Concept 5 - Go After EXISTING Equity

The 10 Essential Concepts Behind DeedGrabbing:

Concept 5

I hope you see why equity (or Expected Return, Expected Value, EV) is so important - without it there's simply no money to be made. I hope I also convinced you that "fishing for equity" will quickly burn you out.

We need to have some control over what we're doing, and desperately searching for that indifferent property owner or ignorant bank without any other indication of motivation is nothing more than banging our head against the wall.

Working on deals where there is no equity or other profit to be captured now...forget it!

We've found that extra indication of motivation or indifference; non-payment of taxes. And we can get lists of these properties and owners right from our county.

Because banks almost always pay off delinquent taxes to save their mortgages, properties on the delinquent list will be more and more likely to have no mortgage as time wears on. By the time properties are about to be foreclosed, most will be free and clear, or at least have motivated lienholders and owners.

By consistently contacting the owners of these properties, and making the effort to find owners who aren't getting their mail, you'll get a lot of great opportunites. And a lot of the properties will have equity.

This leads to Deedgrabber Essential Concept #5:

"Don't try to increase the equity on properties through fixup, landlording, or waiting"

A property ONLY has equity if it can be resold for cash, as-is, right now, for more than you can buy it for.

A property DOES NOT have equity if you have to fix it up, wait for the market to get better, or wait for prices to rise to resell for a profit.

This is not to say that you shouldn't consider selling some of your properties on terms (owner financing), if you can get more for them that way and want cash flow. Renting out certain properties even makes sense. But if a property can't be immediately resold for cash for a profit, it's not a deal.

Similarly, a high percentage of properties that you will get when DeedGrabbing will be fixer properties. They might even be in terrible condition. If you think equity is only contained in pretty properties, think again. Until you understand this, it may be tempting to fix up a property that you buy from a tax-delinquent owner.

If you think about that, now you're just in the rehabbing business. If you can't sell the property to someone else in the rehabbing business for cash, as-is, and make a profit, you've just paid more than anyone else in the marketplace is willing to pay for the property. That's not the way to make money!

As DeedGrabbers, we use our brains to make things happen, not our toolbox. And we don't get involved in deals that rely on appreciation or better markets. In fact, poor markets make our buying so much easier.

Myths abound!

I've already exposed the "Buy Properties at Tax Sale Myth" to you. What about the "Win/Win Deal Myth", the "Rehabbing Myth", and the "Landlording Myth"? Yes, each is real, and you don't want to get sucked into any of them!

"Gonzo Investing" by Joe Kaiser explains why. It changed my investing. Download it here. Warning: "Gonzo" WILL NOT show you how to do a win/win deal where you fix up a property and rent it out for big profits 🙂

Sincerely,


Rick Dawson
The DeedGrabber

Everything You Need to Know to Profit From
Tax Property Before the Sale -

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{ 2 comments… read them below or add one }

Bill McV March 5, 2015 at 6:33 pm

Hi Rick, I now see the value in the delinquent property tax niche. However, I may have stumbled on a more specialized niche and I wanted your opinion. In my county of Hillsborough in Tampa, FL I have reviewed the delinquent property list and have found many properties that are current on their property taxes but are delinquent due to the homestead penalties the owner has received. As you may know, these penalties do not become liens but must be paid upon the sale of a property. They possibly may even be negotiable with the property appraiser's office. My question: are these homestead penalty properties worth going after? Have you found motivated sellers for these types of situations?

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Rick Dawson March 15, 2015 at 1:31 am

So it sounds like the properties are moving through the "tax sale process" even though money is owed for an unusual reason (assessment of penalties for bad homestead, instead of non-payment of taxes). It sounds to me like these should still register on buyers' radar screens regardless of WHERE the amount owed came from.

So there's really no secrecy angle there.

However, if it's true the county is negotiating significantly on these penalties, this could be your angle. You'd go after all the properties that are "priced too high" for tax sale buyers, because of a huge penalty assessed, pay the seller an amount in accordance with that large amount owed, then get it released for much less. That would be your profit.

My concern would be, having any kind of certainty of your "county discount" before buying. Figure it out! Good thinking

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