Hey guys, what's up? This is Seth.
And in this video, I want to show you the process that I go through
when I'm trying to bid on properties at a tax sale auction
and how I can pretty quickly find the specific type of property that I'm looking for
and qualify it as one that actually want to pursue and put a bid on.
And it's pretty straightforward.
The example I'm going to show you here, this is in the state of Michigan.
I think this is going to vary a little bit,
depending on the state that you're looking at.
First of all, it has to be a tax deed state and not all states are.
I've actually got a blog post I can show you so that you can pretty quickly find
which states throughout the country are tax deed states.
So I'll link to that below.
Be sure to check that out.
But assuming you're working in a tax deed state,
it's all about finding whatever website is managing that auction.
Whether you actually bid online or show up in person,
there's usually a way to download a list of all the properties
that are going up for auction and when the time comes and that's the list we're looking for.
So on this website, I can go and view the upcoming auctions
and I'll just kind of pick one at random here,
let's go here to Jackson County.
So in this case, I can actually download the spreadsheet
of all the properties that are coming up for auction and I can do that right here.
So it might go by a different name or be in a different place,
or maybe you have to like literally request it
by email and then they email it to you,
whatever you have to do to get your hands on that list.
Go ahead and do that.
So I'll go ahead and download this right here and we'll open it up
and take a look at what it looks like.
Okay. So this is the spreadsheet here.
It comes in the form of a CSV file in my case,
and that's probably going to be a common format that you'll find it in.
And there's really some key information here
that's going to be pretty helpful to us.
First of all, there's the lot number right.
Now in Michigan, the lot number is important because
that's how you can literally find each one of these properties
and see the listing with pictures and information on it.
So that's the significance of that number.
But the other columns here that are really important are this one here,
the minimum bid amount.
So this is essentially the absolute lowest amount
that can be bid on each one of these properties in order to play ball at all.
So if you're not willing to pay at least this amount
then don't even bother going after the property.
And usually, this number is determined based on
how much was owed to the county in delinquent taxes when the thing was foreclosed on,
plus any other fees tacked onto that
because really all the county cares about is just getting their tax revenue
and because that's all they care about
that's really the source of a lot of great deals here
because you can find properties that have a lot of equity beyond that.
And if you're only paying that minimum bid amount or even a little bit higher than that,
you can potentially walk away with a lot of free real estate equity,
But that's only assuming there's not so much competition
that the prices get bid up so high,
that all of that equity is eaten up by the higher bid amounts.
And that's kind of a whole other issue that we'll have to discuss in a later video.
And then this next column here is the current tax amount.
So if you actually do win any of these auctions,
that's approximately how much you're going to have to pay in taxes per year,
or at least this is what it has been, up until the most recent year.
So that's why that's relatively important to know.
And right over here in the comments section.
So this was some kind of government contractor
is somebody from the county office actually visited each one of these properties
and made some comments about what they saw.
And I don't know if this is always going to be on every list
of upcoming tax auction properties or not,
but it is in this case and it's super helpful because in my situation,
I'm looking specifically for vacant land properties and nothing else.
So I can usually use this to determine,
is this vacant land or is this like a house or something else that I'm not interested in?
And then also, SEV. So that stands for State Equalized Value
and that's essentially the assessed value.
And the assessed value in the state of Michigan
is 50% of what the county thinks the property is worth.
And obviously especially when it comes to land,
the county doesn't necessarily know what they're talking about,
but still, it's something worth taking into consideration
because usually that number is based
on a combination of the most recent sale price of the property and other comparables in the area.
So there is some merit to it, but it's definitely not the gospel truth.
So don't just assume that's accurate, but it's worth something.
So as I'm looking at this big list of properties
and I'm trying to figure out without spending hours and hours,
which ones I actually want to pursue at this auction
I mean, one option would be to go the slow route and literally look up
every single one of these properties individually to verify what it is and what's on it.
And that would just take a ton of time.
That's not necessarily the wrong way to do it,
but as I'm looking at this, just from the 80/20 standpoint,
realizing that I may miss some opportunities,
but I also don't want to spend all day doing this.
There's a couple of key things that I'm looking for.
And one of them is I'm trying to figure out which of these properties have the most value
in the lowest minimum bid amount,
just to start with just so I know it's at least
worth putting down the minimum bid and possibly more,
and just keeping an eye on this thing
as the auctioneer starts to follow it and see if it's possible to get this thing at a good deal.
So what I'm going to do to figure out what that spread is
the spread of the property's value to the minimum bid amount.
So I'm going to take this thing and I'm going to cut it and insert it right over here.
And then I'm also going to create a new column and I'm just going to label this market value.
And again, this is just based on the county's opinion, so whatever that's worth.
And then I'm also going to insert another cell.
I'm just going to call this Spread.
And this one right here, all I'm going to do is I'm going to take the SCV and multiply it by two,
because in Michigan, that's really how this works.
In other States. there's probably some other formula at work,
but I have seen that calculation used quite a bit throughout the country
where for whatever reason, the assessed value is half of what they think market value is.
So whatever the logic is to that number in your state, just make sure you understand that.
And you're calculating it correctly to get what the supposed market value is.
And then I'm going to take this thing
and drag this formula all the way down.
So it applies to all the cells.
There we go.
And I'm also just going to make this in dollars just so it's easier for me to see that
Then do the same thing over here.
Just so it's very clear I'm looking at dollar signs here.
And then right here in spread,
what I'm going to do is figure out what the Delta is
between the market value and the minimum bid amount.
So I'll just do the equal sign and take that cell and subtract the minimum bid amount.
And that's telling me that if I put down this minimum bid amount,
and if by some miracle I were to win
at that minimum bid amount that is on paper in the assessor's opinion,
how much free real estate equity I would be walking away with.
So again, I'm going to take this and drag it all the way down
to the bottom and there we go.
And now what this is telling me, just looking right here in column E
is the higher the number, the more potential value there is for me to pursue.
And I can actually sort this like this.
I'm just going to highlight this column,
go over here to Data and sort it like this from Z to A and I will expand the selection and sort it.
Now what it's doing here is it is sorting these results in the order of priority,
starting with the ones that are worth the most.
So when I scroll all the way down to the bottom here,
say if I just don't even want to bother with ones that have less than, I want to know,
$5,000 of potential equity on the line.
I mean, I can just delete these right now
and not even mess with them.
And you'll see that some of them even have negative equity,
even at the minimum bid amount and part of what makes this whole method
I'm showing you a little bit imperfect is that when you see stuff like this,
there's usually a story behind it.
Maybe there's some exception where the assessor didn't calculate it right.
Or maybe it's like a really odd parcel that's like 10 feet by 10 feet.
And like, you can't do anything with it.
So there's definitely going to be times when you'll just miss things,
if you do it this way, but again, 80/20, this is going to catch the most obvious opportunities
so I can very quickly ignore the ones that are probably not worth my time.
And in this particular list, it actually doesn't look that complete
because some of these comments cells
literally have no comments.
Like they don't tell me anything about the property.
A lot of these other lists have seen it from the site
there were always comments here.
So on this particular one, if I see no comments,
really the only way to verify for sure
whether it's a vacant lot or not is to look it up
either on the county website or on a website, like a DataTree
or for that matter, I could look it up right here on this website.
And I could do that by taking this lot number just on this one, for example,
plug it right in here and do a search.
And I can see this right here, click on that
click on more info and see if there's any description here.
And I'm seeing a picture here. This doesn't really show me much.
I don't know if that is on the property or not all it looks like it's,
it's a garage in Grass Lake.
So this doesn't tell me a whole lot about what size the property is or anything like that.
So in this case, I'm going to go ahead and open up DataTree
and you don't have to use DataTree for this.
Depending on the county sometimes there are other free ways you can find this information,
but DataTree is just a very easy one-stop-shop to get this.
You don't have to like learn a new system or anything like that.
So by the way, we do have an affiliate link to DataTree.
If you ever want to use this service and you can actually get it
at a discount through our affiliate link
and that's retipster.com/datatree.
So we're going to search by APN
and as you can see, I just pulled the APN right here.
We're going to go ahead and put the state in here with Jackson County in there and just search.
And we can see the result pops up right here, and this is showing us,
Okay. So that is the parcel. We can see the parcel map right there.
Let's pull a property detail report.
And every time we pull a property detailed report, that costs a little bit of money.
So it's not free, but as you can see right here,
it gives us all the information in one place.
And it's showing us the acreage is 0.63 acres it shows us the assessed value.
I'm not exactly sure why it's saying the market value is that high
with just an old garage on an otherwise vacant parcel of land.
That valuation is probably a carryover from what it used to be.
Say If there used to be a house on here, then that would make sense.
And this is actually a perfect example of one of the inaccuracies
I think that can come up when you're following the county's assessed value.
Like that's just not right, in this market I know that's inaccurate.
I think usually like 95% of the time, you won't find these kinds of errors,
but this is an example that we're finding right off the bat.
So anyway, I'm not going to go after this one
because I just don't think it's worth that.
And I'm not going to pay attention to that kind of thing right now.
So when we see these other comments, waterfront condo lot on Oak Point.
So that's a pretty good spread.
So we can look this one up and see what this appears to be and see what the acreage is.
Now it looks like this particular one is actually in a flood zone.
That's actually another nice thing about DataTree is that they have these layers
you can put over the map and you can turn on flood to see if a flood zone affects the property.
And you can see it does in this case because it's shaded blue.
You can see the little flood boundary line right there.
And if we zoom out a little bit, it looks like this is, kind of right by a lake.
And that's probably why that flood zone is there.
And it looks like other people have built condos here and this one is vacant.
It could be a reason why that's vacant.
I mean, maybe it's not billable for some reason.
So that might be one concern or one thing to look at.
But if that's not the case, if it is truly buildable and this particular property is almost an acre.
So that's a really nice size for this kind of property,
with that kind of market value, I don't know, it could be worth that, it's very possible.
I think it all goes back to whether or not the thing is buildable.
And for a lot like this, that's in a condo association
a lot of times there is some minor hassles with these kinds of lots
because you're going to have to pay HOA fees and there's going to be very strict restrictions
based on what you can do with the property.
Like you better believe you can't go
and park an RV on this thing.
Like you can only use it for one thing and that is building a condo.
But if you find the right buyer who actually wants to do that, which is very possible in this market,
because it's a really hot building market right now, that might not be too hard.
And the minimum bid amount on this one is $11,250.
I think on this one, it's probably worth that, honestly.
I don't know that I'd want to stick my neck out for an HOA property in particular,
but I don't think that's necessarily a bad deal.
And so another thing I might add here just for my own knowledge,
if I do want to pursue any of these is a maximum bid amount,
just so I know ahead of time before this auction starts, "What is my ceiling?"
Like, I'm not going to go any higher than this number, no matter what.
And in this case, just given what this property is,
I might just make that minimum bid my maximum bid and not go any higher than that.
And in terms of the due diligence, if I actually wanted to spend a little bit more time
to be like a hundred percent sure about the properties I'm bidding on
other things I might look at is, "Is the property in a flood zone?"
"Does it appear to have wetlands by it?"
"Are there any big buildability issues?"
Just kind of going through the usual checklist that you would go through whenever you're buying land
to do your due diligence,
If there are any glaring issues that jump out to you
obviously, take note of those as you're reviewing these things in DataTree,
to make sure you're not going to get a property that
you can't actually do what you want to with, or that you can't resell
because there's some huge restriction in place on it.
Like I know for me, for example, whenever I'm looking at these properties
and I actually pull them up in DataTree, some things that I pay attention to are
what the acreage is,
what the property taxes are per year
If that number seems really high, that might give me pause.
I can also see the previous sale price in a lot of cases.
This isn't always there and in some states you won't be able to see this,
but if I can, that helps just to know,
Hey, somebody else literally paid this amount for the property.
So maybe that's a more relevant number to go by.
Then this one over here, which is theoretical,
and this number is actual for the actual subject property.
That's helpful to know too.
And obviously, I'm looking at this map to see any obvious issues.
Like the fact that this one is right next to a swamp and in a flood zone and in a condo association.
All those things are kind of red flags to me, it doesn't mean I'm not going to do it,
but I would probably want to investigate those things ahead of time
and make sure they're not going to be a problem.
As we continue to go down this list, we can see,
okay, so this one's a one-story brick and vinyl house.
I'm not interested because it's not vacant land.
This one is a vacant parcel of land.
So we would probably look further at this.
And really you just go down the list and see anything
that is very clearly a vacant property, or if it says anything to the effect of
this has some kind of improvements on it,
then you'll know right off the bat.
No, I don't want that because I'm looking for vacant land.
At least that's what I would say in my case.
If you are looking for houses or apartments or duplexes, then obviously look for those.
And if you see vacant land, get those off your list.
And also another little trick with vacant land
is to go to this column here and sort it by the address.
And we'll just do it like this.
And what it's going to do here is sort alphabetically or numerically all the addresses.
And the reason this is helpful is because a lot of time is vacant lots
in particular do not have a numbered street address yet.
So if we look down here, these ones that don't have a number on it,
I can pretty much guarantee it these are all vacant lots.
So if we wanted to, we could just concentrate our efforts right there.
And then based on these, we can go over here and look for the highest spread amount,
which again, in this case, is now column F
because I just moved it over when I added that column.
And just look for the ones that we know are probably vacant and have a really high spread
and just focus your time looking on those.
And when I see ones like 600 or 800,
I can just know I'm not interested.
I'm not going to waste my time with that because the spreads not big enough.
So in this case, we would look at these ones,
probably this one and this one and that one
and this one and that one and that one and that one and that one
and probably ignore the others
because the spread just isn't there.
And again, I can pretty much guarantee you,
there are still going to be some vacant lots for there up here
in these parcels that do have an address.
So that's definitely not a fail-proof way to do it, but for those ones if you want to keep looking,
you can just revert back to these comments here.
Like I can see right here, vacant land on Lansing Avenue.
So this one would definitely be worth looking at as well.
So anyway, just wanted to share that that's kinda like a little time-saving trick I've been using
to try to filter down to only the ones that are vacant land
and have enough potential equity or meat on the bone
to justify me even looking at.
And the caveat, even beyond that is that,
especially when you're going through these steps that I'm showing you
and trying to target the ones that have the most profit-making potential,
I can guarantee you you're going to have some competition
and you probably will not get it at this minimum bid amount.
However, in the state of Michigan, anyway,
you can go ahead and put in your bids ahead of time
before the auction starts.
So it kind of bookmarks that property for you so you can keep track of it.
And if you do want to keep maximizing your bid beyond that,
as other people start outbidding you,
you can do that as well.
And it obviously helps if you've already figured out ahead of time,
what your maximum bid amount is,
so that you don't get carried away in the heat of the moment
and start bidding a lot more than you should in the first place.
So, anyway, hopefully, that's helpful to see that
there is a very slow, long, tedious, and painful way to do this.
And there's also a much faster way to do it.
That is not perfect, but it will save you a ton of time,
especially if you're trying to attend multiple auctions day after day throughout the state,
and you don't have time to pick apart every single property,
this kind of approach can save you a lot of time.
However, say if I was somebody who was like
only looking for properties in Kent County and nothing else,
like I know this is the only thing I'm interested in
in that case, then I probably would be doing a much deeper dive
and spending more time on each of the ones that I'm planning to bid on,
which would also potentially give me the comfort
to increase my bid a lot higher than I otherwise would,
because I actually know with a lot more certainty of what I'm dealing with.
So anyway, hopefully, some of those insights were helpful.
And if you want to stick around for the next video,
I'll show you a lot more information about
like the actual results that I experienced when I started bidding for properties,
following this exact same process
and what the results were and what I did or didn't end up winning.
I think you will find it pretty interesting.
So if you want to see that, be sure to click on the video here
and I'll show you what the outcome was.
And I'll see you there.