YOUR VERY OWN LAND BANK

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1 YOUR VERY OWN LAND BANK I am excited to reveal to you another very lucrative aspect of the tax sale industry. The power and importance of diversification is just as important in the tax sale industry as it would be in any other type of investment. A good stockbroker would never advise you to put all your money in just one stock. Nor should you limit your profitability to just one aspect of the tax sale industry. With over 15 years of first-hand experience in tax sales, I have learned about and profited from several unique niches that are virtually unknown to even experienced tax sale participants. When you marry the power of leverage with the strength of real estate and the added advantage of tax delinquencies, there are very lucrative opportunities that present themselves if you know where to look and how to take advantage of them. I m about to reveal to you the details of one of these unique cash generating opportunities. I call this niche Land Bank. I call it that because you will be able to accumulate a lot of real estate for just pennies on the dollar. It s like owning your own bank with the vault filled with real estate you can liquidate and make an enormous profit! START FROM YOUR HOME WITH VERY LITTLE CASH One of the primary benefits of using the Land Bank system is that you never have to attend a tax sale. You can handle all the necessary transactions right from the comfort of your own home. In addition, the capital you will need to start is very small. To give you an idea just how little capital you will need, it s very common to pick up a $10,000 piece of property for as little as $200. That s right, only 2% of the property value. The amount of real estate you acquire will be determined on how much capital you wish to put at play. There s nothing wrong with starting small and building with your profits. If you have only $500 to start the process, that s OK. Once you ve acquired a couple of properties and

2 sold them, the profit you ll make will allow you to leverage several thousand dollars and create a substantial portfolio of property across the country. Well, I hope I ve got your attention, so let me give you the details. HOW I STARTED LAND BANK As I ve mentioned before, there s a lot of money to be made through tax sales not all of it requires actually attending a tax sale. Let me start by relating an experience I had with one of my clients. This individual had attended one of my workshops and had subsequently purchased several tax sale lists. In fact, over a period of three years, he had purchased close to $20,000 in lists. Now, this was before my monthly list subscription program which would have saved him most of what he spent, nevertheless, it was fairly common for clients to purchase that amount and more. What was different about this particular client was the type of lists he was purchasing. ONE OF MY STUDENTS THOUGHT OUTSIDE THE BOX Initially, I was very puzzled. During this three year period, he purchased all the data enhanced lists for the state of Arizona. Now, that s not necessarily uncommon we have a lot people who do that. The thing that was somewhat uncommon was that he would purchase the lists after the sale. Most people obviously purchase the lists to research the property that will be offered at the sale so they can bid with confidence. That s not why this individual was purchasing the lists. If you look at the price of the Arizona data enhanced lists, you can see he was spending over $6,000 to get all the lists. I couldn t believe he would spend that kind of money to get lists after the sales were completed. The first year, I was really puzzled and couldn t figure out what he was doing. The second year, he repeated the same thing and I was so intrigued that I started to do some research to try and figure out what he was up to. After doing some research, I found his website. (

3 His site was selling a bunch of Arizona real estate that had been listed on a previous tax sale. A little latter that year, his associate attended one of my workshops and I had the opportunity to pick her brain for as much information as I could get about exactly what they were doing. What I learned, I thought was ingenious. Arizona has a three-year redemption period, which means that a delinquent taxpayer has up to three years to bring his taxes current to avoid losing his property. Most of these property owners will redeem their property and pay their delinquent taxes along with all accrued interest and penalties. There are, though, those who no longer have an interest in keeping their property and subsequently have not paid the annual taxes. A SIMPLE BUSINESS PLAN His business plan was really quite simple. He would do a mailing to everybody on the list stating in essence; Your property was on the recent tax sale. If you have no intent of redeeming the property, I might have an interest in buying it. He sent that letter out to about 40,000 people in Arizona each year. Now since he has the data enhanced lists of all the property for all the tax sales in Arizona, he can be selective as to the type of property he is interested in. He would predominately target undeveloped land. Out of all the mailers he sends out, he gets a 6% to 8% response rate. In Arizona alone, that means he s getting probably between two and three thousand responses. When you think about it, these are people, who if they are going to let the property go for the taxes, know they are not going to get anything for the property. As a result, anything he would offer them puts them ahead of where they would be otherwise. When the property owner gets back with him, he spends a little more time doing research on the parcel and analyzing the potential of the property. He then gets back with the owner and makes them an offer. In most cases, his offer is just a few hundred dollars. Over a period of a year, he would buy two to three hundred properties for a grand total of about 20 to 30 thousand dollars. He would use a simple quitclaim deed to purchase the property and in most cases would wait to pay the property taxes until he sold the property. The taxes would need to be paid before the redemption period had expired. Otherwise, the property would be lost to the tax lien holder. SELLING THE LAND FOR 50 TIMES WHAT WAS PAID Typically, he would sell the land for five to ten thousand dollars. The way he sells the property is with a small down payment and then would carry the contract at 9.9% interest over 36 months. There is no credit check or qualification required. He gets his money back typically with the down payment and first monthly payment. Everything

4 after that is pure profit. He will also offer a 15% discount for a full cash payment who wouldn t?! The odds are that about half of the purchasers of the property will default before the 36 months. If this is the case, he retains ownership on the property and sells it again. When he sells the property, he makes absolutely no claims that are not 100% factual. He tells you where it is and describes the area. He gives you a parcel number and also gives you the adjacent parcel numbers and tells you, you can purchase them for nothing down, if you are interested. He lists the size of the lot and indicates where the roads are. He also provides information on the availability of power and water. He also provides an ariel photo of the area (which he gets through Terra Server). You could also use Google Earth by simply plugging in the longitude and latitude coordinates. Keep in mind; he did all this without attending the tax sale. He had to pay someone to go out and take pictures of the property, which would have cost him $200, maximum. And as a result, he s acquired real estate he s now marketing on the web. Most of his sales are offshore.

5 In addition, he offers three guarantees. First, a lowest price guarantee. If you can find an identical piece of property for a lower price, he will beat it by 10% ADDITIONAL SALES INCENTIVES Second, an exchange guarantee. I you visit the property within one year of the purchase and you decide for any reason you d rather have a different piece of land, simply choose another parcel of land from his inventory and he ll credit every penny of your down payment and monthly payments towards the new parcel. There is no down side to such a guarantee. Third, a free and clear guarantee. When the property is paid off, he guarantees he will convey a free and clear warranty deed to the property. In addition, he also offers a couple of bonuses. The first bonus is a framed certified acknowledged ownership certificate. You get a skip payment voucher so you can skip a payment. You also get another bonus of half off the down payment. In other words, aggressive incentives to market the property.

6 Now can you really sell real estate on the web? Let s look at some other examples of successful sites where they do sell property online. WEBSITES THAT SELL REAL ESTATE Bid4Assets sells a wide variety of property on the web.

7 They often use the same procedure, a bid and assume procedure. What that means is that you are bidding on the down payment for the property and assuming the monthly payments. Bid4Assets has been very successful in marketing properties from their website. The beauty of using the Internet to market real estate is that you re reaching a worldwide market. Bid4Assets and Ebay both have capitalized on this international marketing component.

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9 ANOTHER EXAMPLE OF QUICK PROFITS I have a close associate, John Beck, who has been around the tax sale industry a long time. He s attended one of my workshops and he knows what he s doing. Here is a typical situation to illustrate how this works. John lives in Alameda County, CA and he was checking the tax sales and noticed that there was a property that appeared to be located in Sonoma County on the Russian River. The Russian River is a very pretty area, so he got in his car and drove up to the area and discovered why the property was on the tax sale. The only road that gave access to the property had fallen into the Russian River the previous year during some heavy flooding. As a result, there was no access to the property. He also knew it had to have been delinquent for five years or it wouldn t be on the tax sale. He went back home and did some research and found the owner and called the owner. As he talked with the owner, he said Your property is on the tax sale and I assume you re not going to redeem it since it s been delinquent for five years. The owner said, That s correct. John asked if he could come out and talk to him that he might have an interest in the property. John goes and talks to the owner, taking a quitclaim deed, and indicates he can t pay much for the property but whatever he offers will be more that what the owner will get if it goes to the tax sale. I ll tell you what, I ll give you five of hundred dollars for a quitclaim deed on the property. The owner thought about it for a couple of minutes and said, OK, I guess it s more than I ll get otherwise. John gets back in his car, drives out to the property and accesses the home through a neighboring property and takes several photos looking across, up and down the Russian River to where there are some beautiful homes and cabins in a very scenic area. $42,000 PROFIT IN 10 DAYS After returning home, he puts the property up on Bid4Assets starting at a minimum bid of $2,500. He describes the property and the area and put the photos up he just took. After one week, the property sells after being bid up to $42,500. Someone in Germany bought the property, site unseen. As soon as the property sold, John went down and paid the taxes so it wouldn t be on the tax sale. He then records his quitclaim deed. As soon as he receives the proceeds from the sell, he executes a deed to the buyer of the property. In a little over a week, he s made over $40,000 profit. THE POWER OF THE INTERNET The key to making all this possible is the power of the Internet. It has had a dramatic effect on almost every aspect of our lives, including the selling of real estate. You see,

10 you can have a piece of real estate that nobody wants in California take a few nice photos of it and put it on the Internet and expose it to a worldwide market. As a result, the chances of finding someone who s willing to buy the property increase significantly. I have a client, National Recreational Properties, who s been around some 15 years and does a lot of TV advertising. The principals of the company attended a workshop I did in Arizona. After the workshop, they asked if I would come out to Irvine, California and do some consulting work for them. I typically don t do that but they kept after me and I finally consented and expected to go out there and find a couple of guys in a little office in Irvine trying to figure out a way to make some money. Instead, I pulled up in front of an office building they owned with 325 employees. I didn t know what these people got paid but if they were paid only $20,000 a year, that s a six million dollar payroll. They were obviously doing very well. Basically what they do is buy raw land and market it. The reason they wanted me to come and talk to them is they had been the biggest buyers in the tax deed sales on the west coast and they couldn t get any property at a decent value any more so they had to find another source and so they wanted to look at tax lien sales to see what was there. The point I m making is we now live in a global economy. There are a significant number of people that don t understand it. There are people who own real estate and they re going to let that real estate go for the tax value. And yet, the fact of the matter is that almost everyone throughout the world would love to own real estate in the United States. MOTIVATED INTERNATIONAL BUYERS It s really not that different from the Florida land boom in the 20's the difference is, in Florida in the 20's, they would send a train in. This would take place primarily in the winter time to give these people a free trip down to Florida and show them all these lovely properties with warm sun and they sold these lots like mad. What s happening now is similar, but on a global scale through the use of the Internet. You can literally go into Google ( and set up an advertising account and select the language you want it to appear in. You enter all your ad copy in English and Google will automatically translate it into the language of your choice. It will then be marketed only to the people in that chosen country. As a result, you can target your ad campaign to a specific language and country. From an advertising standpoint, one of the reasons Google is doing so well is this feature that provides a phenomenal change in global advertising.

11 GOOGLE ADWORDS

12 I can now sit in Colorado and develop an ad for the Chinese market or create an ad for India. India has the largest middle class in the world. I have an attorney friend who happens to be from India. He told me that one of the big things nowadays in India is to be able to brag about the real estate you own in the United States. There are many people from India who own raw land in the US, all across the country and it s somewhat of a status symbol. This particular attorney feels confidant we could sell over 1,000 properties a year in India alone. China is rapidly becoming a more wealthy country. Eastern Europe is quickly recovering from Soviet domination over the past 50 years. These people are looking for ways to invest their money and one of the more attractive means is to purchase real estate in the United States. MOST SELLERS ARE UNAWARE On the supply side, the vast majority of Americans have not caught onto this fact. As a result, they have real estate they don t want any more. They bought it thinking it would develop quickly, but it didn t so they don t want to pay the property taxes and they haven t made any real effort to sell it. They can t find anybody in the area that wants it because they are already aware that it s not being developed as planned. What they re missing is that offshore, there is a huge market of investors who have a different perspective on investing. Their goals are much more long-term. It s OK if they hold the property for 20 years. A lot of these buyers may be holding the property for their grandchildren. They re not looking for a quick buck by rapidly turning the property. Many of the properties you have easy access to are raw ground a few miles from a city or town. In 20 or 30 years, it s very likely that the city will have grown and the property will be much more valuable. You can sell property on Ebay. Ebay has a specific section designed just for bid and assume properties ( Many of the properties listed on Ebay are from tax sales.

13 EBAY REAL ESTATE

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15 If you choose to embrace this lucrative side market to the tax sale industry, you have several specific options with regards to acquiring and marketing property. PROPERTY ACQUISITION Your first and obvious decision must deal with property acquisition. There are possibilities in almost every state in the country. You see, it doesn t make any difference if the property is in a deed or lien state. The bottom line is the same if the property owner does not pay the property taxes, eventually the property will be sold at a tax sale and the owner may get nothing. You will want to use the lists available through TaxSaleLists.com to determine the areas best suited for you individual investment strategies. DATA ENHANCED LISTS Once you have determined where you would like to purchase properties, you will need to acquire a Data Enhanced list form TaxSaleLists.com to get all the detailed data regarding the properties available in the area you selected. You will want to sort the list to easily identify the specific parcels that you would want to purchase. YOUR OFFER TO PURCHASE LETTER After you have sorted your list, you will then need to create an offer to purchase letter to mail to all the property owners on your list. Once again, you will need to access your Data Enhanced list to get all the names and mailing addresses of the property owners. You can then use the merge feature in Word to bring in the name and address into each individual letter. I ve included a sample letter for you to use as a guide to creating your own. You re welcome to use mine verbatim, but you may find another approach that will work better for you. REPLYING TO YOUR MAILING RESPONDENTS You should expect at least a 2% response rate to your offer to purchase letter. If it s a good letter and you ve mailed it to an area where there is a lot of unwanted property, you could experience a return rate of 8% or higher. You will now need to contact each respondent to determine their real interest level in unloading their property. You must always keep in mind and remind the respondent, if they don t sell you their property, they will most likely lose it all and get nothing in return. Therefore, even just a couple hundred dollars would be a windfall to them. There will be those who will expect something close to market value for their property. Simply wish them luck and let them know if they ever change their mind, you would be

16 willing to give them a few hundred dollars. Don t get caught up with trying to close every deal. Just cherry pick the best those who are highly motivated sellers that will consider your offer. DETERMINE YOUR MARKETING PLAN As I mentioned earlier, there are several ways to market you recently acquired property. Let s review them again. 1. You can build your own website and advertise through Google Adwords. This can be a very effective method of marketing because it affords you the ability to customize your marketing campaign to target specific demographics. If you want to tap into the huge international market place, using Adwords can be the key to access foreign buyers. 2. Use Bid4Assets to market your property. Bid4Assets has been around for several years and has a great reputation for promoting real estate. You will still need pictures of your property and all of the relevant information you have acquired through TaxSaleLists.com and the purchase of the property. The cost of using Bid4Assets is quite reasonable. It will cost you $5 to list each property with them. When a property sells, there is a fee of around $200 for a bid and assume purchase. 3. Use Ebay to market your property. Ebay has an enormous footprint. According to Alexa.com, Ebay is the 8th most visited site on the Internet. Ebay also has a strong international following. Their real estate division will accommodate your needs quite nicely. It is a user-friendly interface and the fee structure is also affordable. It will cost you around $35 to list each property and not much more than that when you sell a property. If you choose not to build your own website, I would personally recommend to try both Bid4Assets and Ebay. Run a side-by-side campaign to determine which would work best for you. Bid4Assets is better known for real estate while Ebay has a larger international footprint. There is a tremendous opportunity here to pick up real estate for practically nothing, from people who don t want it any more and sell it to a huge international market. There is great supply as well as demand but very few are taking advantage of this extraordinary market. It s now up to you to take advantage of this exciting niche in the tax sale industry. Keep me posted as to your success stories as you build you financial future. Happy Hunting, John Lane

17 SAMPLE OFFER TO PURCHASE LETTER Dear (First Name Last Name), Thank you for taking a few minutes to read this letter. I don t want to waste your time, but I m hoping this letter will offer you some options that could be beneficial. It has come to my attention that the property you own located in (Situs Town) at (Situs Address), (ID Data), is seriously delinquent in property tax payments. Under California law, your property will now be sold to satisfy the past due taxes. Unfortunately, if your property is sold for the amount of your past due taxes, you will receive nothing in return. If you have decided not to bring your taxes current, I may have an interest in your property. I can t pay much, but whatever we may agree on would be far better than losing your property at auction and getting nothing in return. My interest in your property is very time sensitive so if you have any interest in selling, I ll need to know right away. There are three simply criteria that must be met before I could offer to purchase your property: 1. Assurance there is no mortgage on the property. 2. An executed quit claim deed (I will provide one for you). 3. An agreement on a cash purchase price (please keep in mind, I will also have to pay all your back taxes, interest and penalties). I hope this option of selling your property provides some solutions and peace of mind for you. I sincerely believe you could benefit in several ways, including: Eliminate the yearly tax notification burden and anxiety regarding the non-payment of the taxes. Eliminate the concern of what to do with the property. Eliminate the stigma of losing your property in a tax auction. Eliminate any possible negative financial and credit issues. Change the liability of owning the property to a positive cash transaction. I am hoping this transaction would eliminate a burden while giving you a reasonable and mutually beneficial solution. If you have any questions, please feel free to give me a call at Sincerely, John Lane johnlane@johnlane.com Copyright 2006, MyTaxSaleLists.com