A lot of people will tell you it can’t be done in this real estate market, but I’m here to tell you that it CAN and SHOULD be done! Most investors focus on finding deals where they simply don’t exist anymore AND when when investors do find deals they focus on them at the wrong stage. That means you need to be finding deals that nobody else on the planet can get, BEFORE the actual public can get them. This post is going to show you how to find one of the hottest motivated sellers that need to sell their home and I’m going to show you how to find these deals at the early stages before your competition even knows they exist. This is a very untapped lead source that you should be implementing at like 2PM yesterday!

I’m talking about TAX DELINQUENT HOMES! We’re gonna talk about how to get leads for those homes, but WITH A MAJOR TWIST!

Here are 5 things you need to know to find VERY motivated sellers that are behind on their property taxes.

Let’s do it!!

1. What ‘tax delinquent’ REALLY means.

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When a property is tax delinquent, that means the owners are behind on property taxes owed to the city or town where the property is located. After a while, the delinquent taxes become a financial burden. When it gets to that point, a lot of people are racking their brains, thinking of ways to not have to let their property go to auction. When it’s sold at auction, the owner most likely won’t get anything out of the deal.

That’s when YOU STEP IN!

2. Why these leads are THE BEST and 100% hidden to the public

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Most of the time when people are in this situation, they are going to be motivated to sell the property and their mortgage free. When you get to the seller BEFORE the property goes to auction, you create a “’WIN” for your seller. Again when you get to the seller BEFORE the property goes to the tax auction is when you want to reach out to these sellers in distress. The goal is to create a “win” for the seller, a “win” for yourself, and a “win” for your end buyer! When you reach out to your potential seller before the property gets to auction, you pave the way for them to get out of the property with a nice profit. You also allow the person who will buy it from you to get a good deal. What’s left for you is a HEFTY PROFIT!

3. HOW to get these leads

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Your local counties ALWAYS know who has not paid their property taxes and I want you to NEVER forget that. These lists are always available, however, the county auditor is going to play like these lists don’t exist. We all know they have a list of people that haven’t paid their taxes. Trust me, they have the system down! This list may not always be readily available, but with a little work, you will be able to get your hands on one. To get a list, make sure you ALWAYS go through the auditor’s website (for the county or counties in your sweet spot). This is your source for property records. Because this information is public record, it will be available, but you may have to do a little research.

You may have to jump through some hoops to get these lists, but believe me, it is SO WORTH IT! When you do get the leads, they may be in spreadsheet format, or they may not be. Either way, make sure they get into that format so you can systematize your process. This will make your life SO MUCH EASIER! Bottom line, you can get these lists and again, you do so from the county auditor. Remember, you don’t want the list of homes going to tax sale. You want the list of people that are delinquent on their taxes! HUGE difference!

4. How to use the MAGIC Excel formula to find the killer deals

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This list is going to be A LOT BIGGER than you expected. The number of homes on the tax delinquent list can be shocking…but that’s good for you! Instead of spending countless hours sorting through these leads yourself, looking for the ones who may not be as motivated, you need to find the ones who are motivated and READY TO SELL ASAP!

The most motivated ones are those who cannot borrow any more money to pay delinquent taxes. If they can borrow money, taxes will not be at the top of their list of things to pay for with that money. Knowing this AND the magic formula will help you find the most motivated sellers.

In your excel spreadsheet, you’ll need columns for the following “Magic” Excel sort:

  • Parcel ID
  • County
  • Owner Name
  • Subject address (the property with delinquent taxes)
  • Subject city, state, and ZIP (of the property with delinquent taxes)
  • Tax-appraised value (Zestimate from Zillow works if you can’t find the tax appraised value on the county’s website)
  • Delinquent tax amount
  • John’s formula Delinquent tax amount ÷ tax appraised value
  • Last sale date
  • Last sale price
  • Tax address (this is where the owner is located)
  • Tax city, state, and ZIP (where the owner is located)

When you’re looking at all of these leads, the most motivated ones will have a delinquent tax percentage of 4-15% (of the property’s estimated value). You will find this percentage in the Excel spreadsheet in the column you create called “John’s Formula.” If the delinquent amount is 3% or less, the owners probably aren’t that motivated to sell because the taxes are likely no more than one year delinquent. Any more than 15%, you would likely not walk out of that deal with any profit once the large amount of taxes are paid post-sale. The bread and butter will be the homes that are delinquent 4-15% because it’s likely the sellers are tapped out and can’t borrow this amount from friends or family.

5. Use direct mail to YOUR advantage

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You got the list. You got it in the right format. The un-motivated sellers are filtered out. Now it’s time to run with this thing. It’s time to SEND DIRECT MAIL to these people. I have never seen a higher response rate than what I’m going to share with you. It will cost the least, while bringing in the most calls from motivated sellers.

I’ve tested the crap out of this message and we finally found a winner that converts like crazy!

The direct mail message:

  • “I drove by the house at [insert address]
  • I want to buy it.
  • Call me.
  • Your name
  • Your number”

So what does this letter look like when it’s sent to the potential seller? After extensive tests, here are the elements that bring in the most calls:

  • Written on a notecard (cardstock)
  • Handwritten (pulls better than typed)
  • Light blue color (bright hue)
  • Cursive handwriting (big font)
  • Message shown above
  • Put into an envelope to fit
  • Sent first class mail

Tip: if you use a direct mail service, having it sent by them doesn’t make a difference in the amount of calls you get. I use Think Ink Marketing and Graphic Connections Group.
This could cost around $1 per piece sent, but you could get a HUGE return! If you want to hand write these yourself and skip the printer. they will convert even higher. Just make sure you use your personal time wisely.

Now, there’s no way to squeeze ALL OF THE INFO into one blog post. But don’t worry! You can take the entire course and get the rest of the info by signing up for an REU members account.

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Go sign up for your FREE REU members account here.

You will LOVE this hidden lead source when you get to these sellers at the right stage. They have to sell because if they don’t, the property will go to tax sale and the sellers get ZERO. The sellers know they have to sell and it’s a perfect chance to put money in the seller’s pocket, creating that win/win situation before the property goes to tax sale, when they would get nothing.

I break this tax delinquent system down in our members area. I highly recommend that you sign up for a free REU account and get inside for some VERY hidden systems like this to find deals that nobody else on the planet can find…except REU members.

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You’ll never get the results if you don’t take the action. Do yourself a favor and go implement this right away!

See you soon!
Johnny C

Real Estate U