Avoid Problems! Considerations You Should Make for Tax Deed Properties

Hey, it's Mark Podolski, the land geek with your favorite cheat real estate website, thelandgeek.com and on this week's Roundtable podcast, we have almost all the usual suspects. We've got the Zen master, Breathe in the mailing, Breathe out. The marketing. Mike Zano. Mike, how are you?

I'm doing great. Thank you for asking. How are you?

Good to see you. I'm great. I'm great. We've got the technician, Eric Peterson. Eric, how are things?

I'm doing well.

Whenever I see you and you don't have a rib in your mouth, it is just a little bit discombobulating for me. I'm just off balance. But it's good to see you sans rib. Taria putting in the reps. Harris, how are you?

I'm well. How are you?

I'm great. I'm great. Good to see you. And, you know, we don't make fun of Atlanta enough, I don't think.

Go for it.

We're scared to. I think we're scared.

I don't even know where we start with, like, the Coca Cola, the peaches.

I'm not from here, so have at it.

All right, Most. Eric's not from Nashville. This is true. Doesn't stop us.

You're an implant.

But speaking of one of the easiest cities to make fun of, Sin City. I love it when you call me Big Papa.

Tate.

Litchfield. Tate. How are you?

I'm great.

Doing well, thanks.

And last but not least, all the way from Tampa Bay, Florida, the Brain, the professor, your Feit. Hoosherpa. Scott Todd. Scott todd.netlandmodo.com Learn anything about anything. Investorninjas.com Scott. Todd. How are you, Mark?

I'm great. You know what I love about Tampa?

What?

Is that the food is worthy of either a trophy or a ring. We get to choose.

Okay, that's an obscure sports reference.

Looks like a Zen cone.

Yeah, like the Stanley. Feel good.

I'm out of here. I was feeling too hot, guys.

I don't know. Just saying.

All right, well, you don't know.

I haven't forgiven Scott, though, since Vegas. And that's something we got to talk about at another point in time, because he comes to my city, we're out, we're having a good time. He comes in, he says, oh, it's so hot outside. I'm dying of thirst. What does he do? What do you do, Scott? What'd you do to me? This is how you started.

Are you thirsty, Tate? And you're like, yeah, it's hot in this town of Las Vegas. I'm like, yeah, I'm hot and thirsty, too. And in my bag, I whipped out my Stanley Cup Turvis tumbler, and I put on the table there and I poured myself a drink of water. I asked, hey, like, you. Would you like to drink?

Drink?

And he's like, no, thank you. No.

I told him to put that away because he was likely to get beat up in this town. And so he quickly put it back in the brown paper bag and into the bin where it belonged. But, yeah, it was rude. It was just rude, Mark. It's just rude.

I mean, look, the whole tribalism of sports, I don't even get it anymore. I'm like, on Mike Zaino's side. It's like, Sunday sports. What? I'm gonna go read, gonna hang out with some friends. I don't understand. I don't know who these people are. I don't even know why anyone cares. How is this even fun?

Yeah, I could actually.

What's that?

Pretty accurate description how I feel about it.

Yeah, I get it. I get it. My son once looked at me, he's like, dad. Because I like cheering at the TVs. Like, dad, they can't hear you. And he's like, and they don't know you, and they don't care. Oh, man. Good point. It's like, I don't understand why you're getting so emotional about these strangers. Like, it's a psychological problem, I'll give you that. But it's so fun.

It's fun.

It's fun.

It's always, we win, they lose. I never understood that. We won, they lost. Like, I don't get it.

Who's they?

When you include yourself when they win, and then when they lose, you exclude yourself.

They lost.

They're having a bad year. We're having a great year. Oh, they're horrible.

Yeah, I don't get it. Yeah, it's. It's. It's truly a psychological, tribal, deep, evolutionary thing. Sports.

It'd be like me watching Tate do that. We got a sale today. Oh, we didn't get a. He didn't get a sale today. So it's like, I'm just watching him do his business. Like, I don't get it. Anyway, enough. Sorry.

Well, let's move on to our topic. Scott. Todd. This is a really interesting topic. I've been so excited to delve deep into this because it's very personal for me for lots of different reasons, which I'll talk about, but I think it's important that we talk about it again.

Yeah. So basically somebody had brought to our attention that they purchased a property, they went through their due diligence, they purchased a proper, and then they sold that property. But what they noticed in their due diligence was that in the chain of title, it had previously been purchased for as a tax deed property. Now, the thing about tax deed properties is that you just typically can't turn around and sell it as a cash buyer. I mean, you can, but if you, if your buyer or someone downline wants to take it through a title company, a title insurance is not going to issue a property title insurance policy on a property that was purchased at tax deed auction within a year period. Typically it's like four to seven years. It depends on the state. Right. So I mean, it could be less than that. But typically it's like that four to six range and each state's different. But the title insurance is going to look at that and say, well, we don't want to issue a title insurance policy on that. Now that doesn't mean that the property is not sellable. It doesn't mean that the property is not, you know, you can't, you can sell it. It just means that you don't have what they call marketable title until the period cures. And there is a way of curing it. You can take it. There's, there's two ways really to cure it. One, you could take it through a court action called Quiet Title, or you could take it through a service like Tax Title Services who were on this podcast in the archives, they were on this podcast and they talked about that. So either one of those two ways to do it is possible. But it brings up the point. One, would you guys purchase a property that in the chain of title has a tax deed property or it was purchased at a tax deed sale, Would you purchase it? Number one and two, what would you, if you did buy it, what would you like? What considerations or concerns would you have?

Well, I know that because he voxes me every day and says, mark, can I start with these difficult questions on the Art of Passive Income podcast? And I always feel badly saying no to Mike. So, Mike, why don't we start with you?

Okay, Well, I have purchased directly from the county tax deed. I have purchased where they're in the chain of title and I've sold them. I will say they're typically lower value properties properties and I typically sell them on terms. And I, I do disclose, you know, to the people that that's, you know, It's. But I, I haven't had any issues, so I'm not. Is the question whether or not we would do it, Scott, or is there any concerns we'd have?

Well, the question is would, would. If you saw a tax deed in the chain of title, would you buy the property? And if you did buy the property, you kind of answered this. Would you. What like.

Right.

Like what would you do? Would you. Like you said you would disclose it to a, to a buyer, terms buyer or a cash buyer, you would disclose that. But I think you just hit on something. It's priced to that, right?

Yeah, I do it on. These are lower end properties, you know that it's not like I'm buying anyway. Yeah. So I've done this a lot. Right. And I've sold them on terms and I've never had any issues and I do disclose that and it's fine because I'm getting them at a great price and the people that I'm selling it to are getting at a really good price, which easy terms. So they've all been happy. So I personally do not have any issues with that.

Okay. Okay. Eric, the technician Peterson, any issues with buying tax, tax deed properties, reselling them before the redemption period or the period of where there you have marketable title?

No issues here. We've done it before and you know, I'm sure we'll do it again. Typically those properties are sold on terms and typically the redemption period has expired prior to the sale being finished. In other words, being the note being paid in full. So at that point we're going to have marketable title and it is, I suppose, a small risk. Right. Doing that. But as long as I know that I'm taking that risk and I'm willing to stand behind that property, if something comes up, then there's not a whole lot to worry about there in my perspective. So yes, we do it.

Okay. Okay. I like the whole risk reward ratio that you brought up. Treya putting in the reps. Harris, how about you?

So we have not bought those types of properties, but I don't see why we wouldn't. We just haven't come across any. I think what Mike and Eric both said, one just kind of disclosing if necessary, that, you know, you cannot pay cash for it is one thing. For me, I guess it would be the price point of the property because like Eric mentioned, it is a bit of a risk. So it would need to be something that, that I'm comfortable risking if anything would go kind of sideways with the deal. So for me, I wouldn't be opposed to it, but it would just need to be within a price point that I was comfortable with risking.

That makes sense. And to Mike's point, these are typically. Very, very inexpensive properties, typically under $1,000. Mike, would you agree with that?

Exactly. The properties I was talking about, I bought a whole bunch of them from a county once that I bought them each for, like, $250 a piece, so I was fine with it. Right.

So they can just as a, just as a point, too. They can. They are not always like that. They can be, you know, higher priced. Okay, so it's not always. They're less than that. The thing is, and I like what you guys are saying, is that as long as it's going through a term buyer, it's not an issue, or if it's a cash buyer, it's still not an issue as long as you disclose it. And as long as they know, hey, this is where it's going to go, and at some point in the future, they can kind of make sure they sell that through title insurance. That's it.

Right, right, right. Tate, how about you buy it from there?

I was going to kind of repeat what Scott said. I've bought a lot of these, a lot of them, and most of them, I don't know if I've ever bought one for cheaper than a thousand bucks. So I'm on the flip side of that. I bought some expensive ones, and I'm okay with that. Number one, I know how this process works, and I think that's the key, is you might need to get some education. Right. You might need to make some phone calls. You might need to know if, what, how this whole process happens, and if you understand that that should boost your confidence or help you steer clear of them, if that's not what you want to take on. So for me, I have the knowledge, I have the risk tolerance. I'm okay with it. We, you know, we buy these if the price is right, I'm going to do the deal, period. Thanks.

Zaina, what are your thoughts?

Yeah, no, I, I, I get it. Yeah. I just happens to be the ones that I purchased were smaller in value, you know, but any, again, knowing what you're doing and knowing the, knowing all the mechanisms in place and be able to explain them to the buyer, I mean, that's it. It's not a concern if you can address it in a way that makes them feel comfortable.

Right. Scott, what are the risks of buying tax deed property?

So basically, the reason that the Title insurance doesn't really want to issue the title insurance policy on it is because if there was a technicality where the county did not notify the sellers or the previous owners in the tax deed situation, your property is going to be lost. Well, then they could make a claim that says we were not properly notified. Okay, so the county, before the county just takes the property away. They get multiple notices. They're getting notices that their taxes are late. They're getting notices that, you know that, I mean, it just doesn't show up at the tax deed auction. They get certified letters. It's hitting multiple addresses. If they find multiple addresses, the owner, the state, the county, if you will, goes through a rigorous process. They do a title search on it and they, they typically turn around and go. So where the biggest risk comes in is not necessarily on the land that we're buying and selling for title insurance companies. Where the biggest risk comes in honestly, is with houses.

Right?

Like you lost your house to a tax deed. Well, that's a lot of money. We all know that the majority of the reason that people don't sell their land is because the owner passed away. And then this guy go through probate and it doesn't go through probate because of the cost involved. So the people stop paying the taxes. And that's why the land gets, gets taken at tax deed auction in the majority of the situations. But I can tell you that you have to kind of just fast forward the movie a little bit. So if you know that that's the risk. Now let's go to the process of what it looks like. So let's just say that I lost my land to the tax deed auction and I truly wanted this land and I'm upset about it. I'm still living the earth and. And now I'm going to turn around and I'm going to sue. I'm going to sue the current owners because I want it back. I'm going to sue the county because they took my property away from me, which is a constitutional violation. I didn't get my due process, all of that stuff. I'm going full barrel after this thing. Now. What's going to happen is I'm going to get in front of a judge and the judge is going to ask me one simple question. So in remember, and by the way, let me back up one more thing. Remember, it just doesn't show up at taxi auction. It's not like you're 30 days late and it's tax deed auction. It's years, years and years and years. Okay. Before it gets to that point. And then what happens is you get in front of the judge, and the judge is going to ask you one simple question. He's going to say, did you pay the taxes? No, Your Honor. Did you know that you had land? Yes, you, Honor. And you chose not to pay the taxes? Well, I didn't get a tax bill, you, Honor. But you knew you had land and you weren't paying the taxes. Correct. Case dismissed. Because the minute that a judge says, oh, you didn't pay your taxes, and, oh, that's okay, it's okay, you can have your land back, the entire property system in America falls down. So you kind of have to look at that and go, what is truly the risk? The risk is very little on the properties that we're dealing with.

Right. Tate?

I was just going to say, going on that same line. When I was in college, I got pulled over because I did not renew my registration on my vehicle. And I remember I went to the cop and I'm getting this ticket. I'm like, well, I never got anything in the mail. And that's because I was out of state. And my parents. And he's like, how old are you, son? I was like, 20. And he's like, how long have you been driving? I was like, well, 16. He's like, how many times have you renewed your car in the past? I was like, every year. He's like, well, why would you have to stop doing it now? Here's your ticket. Have a great day. And I remember I called my dad, and my dad was. He wasn't even mad. He was just like, well, son, regardless of if you get that envelope or that letter in the mail saying it's time to renew your registration, you have to do that. You have a sticker on the back of your license plate that says, you've got to do this. It's the same with your property taxes. The letter doesn't get to you, doesn't mean that you don't have to pay. Right. You're responsible for that vehicle or that property from A to Z from start to finish. And so, yeah, that's a good analogy, Scott. I like that.

Yeah. I mean, for me, this is how I started. I mean, this is how literally I started in the business was at tax deed auction, buying properties and flipping those properties. And I didn't know about anything when I first started. I didn't know there was redemption periods. I didn't know about the legalities that someone could come back and make a claim. I Didn't even know what marketable title was. I just like, oh, I'm going to flip this property. And I did it a lot without anything ever happening. And so as I started getting a little older and realizing, oh, maybe I should learn more about this whole business, then I started seeing, oh, there's a little bit of risk with this. I do remember there was one time at a Texas deal that I just got like a notice saying, hey, there was a redemption. And I had sold the property and the county just sent me a check and said, you know, here, this got money back, you know, And I just, it's like, okay, well, here's your money back. So there's always a way to resolve it. So to get back to what Scott was saying, if this does happen, you have ways to solve this problem. There's almost not. There's no problem that can't be solved in the land business. So if it happens, then go through quiet title, go through taxtitleservices.com save some money. So there's always a way to do it. And you know, to Tate's point, ignorance is not an excuse. I didn't know is not an excuse. If you are in the land business, do your due diligence and be in the land business and know what it means when you're buying a property from a tax deed sale. Who's responsible? Scott Todd?

Who's responsible is the buyer. That's responsible.

The buyer's responsible. 100, 100.

You know, you, you have to know, you kind of have to know what's what the story and what. I mean, if you just look at a, at a chain of title and you're like, well, it's on there, but I don't even know what that means. And you just roll with it. Well, then you, that's on you, right? Like, you know, the whole thing is it continue. Life is all, we all know this, right? Like, life is all about education. You see something you don't know, ask a question. I don't know what that means. What does this mean? Have a conversation with somebody. But definitely, you know, keep, keep learning and keep asking questions. It's the only way to figure this stuff out.

And I think it's just a way, it's a better way to go through life is having the attitude, I am responsible for everything that happens to me in my life. Because if you have that as your life view, your attitude through life, you have total control. And I mean, I think, Scott Todd, we were talking about this maybe a year or two ago. Where you were getting a backup generator for your house because the electricity went out, and I was like, oh, I forgot. Like, oh, you know, I said something flippant like, oh, if that happens, it's not my responsibility. Like, no, everything's your responsibility. Like, even acts of God are your responsibility, and you can do something about it. If the power goes out, you have the power to go to Home Depot and get a backup generator. So if it does happen to you, worst case, it's a learning experience. Best case is, do you have total control for next time? And I just think it's a better way to go through life. It's not fun. I'll give you. I'll grant somebody that. Right. But I just think it's just a better way to approach things. Get educated, keep learning. Keep listening to podcasts, and when you don't know something, ask questions. Don't just assume anything and keep learning. And if you make a mistake, own it and say, okay, next time I'll do better and learn from that mistake and not look at the world to resolve those problems. Okay, I'm off my soapbox and we're back to the podcast, which means that we get to go to our tip of the week. But before we do that, before we go to Toria's tip of the week, I want to just give Scott one last opportunity. Is there anything else you want to add?

No, I think that's good.

Okay, well, I just want have to mention our sponsor, which is flight school. Learn how the next 16 weeks can transform your life. Start building that passive income without any headaches. No renters, no rehabs, no renovations, no rodents. How are you going to do it? Well, the best way to learn is by somebody who's done it thousands of times. A master at it. That's the best way. And so have Scott Todd take you up that mountain of land, investing quickly, safely and efficiently. Oh, I know what you're thinking. Well, what about the tuition? It ain't going to cost you nothing. Guaranteed 180 days or less. You're going to make back that money. Learn more. Start building your own land business. Go tolandgeek.com training schedule. Call thelandgeek.com putting in the Rebs. Harris, what is your tip of the week?

So my tip of the week is really about our community, the mighty networks where we all gather and we share information, we distribute and disseminate information. What I've noticed is that some people are now joining and using these fraudulent names or nicknames. I'll say even. And so those accounts look a little trollish to me. So my recommendation and my tip is use your actual name when you sign up for Mighty Networks. If you want us to engage and communicate with you, we would like to know actually who you are and don't kind of hide behind some fictitious name.

I love that tip. In the same way, if I went to a conference and everyone had their name tag, you know, Eric Tate, Mike Scott, Tria. And I put Bug. What? That's. Your name is Bug? It's not really my name. I just like. I just like to be stealthy. I like to go by Bug. Just call me Bug. I mean, I do maybe Bugs or, you know, or something like, I don't know, some, you know, some crazy pseudonym.

Mosquito.

Fly. Mosquito.

Right.

Grasshopper. People in the community are not going to trust me.

Exactly.

It's just the way it is. Just because it's online, it's still a community and you want to treat it as such. Just like you. If you were going to meet someone in person and said, hey, what's your name? You wouldn't say, my name is Papa John's. Yeah, you wouldn't want to meet your.

Neighbor and say, hi, I'm Bug.

I'm Bug. Or I'm, you know.

Nope, you can rely on that neighbor.

Yeah, I'm a colorful shoelace.

I don't know, Mark, we had someone join the other day and they. Their name was Brew Duh Coffee. Seriously. And the thing is, is that, guess what? They're no longer in the, in the network because you gotta use your name.

Yeah, I mean, I love coffee, but I, you know, when I go to Starbucks, they say, what's your name? I don't say Bruda. It's like. No, it's like, it's, you know, this is what we do in civil society. We use our names. That's why, you know, latte for Bug.

Latte. Skim milk for Bug.

Yeah, yeah, exactly. So I think it's a great tip. Anyways, I do want to thank the listeners and remind them the only way that I'm going to be able to cajole the rest of the lanky coaches to keep coming on the roundtable. Podcasts giving value. Because if you do us three favors, you got to follow rate, review the podcast, send us a screenshot of that review. Supporthelandgeek.com I'm going to send you a free copy of a signed copy of Dirt Rich, which in the NFT world might be going for 1.2 million Ethereum someday. I don't know. Good. So takes you two minutes. Could be a Ethereum millionaire. You never know. Eric, are we good?

We are great.

Mike, are we good?

Yes, we are.

Tria. All good, Tate?

Yep.

Scott. All right, well, thanks, everybody. Let's do this. 1, 2, 3. Let free the freedom ring. Actually, actually that was pretty good.

That was very on point.

Wow. We should record that one and just dub it into all the endings. It's not bad. I don't know. Not bad, not bad. All right, well, you guys have a great day and see ya.

See you guys.

See ya.

Bye. Thanks for listening to the Art of Passive Income podcast. Start your journey at www.thelandgate.com and www.scotttodd.net. read and review the podcast and email supporthelandgeek.com your screenshot for a free passive income launch kit.