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Tax Lien Investing: 13-18% Secured by Real Estate w/ Stephen Morel · Real Estate Investing with RealDealCrew

• 0:00
  Over twenty billion dollars in property taxes go unpaid in America every year.
• 0:04
  And for a hundred years, banks and hedge funds have been buying that debt
• 0:08
  and quietly earning thirteen to eighteen percent secured by real estate.
• 0:12
  Stephen Morrell is a twenty-year title attorney out of New Orleans,
• 0:17
  and he's building jurisdic to open the game up to everyone else.
• 0:21
  In this episode, you'll learn how tax liens actually work,
• 0:25
  why about 90% of them pay back with interest,
• 0:29
  and how AI is finally letting small investors compete with Wall Street.
• 0:34
  If you get some value from this episode,
• 0:37
  hit that subscribe button and check out RealDealCrew.com.
• 0:42
  Let's get started.
• 0:48
  Steven Morrell joins me here today,
• 0:50
  and you can find him on a couple locations.
• 0:53
  One of them is his website, and it's in closed beta right now,
• 0:57
  so you're gonna have to get on the wait list.
• 0:58
  But it is jurisdeed.com.
• 1:02
  It's jurisdeed.com. I'm gonna have that as a clickable link in the show notes.
• 1:06
  But you can also find his podcast,
• 1:09
  Innovative Investor. and I'll have that as a look clickable link as well.
• 1:14
  We'll probably kinda do some sort of collaboration.
• 1:16
  I can send you the link for this episode,
• 1:18
  Steven, when it goes live so that we can have it on both channels.
• 1:22
  But really appreciate your time.
• 1:25
  I'm excited to be here. this this has been one I've been definitely looking forward
• 1:28
  to. So thanks for having me.
• 1:31
  Yeah, this is this is gonna be fun.
• 1:33
  let's let's back things up. Let's talk about what you what jurisd is
• 1:38
  is planned on accomplishing and then we're we're then we'll backtrack
• 1:43
  a little bit and kind of get into the history of things.
• 1:45
  But can you kind of give that to the
• 1:46
  Yeah, sure.
• 1:47
  elevator pitch, if you will?
• 1:49
  Yeah, sure. I I the there's an investment that hasn't most people don't even realize
• 1:56
  is out there, and those who do have probably passed it by thinking it's just
• 2:00
  too complicated or beyond reach.
• 2:01
  And they were probably were mostly correct and not to any fault of their own.
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  And it's an investment in delinquent real estate tax.
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  real estate tax has been the and still is the the greatest source
• 2:13
  of revenue for counties at and cities across the the country.
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  And they they depend on it. But about twenty or thirty percent every year
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  is gonna not be paid on time. And every year there's a new tax bill that comes out.
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  So that's the budget for the county.
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  And if it's not collected, there's a big problem.
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  Either everyone else's taxes are gonna go up or they're gonna have
• 2:34
  to cut the budget. Neither of which are good results.
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  So a long time ago, they created a way to for the counties and cities across America
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  to be able to cr to generate investment to
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  Cover the delinquent amount of unpaid real estate tax every year every year
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  so they have enough money to operate the the county or the city.
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  and it's a it's it has to be very,
• 2:56
  very attractive because this is not one of those investments.
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  If the dollars don't come in, like I said,
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  it could be really, really bad for everyone else.
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  So they have to make it really attractive.
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  unfortunately, it's gotten it's really,
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  really complicated too. It's state by state,
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  so it's very fragmented.
• 3:13
  and if you want to get the type of returns that the professionals do between
• 3:16
  13 and 18% a year, something that's secured by real estate and super prioritized
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  and backed by state and federal laws,
• 3:24
  you're gonna have to learn how to how to navigate the system.
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  And and before we came along, it was really gated behind
• 3:33
  the institutional hedge funds,
• 3:35
  banks, financial institutions,
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  those are who have been dominating the industry for over a hundred years.
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  And not because you can't play,
• 3:42
  because they just figured it out and you know they had the system.
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  So what we what we strove to do with Juris Deed is to create a system that allows
• 3:52
  accessibility to democratize the the the whole investment for anyone
• 3:56
  who wants to participate. And we're starting with those who are already
• 3:59
  in the industry because we were c or at least already serving them in in a
• 4:03
  in a you know through legal practice.
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  I'm a 20-year title real estate lawyer by trade and had have just developed
• 4:12
  a specialty in tax lien investments and putting these properties back into
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  the stream of commerce, which is what helps the county and the city survive,
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  not just the revenue from that one year.
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  So the investment to those who are looking for real estate investments is
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  to put up to buy the tax lien.
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  The lien is the amount that's due that has not been paid by the taxpayer.
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  Each and every year by the county,
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  spot or by the city, to pay that in exchange,
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  the government hands them the lien,
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  just like a mortgage. And the mortgage is the best way to frame it.
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  Because everyone has heard of knows how mortgages work.
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  And if you don't pay, they know how foreclosures work.
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  They're basically right. You know you're gonna lose your house.
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  And so tax liens almost follow an identical pattern.
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  It's a debt secured by real estate.
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  that you own the paper, you become the bank essentially when you buy
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  it from the county. And if they don't pay after a certain amount time,
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  there's interest accrued, but then you can foreclose on the property
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  and get your money.
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  Okay. Well that yeah, I c I can imagine.
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  I think that's where you probably lose or where most people kind
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  of don't pursue this type of thing because dealing with the government
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  at any level can kind of get a little complicated.
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  There's a lot of bureaucracy involved,
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  there's a lot of rules to follow,
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  and I can understand the need to build out a platform to kind of guide people guide
• 5:34
  individuals through this type of process.
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  Yeah, and and it's we saw what happened with with Robinhood.
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  So the the investing platform.
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  So it it's
• 5:43
  Mm-hmm.
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  you know, you had to go through a a stockbroker or you had to go through,
• 5:49
  you know, TD Ameritrade or some kind of like system.
• 5:52
  It wasn't accessible. But it no there's no nothing saying that Jack,
• 5:57
  you or I couldn't go put money in blank.
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  It w it was like, Wait, how do I do that?
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  And it just would just, you know.
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  Stocks and you tracks. And so in a in a similar vein,
• 6:09
  this was that the you know, same kind of situation,
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  right? Is hey, this thing is out there,
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  it's really, really attractive.
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  I mean, 13 to 18% year over year,
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  I mean, secured by real estate.
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  And it just like, well, why can't I play?
• 6:23
  And like, well, you could, if you could all of a sudden get all of
• 6:28
  the the knowledge base and all of the experience and all the tools of
• 6:31
  the trade of the institutional b bankers.
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  Then yeah, you then you can get that,
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  right? Then you can then you can play.
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  And if not, yeah, you might win one here and there,
• 6:41
  but you're not gonna get the returns that they're that they're making.
• 6:43
  And so what's the point? and so we really wanted to do is cre is simplify
• 6:47
  all of this and and and really demystify it and make it accessible
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  to anybody who wants to play.
• 6:53
  You kind of mentioned that you before this were a title attorney,
• 6:57
  like and you were there for like what was it,
• 6:59
  a decade? How did how did that evolve into to this endeavor?
• 7:05
  And I I believe you even have you had your home flooded in Katrina,
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  so there was there a turning point regarding that as well?
• 7:13
  Yeah, that really was the linchpin.
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  That really was the where it all started for me.
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  so I was born and raised in New Orleans.
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  I'm still here. and love this place.
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  I mean it it for all its faults,
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  it's it's a it's an amazing place.
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  It's and and so, you know, when my home flooded,
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  I was about three years out of law school,
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  just kind of mindlessly work billing hours for a big insurance defense firm.
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  I really did not enjoy doing that at all and was disillusioned with
• 7:37
  the practice of the law altogether.
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  So the storm hits.
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  house is flooded and as everybody knows Katrina is bad,
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  but just to paint the picture a little bit more,
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  I got to my house in a boat two weeks after the storm.
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  And and got a two-story house and and got to the bottom floor.
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  And bear in mind this is early September in New Orleans without
• 8:01
  AC for two weeks. And it's this is like sewer water.
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  It is disgusting. It is hot. It is humid.
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  It is murky. It is it is it's like out of a movie.
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  You wouldn't believe it. And so I'm walking into my little office downstairs.
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  and the light of course there's no lights or anything.
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  And but I see through a little bit of light coming through the window,
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  I see my law books floating upside down in the water.
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  And I'm like, I'm done. I'm like,
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  I I I that I don't know. It was just weird.
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  Like it hit me at at that point.
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  I was like, I I I I knew I didn't want to do it anymore,
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  but that was that
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  No pun intended to close the book on that.
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  So I then had to repair my house.
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  I'm a veteran. so I had USAA insurance,
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  and they were the first ones on the ground.
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  They had checks in hand, but everyone else was fighting their insurance companies.
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  and so I was able to rebuild my house and in and literally move back in
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  by the end of by December of that year,
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  just a few months later. And I remember pulling out of my driveway one one day,
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  evening in December, and you know,
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  I got the lights on, the Christmas trees in the in the living room and everything.
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  And the rest of the city is still in shambles.
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  I mean, like dark. And I'm just like,
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  my God. And it and I had probably driven by all of that stuff a a hundred times
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  by then. It had just sunk in when this first sense of normalcy finally came back
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  to my life. And I looked around my city and saw,
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  my God, I'm like not the only one,
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  but I'm one of the only ones. And I was like,
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  I gotta do something. And I and so I fell in love with real estate because
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  I had I personally renovated.
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  And and manage the renovations of my house.
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  And I saw it go from bad to good.
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  I saw it go from ugly to to a pretty.
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  I saw it become a home again. And I was part of that transformation
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  and it was awesome. And I'll and I fell in love with real estate and
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  I started inner you know networking with with mortgage brokers
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  and realtors and builders and contractors and and speculating on things.
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  And and but what I encountered as a lawyer,
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  and this is where the opportunity came around.
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  Is even a couple years after that,
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  there were still thousands and thousands of abandoned properties,
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  and they were not moving. And the the reason I found out there
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  was a common denominator through through almost all of them.
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  Couldn't find the owners. You can't move,
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  you can't just go take someone's property and say,
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  Well, you know, it's been it's been long enough.
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  Sorry, we're just gonna take it.
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  Not in this country, you have to actually find them and legally move it.
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  But in the but in the interim,
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  No one's paying taxes on it. No one's cutting the grass.
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  No one is moving, no, no, the community can't move forward because it's
• 10:33
  a blight now, it's abandoned. And so it really was a very kind
• 10:38
  of complex but intertwined problem that was all about tracking people down
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  and complying with laws. And and I and I knew this,
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  and I was like, Wait, why isn't everyone doing this?
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  So I started looking into the whole thing had to do with unpaid taxes
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  and and the these tax liens and everything.
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  And I found out that it was a really big investment.
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  And a and then so I actually ran into a in a large hedge fund from out
• 11:02
  of state who had a tax lien investments in probably 10 different states.
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  Louisiana was one. And in Louisiana,
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  they couldn't move their properties,
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  they couldn't get title insurance.
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  Nobody the title insurance industry would touch them because they felt like
• 11:13
  it was a dirty title, they didn't have clean title.
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  The courts were regularly throwing these things out because if someone didn't
• 11:19
  get notified, then they're like,
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  the whole thing's bad.
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  Just just, you know, and then you're stuck.
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  And so he said, What can you help?
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  And I had just started a title company and and I'm I'm up against the
• 11:33
  the the big companies, like I'm just starting out and I and I'm just trying
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  to make make a make a business.
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  And I'm saying, Yeah, I'll do that.
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  You know, like like can you help with these tax sales?
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  And I had no idea what a tax sale was.
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  So I'm like, turn over, look at the book,
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  you know, what is tax sale? And so and it but it just kind of went down that road
• 11:49
  because it was it was something that
• 11:52
  I felt was that was at the at the epicenter of this problem
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  of getting properties back into the stream of commerce,
• 11:59
  into productive use, helping the city recover,
• 12:02
  and bring which brings in tax revenue,
• 12:04
  helps the city move forward, and a complex legal problem that
• 12:08
  I'm now perfectly positioned to to like start trying to solve.
• 12:13
  And so all of these things came together and it ended up it led me to.
• 12:18
  What really I needed to do was was to fix the the the title insurance problem.
• 12:22
  I didn't realize it, but you know,
• 12:24
  because if they if the title insurance industry,
• 12:26
  which is kind of a racket to be all to be honest,
• 12:29
  like they're insuring against a risk that already happened.
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  It's the only insurance like it.
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  Something already happened and they just don't know about it.
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  and it's like, could we get these insured?
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  And why would you need title insurance?
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  Why is it such a big deal to those who don't know?
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  You
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  Well, the the lending industry requires it.
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  That's the number one reason. And if the if the banking industry requires that
• 12:49
  you have it when you get a loan to buy to buy a property or to renovate it,
• 12:53
  to fix and flip it, whatever it may be,
• 12:55
  and they say and the title insurance company says no,
• 12:57
  you can't get the loan. You can't get the loan,
• 13:00
  you're not buying the property.
• 13:01
  If you don't buy the property,
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  it sits. Every road led back to title insurance.
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  And I'm like, this is ridiculous.
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  Like
• 13:08
  It's not that big a deal. All you gotta do is confirm that everybody got notified.
• 13:11
  Like that was like, you know, I mean,
• 13:13
  it's a little more complicated than that,
• 13:14
  but that was essentially what it was.
• 13:15
  And so I've created a whole program for insuring ta real estate
• 13:21
  for title insurance companies in Louisiana that was that came through
• 13:25
  a tax sale process because it had to check a bunch more boxes than your
• 13:29
  nor than your average property,
• 13:30
  right? And so I I came up with this system.
• 13:33
  and created a product with the Department of Insurance and then
• 13:36
  and then attracted an insurance,
• 13:37
  a national insurance underwriter,
• 13:38
  to come into the state and be the o be the first one to start writing this pod.
• 13:42
  They had to add like sell an additional insurance product.
• 13:46
  And so it started working, and we I got a chance to pilot this thing with
• 13:51
  the city of New Orleans. And it was a per it was like serendipitous of like,
• 13:54
  hey, I can finally put this thing after all these years of trying
• 13:57
  to recover and help the city recover.
• 13:59
  And now the city of New Orleans is backing this thing.
• 14:01
  They're gonna put all these properties that that the city owned.
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  They don't really own them, but they're the custodians of the ones that
• 14:08
  the city puts into this annual tax lien auction.
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  And when no investors bid on it,
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  then the debt just remains unpaid,
• 14:15
  right? And if the homeowner never pays it and the investors didn't buy the sale,
• 14:19
  it just sits. And after a number of years,
• 14:22
  they can they can try to sell the actual property,
• 14:25
  not the lien on the property, to try to get
• 14:28
  The thing back into productive use,
• 14:29
  but nobody would buy them. Why?
• 14:32
  Because they couldn't get title insurance.
• 14:34
  So we finally put the program in place,
• 14:36
  and in 2015, it was a smash hit.
• 14:38
  My hypothesis was that we will effectively create a market where none exists.
• 14:44
  Buyers don't want to buy it right now.
• 14:46
  Put title insurance on it, and they will show up.
• 14:49
  And it worked. And since then,
• 14:52
  over 10,000 of these properties,
• 14:54
  I think we're up to like 12,000 now.
• 14:56
  across and it and it spread across the state.
• 14:58
  And other because this this is not a New Orleans,
• 15:01
  this is not a natural disaster problem.
• 15:02
  It was just exacerbated by the natural disaster.
• 15:05
  And it's not even a Louisiana
• 15:05
  Mm-hmm.
• 15:06
  problem. Every state and county has this to some degree.
• 15:09
  And so this has created over a hundred million dollars in in
• 15:13
  in unbudgeted revenue for taxing authorities across the state over the last fifth
• 15:18
  10 now almost 12 years and so it's been it was great
• 15:23
  I was working with a software company that was working that that
• 15:27
  was helping the city collect their annual tax delinquent taxes,
• 15:30
  the tax lien auctions itself. They were in fact they were the first ones
• 15:33
  to put a tax lien auction online,
• 15:34
  the very first ones. so they so this was like a like a like a a sister product,
• 15:39
  right? The the adjudicated properties and insurance.
• 15:41
  They're like, okay, yeah, come on board.
• 15:43
  And so I went in-house with them,
• 15:45
  but after a number of years, I wasn't an owner of that company and I wanted
• 15:48
  to move on and it was the system was working.
• 15:50
  I wanted to do my own thing.
• 15:52
  So I created so I left, went back to private practice
• 15:55
  and eventually created jurisdiction to to give the knowledge and the tool set away,
• 16:01
  basically, to like make sure that everybody had access to this,
• 16:05
  not just government, not just institutional investors on Wall Street,
• 16:08
  but everybody, because it it is a it's a cycle.
• 16:12
  It's a big it's a big flywheel.
• 16:13
  Every year, another round of taxes,
• 16:15
  every year a certain percentage unpaid,
• 16:17
  every year, in fact.
• 16:19
  Over 20 billion with a B taxes falls delinquent every year in real estate
• 16:24
  tax in America. And that's in an average economy.
• 16:27
  Obviously, in bad times, it's worse.
• 16:29
  And about six to nine billion of that gets bought by investors every year.
• 16:35
  See, it's a it's a in most it's like,
• 16:39
  wait, what? Did you say billion?
• 16:40
  Yeah, it every single year. And now the good news here is that about ninety percent.
• 16:47
  Of all tax liens sold across America every year will actually pay back before
• 16:54
  it gets to a foreclosure. Every state has different laws for this,
• 16:58
  but there's a waiting period. You can't just go buy the tax lien and slam
• 17:01
  the gavel down the next day. You have to wait variable between six months
• 17:06
  and three years. It just depends on the state.
• 17:08
  But you will get paid back almost 90% of the time with interest
• 17:12
  and sometimes penalties and costs,
• 17:14
  et cetera.
• 17:15
  And that's your investment. That's why you got into it,
• 17:18
  right? But there's about 10% that are gonna not pay on time,
• 17:22
  even after all of that additional waiting period.
• 17:24
  some will resolve through private workouts and settlements and all that kind
• 17:28
  of stuff. Really, only about 1% of the whole lot every year will ever
• 17:33
  end up actually being foreclosed at the end of the day.
• 17:37
  So, what this is really is part of the entire collection system,
• 17:41
  Well before before we go into a few questions that I have for you,
• 17:45
  Steven, just want to remind everybody,
• 17:47
  head over to jurisdeed.com. It is closed beta,
• 17:51
  but get on the early list there.
• 17:53
  And then check out the innovative investor podcast.
• 17:57
  Those are gonna both be clickable links in the show notes.
• 18:00
  If you found some value in what we're chatting about so far,
• 18:03
  do us a favor, share this with one of your friends.
• 18:05
  If you're watching us on YouTube,
• 18:06
  give us a like and subscribe.
• 18:08
  So Steven, I'd be curious as to the effort that it's been you've gone through here.
• 18:15
  Like let's start with how many states are you gonna be operating in when
• 18:20
  you kick things off?
• 18:21
  wow, that yeah, that's a great question because we're still debating that.
• 18:24
  so I'm gonna give you a a potential answer.
• 18:27
  so we we're starting in our home state because that's an that's a no-brainer,
• 18:30
  right? Louisiana is the f is our probing grounds and and and so we have
• 18:35
  we came up with a with a policy internally that because we knew this
• 18:39
  was a national platform, but that the one of the pains we had to solve
• 18:44
  of for the industry was
• 18:45
  Bringing all the states together into a homogeneous asset class.
• 18:49
  The investors don't care about.
• 18:51
  They don't want to have to worry about that the differences from state to state.
• 18:54
  So that was that was a big problem we had to solve.
• 18:56
  That being said, as a tech startup,
• 18:59
  you know, we have to be very focused and very in and you know,
• 19:03
  be lean and try to watch everything and grow smartly.
• 19:07
  And so we're we we talked about a roadmap.
• 19:09
  Of letting the market pull us into additional new states.
• 19:12
  our software framework, what we've constructed,
• 19:15
  is is ready to accept them. It is the infrastructure we have is most
• 19:19
  is mostly a data infrastructure in that in that's in that way.
• 19:22
  allows us to go into ad states when needed,
• 19:25
  but it's a but it's a whole different it's a different set of laws,
• 19:28
  it's a different application of laws,
• 19:30
  there's different steps to do.
• 19:31
  So we said that.
• 19:32
  We decided to let it let the market bring us in and and then start to grow that way.
• 19:37
  When we go to market later this year,
• 19:40
  I expect us to be in probably three states at first,
• 19:44
  and beside including Louisiana.
• 19:46
  Nebraska is most likely going to be one of those.
• 19:48
  Again, that's market driven. and and not just market driven,
• 19:51
  but the specifically, like we we have a list of a of clients that
• 19:56
  are in closed beta.
• 19:57
  So we're piloting this with them as we're learning from them.
• 20:00
  And one of the the the you know the give and take there is is that there's
• 20:06
  can we can we come into your home state too?
• 20:08
  You know? And so there's a couple other on the on the possibility block
• 20:12
  for the the third and and you know it could be as much as as many as five,
• 20:16
  but I would I would more conservatively say three.
• 20:20
  and then it'll ramp up rapidly from there.
• 20:22
  So from year over year, I expect us to be at twenty-five states within three years.
• 20:30
  Hmm. And then like you had mentioned,
• 20:33
  I think and would it be fair to say that a lot of the institutional money
• 20:38
  is associated with the complexity of this and there's kind of a barrier there.
• 20:42
  Like walk through that process of breaking down those walls
• 20:47
  and especially getting getting these states on board to adopt
• 20:51
  a a technology platform. I mean,
• 20:54
  let's face it, most
• 20:56
  Real estate investors, states,
• 20:59
  government agencies, we're they're just behind the adoption rate when
• 21:02
  it comes to any of this stuff.
• 21:04
  So that had to have been a pretty significant lift.
• 21:07
  No, i it is. now there's two different parts of that question,
• 21:10
  and I wanna for the benefit of the listeners,
• 21:12
  I I I want to keep them keep them they're connected,
• 21:15
  but keep them separate at the same time.
• 21:18
  So the first part of it is like what what essentially what is this complexity that
• 21:23
  we have to overcome and what have we done to overcome it?
• 21:26
  How you know the challenge of that in general of of complexity
• 21:30
  of of participating in the investment,
• 21:32
  right? and then the second part of that was
• 21:35
  Specifically focused on the difficulties of dealing with government
• 21:38
  and big institutions that may be a little bit more reluctant to adopting brand
• 21:43
  new ways and changing everything and you know software focused systems.
• 21:48
  So the the first part as far as the complexity,
• 21:51
  every state has its own laws for how to handle tax limits.
• 21:54
  So you have 50 different systems.
• 21:56
  Okay. So, and you have to comply with those if you're gonna participate
• 22:00
  in the investment in their state.
• 22:03
  so that's a lot to juggle if you if you're trying and you really really want
• 22:07
  to get economies of scale and to hit those really attractive investment return
• 22:11
  numbers, you do have to eventually deploy money into beyond one state.
• 22:15
  it it's actually it's still it's very competitive.
• 22:17
  So if you're just trying to, you know,
• 22:21
  get a bunch of liens in one state,
• 22:23
  you probably aren't gonna be able to get enough.
• 22:25
  You're gonna be you're gonna a lot of competitors are gonna get there before you.
• 22:28
  Especially those who have been doing this a long time and they know
• 22:30
  all the tricks of the trade. so you're gonna really have to look at branching out,
• 22:35
  but how do you do that? It that just com it just compounds the complexity.
• 22:38
  And that's one of the big, big systems.
• 22:40
  So this a f a 50 state rules engine,
• 22:44
  if you will. Like so having having the specific part of the laws that that govern
• 22:49
  tax sales state by state normalized.
• 22:52
  Again, our goal with all the complexities is to.
• 22:57
  Have it behind the scenes so that your experience as the investor
• 23:02
  is as typical as any other,
• 23:05
  where the asset class itself is not geographically challenged.
• 23:09
  It's not, it's not geographically burdened by where it is,
• 23:13
  like gold and silver and oil and futures.
• 23:17
  And it just it's it's it's not a state-by-state issue,
• 23:20
  right? And so
• 23:23
  That's the b that's one of the biggest complexities.
• 23:25
  The other one is well, complying with legal requ requirements is it's kind of hairy,
• 23:32
  right? it and it and there's and there's very little cushion there,
• 23:34
  very little forgiveness for lack of compliance.
• 23:37
  It's not like try again next time or or just do it one more,
• 23:40
  do it better this time. It's you lose.
• 23:43
  And so that's a that's a very pretty strict standard.
• 23:47
  So what do most investors do? They they hire attorneys,
• 23:50
  they hire, you know.
• 23:53
  abstract title examiners and ty and and people who are who are experienced
• 23:57
  in this to help them service their their investments.
• 23:59
  And then the servicing eats into the returns,
• 24:01
  especially if it's lawyers. I used to be one.
• 24:04
  Practice, I still technically am one.
• 24:06
  I don't really practice though.
• 24:07
  And they're very expensive. And so you can't really get again,
• 24:12
  you get all the knowledge base,
• 24:13
  but then you spend all your money on overcoming the challenge.
• 24:16
  Then you didn't really gain anything,
• 24:17
  right? And so how do you get that
• 24:20
  beat those barriers down at scale and at a at a with a with a lower cost output
• 24:26
  but but with the same return, which is,
• 24:29
  I have this all figured out now,
• 24:31
  right? and so legal complexity,
• 24:34
  fragmentation state by state, those are the two of the of the biggest challenges.
• 24:38
  and and it's a life it the the the life of a lean of a tax lien,
• 24:42
  even though most of them will what do they call redeem?
• 24:46
  And so I said I said pay back.
• 24:47
  It's it's it's
• 24:48
  Called a redemption, even though 90% of them are going to redeem,
• 24:50
  where basically the government just receives the the debt the
• 24:54
  tax debtor's late payment, processes it,
• 24:56
  and sends the investor their their check,
• 24:58
  returns the money back to them with interest.
• 25:00
  It's it's still a very complicated process and it's a very long process,
• 25:05
  potentially. In Louisiana specifically,
• 25:07
  the redemption period is three years.
• 25:09
  That means you can't instigate legal efforts.
• 25:13
  You you have no right to the property,
• 25:15
  you have no right to the go set foot on it.
• 25:17
  It is you have a piece of paper that entitles you to recover a debt that's secured
• 25:22
  by the property. Again, that analogy,
• 25:25
  mortgages, right? As soon as you do that,
• 25:26
  it's like, yeah, okay, I get it.
• 25:28
  The bank has a mortgage on my property.
• 25:29
  If I don't pay them,
• 25:30
  They could charge me late fees and then eventually maybe foreclosing
• 25:33
  the property and take the ownership away.
• 25:34
  Yeah. Same thing. Same exact thing.
• 25:37
  So all that's really complicated.
• 25:39
  It takes a long time. And it's so what have the institutional investors done?
• 25:43
  How have they got well? They're well well funded and they've been doing
• 25:47
  it for a very long time. And so they've built systems and teams
• 25:51
  and networks of professionals across the states.
• 25:53
  and so that's not very efficient.
• 25:56
  But that gets to show you how much money they're making,
• 25:58
  though, by by participating in this and is in this vital investment that preserves
• 26:03
  community well-being across the country.
• 26:05
  Is but you know, don't let's not paint a purely altruistic picture
• 26:09
  of these investors, even though it in effect that's what they're doing.
• 26:13
  But they're making a ton of money.
• 26:15
  And so they what's happened very recently is the is because of AI.
• 26:22
  And because of work from home and and now all of these the post-COVID
• 26:25
  era is even the institutional investors have been faced with this dilemma
• 26:30
  of completely revamping their entire operation of how they approach this investment.
• 26:35
  You you don't need 80 people in a room like like a like a big law firm doing
• 26:40
  all this work anymore. So much of it can be automated,
• 26:44
  so much of it can be can be can be streamlined and made more efficient.
• 26:47
  and and so
• 26:50
  our, you know, our com our our value proposition is is in simplification,
• 26:54
  right? It's making and making the investment accessible through simplification
• 26:58
  and and through you know at reach and and making it aware people aware through
• 27:03
  education that this is there. so that's those are some of
• 27:07
  the biggest complexities that that really have never been overcome.
• 27:11
  And guess what? Who's not trying to overcome those challenges for everyone else?
• 27:15
  The ones who are making the money from the fact that they
• 27:18
  That they're that the complications are still there,
• 27:20
  right? They've overcome
• 27:21
  Mm-hmm.
• 27:21
  them. So they're good, right?
• 27:24
  You're still not, but they're good.
• 27:26
  So, you
• 27:27
  Yep.
• 27:27
  know, and they're not making any efforts.
• 27:29
  So, of course, I, you know, they don't want to hear me talking about this because,
• 27:33
  you know, but they also don't fear that even if I did come out and talk about this,
• 27:37
  like reveal all their dirty secrets,
• 27:38
  right? that there's any kind of threat to them.
• 27:41
  It's the same thing that the that Wall Street said when Robinhood came around.
• 27:46
  You're like, ha, well Robin Hood people.
• 27:48
  Yeah, whatever. They'll never disrupt the industry.
• 27:51
  And then GameStop happened. And they were like,
• 27:53
  wait. What? We have to make we have to pay attention to this now?
• 27:57
  Shoot. Now it did it force them to fold up camp and stop taking trade requests
• 28:03
  on Wall Street? No. It just meant that they were a real player now.
• 28:06
  Robin Hood was the channel to everybody else to participate and they grabbed
• 28:11
  a market share. A really big one.
• 28:13
  And so, you know, this is real estate.
• 28:15
  It's a huge industry. There's a lot of room for everybody to play.
• 28:18
  So now government, thankfully,
• 28:20
  we don't need government to do anything for us to exist.
• 28:25
  Now, it just so happens that they are a vital part of that ecosystem,
• 28:30
  that flywheel I was I was describing earlier,
• 28:32
  because they're the ones who sell the lien in the first place.
• 28:35
  And they're the ones who process the redemption payments after they sell it.
• 28:39
  And so they're a vital, they're a necessary part of it,
• 28:42
  but they have their own internal processes,
• 28:45
  accounting systems, and you know,
• 28:46
  and it's not for the investment to exist and for us,
• 28:50
  our service to benefit those who participate in the investment,
• 28:54
  they don't have to say yes. now if we really want to complete
• 28:58
  the value proposition of making this almost hands-off to everyone
• 29:02
  who participates in it and have like like we'll get our hands dirty,
• 29:04
  right? You don't have.
• 29:06
  We we have to deal with government,
• 29:07
  but I don't need their permission to operate.
• 29:10
  I don't need them like they don't have to adopt my platform.
• 29:13
  It's gonna work just the same,
• 29:15
  even if they didn't. So
• 29:16
  Mm-hmm.
• 29:17
  but we do have a a a tax collector module that we're that is in
• 29:21
  not even being released earlier.
• 29:23
  Like we were already testing it,
• 29:24
  but you know, because ideally this isn't just a service to one part of one industry.
• 29:30
  This is the flywheel that is the industry.
• 29:33
  And that's what we're going to become.
• 29:34
  And when we when we have when every part of it revolves around this center
• 29:39
  and we are at the center, we can control it and and let and and
• 29:44
  the the benefits will compound to every segment of that flywheel.
• 29:47
  Kind of like blockchain.
• 29:50
  Mm-hmm. You you've kind of i used the comparison to Robinhood a few times,
• 29:55
  but something there's probably a bit more like when you buy into this,
• 30:00
  you're not buying shares into a sing into a property,
• 30:03
  right? You're are you buying the entire
• 30:04
  Right, right.
• 30:05
  lien? Like could you kind of like summarize like what somebody could expect?
• 30:09
  Like let's say they have five grand and they they come into your platform,
• 30:13
  like what could they expect or how would it work?
• 30:15
  Would they be waiting three years for something to happen?
• 30:18
  Like maybe that's an outlier.
• 30:22
  Yeah, so that no, that's a great distinction because we we do use the analogy,
• 30:25
  but at a very high level. Like so it's more about about creating access
• 30:30
  to something that was really gated behind,
• 30:32
  you know, eight century-old institutions that that really just
• 30:37
  ha dominated the space. Right.
• 30:39
  And so in a very similar way, but it doesn't mean that like
• 30:43
  the actual investment activity is is similar.
• 30:47
  And so
• 30:49
  Yes, this is the the the tax collectors sell one a single lien on
• 30:53
  a single property at a time, right?
• 30:55
  It is not a fraction of that. There and there are hedge funds that again,
• 31:01
  there's that word, right? So you got to be part of that circle.
• 31:04
  that that take up that pool money together.
• 31:06
  And so you, Jack, and I could put 10 bucks into a pool of
• 31:12
  a hundred dollars and have 10% each,
• 31:14
  right? Of in that that pool of a hundred dollars.
• 31:16
  goes and invests in tax liens and somebody is put in charge of managing that.
• 31:20
  That actually happens, but very it's it's it's not a a regulated or a
• 31:26
  you know like something that you could go call up tomorrow and say,
• 31:29
  I want in on that one. Now it could be.
• 31:30
  And in that in fact that is it's something that is we're c is a consideration
• 31:36
  for on our future roadmap. But again,
• 31:38
  every shiny object you can't go chase when you're a young tech startup,
• 31:42
  you got to be focused. And so you know one thing at a time.
• 31:45
  And if all the everything we're doing works to the extent that we believe it will,
• 31:48
  we'll get there. We'll get there.
• 31:51
  I think fractional shares, I think allow allowing people to create their own SPVs,
• 31:57
  their special purpose vehicles to put money into and to have that
• 32:00
  be the investment so that you can participate in part of it,
• 32:03
  which makes it even more accessible,
• 32:05
  right? then that's fantastic. Now,
• 32:08
  we have no intention of ever taking your money.
• 32:11
  That's not the game we play.
• 32:13
  We are making it just simple and seamless for getting making sure that you're
• 32:19
  successful in it. So right now,
• 32:22
  and plus the the seller of the lien is government.
• 32:26
  You're not going to ever be taking the money,
• 32:28
  right? So it's just not, it just doesn't like fit that mold.
• 32:31
  but we also don't want to be like this this intermediary either,
• 32:35
  where we we pool money together on behalf of 10 different investors and
• 32:38
  we go invest it for you. Like
• 32:40
  That's not the game that we need to play.
• 32:42
  And I think there are plenty of others that where you can do that.
• 32:45
  The pain we're solving is once you is once is wait,
• 32:48
  what should I buy? First off, do I even know how to do this?
• 32:50
  Right. So there's an educational piece.
• 32:52
  There's an on-ramp to getting in the game.
• 32:54
  And then once you're in the game,
• 32:56
  it's like, now what do I do? Right?
• 32:58
  wait, I that it changed in that state,
• 33:00
  in that state. And guess what?
• 33:01
  State's laws change frequently,
• 33:03
  right? So it's not just 50 different systems,
• 33:05
  it's 50 different volatile systems,
• 33:07
  right?
• 33:08
  And then we have a federal system of laws that force the states to
• 33:11
  all change their laws sometimes.
• 33:12
  It's a constantly moving goalpost thing.
• 33:15
  And it's just again, all I'm talking to is the same thing we we said earlier,
• 33:18
  which is it's really super complicated.
• 33:20
  So much so that most people just be like,
• 33:22
  most people turn away. They just and there becomes a barrier,
• 33:27
  an artificial one, but a real barrier to entry.
• 33:30
  And that's what we're solving.
• 33:31
  You know, we we talked about how AI is you're using AI in this,
• 33:35
  but this is just such a great example of what I suspect we're gonna
• 33:40
  see more and more of is that AI is just the d the level of disruption
• 33:46
  and the the ability to play with the big boys,
• 33:50
  like we we've never seen a greater leveling of the playing field as we have
• 33:54
  we are right now. And
• 33:57
  You know what's gonna happen, Steven.
• 33:59
  If you haven't seen it already,
• 34:00
  that status quo, there's gonna be a few death throws gonna be happening
• 34:06
  and they're going to do anything to prevent you from disrupting their world.
• 34:11
  like have you seen any of that going on yet?
• 34:14
  Like I'm sure there's gonna be some lobbying or something associated with this.
• 34:19
  Yeah.
• 34:20
  Well and and and it's funny you mentioned lobbying because because that
• 34:24
  is completely gonna be part of part of our success strategy because it's it's this
• 34:29
  whole thing is about legal compliance.
• 34:31
  It's it's it's state by state,
• 34:33
  but you know it's so yeah, if you want to really set the tone for the
• 34:38
  the the the end result we're looking for,
• 34:40
  we're gonna have to be play a role in sometimes changing laws
• 34:44
  or sometimes pushing back against bad changes of laws,
• 34:47
  right?
• 34:47
  and so but as far as the AI question,
• 34:50
  I'm I'm I'm glad you asked because you know we we are we
• 34:56
  use AI a lot, but not how most people are using it.
• 35:00
  and not that it's a secret, but it's a lot harder the way we're using it.
• 35:03
  I mentioned this to you before we hit the record button,
• 35:07
  but that one of the key distinctions I'm getting at is
• 35:10
  The industry that we're disrupting is requires you to get it right.
• 35:14
  You can't get mostly right.
• 35:17
  You can't get close. This isn't hor this isn't horseshoes or hang grenades,
• 35:21
  right? This is you it's either right or you lose.
• 35:23
  This is legal rights. It's due process.
• 35:26
  it's check it's legal compliance.
• 35:29
  You check you you did it or you didn't do it,
• 35:30
  right? You did it timely or you didn't do it timely.
• 35:32
  you do about that law change or you didn't know about it.
• 35:34
  It's it's there's no middle growth.
• 35:35
  And so
• 35:37
  And the underlying data that this all rests on has to do with real estate.
• 35:42
  Where are real estate records kept at the county?
• 35:45
  There are 3,100 plus counties in America,
• 35:48
  and they're not on a single system.
• 35:50
  They don't talk to each other.
• 35:51
  There's 3,100 different systems.
• 35:53
  And they're all kind of talking about the same thing,
• 35:56
  right? Land, improvements on land,
• 35:58
  tax. Those are all common concepts,
• 36:01
  but they the data on that.
• 36:05
  is very volatile and very in in in changes from place to place.
• 36:09
  And so how in the world can we be expected to normalize that,
• 36:13
  to standardize that, to make this into this this homogenous asset class that
• 36:19
  I'm talking about? It's really hard.
• 36:21
  I'm not going to kid you. It's really hard.
• 36:23
  But that therein lies the challenge.
• 36:25
  And it's also explains what I'm talking about,
• 36:28
  why have the the the institutions have just
• 36:31
  They have the resources and the teams to overcome that.
• 36:33
  And nobody else does you don't.
• 36:35
  So sorry, you can't play. And so,
• 36:39
  you know, technology is helping us to get that to get to break those down.
• 36:43
  But we are the definition of human in the loop because we can't delegate
• 36:49
  to AI like some businesses. Like they can write their marketing material,
• 36:52
  they can post on LinkedIn, they can follow up,
• 36:54
  they can thumbs up, they can send you the lead,
• 36:56
  they can put in your CRM.
• 36:58
  Like, yeah, we can do that part too,
• 36:59
  but that's not what we're solving,
• 37:00
  right? That just helps us grow faster and give better service.
• 37:03
  What are we solving with AI? We have to be as involved as the AI is.
• 37:08
  And it's because I have,
• 37:10
  Mm-hmm.
• 37:10
  you know, the s the subject matter expertise,
• 37:12
  the 20 plus years of experience,
• 37:14
  the the the the niche, the the the nicheness,
• 37:19
  if you that's a real word, right?
• 37:20
  That this is, makes it kind of obscure and less
• 37:25
  Known to everybody else. So you have to really be focused
• 37:28
  on deploying and leveraging your own experience and knowledge.
• 37:31
  And when we're coding, and and I and I I am the company's developer.
• 37:36
  So what that and that is probably the best thing that AI has done for our company,
• 37:40
  is it is allowed creators to get infinitely closer
• 37:46
  to seeing the manifestation of the product that comes from their expertise.
• 37:52
  If that makes sense. Before
• 37:53
  Mm-hmm.
• 37:54
  AI, I I had I'm I'm the subject matter expert.
• 37:58
  But what's between me and and the reality of this product existing
• 38:04
  are years of what venture capital,
• 38:07
  big teams, software engineering teams,
• 38:10
  millions of dollars, you know,
• 38:12
  like lots of pitfalls and everything.
• 38:14
  And it's just and and lots of of hits and misses.
• 38:19
  Lots of like, that's not what I meant.
• 38:21
  Well, the co well, the coder didn't know,
• 38:22
  you know. So like, well, let's go back to the product guy.
• 38:25
  The product guy has to go to the engineer guy.
• 38:26
  The engineer goes to the like,
• 38:27
  no. The subject matter expert is telling the coding what to do directly.
• 38:33
  And as soon as you
• 38:34
  Mm-hmm.
• 38:34
  give me back your response, I immediately know if it's right or wrong.
• 38:37
  To the to the letter, right? And as soon as you get back,
• 38:42
  I I'm correcting you right on the spot.
• 38:43
  So the turnaround time, the lead cycle of getting something.
• 38:49
  produced correctly, not a prototype that looks flashy and looks wonderful.
• 38:54
  The actual correct thing is is condensed.
• 38:57
  Like it and and it's in that that's that's not just unique to us,
• 39:01
  but that's what that's we're one of the beneficiaries of that.
• 39:03
  And I think that it's it's there's a a startup mentor,
• 39:08
  coach, author out there called Ash Moria.
• 39:10
  He's is a fantastic writer and and a coach.
• 39:13
  and he wrote
• 39:15
  running lean as one it was his book,
• 39:17
  right after Eric Reese wrote Lean Startup.
• 39:19
  And and it's a fantastic book,
• 39:21
  but he's got he has actively his coaching today.
• 39:23
  and he's coined the phrase the founder economy is what we're in right now.
• 39:29
  and it's because the economy is hinges on who the founder is.
• 39:34
  Way more than how much money you raised or or like or or anything else.
• 39:38
  And and so or like how
• 39:41
  How viral can you get? Like how how many how many likes and how popular
• 39:45
  are you and everything? It's how how much in demand is what's in your head?
• 39:49
  Because now it's not that hard to put what's in your head into an actual product
• 39:53
  in the market.
• 39:55
  Mm-hmm. Yeah
• 39:55
  So that's changed
• 39:56
  the significant significant things for us.
• 39:58
  But it also continues to be a big challenge for us because the temptation is there,
• 40:02
  right? AI can is so powerful these days and it's it can do so many great things.
• 40:07
  And the temptation's there to say,
• 40:09
  like, yeah, okay, it looks pretty good,
• 40:11
  you know? And like, we can't do that.
• 40:13
  We can't afford to do
• 40:14
  Mm-hmm.
• 40:14
  that.
• 40:14
  Yeah, this is this is one of those things that is kind of interesting in my world.
• 40:19
  You know what some of the things that I do for for businesses,
• 40:23
  Steven, and and more times than not,
• 40:26
  I'm I'm actually guiding businesses,
• 40:30
  real estate investors. I'm just kind of re dealing with the boring stuff.
• 40:36
  Mm-hmm. Mm-hmm.
• 40:36
  The boring stuff behind
• 40:38
  the scenes because in the end
• 40:40
  It's their expertise getting in front of people,
• 40:43
  making those connections and freeing up that type of time so that they
• 40:46
  can lean into that, that's where I've seen the biggest lift.
• 40:52
  Yeah. Yeah, no doubt. No doubt.
• 40:54
  That's that's it's it's something we we it is is part of our journey
• 41:00
  and we've accepted it. It is it is this is the way it goes.
• 41:03
  And it's it's very hard. It's probably why no one's done it before now,
• 41:07
  right? And it's like, hey, it's really,
• 41:08
  really hard to get that right.
• 41:09
  but it's a massive, massive opportunity in a huge industry.
• 41:12
  and yeah, we're excited to see where it goes.
• 41:15
  Well, Steven, this has just been fantastic.
• 41:17
  I I think we you can I could probably do this all over again.
• 41:21
  b but we better dive into the rapid fire and start closing out this episode.
• 41:26
  Was there anything else we should have tried to hit on though?
• 41:29
  you know, I there's so much that that you like like you said,
• 41:32
  you could teach a I could teach a a twenty episodes of a of a of courses,
• 41:38
  right? On to that would investors would would that's sort of why
• 41:41
  we created the innovative investor podcast was to hey,
• 41:44
  how is technology benefiting investments?
• 41:46
  And we and we stay in our lane,
• 41:47
  right, with with the delinquent tax liens,
• 41:49
  but but you can extrapolate and use that some of these lessons learned though
• 41:53
  to take it into other investment types.
• 41:56
  so no I I I just think it's it's an interesting topic
• 42:01
  to try to tackle because of how much it affects everybody.
• 42:08
  You don't even have to be a homeowner for this industry to affect
• 42:13
  you because you are benefiting from the collection of real estate
• 42:18
  tax in wherever you live.
• 42:21
  you get you are affected negatively if a bunch of blighted properties
• 42:27
  sit there for 10 years in your neighborhood.
• 42:29
  this it it's a universal impact.
• 42:33
  and I don't want to you know undersell that.
• 42:36
  the the benefits that New Orleans saw from after Katrina and the
• 42:40
  and the the acceleration of the recovery that this that this played a role in.
• 42:44
  Is a constant thing, constant factor in the industry itself.
• 42:49
  It is pr it is omnipresent. It's it it really is everywhere throughout
• 42:53
  the country and every county and city in America.
• 42:56
  At some level, this investment plays a vital role in ensuring
• 43:01
  the continuity and the stability of communities across America.
• 43:05
  And I don't leave with that because that sounds self-serving or kind
• 43:10
  of flowery or whatever, but it's true.
• 43:12
  It's true.
• 43:13
  The business side of things has to be successful,
• 43:16
  right? And that's what we're pursuing.
• 43:18
  But we are going to have a nonprofit at at some stage when we're when we're
• 43:23
  financially stable to do so, to give back to communities where these properties
• 43:27
  are being returned to commerce.
• 43:28
  Why are they being put back into productive use at a better clip?
• 43:31
  Hopefully, because of our system.
• 43:33
  Hopefully, investors are benefiting.
• 43:35
  More people are benefiting from being having access to the investment.
• 43:38
  More homeowners and tax debtors are benefiting because.
• 43:42
  One of the most important things that I learned in post Katrina was finding people,
• 43:46
  better ways to track people down.
• 43:49
  It sometimes they're deceased and you have to track down the people that that
• 43:52
  survived them. Have them save grandma's property,
• 43:55
  right? Have them have have them actually become a lot of times foreclosures happen
• 43:59
  and and somebody who cares never even knew about it.
• 44:01
  And so, you know, it is a matter of doing the right thing and doing things right
• 44:07
  all at the same time. And and it's how much it impacts.
• 44:10
  every every one of us in this country.
• 44:12
  So it's a it's a tall it's a tall task and but it's a it's a responsibility that
• 44:17
  I don't take lightly and and I am but I'm excited about it because I've I've
• 44:20
  l I've really centered my career and my life in this space for almost a quarter
• 44:27
  of a decade. So I I you know couldn't I'm I couldn't ask for anything else
• 44:32
  to do anything anything differently here.
• 44:34
  Well, if you're ready, Steven,
• 44:35
  we'll dive into the rapid fire before we do one more time.
• 44:38
  It is jurisdeed dot com. That's gonna be a clickable link in the show notes
• 44:43
  as well as to the podcast, Innovative Investor.
• 44:47
  but if you're ready, Steven, we'll dive into the rapid fire and close
• 44:50
  out this episode.
• 44:52
  I'm ready.
• 44:53
  What lie do investors often tell themselves?
• 44:57
  I've done enough work, I can just go run in and buy.
• 44:59
  If you could go back in time and give your younger self a piece of advice,
• 45:02
  what would it be?
• 45:03
  What you want when you're starting a business does not matter.
• 45:06
  It's what the market and what the customers want.
• 45:08
  I need you to look back in time as you were scaling your business.
• 45:11
  What was the very first hire you made and would you make that hire again?
• 45:16
  First hire I made was a lady by the name of Jenny Carson.
• 45:19
  and she was a r a remote paralegal in right after COVID.
• 45:23
  And it was a weird thing working with someone through a camera.
• 45:27
  and she is now been with me for six years.
• 45:30
  So yes.
• 45:31
  And then finally, what single tool or process have you implemented that
• 45:34
  has had the biggest time saving impact?
• 45:36
  Ooh, I I gotta give my hat tip to AI.
• 45:39
  I mean I know that's a big that's not very specific,
• 45:41
  but I am really good at what I do,
• 45:44
  what I like to do, and I'm really not so good at the things I'm not so good at.
• 45:48
  follow ups and and and managing of th details and I I'm a very much type
• 45:54
  A ADHD fa creative founder person.
• 45:58
  And all of those little detail things that they just always been escaped
• 46:02
  me until thankfully I've I've leveraged AI to keep me from stepping on
• 46:08
  my toes so much.
• 46:09
  Well, Steven, this is just fantastic.
• 46:11
  Again, it is jurisdeed dot com.
• 46:14
  Clickable link in the show notes.
• 46:15
  Really appreciate your time. This was fantastic.
• 46:18
  I hope you consider coming back.
• 46:20
  Again, I I have a feeling you and I could just go all afternoon in the end.
• 46:24
  I have no doubt, and we'd love to have you as a guest on our show as well,
• 46:27
  Jack.
• 46:29
  Well, I look forward to it and well we'll see you next time.
• 46:32
  Thanks for having me.