David R. Gray Jr.

David R. Gray Jr.

  1. Who are you?

David Gray, Jr., an attorney and a real estate investor in Chicago. I focus my law practice on tax collection and enforcement litigation, civil litigation and real estate matters. Much of my practice relates to servicing investments made at county tax sales in Illinois.

  1. What is a county tax sale?

Here in Illinois, when a property owner fails to pay taxes, the county will sell the delinquent tax lien to a private investor. With this process, the county promptly gets the tax revenue to distribute to the taxing districts and in exchange the investor gets a tax lien which can accrue interest and, if not paid, can result in a tax deed to the property sold. The investor has to provide all kinds of notice to the interested parties and there is at least two and a half years for the owner to redeem the tax sale. If the owner does not redeem before the expiration of the redemption period, title to the property sold can be transferred to the investor by tax deed, so the penalties are severe.

  1. Sounds like a good deal for the investors.

A tax lien can be a good investment and can be a bad investment. Each lien is unique so the investor really needs to perform its due diligence prior to the sale. It really is buyer beware so if the property sold does not have value over the taxes and the owner doesn’t redeem, the investor may fail to see any return. Each year a number of essentially worthless properties get sold at tax sales to unprepared investors. There are also numerous steps you have to take at certain times, failure to follow the steps perfectly can spell disaster for the investor. There is also ongoing operating and servicing costs. A tax lien is not a liquid investment either so you have to be prepared to wait the process out and have the capital to service the liens.

  1. Is there a reputation or headline risk involved for the investors?

Tax sales are a legal and legitimate investment vehicle. They provide a valuable service to the government by providing much needed tax revenue. The vast majority of liens are eventually redeemed by the property owners so tax deeds are rare. My clients are professional tax lien buyers who experienced with handling all types of situations.

  1. Do you think the tax collection system in Illinois is fair?

I do, yes. It’s a balancing act, as most laws are. On the one hand, the government needs tax revenue to operate and there must be severe consequences for non-payment or people would not pay. On the other hand, there are the rights of the delinquent property owner who may be experiencing financial hardship and the law does not encourage forfeitures of property. Illinois law strikes a balance between the two by having a public sale followed by a long redemption period, lots of notice and a hardship fund called an indemnity fund when all else fails.

  1. How did you get started in this business?

I majored in philosophy in college and read about the philosophy of law and ethics and decided to go to law school. When I started practicing, I learned a great deal from my father who was an attorney in Chicago for over 50 years. He was a very sharp attorney and also a real estate investor so he taught my brother and I how the process works and how to run an investment business. He was sort of an ‘old-school’ type of guy and we learned the importance of hard work and preparation from him as well as the important of doing this right.

  1. What does your typical day look like and how to you keep it productive?

One of the great things about my life is no two days are exactly the same because every case, every property, every person is unique. Most mornings I appear in county tax court and in the afternoons I am usually working in my office or handling closings. I have a busy practice but I try to find time to stay active as well. By far the best part of every day is being with my son and wife.

  1. How do you bring ideas to life?

I take action, I get things done. I don’t spend a lot of time talking about doing something but rather actually doing it. I keep moving, keep producing, always on to the next thing. I know a few really bright people who struggle to find success and I believe it’s because they are not diligent, they don’t take action. They talk a good game but in the end don’t get the work done. There are also people who just can’t seem to make decisions, and that’s a recipe for failure.

  1. How do you deal with difficult issues?

I try to work collaboratively when I can, I am always trying to find a ‘win-win’ for those involved. You’d be surprised, many disputes can be resolved with an open mind and a little creativity. People don’t always want the same thing. Since I handle a large volume of property tax collection cases, I often see people in difficult circumstances and I try find a reasonable solution for the parties involved when I can.

  1. What is the worst job you have ever had and what did you learn from it.

I’ve had some rough ones. I washed dishes in a busy restaurant. I waited tables, did sales, stuff like that. I worked for a some bad bosses as well as some great ones. I gained valuable experience learning how to relate to people, seeing how people operate and act in different scenarios, and the value of education and real leadership.

  1. What is one failure you’ve had and how did you overcome it?

We all have failures and make mistakes. I guess what really matters is how you learn from the experience. I like the term ‘failing forward’ which is the title of a very good book. I think you just have to keep your chin up and press on; there are a million stories of success after failure.

  1. What is your leadership style?

I believe in leading by example. Once you set a path, you must be committed to it, pursue excellence every day and support those on the journey with you. People are not motivated by marching orders, they get motivated when they feel they are a part of something significant which requires their best efforts. Good character and integrity tends to create credibility which then creates trust and dedication. The best leaders are trusted.

  1. What trends or opportunities do you see from your perspective?

I see a huge potential right now with private lending. Traditional financial services providers like banks are over-regulated in some areas and the result is they are making fewer loans, especially in investment real estate. Since 2008, cash buyers have been a major part of the real estate market, particularly investment property. Investors are talking about crowd-funding for real estate ventures now which apparently is catching on. I think there are good borrowers which are being under-served and if private lenders start competing with banks by offering reasonable consumer loans, it’s going to be a game changer.