After investing in tax-delinquent properties for over 5 years, I have come across all kinds of situations. If you don’t have the experience to help you make the right decision, you may end up with a big problem on your hands. Here are some of the biggest mistakes you can make and how to avoid them.
1. Give up too fast. You just read about Christa’s $ 10k house. What he does not know is that it was not the first time he had bid in the auction. About a month prior to this purchase, Christa lost deals on approximately 3 properties. You also had to overcome some hurdles related to using your Self-Directed IRA to shop in court. I worked with Christa on the phone for a couple of weeks after she purchased my Tax Writing Home Study course, so she knew exactly what she was experiencing and advised her what to do.
She had spent the day with me in my all-day tax deed training class. “I think what really helped me was the hands-on work we did in class. Being shown what to look for in the archives gave me the confidence to do it on my own,” says Christa. He also used my forms to keep track of the information he needed to collect. And when the time has come … they say “Luck is when opportunity meets preparation.” So when the time came, he ‘pulled the trigger’.
2. They don’t do their homework. This is the other side of that ugly coin that has ‘analysis paralysis’ at the opposite extreme. I don’t know which one is worse; In the long run, you lose money on both. As much as I ‘lecture’ investors to make sure they know what they are bidding for, I still find people diving headfirst and bidding on a property without doing their homework.
One of them attended my class and this person was so excited to make a deal that this investor forgot to do their tax deed due diligence and is now prohibited from bidding in 2 counties for not paying for properties won at auction. Which resulted in the loss of $ 400 in auction deposits. This is the same person who tried to buy tax deeds without the home study course. I just haven’t had the guts to tell this investor that the home study course would have cost less than the $ 400 lost in auction deposits, not to mention that it saved the investor from the humiliation and anxiety those deals caused.
3. They don’t know how to bid. Whether it’s a tax lien or a tax deed auction, most municipalities require you to compete for properties by bidding. The problem many people have is that their bids are too high. You know the story of David and Goliath. Brains on Brawn (or cash in this case).
The way I bid is how I taught Christa to bid at her auctions. The person who is willing to pay the most on the sale does not always win. You have to learn to improve your game. Christa carefully timed her offers based on the room climate, and the fact that the clerk quickly passed the sale only increased her chances.
