The Best Tax Yields Deal Ever
Whelp, JP here with something awesome for you…
A super-cool success story from Phil Kessler about scoring his best Tax Yields investment — EVER.
Lemme back up for a second, though… because you might be scratching your head wondering who Phil is and what Tax Yields are.
I’ve got you, no worries.
So, Tax Yields by Jay Drexel is an awesome training program that skillfully teaches real estate investors to tap into a unique asymmetric opportunity with high potential upside, low downside risk, and super-low competition that can be done in countless U.S. markets.
Jay and his co-teacher, Phil Kessler, created this Tax Yields program, and we here at Awesome REI helped them get it to you fine folks.
And yes, I realize saying this was Phil’s best Tax Yields deal ever is saying a lot.
If you've been through this training, then you know he’s a crazy-good dealmaker — tax yields are his day-to-day norm.
But this deal is different from the others in several ways. I know this because I immediately hopped on a video call with Phil to get all the details.
We chatted about:
- High-level outcomes for these tax yields that Phil bought 5 years ago
- How Phil landed 20 tax lien lots near Phoenix for only back taxes owed
- Why these parcels are unique and interesting for “fringe investing”
- Phil’s awesome “secret ninja trick” for mapping & zeroing in on hot money in the area
- The “path of progress” value play he exploited, which scaled his ROI to 200%
- How to turn $40-$50 …into $3,000-$4,000 …into $10,000-$12,000 …times 20!
- The smart strategy he used from the training and where we covered it in the program
- How to recognize these unique opportunities again in the future
So, take a gander at this awesome deal…
JP: Okay. Welcome to a new conversation with the great Phil Kessler. And you can tell since we recorded the original training videos, that we both look a little different. I've grown my hair out and turned my office into kind of a party room, it seems. And Phil now has a chess dungeon. I can see you're equipped for strategery behind you.
Phil: I lock people in here to play chess with me
JP: And you elevated the camera so we get to look down on you. But that's nothing new to us. So without further ado and I guess maybe that was a lot of ado you are in the process of, and I just know about this at a high level, and I'd love to hear the story. You're in the process of an incredible deal, a cluster of deals, I guess, that you will be soon foreclosing on 20 tax lien lots that you have purchased the tax liens for in the Phoenix area. Is that right?
Phil: Yeah, just south of Phoenix.
JP: This sounds like a pretty big deal. Let's start, though, first with what is the likely outcome now for our context and everyone else, there would be people who have an opportunity to watch this who may not have finished the core training that we created. So we can't assume we don't have to teach them the things, but we have to assume that it's possible that they may not really understand the ideal outcomes of these deals. So in a nutshell, just give me a snapshot of the likely outcome of this 20 lot deal for you.
Phil: Likely outcome is I will take title to these properties for back taxes and minor legal fees. Again, snapshot. That's what it looks like. So I'll take ownership of these properties for just paying the back taxes and any legal fees associated with the foreclosure.
JP: That's a pretty sweetheart deal. Do you have any idea and I know you didn't maybe show up ready with numbers, but I'm just curious if you have any idea, like, what is the estimated value of property versus what you estimate you'll actually be investing in these 20 properties when it's done?
Phil: My costs on these liens originally were about $45 a piece. They're spread throughout a subdivision in just south of Phoenix, and the lots are worth approximately $10,000 to $12,000. You got to understand, too, I bought these years ago, and I just said, you know what? They're next to a school. It's vacant land. And I was like, they're next to a school. If they ever want to build this area, they're going to have to build here. I was just looking at it on a map, and I said, they're going to have to build here if they want to build in this area because there's the school, there's the Iten right there. And it just made sense in my head. And so I picked them up. They were $45 apiece. So fast forward five years now, and I'm looking at the news, and I see that Intel is building a $20 billion facility in the area.
JP: So you held those liens for five years before this news. They were just kind of in your these will be interesting someday, correct?
Phil: Yeah, I think leading up to that, they were probably worth about $3,000 apiece, which is not a small amount of money. Right. But I held out hope. Right. I just kind of sat on them. That wasn't like a life-changing I wanted to see what would happen, I guess you could say. So I get when Intel is building this facility, and I look it up on a map. It's about 10 miles north of these lots, and I'm like, okay, that's probably going to raise values. Then there's an electric vehicle company that announces the same thing. It's even closer to the lots. And I'm like, okay. So they're definitely putting industry in here. People are going to need places to live, and they're going to start building homes. So I start pulling comps, and I start looking at recent sales in the area, and I'm seeing those sales jump up every month. And it feels, right now, at least when I pulled the trigger on these about four months ago, it feels like we're close to the top of what I could get for these lots. So I'm looking at that number, and it's about $10,000 to $12,000 a lot. And again, my cost in these was $45 a piece. So there are legal fees associated with foreclosures
JP: But it's a pretty good ROI.
Phil: It's going to be the best investment I've ever made. I mean, without a doubt, it's going to turn out to be best dollar-on-dollar investment I've ever made.
JP: What a sweetheart deal. So this is for context. This is very much like some of the deals that we specifically describe in the amplifier sessions of the program. I can't remember what we cleverly named them, but if you haven't watched those, watch them to kind of get your head around the mechanics of these kinds of deals. So tell me, how often have you done these kind of deals before, if you just had to guess? And have you ever done it on a batch of lots like this? These are all kind of in the same area, right?
Phil: They are, yeah. Throughout the years, I pick and choose. I wish I could put this in terms, because I'm trying to think of this in the way that I was thinking of it at the time and the way I think of it now, which are two different ways, but at the time, it was sort of like a hope and a prayer you need to look at. There are always these over-the-counter liens that nobody wants. And when you go through these over the counter liens that are 40, 50, $60 they call this fringe investing. You're kind of on the outskirts. You're not doing what the banks are doing. You're not doing what the hedge funds are doing. You're kind of doing your own thing. And I think it's really important that as an individual investor, you don't have a billion dollar budget that you have to satisfy so you're more surgical. You can get in and out and you can really pick and choose the different investments that you want. One of the things that makes Arizona so great is that you can look at all of the tax liens they have on a map, right?
Phil: And so we can take their over the counter inventory and we can look on a map and you can start identifying points of interest, things like schools or highways or maybe new development or whatever it is, and buy a tax lien there and see what just hold it $50. It earns 16% interest. So if you get paid back, you get paid back. There are a lot of these liens that have been sitting there for years. And if you're clever and you want to go through this information, the opportunity is already there and they may already be foreclosable. You kind of want to think long term, don't think about how much this is going to make me in the next three months or six months, say, put $50 into a savings account and say, well, what is this going to be in five or ten years? And that's kind of what it is.
JP: Lucrative land leans. I just remembered as you were talking, that was the clever name that we created for that. Again, you want to understand kind of go a level deeper, a level or two deeper to understand the mechanics of these kinds of deals. And you can go check out the amplifier session. Let me ask you, though. If somebody were to want to duplicate or try to duplicate what you're describing right now, would you suggest that they first look in Phoenix because of some of the unique features of Phoenix that you just described? Or would you recommend would you say that there are also other places that you could maybe even identify off the top of your head that have similar features and benefits that would be worth looking at for this?
Phil: Yeah, sure. I think if you're in Arizona or Colorado, I think those are two areas that are experiencing growth
JP: And statewide… You're talking about.
Phil: Statewide. Pretty much, yeah. I think if you're in Colorado, you probably want to stay along that I-25 corridor going north to south in Arizona. You know, it's funny, I realize this job has taught me a lot about geography. In Arizona, I think, pretty much anywhere that's not completely desolate, you want to be near like a major metropolitan area, but not in the major metropolitan area. Because again, think about these areas. These cities are packed, right? People move to the cities and people move out and people move, but eventually they're going to grow. And I don't know if it's going to be in five years or ten years or whatever it is, but eventually they're going to grow. And so you want to be right on the outside of that growth
JP: So that you're in the path of progress, right?
Phil: Correct. And that's where you're going to see the value change. Now, people who own these lots, and they're not paying taxes, they don't plan on paying taxes. They're like, no one's going to foreclose on this. My taxes are probably $15 or $20 a year. They have no intention of paying the taxes or doing anything. So if you're going to the annual auctions in these areas and you can see something clearly, like, maybe a lot of these GIS websites will have previous satellite imaging. So if you kind of zoom all the way out and you look at 2020 and then you look at 2017 and then 2014, and you kind of just go back in time, you can see the path of growth. Right. And if you can start picking up on trends and one of the smartest guys I met was a guy who was buying tax liens in DC. And he would buy his tax liens based on where vegetation was growing. And he was able to identify a pattern between vegetation in the District of Columbia with five years later home values being 5x, 6x, 7x. And I don't know how he came across it, but he used satellite imagery to do it.
JP: That's next level insight right there. That guy's got a beautiful mind.
Phil: Yeah, he was different. But if you can identify, like, a path of growth even the slightest bit, spend $50 on a tax lien, see what happens.
JP: Right, or even if you don't see the evidence of a path of growth. Some of the things tell me if you see anything else. Some of the things I can think of, just naturally, that would seem to be likely paths of growth, like you said, would be in proximity to but on the outskirts of a major metropolitan area that is not currently known for a downfall. I think if it's a metro area, that is like San Diego right now at the time of recording this, San Diego is having a hard time right now. Like a third of San Diego. I just heard this morning a third of the residents there are thinking about moving. Right. If you have a population decrease, maybe that's not the right place to look. And the right metro, honestly, maybe well, I'm not going to get into that. We can get into politics.
Phil: But let me counter what you just said, maybe it is the place to look. A bunch of people move away and the values go down and people stop caring and letting things. Maybe that is the place to look. Because if it ever picks back up, that's the first place they're going to go to where everyone moved away from. Right. We were talking everything goes in cycles, right. So people may come back, and for whatever reason, if they do come back, they're not going to build new. They're going to go into the stuff that was abandoned and clean it out because that's going to be easier and cheaper.
JP: And basically you're rolling the dice. The more intel you have on the likely path of progress, the better. Right. But then if you have that intel, unless you have some kind of unique insight like the vegetation guy, then other people also have that intel, and the property values will reflect that over in the not too distant future. But it seems that you have a low risk. Right. Is this another asymmetric opportunity you can roll the dice, if you will, on loss that cost $40 and see when and if things change and this becomes the path of progress. And that's exactly what you're experiencing.
Phil: Yeah, we're talking low risk, high reward possibilities, and that's exactly what this is. And part of this is understanding the laws in different states. And that's why I say Arizona and Colorado are two good states to do this and participate in their auctions. Look at the stuff that no one else is looking at. Everybody wants to buy the lien on the single family home that's downtown. That's worth a half million dollars, of course. Right. You should be looking at the vacant lot outside of town. And I'm not saying you should definitely do this, but if you're a bit of a gambler and you want to see how it shakes out, I think this is a good place. One thing to consider, too, is that these tax liens do have an expiration date. It has a statute of limitations. In Colorado, that statute is 15 years. So you want to limit yourself to like, okay, in the next 15 years, could I possibly see growth in this area? Now, I would argue that you can pretty much take any 15 year time period in the last 100 years and see real estate growth in any area. Right. I think that's for the most part.
JP: Help me understand that statute of limitations. What exactly does that do here?
Phil: So a tax lien is issued and say you participate in the auctions. That happen every October, November in Colorado, and you pick up a tax lien for the $50. Right. Maybe it's on a half acre of land 15 miles south of Denver right. Or something like that? Well, if the property owner doesn't pay, you're just sitting there and waiting. Now, after three years, you have the right to foreclose on this property. You have the right to go to the county clerk and you trade your certificate for the deed and you file some paperwork. But let's say you're like me and you just kind of want to wait it out and see what happens. Because if you go ahead and take title and you're going to start paying taxes on that. And if you don't pay taxes, then the liens are going to accrue. So maybe you just wait and see what happens over the course of, say, the next 15 years. You're just accruing interest. But once you get to 15 years from the date of the sale, that lien that you own will expire and you're going to lose your investment. So you do want to know that there is a statute of limitations on these liens because they will expire. And so understanding what those are, it's 15 years from the date of the sale in Colorado and it's ten years from the date of purchase in Arizona. A lien could be seven years old and you buy it, and then you get an additional ten years on top of that in Arizona.
JP: So I guess knowing that going in is obviously important. Tracking that and then at the 10 or 15 year mark, once you cross that, when you're about to cross that finish line, the decision is, should I initiate foreclosure? Am I going to lose money if I do or not? Let the $50 that you just put in the slot machine get eaten. Slot machine 15 years ago.
Phil: Usually I think after, if you're looking at the right properties and you're doing the things that we're talking about, it's going to be hard to be in the red on this deal. Now, you may not go out and have like a 10x or 20x deal or something like that, but you should still be on the right side of the deal, hopefully, if you've done the little bit of research we're talking about.
JP: Yeah, because you're not. I mean, I guess the worst case scenario, you foreclose and it's that you don't sell it. You own it and you hold it and you're still holding it until you eventually sell it or until eventually you figure out that you bet correct and the values do go up, even if it's after the statute of limitations. So that's not a bad I said it earlier. You talk about an asymmetric opportunity for clarity in case anyone's not encountered that part of the conversation and the training. This is such an asymmetric opportunity, meaning the potential upside is so much greater than the potential downside. You got a potential upside and a potential downside of this. And that's exactly what makes tax yield opportunities so freaking exciting. You were just talking about how excited you are every day to wake up and do this right before you hit record. You were talking about enthusiastically.
Phil: I love it. Listen, it's hard. I think my whole life I've always been sort of like a jack of all trades and a master of none. And there's something about tax liens that I really like. I mean, I like the black and white of it. I like that it's like mathematics. There's a right way and a wrong way. The laws are what they are. You can sort of use them to your advantage in certain situations, but it just is what it is. And I like that because it's so definite, and I can try to find the cracks and make this better for everyone. I just love what I do. I really do.
JP: Sweet. All right, well, congratulations, everyone who's listened to our conversation. Like a proverbial fly on the wall. I don't know what that analogy even means. Like, you think about a fly on the wall. Flies are deaf. They don't hear anything. So I wouldn't want to be a fly on the wall.
Phil: Unless you are good at lip reading, right?
JP: So, anyway, you've been here with us. If this is something that you want to turn your attention to, you want to make sure you have consumed the lucrative land leans conversation where we go a level or two deeper on the how to for this. Phil, thanks, man. Thanks for the OT today. I appreciate it.
Phil: My pleasure. I love it.
JP: All right, guys. And we're back. That's right. This is some amount of time later since we recorded our original conversation, and the great Phil is back in the dungeon again, back in the chess dungeon. And, man, you have an exciting update on those parcels. So where do we start this part, man?
Phil: I do. So we are only a few weeks later, right? And I received my final judgment on the parcels, which means that I now own them. I own seven of the ten. So we're partially recapping here. Seven of the ten. I have listed them, and they are live right now. Three of them have sold in the first week. The other two are I'm getting offers on, but I'm realizing I can be a little bit more picky with who I let take these things.
JP: So first, dude, high five. Boom. Awesome. This is so exciting. First, let me just rewind a bit, go through the likely numbers as it stands right now, remind us, how much ballpark were you into these parcels, and then how much are you about to start putting in your pocket when you sell them?
Phil: Sure. Numbers. And I guess it'd be a ballpark because I don't know what to the penny, but I believe I spent about $45 to $50 per tax lien in 2017. Now, as I came up with the idea of as I decided to do this, now I have to tell you why I decided to foreclose. It wasn't just that I saw all of these metrics in the market. There is one individual who kept sending me letters over the past year to try and buy my tax liens from me. There's an individual down there who was trying to buy my position on these tax liens. And so I think after the second or third letter, I started taking note and like, well, why does he want these so badly?
JP: Those letters start right after you bought them or just somewhere or what?
Phil: So you usually get like these very generic letters. They say after the first year, maybe into the second year, okay. But once they're foreclosable, they're targeted letters. So, like, hi Phil, my name is John, and I want to buy your tax liens on these specific properties. Prior to that, it just says, hey, we want to buy some tax liens. Tell us what your portfolio looks like. And you can send parcels to them. They can decide if they want them or not, but once they're foreclosable, it's very targeted.
JP: So you were like, with all these letters coming in, somebody knows something that I need to know.
Phil: Correct. And so that's when I started really tracking and trying to forecast what was going on there. And then, of course, I get noticed that Intel is building this huge facility and a couple of other EV companies are building facilities within 20 miles of this epicenter. And so that's when I was just like, all right, well, I'm just going to call an attorney and do it. And that's how easy it was. You just call an attorney and say, I want to foreclose on these parcels. And they say, well, send us the parcel ID numbers and we'll take care of the rest.
JP: So in this particular county, did you have to find an attorney to have them foreclose on it? I know in some counties, particularly in Florida, it's basically just an administrative process, like through their website, right?
Phil: Correct. Yeah. You do have to find an attorney. Now I happen to find an attorney that shares the same last name as me. I was hoping I could get a discount, pretending we were distant relatives, but he saw through my hooves. I should give a shout out to the Kessler law firm down there because they really did do a great job getting all this done for me and in a really short period of time. So I reached out to them. I basically explained just, hey, here are the parcels. Here's the tax certificate years that I owe or that I own. And they said, okay. Basically what they do is they front all of the legal costs. They say, okay, we'll start the foreclosure. If the property owner redeems at any period during that foreclosure process, they are responsible for the legal fees, the property owner. So it took about three or four months, I think, start to finish. Four months start to finish. To get my final judgment. I got the final judgment. I got really an email saying, hey, you've been awarded the properties. You got the final judgment. And they even referred me to a realtor and a title company that deal with treasurer deeds, which are the Arizona equivalent to a tax deed. Right. It's what you get out of the sale. And so they have experience with this. And so I called them right away and they listed and we're in escrow and everything.
JP: So you're into these.
Phil: I didn't even answer the original question, did I? Yeah, it's pretty typical. So $50 per lien. So if we take all seven, $350. Legal costs for foreclosure on seven properties came to about $8,000. It was $1,500 on the first, and then I think $750 per after that. And there is an $800 administrative fee, and so my all in is under $10,000.
JP: All right, and what's the cash you're about to start putting in your pocket?
Phil: I sold two that were next to each other for $20,000. He only wanted one, and I was like, if I kick in the second one for a discount, will you do it? And he said, yeah. One of the parcels, which is, I think, the most inexpensive one that I have sold for seven, and then the other ones that I have listed up are between eight and 16, which are two. And I'm keeping two. I'm holding on to two. I haven't mentioned that. So I'm just going to hold I have two that are corner. One is a corner lot, and I have the one attached to it. So it's like a full acre, and I'm just going to sit on it for ten years and see what happens. The return on investment at this point with and I shouldn't say because we're still in escrow, right? I have nothing's done. Done. But the ROI is, you know, over 200% right now on just the two lots.
JP: Dude, that deserves a press of the awesome button. Probably awesome.
JP: The awesome button. It's like the easy button, but.
Phil: It's just way more awesome.
JP: Way more awesome. All right, so you're not in the middle of the deal, but you still have some pieces of the puzzle at the end here. I wouldn't call them loose ends to tie up, but you can see the finish line of this package deal, and it's exciting. It's super sweet. Recap for me what lessons are there that you don't want us to miss? And I don't mean lessons learned like mistakes you made. It might be that, but also it could just be spotlight what the valuable lessons are of this sweetheart deal that you're about to cross the finish line on for people who may not see it hiding in plain sight.
Phil: Yeah, sure. So I think one of the lessons here that I've learned through this is don't turn your nose up at vacant land for a long time. I did. And one thing I've learned, especially over since 2020, right when we saw that the market creeping and crawling higher and higher, prior to that, if I was buying property, I wanted to buy a single family home or a condo, and that was what I targeted. In retrospect, I realized that land was sitting there in front of me the whole time, and I turned my nose up, and I was like, oh, I don't want to deal with land, but here I am, now. And if I were to look at my income from this past year from real estate transactions, almost all of it is vacant land. And it was a very good year and I'm very happy with it. So don't turn your nose up at vacant land. You never know what it's going to be, I think sometimes taking a shot in the dark. And again, I think I mentioned this last time we talked, you just look at a map if you see that tax liens are in a specific area.
Phil: Here's a key in Arizona, most of these counties have a GIS map that will show you where the tax defaulted parcels are. So you can just look at the map of the county and all the parcels will light up blue that have a tax lien available for purchase. This is a secret trick. So if you can find that tax map, which is provided by the county, you find that tax map. You can zoom in and look at an area and just ask yourself, could I see growth here in the next five years or ten years or whatever it may be? And these liens are probably going to be fifty dollars to one hundred and fifty dollars. They're not going to be very much. So you think risk versus reward and really take a swing at it.
JP: The land is not going to go down in value. I mean, the worst case scenario is you don't make as much money as you hope, but you're still going to make money from those investments at the end of the day. Dude, I love that we got to capture you right here at the finish line and just kind of hear the rest of the story. Thank you. Thanks for letting us in and showing us kind of a behind the scenes look at this sweetheart deal that you have had going. I just want to say to everyone who has been here with us, take action, do the thing, do the doing right. You owe it to yourself to get the most you possibly can out of your experience with this journey you've been on with us with Tax yields. And if you're not yet active, just start with what we've covered in the core training and just start taking action in small, simple ways. Move the ball forward. Even if you're not quite seeing the finish line yet, move the ball forward, take action, build momentum, move on to the amplifier training, the strategy that we covered in this video.
JP: You owe it to yourself to get the most you possibly can out of this. And there are levels of higher and better available to you when you're ready in the tax lien ecosystem. So thank you, Phil, and thank you all for tuning in once again to another exciting episode of Tax Yields.
Phil: My pleasure. Thanks for having me. JP.
Like I said, we covered everything Phil did to make this his best investment ever — for reals. And I just had to share it with you, too. I suggest you dive into that video above right away…
And if you haven’t gone through the Jay Drexel and Phil’s Tax Yields training program, I strongly encourage you to check it out today. So awesome!