Why Bigger Deals Require Less Money (JJ 594)
Why Bigger Deals Require Less Money
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hi.
Jack Butala: Welcome to the Jack Jill show. I’m Jack Butala.
Jill DeWit: And I’m Jill DeWitt, broadcasting this week from sunny southern California where everyone seems to play the guitar in public. Have you noticed this?
Jack Butala: That’s exactly what happens.
Jill DeWit: It’s really kind of funny.
Jack Butala: That’s incredibly perceptive.
Jill DeWit: I was somewhere the other day and it was just the oddest space and I’m like, I’m hearing a guitar. It was almost like in a parking lot, like a covered parking lot, I’m hearing a guitar and I don’t know quite where it’s coming from.
Jack Butala: There’s that guy down the street who plays guitar and sings. Not often.
Jill DeWit: Is it the one that sits on the wall?
Jack Butala: No, like right down our street.
Jill DeWit: Oh.
Jack Butala: And I’m like this guy needs to go straight to Hollywood.
Jill DeWit: That guy. Oh.
Jack Butala: I don’t know who he is or I don’t know what the story. I’m like, this is the greatest stuff I’ve ever heard, ever.
Jill DeWit: Yeah. He was at our birthday party. We don’t see him very often, and I don’t think that’s his day gig, but boy, is he good. It’s just like a hobby and that guy’s good.
Jack Butala: This is a funny topic. So, I saw this guy where we have a storage thing. I think the guy lives there, but he’s standing outside with just shorts on. He’s totally a southern California guy.
Jill DeWit: That’s one way to afford living at the beach.
Jack Butala: And he’s killing it. He’s just ripping the heck out this guitar. He’s killing it. Everybody just exudes talent in this town.
Jill DeWit: That’s hilarious.
Jack Butala: Except me.
Jill DeWit: Where do you live? U-Stor-It. U-Stor-It Redondo Beach. That’s where I live.
Jack Butala: That’s how you get a girl. Hey, you want to go back to my storage unit?
Jill DeWit: I got one of those roll-up doors. Those are cool. Those roll-up wall doors, I got one of those.
Jack Butala: Come on back to the storage unit. I’ll play you a little song. Pour you a gallon of wine.
Jill DeWit: Exactly. Out of my little mini fridge that I plugged into the … rewiring the light at the ceiling socket. There we go.
Jack Butala: Jill, you’re crazy.
Jill DeWit: The other thing I’ve noticed, too, about the people that live here and the guitars, when I’ve lived in other places and you go to a bar and they have live music and there’s a guitar playing there, they’re not always that good. It’s hit and miss. I remember being with you in Scottsdale one time that we actually heard a guy that was really good.
Jack Butala: Yeah, I remember that.
Jill DeWit: Where we ran to our friend who owns a bar and like, “You gotta hire this guy. Have him come in,” and he did. He listened to us. It was really good. But that was a one-off. You don’t find that very often. But here in southern California, everyone’s that good because they were probably a studio musician that retired now. They just do it for fun.
Jack Butala: It’s in the water.
Jill DeWit: The talent here is up ten notches. So, it’s really good.
Jack Butala: Entertaining real estate investment most of the time.
Jill DeWit: And music appreciation.
Jack Butala: Today Jill and I talk about why bigger deals require less money. Ironic, I know, but it’s true. But before we get into that, let’s take a question posted by one of our members on the jackjill.com online community. It’s free.
Jill DeWit: Okay. This is another one of those awesome … the whole thread is shared here because it’s pretty darn funny, the communication that goes on in our community. So, it’s more than just a question. That’s what’s cool about this. This is sharing with you how everybody’s helping each other, and we’re having fun.
Jack Butala: It’s half rant, half question, half banter.
Jill DeWit: Exactly. Rob H asks, “Hi. I still have not used the two-page offer letter format provided in the training. I used a one-page offer and that’s it. Does one work better than the other? Anyone with experience have a feel for one page versus two? Thanks.”
Jack Butala: Peter T. pipes in. “I have had numerous people return the PA, the purchase agreement (page two), so I can say that it does work. I had three letters come back yesterday signed. One told me to fly a kite, and apparently they signed that, so what? Another has seven properties. I need to review the last on and I bought and may make five figures.” Okay, wait a second. So, three letters come back. “Another one has a list of seven parcels that I need to review and the last one came back and I may buy it and make five figures. So, it works.”
Jill DeWit: Mm-hmm (affirmative). Rob H. says, “Thanks, Peter. I just have a prejudice against reading, so I’m wondering-
Jack Butala: I’m with you, Rob.
Jill DeWit: … if people bother with page one. Maybe it doesn’t matter either way.” I kind of like that.
Jack Butala: Peter T. says, “Jack says,” that’s me, “you’re looking for a situation. One percent response rate and you can do very, very well even if 99 percent are duds.” I like this guy Peter. “That said, I get calls from people that don’t want to buy, people that do not want to mail and I am okay with that.”
Jill DeWit: Okay. Trevor shares, “Too much on my mind. Throw it out there and go. Do not waste brain space on minutia.” I love it.
Jack Butala: Trevor’s been with us for a long time.
Jill DeWit: I think what Trevor’s trying to say, which I agree with, don’t overanalyze this, everybody. Get the mail out there. Like Peter says, you’re looking for a situation and you’re going to do just fine.
Jack Butala: Let’s have a serious moment. There’s a few things that these mailers need to contain. Number one, they need to contain an offer price. Number two, they need to contain a deadline. So, there are two deadlines, really. One deadline is, and we need to close the deal by Thursday and then at the very end you say, “I’m going to keep this offer valid for two months,” let’s say. They need to have a place to sign something and send it back. If not for any other reason, it solidifies in the seller’s mind that they’ve signed something and that they’re going to do the deal.
Believe me, when I say this, we didn’t just guess at this. This has been 20 years that I’ve been doing this and I’ve made constant improvements to this. Almost 20 years. It’s like 18, I think.
Jill DeWit: No, it’s been that. I’m doing the math.
Jack Butala: So, it has to contain that stuff. Now, if you put it on two pages, does it matter, or one page? I don’t know how you’d put it all on one page, unless you just sent the purchase agreement without explaining yourself, and that seems silly to me.
Jill DeWit: That’s what I think he was talking about because he said, “I don’t like reading all that stuff,” and who reads page one?
Jack Butala: Everybody reads page one.
Jill DeWit: That’s what I thought. I like page one. Page one tells who you are, why they’re getting a letter.
Jack Butala: Page one says, it explains, look, this is business friend, we’re really credible. Go take a look on the internet. This is not a fly-by-night thing. We really do want to pay you $13,000 for your property.
Jill DeWit: This is my business. Go look us up.
Jack Butala: Yeah. So, what I wouldn’t do, I’ll tell you, and this is the end of the serious moment. I would not front and back it.
Jill DeWit: No, that just seems cheap.
Jack Butala: That’s a total turn-off cheap thing.
Jill DeWit: I agree.
Jack Butala: I think sending a business letter in a number 10 envelope with a window in it, that’s professional and respectful. It’s how you do this. I wouldn’t send a yellow letter that’s got fake scribbles on it and stuff. People are smart. They see right through that.
Jill DeWit: You know what? There’s a common thing that has come up among all of our members, including our really, really, really successful ones, like their name might start with an L, and they have said-
Jack Butala: Oh, Lucy.
Jill DeWit: Yeah.
Jack Butala: Lucy Smith.
Jill DeWit: No, actually, Luke Sherrod on this show one time. We’ve had him a couple times, but one of the podcasts that we did with Luke, in particular, he shared that he had to get out of his own head. He had to say, “You know, I’m going to trust the program. I’m going to do what they say. I’m going to do this. I’m going to send these,” and then, oh, by golly, it works. But in his mind, there’s some things that, like I think where you’re at, Rob, and I totally get that. Just because it doesn’t sing to you doesn’t mean it’s going to sing to everybody else and we all have to get past that, if you will.
Jack Butala: Any time you start something new, your body and your mind and your psyche is going to say, “Wait at minute. We’ve been doing it this way for 35, 45, 55 years. What are you doing to me? Why are you making me get way out of this comfort zone now?” Imagine quitting smoking, right? You stop smoking, your body’s like, “Stop it, man. This is ridiculous.”
Jill DeWit: Withdrawals.
Jack Butala: “We’ve been doing this for 15 years. I’m not going to put up with it. I’m going to make you suffer.”
Jill DeWit: Make you sick. Yeah.
Jack Butala: So, when you start a new thing and it’s counterintuitive, right? It might make more sense to you to send a postcard out. Well, I’m telling you, it doesn’t work. If it did work, I have nothing to gain or lose from this.
Jill DeWit: Right. If it did work, we’d all be doing those.
Jack Butala: If sending postcards out works and it’s cheaper, faster, better, and has a better response, we would be sitting here telling you to do that. If one page worked better than two, believe me, I have sent out a ton of one-page offers. So, Trevor’s right. Really, there’s some stuff that you should not question about how we do this. There’s a bunch of stuff that you should, but the format of this letter and the contents which are on Offers to Owners for free, by the way. Offerstoowners.com, that’s a plug.
Jill DeWit: Under forms. Menu item.
Jack Butala: You should question yourself about why you’re listening to this show in a serial manner. I would question that.
Jill DeWit: I have something to share. I just realized that Jack thinks that the way I talk is Tourette’s.
Jack Butala: Mail it.
Jill DeWit: Yeah. So, you think I speak like I have Tourette’s. I apologize.
Jack Butala: It’s not like Tourette’s, it’s more like a reading at a wedding. Like, a reading.
Jill DeWit: You just think I throw up words. Thanks, Jack.
Jack Butala: Mailer. Two page mailer.
Jill DeWit: Thanks for your [inaudible 00:10:27]. There she goes again. Oh, thank you, Jack. Oh, man.
Jack Butala: You’re right. I do think there’s a Tourette’s situation at times.
Jill DeWit: I know that. You just didn’t word it that way and I’m cutting to the chase in helping you. So, go right ahead. I can take it.
Jack Butala: Do you have a question or you’d like to hear the answer to that question on this show, post it on the jackjill.com community. Today’s topic: Why bigger deals require less money. This is the meat of the show.
Jill in the past is famous for saying, “A larger airplane is way easier to fly than a small, little airplane.” Why is that, Jill, because I’m sure the answer is why bigger deals are … It’s the same thing, right?
Jill DeWit: Yeah, it’s true.
Jack Butala: Airplanes.
Jill DeWit: Now it’s going to be Tourette’s Jack all day. This is what’s going to happen. Oh, goodness. This is going to be great. Boy.
So, it’s very true. Yeah, bigger airplanes are much easier to fly than smaller airplanes. They have all the instruments. They have all the GPS. You type in where you’re going, not verbatim, you know what I’m saying. Just so much of it’s automated now. Coming in for landing is automated on the bigger planes. I sat with my dad, when he retired, I got to be in the MD-11 simulator. Hey, I haven’t shared this. I can honestly say I have landed an MD-11 at San Francisco. Seriously, it was really cool coming in because you come in right over the water and it took every ounce of energy I had to basically hit the brake. You got to push hard on the brakes, man, when you’re coming in on an MD-11, and it was really, really cool. So, I can say that.
Jack Butala: Were there pedals on the floor, like a car?
Jill DeWit: Yeah, yeah. Oh, yeah, yeah. When you’re coming in to land, that’s exactly what that is. Anyway, but I was watching my dad. He was doing the simulator first and I’m like, “So what do you do?” and I’m sitting back watching him, and there’s not a whole lot. But when you’re coming into land on the MD-11, there’s a count that says … it’s a computer that’s telling you how close you are to the ground and it’s a woman’s voice, interestingly enough. And it’s, “40 feet. 30 feet. 20 feet. 10 feet.” That’s really how it goes in the cockpit. I’m not kidding.
And I remember he would say, “Watch this,” and it was at 30 feet or something. He’d just pull back a little, teeny bit. Just a little half-inch. I’m like, “That’s what you do?”
Jack Butala: That’s a perfect analogy for what we’re talking about.
Jill DeWit: Is it? Okay, thank you. So that was what my dad would do. Then I’d take that, fast forward, I’m learning to fly and it’s a whole lot more work. You’re a one-man show. I’m doing the whole walk-around. I’m doing the whole checklist, and then when you’re up there, there’s a lot to it. It doesn’t just level itself. It takes a lot of skill, a lot of time, a lot of patience to learn to fly a single-engine plane. Thank you, Jack. So that’s my thing. The MD-11 versus a Cessna 150.
Jack Butala: Yeah, so, I think as you picture these two planes taking off and then having their flight and then landing, here’s some consistencies between the two and then imagine them as real estate deals. One’s a $1,000 real estate deal that you’re going to sell for five grand, and one’s a $1.2 million movie star ranch that you’re going to sell for 4.1. These two planes take off. They’re both subject to the exact same environment. Same regulations, the same air traffic controller, the same wind conditions, the same weather and the same everything, but because one of them is so much heavier and really so much more engineering. I’m going to argue, engineering has gone into the one that’s carrying people around the planet, it’s probably just designed better, made better, and everybody’s just generally more interested in it.
Jill DeWit: Pressurized. [inaudible 00:14:47]
Jack Butala: And that’s really true with larger real estate deals. There’s not a lot of money guys that are sitting around saying, “You know what? I really need to place $5,000 today.” There’s a world full of money guys sitting around saying, “I need to place 1.2 million bucks today, especially if I’m going to make $500,000 back in 30 days.” A larger real estate deal is way easier and requires way less money, in fact, usually zero, than a smaller one.
The reason that we teach these smaller real estate deals is so you learn. I don’t know how it works in flight school with pilots, but do you start off on a single-engine Piper?
Jill DeWit: You start off small, unless you’re military.
Jack Butala: And then you’re up to, what is it now?
Jill DeWit: Yeah, you start off and you work your way up, but, see, that’s the civilian way and that’s what he started and that’s the way I got in, was the civilian way.
Jack Butala: So, I’m not recommending by any stretch that you start off flying a 747 or doing a huge real estate deal first, but I am saying work your way up. There are people in our group that they go from 110, 100 and then to really large deals quickly and, for whatever reason, like we said yesterday, they had that conversation with themselves that that’s why they’re here, and they do it with intent. They know that that first real estate deal that they’re doing is just a little one. There are some people in our group that just do $5,000 deals and that’s all they do.
Jill DeWit: And they’re happy with that.
Jack Butala: Yeah. I mean, there’s a ton of them.
Jill DeWit: Whatever your threshold is, your comfort level, what time you want to put into it. Maybe you don’t have a lot of time. I think some of our people work their way up to these big, big deals because they just want to do a couple a year and just sit back and just let them-
Jack Butala: Here’s another thing to consider. When you’re sending mail out to people who own real estate, which letter would you rather get over your coffee, while you’re opening the mail? “Mr. Smith, I’d like to buy your property for $12,000 and I can close tomorrow or next week. It seems like you’re not using it at all and it’s in a different state.” Or would you like to get this letter? “Mr. Smith, I would love to buy your house for $1.3 million. I know it’s probably worth $1.5, hey, but you don’t have to worry about anything. Wouldn’t you like a $1.3 million check next week?” Which letter would you like?
Jill DeWit: I’d like the latter.
Jack Butala: Me, too. I’m half joking around, but I’m half serious here. Larger deals are way easier. If you know what you’re talking about and you have the confidence and some experience, and a little bit of gray hair helps, like me, they’re a lot easier. Everybody wants to get involved. If I were you, use the smaller deals for practice, to understand deeding and most of the stuff that any given commercial real person does not know about in any way, I’ve learned recently. Practice and then set your sights high. Go ahead.
Jill DeWit: This ties in to the thread for the question they were talking about, because I have sat in with other investors and it’s interesting that people don’t really … I’m trying to say, people don’t believe that this can happen on a larger asset. They don’t understand that.
Jack Butala: Really?
Jill DeWit: Yes. I really think that there’s a lot of people out there that don’t realize you can send out this kind of an offer letter on a $2.3 million apartment unit, that you can’t use direct mail to source those deals, which we all know you can.
Jack Butala: That’s how we started.
Jill DeWit: I know.
Jack Butala: I started this whole company buying long-term care facilities, sending out offers for 4, 5, $10 million.
Jill DeWit: Right? And I still think that there’s a large community out there, a lot of people that don’t believe that this can happen, that direct mail can happen in any product type, regardless of the amount.
Jack Butala: You’re a salesperson. What would you say to somebody that says, “You know what? I bought 1,400 properties.”
Jill DeWit: That’s exactly what I say.
Jack Butala: What do you say?
Jill DeWit: I pretty much follow up with, “Well, but what I do I know? We only close this many transactions,” and then they kind of go, “Wait a minute.” You have to some credibility to back it up and when I can provide that credibility, then I have people’s attention. It’s so hard to get it out of their head-
Jack Butala: It’s the smoking analogy.
Jill DeWit: It’s really weird. They can’t grasp it, and I feel so bad. This is really interesting. This is one thing that I struggle with. I feel like I’m trying to save everybody. I don’t need to be driving around finding these stupid things and doing it the hard way, and I keep trying to tell people, other online communities that are not ours, I keep saying, “You guys, there’s an easier way,” and no one wants to listen and just don’t simply believe us.
Jack Butala: I had a conversation with somebody, a 20-something, recently and he asked me some questions in a social environment outside of work. He asked me what I did and I said, “We send a lot of blind offers to people in real estate in the mail,” and he got this little smirk on his face, like a cocky 22-year-old would get, and he said, “That doesn’t seem very modern. You send it in the mail? Why wouldn’t you send them an email or text?” And I said, “Oh. How many real estate deals have you done?”
There’s a lot to that. We should do a whole show on that, because there’s technology that’s technology appropriate and there’s not. If I got a text message that said, “Hey, Jack, I’ll buy your house for $2.2 million,” I would laugh. If I got a letter that was professionally done with a purchase agreement on the back and then I looked up on a website and said, “Oh, yeah, this company really does do this stuff and here’s all the deals they’ve done,” I would say, “You know what? Now I’m going to take this seriously.”
Jill DeWit: It’s true.
Jack Butala: So, yes, I do have probably too much gray hair, but I know that from experience, no one’s going to take the stuff seriously unless you present it properly.
Jill DeWit: You have just the right amount of gray hair, Jack.
Jack Butala: That’s nice of you, Jill.
Jill DeWit: Thank you.
Jack Butala: This coming from a person who we really don’t know her real hair color.
Jill DeWit: No, and you never will. You never will.
Jack Butala: Do you know your real hair color?
Jill DeWit: No, I actually don’t.
Jack Butala: How does that feel?
Jill DeWit: It’s awesome. Why do you ask?
Jack Butala: That’s a position of control, like you can make your hair color any color you want.
Jill DeWit: I could be blond tomorrow. I have done that. Long time ago.
Jack Butala: Do you ever get your hair done and come out of it and say, “Wow, that’s not what I expected.”
Jill DeWit: Not in a long time, but it has happened.
Jack Butala: Do you have the right person now?
Jill DeWit: Yeah. I do.
Jack Butala: I’m boring. I know exactly what color my hair is and I have no control over it.
Jill DeWit: Well, you’ve done it again. I’m going take over from here. You’ve wasted another 30 minutes listening to the Jack Jill Show.
Jack Butala: Join us tomorrow where we discuss the imperative market research before sending out your mailer.
Jill DeWit: And answer your question, should you have one. Oh, that’s your cue. Post it on jackjill.com.
Jack Butala: You are not alone in your real estate ambition. Oh, Jill, it was the first week of the Jack Jill new format.
Jill DeWit: I like it.
Jack Butala: I do, too.
Jill DeWit: I think this is going to work out great because we’re still talking about what comes natural to us.
Jack Butala: We’re getting a huge response so far, by the way. Our numbers are really strong.
Jill DeWit: Good. You know what? I was just thinking about I put something on social media the other day about one of our members that said she’s living and breathing and sleeping and dreaming about land, you know what I mean?
Jack Butala: Yep.
Jill DeWit: It was really cute, and I love that, because that’s the best feeling on the planet. That’s how I walk around, too, and I know you do, too. When we’re out somewhere on a trip, you’re just looking at real estate driving down the street. You can’t help it. No matter where we’re going, you have it. You’re looking at-
Jack Butala: That’s just who I am.
Jill DeWit: I know, but it’s a good thing.
Jack Butala: I know.
Jill DeWit: So, the new show is still going to always circle back around to who we are and we’re all property and real estate and, gosh, buying it right and making some money and I look at, when I buy and sell property and I sell it to somebody else for way less value that I’m doing a service to them, too. So, I feel great. As a wholesaler, I’m giving them a great asset for a lot less than what they could spend.
Jack Butala: That’s why we’re here.
Jill DeWit: Thank you.
Jack Butala: That and try to make each other laugh.
Jill DeWit: That too.
Jack Butala: Plus, then we don’t have to talk to each other as much when we’re not with microphones.
Jill DeWit: This is great. I love it. Hey, so share the fun by subscribing on iTunes or wherever you’re listening, and while you’re at it, rate us there. We are Jack and Jill.
Jack Butala: We are Jack and Jill. Information-
Jill DeWit: … and inspiration-
Jack Butala: …to buy undervalued property.
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