The Wannabe
When someone asks me how to be a successful real estate investor, I ask them what they think makes up that success. Invariably, they maintain that knowledge of some real estate investing program is needed, like how to do foreclosure investing, or lease optioning, or rehabilitation, Subject To, etc.
When I ask if they have ever invested in any real estate investing education, most say “yes.” They have spent many hundreds, sometimes thousands, on their investing education, but they have not done any transactions.
I ask, “Why not? What has stopped you?” They all shrug their shoulders sheepishly, and either say, “I don’t know,” or they admit that “I’m scared.”
Most advice givers sagely say - "just go out and do it." Obviously, that is correct, but it is much easier said than done - or we would all have gone out and done it already.
The real estate investing courses we see on late night television all tell you WHAT TO DO. They do not hold you by the hand and show you HOW TO DO IT. That is the difference.
What I do
I help my students to overcome the debilitating and almost overwhelming "Fear of Failure." This infamous trait runs throughout humanity and restricts our fulfillment. The tool I use is - one on one role playing. We role play the situations that the newbie real estate investor will encounter while doing real estate investing. In this manner, the student is ready when the situation arises. We learn the most through observation and doing and less so from reading.
When I think the student is ready, I send them off on the specific mission that we had trained for. Armed with the correct knowledge and methods, they are always successful.
The record
The record is $1,600,000. Using only $1, $1,600,000 is the value of the property that a student took control of using Coach Mitch’s famous $1 Option.
The story
The student was a very shy, bookish type, in fact, he was a researcher. Girls scared him, and he cringed from stressful and confrontational situations.
The student said that he would just do what I suggested to be a successful real estate investor. We rehearsed opening statements, potential replies, and responses to potential replies. We rehearsed entire conversations. It was almost like practicing for a stage performance, and, in some ways, that is sort of what we do. I give the motivation and direct; the student acts.
The student had, on my instruction, sought out several properties that he wanted to pursue. We practiced for those situations. When ready, I sent him off and he was confident.
On this student’s very first property, on his very first conversation, on his very first attempt at a transaction, this student impressed a seasoned businessman to such an extent that he gave this student control of his $1,600,000 restaurant – and only received $1. WoW! Sun Tzu would be proud. He taught, the greatest victory is one where the other side gives up without a fight.
There is Science in Art
The reality is that most of us have little training in speaking with people. Even most professional salesmen don't do it well as 80% of the sales commissions are earned by only 20% of the salesmen.
The biggest thing to remember is to put yourself in the other person's shoes, have empathy.
Before you say something, anticipate what the other person’s reaction is going to be. Try to foresee what that person will feel and what their reply might be. In this manner, you can frame your questions so that you can aim the conversation in the direction you desire and illicit the answer you want. It takes a little practice, but it is not hard, and it provides big dividends.
Suggestion
When driving around and seeing a prospective property, stop, knock on a neighbor’s door, and ask, "Hello, you don't know me. I'm Malissa. I'm sorry to bother you, but I'm looking for some property in this area. I stopped because I was wondering about the property next door. Might there be anything that you tell me about it?"
That's not so hard is it? However, this is not a set of words chosen at random. Everything is choreographed.
First
You should put the homeowner at ease. Knock, then stand sideways with your profile to the entrance, and be well away from the door. When the door opens, wait one full second, so that the homeowner can look you over, then turn and sport your best smile. "Hello, you don't know me. I'm Malissa." You say your name last because the person needs a few seconds to determine if you are friendly or someone to be wary of. If you said your name first, they would not remember it and would feel uncomfortable.
You can anticipate that the neighbor is angered that the dilapidated home next door has lowered their own home's value and created an ugly vision on "their" street. You might help in that situation.
Therefore, justify your intrusion. "I'm sorry to bother you, but I'm looking for some property in this area. I stopped because I was wondering about the property next door." The neighbor now knows that you are a potential friend, someone who can help them.
Wait one full second before continuing, because sometimes people just start blurting out things.
Frame your question correctly; "Might there be anything that you tell me about it?"
Isn't this question better than something terse sounding, like: "What do you know? Or What's going on?" or “Where's the owner?" It sounds like you are asking permission to get information. It is leaving the decision to answer up to the person. You are exposing your soft underbelly, like a puppy.
Sometimes you get lucky and the person just opens up and spills all. Other times the person is suspicious. After all, they might be a friend or a relative.
"Who are you?" or "Why do want to know?" is a typical response.
Just repeat. "I'm Melissa." Hold out your business card. (500 free from Vista Print) "I'm looking for property in this area and I liked this street." You’re giving an indirect complement that the neighbor has good taste. "I saw this property and was wondering about it. Might you know anything about it?" All you did was repeat your opening statement. However, this time it has more credibility.
You will sometimes get asked, "Are you with the police?"
"Oh my goodness, no, I'm not with the police. I'm just looking to buy property. Is there something about this property that involves the police?"
This is a sales technique called, "The Push-A-Way." You are indicating that you might no longer be interested in solving the neighbor's situation; so naturally, they try to reel you back in. "No, I was just checking."
After a bit of this back and forth, you have established 1) that you are not an ax murderer 2) that you are a potential friend, 3) that you don't scare, 4) that you seem confident and professional. This is a great beginning.
Be ready, because their next question is: "What do you want to know?" You should have an entire list of questions ready and each must be reworded carefully to fit the particular situation.
Example: You want to know who might know where the owner is. Which sounds better? "Do you know where the owner is?" Or "You are a neighbor, so I presume that you have a special relationship to the owner. Is there anyone else that might have a close relationship?"
What might the range of answers be?
1) "I don't know anything."
2) "Sure, the owner is hiding at …"
3) "I wasn't on good terms with them, but Bill across the street is his cousin."
What would your next question be to each of these answers? Anticipate.
What’s next?
Most would tell any Wannabe investor to get a mentor. They are correct. Coach Mitch does mentoring in tax delinquent property. This is what my typical mentoring session is like, role playing. When dealing in human situations, like trying to explain a contract clause; to have success, proper human interaction is mandatory
Call me
Consider calling me, as I like conversing about real estate investing more than any other subject.
Good luck to you,
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
www.CoachMitch.com
The Trentonian
Trenton tax lien sale is illegal, says group
Published: Monday, June 28, 2010
By ANDRIA CARTER Online Editor
TRENTON — Some homeowners and business owners believe that Trenton’s Tax Department is illegally implementing an accelerated tax lien sale.
A group of taxpayers challenged the decision and had their properties removed from the upcoming tax lien sale. However, the owners of 3,000 properties that face the auctioner’s gavel today should be concerned.
Jim Smollen, said he is outraged that this has occurred. “It shouldn’t be just me removed from the sale” he said.
The city is putting on a public auction to sell off delinquent tax bills totaling about $5.89 million. A delinquent tax bill can affect a property owners’ mortgage payments and credit ratings, and the property can foreclosed on by the owner of the tax lien.
The latest tax bills, with an 18 to 22 percent increase, were sent out the first week of May. Property owners have only 25 days to pay their bill, and then they are considered delinquent and subject to tax auction.
The group’s attorney noted the discrepancies surrounding the sale, including not allowing his clients to make payments and the failure to allow a right to appeal. The attorney threatened to seek an injunction to stop the tax sale, but did not, as his clients 74 properties were removed from the auction. But, over 3000 others will be auctioned.
According to state law, an accelerated tax sale can be held Assistant City Attorney Peter Cohen reminded the group that the city had the right (the power-editor’s note) to pursue a tax sale in the course of the next fiscal year, which starts July 1, 2010.
The city’s fiscal crisis forced the accelerated tax lien sale. The city did not receive its annual funding, amounting to $34.9 millions. With a budget deficit of $43 million, the city could lay off 475 city employees, including 142 police and 78 firefighters.
See original article: http://www.trentonian.com/articles/2010/06/28/news/doc4c29769856619665626583.txt
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Coach Mitch’s REFLECTIONS
Your government at work
There they go again! From one part of their mouth, government is saying how much they care about citizens. And from the other part of their mouth, they are hurting citizens – without a care.
“Too bad!”
That seems what government types say. No matter how much they feel our pain, there is never a reprieve for taxpayers. There is only the same old, same old policy; “Tax and spend and tax and spend.”
I have never seen even one government entity hire an efficiency expert to deem how to curtail procedures or expenses. Government is rife with Waste. Government is bulging with outright Fraud. Government’s middle name and alter ego is Abuse.
A comment from an aggrieved taxpayer says it well:
" I guess that this is the Palmer administrations parting slap to the Trenton taxpayers. An unapproved budget, a 22% tax increase and now the taxpayers are not even permitted the appropriate time to make payment before they attempt to slam the common man even further. They are incompetent and should all be unceremoniously dismissed. Why was the sale stopped for some but not for all? Special favors for special people or is the City just once again taking advantage of the common man, the disadvantaged and those already down on their luck? Is the City so desperate for money that they will now take advantage of their own citizens. Palmer and friends should be ashamed of themselves. Is this our punishment for vetoing that sweet water deal? If the tax sale is improper or illegal then it should be totally stopped so no one is disadvantaged!!! Bring on the ACLU. I hope that Mayor Mack will decide to play by the rules instead of creating his own."
People are fed up
I truly hope that this November presages an era of new politicians who roll back the egregious spending of the previous decades. High taxation to finance huge spending is a wonderful way to undermine a society.
Those who think this is an accident – do not read history
It has been shown time and again, “give them [the people] bread and circuses.” Divert the people’s attention with promises. Become popular with give-a-way programs. A people who once recognize that they can gain for themselves from the public purse that which they choose not to work for individually, will vote themselves into oblivion. Many societies have democratically voted to put themselves into slavery. The best example is Hitler’s Germany.
We are no different
Hitler was a mesmerizing speaker. He held his audiences spell bound. He told his people that they were great, that they deserved more, that they should have hope, that he would create change – if they would just follow him.
Hope and Change. Does it sound familiar?
This is the refrain of the demagogue. It has been the same from FDR forward. Obama is simply the latest, best version of this old refrain. He will look great in his Pied Piper green uniform, playing that old tune on his magic flute.
For those who say, “It can’t happen here.” Wake up and smell the rotted flesh. It has already happened. The golden handcuffs have been slipped on and virtually nothing will undo them. Who can imagine the undoing of Social Security, or Medicaid? Can you imagine not having Unemployment Insurance? And now, complete National Health Insurance.
Almost all do not even have the beginnings of an understanding of why these programs are the underpinnings of the Collectivist oligarchy.
What government can give, it can take away – and does. Just look at the article above. Thousands of people having “their” properties put at risk, without any due process, and the government says it’s OK because they passed a law that says it’s OK.
Prediction
Within thirty years there will be barbed wire in America!
The only force that has the potential to stop this crusade by collectivists (those who desire power) is an astute population, with a healthy understanding of the concept of limited governance as implemented by a originalist interpretation of the Constitution. The citizenry will need to be free market oriented, and have a stand on my own two feet, I ain’t taking it anymore mentality; who cooperates with fellow citizens where it makes sense. The sort of society that Tocqueville saw in 1830’s America and described in “Democracy In America.” democracy in America, volume 1 democracy in America, volume 2
Fat chance
We have become sissified. We can’t even conduct a war properly. We are afraid of labeling the enemy as the enemy and then we’re afraid of hurting the enemy. Gone is the mentality justifying the Dresden fire bombing. Now we have to understand the enemy, rather than eliminate him. Well, we might feel more these days, but we are a lot more ignorant. I miss the clarity of the righteous, where the population is responsible for the actions of the government it has. What about the thought that the Afghan people are responsible for cleaning up its own government and if they don’t stop their own people/government from harming Americans, then we must take on that responsibility.
We are doomed to shoot ourselves in both our feet and to have our silver spoon shoved way up our pompously shallow nose; and we will have brought it upon ourselves for trying to act civilized in a non-civilized world.
What does this have to do with real estate?
It’s simple. A standard of socialistic thought is to collectivize property. However, a standard in maintaining freedom is to understand that controlling property is freedom. I did not say owning property is freedom. Rather, individual control of property is freedom. Fascist socialism seeks to control via regulation. You hold the deed and pay the taxes, but “they” tell you what you shall do or what you shall not do with “your” property. You own, “they” control. Where’s the freedom in this equation?
Try to do anything with “your” property and see how far you get. You need “their” permission to do almost everything, certainly anything of consequence. Welcome to fascism. It’s here.
To understand how the Law has been perverted, read “The Law.” http://bastiat.org/en/the_law.html
Maybe we can yet save America - so we can spend the monies that we create.
Be free,
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
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Coach Mitch’s REFLECTIONS
A most important skill for any investor, but especially for a real estate investor, is how to evaluate a transaction.
Just say, “Yes!”™
Quickly differentiating what may be a good deal from what is probably a marginal or bad deal, is a necessary skill.
We have all (me too) been guilty of being enthusiastic about having a lead contact you who wants to sell their property, but is insisting that it is worth retail price. What to do? For me, it’s easy. Just say “Yes!”™ Use Coach Mitch’s famous $1 Option™ to take control of the property and market it.
My philosophy is to try to give the seller what they want – but to give it in a manner that makes sense for me. I can even agree to full retail, if I’m only optioning for $1. My risk is $1, plus any marketing costs. I can create a transaction because the seller will almost always back off his price, thus allowing a profit to be made.
Speed matters
A seasoned real estate investor once told me that his goal is, within 15 seconds, to determine if he wants to do that particular deal. He had created a form that is filled out by the prospect, and he looks at certain numbers, like fair market value, FMV, and the principal, interest, property taxes, and insurance, PITI. He divides these to get a percentage, and if there is enough equity, he moves on to look at the rest of the application. If there is not enough equity, he puts the application aside.
It sounds cold, and it is, but this investor believes that being cold is the way to be fair. He mostly wants to be fair to himself. He no longer wants to look for a way to make something work. He has created a significant lead funnel, and either the property fits his cookie cutter – or it doesn’t.
Now, I have to admit that determining someone’s fate in a measly 15 seconds is not my idea of empathy. You are what you do. This methodology can turn you into a cold person. In my view, an investor should seek ways to help in a situation.
Many might think that this investor is simply looking out for his own interest. Of course, protecting one’s self is paramount. However, people are not stupid. If one party tries to take advantage of the other, usually no deal is struck and no one wins.
It’s not just numbers
This investor prized his time to such a degree that he came up with a simple question that, “cuts right to the chase and tells me what their hot button is.” And I agree. I have copied his tactic and I teach it to all my students.
Towards the beginning of the interview, he asks, “What are you looking to accomplish?” This simple question is never asked by anyone. The seller is caught off guard, and he blurts out what he actually wants.
Anyone who has sold for a living knows just how valuable this information is. By knowing the sellers real motivation, you don’t have to play salesman’s games. You can concentrate on questioning about the desired goal and then coming up with a way to Just say “Yes!”™ It is so much easier to create a winning plan when you know the seller’s real bottom line.
Why choose you
In addition, the seller is now emotionally open to you because you have demonstrated empathy. It is obvious that you care about the seller and his wants. You are definitely on second base. Displaying empathy is why you will be chosen to help this seller, versus anyone else. Selling, like buying, is mostly an emotional experience. We decide with emotion, and we justify that decision with logic. We do not buy, nor do we sell, on logic. Find and hit the emotional hot button and you will be involved in many winning transactions.
When getting tax delinquent property for 5% to 50% of the fair market value, the seller is not concerned with fixing a property or giving a further discount because of condition. Asking for more is akin to kicking a man when he’s down. He will turn on you and cancel the transaction. Remember, pigs get fat, but hogs get slaughtered.
For those who insist on numbers…
Some of the necessary knowledge for evaluating a deal
1 Most important is to determine the seller’s motivation.
“What are you looking to accomplish?”
2 The price.
“What are you (seller) needing to get?” Not wanting to get, but needing to get. There is a big difference between the two.
You can ask the seller, “Could you please explain how you came to that amount?” This sounds logical, but the question is clearly designed to elicit good information, much of it personal and situational.
3 “What is the amount of debt against the property?”
Equation: Price seller needs to get, less Property’s Debt = Owners Equity
Most property is sold at retail. These sellers are usually not motivated and often tell you, “It’s none of your business.” when asking a question. But, even if I was told the amount, it was usually too high for me to make a substantial profit. Therefore, I don’t recommend spending valuable time seeking “deals” by looking at properties being sold at retail.
After having too many of these kind of interviews, I decided that I only wanted to speak with highly motivated seller’s. My answer was, Tax Delinquent Property and I created Coach Mitch’s “Ridiculously Simple System…”™
A Golden Nugget: A very high percentage of property that is tax delinquent is also free and clear of any liens. This means that the seller can sell the property for any amount that he chooses because there are no mortgages to pay off. It’s a distinct advantage.
4 Estimate the repair costs
This can be tricky. An inspection is certainly needed. A good question is, “What would you fix if you were going to stay in the property?” It is also effective to go down a list. “When was the roof last repaired?” “How old are the windows?” “When did you paint the porch?” This approach allows you to show that you are experienced and meticulous. The owner will now start telling stories about the property. Listening to stories helps you to create rapport with the seller. Don’t you like someone who listens to you talking about yourself and your situation?
5 Estimate the After Repair Value and the As Is Value
The As Is Value is the value you think the property is, right now, as it currently exists. The After Repaired Value is the value you place on the property after it has been updated with repairs. You determine ARV by using various sites online to look up comparable property data. Ideally, properties you are comparing should be similar in size, in style, and close in proximity. This is a wonderful exercise. Try it.
Axiom: You guarantee your profit when you buy
By buying right, you can sell well.™ If you buy at firesale prices, you can sell at wholesale. In real estate, safety is NOT location, location, location. It IS PRICE, PRICE, PRICE.
Coach Mitch’s “Ridiculously Simple System…”™ allows you to consistently speak to tax delinquents, “The most motivated of all motivated sellers.”™
Blue skies,
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
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Coach Mitch’s REFLECTIONS™
Real Estate Investing (REI)
Investing in real estate may seem a natural place to invest because we are all familiar with housing. After all, we live in a home, we understand many of the issues related to a home, and we know what makes a home desirable and not so desirable.
There are many ways to invest in real estate. You must determine which methods you are comfortable with, which methods are within your ability to manage, and who you can work with that you trust and can rely upon. All methods of investing in real estate work. Each method has its positive points and its issues. Real estate investing of any sort is a good way to make income and insure a nice lifestyle.
Something for everyone
Thank goodness, there really are a lot of ways to invest in real estate. Although lately, investing in real estate has lost some of its luster, unless you win the lottery, I still see nothing else that can propel an average American into the ranks of the Rich and Famous with less time, effort, money, or credit.
Which method of REI is for you?
You can always do the tried and true method of buying a home and selling it. The tax benefits are still very good and the old adage, “they ain’t making any more land” still holds true. Price inflation, which has been unofficial government policy for many decades, has turned many unfortunate purchases into bonanzas.
Foreclosure investing has been a traditional favorite, and has taken center stage because of the financial crises. Buying low and wholesaling property is a bit more advanced. If you are mechanical and you are organized, you can fix up a property and sell it for a significant profit.
Many make a good living simply being a broker/investor. A broker is someone that inserts themselves into the middle of a transaction and puts a new buyer and a seller together. I like this idea because there is almost no risk to the broker. As a middleman, your responsibility is to market well; not to pay a mortgage or other expenses. A favorite method in this case is to use Coach Mitch’s famous $1 Option™. I have controlled as many as 225 properties at one time using my unique option.
If you have an interest in learning finance, then you could consider doing “paper” transactions. Banks “create” paper notes by buying money cheap from the Fed or Wall Street, and selling the same money at a profit. When you act as the bank, you can sell a property easily. Instead of take your profit in one lump sum, by creating a note, you get paid each month. This is what is meant by creating a cash flow. By learning to manipulate notes via discounted cash flow analysis, you can dramatically increase the Rate Of Return.
Leasing and lease options are viable ways to control property without a large outlay and without the need to get new mortgages. The only responsibilities of ownership are those that you choose to accept.
There are many more ways to invest in real estate. You can read about my experiences with other investing systems when ordering my FREE report: 10 Ways Tax Delinquent Property Is An Extraordinarily Profitable System.
Tax Delinquent Property
The method that I have come to like the best of all the methods is tax delinquent property. Some call it Tax Foreclosure. This method consistently puts you in front of owners of property who are in trouble, and who can give you a very good deal, if they choose.
Tax delinquents are the most motivated of all motivated sellers. When the tax auction is coming up, the tax delinquent knows that he has no further option to get the tax monies and is desperate for a solution to save his property. The investor who understands how to deal with this situation can make a significant profit while helping the seller move on to the next phase of his life.
My “Ridiculously Simple System…”™ helps to consistently locate those sellers who are able to give you a significant profit.
See you at the top,
Mitchell Goldstein – Coach Mitch™
518-439-6100 until midnight EST
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Jacksonville taxpayers foot the bill for $86,000 investor profit on Shipyards tax lien
“We just can’t seem to get out of our own way on that project.”
Richard Clark, City Council president
By Matt Galnor May 18, 2010
When the developers of the twice-failed Shipyards project didn’t pay their 2008 property taxes, two out-of-town investors were happy to pick up the tab — with 17 percent interest and an outside chance at getting the land.
Now, Jacksonville taxpayers will foot the bill for the investors’ tidy profit of $86,000 — enough to pay for two of the 40-plus Jacksonville city employees who’ll be pink-slipped this summer.
The interest is the toughest part for many to swallow of the nearly $600,000 tax bill the city is now covering on the 44-acre site along the St. Johns River downtown.
Knowing everything it knows now, the city might have worked a deal to avoid having those two properties among the more than 33,000 on the block at last year’s tax certificate sale, said Paul Crawford, deputy director of the Jacksonville Economic Development Commission.
The city, which deeded the property to LandMar as part of the 2005 deal, is expected to get the land once the dust settles.
But it [the city. ed.] needs a clear title.
Clogging that title are the two investors, who will have liens on the property if the taxes aren’t paid. And every month, the payoff for the city — and profit for the investors — inches up another 17 percent. [Not correct, 17% is an annual interest; each month the interest increases by 1/12th of 17%. ed.]
“There aren’t a whole lot of investments paying that kind of return right now,” Tax Collector Mike Hogan said.
So the city is cobbling together money from its own investments to come up with the $595,933 to cover the taxes and interest by the end of the month. If not, it will cost another $6,500 by the end of June, and increase every month.
The benefit for the investor is two-fold. First, if the owner pays the taxes, the investor gets the interest. But if the taxes go unpaid after two years, the investor has a stake in the property and can force the Tax Collector’s office to sell it. A foreclosure auction then takes place, with the highest bidder getting the land.
Bankruptcy forces those sales to stop, though, and Hogan said the Shipyards property would not have gone for sale until the court process was finished.
The housing market collapsed and LandMar was late on its 2008 taxes before its parent company, Crescent Resources, filed Chapter 11 bankruptcy.
Because LandMar was a successful, private company, the city wasn’t going to just waive the taxes or pick up the tab on its own, Crawford said.
The Northbank land is wedged between Berkman Plaza and Metropolitan Park, a prime property the city considers a cornerstone for redeveloping downtown.
The property is obviously important to the city or it wouldn’t have paid the taxes, said Hogan, who is running for mayor in 2011.
See entire article: http://jacksonville.com/news/metro/2010-05-18/story/investors-make-86000-back-shipyards-taxes-jacksonville-taxpayers-pay
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Coach Mitch’s REFLECTIONS
Typical Government Action
The city of Jacksonville, FL could have avoided this financial debacle if they had listened to the previous owners when the city was told that the company could not pay the taxes. Instead, the city played hardball. I don’t blame them for that, but it backfired, and city employees will be laid off because of the miscalculation.
Tax Liens Are Good Investments
If you had any doubt about tax liens as an investment, then this story should clear out any misconceptions. If you do the research, and you are confident of your numbers, then putting your capital at risk in a tax lien is a very good investment.
The Interest Rates are GREAT!
The ROR you can expect is determined by state law and the rates are widely disparate. With the lowest state rate at 8%, Oklahoma, all states have interest rates that beat the banks CD rates by more than double. There are many states where the interest rates are very high: AZ = 16%, FL = 18%, NJ = 19%, GA = 20%, IA = 24%, TX = 25%, IL = 36%, etc. Not bad if you can get it.
Interest in tax liens have mostly been an institutional investment. The big players know about the high returns. Lately however, more counties are running their tax lien sales over the internet, and the general public is starting to take notice. About five years ago, Maracopa County, AZ had 18000 tax delinquent parcels with only about 250 folks bidding. Last year, Maracopa County sold out all its tax liens; even the junk.
As a Buyer of tax liens, you had Better Beware
Caveat Emptor is the watchword. Research is the key. A goodly percentage of the property is not worth the taxes that are assessed against it. That is why the owner is not paying the taxes.
Many parcels are not desirable, like a ravine. You cannot build when the slope is 60°. Other parcels will not be commercially viable for a long time. Do you want to pay taxes, year after year, when development won’t happen for 20 years? I saw a lady buy a parcel for $1000 at a tax auction because it was in a high toned development. Unfortunately it was a waste piece and not buildable. I knew that because I had viewed the parcel – she didn’t. Be careful! Know – don’t guess.
Many opportunities
I recall a situation where a developer contacted the tax collectors of many metro areas and found a county owned 10 acre tax delinquent parcel which had already been preliminarily approved for a 100 unit PUD, Planned Urban Development. They got that parcel for 10% of its market value. It was a $10MM project. Why would a developer not sell such a valuable property? I don’t know. There are many such stories.
The uninitiated ask, (I no longer ask) “Why would someone give away their property?” There are many reasons, mostly logical, some emotional. The biggest concern for you is: don’t make the seller’s problem, your problem.
The bottom line
Tax liens are a great way to enter the market if you are a passive investor. You must do due diligence, and you must be prepared to pay the properties taxes for several years and to then foreclose. If the property is good, then you have a very secure investment with a much better than average ROR.
Coach Mitch’s “Ridiculously Simple System…”
I teach how to invest in tax liens safely. You must know what questions to ask. You must know the answers to the questions before you spend your money. In this area of investment, once spent, your money is gone. Make sure you can get it back – with interest.
As always, I hold your hand while you look to make your future.
Blue skies,
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
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Attorney sentenced to 1 year for rigging bids at tax lien auctions
Tens of millions of dollars in tax lien purchases were affected by rigging
By Jessica Anderson, The Baltimore Sun May 5, 2010
An attorney was sentenced on Tuesday to one year in jail and forced to $800,000 in criminal fine for rigging bids at tax lien auctions in Baltimore and five counties, officials said.
Harvey M. Nusbaum pleaded guilty to a one-count charge of conspiring to submit non-competitive and collusive bids at tax lien auctions, according to a release from the Department of Justice.
Tax lien auctions are used to recover money owed by property owners who failed to pay property taxes. When they fail to pay their taxes, the county can attach a lien, which, if unpaid can be sold at auction. The highest bidder for the tax lien has the right to collect the amount of the lien from the delinquent taxpayer, along with interest and fees including attorneys' fees and if the owner fails to pay the interest and fees, which can amount to thousands of dollars, the lien holder can foreclose on the property.
The release said that Nusbaum and others allocated tax liens among themselves to suppress the amount bid on the liens. By reducing the amount they bid, they were able to secure more liens for less money and in some cases they were able to foreclose on properties they obtained at non-competitive prices. Tens of millions of dollars in tax lien purchases were affected by the rigging, the release said.
Coach Mitch’s REFLECTIONS
Crime Pays – Until it doesn’t
This is an old story. People think that they can outfox everybody. Wrong. At some point, somebody makes a mistake, somebody gets greedy, somebody brags, somebody gets stupid, etc.
The best policy has always been and will always be – honesty!
You don’t need to steal illegally
By doing a good negotiation, you can “steal” legally. Tax delinquents are WILLING to give good deals AND are ABLE to give great deals because so many tax delinquent properties are free and clear.
DSGGD
Desperate Sellers Give Great Deals. REMEMBER IT! This is your mantra. This is your calling. This is the “way.” Search for desperate sellers, be a genuine person, and let nature take its course.
Coach Mitch’s Ridiculously Simple System is the best way I know of to consistently put yourself in front of sellers who are desperate. If all you speak to are desperate sellers, then even the ever lurking Murphy can’t stop you.
Go out and help someone,
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
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Coach Mitch’s REFLECTIONS
Hi Coach,
Love your stuff but I must be dense. I understand the reasoning behind trying to get a house & land prior to the tax sale and that doesn’t seem to be a problem. What I don’t understand is if I should get a quick claim deed from the owner and then pay off the lien, how do I avoid the outstanding mortgage on the house? I’m now the owner so what happens to the outstanding loan mortgage?
If I actually go to the tax sale and win the property (even though I realize it would probably cost much more money with other bidders, at least I don’t have to worry about the outstanding mortgage.
Many thanks,
Keep up the coaching, coach.
Your student,
Joe
My answer:
You’re not dense at all. You do get it. You asked the good question and you already knew the answer. You do NOT avoid any outstanding liens that are attached to the property. If you own the property, then you are ultimately responsible for the property, the mortgage, the taxes, etc. Now what?
One answer is to make an alternate arrangement with the owner. If the owner cannot sell the property and is going to take a loss of $1000 per month, perhaps you take on a portion of that while marketing the property. The owner might think it better to lose $500 per month rather than $1000 per month to maintain the property while you sell it. You would pay $500 per month versus $1000.
This is a classic Subject To scenario, whereby you take ownership Subject To the existing financing, and you make the payments while the owner moves on with his life or he waits to get a small payment when you sell.
Another answer is not to deal with any properties that have mortgages against them. I have said in the blogs that 40% of tax delinquent property going to tax sale is free and clear. The main reason I like dealing with tax delinquent property is that such a high percentage of the properties are free and clear.
I have a special way that I deal with properties that have mortgages. I option them using Coach Mitch’s famous $1 Option.
Call me. I would appreciate hearing what is going on in your area. I love talking real estate.
Mitchell Goldstein - Coach Mitch
518-439-6100 until midnight EST
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Coach Mitch’s REFLECTIONS
When I read this letter, I loved it, and felt that it would gladden the heart of anyone who read it.
The ‘haves’ are running the hen house (US) – into the ground. This allows for many opportunities. Those of you who want or need to put your financial house in order would be well advised to find a source of income outside of your vocation.
Tax delinquent real estate investing is the best way to put yourself in front of folks who are in a bad financial situation. Their bad situation is not your fault, but you can help them, and along the way, you can help yourself, and your family.
Investigate Coach Mitch’s Ridiculously Simple System… It really does work!
Mitchell Goldstein – Coach Mitch
518-439-6100 until midnight EST
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Best Letter Ever Written to A Bank Manager
by R. MAK. on February 8, 2009
This is an actual letter written to bank manager by an old lady who got her check bounced by the bank due to lack of funds. It was first published in the New York Times in 2006.
Dear Sir,
I am writing to thank you for bouncing my check with which I endeavored to pay my plumber last month.
By my calculations, three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honor it.
I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement which, I admit, has been in place for only eight years. You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank. My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways.
I noticed that whereas I personally answer your telephone calls and letters, — when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.
From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee at your bank whom you must nominate.
Be aware that it is an offense under the Postal Act for any other person to open such an envelope. Please find attached an Application Contact which I require your chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof. In due course, at MY convenience, I will issue your employee with a PIN number which he/she must quote in dealings with me.
I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number of button presses required of me to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery.
Let me level the playing field even further.
When you call me, press buttons as follows:
IMMEDIATELY AFTER DIALING, PRESS THE STAR (*) BUTTON FOR ENGLISH
#1. To make an appointment to see me.
#2. To query a missing payment.
#3. To transfer the call to my living room in case I am there.
#4. To transfer the call to my bedroom in case I am sleeping.
#5. To transfer the call to my toilet in case I am attending to nature.
#6. To transfer the call to my mobile phone if I am not at home.
#7. To leave a message on my computer, a password to access my computer is required. Password will be communicated to you at a later date to that Authorized Contact mentioned earlier.
#8. To return to the main menu and to listen to options 1 through 7.
#9. To make a general complaint or inquiry. The contact will then be put on hold, pending the attention of my automated answering service.
#10. This is a second reminder to press* for English. While this may, on occasion, involve a lengthy wait, uplifting music will play for the duration of the call.
Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement. May I wish you a happy, if ever so slightly less prosperous New Year?
Your Humble Client
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Coach Mitch’s REFLECTIONS
Homeowner’s insurance is a necessary part of the real estate investor’s armor. You can normally get your investment property included into your homeowners’ insurance policy, along with your car. The more you have to insure, the more valuable a client you become and you will qualify for any quantity discounts.
Do lower housing prices mean cheaper insurance?
No. While tumbling house prices may have you wondering whether homeowners’ insurance will fall also.
The answer is not easily seen. While US median house prices have fallen about 7%, year against year, do not expect premiums to be cut by a similar amount.
Your homeowners’ policy covers your home – but also much more. The typical homeowners’ policy also covers contents, and the value of contents is likely to have risen, as well as third party liability.
Industry experts have determined that as many as two thirds of American homes could be undervalued, when seeking monies for rebuilding due to a covered incident.
Most important
Your coverage must be evaluated by understanding that the buildings element of your policy should be based on the cost of reconstructing it, and not on its current value. To base your insurance on the current market value is to make a serious error.
Construction costs up or the same
While times are hard for builders, the evidence suggests that construction pricing has not fallen like housing prices. Prices of materials have moderated, and labor is not quite as expensive, but only slightly.
The wars in Iraq and Afghanistan are taking up any slack in the US market – keeping up pressure on prices.
Check your policy
It makes sense to check that your homeowners’ policy accurately reflects the cost of rebuilding any property that you own, including any investment property.
How to calculate your market value
Talk to your insurance broker. They have their pulse on the local market.
Insurers keep track of rebuilding cost and automatically adjust policies to reflect changes in pricing.
There are online calculators that can be used to assess current costs.
Ask a builder to do a walk through and estimate the reconstruction costs.
Have an appraiser do a full inspection.
Unfortunately, lower real estate values will not lower your homeowner’ premium. However, there are other ways to reduce insurance costs. You might agree to pay a higher deductible, or make sure to use the same insurer for all your insurance needs.
Beware
Stories about insurance debacles are legend.
I will never forget a call from a coaching student informing me that a young child had fallen into a well on their newly acquired investment property. I had worked with this couple to get this property, their first, and I still remember his words, “Yes, I know that you told me to get property insurance…”
I will also never forget the nauseous feeling in the pit of my stomach upon receiving a letter from a tenant that read, “We had a girl scout meeting. Just letting you know that a young girl put her arm through the glass in your front door. She got 67 stitches. Her parents are consulting a lawyer and will be in touch with you soon.” I quickly recovered when remembering that I had liability coverage.
A vivid memory is the time that I was at an attorney’s office, fighting a claim that I, (my workers), had moved some portable front steps at a home that I had just bought and sold. It seems that the new owner became drunk and fell down the steps. Luckily, I could show that the new owner had moved the steps after my workers did, so I was not liable, but my liability policy would have protected me.
And, etched in my memory is the night that I had a washer hose rupture on the second floor of my home and the water went down two floors and did considerable damage. My insurance agent was of no help. Don’t forget, he is the agent of the company. I had to get a public adjuster. He got me at least triple what I would have known to get. He was well worth his fee.
Another costly incident was averted because I had made sure to be on good terms with a neighbor of an investment property. See the post: http://www.coachmitch.com/2007/05/05/good-neighbors-make-for-cheap-insurance/
Take care,
Mitchell Goldstein - Coach Mitch
518-439-6100 until midnight EST
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Tax delinquent real estate, tax liens, and tax deeds are a great way to invest in real estate. Pre-foreclosure and foreclosure investing is significantly enhanced by Coach Mitch's system.
Coach Mitch’s REFLECTIONS
A Question
In post #142, I answered a student’s question. This is a follow-up.
Mitch you are the best, thanks a million. would you by any chance have some recordings of you talking/negotiating with sellers so we can hear it live how this works etc?l
The Answer
While I appreciate the request, please understand that people expect privacy, especially in transactions where they are disadvantaged. If you were the seller, would you like such a conversation to be made public?
The goal is to be the person that the seller wants you to be, so that he can feel good when giving you his property at a low price. This takes an understanding of that individual. It is absolutely not a cookie cutter situation. Each person is unique and they must be treated as such. We can speak about sales techniques in generalities, but, to be effective, you must develop the skills to know what to say, how to say it, what the body language should say, and most important, how to evoke the feelings that you want felt.
Please read my blogs. I continually say that folks must be treated with respect, with empathy, with genuineness. Try to help someone and be creative about it so that you can earn a profit. That is what creates a win-win situation.
My coaching program is the vehicle that will get you into master negotiation mode, including how to put together a winning offer. Anyone can find a motivated seller. That is easy. What do you do next is the real question. Why should that seller sell to you at that low price? What makes you different from the last person who tried to buy? Why didn’t he sell to that person? BTW, that’s a “smart question.” The answer will give good data.
Consider calling. It appears you have real interest and it seems that you understand concepts. What a good start to work from.
Mitchell Goldstein
Coach Mitch
518-439-6100 until midnight EST
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