Here’s a real life example. I went to an auction in Northern Nevada. Almost 200 people showed up. The room was packed and people were ready to scrap with one another over the 150 properties up for auction.
Now, if you have a 200 people bidding on 150 properties, it means only one thing for the price, right? What happens? Exactly… The price goes up. One of the golden rules I stress is to never, ever overpay! You don’t want to buy properties at auction that sell for 80% to 90% of market value or higher.
However, if you can find a tax deed auction that has low competition (which I can teach you how to find) then by all means start buying those properties for pennies on the dollar – like I did when I was starting out.
Some of you may know about tax lien investing. This is a good way to make a passive return of say 12-18%. However, would you rather make 12-18% or 300-5000%? Exactly! Because in a tax lien sale, you have to wait many years because the state has a lien against the property in the amount of the back taxes, and then they sell that lien to an investor.
Now if you do that, you can buy the lien, but then you have to wait for a significant amount of time.
In Arizona for example, you have to wait three years to foreclose on the lien. In some states, it may only be a year or two. But still, we’re talking years, not days.
Let me ask, would you rather make money in three years or a couple weeks? If you’re like me, you probably want to make money today.
So, this is why my letter writing campaign in my “More Deals Than You Can Handle” program (which is part of the Investor’s Toolkit) is so effective. I teach you to avoid competition and to avoid the expensive and time-consuming state foreclosure process.
We avoid competition at tax deed auctions by avoiding the auctions all together!
Next time, we’ll cover offers!