Episode Transcript
[00:00:00] Speaker A: Louisiana 2026 is going to be a real time case study and how this plays out. And one of the biggest examples of that is the fact that you should start portfolio planning like we're talking about.
Even if you're starting with 1, 2, 3, 4, 10, 100 liens, it doesn't matter. It's smart thinking and it's going to lead to your success or if you don't plan you to your likely demise in this investment space.
It's the least passive real estate investment in the history of real estate investing. It is the antithesis of passive investing. And so without the right systems in place or the right resources in place, it's going to be difficult to ever achieve the returns that you're probably seeking when you got into it.
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 technology and expertise combine to unlock tax sale investing success for everyone.
My name is Stephen Morrell. I'm the founder and CEO of jurisdeed and with me as always is my co founder, George Jackson.
[00:01:26] Speaker B: Hello everyone. Nice to be here.
[00:01:28] Speaker A: So this is the final episode of our Louisiana 2026 tax sale system Deep Dive. While this is focused on Louisiana's new tax sale laws, there are broader, much broader nationwide implications going on right now. This has been a great case study in how tax sale, the tax industry is evolving.
And for tax sale investors, this series really gives you a baseline where we are today, what has changed from the past and where we're headed. And as we wrap up the Louisiana case study, we're going to be diving into portfolio management and how the new laws affect those strategies, ones that you used to understand and now they're going to be different.
Specifically, how do you manage a portfolio to achieve professional level results? The ones you read about in the books or heard from the late night infomercials or the gurus online?
[00:02:22] Speaker B: Well, sue, you know, we've partnered with several enterprise customers and each one of the customers has different goals.
So you know, some people want redemption, some people, you know, want reo. It just depends on what their strategy is. And pre Tyler, some investors were interested in just acquiring properties. But post Tyler, there's no longer a claim to the excess equity.
So this thing so that changes things procedurally, strategically.
So working with These enterprise customers has obviously pushed us towards a more portfolio level level approach.
[00:02:58] Speaker A: Right.
[00:02:58] Speaker B: Which you know, required us to, to develop new tools, new systems, new processes. Why don't you walk the listeners through, you know, that process and what, what that all looked like?
[00:03:08] Speaker A: Well, over the past couple of years or a few years we have built what is now the jurisd along with our, these enterprise partners.
We've watched their operations, we've helped streamline a lot of what they do, especially in the state of Louisiana, which is really just an one example of their operations in every other state, not specific to Louisiana, but that's where we help them most. We've helped them modernize some of their systems that were, you know, disconnected databases and you know, scattered information and streamline it to something that's very efficient and takes a lot less time and effort. And we've developed tools to help support that evolution.
At the same time though, we've really learned how to system, how to bring those systemizations and resources to everyone through our software platform.
Louisiana 2026 is going to be a real time case study and how this plays out. And one of the big biggest examples of that is the fact that in Louisiana in 2026 is going to bring about a new law but while the old law is still hanging around for many years to come. So really it's a dual state law system that we're managing just like any other state that we're going to manage.
So this is a really key concept and in ways that we can centralize the investment and streamline it so it's treated more like an asset class rather than a property by property undertaking. And one of the key concepts in this episode that I really think is going to help investors that are downstream from the enterprise, which is quite a few, you know, mid market, small, medium size business, all the way down to moms and pops is to understand how to enter this space intelligently. And that includes grading properties, understanding what do you want to buy, what do you not want to buy, what do you want to stay away from, what's the high risk, low risk, tiering your strategies and approaching a port from a portfolio. From the very, from a portfolio standpoint from the front end, this isn't, you shouldn't be looking at this as a, as a one off or just a, you know, a teaser into taxile investing. The success is achieved at the portfolio and scale level, multiple states and, and across state lines and you can, we can hit that scale of you really start to start to experience those returns that you've read about and have been really why you got into this.
Every state's going to be different and that difference shouldn't matter to your desire to grow your wealth through tax lien investing. Those are tools like JURISD is bringing about streamlining and normalizing the entire investment class.
So it's a single kind of thing that you invest in irrespective of the differences between different states.
Now you know, tiering the portfolio strategy isn't just about total dollars deployed, it's about spent how much you're spending per tax lien. The amount you spend per lien is going to tell you something about his property, its type, its market quality and potential liquidity. It also has an impact on what the odds are that it's going to redeem. Typically the higher the lien amount, the higher chances of redemption but also the higher competition for that lien.
So but think about this. If the lien doesn't redeem, you gotta have to liquidate it. Well what are you liquidating? You're liquidating the collateral that the lien was attached to. So lower desirability properties are going to reduce liquidation probability. And that's part of portfolio strategy. Before you even start bidding you can tier it by tax amount, assessed value, property type or location. There's no single right way.
But understanding property characteristics is just, it's critical to sustaining long term returns. And so we're also developing tools that use AI to help predict redemption rates and post Tyler redemptions drive your returns. We've talked about that multiple times on this podcast series.
That's where this is headed is optimizing your operations, streamlining things, reducing overhead, reducing costs and, and where else can you save money and get back to those original very, very, very attractive returns that existed pre Tyler without the benefit of the surplus? And some investors prefer quick redemptions. They want a fast turnover. This is not right or wrong, this is just what your investment strategy is. But others prefer more of a long term accrual kind of like thinking about different CDs of 5 year, 10 year, 1 year. It really depends on what your strategy is and what your goals are. But modern tools are going to allow you to make much better and much smarter pre purchase decisions.
[00:07:53] Speaker B: So if I'm picking up what you're laying down, tiering is really about capital allocation, is that right?
[00:07:59] Speaker A: Yeah, totally. I mean it's, there's obviously there's a finite amount of capital available right no matter who you are and you just simply have to decide how much you're going to deploy at the auction and how much you're going to reserve for things like subsequent taxes, which of course in Louisiana is probably one of the biggest upsides you can imagine that we've talked about already to really stack those returns and, or things like legal expenses or costs or maybe in states that allow you to step in and rehab a property that is fallen to disrepair.
You know, some tax sales occurred in the middle of the year, some are late year tax bills arrive typically on the like the opposite half of the year that the tax sale occurred. So you got to also plan when the, the capital needs to be deployed throughout, throughout the year so that you can make sure that when you need to spend it, you have it available and don't lose out on that part of the, of the what, what can create the right amount of the right, the target returns that you're, that you're seeking.
And you know, the fear there and the risk of not planning for this ahead of time is that of course if you deploy all of your capital at the auction, you might miss out on what can give you the best returns because the, the auction's going to have the highest competition.
But once you have the lien, you, you have almost a clear sailing towards getting the subsequent taxes without much competition, if at all.
[00:09:23] Speaker B: But you have reserve capital.
[00:09:25] Speaker A: If you have reserve capital. Correct. So this is all about portfolio planning. Even if you're small, you might think portfolio planning, that sounds like, oh, that's the big guys, the big enterprise guys. You should start portfolio planning like we're talking about.
Even if you're starting with 1, if, 2, 3, 4, 10, 100 liens, it doesn't matter. It's smart thinking. It's, and it's, it's going to lead to your success or if you don't plan to your likely demise in this investment space.
[00:09:54] Speaker B: So if I remember correctly, in one of the prior episodes of this series, we talked about the seven year statute of limitations, a deadline.
So my assumption is that's kind of important when you're talking about strategy. So how does that, how does the seven year deadline affect that strategy?
[00:10:13] Speaker A: Well, and now we're back specifically in the Louisiana context in the 2026 law as well. The new law, again just kind of harkening back the old law, there was no time, time limit there. It was, it was infinite. But the consequence of year 7 in Louisiana moving forward, 2026 and beyond is you're done, you get nothing, your lien is wiped out. It's unenforceable, it's uncollectible so whatever you've put into it before, that point is there's no recourse whatsoever.
So planning ahead and knowing when you need to deploy capital to enforce your lien, the ones that didn't redeem, in addition to probably in that same calendar year, if you're still investing, and hopefully you are, you've got MAO money dedicated to buying new liens, servicing the existing liens and deploying towards legal and enforcement costs and potentially even post, you know, if you acquire the, the property at the auction, if you're the high bidder, you're going to need to allocate funds for asset management and disposition of the, of the, of the collateral.
[00:11:14] Speaker B: Huh. So that sounds pretty collaborative. It sounds like there's a lot going on here. A lot of legal processes, notifications, deadlines, capital deployment, you're grading properties, there's a lot of moving parts. So are you, are you engaging service providers for all this?
How, how does that all work? Like what? This seems like a, like a headache for, for the enterprise investors.
Well, anybody or anybody who wants to go through this specifically that, I mean the smaller people are less, you know, would be less equipped to deal with it. But walk me through that or walk the listeners through.
[00:11:51] Speaker A: Yeah, well you know that's, that's been historically been one of the biggest or most, you know, challenging barriers to entry into the, into not just entry into the space, but also to have success. If you are even trying already here. It's the fragmentation of the, how the investment has been executed upon over the, over the past, you know, 100 years. It's spread out not only by states but by counties and these service providers. Only one person does this part and somebody else does that part. And you do some parts in house. You know, lawyers, title researchers, investigators, property inspectors, you know, your drive by due diligence person who handles your subs and when taxes, all these, I mean and that's just scratching the surface. It's complex. And then different states all have different legal systems, different times you got to do things and those change from time to time. It's super complex and it's really what's kept so many people from even trying or people that don't even hear this message and go try because they weren't even think they weren't aware of its complexity that they get and they, they realize really fast of, of what it it And I think I told someone this earlier today, in fact, it's the least passive, passive real estate investment in the history of real estate investing. It is the antithesis of passive investing. And so without the right systems in place or the right resources in place, it's going to be difficult to ever achieve the returns that you're probably seeking when you got into it. But our goal with Juristeed was exactly those barriers.
It's simplification, streamlining one centralized platform, multi state normalization, one place for everything to be managed, similar to how your 401k gets managed. Simply behind the scenes things are taken care of. You get to be the investor and the heavy lifting and all of the cumbersome complexity parts are taken care of for you.
[00:14:01] Speaker B: Well, that's a, that's great information. So what if I'm an investor and I, and I have a lien that, you know, it doesn't redeem.
What, what happens with like what, what is there a backlog of these liens, like unredeemed liens out there? Like walk me through that process.
What happens to those liens that don't remain?
[00:14:22] Speaker A: Well, it depends on the state law. I mean again, and this keeps touching on the same pain points that we're, that we're talking about like fragmentation and the, you know, variability of, of of rules across different state lines.
So in Louisiana, because the time period was before 2026 was perpetual, nobody was really motivated to hurry up and get it done. And you know, unless you were the most sophisticated of, of operations and you had everything, you know, laid out in front of you and you were just going really, really fast and then kind of some kind of cadence.
But for most people it's, you know, I don't know. Did the property fall into disrepair? I don't feel like fooling with that anymore. Or did, did some, did code enforcement put a lien on it? Nah, I don't really want to buy the subs. You know, some of these things can make it spiral out of commerce, right? It just, nobody else wants to take it over. You don't want it, you're kind of walking away from it.
Or maybe you think you can't get clear title, you can't find everybody, et cetera. Or maybe something's happened in your, you know, you just need liquidity, something personal, something business related, something that you're restructuring your business or whatever it may be. Life happens, right? Life changes and situations change. Well, the reason why I'm saying all this is because this is a multi year investment, typically, right? You're getting into on day one, you're all geared up and you start deploying your capital and you're managing these liens and then something changes and you might need liquidity then. Well, guess what? Sorry, that's, it doesn't just, you can't, there's no ATM machine, there's no, there's no, you know, ebay. You can't just go put it up and, and, and get cash the next day. So this is a lean tied to real estate brick and mortar. So that's why the, the, the, the, the standard process is hopefully you get redeemed. And of course we've said before, over 90% or around 90% do. And if not, then you're going to have to foreclose to liquidate the property. You have to, you have to get the money out of there somehow.
And so what that creates though is a long period of time where a number, a lot of liens are held by people who would like to be out of those liens for a variety of reasons. Not even because the lien is bad or because it's no longer a good investment. Just situations change.
So there's a, and it's very similar to the mortgage world where you have lenders who lend up front to, and get the, get the loan started and, and then they, they pass it on to some servicing company and then as long as it's, all the payments are, are on timely and everything's good. But then they follow delinquent and then they sell it to somebody else who can handle the, the delinquent collection stuff. Yeah, they change hands and, and nobody knows where that marketplace is. It's just sort of in the back rooms of a guy who knows a guy who knows a guy who knows a guy. And it's crazy because in the tax lien world it's even less sophisticated than that. And it's not because the need isn't there, it's because there just isn't anything bringing it all together.
So a secondary marketplace is something that we have been excited about bringing through jurisd's platform in the future, in the near future.
And what are we really doing there?
It's not about a marketplace, it's about giving options to investors to create liquidity where there used to be a barrier to getting there. And having a two sides of an existing marketplace who can't currently connect to each other finally have a place to connect and do their business. And one side wants out, one side wants in, and we're going to make that happen.
[00:18:01] Speaker B: So does the seven year shelf life of the lean in Louisiana, does that accelerate that need, the need for this marketplace?
[00:18:11] Speaker A: Yeah, I think so. Because when, well, once people realize that they can't just sit on their liens and wait for mailbox money anymore.
I mean, we see secondary market liens, we see liens that are in still legally in effect right now that are 20 years old.
They're just sitting there, they're unredeemed. And there are, there are multiple liens after that or before, whatever. But the point is that if you've made the decision to kind of like not enforce your lien because it wasn't worth it or whatever, now you might be thinking about that or you should be thinking about that in a much different way because when you're faced with the, the, all the consequence of it's invalid and you can't ever get anything for that, you might take more assertive action to go find an outlet for it. And that best outlet could be the secondary market. It could be someone who is, who wants the property, who's a handy person, a man, he man, a contractor, renovator, anybody who wants to actually their hands dirty, take it the rest of the way and, and, and make the, the upside on the, on the real estate itself. So, you know, it's, there's basically, you know, some people don't want to invest more capital. That doesn't mean the asset is bad. It just may mean that it's, it's misaligned with that investor strategy. But liquidity solves everything. It solves that mismatch. The investors who succeed are going to be the ones who evolve with the industry as it's currently changing right now.
And our mission is to make tax liens mainstream, investable, asset class, accessible, simplified and streamlined. And for that to happen, the ecosystem needs education, needs access to capital, needs litigation coordination, compliance tools and a secondary marketplace all in the same place. And that's what we're building at Juristd.
So moving on, you know, I want to get back to wrapping up the Louisiana case study, George, but we're going to continue expanding this podcast into other states. This is not a Louisiana podcast. This is a tax lien investing podcast for the future for innovators, emerging industry issues. There's so many going on right now with the US Supreme Court case in the, the Pun case. If you, you can't look anywhere online without seeing something about going on about this. That decision is going to be coming up sometime in June of this year, I think.
Also you can stay tuned with@j jurisd.com where in and also on, on LinkedIn where we're putting out current actionable, valuable information for free all the time. We're posting two to three times a week on LinkedIn. We have a backlog of podcast episodes we haven't even released yet. We also have a newsletter that's going out next week for the first time as the date of this this audio recording. It's it's March 5th, so be please look out for that and sign up for it. And wait for get on the wait list for our brand new asset management platform for taxing investing nationwide, which will be launching in a few months.
And for now, I'm Stephen Morrell, founder and CEO of jurisdeed.
[00:21:17] Speaker B: I'm George Jackson, co founder. Thanks a lot folks. Thanks for tuning in.
[00:21:20] Speaker A: Thanks for thanks for being here. Check us out coming soon on our next episodes which will start focusing on the U.S. supreme Court decisions in the in the Pung case coming up, as well as the fallout from the decision of the in the Tyler case and how that's affecting tax lien investing at the state and county level nationwide. Until then, thanks for joining us. We'll see you next time.
[00:21:44] Speaker B: Thanks.
