How to Price a Mailer (LA 915)
How to Price a Mailer (LA 915)
Transcript:
Steve Butala: Steve and Jill here.
Jill DeWit: Hey.
Steve Butala: Welcome to the Land Academy show, entertaining land investment talk. You always crack me up with that.
Jill DeWit: I tried to do it different.
Steve Butala: I’m Steven Jack Butala.
Jill DeWit: I’m Jill DeWit broadcasting from sunny southern California.
Steve Butala: Today, Jill and I talk about how to price a mailer.
Jill DeWit: This is good stuff.
Steve Butala: That’s our number one all-time request, frequently question.
Jill DeWit: Yep. That’s true.
Steve Butala: “That’s all great, Steve. But how it I do I price it?”
Jill DeWit: But we’re not going to give it all away, are we?
Steve Butala: Yeah. I’m going to tell you exactly how to price a mailer right now.
Jill DeWit: I know. We are. That’s who we are, and that’s what we’re going to do, so hold on.
Steve Butala: Before we get into the topic, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.
Jill DeWit: Jeff asks, “So here’s my question. Do you take precautions to remove people from your mailers when they ask, even though it’s a bit tedious? Secondly, is there actually any legal grounds when sending in a contract offer directly in the mail? In other words, could this be interpreted as predatory on any level and if there are things you put in place to address this? Thanks in advance.”
Steve Butala: There’s three questions here. One, do we take steps to remove people? When you send a bunch mail out, there are certain people that are not so pleased with us. Certainly our property owners. They don’t agree with your valuation, let’s say.
Jill DeWit: Yeah. If it were twice what they think it’s worth, they would be very happy and calling you back, and we wouldn’t be talking about it.
Steve Butala: A lot of them are nice about it, and they say, “I got your letter. I don’t want to sell the property at all, not even for any price. Just please remove me from your list,” which is totally reasonable. Yes, we have a rolling by county, by mailer file that we keep. It’s as simple as a Microsoft Word document. We have people’s names on it.
Jill DeWit: Just draw a line through it.
Steve Butala: Yeah. Actually it’s in Excel all by county.
Jill DeWit: Right.
Steve Butala: Yeah, when we hit another county again, I always go back and remove them.
Jill DeWit: If we ever go back to that area again.
Steve Butala: Right.
Jill DeWit: Yeah.
Steve Butala: Do they have any legal recourse? No. No. There’s no way we could sit and teach this that way that we do and have so many members that are so successful. No, we’d be in so much trouble it’s silly.
Jill DeWit: Well, and it’s like number one and number two, is this public information? For me, I see it no different as all the coupons, and the ads, and the promotions, and the things that come in your … Email’s even more … What’s shocking to me is the email stuff I get. This is mail, and there’s a reason why we do this via the mail.
Steve Butala: Yeah.
Jill DeWit: Now email is a whole different story.
Steve Butala: That’s spam. You can’t do that.
Jill DeWit: I think that maybe that’s what you need to know, too. The legal way to do this is mail.
Steve Butala: That’s correct.
Jill DeWit: That’s why we’re doing it this way. That’s why we’re not cold calling them. I don’t know how people have been getting away with that one.
Steve Butala: Me, too.
Jill DeWit: The whole skip tracing picking up the phone thing freaks me out.
Steve Butala: Me, too.
Jill DeWit: Not only do I not want to do that, and it’s a waste of time and money, but I’m like, “That’s scary.” Then email. We all know about spam and email, and that’s not the way to do this. Then you can get in trouble. But regular mail is okay. If you want to spend the money on the stamp, because all you do is take it … Just like a coupon, if they don’t want to do anything with it, they just throw it away. That’s it. No harm, no foul.
Steve Butala: That’s it. Faxing’s not legal.
Jill DeWit: Right.
Steve Butala: Trust me, I know that. I built this whole concept and this whole company on faxing real estate agents who own rural vacant property. That’s a long time ago, before email when it was legal. Faxing commercial real estate owners very, very successful, but then they stopped it. It falls under the spam rules. So, no, the only two legal ways to unsolicitly contact owners is to knock on their door or send them a letter, that I know of.
Jill DeWit: Even knocking on the door, that bothers me, too.
Steve Butala: I think that’s crazy. So inefficient.
Jill DeWit: You know what? Driving for dollars freaks me out.
Steve Butala: In a day, what, if you’re a runner? You can’t knock on 25 or 30 doors in a day. Sending mail, you could send out, I don’t know, three or 400,000 offers, literally.
Jill DeWit: Right. Exactly. Then let people who are serious or interested contact you back. Then if you haven’t done this before, trust me. They will contact you back.
Steve Butala: Jill and I have gotten calls from local sheriffs. We’ve gotten calls from California’s attorney general’s office on, and on, and on. They all go like this, “Hey, Steve. I have to follow through on this because I’m required to. Old Lady X contacted us about your letter, and she thinks it’s a terrible, terrible thing and that you’re a terrible person. I do need to make this phone call. I know you’re not doing anything wrong, but I need to follow up with it. Then you’ll probably never hear from me again.” It all goes some version of that.
Jill DeWit: It’s like, “Yes, sir. Understood.” “Okay, great. Glad we had this talk. Have a nice day.” “You, too.”
Steve Butala: If there was anything wrong with this ethically or legally, we wouldn’t be here saying, “Go do it.” Somebody would have said something a long, long time ago to us and stopped it. We send mail out every month.
Jill DeWit: Well, I’m just thinking about how many people that we have helped, and they’re appreciative, and they’re loving the fact that they opened up the mail and got the letter going, “Thank goodness.”
Steve Butala: That’s the truth of it.
Jill DeWit: Yeah.
Steve Butala: You’re going to get a lot of deals done when you do this, and every single on it of them … The deals that you get done, they’re like, “Thank you. They made this so easy. I didn’t want to go list it with the real estate agent and go through all this stuff. Yeah, I know I’m selling it for a little bit. Money’s not my real point here.” It’s like a garage sale. Just do it to clear the house out. You don’t do it to maximize price on your items.
Jill DeWit: Right. Even if money is that point to them, it’s a set price and we follow through. “Here’s a deal. I offered you 996, and we disagreed on 10,000. You’re going to get 10,000 on closing. I’m not backing out fees. I’m not doing this to you. I’m not doing that to you. I’m following through with I promised,” and like you said, making it easy. Thank you.
Steve Butala: Today’s topic: How to Price A Mailer. This is the meat of the show. There are two concepts goes the thought here on pricing. This is rural vacant land, now. This is not infill lots, commercial real estate, farm land, or anything. It’s rural vacant land, because pricing those other types of land is entirely different.
Two approaches. Number one, the shotgun approach where you send everybody a letter for 5,000 bucks. Number two, the rifle approach where you kind of laser in on each section of the county. You divide this county up into four or five sections based on prices that you see on the internet on Realtor.com or wherever your looking. Come up with a median price and calculate it and excel it that way, and assign a value to each piece of property based on size and location. That’s what I do, and I love doing it. I spend hours on that before we send a mailer out.
We have other members in our group who are tremendously successfully. One person specifically, Luke Smith, sent every owner of a five-acre property in an entire state regardless of urban or rural location for a same amount. He bought a ton of property. Tons. He’s still going through the deals. This is like two years ago.
Jill DeWit: Exactly. It works.
Steve Butala: I choose to … Jill and I, we’ve done all kinds of deals. What, almost 16,000 deals, now. My favorite now are larger pieces of property that are a little bit more expensive that are surgically priced and yield huge dollars.
Jill DeWit: Right.
Steve Butala: We closed on a deal today that we’ll make maybe $350,000 on it. That’s kind of what we like to do now at this point in our career. That’s not to say we still buy a ton of little rural vacant properties for 1,000 or 2,000 bucks, because we have the staff to deal with it all. If you’re on your own, you want to add zeros to everything.
All right. You take a given county. Picture yourself looking at a map. And you divide the county up in, maybe, three, four, five sections, maybe two. Over here in this really kind of vacant, flat area, you determine that the retail value is about 1,000 bucks an acre. Now you want to buying property then at 25% to 45% of that retail value. But over here, it’s a little bit more expensive and a little bit more developed. You determine that it’s $2,000 an acre, so you want to buy it for 25% to 45% of that.
Then you realize the price per acre’s different between zero and one acres, and one and five acres, and five and 10, and 10 and 20, and 20 and 40, and then usually it’s 40 and everything above. Determine that based on size and location. Then work backwards. It all starts with existing property for sale on Realtor.com, and then we’ll move backwards.
If you’re a member, I provide the same XL files that we use to price property. It’s called Equity Planner. It’s a pretty extensive worksheet. For 2.0, it’s the same worksheet we use for infill lots and in 1.0. It’s the exact same worksheet I use to price property for rural vacant land. That keeps all track of it, and it keeps your head real organized, and you can price your mailer that way. Was that clear?
Jill DeWit: Very.
Steve Butala: Do you have any questions?
Jill DeWit: None.
Steve Butala: Really?
Jill DeWit: Seriously. I’m trying to think. No, you spelled it out great. Basically, the shotgun approach, which … The shotgun approach, at the end of the day, you might end up spending more money on mail, so be ready for that. Because it’s not going to be as strategic priced, so you’re just getting stuff out there just to see what comes back. That’s really all you’re doing. You have a big mail budget like Luke did. He just sent the whole state. He wasn’t worried about the postage. He just wanted to see what came back and just pick up what came back. That was it. It’s a great way to get a ton of deals. You’re going to get them all over the place, so that’s one way.
Steve Butala: Cheap, too.
Jill DeWit: But my favorite way is your way, too. It involves doing it right, and really thinking about it, and looking at the areas a little bit. Not line by line. Never get line by line. Don’t get individual properties … because we want you to send out a minimum 1,500 units. Are you going to sit and one-off look up and price 1,500 units? Uh-uh (negative). That’s not how you should be spending your-
Steve Butala: A month. 1,500 a month. Yeah.
Jill DeWit: Yeah. That’s not how you should be … or even at a time … not how you should be using your time. I want you to think about that. Maybe when you start, you kind of … I think the best way is do like two or three parts of the county, okay? This is a little bit closer in. Maybe I circle closer in. Maybe I price a little further out another way and a little further out another way. Then there’s this weird section over here. Something like that. You can see it, and feel it, and you know what you’re doing. You can see the for-sale properties. You can identify where the changes are.
Then after you get it out there, you got a good feel for it, you’re going to go back and change it. You’re going to go, “Oh, this area worked out really great. I just picked up all the five-acres. What would happen if I did all the 10-acres, knowing what I know now? And this area over here, too …” Once you just get that first one out and test it, you’re going to know a lot.
Steve Butala: Well said.
Jill DeWit: Thank you.
Steve Butala: You know, your yields should be on rural vacant land, for every one or two … Let’s just say it. For every 300 mailers that you send out, you buy a property.
Jill DeWit: Right.
Steve Butala: If you’re way below that for every hundred, your pricing’s a little bit off. It’s actually too expensive. Or for every 500 or 800, which is, really, in the end what happened to Luke Smith with his shotgun approach. But the ones that you buy easily justify the cost of the mailer.
Jill DeWit: That’s true. That’s what it is. If you go crazy and you want to do the shotgun approach, hold on to your hat, because you will get some home runs in there. You’re going to go like, “I can’t believe this guy doesn’t … He clearly does not care. Does not care. He clearly wants to get rid of it, and he can’t get rid of it fast enough.” It’s so darn funny, so that’s really, really good.
Steve Butala: That’s it. Test it for reason. I can’t say that sentence enough. Test it for reason. When you’re all done with your mailer, and you think it’s beautiful … and this should take you a couple weeks your first time.
Jill DeWit: It’s true.
Steve Butala: Really, really, pricing should take two weeks. Pick out 20 of them in the whole spreadsheet. Pick 20. Randomly pick them. Then go out on the internet and test it for if the people signed it and sent it back, how you have it priced, is it a good deal? Go through it like you would as an acquisition review?
Jill DeWit: I want to hit it home again. How you know you did it right or you don’t do it right, right? If every offer you send comes back signed, you know you offered too much. The first wave … I don’t know if we talk about this yet. No, not this weeks. Here’s how you really kind of know it back. The first wave is a percentage of, “You are nuts. Don’t call me back.” They’re pissed off. “This is stupid. How dare you think whatever?” Okay. Those are going to get out of the way. The next wave is now you got some signed offers. Then it just continues after that. That’s how you know you did it right.
Steve Butala: From the time that you press the button on offers to owners, you will sit and twiddle your thumbs for two weeks. Because it takes that long, and everybody freaks out.
Jill DeWit: Right.
Steve Butala: I even freak out. Even this … I’m like, “Oh, maybe I did something wrong.”
Jill DeWit: “Is the phone ringing yet? Is the phone ringing yet?” Yeah.
Steve Butala: So there’s two weeks of silence, and then boom.
Jill DeWit: It hits.
Steve Butala: You get a bunch of phone calls with some angry people. Then probably a day later or two days later, you started getting mailed back signed or people calling and say, “I talked to my wife about this. We’re never going use that property.”
Jill DeWit: Exactly.
Steve Butala: Take your time and close it. “I’m going to sign this. I’ll take a picture of it and send it back to you so you have it, or whatever. Just let me know what to do.”
Jill DeWit: Yep.
Steve Butala: “Thanks a lot.” Then the call before that is, “If I ever see you on the street, you this, you that. This, this, this, this, or this.”
Jill DeWit: “Who raised you?”
Steve Butala: “I will string you up.”
Jill DeWit: Yes.
Steve Butala: Then the next one is, “Oh, yeah. I’d love to sell you my property for that price.”
Jill DeWit: Exactly. That’s exactly right. It’s so funny. Never a dull moment around here, I tell you.
Steve Butala: Well, you’ve done it again. You’ve spent another 15 minutes or so listening to the Land Academy show. Join us next time where Jill talks about how to close a deal on a piece of land.
Jill DeWit: And answer your questions posted on our online community LandInvestors.com. It’s free.
Steve Butala: Are you not alone in your real estate ambition.
Jill DeWit: Are you done talking? You’re going to pass the torch to me tomorrow?
Steve Butala: Yeah.
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