Timothy Gray

Timothy Gray • Tax Lien Investment Specialist

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Auctioneer, investor, author, and top 1% producer Tim Gray joins us today to talk tax liens! As a real estate broker who saw a huge opportunity in tax lien investing while auctioneering, he has carved out a niche and encourages other brokers to check it out!

Purchase Tim’s book, No Redemption: Tax Lien Auctions, Evictions, and Lessons from the Foreclosure Crisis by clicking here

Timothy Gray can be reached at info@chicagolandauctions.com and 312-334-1300.

Chicagoland Auctions


D.J. Paris 0:14
Hello and welcome to another episode of Keeping it real. The only podcast made by Chicago real estate agents for Chicago real estate agents. My name is DJ, I am your host. Welcome to the show. We have a great interview with Tim gray coming up in just a few. A few quick items before we get to Tim, our website so you can always listen to every episode we’ve ever done stream those episodes live on with keeping it real pod.com You can also contact us, let us know if Is there a broker that maybe it’s you or someone that you are mentored by or someone you look up to, that you think would be a really interesting interview, send us those examples through the website contact form. And you can also subscribe of course to our show via iTunes and Google Play there as well. Also a special thanks to Chicago real producers magazine, which I am a columnist for and write a monthly article based on some of the lessons learned from these podcast interviews. So thank you to Chicago real producers magazine. Unfortunately I can’t share the articles with you because the magazine is sent to the basically the top 1% same people that we interview on the show but appreciate the partnership there. So if you are one of those people who get the magazine you can flip through and look for my articles every month. All right on to our great interview with Tim gray.

All right, today on the show we have Tim gray. Want to read a little bit about Tim for those of you not familiar from this is from the National auctioneer Association. Tim Gray has authored a book entitled no redemption, which is the first book of its kind to explain not only the theories but the real life portraits of people who are affected by tax lien auctions. Tim has been an expert on tax liens for almost 20 years and it is time to share his story. Tim is also an auctioneer conducts real estate and benefit auctions throughout the Chicago land area. He has been a top producing broker for over 10 years. He is a top one percenter have sold 1000s of properties owns lots of properties, and author and we are really excited to have him on the show. So thank you, Tim, welcome to the show.

Tim Gray 2:40
Oh, thank you very much, DJ, it is a pleasure to talk to you. I’m a big fan of the podcast. I think it’s fantastic and happy to lend my two cents to it today.

D.J. Paris 2:48
Well, you you there’s a lot more than two cents that you have to offer. Because this is a particularly unique interview, at least for me and I I claim ignorance to almost all things real estate, which is unfortunate, but probably more true than not very humble. That well. It’s not falsely humble. I think it’s probably accurate. But anyway, let first of all, let’s talk about you know, your start in real estate and how you’ve moved, you know, in in a probably a much different path than a lot of traditional realtors.

Tim Gray 3:20
That’s true DJ, I basically have taken the road less traveled in the real estate world as an also just in my regular life, pretty much my entire life. And a lot of it was the process of elimination. I did so many jobs that I didn’t like, and that I was terrible at. And I worked in the film business right out of college for a few years. And it was a great learning experience. But I could tell that it wasn’t for me. So I think that as you do things you don’t like you start to go, I can’t do that. I definitely couldn’t be a doctor, I would pass out on my first day. Right? It couldn’t be a lawyer. So I realized that and I didn’t like film. So all of a sudden, I got introduced to real estate went to auction school, I became an auctioneer. They started doing the tongue twisters, how many dollars on and give it to get to you know, and we started figuring out how to do this. So we went in, I went to real estate school got my broker’s license became a real estate auctioneer, and pretty much haven’t looked back. I basically specialize in foreclosures and tax liens. My company that I started, we go to the tax sale, the Cook County tax sale and we buy tax liens, which in the period of three or four years will turn into real estate. So I found sort of a unique subsection of real estate and I’ve really just tried my hardest to get as good as I can at it. And that’s really been the passion.

D.J. Paris 4:41
And are you are you originally from this area or from somewhere else?

Tim Gray 4:44
Yeah, I’m from Chicago. So I know the area very well. I’ve seen the changes throughout my life and I lived I’ve lived in other places but I’m definitely a Chicago and

D.J. Paris 4:54
well let’s talk about tax liens. How did you it was it’s just a natural progression as being an auctioneer you saw these opportunities.

Tim Gray 5:01
There’s no question that when I attended my first auction, I was probably 1516 years old, my dad took me to an auction. And that was the moment where I was like, I want to be an auctioneer. And then through that, I got into the tax sale world, I went to the Skaven, the Cook County scavenger sale, which you only need $250 to buy a piece of property. And that was in my price range at the time. And so I was able to buy some vacant lots that on the west side of Chicago, and for very little money, and held them for a period of a couple years. And of them, most of them paid off. And I collected my money back with some interest, but a few of them did not. And I was able to go and get deeds, and sell them to people that built homes on them. And the light bulb went off in my head. And you know, wisely I took that those profits and reinvested it and continued to sort of build the snowball up. And it’s amazing. When I see the progression of how it’s just been hasn’t always been a straight line. It certainly hasn’t been a rocket ship. I’ve had ups and downs like everyone else. But when you look back on it over a course of 10 or more years, 15 years, it is definitely a great feeling to have, you know, paved a nice business model that works in any economy.

D.J. Paris 6:21
Absolutely. And we should also plug your website which is Chicago land auctions.com Yes, thank you visit Chicagoland auctions.com And you can you can learn more about timber Tim, let’s let’s get into so we have 1000s of listeners, most of them here in the Chicagoland area. Almost all of them brokers probably are as ignorant or hopefully not as ignorant as I am with respect to auctions and tax liens. Can you give us a little primer on why broker should care and what opportunities they might might be missing out

Tim Gray 6:55
on? Sure. And I do think that it’s sort of something no one really wants to talk about, or think about sometimes it shows up in the political arena with property taxes. But the reality is, we just paid off the first installment of 2017, which was due not long ago. And on that tax bill. It says Maria Pappas, the Treasurer writes the amount of the state deficiency in budget. And it’s $68 billion, when you see it, and she put it on there to try to ease the blow of the tax bill, you know, that when you see your tax bill, which has gone up, you actually see the condition of the state. And we’re in a we’re in a you don’t need to even watch much TV to realize that we have some problems we need to work out of at the state level. And so the state level funds the county level, and so the county taxes, the property taxes that we all pay, I can’t even begin to tell you how vital it is. And when part of it isn’t paid, that makes that $68 billion, even worse. So you have a situation where collecting the property taxes is actually most important when you have a county that is struggling with money, because we would have potholes fixed, and the schools wouldn’t be closing down because they’re all based on property tax money. So the county tax sale is only once a year. And the treasurer, it takes everyone who didn’t pay. And last use it all up and says we’re going to auction it all off within four days. And it’s done that way to give people an incentive to pay, you don’t want to get involved in the process. So there’s a deadline, a line in the sand, you have to pay it or there’s a tax sale. And if there is a tax sale, you have a period of time to pay it off with interest. So someone like myself will go to the tax sale and buy the tax lien. And I’m actually giving the county the money that they needed. So I’m filling that receivable. And then the homeowner gets about three years to pay that money back to me with interest. And if they do, it’s a handshake, and it’s a win win for everyone. If they don’t, that’s when they would lose the property. And so that’s when it becomes as an investor, it becomes very interesting business because it’s a win win. If you do it correctly, you’re either gonna get paid out with interest, or you’re gonna get the property. And so that’s kind of the 30,000 foot view of a tax sale.

D.J. Paris 9:15
And what percentage of the time in the deals you do, are the owners able to pay? Or are you able to reclaim?

Tim Gray 9:23
That’s a great question. They pay off nine times out of 10. So it’s, it’s amazing. If you bought 10 tax liens, you’re gonna maybe get one, you probably won’t, you’d have to buy like 100 of them to get 10. And so basically 90, they almost all pay off. And so it’s a little bit of a business model where you’re setting up how much you’re gonna get in return and make sure that that’s satisfactory to you for the area and the risks that you’re taking. And then on the backside, you have to know the value of the property

D.J. Paris 9:54
and what you know what type of return interest return. And again, obviously They can vary, I’m sure. But what is there any general guidelines to what? Somebody who’s looking to invest in in these types of opportunities? Yeah, that’s

Tim Gray 10:07
another great question, DJ. Because if you’re in the if there’s a lien in the Trump Tower, and say, the ad and floor, and that actually happened, we bought, I think it was like at GE, in the Trump Tower, and the that went at 0%. There were 50 bidders bid, sure, make sure to them, we’re going to take it at no interest, because we want that chance that Donald doesn’t redeem. And if he doesn’t redeem, we’re going to get this 80th floor condo, it’s worth maybe a million dollars or whatever in our profit. But the truth matters that did redeem, so the lowest is 0%. And the best stuff goes at zero. But then there’s the other side of town. And there’s some boarded up commercial property, there was a there was a car dealership and park for us. It was like $200,000 a year in taxes. And I passed on it wisely. But someone bought that at 18% interest. So if you get down to the stuff where no one really wants, the the highest is 18%, the lowest zero. And somewhere in the middle is where you try to make it work. But again, there are a lot of bitters, it’s a very competitive tax sale, it’s all electronic. So you don’t really know where anyone is at. You kind of have to use algorithms, and we have really good computer people that are far better at it than I am to help me get a good bidding system. So I can stay competitive. It’s it’s actually, it’s sort of like a stockbroker, a futures trader, basically.

D.J. Paris 11:34
Yeah. And it’s like futures, it’s non correlated, necessarily to the rest of the stock market. Right. So it’s, it’s, it’s particularly interesting. And also, it’s such a, you know, this is so interesting. So I always think about from our listeners perspective, so they’re brokers, they are putting, you know, we’ve done a lot of episodes about working with investors. And this is an even a more hyper focused and unique conversation about a very specific type of investment, which yields a pretty nice return or attractive return to investors, you know, a three year return in most cases, right. Which I imagine, you know, meeting in the middle is a probably a decent number to be able to present. Do you find that there are a lot of brokers in this space? Or is it is obviously, you mentioned a lot of competition. But what do you think the average? You know, are there a lot of brokers that are just missing out on this stuff?

Tim Gray 12:31
I do, I think, Well, I think that at the tax sale level, it really is very difficult. It’s a government tax sale, you have to have a lot of money upfront. And then you have to really cross your t’s and dot your i’s. But at the secondary level, the properties that we get, we buy, say 1000s of them a year, and we get hundreds of properties a year. So as a broker, if it were me investing, and I had a client or myself, say $300,000, you could buy one house, on the north side, maybe. Or you could buy 10 homes on the south side. And so for me, I always looked at as a value being a value investor. And I do think that there are a lot of brokers that are all chasing after that one same home run in Wrigleyville, or in Logan Square right now or in Pilsen. But the truth of the matter is, you could go down right now to Calumet City, you can go to Doulton, there’s parts of the city of Chicago, where you can buy a house for $10,000. In my book, I have examples of homes that sold for $1. And they paid the agent $1,200 in commission. I mean, what a deal is that who could stay alive, if you weren’t a big bank, who could possibly do that you’re paying, you’re selling the home for $1 and you’re paying out all this commission. And so there are great deals now, those homes that were sold for $1 They weren’t the most beautiful homes you’ve ever seen. But in my world I look at I actually see nothing but beauty in a $1 home. I mean, even if you’re there’s siding on it, you’ve you’ve got to say to yourself, there’s this is an opportunity for an upside and that’s you know, most financial people will tell you that the the new beginner investor will buy a stock at the wrong time and sell it at the wrong time. So right now your apples doing great, I’m gonna buy Apple and then next thing you know, the iPhone start to explode, the stock takes goes down into the gutter and you sell it. And so I’m always of the mindset and I try to tell the other brokers flip that philosophy and buy Apple after all those phones caught on fire and I’m gonna Of course I haven’t but that’s the Buying Opportunity. And then when it’s never been higher and and everyone’s touting the record profits, then you sell it. So that’s how I’ve always looked at and if you go down into some of the properties that I look at, I buy and sell, they’re all sold as is they’re all sold very cheap under market and we have a lot of of interest but I have to say this morning alone, I got five or six calls from people who found me on Zillow or realtor.com And they said, Hey Tim, can you Come down to Homewood and show me this house, you know, and so I constantly am saying, Please hire a local broker, why wouldn’t you hire a local broker? And so there really are a lot of opportunities for brokers to reach people who are looking for these homes, I realized that that $1,000 commission or 3%, of $25,000, isn’t the type of thing that’s going to get you to your vacation next winter. But you know, our philosophy here is singles win ballgames you keep hitting singles up the middle, you’ll win every single game that you have. And so that’s sort of how I present our business and our real estate.

D.J. Paris 15:38
I think that is really well said, and it’s so interesting that there’s always, you know, seemed we seem to uncover on the show, thankfully, people like yourself are generous enough for their time to express their own take on it and their own niche. And you certainly have, have done that very effectively. Let’s talk about your book, no redemption, because it’s particularly timely. Yes. i with respect to the the auction coming up in May, can you talk a little bit? First of all, where can people find and buy the

Tim Gray 16:10
book? Yeah, it’s on Amazon, or there’s a link on our website as well. But if you go to Amazon and type in no redemption, or Tim gray tax liens, or any keyword, it should come up. And there’s an ebook there. It’s like five bucks, and anyone who’s interested in tax sales, this is not an academic book that’s going to throw a bunch of numbers and legal stuff that you This is my real idea. This is actually what happened over the last 15 years, there’s nothing I mean, the editor took out probably some of the better stories in the book, as you can imagine. But what’s in here absolutely is true, there’s photographs to prove it. And basically, if you if you look at it, you will see a business that has a ton of opportunity, and a number of headaches. And so my idea with the book, my competitors would never, ever offer any advice as to how to do this. And quite frankly, the old school foreclosure tax buyers, they were really cruel. And there’s kind of a new, I’m trying my hardest to change that we’re instead of being the tax bill collector, knocking at your door in a rude way. We are very motivational for people, if we buy your tax lien, we will go to your house, knock on your door in a polite way and say, Hey, realize you’re behind. You have two years, what can we do here to get control the situation before it becomes so expensive, you can’t afford it, and you’ll lose your house. And that type of motivational tactic and not just the aggressive debt collector tactic, really, it pays off in spades for us. And so we’re able to develop a rapport with people. And you’ll see that in the book that, you know, some of the hardest moments of a person’s life would be losing a home that they grew up in, that their parents or grandparents paid for, for the 3040 years, and they all pass away and leave it to four kids who lose it. And for years to taxes, no one pays a single bill. And everyone, you know, is moved throughout the United States. And, and to me, that’s really sad. And so you say to yourself, the really responsible way to handle it is to handle it with compassion, and try to get out in front of the situation. So that that people are not incredibly upset and think that you’ve mistreated the situation. And so that’s what we do, we really take a lot of pride in how we do the work. It’s the passion of our job is in taking a difficult job and doing a really good job of it, you know, and it’s easy, I play music. So it’s easy to say like, I’d rather play music, that’s my passion. But at the end of the day, the passion is doing something really well. And I would encourage brokers no matter what you’re doing, and when you’re doing it, you probably would rather be somewhere else. I mean, I’d rather be on a golf course most days. But if you could just take what you’re doing, and take as much pride in doing a great job as possible. I think you will always succeed. It’s very rarely that someone would let you go or not hire you or promote you, because you didn’t do the best job that you could.

D.J. Paris 19:08
Well, I certainly could not have put that better. And I couldn’t agree more

Tim Gray 19:12
because you do a great job DJ, that’s why take no one.

D.J. Paris 19:16
That’s very, that’s very serving to me. But but the but the reality of it is is I found that to be very consistent that you know, what you just so eloquently put has been said either directly or indirectly by many of the other people almost all if not all of the other guests on the show over time as these top one percenters in particular, of course, are excellent at what they do. They work very hard, very professional. And I also want to go back to a point about the generosity that you very quickly and briefly mentioned, which I think is not to be overstated, is that there are no secrets or there are secrets. Maybe there’s worth sharing, and you’re certain You know, sharing some of the secret sauce today and we couldn’t be more appreciative of that. I mean, there’s, you know, Tim is doing this, just being a nice person, and we do appreciate it. And, and so as with all the other guests we have, and I think that is been a very unique and consistent quality. I met a woman I was on vacation last week in Costa Rica of all places, and I met a woman. I don’t know if you’re familiar with the Brian Buffini training system? I’m not but yeah, he’s so he’s basically the largest independent training center or real estate training program in the countries out of San Diego anyway. So just so happens, this woman sitting next to me she is we’re on an excursion and ATV tour, and we’re actually on the way back from driving ATVs through the rainforest. And I’m we’re dirty and gross. And I’m sitting in this van shuttling us back to the hotel, and the woman next to me says, What do you do and where are you from? And she’s from Atlanta, and she’s a realtor. And I said, Oh, that’s funny. I basically recruit realtors. But I always say that because people might ask me, what’s the real estate market like in Chicago? And usually I don’t have a great answer for that. But I said, she said, Oh, well, you know, I do you know, Brian Buffini is coming to Chicago, and she’s a big Brian Buffini fan. And she uses them in our coaching. And she is and so we got to talking. She’s 72 years old. She does 12 transactions a year averages 20 million in production. Pretty, pretty decent numbers for for traditional real estate broker I thought, and she and she and I said, Oh, well, you know, maybe you’d like to be on the show in the future, because we don’t normally have people outside Chicago, but hey, why not? Right? And she said, Oh, I’d love to but but one thing she said bringing it back to you is she she said, You know, I just I treat this like a real job. And I have my niche. And my niche is I you know, with whatever suburb of Atlanta she lives in, she’s like, I know it better than everyone. And it wasn’t even better than any everyone. She didn’t say it quite that way. But that was what she meant. And she said, You know, I treat this like a job. And I’m I do such a great job that I only have to do 20 transactions a year to hit my goals. And, you know, as a result of that, and she said, I’d love to share exactly what I do every day. She’s like, it’s not going to sound very exciting, right? But, but it never does. But it’s it’s always that that hard work.

Tim Gray 22:25
I mean, that’s why I put some of these pictures in the book of I have a couple bathroom pictures, that you literally look at the book and you will ask yourself, Do I really want to buy foreclosures? This right? Because it’s I mean, it’s pretty hair raising, I’ll be honest with you, but again, when you see the flip side of it, that someone’s gonna buy it, rehab it and live in that home and maybe raise their kids and their kids and do the same thing where they’re the grandparents, parents that took out the mortgage 50 years ago and handed it down. That’s a great feeling. And there aren’t, even if you’re a big investor buying 100 properties. It’s not that many it’s big, every single property is a big purchase. And for most people, I bought my home over a decade ago that was looking back on it a huge purchase, I would have felt a ton of pressure, if I knew I was going to hang on to it that long. A lot of people buy homes. And so we’re in a business where we have to it’s not like a car that people are leasing for a couple years. This is a big purchase for everyone. I think we should all feel very lucky and very blessed to be able to work and have that result for someone. And I get a lot of those calls from people who have made really good money off of our the properties they bought from me. And I always say at least somebody’s making money off of this.

D.J. Paris 23:37
Well, yeah, and I think you’re absolutely and I think from a broker’s perspective, what an amazing opportunity to start to learn about tax liens and to be able to then offer those to investors as another opportunity. I imagine. I don’t I don’t know what percentage of brokers don’t understand or really, you know, bring these kinds of opportunities to their investors or their clients. But it’s got to be in the 90 percentile, right?

Tim Gray 24:03
There’s no like question on the realtor exam about tax liens. There’s nothing in doing education that’s ever come up. No one ever really talks about it. And so but the truth of the matter is, they’re all open to the public. Anyone can bid anyone can buy, and anyone can buy from me, or any other foreclosure tax buyer. It’s yeah,

D.J. Paris 24:22
let’s talk about that. How if someone’s interested in learning more, whether they’re a broker who wants to sort of bone up on the skill on the skills or even just a consumer, where should they go? What should they do?

Tim Gray 24:35
Well, if they want to buy real estate on the back end of the tax sale, then simply contact myself or there’s a number of other people that do Foreclosures And Distressed property. If they’re looking to get into the tax sale itself. A lot of it is public information. It’s a little harder to read, but it’s it’s a statewide statute. Every county in Illinois has to have a tax sale. The rules are laid right out They’re not that easy to read, but they’re right out there. And then you can basically register for a county tax sale, you buy the list of delinquent properties, you do your homework, and you can go in and actually bid on it. There are a lot of pitfalls to it. It doesn’t make the best part time job in the world. There’s a ton of books when I wrote my book that one of the reasons that I wanted to write it is because every book on tax liens was like an advertisement from someone who had never really bought a tax lien. And it was basically just just a snake oil salesman writing a book. And I was I buy them all, and I would read them and just but this isn’t the way that the business is, and there are touting all these huge interest gains you can get and how you can quit your job and all that. But the fact of the matter is, is that this is a full time job, and you’re dealing with people possibly losing their homes, and I don’t think you can really do it, doing it part time. Because what happens is, life catches up to get busy, and you forget a deadline, and every one of your tax liens you lose money on you’ll never, you only get one chance to get it right. And that’s because the penalty is so severe if they don’t pay, but if you don’t do your part, as a taxpayer, you will lose your investment. So a lot of people just depending on their risk assessment, their comfort level, they’ll say, Tim, I don’t want to go to the sale tax sale and wait three years for the property, I want to buy one of these properties today. And my average sale price is you know, 25 to $50,000, which is not the end of the world and people are using now it’s fantastic with these companies that are offering rehab loans and hard money, people are able to do these projects again and get these communities revitalized, that they weren’t able to do for the last 10 years. And it really is great to see it.

D.J. Paris 26:45
Wonderful. Well, let’s plug your book once again, which is called no redemption. So you can find that on Amazon again, search for no redemption. Tim Gray is the author and our guest today. Tim, thank you. So also visit Tim’s website, Chicago land auctions.com. And a lot of great information there about Tim and really appreciate your time today. Tim, this was very, very interesting. And I know our listeners would have loved it, you know, and I just got an education myself. So I appreciate that.

Tim Gray 27:24
Well, I’ll see you at the tax sale and DJ right. I’ll be back next to me bidding. Yeah, I encourage any of the brokers just reach out anytime they want to say hi, I’m downtown in here on LaSalle Street and definitely looking to network and help other people grow. It’s a win win win. We all do business together.

D.J. Paris 27:41
And what’s the best way someone can reach out to you? Yeah, the

Tim Gray 27:44
website, or I mean, I’m on LinkedIn as Tim Gray. The website Chicagoland auctions. You could send me an email say hello. I’d love to hear from you.

D.J. Paris 27:55
Awesome. Well, thanks, Tim. We appreciate you being on the show.

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