Seth: Hey, everybody. How's it going? This is Seth Williams and Ajay Sharma, and you're listening to the REtipster podcast. This is episode 177. Today we're talking with Logan Fullmer.

So Logan reached out to me recently about coming on the podcast, and when I heard more about his experience and his story, he seemed like a really great fit. Logan is an investor in land and commercial real estate, and he deals with some of the toughest title issues out there and uses them to kind of find some incredible opportunities. And these are three areas that I have a lot of interest in, and I know a lot of other people in the REtipster audience do as well. We're going to talk all about that and learn everything we can from him.

Logan, welcome to the show.

Logan: How are you doing, Seth?

Seth: Doing great. I appreciate it. Thank you. So why don't we start from the very beginning? Why don't you tell us about your real estate investing story? How did you get into it? What did you start with? How long ago was this? And then when, how, and why did you make your foray into the land business? How did that come about?

Logan: Well, about ten years ago, more or less, I'd kind of gotten my first real job. I inherited a little bit of money early on, and I was a poor steward of that, so I spent it as fast as I got it, just about. And it was a substantial amount of money.

After that, I thought, oh, my gosh, I got to figure out how to be an adult. I thought the $1 million was going to last the rest of my life, and it lasted, like, three years. So I went up and worked in the oil field, and after a couple of years, I started saving a little money and thought, okay, let me try this again. And I knew that I had to invest, otherwise, the salary that I made wasn't enough to get me much further in life. I bought some low cost vacant land just outside of downtown San Antonio, just outside of the MSA.

And those lots I was buying for between $5,000 apiece back then about ten years ago, and I'd already lost. I already had an experience with risk and loss and poor choices, and I went in with a bigger concern about my downside risk than more people usually do. Usually, folks are looking at how much money they're going to make on the upside, and they completely forget about all the risks. And this happens. A large part of the people, even after their experience, it continues to happen.

When I looked at this, I thought, what have I seen in the past? How did people make money? And I saw folks buy land and buy houses in older parts of town. And as those parts of town would turn around over a ten-year period, they would get some value, not just rental income, but just truly appreciation. And I remember seeing a couple of different big cities in Texas.

So I kind of had this thought in my mind. San Antonio was very close to where all the oil field areas I was working in. And San Antonio is the 7th largest city in the United States, but it's very undervalued. So I could buy these lots, literally. There was a highway that divided the central business district from some of the lowest values in San Antonio, so you'd have big time value and then nothing.

And I thought, boy, if the value spilled over that one highway, we're in good shape. So I bought a couple of dozen lots with a couple of years of my savings. So $5,000 to $10,000 dollars apiece. At that time, I was thinking, how much lower can the value go? They can't get that much less valuable than $5,000 apiece.

But if they do anything like the other downtowns in the big cities in Texas, they could go to hundreds of thousands apiece. So I've got a good shot at a lot of upside, but the downside risk is very low. So that made me feel comfortable spending every nickel that I had at the time. And the neat thing is, that segment of the story is very short, because within about two years, the market moved. I got really lucky and put all my chips, pushed them across the line there, and bet on black.

Thank God black was the color and the values just started skyrocketing. And the way I found out is I got a call from a realtor that said his client wanted to buy one of my lots for 200,000. And I was all in the whole portfolio for about 300,000. So you can imagine what changed in that moment.

Seth: You didn't learn about the land business from some land flipping course or something like that. You just kind of figured this out on your own, is that right?

Logan: Right. So this was ten years ago. So what we had on YouTube, that's just at the time, the guys, like all the guys that we look at as the old timer guys now, they were just starting to play with YouTube or hadn't even had a channel yet.

Seth: Yeah, that's kind of unusual. I do come across people like that from time to time who figure out land on their own, like, without somebody prompting them and kind of showing them the light. But it's not that often.

I mean, usually people hear land and they just are kind of turned off by it and they walk away. But it sounds like you kind of figured it out on your own and put the pieces together. It's pretty cool.

Logan: My dad was a CPA, so I'd gotten to see his stories about a lot of wealthy people because he got to see their taxes. Now, my dad wasn't wealthy, but I got to hear these stories about folks. And I realized folks usually made their money investing. It was a lot fewer people made it in just some kind of special career. And I realized that I couldn't afford a lot of the investments that were out there at the time. So I kind of defaulted to land because I just happened to be in a situation where someone said, oh, wow, land is cheap in San Antonio.

And I thought, I don't have a lot of money. Land is cheap and it's stable, whereas stocks, I don't understand that. And that'd just be a bigger risk than I took. So that was something that was affordable, it was close and I felt like I understood it because the lot that I bought was right there and no one could move it and it couldn't go up or down in value overnight like a stock. And I thought, this is the easiest thing I can get close to in my proximity and timing.

Ajay: Super interesting, Logan, because I feel like you interpret risk very differently than most. I think a lot of investors and folks listening get super excited at the prospect of doing massive deals, which I do too. I like doing deals where you can add some zeros at the end.

But I want to highlight your philosophy as you were getting started You essentially said, well, it can't go any lower. So if I'm investing five grand, I can't lose more than five grand a pop. But these things can go to the moon, essentially, right? And so they're not really going to go down to zero because their land in San Antonio, this is a great area, but I have a lot of upside here and I think investors talk a lot about asymmetric bets. But you basically figured asymmetric bet out on your own. Just reasoning through, let me throw some money at this thing.

I'm curious, is there a reason as to how you thought about risk back then and why you perceived it that way or anything kind of ingrained in how you grew up?

Logan: I didn't grow up with really much, just middle class, whatever, nothing really special, but neither up here big into investing or any of that stuff. But when I inherited some of that money, I didn't realize it was nearly a million bucks, and it was just the largest amount of money I’ve ever seen. I never had more than $10,000 or $5,000 in my checking account at one time. So when that kind of money came in, I thought I was rich for life. I was young, I wasn't paying attention. And when I lost all that or just blew through it, basically, I remember thinking, oh, my gosh, money can go so quickly. I need to respect it more. I had a good shot at it and it's all gone.

And I remember the next time when I worked to earn a couple of hundred thousand dollars. I remember it took me several years, three years to earn and save this after my income, after my expenses, after my taxes. And I remember thinking, gosh, it can go so fast. So I was really worried about losing it.

Seth: Yeah, for sure. I know a lot of people who went through the last big recession in 2009 and all that, myself included. It kind of scarred me to this day. I kind of have a hard time going out on a limb because I always see the world through that lens. I mean, that's how I entered the real estate investing market. Just saw it, it's very risky.Things can go wrong, things can go terrible, which they can. But that was kind of an unusually bad time back then, and that was not an appropriate way to think over the past ten years, as things have been going up and up and up.

So, it's kind of a blessing and a curse, I guess, when you have that sort of scar in your upbringing, right?

Logan: So there's an interesting balance. I met a guy, he's a local CPA. We started doing business together a couple of years into this. And it's interesting because I still had this care for the downside and risk mitigation. But he is ultra conservative. So there were times where I was willing to push the envelope more, although not near as risky as some people. I kind of helped things grow and expand, but he was always there to remind me, if you screw up, this is how bad it can be.

And I always remember thinking, man, I can swing for the fences like some of these guys that take on huge amounts of debts and take on projects that are real risky, that might have massive multiples, but if we screw up, we have to start all over again. And I remember thinking I would rather grow aggressively, but in a manner that I could control and felt comfortable with than looking for that one in a million shot. But I have good odds that I'm going to lose it all or bankrupt. I would rather be stable and consistent and grow in the long term than keep swinging for the fences.

Because I met guys like that the old time. A lot of developers have been bankrupt multiple times. They've been divorced a couple of times. They've had to move back into that small apartment multiple times from some lavish life. And man, that's stressful, dude. I didn't want that.

So anyway, that mattered to me a lot. But that was an interesting part. But to me, what was more valuable than that particular chain of events was when I went back to the market after I'd found that my lots had gone up in value and I sold several of them. At that point I said, great, I'm going to go buy some more of these $5,000 lots. And I realized there were no more $5,000 lots.

Ajay: Yeah, where'd they go?

Logan: Yeah, there's a really unique situation though. One of the lots that I bought, I got sloppy and I didn't buy title insurance. I was going through this slow process of going to title company, getting a commitment, closing, blah, blah, blah. And this one guy would sell me his for $5,000 or $4,000, but he said, “I'm not going through all the title company stuff. Just come pay me for it.”

So I gave him a check and he gave me a deed that recorded it. But later on I found out that I bought one of five deeds. That's why I didn't want to go to title because he would have to share the proceeds with four other siblings. And I went through this process that summer of calling lawyers, asking them how to fix it, making calls to property, the other owners trying to get this thing in front of a probate judge (it turned out I only need an affidavit of heirship), just all these steps.

And I figured out how to fix that. I picked up the other shares and then I also found there were some judgments and liens along the way. And I had to call these creditors and negotiate them. Some of them were so old that they were no longer valid. I learned a whole lot of information about that property. And I remember when I went back to the market to try to find those $5,000 lots that were no more, they were $100,000, $500,000. I remember thinking, “Wait a sec, there were a lot of people that couldn't sell because they had problems with title.” And I thought, I bet they haven't sold still.

So I called some of those people back and none of them had sold. So I remember thinking, well, there are problems but if I can figure out how to solve them, maybe I can get a deal. And that's when I started offering people just pennies. Like, literally, I'd still offer them the $5,000, but the difference is, I said, hey, you can come to the lawyer's office to pick up the check, and I'll get a deed from you.

I know we got multiple owners. I know we have title problems, but I'll basically inherit your issues. And that's when I started buying the land with problems in tow and figuring out every possible way to solve the problem. And that more or less became the basis of my business model for today. That was eight years ago.

Seth: Maybe that's a good segue. Tell us about your curative title work. Is this like a separate company you have where you help people solve title issues? Let's get into that a little bit.

Logan: So it basically has become the basis of a lot of my companies. It's kind of the feeder to my portfolio. It became the feeder to my cash flow machine. But at the end of the day, everybody's out buying property from wholesalers, sourcing their own deals, figuring out any way to acquire real estate. And I realize I'm looking at the downside risk.

If I can buy something for substantially less than it's worth, I can make a mistake valuing it. I need to liquidate it real quick and get some cash and still make money. All the things can go wrong, and I can still do okay because I got such an extreme discount on it. And that really mattered to me.

So I started acquiring properties with these problems, and it started translating. Into big ranches, I bought apartment complexes with problems like this. I'm talking industrial sites. You'd be absolutely amazed how often this problem exists in the rest of the commercial world.

Seth: If I understand right, are you intentionally going out and trying to buy properties with title issues? Is that what's going on? Or you're helping other people solve their problems with title issues, or what is it you're doing in that?

Logan: My goal is to buy them with the problems, I guess, inadvertently solving other people's problems along the way. But I'm the one that most of the time gets the bigger financial benefit out of that. I'll pay them some amount of money for their share, and then I'm taking on their problems. Then I've got to solve those problems that now become mine because I've got the land.

So at the end of the day, I'm looking for something that's got trouble. It may have judgments or liens, like an IRS lien or a creditor lien that's more valuable than the property actually is. As a result, these folks cannot sell with title insurance. It doesn't work. I'll buy it for a very small amount of money and then at that point I'll go in and negotiate with the creditor, sue the creditor, I'll deal with all the title issues. Maybe I have to open a probate. Maybe I've got to go find some owners that are lost or disconnected, things like that.

And once I get through solving those problems, now I have an asset for $0.30 on the dollar and I can decide, is this development land? Is there something I'm going to go sell to the market and capture my equity? What am I going to do with it?

Seth: So it sounds like the big advantage of buying properties with these title issues is basically you can get them at a huge discount. I think you just said $0.30 on the dollar, that kind of thing. It makes me wonder, though, what kinds of issues are we talking about and how costly and time consuming are they to fix those problems?

Logan: Yeah, I'll say one of the most common ones is multiple owners in unresolved estates. I call them kind of “orphaned estates.” That's one of the big issues.

Another issue is a break in the title chain, meaning someone didn't file a deed 40 years ago and then the next person that bought it sold it to the next person. They didn't get title insurance, but there's this chain of transactions, occupants, users. There's just this gap in the title chain for an unrecorded deed 30 or 40 years ago. Maybe you'll have an unreleased mortgage that's 70 years old and there's no release. And the owners can't find a mortgage company because they're out of business.

Sometimes you'll have a bad deed. Sometimes someone will sell this property and they'll write the legal description wrong. But that deed is from 60 years ago, maybe. That's a problem that has to be solved or the property can't sell the judgments or the liens. Maybe somebody didn't pay their child support liens. They have 250 grand in child support. The properties are 200. That doesn't make sense. All of these problems that prevent a property from selling.

I'll give you an example. Somebody wants to sell an apartment complex. He contracted to sell it. And the guy who was the seller changed his mind and did not close. He backed out. But the person who wanted to buy it still wants it. But he's in this spot. Well, I'll buy a specific performance claim from him and go sue that seller for performance, as long as there's enough equity in the deal. And I'll become the buyer of that after I win a lawsuit, basically.

So, in that case, you got to have millions of dollars at stake. I mean, that deal is $150,000 worth of legal fees. Took two years. I had a couple of million dollars in equity on the line there. So that is an expensive, long, high value-solve.

But some of these aren't so bad. I'll give you an example of a very common event. A property is worth 200,000. I'll buy it for ten or 20 grand from two or three owners. But there are half a dozen lost owners, and none of their probate, none of their heirship has been not. I'll just buy shares at a time and go find people one at a time, and we'll do a big affidavit of heirship or a declaration for heirship in the local probate court. That might cost… I might spend another 20 grand buying shares and doing a declaration of heirship. So that would be on the low end of the expensive side, and then the apartment specific performance would be on the high end of the expensive side.

Seth: In terms of these different issues that you're mentioning, some of them I understand pretty well because I've seen them many times. Some of them, I haven't seen them. But when I think of breaks in the chain of title or multiple owners and that kind of thing, can you just file a quiet title action to fix that stuff? Or is it way more convoluted than that?

And what happens if you take on one of these projects and you can't solve the title issues, and now you have a property you don't really own? Does it ever happen? And what's the risk of that?

Logan: Okay, that's a two-part question.

The quiet title lawsuit is not for multiple owners. That would be a declaration of heirship. That would be a different situation. So you need to be very sure that the share you're buying is legitimate. I've bought shares of properties before that were not shares of properties. So I got a deed for somebody from somebody, and paid them money, and that deed was worth nothing. So I've made that mistake. But I also bought six deeds to the same property, and I got those deeds for a good deal. And that last 7th one that I bought that was worth nothing. Didn't matter because I paid so little for them. I was still in the money.

So that happens a lot. But a quiet title action, a lot of times a quiet title or trespass to try title, those are two curative lawsuits that basically can catch a lot of different problems. A title break in the chain, that's a really common word that I'll use for that type of suit. And what you're doing is you're basically saying, this is my property. I'm saying it's mine. And unless anybody else comes to challenge that, the judge is going to rule in my favor and give me a full order for title. That works on some of these problems.

But when you're talking about the heirship stuff, the simple answer is you have to find everybody, and you have to have a bunch of people sign off on a genealogy report. And in Texas, we have a statute, an affidavit of heirship. And a lot of family members have to sign off on this after this big genealogy project has been done that says, this is my family. These are the heirs. Then an attorney compares the intestate succession chart in the estates code that says, these are the heirs. According to the law, if there was no will, it's a big document that gets filed in the land record, and that becomes your title chain instrument that connects all of those breaks in the title chain from all the owners.

To me, some of the ones I've done have been the worst. You're talking 60 and 70 heirs. So you have to find people all over the world sometimes. Sounds like an absolute nightmare. It can be. I made a million dollars on a 60-heir property. I spent $250,000 paying liquid taxes and buying shares. So I was all in for about 250. It took about six or a little less than six months, about half a year, when I got down the way and resold the property. Sold the property for a million.

So it is a hassle. But for a million bucks, I'll take that hassle

Ajay: Me, too!

Seth: It almost kind of reminds me of when you're trying to subdivide or get entitlements for a property where there's some. Risk there that maybe this won't work out. Like, I'm sinking a bunch of money in that maybe it won't come to fruition. It sounds like kind of a similar thing where you're doing a lot of this paperwork to put the pieces together. Has that ever happened where you went all in on this thing, and you couldn't get all those heirs to sign off, and you're like, well, I'm screwed. I mean, does that ever come about?

Logan: It's happened, but I'm not screwed. So let me talk about the entitlements for a minute there. You're saying you're going to spend all this money and you might not get the entitlements. There are tons where you're not going to do well in that case.

And I've got several, very large, I've got a 250 and a 450 lot subdivision happening right now, one in Austin and one in Dallas. But I bought each of those 30% below market. So I can screw up and spend a quarter million dollars on engineering fees and legal fees and all this.

And let's say I don't get the entitlements. I can still take the property to market, sell it for fair market, and I'm not going to lose any money. I'm going to make a couple of bucks, but I'm going to get reimbursed for my legal fees and my labor and time and the investment. I'm going to get all that back because I bought it below market.

Seth: And that's assuming we have a firm understanding of what market means, right?

Logan: I'm not going to spend three, four, five, 6 million unless I know what market is.

So there are times where I'll pass on them. When I'm looking at the 100 acres it was $7 million. I've got another one that's 200 acres, that's 450 lots, that's $6 million. So if I'm going to spend that kind of money, I'm going to figure out what it's worth and feel good about it, or I'm not going to buy it. So I'm not going to take that risk.

Some guys, they'll cut that check and say, go big or go home. I'm like, well, you might be in the courthouse one day and I might buy that land from the next guy at a price where I got the protection. You see? Different.

But that's how that'll play out of the land development deals. I don't want to take that risk there. But when it comes to the 60 heirs, I've had that situation where I get 40 people in and the other people say, “I'm not selling to you, forget it. I'm done.” In that case, in Texas, we've got section 23, which is a partition of real property. 23, the property code. It's an absolute right in Texas to access your equity and land.

So you file that judicial plea in your county or district court, and you ask the judge to sell the land and you get your share of the money, the partition lawsuit. So you're not ever going to be in a spot where you're just screwed and you can't get your money unless you bought a share that's not actually a share, then you might be. But if you bought a bunch of shares, that judge will sell it and give you your money so you can get out. I had to do that, too.

Ajay: Logan, this is super interesting, and I think most people are afraid to go through the quiet title process, and I think a big portion of that is truly, they just don't understand it. And so could you speak about, number one, who are you hiring to get that done? I'm assuming an attorney, right? But for those that don't know, just what type of attorney are you reaching out to?

Number two, how long does that time take, that whole process take? Number three, sorry, this might be like a four-question stack, man. Number three is, what court is that going through? What judge is ordering that summary of judgment? So I guess who do you hire? How long does it take? What's it cost? What court? Let me know if you need me to repeat that.

Logan: A real estate attorney that's experienced in this specific area. If you go to the doctor, you're not going to go to a quick doctor for a brain problem.

There are a lot of real estate attorneys. You need to find one that specializes in this stuff. I've got an attorney that works for me and he has a lot of this experience, but over the years, working specifically with me, he's kind of narrowed that down. Now I've got half a dozen other attorneys that don't work full time for me. I use them as necessary.

So an attorney that is experienced in this type of lit is what you've got to get.

Ajay: And what would I Google, “title attorney?” Or what exactly would I be looking for?

Logan: You're going to have to Google real estate attorney and start calling them and asking who takes on these cases, what their experience is. A lot of attorneys will say, oh, we do quiet title. And I say, great. How many of them have you done? How many have been successful?

And that second layer of questions, people like you and I are usually afraid to ask an attorney that, because the attorneys are condescending, you think they're smarter than you, you think they're richer than you, you think they know everything. When you take my annual income and divide it by the hours I work, I make probably four to six times what most of the best attorneys make.

So I had to realign my thinking and say, no, I'm the expert here and I need to find the best trade. It's a carpenter. It could be, I don't know, a plumber. In this case, it's an attorney. But there's still a trade to supplement my business. So when you think about it that way, all the questions you would ask a carpenter, you better be asking these to an attorney before you start dropping tens of thousands of dollars to hiring him, before you know what kind of work he can do. So you got to ask the right questions. But when you find that right attorney, then you get going.

Now, when you talk about, you could make a mistake and things may not go your way. You mentioned that earlier and you said, because you don't know what you don't know, is more or less what you're saying. In this case, we look at the statutes, we find out exactly what that is, we compare my fact pattern to that, and I look and decide how closely those line up.

If the fact pattern is darn near dead-on, and I really feel good about that, then I’m gonna file the case. But there are a lot of cases that I've looked at that I decided not to file and not to take because the fat iron wasn't convincing enough or wasn't close enough of a match. So I walked away and didn't take them because I didn't think I could win. I'm not going to take on that case and file that lawsuit unless I think I got a 90% chance or more. Otherwise, I had a really good track record in winning these things.

So it's kind of like that. You don't pick a fight that you don't think you can win. All the boxers do that. Now let me speak to the time. If you're going to get a default judgment, let's say you notice all these other parties that you have a plea and their name might be on an instrument of title chain. And I'm basically saying, hey, everyone, this is my property in this plea. And either you contest my ownership or you let this thing go. But if you don't contest it, I'm going to be the title holder according to the judge's final order.

That's what the summary is. If you get a default judgment and you notice everybody in the title chain and no one responds, you're going to get a default judgment in 90 days. But if folks raise their hands and say, “Whoa, that's my property, and here's why.” You have to litigate it a little.

Quiet title cases, unless you're dealing with a high value in a very complicated fact pattern, if you spend more than 10,000, $20,000, and it takes more than a year, be really surprised. These are usually relatively simple. So less than a year, less than 20 grand.

Seth: I got a question. When you were talking earlier about buying shares in a property, so are you talking about, like, a tenants-in-common situation where that's how the property is deeded to the existing owner, and you buy out one of the owner's shares in the property? Is that what you mean?

Logan: Right. Yeah. So you have co-tenants here in Texas. So what happens is most of these people that have multiple ownership situations, they didn't buy the property. It's not like all three of us went and bought the property, and all three of us are entitled together. That's very rare. That does happen. It's very rare.

It's typically Seth's daddy died, and Seth had four siblings, and Seth died and had seven kids. And now you have this congregation of 18 people. That's the most common tenants-in-common situation or co-tenant.

Seth: Okay. And that's what you're referring to when you talk about buying shares, right? Because otherwise there are joint tenants and that kind of thing. That's where everybody owns all the property together. And do you not deal with those types of properties as much?

Logan: Texas laws are different. We don't have rights of survivorship in our Texas laws. So when Seth passes away, if you don't have a will, Seth, the state's got a will for you. It's just a succession chart. It's in the state’s code.

And when you die, Seth, without a will, that section of the law, the codified laws, basically say who your heirs are. And there's this whole chart that you go through to pull out who says the heirs are.

Seth: It sounds like a lot of what you're able to do here hinges on the fact that you understand Texas law really well. If you were to try to do this in some other state, how much of this would you have to relearn? I don't think you'd be lost. But is there a lot of stuff where it’s like, oh that doesn't apply anymore. And neither does that. That's the Texas thing.

Logan: Yeah. I think once you understand the process and you understand how to read it, how to understand it and how it works, that's your biggest hurdle. Laws apply a little bit differently in each state, obviously, but it'll take you some time to figure that out. But as long as you understand the basis and civil practice and procedure, you'll be able to look at stuff and figure out the difference just by reading the common law or the statute and figure out what to do differently.

But what's neat here is Texas is huge, and I got no reason to go outside of Texas at this point. And I can talk through these projects with people on the phone like that without having to research.

Seth: Now, when you're working through these title issues, do you wait until the title issues are clear and then take title to the property, or do you just buy it and assume you're going to be able to figure it out and then deal with the stuff after that?

Logan: Typically, what I'll do is contract with at least one or multiple owners. I'll get a contract, and then I'll do some real research. And at that point, I'll make the decision to buy pieces of the property without title insurance or continue to work on solving them while I have a contract.

But I would say a large part of the time, I'll buy without the title insurance, and then I'll fix the problems. And the reason is, early on, I would trust people, and I would go fix all their problems. And then at the end, they would say, I changed my mind. And that's how I learned to do so well with specific performance lawsuits.

Seth: That's not cool.

Ajay: That's tough.

Seth: Are you putting down an earnest deposit or something to secure this? And how much time do you have to work through this stuff while it's under contract?

Logan: I do pretty low earnest money on stuff like this. A lot of times, I'll give somebody $500 for earnest, if I'm doing earnest. But because a lot of these are not going through a title insurance company, I'm going to send them a contract that doesn't include earnest money. And I'm basically going to tell them I'm going to close them.

The typical contract in our office closes between three and five days. So I only need enough time to run my own title abstract, get a third party title report to fact-check my work. My attorney and I look at it, and then it closes, usually within a week. So I don't have time to receive earnest money, get it receded, send out copies, everybody. I need to get them to sign that contract, and I'm going to pay them for their deed.

Seth: So it sounds like you are taking title to as much of the property as you can for as little as you can, and then solving the title issues after the fact, just based on what you said there.

Logan: That's right. A lot of folks watching this stuff saying, oh my gosh, that sounds so complicated. But one of the messages I like to explain to folks is it's a lot less complicated than you think because you don't have the right guidance and you haven't been around the right folks to figure it out.

But I'm going to tell you, I look at this and say, I can't understand why everybody is not doing it if they would just get a very small amount of education or read a little bit about it and invest very small amounts of money at a time. The returns are freaking astounding. I bet there's probably half a dozen people in the United States that are doing it at my level and they're all really open and really willing to share.

So if someone's got some, if, let's say they have a little bit more time than they do money and they're willing to invest some time but make exceptional returns, I'd tell people to seek these folks out, go watch all the stuff on the internet, call an attorney and pay them a couple of $100 an hour to explain stuff to you and go buy yourself a deed for $500. How much are you going to lose?

Seth: It sounds like there maybe is a systematized way to intentionally go out and find properties with these kinds of title issues on them. And it got me wondering, say if I want to go out and find a bunch of commercial properties with title issues so I can buy them at 20% or 30% of market value, how do you do that? Because a lot of times you can't really find title issues until you do the title search. And that's when you realize, oh, there's a problem.

Is there a way to, in DataTree or whatever your data service is, only show me these properties that are likely to have a problem? Or do you go to Foreclosure.com and look for those properties? It sounds like there's some special list somewhere that has all this stuff. Is that true?

Logan: Usually the property that have these kind of problems, the problems have been there long enough for the owners to be frustrated, are delinquent on taxes. So there are a lot of different ways that you can go find this stuff. In my opinion, that is the best distressed real estate list ever in the world and probably there will never be better.

Seth: When I hear that, I think, the distressed issue is delinquent taxes. There's a tax lien on the property or something like that. But it sounds like there's probably lots of other different issues on those same properties. Is that accurate?

Logan: Yeah. Usually once you start peeling those layers back on that onion, the first one is the delinquent taxes. But there are usually other layers in there. So let's examine that for a moment.

A property can only be delinquent on the taxes if there's no mortgage. Because if there's a mortgage, the loan servicer or the lender will pay the taxes and then shoot that bill over to the borrower and put them in default many times. So if there is no mortgage on a property, then the taxes can be delinquent. If there is no mortgage on a property, then it's very old ownership, or it's a very wealthy person that didn't use debt and they just bought it. The odds are it's old ownership.

So many times when there's old ownership, title problems exist. Because generally, if a mortgage is for 30 years long, most people don't pay mortgages off in their life. Some do, but a lot of people don't. So let's just say most people buy property and pay it off and live there. When they die, their children inherit it, may not do the right paperwork, and it comes without mortgage liability.

So many times you have second generation owners with title problems and they become delinquent on property. These folks didn't buy property and set out to be a property owner. They inherited it. They were given the property from their parent. So the folks that handled the title problems paid up the taxes and kept the property in good standing. They're not the person you're dealing with. You're dealing with that person that inherited it and really wasn't ready for it.

Seth: Well, this makes me wonder. Of all the different title issues out there, what one or two title issues would you say are the easiest ones to solve? Like when you're aware, okay, that's the problem. No sweat. We're going to take care of that. Just push-button easy.

And which title issues are like, the worst? Like, so bad they would scare you away. What would cause you to say, no, this isn't worth it, I'm running. Is there such a thing?

Logan: Yeah, there is. Or two things.

One of them is low property value. Almost any problem with the property. If the property is only worth 30 grand, I ain't getting out of bed for it. Not worth it.

The other thing is one of the owners is a minor. That's a nightmare. You're unable to buy a minor share for a discount to market, and you're generally unable to buy it for market value. You have to appoint an attorney for them, for the minor. You have to go get a guardianship of the real estate of a minor. You have the estate of a minor. Then the judge appoints an outline of attorney for the minor.

By the time you're said and done to this thing. You had two or three freaking attorneys for this dead gum minor. And if the minor has a very small share, like a few percent. You can afford to pay the premium on it. But if the minor has a large share, 20%, 30%, 50%, you can't pay the premium. So it's not worth doing it.

So if I hear there's a minor involved, I'm out. Unless they own a very single-digit share.

Seth: When you say minor, are you talking about somebody under 18 years old? Are you talking about like a coal miner? Because I keep hearing miner, like, what's the problem with miners? These coal miners, why are they such an issue? That's what you mean now, right?

Logan: Yeah. Somebody who's under 18, it's slow and it's a hassle. Some of these bigger problems, they're okay to deal with. When you're dealing with property, it's worth a couple of million dollars. You're willing to deal with it and pay the fees and take the test of time.

I did one earlier this year. That was about between $5 and $7 million community property estate. And I purchased the community property from the wife. It's worth somewhere around $3, maybe $4 million per share for. I'm not going to say how much, because this will probably end up in court one day. And we're not that far. But I'm going to tell you that you could buy a forerunner for more than I spent for this share of property.

And I believe the husband, who is going to say this is separate property. And we believe that it's community property. I think it'll be a substantial fight. Hundreds of thousands of dollars of legal fees. Many years worth of fighting. But on my side, I got $2 to $4 million on the law. So I'm willing to take that fight.

Seth: What are, like your bread and butter easiest title issues to solve. Like when you see it, it's basically not even an issue. Like you know exactly how to fix it.

Logan: A judgment or a lien that's almost ten years old, that's cake. That creditor is willing to negotiate. The debt is so old, it's almost worth nothing anyway. You give them 10 cents on the dollar, you're settled, done. I don't care how big it is. Good deal. So a low value judgment or a very old judgment.

And then when you have less than half a dozen owners, that's usually a gimme because each share of that property is worth at least 15% to 20%. So if you can buy that first share or two for a small enough discount, or big enough discount, small enough price, you're in the money. You're going to get those other shares from those folks.

And once I buy two, three, four, or five shares, even if the last person says, I'm not going to sell it to you because you want to give me small money for it, I just say, look, let's go sell it at market. I'm going to sell my 80%, you're going to sell your 20%. You'll get fair market value, your 20%, while I'll get my 80%. To me, that's cake. I'll get the three people of the five that agree in contract and close them. Let's go sell it at market together. It's easy.

A lot of folks walk away from a deal who only have four owners and two of them don't want to sell. They walk away from that because they don't know what to do. I just say, buy those two who do want to sell for ten grand or something low, record your deeds, call the others and say, let's go sell at market. You just replace those other two people, but pick up their equity for the discount you negotiate, and then it's a clean deal from there.

Seth: When you talk about low value judgments, that being an easy thing to solve or a judgment that's ten plus years old, is there a systematic way to find properties with just that issue? Or is it, again, back to the delinquent tax list, and just hopefully you'll come across something like that in your contact with those people?

Logan: I think the best way to do this is to start becoming very familiar with the basis of these half a dozen most common issues. Become familiar with them, how to spot them, what you think you might be able to do, and then go start fishing in the delinquent tax list. And once you start to find these and hear the problems, you call a guy like me, you call a local attorney and start to walk through those problems. You would be surprised how much easier you can really solve these.

But a lot of folks just don't want to put in the time. I look at it and say, I ain't about to go flip that house for a $19,000 profit margin and do all that construction and borrow hard money and all that for four months. I'd rather call lawyers and call property owners and make negotiations for four months and make an 80% margin instead of a 20% margin.

Seth: Well, on that thing, because I've seen this tons of times on the delinquent tax list, where there's properties that have a break in the chain of title or like a tax sale in the not too distant past. But I won't know that until I get it under contract and send it to a title company and they do their title search.

And now, at that point, I've already made an offer to them not knowing about this issue. How do you know this stuff before you make an offer? Or do you make the offer and then adjust it way down?

Logan: Well, it can happen like that. You make the offer and you adjust down, but that's really hard to do because the moment you tell someone, you're giving them $200,000, and then you come back to them and say, just kidding, you have all these problems, 20 grand, they don't trust you, and they walk away.

But typically, if you're buying from the delinquent tax list, these folks have already tried to sell. They know they have problems. I know there's usually a problem. So when I'm going through this process, we're scanning the delinquent tax list, especially on the tax sale list, we're plugging these people's names and legal addresses and land records and doing a five-minute title search real quick to see what we can find as we're talking to them.

So, in my office, people are in clusters. You have a closer and you have a researcher. So everybody works in teams of two with this kind of work. So I got somebody, a phone jockey. And he’s like a deal maker who loves to talk to people. They're gregarious or charismatic. They love making phone calls. They're doing that. And I got a super nerd sitting there on the computer running the data.

Seth: How are you doing that five-minute title search? Are you using certain software for that?

Logan: Most land records, there's a couple of iFile pages or websites that will allow you to search all of the land records together. But we're in Texas, we're pretty familiar with the different real property records. So you just get a login to the deed records in your county and log right in, and you can pop the name in and literally see all of the deeds that attach to that legal description.

Or you just go, grantor, grantee, and just keep swapping their names into the search and you'll pull out deed after deed after deed. So it is a skill. I won't say it's not.

Seth: Yeah, I've actually got a video I put together a couple of years ago showing how to do this with DataTree. You can do title searches right in there. It doesn't work everywhere. The county's data has to be available in their system, but assuming it is, you can do it pretty easily there, and there's a cost to that.

Logan: What's DataTree?

Seth: You know First American Data?

Logan: I have no idea.

Seth: So First American, it's one of the big three data aggregators around the country. First American, Corelogic, and Black Knight. They all basically collect this county data from the counties. And First American has a platform called DataTree, and that's where people like us can actually subscribe and get this data directly from them. And it's pretty convenient.

DataTree data is also hooked up to a lot of other resellers out there that kind of pretend to be their own data service, but they're just rehashing DataTree's data. DataTree has a way to do these title searches throughout the country, in most markets.

Ajay: DataTree is where us regular land flippers go to find deals at 50 cents on the dollar, where people want like 120 cents on the dollar pretty regularly. It's a great tool.

Seth: I was actually talking to the folks at DataTree not long ago, and they were telling me that apparently most users of DataTree are not real estate investors. Really, the reason any real estate investors use them is because, well, I don't want to take all the credit, but I started making videos about it and a few other people started doing it too. Most real estate investors use other stuff, like PropStream and that kind of thing. It's really tailored to them. But DataTree is like a catch-all. Like anybody who wants property owner data, you can use DataTree. So I thought that was kind of interesting.

Ajay: That's super interesting.

Logan: Is there a couple of providers that can provide a title report within one day? And they may be using some of this as a background source of information. But I've got providers that for $200 will do a title report and it's 80% of perfect, and it literally gets delivered in a couple of hours for $200, we do a quick report real fast, in a few minutes in the land records, and then we get to the point where we say we're going to do this deal, let's get on the phone, let's start finding people. We'll immediately order that third-party title report and it'll show up later on that day. And we have something to compare our work to just to make sure we're not messing out. It's kind of a fact check for $200.

Seeth: I've made several videos showing how to do this with several different platforms. I'll include links to those in the show notes for this episode at retipster.com/177.

I was wondering, Logan, so I was looking at your Instagram profile, and you got some really fascinating stuff there about some of the deals you've done, like this landlocked parcel that you bought and then put an easement and a road in there. And I think if I remember the numbers right, you said you bought it for $5,000, put about $150,000 of work into the easement and building the road, and then it was worth $500,000. And I saw another one about like an RV, a parking lot that you bought and then a metal building that you bought and turned it into storage.

Are these deals all coming from the delinquent taxes? Like, is that what you're doing right now when you find these deals? Or are they coming from other places, like referrals from other investors, or do you have some other secondary or tertiary source of deals you're getting?

Logan: I would say right now about a third of these transactions are coming from referrals. I really don't like to be the first one that calls to identify a problem because then there's no trust with me. And that's not an indicator of my pitch, that's more a human situation.

So I'm the first guy that shows up and says, I found you have a big problem, by the way, I'm going to buy it from you for nothing. I have a hard time there. But usually when I'm the second, third or 10th person that just gets brought to me at that point, it's real easy. They already know the problems. They've been down this road.

And it's funny, the shoe is down the other foot where these folks are referred to me by a realtor, or we have called them after they have had many years of problems. And I say, look, I think we've identified some problems. This may be the type of project that we take on often. I have a series of questions, and if it looks the way I think it might, I would consider taking on that problem and maybe doing a project like this.

So I'm kind of telling them I might do it, I might not. And at this point, they tell me, “We've been trying to sell this property for ten years. We hired our own lawyer. We've done it all, and no one can buy it.”

And that's when I say, great, would you like to come to my office tomorrow and I'll give you $10,000 in cash? It's a whole different thing, because no one's ever offered that and no one solved it. They already told me. So now I've got an answer for them.

But I would say a third of the deals do come from referrals. We are looking through the delinquent tax list. You can run a search for tax foreclosures in the docket search in your county, because tax foreclosures are judicial foreclosures. They're not like a mortgage, where it's a foreclosure on a deed of trust.

So lawsuit happens for about six to twelve months before the order of sale happens. So we can get into the docket and find hundreds of those.

Seth: Have you had to work really hard on just making it known? Like, “Hey, I'm a guy who deals with title issues. If you have those problems, come and talk to me.” Has that been a useful thing for you to do, given that you have the skill set of knowing how to deal with those problems?

Logan: Yeah, I mean, I've spent a lot of time on my social media talking about, know, my followership is nothing like a lot of folks, relatively small, but it's enough to drive a substantial amount of business over the years.

Ajay: Logan, in terms of foreclosures, so obviously you're dealing with delinquent, you know, a decent chunk of these are tax foreclosures. But are you ever negotiating with mortgage companies as lienholders or banks or people who might be holding first position liens of a mortgage that's going into foreclosure? And how is that different from a tax foreclosure?

Logan: It does happen. A lot of the time, I'll find that there are mistakes. If there's a title problem with the property, they'll have a situation where they made a mortgage with the husband and never got the wife, and it's a community property asset. She never signed that mortgage.

So, unfortunately, they only have half of the collateral that they foreclose. They will only foreclose on a 50% undivided interest, more or less effectively, not the entire share. So I go to the bank and say, “Guys, you only have 50% collateral, but in order to get to that, you got to foreclose and then you have to deal with the other person. Then you have to file a partition lawsuit. Now you're going to look like a monster because you did this. You're going to be in the news. Do you want to go through all that or will I? Sell it to me for a discount and we'll all settle today.”

Man, this is an interesting thing. You take everything for granted. You think the guy that wrote your insurance policy on your car did it perfect and didn't make mistakes. You think the deed of your house doesn't have any errors in it. You think the lawsuit that was filed against all these people, you think all the mortgages are out there don't have problems? Think about this for a minute.

If you fill out a 100-item questionnaire, you're probably going to make a few mistakes. It just happens. We're humans. If you look at every single document and every single process, you find a lot more mistakes than you realize. And those are opportunities.

Ajay: Seth, I feel like your skin's crawling at the thought of every property…

Seth: A little bit. I was actually talking to a different guy, David Hansen, from the last episode. He does fairly complex subdivisions and plat maps and all this stuff. And he was explaining to me all the costs that go into doing that and how much time it takes and the risk involved. And it kind of reminds me of this a little bit. Just in the time and money investment to solving these issues and making it a marketable title and all this stuff and then having a much higher value on the other side.

But when you're figuring out how much to offer somebody, is there a certain formula you're going into this with? It's like, okay, well, the market value is this and it's going to cost me this much and take me this much time to solve the problem. So my offer is this. Or is it just like no, 30% and whatever delta is there between that and the market value, I just could take that.

How hard do you think through that? Or is it just sort of the standard formula is 30% of market value?

Logan: It is case-by-case dependent. But I will tell you a number that sounds really good is $5,000. And another number that sounds really good is $10,000. The reason I like those numbers is they're big enough to be real money, but they're small enough to where if you're talking about real property that has any amount of value, those are small dollars.

So if I'm offering a person 5,000 or 10,000, it can be a very small fraction of the value of the property. But I don't care how much money you got or how much money you got, $10,000 is real money. And if I'm going to put it in your hand tomorrow, the next day, I'm worth a lot of money and I'll pay attention to ten grand, so it matters.

10,000 is a really good number. I use that number a lot, and that number can be used on a $200,000 property, or it can be used on a $500,000 property. If I think the problems are big enough that people are just done with it.

Now, I do, back in a lot of times, I don't want to be in anything for more than 30 or 40 cents on the dollar. So I've got to back into it a lot of times and say, these are the taxes, these are the amount of shares. Total 30,000, but I'm only buying 25% from them. Okay, I can only afford to give them this much, but I also kind of feel through it because you'll hear indicators during the phone call. We're sick of it. I'm done with it. I'll just let the county take it for the taxes. And when they hear that, I'm like, you'll give it to people.

Seth: Logan, I saw you post about a landlocked property that I mentioned earlier, where you bought it for five grand and put 150 grand into it, and then it was worth 500,000.

That struck a chord with me because I come across plenty of landlocked properties and I buy them a lot. I just don't do anything to fix it. I just buy them for super cheap and then sell them for super cheap. But when I thought about this idea of, man, that is a huge jump in value from putting in the easement and the road. I mean, that's just amazing.

And you mentioned in that video that in Texas there are four common law remedies to get access to your property. And I don't know that those laws exist in every state. In fact, I've come across issues where there definitely was not a way to solve the issue, or at least everybody I talked to didn't know how to do it.

And so I'm wondering, if somebody was trying to do exactly what you did and intentionally seek out landlocked properties with the goal of suing for access and building a road. That is the sole business model, only landlocked properties where we can do this. How would they figure out which states make the most sense to do that in? Like, what do they need to research and figure out and then what's the best way to filter a list or find only landlocked properties like that and only go after those? Any ideas on that?

Logan: Yeah, so I know for sure Texas has really good laws for that. We've got a lot of common law that gives you those four remedies. So I might spend a little time doing that research for those other states. But if you get an attorney who knows what they're doing, it's not as complicated as people think.

I mean, you can get into Westlaw or some of these, the programs that they have and type in landlocked, and you're going to find a bunch of case laws. So a lot of attorneys just say if they don't know how to do it, you can't do it. I heard that for several years, and finally I heard a different answer. I realized there's a big business case out here. So spending the time to keep asking people and doing your own research, you'd be surprised what you'd yield.

Now, when you talked about CoreLogic, you can go into the company like that, or even, there's one here called TaxNet that we use, and there are a bunch of different categories of filters. But a lot of these properties, if they're landlocked, it does say it in the appraisal district like metric somewhere.

So you might spend a little time filtering through some data in particular counties that you're familiar with. But a lot of times you can find it where it says that it's landlocked, and they even under-assess the value sometimes because of that. So if you do that, and you could pull that stuff out really quickly in large volume.

I haven't done it that way. I'm really looking at this particular property that was on the tax sale list, and I called the owners, $5,000 in the taxes owed, and $5,000 is what I paid to the owner. So I was in it for ten grand, which is what I actually paid. But you really have to look at the fact pattern and what caused it to be landlocked.

So if you're a single operator and you want to go make a lot of money, you might want to do some bigger projects or other projects. But if you have some people or some help or your time isn't quite that valuable, you can poke through these and you'll see a lot that's landlocked and doing a little bit of research, you'll be able to see that the front property is what used to be adjoined with that property in a single property. And when the front person sold off the back piece and caused the back piece to be landlocked, that's your event that's going to allow you to get access. That particular problem caused land to be locked. That event is illegal in Texas. So you can sue that front tract owner for an implied easement and you'll get it.

Seth: It makes sense. I don't know why that wouldn't apply everywhere.

Logan: All of these situations exist. All of these situations have clues. All of these situations have data pathways somewhere out there. You can get into it fairly easily by just finding a few owners and doing one of those deals, maybe negotiating some judgments or liens. What I'm talking about is ten years in, so they're very complicated and I'm talking about very simply.

But if you really want to get started, pick a couple of problems and just sort your way through it at a low cost every time. And that's when you develop a skill that may not be your everyday full-time skill, but when you run across these deals once a month, that might be where you pick up massive deals because you feel willing to try it.

Seth: That thing you were saying earlier about how you come across an attorney who doesn't know how to do it so they can't say it can't be done. I feel like I've encountered that a lot in my life where people just, what they're really saying is they can't do it, not that it can't be done.

How do you know when to believe that versus saying, no, I don't believe it. I'm going to keep powering through. When do you quit or when do you settle and just accept what you're told? Do you have any guideposts that you use for us? Like, okay, well, this person is this level of smartness, so I'm going to take what he says. Any thoughts on that?

Logan: You know, you'd be surprised. There's a lot on Google today. A lot of these law firms put out good articles, and if you get on Google and start Googling about your problem, you'll find a lot of really good information. And you have to feel comfortable questioning the knowledge.

The first guy that I sat down with was referred to me, the attorney from the title company, and he would say, this won't work. And I would say, why? And he would say, well, because of this. And I would say, why? And he would say, well, because of this. And I would say, why? Like a three-year-old. You really have to be willing to pester the heck out of a professional who thinks he's smarter than you, and you have to get him to the point where he'll either give you a different answer or give you an answer that you really believe.

Seth: Awesome. Well, Logan, if people want to find out more about you or learn more from you about how to dig into these title issues and make sense of them and really get to the bottom of what can and can't be done, where do you suggest they go? Do you have a website for this kind of thing or how does that work?

Logan: I tell people to go to Instagram, type in “Logan Fulmer” on Instagram. You can see it right down there. My name, if you go there, man, I'm easy to connect to. I give a lot of information out here. And the truth is I need those folks and they need me. I can help solve their problem, but I do deals with folks from these referral sources all the time. One in three deals are referrals.

So I encourage folks to reach out to us with these problems. You're going to learn something from us. We're going to help do the deal with you and make you a little bit of money on it. And you might decide it's your new profession, I don't know. But let's start that on Instagram.

Seth: Awesome. And just to clarify, that is logan_fullmer, and I'm going to have a link to that Instagram profile in the show notes, again at retipster.com/177.

Logan, appreciate you spending some time with us today and schooling us on how this stuff works. Appreciate it. And let's stay in touch.

Logan: Absolutely. I enjoyed it. Thanks for your time.