The Marion County Tax Sale

As I enter the massive room used to hold the annual Marion County real estate tax sale, I notice one thing peculiar, the lack of copious amounts of professional real estate investors. Color me intrigued. Armed with my list of carefully sought-out, assessed and reviewed properties I take a seat near the front. In my sights I finally see one familiar investor face…competition. Now I’m not saying I know everybody in the real estate “game”, but after a decade of investing, brokering, studying and owning property, I know a fair share of professional real estate investors. What I saw was hordes and hordes of beginner want-to-be investors looking for their first BIG score. Each one had their list and were feverously taking notes as I waited for the auction to start.

Here is my big problem, many of the people surrounding me, eagerly ran up bids on properties that I had concluded were, at best, being auctioned far above their value TO ME at their stated minimums. I saw vacant lots in the inner city go for thousands of dollars and I thought to myself, why waste money on a lot that probably will never be reclaimed. Add to this the fact that the bidder must wait, usually, 1 year to redeem these properties. Then what? Sell it on the open market. Who is the Buyer? Not me…you? Are they going to build a NEW house in the OLD city blocks? Even then who is the Buyer?

Please consider this question you should ask yourself every time you buy a property. When, not if, I sell this property who is the Buyer and where are they living now. Let me explain, a cute little bungalow perfect for the “beginning” family, where are they living now. The answer…apartment dwellers. So if you are selling this bungalow you shop the apartment complexes for the Buyer. Similarly, large mansions Buyer’s are currently living in the mid-range house and that’s your target for this mansion sale. So, if this true who wants to buy a NEW house in an OLD area? The answer is …nobody, or very few.

Why then, are these investors buying these properties? The answer is two parts: 1) Cheap. They think that they can buy something of great value for little to nothing at all 2) late-night program hawkers that “teach” beginners the secrets on how to buy tax sale properties for under $300.

After a few hours I have determined that most properties are either not being bid on or they are being bid-up by multiple investors trying to get the same “great deal.”

So I left, of course AFTER I bought my three choice properties from my list…coincidently no other bidders emerged on these properties. Many beginning investors carefully stepped over the diamonds to get to the lumps of coal.