The Dumb Buy Number One
There are a hundred different ways to do this but they all can be summed up with “I never should have bid on that parcel, let alone buy it”. This is what Capital Assets lost money doing.
I can give you an example: Back in 95 or 96 I was bidding in Kent County, Michigan. There were about 40 of us in the room and when the parcel number was read we would each scream our bid and the treasurer would “hear who was first”.
There was a parcel number read for a $200,000 lien and one screamed out his bid. When you are the only one in the room bidding (most of the people were professionals) you know you have made a mistake! In this case, as I recall, it was a closed battery factory (had been closed for ten years) that was on the EPA watch list. (oops)
Everybody likes to talk about the redemption rate in tax liens – how it is 90%, 95%, 98%. I even saw one write up that said it was 99.9%. All of these numbers have been MADE UP by people, because nobody has done a complete redemption study including all sales.
We did a study in the late 90’s of 13 states, county, etc. All of those numbers sound ok, but let me give you another one. The redemption rate for abandoned battery plants that are on the EPA watch list is 0%. The redemption rate for abandoned anything factories is very low. The redemption rate for vacant land that is under water is near 0%.
The redemption rate for parcels that are 1 acre in size, but whose dimensions are 12 feet by 4,100 feet, are close to 0%. The redemption rate for burned out crack houses on blocks that have 12 other boarded up or burned out houses is close to 0%.
It constantly amazes me to watch people bid on properties at auctions when they have no clue as to what that property is. If you bid on properties blind you WILL LOSE MONEY. End of report – no exceptions.
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