Real Profit on a 10,000 Unit Mailer (LA 1290)
Real Profit on a 10,000 Unit Mailer (LA 1290)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hey.
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 the real profit on a 10,000 unit mailer. It costs like five grand to do a 10,000 unit mailer, which is a huge one, by the way. If you’re brand new, you never want to do one that big. But here’s a hint on the answer. You make more than $5,000.
Jill DeWit:
One deal could do it. Exactly.
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:
Charlie Row. So I was opening my PATLive account after deciding I don’t like talking on the phone. It’s holding my business back. And I saw one of the things that they specialize in is real estate sales. They’re currently answering my phone for mailers, but I didn’t even know that they would do sales. My first instinct is to just use them on cheap property, where I find myself repeating everything that’s already in the ad when a potential buyer calls. Is anybody using them for sales? How is their salesmanship? I mean, if they sell one property a year, it pays for itself. I think I have to do it. I’ve honestly not used them for sales.
Steven Butala:
So, I mean, you’re an expert at this stuff, Jill. Do you mind if I ask you a couple of questions interview style? There’s something bigger and deeper going on here, and I’m certainly not picking on this person at all. We all have stuff that we love to do, and we all have stuff that’s not our favorite task to do in these real estate deals. So this person is stating something that has fascinated me since the beginning of my career in real estate. You post the perfect posting, you buy a piece of property for 10 grand, you post it for 25,000. You have a perfect posting. It gives all the information you could ever want, utilities, all of it. Yet, to this day, buyers call and say, “Hey, where are the utilities on this?” What’s the psychology behind the same questions over and over and over again from these buyers?
Jill DeWit:
Well, first I would argue… I want to make sure… If he gets this, there’s a chance that you miss something now and then. There’s a chance that you forgot to put the taxes in. So I would pay attention to that if I get the same question, like, “Oops, I forgot to add that.” Because that can easily happen. Then otherwise, they’re just people that are not real buyers. There’s tire kickers out there and everything. I’m sure every person, I don’t care what kind of product you sell, there’s a percentage of people that don’t bother looking at the description, and they go, “Is it really baby blue? Are you sure it’s not navy blue? How blue is the baby blue?”
You know what I mean? Who knows? There’s something of that nature. But other than that, if you do a really good posting and you spell it out correctly, and you’re getting it in front of the right people too, by the way, you’re marketing it to the right community, you’re hopefully getting the right calls, and it’s just kind of a, “Hey, I’m about to drive out there. Just want to make sure your website’s up to date and it’s available.” “Yep.” Or, “Hey, I’m going to buy this. I need to wire some money over tomorrow. How can I lock it in right now?” Kind of thing.
Steven Butala:
If you do everything right in the acquisition and in the presentation of the property online, that property should sell in one or two weeks or less. The problems come, and all these questions that are related to sales like this come when property doesn’t sell as fast as you think it should, or you’re overpricing it, or a combination of those things. I’ve long said there’s two reasons that property doesn’t sell quickly. Number one, you paid too much for it and you’re trying to sell it for too much. Or number two, it’s not reaching the right people. So sales… And you shouldn’t be getting that much phone calls you should.
Jill DeWit:
See, that’s what I would argue.
Steven Butala:
Somebody should be calling you and saying, “Boy, I did all the research. If I have any questions at all, it’s why is it so cheap?” And the answer is, “Because I’m in this business.”
Jill DeWit:
Congratulations. Don’t tell anybody. That’s what I tell them. Good for you. I can mark it up if you want me to. “No, no, no.” Okay. If it’d make you feel better, I’ll charge a little more. Well, here’s… So this I think is where I want to end with this is, if you wrote a great posting, it sold them right then. That’s, I think, the point that we’re trying to make here. And I would not personally write a crappy posting and expect PATLive or anybody else to sell it. I want the people to already fall in love with it, with the photos, and the video, and the dreamy description, and how well I conveyed it online, so there’s no selling.
Steven Butala:
If you get excited about it during your acquisition process, like Jill talked about yesterday, where maybe the purchase agreement comes back signed, or the seller says, “Okay, I will sell it for X.” And you’re staring at it on NeighborScoop, or ParcelFact, or wherever you’re looking these properties up, and you’re like, “Oh my gosh, this is a fantastic deal.” That’s exactly what’s going to happen when you go to sell the property. Exactly. So we talked about this on a Thursday call this week. There’s no reason, in this economic environment, which is a real good one for us, by the way, that you should be buying marginal property. Every deal that you do right… You should send out so much mail that every single, this taps into the topic today, deal that you’re doing is like, “I can’t believe I just bought this property.”
Jill DeWit:
And it’s very easy to do.
Steven Butala:
Right. So sales, I don’t think you needed to use PATLive for sales at all. For acquisitions, I get it. But they’re not… Acquisitions is just… On acquisitions, PATLive is collecting information and thanking everybody.
Jill DeWit:
Well, yeah. And you know why, here? Because here’s the reality, too. What is PATLive doing on the sales end? They’re looking it up on your website and just reading off the information. That’s all they’re doing.
Steven Butala:
Yeah. They can’t sell. They’re not… They can’t sell anything.
Jill DeWit:
Yeah. Cool.
Steven Butala:
Those people chose that job because they want to work in a call center. Think about that for a second.
Jill DeWit:
True. They don’t know about the property. They don’t know the area.
Steven Butala:
Who wakes up in the morning and says, “I’m going to work in a call center.”
Jill DeWit:
It’s a job. People have enjoyed that job.
Steven Butala:
They’re not listening to this show. I’ll tell you that.
Jill DeWit:
I mean, I know. Listen. All right, let’s not pick on that, please.
Steven Butala:
Today’s topic, the real profit on a 10,000 unit mailer. This is why you’re listening. Let’s do some math real fast. 10,000 unit mailer costs about $5,000. How did I come up with that? You got to buy the data and you need to send it in the mail. So it’s between 50 and 60 cents per unit to get it in the mail.
Jill DeWit:
That’s data included, everyone. That’s what we provide to the planet, FYI. Tip.
Steven Butala:
Yeah. Jill and I are the data… Yeah. I always forget to mention this. Yeah. We’re the data providers and we are the mail. The offers network.
Jill DeWit:
Think about this. For 60 cents, you could get all the ownership records, I got to hit this home please, because I really need to get this out there, and then get it in the mail. Nowhere can you do that. Think about it. I know people out there are spending more than a dollar to get stuff in the mail and that breaks my heart. They’re not even getting the data for that. Okay. Now I’m done. I just had to get that out there.
Steven Butala:
Well, Jill and I have spent years setting up a system for people at Land Aca… We don’t talk about this stuff, and I’m not selling anybody anything. I’m just informing you we’ve spent years putting the right people in place at offers to owners, and data compiling, and mail merge. There’s a lot of stuff. Jill and I tend to skip along the top on this show, but there’s a lot of stuff that goes on behind the scenes. And she’s right. It’s actually truly amazing to think about getting an offer in the mail for less than 60 cents, or about 60 cents, and then when it comes back, logging onto ParcelFact or NeighborScoop, which are our companies also, which you get with the subscription, and making a decision or you don’t.
Jill DeWit:
It’s member pricing. There’s different pricing levels, but yeah.
Steven Butala:
Oh, okay. That’s how much I know.
Jill DeWit:
It’s okay. I’ll help you.
Steven Butala:
And immediately pulling it up on your screen and saying, “Yeah, I do want to buy the property.” That’s come so far along from when I started this in the 90s that I can’t describe it. So it’s really a big deal. Anyway. So it costs $5,000 or $6,000 to get a 10,000 unit mailer in the mail. Historically, and it depends on what you’re shooting for, for every 300 to 3000 mailers you send out, you’re going to get a signed offer. If you properly add zeros, like we’ve been talking about for the last year or so, you’re going to buy a piece of property for $20,000 to $30,000 and probably sell it between 50 and 60. So let’s just say you make 20 grand, after the way better end of the deal. That’s after potentially hiring a real estate agent on the south side or all kinds of other stuff. So you spent 6,000 bucks to do three $20,000 net margin deals.
Jill DeWit:
I’m good with that.
Steven Butala:
That’s a very, very, very, I don’t know what I’m doing, realistic number. For us, a 10,000 unit mailer, we’ll probably do at least 10 deals. Probably more, but let’s just say 10. So we spent 6,000 bucks to make about $200,000 and that’s a regular month for us.
Jill DeWit:
I’m good with that.
Steven Butala:
So, I wanted to put this in here because people ask me this stuff all the time. Some of the other things that they ask me are things like, “Well, you guys have a show. I don’t have a show. That’s the difference between you and me. My numbers aren’t going to be like that.” The show has nothing to do with the actual sales of real estate and our margin yield.
Jill DeWit:
True.
Steven Butala:
“Oh Steve. But you guys have all this experience. There’s no way you’re going to make a mistake pricing. I make mistakes pricing mailers every single month.”
Jill DeWit:
I like this game. Let me take some other things. This is funny. “Oh, I’m going to make mistakes.” Or how about, “I can scrape up the money to send out the mailers, but man, I can’t afford to buy all this stuff. What do you do? You have all the money so you can make that happen, too.”
Steven Butala:
Well, we use LandTank, just like you do.
Jill DeWit:
Or Land Academy Deal Funding. Yeah.
Steven Butala:
Yeah. There are people in our group that are just dying to give us money. And not just us, everybody in the group. No good deal should ever go to waste because of money. So my point is the numbers work, they’re real, just go on Land Investors and check it out. If you don’t believe us, then cool. There’s a job in a call center for you.
Jill DeWit:
What a stinker. Happy you could join us today. Five days a week. You can find this here on The Land Academy Show.
Steven Butala:
Tomorrow, the episode on The Land Academy Show is called Do Sellers Really Know the Value of Their Land? You Are Not Alone in Your Real Estate Ambition. There are some places on this planet, or in this country, I should say, where people adore their real estate. They know everything about it, and they treat it like their children. The vast majority of other places, they just don’t care. They have other stuff to do in their life. They’re not obsessed with their land, or their house, or the value of it. Maybe they’ll do two, or three, or four real estate deals in their entire life and it doesn’t lead them around with a ring in their nose. They aren’t led around by the real estate situation.
California is one of those places, and we’ll get into it tomorrow on the show in a lot of detail. And I believe, truly, it’s well founded in California because property values just continually go up constantly, and so, a lot of people that have had extremely positive financial experiences, so they choose to concentrate on it versus someplace like, I don’t know, West Virginia, where it’s very common to buy a house for $80,000 and 20 years later sell it for 90, or 70.
Jill DeWit:
Thank you. The Land Academy Show remains commercial free for you, our loyal listener. So wherever you’re watching, wherever you are listening, please subscribe and rate us there. We are Steve and Jill.
Steven Butala:
We are Steve and Jill. Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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