Offers Academy for Commercial Real Estate (CFFL 344)

Offers Academy for Commercial Real Estate

Jack Butala: Offers Academy for Commercial Real Estate. Leave us your feedback for this podcast on iTunes and get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.

Jack Butala: Jack Butala with Jill DeWit.

Jill DeWit: It’s Thursday.

Jack Butala: Welcome to our show today, Jill. In this episode, Jill and I talk about Offers Academy and how to use it for commercial real estate.

Jill DeWit: What?

Jack Butala: I love this.

Jill DeWit: What?

Jack Butala: I got started in commercial real estate.

Jill DeWit: What?

Jack Butala: I feel qualified to have this podcast. Before we get into the detail of it, let’s take a question posted by one of our members on LandAcademy.com, our online community. It’s free.

Jill DeWit: I feel qualified to wear these boots today. Just so you know. I have to say that. Michael asked, “Just wondering how I should handle this. I chose to have the buyers do the recording because in California, they need to sign the PCOR anyway. For two of my properties, from several months back, I just received new tax bills. Should I contact the buyer and remind them or should I just let it go?”

Let me clarify this a little bit here. What this is is a … Michael clearly sold a couple properties to an individual. He sent them the completed deeds with recording instructions for them to turn around, mail it into the county, have it all recorded and get everything updated with the assessor, as in new ownership information and all of that. Correct. What goes along with, depending on the state, there are additional forms that talk about the transaction, maybe what the sales price was, what the sales terms were, were there any improvements on the property, did it come with anything else, how was the … what kind of a title was used? All of that kind of information to help the assessor for their information. That’s comes on an additional form, which traditionally, it is a PCOR in California. It’s an Affidavit of Property Value in Arizona.

Jack Butala: It’s a TD-1000 in Colorado. Just about every state’s got one. New Mexico does not have one.

Jill DeWit: Exactly. New Mexico does not.

Jack Butala: What it’s really for is to give … it goes straight to the assessor.

Jill DeWit: They need to have that information to say … They’re going to adjust their tax bases depending on, “Okay, we just got in a flood of these Affidavit of Property Values for this county in Arizona. Wow. These are all selling for $5,000. We might want to look at the assessed tax base and adjust, make some adjustments.” That’s what they use that for.

Back to your question Michael, so they didn’t send it in. The county still thinks you own it. I would tell them that you want to get it updated. One easy way to alert the buyer is forward them the tax bill. You just got it in the mail from the assessor. You could forward to them and say, “Hey guy, I’m getting your tax bills. You own this property. I don’t. If anyone’s going to fall behind on the taxes, it’s not me. It’s you. You are now responsible. Here’s your tax bill. You might want to send that in.” That’s it.

Jack Butala: His question is, “Should I let it go?” No. No, not at all. You should notify them.

Jill DeWit: You don’t want them to get in trouble because you know why? You’re doing the right thing. You know what? This person, they may not know the ramifications of not updating the information because let’s just say five years pass. Here’s an example. You do nothing. Let’s just say you do nothing, Michael, and you shred them for five years. It eventually after eight years, the stuff’s going to happen where the county might start looking at taking the property back. They only have you as the owner on file and you really aren’t the owner. You don’t want this poor person to go, “Oh-oh,” and lose the property because they didn’t do that. It’s part of doing the right thing too is helping him out, letting him know, “You got to put this in your name and keep up with the taxes.” That’s it.

Jack Butala: We’re assuming too that you sold them for cash or we don’t … I’m assuming that you didn’t sell them on terms. If you sold them on terms and you’re collecting payments every month, you definitely want to make sure that the properties are … It stays in your name the way we do it, in Arizona anyway. It stays in your name until the last payment, and then you convey the property, so you are responsible for paying those taxes. We prorate. We adjust our payment amount to collect the taxes for them, and then we pay … make the tax payment on behalf of our terms buyers we call them.

You got to micromanage that side of the transaction, just like the buy side. You got to micromanage the sale side. A lot of cases, Jill’s people here at Land Stay, a real estate company, they will record the properties on behalf of the buyer, especially if they’re out of country.

Jill DeWit: If they’re international, I’ll usually offer to do it for them because it’s such a pain. I’ll make sure it gets done correctly and all of that. This is an interesting thing that we’ve talked about with our members. It’s not crazy to offer this to your people for a fee. Going down the road, if you see this is a trend-

Jack Butala: I never thought of that.

Jill DeWit: … you could say, “Hey, here’s the deal. I know I’m going to send you all the documents or for $30, if you want, my people will do it, and then you’ll just get the recorded deed.” Some might go, “Great. Thank you. Perfect.”

Jack Butala: It’s not free.

Jill DeWit: Right.

Jack Butala: There’s always a recording fees and stuff.

Jill DeWit: There’s recording fees.

Jack Butala: Transfer taxes.

Jill DeWit: You can sign the PCOR. You can sign the Affidavit because most of those forms say “Seller” … They say “Buyer/Agent”, so you could have someone in your office representing the person sign as the agent.

Jack Butala: That’s right.

Jill DeWit: The buyer knows what you’re doing. Everything’s legitimate. You’re doing it. “Hey, I’ll record it for you. All good.”

Jack Butala: Exactly, Jill. Well said. If you have a question and you want to be on the show, reach out to either one of us on LandAcademy.com. Today’s topic, this is the meat of the show, is how to use Offers Academy for commercial real estate.

Jill DeWit: You know, Jack? You are qualified to, no, serious, in a good way, to talk about this. Will you please share with us the background.

Jack Butala: Sure, yeah. I started in real estate pretty much after college and started as a commercial real estate agent just right out of school. There were tough times in Michigan back then. It was congratulations, I graduated right in the middle of a real estate recession. I had to devise a better way to contact people with buildings, and then either list them for sale or represent a buyer to buy them. The way that I was doing it and the way that I was taught was absolutely wrong. It’s the way that I see most people doing it now, both agents and [imposters 00:06:35]. They’re going out to look for business everyday instead of making it come to them.

I developed what’s now this five step process. I ultimately ended up working as a vice president of acquisitions for a very large healthcare institution. Eventually, we took the company public and it was all of it was because I acquired properties using this five step system, which I now have since 1999. Been doing it just solely for Jill and I for the investment group that we have.

How do you use it for commercial real estate? Congratulations, if you’re in commercial real estate, it’s a heck of a lot easier. It’s a closed market, I like to call it. There’s infinite number of land properties out there. There’s an infinite number of houses or seemingly. If you’re commercial real estate, there’s only a certain amount of office buildings. There’s only a certain amount of … Let’s say, in my case, it was a long-term care facility, so assisted living facilities, nursing homes, and convalescent hospitals. There’s a closed database. At that time, there were about 15,000 properties in the whole country and that’s it. Most of them were individually owned by mom and pop, let’s say. I would send them a letter, imagine that. It’s the same five step process.

You get the tools and if you … We have multiple commercial real estate people who have left extremely high priced jobs in our group because they were doing it all wrong. That’s why I decided to do this show because I had a long talk with a guy in Texas who’s commercial real estate. He’s like, “I’ve been working commercial real estate my whole life. My parents have done it. We’ve been doing this all wrong. Thank you.”

Step one, get the tools. Essentially, the tools are made up of two things: access to data, get the best data you can, and devise or get the tools to send out offers, whatever that may be. We do it through bulk mail printer.

Jill DeWit: I was going to add a comment. One thing about you, Jack, which is so great about this whole process and this whole … The way you do things and what you’re explaining right now is really who you are. You set out to do this to find an easier way to reach a large number of people and systemize this, which for the record, is the whole model, business model of a franchise. When you really think about it, …

Jack Butala: I never thought of it like that.

Jill DeWit: … that is how you think, which is so wonderful, Jack. It just came to me too. How you normally think is in the franchise mode, which is how everyone should think.

Jack Butala: There’s like a procedure.

Jill DeWit: I should never be thinking like, “I need one person doing this. I need one person doing that.” That one person is only the only person that can ever do this same job. They are the only one that knows how this works and the only one that has access to it. No way. Let’s think bigger everyone. It’s a compliment to you.

Jack Butala: Thank you.

Jill DeWit: You’re welcome. It just came to me. That’s how you think, think franchise. Think of an easy way.

Jack Butala: Systemize everything.

Jill DeWit: Systemize it, and then don’t look back. The volume and the … You don’t even have to want to do a ton of transactions, especially like you just talked about in commercial real estate. You’re not flipping 10 apartment buildings a month, let’s be honest, you know?

Jack Butala: Yeah.

Jill DeWit: Those are yearly. Those are much bigger transactions sort of the commercial world. Slash, however, it’s all done the same way and let’s not hit our heads against the wall trying to do it, you know?

Jack Butala: That’s right.

Jill DeWit: Thank you.

Jack Butala: The five steps are this in case you haven’t heard the shows from earlier this week. Get the tools. Get the qualified buyers, in commercial real estate, this is simple. It’s easier than anything else. The qualified buyers are the people who already own the assets. If it’s office buildings, or like Jill said, apartment buildings, everybody who owns a big apartment building wants to look at more. There’s a reason that they’re in that business. They’re probably doing pretty well. If not, the assets are for sale. Find a qualified buyer, even if it’s a real estate investment trust. It’s published all over the place. Real simple. You can use RealQuest are the data that we use to do that. You can find out who owns just any property in the country.

Jill DeWit: That’s a good point. You could say, “Jill, you know what? The asset that I’m looking, whatever it is, it’s just exactly like that building right there,” well then, go sit and pull it up. You could pull it up. You and I can pull it up on our phones right now in five minutes. I could tel you exactly who owns that property and every last detail about it.

Jack Butala: I’ll tell you right now, there’s not a CEO of a real estate company or an owner of a real estate investment company that’s not going to take your call if you … or answer you letter if you say, “Hey, I’ve got a ton of property that you might be interested. I’m in a business of identifying undervalued apartment buildings.” They’re going to drop whatever they’re doing and get to know you. Get some qualified buyers. Step two, real simple.

Step three, what is step three, Jill?

Jill DeWit: Clarifying the asset criteria.

Jack Butala: How do you do that? You have a conversation with your buyer and your buyer might say something like this, “Boy, if I had three apartment buildings that were more than 32 units, they were all three bedroom apartment buildings, I don’t like one bedroom apartments, and it was priced below X per door,” in that industry that’s how you price properties, price per unit or price per door, “I would just do great. I could fill it. I don’t care if it’s not even full. In fact, I hope it’s not full because I know how to fill up buildings. How you identify assets for a living, well, I know how to fill up buildings for a living. In fact, I own my own management company.” You’re going to get to know that person really well or you’re going to have a conversation and it goes, “This guy’s just an ass. I don’t ever want to talk to this guy again.” Good, check him off your list.

Jill DeWit: Problem solved.

Jack Butala: Commercial real estate’s real fast like that. Use the tools to get the offers to the owners. Get them out in the mail. Back in my day, I was eating Ramen noodles and I couldn’t afford to send any property mailers out, so I did it through a fax machine. I would fax offers overnight because, I talked about this in the E-book, in the free E-book at Land Academy, during the middle of the night because the longs distance rates were way cheaper.

Jill DeWit: Rates were cheaper. Isn’t that funny?

Jack Butala: Mm-hmm. It was still [mail merge 00:13:03]

Jill DeWit: Again, that’s you systemizing it.

Jack Butala: It is still an [mail merge 00:13:05]. It was still directed a person, not just to whom it may concern or current resident. It had an offer, dollar amount in there. Same basic stuff that we talk about now.

Jill DeWit: I have another compliment for you. You get it, Jack, and a lot of people don’t. No, in a really good way.

Jack Butala: Cracking me up. You’re sounding like my mom for a second, “You get it.”

Jill DeWit: Jack, you get it. You do not get an award for doing it the hard way and for working 10 hours longer than the next guy. There’s no award for that. All that is is wasting your time, your money, and your energy. Jack, you figured that a lot out.

Jack Butala: I sent a mailer out one time. I sent postcards out a lot of years ago. It was, “To whom it may concern, I’m real interested in buying your land. Give me a call. Jack.” You know what happened? 7 million people called me.

Jill DeWit: Everybody calls.

Jack Butala: I wasted like a month of my life talking about offers, property prices, and the whole thing. Justifying it. I bought nothing. I worked my tail off for a month. That’s how I decided, “You know what? I’m going to send it to a person and I’m going to send an offer, offer amount, like a ludicrously low offer amount just to smoke out the people who are real serious about this.” Now that when they call back, they know the price, they know what’s going to happen. Some of them try and negotiate. Quite honestly, I don’t … Jill negotiates a lot more than I do. That’s just one of my things.

Jill DeWit: You know what’s funny? Sometimes I negotiate down. This is what’s the funniest thing too. No, I’ve had that. They’ve called me back. People go, “What?” I’m like, “Yeah. I went and looked at it and now I realize I might’ve offered a little too much. I don’t really know if it’s really worth all that, so I’m going to negotiate a little bit lower and here’s why. I thought it did have X and it really doesn’t, but I’m still interested.” You know what? I walk away. If they say no, walk away, so what. I got 10 more letters I got to open, big deal.

Jack Butala: That’s right, Jill.

Jill DeWit: That’s it.

Jack Butala: If you don’t have 10 more letters, you didn’t send off enough mail.

Jill DeWit: Exactly.

Jack Butala: Or you didn’t price it right or something went wrong.

Jill DeWit: Just something.

Jack Butala: By the way, there’s not a lot of guess work in this. We provide all the details for all of it because we’ve done it all wrong. We do it right, now. Step five is get the deal done, complete the transaction. If you’re in real estate at all already, you know how easy that is and the steps that you have to take. Commercial real estate is a beautiful, beautiful thing.

Here’s something that’s a little bit different about commercial real estate than let’s say whole selling houses like we talk about in Land. You want to send a … because the universe of properties is much smaller, you want to send out follow up mailers. You don’t want to just send one offer out and then forget it. You might want to send an offer out. If they do have a fax machine and the data, a fax number, check with laws before you do this, but you might want to send a nice note that says, “Hey, I sent an offer on behalf of my client,” or, “I really want to buy your building. I’m not joking around.” You might want to send a honest to God follow up postcard or a letter that says, “Hey John, I sent an offer to buy the building over there on 3rd Street. This is just a friendly reminder. I’m making sure you got it. I hope nothing went wrong in the post office or something.”

Jill DeWit: You know what’s funny? You just tipped on something that I was going to say. I see a lot of people in this industry trying to get attention, so they put things like a dollar bill in there. Right? I know, I can see the look on your face. This is so good. I go, “What the heck?”

Jack Butala: This isn’t a game.

Jill DeWit: I know, this is not … What are you going to do? Put a coupon in there for a Happy Meal? Serious. People do silly things like that. All it does is make you look less professional in my mind.

Jack Butala: That’s right, Jill. Me too.

Jill DeWit: I don’t think that’s the tactic. You’re not that guy, “Oh, I can afford to put a dollar in every envelope. Big deal.” That’s silly.

Jack Butala: This is not a marketing game.

Jill DeWit: No.

Jack Butala: Especially in commercial real estate, I find this with land owners too, they want some respect. Give them the respect they deserve. Show them some respect. Send them a well thought out, well written letter. Sign the bottom of it. We cover all these details, but you’re exactly right, Jill. Plus, the people who respond to a Happy Meal coupon, those aren’t … they’re not serious. That’s not the person you want to be doing business with anyway.

Jill DeWit: It’s the funniest things.

Jack Butala: You can save yourself so much time and energy by sending out the right mailer that’s worded properly. You get the right people to call you back right people to call you back right out of the box. It only works with a bright bulk mail printer who’s got the software to implement that. If you’re licking a stamp, you’re doing it wrong. It is the most expensive way, the most time consuming way, and you’ll get the highest return of undeliverable mail possible. You’re going to have to buy printing, toner, and paper. It’s not good.

Jill DeWit: If you find yourself all excited driving to the post office with full bins to deliver, then maybe you should look at a different line of business. Maybe you should be a printer and only do that.

Jack Butala: I agree.

Jill DeWit: Go get a printing company.

Jack Butala: You’re not in a printing business.

Jill DeWit: Get the equipment. That’s really going to be your full-time job.

Jack Butala: That’s right.

Jill DeWit: You know what? I’ll happily let you do my printing.

Jack Butala: That’s it.

Jill DeWit: But i’m only going to pay this much. I don’t pay a lot.

Jack Butala: What other business are you not in when you implement this? Let’s think about it. You’re not a printer.

Jill DeWit: I’m not a receptionist.

Jack Butala: That’s right. You’re a deal maker.

Jill DeWit: I’m not a marital counselor. “I want sell, but my wife doesn’t.” Whatever, that’s not what this is about.

Jack Butala: Next. No, with commercial real estate, it’s a … You’re going to get to the person who owns a building and they’re going to be serious. They’re going to be serious. It’s fun.

Jill DeWit: It is.

Jack Butala: I love commercial real estate.

Jill DeWit: If you want to get some attention, just change your letter. Up your game a little bit. That kind of a thing. You need to have a really good website. Really let this person know you are in this business. They should go on LinkedIn and see you.

Jack Butala: That’s right, Jill.

Jill DeWit: This is what you do by the way.

Jack Butala: That’s right.

Jill DeWit: Your website reflects that. It’s not silly stuff like you and the family and the dog in the park. You’re a professional.

Jack Butala: That’s exactly right. The commercial property person is … That’s exactly right, Jill. You want to get know them. Everything then it becomes relationship based. Well said.

Jill DeWit: Thank you.

Jack Butala: Join on another episode where Jack and Jill discuss how to use information. That’s me.

Jill DeWit: 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: You are not alone in your commercial real estate ambition. Good show, Jill.

Jill DeWit: Have you seen a Happy Meal lately?

Jack Butala: No. [I could’ve had 00:19:52] Happy Meals? Is a Happy Meal …

Jill DeWit: You know what a Happy Meal …

Jack Butala: … McDonald’s, right?

Jill DeWit: Yes. I have to tell you because I’ve done this. I’ve been with people that there’s like, I don’t know. There’s been Happy Meals I’ve seen in the last months. It’s like a little bag of 10 french fries. It’s the funniest thing because with all the new FDA stuff, they have to meet certain criteria.

Jack Butala: They can get apples too now.

Jill DeWit: They do get apples. You can get like a Go-Gurt. You can get milk. It’s really kind of cute what they do in there. There’s still a toy.

Jack Butala: You can turn into a kid really fast.

Jill DeWit: Thank you.

Jack Butala: You know that? Did you see one because you got one for yourself?

Jill DeWit: Yes. I’ve got one for my …

Jack Butala: There’s been times where I’ve been with you and you’re like, “You know, I’m going to get a Happy Meal.”

Jill DeWit: I have got a Happy Meal. It’s not like a daily thing, weekly thing, monthly thing. In the last 12 months, have I had a Happy Meal? Heck yeah. It’s funny.

Jack Butala: That’s hilarious, Jill.

Jill DeWit: Sometimes I just want to see what’s a Happy Meal’s all about right now. I’m really kind of curious. Where has their marketing gone and what’s their … What does $3.50 get you? I’m kind of curious.

Jack Butala: Information and inspiration to buy undervalued Happy Meals.

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