Hey gang, I wanted to do a recap of the webinar I did back in May on evaluating properties before going to auction. In the last year we’ve spent 2.7 million on deals with students who have since made over $4 million profit, so we know lots of tips and tricks to get the most bang for your buck.
Why Learn to Protect Yourself When Evaluating Properties?
The success of our students is always our top priority; I want you to learn from our mistakes, not make them on your own and lose your hard earned money. That said, one of the biggest pieces of advice I can give is to thoroughly vet a property before going to auction.
The tricky thing is that it is not legal to enter the premises so you have to rely on your eyes and instinct. Look, going on tax auction tours can feel like an epic adventure (Game of Thrones-style), so let me give you my top 7 tips on how to prepare for the journey.
#1 Don’t touch ANYTHING
For legal reasons of course, but also in case there are any insects hanging out on the property, like those intense red fire ants that attacked me when I was on a tax auction tour. I stuck my smartphone through a crack in a doorway to get a picture of the inside of the property and I snap a picture and then start feeling sharp pinches on my hand. I ended up with three ant bites on my left hand and they felt like bee stings! Turns out I’m slightly allergic to red ant bites so it was pretty unpleasant. Lesson learned? It’s much better to peer into a property than try to get a closer look, if you ignore this advice you may end up with swollen hands like me!
#2 Cruise Through the Neighborhood
Here are the key things you’ll want to observe:
- The type of people walking around so for example, are there kids around, does it seem deserted, are there parents pushing strollers
- How the above is affected by the time of day, we recommend driving around in the early afternoon and then close to when it gets dark; just be safe
- The types of cars on the street and their condition, are they big SUVs, junky cars, convertibles
- The local spots that may add or detract value (churches, schools, garbage dump site, etc.)
#3 Don’t Make Assumptions
Remember the first three letters of “assumption” since that’s sometimes how you can come off if you make this mistake! A property may look incredible from the outside, but if it’s dirt cheap it’s likely there’s a structural issue or some kind of (very expensive) problem with plumbing, you know what I mean.
#4 Pack Smart and Suit Up
Heavy duty crowbar, drill, multipurpose tool, bug spray, sunscreen, hand sanitizer, small flashlight, tape measure. Bring a big water bottle too, we once had a student on a tax auction trip get really dehydrated (despite the water we offered) and had to go to the hospital. It’s also really important to wear gloves, heavy boots, and bright colored clothing. The last one there is the best way to avoid looking suspicious, a guy in a bright red shirt versus a guy in all black poking around an empty house is a smart call. Oh, one of my BIG tips (that you’ll notice in my videos) is if you are able to go inside a property is to always hold your hand out in front of your face to avoid cobwebs, it’s hard to make that mistake multiple times!
#5 Use Strategic Technology
You’re always going to want to use a GIS system on your phone so you can easily find property lines. I also recommend:
- Route4Me so you can plot out your day of home tours
- WhatsApp is a tool we use with our students on trips so we can all take notes and share information
- Realtor.com for home value estimates
#6 Smile and Wave
This may seem silly, but you will almost always come across people checking you out while you’re inspecting a property. You know who I’m talking about, that lady who scowls at you from their porch or the guy mowing his lawn while eyeing you suspiciously.
#7 Determine Rehab Potential
Finally, you’ll want to take a step back and think through the numbers on what it will take to make the property safe and livable. By looking at your margins early on, and always overestimating, you’ll ultimately save yourself a ton of time, money, and headaches by not buying that property that “needs a LOT of love.” If you do decide to rehab, make sure to wait until the redemption period is over.
Learn More Ways to Protect Yourself While Evaluating Properties
I hope you find these tips valuable and, if you’re in the mood to watch this process in action, check out this video on how I assessed a Tax Deed property in rural San Bernardino County in California. Got any questions about this process? Comment below and I’ll get back to you ASAP!
🎥 WATCH ⤷ https://youtu.be/NEaX875Of6k