tax sales

Been thinking about a lot of different real estate strategies that I'm considering. Been debating a lot on what I want to focus on most.(I'll talk more about that in another post) One of the areas I've been looking into quite a bit lately is getting into some cashflow deals. You can't really cashflow here in Arizona, so I've been looking into some other areas.

In one of the areas I've been looking into pretty strongly, my friend passed on some information to me of a guy who was investing heavily in that area, and was going to be bidding on properties at a tax sale there next month. The information that I received was that he was looking for investors who wanted him to bid for him at the auctions. He buys a few houses for himself, and bids for others for a fee. So in those transactions, he basically works as a bird dog for you. He does the research, and even the bidding for you. I decided to give him a call.

We spoke for over an hour yesterday. He currently owns 17 properties in that area, and has been investing there for 5-6 years, so he knows the area very well. He buys the properties for cash, which is why he can only buy a couple at a time. The good news is, they are very cheap to buy. They do need work done to them though. My exit strategy would be to flip the property if I thought I could make $15k+ on it, and if not hold for cashflow. Based on the numbers he was talking about, I should be able to have positive cashflow of around $300/month after fix-up. He goes down a couple weeks before the auction, and does all his homework on the properties. He even hires people out to bid for him at several different auctions throughout the area. Often, the auctions require you to pay with cash right there at the auction, so I'm sure this lowers the competition from homeowners, which is good for investors.

I am thinking of buying one or two properties there with him, leaning towards probably just one this time to see how everything works out with him, and the deal. I would want to be there myself to bid on the properties, so I may fly out next month. I don't usually like carrying a lot of cash on me when I travel. When I fly somewhere where I think I'll play poker, I sometimes have a bunch of cash on me, and am always afraid I'm going to lose it somehow while traveling. The good thing about flying with cash, is that I probably won't get robbed since no one can bring a gun/knife through the airport. This would be much more cash than I'm used to carrying though, so I'll have to think of a good/safe way to travel with it if I decide to go. I heard a great story a few weeks ago from one of my friends about a situation traveling with a lot of cash. I'll post the story sometime this week.