What do Boots on the Ground Do for Buyers (023)
What do Boots on the Ground Do for Buyers (023)
Transcript:
Steven: Steve and Jill here.
Jill: Hello.
Steven: Welcome to the House Academy show. Entertaining real estate and investment talk. I’m Steven Jack Butala.
Jill: And I’m Jill Dewit broadcasting from sunny Southern California.
Steven: Today, Jill and I talk about what do the boots on the ground do for the buyers. Yesterday, we talked about what the BOG does for the sellers. At length, actually. If you didn’t catch it, the episode before that, the day before, we really defined what the boots on the ground are. This episode might have more meaning if you go back to the Monday episode about, what the heck are these guys talking about, BOG boots on the ground every other word.
Jill: Right. [crosstalk 00:00:49]
Jill: [inaudible 00:00:51] over here with our Phoenix, I’m not saying boots on the ground, Kristine and Ken Bond. And well, yes we are wearing the same shirts that we wore yesterday and the day before in case you are wondering, we don’t just live in this.
Steven: We are here during the Fourth of July break together and we’re filming five episodes back to back.
Jill: Yup.
Steven: But they’re just, they’re airing daily.
Jill: Exactly.
Steven: Before we get into it, let’s take a question posted by one of our members on the houseacademy.com online community. It’s free.
Jill: Stanley asks, “What are the biggest and smallest deals you have ever done?”
Jill: I kind of want to answer this too.
Steven: Well these are house deals, now. So…
Jill: Oh, okay. I’m like… Bring it.
Steven: We have a house transaction here in California in the works right now. We had position prices about 750 and, or 760-ish and the sale price will be about a million bucks, maybe 1.1 so, that’s, as far back as I can remember, the largest house deal I’ve ever done. Or we’ve ever done. And the smallest is, man, really tiny. I bought a cabin on Prince Edward Island in Canada for $22,000 one time from a bank really quickly and sold it for $120,000. Like I said, that’s a pretty large spread, but, smallest and largest. There’s a lot of stuff in between and, quite honestly, I can’t remember.
Jill: Exactly.
Steven: That’s the answer.
Jill: Mm-hmm (affirmative).
Steven: But a typical deal for us, more importantly, is probably what acquisition price $200, $210 to $300, sale price $360 to… we try to make between $40 and $100,000 split three ways.
Jill: Mm-hmm (affirmative). That’s good.
Steven: Good question.
Jill: Yeah.
Steven: Today’s topic: What do boots on the ground do for the buyers? This is why you’re listening. So we talked about the sellers. Kristine got us to the point where we own the property.
Kristine: Mm-hmm (affirmative).
Steven: By the way, we haven’t put any money into this thing yet. And won’t because our investors did. So we own the property. What do we do next? How do we help the buyers?
Kristine: Mm-hmm (affirmative).
Steven: The potential buyers.
Kristine: Yeah, as we were in the close process we are also starting to create the profile sheet. The listing profile sheet for that particular property. So we’re pulling information, the specs about the house. That’s in the works and getting that all developed. At that point, we’re also starting to list it and we’ve used a couple of, for example, Congress Realty and the online listings. We’re also listing it there and starting to, the whole marketing aspect of the property.
Kristine: Yeah.
Jill: I’m sorry. I realized I need a tissue.
Steven: You know what, Jill, there is never a dull moment with you.
Jill: Can I have a tissue please?
Steven: So one of the reason that the four of us get along is because we have type triple A personalities. Jill, Kristine’s telling this perfect, dutiful story about how these deals go and how we make hordes of money. And Jill’s, I think, a little bit bored with it. [crosstalk 00:04:18]
Steven: It’s just too slow for her. It’s a little too slow for her.
Jill: No.
Steven: So she’s thinking about her nose and her body temperature and the fact that she needs some kleenex.
Jill: No, sorry. My nose just started to run.
Kristine: What’s great is I can sense that something was going on so I’m like is everything okay?
Steven: It’s good news for me because usually when she writes and flips the script over and writes notes it’s usually stuff like: Steve, slow down. Steve, you suck. Geez, Steve, you’re not smiling enough.
Steven: Fortunately, I’m not in trouble right now so that’s good.
Jill: Okay.
Steven: I’m sorry, Kristine. Go ahead.
Kristine: This is truly unscripted if you can’t tell.
Kristine: Okay. So where was I?
Kristine: Now, we’ve listed the property…
Ken: On the MLS.
Kristine: …on the MLS and we’re starting to get calls. So this is where the fun begins. As we were mentioning in the previous episodes, the range of the calls you get, it’s drastically different. We get calls that hey, my offer is $150,000 less than what we were posting out there. And then you have some that have, you get offers in via email that say listing your post and how they’re going to contact you, and then we finally narrow it down to okay, this is one that seems to be a legitimate offer. What are the next steps with that, with the buyer?
Kristine: And so-
Steven: Before we get to that, Jill, you should really talk about building a buyers list in a new market.
Jill: I was just thinking about that.
Kristine: Yeah, great idea.
Steven: Building an open house and some of the stuff that has to happen on the first few deals when you get into a market.
Jill: Yeah.
Steven: To develop. So that’s a great description of the retail, selling a property retail.
Jill: Right.
Steven: We don’t like to do that. That’s not our first choice and in fact, most of the deals-
Kristine: Good point.
Steven: The most recent one we did was that way.
Ken: Yeah.
Steven: It went longer than we thought. It didn’t go exactly how we thought. That’s why it’s stuck in our minds, I think. But, what we typically do, go ahead, what do typically do here?
Jill: Well, our goal is to have a really good buyers list and never have to list a property.
Steven: Yeah.
Kristine: Yeah.
Jill: Everybody wants an off market deal. We have off market deals, but when you’re new in a city, in a place, for some reason, they don’t know you yet, you don’t have a reputation yet, so, just saying you have an off market deal and emailing it to a bunch of potential buyers, in our case, usually, it’s other investors, it’s not quite enough. So, we have found that we put in the MLS, have an open house and start to collect these buyers, meet them.
Steven: Investors, really.
Jill: And get to know them. Investors only open house, exactly. And build up a good group of people then they’re like, okay now we know you guys are legit.
Kristine: Yes.
Jill: And then as time goes on…
Steven: Yeah.
Jill: We do have a good buyers list and I really don’t have to put in the MLS. I really can just email them and we have several that are all on a first name basis.
Kristine: Mm-hmm (affirmative).
Jill: That we all know, I know what they’re looking for, they know how we work, it’s just a perfect storm, if you will. One of the things, like Steve was saying we do, in a new market, and we’ll do it right away. This is a goal, the goal here is to sell it fast. I don’t want to hang on to it for a long time. I want to be cash in cash out, escrow and everything in days or weeks. Not weeks and months.
Steven: Days.
Jill: And I might go also find another cash investor like me who’s trolling that neighborhood…
Steven: To renovate.
Jill: …who’s already right by the dumpster a block over and he already knows the area, he’s got the architect, he’s got his designer, he’s got his crew ready to roll. He just wants to move them over here. And he wants this deal too. So this is great. How you get started is, traditionally we put in the MLS and we start getting ready, as we’re getting ready to close, we’re all getting ready to post it. Because the day of it’s recording, we want to hit that button and have it out on the MLS and that first weekend after or whatever day we pick, have a nice open house and be ready to start showing it and get those guys coming in.
Steven: Yup.
Jill: And they do. Especially with investor special. We put our silly little sign out in the yard that’s like a for sale by owner, investor special with our phone number. They call it.
Steven: Mm-hmm (affirmative).
Kristine: Mm-hmm (affirmative).
Jill: One thing I would say too is, a good tip is we’ve learned, once you have it and it’s under contract and being sold, keep that stupid sign in the yard. Because they’re still calling you and you’re going to keep building up a good investor list.
Steven: Build that list.
Kristine: Yes.
Jill: Because we do have 20, 30 people in just this one small area that we just quickly can blast it out to them every time we get another one.
Steven: Really helps to hand that inspection that you… the inspection passed our acquisition process, physical inspection, it’s easy to hand that to the next buyer and say look, this was done three weeks ago. And we had no one step foot in the house. Everything holds here, hope we can save some time.
Jill: Save some time and money.
Steven: You know, actually…
Jill: So we do that. We send it as an attachment. If we’re emailing them we’ll send as an attachment and the MLS, we can put it in there too.
Kristine: Mm-hmm (affirmative).
Steven: And they all get their own inspections anyway.
Ken: I noticed that.
Jill: Well, one time it was a goof because they didn’t see ours. Because it wasn’t posted correctly by the MLS.
Steven: I think it’s a guy thing maybe.
Jill: Maybe.
Steven: Like people just want to get I don’t trust that guys inspection. Cost a couple, few hundred bucks just to get my own guy out there.
Ken: Yeah.
Kristine: Yes. Yeah. We’ve seen that.
Steven: But it says you’re serious if you just hand them something.
Kristine: Mm-hmm (affirmative).
Jill: Yeah. We just did it, here you go.
Kristine: Yeah. The full transparency. Again, it’s up front. This is the property, this is what you’re getting. But I do agree it starts with what is the strategy for that property. Is it the quick, and I know I’m starting to forecast, but you believe you buyers going to be?
Kristine: Because there’s been times where we actually were forecasting. Oh it’s going to be an investor and actually we find out it was a-
Jill: It was an end user.
Kristine: Yes. [crosstalk 00:10:08]
Jill: It was a mom and her kids.
Kristine: Right. Which they had all intentions to remodel…
Jill: Are they living in that?
Kristine: Right. Yeah so I’ve just seen that strategy.
Kristine: The open house is great. It starts to establish within that local area a buyer’s list. Leaving the sign out, what we’ve found is, as they call in, we’ll tell them that house is under contract. They immediately will ask, do you have anything else?
Ken: Yup.
Jill: Yup.
Kristine: Anything available?
Jill: They’re on my list now. [crosstalk 00:10:36]
Kristine: We get that all the time.
Ken: Yeah.
Kristine: Yeah.
Steven: Bought a house, right. Selling it’s easy, especially to wholesalers.
Ken: Yeah.
Steven: When you buy the house right but you mark it up a lot, like we recently did, on a retail thing, it always works we made a ton of money on the deal, almost a $100,000 bucks. But it took a long time.
Jill: Yeah.
Steven: I think it took 90 days.
Ken: I remember that.
Jill: Yeah.
Kristine: Mm-hmm (affirmative).
Steven: It felt like 20 years.
Jill: Yes it did.
Steven: And it shouldn’t because it’s not even our money.
Kristine: Right.
Steven: Did it sell yet? Did it sell yet?
Jill: Exactly.
Steven: So I’d like to think that the role or the difficulty level or time commitment for the BOG on the sell side is a lot less than the buy side if we’re all doing it right.
Jill: Yeah.
Ken: Yeah.
Steven: I think the hard work’s in the acquisition. It’s just like land. You make all your money when you buy it not when you sell it. I hope that’s true, do you think it is?
Kristine: Yes. I agree.
Ken: Yes, I absolutely do. Absolutely do.
Kristine: Because at that point you’re, the emotional aspect at which we’ve found in a number of cases on the seller side, you don’t have that anymore. We own the property and we want to sell it as quick as we can. We’re entertaining all offers, reasonable offers I would say, definitely at times. But yeah, I would agree.
Jill: I’d like to point out something here that I think a lot of people do this differently. We own the asset. We bought it, paid for, our name is on the deed. [crosstalk 00:12:00] It’s not an assignment, it’s not a contract, I’m not out shopping a contract or something and I think, I hope for you all, I’d like to hear your take on it, when you’re talking to other investors it’s probably like oh, really? It’s kind of weird. Everybody thinks oh great, you’re just passing off the contract or the option. You’re like no, we own it.
Kristine: Yes. And that’s a good point. And again, they take you serious. Yes, they take you serious. And they know that absolutely we have a vested interest in trying to sell the property as quick as we can. But yes, I agree. I would say that has helped all of the conversations. Informing them that we own the property and we can close. Oh, by the way, if you want to close tomorrow or if you want to close two weeks from now, we’re good to go. Let’s just make the deal.
Jill: Right. Isn’t that great? I love too, our whole philosophy is we’re trying to make this much because we want them to make this much. Because then they’ll keep coming back. We want these investors. We’re not getting greedier. We have our numbers that we’re hitting but we want our investors to just come in, make it beautiful and kill it and then all their going to do is come back and go all right I need five more of those.
Kristine: Mm-hmm (affirmative).
Jill: That’s the goal.
Steven: This is really, really important. The person that you sell this house to whose going to renovate it and sell it out retail needs to make more money than you and if that’s not the case, you’re asking too much for their property wholesale.
Jill: Yeah.
Steven: You never want to maximize price on an asset sale in a wholesale environment. Never. And it goes against everything that we’ve ever learned about real estate our whole lives. That our parents have taught us. Maximizing sale price is an international error in my…
Jill: You’re right.
Steven: If you go to some bazaar in India, the seller wants to maximize the price for a piece of silver jewelry that you’re buying for some reason and it’s just human nature and I don’t… that doesn’t work here.
Steven: It does it when you’re the end seller in retail but it doesn’t, in my opinion, wholesaling anything. You should be cheaper. Sam Walton built Walmart on that concept. When he bought stuff cheaper he sold it cheaper and he built an empire based on that. We have a little tiny empire version of that I guess.
Jill: Might be tiny now but it’s not going to be later.
Steven: Hey, I know your time’s valuable. Thanks for spending it some of it with us today. Join us next time for the episode called What Do Boots on The Ground Do For Us as Investors?
Jill: Mm-hmm (affirmative).
Jill: And we answer your questions posted in our online community found at houseacademy.com. It is free.
Steven: You are not alone in your real estate ambition.
Steven: Do you have announcements?
Jill: I don’t.
Steven: Good.
Jill: None. [crosstalk 00:14:45] Did you guys get everything out that you wanted to say about the…
Kristine: The buyers?
Jill: …about the buyers?
Ken: Yeah, I think so.
Jill: Okay.
Steven: Did you ever have a problematic buyer?
Kristine: Yes.
Steven: Let’s hear it.
Jill: Give us one.
Kristine: It goes back to… Again, there’s the buyers that know the process and then there’s the buyers that do not know the process. The example where we shared, the profile we were anticipating was going to be an investor and it ended up being the actual family that wanted to live in that home…
Steven: Oh yeah.
Kristine: …it completely changed our approach with that transaction. Because that was, we never thought in a million years it was going to be the end user, the family, who lived there. Because it needed some work.
Steven: That house was pretty banged up right?
Ken: Yeah.
Steven: How did they get a loan on it?
Ken: No clue.
Kristine: I don’t know. I don’t know.
Steven: I was worried about that.
Ken: Yeah.
Steven: I remember that deal.
Kristine: I don’t know. Absolutely. And then we were hearing that they were going to completely change their backyard into a race track.
Jill: A race track.
Kristine: A moto-race track. We were just like oh geez.
Steven: That’s the other thing. We have a wholesaler in the Phoenix market, I mean we have a person who buys land from us in the Phoenix market and he’s extremely professional and so are we. And as soon as I have a land deal in that metro Phoenix market come in, I send him a text with the APN. It’s a series of numbers and that’s it. And then within a minute he sends me either a Y or an N. That’s the kind of deal I like doing.
Jill: Yeah.
Ken: That’s great.
Steven: APN and price and then he takes the deal from there. I don’t know about it. He just sends me the money.
Jill: It’s perfect.
Kristine: That’s awesome.
Jill: Wherever you’re watching or wherever you are listening please subscribe and rate us there.
Jill: We’re Steve and Jill.
Steven: We’re Steve and Jill. Information.
Jill: And inspiration.
Steven: To buy undervalued property.
If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
The BuWit Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.
