Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Stephen Morel. He is a title attorney with 20 years of experience in property law and the founder and CEO of JurisDeed, a tax lien investing PropTech startup that makes tax lien investing accessible to accredited and non-accredited investors with as little as $5,000. After Hurricane Katrina destroyed his home in 2005, Stephen rebuilt it with his own hands while simultaneously launching his legal practice. Today, he serves on the Louisiana State Tax Sales Committee and co-authored a complete re-draft of Louisiana’s tax collection system. So Steven, thank you so much for being on the show today.
Stephen:
Yes, thank you. That’s a warm introduction. , , It’s, it’s always, , fun to be online and talking with, , folks in the real estate industry. So, , I’m happy to be here.
Charles:
Great. , if, what we were talking about before, we don’t have too many tax lien investors and attorneys that come on the show, but before we get into that, , tell us a little bit about yourself, both personally and professionally, prior to, you know, launching your own legal practice and getting involved in tax lien investing.
Stephen:
Yeah. So I, , I’m born and raised in New Orleans, , Louisiana, and I, , went to LSU undergrad and, , law school, Go Tigers. , So, , I, when Hurricane Katrina came around, , I was a young attorney, just a couple years in, , and, , was really not enjoying life. I ju – it just, , the life of a young associate, , is just billing hours and just mindless, , you know, living around the billable hour, so not me. , And, , I, I was very disillusioned. So the storm comes in, and of course, you know, that, it’s devastating. , My house was d – , all but destroyed. , I had a two-story house, so the second floor looked like nothing happened, and the first floor was just like a, like a, you know, Beirut. , And so, , I, it, it just kind of all came over me at, at that time.
Stephen:
I, I’m sitting st – or standing in this s – nasty sewer water. By the way, this is two weeks after the storm to kind of give me an idea of the severity of this, , and it’s still five feet of water. , Nasty sewage water, late August, early September in New Orleans with no, no air conditioning, closed doors, everything. You can imagine, like, what this, what this surreal looks like. , And I, I’m seeing in my little home office on the first floor, which was part of the ruin, , my Blacks Law Dictionary floating upside down in the water, , with this amazing stench in, in the air. And it was just, like, this. It hit me. I’m like, “I’m done. Like, I, this is not what I’m supposed to be doing. I’m not supposed to be billing hours for somebody else.” And, , so I, after that happened, , I, I, I had to do the obvious, which was to fix up my house and, and figure out, you know, how to move forward.
Stephen:
, I’m a veteran, and so I had some, , , USAA was on the ground. They were fantastic. Everyone else was fighting their insurance companies, whether, whether it was caused by wind or flood. And, , and I was rebuilding my house. But I knew nothing about real estate at the time, but very little, very little. And I had never, you know, got into, to real estate investing. But I had to, , really get my hands dirty. And, and, and it was, it was the Wild, Wild West. And it was like, you know, chasing down a contractor in a pickup truck down, down a, a, a bumpy road and like, “Hey, hey, I need help,” you know? , And, and so I met all these people. I, I still had my law degree. I’m like, “What am I gonna do now?” Well, I got in, back to my house around December, around Christmastime, which was really fast <laugh> by, by the way, by all accounts.
Stephen:
And, , and I, I was like, “Wow, I’m back in my house.” And I, and I walk outside and look around, and the rest of the neighborhood is still in shambles. And I drive around the city, and it’s still in shambles, half dark and everything. And I’m just like, “Oh my God, like, I’ve gotta do something. This is what I, I feel called to use legal in real estate that I’ve now fallen in love with because I’ve watched the tangible transition, the transformation of something that was in disrepair go into something that’s beautiful again.” And I’m, I’m watching it, and I’m watching in my own labor, it caused this change, and it was, it was just a surreal feeling. And I’m like, “I c – I, I’m not about to go into the contracting business and go try to fi- fix up the rest of the city, but what can I do with my law degree?” So I, I, I, I had some people come back and, , wanted to do deals and, and they were in- investing in tax liens, et cetera, who walked into my office.
Stephen:
I started, started like a title company. And, , and they were like, “Hey, we can’t get our, these, any of these deals through. They, they know what they’re. We have these tax liens that are, that are the, you know, the, from the, from the county, et cetera. And because we can’t find anyone to serve, and we can’t move the property unless we know all where all the owners are.” And it became this whole thing around finding people. And that was the main thing. And, and I was like, well, it goes. That principle alone is, like, is essential to our constitution, right? Due process. You can’t have a legal action that takes the property away without, without due process. So, , I, I worked on a system of, of trying to just. It was just kind of just trying to do business, to be honest with you.
Stephen:
I didn’t know, like, it was gonna become a big thing. , And then I, I, I found out that there was no title insurance, even if you did find all the people, and so then they really couldn’t sell the properties if they. If we succeeded in the, in the legal foreclosure part of this, they were not, they were never gonna get title insurance, which means they can’t sell it at market rates, and there was this big thing. So then I developed a title insurance product, , that, out of thin air, I didn’t know what I was doing, but I decided to, , this was gonna be my niche, and so I started doubling down. , And in 2015, I was able to get this product, , like, approved by the Department of Insurance. , First time ever that insurance companies could insure the risk of a tax sale in the chain of title, which then gave them the ability to cover the risk and made it, and made it insurable.
Stephen:
, And then I, I went in-house with a software company in New Orleans that was working for tax collectors at the time, doing, , you know, B- B2G, , work, , and, , and, , rolled out this whole program for taking all of the old properties that the counties and cities had taken back into inventory and ever wanted because of unpaid taxes, and it allowed them to get cleaned up, put back on an auction block and get, or, or track down the owners who, who, you know, maybe forgot they even had their, their ancestors had this property, and get them resolved, and get them back into the flow of commerce. And it worked. , , Over the past decade, over 10,000 properties in, in Louisiana have been, , , reinsured and back into stream of commerce because of this program. , But I wasn’t an owner of that company, and after a number of years, after everything was kind of running on autopilot, and I decided to, to leave and go do some other things on my own.
Stephen:
I formed Jurisdeed in 2020. , I didn’t know what the heck Jurisdeed was at the time. <Laugh> I just decided I wanted to. It decided. It was a cool sounding name. It was like law, real estate. Okay. That, that sounds like me. Let’s go do something. , And then it turned, it just took lots of pivots and t- twists and turns, and it became apparent that this is a $25 billion industry, this tax lien industry that’s been gated by comp- complexity and big institutional investors that have kept everyone else out for over a century. I’m like, “Ah, there’s an opportunity. Let’s work on that.” So it became an, an investor lifecycle platform for automating the path of, of making money in tax liens, also playing a very vital role in keeping the counties funded in America. So it was a pretty cool thing. And it’s, it’s, we’re, we’re now in our, our, , you know, beta stage of, of launching a platform that can be, , nationwide, , for the public to invest in tax sales, much, much like Robinhood did to stocks and crypto.
Stephen:
, We’re, we’re breaking down the barriers of accessibility, simplifying things so that you don’t have to be an expert in tax lien investing to enjoy some of these incredible returns that you may have read about, , that the institutions have guarded for over a century.
Charles:
Yeah. No, it’s, it’s very interesting. Before we dive into what you’re doing now at Juris Deed, can you give us an overview in the background of what tax lien investing is and who the typical investors are that purchase these liens?
Stephen:
Yeah. So, so every year there’s a tax on real estate if, unless it’s exempt. , And if it’s not paid, , the, the county or the city that is, that is trying to collect that, it’s one of their number one top sources of revenue. So they’ve set a budget, and if they, if you don’t pay it, then they could have a shortfall, right? So something in budget doesn’t get paid for. , Or if it happens repeatedly, they might say, “We need to raise everyone else’s taxes,” right? So both of them are bad results. Cut the budget or raise everyone else’s taxes. So there’s a, a, a, a, a prioritized system in America and at the county level or city level, large cities sometimes tax thems – tax on their own, , to make it really incentivized for investors to come cover the unpaid portion of their annual tax roll.
Stephen:
So if you, if, , 20% on average are not going to pay within 12 months of receiving their tax bill on a year, on a normal average basis. If that were allowed to persist, and there was no investment vehicle but to, to save the day every, every year, over 50% of America’s counties would go bankrupt in o – in one year. So it’s a, it’s an absolutely necessary part of this flywheel that actually keeps communities funded on an annual basis. Now, what real estate taxes are paying for, right? You, , police and fire and public schools and roads and all the b – essential public services. So it gets a bad rap sometimes, the tax sale industry. It’s like these money grabbing, you know, like, like greedy investors to come in, swooping in from out of town. They have no interest in the property. They’re gonna leave it high and dry.
Stephen:
They’re like, and maybe some of them do. But you don’t wanna have a year where those investors don’t show up at your tax sale because you’re gonna go bankrupt. And, and that’s just the way, it’s just the nature of the, of the game. So, so what happens is the government by de – by, by default, has this lien on your property when they issue a tax bill. Like, it doesn’t mean it’s a bad thing. A lien is, a mortgage is a lien too, right? , And if you don’t pay it a- after a certain amount of time, they, they need the cash. They’re gonna need to operate. So they, they have this incredibly, like, not attractive investment vehicle called a tax lien. And they offer it up for a public auction through a number of different options. And, and people show up, investors show up, and they, they, they bid against themselves and they win it.
Stephen:
, And when they win it, the county gets their money. They got the cash. They can cover that delinquency. They can now, that budget item is checked, and the investor now holds the lien. So the government effectively just assigned their lien to a private individual that they used to hold on that property until that tax sale event happened. Now, the investor holds the paper. , And it’s purely just a lien. This is ju – it’s very, very akin to a mortgage. So it, it’s amazing how mo – many people really don’t understand what a tax lien is. And it’s not amazing that many people don’t, because it is kind of like a, a weird niche thing. But it’s so simple when you would just analogize it to mortgages. It’s mortgage is a lien against your property for debt that the homeowner owes, and it’s secured by the property, right?
Stephen:
, And it, for, for repayment. Now, the ba – the, the lenders do not want your property ever, right? The, the ones who lend the money originally, they do not want your property. That is the worst case scenario for them. It is a fail-safe. They just want the interest. <Laugh> Like, you know, that’s why they desperately try to, like, rescue you if you’re late on your payments and everything. And so tax lien investing is a little different in the sense that the journey for the investor starts at the period when it’s delinquent, right? You never are owning the lien when it’s, you’re not the government, right? So you’re not owning the lien before it becomes delinquent. You’re entering the game whi – the, right when it becomes, or shortly after it becomes delinquent. But there’s still a period of time, and every state has slightly different rules and systems for this.
Stephen:
But there’s a period of time after you, the investor buys the tax lien from the county, where you’re just sitting back holding the paper. You’re just. It, it’s. Now, it’s accrued interest, you know, you’re, you’re holding onto it, but you can’t go foreclose the next day. Like, that’s not. Nobody allows that. There’s a varying r- range of times. It could be between six months and three years. , Typically, three years is the longest we’ve ev – you know, that any state has, where you can’t take any kind of foreclosure type action against the homeowner until you’ve at least allowed that time to pass where they can come in and pay it off with interest. , It’s an absolute right. And then what happens is the, during that, it’s called the redemption period. So in that redemption period, the government is still playing a role in the sense they kind of play referee a little bit.
Stephen:
They’re like, “Okay, we’ll, we’ll let. We’ll be the person that receives a request to redeem from homeowner, you know, rich uncle, mortgage company, who is somebody, whoever wants to, to prevent this from going to a foreclosure. And we’ll calculate it, give it to them, receive the money, process whatever, and then send the check to the investor, , that, that bought the tax lien from us last year,” or whatever it was. , They’re, they’re, you know, the lion’s share of it. , And then record it and it’s over with. It’s, it’s gone. It’s like the lien’s gone. It’s, it’s like, it’s like it never happened. , And that’s how it works. Now, if it gets beyond the redemption period where, , that, then it becomes a series of, of, of more judicial processes and rights that the lien holder has, just like a mortgage company who has thrown up their hands and said, “We can’t collect this.
Stephen:
The only thing we could do is file suit and foreclose on the property to what? Not to try to liquidate the lien, right? To try to. It’s a recovery effort at this point. It’s not. You already, your plan A and B has already failed, right? And so lien holders, tax lien holders is exact, exact same way for the most part. And, and there are some. I wanna call this out. There are definitely some differences in the ta – in the, in, across the different states. Part of the complexity that’s kept little, you know, young, , smaller people out of investing. , Between tax liens, and you’ve probably heard of tax deeds, and, , and like, what in the world is the difference between a tax lien and tax deed? , And the biggest difference is that some states choose not to sell tax liens. They co – they, they, it’s still delinquent, but they hold the delinquency for a longer period of time, and they try to collect.
Stephen:
They just, they send it to a different department internally. They do the dunning letters. They send out the request. They do the, the legal notices and all this kind of stuff. And after a certain period of time, they’re like, “Okay, we’re done with this. It’s not paying off. We’re gonna put the property up on the auction block, not the lien.” And that it’s a quick claim with no warranties and no title insurance, but it is technically a transfer of title at that point. That’s a tax deed. , It’s very different from the lien, obviously, as, as it, as it, as it sounds. So, , at the end of the day, you’re just trying to make a return on your money. You’re using tax, delinquent taxes as the vehicle through which to do it. Every state has differences, and you’re gonna get, you’re gonna play this period out.
Stephen:
Most pro – most tax liens redeem. The vast majority redeem. Think about it. It doesn’t even matter, like, if it’s three years or six months or one year of, of that redemption period from state to state. Everyone knows the time they have to pay something off before the worst thing happens, right? You, most people take advantage of the time that they have if they, if they need it. And so, but during the redemption period, approximately 90% of all tax liens nationwide are gonna redeem. That’s just historical averages. , And then only about 1% of, of that total number will ever foreclose. , And the reason being that, that gap between 90%, , , or 10% that doesn’t redeem and only 1% that forecloses. I mean, like, all the way, like, where the, the tax lien investor is now, like, the, the, the, the, the sheriff has cracked the gavel and the home is no longer owned by you.
Stephen:
1% at best. , And that’s typically truly abandoned property, a vacant land. , It’s not a, it’s not a great way to earn, go buy property. So the biggest misnomer of all is why are you getting into tax lien investing in the first place? It’s not a great way to, to, to become a property owner. If you’re trying to earn, go buy property, there are many better ways to do it than tax lien investing. Tax lien investing, and, and this is becoming a, a national trend, , towards consolidating in this, in what I’m about to tell you, is becoming really an interest play. An a – it’s an a – it’s a homog – it’s becoming more of a homogenous asset class nationwide, as states are kind of ali – falling in line with what works, , and what the Supreme Court has, has, has come out with several decisions recently that said, “You can’t do that.
Stephen:
No, you can’t keep the surplus equity yourself. You, you greedy investor person, you, you’re gonna have to give it back to the homeowner.” Like, yeah, okay, well, why am I doing this? Because historically, you’re making 15 to 18% year-over-year <laugh> of returns, , secured by real estate with, that, that is, and it’s super prioritized. You leapfrog over other lien holders that are already there. You’re, like, nothing is a higher priority than a tax lien. Because you know what that money is going towards, that’s why you know why it’s that high priority. So that’s the biggest reframing of what most people don’t understand about tax liens. It’s just, it’s, it’s more today than ever before. It is get it, get it in to, to try to earn that interest and not try to get
Charles:
Property. Yeah, so it seems senior to your mortgage, right?
Stephen:
Yes, absolutely. Yeah, you’ll be the first
Charles:
To get paid for sure. Yeah, yeah. I mean, you’re probably not. These properties probably don’t even have mortgages on them because that would be already covered by the bank, I would imagine, so they don’t lose their position. Yeah,
Stephen:
Most mortgages. , If you’re not, if you’re escrowing,
Charles:
Right? Private, maybe not.
Stephen:
Yeah, if you’re escrowing, and if you’re not escrowing it, there’s the potential for that. But then a lot of times, even companies that aren’t escrowing, they get notified, right, that, “Hey, the tax sale just happened. , We should come, step in and pa – and cover it.” It’s kinda like if you stop paying your, your property insurance, right? The lender’s gonna be like, “Oh, wait minute. No, I’m gonna.
Charles:
We’ve got insurance for you.”
Stephen:
Yeah, right. Exactly.
Charles:
Exactly. Right, right. , So let’s talk about the investors that usually buy these. As I understand, they’re nationwide banks, is that correct? In investment groups that usually buy these. And I was reading one place many years ago that i- if you’re a small tax lien investor, you’re really buying them secondary? Is that, is this a, is that how it works? Is that
Stephen:
Correct? No, not necessarily. , N – it can, but not, that’s not a rule. So, , it is tr – absolutely true that the institutional buyers, and what I, what does that mean? Well, it, you know, you basically segment the, the, the, the investing industry into how much money do you spend, right? How, like, how much money are you, , deploying every year? Institutional, we’re talking, you know, in the 50s to hundreds of millions of dollars annually. , They take up over 80% of the market share every year. I mean, and then we’re talking more specialized hedge funds. , There are groups that, that, that do d- diversify and have money deployed in multiple d – and tax liens, just one of them. But a lot, most of what I see, it’s pretty much all they do. Like, this is, this is what they’ve, you know, they, they’re leveraging their own experience and expertise in niche, , dominance.
Stephen:
So about 80%. , The other 20% are, are the, are the other levels segment, various segments of in – of investors downstream from that. , You know, mid-market, small, medium-sized, mom-and-pops, all the way down to, to the, you know, people showing up at the, the little city tax sale that has five properties in the sale, you know? So, , that’s, that’s who. Now, as far as, like, what happens after that, the tax lien is an absolutely a, , an assignable, heritable, transferable vehicle. It’s a, it’s a note, right? Just like a mortgage. So, again, I’m gonna use this analogy a lot because it resonates with most people, but you’re f – everyone’s fami- familiar with mortgages. So, you know that when you get a, when you get a mortgage on your house, like, from, on day one, y – chances are, that’s not gonna be the mortgage company that is servicing that mortgage for the life of, of it, right?
Stephen:
A, a month later, you’d be like, “Hey, it’s now transferred to this mortgage company, you know, now send your payments there.” And then you might even get another one about a year or two later, right? They says, “But now it’s over here.” Well, guess what? If you, if it falls really delinquent, you’re probably gonna get another one of those because most mortgage companies that are mainstream and they’re just trying to li – they, they don’t really want to service deli – like, seriously delinquent mortgages. And there are other companies that are much better suited to do that. That’s what they do, right? And so, they transfer it again. And so, much like that happens, and it’s, it, no one questions it. It’s just, just part of the, you know, the way the market works. Tax liens are the same way. The problem, though, is that there’s no secondary market that’s for – like, , it’s, it’s the wild, wild west.
Stephen:
It’s like, I know a guy who knows a guy who knows a guy <laugh> who said that, you know, that they have these tax liens that are unredeemed and they wanna get rid of them. And that’s really how it’s the secondary market. , Which means that it’s an, it’s an, it’s a fairly untapped, , marketplace. So, when we say it’s a $25 billion industry, that’s the delinquency amount. That’s not even the amount that, that it actually. The amount that gets bought by investors annually, it’s still in the billions. It’s between six and eight billion annually. It gets actually money spent out of pocket to counties across America buying their delinquency, six to eight billion. , That doesn’t take into account that a, a good ch – yeah, a fair chunk of that might be assigned to somebody else before it’s at the end of that, of the life cycle of that asset.
Stephen:
So, that’s another transaction, right? Somebody’s gotta prep the paperwork and file it and transfer money and all stuff. , And then, when it goes to auction, if it’s a judicial foreclosure auction, which is becoming more of the standard, then it’s, like, s – who’s bidding at this prop – who’s bidding at the auction for the property? You know, ty- typical to, like, a, what a mortgage company would do is they’d send their attorney to the auction, right? And they would, they’d be the opening bidder, right? ‘Cause It, it, that’s the amount that pays them back. That’s their writ amount. That’s how much they’re owed. And so, they’ve opened that, so they make sure and get that. And anyone who bids over that, they’re cashed out. They’re done, right? They typically don’t, they’ll, they’ll compete. , And, and then if it doesn’t sell, then they’re just, they, they’re, they’re just.
Stephen:
I mean, if no one el – outbids the mortgage guy, then they, they get stuck holding the property, then it becomes REO, then they have a surfacing company, then they need a realtor and flip it, right? So, taxing investing, very, very similar. So, you’re gonna end up in a tax lien foreclosure auction, you’re a secured lien holder, you’re in first position, you’re just trying to. Most of them are just trying to get their money back, but there’s an opportunity there that you could make, make, you know, if you really are a, a property player. But a lot of times, you’re gonna let that go, or you’re gonna buy it and flip it to somebody else, a wholesaler, and that gets a whole other part of the market. But there’s really no s – there’s no organized secondary market. It’s, it is, it’s crazy. I, and I’ve been a part of some of these bulk deals before, and it’s just, , I don’t know, what do you want for today, Jo – Bob?
Stephen:
You know? <Laugh> So, it’s just wild.
Charles:
So, what happens after an investor purchases it? So, they purchase a lien. What is kind of the process, whether for one of these firms, like, obviously, we’re not foreclosing, it’s an interest rate play, high interest, , return on our money as everybody’s going for, and which turns out 90% of the time like that. What, what is the process after they actually purchase the tax lien to get to the point of getting paid off?
Stephen:
The most automatic payoff is, is the natural course of things. Like, we could do almost nothing, right? Because the law is set up to promote redemptions, , to a redemption, meaning that someone who owes the money pays it back, or on their behalf. That’s the redemption period in which that can happen, all that stuff. , There’s a, there’s a, there’s an automatic application of, of an interest rate that, that’s. A- a- and again, this is part of the nuances in the, in the, in the difficulty is that every state’s laws are a little different. , But there’s some applica – some interest rates, some kind of penalty, or some kind of cost recovery, that kind of stuff. But whatever it is, you could just sit back and literally do nothing, and then all of sudden, check shows up. You’re like, “Oh, well, that one got redeemed, and just check that box, and that’s how much I made on that one, and park it, and whatever.” , that’s the number one way to make money in tax lien investing, is to literally just go buy and sit there and do nothing.
Stephen:
, Now, that’s very, very short-term, because if you play the odds though, if 90% of all tax liens redeemed in the redemption period, you don’t have to do a whole lot to make a, to, to do, you know, to make a good return. It really, they really just need to, to deploy enough money to, to get the, you know, margins scale. , So, , but there, there comes a time in most jurisdictions, and I’m gonna speak from Louisiana because that’s, that’s where I’m from, although I have, , you know, , nationwide, , exposure, most states have something that is, , that requires some work to be done to be in what they call in compliance. , So you’re holding this lien, and, and you’re trying to get to a point where you’re, you are, , the. You can take advantage of all the laws that are granted to tax lien investors, right?
Stephen:
Like being in first position, being able to foreclose the first day the redemption period ends, as opposed to having to wait another six months. A lot of things like that. And what do I mean, but what do you gotta do? It’s typically sending legal notices out, warning people that this, they have this much time left. You have this, this tax sale happened. A lot of times, you have a death in the family. They’re not, the kids aren’t even aware that a tax sale happened. Like, it’s about, it’s, you know, and, and there’s a, there’s a standard set by, this is all coming out of a constitutional law through Supreme Court cases down to the state saying, “Well, how hard do I have to try to find this person, right? You know, like, and it’s like, okay, well, you gotta pretty much try and prove you did it and all this stuff.” And it, it becomes.
Stephen:
I’m, I’m, I’m underselling the, the difficulty of doing all this, but it, it’s, it is, it’s actually how I started the company, which was do- doing that for investors. It was just, , just scaling that out and just doing all the, the, the, the dirty legal work that they didn’t wanna do. , But it keeps you, your lien in prime position. It keeps it, it, you check all the boxes, the law that requires you. You wanna take advantage of the laws as you’re in your favor, you gotta do the things that, that are required of you to be in that position, right? And that’s what it comes down to. But in its simplest form, it’s sending legal notices. You just gotta know who to send to, where they are. So you gotta do a little digging, a little research, and then prove you did it is important.
Stephen:
This is not direct mail marketing. You have to kinda get it right, and you gotta prove you did it.
Charles:
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Charles:
That’s investwithharborside.com. So let’s talk about what you’re doing now. So Juris Deed, I mean, what are the core problems that you’re solving with your platform?
Stephen:
The biggest thing is breaking down the barriers of these, of the complexity of the market. I mean, like, the industry it- itself is just extremely complex. It – but it turns most people off. I mean, to be honest with you, you know, it- it- it’s like, hey, , , there’s way simpler things for me to put my money in. , Not- not for me, right? , What- what Juris Deed is doing is- is really creating more accessibility to the marketplace and becoming a entire lifecycle infrastructure. So if you are going to go spend money and put money into this marketplace, that’s- that’s great. But, like, where? And why this state instead of that state, and why this county instead of that county? And- and what do I do next? And what happens if it doesn’t redeem? And I mean, there’s. And then, wait, , , there’s not enough money here in Louisiana.
Stephen:
I need to go also put some money in Mississippi. But the laws are totally different there, right? And so it- it’s how do you get the economies of scale to- to play to your favor at. And- and this is why the institutions have made so much money, because they’re not in one state. They’re in multiple states. So what we’ve done, what we’re – what we – what we’re doing and what we’ve done is created a platform that takes all that complexity and puts it behind us. Like, we have. We’re using AI, we’re using, , some advanced, , , predictive analytics and- and- and- and, , algorithms and a lot of data, , to normalize what are. What historically has been all of these barriers through comple – of complexity through the differences of the – of state by state, where you don’t have to worry about that. It’s- it’s the.
Stephen:
And a great analogy is, , I like this, is <laugh> is if you are. If you’re not a stock, you’re not a day trader, right? And you have – your company has a 401k, , plan, and you have money because the employer’s giving you a paycheck, and you’re gonna. You wanna put some money into the 401k, you don’t know, need to know how that makes money in order for your money to make money, right? It’s, like, it sounds funny, right? ‘Cause Everybody does it, right? You have a, you have your Fidelity dashboard, and you see the line going up and down, right? It’s not because you did anything that day, or you had to go to school to learn how that worked for that to happen. It’s just happening. But somebody has to know what they’re doing. Somebody behind the scenes knows exactly what they’re doing, and it’s the only reason why that- that’s- that’s working for you, right?
Stephen:
And, and so what we’re, what we’re essentially trying to do in a much. With a much more complicated set of facts is to provide investors with that kind of experience. It is a one-stop shop. It is a, it is start to finish, , a lifecycle infrastructure for taxing and investing nationwide. , So the differences in states, the differences in laws that when the laws change, which state legislatures love to change laws all the time, <laugh> you know, we have that. , We have a network of attorneys in i – different states so that when that. When and if that needs to go to foreclosure, that’s covered too. , And so you can truly just watch your investment grow and make smart business decisions. You could be an investor and not worry about the complexity of the investment that you’re investing in.
Charles:
Interesting. So if I’m a tax lien investor who’s using your platform, what does the rest of my team look like? Do I need an attorney? You just mentioned before that you have attorneys for foreclosures. Do I need one at all Do I need any other professionals? Like if I’m sending out letters and stuff like this, I mean, what, what else do I need on my side to be successful with a small investment and working on a platform like yours?
Stephen:
, Very little. And that’s, that’s really, I think the, the, the unique value proposition if you wanna sum it up. , I mean, , Juracy really replaces the need for a separate attorney and title researcher and data analyst, and our platform is your team. And I think that’s the reframing that’s never been possible before, , until, until this. , And, and it’s never been possible for us to produce it until the availability of the technology and, and artificial intelligence that we’re able to take advantage of. , But it started a long time ago with, with trying to normalize the data. , , That alone caused the investors who were in the space to need large teams, to need title companies and abstracters and, and researchers and, and, and, and, and every different state was a different group because it’s licensure, different, , customs and, and, and, you know, and different, , ways of doing business.
Stephen:
There are over 3,100 counties in America. And this is, and this data originates at the county level, right? This is property. And so ev – there is not one unified county recorder system. So every single one has a slightly different way of maybe calling, what is a parcel ID? Is that in a, is that an APN? Is that a PID? Is that a t – is it got a leading zero or in, in, in tech and data, that stuff matters, right? ‘Cause It can route you to the wrong place or it can fail, it can break. And so how do you programmatically make something that’s nationwide that sits on data that has 3,100 plus different variable versions of it, you know? It, but it’s really talking about the same thing. It’s, it’s just, it’s nuts. And it wasn’t until about, , about now about six, seven years ago, you started having large data companies that were in the data game, like, you know, big core, CoreLogic, Black Knight, First American.
Stephen:
And they are, they did all of that aggregating work. They, they had the contracts with the counties. They have the feeds and everything. Not because they wanna build niche products like ours, because they wanna sell the data. And good for them because it allowed us to do what we do, right? And so, , you know, we have, we get the, the, the. Being able to do that replaces the need for big teams. , Now, on the legal side, that’s a lot of intelligence of our platform. That’s never been done before where, , we have a, a, , a package of, of work that is automatically, , accomplished and QA’d. A lot of hu – we have a lot of human involvement too, , because the sensitivity of the information and legal rights and financial wealth, and I mean, these are things that you don’t wanna trust the AI.
Stephen:
We have AI making our humans much, much, much faster and better and smarter and able to scale better as something that previously was impossible. , And then when it becomes need for, for a lawyer, you can bring your own attorney, because we don’t, we don’t tell anybody they can’t bring their own attorney. , But we have a network, just like LegalZoom, a rocket lawyer, if you’re somebody you need, you need consultation about a, about a, a, a, a lease that was, somebody broke a lease with you and that you need, you know, they’ll place you with a vetted attorney some- somehow very, very quickly, right? Well, that’s because they have a vetted list of attorneys already that’s a different, the other half of their business model that have already, they got the license, the insurance, the subject matter expertise, and they’re waiting to take jobs, you know?
Stephen:
And so in a very similar fashion, we’re not reinventing that wheel, we’re just applying it in a very niche space to tax liens, , and having, you know, being able to have that resource. Most investors we talked to when we were kind of putting the first, the final version of what we are today together was, “I just don’t wanna have to worry about that. Like, I, I have too many things to worry about. I don’t have to worry about like, oh my God, this one’s at this stage. I need to go call John. Like, I, like, just make it happen for me and let me experience the returns.” Most of the smaller investors, , and, and just to quantify that, you know, in my mind, when we talk about smaller investors, we’re talking about, you know, under a million dollars, , a year de- deployed.
Stephen:
, And so, , that’s typically gonna be one state, , usually a part of one state. , And they’re leveraging their familiarity with a, a region of the state, , to, to offset risk. , And, and it actually is a superpower that, that some of the institutional investors don’t have, because they can’t have someone who’s intimately familiar with a certain subs – area of a com – of a state, you know, as well as someone who’s born and raised there. , So, but that, but yes, they will, they will then have to, , they’ll only. So they, they won’t really get the economies of scale that I was talking about before, because they won’t be deploying enough capital to really get those returns consistently. , But they’ll have hits and, and misses, you know? , And they’ll sustain that. The ones who stay in it for a number of years have enough money in the market where they are still pu- putting along, making enough wins to offset losses and, and make them happy.
Stephen:
But in order to get those wins, it’s typically a fight. , And what I mean by that is they don’t have a system set up to deal with the, , like, efficiently deal with the legal compliance, which is gonna be annoying, and you’re probably gonna have to turn to a, somebody to help, title ins – title company or a lawyer or something like that. It’s gonna be expensive, way more than you can afford to do at scale. , And so it’s gonna eat into your returns, , and it’s gonna be slow, and it’s gonna be something that you don’t even understand what the heck they did. They just, you just paid them to do something that to check the box. , And then it’s not the case with so many lawyers. <Laugh> I’m like the anti-lawyer lawyer. , And so, , you know, a- a- and they would just deal with, , , and then somebody c – I mean, somebody files a lawsuit and says, “Hey, your tax sale is, is, is bad.
Stephen:
I’m, I’m gonna try to nullify your tax sale because you’re, you know, you didn’t do something right, and I’m gonna take you to court.” Like, oh, you know what? Insert expletive here. Like, what now would I do? You know, like, and, and that just takes up the rest of your year and, and the rest of your return, you know. So it probably something that could have been avoided, by the way, had, had the, had the work been done ahead of time to vet out, oh, maybe you shouldn’t have bought that property because it’s been in five lawsuits before you even bought it. And, or maybe you forgot to notify the, you didn’t know that, that the owner died and that this is his kid that, that is trying to fight you, that you would’ve known that had you done the research correctly. So it’s, it’s, it’s just a.
Stephen:
That, that’s the typical small team. It, it, it, you. But even through all of that, you had a lot of investors still making a, you get a home run every once in a while. And it’s like, “Yeah, let’s go do this.” It’s kind of like when you’re, if you’re not great at golf, you go out and play golf and you get that one shot, that one shot, it keeps you coming back, right? , And so, you know, that’s, that’s kind of what taxing investing was at, at a small level. The majority. In the middle, though, I wanted to just point the, the distinction out here, , is big teams. I mean, like, even the institutions just. They still have it because they haven’t figured out a way to technologically replace those teams and still get it right. And I mean, get the, the information right and make the right decisions based off of that.
Stephen:
, But they, it’s just. We have institutional investors who are investing 50, $100 million a year who still have people sitting in a corner folding and stuffing envelopes. I kid you not. I’ve seen it in my own eyes. And I’m like, “Oh my God, I can press a button right now and have all of that mail sent to the right person, have a audit trail that says where and when it came all the way back, it was returned, why it was returned, and I can drop that into an affidavit to hand to my, to your lawyer in, in a, in a, in a day.” You know, like, it’s just, it’s crazy. , But it’s awesome at the same time, because it’s, it’s just an untapped opportunity.
Charles:
Well, Steven, this is a lot of great information, a masterclass on tax lien investing. Can you tell us a little bit about how our listeners can learn more about you and, , in your business?
Stephen:
Absolutely. Yeah. So our company is jurisdeed.com. , We have our, , marketing website up at jurisdeed.com. We’re also, , putting out. We have our own podcast called the Innovative Investor Podcast. We started earlier this year. , And we’re, we’re putting out a couple episodes a month right now. , We also are on LinkedIn, , Jurisdeed, as well as my own personal profile, , and on YouTube with our, with our podcast episodes, which are typically in video as well. So through those various channels, , we, we, you might see us pop up here and there on Reddit and in other places where we can be of assistance. , And my, my personal philosophy has been that is really served well, that you get so much more by giving. , And I have found that i- i- in, you know, smartly giving, obviously not giving away. , And by giving first, I have, I’ve, you know, been rewarded time over time by, by doing that.
Stephen:
So we, we lead, we lead with value with everything we do, , and, and that, that shines through in, in the way that you might find us online as well.
Charles:
Well, Steven, thanks so much for coming on. We’ll put the link into the show notes and, , looking forward to connecting with you here in the near future.
Stephen:
Awesome. Thanks for having me on. I appreciate
Charles:
It. Hi, guys. It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in getting involved with real estate, but you don’t know where to begin, set up a free 30-minute strategy call with me at scheduledcharles.com. That’s scheduledcharles.com. Thank you.
