183. Real Estate Tax Lien Investing Explained with Stephen Morel

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Chris: Welcome. I'm excited to be interviewing Stephen Morel today. He's the founder and CEO of Jurisdeed. Jurisdeed is the first AI platform for nationwide tax sale investing, a digitized expertise partnering with investors. Stephen was formerly a title attorney with twenty years of experience in property law, and he served on the Louisiana State Law Institute Tax Sales Commerce Committee.

And he's as well co authored a complete redraft of the Louisiana's delinquent tax collection system. Stephen, very excited to have you on today. And I've got a lot of questions about Jurisdeed and just your experience in tax deeds.

Chris: So, why don't you tell us a little about yourself?

Stephen: Absolutely. Thanks for having me on. And this is great. I'm aware of the show and I'm happy to be a part of it and hopefully we can bring something of value to your listeners. So as you mentioned, Jurisdeed is an AI powered platform that helps democratize access to tax lien investing from start to finish.

Before now, this is this is a $20,000,000,000 industry as far as every year. That's how the delinquent real estate taxes. Get severely delinquent to the point where counties and cities need to look elsewhere to have them collect it so they can meet their budget for that year. So they created something called tax liens so they can offload the the the lienholder like like a mortgage to a private investor, collect the cash, operate the county. We want it the next year.

And these are essential, you know, dollars for basic public services, etcetera. So it's extremely, extremely important for them to have this collection mechanism. And in any given year, if one county did not collect at least 80% of their tax roll, their real estate tax roll, it would bankrupt the county. That's how important this So it's given this super lean status, it's heightened, you know, it always outranks everything else, etcetera. It's secured by real estate.

And so it's this kind of a unicorn of an investment type, if you will. It's got, it's, you know, federal, state and local laws revere it. And it's it's like I said, and it's got typically a pretty attractive interest rate. And you're like, well, why isn't everyone doing that and just drop what you're doing and just do that? And that's where we come in because the whole system is incredibly manual and is is very siloed.

It's fragmented by all the state laws. Every single state has different procedures for it. It's very cumbersome. It's complicated, and it's been dominated by institutional banks and financial groups for a for a century. And for good reason, they don't want to let it go.

They don't want to let it go. So they don't want you to join in the fun. But much like Robinhood did with stocks and crypto. Yeah. Much like Robinhood did with stocks and crypto not long ago.

It's like there's this thing out there that anyone could legally do, but not enough people do because it's just inaccessible, you know, for whatever variety of reasons. And so we're breaking down those barriers and making it available for anyone to generate wealth through that view.

Chris: That's pretty exciting. Stephen, why don't you tell us, like, how your journey led you here to starting this company? I mean, obviously AI is an extremely powerful tool, so that's really exciting, but why tax seeds?

Stephen: Yeah, my story started, I was already practicing law for a couple of years, like most lawyers, you try to get a job and you get plugged into the system and you're billing it mindlessly billing hours and you're thinking about billable hours while you're on vacation. And it just is not fun. And it's not my personality. It's just what I did. It's just what I had a law school.

And a couple of years after starting, I'm living in New Orleans and Hurricane Katrina happened. And along with the vast majority of the city, my house flooded, like destroyed, kind of flooded. And luckily I was one of the first ones to come back. I was, I'm a veteran of the Louisiana Army National Guard and I had USAA insurance and they had checks on the ground, like in two months. I mean, they were the first ones there.

And so I was able to rebuild and move back in. And then like by Christmas time and then Katrina happened at the August. And I looked, drove around the city and it was like the hurricane happened yesterday. It was still in shambles. And I'm like, I've got to do something.

I love my town. I moved back in. I'm a real estate. I mean, I'm not a real estate lawyer yet, but I I really fell in love with the process of real estate, the tangible change that I witnessed and was a part. It got my hands dirty, learned everything about, you know, the construction process and mold rehabilitation and values and refinancing and met brokers and realtors and contractors.

And I was like, you know what? I This is what I wanna do. And so I'd started my own title company and started doing all There were tons of construction loans, closings, as you might have guessed in post Katrina, New Orleans. And then one day a realtor walks in that I was probably doing a construction loan for. He said, You know what?

We got this company out of town that's got a portfolio of tax deeds. I don't know if you know what that is or not, but they can't get any of these things moved. These are the ones that they didn't pay back, the debtor didn't pay it back in the required time period. And now our only option is to foreclose on it and take the deed, but they can't get clear title or title insurance, so they're stuck with it. Like, can you help?

And I had no idea what a tax sale was at that time, by the way. And I was just staring him in the face and said, Oh yeah, yeah, got that. I could help.

Chris: They could make it up. Yeah,

Stephen: exactly. So I, you know, like you're studying the book and looking at it and reading up on tax sales and it just spiraled. I mean, there was nobody helping with this and nobody was trying to resolve these. The law was set up to fail. The system was set up to fail and all these properties were just building up in this backlog of uninsurable, you know, inventory.

Even the cities in the parishes or counties or parishes, they were taking in these inventories when they couldn't even get the taxes sold at the delinquent tax sale. And so now we're facing 80% of the city is flooded. People are deceased. Over eighteen hundred people died in the storm. You have people that are never coming back and you can't move property unless you know where all the owners are.

And so it's like, the city is never gonna move forward. And then the time where they need funding the most ever, the number one source of that revenue is tax revenue, real estate tax, and nobody's at home paying it. And so it was just a really, really bad situation. I was like, I've got to be able to do this. And so I just went down that path and said, let me figure this out and started working with title insurance underwriters saying, what are you really afraid of?

Like, what if I built this whole system from ground up and got the risk level to a, would you sell an extra premium in exchange for the, you'd be the only game in town doing it. And they were like, and finally got someone to say yes. Then developed the first little program, piloted it with the city of New Orleans. And in 2015, I went in house with a software company that was already working for the city, collecting their delinquent annual real estate tax, doing the tax sales online. And I said, look, you have thousands of these properties that failed to sell and you took them back in inventory or you can't get rid of them.

What if I could put them up on an auction block, but guarantee clear title and insurance? My theory is that people will show up and wanna buy them. Because when you can get insurance, you can get a bank loan without it, you can't. And all of a sudden, a new pool of investors shows up and it was a huge success. We went on spread throughout the state of Louisiana and even into other states.

It was a it was a program that just it just it wasn't Louisiana specific. It was just risk mitigation. It was systematizing a process that they were afraid of for no one for no reason other than they just didn't understand it, underwriters. And so we finally figured it out. And then, I mean, we're over there over 10,000 properties since that have that have been moved that were deemed to be uncollectible.

Chris: So this was a Years. Yeah. So in 2006, of course, I had a buddy who was going to school at Tulane. He was playing golf and they canceled all of their sports.

Stephen: Yeah.

Chris: It was Yeah. It was It

Stephen: bad. I mean, I remember not.

Chris: You know, and then he went to Alabama and, you know, that was a Roll Tide guy.

Stephen: Oh, geez. Don't say that around here. Yeah.

Chris: I mean

Stephen: LSU threw and threw around here. But, you know, the yeah, like, I don't know if you remember or not that that next year, the the New Orleans Saints football team never played a home game. I mean, their home games were in every state. They they traveled around. They were awful the first year.

They were they were good the following year. Okay. When they got Drew Brees, the second year was when Drew Brees started and everything. Yeah. But the timeframe was, so 2014 is when I got an insurance endorsement created with the Department of Insurance to insure over this risk, created the underwriting guidelines for an insurer, any insurer, to be able to sell the thing, and then got the contract with the city of New Orleans, partnered with the software company that I mentioned, and rolled it out.

And people showed up and bought it. And it was like, wait, every government authority, every single parish in the state has these things. They can all do this. And it was just a slam dunk about in '20 at the 2019. I left there.

I wasn't an owner of that company and it was all kind of just running on autopilot this time. And I wanted to take some of these tools and really bring more software into what was What we were doing was a very Still a very manual process. We This underwriting thing, it was a team of lawyers and paralegals and and abstractors and investigators and property managers and all this stuff like this. It was just very, very non scalable. And I was like, man, this would be fantastic if we could systematize the whole thing for investors who have, you know, the money and the capital to be able to keep investing more and more and more rather than government.

And and let's see where we can take this. And it was several years after starting that venture where I didn't really know exactly how that would that look like that I realized that the problem here is that there's no system that actually helps investors go to all go all the way to profit, go to all the to liquidity, which is where you realize your gains, right? That's where you're actually experiencing the win. There's tons of late night gurus and books and courses that tell you about tax sales and how wonderful it is and how how much the interest return. And they tell you all about what you need to do.

And then you graduate from the course and they say, good luck sucker. And you've already paid them the course fee. They're like, well, what do I do now? Like, go find an attorney and I don't know. Know.

They'll tell you.

Chris: Stephen, you even mentioned it yourself. There's this incredible investment that has lean priority the interest rate is Sounds important. And, you know, I mean, basically, but like last time we chatted, you said that learning how to purchase these and purchase the is one hurdle, that's a relatively big hurdle, but maybe an even larger hurdle is the solution that Jurispeed

Stephen: Right.

Chris: Kind of tackles.

Stephen: So you just bought it. Now what? Right. And and that's where you can really and now you put your money on the line right before you bought it. It's just it's your time, it's your energy, it's your you know, you don't want to waste that.

But when you put your cash on the line, you and you become the lienholder, you better know what to do at that point or else you're now you're gonna lose your time and you're gonna lose your money too. And most likely you won't ever come back and do it again. You'll just be sunk, you know, and wasted money. So there has never been a system out there or a resource that really partners with investors from the time they acquire all the way through the time that they're cashing their checks and realizing their gains. It's always been fragmented.

It's always been just go, don't know, go talk to somebody, go talk to an attorney or a title company or something. I don't know. And nobody's partnered with them to their success. And so, you know, we started working with investors at the enterprise level at the very top because they were just looking for ways to streamline things. Didn't.

It wasn't a burning desire, but that just happened to be who I knew. We started out working with these big hedge funds out of Omaha, and they were buying, you know, dollars 50,000,000 of tax liens across ten, twelve states, etcetera. But the great thing there is we learned all of the tricks of the trade and how they had systematized us internally.

Chris: And $50,000,000 at a 12 or 13% return is pretty solid. I mean, you can't do that in multifamily. To do something at that scale, it gets pretty interesting at those really, really, really high numbers. If you've got $10,000,000 to invest, you get to spread it out a little bit among different assets, but if you're buying, what, a thousand or 10,000 tax liens or tax deeds, then you've got a thousand or 10,000 potential problems.

Stephen: Yeah, but it's very, you can, there's a system here, playbook. There's There's a reason why these big companies have, made a lot of money over the years doing this. And, you know, and they've had a lot of resources. They've they're well funded. They're well cap.

They have they can withstand long holding times, you know, all these things. And they have a network of attorneys across different states. The fragmentation, they sort of kind of band aided together. Like they said, Okay, well, yeah, we'll just have John in Tennessee and Bill in Mississippi, and we'll just have people to manage the people. And they were making so much money that it was okay to have inefficient people heavy systems like that.

Plus, this is decades ago when they were first kind of when they were really these groups were getting together and the modern technology didn't even exist. But in today's day and age with the technology that we have, those barriers that kept everyone else from even trying or kept the mid level or small, medium sized investors from having the kind of gains that the enterprise is having, they're artificial now. And it just takes someone to break them down. Those barriers to to entry into success are things that we are resolving at Jurisdeed and are allowing everyone to have the same level of success that the enterprise has enjoyed for a century.

Chris: Do you want to break it down, kind of give us some of the nitty gritty, like some of the solutions that Jurisdeed provides, you know, where-

Stephen: Yeah, sure.

Chris: A couple examples of where something would be pretty time consuming to have to figure it out in like different states, different counties, etcetera, where it's streamlined with Jurisdeed?

Stephen: Yeah, sure. I mean, well, the first thing is to think about, you gotta have the right mindset. Like, so this is a delinquent debt, right? So this is, imagine acquiring mortgage notes, but they're already in default, right? You're acquiring them at the default stage to take it from default to liquidation through foreclosure or workouts or whatever.

That's a tax lien, right? The tax, it's secured by the property, it's delinquent and it's enforceable. And what that means is that it's going to hinge on application and compliance of laws. That's how you get to liquidity. You have to comply with laws.

That's why the courses tell you go talk to a lawyer, I don't know. And so what jurisdeed initially does is takes every single state that has its own set of rules and laws that you have to abide by if you're going to play in the tax lien game in that state and be successful with it and automates the compliance aspects of it. So you don't need to know. It doesn't really matter whether you know how to do it or you don't have to worry about going hiring somebody to do it. At some point, there's some work that has to be done for you to maintain your investment.

It's time sensitive. Not forgiving. If you miss the deadlines, you could lose your rights, etcetera. And so no matter where you are, we have a multi state kind of a rules engine, so to speak, that's the backbone of the intelligence in the system. And because most investors, they make the returns that they're hope that they're going for in tax liens by getting to a certain level of scale.

And typically that involves more than one state. And so even if it didn't, though, just in one state where most people start, you're going to have to comply with that state's laws. And even though it's it's okay, you only have to comply with one set of laws, it's still really cumbersome work. You're talking about over a thousand data points of per property that makes up the detail, the legal description, the meets and bounds, the assessment, the tax, the ownership, the chain, all this stuff and all of it matters. The, and the think about this, there are 3,140 something counties in America and they all operate on their own independent playbook.

And that's where tax sales start. And so you have, you don't just have 50 states, you have over 3,100 different systems. And that's just assuming that like in New Jersey, they sell at the city level, not at the county level. So there's like, you know, 500 tax sales in the state of New Jersey every year. It's crazy.

It's just too much to keep up with if you're gonna It's like in most and most investors, you already have a day job. You're probably trying to do a second stream of income, have some passive income or whatever. Don't have time to learn all that. How are you gonna be So it's impossible, Bert. We've done this normalized all that kind thing.

Chris: Pretty large barrier to entry.

Stephen: A 100%, I agree. Know? Even

Chris: acquiring, when you mentioned that there's, you know, 3,600 tax sales, you know, and that for you to be successful, you need to be attending and acquiring tax deeds from multiple different tax sales. I mean, that's a pretty large hurdle in itself. It's just acquiring the

Stephen: the the liens. Yeah, the acquisition part. Again, that's not where we're starting. There's it's in our roadmap that eventually as we grow, we're going to expand to more aspects of it. And then and then the front end of things we are We do have or are building a pretty robust education and information center that we're gonna make available to all of our platform subscribers once we launch the platform, which isn't live yet.

We're in closed beta with a few handful of heavy users who are giving us feedback. But later this year, we launched the platform, we're gonna have an education center, which is going to allow you to self-service and have courses and master classes, that kind stuff. But really not to generate a big line of revenue like some people do as their exclusive, that's their business, right, is selling courses. Really just to make smarter customers and make you feel more confident and comfortable with getting into the investment because if you don't get an investment, you don't become a customer, right? And so we're just helping our pipeline and making you feel more confident about your And probably more likely to have success because of the content is gonna be such It's gonna come from attorneys and from title insurance underwriters and the best in the business.

So it's not gonna be any kind of fly by night or, you know, then that's not where you bread your your butter your bread. You're doing it because you you you care about your customers. You care about their success, not because you're trying to make a buck from that. And that's a whole different story when you're trying when, you know, when you think about the quality of that that that information. But getting back to your question about what we're doing is, we're starting with the investors who are already trying to play in the space, who are already maybe struggling to make the returns that they were hoping to make, or maybe are ready to do it and just don't know where to turn.

Or maybe they did it last year and are now like just realizing, oh, you know what? What do I do now? I need help. You know, all of those are great personas of who we we can serve right out the gate. And then we'll evolve to a broader spectrum, just like most startup companies.

You'll eventually go from a niche to a broader audience. But once you've done all the legal compliance work while the lien is maturing, there's a time period. No matter what state you're in, there's that you're gonna after you acquire it, there's gonna be a time period where you have to kinda sit on it. You have to let time for the the the tax debtor to pay it pay it off without any severe consequences. They'll pay it with interest and penalties, and you'll get a return that way.

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Chris: Yeah. And they don't. Period varies from state to state?

Stephen: It does. It does. And obviously, we have that normal Does

Chris: that vary from county to county or is that more state law?

Stephen: No. Not, not, I mean, not as far as I know, there are maybe New York City or something like that. But other than that, no, it's pretty much standardized at the state level. And so, but then after that time period passes, just to kind of jump ahead in the timeline here, First off, about 90%, 88 to 90% of all tax liens are sold across the country will redeem, meaning they will pay back within that limited time period because people typically don't want to lose their properties. They may fail on hard times.

There's a thousand reasons why. But just it's just that's and that's good if you're because it shows you that you're you're really doing this to get an interest return. That's it's not a great way to go acquire a bunch of property, not a tax lien stuff. There are other ways to acquire the deed from the county and like these counter sales and whatever, there's different terminology for it. Yeah, sure, go for it.

But the tax lien is more, think of it like an asset class that you can generate a return in, that you can grow wealth in, almost like a four zero one ks, right? You're just putting money into a system that is you want to grow value to over time. The way that you grow value is not because the corporation is has has greater earnings on like stocks. You are literally mature, let it following laws. That's what you're doing.

You're you're following. You're doing the right thing. It's going to naturally happen if you just do the right thing. And we've made sure that you don't have to worry about that. So that's, we've given you the confidence that you can succeed without needing to know how to do it.

Chris: Oh, and so I guess you mentioned something about the difference between tax deeds and tax liens

Stephen: Leans and deeds.

Chris: Yes, liens and deeds. And I think that, you know, I've been mentioning tax deeds. Can you explain the difference to us?

Stephen: Yeah, I mean, it's very similar context to mortgages. So think about a mortgage as like a lien, right, against the property. It's not ownership. It's not titled to the property, right? A deed would be own ownership of the property.

So certain states choose to enforce their collection of delinquent taxes through a tax deed system. And all what that means, they are not selling the lien against the property for collection of the delinquency like a like the the mortgages. They're selling quasi title to the property because they have already they they have kept the lien in house during that maturity period where a private lienholder would have. So liens, think about it, you're much closer to the delinquency date when you buy the lien. And then there's the maturity period.

And then after the maturity period, there's the potential to sell a deed. And the states that have employed that system basically said, I wanna We don't wanna sell the liens. We wanna keep Try to collect in house, do all the legal compliance stuff ourselves. And then if that doesn't work, then we'll sell a quitclaim deed to some somebody, you know, wants to buy this and maybe have to go file suit on it to clear it up or whatever. But tax deeds do not necessarily give you clear title, but it gives you quasi title like on the surface, you are the owner, but you may not have merchantable title yet.

You may have to go into court and still get a judge to bless it. Or you might have go into an auction or a title insurance company to cure any defects, etcetera. That's the difference. You're ahead in the time.

Chris: Jurisdeme mainly focuses on tax lien, just managing large amounts of tax liens.

Stephen: So I'm glad you asked that question because, A, if you think about it, what I just told you is that if the if the if the trigger or the defining line where a lien kind of becomes like a deed kind of turns into a deed because it matured enough, right? It's past the redemption period. Even though it came out of a lien, a state that has a tax lien system, if it didn't pay off and now your post redemption period, your option is to foreclose on it. It's not ownership, but you kind of have to treat it like like something that you have to go do something with now. I mean, you got to liquidate it, right, to get your money out.

So you're gonna have to foreclose on it. And, you know, maybe even you sit on it for a while and you're like, you know what? I just want to cash out. I'd love someone to take this off my hands. Let me assign it to somebody else.

Mortgage companies do this all the time. Right. Mortgage companies that are servicing loans that are that are being paid and then it falls into default. They're like, oh, let me send it over to this company. Or,

Chris: you know.

Stephen: Yeah, yeah, yeah. So there's different markets within with very undefined and very unregulated. But there are different segments of the market in tax liens too, where who who just look for the ones that are near the end of the delinquency, I'll take it and go to foreclosure. That's what I love because I want the property. The lien holders are like, I just want my money out so I can go invest it in the next tax lien sale.

Just like a mortgage company would want their money back to go lend out to somebody else, right? They don't wanna get tied up in And three years of so that's a very, very similar system. That's why I keep coming back to that mortgage analogy because it really simplifies it for most people. Think about it because everybody knows mortgages and they have foreclosures, that kind of stuff. It's really the same thing.

And so

Chris: and you mentioned that the tax liens are they're superior to or more senior than mortgage debt?

Stephen: Yes. Yeah. Even if they came afterwards.

Chris: Yeah. And yeah, that's why the lender wants to escrow taxes because they become subordinated

Stephen: and correct. And a lot of redemptions ultimately happen because the lender goes and pays it on behalf of the tax debtor, and then they just tack it on to the mortgage debt because they know that they're in that kind of posture. They're in a defensive posture because the tax lien trumps them.

Chris: Interesting. Yeah. Let's say that you buy a tax lien and you bought it for $20.25, and now it's October and you're still in the redemption period and you're 99% certain that the homeowner is not going to pay their 2026 taxes. So what happens, I mean, you know, I think you had mentioned you want have enough capital to continue to pay, but what if we don't pay for 2026? Like, let's say that you've paid for three, four years in a row, and, essentially, like the amount of money that you've raised for that investment is not, you're out of what you planned for, and I guess the workout is taking longer than you thought.

Stephen: Yeah. So so you're you're hypothetic. You're you're already a lienholder in an earlier year and it's taking too long or and you were hoping for an early redemption that didn't happen. Now that's the that's the beauty of what we're what we're evolving into. We've already started it, which is our asset management and liquidation department.

And when we when we decided to create a solution that partners with you all the way through profit or liquidity, We meant it. And it doesn't leave you short when you come across a situation where, shoot, well, we don't do that part. You have to go find some other help for that part. Otherwise, the whole premise fails. Right?

So if if you end up with a lien that you're stuck with and it didn't happen, then somebody you you have to get you have to liquidate it. Well, who well, how does that happen? Well, either you foreclose on it through the state law that you're in if it's timely enough and you're you're eligible for it, or you assign it to somebody else who wants to take it up and go from there. And so we are we are informally, we've already created a secondary marketplace for distressed tax liens that are already in circulation. That's why we call it the secondary market, primary being the point which you buy it from the government.

And so you want out, somebody else wants in, I guarantee you, and we just need to make that connection. Then we can formalize the transaction on the platform. So your path to liquidity is our is our mission. And that's and we don't we take that very seriously because it probably made a difference in maybe you getting into the investment. You're like, oh, I have I have a solution.

Honey, look, if we get stuck, I'm going with the juristeed guys like they they'll help us get unstuck, you know? And like so then we get to that sticky point and we say, No, no, we can't help you. Like, that would be a pretty short lived client experience. And so, you know, we had like, well, how do we how do we help that? Well, I'm already familiar with the fact that there's a tons of unorganized groups that that would love to buy your lien.

They just have no idea who you are and that you have this thing for sale. And so, you know, bringing together a marketplace where that commerce can take place and a willing seller and a willing buyer can make both sides happy. So that's one way. We're also financing is another big thing. It's very difficult to financing if you're using it towards buying tax liens or deeds.

Banks traditionally just don't like the asset. It's too volatile. It's not secured enough. It changes form and format and every state's different. And so but there are lenders who will lend with and certain lenders actually live in this space.

They're they've just kind of like, you know, just fall into it and you become a nerd in it. And and we have a couple of partners there and we're working out a program right now where we'll be able to make financing available through our platform as well to our customers, where either you need money to get into a deal or you need, or you need to be bought out. And potentially, our system could even make you an offer and buy you out of your position, and then we will find the buyer for that lien down the road.

Chris: So, all right, let's kind of jump back. And so let's, can you share a couple of people or stories that have been successful with tax liens and essentially, like, kind of show our audience what the upside looks like, and, you know, just like show the benefits of getting into it. Like, I can kind of see it in my mind, but I'm interested to hear some of the people and the businesses that have succeeded in the space.

Stephen: So the reason I know is because I'm one of the stories. So when I was a still, you know, private practice before the software company days and before the the the the Jurisdeme days, I was working with some private investors with their own portfolios. And and one of them was a close buddy of mine from college. And he was like, Hey, I love this kind of this kind of investment stuff. And I got I got some cash to burn, but I don't know what the hell I'm doing.

So how about we partner together? You'll be my guy. You do all the stuff and we'll, you know, and I'll I'll compensate you appropriately. And so I said, all right, cool. Let's do it.

And so I was more of an equity partner in that deal. And this was, something he maybe bought like 150 unredeemed tax liens beyond the redemption period. So these are the matured ones. And they were.

Chris: Yeah. So they they needed to be foreclosed on or.

Stephen: Right, right. Now, the person who the person that the group that he bought it from was a major, a huge financial institution that that makes 15 to 18 year over year just on redemption part. That they they got the rest of their cash, they, you know, for these unredeemed ones and they they're they're trucking. So the the story about the the interest play is just a reality of of the situation. And the the only ones who have experienced it have been the bigger companies.

And so that's, you know, as far as that part of the story. But the the more like personalized portion of it is is this. So we we worked up the portfolio over like eighteen months or so. We did a lot of workouts. You know, people we would we would do skip tracing and track down heirs and owners and try to find somebody who cared about saving this property and eventually would do deals, quit claims with them and just, you know, make a margin, whatever.

Some of them, no answer, and it was valuable enough to file a foreclosure action on it. And so, and of course, being a lawyer, I was able to do that. One of them was in a up and coming area of New Orleans. It was a lots of properties that would what would in New Orleans, the renovations are they add on top of it. They add like a Camelback, whatever, because we're not getting any bigger.

We're pretty constrained between lots of bodies of water. And so this was a perfect opportunity for that. You saw Camelbacks going up all around. This was a single story house and just like waiting to be. And there's one a little old lady who lived in there and she was not the original titled owner.

And when we when we approached her, she was like she had inherited the property. She had never paid taxes in her life or property taxes. She was she she wasn't her thing. I mean, she she just happened to fall into ownership. Right.

So she didn't even nobody nobody helped her. And we're like, I was like, look, you know, the back to portion of this is like this much money. She couldn't pay it like, Okay, all right. What can you afford? And so we actually helped her get into a new to move out amicably helped.

We paid her first month rent, her security deposit, found something that she could afford on her or whatever her monthly revenue was. And and it was very peaceful. That was like and that was part of the story. That was like a nice little side story like, well, that's a good thing to do. We ultimately took the title, of course, and we renovated it and we and we added the camelback.

Chris: So you guys flipped it.

Stephen: Yeah, we did because it was it had that much upside to it. So it was like that diamond of of your portfolio where you're like, I'm holding on to this one. And and we and we flipped it. And literally the day we put it on the market, we had we had an all cash offer. I mean, it was like because our the cost basis, you know, they that the old adage is that is that you make your money when you buy, not when you sell.

Right. So if you could you could over overbuy kind of screwed. Right. And so the cost basis of tax liens is so low, even if you're paying subsequent years taxes and keeping up with it, it's not like you're buying the house, you're getting the house because you bought the taxes. And so your cost basis was just really, really low.

We were able to make a hell of a deal on a price that kind of undercut the market. We got cash sale like that. Well, I had been dating this pretty young lady for a while by that time, and she was probably feeling a little bit of the pressure of what to do next. And look, I was still trying to get my my law firm off the ground. I didn't have a pot to piss in or you know what?

And so when we close on this deal. That girl got an engagement ring and she's still my wife today with our two little kids. And so there's a success story.

Chris: Yeah. Wow, that's that's pretty amazing. So it was one out of the 150 that turned out

Stephen: was was that's a home. That's a home run, right? And that's why that's why it's fun it's a fun story to tell. We had many, many singles and doubles along the way. I mean, you know, in every one of those workouts, I think we probably.

Probably threw into the trash can like they just there's just nothing you can do with these. I don't like I can't even find it. Like it's not even the assessor doesn't even know where it is. Like, I think we probably threw away, know, maybe like 5% of the portfolio is just like not even worth our time. Yeah.

We had we probably had two that were, oh my god, grand slams. That was one of them. And so there were two in that batch. And then every everything else kind of fell somewhere in the middle, like singles, doubles and triples. And and we all we made a lot of money and.

Chris: Did your friend ever tell you what the return on the portfolio was?

Stephen: I knew because I was lawyer, his lawyer. So yeah, I mean, it was it was crazy. And I hate to say it because like then it's kind of like the late night guru guys were like, Hey, you can make 50% on your whatever. And they're like, you know, they'll really tell you how to do it or I don't care if you fail. But it was it was in that range.

It was in the 40% range. And that's and that's and that's awesome, you know, but it's. You know, the little fine print results, not typical, right? Other commercials, but, you know, it's if you know what you're doing, I don't think it was an accident. You know, my friend, knowingly or not, partnered with someone who knew how to how to how to work the system, knew how to, you know, could be the lawyer, could be the builder, could be the, you know, like I could be the renovator, could manage everything.

And he had personalized experience. That's not very scalable from my perspective, but but it were right. And it's like, well, maybe we can bottle that that service up into some software that's powered by the intelligence that, you know, that we can now like scale me or I don't say that with any ego. I just mean like the like the what he got out of it. Right.

And then be able to offer that to more people.

Chris: But then, you know, it's also how do you get that 100 or 150 property portfolio that has a couple of diamonds in it?

Stephen: Yeah. And that's why I think the secondary market is such a huge opportunity because it's completely untapped. I mean, have been a couple of places in the past that tried to bring it together and they have failed. And I think that's because they've they didn't understand the power of of effective marketing and how important that is in business and and in trust and in thought leadership. And, you know, people aren't going to just like hand over their assets to you because you happen to be standing there.

It's like, I need to trust you and I need to know that that I'm going to be I'm going to be made better because I I'm trusting in my portfolio. And it just hasn't been any service that's come along that that people have have. It's been able to pull that all together, bring both sides of an unstructured marketplace together, convince them all that this is the place to be. I mean, you know, that's that's not easy to do. I did that by and I'm the one who sought out that portfolio.

I did that just by networking. I mean, I like like extensive networking and eventually talk to the right person, the right, you know. And that's not scalable either, right? From my

Chris: perspective, there has to be like, you know, a stack of paperwork for each one, right? Like, there needs to be, like, proof and all the notices and that everything has kind of been staying compliant.

Stephen: Yep.

Chris: I mean

Stephen: So back then

Chris: pretty heavy. It was very heavy lifting to ensure that there was an actual valid like opportunity process. And that's right. And now. Well, has anything changed?

Stephen: Quite a bit has changed. And I can tell you, I swam in that paper for for my for years of my life, returned unopened green cards. You know, mail day was awful because it was just the boardroom table is stacked of big bins of, you know, green cards and envelopes and letters and folding and stuff.

Chris: It's like my worst nightmare.

Stephen: And then 90% of them come back unopened anyway, like no such address, no returns. It's a it's a fool's errand and it's awful. And nobody signed up to do that kind of stuff. So again, it's another. But we don't do it either anymore.

And so everything that we've built today is completely digitized, but it does not skimp on what's required from a legal and title insurance standpoint. That's where I started my training. That is that's where that's the paradigm I'm operating through is if if you have all laws complied with and you can get merchantable title, you're going to win. You're going to win. And the only way to do that is to do it right.

There is no shortcuts. Now, what we have expedited and streamlined is all that manual labor, the fragmented rules that sometimes change year to year. They have a new set of rules. Louisiana just came out with a whole new set of tax sale, a whole new tax sale system this year, Completely different. If you were basing your we have a bunch of LinkedIn articles and podcasts on this now.

Like if you were basing your strategy off of last year and you still are coming, you're going to lose. It's a completely different system. It's like a different state. Like, how do you keep up with that? Wait, I thought it was just 50.

Now, now it's 50 that actually changed from time to time. Come on.

Chris: I thought that, you know, property management was hard.

Stephen: Probably is, but that's not I can only solve one problem at a time. So this is the one we've chosen and this is our lane.

Chris: Well, Stephen, we are at the end of the interview and I'd like to ask you our four last questions. Normally, it's AJ and myself tag teaming this, but I get to ask AJ's questions today too. So I'll start off with his last question, which is, what's one piece of advice you would give to your 25 year old self?

Stephen: I would say trust in your instincts. They're usually more right than they are wrong.

Chris: Oh, this is just so funny since we did this. This is

Stephen: a

Chris: podcast. That's the exact same answer you had last time.

Stephen: Did it really? I you know what? I have to think about this.

Chris: Myself more and start building in public.

Stephen: Oh, yeah, that's a new year. And I would that is something I would.

Chris: Yeah. Okay, next one is what's your first entrepreneurial endeavor?

Stephen: Oh, I do remember this one, too. So I sold snowballs, which is in New Orleans with the snow cones, ice cones, whatever. Yeah. In summertime for $0.25 unless you throw another nickel on there for condensed

Chris: milk. So

Stephen: get to this.

Chris: Oh, this is amazing. Okay, and then how has your formal and informal training shaped your journey?

Stephen: Yeah, formal training is, I mean, a no brainer. I mean, I was a lawyer and then and then real estate lawyer and then title insurance agent. I mean, all of these things are just have just been ingrained in helping me to accelerate delivering solutions in the space. I mean, there's no question about it. I live it every day and I don't have to think about it.

Just it just, you know, it's part of part of my what I offer now. And informally, I was in the Army, as I mentioned, and and that that there's an intangible with military vets. And I can't speak for every single one of them, but for the everyone I've ever known, there's a never say die, never quit kind of attitude. And if you get knocked down, it's just you figure out what not to step in next time. Jocko Willink is a great is a great podcast.

I love everything he's ever written. And he says, you know, when you face adversity, something bad happens to you, you stare at and say, good. I know what not to do next time. I'm smart.

Chris: That's very cool. So I wanted to follow-up on, you know, you mentioned your legal training as a key differentiator. Would you say that it's the training or the fact that you're working in the field, like getting the experience? Like, would you say that the formal training, like you know, going to law school, passing the bar is what got you to where you are now? Or is it practicing law and gaining experience in real estate?

Stephen: That's a great question. I've never been asked that question before, and it's and it brings a very, very distinct clarification answer 100% after law school ended, like after bar exam, like almost none. I would say very little of what was the academic side of the practice of law, the testing side, the continuing education side. Not that it's worthless or anything. I'm just telling you like what I what I attribute the value to what I do now is the application of those concepts in the real world in this lane.

And that but I probably would not have been able to gain that had I not had that that academic training.

Chris: Well, wouldn't be able to entry. I mean, every single attorney that we ask this question to, they're like, without a doubt, my my legal background, you know, the legal training, like, you know, but the barrier to entry and the, like, being given or allowed to practice law and gain that experience is only available to a select few. And it's pretty incredible. I've just always felt so interested because I never went down that path. And every attorney that I talk to who's in real estate, it's like, a doubt, the experience of practicing law in real estate, the situations and circumstances, what you learn is so valuable.

Yeah. And yeah, I just think it's really interesting because it's only attorneys who are interested in real estate, and most attorneys, I would say, don't practice law in real estate. And so it's actually a very like niche area. Like, there's just not that many attorneys who even consider real estate investing a thing.

Stephen: Right, right. And then and then to say that take it even step further is is. Delinquent real estate and then delinquent tax liens as the type of delinquency, you know, like it's a super which just happens to be a $20,000,000,000 industry. It's just goes to show you how how humbling the real estate industry is as a whole, right in the trillions. But yeah, no, it's the application of it in day to day.

There's no question about it that has that has led me to this point.

Chris: Yeah, I mean, that's almost a whole podcast in itself of just like what, you know, what could be learned practicing law in real estate. So that's yeah, it may be a follow-up episode.

Stephen: I love it. I love it. You're right. I could I could share. That would be a fun one to do.

No doubt. Okay,

Chris: and then our final question, what was your biggest mistake and what did you learn?

Stephen: Biggest mistake was, ironically, was leaning on that experience too early on in building my own company, building my own startup. So very, very different as a startup, you have to go create something that doesn't exist yet. And talking to customers or who you think is your customer until you figure out who your customer is and what they really want to pay you for before you go build what you want to build for them. Rather than leaning on your expertize and saying, I know what they want, I know what they need. Or even filling in the blanks with what you think you know.

It's not about you. You have the honor and the privilege of being able to create a solution that they've never had before that makes their life better. That's a privilege. And it's not about you. It's about you figuring out what they need and then providing it.

Chris: Yeah. Well, Stephen, it's been wonderful again. Thank you so much for sharing your knowledge and being on the podcast.

Stephen: As fun, second time was just as fun as the first time.

Chris: If anybody wants to get ahold of you, what's the best way they can reach out?

Stephen: Yeah. So our our our beta platform is is not live yet, but our website is jurisdeed.com, jurisdeed. We're I'm also on LinkedIn and we just launched our own podcast last week, which is the Innovative Investor podcast. Check it out. We're doing a whole series on Louisiana's new tax sale system first, and we'll be diving into the more national scene in a couple of weeks.

But we're on YouTube, Spotify, Apple Podcasts, all the all the different channels.

Chris: Well, phenomenal. Thank you again.

Stephen: Alright. Thanks for having me.

Chris: Appreciate it.

AJ: Thank you for listening to this episode of the Real Estate Professionals Investing Podcast on WIN, your community of investing knowledge for growth. Hope that this episode has increased your knowledge and added value to your path to freedom. If you would, please take a second to rate us so that we can get more great investors to interview. If you or someone that you know wants to be on, please visit westsideinvestors.com and fill out our form to be on the show. Thank you again, and enjoy your day.