Back Tax Property Offers Miss Two Thirds of Willing Sellers (CFFL 0215)
Back Tax Property Offers Miss Two Thirds of Willing Sellers
Jack Butala: Back Tax Property Offers Miss Two Thirds of Willing Sellers. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack Butala:
Jack Butala from Land Academy, welcome to our Cash Flow from Land show. In this episode Jill and I talk about back tax property offers and how they missed two-thirds of the willing sellers. Awesome show Jill, always an awesome show. Well maybe not always.
Jill DeWit:
We try for awesome.
Jack Butala:
I like them. People seem to have varying opinions. Anyway, seems like a good show today. Let’s take a question though, before we get into it, posted by one of our members on successplan.com our free online community.
Jill DeWit:
Okay. Nick wrote, how do you know these counties have been hit hard by other mailers? Is it safe to say, most of the properties on taxsalelist.com high in tax delinquency have already been hit hard with mailers? I’m trying to figure out counties for my first mailer, but I feel like there’s so many counties that seem great on paper, but have been over-saturated with mailers, and that it may be best to try to look where others have not.
Jack Butala:
I put this in here on purpose and I specifically chose this question/comment on success plan, based on the topic today and I’m going to be incredibly honest, ready?
Jill DeWit:
Mm-hmm (affirmative)
Jack Butala:
I’m a little sick and tired of this topic. Not a little actually, a tremendous amount sick and tired of this topic.
Jill DeWit:
I am also.
Jack Butala:
What evidence, and it has nothing to do with Nick. Nick you’re awesome, thanks for the comment.
Jill DeWit:
Sure.
Jack Butala:
Nothing to do with anybody, personally. What evidence do we all need?
Jill DeWit:
Exactly.
Jack Butala:
That mailing back tax properties specifically is the right thing to do.
Jill DeWit:
I agree.
Jack Butala:
You miss two-thirds, this is part of the show, you miss the vast majority of the willing sellers and the problem free property.
Jill DeWit:
Oh, problem free.
Jack Butala:
That’s the key.
Jill DeWit:
It’s true.
Jack Butala:
Go out on bigger pockets or success plan or any other groups on Facebook that are not just about this topic, not just for land, but houses and apartment buildings and stuff. If you’re identifying foreclosure property, or estate property, or back tax property and you’re little niche, you’re missing two-thirds of the opportunity. Spend some money on, get some mail out there and some offers and address the other properties based on some other statistics that you can find in the assessor’s data. Oh, that’s what we provide.
Jill DeWit:
Exactly.
Jack Butala:
Data to doorstep.
Jill DeWit:
I love your problem free, because that’s so true. There was a guy on Facebook, you and I were talking about it yesterday, that did his own little test and I copied and pasted that little test for others to read, because he said, “I just tested it and gosh, Jack and Jill are right.” No kidding.
Jack Butala:
Yeah, he did all the math, in a pretty sophisticated way and he said that he buys two-thirds more property by sending less mail out-
Jill DeWit:
At a higher price, by the way. I mean at a better price and gets more money out of them, it’s a better profit I guess what I’m trying to say.
Jack Butala:
It tends to be a problem free transaction. Property’s tax delinquent for a reason.
Jill DeWit:
Exactly.
Jack Butala:
It doesn’t mean you’re going to get it cheaper.
Jill DeWit:
Right. There might be a problem. You know and that’s true.
Jack Butala:
Big problems like it’s not in the name of the seller, those kinds of problems.
Jill DeWit:
Exactly. They stopped paying because they’re like, “Good luck finding me.”
Jack Butala:
Insurmountable problems. Not solvable problems.
Jill DeWit:
Yeah, and you think that you found a good deal, did you? I’m not quite sure.
Jack Butala:
If you have a question or you want to be on the show, call 800-725-8816, again today’s topic, back tax property offers, they missed two-thirds of the willing sellers out there. This is the meat of the show. How many back tax properties do you see, like this, all of the mail that comes in and all of the property deals that we do, what percent do you think have back taxes? I have a number in my mind.
Jill DeWit:
Less than 10.
Jack Butala:
Yeah, I think it’s like one percent.
Jill DeWit:
Mm-hmm (affirmative) It’s very minimal.
Jack Butala:
They’re almost always problematic.
Jill DeWit:
Correct.
Jack Butala:
I stopped doing back tax mailers. I only done it a couple of times, really early on, by the early 2000s for this reason, because a lot of people call you in desperation. The last back tax property deal, I actually remember in the slew of deals that we’ve done, a woman she was just in a desperate situation. It was an estate deal and she’s calling every 10 minutes trying to get $5,000 bucks out of me for the property that was not in her name, by the way.
Jill DeWit:
Ah, see.
Jack Butala:
The deal never got done.
Jill DeWit:
Mm-hmm (affirmative). I wonder too and I’ve watched people figure this out, how many times are the taxes more than the property is worth? I’ve watched people waste a whole lot of time going doing all the leg work and they get to that last piece, which they should have checked it first, and they realize, “Great, I figured out how to transfer title, I’ve figured out this, I’ve figured out that.” They go through all their research, “I figured I liked the property, It’s got the 4 As and all the things.”, and they go “Oh, no I was going to offer the guy $1,500 and I just found out his back taxes are $1,800, I’m out.” I’m like, “Well yeah, gee. There you go.”
Jack Butala:
Right.
Jill DeWit:
You know you just wasted how many hours? You should’ve checked that first.
Jack Butala:
I’m not saying it’s completely useless at all, but the numbers don’t lie, it a lot less attractive.
Jill DeWit:
There’s a reason why on my checklist that I put in our Cash for Land Program and I have on my staff’s desks that there’s a question on there, when you ask the APN and the size and all this stuff, you better ask. where are you in the tax situation?
Jack Butala:
Right.
Jill DeWit:
You need to know that right now, not find out a week from now as you’re all excited about this deal. You need to know.
Jack Butala:
For housing, for FSR wholesaling like we do all the time, I don’t even touch back tax property and some people just focus on that. It’s because, specifically in that product type and let’s say apartments, that’s an indication of a huge problem. If you have a $5,000 piece of land that you inherited and you just got tired of paying the taxes, you can get over that. If a house has back taxes on it, first of all, there’s no mortgage. If you can’t come up with the amount of taxes, something else is really going on, so you’re going to have to fight for it. Usually the people who we wholesale these properties to, the flippers, the fix and flip guys, they don’t want any part of it. If there’s any chance that there’s some type of title issue that might stick with the property-
Jill DeWit:
That’s a good point.
Jack Butala:
They’ll turn that deal off immediately.
Jill DeWit:
Exactly. There’s a reason why.
Jack Butala:
Plus, there’s so much less stuff to mail.
Jill DeWit:
I know.
Jack Butala:
Think about how many houses are in Maricopa County, Arizona which is where Phoenix is, then how many back tax properties there are. It probably represents, I going to have to guess, maybe three, four, five percent of the actual properties that you can possibly mail. Why would you limit yourself like that?
Jill DeWit:
Totally, well and it’s funny [crosstalk 00:07:17].
Jack Butala:
I get animated about this and I’m sorry.
Jill DeWit:
Right? Well, how many people we hear like, “Oh, I heard so and so got another letter.” Yeah, because you’re only sending. “You know what this is? We’re all sending to those people.” You know what? That’s great, because Jack and I are quietly over here, buying up all these great undervalued properties from people who really own them and have been paying taxes on them and they just don’t want them anymore. If you guys all want to focus on that, knock yourselves out.
Jack Butala:
Jill and I own our primary residence, one of our primary residences is in Scottsdale and it doesn’t have a mortgage. I’ve never received a letter.
Jill DeWit:
Correct.
Jack Butala:
In my life, ever.
Jill DeWit:
Nope.
Jack Butala:
What would you do? I’d open it and there would be a price. Let’s say you got our offer, the one that we send and it says some version of this, Hello Jack, Hello Jill, I love your property located at 123 Main Street, fictional address of course, my research shows that we would be willing to purchase the property for $622,000 and it’s a cash deal, we’re going to waive all of the contingencies, and if you’re interested, we’re flexible on the closing date, but for whatever reason we can do it as fast as, I don’t know, three weeks, two weeks, or if you want to stretch it out, because you need to find a place, that’s fine too. Let us know. Here’s my phone number.
Jill DeWit:
I would entertain that.
Jack Butala:
I would, even if I got a letter that said, the same letter saying the same thing but it say $32,000. I might throw that away, but it said $300,000. I’d say, “You know, how did you come up with the number?” I’d probably call a person.
Jill DeWit:
Yeah, I am kind of curious.
Jack Butala:
Why would you miss that opportunity?
Jill DeWit:
You’re right.
Jack Butala:
And just sent it to people who clearly are going through some awful stuff and they don’t even have the money to pay the back taxes? Or, they don’t want their property any more or something else is going on. Maybe they passed away, that’s what happens a lot, too. That’s a whole different legal thing.
Jill DeWit:
People buy bigger homes, people downsize, kids go to college, there’s all kinds of things. We have neighbors that are snowbirds, there’s people at some point they’re going to get too old and they’re not going to be going back and forth, there’s a perfect reason. I know that their place is paid for, cash. If you sent them an offer, they’d be like, “Well, you know maybe now’s the time. You know, I’m tired of making the drive back and forth to Illinois and whatever and we’re getting older and want to be around the kids.”
Jack Butala:
Right.
Jill DeWit:
Perfect. People miss it.
Jack Butala:
The way that we do it, our numbers are like this for wholesaling houses, about 1 out of 2,000 letters we send, pre-selected, hand-selected letters, but here’s a caveat, we scrape the bottom on these prices. If we wanted to make 20% our numbers would be staggering.
Jill DeWit:
Oh, good point.
Jack Butala:
Let’s say you price a house out in a master-plan community in North Scottsdale, where the fixed up prices, I don’t know, 750 and the wholesale price is 600, that’s who we sell it to, and they put a hundred in and make a hundred, or something. I’m just throwing the numbers out. In a neighborhood like that, like normal people probably send out an offer for 550 or 600, we’re out sending them out there for $300,000, $400,000. Being then it take just zero [inaudible 00:10:38], so we have to send a lot more mail out, but we’re not losing. We can’t lose.
Jill DeWit:
Jack just brought up a beautiful point and I just want to reiterate that.
Jack Butala:
Yeah.
Jill DeWit:
Our percentages that we share are very clear and consistent and Jack is right, it is because we are wholesalers, we really are buying really undervalued/however. You want to have a much higher percentage rate, you sure can, up your offers, up your volume. Knock yourselves out. You could do the same thing.
Jack Butala:
Right. When we were doing a long time ago, and I keep bring up health care facilities, but back then we were offering, we were not scraping the bottom. It was a rational price based on income and stuff, and so our response rate was amazing. I probably got, I never tracked it back then, maybe 50% of the people that I put offers out, they would call back and say, “Let’s talk about this.”
Jill DeWit:
It’s it the nature of that industry or that asset.
Jack Butala:
I think it was just price point.
Jill DeWit:
It’s not the asset, not that kind of an asset?
Jack Butala:
Uh-uh (negative)
Jill DeWit:
Okay.
Jack Butala:
No, I think the owners really, I was priced within, well within reason. I was a broker, I wasn’t buying them. We weren’t scraping the bottom at all.
Jill DeWit:
You’re saying what I just said.
Jack Butala:
Yeah.
Jill DeWit:
Make it a more, for example-
Jack Butala:
We’ll do that, I’ll send a 70% of value offer out, instead of a 40% of value, which is what we usually do and see what happens.
Jill DeWit:
Right. There you go. That’s the difference and you’re still going to be just fine. You’re going to buy it at 70% of value, sell it at 80% of value, you know, and there you go.
Jack Butala:
I bet the numbers are staggering. I mean I bet. I know they are. We’ve done this so many times that, I know the response rate, you’re not going to be able to keep up with the response rate, you better [crosstalk 00:12:42].
Jill DeWit:
Yeah, be careful.
Jack Butala:
Dramatically reduce the amount of mail that you get out there.
Jill DeWit:
That’s true, I love that when we have new members that they do it and this flood, they’re like, “Oh my gosh! I can’t keep up with the calls.” It’s great. It’s either you think you did what we talk about, yeah maybe there’s times we did over offer. Okay, so what? You still did a good job and also their like you may have hit a little gold mine a little pocket of properties there, that everybody’s like, “We’re not going to use this.” It happens.
Jack Butala:
It’s really important to make sure that you’re not trying to maximize money on every deal. If sent that mailer out, in the case of land and it’s a little too high, you shot high, just wanted to practice a little bit. We get this from a lot of people, a lot of our members, “We shot too high and so oh my gosh I’m not going to do a deal.” No, do the deals, so you’re going to make a little bit less money. Maybe you just have to sell for just slightly more, I’m not say triple what you should have sent it out for. I’m just saying, don’t sweat it.
Jill DeWit:
Learn in the process.
Jack Butala:
Yeah.
Jill DeWit:
It’s good.
Jack Butala:
Hey, this is the Technical Two, it’s two minutes of property investment advice from our 15 year 15,000 deal experience. I bet you know what today’s Technical Two is. Don’t just mail property owners who have back taxes associated with their property. Don’t just mail foreclosures. All the stuff you hear from everybody out there about specializing, they’re just afraid of mail. They’re afraid of doing a lot of mail. Trust me on this. Like the title says, 15 years, 15,000 deals. Mail everybody. Choose an area, scrub that data as best you can, take my advice on that too, on our programs. On how to scrub the data, and watch me do it actually, right on the internet. I mean right on the screen and send everybody a letter within a criteria, not just back taxes.
Jill DeWit:
Exactly.
Jack Butala:
Can we say it any more, Jill?
Jill DeWit:
I know.
Jack Butala:
Are you tired of it, yet.
Jill DeWit:
You know, I am not.
Jack Butala:
Hey, like I said earlier if you have a question or you want to be on the show call 800-725-8816, Jill has some inspiration for us today, I’m sure of it.
Jill DeWit:
We were talking about Sonny and Cher recently and I went back and this morning I spent a few minutes and I listened to Cher’s eulogy of Sonny Bono when he passed. It’s inspiring because sometimes we realize later what other’s have done for us. I think for her it was years later. I think she knew it. I know she knew it. She said that. She knew it, that’s why she was with him from when they met at age 16 and married at 18 and all of that, all of the things they did together, but it was so-
Jack Butala:
He made her a star.
Jill DeWit:
He did and he never gave up, some of the things that she said were, “He knew what he wanted and he would not stop, he would get there.” She said, “It may not happen the first time or the second time, but he wouldn’t stop. He would get to what he wanted.” It was funny because-
Jack Butala:
You have to be over 30 to enjoy this inspirational segment, by the way.
Jill DeWit:
Everyone else don’t know who Sonny and Cher is. Maybe [crosstalk 00:16:05] Sonny and Cher. You know what is cool. I was watching some other videos, by the way, Cher did some funny things with Michael Jackson, when he was a Jackson 5, like first thing and it was really cool and like oh wow.
Jack Butala:
They were on the show right? From the Sonny and Cher show
Jill DeWit:
It became the Cher show later, by the way, I think that she had her own show and it was just Cher.
Jack Butala:
I didn’t know that. See, I only know Sonny and Cher.
Jill DeWit:
There you go, there was Cher.
Jack Butala:
Was it a variety show like that?
Jill DeWit:
Mm-hmm (affirmative). Yep. Yeah, so I was watching some clips of that. This is me avoiding work today. Anyway, that happens too. Too many days doing research.
Jack Butala:
Tell the truth.
Jill DeWit:
What are doing Jill, research.
Jack Butala:
This is the first time I’m hearing about this, but I’m going to, you tell me how off I am on this.
Jill DeWit:
Okay, ready.
Jack Butala:
I’m guessing you got up, had a cup of coffee that I left at the very close to your bedside.
Jill DeWit:
Yeah, keep going.
Jack Butala:
Turned your little laptop on or probably or even your phone.
Jill DeWit:
Yeah I was on my phone.
Jack Butala:
Looked up in YouTube or the internet found videos of-
Jill DeWit:
YouTube. Keep going.
Jack Butala:
Just avoided coming into work for quite some time to watch the Sonny and Cher eulogy or whatever.
Jill DeWit:
Bingo.
Jack Butala:
Was there anything wrong about it at all?
Jill DeWit:
Nothing.
Jack Butala:
You know what? I think that’s awesome.
Jill DeWit:
Nothing.
Jack Butala:
That’s exactly what you should have done this morning.
Jill DeWit:
Nothing. Sometimes you realize much, much later what other’s have done for us. I think it’s cool to look back and appreciate. I can look back and think about teachers, and bosses, and some of my coworkers, and peers, and other investors that showed me some stuff, gosh I can look back and I can see what they did for me and I’m appreciative. It’s really good.
Jack Butala:
Join us in another episode where Jack and Jill discuss how to use your information, that me.
Jill DeWit:
And inspiration, that’s me.
Jack Butala:
To get just about anything you want.
Jill DeWit:
We use it everyday to buy property for half of what it’s worth and sell it immediately.
Jack Butala:
Get a bunch of offers in the mail using data to door step and get there before anybody else. Get there first. I love the Sonny and Cher stuff.
Jill DeWit:
Thanks.
Jack Butala:
I think it might date us, but I don’t care.
Jill DeWit:
Yeah. I can say it sings to me! It does sing to me. You know what I thought was really interesting? He actually could sing. I was watching some of the songs, she does most of the singing, but he could sing.
Jack Butala:
It takes two people, sometimes, not all the time. That’s like rock bands are perfect example.
Jill DeWit:
It takes two baby.
Jack Butala:
Oh my gosh Jill.
Jill DeWit:
It does take two.
Jack Butala:
This is a singing show.
Jill DeWit:
I know. I cannot sing, sorry. I’m going to apologize right now, for everyone for that actual accidental vocal outburst from me because I cannot sing.
Jack Butala:
No, I think rock bands got a great formula. There has to be someone who kind of writes the songs and manages the stuff, then some people who, there’s lead singers. It’s a great formula and I think Sonny and Cher had that, I think he was kind of the brains behind the whole thing and she was the talent. A good looking talent.
Jill DeWit:
I wonder if, when he met her that he knew. Do you think people know?
Jack Butala:
Yeah. He either conscious or subconscious. I’m guessing. I don’t know Sonny Bono at all, obviously, he just seems like he was the kind of guy that, it was in the back of his head. He seems like a real straight-forward honest.
Jill DeWit:
Yeah.
Jack Butala:
Probably in the back of his head he was wanting to do it, and she was like what? 18 when they got married? There’s no way he could have known anything.
Jill DeWit:
Well, he was much older. She was 16, he was like 27, 28 I think.
Jack Butala:
Oh.
Jill DeWit:
He was much older. Then they married when she was 18.
Jack Butala:
That’s good because otherwise, it’s like a felony.
Jill DeWit:
Yeah, that’s kind of true. Oh boy.
Jack Butala:
Oh and Jack and Jill, information and inspiration and you know what I’m going to say next. Let’s go buy some property.
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