An Interview with Don Fullman and Charles Sells of PIP Group
As the market continues to rebound, inventory levels are running low. With inventory low, it’s easy for investors to get discouraged about new deals. For partners Don Fullman and Charles Sells, new deals are a matter of knowledge and patience, “there are more investment opportunities than there is cash to put into them”. As director of acquisitions for Platinum Investment Properties West, Sells doesn’t claim to have a magic wand approach to investing. Though PIP offers clients the opportunity to acquire property for “pennies on the dollar” that’s just the result, not the approach. The approach Fullman and Sells take is a refined one. Just as some restaurants, such as McDonald’s, are fast while others require reservations months in advanced and a schooled palate, Sells and Fullman take a slow-cooked approach to investing.
“We offer a conservative, high-yield opportunity that is backed by government regulations,” Sells shares, saying, “we try to take all the hype out of the water.” The partners find opportunities for investing in a segment most find too marked by red tape to even consider. It’s a niche market – and for those that know what they’re doing within it – it’s overwhelmingly a safe one. The market? Property taxes – unpaid ones, that is. What do Fullman and Sells do, exactly? They buy tax liens, not property. They acquire tax liens and deeds when property owners neglect to fulfill their tax obligations.
Fullman explains, “we look nationwide for tax sale opportunities that will fill the high-yield investment objectives of our clients. Our target areas can change due to a large number of factors, including but not limited to changes in the economy, the real estate market and the laws of a state. What is opportune today, may not be tomorrow. The market is very dynamic, and thus PIP needs to be dynamic to meet our clients’ needs.” At the moment, Fullman and Sells are focused on two states: Georgia and Illinois. They scout out tax auctions to find deals and get the ball rolling. For example, says Sells, “in Illinois, what we buy is a tax lien to the property. In 2013, we would be buying 2012 delinquent taxes.” Illinois gives delinquent taxpayers a period of redemption of two and a half years during which they can pay back owed taxes (plus interest). “The bid rate starts at 18 percent – and it can be bid down to as low as zero. Whatever your bid rate is, in Illinois, it doubles every six months,” Sells states.
By doubling, Illinois brings a significant ROI to savvy investors. “So if you bought it at 15%, you’re actually gaining a net annualized return on a paid-off certificate of 30%,” said Sells. Once the redemption period ends, if the lien is not paid off, the lien holder (or the investor) can then initiate the foreclosure process on the property. That’s where the red tape comes in.
Where some see red tape, Sells sees opportunity. Acquiring property from tax liens isn’t a get rich quick scheme. The process can be drawn out, taking as long as a year. There are attorney fees. Court fees. Back taxes to be paid. Things to be sorted out. This is the slow-cooking part of their approach. The return on time, and the return on investment, are substantial. At the end of the process, you’ve acquired the clear and quiet title to that property: a meal worth waiting for.
For investors, holding a tax lien is a good place to be. “You’re in line even before the mortgage company,” Sells says. Because taxes are escrowed as a part of most mortgages, clients often find themselves redeemed by the banks themselves. When owners fall behind on their mortgages, the property taxes may not get paid. When they assume a property, the banks are responsible for back taxes. Therefore, Sells explains, “the banks have to redeem us out just like the homeowner would.” He goes on to say, “we have rights to foreclose on the mortgage companies just as we do the homeowner; it’s a pretty safe spot to be in.”
Safety. Cutting through red tape. Patience. Sizeable returns. It’s a strategy that works for Platinum Investment Properties West and their satisfied roster of clients. Declining inventory levels are not a problem in this niche market: in the business since 1996, they’re busier than ever right now. The fundamentals, Sells indicates, are strong. “Our company has doubled in size every year for the last six years,” he says. “This year we performed higher than we ever have in past years. There’s still plenty of inventory out there for us, because I think there’s a lot that still hasn’t come to market yet.”
Their clients aren’t looking for quick cash: they want high yields – and they’re willing to wait. 40 percent of their investors are self-directed IRA clients who understand tax liens are not exactly liquid. Investors, like investing strategy, don’t follow one set of principles that apply across the board. Fullman says, “It is also important that investors determine their own investment objectives, preferences and tolerances so they can recognize the investments that are right for them.” For their clients, patience is key to the approach, “we still push on all our clients that this is a long-term hold; you’ll get redemption checks immediately upon investment, but don’t expect that you’re going to flip all this stuff out in a year’s time and do it again.”
There’s a learning curve to deals so intricate – and it’s one reason that so much opportunity within this niche market still exists. It’s not fast food investing – it’s long term, proven, safe investing for investors who want and understand the value of patience.
When it comes to tax lien investing, Sells and Fullman know their industry inside and out. “I think we’re the best in the business that offers this type of opportunity now. And the reason we continue to have our success is because our clients are successful,” Sells says. For investors looking to find out more, Fullman says information is crucial. To keep clients informed and ahead of the curve, the two communicate with their clients through newsletters, educational conferences, webinars and of course, directly over the phone, in person and via email. Before making any move, Fullman believes investors must start by being informed, saying simply, “investors need the information on the investments.”
For more information, visit Sells and Platinum Investment Properties West on the web at http://www.pipwest.com.
Real estate investor since 1979 and current President of Platinum Investment Properties – West, which is a real estate company focused on acquisition, consultation and management of tax lien and default real estate investment opportunities. Don has been a principal contributing speaker on various outlets for Tax Lien and Tax Deed Investing – what they are, the processes for each, and pertinent investment strategies. Has attained various levels of expertise in a number of real estate areas including tax lien investing, income property strategies and analysis, property management (CAM certification) and default real estate. Early experience and education were in the areas of engineering, computer science and project management.
(949) 433-8864 (cell) (877)335-2529 Ext: 103
Charles has been actively investing in U.S. real estate for the past 14 years (special-izing in default/distressed acquisitions). He has intimate knowledge with most real estate markets throughout the U.S. To date, he has over $60 million managed in principal, or transacted property liquidation for the benefit of nearly 300 investors. Credited on financial news shows as an authority in the laws pertaining to default acquisitions, Charles opened his first business specializing in national tax lien acquisitions in 1999.
(843) 298-0009 (cell) (877) 335-2529 Ext:104