Episode Transcript
[00:00:00] Speaker A: I didn't see the bad language. I kind of went, holy crap, somebody could end up owning my home for back taxes. That's like a percentage of the property. But the reality was it was two years or more of I felt like banging my head against the wall for what ended up being like two minutes of pool.
[00:00:17] Speaker B: What does a systems engineer see when they look at a tax sale auction that a traditional real estate investor doesn't see?
[00:00:24] Speaker A: Their entire job all day, for weeks on end was just typing in a parcel ID into a county assessor website and then copying, copying, pasting, one by one, all of the details into this giant Excel spreadsheet. This guy today, using our platform, invests about the same volume, but does it with two people instead of a team of 50.
[00:00:46] Speaker B: Quick note before we continue. Nothing we discuss in this podcast should be considered legal, financial or investment advice. Tax lien laws vary significantly by state and every property situation and investor is unique.
Always consult with qualified legal and financial professionals in your jurisdiction before making any investment decisions.
Now let's get back to the show.
Welcome back to the Innovative Investor podcast where data law technology collide to unlock the world of delinquent tax sale investing for everyone. I'm your host, Stephen Morrell, founder and CEO of Juristeed, and today I'm flipping the script. Literally. For years, my guest today has had me on his show Tax Sale Insiders more times than I can I can recall.
But this time Brian has graced us with his presence on our podcast and we're very, very happy and humble for it.
He's a former aerospace engineer who applied systems thinking to build the most comprehensive tax sale data platform in the country. He tracks over 9,000 auctions and nearly 2 million distressed properties annually, is the co founder of Last Best Partners and Mountain North Capitol, Vice president of the ntla, and as of last year, a fellow podcaster with distress to success.
He's been a colleague, a collaborator, and frankly one of the people I respect most in the entire industry.
Brian Seidensticker, welcome to the Innovative Investor podcast.
[00:02:14] Speaker A: Wow, thanks, Steven.
I appreciate it. It made me sound pretty good there and it's, it's nice to be on the other side of the, of the microphone. The other side of the script, if you will.
[00:02:24] Speaker B: Right, yeah. Thanks for being here.
So, you know, we, you and I have been talking about tax sales together through the NCLA for over a decade at least.
And you've. I stopped counting when it hit 10. Like I stopped counting my age when it hit. When I hit 40.
But you've had me on tax sale insiders more times than I can count to talk Louisiana Anything, right? Tax sale the law that is going to change and it never did. And then it finally did and man
[00:02:55] Speaker A: are investing excited about it right and then.
[00:02:59] Speaker B: But I've also been threatening to flip the tables on you for years and having you on a podcast that never has not existed until now. So you know, welcome on here we are finally and for our listeners who don't know you, can you give me basically your 60 second version of your career elevator pitch from aerospace engineer to taxel industry icon. How did that happen?
[00:03:20] Speaker A: I'm gonna mid up front and I think as you know, I think we're both bad at keeping it short. So this is definitely not gonna be within 60 seconds. Not that it's really that much more entertaining than, than somebody that can pack it into 60 seconds. I just don't have that ability to really shorten.
[00:03:36] Speaker B: That's what editing is for, my friend.
[00:03:39] Speaker A: Well, so you know, I guess kind of say starting the beginning, I, I, I guess graduated or I was trained right as an engineer and out of school really while I was in school as an intern, you know, realized I call it my early twenties crisis.
What did somebody else said it's your quarter century crisis but that maybe engineering is not or my long term passion lies. And so I at that point in time started looking at other things right to do. And at the time that other thing was, was fixing and flipping properties really in the last couple years of, of school. And that was really my, I'd say toe dipping into the real estate world and that comes into play later.
But I did end up going into engineering, worked on some really cool programs, ended up working at a company called Orbital Sciences, you know, on missile defense programs on both sides, Interceptors and Targets doing some cool stuff. Right. And I think most people that kind of listen to that go well why the heck did you ever get out of that actually including my own kids. My daughter asked me why I didn't want to be an aerospace engineer anymore.
[00:04:51] Speaker B: Dude. What?
[00:04:52] Speaker A: It sounds way cooler than you know, being in tax liens. And she's, she's right. But the reality was it was, you know, two years or more of, you know, I felt like banging my head against the wall for what ended up being like two, two minutes of cool. And that that ratio just didn't work for me.
And that's a personal thing. Right. I don't think I respect everybody that's in, in the industry.
Right.
But anyway, I knew I didn't want to do it long term. And I was doing this fix and fit thing right really at the wrong time. This is 2006 through 2008.
Owned a couple properties in Montana at the time and one of them ended up upside down. And I got sent a tax potential tax sale notice in Montana. I don't know if you're familiar with that state, at least at the time, Stephen. Every investor had to send a certified letter to the homeowner explaining that all of the, I'll say, harsh language of you could lose your property due to these taxes. Well, I guess maybe I'm programmed to be optimistic, but I didn't see the bad language. I kind of went, holy crap, somebody could end up owning my home for back taxes. That's like a percentage of the of the property.
And so I went into say, research mode and that was my introduction into the the tax lien space.
Found that yes, the space is real.
I learned enough and to kind of do what I normally do, jump in, maybe not head first, but you know, not doing like a full breadth analysis of how the whole country works because I think if I knew how other states worked then I would have never gone to Montana because it was one of the not worst returns, but not a great return. You get 10% Sounds good, right? Especially at that time in history. You could get mid teens return in the space in some parts of the country. But anyway, long story short, ended up working through that property, getting out of the fix and flip and then really pivoting and buying tax liens.
And really that was my entry into the space which eventually became a suggestion from a friend to take a internal tool which was a. Which became Taxel Resources. It was just a website I built because I knew some basic programming.
Google Drive didn't exist. Right. It was like in today's world would have never gone down this path, but introduced taxile resources as a resource. Right. For investors in the space and really by 2012 abandoned buying tax liens because A the website was making more and B, I didn't want to compete with my customers and really gave up. You know, I'd say running a fund for almost 10 years until we kind of dove back in via Mountain Earth Capital and buying tax deeds. And that was in 2020 and have grown that fund and that model pretty significantly over the last five years and kind of led us to where we're at today. So I know that wasn't 60 seconds, Stephen, but that's my story.
[00:07:52] Speaker B: Yeah, that's okay. We're not gonna not Gonna hold you to it.
That's actually a pretty concise version of that. I've heard the longer version than that. So that was, that was pretty good.
[00:08:00] Speaker A: I'm. I've practiced it enough at this point on my podcast. I got it. I got it down about as short as I can get it.
[00:08:06] Speaker B: I'm glad you mentioned about the Montana property, because I was gonna. If you didn't bring it up, I was definitely gonna ask you about that because I've, I've heard that story before and I love how the startups.
And it doesn't matter if you're a tech startup or you know, small business owner, whatever, but so often it's a story, right? There's an anchor, there's a change, something happened or something had to stop happening or whatever it was in your life.
And like for us, it was Hurricane Katrina, like that changed my whole life.
It thrust me into real estate. And I was at a crossroads of my career at the time. And I'm like, what am I going to do? I fixed up my house and with. Because I was a vet, I had the money right away. And then I looked around and the whole city was still in shambles. And I had a law degree and I didn't want to practice law, doing the typical, you know, like, insurance, defense, billable hours thing. And I'm like, real estate. I mean, I got, where are all these people? And like that.
I didn't even realize what I was saying at the time. How important where are all these people Was going to become to the, you know, that led me down the path of distressed property and finding people so that we could move, you know, either get them their house back or at least move it back into stream of commerce. And I mean, like, just crazy.
And I just. One more analogy because one of my colleagues here in the New Orleans startup scene was renting a property. This is probably a decade ago. And you know, pretty informal. Someone's house, you know, landlord was, this is not a big apartment complex is someone's house and was moving out. And you know, thought they turned, turned over the keys and the house was in pretty good condition and they wouldn't give them their deposit back. And they're like, why? Like, well, it. Because of this, this, this and this. And like, well, that wasn't, that wasn't there when I moved in. You know, I mean, that was there when I moved in or whatever. And the guy just said, screw you. I'm. I'm not, I'm not giving it back to you. So that person ended up creating a startup for called Rent Check.
And it, it created a system initially of verifying a source of truth for both the landlord and the tenant of. With. With like a, like a walk your phone around the room kind of thing verifying everything. And it kind of laid out the. All the factors both people had to kind of e sign off of the whole thing. And, and it was like that became a pretty. I think they're post series A at this point and they've pivoted to be ironically being a resource for landlords at this point. But, but you see how it all happens. It's like failed return of a security deposit that was traumatic for that in that point of her life turned into a startup that's doing well now. So it's just, it's just great how that happens. But let me hit on something that you talked about in your, in your past because it's an interesting dichotomy I guess if you will. You're with the engineering background and then what you're doing now.
You've talked to me about before about applying systems engineering from the, from the space launch industry into tax sale resources, kind of, kind of being part of how you do things today and so to speak. What does a systems engineer see when they look at a tax sale auction that a traditional real estate investor doesn't see? Like what do you see through your lens that others maybe have trouble seeing?
[00:11:22] Speaker A: And there's pros and cons to this, right? I think, I think probably the opposite mindset typically is from an accountant, right. When you look at it purely from the economic standpoint and I typically look at things purely from the what's the problem here? How can I solve it? Right. And systems on a rocket was what I call a jack of many trades, but really the expert of none.
I knew and had to interact with all of the individual disciplines from electrical to propulsion to mechanical, you know, to make it all come together and ultimately responsible for making the thing fly. Right.
And, and maybe it's a training thing right through, through schooling. And I also think it's probably just a programming from early childhood thing. I was really into the Legos of just like really understanding how all the pieces of the puzzle go together. Right. And so call it tax sales, right. Whatever. Right Is like okay, what are you doing? What are all of the pieces that make this puzzle come together?
And in the taxile world, I guess the first puzzle piece that I recognized was kind of missing was some technology, right? It was a, it was a. We didn't invent the space. The space had been around forever, you know, and at a large scale, right, you know, billions of dollars a year was being transacted. But what was missing was a way of actually easily identifying and you know, making the decisions to, to decide which ones, you know, wor are worth buying and which ones weren't.
Nothing like that existed. And so kind of saw that missing piece of the puzzle. I was like, boy, we could make every investor's life a whole lot easier, right. If we were to, to make this, you know, easy to interact with, right. And I like to, because most people are familiar with Zillow. Like if we could build a Zillow. Because you can't find any of this stuff on Zillow. If we could build a Zillow, right, but had all of these property information on there, man, would investors lives be easier? And that's, that's really, I guess an example of I think my mindset going anything was like where's, how is this whole thing supposed to work? Ideally, right? How is it working today? Where are the biggest pieces of the puzzle that are missing between current and what it could be and is there a way for us to come in and solve that? And that's really, I think, been a bedrock or foundation of how we've approached every business unit and problem that we wanted to solve.
[00:13:43] Speaker B: A little bit that's, that's cool. I mean a little bit of zooming out to see the whole end to end picture, right? So it's kind of, but then, but, but different than a, than a, than a just a pure visionary.
But you've also have to have an understanding of, of how everything connects and how everything works together to function. Otherwise there's, there's a, a loose gear over here, it's going to start shaking and this is going to, you know, something else is missing.
It's interesting to have that, that dynamic of both the, the high level vision but also like the inner workings that make it all like what it, what it needs to be to work properly. That's pretty cool.
[00:14:19] Speaker A: Yeah, thanks. You know, I think I appreciate that but I can also, you know, state that that, that can get in my, I can get in my own way in, in many cases, right, As a, I think any entrepreneur, right, that if there's a piece of the, of the total company, right, and the process that needs to happen and you have a passion or you have a really good understanding of how it works there you have this gnawing feeling constantly of like I need to go fix that. Yeah. And I think the engineering mind to me, like also. Right. Enables that. Not always in a good way. I think on one hand it's great to have the ability. Right. So that when you have those problems, you can always like lean on, hey, I can fix this. Right. And so I don't ever feel like powerless. But it certainly has been a learning curve from. I'm much more visionary, entrepreneurial minded today. Right. I think I still have an engineering core, but I had to get out of my way for many years because I wanted. I knew how to fix it. I know how to fix it the fastest.
And until I, you know, had the epiphany of really the thing that is truly limited is time. I only have so much of my time and where's the best use of my time and the team members time. And I, and I need to let somebody else solve that. Even though I might know how I need to let them solve it because I have other uses of, of my time that are ultimately better for the organization in the long run. That was not natural for me, especially as an engineer. Right. I wanted to jump in and fix it.
And that's not, that's been a hamper to our progress for many years.
[00:15:48] Speaker B: I'm. I'm laughing because I'm an. As you're talking, it's resonating with my. Again, not to turn this around just about me, but this is. I had to unlearn how to think like a lawyer in order to be a startup tech entrepreneur CEO.
I wanted to over explain everything. I wanted. I overthink everything.
I could not possibly give a 60 second elevator pitch if I tried. And if I did, your eyes would glaze over with all the technical detail and legal jargon that I would have given you. So yeah, I feel that. So that's, that's funny.
So TSR now currently, I mean, you correct me on the numbers here, but something like 9,000 plus auctions across the country. Are y' all tracking that many? And like over 2 million distressed properties annually. Is that, Are we, are we kind of in the same ballpark?
[00:16:41] Speaker A: Well, yes and. Right. And I think the. And which really is not a publicly available piece of the data. We actually track almost 2 to 3 million parcels that are for sale on, I like to think every platform out there every week. Right. And so it's a massive amount and a lot of them are the same. Right. One week.
[00:17:01] Speaker B: Right, right, right, right.
[00:17:02] Speaker A: But we kind of, we've, we've grown from. I'd say initially we tracked just tax Lien auctions. Right. And then we tax lien and deed auctions and then tax lien. Indeed. And, and for mortgage foreclosure auctions. And then today it's, I really, I guess I, I pay some of my folks to a bonus if they can find a website that has properties that we can't pull in or haven't pull in. Pulled in because, you know, for what we run at Mountain North Capitol, the biggest thing that we have is, is data. And the more data we can have of what's for sale, you know, everything from distress to county owned to, you know, it's similar to county owned, but like over the counter to government auctions. Like we bought properties from the federal government. You know, there's, you know, HUD homes and I mean there's just a litany of different sources out there. And so we combine all of that. Anyway, long story short, it's, it's much higher than 9,000 auctions and 2 million parcels annually today. But from a tax sales standpoint, we still monitor that quantity.
[00:18:01] Speaker B: Perfect. All right, well that's, that's, that's better context for the rest of the question that I have, which is for, for basically, for someone who has never used your platform, can you walk, walk the listener through what the data actually looks like from a. And you kind of just did a little bit but like jurisdiction information, upcoming sales property data, high level here. And, and why, why that trifecta of jurisdiction, sale dates and property data, why that trifecta matters for really investing intelligently?
[00:18:34] Speaker A: Well, I think it's, if you go back to, you know, how underwriting was done, you know, really before Taxile resources, you know, came about, it was, it was very structured like that. Like you just mentioned of investors had to out of necessity say where do I want to invest? Right. You typically starting with the state. Right. And then the jurisdiction. And then it's when are these auctions occurring? And you have to collect that information too, because that wasn't available on a website. And then it was the, you know, what are the property detail, you know, really the properties themselves associated with this auction. And then the last piece of the puzzle was what are the property details associated with that? Because, you know, there wasn't the single source of where, when and where are these auctions occurring? What is the list of the properties and then what are all the property details so that you could quickly, you know, sift through, you know, an auction list to decide which ones you want to buy or not. And so it was, it was a heck of an operation. I mean, I talked to guys that, you know, I guess say OGs in the tax sale space, right? And the, and what the operations look like, you know, for them today versus, you know, let's say 15, 20 years ago. And one gentleman I was talking to who, who was a part of a large, one of the large institutional guys, and he talks about a room full of 50 folks that all they did, right, once they got the list is their entire job, all day for like weeks on end, was just typing in a parcel ID into a county assessor website and then copying pasting, one by one, all of the details into this giant Excel spreadsheet, right. Ultimately, so they could give it to their boss so the boss could filter it down. Right? Out of these 10,000 parcels, here's the 500 I want to buy. I mean, that was the task of dozens of people. And this guy today, using our platform, invests about the same volume, right. But does it with two people, right, instead of a team of 50, because he doesn't have to do that all by hand today.
So that's just kind of an example of the process we go through and kind of how we've tipped the process on its head or upside down from used to, had to do all that hard work, you know, by necessity, right. To just figure out which ones we want to buy. In today's world with our platform, which I think of it as, I mean, Zillow, usually people can, can picture, right, think of it as a Zillow, but now you can apply a true business model to it, right? You could not 10 years ago, you could not say, hey, I want to go buy multifamily homes across the country. Don't care, Right. It was a, it was more opportunistic. Like if you see them in the auction and you win one, great, Right. But you couldn't build a model about it around, right. Today you can get as specific. You know, I like to use the joke I want to buy bowling alleys, for example. Well, out of the 200,000 parcels that are going up for sale through this mechanism, there might be three nationwide that are bowling alleys. Right? Right. And so if you're just after a specific asset class, you put that asset class in and it tells you go to this auction, right?
That's very opposite from it used to be. I want to go to this auction and then I'm going to buy as much as I can. And so it's a very different mentality newer investors have than, I think, original investors in the Space have.
[00:21:46] Speaker B: Right.
No, that's, that's, that's interesting. So I want to ask you about the county level data because for most investors, they may not even fully understand, like, why it's so difficult sometimes to be a, to kind of broaden out your reach into different jurisdictions, but to have a single business model of, I'm going to invest in tax sales, I have this much money, I understand this much risk, I want to just do it, right? And, but then when you expand, span out across, you know, into different states, it's like, oh, wait, wait, what changed here? Excuse me. I thought I was, I thought these were the rules.
But from, I don't want to get on the legal side of things. But, but really from a, from the data side of things, like over 3,100 counties, right. And then you think about places like New Jersey where, Where the municipality matters a lot more.
How have you all tackled that problem and made it simplified for.
So that the complexity is behind the scenes and what the investor gets on their end is, Is essentially more of a homogenous experience in investing in tax liens.
[00:22:55] Speaker A: Yeah. Well, I guess to kind of go back into, you know, how we were originally building Taxo resources and we knew we wanted to be able to manage these auctions nationwide. And I guess I was smart enough at the time to recognize, hey, I know what I know, but I also. I don't know what I don't know. Like, how can I build in the flexibility into these layers, right? And so one layer is easy, right? The property. Right? And then there's probably even one layer deeper than that that I guess we left flexibility. And it's like, okay, the lean details, right. Over multiple years.
Didn't necessarily know that to begin with, but we were able to build it in. And then on the opposite end, right. The other one's easy, right? Nationwide. And then how many layers do you need in the middle, right. In order to be able to sufficiently track these? So states, obviously, you know, counties were known, but then like you said, there's municipalities in there as well.
And so we, we tried to make the interface to where you don't need to know all of that complexity of how that all goes together, because counties could have any. Have these auctions, right? Multiple cities within that county can also have an auctions, you know.
[00:24:00] Speaker B: Right.
[00:24:01] Speaker A: Today we track, I think over 5,200 what we'll call jurisdictions, right. Counties plus municipalities that we're aware of. Right. That have auctions. And I also know there's more out there that we aren't aware of because our team is constantly finding new ones and that number is continuously growing. But that's agnostic to investors. They don't really care. At the end of the day, they might care. If they're very area specific, like I want to be in my city or in my county, then they do care that level, but they don't really care who's having the auction. And so we tried to make that as easy as possible. Well, you set up the filters to monitor certain geographic regions and certain asset classes, and it'll tell you when an auction pops up in that area with. With properties that meet those characteristics. And so you're not sit and sit and having to stare at everything every day. Right. Hop on the one day or a couple of days a year in some cases. Right. When you, when you know those occur. So it's a. It's highly. It's hugely time saving. It's kind of.
I don't know if it's a complaint, but the number one comment that we get from folks that I say ultimately don't subscribe is, well, but all the data is public.
Spot on. Right. All of the assessor data is public. But can you imagine trying to compile that information for 50,000 parcels yourself and then trying to sift through that yourself?
Go for it. Right. Anybody that has that amount of spare time, God bless them. I don't. Right. I don't think most investors do. And so if you can sift through those 50,000 parcels in a couple minutes. Right. Isn't that a better use of time? Don't you have, don't you have other uses of your time that are a whole lot better than sitting and staring at an assessor's website? That's usually my, My question back to folks. But again, I guess, Stephen, I'm, I'm bad at short answers, but that's a little more under the hood.
[00:25:52] Speaker B: And I'm probably bad at like, reining that into. Because I like the longer answers to an. Deep down. So, you know, we're probably. That's why people like you and I are like, dangerous for podcast editors, because they're like, wait, Jesus, I'm editing out more than we're keeping. No, but seriously, that's great information because it is. It's a real problem. And again, I don't think a lot most investors understand it to that level or that it is that much of a problem. But it, you know, getting it from that kind of a problem to a good user experience in reaching outcomes that investors are looking for. That's the challenge, and that's what people like you and I are faced with every day. Ready to hear more about this exciting conversation with Brian Seidensticker of Tax Sale Resources?
Don't fret. Part two of the conversation is coming to you next week. Stay tuned and we'll see you then.
