If you've got any questions about those topics discussed in the show, be sure to ask in the comments below the show notes or in this thread so @Ankit Duggal can answer them for you.
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
Thanks Jerry. I am the king of bad jokes so I will take that as a compliment. You are absolutely correct that due diligence is what kills you in the business. With the right systems and spreadsheets, it can go a lot easier and once you have your market narrowed. Thanks for the listen
Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
12y
@Joshua D. Great show. Of course I would listen to this topic. Nice to hear you and Brandon get interested in this type of investing. It's the due diligence where most people drop out of lien investing. The amount of time it takes for each property only to have the big boys bid really low, can drive new investors away. You want to get a payoff for all that work and if a bank or fund bids 4%, then it's easy to feel all the time spent researching is not worth the return.
But with systems and getting good with how to perform the due diligence you can really make nice returns with "no tenants, no toilets, and no termites."
Ankit did a nice job of keeping it simple despite there being so many different rules for each state. There is a lot to learn up front, but once you have it, it can be a nice part of an investment portfolio.
PS. I for one do enjoy the loose interview style and the attempts at jokes. Sometimes a failed bad joke is funnier than a scripted good joke!
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
Thanks Jerry. I am the king of bad jokes so I will take that as a compliment. You are absolutely correct that due diligence is what kills you in the business. With the right systems and spreadsheets, it can go a lot easier and once you have your market narrowed. Thanks for the listen
Investor · Redlands, CA · Member since 2013 · 177 posts · 76 votes
12y
Wow great show! I had begun reading up on note investing last year and opted against it based on the reasons @Jerry K. had mentioned that scare away newbies. I may start looking into it again!
@Joshua D. and @Brandon turner, Keep up the good work. If you guys ever miss a week of recording I may have to quit my job... I have a 2 hour drive once a week and I don't think I could make it without you guys.
Investor · Stamford, CT · Member since 2013 · 75 posts · 30 votes
12y
Another enjoyable podcast, thanks guys. However on tax liens, I want to mention some serious cautions. I'd welcome a counter-argument that this is a good place to invest. I spent a few months trying to invest in tax liens in NJ and Florida.
To net it out, in north and central NJ, on every one of 9 city auctions I visited, I had a handful of hedge funds completely price the liens out of reach of small investors. Not only were interest rates bid down to 0%, but the premium (over-and-above) paid, ranged from $25K to $150K. That is, you're paying a high multiple over the value of the tax lien, to have some small possibility in a few years that the entire property will default. I hear from those attending that this has driven average returns on tax liens to 6-9%, but that's for financial institutions with scale that can hire cheap labor to visit every site (which is a must to ensure the property is in good shape), go to the local assessor's office and look up all the liens, hold onto the lien for several years, administer the ongoing payments and any foreclosure proceedings, and run pretty sophisticated spreadsheets that estimate whether you're going to get 6% or 8% return, based on economic forecasts, etc. If you can't do all this, I don't think you're going to be competitive in Jersey liens. Even if you take all these steps, odds are you will lose most of your bids unless you pay aggressive top dollar and you've sunk the time in.
Florida has an online bidding process in many cases and you can bid on liens that didn't get assigned at initial auction. You'd still want someone to visit the properties. But the only ones available I could see were in large exurb plots where you could buy a lien on an green acre for a few $K, but noone was building anywhere near by.
Another BP member has told me that Georgia now also is swamped with hedge funds from NYC flying someone down to bid. They just hire someone inexpensively, tell them the max # and the person bids like a drone up to this number.
The other states with online auctions seem to have few if any attractive properties in the online inventory. Hedge funds are automating the analysis and capturing the returns across the country.
As intriguing as tax liens seem, I haven't found someone who has invested recently that says the returns are attractive. Most have told me don't bother getting into liens unless you have a big operation and money to play.
So, help!, I'd welcome someone's input that these investments are attractive and in which states.
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
@Jeff Neckonoff it really depends as those are two very investment asset classes and revenue generation models. If you are seeking less headaches and returns a fixed return profile then I would state go for tax liens. However, if you want upside and wish to complete a value generation activity then fix and flip should remain in your investment wheelhouse.
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
@Scott L. Great points and thank you for sharing your experience. You bring up some great points. You are competing against the hedge funds and they do have resources, scale and patience. So how you can possibly compete? Well you can if you narrow you focus areas and include strategic urban markets within your investment markets. I know you have stated that no investor has recently invested in tax liens and been successful doing it for a viable financial return profile.
So let me be the first one to tell you that you can invest in tax liens and make returns even in a competitive state like NJ. My tax lien investment firm, Anbar Group, whose first year invested in over $150,000 of tax liens earning an entity level 18% and our capital partners making 8-10%.Yes it is a ton of leg work but that is all investment asset classes in general.
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
@Ceasar Blackman I am not a big fan of vacant land for tax lien investments but you can do so especially if the vacant land is in a development of some kind.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
12y
@ankitduggal I also enjoyed the podcast. One thing that was glossed over was your transition from rentals to tax liens. What did you do with your rentals once you decided to make the transition? Did you simply had them over to a property manager or sell? I would love to hear more about that transition.
Fix & Flip, Wholetailing, · West Columbia, SC · Member since 2013 · 215 posts · 60 votes
12y
Never had much interest in tax liens. But this was a really good podcast, I found myself stopping it replaying portions of it. Well done show as usual.
Houston, TX · Member since 2013 · 8 posts · 1 vote
12y
Great podcast, once again, filled with great information! Thank you! I just had a quick question for Ankitt Duggal; what certification/professional designation have you noticed investors looking for, especially in the realm of syndication (excluding a graduate degree in real estate)? I am heading into real estate investing, one way or another, and would like to be serious about it. I thought about the CFA but that is really more for portfolio managers (stock and bond investments) and a huge time commitment. The CFP is also a good one for managing individual investments/finance. The CIMA is tailored towards brokers working on the commercial side. So, I'm really having a difficult time figuring out what makes sense. Thanks for any insights!
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
@Serge S. Thanks for listening. So my transition is still in progress from rentals to tax liens. I sold a large pool of my rental portfolio in 2012 and 2013 and I still have a small multifamily rental portfolio that my property management team handles. The firm has purchased more NNN assets as we are a vertically integrated business so we have brokerage, property management and investment management in-house.
I would be glad to share more. Just ask me what else you would like to know.
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
12y
@Runar S. Thanks for the listen. Investors typically like to a see a well rounded investment manager and you do not need any certificate exams or degrees necessarily to do it as can be noted by the many successful syndicators. If you still want to get a degree then I would recommend an MBA with a focus in real estate and/or a CAIA.