Video Series: How to Profit From US Real Estate for Pennies on The Dollar Without Being a Landlord or Fixing or Rehabbing Anything Video 3 Live Tax Auction View the video 3 now: www.tedthomas.com/tvideo3 Chuck: Welcome to Lesson number 3 in Ted Thomas Introduction to Investing in Tax Lien Certificates and Tax Deeds. I m here again with America s Tax Lien Certificate and Tax Deeds Authority, Ted Thomas. You know, I really think you're going to love today s lesson. This is the one where Ted s going to take us to a live tax deed auction. But before we do that I think we need to do a quick recap of our last lesson, Ted. Ted: Okay. Let s go and take a look of a picture. Here is a picture of a property and there is a tax due on every property. The property tax is always owed to the county or the municipality. If they don t collect the taxes from the property owner they simply sell a tax lien certificate or they sell a tax deed. Anybody can buy a tax deed or they can buy a tax lien. Anybody can do this and you can start for fifty bucks. So we re going to talk about tax liens and tax deeds. We re learning two businesses in one. 1
Chuck: All right. You ve introduced us to tax deeds. Can you explain again, what a tax deed is and how it is different from the tax lien certificate? Ted: Okay. Well a tax deed simply means that the property owner did not pay the tax so the local government basically sends many, many notices and said, look if you don t pay the property tax we re going to seize the property which they ultimately do. They seize the property and then they push the people out of the property and they delete the mortgage and then they sell that property at an auction and the starting bid is the back taxes. So that s a tax deed auction. Chuck: All right. But how are tax deeds sold? Ted: They're sold at auction. If they aren t sold at an auction they are sold overthe-counter. But basically they have large auctions and they ll send out notices like this. Like this is a notice from upstate New York 155 properties at this auction. Every one of these properties has a starting bid of the back taxes. Chuck: All right. That s one way to prepare for the auction but what are some of the other ways to prepare for it? Ted: The easiest way of course for most people is just do it in their local area because they ll know the area but you can also do this online. For you people who want to buy online we can show you how to find the auction, the auction calendars, and we can show you how to get a list of all the properties that are available. Chuck: All right. Now you showed that there are online auctions and that bidders can bid from anywhere in the world. But, what is a live auction actually really like? Ted: Well a live auction makes everybody a little nervous. If you ve watched one of those on television which I m sure you have they're selling the cars, the auctioneer is snapping his fingers and they're moving the cars quickly. So that s one type of auction. Or maybe you have been to a big equipment auction which is like Ritchie Brothers or one of those big companies that sells heavy equipment this is a slower process although it does move along, it does move along. So the auction is not anything to be intimidated by but most people are intimidated. 2
Chuck: Yeah. Because you get the fast talking auctioneers at most of these auctions that most people are familiar with. But I guess the best thing to do and what s probably very difficult for most people to do is to move past their fears. Ted: These auctions are going to be a little easier than the professional auctions because basically it s county employees that are selling these properties. So the county employee would just read off a number and the auction price so the process is going to be just a little bit easier and slower. But I ve found the best way to learn how to do this is what we re going to do right now. Why don t we take you to an auction and I get all the fear out of people quickly by doing that. Lynn: So I know we re seen undeniable proof that Ted s system really works however I would never agree to host a TV program endorsing a product or system unless I knew for myself that it really works. So I ve decided to travel to a typical all-american town here in Bartlesville, Oklahoma to truly test out Ted s system. Ted: Okay. We ve been in researching property and now what we re going to do head down to check the properties out and then we re going to go to the auction. Lynn: I am so excited I found this property I love and I can t wait to bid on. It is a 2-acre wooded lot. As you can see has a spectacular view of Bartlesville the valley and downtown and it is attached to a high-end subdivision that s gorgeous. Let s go look. See, isn t it a gorgeous subdivision? I m hoping to get that property at minimum bid which is the back taxes so I will own it with no mortgage. Now let s go to the auction and see if I can get it. Ted: Wow! What a nice neighborhood that is. Now we re going to head down to the auction. Lynn: Inside the courthouse it s hectic and the auction is about to start. My plan is to bid on those properties that I checked out and researched the way Ted teaches. Auctioneer: Next Property Tax ID 10773. It s on the circle map in the state. The starting bid is 770 dollars and 65 cents. Is there a bid? There is. I have a bid on the 3
floor for 770 dollars and 65 cents. Is there 1,000? 800? 780? Are there any other bids? Going once, going twice, sold. Your number please. Lynn: 12 Ted: There you have it. Only 40 bidders in the room and no one bid against her. So you can see it wasn t too intimidating. Now the auction that just took place the county treasurer was the auctioneer for that particular county. Now we were just north of Tulsa, Oklahoma at this particular auction and you can see there were actually people in the background standing there. So there's little more than 40 people there but most of the people don t bid at these auctions which is quite surprising. Chuck: And is that typical that like no one bid against Lynn? Ted: Well, in this case there was numerous properties like that that were for sale, by that I mean there were 3 or 4 lots. She only wanted one lot and someone else wanted the one next to her so people kind of pick and choose which one they want. Lynn: Woo-hoo! I did it! Oh it was so fun I just raised my little hand and I got the property I wanted. Just 770 dollars and 65 cents. And it has a tax-accessed value of more than 10,000 dollars. So it seems pretty obvious I m going to really make a good profit on this deal. After all I only paid less than 8 cents on the dollar for this property. There you have it! Proof that Ted s system really works. Chuck: All right, Ted. What I d like you to do is review the steps Lynn went through to be the winning bidder at this auction. Ted: Okay. Number one, she just got the list, okay, you saw us do that. Next we went and evaluated the property remember that. And then she went and bid at the auction no other bidders against her. Now the only thing she has left to do is sell the property. So when she goes to sell she sells for 50 cents on the dollar she would do pretty darn good. 4
Chuck: Wow. Ted, before we move ahead I d like to know how you got so knowledgeable in this area? Tell us a little bit about your background. Ted: Well my personal story was very good and I went up, up, up, and then I hit some down, down, down, so I ll tell you about both of those. First of all I started as an air traffic controller in the military and then from there I went to be a pilot I flew for Aloha Airlines in Honolulu, Hawaii, but when I found out how much money there was to be made in business I got in business and I also got into the business of publishing. And when I got in business I had a business that grew and grew and grew but in 1986 I went through a massive bankruptcy and as you can see here a 200-million dollar bankruptcy. So I crashed down and the private jet was gone and the beautiful home in a country club was gone and I was basically broke and at that point in time. I said I m getting out of the risk business. I don t want to be in anything where there is risk. So I got out of the risk business. Chuck: What were the big lessons you learned from bankruptcy. Ted: Well, bankruptcy is very painful because not only do you lose all your friends and you probably lose your closest family everything goes wrong and so that s not a good situation. You certainly want to avoid that but what I really learned more than anything was to be conservative and just go step by step. Don t explode and suddenly decide you got to be a millionaire in a couple of weeks. Now I made millions of dollars but in 10 years I didn t build enough foundation for when the crisis came and the crisis came in 86 it wiped everybody out. Most of you out there are concerned about losing your money. So let s get that concern taken care of. If you invest in tax certificates you're going to buy a predictable certain and secure investment. But if you really want to make the big bucks and be the entrepreneur that s inside you and you're motivated you're going to do like the young lady I m going to show you now. She was motivated and she wasn t motivated for all the right reasons. It was all negative. She first started out with a divorce situation but she did get a little small 5
settlement but her investment advisors did not help her and that s not uncommon story. But unfortunately she lost her money and she had to do something because she had a handicap son and so she needed to take care of him and take care of herself and so she came into the class and workshops and she learned how to do this but she was very motivated. And she started out small, she didn t make her first big deal right away, but she made a lot of deals and in one year s time she completely turned her life around and we re going to show you how she did that. Puff: This is the best time to be using Ted s system. And these horrible economic times with all the foreclosures and all the things that are happening with people I ve bought more properties that I would ve dreamed possible. In my first year I bought 7 different properties. I sold them and made over 125,000 dollars. I mean, is that amazing for somebody who had no experience at this, didn t know anything. I didn t even know what a tax deed was. I bought an office condo, I bought residential property, I bought a lot, I bought a boat slip for yachts. Just like this property right here. I bought this at a tax auction I paid a little over 5400 dollars, 5418 dollars and 3 cents and I sold it less than a month later for over 75,000 dollars. I made a 70,000-dollar profit and these people got a house for 50,000 dollars less than all the houses in the neighborhood were selling for. Is that amazing or what? I made money, they got a great deal, I love Ted, his system is the best. Ted: Her life was in financial dominos when she started and she made a huge recovery but she was motivated so the people out there if you're not motivated, you know, you're going to pass up a wonderful opportunity. This is a wonderful opportunity it is in your best interest. Now Puff was very nice to me she said, oh Ted Thomas was the greatest and all that. And that was nice she was very generous with her words but if you think about it she did all the work I didn t do the work. I just was a catalyst to get her started in this business. And you know I found out from experience that what women will do is they ll follow instructions and that s what this business is all 6
about. If you ll follow instructions and do what we tell you to do in a step by step process you can be just as successful as the woman you just saw. Chuck: I m starting to feel that way, too. I m getting the idea that after a little basic instruction I can do this. But I ve got a question for you. What about an investor from another country like Canada? What does it take for that investor to buy tax deeds here in the US? Ted: Well, in the good old days, prior to 2 years ago, this was a little bit of a challenge. But recently technology has changed a lot. Now this little device right here which is nothing more than a Dell Android Tablet and it will let you access all of the counties in the United States. So I teach my Canadian investors and I have hundreds of them. I teach them to use this tablet and what they do is they access that properties that they want to buy and they buy right here in the United States. For example, if you look at the slide I have up there now, this young lady she lives in British Columbia. Now that s clear over in the western part of Canada and she recently bought in Sebastian, Florida which is a resort area right on the nice warm Atlantic Ocean. So imagine her in a freezing cold place zero degrees in Canada and she s buying in a nice warm place in Florida. That s exactly what she did and she did all of that online. Chuck: All of it? Ted: The whole process. She invested her money online because they have online tax auctions, and she purchased the whole property online. Chuck: All right. There are a couple of steps that you mentioned that viewers might not know how to do but can anybody evaluate a property? Ted: Oh, sure. It s not a difficult process. First of all if you want to evaluate properties you can do it many different ways. One way is you could just telephone a broker and say what is the property worth, okay. You can also call the local county and say I m looking at properties in this area, can you give me the values in those areas? So every property has a taxed assessed value. So anybody can do that how about just going on knocking on doors ask the neighbors what they think 7
it is worth. But everybody knows to call a real estate broker. The easiest way to do it is learn how to do a little bit of this online. Now, this is not a computer class. We re not in the tech business here but we can show you how to do that. And if you look at the slide I m putting up now as you see from the slide there's a lot of different accessible tax information. For example, Trulia and Zillow and Realtor.com. You can go right into their sites and they ll tell you exactly what the property is worth. Chuck: Ted, these auctions, where do they take place? Do I have to travel say like to the state capital? Ted: No, no, no. You don t have to do that. First of all you can do it all online. That s the first thing you put in your mind, this is an online deal if you want to do it. Okay, where do the auctions take place? They take place at government buildings. Okay, these are government control auctions. This whole thing is mandated by the government that s what makes it so safe and secure. Now, that isn t where we re finished because you see the auctioneers are basically government employees in most cases. Now they can hire auction companies but most cases they are government employees. Now here s the beauty of the business and why it s so safe. The opening bid for a tax deed sale is the back taxes. So it s 100,000-dollar property that has 3,000 property taxes due that s where the auction can start. Now I don t know if you're going to buy it at that price but you want to get as close to that as you can but it s going to start at the back taxes and the mortgage has been extinguished, wiped out by an act of law. Chuck: Well, with that being said I bet these auctions are quite crowded. Ted: Actually they're not because most people haven t learned about these auctions. You can go to rural counties now not Miami, not Boston, not L.A. You can go to some rural counties there might only be 10 or 50 people at one of these auctions. Now if you go to an auction in Los Angeles that auction will have 500 people at the auction. Chuck: Five hundred people! 8
Ted: The auction list is like a phonebook there are thousands and thousands of properties that will be auctioned. There will be 500 people at the auction but listen to this. In all the time I ve been going to these auctions in 20 years I ve never seen more than 15% or 20% bidders. So that means you got 500 people there might be, there might be 100 bidders. Chuck: Wow. I got another question for you. Can I use my credit card at this auction? Ted: Well, you want might to try it but I don t think you're going to get away with your credit card there. Now, I m not saying you can t. The auction rules will always tell you this and you have to know the rules. If you don t know the rules, folks, don t go to the auction without knowing the rules. The rules are going to tell you that you're going to need cashier s checks or you're going to need cash equivalent of money. Cash equivalent of money is cashier s checks. So you ll know all that before you go to the auction and you have to have the check made out to whoever they tell you. Like it might be the sheriff, it might be the treasurer. If you do it wrong they won t take your bid. Chuck: Now we ve been talking during our lessons about our comment box and we invite you to send your questions in for Ted Thomas. All right, Ted, we just received a viewer question in the comment box. This one comes from Phoenix, Arizona. They have an IRA. Can they use those funds to invest in a tax lien certificate or a tax deed? Ted: Okay, so, all of you folks that have a pension plan, an IRA, a profit-sharing plan, or a 401K, the government is familiar with this so you can take the funds from those if it s self-directed. If it s self-directed you can take the funds and invest in these and you're just going to put the investment in the name of your 401K or the name of your pension plan or the name of your profit-sharing plan. So the answer to that is yes and that s the way to do it. See the government has been doing this for hundreds of years. This is not new to them it may be new to each of you that are looking today but it s not new to them. Chuck: Yeah, it s obvious you ve been doing this for a long time and you ve established a reputation, well-deserved reputation as America s Tax Lien 9
Certificate and Tax Deeds Authority. Another question we have here. How long is it going to take the average person say someone like myself to learn and to start making money if that s what it s all about? Ted: Right, yeah. Well that s what you re learning this for because you want to make money and I completely understand that. I want you to imagine yourself sitting in one of the provinces of Canada in this case the province of British Columbia and you are thinking about buying a property in Florida. Now, you understand that some of those Canadian provinces get pretty cold in the winter. So think about zero degrees and then think about Florida in the cool weather 70-80 degrees with palm trees. Debra did this whole process from Canada. She takes her time, she s not in a hurry, she s going to do it 100% online. She s not going to visit the property until after she buys it and she did this whole process online. She took a couple of months to do it. I have seen eager beaver young guys, I ve seen them do it in less than a week. So it s going to be up to you how quickly you want to do this. And we ll show you both ways. Now Debra took her time, she did it online, she was afraid to bid or her husband had to keep encouraging her but she did it and she did the whole process online. Debra: My name is Debra Murphy and we re up here in Kelowna, British Columbia. We just purchased our first property in January of this year. So it is in Florida and there's the front of the property. We got it for a super price. I knew what houses were selling for in the area by doing some research. We got this place less than half the going rate. I d say about 35 cents on the dollar, which is awesome for Florida. So we bought it for $24,600 and then in the mail we received the actual property tax deed itself straight from the county. Now if I want I can sell the property quickly for $50,000 that would be a quick sale. I could possibly even get $55,000 or $60,000. I chose this particular property because the lot itself is situated by a water way and it s an extra double lot. These are manufactured homes in this area where people come to holiday. Lots of Canadians go down to Florida. So these manufactured homes are very nice and they're perfect for vacation homes. 10
I love Ted for the fact that he s book smart and he s street smart and he s not afraid to say it like it is. Before you buy a property you have to know what your exit strategy is and you have to know that it s workable strategy and not just a fairytale. Can you really sell it and can you really rent it? So Ted is very strong on making you tell yourself the truth and that s worth its weight in gold. Ted: Okay, here are some important points. Number 1, she did it online. I think this is exceptional. Think how far from British Columbia is from Florida she did all that online. Okay, she did that from her home, we actually saw her on video that was videotaped in her home. Now this is a woman that told me during the interview process she told me she said, I have hired investment advisors whether insurance agents, investment advisors, stockbrokers for 20 years and all she ever wanted to do is she wanted to make 5% of her money. She tried and tried and every year there was an excuse. Oh we didn t make any money, oh we made 2%, oh we lost some money. Those are her words. And she said all that to me and here on her first deal she s in British Columbia, she buys in Florida, she made 40% that was her annualized return first year. Chuck: Ted, wait a minute. This one is making my head spin. She didn t have to come down to Florida and see the property before she bought it? Ted: She didn t have to come to Florida because part of the learning process of what we teach you is you're going to be able to see every property you're going to see a street view and a birds eye view on every property you buy before you buy it You're going to be able to see every property but better than that we taught her just get on the telephone, pick up the phone, call a local broker, and say, look, I m interested in a certain property and I am going to want to list it to sell once I buy it and have the local broker with a cell phone go out and take a picture and send it to you. She knew exactly what she was going to buy Chuck: Before she ever bought it. Ted: Before she ever bought it. 11
Chuck: That s amazing. Ted: Here s the better part of it. What I didn t have a chance to tell you is this. She then decided to come to the property and we ll talk about that in just a minute. Chuck: And, Ted, this all took place online? Ted: Everything she did online. She purchased in Florida online and now after she purchased some weeks later she and her husband got together and they flew to Florida. Now, for you folks, I m not an accountant and I m not a CPA or anything like that but the Canadian law is very much like the law here in the United States. Those trips are tax-deductible trips so just imagine up in cold Canada she flies to Florida tax deductible she and her husband got a nice vacation out there. But the most important thing she did is she was going to sell it. She bought it for like 35 cents on the dollar as she said on the video but she decided not to sell it because there was so much demand to rent it. So, she rented it and she s making a 40% return, that is right a 40% return. Chuck: Ted, what I m interested in is how does she know how much to bid for the property? Ted: Well obviously she wants to buy the property at a bargain, right? Okay. So every property has an assessed value. If you were to ask me I d say only bid 20 cents on the dollar, okay. But she spent a little bit more than that. She spent 35 cents on the dollar and she was happy with 35 cents on the dollar. Keep in mind she s buying a property at a tax deed auction that means there's no mortgage and now she owns the property she could sell it immediately if she wants to. If she doesn t want to sell it she could rent it. Well after she looked at it as a matter of fact when she opened the door she found out it was fully furnished. So she cleaned it up and she rented it and so she s going to make a 40% annualized return. Now think about that. Just like the law in the United States, Canadian law says, if you travel to your investment you can make that trip a tax deductible trip. 12
Well, think about it. Imagine being in cold Canada in the winter and you come to Florida for a couple of weeks vacation and it s tax deductible that wouldn t be too bad. Chuck: Everything worked out great. Ted: Exactly. Chuck: As we promised, we have America s Tax Lien Certificate and Tax Deeds Authority, Ted Thomas. Listen, we re going to turn now to the comment box on the webpage. Ted, are you ready for a few questions? Ted: Let s go. Chuck: All right. Here s number one. Are liens or deeds better? Ted: Well it depends upon who you are. If you're a real conservative investor and you don t ever want to worry then invest with tax lien certificates because you're going to invest with the government, you're going to get a check back from the government, and you're going to get a guaranteed rate of return. Chuck: Okay. Ted: If you want to buy Tax deeds then you're probably an entrepreneur and so you're trying to buy properties like you ve been reading about here, people buying for 10 or 20 cents or 30 cents on the dollar and then sell them for a higher amount. Chuck: All right. Between the two of them where should I invest? Ted: Well, let s take a look. All right so you can pick where you want to be. The states on the right are all tax deed states. So that means if you buy in those states you're actually going to get the property. Now, on the left those states are tax lien certificate states. You can do either one, you can do both, some people do both. Chuck: Do both? Ted: Exactly. Some people like tax lien certificates, some people like tax deeds, some people do both. 13
Chuck: All right. Can you do this anywhere in the United States? What if you live outside the US, how does that whole thing work? Ted: Okay, if you're outside the United States I teach the same classes, I teach them in the UK, I teach them in Singapore, we teach them in Australia. And so you can be out of the United States and of course I didn t mention Canada I have a lot of students in Canada. Canadians use their computer or their tablet a lot so they can do it online but some Canadians go to the auction and the local counties welcome them as they want their money. Remember the investor is protected by the property tax code for the whole time they invest. Chuck: All right. Do I need to be selective or should I buy any tax lien certificate available? Ted: Well, I would say be selective as you can be Why not do the easiest thing? The easiest thing is buy in great neighborhoods that way if you bought a tax certificate and the owner didn t pay the property tax you are going to get a great house. Don t forget, folks, if you want your questions answered put them in what I call the chat box or the comment box and I would be happy to answer them. If we don t get them while we re live here we d be happy to send you an answer by email. Chuck: I cannot believe Ted Thomas is continuing to give away all these secrets. No one else would do this, Ted. And as always you may be thinking after you watch or read this you may be thinking of a question or a comment that you d like to make. All you have to do is put it in the comment box and Ted will answer your question or address your comment. For Ted Thomas, I m Chuck Bennett. Have yourself a great time and we ll see you at Lesson four which is the final lesson. See the next video: How To Start Today 14