I always thought I was savvy. I was going to use my many years in real estate to my benefit. Each city holds tax auctions where they sell off property that have unpaid property taxes where the owners never paid up. I got on the published list and then went about determining the value of each property on the list. There were about a hundred properties in Chesapeake, Virginia. I did my due diligence. Researching the multiple listing system and the city tax records and then driving around to each property to get a look at them. I had my target list of the top dollar I would bid for each property. I was ready.
I sit down front in the conference center as the room filled up with about 200 people. Man, I thought. I armed with the best data you could have on these properties. The guy who sat next to me was a black guy. Very friendly. Very inner city looking. His dress was over sized baggy hip/hop. I was your typical white guy, beige chinos, blue shirt and blazer. No tie. Very hip. Not much hop.
I ask him if he had been to these before. He said yeah, he had bought a lot of them. He asked me what I did, and I told him I was a Realtor. He told me he got his GED and then worked for a fence company installing chain link fences around industrial sites. But said he works for himself now buying property and renting it out.
The auction begins. The properties I wanted were all single-family homes. They came up for bid and each one was bid higher than what I felt they were worth. So, I sat on my hands. The guy next to me didn’t bid on any of those properties. In fact, he didn’t pay any attention to those. But he came alive when a series of properties that in my research I had scratched as not worth anything came up for bid.
These properties were mostly very small parcels on busy streets. To small to build on. Some with no utilities running to them. Most of them didn’t have a building on them or maybe an abandoned garage. The guy next to me bid $300 for one. And got it. No other bidders. And $700 for another and got it. No other bidders. And so on.
With the auction over I turned to him and said, “I researched these properties and scratched them. What are you doing with these things?” Big grin. He said “I put chain link fences around them. And then I call the power company and the gas company and the cable company and the city utility department. I ask them if they need a place to store their construction stuff in this area. I got dozens of these all over the place. They pay me $2000 or $3000 a month to store their pipes and wheels of fiber cable. No utilities. No roofs to fix or appliances to replace.
I watched him get into his brand-new BMW as I slinked away in my savvy beige chinos.