Direct Mail Campaign Efficiency is Not a Goal (LA 1345)

Direct Mail Campaign Efficiency is Not a Goal (LA 1345)

Transcript:

Steven Butala:
Steve and Jill here.

Jill DeWit:
Howdy.

Steven Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.

Jill DeWit:
And I’m Jill DeWit, broadcasting from sunny Southern California.

Steven Butala:
Today, Jill and I talk about how direct mail campaign efficiency is not a goal.

Jill DeWit:
What? I would think that is.

Steven Butala:
You send out-

Jill DeWit:
I’m kidding, of course.

Steven Butala:
… 1,000 mailers. You buy a property, you make 10,000 bucks, your mailer costs us $500. You do everything wrong, you send out 3,000 mailers instead because you made some mistakes, it costs $1500 now to make $10,000. That’s the whole show.

Jill DeWit:
And you will explain more, I am sure.

Steven Butala:
Before we get into it, let’s take a question posted by one of our members on LandInvestors.com online community. It’s free.

Jill DeWit:
I imagine people are scratching their heads right now. I thought more was better. I’m so confused.

Steven Butala:
No. You know what it is? And this begs the … there’s always a bigger … what’s really underneath the whole thing. Number one, people don’t like to outlay money to make money. That’s just human nature, unless you’re on Wall Street, then you love doing it. And, number two, I don’t understand what it is about … there’s this whole culture, and Jill and I have been talking about this for years on this show, this culture of negotiation and getting stuff cheap.

Jill DeWit:
Right. I understand. Thank you. All right. Greg wrote in our online community, “Hi, fellas. I’ve got a slick deal out East on 10 acres, but I was checking the deed and it’s in an HOA. I searched and searched, but it sounds like the subdivision was divided 15 years ago, but few of the lots were sold and the HOA never started collecting fees. They were $300 annually in the HOA declaration. Most of the lots seem to be owned by a bank and are not for sale. I want to call the HOA and ask if the fees are active, what the future looks like for access, etc., there’s a private road leading to the property, but I can’t find any contact information for the association, if there is one. My concerns are, number one, are there back fees that the seller hasn’t paid, I can’t seem to verify, two, can they put up a gate across the private road and further restrict access either now or in the future-”

Steven Butala:
Yes.

Jill DeWit:
“… three, hold me hostage for other fees, etc.?”

Steven Butala:
Yes.

Jill DeWit:
“Should I be concerned? Is this just a good old junk property now, the kind I like, and how can I find out more about the HOA? Thanks,” and then we have a little follow-up here.

Steven Butala:
Yeah. A lot of people answered in Land Investors and then he finally said this.

Jill DeWit:
This is the result of his digging?

Steven Butala:
Mm-hmm (affirmative).

Jill DeWit:
All right. Then he said, “I called the county and they indicated the HOA is still valid on record, but the subdivision went bankrupt. I called the bank and they told me that the rest of the properties in the subdivision are under contract to buy. It looks like someone beat me to this pile of properties, but I might still buy one from the private party after I discuss with the current owner about the HOA fees. The question is what is the new owner of the rest of the subdivision going to do with the parcels, sell them cheap or make something more valuable out of them?” This is a really good question.

Steven Butala:
That’s what I thought too.

Jill DeWit:
For me, I have to take a step back and think about … what is his name, Vic, Vic or-

Steven Butala:
Greg.

Jill DeWit:
… Greg, okay. Greg, I got to take a step back. I’m wondering do I want to get involved in this mess, potential mess? And I love that you’re thinking about, “If this guy bought them all up, yeah, and he sells them really cheap, great, that’s going to make the value of mine go down when I post it for sale, or he could be a buyer, though, too.” If he’s buying them all for a particular reason, he will want yours, so there could be an opportunity and a play there. What do you think?

Steven Butala:
What’s left out of this, and I’m not criticizing it at all, this is a fantastic question, and it’s a pleasure to answer these questions, how much money is to be made. If we’re talking about buying a piece of property for, let’s say, a few thousand dollars and it’s going to be 50 grand by the time it’s over, it’s worth digging into. In general, Jill and I have said for years HOA property is tough for a bunch of reasons. It really throws a wrench into a lot of things. My gut on this, just from the information that Jill just described, is that the HOA is probably long gone. The HOA, people get salaries and stuff, so they’re probably long gone. Are there accumulated fees? I’m sure there are. They didn’t file the paperwork to end it with the county. I’m surprised that’s all the county said. Usually, the county will have a real strong opinion about what … “Oh, my god. Oh, don’t even think about buying property out there. Janice, two years ago, bought a piece of property and it got flooded,” that kind of thing. For us, I wouldn’t do this.

Jill DeWit:
Yeah. And I’m with you there, because here’s my thing, for all the questions that you, as a professional investor, have right now, Greg, imagine the questions you’re going to answer from every single person looking to buy that property. You’re going to be forever telling the story and forever trying to make them feel good and forever telling them that “I really think nothing’s going to happen” because that’s the reality, “I think it’s going to be okay. I don’t think this HOA can come back to life,” but there’s that 1% that we don’t know, and for those reasons, I’m out.

Steven Butala:
Okay, Shark Tank.

Jill DeWit:
That’s right.

Steven Butala:
Here’s what’s interesting about this and, really, the reason I included it in the show, there’s a bank, so the bank saw some value in this at some point and lended against it, and now they foreclosed on it, which is expensive as hell and time consuming, and they’re reselling it to somebody. Somewhere, there’s this REO property, real estate owned property, by the bank who saw some serious value in it. That makes me think, all right, wait a minute, I’m not going to give up too soon here.

Jill DeWit:
Then it comes down to how cheap is it. What I would do, too, okay, how cheap is it? This could be the deciding thing for me. I’m getting it for a couple thousand dollars and then, worst-case scenario, I don’t remember what he said the HOA fees were, $300 a year, I think it was, so how many years … if it’s $300 times 15 years, what could they come at me with? I’d have to add up worst-case scenario, worst-case scenario, and then I make a decision.

Steven Butala:
Yeah, but no one’s collecting. It’s bankrupt.

Jill DeWit:
I know.

Steven Butala:
The subdivision went bankrupt.

Jill DeWit:
I know.

Steven Butala:
I don’t know if they filed bankruptcy.

Jill DeWit:
I want to see it in writing.

Steven Butala:
You know what? Jill brings up a great point. I’m sure nobody’s paying anything on this since ever, including all the other property owners. All it takes is one attorney, who’s bored one day, to look into this and say, “I’m going to send everybody a bill.”

Jill DeWit:
Yeah, “And I’m going to bring this HOA back to life.”

Steven Butala:
There’s real specific laws-

Jill DeWit:
Could you imagine?

Steven Butala:
… state laws about homeowners associations and, if you get just a couple months behind, they can start filing lawsuits. I know this from personal experience in Arizona, owning condos, flipping condos. This has happened to us, and the rules are outrageous, outrageously against the homeowner.

Jill DeWit:
This could be somebody’s business. You’re not wrong.

Steven Butala:
It is somebody’s business.

Jill DeWit:
Well, some attorney could say, “Wait a minute.” You got at least 10 years of how many properties? Let’s just say there’s 100 properties times $300 a year, that’s a lot of money. If I was an attorney, I’m like, “I might take this on because the money I collect will now bring this HOA back to life.”

Steven Butala:
Here’s a Frankenstein of a story about HOAs. One of our best friends is an attorney in Scottsdale, has a huge practice, it’s mostly real estate, and he said, every time somebody builds, this is brand new, any type of condo complex or even a lot of new master plan subdivisions now even have HOAs. They’re 25 bucks a year, but they take care of landscaping and things like that. When it gets released, the project’s done, and it’s open to the public, there’s a class action lawsuit filed, every single one without exception, in Arizona. Do they get any traction on it? Of course. They settle. It is a lot of people’s business model. I’m not here to say, “Oh, my god, never buy HOA property.” That’s probably not going to happen here. I’m just saying HOAs suck. That’s what I’m saying. They’re stupid.

Jill DeWit:
Tell us how you really feel, please.

Steven Butala:
Well-

Jill DeWit:
I’m kidding.

Steven Butala:
… just picture the person.

Jill DeWit:
I know.

Steven Butala:
We’re all investors here. I want to picture in your head what the person looks like who’s sitting in a new house that they bought in Arizona on their travertine tile and their quartz countertop, drinking a cup of tea and just wallowing and reveling in the fact that no one can have a camper in the community and the grass has to be between one and a half inches and two inches, you can’t park in the street overnight, and she just loves that. She just wants to hug herself because she’s part of that. That’s an HOA. She’s probably a real estate agent too actually.

Jill DeWit:
Sounds like a former girlfriend something. You know really a lot of this. Just kidding.

Steven Butala:
No, I’ve had to personally settle lawsuits that [inaudible 00:09:30] planned. But Jill and I, for a period, bought defunct condominiums from banks for really cheap, ended up keeping one forever, and so there was always a battle with an HOA

Jill DeWit:
It’s funny. I just bought an HOA property right now, I’m not kidding-

Steven Butala:
That’s great, Jill.

Jill DeWit:
… and the reason that I bought it, I want to give a little bit of truth time, it’s not all bad, but I’m testing this area out. There’s several I could buy. I’m buying one to see … because it really is dreamy and it’s lake with boat rides, and they have a shared boat dock and a slip.

Steven Butala:
Really?

Jill DeWit:
Each house gets a slip. I’m not kidding. I’m dead serious. And it’s not expensive. They don’t have a pool. That’s the thing. There’s basically, at the end of this drive, at the main point on the lake, they have a shared building, a community center or something. No pool, no tennis courts, nothing like that, it’s all about the boating, so that, you know what, I’m going to test this. It’s not expensive and I bought it so darn cheap. We can afford to do this.

Steven Butala:
I love boating.

Jill DeWit:
I happen to know … really?

Steven Butala:
I’m going to ask you to don’t ever do this at home. This is just between me and Jill now. Is it something you’d like to keep?

Jill DeWit:
Potentially. It’s a really pretty area. I did it because it’s newer. The homes are gorgeous. It’s a definite pride-of-ownership situation. I didn’t think about this, actually, when I bought it. I’ll see how it goes. Let’s see if we like it, how fast it sells, and maybe I’ll bring one to you.

Steven Butala:
Okay. Is there more than one?

Jill DeWit:
I have the opportunity to buy several.

Steven Butala:
Oh, Jill.

Jill DeWit:
I said, “Let’s hold off. Let’s test one in this area,” because I don’t know it. It’s so backwards too. I had to literally ask and dig to find the CC&Rs. No one provided them. We bought it through escrow too. No one ever thought about, “Can we get our hands on this stuff, by the way?”

Steven Butala:
That’s a good sign.

Jill DeWit:
It’s hilarious.

Steven Butala:
You can’t find somebody to hand you the CC&Rs and they’re not online, they don’t care.

Jill DeWit:
Yeah, I had to dig to get them.

Steven Butala:
That’s good.

Jill DeWit:
No, and my team said, “You can do pretty much anything you want out here.” I’m like, “This is great. Okay. Done.”

Steven Butala:
Today’s topic, direct mail campaign efficiency is not a goal. This is why you’re listening. What does he mean, efficiency? This happens multiple times on consulting calls that we have, Jill and I, and just in our environment, there’s this desire, for some reason, to not trust how we teach this, which is, look, you’re going to send out X amount of mail, X amount of offers, intelligently send them out, and you can expect, within reason and range, that between Y and Z number of offers are going to generate a deal where you can make a ton of dough at 20 to 25% of retail. And so the vast majority of our members, they go with that and they’re happy and they email us 10 deals later and say, “You guys are the best.” There’s always people who, for some reason, actually, I know the reasons, want to make that more efficient.
And so, yesterday, we interviewed Tiffany Carter. If you haven’t listened to it, you really should. And so she started in this business, long before she ever knew about Land Academy or even investing in land, by driving around in the car and picking out 10 houses in a subdivision or 40 houses, she said, I guess, and there was always, invariably, an info lot, a vacant piece of property, and sending mail. She would go write them all down and get the addresses and then go home and make a tiny little mail campaign and send out letters of interest, I think she said, or maybe even offers. But she was always intrigued by the land part of it. There’s always one or two pieces of land. And so, of course, what she was doing, inadvertently … I’m not criticizing Tiffany, I think it was one of the best interviews we’ve ever done-

Jill DeWit:
I agree.

Steven Butala:
… and I have nothing but respect for her, and we all can, including me and Jill, can learn from that interview, and what I learned was that mailer efficiency is something that seems like a natural, normal thing, like saving money is a natural, normal thing for most people. This is not the time to do that. Now is the time to get more mail out. In fact, the week before, we interviewed Tom and-

Jill DeWit:
Patricia.

Steven Butala:
… and Patricia and title of the show is I Wish I Would’ve Sent Out More Mail. Mailer efficiency, while you might be new at this and you might be saying, “I don’t want to send out a 1,000 letters and buy one property. I want to send out 300,” I’m here to tell you that’s bad.

Jill DeWit:
That’s right. More mail is always better. That’s what we always say, and it’s so funny, people laugh at us for like, “Come on, really?” I’m like, “No, that’s really what we talk about.” We have this separate advanced group that we communicate on WhatsApp, and we have a call with them today, and we get together and it’s the same thing. They’re blasting by the … we’re not-

Steven Butala:
Tens of thousands.

Jill DeWit:
… [crosstalk 00:14:40] by the thousands. It’s, yeah, the tens of thousands is who it is. And you know what’s interesting is if you want to be in the advanced group, that’s one of the things that we look at. We know you are in this, you are serious about investing like us because you send out a ton of mail-

Steven Butala:
That’s it.

Jill DeWit:
… which is what we do-

Steven Butala:
That’s what we do.

Jill DeWit:
… a ton. Because I always say, too, it’s just so much easier. This is how I look at it, and I got to be a guest on some Land Academy members accountability group recently, and I told them the best thing they could do is cut themselves off, don’t spend days and weeks analyzing and picking and counting and pricing, give yourself a cutoff, and get it out there. And I told them, too, just do a lot and, if you don’t have a lot of time, get a lot of data, scrub down so you have maybe two or three thousand going out on a week consistently because that’s the best thing ever because what does that do? It gives you, every day, new opportunities popping into your email, coming on your phone, popping into your mailbox, of properties to look at, and you have consistent stuff to look through.
And you might go to bed sleeping about one, this is truly what I do, I’m on the fence, I write myself notes to my team and I’ll put in there, “Jill to decide on Friday,” because I’m like, “Oh, I got to sleep on this one a little bit.” And, usually by the time Friday rolls around, I’m either doing it or I’m not doing it or there’s something better that popped in is usually what happened and I’m like, “You know what? Glad I didn’t waste my time on this one, I was obviously not feeling it, I didn’t jump into it right away, and, look, I got three more that are better than this one. Done.”

Steven Butala:
We have certain people in our group that only want to do one or two deals a month, but they want to make sure they’re really good deals. In one case, this guy only does deals where he can make $100,000, so he tries to make a million dollars net a year. Do you think that, if he sends out a bunch of mail, sends out four or five thousand pieces of mail and gets three acquisition candidates back, that’s good, or is this better, sending out 50,000 offers and looking at 80 or 90 or 100 potential transactions and then choosing from that group? No matter how you slice this, it’s always better to send out more mail. I’m not saying blanket the entire country with that because that’s just silly and I think you could never handle the calls. You still have to be smart about it. And I’ll tell you, if it’s not priced right, then you’re just wasting time and money anyway. But I’m saying intelligently send out a bunch of mail so that you have enough deals to choose from where you ensure your success.

Jill DeWit:
Exactly. Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show.

Steven Butala:
Tomorrow, the episode on the Land Academy Show is called Filling in the Land Acquisition Education Gaps with Land Academy. You are not alone in your real estate ambition. It’s Tiffany Carter week.

Jill DeWit:
It is. It’s funny.

Steven Butala:
And she said, “I learned about buying and selling land all over the internet, and then I learned about you guys and you filled in the gaps.” That’s what we’ll talk … what gaps those are exactly tomorrow.

Jill DeWit:
Yep. Thank you for tuning in. We hope you find our content valuable and we absolutely appreciate your support. If you haven’t already, please zip on over to our YouTube channel and hit the subscribe button.

Steven Butala:
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Steven Butala:
We are Steve and Jill.

Jill DeWit:
We are Steve and Jill.

Steven Butala:
Information.

Jill DeWit:
And inspiration.

Steven Butala:
To buy undervalued property.

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