EP218: Tax Lien Investing Made Simple - Stephen Morel

Speaker A: Are you like most sales and other professionals who want to grow their wealth faster than what they are currently doing through their company 401k? Even with that company, match the stock market or just plain saving money? Would you sleep better at night if you had the financial freedom to be job optional in just three to five years through investing in real assets? Maybe you don't want to stop working, but wouldn't it be cool if you could retire a decade earlier than most and do the traveling you and your family have planned for years while you're still young and can enjoy it? Let's face it, most busy professionals don't have the time or desire to take on more work outside of their W2 to grow their wealth. On the Wealth Flow. Each week we share the stories, the investments, and take a deep dive into the various asset classes that can deliver that accelerated growth to your portfolio passively. That's right, no extra work for you. Instead we'll put your money to work, learn what the 95% aren't talking about, and join the top 5% of earners today on the Wealth Flow.

Speaker B: All right, welcome to the Wealth Flow. My guest today is Stephen Morrell. He is the founder and CEO of jurisdeed, which is a New Orleans based prop tech startup that democratizes access to tax lien investing a $20 billion plus market that institutional investors have dominated over a, for over a century. As a title Attorney with 20 years of experience in property law, Stephen isn't your typical tech founder who googled profitable real estate niches. He is disrupting an industry he has worked in for nearly two decades, uh, bringing deep legal expertise to solving problems he's lived firsthand. Steven, welcome to the Wealth Flow.

Speaker C: Thank you for the warm introduction. Uh, I appreciate it. Thanks for having me on.

Speaker B: Absolutely. I always love to start with really your background, uh, where you grew up and what eventually got you into not only being a title attorney but also into this world of uh, uh, tax liens.

Speaker C: Yeah, I'm, I'm born and raised in um, in New Orleans, Louisiana and I, I went to uh, lsu, uh, Go Tigers under undergrad and law school. And so I was uh, I was definitely going to go the purple and gold route. Both my parents went to LSU and, and met there in fact. So uh, it was kind of in the blood. Um, I was a young practicing attorney at the time of hurricane, uh, Katrina and uh, just a couple years out and like most uh, associates just try to get a job and uh, if you're lucky you can go, you know, get one of the big firms to pick you up and pay you a decent salary and start billing lots of hours to make up for, to, to account for all that uh, that good salary. Um, and so uh. But I, it wasn't for me. I, I have been a entrepreneur my entire life, since I was a little kid selling snowballs, uh, in the summertime, cutting grass, uh, you know, uh, arbitraging, uh, you know, candy from a different state if I could. So uh, you know, it was just that I couldn't work for someone else. And eventually uh, that's kind of where I was at during the, at the time the storm hit. Um, I, my home was, was, I had two story home. Uh, I was destroyed uh, at the, the bottom layer of it, the bottom floor. Uh, um, two, uh, weeks later I had to get back to my house on a boat. Um, and uh, wow. M I, it was sort of wake up call. Uh, I walked into, I had a little live little office downstairs and I walked in and saw my law books floating in the water. Now mind you, this is uh, early September in New Orleans. It is extremely hot and humid. The power's been off for two weeks and there's be sewage water sitting in my house for during that whole time. And so I'm walking in and it is surreal. Uh, I mean I'm yeah, you know, waist high, waiters up. I don't know if you've ever been, you know, duck hunting or fish fishing, uh, in shallow water, you know what I'm talking about? Um, and gas mask on and everything. It's, it's borderline toxic in there, mold growing everywhere. And I see my, my law books like floating upside down in the water where I used to have a bookshelf including Black's Law Dictionary, which is like what every law student gets as a gift from some grandparent or something saying hey, good luck, go to law school and learn, learn all about the legalese. And it was just like I was staring at this book and saying oh my God, this is it, I'm done. I am, I'm so done. And I didn't know what I was going to do. I didn't necessarily want to stop using the law, but I just didn't want to go back to you know, so and so's law firm and keep billing hours. Um, I end up having to repair my house obviously. And, and I'm a, I'm a veteran and I had usaa uh in the in but thankfully because so many people fought their insurance companies for uh, years after the storm um, and we had to check full policy limits like within a couple of months. I mean it was, it was, it was wonderful. Moved back into the house around Christmas time of 2005. And uh, I was like, wow, this is great. I'm back. And then I stop and look around and the rest of the city is still in shambles. I mean it's, it is, my entire neighborhood is dark. Uh, I'm like one of the only ones back. And like it was that moment where I'm like, I think I could do something here. I can do something good with my, my training and my career. And I've fallen in love with real estate because I had to uh, basically learn how to, what it meant to demo a house and mold remediation and build it back up and, and what did that do to the value of it? And I had to get, you know, different types of loans and uh, and met realtors and, and builders and mortgage brokers and all the things I'm like, you know what? I'm going to build a title company. I'm going to start doing this for other people. And, but really what I wanted to do was to help get the, expedite the recovery of my hometown. And so many people were still lost, they were missing. Uh, I mean over a thousand people died in New Orleans in the storm. I mean that goes overshadowed sometimes. And you can't move property until you find everybody that owns it. And it was this like, it seems common sense, but you're like, yeah, but what happens when somebody doesn't move back in? Well, they're not paying taxes probably there, it's blighted, it's abandoned, it's not, it's the opposite thing that a city needs to recover. And so it, once I started to try and approach this from the legal standpoint, it was like, well, you're not going to be able to do anything until you, until you find everybody and find out if they want to sell their house or you know, if they want to do something with it. So long story short, I, I've eventually put together a program that was built off of title insurance and state law that allowed for abandoned and blighted properties to be repurposed with clear title and insurance and put back into commerce into. And what that, that first, uh, kicked off in 2015 with the city of New Orleans and then it spread statewide and it even started spilling into other states as well. Because blight, blight, abandonment is not a Louisiana or New Orleans problem. It was just exacerbated by that storm and so, uh, title insurance always sort of just said, I don't want any part of that because it's too risky. And title insurance just doesn't like risk even though they're in the insurance business.

Speaker B: And so. Right.

Speaker C: Uh, you know this. Since that time, that program has seen over, uh, I think now over 12,000 properties that were written off, that were just. They did nothing's ever going to be demoed and just going to be a vacant lot, uh, return to productive use. People are owning them, living in them, renting them out. Uh, and I mean millions and millions of dollars of, of tax revenue that would never have been realized across the state. It never been done before. Um, and, and so that kind of put my, um, put a notch in my belt, if you will. And, and uh, I was working for another company at the time, uh, which was a software company that helped the tax collectors collect delinquent tax within compliance with state law and hold the tax lien auctions and that kind of thing. And so this was a means to help the counties in the parishes, our counties are parishes here, um, to sell the properties that, that didn't collect delinquent taxes and that the county had to take it back and then now sell the real estate. We call them adjudicated properties here. And that was what the Title Insurance Program act built was first based on. So, um, I, I was working for the software company. This program is blowing up. I'm, I'm actually now into sales. I'm like touring across the state, talking with, with parish governments and cities and everything saying, hey, yes you could. This is no cost to you. We do everything for you. And we, and now people are showing up at the auctions because they can get clear title. Um, and so, uh, but I didn't own that company and it sort of just started running on its own. So I was like, I got to do something different. And I eventually left in 2020. Great time to start a new business. Um, and uh, and um, I was like, I want to build something for the industry. This is a. Tax liens is misunderstood. It's a $20 billion industry, at least. That's not even counting the secondary market transactions which trade just like delinquent mortgages do, um, every year. And it's. No, everybody thinks it's, it's, it's almost un. Unapproachable because it's so complicated. It leans on state legal compliance and every state's got different laws and those are always changing. And then you got Supreme Court cases that are changing them and you got all this, all these variabilities in access to capital. Lenders don't want to lend on it. It's basically one of these things that those, most average people are like uh, you know, they may read a course and say oh I could do that. And they get, and they go buy two or three of them and they're like, wait a minute, this didn't work out quite like uh, I was promised. And institutions have kept this whole thing gated behind this complexity for a century and they don't want you to understand, they don't want you to figure it out or to, for someone like me to come around and, and knock those barriers down because they have it pretty good. They've been making double digit returns for a century and the complexity keeps the competition out. But that complexity in today's day and age with technology as we have it is our artificial barriers. And that's the per, the mission of jurisd is we're democratizing access to this, one of the most lucrative asset classes on the planet, which is real estate secured delinquent debt. And that is in the form of tax. And it's never ending because you're talking about real estate and tax. And it is, there's always a portion that's delinquent. It's, it's vital for the county, local government to collect it. So they make it incredibly attractive to uh, for investors to come in and pay it for them. And you know, it's what Robinhood did for stocks and bond and crypto investing. It was unapproachable before them and for so many people. And then it became, hey, click this button and you can do this too. And that's what we're doing with tax liens.

Speaker B: No, that's fantastic. Yeah, let's, ah, there's a lot there. So um, tell me a little bit about uh, going kind of back to uh, New Orleans and you know, uh, when you went through and were able to get uh, these properties or help people get these properties that were essentially abandoned, um, that was all through the vehicle of you know, hey, we can't find who the owner is and the now the taxes have gotten delinquent. Is that the mechanism that the, the tax is being delinquent that helped change uh, ownership or was there a process of changing ownership by saying, hey, it looks like this property is delinquent? Um, I know like in the mobile home park industry there's, at least in Texas, uh, there's a process for, you know, if somebody abandons uh, one of the homes within your, um, within your park, uh, you do have to send a letter to the tax office as well. But it's, it's mainly like, hey, look, somebody has a ban in it, you have to wait till X amount of time. So I've gone through that process a couple different times, just curious on how it worked there. If it was specifically that they were behind on their taxes or, or if it was like, hey, there's looks like this property is abandoned and you put out some kind of a notification in

Speaker C: order to change ownership with delinquent taxes, uh, so many times, especially the ones that are seriously delinquent. Not the ones that just, you know, one year or so, but the ones I'm calling adjudicated properties. These are the ones that were delinquent for maybe, you know, five, ten years. Uh, and you might, as you might guess, blight and abandonment kind of go hand in hand. I mean it, there's almost a one to one relationship to delinquent tax blight. It's you, you find one, you find the other. Uh, and again, not, not so much with, you know, just one year of delinquency, but, but serious ones. Um, and so it almost was, uh, what's the angle? Like, what's the starting point for, for, I guess if you're looking for deals or if you're looking for opportunity to do something, you know, you could probably start from either angle and probably get to the same end goal, end result. Um, yeah, makes sense. Um, you know, but the, the idea of the missing owners, um, you know, from putting with the lawyer hat on, I think, uh, it's, it's. I have to be able to serve somebody. Um, and what is service? It's notice. Right? It. Notice goes to due process, which is that you can't have the government take something away from you without telling you they're about to do this and to give you a chance to show up and, and fight it or, or resolve it or whatever. And uh, and so, but what does notice also do? It maybe puts them in communication with you. Maybe they just, maybe they just want to sell it to you. Maybe they just want to do a deal and before they were just, you know, and uh, and a lot, what happens a lot with older properties and, and after disasters is the people you might think you need to communicate with are no longer living and you, you need to find that out. And then, well, somebody went and took over their rights. It didn't just stop with that person's death. And so. Well, who do I talk to now? You know, and then where are they? And so it became this whole puzzle of that, that was rooted in legal compliance, due process, uh, efficiency at doing deals and getting deals done and moving, just moving things along and you know, which benefit benefits. The, both the, the, the local community as well as the people who are entitled to that notice as well as the people who are trying to make this into an investment. You know, it was, it was a, it, it wasn't even an option. It had to happen from a legal standpoint and it was the single number one reason why title insurance wouldn't, wouldn't insure these properties. It's the one thing they were most afraid of. Somebody was missed, right? You notified them, but not him. And there, there's a claim, right? It's the, it's all about notice. And, and it was like, okay. That was extremely manual process though. It took lawyers and billable hours and paper and certified for green, you know, green cards and all this kind of stuff. And it was extremely expensive and up through. When I was at the software company working that did the delinquent tax collections before I found a jurisd, even though we systematized the process that worked, it was still very, very manual and it was very expensive. And I was like, this doesn't work for the investment industry. You've got to be able to scale this and to make it uh, affordable or else they're not just going to look for something else to do.

Speaker B: Great. Makes sense. And, and tell me a little bit about the process then. So, um, you know, as, as you mentioned already, it uh, sounds like you're in multiple states now, not just Louisiana, may have started there, but now you've got grown it. Um, and every state is going to have some differences on the rules of, as to when, you know, uh, if a property becomes delinquent, um, you know, how long before the owner has, uh, the prior owner has the ability to kind of take that property back or get caught back up. Tell us a little bit about some of those nuances that you have to kind of work through, uh, to assure that, you know, when you do in fact catch uh, somebody up on their taxes or you know, buy it, uh, through a tax auction, um, you, you know, what kind of a wait period you have before you can feel comfortable that you can sell the property. Those kind of things.

Speaker C: Um, yeah, listen, um, it's, it's cumbersome and, and, and again this is, this is kind of, it kind of keeps back, coming back to the same theme I was talking about earlier about, about these Artificial barriers to entry, to being in or successful in as an investor in the space. Yeah. And so yeah, look, it's, it's. Every single property has, has a story and you have to uncover that story a lot. In one of the most difficult hurdles to overcome from a, from my standpoint, from a standpoint of someone who, trying to, trying to build a business around, scaling this into a automated system, um, is the, the underlying data is about, is the, is the property and in the title and the chain of title. Like the public records. Well, where are the public records? That's at the county level. Right. And it's a lot of times it's in scanned documents which are not ideal for, for, you know, for using data. Um, and so, but worse than that, there's no single registry of public records. Uh, in America. Every county has their own system. So you have 3,100 and something counties in America and you're trying to systematize something that is that volatile. And it was virtually impossible to build a nationwide business around this 10 years ago. Um, and I would say in the last 10 years you've had data aggregators, uh, big, big, you know, big Data companies like First American, CoreLogic, Black Knight, these big guys who have basically done all the aggregating and scrubbing, you know, just to sell data, uh, for a variety of reasons. And it made it possible for an enterprise like ours, or an idea like ours to be able to tap into that for their, like they're the grocery store and I'm, and I'm the restaurant. Right. I just need their ingredients and, and they've already like gotten it from the farmers and cleaned it up and made it and put it for sale. And now I can take that and build a world class restaurant out of it, um, because I know how to cook. And so that's the analogy there. But, but before then it was, it was virtually impossible. You do want one at a time, you know, one at a time. And it, and it was like it was too expensive or it wasn't worth doing it. And so you're trying to uncover the story of who has an interest in this property. And that's, that's buried in those records. But that's, but that's only part of the, part of the process that makes this challenging because those documents are stale the moment they're recorded. Right. You don't, the person who, who just bought the house can walk into the county recorder's office, clock it in, walk out and get hit by a bus and die. You know, so it's which isn't funny, but what's, what's, what's humorous is, is the, is how volatile this, the whole situation is. And if you don't know that and don't, then you're wrong. And, and the whole thing fails because you have to have, if you don't have legal compliance, you can't have. You're not going to get your, you're not going to make a return if you can't, if you can't check all the boxes, you're going to fail. And so it's kind of one of these things, you know, at some point you just have to either find a way to do it and make money out of it or don't do it. And the enterprise, the institution level, they have built teams across multiple states. Very, very uh, inefficient and not scalable. But it's been so financially worth it for them to do it that they've done it right over the years. They've just warehouses of people in different vendors in every state. A lawyer in Ohio, a lawyer in Louisiana, a lawyer in Texas, title companies, abstractors, property inspectors and it's people managing people. And that's really what like, I mean Jurisdicte, uh, is changing all of that. I mean this is one place to go no matter where the assets located. We're making it a, this asset class into a homogenous opportunity regardless of where the property is located.

Speaker B: Yeah, no, that's fantastic. And as you said, I mean it has been kind of the moat that the uh, institutions have, have had because it is complicated um, and, or it appears to be um, you know, in order to uh, to, to get clear clear, uh, title. So is jurisdicte across all of the US right now or there specific uh, pockets that you guys don't operate in?

Speaker C: Um, so we're where we are in our journey is, is we are um, we're building out our, our beta platform right now. We've been working kind of enclosed beta for the past uh, couple years really learning with, from the, the, the institutions that we're talking about, um, and primarily in Louisiana. Uh now we've done work in probably five at other states. Um, but really just more exploratory work, you know, probably very manual and just learning. And honestly like what I was. One thing I was taught uh, in building a startup was you need to be able to do unscalable things to learn how to scale it. And it's, you know, that's. How are you going to, how are you going to now Use an AI example in today's uh, how do you know how to prompt the AI to do exactly what you need to do in a very, very niche vertical space? You need to be able to know how to do it right. The computer can do anything as long as you tell it what to do. And as soon as you don't tell it some detail, it's going to hallucinate or fill in the blanks for you and it's not going to be good. So. Right. You have to just go through it, you know, so that's what, that's what the last couple years for us has been. You know, uh, obviously I have my legal expertise and the industry expertise, etc, but now working directly for understanding the customer's pains and their problems and really what's nice to have and what they need to have, etc. It also helped us realize the institutions were not really our ideal customer. Not long term. They were fantastic partners though to learn from and to build all to all the things that make this possible for it to be uh, an investment possible for everyone to be successful in and then bring all those tools and that in that learning downstream for everyone else to have access to. Um, is sort of, was sort of became, became the our path through that experience. Um, taking those learnings and packaging it up, productizing it and making it available to others uh, has been, has been really exciting to um, to of a journey because we didn't even realize who our customer was at first and we just said hey, there's someone paying us. You know, that's great. Let's, let's roll with that. And then it's quite an exploration to figure out that that was not our ideal customer because there's only 100 or so of these big institutions that exist anyway. Uh, and a lot of them think that they're so awesome that, that they don't really need us, you know. And so it's, but everyone else is like oh my God, yes, this has never existed before. This is amazing. Yes. We just want to be an investor. We don't want to worry about legal compliance or navigating vendors and state to state laws and like, like that's, that's for you to handle. Right. I just want to be able to like spot this as the way to, to, to grow my uh, my, my returns for my investors and my stakeholders. You, you just make it work. Right? And that's like, that's, that was never been possible. It was a joke before, but before jurisdicte I was like that doesn't Exist. You're dreaming. And now we're making those dreams a reality.

Speaker B: Wealth flow. Audience, pardon me for a quick interruption to today's show, but I have some exciting news that I want to be sure that all of our listeners are aware of. We just launched three totally unique to the market funds that are at the cutting edge of technology and AI. We have combined my 25 years of real estate experience and my recent work as VP of uh, development for a tech company to bring three awesome investment options to our audience. For full details, go to our website@bobocapitalventures.com again, that is B O B O Capital Ventures dot com. All right, back to the show. So who is your customer then? Real estate investors. Uh, primarily just, you know, average real estate investors, I guess are probably real estate investor groups. Flip Flippers. What, what, uh, what are you seeing out there as, as the folks that are kind of gravitating towards this product.

Speaker C: So a lot of people, uh, tax l investors. So actual participating. Um, and, and bear in mind too, that as a startup, you have to focus really, really, um, laser. Laser focused. Because I, I've been through that learning lesson too, about every shiny object and um, and in chasing every dollar that wants to be thrown at you as being, ooh, let me go get that. Ooh, let me go get that. And it's not. It could actually cost you in the long run. What we've built out is a journey to get to what we feel like is a full market saturation. Um, but starting from enterprise, we learned our lessons and learned what the tools are and learned how to do things. Downstream from that are like what we call our mid market, still large funds, sophisticated, but only have a handful of people managing, you know, $50 million of assets and they're just swamped. Right. And that, that becomes our, our stage one because they have the, they have the money to hire us right away. They have the need and that it's much more of a pain point than the institutions and then. But. And continue going downstream. And when I mean downstream, I'm talking about the total amount of dollars that you're investing annually in the tax lien space. Currently not yet. Trying to get to a point where it's. It's moms and pops, um, yet. Or people who are not yet investing at all and who are looking at saying, hey, this looks too difficult or complicated. I'm not ready yet. Oh, here comes Jersey now I'm ready. Like that is the end game, which is what Robin Hood did. Right. And, and I think that's that's, but we're working towards that in a, in a, in a strategic roadmap journey to get to that point. Those are very, very different uh, approaches in marketing and sales and, and, and pain points and everything. You can't build for everybody right now. You have to, we have to make our little niche and then expand downstream from that. I think that's, that's where we're going to make this work. But then it, you know this could expand into mortgage um, backed securities as well. Um, not just tax liens which is 10 times the market. Right. Um, and it's that, that's, that's just something how big this could get. Um, but we'll see, we'll see where we get to.

Speaker B: Yeah, yeah. And so tell me a little bit. How is it, how does it work? Is this a, is this a subscription based uh, where they have access to X number of properties? How, how is the, how is that part of the, the platform, uh, built out?

Speaker C: So um, yes, it's, it's a. The platform again. It's, it's. We're building out our public facing beta, um launch right now where we have a wait list, early access wait list right now which uh, you can find@jusd.com back uh wait list. Um and um. And it's a subscription platform that provides immediate value from being a subscriber. We have a few different levels depending upon what, what you're, how involved you are in the industry and how much you want to spend. Uh, to have access to tax, uh l. Investing intelligence, um um, you know, auctions and in different, every state's laws we have coded in. We know exactly what the, what your ROI is going to be in every single state. If I invest this much, this is how, this is the time to value. This is the time to liquid the liquidity. Uh, I mean things that are not made available to you unless you go call an attorney in that state to tell you this. And again it's not legal advice but it's, it's data that is built based on, on a combination of state laws, federal laws as well as past performance. So predictive analytics is now playing a role in this and we're using AI both internally and externally, um to, to enhance what we can provide uh, and to, to customers. But the platform is, is intended right now to be an asset management platform. So it's not intended to, to, to really. I mean there's a lot of education there and we're, and we need, we're actually building that Part out to, to help people to feel comfortable coming in and trusting that what we know what we're talking about, it's a vital part of that relationship. But from a functional standpoint, the idea is, is you're going to go acquire whatever tax liens you want it to on the marketplace, either from the primary market, which means buying it from the government, or in the secondary market, which means you're, you're, you're taking a, uh, you're assigning their portfolio of liens from someone else to you like passing on from one investor another. Um, and, but you need to, once you, if you're the owner of that asset, you, you have a job to do and either you know how to do it or you don't. And this is the platform to make sure it's done for you. Um, so whatever that means, every state's law is going to have different, different rules and laws and they're, they're very unforgiving. Uh, this, it's again, it comes down to time based notifications, uh, legal notices and tracking. Everything you do. This is not direct mail marketing. Every single letter that goes out, you have to prove you did it. Who, where to go to, what happened to it? Did it get returned? Why did it get returned? I mean the whole thing. And we do all of that for you with, with legal audit trails. Um, um, and it like ready to go into court saying I swear this is what happened and here's my proof. I can, this is evidence now. Um, because of that origination of the, the idea out of title insurance, that's sort of our like, you know, what spawned all the, like, all of this like, you know, what's the, what are you trying to get to? Well if, if title insurance is the hardest barrier to overcome because they, they, you know, they don't want risk, uh, and that's what you're shooting for then you know, it's, it's, you're going to be able to be very successful at a lot of other things because that, that's your playbook, et cetera. Um, and, and it, you know, it's, it's very helpful. So the, the platform has the ability to automate your asset management of your tax liens. You don't have to worry about it anymore. You can simply go be an investor, go acquire your liens, you put the money up and as soon as you have it, what are you going to have? You're going to have a spreadsheet, right? You're going to have a spreadsheet of your of your liens. You, we have a couple of clicks, it's uploaded and it's on the platform. It's automatically assigned to whatever state it's in. It can show you a timeline of requirements. And then when we get to the point where you need to do things like transactions like actually send letters or actually do research, um, the, your subscription is going to give you credits and depending upon what tier you're at as far as, like what uh, to go towards your spend of those transactions, you, uh, can, and you can add more or not use them and roll it over, etc. But the idea there is to say, hey, this is a, uh, the platform is your comfort layer, right? Your cut, your cut. We gotcha, we gotcha and it's going to happen. Then when you need to take steps, then uh, all of those transactions are there. And then we have a legal network as well. So at some point, just like mortgages, you might try to collect and it's delinquent and you're getting penalties and fees and everything. But at some point you're going to have to foreclose, right? If it gets that far. And what do you need for foreclosure? You need a licensed lawyer in that state to take it from there and get it through foreclosure. So in Louisiana, where, where we're starting from, we have a, a part, a sister law firm like our, that we created to, to do nothing but this. Like that's all, that's all this, this firm does. And then what. We're using that as a blueprint to have satellite, uh, firms in other states that will be compliant in that state as well. So again, it's not leaving the investor with another job to be done as soon. If, if the lean gets to that point, it's just keep going, right? Let me know when I can cash my check from, with, with my return built in it. That's what investors want to know and have. And that's exactly the, the, the life cycle that we're mirroring. We're, we're, we're your partner, your co pilot, all the way to profit, right?

Speaker B: And, and so, so that, that helps. I appreciate that explanation. I think I understand, you know, more, more along the lines, I mean you're gonna, so you're still gonna go to the marketplace to go ahead and buy the actual tax liens, then once you get them, you upload them into your platform, um, and your platform helps give the actual framework and um, you know, uh, timelines like you mentioned, uh, kind of the next steps on okay. And in order to really recognize this tax lien, now that you've. You've purchased, here are the steps that need to take place. Um, and. And then just being able, like you said, to keep it all organized. I mean, half the time that's an issue. Now I've got a personal experience on one of these where I did, uh, you know, kind of a filed for abandonment on a property, came back, and, you know, for me, it was, uh, I, you know, I'm not an attorney. I tried to read through the instructions. I messed up. I messed up. I did something wrong. I. I did an affidavit of fact. Before or after? I don't remember exactly, but in the wrong sequence. Okay. And so the. The deal got rejected because of that. Like, they were like, you can't do the affidavit of fact before you send the. The certified letter or.

Speaker C: Right.

Speaker B: Uh, after. I think it was after I did it, after I sent the certified letter.

Speaker C: I don't know.

Speaker B: But long and short, it can get complicated. But it would have been a lot easier if I would have had a platform like this to help walk me through it.

Speaker C: Yeah. And we have different levels, and so, you know, and it's, uh, in. And we also understand the industry so well that because we have lived it, Uh, I have. I've been immersed in this for two decades now. I, uh, have spent thousands and thousands of hours speaking with customers, et cetera. And we have of, you know, poured all of that back into the platform and to be. What is this. What is the ideal version of this to make the entire process exciting and painless and, and in just maximizing your opportunity for returns and breaking all those artificial barriers down, uh, it's been, it's been. It's a lot of fun. We have a long way to go. Um, there's so many things we want to do with it. Um, you know, predictive analytics is really open my eyes to how much. What we can. What we can, um, uh, empower investors to make smarter decisions that they could never have made, uh, beforehand. Hey, which of these tax liens that's for sale at the auction is the most likely to redeem and be and pay back, as opposed to go to foreclosure. That would be pretty cool to know. Depending upon, like, maybe you're the kind of investor that just wants the return. You don't want. You don't want to go to auctions and deal with real estate. You just want to, like, cycle the money over and over again. That's what the Institutions typically do. Um, well, wouldn't it be nice if you could know these are, most are more likely to pay back and not have to go to foreclosure. Uh, you know, and then what about this crazy secondary market thing? Like there is not, there is no organized secondary market even in mortgages. If you think about it like you probably have gotten, if you have a mortgage, you've probably gotten a notice saying it's servicing transfer. Right? It's been transferring from one company to another. Everybody's gotten those before. Uh, and that's nothing. That's nothing strange. But a lot of times if in delinquencies, they'll trade, they'll, they'll, they'll sign them again because they're not set. That Morris company isn't set up to deal with delinquencies. Then they, they say assign it. How did that assignment take place? Did Joe from one mortgage broker and, or bank and, and Jim from the other one. Did they just happen to know each other and have lunch at the, at the country club one day and said, hey, you want my delinquent mortgages? Yes, that's exactly how it happened. To be honest with you. That is how it happened. And it's like, that is nuts, man, because it's not a exclusive asset. It's just a matter of like these two people knew each other and trusted each other and said, hey, this is how much it's going to cost me to take it. Take it. You know, and in tax liens, it's even worse. It's even less organized and, but it's, I'm talking billions in delinquent taxes that are unredeemed, that, that either aren't being traded or need to be traded, uh, on, on in. Its, the, the, the, the value in it doesn't change because somebody wants out and somebody wants in. In fact, it's just more commerce. So we're going to accommodate that as well. Uh, we already have a secondary market platform that is, is in design and is going to be part of our build for this year. Um, because one of the most important things to do once you've gotten into the investment is getting out. Right. Liquidity. And, and that's, and of course with anything with real estate that becomes enemy number one. Um, and brick and mortar. How do you cash out when you need to? So we're also partnering with financing, uh, partners, capital partners to provide financing for people who want to get out and people who want to get in, uh, and a secondary market to accommodate those transactions.

Speaker B: Okay. And maybe for the audience, if you could, uh, you know, you've already explained a little bit about you know, there, there's different ways to exit these things once you buy them. But maybe if you could just break down and you know, maybe not across multiple states, but just in Louisiana, if somebody has a tax lien that they purchase, um, what are the potential revenues, uh, that they can have or potential exits that they can have? Uh, with one, if they just bought one, you know, off of uh, one of the auction sites, the number one

Speaker C: way is just sit back and, and wait for a redemption payment. Um, the, a lot of tax liens Mo. Most tax liens will redeem. And when I say redemption, that means it's a, it's a payoff. So the, the law in every state's the same way. Like that nobody, no uh, state sells a delinquent tax lien to an investor. Um, and it have immediate consequences right there where there's no recovery, there's no recourse. Right there is always like this, this sort of waiting period where they allow time. Now interest is accruing. So it's not a, it's not a, a ah, zero sum for the investor, but it's a, it's a, a, a protected period where interest is accruing but it can be resolved. Um, and so, and most of them do, I mean between eight, between, somewhere between depending on what state and county you're in between 85 and 90% are going to redeem during whatever the period of time is of that that state allows. It could be one year, two years, three years, um, for redemptions to take place. There is a, there is a finite amount of time. Every state has their own version of it. Um, now you still have to do your legal compliance during that time period if and when that, that whenever those deadlines pop up to maintain that.

Speaker B: Right.

Speaker C: But if you do that, your number one way of, of, of cashing out is to simply let the process work. It. You're gonna, you know, 90 of the time you're gonna get paid back with the statutory amount of interest penalties, whatever you're entitled to under the law. Um, we have, we have a, an um, uh, a micro site that, it's just sort of like a standalone site that we just built last week that actually takes that, that analysis, that ROI analysis state by state and says, you know, if, if I'm in this state, this is, this is what I'm likely to see as my ROI on this amount of spend and based upon how long it takes to get to Redemption and what the penalties are and what the interest rate is and all that kind of stuff. So it's pretty cool if you're looking at different states of like, where, where can I deploy my funds? Um, yeah, but that's, that's number one. Number two is, um, is going to be through a, the foreclosure process. So if it. The, the 10 to 15 that does not redeem during the redemption period. Um, you know, as I mentioned, the most common way is at that point is you need to foreclose. Just like a mortgage. Uh, it's a, it's a, it's a lawsuit. It's a judicial auction. Properties up on the auction block. The, the creditor is the lien holder and they're the foreclosing creditors like the mortgage company. Um, and high bidder wins. But that, that sale creates the liquidity for your lien and that, that's how you get paid back. Plus you're going to get extra stuff for like legal fees and costs and filing fees and stuff. Uh, the third way is this is more like voluntary workouts. So after the redemption period ends, the government, the tax collection part of it kind of steps out, kind of stops at that point. The tax collectors typically, uh, most states stay involved in the collection process during the redemption period. It sort of play like, like referee, if you will, um, and the payments go through them. Then they issue the check to the investor. They kind of play that middleman. After the redemption period, they're like, I'm done. Like, we're writing this thing off. You already paid us, we're out. And so a payoff has to be communication between in, you know, debtor and investor. And that becomes a different chapter of the opportunity. For a lot of times it's way more worth it to do that at, at some level than to go to foreclosure. Um, and usually it is, um, especially now under the current Supreme Court, um, uh, uh, the new era of, of, of tax lien and mortgage foreclosures are that if you're a foreclosing creditor, you can't keep the surplus that may be generated from that sale. Uh, like you, you have to let. That has to. Nor can the government. Which was what spawned the lawsuit that went to the Supreme Court, the Tyner Tyler v. Hennepin case from a few years ago, I think, uh, on you had Brian Sidon sticker from Tax Sale Resources, uh, on your show before. Y. Y' all probably had, had talked about that and, and that really said like, you just can't Keep the surplus. You, you're here because they didn't pay their tax. So take what you're owed, but don't take more than that. That's not fair. You know, we have to get like return that back to the homeowner. But for many, many years, tax l Investors simply said, hey, I'm going to keep this because why. No one's stopping me, so why not? You know.

Speaker B: And now.

Speaker C: And that, that full stop on that one. Um, and so um, you know, that's that those are the three main channels. You have redemptions you have for foreclosure. Uh, the payout from the foreclosure or from a voluntary workout with, with the, with somebody either the, either the debtor or someone on their behalf. Um, sometimes it could be a relative or even, even a lien. Holder might want to rather pay you off than lose their, lose their lien on the property as well. Uh, the tax liens by the way, take super priority. They jump over anything else that's before them. Uh, and so. Including mortgage. Yeah, that's what. Because it's again, it's tied to this idea of like how sacrosanct tax collection is at the county level. Right. It's so important they had to make it that attractive otherwise people wouldn't jump in there and pay it and then you would have broke counties.

Speaker B: Right. No, no, no. It makes total sense. And I've seen obviously a lot of lenders uh, as well. You know, I've had experience with this, this as well where uh, somebody we try to do subject to loan and uh, on one, one particular instance of that, uh, the folks owed almost as much, uh, believe it or not as their original mortgage just on um, taxes that were paid by the lender. So the lender kept paying them, you know. Uh, yeah, yeah. Kind of amazing stuff that's out there. But I'm sure you see all kinds of crazy uh, things with you do with respect to that.

Speaker C: It's how many different variations of the same story I've, I've seen and continue to see is, is breathtaking. It is, it is, it makes it interesting. Uh, I mean you know, like there's, there's about a thousand reasons why. How did this end up like this, you know.

Speaker B: Right.

Speaker C: And what, and what is the, what is the path out? Uh, it is just a never changing, um, almost a never ending story because my kids were watching that movie the other day. But the never, never changing story, uh, it's always different.

Speaker B: Yeah, for sure. Oh no, this is uh, this has been Great. I'm excited to just kind of, kind of see the progress, uh, that jurisd, uh, does over the, the course of the next several years. Uh, and um, we'll certainly be following it on this end. I, um, think this has been great. Uh, and I think the audience got a whole lot out of this, Steven. So I, I really appreciate you being a, A guest on the wealth flow. Um, I do have a couple other questions for you first. I guess is there anything that we didn't cover that you definitely want to make sure that. To convey to the audience before I get to my last couple questions for you?

Speaker C: Well, I think, uh, you know, there's a, there's a, A lot of other tangential opportunities from, from tax liens. Um, you know, there. Even if you're not playing the property angle, then this has become. Because of the Supreme Court ruling and Tyler v. Hennepin, this has been. It's, it's relegated tax lien investing to almost exclusively an interest play. Um, and uh, but again that 10 to 15% that has to go to foreclosure. Um, it doesn't mean that, that there isn't a play on the real estate there just means that you're not the, you're not just going to flip it into your own ownership without a public auction. You would just need to go bid on it. And I think that's still an opportunity to um, for those who are more interested in the real estate itself, is to look at the secondary market. There is a symbiotic relationship between the two. The two sides of the marketplace that have never been really connected. And I, and I think that's going to be really exciting for uh, for me to watch, to see what happens when we, when we really promote the secondary marketplace on our platform. And um, because that, you know, it's just, it's not right or wrong, it's just two different schools of thought. You know, you want to play interest or you want to play real estate and uh, and. And those two sides should meet one day and we're going to make that happen. So um, you know, that's going to be exciting to watch. Um, and obviously then if you're taking over the property, ah, you know, do you have asset management or like REO management capabilities? Uh, um, and we, and we have, you know, plenty of contacts and we're not interested in. Are probably going to. For a long, long time if ever get into the, you know, reo, like on management of things. But we have, we intend to be the hub through which everything you need is provided or, or you're connected to so you don't need to go anywhere else. This is your one stop place to be for successful tax lien investing nationwide.

Speaker B: Yeah.

Speaker C: Now.

Speaker B: Fantastic. All right Stephen, I've got uh, two other questions I ask every guest. One is just any advice you would give somebody who's maybe just starting out in their investment journey.

Speaker C: Learn a lot. Uh, don't start spending money yet. Um, uh, I would, I would say you know, follow us. Um, um. M. We're not the only ones. There's plenty like Taxo Resources is fantastic as far as uh, a place, a resource to um, to go to get information. Um, find out what you're. You know it's so much of real estate is where is it location. Right. And, but that's, that's really important also for, for what you're going to be up against. Not just in the location but from a geo standpoint. But from a legal standpoint, what are you going to have to. Some, some are more hands on, some are more hands off, some are more complicated than others. You know, where, where do you want to go learn? Secondly is economies of scale. Um, there, you know there are projections about what you can make in tax lien investing and they're not going to ever be realized if you buy 5 liens unless by accident. You need to be able to put together enough money to experience the averages that, that, that are possible and you know with the institutions have, have clearly done that because that's all they operate in is high volume. But those are impressive numbers. I mean that averaging 15 to 18% year over year. I mean it's, it's, it's nuts. Um, by, with, with mortgage backs or like real estate backed securities here guaranteed by state and federal laws. It, it's, it's, you know it's a, it's an incredible cocktail of risk aversion and high yield. Um. So um, if you have to uh, let's say well I'm just getting started out. I only I don't have that much money or whatever. Well you know, why don't you pull together some money? Um because there's nothing stopping that from happening. Um, you know, um, and you know fractional investing in tax liens is not yet here. Um but it's going to happen eventually just like in vacation real estate and that kind of thing. Um but put, pull money together uh, and, and create your own economies of scale so that you can actually experience the returns that you're, that you're striving for.

Speaker B: Yeah, no, I think that's great advice. How about a, uh, book recommendation? Doesn't have to be real estate related. Certainly can be just something you've read that's been impactful.

Speaker C: Uh, in my journey of going from lawyer, um, to tech entrepreneur, it was a lot about learning how to focus and um, and figuring out what you wanted to do and then prioritizing. I got a, a, a lot of value out of the book called the One Thing by Gary Keller. Yeah, um, it's fantastic. Uh, for anybody that is an entrepreneur is, or just dealing with so many things underplayed all at one time, um, there can't be two one things. There can only be one one thing. Uh, and, and that is really. It was very eye opening because I've skinned my knees on not knowing that many, many times where. This was very helpful in keeping me, you know, finding where that focus is that makes everything else easier or unnecessary.

Speaker B: Yeah, no, great book, Great recommendation. Steven, this has been fantastic. Thank you so much for being a guest on the Wealth Flow and I think we'll call it a show.

Speaker C: All right, thanks for having me. Appreciate it, Keith.

Speaker B: All right, if you're still here, I assume that you found value in today's show and with the guests we interviewed. Please take a minute to subscribe and to review the show. It really helps. Also wanted to remind you to check out Bobo Capital Ventures to get the first look at our three new cutting edge, first to the market investment opportunities. We have only about 15 spots for each fund for retail investors and we would love more than anything else to have our audience be part of that group of limited partner investors. Thanks for listening to the Wealth Flow and have a great day.

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