Show Summary

In this episode, I talk with Arnie Abramson, the authority on buying properties at the Sherriff’s tax sales. “Tax Liens”, “Tax Deeds”, “Sherriff’s Sales”…are all simply ways to purchases houses foreclosed on by taxing authorities. There are many important factors and things to consider when investing in tax liens, and investing in this space without knowing what you’re doing can get you into trouble! Fortunately, Arnie couldn’t be more willing to share his knowledge of more than 2 decades in Texas tax liens. It’s an interesting investing opportunity…don’t miss this show!

Highlights of this show

  • Meet Arnie Abramson, renowned expert on Texas Tax Lien real estate investing.
  • Learn how tax deed investing differs in different states, and how Texas specifically offers better investing opportunities that most states.
  • Learn more about how you can get started investing in Texas Tax Liens.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike Hambright: Welcome to the flipnerd.com podcast. This is your host Mike Hambright and on this show I’ll introduce you to V.I.P.s in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store, or by visiting flipnerd.com. So, without further ado, let’s get started.

Mike Hambright: Hey, it’s Mike Hambright. Welcome back for another flipnerd V.I.P. interview show. Today I have with me a good friend of mine, Arnie Abramson. He’s a leading national expert at purchasing properties that tax sale and has tremendous overall experience in the real estate investing space. It’s a very interesting topic to talk about tax sales, and not a lot of people that really know how to do this right. Arnie’s the guy. So, before we get started today let’s take a moment to recognize our sponsors.

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Mike Hambright: Hey, Arnie. Good to have you on the show.

Arnie Abramson: Well, thank you. I’m honored to be here.

Mike Hambright: Oh, thanks. I’m honored to have you. So, we’ve been friends for a long time. We’ve been running in some of the same circles. Although, I don’t personally invest in tax sales, there’s a lot of things I don’t do. It’s a really interesting topic. Why don’t you take a second to, kind of, before we get into it, the nuts and bolts of buying a share of sales and tax lien sales and things like that, why don’t you introduce yourself and let everything know a little bit more about you.

Arnie Abramson: Well, okay. As you know, we operate in Texas. And, even though I was born in [inaudible 00:02:37] I consider that the capital of East Texas.

Mike Hambright: Okay.

Arnie Abramson: But, I’ve been here since 1990 and in my former life I was a financial planner. And, before that, or during that period, I also worked for a real estate company that did public offerings of commercial real estate and that’s where I really got my first taste of real estate.

Mike Hambright: Okay.Arnie Abramson: Got here in 1992, I did my first tax sale in Dallas and I got ten of them in the first twelve months.

Mike Hambright: Wow.

Arnie Abramson: It was because it’s intricate process, and then that was before there was any kind of real information from the internet. So we had to do a lot of leg work and it was entirely different.

Mike Hambright: Yeah.

Arnie Abramson: But I was very fortunate. I met someone who had just moved to town who had experience in tax sales. And, but he didn’t have the time. I had the time and didn’t know what to do so we formed a joint venture and operated that way for two or three years and that’s really how I learned about it was by doing and being mentored. It was quite an experience.

Mike Hambright: Yeah. Yeah. And, you know it’s funny sometimes when I hear a year now like 1992, you know my first thought is oh that was just in 1992, and it’s like wait a minute that was almost twenty-five years ago.

Arnie Abramson: I know. I know.

Mike Hambright: Time has flied.

Arnie Abramson: Usually when I’m talking to somebody, I said, “That was before you were born.”

Mike Hambright: Yeah. So, you’ve got a lot of it. And, all along you’ve really become an expert in tax sales and I mean you’ve been doing this ever since you started and. . .

Arnie Abramson: Well, I did it for several years and then the market started to change. Back then, you could only work one county at a time because it was really, literally, you would go down to Dallas County and form a circle around the sheriff and they would have six or seven properties and that was it. Then the out of state investors started coming in and driving up the prices. So we kind of played it cool for a while. I started doing a lot of other things. I did foreclosures, buying [inaudible 00:04:45], [inaudible 00:04:46] foreclosures and did that for many years. Then, when the economy started to turn around, not too long ago, I said, “You know what? This is time to get back into this, because there are going to be a lot of tax foreclosures.”

Mike Hambright: Yeah.

Arnie Abramson: And, that’s when I kind of rededicated and got reacquainted with it, with the tax sales in terms of information available online. I mean, it was incredible and we are even covering the whole state now.

Mike Hambright: Yeah. Yeah. Well, before we get into too many details, why don’t you tell everybody a little about what that even means saying, just saying we’re throwing around the word, the phrase “tax sale.” Why don’t you talk a little about what that means, which is pretty standard across the country but I know there are some differences in other states as well. Just kind of explain…

Arnie Abramson: Sure.

Mike Hambright: … the general opportunity that exists for real estate investors.

Arnie Abramson: Well, as a little seg way into this, I have to tell you, not long ago I was watching television and they were doing ‘Gone with the Wind’ again and I decided I would watch it for about 10 minutes and it happened to be the time when Scarlett, after the war, Scarlett goes to find Red Butler and she pulls down the curtains to make a dress to be presentable and she finds him and she says, “Brett, or Red you’ve got to help me. I need $300 because the sheriff is coming to foreclose on Tara.”

Mike Hambright: Yeah.

Arnie Abramson: So, there we are with the tax sales back in the Civil War.

Mike Hambright: Yeah.

Arnie Abramson: And, that was the example. I wanted to get that clip, but today the tax sales in the country, the states are divided about fifty-fifty. About half of the states are what they call tax lien states. When you go to the auction there, you’re bidding on the lien that was created for the taxes they owed. You’re not bidding on the house. You’re biding for the lien. Alright, and they start off at eighteen percent and we’ll say, “Okay, I’m going to bid eighteen percent. I’ll take over this land for eighteen percent.” The next guy will say, “Well I’ll do it for seventeen.” And, the next guy says for fourteen. So the guy who will take the lowest interest rate winds up buying the lien. And, the lien may be $800, $2,000. Whatever it is they owe in taxes. Those are tax lien states. That does not apply to Texas.

Mike Hambright: So, before you go further, if somebody buys the lien, let’s say they buy $1,000 lien and just to keep the math simple at 10%, what is it that they are getting because the person is clearly not paying the lien which is why there’s a problem in the first place. What are they getting and is it ultimately to try and get the house anyway?

Arnie Abramson: Well, it’s not necessarily that they’re not paying it. They will get it and they will get the interest payment and if they don’t, then they have to go and foreclose on the property.

Mike Hambright: Okay.

Arnie Abramson: And, take it over.

Mike Hambright: Okay.

Arnie Abramson: That’s the tax lien state and that’s the ones that all the gurus are talking about on the internet. They talk about you can do it from home. It’s easy. You don’t have to know anything. You don’t have to look at the properties. Those are what they are talking about.

Mike Hambright: Right.

Arnie Abramson: And, you must understand that none of that applies to Texas. As a matter of fact, four of the big gurus of tax liens out there, when they want to buy for their personal accounts in Texas, they come to us, because they know it’s entirely different.

Mike Hambright: Yeah. Yeah.

Arnie Abramson: Which is a nice segway into Texas, right?

Mike Hambright: Yeah.

Arnie Abramson: Okay. The other half of the states are what they call tax deed states. In those auctions you’re not buying a lien. You’re actually buying the property and you get a sheriff’s deed or a constable deed. Now, Texas happens to be the best of all the states because number one, it has some features that some of the other states, or tax deed states, don’t have that apply to tax lien states. For example, if we buy a property at the tax sale in Texas, the owner that lost it has up to two years that he can reclaim it or redeem it. And, this redemption feature is unusual in tax deed states. Now, if he does redeem it in the first twelve months, he has the pay the buying his cost plus twenty-five percent.

Mike Hambright: Okay.

Arnie Abramson: And, if it’s in the second year it’s plus fifty percent. And, what makes Texas different is that’s the highest rate in the country and unlike other states that have redemptions it’s not prorated. It’s cumulative. In other words, if I buy the property today and they redeem it tomorrow, I get the full years twenty-five percent limit.

Mike Hambright: Okay. Wow.

Arnie Abramson: Yeah. Now, the reality is, and on the internet, again, when they’re talking about tax lien states, they’re talking about oh most of them get redeemed. Well in tax deed states, it’s most of them do not get redeemed.

Mike Hambright: Right.

Arnie Abramson: And, there’s some reasons for that buy usually if they can’t afford to pay their taxes, how can they afford to pay you what you pay for it plus your penalty.

Mike Hambright: Yeah.

Arnie Abramson: So, about one in ten get redeemed in Texas as an average overall.

Mike Hambright: Okay.

Arnie Abramson: Now, our average is a little bit less than that. It’s like one in five. A little better because we don’t mind vacant lots, which bring your averages down.

Mike Hambright: I see. Okay. So, the circumstance is generally going to be that someone has unpaid taxes and the city wants their money at some point, and so they have a share of sale, they have a tax sale.

Arnie Abramson: Yeah. Here’s the process. Anyone of the taxing entities can initiate the suit or taxes. It can be the city. It can be the county. It can be the school district. Those are the three main ones.

Mike Hambright: Yeah.

Arnie Abramson: But, it could also be the hospital or a junior college, or a [inaudible 00:10:30] district or anything. Usually it’s the three: the city, the county, or the school district.

Mike Hambright: Okay.

Arnie Abramson: And, they can initiate that lawsuit just for the taxes owed to them. For example, one of the law firms might represent the city and a different law firm may represent the county. And, that happens quite often. And, so they can sue taxes for the taxes just owed to them, or they can include all the others in it themselves. So, when you’re looking at a tax sale, you want to see who the, whose doing the suing, who the plaintiff is. And, if it has the magic phrase et al after it, which means that would include all of them, the taxing entities. So, once they initiate that suit and they’re required by law to notify anyone who has an interest in that property.

Mike Hambright: Yeah.

Arnie Abramson: And sometimes that can two, or three, or four years.

Mike Hambright: Right.

Arnie Abramson: Because the heirs that have to be notified etcetera. They have to notify them and then if they still don’t make their payments, then they will go to court and it is a judicial process, which is what differentiates it from the trustee sales or the mortgage companies that close.

Mike Hambright: Right.

Arnie Abramson: That mortgage company can just close here, they cannot. It’s a judicial process and there is a lawsuit and that lien that is created then supersedes all other liens except for government liens. For example, it will wipe out, or extinguish any mortgages. So, if you buy it at the tax sale, you’re going to get free and clear of any mortgages.

Mike Hambright: Wow.

Arnie Abramson: So, now the buyer at the sale assumes all the rights that the county or whoever is doing the suing. In tax lien states, that means they have position of those lands. In tax deed states, they now have possession of the house. Now, in Texas, once that is sold, the ex-owner has zero rights, period, except for that right redemption. He does not have right of possession. He does not have right to collect rent. He has the right of redeem it only.

Mike Hambright: Wow.

Arnie Abramson: Yeah.

Mike Hambright: So, how often does a lender actually get wiped it. It seems like if it takes a long time because of the judicial process to notify everybody, that they lender probably has some time to protect their interests by taking, I mean, presumably if they’re not paying their taxes they’re probably not, maybe not, paying their mortgage payments either. So, could they essentially, because they can foreclose, sounds like much faster [inaudible 00:13:06]

Arnie Abramson: Exactly.

Mike Hambright: So they could potentially preempt the tax sale by foreclosing then the house.

Arnie Abramson: Mike, that’s a great question. Really, because, and that is exactly correct.

Mike Hambright: Yeah.

Arnie Abramson: Let’s take Collin County. . .

Mike Hambright: We didn’t plan that by the way.

Arnie Abramson: No we didn’t. Ever since. Hey you’re right there. Most of the sales, most of the properties that go to sales do not have mortgages for that very reason.

Mike Hambright: Yeah.

Arnie Abramson: Because if people have a mortgage on a house, most of the time they’re going to have the mortgage company ask for taxes, as long as they make their mortgage payments the mortgage company will make the payments for taxes. Now, there are some people who insist, “No I don’t want to ask for a loan,” and sometimes they occur and they show up in the sale.

Mike Hambright: Yeah.

Arnie Abramson: Many times it’s after, especially in the lower price houses, where lending people have been in there for twenty or thirty years, there’s not more mortgage on it. That happens a lot. So, having said that, generally speaking, most of the properties that come up in the tax sale do not have mortgage just because they would have gone to the trustee sale first. However, there are some that slip through the cracks.

Mike Hambright: Yeah.

Arnie Abramson: For example, in September we bought a house that had a mortgage in Hunt County and maybe the mortgage company just didn’t wanted to go to Commerce, Texas where the house was to check it out. But, we bought this house for $90,000 and it was a $300,000 house.

Mike Hambright: Wow.

Arnie Abramson: Now the mortgage company redeemed it. And, they are more likely to if there is a mortgage than the owner. Because, after all, they did a eighty-twenty to get into the house, the mortgage company has more skin in the game and they’re more likely to redeem than the individual.

Mike Hambright: So, what happened? They redeemed. They came back and paid you $90,000 plus twenty-five percent?

Arnie Abramson: Well, we buy houses only for our investors because we don’t want to have any conflicts of interest. So, our investors total out of pocket on that house was $104,000 and they got back $132,000 in fifty-two days.

Mike Hambright: Okay.

Arnie Abramson: Now, let me hasten that. That is not normal. That is not what you would expect.

Mike Hambright: Right.

Arnie Abramson: That’s in aberration, a good one.

Mike Hambright: Yeah.

Arnie Abramson: But, it happens every now and then.

Mike Hambright: Right. Right. Yep. So what trends do you see with the economy getting good and bad over time? What trends do you see in the tax sales? Are you more likely to see them in bad economies versus good? I mean, what are your general thoughts on that?

Arnie Abramson: Well, naturally when the economy is going downhill you’re going to have more foreclosures.

Mike Hambright: Yeah.

Arnie Abramson: All kinds. And, however, what we’re seeing is a very, very steady amount. Harris County for example in Houston, that’s one of the larger counties and they’re so big that they don’t have just one tax sale. They have eight precincts and each precinct has their own sale.

Mike Hambright: Oh. Wow.

Arnie Abramson: At the same time, at the same place, and it’s a zoo.

Mike Hambright: Right.

Arnie Abramson: They, for example, they’re offered 418 properties for sale.

Mike Hambright: Okay.

Arnie Abramson: That’s incredible.

Mike Hambright: Yeah.

Arnie Abramson: You know. So, yeah, it’s probably the economy is getting better, but remember that, not you know it’s changing. It’s getting better and you may not have as many, but remember this that more people are moving to Texas from anywhere. The fundamentals in Texas as a real estate spot is just great and there are articles all over the place where we as a nation and as a state are becoming a nation of renters, because the mortgage companies are still getting a little stingy. So, where do we as investors want to be? We want to be the guys who are renting it to these people coming in from out of state.

Mike Hambright: Right. Right.

Arnie Abramson: So, this is just another source of where to buy houses below retail value.

Mike Hambright: And, aside from that example that you gave about that house that was a $90,000 house. I mean typically these are lower grade houses anyway that tend to be more like a typically, probably, in my guess is more like C class rental property.

Arnie Abramson: Well, they really are all over the board. In that same month that we got one in Hunt County, we bought one for $5400. In Tarrant County, this rented for $500 a month.

Mike Hambright: Yeah.

Arnie Abramson: I mean, that’s incredible! And, by the way Mike, for the first time this is the big one for me. We bid on the house last month where the appraisal value was $832,000.

Mike Hambright: Oh. Wow.

Arnie Abramson: Now, we did not get it

Mike Hambright: Yeah.

Arnie Abramson: But, somebody did for $375,000.

Mike Hambright: Wow.

Arnie Abramson: And, but, you can’t go in the house to inspect it so maybe it needed a. . .

Mike Hambright: Yeah, who knows. So what, you mentioned, I think maybe you said this before we started the show. You were talking about the percentage of houses that typically sell at the auction. What would prevent a house from selling? Does the bidding typically start at $1? I mean, it starts, it starts wherever somebody opens it up but are there reserves on these that keep some houses from selling?

Arnie Abramson: Another good question. Unrehearsed.

Mike Hambright: Yeah.

Arnie Abramson: The bidding starts. . .

Mike Hambright: I’m full of it Arnie. My wife tells me I’m full of it. I think she means good questions.

Arnie Abramson: I think so too. The bidding starts with the amount of taxes owed. So if they owe $1, yeah. That’s where it would start. Now if the taxes owed plus any legal fees and that kind of stuff, and usually they publish them in the bid. Now, there is no reserve. That’s where the bidding starts and the house where I told you I bought for $5400, no one else bid on it. We just yelled at minimum at the very end and got it. And, it was a classic case where it looked horrible from the outside but if you looked closely at the bones of the house, they’re pretty good and there were people living there. So, it was one of those aberrational things that worked.

Mike Hambright: Yeah.

Arnie Abramson: So the bidding starts with the taxes owed. Now, having said that, here’s what you have to understand. Remember we said earlier that it’s a judicial process and you get a judgment for all the taxes. Well, from that point on, it could take a year, six months, a year, two years, four years before it gets to the taxing because again, they have to notify every person who had an interest in that property. But, meanwhile since that judgment, more taxes are accruing that are due. So, the bid, when you buy it at the tax sale, and it’s going to pay off whatever you purchased it for, which let’s say they owe $8,000 in taxes and you buy it for $20,000. Eight of that twenty thousand will go to pay the taxes. But then, there are taxes that have accrued since then and we call them post judgment taxes and you have to pay those as well, but, not necessarily the same day but just before January 31 of the following year.

Mike Hambright: The buyer has to pay those.

Arnie Abramson: The buyer. Yeah. So those are not, they don’t tell you about that on the internet. That’s one of the things that you need to know.

Mike Hambright: Right.

Arnie Abramson: So, that’s part of the research that you’ll have to do.

Mike Hambright: Yeah. So, what do they do with houses that don’t sell? I mean, that are, well you know and I know in this town we hit opportunities to buy houses all the time, you know, once the house is fixed up it might be worth fifty or sixty thousand but it needs sixty or seventy in work to get it there and you wouldn’t take it for free. So, I’m sure that happens in the tax sale space as well but what happen, I mean what does the city do, I mean ultimately are they willing to negotiate on their taxes. Or can they even do that legally?

Arnie Abramson: You know what you’ve been talking to somebody in my staff to have to ask these questions.

Mike Hambright: No, I haven’t.

Arnie Abramson: You’ve got to, you’ve got to.

Mike Hambright: I’m just really smart Arnie.

Arnie Abramson: Let’s take this month, April sale. Now there were sixty or seventy properties listed in Dallas County. There were only nine sales

Mike Hambright: Okay.

Arnie Abramson: Now, here’s what happens to a lot of them. Number one once the list comes out of what’s for sale, there are about twenty-five or twenty-six licensed companies that will start flooding these people with flyers saying, “Don’t lose your house we’ll loan you the money, no payment for ninety days, and all this stuff.”

Mike Hambright: Right.

Arnie Abramson: These are licensed lenders for tax sales. And, a lot of people will do that. So that diminishes the number somewhat, but then the number of them still go to the tax sale and no one bids on them because maybe it’s a vacant lot. You know, the most part, you’re going to have to hold the property that you got taxed for in generally for at least two years because you can’t a title [inaudible 00:22:09]. So, if you’re getting a vacant lot, that’s not producing any income. It’s costing you maybe liability insurance and taxes. So, a lot of people don’t buy a vacant lot. Maybe some builders will. But, the point is that if no one bids on the house, or it could be the minimum bid, I’ve seen, I’ve seen taxes build up a $40,000 house and they owe $30,000 in taxes.

Mike Hambright: Right.

Arnie Abramson: I mean it’s just incredible. You’re not going to buy those houses. So, a lot of them, no one bids on. And, usually those are what they call struck off from the sale. Struck off from the sale is important to hear because now in Dallas County, it started saying other things like pulled from the sale, and there’s a subtle difference there. If it’s pulled from the sale, that means they may to sell it again later. They may bring it up to another sale. If it’s struck off, here’s what that means. That means that it is taken off of that sale and it is acquired by the taxing entity that initiated the suit, the city, the county or whatever. And, they take ownership of it instead of the taxes, before the taxes owed. So they actually buy it.

Mike Hambright: Okay.

Arnie Abramson: The reason they do that is so that will start the clock on the redemption period.

Mike Hambright: I see.

Arnie Abramson: Now, usually they cannot reduce a price on a house until the redemption period is over. And, by the way, some of the redemption periods are only six months. But they cannot reduce it. And, then the fine print says unless all of the taxing entities agree. So, they can and then every county is different in how they handle these strike-off sales. Some counties, Dallas and Tarrant County for example, they have the different ways where, “Okay, during the redemption period you can walk in and you can give us the minimum bid and take the house.” But, if you didn’t buy it during the tax sale, why would you buy it now?

Mike Hambright: Right.

Arnie Abramson: So, sometimes some good ones slip in and you can go and do that. Then they’ll have sales where a sealed bid where you know, they’ll say okay we’ve lowered the price a little bit if they can get all of the taxing entities to agree. Lowered the price and now there’s a minimum bid of this or maybe just make any bid and we’ll consider it. Now, we won two bids on that kind of bid in Tarrant County on our last October and we couldn’t close on it until January because they had to wait for the first meeting of all the taxing entities to decide if this bid was acceptable.

Mike Hambright: Right.

Arnie Abramson: So there’s all sorts of things. Now, some of the counties handle those in very interesting ways. In Denton County for example, they might say, okay, at the end of the tax sale, it say, “Here’s the property of last month that we tried to sell for $64,000. Nobody bid on it. Anybody today want it for $64,000? No. Okay, how about $60,000? No. $55,000? No. $50,000?” They’ll go all the way down to $500 and everybody knows the game and then they start bidding up again.

Mike Hambright: Oh, wow.

Arnie Abramson: So they’ll wind up selling it at some price. So some of the counties get very creative on how they handle those.

Mike Hambright: Yeah. And so, just to clarify, the redemption period at least in Texas, I think I know the answer has to do something with whether that was somebody’s primary residence. They had a homestead exemption. Is that the difference between the redemption periods?

Arnie Abramson: Well, you were right and then wrong. And, most people don’t know this but you brought up a good point. Yes. In 1992 I think is when, up to that time it was, or ’93, it was always a two year exemption. They changed the law and said if it’s not a homestead, or a agricultural [inaudible 00:26:04] it will only be a six month redemption period. Then, if you read the fine print it doesn’t matter. And, the case law has said, it doesn’t matter if you were negligent and didn’t file for the exemption or not. It’s your homestead if you’re living in that property as you’re a primary residence when the lawsuit was filed. So that’s a distinction. A lot of people, especially new people with this look on the appraisal district and say, “Wow there’s no homestead exemption and six month redemption.”

Mike Hambright: Right. Right.

Arnie Abramson: It’s not necessarily true.

Mike Hambright: Yeah.

Arnie Abramson: Now, having said that, there’s another. . .

Mike Hambright: How do you know where the person was living at the time of the. . .

Arnie Abramson: Well that’s part of the research you’ve got to do. But the reality is this. It doesn’t really matter and here’s why. There’s another law in the books that says that anyone who was not properly notified of that sale who had an interest in it can contest that sale for up to two years. Now, usually it doesn’t happen but because that law is out there, the title companies are reluctant to give anyone a title policy, even it’s a six month redemption for two years.

Mike Hambright: Right. Right.

Arnie Abramson: So it really doesn’t matter.

Mike Hambright: Yeah. So the significance of that redemption period, Arnie, is that if you make repairs to the property you may not get that money back, or is that wrong?

Arnie Abramson: You’re at it again. It depends. It depends. That’s the legal answer. It depends.

Mike Hambright: Okay.

Arnie Abramson: It depends on what type of repairs you do. If you do any upgrades you’ll not get anything. You take your countertops that the it’s [inaudible 00:27:45]. No, you’re not going to get it.

Mike Hambright: Yeah.

Arnie Abramson: But anything, and here are the three magic words to maintain, preserve, or safe keep the house is reimbursable plus twenty-five percent.

Mike Hambright: Okay.

Arnie Abramson: For example, once you buy a house, even if the resident is the owner, once you buy it, you’re not living at it, it becomes a rent house. Now we better put that up, get that up to code. Let’s put the one way deadbolts in, let’s put the peep holes, let’s do the smoke alarms, all of that.

Mike Hambright: All of that.

Arnie Abramson: And, that’s reimbursable because it’s to maintain, preserve, and safe keep including insurance.

Mike Hambright: Yeah. And, would that include major expenses like an HVAC system stopped working and that needs to be replaced because you’re probably not going to want to rent it, at least not in Texas without A.C. and the roof was damaged or is leaking so the roof needs to be replaced. I mean, those are significant things that would, are much more likely to reduce the fact that it could be redeemed because. . .

Arnie Abramson: Well, not necessarily. You have to be careful. If you do too much redemption, too much rehab like that, and you go over a little bit, you’re right, every one of those things are to maintain, preserve, and safe keep. They’re okay.

Mike Hambright: Yeah.

Arnie Abramson: But, let’s say you put granite and replace the cabinets and do all this. The ex-owner can go find somebody to loan him the money to buy for twenty-five percent if you’ve improved it to a greater value.

Mike Hambright: Right.

Arnie Abramson: So, I’m not sure if that was the question.

Mike Hambright: Yeah. So the game really is to buy these house, get it rent ready, kind of do the minimum, at least until that redemption period is over and then you can, the title will be free and clear. You won’t have to worry about anybody coming back. You can improve it however you want. Sell it, whatever you want to do at that point.

Arnie Abramson: Right. Now, that doesn’t mean you have to do just minimal stuff. If the carpets are worn out, put nice carpet in there. That’s okay.

Mike Hambright: Yeah.

Arnie Abramson: Repaint it if it needs repainting. You can make it nice, and, depending on the price of the house. We bought one house in Plano a few years, a few months ago, but we really fixed it up. It was a $300,000 house and we fixed it up nicely and it’s rented, [inaudible 00:30:03] we spent some money on it.

Mike Hambright: Yep. Yep. So, a lot of folks you work with, I know you have a service that you provide to help folks invest in tax sale properties. Do you want to tell us a little about how the services, how your services works, how you work with other investors and then maybe tell us a little about how folks want to learn more can get ahold of you.

Arnie Abramson: Sure. I thought you’d never ask.

Mike Hambright: Yeah.

Arnie Abramson: The reality is, as I said in about 2007 and 2008 I kind of rededicated maybe and said let’s get back in this game. And, I started teaching people about tax sales. And, I found that it’s very [inaudible 00:30:43] a little bit, it’s very, it’s a lot of work. It really is. And, a lot of people wouldn’t do it. So I said well okay instead of me doing that, let me hold their hand. I will start mentoring. And, I would mentor people in the same thing happen. You know, they’ll get discouraged because, you know, you have four or five houses I’m ready to bid on in Dallas County, I go down there and only one of them is left on the list and somebody outbids me. That happens two or three times you get frustrated. Two or three years ago we made this decision. “Look, let’s just do all the work and we’ll, somebody can pay us a fee if there’s success in buying a house.”

Mike Hambright: Yeah.

Arnie Abramson: So that’s what we did. We developed a turn-key program and it just blossomed because that’s what people want. And, the big advantage for investors is, they can still pursue other interests in real estate. They can still go out and flip houses with Flipnerd and do other things and this is all passive for them because we’re doing all the work. So it enables them to get some diversification. Well then, we started to enhance it even more because here’s what would happen. People would call me and say, “Okay, I’m looking at these houses. What do you think I should bid on?” Well, four people asked me that question, I’m going to give them the same answer. Well, after a while it kind of got to me so it was like when I was a financial planner, people want you to make their decisions for them and I said, “Listen, I’d be happy to tell you what I’m going to bid, but you have to understand this, there’s some educated guesses I’m making. For example, I don’t know if the property you’re talking about will even get to the sale. They may morrow the money. If it gets to the sale, I don’t know if it’s going to even, if we get outbid I don’t know if it’s occupied or not. Because, sometimes the neighbors will fix up the house so it doesn’t get vandalized. If it’s occupied by the owner, I don’t know if he wants to stay or he wants to redeem it. If it’s like occupied by a renter, I don’t know how much rent he’s paying or how much he will pay. I don’t know what the inside of the house looks like, how many repairs it needs. Therefore, I don’t know what it’s going to rent for, and I don’t know what your cash flow is going to be. What to tell me to tell you what I think?”

Mike Hambright: Right.

Arnie Abramson: You know. So we figured out a way to solve those problems. Get rid of those unknowns. And, it’s like this. We buy it first and then we go in and find the answers to all that and offer it to our “members.” So, that is really been great.

Mike Hambright: Yeah. Yeah. Great. Well, folks wanting to learn more about that, how to get ahold of you, what should they do Arnie?

Arnie Abramson: Well, our website is txtaxsales.com

Mike Hambright: TxTaxSales. All right.

Arnie Abramson: It’s not texastaxsales, you have to put txtaxsales.com and if you want me, my email is arnie@txtaxsales.com.

Mike Hambright: Okay.

Arnie Abramson: We hold meet-ups once a month in the metroplex. We have one coming up on the 19th at 1:00am. It’s a Saturday afternoon. You know it’s right after. . .

Mike Hambright: 1:00pm! 1:00pm!

Arnie Abramson: I’m sorry. 1:00pm.

Mike Hambright: I don’t think anyone is going to be at that meeting.

Arnie Abramson: See you were paying attention. You passed the test. 1:00pm. The address and everything is on our website and we’ll meet-up. From 1:00 until about 2:30, I’m going to go over the whole thing about how tax sales work in Texas.

Mike Hambright: Okay.

Arnie Abramson: Then, we’re going to have a very short meeting where we’ve got some new innovations that are going to bring tears to your eyes they’re so good.

Mike Hambright: Okay. Wow.

Arnie Abramson: I mean, you’re not going to believe. . . anybody that comes is not going to believe what we’re going to reveal.

Mike Hambright: Yep. And, just to clarify. So a few things, you do most of your investing in Texas but nationally you’re pretty well respected and known for how these types of things work throughout the country. So if folks want a subject matter expert, they can seek you out?

Arnie Abramson: Actually, I only do Texas.

Mike Hambright: You’re only doing Texas now.

Arnie Abramson: Yeah. There are 254 counties in Texas and we cover all of them so that keeps me busy enough.

Mike Hambright: Okay.

Arnie Abramson: Texas has the best fundamentals. Now if they do want tax liens in other states, I do have some referrals I can give. Some of the other people in other states that we work with who refer business to us as well.

Mike Hambright: Okay. And, then also, just to clarify, if folks live outside of the state of Texas, where you live has nothing to do with this. If you’re interested in buying properties in Texas through the tax sale channel, then they have the opportunity to work with you.

Arnie Abramson: Absolutely. We have clients not only in a number of states but in four different continents.

Mike Hambright: Oh, wow.

Arnie Abramson: How’s that?

Mike Hambright: Okay.

Arnie Abramson: Antarctica is not one of them.

Mike Hambright: Okay. Awesome. Well, Arnie I definitely appreciate your time. We’re going to add links down below the video for anybody that wants to get ahold of you, to get to your website, and to email you personally. So I appreciate your insights. It’s obviously a very nichey area that is you’re interested in learning that certainly in the state of Texas, Arnie Abramson is your guy. Thanks for your time Arnie.

Arnie Abramson: Thank you so much. By the way, if anybody has any questions about it, even if they want to do it on their own, I’m happy to help you.

Mike Hambright: Great. Great. One thing I should say is you’re in all the R.E.I. expos around the country to we’ll a link down below. We’ve got at this point in time, we’ve got one, there’s one in May in D.C., July in Chicago, and November in Los Angeles. Is that right?

Arnie Abramson: That’s correct. May 17th & 18th in Washington, D.C. at the…

Mike Hambright: At the Gaylord.

Arnie Abramson: Gaylord! Thank you.

Mike Hambright: Yeah. I’ll be there too, which is why I know.

Arnie Abramson: That’s right. The same place they had the seat CPAC convention by the way.

Mike Hambright: Okay. Okay. All right.

Arnie Abramson: And, Chicago I think in July, and probably it’ll be in Orange County somewhere, October, November.

Mike Hambright: Great. And, those are great events and Arnie will be at all of them. So, if you happen to be at one of those events, or you want to talk to Arnie, you should come to one of those events. We’ll add a link for the expo below.

Arnie Abramson: Would you like my cell phone number, in case anybody has questions?

Mike Hambright: We can put that on the site if you like Arnie.

Arnie Abramson: Okay, great.

Mike Hambright: Alright?

Arnie Abramson: Yep.

Mike Hambright: Well thanks again for your time. I appreciate your info.

Arnie Abramson: Well thank you and I enjoyed it. Thank you again.

Mike Hambright: Alright, we’ll be talking to you soon. Arnie Abramson: Bye-Bye.

Mike Hambright: Bye-Bye.

Thanks for joining us on today’s flipnerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions by visiting us at flipnerd.com.