Learn the two types of sellers you want to look for when acquiring land from land expert, Mark Podolsky.
By searching for those who have no emotional connection to a property and owe back taxes can be more willing to accept lower offers and in turn, enable you to make a higher Return on Investment.
Announcer: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Mark: Hey, it’s Mark Podolsky, The Land Geek, with TheLandGeek.com, and today I want to talk about how I acquire land at 20 to 30 cents on the dollar. Right?
Announcer: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.
Mark: It’s a very simple model, but it works time and time again. It’s proven. Now, when I first started out in this niche, I used to go to the tax deed auctions and there’d be nobody in the room, and you could buy properties 10, 15, 20, 30 cents on the dollar. And then as people started to learn, “Oh, I can but this property so inexpensively,” the rooms got bigger, they got more competitive, and the next thing you know, you’re paying retail.
Now, we all know in real estate, we make our money on the buy. Right? So how do I go about and find these distressed sellers? Well, I look for two things. Number one, I want to find somebody that owes back taxes. They’re advertising to me. They don’t value that property anymore. We only pay for things that we value, and I’m not talking about thousands upon thousands of dollars in back taxes. Even $15 in back taxes owed is a signal.
Number two, they live out of state. So if you live in Arizona and you have property in Texas and you owe back taxes, that’s a really strong signal that number one, you don’t value the property anymore. This one-time asset now has become a liability. And number two, you probably don’t have an emotional connection to that property. Maybe you thought one day you would improve that property, or you would go out and move there, but you’ve never done anything on it. So what we do is we send you a “top dollar offer,” 20 to 30 cents on the dollar, and a percentage of those people will accept our offers, typically about 3% to 5%.
So what have we done? We’ve gotten to that owner before it’s gone to tax deed auction, or even a tax lien auction. And this is the key to our deal flow, and this is how we’re able to buy so many properties on a weekly basis 20 to 30 cents on the dollar, and we have a massive market because we’re in this non-competitive niche. You don’t go on HGTV and see flip this land. So if you want to know why I’m walking, by the way, I’m on the treadmill desk again. [inaudible 00:02:51] smoking.
So just to recap; how do we buy properties so inexpensively? Number one, we’re going to get a list of people from the county treasurer, the county assessor of people who live out of state and owe back taxes. And it’s very simple to scrub that list.
Number two, we’re going to send them an actual offer. We’re going to price it and we’re going to send them an actual offer, 20 to 30 cents on the dollar. And those are people that live out of state and owe back taxes. So we’re not going to be in the appraisal business. We’re not going to say, “Hey, I’m interested in owning your property,” and then they come back and say, “Oh, what’s your offer?” I’m not spending all day on the phone. These are 23 cents offers on the property, 3% to 5% acceptance rate, and then after that we go through the due diligence to make sure that we have a property that is free and clear of liens and encumbrances, doesn’t owe too much in back taxes, and that we can actually make money on the property because again, as we all know, we’re going to make our money on the buy and not necessarily on the sell.
So I hope this was very valuable for you. This is Mark Podolsky, The Land Geek, and I will see everybody next time on the treadmill desk.
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