Back Tax Property – The Truth (CFFL 361)

Back Tax Property – The Truth

Jack Butala: Back Tax Property – The Truth. Leave us your feedback for this podcast on iTunes and get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.

Jack Butala:                            “Truth be Told” with Jill DeWit.

Jill DeWit:                               Hello.

Jack Butala:                            Welcome to our show today. In this episode, Jill and I talk about back tax property and the truth. The truth about back tax property entirely. Awesome show today right after Christmas Jill. Before we get into all that, let’s take a question posted by one of our members on the LandAcademy.com online community, it’s free.

Jill DeWit:                               Okay. Kevin asked, “I’m getting some desert properties that are in a subdivision with covenants and restrictions. No mobile homes, even on concrete pads and home plans must be approved. My offer of $500 for 500 acres is being accepted.” Love it. “Do you have any experience with selling this improved, quote unquote, type of desert vacant land? I feel like it would take a very different buyer to respond to these property types.”

Jack Butala:                            Well, first of all it’s a great question. My gut reaction right to this question is we’re just all now real comfortable buying property for 500 bucks an acre.

Jill DeWit:                               Exactly.

Jack Butala:                            I mean $100 an acre.

Jill DeWit:                               Exactly.

Jack Butala:                            Good for you Kevin, you’re doing it right and I’m glad the offers are getting accepted and no, this doesn’t scare me at all. Does it scare you?

Jill DeWit:                               Not at all.

Jack Butala:                            Pros and cons. Just like with an HOA with a house, with a residential, where you live. There’s a real good … Some divisions that are heavy on HOA, the pros are somebody doesn’t have a camper across the street in the driveway all day.

Jill DeWit:                               Eight foot long weeds and overgrown things like that. It’s maintained. Somebody’s taking care of stuff.

Jack Butala:                            Yeah, and the cons are in general. You’re regulated, somebody’s watching you. For some personalities, they love it. For some personalities, they really want to bang on something in the garage all day and night. It’s like anything else. That person that wants that type of property is going to find it If their price is right. No, I would buy property, buy away.

Jill DeWit:                               Yeah, I agree. It doesn’t scare me at all. Is it a very different buyer? No. You know how to do this right Kevin. You’re going to be posting this all over the planet and you will reach that person. It’s no different from the person that wants the lakefront to the person that wants the treed, not on the lake because it gets cold. Who knows? There’s little nuances of things that people want and I stopped a long time ago guessing. This is one of those things too where your opinion might be stepping into it and sometimes you just have to get out of your own way.

Jack Butala:                            It’s a good question.

Jill DeWit:                               Yeah, it’s a great question. “Do I need to be worried about this?” Nah. “It is going to take me longer?” Probably not. It’s probably going to be just fine. You’re going to reach them.

Jack Butala:                            We have customers who contact us regularly seeking out property with no access so that’s, in my opinion, that’s the end of the end so do we go out seeking property with no access? No, we don’t but when it comes across our desk and it’s a pretty strong acquisition candidate we think twice.

Jill DeWit:                               That’s true.

Jack Butala:                            If you’re brand new at this, you shouldn’t buy property with no access at all but if somebody’s asking you, “Hey, I really want to buy some property” and full disclosure and the whole thing, that’s a good idea.

Jill DeWit:                               Yup, cool.

Jack Butala:                            Hey, if you have a question or you want to be on the show, reach out to either one of us on LandAcademy.com. What a weekend Jill.

Jill DeWit:                               Oh, yeah.

Jack Butala:                            It’s the weekend after Christmas. I mean it’s the-

Jill DeWit:                               Day after Christmas.

Jack Butala:                            Monday after Christmas, yeah.

Jill DeWit:                               Monday after, day after. Yay.

Jack Butala:                            Did you have a good one?

Jill DeWit:                               I had a great Christmas. How about you?

Jack Butala:                            Excellent.

Jill DeWit:                               Yup.

Jack Butala:                            What did you get?

Jill DeWit:                               Well I’m holding one of my toys right now.

Jack Butala:                            There’s a lot of different ways I could take that.

Jill DeWit:                               Oh, hello. No, I’m holding my nice, new tablet here. I’m having a really good time with it so … It’s that rocking iPad Pro and I’m having a whole lot of fun.

Jack Butala:                            That’s great. I can tell, there’s a big smile on your face.

Jill DeWit:                               I know. I’m playing with all these little tools and things. That’s really silly, but I’m using it for our show.

Jack Butala:                            Yeah.

Jill DeWit:                               How about you Jack?

Jack Butala:                            I got a this little cylinder thing where you can ask any question on the planet. What’s this thing called that you got me?

Jill DeWit:                               Google Home.

Jack Butala:                            Yeah, it’s called Google Home. You just ask it questions, so I figured we’d have it on the show today to ask about back tax property and stuff and see what she says.

Jill DeWit:                               I think it’s a great, great idea.

Jack Butala:                            Today’s show, and this isn’t me the show, the truth about back tax property. You know we hear this all the time. “You should only mail offers to people with back tax … People with property that have associated back taxes.”

Jill DeWit:                               Delinquent taxes, delinquent property.

Jack Butala:                            Or properties that are pre-foreclosure or properties where the owner’s in trouble. On and on and on and if you listened to even one episode of this show before this, you know that Jill and I disagree with that.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            We believe you should mail every property that doesn’t have any type of mortgage on it.

Jill DeWit:                               Yup. Whether or not they’re current.

Jack Butala:                            Let’s see what she says about the definition of property taxes. Okay Google, what are property taxes?

Google:                                     According to Wikipedia, a property tax is a levy on property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located. It may be paid to a national government, a federated state, a county or geographical region or a municipality.

Jack Butala:                            All right, this is made for me.

Jill DeWit:                               This is a total … This has been my world for the last 24 hours. Let me just pause for a moment here. As you can see, it does not leave his side. Oh my goodness.

Jack Butala:                            I’m smarter. I’m so much smarter than I was 24 hours ago.

Jill DeWit:                               Yeah. As if if wasn’t bad enough with your cell phone. Now it’s just that much easier. I swear, there’s … I don’t know, that thing is pretty smart. We’ve been having a good time with it. I was asking, what was that I was asking? Oh, I was asking about counties and things today. It was just …

Jack Butala:                            Yeah, what was your question about counties today? Go for it.

Jill DeWit:                               Oh, here it goes. Here we go. Okay. Okay Google, how many counties are there in the United States?

Google:                                     According to Wikipedia, as of 2013, there were 3,007 counties, 64 parishes, 19 organized boroughs, 11 Census areas, 41 independent cities and the District of Columbia, for a total of 3,143 counties and county equivalents in the United States.

Jack Butala:                            Okay, well that’s the greatest thing I’ve ever heard.

Jill DeWit:                               Jeez, that’s a whole lot. Well here’s what’s funny, it’s funny the followup question. This is really good. I’m not going to … Do you want me to do the followup question?

Jack Butala:                            Oh, you could just tell it.

Jill DeWit:                               I’ll just tell you. The followup question was all right, then how many properties are there? No matter how I asked the question, I even asked SFRs, I was asking … Google can’t get it. It’s just, it was funny because Jack, you’re staring at me going, “I know that because I’ve tried to do this too. The number’s too high.”

Jack Butala:                            Well yeah, I’ve searched every corner of Google to try to figure out if there’s a source,, one single source.

Jill DeWit:                               A reliable source.

Jack Butala:                            For how many properties there are, how many APNs there are in the country, the whole thing, and I cannot find it.

Jill DeWit:                               Right.

Jack Butala:                            What do we do when that happens? We create our own.

Jill DeWit:                               Exactly.

Jack Butala:                            I am working on that actually. We’ll get to the bottom of it.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            It’s finite. Geography’s finite. There’s a finite number of APNs based, broken down by county in this country.

Jill DeWit:                               Except for the parcels that we split and make more.

Jack Butala:                            Yes. The only reason … Exactly Jill. The only reason that number will change is when people create new subdivisions and that happens but it’s pretty trackable. They have to do public notice for all that.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            Or, when they take properties and consolidate them. You see that a lot with agriculture for some reason.

Jill DeWit:                               Right.

Jack Butala:                            You take 15, 40 acre properties and make it one parcel. If you talk to developers, they love doing that but we don’t.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            It depends on how you’re going to use the property.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            Anyway, today’s topic is the truth about back tax property.

Jill DeWit:                               Today’s topic is okay, Google. Oh, she turned on. Sorry. Woops.

Google:                                     Sorry, I don’t understand.

Jill DeWit:                               We knew that was going to happen.

Jack Butala:                            She should be a permanent guest on the show.

Jill DeWit:                               I know, I know. Wouldn’t that be hilarious?

Jack Butala:                            Yeah. Maybe she could just replace us all together.

Jill DeWit:                               Now we’re talking. “Today, on today’s show, Google and I discuss …” Could you imagine? Google just replaced me.

Jack Butala:                            Okay Google, would you like to be our radio show guest permanently?

Google:                                     Sorry, I’m not sure how to help.

Jack Butala:                            Yeah, exactly.

Jill DeWit:                               That’s right.

Jack Butala:                            Human being can still, we still have to rule.

Jill DeWit:                               That’s right. Sometimes I’m not sure how to help.

Jack Butala:                            All right, so the truth about back tax properties is this. When you mail just back tax properties, and believe me, when we cast a net out there to find buyers seriously willing … I mean sellers, we cast that net over the back tax property too so it comes in with all the mail, with the offers we send out. Guess what? The properties that come back that have associated back taxes are very problematic.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            You might get 10 properties in that have associated back taxes, and pretty serious ones sometimes, and great deals, but there’s problems.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            The thick of it is this. Back tax properties, here’s the truth, they’re problematic. They’re problematic to purchase, they usually have other liens. It’s a huge sign that there’s problems. For me it’s a red flag. I mean what do you think Jill?

Jill DeWit:                               Yeah, I agree. I was just looking, I just checked off on my little tablet. I wrote down three things about stupid back tax properties and I’m sorry, I just don’t want to focus on them. It’s a waste of time. I know so many people that have tested this theory and really gone out and done mailers and focused only on back tax, not kidding and then everything else. They came back and said, “Wow.” They’re eating their words. They’re saying, “You’re right. I just proved myself wrong. I had a better ROI, I had better properties, I had easier to transfer. I didn’t have to deal with all of these issues.”

Here’s my thing. I mean there is often a reason why, there’s a problem. It’s like you and I Jack, those two homes along … There’s two homes in La Jolla Cove that have been sitting there for 30 or 40 years, and Jack you know what I’m talking about. They’re obviously tied up in something but any person would drive along, like a flipper would drive along and go, “Oh, there’s a diamond. I’m going to find out who owns them and I’m going to get those.”

Jack Butala:                            They’re falling down.

Jill DeWit:                               Yeah, they’re falling down and they’ve been that way for years.

Jack Butala:                            They should be condemned actually.

Jill DeWit:                               I think they are condemned. No one can go in there. They’re all boarded up. Some of the most expensive real estate on the planet and there’s a problem. You shouldn’t be mailing them, you shouldn’t be spending your time on them, you shouldn’t be doing it. There is something going on there if it’s that long. I say number one they’re a problem. Number two, they’re hard to weed out too. If you really want to just focus on that, again, why? You’re just wasting time and three, transfer issues.

Jack Butala:                            That’s the real issue.

Jill DeWit:                               Mm-hmm (affirmative)

Jack Butala:                            I mean here’s what lures people into just mailing offers to back tax property. It’s cheaper, right? In the universe of property, let’s say you go to any given county and you sort through a database and you find all the five acre properties that you feel like you want to send offers to. Then let’s say it’s 4 or 5,000, right? Then you take the back tax properties only within that, and now it’s 10 or 15 percent. It’s a lot cheaper to send a mailer out to that to get a yield and it’s just cheaper, the postage is cheaper and I think it lures people in.

Jill DeWit:                               Well the postage is the same no matter who I’m sending a mailer to, so I’m not sure what you mean, I’m sorry.

Jack Butala:                            In the universe … How we do it is this. We choose a county and let’s say we choose five acre properties. Then we scrub the data down for the people that we don’t want to send it to like the U.S. government. Now we have this universe of five acre properties with no debt on it and we’re only sending it to people that we think might respond.

Jill DeWit:                               Right.

Jack Butala:                            From there, let’s say there’s 1,000 properties.

Jill DeWit:                               Right.

Jack Butala:                            From there there might be only 150 properties that have associated back taxes.

Jill DeWit:                               Right.

Jack Butala:                            It’s a lot cheaper to send 150 mailer units out than 1,000.

Jill DeWit:                               Oh, to weed them out and then only hit those people.

Jack Butala:                            Yeah, and I can tell you, I guarantee it, you will get a response. You’ll get a ton of responses from that 150 unit mailer and you won’t buy anything.

Jill DeWit:                               Mm-hmm (negative)

Jack Butala:                            You’ll be wasting your time. That’s why I think it lures people in.

Jill DeWit:                               Mm-hmm (affirmative) Well, you’re going to get calls back from people that say, “Yeah, I’ll take it.” Then you go do your homework and you go, “Oh, no wonder he wanted $500, because he owes $800 in back taxes.”

Jack Butala:                            Or $8,000.

Jill DeWit:                               Yeah, now the deal’s no good. Now I’m out kind of thing. I’ve heard, here’s my other thing. I’ve heard other people, [Maglinkey 00:13:22] we talked about saying, “Just offer them a dollar and do that.” I’m not going to waste my time on that too. I had a call with somebody, we talked about that. I’m not going to offer someone a dollar and waste their time and my time.

Jack Butala:                            That’s disrespectful too.

Jill DeWit:                               Yeah. They’re not going to be excited waiting for the notary to show up for a check for a dollar, no. I just move on. It’s not worth my time and I feel bad for them but I need to be spending my effort and my energy on really good deals.

Jack Butala:                            If you want to get a ton of people to call you back trying to sell their property to you, do this. Mail out a bunch of postcards that says, “Dear resident, we would love to talk to you about selling your property.” You’ll get a million people calling you back and you won’t buy a darn thing. You’re going to get a million people calling you to try to negotiate a deal.

Jill DeWit:                               At retail, top dollar.

Jack Butala:                            Yeah. I’ve done all this. You know that’s how we know this. We’ve done all these things.

Jill DeWit:                               Because they think you zeroed in on their home, right? “Oh, they love our home and they love the view and it’s so great, they’re going to pay for it.” They don’t know. Yeah, that wastes your time. This is one of my big things is the time that you’re putting in here. That’s, if I’m going to spend 10 hours a week on this, I’m going to spend 10 hours a week on the right stuff. Not spinning my wheels on one property that I think is good or whatever.

Jack Butala:                            Here’s the thing and we’ve said it a million times to kind of wrap this topic up. You’re searching and looking for a situation, okay? You’re not looking for a piece of real estate, that comes later. You’re looking for a property, here’s my wish list, here’s my dream acquisition. I would love to buy a large acreage property that has great access for about 100 bucks an acre or so. Let’s say a 40 acre property for about 3 or 4,000 bucks. It has great access but then that’s great, that’s the property details.

More than that, what I would love is to have a seller call me back and say, “I’m the owner, I got your offer and I thought about it. I talked to my husband or my wife. We would love to do this deal with you. There’s no back tax properties on it, there’s no issues at all but we just, we talked about it and we’re never going to use this property. We bought it 15 years ago, kept up on the taxes, some stuff changed and let’s just get this out of our life. I don’t want to receive the tax bills anymore.” That is what I’m looking for. I’m not looking for trying to make a deal complicated, which is what back tax properties are. I’ll take a substandard piece of actual real estate but with the situation that I just described versus a perfect piece of property with massive problematic situations trying to get it closed.

Jill DeWit:                               Bingo. I was going to add one little thing for me though.

Jack Butala:                            Yeah.

Jill DeWit:                               It’s not that I’m not going to buy these by the way. When we do our mailers and these calls are coming back, I just do my homework on them. They very well might have back taxes on them and that doesn’t scare me.

Jack Butala:                            Right.

Jill DeWit:                               I just don’t seek those only out. I look it up and I make sure and I confirm with the county, “All right, I was going to offer 800 maybe, now I’m down to 700 or 600 because they have x amount of back taxes.” I let the seller know that and that’s a negotiation, negotiating tool that you could use later on by the way.

Jack Butala:                            Right.

Jill DeWit:                               Say, “Hey, that tax bill that you’re staring at that’s due right now, don’t pay it, I’ll pay it. Let’s just take $100 off and everybody’s happy.” They’ll go, “Heck yeah.”

Jack Butala:                            Well said.

Jill DeWit:                               Thanks.

Jack Butala:                            Join us in another episode where Jack and Jill discuss how to use information, that’s me.

Jill DeWit:                               And inspiration, that’s me.

Jack Butala:                            To get just about anything you want.

Jill DeWit:                               We use it everyday to buy property for half of what it’s worth and sell it immediately.

Jack Butala:                            You are not alone in your real estate ambition. Good show Jill, let me ask this Google thing some funny stuff.

Jill DeWit:                               I was just going to say the same thing. Okay Google, what’s your favorite podcast?

Google:                                     Well, it’s hard to pick a favorite.

Jill DeWit:                               How about ours?

Jack Butala:                            Okay Google, who is Jill DeWit?

Google:                                     Sorry, I’m not sure how to help.

Jack Butala:                            Wait Jill. Okay Google, who is Jeff DeWit?

Google:                                     Sorry, I’m not sure I [crosstalk 00:17:48]

Jill DeWit:                               Okay Google, who is Donald Trump?

Google:                                     According to Wikipedia, Donald John Trump is an American politician, businessman and television personality who is the president-elect of the United States.

Jill DeWit:                               Nice job.

Jack Butala:                            Okay. Google, I’m bored.

Google:                                     I can fix that. We can write a Mad Libs story, I can find you a fun fact or you can spin the wheel. What do you want to try?

Jack Butala:                            Find a fun fact about real estate.

Google:                                     Sorry, I don’t understand.

Jill DeWit:                               Because real estate’s not fun. It is fun.

Jack Butala:                            Okay Google, how do I become a real estate agent?

Google:                                     According to Kaplan Real Estate education, you must be at least 18 or 19 years old, have legal U.S. residency, complete your required pre-license education, pass a state real estate license examination.

Jill DeWit:                               Where did she get that fact?

Jack Butala:                            I don’t know.

Jill DeWit:                               That’s hilarious.

Jack Butala:                            Okay Google, how much money do real estate agents make every year?

Google:                                     My apologies, I don’t understand.

Jill DeWit:                               Okay Google, what’s the average income of a real estate agent?

Google:                                     According to Workchron.com, “Houston Chronicle,” while Simply Hired reported salaries of $33,000 for first year real estate sales agents in 2014, the annual average salary for all real estate sales agents was $51,934 as of May 2012, according to the BLS.

Jack Butala:                            50 grand Jill.

Jill DeWit:                               You know we just had a member the other day put on Facebook that he made $46,000 in three transactions on the same day.

Jack Butala:                            The same day.

Jill DeWit:                               The same guy. That was his profit. Hmm, interesting.

Jack Butala:                            You know it’s so funny, and we’ll lave it on this that I don’t know, some stuff just makes sense and some stuff just doesn’t. This business model just makes sense to me, it always has. Our group is getting, we’ve got the people in the group now that I think they got it before they got to us. They just needed the last few pieces to the puzzle.

Jill DeWit:                               Bingo.

Jack Butala:                            Like David who you were talking about that just closed all those deals.

Jill DeWit:                               Mm-hmm (affirmative) Bingo.

Jack Butala:                            Information and inspiration to buy undervalued property.

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