That’s about five times the CDs. CRAIG: That’s amazing. People just don’t think it’s real, but I’m living proof. TED THOMAS: Give us an example of a property that you bought. CRAIG: Here’s a piece of property that I paid $357 for. It’s a 10-acre tract of agricultural land. Here’s my check that I sold it for 30 days later. TED THOMAS: Six thousand dollars? CRAIG: Six thousand dollars. I paid $357 for it. TED THOMAS: No! You couldn’t have sold it for $6,000. CRAIG: Here’s a picture of it right here, Ted. Beautiful trees. Wouldn’t you want to own a piece of property like that? TED THOMAS: That’s a great piece of property. Could I cut those trees down and sell the trees if I wanted? CRAIG: I guess you could. TED THOMAS: So I could make money right away on that. CRAIG: If it’s your property, you can do what you want. TED THOMAS: And how much did you pay for this? CRAIG: I paid $357. sell?
TED THOMAS: That’s incredible. How did you go about selling it? Was it hard to
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CRAIG: Not at all. I used the strategy of selling to the neighbors. If I buy a five-acre or ten-acre tract of land and get the deed to it, I call all the surrounding neighbors who had no idea that this sale was going on. Here they live right next to the property and they don’t know. TED THOMAS: Everybody wants to own the land next door. All I want to own is the one next to me! This sounds like it’s pretty tough. CRAIG: You can’t believe how easy it is. You cannot believe.
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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 #5
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TED THOMAS: Have you done any others like this?
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CRAIG: Let me show you some others. Here are some lake lots. There are a lot of lakes in Oklahoma. There are really pretty lakes. I always wanted to own property on a lake. Of course, you can’t up and buy from someone: it costs too much money. If you don’t have any money, you can’t buy. I’ve got an RV. I like to travel and camp. This way, you could buy several different lots on different lakes, pull your RV up to them, and have a place to camp at every lake you go to. Here’s a picture of one. Look at how close to the lake that it. TED THOMAS: Wow. What’s a lot like that worth? That looks like a pretty big lake. It’s got some lake here and then there’s a little island in the middle here. Is that what that is? CRAIG: This is a road right here in front. The lake is right on the other side of this. This one actually came with a boat dock. I don’t have a boat yet. TED THOMAS: But you’re going to get one, I’ll bet. CRAIG: I’ll get one now. These I paid about $300 for. I bought two of them in here. I have them listed for sale at $15,000 apiece. TED THOMAS: Wow. Is that what lakefront lots would sell for? CRAIG: Yes. TED THOMAS: That’s tremendous.
CRAIG: Now the problem is, which ones do you sell and which ones do you keep? You can’t keep them all. TED THOMAS: No. You sell one and keep one, and you’ll have all your money back, won’t you? CRAIG: That’s right; and then some! TED THOMAS: Again, how much did you spend for this lot? CRAIG: About $300 for each one of them; I bought two of them. TED THOMAS: Who did you buy those from? CRAIG: I bought them from the county. TED THOMAS: From the county Tax Assessor? CRAIG: Yes. Somebody didn’t pay their taxes on there. If you can imagine, I’m sure people are saying to themselves, “Why would somebody be so irresponsible to not pay their taxes on there?” Every one of them has a different story. 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 #5 TED THOMAS: You have a whole stack of these here! CRAIG: There are stacks and stacks and stacks of them. There are so many. There are more out there than one person could ever buy. TED THOMAS: How many could I expect if I went to a county? The first city that comes to my mind in Oklahoma would be Oklahoma City, Tulsa, or something like that. Could I go there and find properties just like this?
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CRAIG: You could go there tomorrow and have a stack of computer paper this thick with thousands of properties that you could pick from. There are thousands of properties. There are so many properties, one person could never even make a dent in them. TED THOMAS: Why isn’t anybody doing this? CRAIG: They don’t know about it. When I first got started, nobody would tell me how to do this. I saw people doing it. TED THOMAS: It’s kind of a hidden market. know.
CRAIG: It’s a hidden market. The people who are doing it don’t want anybody else to
TED THOMAS: So the attorneys really do know about it, but don’t want to tell anybody. CRAIG: They don’t tell anybody. If I had had your tapes, it probably would have saved me a year’s worth of stumbling and making mistakes, figuring out how this works. I was the biggest skeptic in the world. There wasn’t a bigger skeptic than me. I didn’t have a lot of money and I put my hard-earned money up. It was the idea that it was guaranteed by the county. TED THOMAS: That was great.
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CRAIG: I could talk myself into that. TED THOMAS: Did you keep your job while did all this? CRAIG: Full time. TED THOMAS: You just kept your job and did this part time?
CRAIG: Once you learn the system of how to do it in your particular county, it doesn’t take but one day a month you can go down there. It just depends on how many you want to buy. Maybe twice a year I’ll spend three or four days going down and picking out which ones I want. Once you learn the system, you do it over and over and over. TED THOMAS: Certainly, in something like this, if you bought it for $300, even if you sold it and put it up for sale for $15,000... Would you sell it for $5,000 if I offered you $5,000 16
Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 this afternoon? CRAIG: Have you got your checkbook? TED THOMAS: You probably would sell it for $5,000 this afternoon! You’d still make 1,000% on your money, wouldn’t you? CRAIG: And that’s not the best deal. I’ll show you another one. TED THOMAS: Show me the best one. I want to see the best one. Look at this: file after file. This is incredible. Folks, why aren’t you doing this? Probably because you don’t know about it. It’s time to learn. Let’s get another lesson from the professor.
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CRAIG: Here’s a really quick one that was quick and fun. I bought a 20-acre tract that had a big mortgage on it. A lot of people would be afraid of that: “There’s a big mortgage on it.” I bought it. I think I had about $200 in this. The bank gave me this. How much is that check for? TED THOMAS: That check is for $1,000. CRAIG: They gave me a $1,000 to go away. They called me and said, “You have ownership of this property and we have a mortgage on it. We’ll give you $1,000 to go away.” Of course, I said, “Sure. I’m gone.” They get a good deal, I get a good deal, and everybody’s happy.
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WOMAN: Show me another one.
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CRAIG: Okay. This is probably my best one. This one actually was a mobile-ready five acres. It had a septic system and everything ready for a mobile home. WOMAN: So it was all ready to go to put a mobile home on it. CRAIG: I paid $200 for this one and sold it for $20,000. WOMAN: You spent $200 and you sold it for $20,000? How long a period of time did you hold onto it? CRAIG: This was about two months. WOMAN: In two months time on a student’s salary and paying $200, you sold the property for $20,000. Here’s a picture. Check it out. For $200. CRAIG: I found a young couple to move their trailer on there and I financed their note. I get $300 a month off of that every month for the next ten years.
Ted Thomas is America’s Tax Lien Certificate and Tax Deed Authority and Coach.
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ON-LINE COURSE Session #5 Index
Subject Nbr
+ + + + + + + + + + + + + + + +
Transcript Track Elapsed Page Nbr Time
1
Ted Thomas - Bidding Process - Bid Down Interest rate
1
1
0:00
2
Bidding Process - Bid Down Portion of Property- Iowa
2
2
0:00
3
Iowa - good process? - High Interest Rate, High Redemption Rate
2
2
2:00
4
Review first two processes
3
2
2:25
5
Bidding Process - Overbid Process -
3
2
3:05
6
Rotational Bidding - sequential numbers
4
2
5:40
7
Rotational Bidding - random numbers - ping pong balls
4
2
6:15
8
Bidding Process - Regular auction - bid up
4
2
6:40
9
State/County Bidding Process - Get the rules
4
2
7:30
10
Reminder - bidding process varies by state and county
4
2
7:45
11
Redemption - Texas
5
2
8:00
12
Redemption - Penalty states
5
2
8:25
13
No right of redemption - Michigan
5
2
9:10
14
Right of Redemption
5
2
9:25
15
Tax Certificate - safe keeping until redeemed
6
2
10:25
16
Tax Deeds
6
3
0:00
18
Want to know more? – ask for Ted Thomas’ Reference and Learning Library • 321-449-9940 Phone • 321-449-9938 Fax
ON-LINE COURSE Session #5 Index
Subject Nbr
+ + + + + + + + + + + + + + + +
Transcript Track Elapsed Page Nbr Time
17
Where do you find lists of defaulted properties?
6
3
0:50
18
Who conducts sale?
6
3
1:00
19
Tax Deed States
7
3
1:15
20
Priority Liens
7
3
1:35
21
Minor Liens
7
3
2:30
22
Beware state and county rules before you bid.
8
3
3:20
23
Bidding Strategies
8
3
3:35
24
Ted Thomas - Interviews Terry and Susan Eversole
9
3
4:15
25
Susan - stock market is like gambling
10
3
7:00
26
Terry and Susan - three bedroom two bath home in Redding CA
10
3
7:25
27
Terry and Susan - registering in tax office
12
3
12:00
28
Ted Thomas - Interviews Craig Talkington
12
4
0:00
29
Craig - bought agricultural lands
13
4
1:00
30
Ted - redemption
13
4
1:45
31
Craig - selling to neighbors
14
4
3:25
32
Craig - waterfront lots available
15
4
4:00
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 #5 Index
Subject Nbr
+ + + +
Transcript Track Elapsed Page Nbr Time
33
Craig - thousands of properties available
16
4
5:45
34
Ted - What about your regular job?
16
4
6:40
35
Craig - bank bought the property back
17
4
7:40
36
Craig - best deal - lot ready to build on, fantastic profit
17
4
8:20
20
Another Wealth Creating Report by Ted Thomas © 2009 • 321-449-9940 Phone • 321-449-9938 Fax
