🎙 Passive Cash Flow Podcast EP.193 | He Bought a $30K Tax Lien… It Turned Into a $600K Property
Interested in tax lien investing but don’t know where to start? In this episode of the Passive Cash Flow Podcast, host Aaron Fragnito sits down with “Tax Lien Pro” Brian Seidensticker to demystify this unique corner of the real estate market.
Brian, the founder of Tax Sale Resources, shares his journey from aerospace engineering to managing millions in distressed real estate. We dive deep into the mechanics of how these investments work, from bidding strategies to the recent Supreme Court rulings that have changed the game for investors.
About Our Guest:
Brian Seidensticker is the founder of Tax Sale Resources (2010) and Mount North Capital (2020). His platforms provide the data, workflow management, and capital access that professional investors need to scale their tax lien and deed portfolios. To date, his teams have partnered on over 240 properties, funding more than $23 million in investments.
Connect with Brian:
Data & Resources: TaxSaleResources.com
Capital & Funding: MountNorthCapital.com
🧠 Topics Covered:
00:00 Introduction to Tax Liens
00:58 Brian’s Background
03:06 Discovering the Industry
04:04 Market Scale & Revenue
05:14 Buying Tax Liens Online
06:03 Education & Legal Advice
08:15 Online vs. Live Auctions
09:42 Bidding Methods Explained
10:46 Supreme Court & Deed Rights
12:55 The Florida Fast Five Game
15:10 Strategy by State
16:46 NJ Accelerated Foreclosures
21:12 Risks & Underwriting
24:55 Common Pitfalls
26:48 Liens vs. Mortgages
29:26 TSR & Mount North Capital
31:14 Connecting with Brian
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⚠️ Disclaimer:
This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:00:00 – 00:00:02:02
Unknown
I kind of got into tax liens.
00:00:02:04 – 00:00:04:04
Unknown
Really on the wrong side of a tax lean.
00:00:04:04 – 00:00:04:21
Unknown
Honestly,
00:00:04:24 – 00:00:07:07
Unknown
way small compared to the standard real estate, but at
00:00:07:09 – 00:00:10:05
Unknown
4 to $7 billion a year of taxes that are sold
00:00:10:07 – 00:00:12:02
Unknown
annually, it was a pretty sizable,
00:00:12:05 – 00:00:12:21
Unknown
space,
00:00:12:21 – 00:00:14:13
Unknown
Brian, one of the unique things about this space is
00:00:14:13 – 00:00:16:17
Unknown
you don’t need a license, you don’t need a certified.
00:00:16:17 – 00:00:20:14
Unknown
You don’t need to do really anything in order to buy them. It is as simple as
00:00:20:16 – 00:00:23:19
Unknown
go Google right now tax lien sale in
00:00:23:21 – 00:00:28:17
Unknown
as long as you have any. Yeah. And you can go sign up, register, you know, put your deposit down and start buying.
00:00:28:17 – 00:00:36:08
Unknown
I like the idea of buying tax liens, like, where do I go to even buy a tax lien? How do I start that process?
00:00:36:10 – 00:00:58:03
Unknown
All right, ladies and gentlemen, welcome back to Passive Cash Flow Podcast. I’m your host, Aaron Frank Nieto, co-founder of Peoples Capital Group. And we have the tax lien pro here, a gentleman who’s been buying tax liens and profiting off them and helping other investors profit as well. For many years, we have Brian side and sticker. How are we doing today Brian?
00:00:58:05 – 00:01:18:24
Unknown
Aaron I’m well I’m well thanks for having me. Excellent, excellent. Yeah, I wanted to have you on the show here because I have bought tax liens before. We have done decent with that. I think we got one for like $30,000 in Irvington, new Jersey. Tax sale one time, and we foreclosed. We, like, accelerated the foreclosure and took title of the asset.
00:01:18:24 – 00:01:36:06
Unknown
And we got like a three family property for like 30 grand. It’s probably worth like $600,000 today. We still own it. So really good experience there. I needed a little work, but, on on that, on that experience, you know, take your title on property. And I know there’s different ways to make money in tax lien investing.
00:01:36:06 – 00:02:02:08
Unknown
That’s why I want to have you on the show here. But to our listeners, if you’re enjoying our content, make sure to subscribe and hit that like, button. We’re out on all major platforms and, podcast platforms and YouTube as well. And if you if you’re enjoying this content, share it with a friend or a colleague who you think could benefit from learning more about investments in real estate and building their wealth, here on the Passive Cashflow Podcast, we have a new episode every two weeks, so let’s dig into it here.
00:02:02:08 – 00:02:12:10
Unknown
Brian. So you are a tax, lean pro here. First, tell me a little bit about your background and how you got into this. Yeah. You know, I guess
00:02:12:16 – 00:02:18:04
Unknown
I kind of got into tax liens. Really on the wrong side of a tax lean. Honestly,
00:02:18:04 – 00:02:25:10
Unknown
my. I am not, an aspiring tax lean, investor by any means.
00:02:25:10 – 00:02:49:16
Unknown
I actually grew up, wanting to go to space, actually, by training, was an aerospace engineer and worked in the missile defense space for, you know, several years, and I guess learned early on that, you know, that, schools it sounded didn’t quite scratch the itch that I had as far as, freedom daily, a daily feeling of accomplishment.
00:02:49:18 – 00:03:06:17
Unknown
And so, yeah, I really started as a dabbling in real estate, really on fix and flip, you know, style. Early on while I was still in the aerospace industry, and we were, buying and flipping properties in Montana, which is where I’m originally from. And,
00:03:06:19 – 00:03:10:24
Unknown
and really got upside down in 2007, 2008 got upside down.
00:03:10:24 – 00:03:12:01
Unknown
And one of the properties,
00:03:12:03 – 00:03:16:20
Unknown
end up working it out, right? So didn’t end up going through foreclosure, but,
00:03:16:22 – 00:03:18:09
Unknown
as part of that process,
00:03:18:12 – 00:03:39:21
Unknown
if you don’t pay your property taxes, this is very unique to Montana. All potential investors, at least at the time. I think they’ve changed the statutes since then. But at the time, any potential investor that might want to buy the tax lien on your property, since you had to send you a certified letter, that was one of the weird, unique requirements that, you know, Montana is the only place that you have to do this before the auction or the sale ever takes place.
00:03:39:21 – 00:03:43:13
Unknown
And so I got all these certified letters from all these different investors.
00:03:43:13 – 00:03:54:14
Unknown
And that’s really what made me go, what is this all about? I it’s one thing if it was a notice, one notice from the county, like, hey, you’re and this is how most states work, right? You’re, you know, might be a tax lien sold on your property.
00:03:54:16 – 00:04:04:22
Unknown
Probably would have never thought twice about it, but the fact that I got all these from private entities is what got me really pursuing what this whole tax lien space was all about. And a buying a book,
00:04:05:01 – 00:04:09:04
Unknown
you know, and I can’t remember exact name, but does, like, Tax liens for dummies, maybe,
00:04:09:06 – 00:04:15:04
Unknown
realized, like, there’s a whole space out there, pretty large industry, you know, probably some
00:04:15:06 – 00:04:25:02
Unknown
way small compared to the standard real estate, but at for 4 to $7 billion a year of taxes that are sold annually, it was a pretty sizable, space, right.
00:04:25:02 – 00:04:30:10
Unknown
As far as revenue goes, it’s really on par, at least on that time where with the NBA,
00:04:30:12 – 00:04:34:16
Unknown
you know, and everyone’s heard about the NBA, right? That just tells you the difference between marketing.
00:04:34:18 – 00:04:46:14
Unknown
that’s what introduced me to tax liens. And so really recognizing that, you know, buying and flipping properties, you know, latter half of the 2000s probably wasn’t the best thing to be in.
00:04:46:16 – 00:05:07:13
Unknown
I pivoted, raised, I guess some friends money, a friends family money. And again on the side started buying tax liens in in Montana and Wyoming for several years. And that’s really how I got into this space, Aaron. And it’s been quite a journey since then, but at least that’s the start of the story. Okay, okay.
00:05:07:13 – 00:05:14:18
Unknown
Interesting interesting. So let’s kind of start from the beginning here. You know, I’m, I’m, an aspiring real estate investor, let’s say. And
00:05:14:18 – 00:05:21:17
Unknown
I like the idea of buying tax liens, like, where do I go to even buy a tax lien? How do I start that process?
00:05:21:20 – 00:05:22:07
Unknown
Well,
00:05:22:13 – 00:05:26:20
Unknown
Brian, one of the unique things about this space is you don’t you don’t need a license, you don’t need a certified.
00:05:26:20 – 00:05:48:16
Unknown
You don’t need to do really anything in order to buy them. It is as simple as go. There’s many websites now when I say positive of Covid was, you know, prior to Covid, maybe 5% of the counties out there had their tax sales online. Today it’s probably 70, 75% of tax sales are online. So access to them has become immensely easier.
00:05:48:18 – 00:06:03:15
Unknown
It is as simple as go, go Google right now tax lien sale in Broward County, Florida. It’ll bring up, real action or Grant Street website. You can, as long as you have any. Yeah. And you can go sign up, register, you know, put your deposit down and start buying.
00:06:03:15 – 00:06:07:07
Unknown
It can be that simple. Now, I’m not saying go do that.
00:06:07:09 – 00:06:39:04
Unknown
But it, you know, as far as access is that simple. The problem is because it’s that easy, a lot of people do that and get themselves in some trouble. And so I would always recommend. Right. Somebody is interested in and is is start with educating yourself to some degree. And there’s different levels of educating yourself. From, you know, National Taxing Association has a what they call an entirely you, which is now a high level overview of how tax things work through a series of modules you can do online.
00:06:39:04 – 00:06:59:07
Unknown
I think it does. They do a really good job of of a high level overview of of how the space works. You can actually go to the very the other end. Right, which is you can hire essentially coaches in the space that there’s some that are I say they’re all good, but some that are very, very expensive. Like debatable whether you get the value that you’re paying for.
00:06:59:07 – 00:07:34:17
Unknown
I’ve also heard the argument of like, it’s the same argument with standard, you know, college education today. You get your value out of what you’re paying for that too. So and then there’s some that you don’t charge that much. And you, you know, you get good education out of. But I’d also always, recommend educating yourself and ending with, you probably don’t want to pay an attorney to educate the whole thing, but at least talk to an attorney, an attorney familiar with how the tax sales work in that state, and they can answer those detailed questions and hopefully, you know, steer you away from those potholes and pitfalls and areas where you can
00:07:34:17 – 00:07:56:11
Unknown
really get burned. Yeah. Yeah. Well that’s good. That’s interesting. There’s a lot of support behind it. Kind of like the real estate syndication space. There’s a lot of, you know, coaches out there, a lot of coaches to people that kind of took a coaching course on it. And now they’re a coach on how to do the same thing in the industry, which I always find incredible.
00:07:56:13 – 00:08:15:24
Unknown
So that’s interesting. But, okay, so access online kind of like buying properties at auction. You and most of them are online, but I imagine the ones that are in person in kind of get better deals, because one of the challenges we find with online auctions is everyone can access them, right? Auction.com, all these other different websites.
00:08:15:24 – 00:08:40:13
Unknown
And so you can pretty much, everyone can access them, which creates bidding wars, which means you don’t get a great price. And, and you have a lot of people bidding that don’t really know what they’re bidding on, so they overpay and that, you know, removes any opportunities from you getting a decent deal. So would you suggest it’s kind of skipping the online auctions and going to the in-person ones, or you feel like there’s still opportunities out there with online, tax lien auctions?
00:08:40:15 – 00:08:58:16
Unknown
Yeah. Well, it’s it depends. Right. I guess, I’m really good at the, at the not directly answering questions, like that, but, you know, it’s one of those if you can invest locally where you can drive the properties and do your due diligence right yourself locally, that’s always a much better scenario.
00:08:58:21 – 00:09:04:03
Unknown
That isn’t always possible and definitely not possible when you get to a certain size.
00:09:04:05 – 00:09:21:23
Unknown
And so that in mind, right. Live auctions, I can tell you. Right, based on data. Right. That’s one thing that tax our resources we do is was we’re a data analytics, you know, aggregator and software provider for the for, investors in the space. And yeah, data definitely backs up. You get a better return going to those live auctions.
00:09:21:23 – 00:09:42:04
Unknown
And so if your goal is that right just keep in mind right. The really the the game right that you’re playing is is really a cost of capital game. Right. Because there’s some very large institutional, several very large institutional buyers in the space. And if they can place enough capital, they’re attending that auction. And so if it’s an online auction, they’re going to be there.
00:09:42:06 – 00:10:00:11
Unknown
And so you’re typically competing with them and their cost of capital. I guarantee is going to be less than yours unless you’re just using your cash. Right. But I will also say, you know, you can you can find better places to earn, you know, 4 or 5, 6%, right, than in tax liens with a whole lot less work.
00:10:00:13 – 00:10:24:19
Unknown
And so, you know, just kind of keeping that in mind versus, you know, are they, non, non I say live auctions. Right. Or kind of these peripheral, you know, models that are out there in the space where you can earn, you know, teams, you know, mid-teens percentage return, which is very fairly realistic if you’re not looking to place, you know, $10 million doing that, but a few hundred thousand, sure, you can earn, you know, 15 to 20% return.
00:10:24:19 – 00:10:46:08
Unknown
So, anyway, yeah. So you’re exactly right, you know, finding and and going to those live auctions is is definitely an advantage. Okay, now, without getting too much into the weeds here, let’s kind of talk about also the different scenarios of buying a tax lien. Right? So like I know some people buy tax liens and they don’t really intend to actually foreclose and take title of the property.
00:10:46:08 – 00:11:06:24
Unknown
They might ultimately do that here and there. But for the most part, they’re in a really for that interest rate, which can be somewhere in the mid to high teens. But from what I understand and you’re the pro here. So educate me on this. There’s like a bidding war but you like bid down the interest. You’re willing to charge the, homeowner or property owner on the lean.
00:11:06:24 – 00:11:25:09
Unknown
Right. And it’s like a race to the bottom, almost. So like a property with a lot of equity and a good location. Maybe everyone wants that tax lien, right? And then. So now, normally you earn like an 18% interest rate, but then I say, well, I’ll take 17. You say, well I’ll take 16. And like the person who’s willing to take the lowest interest rate gets the line.
00:11:25:09 – 00:11:55:07
Unknown
Am I missing something? How does that work? Yeah. So I guess yes, you have that. I’m going to take a you mentioned something. So I’m going to kind of, you know, close a myth that existed or what actually was factual. Right. But has been closed. The Supreme Court, US Supreme Court, it was Tyler Hennepin Supreme Court case a few years ago that closed the door on, you know, buying a lean with intent of owning the property at the end of the day, prior to that Supreme Court case, around roughly 50% of the states had a process.
00:11:55:09 – 00:12:18:04
Unknown
Well, I’m probably less than that. Probably 15% of the states had a process where you buy the line, and if it never redeems, right, you basically apply for a deed and you get the deed right for this back taxes. Supreme Court said that’s not constitutional. And so all states, except for one that’s lagging, which is Illinois right now, have implemented statutes said don’t allow you to end up with automatic ownership.
00:12:18:06 – 00:12:34:23
Unknown
Bye bye. You know, owning the land itself, it has to go through a second process, right? A foreclosure process that culminates in what I’ll call a tax deed auction. And so if your goal in all of this is to own the real estate, buying liens is really not what I’d recommend, you might as well just attend the tax deductions.
00:12:35:00 – 00:12:55:18
Unknown
Which there’s now a lot more of because those states that never had them now do. That’s right. Two exceptions. Right. And I think before we have time recording or maybe at the very beginning, Aaron, you mentioned you’re buying a line in new Jersey, right. And new Jersey and Arizona have, have it set up to where the, the owner, the property owner has to opt in to that tax deed auction.
00:12:55:18 – 00:13:15:00
Unknown
And so there’s a slight chance, right, that you might owning on that property. So I just wanted to kind of dispel there’s a lot of information out there. And previously it was it was true. Right. You could do that. Today’s world is that’s more of a dinosaur. If you didn’t buy it prior to 2025, chance of owning that piece of real estate for the taxes just isn’t a thing anymore.
00:13:15:00 – 00:13:35:03
Unknown
So that aside, right? So back to your original question of how do these, you know, how does this bidding take place? And there’s really, well, reality. There’s a bunch of different ways bidding takes places, but there’s really two primary methods. One is the bid down method that you just mentioned. And several states implemented that where and it varies at the starting point.
00:13:35:08 – 00:13:59:20
Unknown
Arizona starts at 16. New Jersey starts at 18, Florida starts at 18. But you’re bidding down right? It’s opposite of what people think of where, you know, on TV, it’s like, I’ll bid 10,000, 20,000, 30,000, right? It’s starting at 18%. And you’re bidding what you’re willing to take as a return on that. Right? 18 and next guys like I’ll take 16, 15, 14 and bids down till somebody says, well, I don’t you know, I’m I’m done.
00:13:59:20 – 00:14:22:02
Unknown
I don’t want to take a 0% return. And the lower bid wins essentially is how it works in that. Now, the caveat in that process is, is that what’s called a penalty? So in Florida there’s a 5% penalty. So no matter what you bid it down to, you’re going to get that 5% and you’re gonna get that 5% whether they redeem tomorrow or they redeem two years from now, you’re going to get at least that 5%.
00:14:22:04 – 00:14:37:08
Unknown
And so there is a lot of, folks that play what’s called the Fast five game in Florida, where they try to target folks that that are going to redeem very quickly, and they’re willing to bid those all the way down to a quarter percent. Right. And so if you don’t know that nuance, right, you kind of look at that makes no sense.
00:14:37:08 – 00:14:56:03
Unknown
Why would you take a quarter percent return on your money? Well, if it ends up being 5% that you get the next day annually, that’s a fantastic return, right? And so that’s basically the nuance of how the bid down method works. The bid up method is a lot more, you know, similar to like a traditional auction, right?
00:14:56:05 – 00:15:16:08
Unknown
The lean amount might be, let’s say, $1,000. Right. And then you’re bidding a premium. So you’re bidding, I’ll pay $100 premium, I’ll be a $200 premium, you know. And that bids up right. And the basically the highest bidder wins in that scenario. But the nuance comes into some states will pay you interest on that premium and some states will not.
00:15:16:10 – 00:15:35:21
Unknown
Oh, and so that’s, you know, where you have to educate yourself then. Because if you’re paying premium and you’re not getting interest on it, right, that’s just burning down whatever interest you were were earning on the principle. So yeah, those are the nuances of why I recommend doing your homework and learning right. How that state works so that you don’t get tired.
00:15:35:21 – 00:15:54:08
Unknown
I hear all the time, or at least enough where people take the Florida Fast five model. Go to Arizona because the bidding process is nearly identical, a bit of down to a quarter percent. And they’re surprised when there’s no 5% penalty and basically a certificate. And you know congrats. You won this a quarter percent interest for the next three right.
00:15:54:08 – 00:16:12:16
Unknown
And they’re like oh crap that was a waste right. So those are the things that you try to avoid if you know what you’re doing okay. So it’s really state by state. The laws tend to change a lot. So it might be best to be a successful tax lien investor probably to focus on like 1 or 2 states to start because, it sounds like it’s similar to a lot of real estate investing.
00:16:12:16 – 00:16:30:19
Unknown
I mean, I, I definitely practice what I preach there, too, because I focused on new Jersey my entire investment career. I think 99% of the deals I’ve been I have completed are in new Jersey. And the other 1% was like Philadelphia, which is, you know, right across the river. So, yeah. So I get it, you know, make sense?
00:16:30:19 – 00:16:46:05
Unknown
You got to know your market. You have to know your laws. And they actually change here in new Jersey, city by city, like rent control will change, you know, from Jersey city to Bay zone. And they’re right next to each other, right. If there’s a big difference in the rent control laws and landlord restrictions and so on. So I can see taxi investing is similar.
00:16:46:05 – 00:17:02:16
Unknown
You want to know your market and then you also have to know property values, right. Because you can also bid on a tax lien. And the deal has like no equity or you you find you go to the property and it’s a disaster and it’s like practically a knock down. You’re like, shoot, they owe 100 grand to the bank.
00:17:02:20 – 00:17:25:18
Unknown
I just paid 20 grand for a tax lien, but the property is worth 80. I literally. And now I just lost 20 grand, you know, because the things there’s no equity in it. And, Right. So you got to be you got to recognize that, and one note there, I, I think the tax liens we’ve bought were where tax deed auctions, like accelerated foreclosures was the thing Irvington was doing.
00:17:25:18 – 00:17:45:19
Unknown
They had a bunch of vacant properties throughout the city, and inner cities will do this. And they got to get these vacant properties off their books. They want to create revenue for the city. So they accelerate the foreclosure process. So these are like if they pay 90% through the foreclosure process and we were able to like buy the lean and then lengthen like six months, we own the deed.
00:17:45:23 – 00:18:13:06
Unknown
So that must have been an accelerated tax deed auction. Well New Jersey’s we’re probably in the weeds a little bit. New Jersey’s got some of the best I’ll say blight remediation laws right for that. Where if the property’s abandoned like nobody’s living in it and it’s just degrading. They allow it to to be accelerated. And so typically with a tax lien right from purchase to, you know, going through a foreclosure, it’s multiple years, right?
00:18:13:06 – 00:18:32:06
Unknown
This isn’t, like a mortgage foreclosure where three months later, right. You might show up on the, on the mortgage auction, typically taxing there are two or 3 or 4, in some cases five years down the road, new Jersey built in that mechanism. Or, hey, if it’s a lean on a private is abandoned, right? They recognize that probably not going to get any better in an abandoned state.
00:18:32:06 – 00:18:51:13
Unknown
It’s just going to get worse. So why don’t we get it in the hands of an investor that’s going to do something about it before it does get. And that sounds like that’s what you ended up buying, which is a, you know, on the board. And, and TLA, we tried to get other states to adopt it. Unfortunately, it’s not very, very low priority compared to all the other arguing going on at states these days.
00:18:51:13 – 00:19:10:07
Unknown
But, I wish more states would adopt that exact, statute that new Jersey has for sure. That makes sense. I mean, a lot of these inner cities, is really struggle from abandoned properties. And, you know, what’s it called, the, broken window rule or something, you know, like when it when your neighbor’s house is dilapidated, then your house becomes dilapidated.
00:19:10:07 – 00:19:30:16
Unknown
And so I remember I bought a property one time. I, we do this all the time, but I particularly in, in Vermont, it was a vacation property near Okemo ski resort. And it was in this kind of like low key little neighborhood. And I bought the property, was a fixer upper, and I do all the landscaping and spruce the thing up and make this property really look nice, have some curb appeal.
00:19:30:20 – 00:19:44:11
Unknown
And all of a sudden I noticed, oh, the neighbors started doing their landscaping. And then the guy down the street who had a bunch of crap in his front yard, all of a sudden that was cleaned up and like, the neighborhood started like improving itself, you know? And it all took with me to I know of course, my ego.
00:19:44:11 – 00:19:58:20
Unknown
I take credit for this, but, to improve my asset there. But, you know, you you see that, and it can work the other way, right? Where? Abandoned properties in inner city areas, you know, they get trash in the front yard and they’re falling apart and they’re dilapidated. And then the neighbor’s house starts to kind of look the same.
00:19:58:20 – 00:20:18:11
Unknown
And then there’s another guy down the street, and then it creates this environment where you have a very, ugly, undesirable neighborhood. Right? And then people move out and schools lower in value and so on. And, so, yeah, it’s a, it’s a really, multiplying effect there. So I think that law makes a lot of sense. Absolutely.
00:20:18:14 – 00:20:37:00
Unknown
Yeah. I think it’s fantastic the way they’ve made that function. And, and, you know, I say you should certainly pat yourself on the back because we see it all the time of the, you know, tax the investors that buy those vacant properties, you know, it is the worst property on the street, 99 out of 100 times. And is bringing the whole neighborhood down.
00:20:37:00 – 00:20:53:11
Unknown
Right. And they go in, buy the property, fix it up, turns into probably the nicest house on the street in many cases. But the whole neighborhood, you know, benefits from that. And neighbors will come out and be like, that’s, you know, that was the worst house that attracted all the riffraff. Right? And now it’s, you know, the best house on the street.
00:20:53:11 – 00:21:12:12
Unknown
So it’s. Yeah, you know, obviously I’m biased to coming from the space, but I think there’s a lot of good and positive that comes out of those scenarios. Yeah. Yeah. Okay. So now so we talked about how you can kind of source these, tax liens online or in person and auction, there’s different ways to make, interest on your investment.
00:21:12:15 – 00:21:36:12
Unknown
One quick question. When you pay the premium, right. So if you’re buying a taxing that’s worth 5000, you pay a premium up to 10,000 because it’s a really good opportunity. Who gets that 5000 extra, the city or the owner of the property. But depends. Right. So I’ll speak. It depends on the state. Right. Every state different. So in new Jersey with the change to, you know out of Tyler Hennepin that actually goes back to the previous owner.
00:21:36:14 – 00:22:01:00
Unknown
Right. Or at least they have the opportunity to come claim it. Yeah. And Maryland is an overbid, state, which actually gets applied to the purchase of the property. Right. Which then again gets, put into a bucket of funds that are available to the previous owners to come claim those. And then there’s, states where, Indiana, which I, I’m not as familiar.
00:22:01:00 – 00:22:20:24
Unknown
So there might be some you out there who can correct me on this, but the premium you bid ends up going to the county. Right. But there’s a second tax deed auction that happens down the road. Right. And that’s where, the ownership. Right. And the equity is available to the previous owners as well. And so it just it kind of depends.
00:22:20:24 – 00:22:44:14
Unknown
Right. And so it’s, it is very, very state specific. Okay. Interesting. All right. And then, so what are the risks, you know, how do you lose money, doing tax liens and why would someone not want to potentially jump into this, industry. So really the biggest risk right. And is, is really not fully understanding what you’re buying.
00:22:44:14 – 00:23:04:03
Unknown
Right? It’s underwriting the property or the lien, just like you’re buying the property. Because in general. Right. Which this isn’t wrong. Right. In general, you’re buying and you’re being secure, you’re buying a line and you’re you’re secured by the real estate, which in theory, right, is ten times 10 or 20 times, you know, the value of the lean.
00:23:04:03 – 00:23:23:07
Unknown
And so the margin of safety of something happened in that property and the grading, you know, down to where it actually affects your investment is very, very low. It’s not zero, but it’s very low. But right. And this is the key thing the but the not every lean right is on a property that has value. And you mentioned this earlier Aaron.
00:23:23:07 – 00:23:40:12
Unknown
But you know I’ve seen leans right. I’ll take a step back. Right. Anybody that’s looked at a parcel map of any city with any eye Phoenix might be an exception. I haven’t actually looked at Phoenix, but it’s just laid out as a grid, and it’s all nice and neat. Most cities aren’t that way. So when you look at the parcel map, right.
00:23:40:14 – 00:23:56:21
Unknown
It’s weird. Right? You got these weird little parcels, these little corners, right? These little where multiple parcels come together and end up with this weird shape. Right? They just couldn’t get it all to fit. Right. These will be sold on those because the county doesn’t. They don’t intentionally say, hey, I want to sell this. All they’re doing is like, what?
00:23:56:23 – 00:24:21:05
Unknown
What parcels don’t have their taxes paid? I’m going to put them for sale because of that. We’ve seen liens bots, right. And people complain about it. But on what ends up being just a mailbox or a chunk of sidewalk or a piece of swamp landlocked in the middle of nowhere, right? Those that’s very common in Florida. And if the property has no value to it, then then you know, your chance of actually recovering.
00:24:21:05 – 00:24:37:23
Unknown
That is very low, right? You sure you could let it ride? You could foreclose on it would be you own a mailbox. What are you going to do with that? Right. And you’re going to recover your investment into that at that point. So the biggest thing is just making sure you’re underwriting that, that lean, just like you would underwrite the property.
00:24:37:23 – 00:25:05:22
Unknown
If you buy the property, then, okay, by the lean that’s probably the biggest pitfall, right. Number two right is is really understanding procedure, which we talked about I talked about a little earlier. Not I’ll say bidding overly aggressive right where you end up earning nothing. Right. If it’s a big not down bend down scenario or in a bid up scenario, you bid a bunch of premium which you’re not going to get back right or return again goes down to near zero.
00:25:05:24 – 00:25:27:21
Unknown
Those are probably the two most common methods of not earning anything or losing. Right. Your principal by far. There are many others. Right. Wild scenarios where okay. And these are just aren’t common. So I can’t say you really have to worry about them, but there things that happen, you know, where the lean was sold and then it went to a taxi auction.
00:25:27:23 – 00:25:48:16
Unknown
I’ve heard of this happening in Florida. Sorry. And then the taxi doctrine occurs in the secondary loan, right. Second mortgage wasn’t notified correctly. And so you end up owning the property, but it’s still subject to a second mortgage. Is that possible? Yes. Is it likely no right to make all of your decisions and do your underwriting to try and eliminate all those second mortgages?
00:25:48:16 – 00:26:08:03
Unknown
I would say no. Right. But that’s something that can happen. The other thing that we’ve seen happen is you buy the property at the tax doctrine, right? Ends up burning down right, for whatever reason. And that’s something to keep in mind. Right is in some scenarios, there are very disgruntled, owners on the other end of that process.
00:26:08:03 – 00:26:32:24
Unknown
Right. I am a firm believer that everybody should pay their taxes and contribute to what those taxes go to, right. And paint pictures. Thankfully, it’s been firemen paving the roads, right? All those things needed. And you need some form of of enforcing that, right. Otherwise, if there were none, no. Why would anybody. Right, right. Yeah. But folks that on the other end of that usually are not happy about this happening.
00:26:33:01 – 00:26:48:02
Unknown
Yeah. They’re even in the picture. And quite frankly, the vast majority of them aren’t even in the picture. These are properties that have been abandoned for whatever reason. And that’s part of why they’re in pretty rough state when you do end up owning the real estate. So, those are a lot of the pitfalls that you can fall into.
00:26:48:02 – 00:27:10:03
Unknown
Aaron. Okay. Interesting. And what about the lender? What about the first lean position? You know, let’s say you say you buy a tax lien. Your goal is to get the deed if you structure it that way. But then I believe you, you can’t foreclose over like a first lean. You still owe that debt, right? Is that still tied to the property or how does that work?
00:27:10:03 – 00:27:32:10
Unknown
That’s actually, one of the major benefits of taxes in almost all states. I know New Mexico. It’s not this way. And I think Utah’s the other state that doesn’t do this. But in all the other states, the tax lien actually has what they call a super majority position. So it sits in front of the mortgages, right? Primary all of their mortgages if if they’re for tax deed foreclosure goes through the way it’s supposed to.
00:27:32:12 – 00:27:55:00
Unknown
Those those entities. Right. Anybody with interest had an opportunity to come forward and pay the taxes. Right. Add it to the bill. If they choose not to, their actual interest gets extinguished. And so, if there is a primary mortgage or a second mortgage on the line, very, very likely it never gets to that stage because the mortgage holders at some point are going to hop in and say it’s not worth losing $300,000.
00:27:55:00 – 00:28:18:07
Unknown
I have invest in this property for a $5,000 tax bill. Right. I want the property owner to pay it, but they’ll just go ahead and pay the tax bill to prevent that from happening. But there is this there is the chance. And we do see it happening like, more often than you would imagine where somebody is asleep at the wheel, right at the mortgage company, probably more like, personal lending right now.
00:28:18:07 – 00:28:35:08
Unknown
Yeah. Yeah. Like, right. But like personal lending. And I think it’s secured through mortgage. They never really check on it. And it goes all the way through the process and their, their mortgage ends up getting extinguished. It’s crazy. Yeah. And that’s why, when you sign up for a mortgage here in new Jersey, your taxes are normally included with your mortgage payment.
00:28:35:08 – 00:28:52:09
Unknown
You know, you have your principal interest in your taxes. You kind of pay in all one shot, every month you know, and they hold an escrow that pays the taxes. A lot of times your insurance is included in that, too, right? Your homeowners insurance, all that, that for commercial real estate, that’s less common. Okay. That makes sense.
00:28:52:09 – 00:29:09:24
Unknown
That makes sense. Our Brian. So, you know, you definitely seem like the tax lien pro here. You know, I’ve had a good experience with the tax deed, auction that we did. I think we got about two deals, and that was pretty good for great prices. So, hopefully even more of those come up and we can, take advantage of those as, investors.
00:29:09:24 – 00:29:26:23
Unknown
But, how can people, reach out to you and learn more and, and kind of what do you have going on these days? Yeah. Well, I, I mentioned earlier, you know, that there’s really two, two aspects to the space that we are involved in. One is we are still very much involved in the, the data analytics. Right.
00:29:26:23 – 00:29:46:15
Unknown
Compiling. You know, your first question of when and where do these auctions exist? When we guys start in this space and then nothing, nothing like that existed, right. Just finding that those basic answers of where are these auctions, when are they, what properties are associated with them and what what is the information behind those properties, all the data points.
00:29:46:17 – 00:30:09:15
Unknown
That is what tax resources. Right. Our company compiles. And so we’re essentially all the tools that successful investors need. Right. With one exception. We’re not an educator. We have some really good resources that are free out there. I interview industry professionals, attorneys. Right. And so if you want to educate yourself and certainly go peruse the website and all the the podcasts that we have up there.
00:30:09:17 – 00:30:27:17
Unknown
But once you know what you’re doing, then we have all the tools, right. Think of it like a Zillow. Right. But for the tax sale space and finding which ones that you want to buy. So that’s one half of what we do and the other half is and, and really starting 2020 started a fund that is focused on tax deeds.
00:30:27:19 – 00:30:49:08
Unknown
It is a 560 fund, so it’s only available to accredited investors. But folks that that want to earn a decent return but don’t necessarily want to do the work right, then they can participate through that mechanism as well as called mountain capital. And those are the two ways. And depending on what your involvement you’re looking for, that you could get a hold of us or get a hold of me and then explore from there.
00:30:49:10 – 00:31:14:15
Unknown
That’s great. That’s great. Okay. And what’s the website or how do they get in touch with you there? So yeah, tax sale resources. It’s, it’s not a short one, but tax sale resources.com. If you want to go that route and then mountain of capital is again Mount North capital.com. And you can, you know, go to that website and it’ll depending on what you’re looking to do, it’ll, it’ll point you in the right direction from there.
00:31:14:17 – 00:31:32:17
Unknown
Great, great. Excellent, Brian. Excellent. Well, maybe I’ll check that out myself. Learn some more things about this. I admittedly am not an expert in the space. That’s why I want to have you on the show here today on the passive cash Flow podcast. So thanks for coming on. And, you know, again, to our listeners, we’ll put Brian’s, contact information, those two websites in the show notes.
00:31:32:21 – 00:31:47:12
Unknown
Brian, be sure to shoot that over to me and we’ll put that in the show notes here so you can get in touch with Brian and his team and learn more about this, space, which I find very interesting. As I said, I’ve had success, a little bit there as well. Not as much as you, but, definitely, you know, I’ve had a good experience with it.
00:31:47:12 – 00:32:05:05
Unknown
So definitely interested in learning more. And, you know, to our listeners here on the Passive Cash Flow podcast, if you’re getting value out of these episodes, we come out with one, every two weeks, share with a friend, hit the like button. Subscribe button. We’re on all major, podcast platforms and YouTube, so check us out there.
00:32:05:05 – 00:32:22:22
Unknown
We also have like other webinars on YouTube and other educational content, but People’s Capital Group in there or passive cash flow podcast, you can find us on YouTube there. Check out our other content. Of course. I’m Erin for regular People’s Capital Group. We help people build and preserve their wealth in new Jersey, apartment buildings. Want to learn more about that?
00:32:22:22 – 00:32:40:14
Unknown
Go to People’s Capital group.com. And, enjoy, this, cold day here, Brian. Probably by the time this episode comes out will be a little bit warmer. So we’ll see. Yes, let’s hope so. And I hope so. Thanks for having me, Erin. This is fun. Hopefully folks learned a thing or two and we have interest. Don’t be shy.
00:32:40:20 – 00:51:36:04
Unknown
All right. Thank you, my friend. Have a great day.
00:51:36:06 – 00:51:59:04
Unknown
At People’s Capital Group, we help you invest in real estate. Build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now we only work with select people who are serious about building wealth.
00:51:59:08 – 00:52:03:08
Unknown
So find out if you qualify at Peoples Capital group.com.
