Episode 110: Lien With It, Rock With It: Jay Drexel’s Journey From Retail Arbitrage to Tax Lien Investing
The Profit First REI Podcast
September 5, 2022
David Richter
Summary:
Jay Drexel is the jack of all trades when it comes to tax lien investing. With decades of experience, he will teach you how to skip the learning curve and get profitable faster than you could on your own. Jay has been doing tax yield deals for quite some time… and he loves teaching others his REI secrets.
Let’s find out how to avoid the mistakes that most investors make and get the strategies to get guaranteed returns.
Key Takeaways:
[2:35] What got him into taxing and real estate?
[6:46] What’s the process of his tax default property investments?
[11:35] One great advantage of foreign investing is the price point.
14:44 What early lessons did he learn about money, and how does it compare to what he learns about money today?
16:59 What is one of the biggest mistakes investors make in real estate investing?
Quotes:
[13:25] “Let’s find you someplace that’s easy to invest in, that’s affordable and works within your budget, and has a good rate of return.”
[15:33] “You don’t have to start with a ton of money to be able to retire comfortably. It’s about what you keep and learning all the different things. “
[19:46] “Continue to learn different aspects and different points of view”
Links:
Text “invest” to 72000 to get access to their free ebook!
United Tax Leins-http://unitedtaxliens.com
Profit First Real Estate Investors FB Group-https://m.facebook.com/groups/ProfitFirstREI/
Simple CFO-https://simplecfo.com/
Tired of living deal to deal?
If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David
Transcript:
Jay Drexel:
Some people may not have a lot of liquidity, but their money’s continually working. And that’s really what I tried to share with investors that are brand new, that aren’t working with a ton of capital. Hey, well, once you get there and you get those compounding interest, examples, just continue to make, make sure your money’s always working for you. Never stag it. So that’s the biggest thing that I’ve really conversion that I’ve made
Intro:
Welcome to the Profit First REI podcast where real estate investors, master financial management, eradicate entrepreneurial poverty, and learn to be profitable from day one. Now for your host David Richter,
David Richter:
Hey everyone. It is David Richter here with the Profit First REI podcast. Have another exciting guest Jay Drexel, which I know from a mastermind group that we’re a part of together where I’m, there’s a lot of high level individuals in there. And Jay is partners in the United tax liens and does a lot of taxing education. And I know that he’s gonna provide a lot of value here. Some of you might be doing taxing. Some of you might not be doing taxing. So I’ll probably have you talk about that a little bit, Jay, but thanks for being on today.
Jay Drexel:
Oh my pleasure. Thanks for having me on man. I’ve listened to a few of your podcasts, super excited about the things you’re doing. Wish you best success, and I’m glad I could be here with you.
David Richter:
Awesome. So before I ask you how you got started and all that stuff, like I start off. If you are listening to this podcast, you can’t see this, but if it’s YouTube, you can see behind him, he’s got a wall of checks. It looks like. So Jake, can you explain what that wall of checks is behind you?
Jay Drexel:
Yeah, it’s just me showing off that. What I, there you go.
David Richter:
<Laugh>
Jay Drexel:
I guess this proof of what as to what we do or what, what I educate on. I do a lot of, I do a lot of webinars and something makes us a little unique in the webinar space is that everything we do is live. We very rarely run recordings of anything we do. So I’m in this area a lot. So just as a visual, what came up with the idea me and one of the partners that I get, these checks all the time, redemption checks, which if you don’t know much about ’em, we’ll cover some of that stuff in a bin and came up with the idea. Well, what if we just put ’em on a court board and I’d never thought about it. I usually just, just like any other checks, I just get ’em deposit. ’em Toss ’em away. And then about two years ago, they’re like, why don’t you just keep ’em all. So I’ve got those behind me and I cycle ’em out all the time. This is a stack from just the last couple months. And it probably won’t seem that much anymore just because a lot of local governments are moving to electronic transfers, but you still do get a lot of checks from, from local governments counties specifically.
David Richter:
So. Awesome. So we’ll talk about what redemption checks are, but why don’t you tell us your background? Like what got you into tax loans? What got you into real estate and where you are, you know, where you went from to where you are now?
Jay Drexel:
Yeah. Thank you for asking. So I guess just like anybody that wants to have success in life or just financial security. I came from a blue collar background originally from a, a mining town in Utah, all places. Now spend most of my time in DC, Washington DC area. But back then I was raised by my single mom. I’m one of eight kids. So I always learned to work really hard, but not very smart. And so <laugh> graduated from high school. I went through the normal path of blue collar work mostly. Eventually did an installation in car, audio systems, home entertainment systems. I was a garbage man for the better part of 10 years, got into a little bit of construction. And then eventually about 15 years ago, kind of that trifecta things happened to me. I lost my job, my homeowner in foreclosure, I got divorced.
Jay Drexel:
So yay. Victory success. <Laugh> kind of fell on my face, was move forced to move back into my mom’s basement. And it’s not a sob story, just I guess, an origin story. And I started looking for ways to create income outside of what I had and I didn’t have a college education. I really didn’t have a lot of skills <laugh> to be honest. And so I started to hear from people that, Hey, real estate kept start. I started to get into that journey of reading books and finance, you know the journey that so many people do. Like you rich dad, poor dad. I’d heard you talk about that several times yourself, right? Yep. And started to go through that. And that’s actually the first place I’d ever heard. The word taxing was in that book. If you recall, he does talk about them.
Jay Drexel:
But I didn’t know anything about it. And I stumbled across a book and I don’t wanna make it too long, but to make some extra money while I was looking for a job, I started to do retail arbitrage. I dunno if you’re familiar with that. I basically was buying stuff and selling on eBay, right? Yeah. At that time, cause Amazon wasn’t really a thing back then. Not that big anyway. And I stumbled across this book called the 16% solution. And I didn’t know anybody successful in real estate at all. Right. Didn’t know anybody, any side the world. And this book was about tax liens and it explained, it seemed like it was simple enough. And then I watched an infomercial on it, those famous slang, early 2000s infomercials. And I eventually went to a tax sale and everything I read in the book, nothing was accurate to not to say it was bad.
Jay Drexel:
It just didn’t apply to my scenario or my area. Right. And so I was defeated because I didn’t, I had a couple hundred dollars to my name. I was leaving in a guy that I happen to strike of a conversation with, started talking to me and I said, well, I heard that they have these inexpensive ones. There’s nothing here. And luckily kind of my guardian angel said, oh no, you can buy those directly from the county. They just don’t auction ’em off. It’s not worth them worth them to do it. So I bought one directly and it was like 72 bucks. And a few months later kind of said in the background as I went and got another job and a few months later, I got a check for $85 and I was like, I’m rich $13. <Laugh> the bigger, bigger thing is you like to educate and reach on is the ROI, right?
Jay Drexel:
The return on investment was 18% and I realized it was duplicatable. So my journey was very slow. And I tell that people all the time tax lien isn’t something that you necessarily get into for the big boom chunk of money like you do in other types of real estate. It’s very safe. It’s very secure if done, right. And it’s a slow burn, so to speak. But I eventually started to continue to invest eventually got some properties and just kept doing it over and over again. Now I do dabble into other types of real estate, but this has just been my, my background and always done it. And then other people started to seek me out, cuz it’s public record when you buy real estate. And I didn’t have an entity at the time. So my name was on tons of tax liens in different states. And so people started to ask me like, your name keeps coming up. Like, how often do you do this? And I just built this pipeline. And then things went digital over the last few years and then I just kept doing it and I buy pretty much every week. And I currently hold about 700 tax default property investments in the form of liens and deeds all across the United States. And now I just educate people on it. So that’s it that exciting?
David Richter:
No, I mean that’s, that’s awesome. No, that’s a lot of action and a lot of massive action, you know, like over the years to have that many. So can you explain that process then? Like how long does it typically take? Like when do you get the payouts? Like yeah. Talk about the redemption checks. Like talk a little bit about the, you know, the process.
Jay Drexel:
Yeah. So to kind of rewind if you’re, if you’re not that, do, do you have any experience investing in tax leads or, or
David Richter:
I don’t personally, no, not in my real estate career.
Jay Drexel:
One of these things that you hear all the time that I, I deal with a lot of people or I help a lot of people that are in traditional real estate. Whether it’s whole selling, flipping rehabs, buy and hold, whatever it is. And they’ve all heard the term tax lien or tax deeds, but not that many people are that familiar with it. And what I’ve discovered, especially in the last two years is the things that a lot of people think they know aren’t even close to the reality. So it’s kind of a hard genre because it’s not like the whole whole selling or flipping we’ll find this property. Here are my numbers. They match up. The difference in tax sales is they’re different everywhere in the us. Every state has different laws, rules and regulations than every, within each state. Each jurisdiction has different law will have the same laws, but the way they operate is different, it’s independent.
Jay Drexel:
Yeah. And that’s where it gets confusing. But my basic process and what I really focus on right now specifically in tax lien is just a higher yield. I’m looking for myself personally in the investors. I work with 16 to 18% consistently annual that’s annualized, right? There are some places that will pay higher than that. And the people here many times that re redeemable deeds in taxes pay 25%. But historically what it was is you would find out about a sale. Most areas would have their taxing sales once a year and maybe twice in each local area. And so you’d get a list of this stuff. You’d go through it all, figure out what you could afford and meet your criteria. And the other hard thing is that these local governments, they’re just doing this to bring in money. It’s the reason they’re doing it.
Jay Drexel:
Cuz they need the money to pay for schools and roads and everything else. Yeah. So they put every parcel of, of land on there that has liquid taxes, even their own land, even county land, which a lot of people don’t realize. So you can buy liens against small land ditches, desert meetings on freeways rights of away. If you don’t know what you’re doing. Cause you just look at the numbers. If you don’t pay attention to what the property actually is, then you can get yourself in trouble because it comes back to unfortunately, a lot of those infomercials you used to see back then, right? They always say you’re guaranteed X amount or the property. Right. Right.
Jay Drexel:
And that’s correct, but it’s got a lot of legal stuff in there too, right? Yeah. So what we’ve tried to do is simplify it. So instead of having to physically go to sales, like you used to have to do and then pay cash. If you win, if you can’t pay, you get penalized and banned from areas, we’ve just created the system to simplify it. So you can do a virtually. So I can be in DC and I can invest in many different places across the us or I can be on vacation. And that’s really what we educate on is just simplification and saying, okay, you’ve got this great rate of return. And if they don’t pay back in a certain period of time redemption period, right. If you don’t get that redemption check, like you see behind me, which is the amount that you’ve invested your principle, plus whatever the mandated rate of return that area is whether it’s 10, 14, 18, or 24%, if you don’t get that and the timeframe expires for them to pay back, that’s when you can step in and acquire the property county, doesn’t really give it to you. You have to go through a legal process, but you’re still acquiring properties. That huge discounts, right. Compared to market value. So that’s the basic idea of it. And we just do it virtually now and then I’ve done it on a weekly basis for several years now, since it went digital. So weekly, I get either redemption deposits or checks and took a long time to build up. But it’s something that anybody can do these days.
David Richter:
Yeah. Okay. So that’s, so it kind of is a little bit mailbox money there, but you’ve gotta do you, so you still have to keep actively going after new ones in order to keep the pipeline full so you can keep the, the checks rolling in, correct.
Jay Drexel:
Absolutely. David, it’s not like having a rental. I mean, even with a rental, it’s not completely passed. If you have to manage the property or have a manager, right. This you have to continually invest right. And can do no over and over and over again. And it depends on what you’re looking for. So it still can be a great way to acquire properties. And that’s where I’ve seen a big influx of traditional real estate investors that are flippers or buy and hold investors. Yeah. Because there seems to be a shortage of inventory in some areas in the us right now. Right. So they don’t want their money to be stagnant. So they realize that if they learn the right way to invest in tax means indeed their money’s growing, you know, 10, 18, 20 4% annually with a chance to also acquire a property. Right. And at usually a discount. And as we all know in real estate, you generally make your money in your buy. Right. So if they can get a property for pennies on the dollar, then it boosts their profits, but it’s more of a patient’s play. And that’s where, especially new investors, it’s hard to teach patients to new investors cuz we get so, so excited. And I was that same way too. But you know, you just kinda learn, continue, let it to grow.
David Richter:
Awesome. So this is something that could be also added in as a potential source. Like if you’re doing, you know, other fix and flip or wholesale or whatever, like you said, like you work with a lot of people doing that and they add this to their repertoire of what they’re doing.
Jay Drexel:
Yeah. That’s exactly what we do. The it’s great to bring new people into one great thing about tax lien investing specifically is the price point. I can get people started with $20 and actually go out today and buy a tax lien. Right. Is that gonna make you a ton of money? Probably not, but you’re starting. And as you know, for so many people doing the first one is the hardest. And once they get that outta the way it continues on. But where I see a lot of people that aha goes on are people that already real estate investors and they realize, okay, this isn’t in competition. I’m not taking all my time and putting it into this instead of finding the next property to flip, I’m just doing this along with, it’s complimentary to all forms of real estate it’s in that same universe. And it’s something you really can do in your spare time today. So it just adds to what you are already doing.
David Richter:
Yeah. No, I love that. That’s really great. So for that, if, if you’re listening to this podcast right now, then you’re probably doing some form of real estate or wanna jump in, this is a great, like you said, a great complimentary thing to do while you’re doing whatever it is you’re doing. And if you’re, even if you’re just jumping in, I’m sure you, you probably work with some people maybe who have w two jobs still and like, you know, they do this maybe on the side or something just as you know, I don’t know. Seems
Jay Drexel:
Like, yeah, absolutely. David start to step on you there. But most, most people that we do educate are people that have regular nine to five jobs or whatever the hours may be night shift and they can really do it. The, the hardest thing with tax liens, just like anything you’re learning is the learning curve, right? Once you get through the learning curve and the challenge that I have with a lot of new investors when it comes to tax sales in general is it’s so broad. They don’t focus in and they get so consumed by all the other things. That’s why the direction we take at United is let’s find you some place that’s easy to invest in. That’s affordable. That works within your budget as a good rate of return, that 16 to 18% sweet spot that we talk about and a great chance to acquire a property to discount.
Jay Drexel:
And let’s focus in on that and it’s getting a lot of people to think, okay, but that’s not my backyard. Well remember you’re not buying the property, right. So it doesn’t matter where it is. And if you get the property right, and you know this in real estate, if you know, I happen to be in DC and I acquire property in Arizona and the property’s market value is $280,000, but I pick it up for $25,000. There are ways to make money with that where I don’t physically have to go touch the property. Right. And essentially wholesale it to somebody in that area, dump it off on them. And that’s one of those things you have to make that conversion for some people that don’t have that maybe that mindset or just that experience. Right.
David Richter:
Right.
Jay Drexel:
Yeah. But most, most have regular jobs. And just do this spare time. Just add it to what they’re doing.
David Richter:
Awesome. No, I love that as well too. It just seems like very complimentary, no matter what the situation is, you know, as, as a real estate investor or as a, if you’re working still nine to five, this could be your introduction to real estate investing. Yeah. So I love that. So Jay, I’m sure along your way, you’ve learned some lessons about money, cuz this is the Profit First REI podcast. We wanna talk about profitability, all that good stuff, but what lessons, what early lessons did you learn about money and how does that compare to what you know about money or think about money today?
Jay Drexel:
I learned very few early lessons about money, so was bad managing money. And then when I started to make decent money, I guess, you know, become again on that path of financial freedom, I still was bad with money. So went to people like you that are good and understand that. And so it’s, it’s changed dramatically. It’s like, cuz I just made it, I spend it because that’s kind of my mindset where I was, that’s how I grew up and it was just learning. And the first thing that put me on that path weirdly enough to save was if you ever read the book Rich’s man in Babylon. Oh
David Richter:
Yeah, yeah,
Jay Drexel:
Yeah. But, and I was the net net that it’s basically reinvest. Right? Mm-hmm <affirmative> save X amount reinvest and that’s what it started to continue to do and just continue to build wealth and making sure the other big thing, and this is what I’ve really focused on the last 10 years. You don’t have to start with a ton of money to be able to retire comfortably. It’s like you say, it’s whole, it’s what you keep. Right. So it’s learning all the different things like you can invest through self-directed IRAs, self-directed Roth IRAs. So you can keep more of that money in, continue rolling on. I’m sure. You know, quite a bit about that and it it’s really what we’re able to keep and continue to grow in knowing that as long as your money’s constantly working for you, right? I mean, I mean, some people may not have a lot of liquidity, but their money’s continually working. And that’s really what I try to share with investors that are brand new, that aren’t working with a ton of capital. Hey, well, once you get there and you get those compounding interest, examples, just continue to make, make sure your money’s always working for you. Never stacked it. So that’s the biggest thing that I’ve really conversion. I’ve made.
David Richter:
Awesome. Now I love that. And that’s what I love that you mentioned the rich van and Babylon cuz that’s definitely one of the foundations of, I believe the, the principles around that, that Profit First is built on and what we wanna make sure that we’re, that we’re not just building for, you know, just for today, but for tomorrow and what, you know, what we want to do and why did we start this business? And just some of the things we lose sight of as we start, as we start making money and you know, having the same habits of, you know, personal habits that we bring into the business world, you know, like until we learn how to actually get the cash brand needs to be. So really appreciate that. And then with your, what would you say in your, in your opinion is one of the biggest mistakes that you see investors make maybe even in the active side or in tax lien or like what is some things that you see like just out there that people are making mistakes when in real estate investing, it
Jay Drexel:
Seems too simple, but the biggest, biggest one I see is procrastination overthinking, right? What’s it paralysis by overanalysis or whatever it is. Right. that’s the biggest one I see is that everybody wants to weigh all every single option of what, and it’s the, what if this happens, not, you know, what if this bad thing happens, but what if this good thing happens is it’s very rare. You hear that? Okay, the good stuff’s gonna happen. Everybody’s so worried. And that’s why what’s cool about this is the smaller, you know, investment in scaling up. That’s the biggest thing is just overanalyzing. Never actually Hey, to use the code, but pulling the trigger. Right. That’s the first thing I see and not to add to it, but the second thing is not understanding due diligence, but I think that goes for all real estate
David Richter:
<Laugh> yeah, yeah, no kidding. Yeah. We see that. We gotta make sure that you buy it right. And that’s all that really matters up front. If you can buy it right. You can usually do whatever you need to on the back end. So no, that’s great. So is there anything else, I’m sure you have tons of material on tax lien investing, but what else would you wanna pass on or what our listeners know about tax lien investing that we haven’t covered already
Jay Drexel:
Really? That it’s I know there’s a lot that it’s misunderstood, but it is really safe. It’s been consistent. It’s been in the us for over two centuries. It’s something that a lot of people have heard, but don’t know that much about. And it is incredibly secure and it’s the way I look at it. It’s a high, it’s a high yield without volatility of the stock market or crypto. It’s not doing this right. If you do the proper due diligence, it goes in here, it comes out here. It’s consistent. And it’s been consistent for well over a century. Yeah. There’s never been a downturn market to tax sales. Every us history doesn’t mean you can’t go wrong. It’s just that you need to know, understand the due diligence, but it is incredibly safe. It’s incredibly secure as long as it’s done. Right. Yeah. And it’s great for wealth creation and keep in mind, it’s not instead of it’s to add to. Yeah. That’s probably the easiest things to point out.
David Richter:
Okay. No, I love that. That’s love, love this whole concept. Love that. Basically, anyone listening to this podcast, you do one deal or a thousand deals that this is something that you can add in to, as an investing strategy, but just got a couple last questions here. Do you have any general advice for the real estate investing world? And you know, this is just your time to shine here of like what you’ve seen and what you wanna make sure that you get out to that. The invest.
Jay Drexel:
Great question, man. I would say for me, and I think you’re on the same mindset also is just continuous education. Yeah. Really just continue to learn, continue to learn different aspects, different points of view and something you may learn in real estate may not suit you right now, but you never know when you’re gonna use it. Some people say, well, you know, and don’t, don’t spread yourself too thin, but really focus on become really good at one or two things. And then keep adding to it, keep adding to it, but continue the education because especially in real estate, it changes all the time. Yeah. And we can try to predict markets all we want to, but there’s certain things that stay consistent. So I’d say that’d be my biggest advice is continue to learn from people like David, the guests that he has on this podcast.
Jay Drexel:
You know, we’re not any of us that are in real estate. We’re not telling you don’t do this program. Don’t go through this. I think if you’re a good expert, you’re telling people learn as much as you can because applied knowledge is power, as we all know. Right, right. But it’s not gonna hurt you to continue to learn, continue to learn. It’s gonna only help your growth. And as you point out, it’s not just the money we make. It’s the legacy we create. As we pass it on to those around us, families, friends, kids, nieces, nephews, really. It’s just being able to, once you learn it, giving back just like you are and bringing on people that show different aspects of different types of real estate that they can add to what they’re already doing.
David Richter:
Yeah. No, I love that. So the last question here, since there’s been so much advice, so much good education, here’s so many nuggets of wisdom, then how can our audience provide value back to you? What is, you know, what’s, what are you do working on right now? I know you that you teach taxing. So tell about how to connect with you.
Jay Drexel:
Yeah. We do a lot of live classes that are free to attend the initial, Hey, just introduction, but for all of your listeners or viewers on on YouTube we have a free book. We’d like you to take if you’d like to have it. And there’s a couple things you can do. And I know you can put this when you do, when you putting it up on screen or whatever, but they can text the word. Invest can be capital’s lowercase. It doesn’t matter. Text I N V E S T to the number 7, 2 0 0. If you wanna use your mobile device, your phone. So once again, that’s INVEST 7 2 0 0, 0. You’ll get a free e-book. And if you’d like to have a free consultation with one of our attacks, sell experts, just to help point you in the right direction, cuz we kept this very, you know, bites, sized and consumable. The other thing they can do is they can go to our website, which is United tax lien.com. And if they like to add just an extension to it just front slash free gift, they can go there and download that free book instead of a consultation if they like it also.
David Richter:
Okay, awesome. There you go. So invest a 7 2 0 0, and that can get you started on that road. Jay, it’s been awesome worrying about tax liens on here, getting that information out and then just a lot of other good stuff that you had here. So thank you so much for being on the proper first star. I podcast
Jay Drexel:
My pleasure, man. Thanks for having me.
David Richter:
Thank you so much for listening to today’s show. If you found this episode valuable, could you do me a quick favor? Could you give us an honest rating within iTunes and be honest, you could say whether you liked it or not. And obviously with iTunes, the more reviews and ratings we have, the better it is for other people that are searching for a Profit First and a podcast. So we’d love to be ranked on there and that’s thanks to your help. So we would really appreciate that if you would like to go give us a rating. Also, if you’re looking to connect with us further, I would highly recommend checking out our Facebook group Profit First for real estate investors. And that’s literally what it’s called. So you can type in Profit First for real estate investors and you’ll be able to find <laugh>, you’ll be able to find our Facebook group right there.
David Richter:
So come join active real estate investors who are supporting each other and growing their businesses and profits together. That’s what that group is all about. The link should be in the description below. And if you’re interested in working with us in implementing Profit First in your real estate business, we offer coaching and guidance. So if you wanna work with someone who’s actually Profit First certified and who works right now currently with real estate businesses, you can actually go start your application process by going to simpleCFO.com/apply or just go right to simpleCFO.com and there’s an apply button right on there. If you wanna actually start your Profit First journey with someone who can actually walk you through those step by step and help, you know, and grow your cash flow. Thanks again for joining us for another episode of the Profit First REI podcast. See you next episode.
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