TGCI 29: Tax liens and Tax deeds. Buying real-estate at hefty discount!

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Episode 29 – Tax Liens and Tax Deeds - Buying Real Estate at a Hefty Discount!

Show #29 - David Krulac - Episode Art

Summary

In today’s show, Pancham interviews David Krulac, real estate owner, broker, speaker, and author of the book, How I Started with Nothing and Made 12 Million in Real Estate Part-Time.

This show is a particularly interesting one as David reveals the nuances of purchasing a tax sale and a tax lien property. For those who are not aware of this investing approach, David first explains the basics in simple terms.

Right from conducting due diligence to visiting a tax sale auction, we explain the entire investment process in great detail. What are some red flags that you should watch out for while purchasing a tax sale property? What sort of returns can you earn using this investment approach? Are the rules for purchasing tax sale and tax lien properties different in every state? 

For all this and much, much more, tune in to our latest show now!

PanchamHeadshotTGCI
Pancham Gupta
TGCI 29 - David Krulac
David Krulac
Show #29 - quote art

Timestamped Shownotes:

  • 01:38– Pancham explains a little-know strategy to purchase a real estate property at maximum discount
  • 01:44– Pancham welcomes David to the show
  • 03:05– How did David get started in the real estate business?
  • 04:05– Why does David find a tax sales purchase such an attractive proposition?
  • 04:34 – What is a tax sale? David explains in simple terms
  • 05:34– What is the process of a tax sale auction?
  • 05:44– What is a tax lien?
  • 06:27– Tax deed vs Tax Lien – Understanding the difference
  • 08:37– 3 Important FACTS that you should be aware of before buying a tax sale property
  • 09:53– How to conduct due diligence for a tax sale property
  • 10:55– Should you insist on physically seeing the tax sale property before making a purchase?
  • 14:13– David reveals how performing a title search can help you buy a tax sale property at a huge discount
  • 15:39– How can you make money by purchasing a tax lien? What sort of returns can you earn?
  • 19:13– How is the process of purchasing a tax lien different in a bid down state?
  • 20:44– David explains how the process of purchasing a tax lien property is starkly different in a state like Michigan
  • 22:06– How often do tax sales happen?
  • 25:54– David explains how ended up turning $4,500 into $600,000 by investing in a tax sale property
  • 30:15– Some red flags to be aware of before purchasing a tax sale property
  • 32:42– Taking the Leap Round
  • 32:52– When was the first time you invested outside of the Wall Street?
  • 33:20– What fears did you have to overcome when you first invested outside the Wall Street?
  • 34:16– What was one investment that did not go as expected?
  • 35:58– What is one piece of advice that you would give to people who are thinking of investing in the Main Street?
  • 36:53– What inspired David to write his book, How I Started with Nothing and Made 12 Million in Real Estate Part Time?
  • 40:35– Pancham shares his contact information

3 Key Points:

  1. What is a tax sale property? And, why is it such an attractive proposition?
  2. Tax Sale vs. Tax Lien – Understanding the Difference
  3. Some red flags to be aware of before purchasing a tax sale property

Get in Touch:

Read Full Transcript

Welcome to the Gold Collar Investor podcast with your host Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams.

Here’s your host Pancham Gupta.

Pancham: Thank you for joining me today. And I really appreciate you being here with me. I hope you’re enjoying the podcast and also learning at the same time. Nothing will make me happier if you use or implement one of the ideas that you get from the podcast. I also have added a brand new functionality to the website where you can leave me a voice message if you have a question and I will play that in the last bunch of episode. Now let’s get into the show. When I was investing in single family homes, I used to learn and look at many different strategies of buying real estate. There are so many different strategies and ways to structure and finance your deals that it’s extremely hard to become master of all. There was one strategy that really excited me early on, and it still does. However, I was not very successful at implementing that strategy. I was too naive at the time to let go of so many great opportunities that came my way. This strategy is so cool that it makes Black Friday sales look not so great. If there is one strategy where you can truly think of a sale like Black Friday for real estate, it’s this one. And it’s buying properties through tax deeds and at the tax sale auctions. If there’s anyone who comes close in knowing about all different strategies of buying and selling real estate, it’s David Krulac. David started with nothing. Financing hundred percent of his first 11 properties. He has bought and sold 980 properties for his own personal portfolio. Beginning as a part time investor with a busy full time career and out of state travel, David was able to accelerate his real estate holdings by purchasing 39 properties in one year, and selling 35. All the while having a full time non real estate job. He specializes in locating, researching, purchasing, improving and selling niche properties that others may overlook. David, welcome to the show.

David: Thank you for inviting me Pancham.

Pancham: You know, thank you. The honor is mine to have you on my show. It’s great to have you on. So are you ready to fire up my listeners break out of Wall Street investments?

David: Yes, we’re ready to fire it up.

Pancham: Okay, thank you. Thank you. So David, before we begin, do you want to give a quick overview of what’s your background and how you got started in this real estate business.

David: I got started in real estate because a friend of mine had been successful in it. And I decided that I’d like to do the same. And I started investing while I was working a full time job. And I bought my first property when I was only on my full-time job for nine months. So I started early on, and my goal at the time was I’d buy a few properties and get some additional income and then it would supplement my ultimate retirement. It mushroomed. After that, I started buying more and more properties. I started looking at different types of properties, different ways of buying properties. I bought houses in Boston, townhouses, condos, a small apartment buildings vacant lots farms would land, and I’ve used about 20 different acquisition methods. One of the ones that I’ve used a lot is tax sales. Right? I find it very intriguing. You’re not dealing with a seller, and it is very matter of fact. There’s no emotion in the tax sale purchase. 

Pancham: No, that’s great. And that’s what I want to dive into today. Taxes and tax liens and all that. So, you know, for my listeners who have no idea what that tax sale is really, can you break it down and tell us like, what is this and how it comes about, and what is taxes really? 

David: In every state in the United States, they have real estate taxes, and it’s a tax on your property. And it goes to pay for schools, fire protection, police protection, new buildings, new roads, bridges, maintaining the services that the government provides. Typically, this would be the municipal government, the county government, and the schools that are in the area. And every year, they send out tax bills to the property owners. And if the property owners don’t pay that bill, it becomes delinquent. And after a period of time, in most states, it usually takes a couple years before it gets on to the tax sale list. So you can be delinquent for maybe two years, or maybe even more than two years before the property is put up for sale typically by the county government. And they have an auction. Typically, it’s a live auction. Some of the auctions you have to be there in person. Some do accept online bidding, and they sell. In some cases, they sell a tax lien, which is like a mortgage on a property. They’re not selling the property. All they’re selling is the lien that the taxes represent. So if you have a property and your tax bill for a couple years is $10,000, they would sell that $10,000 lien in most of the states the way that it’s sold as its bid up in price. In some states, the lien, the interest rate is bid down. So there’s different methods for buying tax liens in different states, about half the states have tax liens. The other half of the states have tax deeds. When you go to a tax sale, in a deed state, typically you’re bidding up the price and the minimum bid is usually the taxes that are owed. And then the highest bidder gets the deed to the property. So it’s a little bit different than in tax lien states. And there’s assortment of both. For example, New Jersey is a tax lien state, as is Maryland and West Virginia, Arizona, Florida, Illinois, Iowa, Colorado. Those are all tax lien states. For tax deeds, California is a tax deed state. Connecticut, Washington State, Oregon, Nevada, Virginia, New York, Ohio, Georgia, Idaho, New Mexico, Texas, Utah, and Pennsylvania. Those are all tax deed states. So no matter where you live, if you’re interested in tax liens, even if you live in a tax deed state, usually one of the neighboring states or close by states is a tax lien state and vice versa. If you’re interested in tax deeds and live in a tax lien state, there’s another state that’s close by that would accommodate what you’re looking for.

Pancham: Great. So thank you. That’s a lot of information there. And you know, in my words, like if I were to rephrase it, what you just said is you’re saying that the property taxes that we owed to the county if I stopped paying that on my personal home, it will go into this tax sale auction. Whether it’s a tax deed, depending on the state I am in, it would be the tax deed auction or a tax lien auction. And let’s assume that if it’s a tax deed auction, the county will sell my property or put it up for sale just to recoup the property taxes, even though the property may be a million dollar property. Is that right?

David: That’s correct. They put it up for sale. And usually the minimum bid is what the taxes that are owed. Now there’s a lot of different rules and a lot of different states. And that was one of the things I wanted to bring up today. I have three personal rules that I operate when I go to a tax sale. And the first thing that I always do is I want to know what the specific rules are of that sale. Right? Every sale has different rules. There’s some places that I’ve gone, where they don’t accept cash. No, you have to have a check. Some other counties won’t accept a personal check or a business check. The only thing that they’ll accept is that cashier’s check or money order. Some sales, you have to pre-register and they vet the bitters. And usually when they do that, the period for registering is like several weeks before the sale, and then it cuts off. And that gives them time to vet the bidders. So all the bidders has to be vetted before you can go to the sale and did so if you show up at the sale and you haven’t pre-registered and you haven’t been vetted, won’t be allowed to bid. So there’s a lot of different rules for all the different tax sales. They’re usually run at the county level. If you want to find out what the rules are in your county, you should call the county government. The second rule that I have personally, is that I do due diligence on the property that would entail doing a title search on the property. Pretty much looking for liens and judgments and mortgages that are on the property and some of the tax sales, the liens and mortgages transfer with the sale. So if you buy the property for $10,000 that are owed in taxes, and it’s a $100,000 property, but there’s the $80,000 mortgage, you get the mortgage too. 

Pancham: Oh, I see. 

David: Some other sales, the mortgages and judgments or liens are wiped out. But those lien holders have to be notified. So you need to look in the records to see if those people were notified. If they weren’t notified, their mortgage and lien is not wiped out. So there’s a lot of risks there. You need to do your due diligence. You can’t just go to the sale and say, I’d like to buy that property and not do the research on and title search on it. Third rule that I have for all tax sales. As I have to physically see the property. I don’t rely on Google Earth, or any other internet service, to see a picture of the property. Some of those pictures are years old. Right? I’ve gone to tax sale where the property had burned down a couple days before the sale. There were people at the sale who are bidding on the property, who either had not looked at the property recently, or had never looked at the property only looked at Google Earth and saw a nice house there. And that house was no longer there by the time of the tax sale. So you got to be very cautious and buying at tax sales. I call tax sales the most hazardous dangerous and treacherous way to buy real estate.

Pancham: No, you’re so right, David. And you know in the intro, that’s why I said that. I’ve tried learning this strategy or tried, even you know, going to these taxes auctions and tried and all those things that you just mentioned, but every single time I just didn’t have the courage at the same time. 

David: Yeah, you need to set a bid limit when you go to a tax sale and not go over that limit. There are other bidders at the sale, who I’ve seen people pay, like market price. In some cases, even more than market price. They are thinking that they’re getting a bargain when they really weren’t.

Pancham: Exactly, exactly. I still remember it was in Pennsylvania, and I went, the guy pretty much paid full price for the 10% discount from the market value and right and the property wasn’t in a great shape because I physically saw it before the sale. And yeah, I was completely surprised that why someone would pay that price for that property. But yeah, you see everything that you go to auctions, that’s great. So tax deed is where you get the title to the property. So let’s say if the notifications were sent to the all the lien holders and you know, let’s say the bank was the only lien holder with who had the mortgage on the property, and bank decided not to do anything with it because they have the option at that time to pay the taxes or foreclose on the property. Right. So if they didn’t do anything, that means they are letting go of their lien, right? 

David: Yeah, to survive. The rules of the sale are the mortgages are discharged. There’s some tax sales where they don’t send notices to the lien holder. And so you’re buying the property, including the liens, right? So you need to know what kind of sale you’re going to. And in some states, they have both kinds of sales. So they have some sales where the mortgages are wiped out, and then they have other sales where the mortgage is not wiped that you need to know that information before you go. To this day, we always do a title search. So we all already know if there’s a mortgage on the property. And one of the niches within a niche that we like to look at is we go to the sale, where the sale rules say that the mortgage is not going to be wiped out. We do a title search, we find out that there isn’t any mortgage. Right? People go to the sale, and there’s a lot less people bidding at that sale because they don’t do a title search. They don’t know how to do a title search. They don’t want to pay to have a title search done. So they don’t bid at those kinds of sales because they don’t want to end up with the mortgage. Well, in the country as a whole, about a third of the properties have no mortgages on them right now. People paid cash for or they’ve owned them a long time. They’ve paid the mortgage down to zero. The mortgage is non-existent. So there can be properties at tax sale where the mortgages would transfer to the tax buyer. But they don’t have any mortgages on it so it doesn’t apply. 

Pancham: Right. 

David: And that’s the kind of things that we’re we look for. That’s the niche within a niche that we look for is properties that don’t have liens on and don’t have any mortgages on them, but are being sold at a sale where if they had a mortgage, the mortgage will be transferred to the new bidder. 

Pancham: Right, that’s pretty amazing. So that clarifies…that talk about the tax deed. So can you break down the tax lien a little bit more? You said that there is a bid up and down my understanding is that if I go and take on the lien, the idea is that the county is actually trying to recoup that money for themselves just like in tax deed. But instead of giving the title, you know, you’re buying the lien. So what that means is that whoever pays the taxes, they will have to pay you the amount and also the interest on top of that,

David: Right? That’s correct.  So I go and pay the taxes to the county. The county has the taxes now. Whatever they were behind on, and I would get interest on that money whenever that happens. In West Virginia, it’s a tax lien state. They pay 12% interest per year on tax sales on tax lien sales. There’s a redemption period of 18 months. So the owner has 18 months after the tax sale to pay off the lien and they have to pay the interest. So a lot of people go to a lien state like West Virginia, just to get the 12% interest because in today’s market, you know CDs are paying 2%. Right? This is a better place to park your money. You park your money in a tax lien in a state. It’s paying 12%. And you either get your 12% return, or you end up getting the property. Right? You can’t lose. It is amazing again, right? You can choose. It’s not hundred percent risk free. Right? Because there are…What if there were, there was a mortgage on this one, and they all get wiped out at that point or you take over. And that also depends. It depends on what the rules are of the state. In a lot of states, the taxes have higher precedence than a mortgage. So it depends on what state you’re talking about. Right? But I think you need to have a different philosophy at a tax lien if you’re going in there and your purpose is just to get the interest. You don’t really care about getting the deed actually. You want to bid on properties that are in nice condition. No people are living in there. They’re cutting their grass, you know. All that sort of thing. Because those are the kinds people that are going to pay off the lien and you’re going to get paid off. In a tax deed state, we’re looking lots of times for something different. We’re looking for a house that’s vacant, that’s empty, that the grass is waist high, that we have a better chance of keeping the property because the owners deceased or the owners abandoning the property, or some other situation. So, in my view, when you’re going to a tax lien state, if you’re only looking to get the interest, you want to look at better properties that have the best chance of being redeemed, and you getting your interest money. You know, even in West Virginia, they’re paying 12% interest on the lane. If the liens never redeemed, you never get that 12%. Right? 

Pancham: Right. 

David: And if the property is not worth what you bid on it, now you’ve over bid on the property and you wasted your money. So in these tax lien states, let’s say, you know, at auction down state level, you’re going into this auction….It is going to start at certain percentage. Let’s say West Virginia at 12%. So on West Virginia, they don’t bid the interest rate down. Where they do bid the interest rate down is Florida. That’s the tax lien state also, and you go to the auction, and I think they star at 8%. You bid at 8%, and you’re willing to buy the lien and get an 8% return. Then someone down bid you by saying, well, they’ll take 7% and then someone else says, I’ll take 6%. All right? Some cases, people bid down to zero. They’re saying, well, we’ll accept zero interest. Because they think that’s such a good property. They think that if they get the property, it’s going to be such a big reward that they’re willing to accept zero. And of course, the county likes that because there’s not going to be any interest paid. And the people that own the property that are being tax sale, they like it too, because if they redeem the property, there’s no interest premium that they have to pay.

Pancham: Right, right. So the amount that you have to pay as a bidder doesn’t change.  That’s changing in Florida, but in West Virginia, it’s the other way around. Basically, they are auctioning the amount that you’re paying goes up and up and up, but it stays at 12%. Is that right?

David: There is a 12%. Right. And some other states, there’s a two year redemption period and some other states and the first year interest is something different than the second year interest. Like in Michigan, they have liens, and I think the first year is 12%. But then the second year goes to 50% interest. Okay? And the idea there is they want to have people pay off the lien in the first year so they have a big penalty. In the second year, and it’s much higher interest in the second year. 

And like in Maryland, the county gets to determine what the interest rate is. So some of the counties in Maryland only pay like 6% on a lien, whereas some other counties paid 24% interest on a lien. And typically the ones that pay the higher interest rate in Maryland are the more rural counties. The less populated, smaller counties, they pay higher interest rate, but there’s fewer properties on the list because there’s fewer properties and fewer population in the county. 

Pancham: Right. That makes sense. So how often these tax sales happen, you know, I know it’s different for different counties and States, but is it like, you know, every quarter, every year, every, like twice a year?

David: Some of the larger cities, they have a tax sale every month. 

Pancham: Oh, wow. 

David: Okay. In the smaller cities, smaller rural areas, they might only have a tax sale once a year. So it depends on where you’re at. And typically, it depends on how big the list is. Right now I’ve gone to tax sale, the very first tax sale I ever went to, there was only 30 properties on the list. But I’ve also gone to tax sale where there’s 3000 properties on the list. Right? So there’s a big variance in how many properties come up for tax sale. And typically in the more rural counties, the list is much smaller.

Pancham: Got it and you know, if you if you’re going to a tax auction with 3000 on the list, it is physically difficult…Not difficult. I would say next to impossible to go and physically visit all 3000 and do titles. So you really have to hone down on your criteria to filter and filter and filter and really like how many would you say you look at when you go and actually go and do title searches on? Let’s tell us. First 3000…the list usually comes out like 30 days before the sale. Right? And it’s 3000 on the list. During the next 30 days leading up to the sale, the owners of the property have the opportunity to pay the taxes off. Right? And pull their property off the list. There’s also some other ways that properties get pulled off the list. In some counties, they accept payments. So if you owe $10,000, they might break it down into four payments of like $2500 each and you get on a payment plan as long as you make your payments. They pull you off the list. And some other counties, one of the things that would take you off the list is if you declare federal bankruptcy. Okay, so those are the kinds of things that will pull you off the list. So if the list starts at 30 days before the sale. Sometimes the ones that are left on the sale in 30 days, could be 400 or 500. So there’s a big drop off people paying at the last minute. I went to a sale about a year ago, where 700 people paid the last day before the sale. So I looked at the list the day before the sale. And then I went to the sale the next morning, there were 700 properties that weren’t on the list in less than 24 hours. 

Pancham: Wow, that’s pretty remarkable that people wait to the last minute. 

David: Right. I’ve also gone to tax sales, where they’ll hold the tax sale in one room at the courthouse. But the office that collects the taxes is in another room in the courthouse. And people come in during the sale to pay their taxes to get it off the tax sale list. I mean, that’s kind of down to the narrowest of margins. You know, what if you got a flat tire? What if you couldn’t find a parking space? You know, it’s ridiculous to wait to that last moment to do that. But some people do that for whatever reason. 

Pancham: Right. Right. So David, I think this is great. Can you give us a share one example where you would say that you’ve thrown it out of the park with the purchase that you did at the tax sale auction? And it was a great, great deal, or ended up being a great deal.

David: We’ve had several that have been really good. They’re not all like that though. We’ve had some that were pretty bad too. All right. So, one of the best ones that we had was a vacant piece of property. The owner had died in 1910 

Pancham: Wow. 

David: He was not married, and as far as we can tell from the records, he never had any children. So he didn’t have a will. No, there was no real probate in its courthouse. He didn’t have a wife. He didn’t have any children didn’t have any errors. In 1910, when he died. He kind of unofficially gave it to his girlfriend. No, there’s no deed transfer or anything. She just took over and paid the taxes on the property. This is a vague contract. There’s no house on it. The girlfriend died and her son took over and paid taxes for a number of years. He passed away. His two sons took over paying the taxes. This went on for, like 85 years. They were paying the taxes, right? It was not a delinquency. Somebody approached them about buying this parcel of land and doing small residential subdivision on it. So they started doing preliminary work. They did a boundary survey, and they did a title search. The buyer had his attorney did a title search. And the attorney did the title search and called up his client and said, you know, those guys that are selling you that property that they don’t own it. They can’t sell you that property, they don’t own it. And so you shouldn’t buy it. So the buyer went back to the two brothers and he said, my attorney did a title search and he says, you guys don’t own the property and I can’t buy it from you. And they said that is not possible. Been in our family for 85 years. We’ve been paying the taxes on it. So they had their attorney do a title search. And he came back to the brothers and he said, yeah, that’s right. You guys don’t own the property. You can’t sell it. So two attorneys told their clients, there’s nothing you can do about this property. They didn’t have the deed and they had no rightful heir to the property. They didn’t have a will. They didn’t have a deed right and if anything, so they stopped paying the taxes. I went to tax sale and I bought the property for the minimum bid, which was two years ago. It was $4500. I completed the survey. I did a subdivision plan on the property, and the property is worth $600,000. I bought a property for $4500. Then after doing a subdivision plans, it was $600,000.

Pancham: So when the lawyers said, there’s nothing you can do, that statement doesn’t sound right, because they could have done what you did, right?

David: They could have gone to a tax sale and bought at a tax sale. But their attorneys weren’t familiar with that. I guess a lot of people don’t know anything about tax sale. So, you know, knowing about tax sale and how they work, you know, it was an opportunity. And when I went to the tax sale, there were probably 200 people with the tax sale. Nobody else bid on it. There were a lot of professional bidders there. People that are experienced bidders, nobody else bid on and I was the only one to bid on it. I got it as a minimum bid. Only those two attorneys that passed over on the property, or 200 people and their amazing attorneys. 200 people…the property and the owners didn’t want the property and I was able to capitalize on that.

Pancham: Amazing, amazing. Well, that’s great. Thank you for sharing that example. Pretty amazing. I want to move on to the next round. Do you have any questions or anything you want to add before we move on?

David: I do want to say that tax sales are very difficult to do. They’re very hazardous. In today’s age, you know, we’re used to seller’s disclosures, and property Inspections and seller liability. All that sort of thing. You have none of those things at a tax sale. This is like the Wild West. This is like you bought properties 100 years ago. Now there’s no inspections. There’s no disclosures. You know, it’s as is where is, and, you know. There’s that Latin term are on tour, which means buyer beware. Right? That applies to the tax sale.

Pancham: Yeah, cool. Thank you for sharing that, David. We’ll be back after this message. If you are an accredited investor and have been thinking about putting your money to work for you, then I have good news for you. I have created an investor Club, which I call the Gold Collar Investor club, I will be putting together investing opportunities exclusively for the group. These are the opportunities where I have done the due diligence for you and will be investing my own money alongside you. If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat.  thegoldcollarinvestor.com/club. I will reach out to schedule a 30 minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some passive income. And in case you are wondering, what is an accredited investor, accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for last two years. Another way to qualify as an accredited investor is if your total network is more than $1 million, excluding your personal home. It includes your stocks IRAs, cars, etc. Just not the equity in your personal home. If this is you, I would highly encourage you to sign up. So let’s move on to the next section of the show which I call taking the leap round. I ask these four questions to every guest on my show. My first question for you is when was the first time you invested outside of Wall Street? 

David: What year? 

Pancham: Yeah, what here? 

David: The first piece of real estate I bought was in 1975.  Yeah. The first tax sale property I bought was in 1986. 

Pancham: Pretty cool. So what fears did you have to overcome when you first invested outside of Wall Street?

David: I had no experience. I had never bought any real estate before. My parents had only bought one real estate in their lifetime. So they weren’t experienced either in real estate. So I had to kind of go on my own. I had to learn, ask a lot of questions. Learn as I went.

Pancham: Yeah. Okay. So would you say that you were probably too young. You were too young to have any fears at the time, like you just went in. 

David: I still had fear and I didn’t have any money, right? So that’s a big fear right there. And since I had never done it before, there’s always the fear that I’ll do something wrong. I’ll make a mistake and they’ll lose all the money that I’ve put into the property. 

Pancham: Right. Right, right. Yeah, that’s true. Cool. So my third question is can you share with us one investment that did not go as expected?

David: Sure, I bought a house at tax sale that didn’t go exactly as expected. I hadn’t gotten into the property before the sale. So I didn’t know what the condition was inside it was occupied. And when I got the deed to the property, I went back to the property and I knocked on the door. Person answered the door. I said, No, I bought this house at tax sale. No, what are your plans? And the person said that they didn’t believe me that I bought the house at a tax sale and they close the door on me. And that ended our discussion. I had to follow suit to get possession of the property. When we finally got possession of the property there were 47 cats inside the house. It was quite aromatic. That was something that was totally unexpected. I’ve never been in a house that had 47 cats.

Pancham: I can totally imagine. So did you actually, you know, did you end up selling that after you cleaned it up and all that? 

David: We did a rehab. We got rid of… There was some furniture and personal belongings in there. We got rid of that. We got a dumpster. We got rid of all the carpeting. We got rid of everything that was damaged in the property, but we didn’t fix it up. And I sold it to a flipper. And they went in and they redid the property and then sold it. 

Pancham: Okay, cool. So my final question is what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street? 

David: I think you can do it almost everywhere. I think there’s opportunities almost everywhere. It’s easy to do. Buying a house is pretty simple. Everybody knows what a house is what it’s supposed to be, you know, it’s supposed to have a roof. It’s supposed to have heat. It’s supposed to have electric. It is supposed to have plumbing. It’s something that’s, I think, a lot easier to understand than Wall Street. And I say that, no, if you’re buying on Wall Street, no, you don’t have any control over the situation. That you’re not only the tail on the dog, but you’re the flea on the tail, the dog. Whereas if you buy real estate, you are the dog. Right?

Pancham: Right. That’s great piece of advice. Thank you for sharing that. So listeners. I know Dave, you have written a great book on your experience over all these years. You want to talk about it. I have it actually in my hand, which you were gracious enough to sign as part of, you know, me buying it. And it was the first real estate book that I actually wrote a review on Amazon. It’s pretty amazing.

David: And you were very gracious in your review, I might add.

Pancham: It’s a great book and you want to talk about the book a little bit like what you put in there.  

David: The book that I wrote is titled, How I started with nothing and made $12 million in real estate. And it’s the true story of what I did. I did start with nothing, I didn’t make $12 million. And the book is case studies have about 270 properties that I actually bought. And for each one of the properties that I bought, I put down what I paid for, what I sold it for. If I rented it, what the rent was. What was the source of the financing? What was the source of the deal and capital? What I did with the property? Fix it up. What I did to fix it up? Whether I kept it. Whether I sold it. There’s three distinct sections in the book. The first section is houses and apartments. The next section is land subdivision and development. Farms and woodland is some subdivision. We subdivided land as big as 100 acres. Then the last section of the book is scattered lots, but scattered lots all over the place. We bought hundreds of scattered lots. And the story is about what we did with all these lots that we bought. The book is 342 pages long. It’s available on my website, which is dolalr12millionbook.com. And 12 is one two, the numerals. And the book is $39.95 and it’s free shipping, if you buy it on my website. And it took me about a year to write it. Very detailed, very comprehensive. I found that a lot of other books that I’ve read didn’t have enough details that you could copy and what the deal was. I tried to make the deals as explicitly as possible that hopefully somebody can copy the good things that I did and avoid the bad things that I did. So there’s some good deals in the in the book and there’s also some bad deals that are in the book.

Pancham: Now, that’s great. And you know, one thing I really liked about the book was is no fluff. It’s just talks about the deal, actual numbers, and the actual lessons learned from that particular deal. So if someone is really trying to learn this is a great resource. Well, thank you for that. David. How can listeners reach you?

David: They can reach me through Bigger Pockets. I did a Bigger Pockets, podcast number 82. They can reach me on LinkedIn. Either those two places or they can reach me through the book website.

Pancham: Great. Thank you David for your time today and sharing all your knowledge.

David: Thank you for asking me, Pancham. I really enjoyed speaking with you again, and look forward to seeing you in the future.

Pancham: Yeah, sure. Thank you, David. I hope that you guys enjoyed what David had to share. I really appreciate you joining me today. Thanks for listening. If you have questions email me at p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.

Thank you for listening to the Gold Collar Investor podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast or opinions as always. Please consult your own financial team before investing.



Show #29 - David Krulac - Episode Art

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