HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT
Learn How to Know if the Property Is a Good Investment. Assessed value, margin, cash flow, exit strategy, market conditions, and using tools like G.I.S may sound complicated, but anyone can learn it. Ted Thomas, America’s Leading Authority on Tax Lien Certificates and Tax Deeds, will show you how.
Watch the video above or read the summary below:
How to know if the property is a good investment? Today, I’m going to answer your question, how to know if the property is a good investment. You’re going to find this very interesting.
My name is Ted Thomas, and I’ve been involved in the real estate business, especially tax liens and tax deeds, for the last 30 years. I started out as an investor, and then I became a coach and a teacher and a guide.
I’ve been teaching people how to do this for the last 25 years.
Tax lien certificates and tax deeds are great investments. But what you want to know is if you could buy it at the auction, how much margin would you have in the selling price?
So, is it a good investment or not? Well, this is an investment that I discovered about 30 years ago, and it’s quite lucrative. I’ll teach you the steps as I go along.
The brilliance of these tax defaulted properties is how easy it is to locate information. It wasn’t that easy years ago, but now you can do everything online. We can teach you all the steps to do this online.
Now, it takes a little while. You are not going to get rich by Friday, but this will always work.
I have a gift for you. It’s a mini course. It will teach you the secrets of tax liens, and it will also teach you how to make money with tax defaulted property. It’s free, and it’s a gift.
I’ll also tell you about how to avoid the big mistakes at tax auction. Two big mistakes are made at these auctions. I want you to be sure to avoid those mistakes, and so I’ll teach you that towards the end.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – PROFIT MARGIN
Let’s get back to the topic, how to know if the property is a good investment.
You may want to buy it low and sell it high, but I recommend you buy it low and sell it low so that you can do it quickly.
I’ll show you about property evaluation. The challenge is you need to have margin if you are going to make money in business. The margin in this business is all made when you buy.
You make your money in real estate when you buy, so you need to establish the margin. In other words, the price that you are willing to pay and the price you know you can sell it for. How are you going to learn about all that?
Well, across the United States they hold a lot of these auctions. There are over 100 million properties in the United States. 2% or 3% of those properties will end up at a tax defaulted auction.
There’s no better place to buy than a tax defaulted property auction. Why? Because they are going to sell at very close to the back taxes, and they’ll have the mortgage deleted.
That means you are going to buy a property without a mortgage, so that’s going to give you a ton of margin, much better than going to a foreclosure auction.
Here’s how to know if the property is a good investment. If the property’s got enough room, $10,000, $20,000, $100,000 between the purchase price and what you think you can sell it for, you’ve got a great investment.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – EVALUATING PROPERTY
So let’s talk about that. How would you evaluate property?
If you’ve been around the internet for awhile, you know about Google and Google Maps. You know about Zillow, and you know about some of the real estate sites, for example, the MLS system.
You know that there are many ways to appraise a property.
One way you can always find out what a property is worth is to check with the county, and see what the tax collector says. That will give you a rough idea. Another way is to look at the Multiple Listing System.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – WHAT IS G.I.S.?
However, something I want to introduce you to if you don’t know about it is called the Geographic Information System. Now for short they use an acronym G.I.S., Geographical Information System.
This is the best thing since sliced bread. It’s a satellite, circling the world, and of course, you can get into the satellite online, and you can bring views from the 10,000 foot view all the way right down to almost right over the property.
There’s a ton of other information, but right now, let’s just know that this is the most accurate way to check out property.
I’m not saying to not use Google. I’m not saying not to use any of the other appraisal systems. You want to use them all, but this is the best one of all. This system is not only worth learning about, but it’s superior.
When I say superior, I mean it’s going to give you values in the neighborhoods. It’s going to give you locations. It’s going to give you the bird’s-eye view of the property.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – TAX SALE PRICES
Why do you want to know all that? Well, you want to know that because tax auctions are going to sell property at very close to the back taxes.
That means that you are buying it at rock bottom, and at tax auctions the mortgage is wiped out. If you can figure out a value, you are doing pretty well.
Does that mean you are going to get every property for 10 cents on the dollar and sell it for 100 cents on the dollar? No, but what if it was a $200,000 property and you could get it for 10 cents on the dollar?
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – BUY LOW, SELL LOW
Do you have to hold out to get 200,000? No, you could hold out and say to yourself, well, I bought it pretty right, why don’t I sell it right? So you can sell it for $40,000 or $50,000 and make a nice profit.
Why would you do that? Well, because you bought it low, and you could sell it quickly to a fixer upper person. The whole idea here is let’s buy properties that have good margin, and you’ll find that at the tax defaulted auction.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – BIDDING
It’s up to you to always know the value of the property that you are buying so that you don’t bid too high.
For example, for a $100,000 property, you don’t want to bid $100,000, but if you can get it for 20 or 30 cents on the dollar, you have plenty of margin.
If you spend 30 cents on the dollar, and it was worth $100,000, that’s a lot of margin. If that were me, I would then sell it for $49,000 and make myself a $29,000 profit. I just moved into the profit range very quickly.
I just want to buy the property and quickly sell it. Other people have a different way to do it, but I’m going to tell you, if you can buy low and sell low and do it quickly, there are going to be plenty of properties.
Why not be in that business instead of doing what everybody else is doing, fixing properties up. That’s not a lot of fun, and it costs a lot of money.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – AN ONLINE BUSINESS
This is a business that you can do from your kitchen table online. You could sit there on your rusty dusty and start making money.
I never said bypass Zillow; I didn’t say bypass the MLS or Google.
I want you to do all that, but keep in mind that G.I.S., Geographical Information System, is really going to be a superior system and give you an inside track of what properties are worth.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – CASH FLOW
If you know what a property is worth, then you are not going to bid too high. If the property is worth X, and you can sell it for way under X, it’s going to happen quickly.
Why would you want to do that? You want to do that because you need cash flow.
Cash flow is important.
Who does things quickly? I can tell you a couple of places that do not only quickly, but they give you good prices. One is Costco; one is Walmart, and one is Target. They all do the same thing.
They buy it low, and they add something to it and sell it. They don’t try to get Macy’s prices or Goldman Sachs prices. Check it out, drive around, and look at their parking lots on Saturday. You’ve got to wait in line for a parking space.
People want bargains. If you are in the business of buying low and selling low, you are going to be successful. Success is what you are after here.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – PROPERTY APPRAISAL
So what’s the question I’m answering? How to know if the property is a good investment? The only way you are going to know is to know the values that you could sell it at.
To answer that question is really easy. If you have ever wondered how to appraise property and evaluate it, you now have to start learning that. You can learn that by using these electronic systems.
An electronic system is going to make all the difference in the world for you.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – SELLING PROPERTY
The challenge for you is before buying at tax auctions, you always want to look at the property because some of these properties are used and abused.
You are not going to get top dollar for those kinds of properties, but if you can buy them for 20 and 30 cents on the dollar, wow, why not sell them for 50 cents on the dollar?
Does that mean you have to sell at the exact amount I talked about? No, but I found a system that’s worked for me for the past 25 years. I buy as low as I can, and I sell it at a profit every time, but I don’t try to get top dollar.
I want to give the other guy some room, so he can get in it, and I want to sell it quickly. I don’t want to fix it up.
Now, do I end up with a fixer upper once in a while? Yes, and that’s going to take me three months, six months, nine months.
That means I’m paying taxes; that means I’m paying heating. It means I’m paying security; it means I’m taking care of the lawn, and I’m taking care of fix up. I’ve always got something to do if I’m hanging onto that property.
What if I bought it 2,000 miles away? Do I know if that stuff is getting done?
I teach people in other countries how to buy in the United States. If you buy properties, you want to be able to sell them relatively quickly. If you are going to buy a tax defaulted property, it’s going to be challenging in this respect.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – EXIT STRATEGY
Buy it as low as possible, but know what you are going to sell it for before you go to the auction. If you don’t know what you are going to sell it for, then for goodness sake, don’t get involved.
If you don’t have an exit strategy, don’t buy and hope you’re going to figure it out later.
90% of the people buy at auction, then they go and try to figure it out. By then, it’s too late. You may have spent way too much money for that property.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – MARKET CONDITIONS
Determining the value and the market conditions are going to be important. It doesn’t take much to figure out market conditions.
Either the market is good, or it’s great, or it’s bad. There’s no in-between zone because real estate goes up, and then it goes down.
If you are paying too much, and it starts down, you’re going down with it. You could ask anybody who lived in Phoenix over the past 10 years, or lived in Las Vegas, or lives in Miami-Dade, what happened.
That market crashed out from under them. It didn’t matter if they only had a very small mortgage, they still lost the properties because when the real estate comes down, it really comes down.
You are going to be buying at 5, 10, and 20 cents on the dollar. So it’s got a long way to come down, but remember, the market is super competitive when it’s coming down.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – PROPERTY VALUES
What are we doing today? Well, we’re answering the question, how to know if the property is a good investment.
You are going to know by checking values, and you are going to have to try to find the values online.
You are going to maybe even hire people to go survey the neighborhoods, so you are going to know what the value is and not be guessing.
Do you think people guess a lot? What they do is they think every property at the auction is going to be a bargain. Guess what? Every property is not a bargain, just because it’s at an auction doesn’t mean it’s a bargain.
There are some properties that are used and abused.
Some properties are abandoned; some properties are worthless, and some properties you just shouldn’t even look at because it’s going to cost you too much money to get yourself out of it.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – FIXER UPPERS
If you’ve never done this, I don’t want you to start doing it. I’m talking about fixer uppers. This is not the business that you see on TV.
The business you see on TV is entertainment,. You see this pretty girl telling you what they are going to do in this house. It’s an average, mediocre house, and 29-minutes later, it’s a mansion.
There are these grizzly contractors going in and out, and then there are these sponsors knocking fireplaces down with sledgehammers. That isn’t the business I’m in. That business is all entertainment.
If you see the money being poured into those properties, you need to think about it. You want to buy them and quickly sell them.
I doubt very much if you are going to have a pretty girl standing up front directing the contractor. I doubt very much if those contractors will listen to her.
They are gritty guys, and they are working to get done quickly so they can get on to the next job. They put thousands and thousands of dollars into just staging the house so it will look pretty when the cameras come through.
That is not the business you want, and this is a big job. If you are a fixer upper guy, you’ve got a great business. There are plenty of these properties for you. If that’s the business you like, you’ve got it. There are plenty of them here.
However, most of my clients want to buy, and they want to resell.
Remember, I have a gift for you, but before I finish, I’m going to answer two other questions.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – STATE STATUTES
What are state statues, and why are they important?
When someone says statutes, that simply means where are the rules.
If you want rules to your state, obviously the state will have a library. Every big city will have a library. They are just books with all the rules in them. That’s what the state statutes are.
If you have an attorney, you can more than likely go to their office and go to the library in the conference room, and it’s all covered with books. Those are the statutes, and anybody can read them.
The statute just means it’s the rules for that particular state and county.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – TITLE INSURANCE
What is title insurance?
When you go to sell a property, the buyer will say, well, wait a minute I want to have title insurance.
Why do they want title insurance? Because they want to make sure that you own it. If you don’t own it, you shouldn’t be selling it. If you get caught selling some property you don’t own, you’ll go to jail.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – QUIET TITLE
So let’s hold on here. If you want to sell it, you need to make sure the title is clear.
When you buy the property, if you buy it at an auction, you might have to do what’s called a quiet title. Basically that means someone has checked all the paperwork, everything is right, and it’s okay for you to sell.
When the title is clear, in other words, there’s no mortgage on it and no liens on it, you can sell.
In the old days, they used a warranty deed. So if I owned a property and sold it to you, I had to warranty it was clear, and it had clear title.
What if I sold it to you, and there were problems, and I went to Mexico? Well, I’m gone.
So now people buy insurance to make sure that it’s done, and you buy that from a title company who checks all that.
It’s a simple process that they do. You’ll never do one, but you will buy title insurance.
HOW TO KNOW IF THE PROPERTY IS A GOOD INVESTMENT – COMMON MISTAKES
There are a couple of things you want to be careful of. There are two mistakes that people make at these auctions, and these two mistakes can cost you a lot of money.
Mistake number one, is don’t buy any property that you haven’t looked at. Why do I tell people that?
What if it was next to a chicken farm that had terrible smell? You wouldn’t want that property. What if it is next to a railroad? You might not want to be on that property. What if there was a fire?
When you buy at the auction, you are buying it as-is. If there was a tornado last week, and it wiped it out, you are going to have a damaged property. So you need to look at it relatively close to the auction.
The second big mistake people make is they get involved in the auction, and they are so excited about getting a property that they are just going to buy something. They keep bidding and bidding until they get something.
The object of the auction is to buy a property that has plenty of margin. You don’t want to buy a property unless you already know what that margin is. In other words, you’ve got an exit strategy.
The exit strategy is just as important as purchasing the property. So don’t buy a property unless you’ve looked at it, and you have already planned your exit strategy. Otherwise, you may pay too much, and then you are in trouble.
We hope you enjoyed Ted’s lesson, “How to Know if the Property Is a Good Investment.”
You can evaluate property via several methods, Google and Google Maps, Zillow, the MLS system, and G.I.S. (Geographical Information System), with the latter being the superior system.
At a tax sale, you can buy a property for pennies on the dollar, which gives you a big profit margin. You can buy it low and sell it low for a quick sale. This provides you with cash flow.
Determine the value and market conditions, and have an exit strategy before you buy. Don’t bother doing a lot of fixer upper work when you can quickly sell it at a low price and move on to the next one.
An important way how to know if the property is a good investment is to look at the property before you buy. One of the biggest mistakes people make at auctions is buying a property they haven’t seen.
If you’d like to learn more, there’s no one more qualified to teach you than Ted Thomas.
Ted has been teaching for over 25 years, and he’s famous for showing people how to earn 6-figure incomes within a year of completing his training.
Ted is the only one who provides full support and offers home study courses, live web classes, workshops, Q&A sessions, and personal coaching.
To get started today, get the FREE Safe Haven Investor System course (valued at $197), Ted’s gift to you.
Safe Haven is 2 hours of streaming videos and a 100-page illustrated manual that reveals the secrets of tax liens and how to earn profits in tax defaulted property.
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