Turning a Hateful Mailer Response into a Seven Digit Deal (LA 1829)
Turning a Hateful Mailer Response into a Seven Digit Deal (LA 1829)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Hello.
Steven Jack Butala:
Welcome to the Land Academy show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWitt, broadcasting from the Valley of the Sun.
Steven Jack Butala:
Today, Jill and I talk about turning a hateful mailer response into a seven digit real estate deal.
Jill K DeWit:
Which happens all the time, by the way. Isn’t that kind of funny? You know what it’s interesting? It really depends on how you look at these. We are doing some deals with a certain… I know we’re going to talk about later this week, too. We have many partners out there, not just our partners, but we partner with other people and do deals with them, usually through deal funding, but sometimes other ways. But the point is, this other individual thinks like we think, where he’s like, “I’m not afraid of hate. What’s so bad?” He’s like, “We call it the hate. It’s not that big of a deal.” It’s really how you look at it. It was not a hell, yes response. That’s kind of an it. It was a no way response. And then we turn it around.
Steven Jack Butala:
Here’s the typical anatomy of responses that you get to a mailer. So you send out 10,000 units, you do all your homework, you price it right, do the stuff that we teach in Land Academy 3.0, you send a mailer out, and you wait two weeks for the mail to hit, between one and two weeks. And you start to get, in the beginning, some pretty angry people that immediately open the envelope, they’re real unhappy with the price or some version of it, and they call, which I don’t understand, but they call and tell you about it.
Jill K DeWit:
Right as they’re walking. You can tell they’re literally walking with the letter in their hand back from their mailbox. It’s the funniest thing.
Steven Jack Butala:
And then as the mailer progresses… So that’s the first week. As the mailer progresses, there’s a little bit of a quiet period where some people call back and say, “Yeah, I actually really do want to sell my property to you. Maybe for a different price, but we’re in the ballpark.” And then the third and final phase of the reception of the mailer is back to the sender, which is us, “Yeah. I think I’m just going to… What do I do next? I do want to sell my property. I talked to my husband or I talked to my wife and that’s it. I’m ready to go.” So you get all that angry stuff up front, then there’s some mediocre negotiation. And then at the end you just buy a bunch of real estate. Most of the time, if you do everything right. Jill has a real specific case study on this episode where she’s going to take us step by step through what happened with this particular seller and now we’re doing the deal.
Jill K DeWit:
Cool.
Steven Jack Butala:
Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free. And I hope you can now log onto parcelfact.com and see all the improvements that we made in combining two separate sites that we had, where you can do phase one due diligence. It’s all now in a nifty little package. And honestly, I don’t have to manage two sites anymore. I only have to manage one great one.
Jill K DeWit:
Exactly.
Steven Jack Butala:
Check it out. Parcelfact.com.
Jill K DeWit:
I like to say the test worked.
Steven Jack Butala:
We did a split test and decided they’re better together.
Jill K DeWit:
We did a split test and we picked the best one. Exactly. It’s great. Aaron wrote, “I’m double closing on a rural 10 acre property in blank state. Is there any reason I should pay for title insurance? It’s a simultaneous close, so I won’t own it for any period of time. And the end buyer will be getting title insurance.” I’m guessing at a later date. “I figured I could save a few bucks, but not sure if that may expose me to something. For example, if there’s a claim on the end, the buyer’s policy, might the title company come after me down the road?”
Steven Jack Butala:
No.
Jill K DeWit:
Thank you.
Steven Jack Butala:
This is a double close. So there’s two ways to do what we do. Here’s the right way. I’m not sure Aaron’s doing it the right way. But here’s the right way. You find a seller and you buy their piece of real estate and everybody negotiates the deal. It’s $35,000. The only reason we would ever buy a piece of property at $35,000 is we know we can sell it for 70 or 80 really quickly. So we buy it and we own it and we get title insurance and we go through. And it would be just as if we bought a house and lived there for 30 years. But that’s not the case with what we do. We buy it, we own it, we get title insurance, hopefully we only own it for a week. Then we immediately post it on the internet or call one of our potential buyers and then they buy it from us. Very, very straightforward. And they consequently get a title insurance policy when they’re done and they own it. And everybody goes on their merry way. This double closing business that Aaron is talking about is this. I find a piece of property for $35,000. I know I can sell it for 70,000. Well, why would I buy it then? Why don’t I just wholesale it in air quotes.
Jill K DeWit:
Assign it.
Steven Jack Butala:
Assign it or wholesale it. Sure. And so all I’m doing is I have a contract that says I can buy this property for $35,000. I hand the contract to Jill and she buys it for 70,000. She writes her name in, instead of mine, I never bought it. I just signed the contract to her. So in the chain of title, I’m not there. There’s no reason I would need title insurance for that case.
Jill K DeWit:
It’s really one transaction. I’m getting a fee. I’m just kind of getting a… It’s like a commission. It’d kind of like I’m getting a commission like I’m a real estate broker kind of thing.
Steven Jack Butala:
Well, Jack, why wouldn’t everybody do that? It sounds glorious. I don’t have to come up with the $35,000. I don’t have to do two… I only have to do one transaction, not two. Why do you guys do it? Why do you actually own the property?
Jill K DeWit:
Because I don’t want anything to go wrong.
Steven Jack Butala:
Because it’s a great deal.
Jill K DeWit:
And I believe in it.
Steven Jack Butala:
And it’s the right thing to do.
Jill K DeWit:
It is the right thing to do. I just talked to somebody about this the other day, about all the possible things that can go bad doing assignments. One, unfortunately, it’s giving wholesaling a bad rap and a bad name anymore. People are like, “Yeah, you’re not even really going to buy it. You don’t even believe in it,” number one. And maybe you don’t, and maybe that’s why you’re doing it too. Maybe you don’t believe in the property. We do. My whole point is I believe in the property. If I didn’t believe in the property, I wouldn’t be doing this. And I either have the money myself to buy it, or I have someone in my back pocket who can fund the deal like us. So the money is in there and I really buy it and I own it. And now I turn around and now I sell it. I have a hundred percent control over this transaction.
Steven Jack Butala:
Control.
Jill K DeWit:
If I didn’t do this, I’m really opening myself up to people changing their mind, people getting mad, people going dark. You could have this assignment with a 90-day close and be running around trying to shop for this. And then you find a buyer, you’re all excited. You call the title company, and the title company turns around and said, “Oh no, Mr. Jones said he is not selling now. His brother wanted it.” That could happen. You snooze, you lose kind of thing. So many things can go wrong.
Steven Jack Butala:
All these things have happened to us and our members in the way past. And that’s why we’re all here now doing it this way.
Jill K DeWit:
Yeah. At end of the day, I just don’t feel right about it.
Steven Jack Butala:
It’s sneaky.
Jill K DeWit:
I know. If you really believe in it, buy it.
Steven Jack Butala:
It’s not a finder’s fee. I understand a finder’s fee. I found this property. I’m going to buy it for $35,000. I have a guy who regularly spends 70,000 on him. I’m going to charge him 5,000 bucks to turn a deal over. I get that. And everybody else does too. So now he’s buying it for 40,000 instead of 70 because I’m an expert locator. I get all that.
Jill K DeWit:
That’s a separate kind of thing. That’s true. Thank you.
Steven Jack Butala:
Today’s topic, turning a hateful mailer response into a seven digit deal by Jill. This is why you’re listening.
Jill K DeWit:
Here’s the case study. So yeah, mail went out. This gentleman emailed back. It was about, I’m going to say a week, it was probably a week after the mail hit, and obviously thought about it and emailed me back. It was interesting. Emailed me back pretty much, “Thank you for your offer. Not happening. This is not at all what I would sell this for. Have a nice day.” There wasn’t any real mad, I offended him. And even if there are… There was a little something there, they were like, “You must be nuts. This is not the price I’m going to take. If you look, I paid a whole lot more for this,” kind of thing. Which the person did in 2005, by the way.
So anyway, I always see those as there’s a potential. I really want you to try to learn out of this. This is a couple takeaways. Takeaway number one is there might be something there when people write you back like this or call you back. Your job is to find out, dig just a little bit. So I very nice… I didn’t have a phone number. I didn’t have other way to reach this person. So I emailed back just a nice little, “Hey, thanks for letting me know. By the way, now that we all… Now, I know you do want to sell. I didn’t mean to insult you with this price. What is the number that you would be happy to walk away from?” keeping in mind who we are, what we do kind of thing.
So the guy wrote me back and we arranged a phone call. And this was so funny. So this was on, say, on a Wednesday. So Wednesday, Thursday, we’re emailing back. Friday, we decide let’s talk next week. Let’s talk on the phone. Because I want to get to know this guy and I got something there. I’ve had some time to look at this. It’s actually a big property. It’s over 150 acres. I’ll just leave it at that. And it’s awesome. Our original offer price was around a $1000 an acre. That’s what we came out of the gate with. And I knew he wanted more. I also looked up and saw, and I did some digging, got with my team, got ahold of the vesting deed. This guy paid, I want to say over $20,000 an acre, not kidding. Because he paid close $3 million for this property back in ’05. And it was during a time, if you guys remember, ’05, things were going up. It all came crashing down ’07, ’08, ’09. Things reset in a big way in a lot of places in this country.
So anyway, then as we’re communicating, I find out, here’s my number and it’s in England. I’m like, okay. So we arranged to talk that next Monday or Tuesday, whatever it was. I’m like, “Sure, I’ll call you.” Anyway, I call him. And of course, too, I’m calling him, I’m leaving a voicemail, we’re having internet issues. He’s on a tiny island in Scotland to add to this. That’s where he is. So he emails you back and says, “I saw the missed call. I don’t have great cell service, but I do have good wifi. Do you have WhatsApp?” And I had it on my phone. I’m like, “Give me a minute.” So I quickly load WhatsApp right back on my phone so I can call. I’m like, “Let’s go.”
So I call him. This is stuff, too… Okay, take away number two. Don’t give up, work with these people. I’m like, “I can talk to you on WhatsApp.” I’m like, “That was brilliant that he thought of that.” I’m like, “Done.” So I put the app back on my phone so I can call this guy. So I call him, and just a really nice gentleman. And he was like, “Look, I know I’m taking a hit.” And like I said, I did my homework going into it so I knew he was not fibbing being here. He paid a whole lot more for this when he bought the property. And he said, “Look, I own a manufacturing company. I make the rubber stuff for kids’ playgrounds. I happened to be in another part of the state back in the day when I spent the $3 million on this property. I know I’m not going to get that out of it, but I’m also not hurting for money. So I’d take $3,000-
Steven Jack Butala:
He’s a perfect seller then.
Jill K DeWit:
Oh yeah. He’s like, “But I would take three. I’m going to take a hit. Just not that low of a hit.” And he’s like, “I would be okay with $3,000 an acre to walk away from.” And so I said, “Well, give me 24 hours. Let me see what I can do.” So I went back, showed it to you. We talked about it.
Steven Jack Butala:
I’m in love with this deal.
Jill K DeWit:
I know.
Steven Jack Butala:
Money-wise and real estate-wise.
Jill K DeWit:
Can we make $3000 work?
Steven Jack Butala:
Seller-wise and all that.
Jill K DeWit:
Can we make $3000 work? I kind of knew I could going into it. But, there’s a reason, takeaway number three. Even if I know right now in my head, I have a number that I could make work and that’s it, I still want him to think that I’m spending a lot of time on this, more time on this and only on his deal. So I said, “Let’s talk tomorrow.” So we hang up, call him back tomorrow. We make a time to talk again.
Call him back. And I talked to him. And I still said… I was still not… Sure, I can make it work. But is it better… I tried to meet in the middle. That’s really where I came at it. I said, “Can we meet in the middle? Is there anyway?” Because that does work. It doesn’t hurt to ask. Don’t be snotty about it, but just go for it. Take away number four. So he’s like, “No, I really can’t. That is my bottom number. I too have put a lot of thought into this.” And I said, “Okay, let me get back to you.” And I didn’t even say yes at that point. Hung up. And I’m like, “All right,” I couldn’t get my meet in the middle, which would be like 300 and something thousand dollars. So he’s on his 450, roughly an acre or 450 total, $450,000 total at $3000 an acre. So I’m like, “All right.”
So I go back to you. [inaudible 00:14:09] already had your answer. So now I’m putting it into play. I’m like, “Okay, let’s do this. Let’s get a signed purchase agreement.” I said, “Can you scan this out and cross off your number, cross off the original number, write in the new number we just talked about,” I emailed him, “And just send it back to me?” He’s like, “I don’t have a printer.” I said, “Not to worry. Give 10 minutes, you’re going to have a DocuSign,” which we did, which he happily did. So we’re solving problems together here. That’s what we’re doing. And he did it in minutes.
And next thing I do is like, “All right, now we’re going to find a broker real quick.” And this is a big enough property. Come on, it’s 150 acres and I’m spending $450,000 on it. This is nothing to sneeze at. And it’s my money, by the way. I’m not getting money from somebody else to fund my deal. This is our transaction. So now this is where I’m at right now today, by the time we’re done recording these shows, I will probably have an answer from this broker. I get an initial comps from the broker within two hours of the phone call. We have a good guy that we just found in this area now that we really like who’s professional, older, owns property in the area, knows what he is doing. He’s already listing a couple other properties for us right now.
So anyway, I got the initial thing back. I’ve got a signed purchase agreement. I’m not opening escrow just yet because I want to just to triple check, make sure before I plop down that money, that we’re all seeing what we think we’re seeing here. It’s zoned. I don’t want to give away too much, but it could be ag, it could be residential. It’s kind of in the middle.
Steven Jack Butala:
Well, I can tell you exactly what’s going to happen with it. The property is being farmed on three sides by separate farming companies. It is zoned agriculture, but it has entire and complete water rights that come with it. And the water is being welled by the adjacent farming operations. So that’s like no improvements are required. It just needs to be cleared to go into immediate farming, which is what’ll probably happen with this, whoever buys it. But what I love about this deal, and I’m not the only one looking at this area like this, is that it is right on the fringe of huge growth. And how do I know that? Not because I lived here forever. Not because-
Jill K DeWit:
It’s not in our state.
Steven Jack Butala:
Yeah. It’s not even in our… Yeah, not because I lived here forever or there forever. It’s all because of data. I can see exactly what the days on market are and analyze it. So it could be in any state. I can see where that… I don’t want to use the word growth path, but it’s in an area that is rapidly… You can see all the new subdivisions that are going in on the fringe of what’s happening. And everybody else knows that.
Jill K DeWit:
Everybody knows what’s coming in the area. Everybody knows where the new Amazon is going to get plopped down. Everybody knows the new mall that’s being built, or fill in the blank kind of thing. What I was going to say too, this came up in conversation the other day, someone said, “Did you mail Scotland?” By the way, “No, I did not mail Scotland.” So this guy, he’s professional, he’s business, big business. He’s probably got a branch here. But the letter I believe went through his attorney who is in the United States. And then the attorney forwarded the letter to him.
Steven Jack Butala:
In real estate, you have a mailing address because that’s where the tax bills go. That’s where we mail these letters to the notice of record. Some people-
Jill K DeWit:
I wouldn’t have done Scotland. I wouldn’t have mailed Scotland.
Steven Jack Butala:
Some people have statutory agents. Some people get the mail at their own PO box, wherever the tax bills go. So we have a system like that. Jill and I have had the same mailbox since the early ’90s. And so wherever we are in the entire country, we have people that are local here that manage that and get whatever mail comes to us, to us physically.
Jill K DeWit:
Right. And we’re buds now. And by the way, fifth takeaway, we didn’t talk very much. We just had like that… But that first initial conversation was pleasant and professional. And it was easy for me to establish trust, for whatever reason.
Steven Jack Butala:
You guys just got it. It just clicked.
Jill K DeWit:
Yeah, it did. It clicked. I understood who he was.
Steven Jack Butala:
He’s a willing seller and you’re a willing buyer. That’s a lot of it.
Jill K DeWit:
He’s professional. I’m professional. All we had to do is agree on a number. That’s it.
Steven Jack Butala:
So a long story short, that’s 150 plus acres buy for 3000, probably sell for or end up-
Jill K DeWit:
Oh yeah, six or eight, those are the initial comps.
Steven Jack Butala:
Between $6000 and $8000.
Jill K DeWit:
An acre. So that’s going to be at least double our money. I’m good with that.
Steven Jack Butala:
Probably more.
Jill K DeWit:
Totally good with that. I’ll know more in a couple hours. Happy you could join us today. Five days a week, you can find us here on the Land Academy show.
Steven Jack Butala:
Tomorrow the episode on the Land Academy show is called How Jill and I Take on Other Partners for Very Specific Deals. You are not alone in your real estate ambition. That’s a good deal.
Jill K DeWit:
That is a great deal.
Steven Jack Butala:
That’ll cap us off for my financial goals if we get it done in this year, 2022. That’ll accomplish it.
Jill K DeWit:
By the way, I’d be very happy just doing one of those a month.
Steven Jack Butala:
Oh my gosh.
Jill K DeWit:
I’m sure a lot of people here would do too. Let’s see, Jill, I do one deal a month. I net $400,000. Yep. That works.
Steven Jack Butala:
So you net four, then you do that 12 times.
Jill K DeWit:
Well it’s hard. That’s when you do like-
Steven Jack Butala:
It’s $5 million a year.
Jill K DeWit:
Well shoot, I can do two a month then. It’s not that hard. Nope. You’re right. Thanks for tuning in. By the way, speaking of all these big numbers and all these big deals, Jack and I are aware that not a lot of you have a couple hundred thousand dollars lying around to fund deals like this one. But don’t worry. We do. And there’s so many people in our community that do. So check out landfunding.com or go to our website, landinvestors.com, which is a version of our online community. And at the top, you’ll see a little arrow that says deal funding. And that shows you where to submit it, what information we need, and we’ll get some eyes on it and maybe be your bank.
Steven Jack Butala:
We are Jack and Jill.
Jill K DeWit:
We are Jack and Jill.
Steven Jack Butala:
Information.
Jill K DeWit:
And inspiration.
Steven Jack Butala:
To buy undervalued property.
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