Jack Explains How to Select a Great Deal (CFFL 451)
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hi there.
Jack Butala: Welcome to our show today. In this episode Jill and I talk about Jack, that’s me, explains how to select a great deal.
Jill DeWit: Oh.
Jack Butala: If you’ve got a bunch of signed offers staring at you because you did everything right and sent a massive campaign out and you’re staring at 10 deals, how do you select the best one? Believe it or not, it’s not going to be the most profitable one, I’ll tell you. Before we get into it, like I just did, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit: Okay. Jim asks, “I know Jack always says to copy the grantor verbatim, but my John Doe in this deal is deceased. My question is, do I have to leave as is or do I leave off the John Doe managing trustee, or do I replace it with Jane Doe, successor trustee?”
Jack Butala: This is a Jill question.
Jill DeWit: Okay. Well number one …
Jack Butala: The guy’s that …
Jill DeWit: I know. You know, I love these questions. These are really good questions. The only thing is, I’m missing some of the information.
Jack Butala: Right, and what I would say to Jim, what you want to do here is if you’re brand new like this, I would hire a title agent.
Jill DeWit: First, check with the county in case it’s something easy.
Jack Butala: Yeah.
Jill DeWit: If it’s a joint tenant … What if it’s joint tenant survives a survivorship, and Jane Doe is a survivor? Now the county, you can easily take care of that and not have to go through anything special, so that’s easy.
Jack Butala: You want to be a deal maker.
Jill DeWit: Right.
Jack Butala: When these things come up, this is, as things go, pretty complicated, or it can be if you’re brand new. I would hire a title agent if the economics are worth it. Title costs between, I’ve heard it as low as $300 and as high as, I don’t know …
Jill DeWit: $800.
Jack Butala: $800.
Jill DeWit: Exactly.
Jack Butala: If you’re new, you don’t want to be wrestling with this stuff. Actually, this ties into what this show’s about, too. This might be, if you’ve got 10 deals you’re looking at right now, and this might be the most profitable one, I get it. When you get a letter back, the first thing you do is you go to Parcel Fact, pull it up, and you just fall out of your chair because it’s an unbelievable piece of real estate, but it’s unpurchasable like this, or potentially unpurchasable, just move on to the next one.
Jill DeWit: That ties into what I wrote about this topic, so really good stuff. Yeah, I apologize Jim, but yeah, I need a little bit more information, A. B, you might be able to solve it quickly with the county telling you, just someone helping you real quick. Even just calling an attorney helping you. They’ll sometimes tell you over the phone how to title stuff. I’ve done that for free. C, hire an attorney, I’ve done that to help with it. Then D, old fashioned, if there’s enough money in it, you know, you’re going to make $8,000 on it, go through title and they’ll do it for you.
Jack Butala: Hey, here’s the thing to directly answer your question Jim, you have to do it verbatim. You might just [inaudible 00:03:09] deed. The dead guy has to, to get to the person who’s going to deed it to you. Might be an heir, might be the state. It gets complicated when people are totally deceased. That’s why one of the reasons that … I mean, there’s some people in our group that specialize in this. That’s all they do, they seek these things out.
Jill DeWit: The correct answer is yeah, the grantor or the grantee does stay the same, but who’s signing at the bottom, that will change. They were signing on behalf of … Trustee for … All that good stuff.
Jack Butala: Right.
Jill DeWit: Thank you.
Jack Butala: If you have a question or you want to be on the show, reach out to either one of us on landinvestors.com. Today’s topic, I explain how to select a great deal. This is the meat of the show. Do you have anything scratched down like you always do?
Jill DeWit: I do.
Jack Butala: Awesome, initial, fiery comments?
Jill DeWit: I do.
Jack Butala: Go for it.
Jill DeWit: Okay. Selecting a great deal, it’s data. A lot of it is all around data. It’s not because someone came to you and said, “Hey, my mother in law is moving. Do you want this property?”
Jack Butala: You never want that.
Jill DeWit: Exactly. It’s data.
Jack Butala: Never, ever, ever. That’s not how you do deals at all, ever. Might be the greatest deal ever, still pass it.
Jill DeWit: Isn’t that crazy? I get those all the time.
Jack Butala: Me too.
Jill DeWit: Number two, it’s not emotional. You’re either going to win financially or you’re going to win emotionally. Which would you want? In our business we win financially. In our home, Jill wins emotionally.
Jack Butala: I lose all of it.
Jill DeWit: That’s the reality as I look out here, the window. Anyway, that’s how that goes.
Jack Butala: Jill moved to her dream house recently.
Jill DeWit: I did. Well, you moved too.
Jack Butala: I live in the garage.
Jill DeWit: You do not. I let you in the big house sometimes. All right, so selecting great deals. Still about the data. It’s numbers, not emotional. Then my third thing is, don’t be afraid to walk away, like you said. Like this one, Jim, you know what? Hey, that could be the greatest deal on the planet, but if it’s going to cost me $800 to do this, and then I find out this is wrong and that’s wrong, and it’s going to take me a week, oh I’ve walked away. I’m done. I could do five easy deals in that same time, and make more money. That’s where I’m going.
Jack Butala: Here’s how it works from start to finish. You choose a place, a county let’s say, that you think for whatever reason shows good signs of yielding a good return on the mailer campaign that you send out, on the offer campaign. You send out a ton of offers. You send out 1,500, 2,000, 5,000 offers. Then you wait. You wait for about a week, and they start coming back. They come back in three forms. Well, really one of four things is going to happen. People are going to open the letter and their jaw’s going to hit the ground and say, “Who has the gall to offer $5,000 for my $5 billion piece of property in Northern Arizona?” They throw it away and you never hear from them again.
Number two, someone says some version of this, “Oh my gosh wife, this is a godsend. We need $5,000. I would love to sell this $5,000 property that we’re never going to use. I’m signing this and I’m sending it back. Will you please give Jill a call?” That’s what you’re looking for. Then the versions in between are, they call and they try to negotiate or they call back and they’re extremely angry. Either way you’re not answering your phone because [inaudible 00:06:40] live, so doesn’t matter. The ones that you want to concentrate especially in the beginning on are the ones who sign it and send it back. They say, “Tell us what to do, we’re ready to close.”
The more mail you send out and the better you get at pricing, the more chance that there’s going to be a great deal. If you do everything right, you sent the mail out, and you’re getting one, two to five letters back. They’re transactions that you’re going to review and see whether or not you want to buy them. That’s what this show is about. How to select which one of those, when they sign them, how do you select them? Well number one, you’ve got to get a map. It all starts with that. Parcelfact.com, which we’re releasing next week, well by the time this airs it will be released. Allows you to quite simply put the state, the county, and then the assessor’s parcel number, the APN and up pops a map and a bunch of information, who owns it, the whole thing. It’s quite amazing, actually.
You do that on all the letters that you get back and you look at it, so that’s the first thing. You look at it and see, does it have any attribute? We already know it’s cheap enough. What size is it? Hey, can I sell it for more? That’s number one. Then, in our world, now it goes to Jill’s department to see if it’s closable. That’s what Jim was talking about up here. Is the person on the phone that I’m talking to, is their name …
Jill DeWit: Really the deal maker?
Jack Butala: Is their name the same one that’s on the deed? If it’s John Smith, are you talking to John Smith or are you talking to the daughter Sally Smith?
Jill DeWit: She doesn’t even know …
Jack Butala: Where’s John? “Oh, well he died 18 years ago.” Now there’s potentially issues. Sometimes not, sometimes. It’s not so much the best deal financially, it’s the one that you can easily close, number one. This is the takeaway from the show. Best deal that you want to do is the one that’s the most easily closable and, and, and, and please retain this, consistent. Someone’s going to send you a golf course deal. Do you buy golf courses? No. That’s not the business we’re in. You never want to hear Sally’s story about the deal that her mother in law has and has to sell. Don’t even listen, just shut it down. You want to create an acquisition machine. I’ve passed on deals where people have gone and made millions of dollars, literally, because it didn’t fit our acquisition criteria and I didn’t want to spend all the time on it. I probably made $1 million in between.
Jill DeWit: Yeah, that’s what happens.
Jack Butala: On deals that were easy to do.
Jill DeWit: Exactly. That’s what happens when you have a good criteria and you stick to it, you’re going to do more deals and be more efficient, and you have a system and you’ll make more money. You’re going to be just fine.
Jack Butala: Yeah, it’s going to be okay.
Jill DeWit: It is. By golly, I like you.
Jack Butala: Is that a Jack Handy thing?
Jill DeWit: Yes.
Jack Butala: Deep Thoughts, by Jack Handy.
Jill DeWit: I’m smart enough.
Jack Butala: Strong enough, by golly, people like you. Did you see the one with Michael Jordan where he’s interviewing …
Jill DeWit: No.
Jack Butala: Jack says, “Michael, don’t look so down. You really are a good basketball player.”
Jill DeWit: That’s really good.
Jack Butala: “You know basketball where you dribble the ball, bounce it and throw it up into the basket?”
Jill DeWit: Yeah. That’s good.
Jack Butala: Oh, it’s worth it [crosstalk 00:10:08]
Jill DeWit: Okay, good.
Jack Butala: It’s really funny.
Jill DeWit: Tell me, is there any more about a great deal? I mean, what else?
Jack Butala: What ends up happening, too is that we have some members who, they’re brand new. A lot of our members are really well seasoned, but some members are brand new and they run into some of these problems and they have a great attitude.
Jill DeWit: Right.
Jack Butala: One comes to mind where they only buy properties now like the one Jim talked about earlier.
Jill DeWit: Yeah.
Jack Butala: In Colorado specifically where they have to do a glide title. That’s their whole business model now, and they’re killing it. They’re taking uncloseable deals, it would be actually an uncloseable deal for you and I. Not because we can’t do it, just we don’t want to.
Jill DeWit: We passed. Yeah, for us it’s like … Well it’s interesting, here’s another thing. For us, a great deal is, it has to meet now, not only all the things that we talked about, but my margin has to be X amount, or I’m not doing the deal. That’s kind of a fun place to be in.
Jack Butala: This country is packed full of real estate owners who have no mortgage who would be happy to sell their property to you for way less than $100,000 what it’s worth tomorrow. Just because they don’t have to clean the house out.
Jill DeWit: Get it off their plates.
Jack Butala: It’s an old ranch that my dad used to own in Santa Barbara, let’s say. I’m not using this example lately.
Jill DeWit: Right.
Jack Butala: Yeah, just, I don’t want to do any work. Money’s not a thing for us. If you can just pay us cash for this, and I hope you make a ton of money, and good for you.
Jill DeWit: Exactly. Maybe there’s something else. Maybe this property’s holding up something else in their life that they either can’t qualify for, or maybe it’s a trust situation that we need to get all the assets liquidated because the family’s going to get some really bigger payout. Those things happen all the time.
Jack Butala: It all adds up to the fact that, you’re looking for a situation, not a piece of real estate.
Jill DeWit: Right.
Jack Butala: Some family situation. You’re solving a problem for somebody that … The reaction that you’re looking for when they open that offer is, “Hey honey, they’re going to send us $25,000 for this property. Want to take it? Then we don’t have to do the thing on it with this other thing over here. We’re never going to use this property anyway, so I’m going to sign this and send it back. What do you say?”
Jill DeWit: Exactly.
Jack Butala: They’re usually talking to each other from different rooms, because people who are married never talk to each other in the same room. Do you notice that?
Jill DeWit: Wow. Where did that come from?
Jack Butala: There’s just all kinds of yelling through the store.
Jill DeWit: Where did that come from?
Jack Butala: People who are married, the longer they are married they just yell through the store. Yell through the house, five rooms away.
Jill DeWit: I don’t do that. We don’t do that.
Jack Butala: I know we don’t.
Jill DeWit: Okay, thank you. You have to make a conscious effort not to do that, I understand that.
Jack Butala: “I’m signing it and sending it back in. I don’t care what you say.”
Jill DeWit: Yep, so funny, oh my gosh. I’m trying to think if there’s anything else I want to add about this, about the great deal, but I don’t think so. I think we covered it all.
Jack Butala: I think so too. That’s Jill’s nice way of saying we should stop this episode.
Jill DeWit: Okay, wait, wait, wait. One last thing. You think, by the way, this is what’s really fun when you get rolling in this business and we’re talking about great deals. You think this is the last one you’re ever going to see. Oh my gosh, because I’ve had this like, “That was like a home run.”
Jack Butala: [crosstalk 00:13:08] in 2010.
Jill DeWit: You’re cruising along, cruising along. You’re six, eight months in. Something comes across your desk, you’re like, “This can’t be right. This can’t be right.”
Jack Butala: We just did a deal like that.
Jill DeWit: You are running, running to the bank, so the next thing you know you’re like, “Okay, it’ll never happen again.” Guess what? Two months later comes another one. You’re like, “What the heck?” That’s one of the happy things that comes with this, too. I just had to share that.
Jack Butala: Join us in another episode where Jack and Jill discuss how to use information, that’s me.
Jill DeWit: And inspiration, that’s me.
Jack Butala: To get just about anything you want.
Jill DeWit: We use it every day to buy property for half of what it’s worth and sell it immediately.
Jack Butala: You are not alone in your real estate ambition.
Jill DeWit: That was fun.
Jack Butala: Yeah, old people talk through the house. You know what I mean?
Jill DeWit: I do know what you mean. I’m sure they do. Well you know, in the store, I hear them, I see them, I do. What are you looking at? Is somebody calling you from another room?
Jack Butala: Yeah.
Jill DeWit: Are you looking [inaudible 00:14:11] because nobody was doing it? Is that what it was? Was that a signal? “Jack, get in here.” “No.” No, I know what you mean. It is kind of funny. Well you know, is it an age thing and no one can hear? They don’t even know the other person left the room?
Jack Butala: It’s just everybody gets too comfortable, you know.
Jill DeWit: Maybe that’s it.
Jack Butala: I have no idea. That’s not the point, though.
Jill DeWit: Okay.
Jack Butala: You know, the best deals that we’ve ever done are people, that’s what this whole show was about, are the people where they just call us back excited. They’re like, “Yeah, I want to sell that property for $5,000.”
Jill DeWit: Yep. “Where have you been?”
Jack Butala: “Let’s do it.”
Jill DeWit: “Thank you so much.”
Jack Butala: “You just saved me a ton of time.”
Jill DeWit: “How fast can we do this?”
Jack Butala: My favorite, too, one of them, we didn’t talk about it is, “Oh, that property’s been on the MLS for eight years.”
Jill DeWit: Right.
Jack Butala: “You’re offering more than I was willing to take on the MLS, but the broker wouldn’t let me do it.”
Jill DeWit: There you go.
Jack Butala: “Yeah, I’ll do it.” I love that.
Jill DeWit: Exactly.
Jack Butala: Information and inspiration to buy undervalued property.
If you have any questions or comments, please feel free to email me directly at jack@LandAcademy.com.
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