Dave Schumacher joins us for this episode of the FlipNerd.com Expert Tip show to share his story…of how he advanced in his career by making sure he stayed ahead of the curve for where the market was heading, and by becoming an expert in areas that many avoided…which meant less competition. It’s a great lesson to learn for how to set yourself up for a remarkable career. Check it out!
Mike: Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting expert interview where I interview successful real estate investing experts and entrepreneurs in our industry to help you learn and grow.
If you haven’t checked out the new FlipNerd.com, please go check it out. We’ve changed quite a few things, and I think you’re going to love it.
Today I’m joined by Dave Schumacher. He’s the President and Founder of Tax Title Services. While you may not know him yet, he’s a leader in the title industry. In fact, many of the products that you buy today from title companies are products that he was probably involved in creating. We could spend the entire show today talking about title policies and title insurance and title search and all that, but we’re not. We’re actually going to talk about Dave’s story of starting out in college with an interest in real estate investing and finding himself working in a title company and starting a small business that has had both great times and bad times, and how he’s made it through. While it’s a different business than many of you that are listening have, I think you’re going to hear a story that every small business can identify with.
Before we get started with Dave, though, let’s take a moment to recognize our featured sponsors.
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Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Hey, Dave, welcome to the show.
Dave: Mike, thanks for having me.
Mike: Yeah, I’m glad you’re here. I tell people that listen to the show often – they kind of know now that there is kind of a pre-show part of the show, so I always talk with the guest that’s going to be on, and we always talk about what we’re going to talk about today, and usually we talk about that person’s area of expertise or something like that. We talked about that a little bit, but I know you’re going to share your story today, and I think that we don’t do enough of that. Something clicked when we started to talk about that that I think people want to hear the story of other small business owners sometimes. Not everybody wants to open up and share their story, so thanks in advance for doing that today.
Dave: Sure, you’re welcome. I enjoy this, in fact.
Mike: I think there are a lot of people that probably started off like you. They had an interest in real estate investing and they got a lot of education, and either they invested or they didn’t, and they found themselves in some sort of derivative of real estate investing and not necessarily doing exactly what they thought they might be doing or what the books and tapes that they bought said they were going to be doing. But it was some kind of peripheral business that was still in the same kind of industry or place, if you will. And that’s kind of what happened to you. Is that right?
Dave: Yeah. I was in college. I’d see these info commercials at night. I was married young; I was still in college and I was married and had a child in my last 2 years. When I was younger, I couldn’t sleep as well, so I’d see these info commercials, so I would buy them. I’m a voracious reader; I love to read. I’m always wanting to educate myself, and so I’d buy these things, whether it was Dave Del Dotto from 1988; he was kind of the first no money down guy, and then Robert Allen and Carleton Sheets way back in the day, this is stuff that’s from the 1988 time
Mike: Yeah, that’s back in the cassette tapes days.
Dave: Yeah, that was before CDs, you know, no DVDs and no CDs. So I was always reading this stuff, you know, how to buy property, no money down, and I always – my wife at the time, she would get so mad at me for buying another book and tape. But the thing was, which a lot of people don’t do, is I always took action when I read these things. It wasn’t something I just got all excited about and put up on a shelf and then went back to my normal life. I always read it and I always implemented it, and the stuff worked.
So I started coming up with if I could buy one property a year like a 401(k), no money down; or back then, there was a lot of VA foreclosures which were really for investors to buy, and so my thought was if I could buy one house a year and hold on to it and I had no speculation and had it rented out for PITI, at least break-even or maybe a – you want a positive, but you just don’t want a negative, and as long it did that and I bought in good school districts, if I just did that one time a year and I held on to those until I retired, I’d have 20 free and clear houses.
So I started doing that. I remember the first thing I had bought was a – back then, for VA foreclosures, it was a blind bid. You didn’t know if you were going to win or not, so you didn’t know if you were going to have the winning bid. So I put in five bids for VA foreclosures in Florida. I was working with a realtor out of Santa Barbara here, and he had a team out there, and he’d sent me these photos. There was no Internet back then, it was just a package of photos and he’d send them to me, and I’d look them over and then we’d come up with a bid.
So I remember the first time I put in five bids for five properties, thinking I’d be lucky if I got one of them, but I got all five.
Mike: Oh, wow.
Dave: I had to go to my wife and say, “We’re the proud owner of five new foreclosures that are rental houses now.” She flipped. She was like, “We don’t even own our own home, and you’re buying VA foreclosures?” But to be honest, that first house I bought back then is now free and clear. I went through a divorce eight years ago and my wife got all the property, which is fine; I kept my company, but that first house is now free and clear.
So think about it. If you had 20 houses in your 50s or in your 60s and you’re getting $1,000 a month rent and they’re all free and clear, could you live off $20,000 a month?
Mike: Sure, yes.
Dave: Sure. You don’t have to worry about Social Security, and that was kind of my plan. So then, one became two, and two became three, and duplexes and triplexes, and at the time of my divorce, I had about 50 properties. But the concept worked. So here I was in my 20s, doing things which my peers weren’t doing. I was buying houses like they were cars and such.
So, backing up, when I graduated from college, I was already primed how to handle foreclosures because I was buying them. When I graduated from college, I saw an ad in the paper for a management training position at First American Title, and I thought, well, from my studying real estate, I knew what title was, so I gave them a call. I interviewed with them and didn’t realize that a management trainee position was you start in the mail room and you work your way up. And that’s literally what I did.
Actually, I was not in the mail room, but back then, in order to get title document or records, it was all on microfilm or microfiche, and so my job for eight hours a day was to sit at a machine and punch a button for title officers to get the book and page of the document they’re trying to search. Back then, again, there was no iPhones or anything like that, so I had my Walkman with my headphones, and I was listening how to buy mortgage properties, no money down, for eight hours a day while I was punching this machine and smelling all these fumes.
They told me, okay, you’re probably only going to be here three months, and it turned out the market dropped, and so I was there for eight months. But I learned rather quickly that in title insurance and title in general that when refinancing is good and business is good, when that slows down, the title companies will ramp up and then lay off 30% of their staff. So I learned rather quickly, I need to master something that nobody else wants to do so I could keep my job. If you become so valuable, they can’t get rid of you kind of was my thought.
Mike: So at a young age, you were very insightful as to how to keep a job. People don’t generally think like that when they’re in their early 20s. And then also, how to kind of lay stepping stones for building wealth, which pretty much everybody that I know, probably the biggest regret I would say most real estate investors have, that I’ve experienced, is that they didn’t start at a younger age.
Dave: Well, again, when you study, when you keep – I just keep reading and reading. I still read, I still buy tapes, I still buy everything. I visit websites like yours. I mean, there’s always such massive great content, and one of the things I learned rather quickly was about compounded interest.
Somebody who starts investing or saving in their 20s, if you put away money for 20 years and you stopped at 40, if you’re making 8% on your money through compounded interest, if I just did it from 20 to 40 and stopped and didn’t invest any more except what was coming – I was already investing with, through compounded interest, that if somebody started in their 40s, I would have way more money than they would. You’d be a multimillionaire just off putting a little bit of money away, making 8% percent on it.
So I learned that. I read that when I was 20, and I’m like, okay, I need to start doing that. I remember my father, a very conservative guy, and he just could not believe; “I can’t believe you’re buying real estate and fixing flips.” Unfortunately, he passed away a couple of years ago, but you know, the last 15 years, we were close friends, and he was like my best friend and he started like listening to me. I’m like, Dad, we should be getting into some gold right now, and he never would invest like that. And then he started, and I now manage his trust now for my stepmother, and it was because he started getting a little more aggressive because he started seeing the calculated risks. You can still be aggressive if you have time and you could ride waves up and down. The younger you are, the more time that you have where time is your friend, it’s not your enemy. As you get closer to retiring, you can’t go through cycles like that, so you start moving into more conservative investments and bonds and stuff like that.
So I started that mindset. I was thankful that I had that at such an early age.
Mike: So, the market turned down, and you were and the mail room. Where did you go from there?
Dave: I got promoted right before the downturn into searching. So I went from the mail room to title searching. We had a quota. We had to do eight searches a day. That’s where a title officer sends a request down to me to prepare the search, go through the public records, grab all the mortgages, the liens, all against a property to prepare a title commitment. So we had to do eight searches a day.
I remember there were always three stacks. There were the simple searches; they called them lot blocks; and then you had commercial searches, and then mortgage foreclosing searches. No one touched any of the commercial and mortgage stuff, they just would go and do the easy stuff. I was like, okay, if I mastered this commercial stuff and this mortgage foreclosure stuff, I will keep my job because I will be the best they’ve got because nobody wants – I’ve always been about the messier, the better, and if you can master it, you have security and you become an expert.
And so, I would come in at 6:00 in the morning when nobody was there and I’d punch out my eight searches for the day from 6:00 to 8:00 in the morning., and then I’d wrack my brain like a college thesis on these commercial searches. Like, one search would just, you’d be just exhausted by the end of the day. So I mastered that, and that was right around the time the downturn started. The title insurance industry had never gone after title insurance for mortgage foreclosures, so
Mike: So, what year is this, Dave?
Dave: This would be about 1992, 1993.
Dave: The market peaked in 1989, and then collapsed right after that. It’s funny, because back then in 1989, interest rates were 13% to 18%, and people don’t understand that now. You see 4%, and if it goes up to 5%, everybody is like, 5%! Back then, it was 13% to 18%.
So the downturn hit, and so right around that time, someone from the upper echelon came down to my boss and said, “who’s your best mortgage foreclosing searcher?” and that was me. So then I was promoted and I became the first title officer for First American Title to specialize in mortgage foreclosures, and that’s all I did. So, again, here I was studying how to buy mortgage foreclosed properties, and then setting myself up for this career in title that I never knew I was going to have because I had studied real estate on the side.
So again, the tip being you can become an expert. The average person probably watches five hours of TV a night or day, and if you turn that TV off and you just read things, something like that or self-help or something, that’s where you can find the time to do deals, to make phone calls, to really do things that most people can’t. I was always willing to do what most people wouldn’t do; like yourself, like you and your wife, you know, FlipNerd.com comes out of what you started years ago. Had I talked to you probably 10 years ago and said, “Mike, you’re going to be this successful entrepreneur, real estate guy, you’re going to have this brand and all that, you’d probably say, “What?”
But again, it’s the same thing. I was reading and doing things and taking action instead of watching TV and whatever.
Mike: That’s great. Tell us where things went from there, and how you got to the point to where you ultimately started your own business.
Dave: Again, I was always really good about seeing where the marketplace was going, and it’s usually about how to seize opportunities. One thing that I just started doing is I started listening to what my clients kept calling me about. Dave, you know, why can’t you – I live in Orange County, California, so I was doing Orange County mortgage foreclosures. I started getting these calls from lenders saying, “Dave, I know you do Orange County, but why can’t you do Riverside County? Why can’t you do San Bernardino or San Diego?” I said, “I don’t know, let’s look into it.” So I did, and we did. So, Dave, now that you can do Southern California, why can’t you do Northern California? So now we can handle the whole state out of one office. I saw this coming just by listening to the clients.
So I started going to my bosses and saying, “Look, national default is coming, and we can beat everybody to the punch. We need to create a national group that can handle multiple states or ultimately the nation.” At that time, I had been a title officer for about four years and I was burning out on it and was looking for a promotion and wanted to do something else, and so I started going to my boss and saying, “Look, we need to build this national default group. I can see it in my mind, and it’s two years, and we can beat everybody. Let’s do this.”
They were like, “No, Dave, no, no, but we’ll offer you this job up in Northern California to manage some office.” And I said, “I’m not relocating my family to go up there.” So I quit – well, I didn’t quit. One of my sales reps, he had left and he went to Fidelity Title, and then Fidelity – he called me and said, “Dave, we want to build this national default thing that we were talking about, you and me.” And so I went to my boss and said, “Look, I don’t want to leave. I love First American, I’m loyal, but this is where the industry is going. We need to get there, and I’m the expert for it and I want to do it.” And they said, “Sorry, Dave.” And I said, “Well then, I’m going to go to Fidelity. Are you sure you don’t want to do this now?” They said no, so I left.
Unfortunately, I got into a bad situation, and six months later, I quit. I was disillusioned, and I was just going to be like you and just do real estate full time, be an investor full time. Two days after I quit, First American called me back and said, “Dave, we want to do this national default thing now. Why don’t you give us a business plan, and we’ll see if we want to do it.” I said, “No, no, no. Make me an offer, put me under employment, and I’ll share all my secrets with you.”
So then they did, and then I went there. So with me and a laptop in a one-man office, I created what was then called Lenders Advantage, and that was basically a one-stop shop for – well, back then, it was Countrywide and all the subprime lenders, New Century, Fairbanks Capital, Option One Mortgage. All that stuff is now Wells Fargo, Chase or Bank of America.
When I left the company in 1999, we were doing over 50,000 mortgage foreclosing titles a month, where we would handle the title and the foreclosure. I would outsource the foreclosure, part of it, whether it was in a trustee state like California or a judicial foreclosure state, say like New York, and so we would handle the title from foreclosure to REO and give the lender a clean title and a policy. There were always curative issues that would come with products like that, so I created this streamlining of cleaning up titles from soup to nuts, one-stop shop, and so when I left, we were doing 50,000 a month and $26 million in business a month.
Dave: And I had 400 employees as part of it.
Mike: Dave, maybe take just a moment and kind of tell people what the significance of the title insurance products that existed prior to that. Why they didn’t cover foreclosures, and what the significance is of the concept that you had that later became obviously a huge business.
Dave: To be honest, I couldn’t really tell you why we never went after title insurance in mortgage foreclosures other than that it just wasn’t a prevalent thing for the 1990s.
Dave: The amount of foreclosures was just massive. You couldn’t ignore it, and I think that was the only reason. Prior to that, there wasn’t – do you remember back in the day the RTC and the S&L collapse that was in the 1980s? We did have a product for that, but it wasn’t foreclosure related. But the whole thing about it was that there were just so many foreclosures. The one in the 1990s was nothing compared to what happened in 2008, 2009, what we’re still kind of dealing with today. The numbers today are just staggering compared to what I was – the first one that hit in the 1990s.
Dave: So the only thing was is that the lenders, they needed, you know, the foreclosure departments and the REO departments never worked together within the lenders, so they were wasting money. The foreclosure department would order one title, and they wouldn’t clean up any of the old title problems that were associated with the chain, and then the REO department would get this bad title, and they’d have to go through all this clean-up, so then they’d have to order another search.
So again, the lenders would just complain to me as their title officer, and I just started hearing, like, okay, there’s a product there, there’s a product here. Just like anything else, your own clients will sell you. Dave, why can’t you do this? Why can’t you do that? And if you get so many calls about that – it’s on any subject. It doesn’t have to be in real estate. It can be something else.
Dave: And if they keep asking you, there’s a need there. Just fill the need. Create a product that fills the need. And so that’s kind of what I just did. I just kept listening, and by listening, I created an industry first.
Mike: Awesome. I’d like to apply kind of your lessons learned up to this point for folks that are listening, like how they could apply that to where they’re at in their life and things they could do to solve problems for other people. Maybe you could kind of – I know we’re going to continue with your story of going out on your own and things like that, but maybe, like up until now, what are some of the takeaways that people should be hearing right now?
Dave: Well, the takeaway is that back in my day, employers were loyal and employees were loyal. That is gone. That’s not happening anymore. The average person is probably going to have seven different jobs in their life. So the takeaway is that you need to always be educating yourself and keep staying abreast of what’s current. Keep yourself current.
The example is being able to teach yourself something. Even if you’re a manager, take outside classes, read on how to be a better manager. There are so many great classic books, like The One Minute Manager. That series is amazing. Start applying those kinds of things. You can always be a better manager. Separate yourself from your peers.
There’s always a lot of times within corporations hierarchies and there’s nepotism and there’s these different things that you need to separate yourself from everybody else in order to get – you don’t have to wait to get promoted. You actually can create – I call it being exponential, you know, jumping over things and going from 0 to 60 in your career a lot faster just by listening, speaking with people, networking, going to events in your industry, even on your own dime, educating yourself, listening, talking to higher-ups. I call it “modeling.”
If there’s a job that you want, you just need to find the person who’s doing that, and take them to lunch. Five years ago, I learned about what’s called “relationship marketing”. The more people that you get in a relationship with, and I’m not talking about dating, we’re talking about just talking, networking, and picking their brain, taking experts to lunch, listening to things like we’re talking about now. That’s how I, at 20 years old, was doing things that people couldn’t even do. I was jumping over people in their 50s, and they were – they didn’t like it. They didn’t like this young gun, this guy. I actually ran into that, and that’s how I ended up leaving First American, because I ran into somebody who didn’t like this young, 24-year old guy with all these big ideas.
But again, the takeaway is on your free time, read, turn the TV off, go to events, network, find out what ideal thing you’d love to do. And usually, if you’re willing to do something – and again, a lot of these are all clichés, and everybody’s saying, oh, I’ve heard that before, but it really is true. If you’re passionate about something, and if you’re willing to find something you’re so passionate about you’d do it for free, the money comes. The opportunity comes, because people want to be, “Wow, this guy really likes this.”
Mike: Dave, this is such a different message. This is fantastic. This is such a different message than the victim mentality that a lot of people face here in America, unfortunately, or the people that are fast-food workers that think they should be making $15 to $20 an hour. It’s like, well, you’re not – I guess I don’t really care if I offend anybody that’s listening to this that thinks that that’s a problem – but if you haven’t differentiated yourself, if you don’t have a skill that somebody else couldn’t step in and do in a minute, then how could you expect to make more money or get passionate about what you do, because quite frankly, you end up being replaceable, right?
Dave: Well, yeah, and especially for people who are like my age, 47, pushing 50 or in their 50s, this generation that’s coming up, they’re born with technology. They have their iPhones, they are forced to it. People like us, you have to be able to keep current with technology and stay abreast of your skillset.
Again, it’s true, you don’t have to buy in to the fact that you’ve got to work for a company. Back in my day, it was like you worked for a company for 40 years and you got your gold watch and your pension, and that’s it. You have to be able to, especially if you have children you’re putting through college, you’ve got to have some kind of investing going on in order to – because you’re not going to make enough money just – eventually you can, like I did, if you separate yourself and you get promoted, you can, but you have to start doing things that other people aren’t doing.
Mike: Right, right.
Dave: And we’re not talking rocket science here. I didn’t reinvent the wheel. Did I create title products that were brand-new? Yes, but how I got there was just modeling; relationships. People trust me because my relationships within the industry allowed them to trust what I’m doing in order to create my own company.
Dave: It was because of those relationships and how to generate more business, and how you treat you employees if you’re an employer, because those are your customers, too. How do you motivate them, how do you keep morale up? I have a philosophy, a reverse triangle kind of a thing, where the more responsibilities that have been put in my care, the more responsibility I have to treat them well and then make sure that I – I call it being a steward; like an upside-down pyramid kind of thing. But I learned that by reading, by going to seminars, by meeting people; talking with people. And you’ll find out, most people, they’re just like you, and even though they’re very successful people, they still have insecurities. They’re just like you and me, and they like conversations a lot.
Mike: Right. Dave, talk about when you leapt off and decided to go out on your own.
Dave: Well, again, at this time, Lenders Advantage was very successful, but I started getting these calls, these regular calls. Again, here come these calls, and it kept happening so often based on tax liens and tax deeds. For those of you who aren’t very familiar with that, tax deeds are related to – if you don’t pay your property taxes – like, Mike lives in Texas and in Texas, if you don’t pay your property taxes, the tax collector in any other state can foreclose on your property to satisfy your taxes. If you don’t pay your mortgage, the mortgage lender can foreclose on you. If Mike doesn’t pay his property taxes in Texas, they can foreclose on his house; take it to auction to satisfy his property tax bill.
So in Texas, it’s a bid auction like a mortgage auction. It comes with a right of redemption, meaning if I go and I purchase a property, say, in Bexar County, which would be San Antonio, or Harris County, which would be Houston, and I attend one of the tax sales and I get that deed, if I try to go sell that property, that deed or title I got, the title insurance industry doesn’t recognize that as good title. So I was getting calls from institutional clients, Wall Street money, who were spending hundreds of millions of dollars buying [tax certificates 28:55].
In other states, they sell not deeds, but they sell certificates; basically a years’ taxes that they sell to an investor. Because the tax collector has to collect this money if the homeowners are not paying, so they’ll sell a lien to an investor, and you have the right to bid on that and accept a certain interest rate guaranteed by the law. In Texas, the tax deed acts like a taxing certificate for two years. It’s a penalty state, meaning you get 25% on your money the first year; 50% on your money in the second year.
Other states, it ranges, say, 8% to 24%. So basically, the tax collector is saying, “Hey, Mr. Investor, if you pay these taxes, we’ll give you a lien against the property, and once the homeowner or mortgage companies do finally pay, then you’ll get your money back plus this 8%, 12%, 25% on your money. And most of these people – 95% of these liens get redeemed. They don’t end up in deed.
But in other states, like in my home state here in California, it’s actually a deed state, meaning you’re actually getting the property. You’re bidding on the property just like a mortgage foreclosure. So once you get the deed, you own the property. You inherit a title from – and this is where I kept getting these calls, “Dave, you know, I bought this tax deed property. I went to go sell it, and we opened up escrow, and the title company said, hey, Mike, sorry, buddy, we don’t insure tax deeds. You’ve got a title problem. You need to go get a quit claim deed from the former owner and you need to get releases from the mortgage companies that were of record, and/or you need to do what’s called a quiet title. In Texas, they don’t have quiet titles, but in most states, a quiet title is a court action where a lawsuit quieting or meaning clean, clear title in court, and that usually involves a lawsuit where you have to sue the former owners. You’ve got to sue the mortgage holders and anybody who had an interest in the property; you have to foreclose on them again, and get the court to say, “Mike, your title is now quieted or cleaned, cleared.” And then the title company will feel comfortable to insure.
And so, I kept getting these calls, and I kept running up the flagpole to senior underwriting at First American and saying, “Why don’t we insure these things” and nobody could tell me. It was like, tax deeds, no. And so, I started reading, again, on my own time, I started pulling all the case law, and I found out that the biggest problem with these things is that the tax collector – it’s all about notice, and no one can take your property away from you without giving you legal notice, to let you know, “Hey, Mike, you didn’t pay your property taxes. If you don’t pay, we’re taking this to auction. So here’s your legal notice that gives you your rights, your due process rights, to know that this is going on and to protect your interests, we recommend you come in and pay your taxes. Otherwise, we’re going to take your property from you.” That’s called due process.
And so, the problem is that the tax collectors don’t go beyond the call of duty to get that notice to you, and if you don’t get the notice to people, they can hire an attorney and they can attack the title or attack the foreclosure and overturn it.
It’s kind of the same thing, you remember, Mike, like robo-signing in the mortgage foreclosure stuff?
Mike: Sure, sure. Yeah.
Dave: Same type of thing. Mortgage foreclosures used to be really something they always insured. Now, they have to look at those and scrutinize those and they look at them as a risk. They didn’t always used to do that, and that’s because the mortgage companies were not following proper procedures. The same thing on tax deeds. If you don’t get the notice to people, they can overturn or attack it.
So you can imagine, you’ve got this tax deed on this property, and you can’t do anything for six months to a year while you’re suing everybody. That was the problem, and that’s why I kept getting these calls, “Dave, why can’t you guys insure? Come on. Figure it out.”
So I did. I remember, again, we were giving some tidbits to people about if you are in your jobs, what happens when you run up against people who don’t like you in your job and they’re in your way? Well, that happened to me at First American. I was 24-years old, and I’m talking about tax deeds, and my boss was completely like, “Dave, we’re never going to do this, and if I see you working on tax deeds, I’m going to fire you.” I mean, you can imagine, wait, I just built this $26 million business for you, and here I think we have another one, and you’re going to stop me?”
But again, it was more of insecurities of people who didn’t like me, this young guy with all these big ideas, and people get intimidated sometimes by that and there’s jealousy and there’s envy I think. So at that point, I saw the writing on the wall, that here comes the future of where I’m going to head, and either I’m going to do it with First America, or I’m just going to do it on my own.
One day, I remember I was at Countrywide, you know, it was one of my accounts in the mortgage foreclosing side, and I get a call from my boss saying, “Dave, when you get back in the office, I need you to come into my office.” So I thought, “Here I go; I’m getting fired.”
So I came to his office, and both my bosses were there talking as if I wasn’t even in the room. They’re like, “Yeah, you know, that Dave Schumacher, he’s a smart guy. He really knows what he’s doing” like I wasn’t even in the room. It was really weird. They said, “Oh, hey, Dave. Hey, Cliff Morgan came down.” And Cliff Morgan was the number-three person for First American. He was Senior Counsel, and I had been meeting with Cliff and these other gentlemen up there in underwriting on how can we do these tax deeds and insure them. So, Cliff came down to my boss and said, “Hey, I’ve got an employee here who has a product, and we want to see it done. It belongs to the default section, so we want to see it done. Promote him. Make him a Vice President. He’s going to start this whole new division.” I didn’t even know this. They didn’t even talk to me about it.
So then I had a month to go around the country and I started, again, meeting with what’s called the National Tax Lien Association, and that’s made up of all the institutional clients. So I started going, again, talking about how to build relationships and something new. So I started attending these conferences and speaking at them. I became a public speaker on tax deeds. I became an expert and put myself out there and grabbing cards and started building this business. I did that for about a month, and then I went on a vacation to Europe with my wife, and during that time, when I came back, the first day back, my boss called me – he wasn’t my boss anymore; I was at his level. He wasn’t my boss
Mike: Dave, how old were you now?
Dave: I was probably 25, 26. So I guess my boss, former boss, had finagled – he said, “Dave, while you were gone, we made some changes, and your division is now under mine.” I said, “No, this isn’t going to work.”
So I went upstairs, ready for this. Again, you always have to have Plan B and Plan C; what-ifs. You’ve got to be prepared for what-ifs, and I was prepared because I saw the writing on the wall when you’re dealing with somebody who doesn’t really – who’s going to hold you back, you know, again, about getting over fears and taking calculated risks. So I went upstairs, and I had already been talking to people about starting my own company. And so I went up to senior underwriting, and I said, “Look, if I start this company and I issue a certification to you, First American, our clients will pay us and [move it to an attorney 36:17], and we’ll be faster and cheaper, and now you guys will have an avenue of business that you would insure and we’ll indemnify you, meaning if there’s any claims, it’s not your issue, it’s mine, and tax title we’ll do.”
So they said yes, and I went down to my boss and told him, and he said, “Well, Dave, that’s unfortunate, because we’re going to have to
” I told him, “Hey, this tax lien thing isn’t going to work,” and he said, “Yeah, unfortunately, we’ve [indiscernible 36:42] your old job, and now we’re going to have to lay you off.”
I knew that they – that the company doesn’t like employment problems. I used to negotiate this stuff, and so I said, “Look, this is wrong,” and he’s like, “Okay, Dave, what’s it going to take?” And I said, “Well, I want a years’ salary.” And they said, “Well, we’ll give you six months,” and I said, “Okay.” So that helped me start my company, Tax Title, out of my house.
Six months later, I was growing so fast, I had to move into an office. And 15 years later now, 15,000 orders later, and Tax Title is where it’s at now. It’s a national company, and it works in all states and it provides – basically it bridges the gap with investors who are buying tax deeds and wanting to sell and get title insurance for their buyers or their lenders. Our product bridges them without a quiet title. It’s a faster and cheaper alternative.
But again, in order to create that title product, I actually went out and bought tax deeds so I could step in the shoes of my clients, because it’s a knowledge-based sale. I bought mortgage foreclosed products so I could speak the language with lenders and attorneys, foreclosing attorneys. I did the same thing with tax deeds. So, I’ve invested in tax deeds; I’ve used self-directed IRAs to do that.
But again, the takeaway is calculated risks, having to deal with people in your own company or that you’re working for that may not like your big ideas, but you just have to be a master of something that nobody else can do, and if it can’t work within that company that you’re working for, well then go start your own.
Mike: Dave, it sounds like your story is a – it almost would sound like you had it fully mapped out. Like, you kind of were always a step or two ahead of your circumstance, and I think a lot of people kind of find themselves just kind of drifting through life, and opportunities may arise, but it just seems like it was just more of fate or whatever that might kind of pop up. I mean, what advice would you give to people to kind be a little more purposeful with the direction that they’re heading in their career and their business?
Dave: Again, pay attention. Listen, especially to clients, if you’re in sales or whatnot. Your clients will tell you what products they want, but it’s also, again, building relationships within your company, your co-workers. They’re your customers too, and you never know – one of the things I learned is you never know where people end up. You start in the mail room, and those people could be running companies later, and they remember you along the way, so be careful about how you treat people when you’re working with your co-workers; how you treat your bosses. It’s about relationships, and you never know where people end up 30 years later in their career, and if you had a good relationship with them, they’ll remember you and then all of a sudden they want to pull you with them to – they’ll remember you, and then you can get promoted and/or get job offers that you never thought just because they remembered you and you had a good relationship with them.
Mike: I’ve talked a number of times about building relationships with people, and you’ve talked about the importance of it here today. Can you kind of share any kind of tips or advice on how to nurture those relationships over time? I think a lot of people tend to believe that networking, networking is the act of exchanging a business card with somebody that met you somewhere, and you and I both know you go to a conference or an event or a club meeting of some sort, anything, and you come home with pocketful of business cards, but that’s just the beginning of what that relationship could be. Can you kind of share any advice how to nurture those things over time?
Dave: I call it – it’s all about the follow-up. And you can do that even if you’re an employee working with people, too. Like, if you have an assistant who works with you or whatnot, there’s always an opportunity if they’re having a hard day, or – it’s kind like with your wife. That’s a relationship too. You bring flowers, I mean, I’m not telling you you do that at home, but it’s the same thing. People can have hard days, and if you can just be thoughtful and nurture people who work with you or under you, or offer, again, because I’ve invested, I’ve helped teach my employees how to invest, and just, again, being generous. But when you’re networking outside and you’re doing these conferences and you’re grabbing their business cards, it’s about following up. Hey, nice meeting you. We talked about possibly this; what’s a good time to talk with you? When’s your next conference? So you start building that, and especially with technology, and like what we’re doing, Skyping, I mean, this is a way if you’re not in a home state of that person, you can still keep in touch with them. It’s about follow-up. It’s always been about the follow-up.
Mike: I think so few people do that well that it’s not that hard to stand out, really, and differentiate yourself in terms of building relationships.
Mike: Well, Dave, any last minute takeaways here in terms of how you’d advise people? Thank you for sharing your story with us today. I hope what people get out of this was to always be thinking about what’s next for you and your business or your life. Any kind of takeaways here that you want to make sure that people heard?
Dave: Again, just reiterating, don’t be afraid to take chances and calculated risks, whether it’s within your job, whether you’re an entrepreneur. The other being save your money, put money away. Like, when you pay off a bill – let’s say you had a car payment and you paid off your car, and let’s say that payment was $300 a month. That $300 a month, keep acting like you still have that $300 a month payment because you’re used to not having it, and start socking that away.
If you ever buy property, don’t sell it. I remember asking my Dad one day, “Dad, what was your first house you ever bought?” He was in the military when I was younger, and it was a VA loan, and I said, “What did you buy the house for?” He said, “$10, 000,” and I said, “What was your mortgage payment?” And he said,”$138.00.” And I said, “Were you nervous about that $138.00 payment?” He said, “Yeah, I wasn’t sure how I was going to pay that.” And later, he made money in real state without realizing he was doing it.
But again, the take-two is what was once uncomfortable will become comfortable. Remember, any one of us who learned how to drive, remember the first time you drove out of your driveway and you drove yourself to school or something? The first time how nervous you were? Three months later, you’re tooling around town, not even nervous, right? Same thing for your first day on a job, your first flip. Mike, go back to your first flip, you were nervous the first time you ever did something, and now, six years later and 40 houses later or whatever you’ve done, now it’s not uncomfortable anymore. That’s the big takeaway is what was once uncomfortable will become comfortable, you’ve just got to put yourself out there and then it becomes easy. The more times you practice, the better.
I tell people if you’re going to do fix and flips or if you’re going to do tax deeds, go to auctions without buying. Just go and do the homework and attend the auction and see if you would have won or not, and you can do that. If you’re afraid of buying something, well, you can go through that exercise without buying. That’s always been helpful for people, and practice, practice, practice. But then one thing you’ve got to do is you eventually got to pull the trigger. You’ve got to make those offers. You’ve got to put the offers out. You’ve got to take a calculated risk. Don’t get caught up in auction fever. If you have to speak to a homeowner and that makes you nervous, well, the more times you do it, the better. So just keep doing it, and eventually you’ll get – it will become comfortable. Or partner up with somebody who can teach you, like Mike. You have FlipNerd and you’re coaching and all that. That can help as well, but eventually, you’ve got to do your own. You’ve got to take an action. You’ve got to make an offer. You’ve got to maybe quit a job. If you’re unhappy, change it. You’ve got to change. Don’t live unhappy.
Mike: Bet on yourself.
Dave: Change that. You’re the only one who can make yourself happy, and it may take a calculated risk to change it, but you can change it. You’ve got to educate yourself. Network, relationship marketing, make offers, save your money, invest your money. I think that’s most of the takeaways.
Mike: Just kind of bet on yourself; be willing to take risks. Dave, thanks so much for sharing your story today. I think there’s a lot of great lessons in here for everybody who’s listening, and I definitely appreciate you opening up and sharing it with us.
Dave: Thanks, Mike. I appreciate you for having me.
Mike: Yeah. Have a great day.
Dave: All right. You, too. Thanks.
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