How to Profit from Foreclosures: Tax Sale Auctions & Mortgage Auctions (Trustee Sale Auction) Explained

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Show Summary

In this episode of the Real Estate Pros podcast, host Erika interviews Arnie Abramson, a seasoned expert in foreclosure investing. Arnie shares his journey into the world of tax sales and foreclosures, detailing the complexities and challenges of the auction process. He emphasizes the importance of education and preparation for investors looking to navigate this intricate market. Arnie also discusses key strategies for successful bidding, the significance of research, and how to create win-win situations for all parties involved. He highlights the differences between tax sales and trustee sales, providing valuable insights for both new and experienced investors. Listeners are encouraged to connect with Arnie and his team for guidance in the Texas foreclosure market.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Arnie Abramson’s Email: [email protected]
    • Arnie Abramson’s Phone no.: 214-869-7188/972-449-0988
    • Arnie Abramson’s Website

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  ARNIE ABRAMSON (00:00)
  And if you want to do it, you do all that work for one property or two properties and it gets paid off, you’ve wasted a whole month.

  Erika (00:10)
  Right.

  ARNIE ABRAMSON (00:10)
  So we’re doing it for everybody and they can pick and choose it. And what’s interesting is a lot of times they’ll say, oh, that one got pulled. Okay, how about this one? We’ve already got the research done. So that’s why it’s growing and we’re not advertising about it because…

  Erika (00:23)
  Yeah.

  ARNIE ABRAMSON (00:32)
  ⁓ I don’t want to get so many people that it becomes a multi-level thing something or that feeling about it.

  Erika (02:13)
  Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Erika. And today I’m joined by someone that I’ve been looking forward to chat with, Arnie Abramson. He’s been making serious moves in the residential foreclosure space with his company, TX Tax Sales Resource Group, LLC. Arnie, I’m glad to have you here.

  ARNIE ABRAMSON (02:36)
  Well thank you, it’s nice to be here.

  Erika (02:39)
  I think our listeners are really going to take something away from how you’re approaching foreclosure investing. So let’s dive on in. For our listeners who may not be familiar with your world, can you share your story with us? How did you find yourself focusing on foreclosures?

  ARNIE ABRAMSON (03:00)
  that’s a great question. ⁓ The reality is this. I got a call from my wife one day and she said, you know we’ve been thinking about real estate and ⁓ there’s a real estate ⁓ meetup tonight, why don’t we go? I said okay and we went and there was a speaker there and he was talking about all these different kinds of ways to invest in real estate.

  And I was kind of nodding off in the back and she gave me an elbow to wake up and said, hey, pay attention. This is interesting. This guy’s talking about tax sales, tax foreclosure sales. And pay attention. And at the end of this guy speaking, he said, who here has done a tax sale in Texas? This was in Texas. And two or three people raised their hand.

  And that’s when she woke me up again with her elbow and said, hey, that guy over there, when the meeting was over, he raised his hand, let’s go talk to him. And it was the guy who had just moved to town, to Dallas, where we were. And he had done about 14 of these before he lived in San Antonio. And we talked to him a little bit and he had moved to Dallas because of a job, his full-time job, transferred in here and he… ⁓

  He knew what to do for the tax sales, but he didn’t have the time to

  So we had the time and didn’t know what to do. So it was a pretty good fit. So we joined with him and for a couple of years we did some, we learned about it from him and we joint ventured and bought about 10 or 12 properties. And we wanted to keep growing and he didn’t. So we split up what we had and Pat, my wife and I kept going.

  And what we did initially,

  on the we had done those tax sales, but then we said what other kind of foreclosures are there and so we went to HUD housing, you know the HUD and ⁓ and for the first time HUD was going to have an auction and they gave us about three weeks notice and there were and we got the list of the auction properties all 200 of them and we went and looked at every

  Hey, we were eager and ready to go full time. And then the auction came about and there were so many people at the hotel where they were having it. We barely got in in time to bid on one property and we got it. were hundreds of people there. So we thought, well, that’s nice. And then we found out about two weeks later, they’re gonna do another auction from HUD. It was so successful.

  Well this time, same thing happened. And we bought four props.

  And then the next time they had an auction, my wife made a terrible mistake. She let me go without her. And I bought 10 properties. The way you could do it, you could buy the properties and then you had 30 days to come up with the money. So, you know, it’s not like you had to have the cash right there. So that really launched us into…

  doing it and you know we had to get all the pieces together and then we started we tried some other we went to the VA the Veterans Administration they had a program and we loved their their program because what they did was if you put down 10 % they can have the financing for the rest of it so that was one

  So over the next few years, we bought for us and our investors that we were building because my wife and I both had been financial planners. So we had clients that we were doing investments for. so we went to the VA and we found out that, well, over the next three or four years, we bought 72 properties from the VA. And so that’s what happened at some point.

  we looked around and as I think I told you earlier.

  We had, there I was in an office with 10 employees. We were managing 250 properties and this is not what we wanted. We didn’t want to do that. I mean, it was great and we made some money and all our investors were happy. So we started to downsize and…

  get to where I wanted to be. And one of the things I really wanted to do was teach people about the tax sales because those are the foreclosure auctions where people got behind on paying their property taxes and the county foreclosed and they would have an auction. And that was really so unique and we found out it was a

  And I could go through it with you. I was just doing that earlier in case you asked me. I have like 14 steps we have to go through. But it was so unique because we didn’t have a lot of competition. There were lot of, you know, there were people who in Dallas were great. anyway, we started going to Dallas and Fort Worth for their auctions every month. And we built up a lot of stuff.

  Erika (09:35)
  Yeah

  ARNIE ABRAMSON (09:57)
  ⁓ And then ⁓ at some point we noticed that some of the big players were coming in, ⁓ the hedge funds. And they were creating more competition, the prices were higher, the deals weren’t quite as good. And one actually contacted us and we did some stuff with them for a year and I could see the writing on the wall.

  So we took our small group together and said, okay, we’re now gonna.

  no longer go to the big cities, we’re going to the smaller.

  competition is less. And when competition is less, prices are better. So that’s a long answer to a short question.

  Erika (11:20)
  But it’s very insightful, Arnie. For our listeners today who are investors and they haven’t dealt with purchasing a foreclosure before or the auction system, what do you want them to know?

  ARNIE ABRAMSON (11:38)
  I would.

  Erika (11:39)
  What do you want them to know?

  ARNIE ABRAMSON (11:42)
  Whatever they need. But here’s what they need to know up front. They need to know the reason there’s less competition is it’s a very complicated and laborious journey. Just to give you a quick overview, all the auctions are the same day. It’s usually the first Tuesday of the month. Unless it’s July 4th or New Year’s Day, then it’ll be the next day. Those are the two exceptions.

  And that’s a pop quiz test question. So if you’re watching Jeopardy, it’ll come up one day. ⁓ So anyway, I lost my thought now. Where was I going? ⁓ So.

  What was the question again? I’m sorry.

  Erika (12:32)
  I was saying, what do you want investors to know who are unfamiliar with this experience in the foreclosure space?

  ARNIE ABRAMSON (12:34)
  ⁓ yeah. So they need to know that

  and as far as I know, there are a lot of people online that are saying they will teach you about foreclosures. They will teach you about tax sale foreclosures. They’ll teach you about trustee sale foreclosures, which are the mortgage foreclosures. They’ll do all that. And then you have to go out and do the work after you’ve paid them a ton of money.

  just to learn it and then you gotta go out and do it. And there are some interesting challenges. For example, all of those sales at the same time.

  Are you gonna do all you can to go to one and you get there and find out they paid it off at the last minute and there’s nothing to do and you wasted the whole time? Or what if there are four different counties that have properties you want? How are you gonna do that? So there was a vacuum created. And so what we started out to do was to teach people about tax sales in Texas.

  Almost all of the gurus online are talking about tax lien sales, not tax deed sales. And there’s a difference. Some states are tax liens, some are tax deeds, without going into a lot of detail. I can’t lay there if you wish. The difference is between an investor buying a bond or buying a stock. One is debt, one is equity.

  tax lien sale, you’re buying the lien against the property. You’re not buying the property. Tax deed sale, you’re buying the property. And that’s what Texas is, the tax deed sale. So you’re buying the property if you buy at the auction. So even that distinction. so, and I don’t know anyone who is teaching about tax sales in Texas. A lot of gurus talk about

  In fact, there’s an interesting story. Several years ago, one of my members called me and said, hey, there’s a guy in town, guy from Nevada someplace, who’s having a three-day seminar in Dallas about tax sales. And I’ve got to, I can bring a companion. Would you like to come? I said, of course.

  So I went with her, and the first day, all this guy did was talk about how great they were.

  And I’m thinking, I will not be here tomorrow. And right before he broke up, he said, now tomorrow I’m going to get into how to really do it in Texas. I said, all right, I guess I got to come back. So I came back the next day and he said, OK, here’s what I’m going to tell you about Texas. And.

  Without going into detail, he made some statement, a premise, and I stood up and I said, I’m sorry, you are wrong. Here’s what the law is in Texas. And he handled it well. He said, that’s why we like to have local people here. And he went on to something else. So I was about to leave when they had a break and he said, before you leave, come over here. He said,

  Erika (16:33)
  Mm-hmm.

  ARNIE ABRAMSON (16:41)
  Can we meet later? I want to talk to you.” I said, okay, here’s my office. Give me a call. And he did. And he said, you you seem to know a lot about this and that’s great.

  we do?” said, I want to talk more with you. I said, okay. So he called me a couple of weeks later and he said, I would like you to buy a property for me in Texas.

  I said, okay, and he gave me all the data. And then about two days before the sale, he called me said, I’m coming in, I wanna be there with you. And he did, and he came in and we bought a property and he, you know, so.

  Erika (17:27)
  You

  ARNIE ABRAMSON (17:37)
  That’s, ⁓ I forgot that question, it’s long answer. that was, the point is that out of state people.

  Erika (17:42)
  You

  ARNIE ABRAMSON (17:52)
  And the people pretty much in Texas are doing it.

  They get big crowds because they go there trying to learn because no one else is teaching it.

  Erika (18:04)
  Right.

  ARNIE ABRAMSON (18:05)
  So, and we’ve now developed what I call our foreclosure academy, Texas Foreclosure, and we’ve got classes and we’re now in their own PowerPoint. So, you know, we can do that. And we originally started off to make that available and they would pay for it and all that. And then we developed a membership program. And now that’s who our classes are only for.

  Because why do we want to educate our competition? Now if anyone calls me, if they ask a direct question, I’m happy to give it to them. So tell your listeners there. I’ll be happy to answer any questions. there are no short answers in this business. That’s the problem. I can give you a short answer, but there are no real answers.

  everything is so complicated and convoluted. Look, you’ve got 254 counties and every county is doing it differently. I mean, a lot of them are the same rules, but they’re different.

  Erika (19:10)
  Yeah.

  Yeah, for a lot of people, the process can feel intimidating, especially if ⁓ they’re new to it. So can you walk us through, like, what would you say are two or three non-negotiables that you look for before you even decide to bid?

  ARNIE ABRAMSON (19:36)
  Well, I have 13 of them. Would you like to hear them?

  Erika (19:38)
  Yeah.

  ARNIE ABRAMSON (19:40)
  Well, number one, ⁓ you have to find out when the auction is and which counties are having the auction.

  Where do you go to do that? There’s no one place. That’s what we do. Our sale was yesterday. Today, we’re already starting to check with the counties for next month. So which counties are gonna have a sale? And of those counties having a sale, some of them are online and some are not. Now, the online counties, that means the competition is the world.

  Where we’re going, the smaller counties, the competition, maybe one or two people, or none sometimes, the smaller ones. Now, we also will go where our investors want. We bought a couple properties yesterday in San Antonio, you know? And we rarely go there ⁓ in the bigger cities. But you know, someone wants it and they can’t go, we will go. It charges us.

  you know, we’ll charge them for it. So when, which ones are online, where are they? And then, okay, now that we’ve got the list, a list of all the counties that we have picked, well, a list of all the counties that have announced it’s gonna be online, and we have to check it every day. Some of them don’t even come online until two days before the sale, which is great.

  Every day we have to check it and find out which counties are going to have a sale. Then we have to select which ones we want to go to or which ones are our priority or our members want to go to. I’m not going to go to El Paso, you know, because I mean, that’s like another country we’re out there. I have in the past and we will if there’s a big demand for it, but right now…

  You know, we’re in Dallas and El Paso is, you know, 6,000 miles away almost or whatever. But, so you have to decide which counties you want to look at. if they come up with, ⁓ early in the month, they come up with one property on their sale, probably not going to go there. Because the odds are 50-50 that they’ll pay it off before the thing.

  Whereas if you go to a county that has 30 different properties, that’s worth starting to look at them and to research them. And that’s what we’ll do. We’ll research them. And that’s a complicated process because first thing you get before you wanna spend a lot of time researching is let’s look at the price. What’s the opening bid and what’s the value?

  And that’s something we’ve learned over the years that if the opening bid is $2,000 and the value of the house is $300,000, that looks great. But there’s 99 out of 100 times that property will not go on the sale. They’re not going to lose a $300,000 property for $1,000 or whatever it is, or $200,000. So don’t get excited about it. But there are exceptions. What if it was someone

  Erika (23:08)
  Mm-hmm.

  ARNIE ABRAMSON (23:16)
  died and didn’t go through probate and it’s a daughter or niece or somebody who’s living there you can’t they’re not they’re not the owner they’re not the real owner so they you know they can take the chance and pay it off but one day somebody’s gonna come along and you know

  I could go on and on, I don’t know about that. So that’s one of the things is we have to research and then when we pick out the ones that look suitable, maybe a $300,000 house and the opening bid’s gonna be 100,000, or 50,000 or 60,000, then that’s worth looking at. And then we have to do the real search, the looking at it. We need to…

  We’ll send one of our people out to take pictures of it. We’ll have a report for him, for him to fill out. A flyer to leave on the door if no one’s home. If they are home, we give them, here’s what we want to know, maybe we can help you. We love doing that, where we can help someone. They want you to loan them money. And by the way, they’re getting all kinds of, ⁓ there are legal lien lenders out there that are sending them postcards. ⁓

  Their favorite deal is this, we’ll loan you the money, no payment for 12 months. Sounds great. Until we met a lady that owed 9,000 and she thought that was great. 12 months later, the Senator billed for 21,000.

  because we gave her the nine and all the new ones that came on and all their fees and you know, so we have to warn them about that. And we can help them in lot of ways. You want an example? I had a single mom, had three kids and her house was worth about 150,000, which was a size house several years ago in the Southland.

  She only owed, I think, 12,000. And she couldn’t come up with it. So she’s about to lose her house at the auction. So we went and talked to her and ⁓ looked at the house and finally came up with a suggestion. We said, how about this? We’ll buy the house from you before the sale and we’ll pay out of what we give you. We’ll pay the taxes. And you can name the price what we buy.

  She said, what? I said, hey, we’re not gonna give you a hundred thousand dollars for a house that you owe 12,000 on. We’ll agree on a price, but here’s what you need to know. Whatever price we agree on.

  means we’re gonna own it. So then what we’ll do, we’ll rent it back to you for six months.” She said, much rent? I said, what’s comfortable for you? She said, 400 a I said, okay, 400 a month for 12 months.

  And then…

  sell it back to you for what we paid for it plus 25%. And we will finance it.

  You’d do all that? Yeah, we’ll do that. What would my cost be? I don’t figure it out. It wasn’t much more than the 400. You know, or five or whatever it was. Well.

  financing it for her now. It had been for seven or eight years and we give a thank you every Christmas. And we love doing that because everybody wins. My investor got the 25 % profit, he got the six months of rent and the…

  Erika (27:06)
  You

  ARNIE ABRAMSON (27:18)
  Let’s see, what else do we, we got the. ⁓

  There’s something else I forgot, but you know, it’s…

  Erika (27:29)
  Yeah, it’s it’s a win win win situation.

  ARNIE ABRAMSON (27:33)
  That’s exactly what we like and we try to do it. And that 25%, the reason we came up with that is in Texas, if they lose their house at a tax sale auction, they can buy it back. They call it a redemption. They can redeem it for what they lost it for plus 25.

  So we said this way if it sells at the auction for 50,000 you’re gonna have to pay back 50,000 plus 25 % and then this case by the way, we’re gonna see I said 12,000 we’ll give you 20 I want you to have some money in your pocket so that you don’t have to Scrimp every month, you know that’ll help you do that. That’s what you like. Oh, that’s great. Well 25 % on

  20,000 is lot better than on 50,000 or 100,000.

  Plus, she didn’t have to come up with the cash. So anyway, those are the kind of deals we love, because everybody wins, you know, as you said.

  Erika (28:34)
  Yeah,

  ⁓ that’s a really great story. mean, I feel like when people hear about foreclosures, they usually think of the negative and that it’s only going to be a negative situation. But it’s cool that you can turn it around and make it a win for everybody.

  ARNIE ABRAMSON (28:52)
  That’s what we love to do. ⁓ We feel good about it that way too. And that’s why our business has grown because the investors see that, just what you said, and they want to be a part of it. And that’s great. And now that we’re covering so many different counties, that’s why we want investors and would be investors because we can train them. We need more people to go. You know, we do that. Remember I said we have a…

  Erika (29:03)
  Mm-hmm.

  ARNIE ABRAMSON (29:22)
  they become members. And there’s a fee structure we have for that, of course. But the fee structure is interesting because some people can pay it all up front. The others, we train them and we give them credit to earn it. And then they start getting cash. So we want it to be accessible to lot of people. Anyway, I was going through all the, what we do and that was the research and then we have to go to… ⁓

  to visit the properties and see and then we have to check them every day because some people pay them off. And we don’t want to go through all the work to pay them off and we don’t want to send people there that nobody’s gonna bid and then nobody has any properties that sell. Then we have to select which auctions that we’re going to and who’s going where and.

  and the money situation, how do you pay it off and all that. And we’ve got systems for all that. And then you have to wait for the deeds to come to you. Anyway, that’s the overview. ⁓ It’s very complicated, all this stuff. And that’s why there’s less competition for it. It’s a lot of work.

  And if you want to do it, think about it. you do all that work for one property or two properties and it gets paid off, you’ve wasted a whole month.

  Erika (30:47)
  Right.

  ARNIE ABRAMSON (30:48)
  So we’re doing it for everybody and they can pick and choose it. And what’s interesting is a lot of times they’ll say, oh, that one got pulled. Okay, how about this one? We’ve already got the research done. So that’s why it’s growing and we’re not advertising about it because…

  Erika (31:01)
  Yeah.

  ARNIE ABRAMSON (31:10)
  ⁓ I don’t want to get so many people that it becomes a multi-level thing or something or that feeling about it.

  We want it to be on a one-on-one basis. It’s not just me. We now have a staff of five or six of us who were all investors with us and have grown up and wanted to come in. So it’s making it more efficient.

  Erika (31:34)
  Yeah, ⁓ that’s really great. Well, if someone is in Texas or an investor who wants to get in the Texas market, Arnie, ⁓ they want to reach out, connect, maybe they want help with bidding, what’s the best way for them to reach you?

  ARNIE ABRAMSON (31:53)
  Probably at my cell phone number, you ready? We have a website also, the TXTaxSales. ⁓ TXTaxSales will usually get you to our website. But we’ve been so busy, it’s kind of dated a little bit. So let me give you, just call my cell phone. I will call you back.

  If I don’t answer, that means I’m on with somebody else and I will call you back. Just leave me a voicemail. I will get back to you. Anytime you can call after 8 a.m. or up to 10 p.m. Seven days a week. Okay. And you ready? I’ll give you the numbers. 214-869-7188.

  Also, as I say, we built the staff and so now one of our investors that has been with us a long time just retired from his job two or three years ago and so he says, hey, I want to be full time and he is now the president. I’m the chairman, the CEO, but he is now the president. His name is Roy, let me give you his number. Also, he might, I don’t know if he’s easy or.

  harder to reach than me, it’s also 214 and then 505-9718. We have recently also put in a number for the whole organization if someone wants to call and get, and that number is 972-449-0988. And.

  you know, sometimes it’s easier to do that move of message and somebody will call them back because some days the phone doesn’t stop ringing, they won’t get through, you know. So, and we’re happy to have calls and…

  What else?

  Erika (33:56)
  Well, you gave us three different phone numbers. So I think people have ⁓ plenty of ways to ⁓ reach you, Arnie. Again, this is great. We need more people in the foreclosure space who are doing things the way you are creating those win-win-win situations.

  ARNIE ABRAMSON (34:16)
  And by the way, you’ve asked some great questions and all.

  questions. Okay, don’t hesitate to call. I do love questions. But I do warn you, there are no short answers as you can tell.

  Erika (34:36)
  Yes, as we’ve learned today, this is a complicated process. So it’s good to have experts like you that can help navigate these deals and do the bidding there.

  ARNIE ABRAMSON (34:49)
  Well thank you.

  What we like to say to really sum up everything is ⁓ that you have three choices with us. We can teach you everything you need to know, period. We can teach you…

  everything you need to know and do just the things that you don’t want to do yourself. We can do those for you. Or you can join us and do whatever you want and get paid for stuff that you’re doing. You just do it the things you’re doing for yourself. You can also do it at the same places for others and get paid for it.

  Erika (35:29)
  Yeah, the flexibility there is really, really cool.

  ARNIE ABRAMSON (35:31)
  And I gotta tell

  you, every month we have some people that make in the thousands on that one day of the tax sales. had, I think the record is 11,000 somebody made once and we’ve had a 9,000. Now.

  you’ll get the worst, if you don’t get anything, you’ll still get something because we’re gonna give you gas mileage and stuff like that in minimal, but it’s not all that way. I don’t want to give that impression. It’s based on what properties we’re able to buy. And I will say this, that this month of yesterday’s auction, for the first time, we won at least one bid in 75 %…

  counties we attended. This is highest I’ve ever seen. Now sometimes it was one property, sometimes it was seven or ten. Now I talked pretty much about the tax sales very briefly. The trustee sales are very, they’re the same time, but there’s a lot of difference. If we’re running out of time, we can do another deal on this. But briefly,

  They need to know this. The difference, you don’t have all the strings attached with the trustee sales, the mortgage foreclosures as you do with the tax sales. And the reason, one of the reasons is the motivation. The tax sale people, they want investors to buy the properties because once they buy the properties, they’ll pay the taxes. They need the revenue.

  Not so with the trustee sales. Those are the mortgage companies. If they loan somebody 80,000 five years ago to buy a $100,000 house.

  and gonna foreclose on it, they don’t wanna have an auction. The house is worth 300,000 today, and they’re in it for 80,000. They don’t wanna sell it for a bid at an auction, but by law.

  Erika (37:52)
  Mm-hmm.

  ARNIE ABRAMSON (37:53)
  Well, it’s funny.

  They make it very difficult to find out when and where. Not where, we know where, but when. And it’s not like at the tax sale, we know it’s at 10 o’clock. A trustee sale, sometime between 11 and four. And you gotta wait there all day and sometimes they don’t even show up.

  because they’re gonna make it very difficult.

  They don’t want to but they have to and they can’t claim it until they hold an auction.

  So it’s a different motivation and we’re doing both. And we’re doing both now because the prices of real estate of houses are so high, everybody’s got to have a mortgage.

  And the mortgage foreclosures can happen right away. Whereas with the tax sales, they’ve got to jump through hoops, they’ve got to notify people, give them 90 days to respond, go through all this. they’re alike. They’re like, I tell people they’re like apples and oranges. They’re both fruit, but they’re different. And these are both foreclosures, but they’re different, you know.

  Erika (38:57)
  Mm-hmm.

  Right, right.

  Well, it’s so

  good that you know how to navigate both of those. Thanks again for being on the show, Arnie. This has been great.

  ARNIE ABRAMSON (39:19)
  Okay, thank you and I’m sorry I just kept going on and on.

  Erika (39:23)
  We love your passion. That’s what we need, especially when it’s something as complicated as this. For our listeners today, if you enjoyed this episode, make sure that you’re subscribed to the Real Estate Pros podcast. We’ve got more conversations lined up with experts like Arnie who are out there building fantastic real estate businesses. We’ll see you on the next episode.