BiggerPockets Podcast 039 with Seth Williams Transcript
Link to show: BP Podcast 039: Dirt Cheap Land Flipping and Reaching Motivated Sellers with Seth Williams
Josh: This is the BiggerPockets Podcast, Show 39.
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Josh: Hey everybody, this is Josh Dorkin, host of the BiggerPockets Podcast, here with the big guy, Brandon Turner. Hey Brandon.
Brandon: Hey, I’m here with the little guy, Josh Dorkin.
Josh: You fancy yourself a funny guy, don’t you?
Brandon: Yes, I’m a regular stand up comedian. Look at me.
Josh: Oh my goodness.
Brandon: I just flew in from New York, boy are my arms tired. Badumpsh! Get it, flew in. Awkward.
Josh: Cricket. Yes, that was awkward. Alright, so how are things man?
Brandon: Things are awesome.
Josh: Yes, this show 39, we’re growing every week.
Brandon: We’re almost over the hill.
Josh: We are, man. We’re doing really good. I think we are on pace to hit a 100,000 listens to the show this month.
Brandon: Oh, nice.
Josh: That’s insane.
Brandon: That is insane.
Josh: It is. Yes, no, the show’s going well and we’ve got good one ahead, but before we do, I think we should talk about this little contest we’ve doing.
Brandon: We should.
Josh: This is by the way, this is the last week we’re running the contests.
Brandon: Just for now. We’ll bring it back some time.
Josh: Yes, we’ll do something.
Brandon: We’ll change things up here.
Josh: Yes, we want to announce last week’s winner, Jos, I can’t speak, Joshua good name. Joshua Dean Gordon, Twitter account, JoshuaDeanGordo who said, I think Brandon’s favorite quote so far.
Brandon: Favorite quote. Yes.
Josh: Yes.
Brandon: One word.
Josh: The quote is.
Brandon: Awesome.
Josh: Awesome.
Brandon: Very clever. Good job.
Josh: Yes so thanks, Joshua and he’s the winner of what?
Brandon: Six months of BiggerPockets pro membership so.
Josh: That’s pretty cool because now he can market in the marketplace and any deals, opportunities, wants and needs that he has and what else can he do? He can see who’s visiting his profile, promote his company through his signature, all sorts of cool stuff and if you’re interested in pro.
Brandon: Yes, where can they find out more about that Josh?
Josh: They can find out at BiggerPockets.com/pro, Brandon. Thanks.
Brandon: Wow, nice plug, good job.
Josh: That was awesome. You wonder why we put on this contest.
Brandon: Yes, now everyone knows. Hidden agenda.
Josh: Yes, it was devious and it was Brandon’s idea, so you know, the king of deviousity.
Brandon: That I am.
Josh: Yes.
Brandon: Devious.
Josh: Alright so, it’s a good word.
Brandon: It is a good word.
Josh: It doesn’t exist, but I think I’m going to start using it.
Brandon: Do it.
Josh: Yes, alright so today we’ve got a great show ahead. We have with us, Seth Williams. Seth is a blogger at BiggerPockets as well as on his own site REtipster.com. He’s been investing since 2006 and he’s a pretty bright guy with a unique strategy that we haven’t really talked about too much yet, but it’s definitely stuff that any investor, well, the show contains lots stuff that any investor can use in their own business. With that, why don’t we jump into the interview? What do you think?
Brandon: Let’s do it.
Josh: You know what, before we do though, I do have a point that I make really quickly and that is.
Brandon: Do it.
Josh: If you have any questions for Seth, definitely make sure to ask them on the show notes at BiggerPockets.com/Show39. Also, if you like the show, you love the show, definitely be sure to share your feedback, honest feedback on iTunes. Leave us a rating, a review. We definitely love getting those and hearing what you guys think of BiggerPockets podcast so please do that.
Brandon: Cool.
Josh: Without further ado, why don’t we bring him on.
Brandon: Do it, bring him on.
Josh: Alright, Seth, what’s up man, welcome to the show, good to have you.
Seth: Thanks very much for having me guys. Appreciate being here.
Brandon: Yes, we’re glad to have you too.
Josh: He’s got a radio voice doesn’t he?
Brandon: He does have a radio voice.
Seth: Do I really?
Josh: He’s got a radio voice.
Seth: No one’s ever told me that.
Josh: He’s got a radio voice and a face that only a mother could love.
Seth: Oh, thanks Josh. Appreciate that.
Josh: I’m just kidding man. I’m just kidding. Hey, well, thanks for coming on board, man, we’re really excited to have you. You’ve been one of the fun BP guys, man, with your crazy animated GIFs all over the place.
Seth: Sure man, yes, I just want to keep things alive and happening, you know, that’s the only way I know how to do it so.
Josh: Fabulous.
Seth: Anything I can do to help.
Josh: That’s great, well listen, so let’s talk about your business. Tell us about what kind of real estate investing you do.
Seth: Sure, well, I guess, I got started with real estate investing back in about 2008. Really what I do, is I buy and sell vacant land that’s kind of my bread butter. That’s what I spend most of my time doing. I guess what exactly do you guys want to know about it? What’s the.
Josh: That’s a good start so you do vacant land, alright.
Seth: Yes.
Josh: We’re going to definitely start digging in and asking questions about that.
Seth: Sure.
Josh: Are you developing the land? Are you just flipping it? What’s kind of the strategy?
Seth: Yes.
Josh: Or do you do everything?
Seth: Well, really, when I first heard about the whole idea of vacant land, I was kind of like, I didn’t really get it, I didn’t see why that would be such a great thing, or why people would be attracted to that. Really I found vacant land just to be an awesome opportunity because the way I do it is I contact people who are delinquent on their property taxes and send them mailers through direct mail. Then they respond and often times I find that usually, there’s a reason why people have delinquent property taxes. It’s usually because they don’t care about their property. Maybe they inherited it and they just don’t want it. Maybe they can’t afford it. For one reason or another, the fact that somebody has delinquent taxes is just a sign that something is wrong.
Josh: Yes.
Seth: There’s a problem that needs to be solved.
Josh: Right.
Brandon: Now.
Josh: Go ahead.
Brandon: Well, I was thinking, I always hear, I mean people say a lot of times don’t start with vacant land. Don’t do vacant land in just general.
Seth: Yes.
Brandon: Because it doesn’t cash flow.
Seth: Yes.
Brandon: There’s no extra income each month and so when I heard that you did vacant land, it’s one of the reasons I wanted to have you on here because I don’t know anybody who does vacant land.
Josh: Yes, I don’t do—I don’t either.
Seth: Sure.
Brandon: Yes and we’ve never had a podcast guest do it so can you kind of walk us through the whole process.
Seth: Sure. Well, the two reasons you guys just said, first of all you said it doesn’t cash flow and then the fact that many people do vacant land, that’s what makes it so awesome.
Seth: First of all.
Josh: No competition.
Seth: Well exactly. There’s no competition. I literally have not ever come across on a competitor on a single deal that I’ve ever done and also it does cash flow. It’s just a matter of knowing how to work the deal and how to sell the things that you’re actually turning the purchase price into monthly payments over several years. Really, the whole delinquent tax thing, a lot of times the people who have delinquent taxes. I mean like I said before, it’s a sign that there’s a problem and because there’s a problem. I mean they literally in a lot of cases, they’re months or even weeks away from losing this thing completely.
As a result, I’m able to send them just a ridiculous, stupid offers that no normal person should accept, but the fact of the matter is, if they don’t accept my offer, they’re losing everything. It’s you know, what’s the lesser of two evils so a lot of times I can send offers for you know a couple thousand bucks, a couple hundred bucks and people will accept that.
Josh: Can I dig in really quick here?
Brandon: Yes.
Josh: We’ll definitely continue on through the process so.
Seth: Sure.
Josh: I’ve got a property, say it’s valued easy numbers a hundred thousand dollars. I’m delinquent on taxes I owe, say, I don’t know, a couple thousand bucks in taxes.
Seth: Yes.
Josh: What happens next? The government’s going to basically take this property away right?
Seth: Correct.
Josh: Okay, so you come in and you make an offer on this hundred thousand dollar property at what price?
Seth: Hundred thousand dollars, my offer would probably be somewhere around ten to $15,000.
Josh: Ten to $15,000, okay and they take or they leave it, they get the $10-$15 grand they pay off the $2-$3,000 in taxes that they owe. They come out ahead slightly and you walk away with a piece of land that’s worth eight or so times what you paid for.
Seth: Yes, and usually, one of the ways that I make it more easy for someone to accept is I’ll tell them, “You know what, I’m going to pay for your property taxes. I’m going to pay for your closing costs. This is going to be cash sale so we’re not going to wait around for months for me to get a proof of mortgage.” A lot of times, the reason somebody is going to be willing to accept, you know, such a dumb offer like that is because they want an easy button. They want things just out of their life. This thing is a nuisance. This is a hassle for them.
Josh: Yes.
Seth: I’m that solution so.
Josh: Got it. Okay, so you’ve just picked up this property for $15,000 plus your $2,000 in tax payments that you have to pay to help make it square.
Seth: Yes.
Josh: Now what?
Seth: Well, once I own the thing, I own it free and clear. The interesting thing, a lot of times if somebody has delinquent taxes on a piece of land. It usually means that, nine times out of ten, that they don’t have a mortgage on it so they own this thing free and clear. That’s part of why they’re able to sell for next to nothing, but yes, once I own it, I mean, in most cases my goal is to turn around and resell the thing soon as I can. In your situation there, if the property is worth $100,000, I’d probably list it for, I don’t know, $40-$50,000. I mean, a really good deal. As a result, I mean because I’ve basically acquired all of this free equity with this piece of land. You know, you’re able to list it for a really cheap price and it sells relatively quickly in most cases.
Brandon: Do you sell it on terms at all or do you sell it straight up?
Seth: Yes, I mean something that I like to do whenever I can, is sell it with seller financing and when with seller financing, I can really just sort of become the bank and I can ask for whatever down payment I need to be made whole and the rest of it is, I mean, literally pure profit because I’ve paid off everything I have with another property. Then for the next four or five or ten years, however long I want to make it, you know, it’s all money above and beyond what I put into it.
Josh: Right. There in lies the cash flow right?
Seth: Yes.
Brandon: Exactly.
Josh: Got you. Are you doing any kind of zoning or well first of all, where is this land? Are you buying ag-land? What kind of property are you buying?
Seth: Yes, no, good question. It’s really whatever kind of calls I get. I’ve had land, you know, right in the middle of the city. I’ve had some the nastiest vacant lots you can imagine in Detroit, which I actually didn’t buy, Josh, so you’ll be glad to hear that.
Josh: I have nothing to say about Detroit. Why does everybody think I have problem with Detroit? I mean, what? Have I said something over a couple podcasts? I mean what?
Seth: I have no idea. I don’t know.
Josh: I don’t know.
Seth: I don’t know. I mean there’s anything you can think of really. I’ve had farmland. I’ve had vacant lots out in the middle of nowhere. I’ve had hunting land. I’ve had lakefront properties. Really, anything you can think of that qualifies as vacant land.
Josh: Okay, you’ve acquired various types of land.
Seth: Yes.
Josh: You pick them up and so the question was, are you changing the purpose of the property? Are you marketing it as anything but the same thing that it was marketed as before. Are you, you know, doing any kind of development? Or are you literally just flipping vacant land?
Seth: I’m just flipping vacant land. I’m not changing the zoning. The only reason I would do something like that is if say I didn’t do my homework or if I, you know, if I bought something and then made sense to try to change it if the value was going to go up. I’ve never done that. It’s not been a necessary thing for me.
Josh: Got you. What comes to my mind on that then is you’ve got this land that you’re buying it seems like over a pretty broad area now. I wonder in terms of the direct marketing that you’re doing, presumably, you’re not just doing, you know, one or two zip codes. I mean, it sounds like you’re kind of shooting out over much broader swats. How do you decide on that? You know?
Seth: Yes. I mean when I started doing this, I actually, the way that I would market to people is I would call a county so it would be county by county and I’d say, “Hey, I want to get your list of delinquent property owners, people who owe money on their taxes.” It costs money. I mean you got to pay sometimes a lot for these lists. Just depends on the county, what their fee structure is, but you’d get these lists and you’d send the mail out. Then every person who calls you, you know that they’re going to be within that particular county so there is some predictability there, but as far as, you know, picking and choosing specific neighborhoods and that kind of thing. It’s really just luck of the draw, who ends up calling you back.
Josh: Got you. Okay, so how did you get into that? Why did you decide on vacant land?
Seth: Sure, back in 2008, I actually, I bought a home study course on the thing. Again, when I first heard about it, it didn’t make sense, but when I heard the explanation of how it all works. It made a lot of sense to me so I got that course and studied it, have applied some new things to that, and kept some things the same and kind of made it my own in a way. Yes, that’s how I found out about it.
Josh: Okay, and are you doing other strategies or is that really. I mean are you buying, you know, houses. Are you wholesaling? What, you know, or is that pretty much it?
Seth: Yes, well I’ve used the same strategy to get houses under contract and assigned other people. Something I’ve been trying to work out a little bit more this past year is applying this more towards wholesaling so just that kind of thing.
Brandon: I’m wondering if you’re buying these properties then immediately flipping them to others, why not just put them under contract then sell the contract like wholesaling instead of actually buying them. Is there a reason or do you do both?
Seth: No, that’s a great question. That really is my intent to figure that out. I’ve never been really a wholesaling expert. I understand most of the mechanics of how it’s done and that’s something I’m trying to work on more in my business. I think really with the land, it’s a little bit different than houses, which is what most people are wholesaling when they’re doing that. Land has, I think, kind of a smaller pool of buyers. Most people are not necessarily looking for just dirt. Kind of for the reasons that you guys are thinking earlier, they just don’t really get it.
Josh: Yes.
Seth: Like why would I want the land if it’s not going to cash flow so for that reason, it can take significantly longer to find buyers for certain parcels of land. Sometimes it’s hard to know which ones those are going to be until you just buy the thing and just try to sell it. So…
Josh: That was what I was going to ask you. I’m sitting here thinking. Somewhat listening, but somewhat up in my brain now, I’d [Inaudible][16:08] but no, but you know, I’m wondering, alright so you’ve got these parcels and who’s the buyer? Who comes in and picks up. I could see, you know, a plot a city in, you know, potential developers on the ags side, obviously I’m guessing somebody who wants to maybe with a plot that’s next to one of the plots that you’re looking at, but generally it seems like you’re now—it seems a little more difficult to turn over these properties than it would a three, two, you know, house, that your typical wholesaler is probably going to go for or buy, you know, rehab, or so on and so forth.
Seth: Yes, it really depends on the property. Some vacant lots are absolutely, they can take forever to sell the things because I guess the uses just aren’t there or the zoning is some odd thing or you know maybe the land doesn’t perk or for some reason they can’t do exactly what they want to do on it. Those can take awhile and I mean others though, it’s exactly what everybody wants and they sell, you know, within the week so it just depends.
Josh: What’s been the longest you’ve end up stuck with the property and in that or those cases have you ended up coming out ahead or losing money in the end?
Seth: Yes, I think the longest—I’m trying to remember. I want to say it’s about six months. That was the longest I’ve ever had one.
Josh: Okay, and you still presumably turned it over and making a profit.
Seth: Yes.
Josh: Okay.
Seth: I think I’m trying to think. There’s only been like one or two times where I’ve not made a profit. One of them was when I tried to sell it with seller financing and the guy sent me two payments and then just stopped and that was it. I never heard from him again and he moved away and I basically just disappeared so that time, I didn’t really make money on it. Another time.
Josh: Did you take that back? Did you end up foreclosing on him or?
Seth: Well, it was a land contract so it’s actually the deed is still in my name, the whole—it was a pretty cheap property. The whole foreclosure process, I actually haven’t gone through yet. The land contract is not matured yet so as long as I do it in the next couple years. I can presumably get that back, but.
Josh: Okay.
Brandon: That’s right Michigan has the land contract thing that Clay Hubert talked about on his podcast.
Seth: Oh yes.
Brandon: Which we’ll link to in the show notes, which are at BiggerPockets.com/Show39, but yes it’s a little bit different. I think maybe other places might, I don’t know, seller-finance it a little bit different.
Seth: Yes.
Brandon: You can maybe equate it to kind of a combination between a lease option and seller financing. That’s kind of the way I think of it in my head. Does that make sense to you at all?
Seth: Yes, and actually the money that that guy has paid me, I don’t remember exactly the balance that he still owed—or I’m sorry the balance that I still need to get totally paid off, but it was like really close. Like, I wasn’t really out a lot. It was just kind of, I don’t know, like he mostly covered what I needed.
Josh: Got you.
Brandon: Are you only buying in Michigan then or do you buy anywhere in the country?
Seth: Yes, when I started I was only buying in Michigan, but actually, no I actually get leads from a lot of places on one of my websites. I send offers all time all over the place. I actually just had one accepted last week for three lots, one of them in New Mexico, one of them in Texas, and one of them in Arizona for $150 bucks. Yes, I mean do buy stuff like that whenever it comes in.
Josh: Talk to us about the three lots for $150. What—same thing. Was it just delinquent taxes and what are the properties worth?
Seth: Yes, well.
Josh: Brandon’s smiling I can see his.
Brandon: What I got a $150 bucks I want a couple of properties. I can put up a tent and go camp there, anyway.
Josh: Exactly.
Seth: Yes, well, the interesting things about the ones that come in from the internet is that these people just find me through doing a Google search and when I get those leads, it’s not necessarily because they have delinquent taxes. Like, I didn’t send them mail because they showed up on some list so there can be a lot of various reasons why people just don’t care and they just want somebody to take it out their life. This guy does not have delinquent taxes. I actually have not gotten down to the actual reason why he just wants to get rid of them so bad. It could be he just doesn’t want to pay tax bills or it could be that.
Josh: Man, government.
Seth: Yes, exactly. I mean not that there’s really much liability with land because there’s just—there’s not, but I mean it could be something psychological. He just doesn’t want these loose ends in his life. I don’t know, but for some reason.
Josh: Alright so what are the properties worth?
Seth: Not a lot they’re all mostly, they are all very rural, like I think the one in New Mexico was like way out in the desert in a subdivision that had been plotted, but no roads made. I mean, we’re talking out in the sticks.
Josh: Yes.
Seth: From when I was looking at it, it was probably a few thousand bucks per partial.
Josh: Got you.
Seth: I mean, we’re not talking huge dollars, but the nice thing is—it’s just there’s very low barriers to entry with this. I mean, you don’t have to have ten grand in the bank and you don’t have to take out loans. I mean the ability to buy these things and own then free and clear is huge. I mean to not make monthly payment in anything. It’s a big deal.
Brandon: Yes, that’s pretty awesome so how—the thing that kind of pops in my mind though that would be a bit difficult is knowing the value.
Seth: Yes.
Brandon: Like, cause land, I mean if you got a lot that’s in the middle of the dessert, I mean, how do you even know it’s worth a couple of thousand?
Seth: Yes, no that’s one of the big dilemmas of land investing. Even if it’s not in the middle of the desert, even if it’s in the middle of New York City, those can even be hard because I don’t know what the reasons, but land just does not have a lot of good accurate, recent comps available. I mean you can search high and low, but as far as getting like really concrete data to base it on. It’s usually not going to be there. Usually what you have to do is find similar properties that are listed for sale within, I don’t know, ten square mile radius or something like that. This isn’t necessarily giving you the value of the property, but it’s showing you want your competition is. If you list this thing for sale, I mean, who else is out there in the market trying to sell the same thing? If you can price yours below that or have some terms that are significantly more attractive, again, it’s not a guarantee that you can sell it quick, but I mean it’s just going to indicate that you’re probably going to be sitting in a better position than they are.
Josh: Got you, got you.
Brandon: How do you find the buyers then?
Seth: Yes, the buyers, I have found, I want to say, almost all of them just on Craigslist.
Brandon: Oh okay.
Josh: Okay.
Seth: Yes, I mean, a caveat to that, usually when I’m putting them on Craigslist, they’re also going on Postlets, which you guys have probably heard of.
Josh: Yes.
Seth: That syndicates to a lot of other websites as well so I shouldn’t necessarily say it’s purely from Craigslist, but that’s usually where the business comes in from.
Josh: That service is a pretty convenient one right? You can upload the information, upload some photos, and Postlets will just push out, pretty much back page, Zillow, Trulia, everywhere right?
Seth: Yes, for the most part.
Josh: Is that your primary marketing tool other than your website?
Seth: Yes, I mean I’d say, you know, Postlets, Craigslist, my website, I know Backpage is another—it’s kind of like Craigslist’s little brother. There’s not nearly as much trash, but it’s.
Josh: Yes.
Seth: It’s still worth doing, so yes those are the main ones.
Josh: Nice, no that’s great, now are you working a full time job or you do this on the side? Why don’t you tell us a little bit about your—you know—where do you come from and how did you?
Seth: Sure.
Josh: I mean you talked about how you found this course that kind of got you into the game, but you know what drove you here?
Seth: Sure. Well, my job is actually I work for a small business financing company and we do SPA loans. It’s kind of our main bread and butter so essentially what my day job is, is being a commercial real estate banker. There’s—it’s really, I didn’t actually plan it this way, I kind of, ever since college I wanted to do something with real estate. Really the way my job just worked out is there’s a lot of overlap with what I do and just a lot of skills and general knowledge that applies to both worlds so it’s actually been really, really helpful.
Josh: Got it.
Seth: Yes.
Brandon: Let’s go back to something. You know, a lot of people, you know, a lot of our listeners, the land thing is brand new to them, they’ve never heard of that before and they don’t invest in land right now so let’s go to something that applies to every single person probably and that’s marketing.
Seth: Sure.
Brandon: Because you do a lot of advice in the forums about marketing so I guess why don’t we start with direct mail a little bit. You said you do that.
Seth: Yes.
Brandon: Do you want to just explain kind of what you do for direct mail right now and what’s working for you?
Seth: Sure, well, really with direct mail, there’s a number of places that you can put your list from when you’re mailing to these people. The two sources that I’ve used the most, first one is actually calling accounting and getting that list directly from them and the nice thing about that is that the information is as current as it’s ever going to get. As far as delinquent tax information, that’s, you really need that to be current. Like if it’s more than a couple of weeks old, you’re probably going to get in trouble because you’re going to send mail to people who don’t have delinquent taxes and you know, you just don’t want to do that so getting the direct from the county is great, but it’s kind of expensive.
Josh: You’re calling the assessors office, yes, is that?
Seth: Usually it is the treasure or tax collector or treasure depending on what state you’re in.
Josh: Okay, you’ll call them literally say, “Hey, I’m interested getting a list of delinquent folks in your county.”
Seth: Yes.
Josh: You know, get a hit—you know, because what I think a lot of people are afraid of is, they start getting a hundred questions. “Why do you want that? What are you going to do with it?”
Seth: Yes.
Josh: Presumably, there’s no questions asked really right?
Seth: Well, it’s—that’s a good question. It’s kind of—usually when you call these people, you know the treasurers or the tax collectors, I don’t think I’ve ever had it where I’ve called them and the first person I talked to knew what I was talking about. Usually, they got to pass me off to somebody else and then somebody else and, I mean, it’s almost like they don’t even understand their own system.
Josh: Nice.
Seth: I really have to explain exactly what I want. I don’t want the properties that are going to tax sale. That’s not what I’m looking for. I’m looking for the people who currently are delinquent on their taxes, but they still own the property.
Josh: Yes.
Seth: That kind of thing and I mean, regardless of what they tell you, everybody has this list because they have to monitor the taxes in some way shape or form so they all have the information. It’s just a matter of how easily they’re going to give it to you and what they’re going to charge you to do it. Usually, I think like the cheapest I’ve ever seen a list was like a penny per partial and the most expensive I’ve ever seen was like a buck 50 per partial so I mean.
Brandon: Whoa.
Seth: You could, I mean, I’ve never, if a list costs more than like $500 bucks, I don’t. I’m just like forget it. I’m going to some other county, but usually, you know, the few hundred-dollar range is kind of the sweet spot.
Josh: Got it. No that’s great so the first way is directly through calling the county and the second is through.
Seth: Yes.
Josh: One of these lists companies right?
Seth: Yes.
Josh: Like ListSource is that what you were?
Seth: No, the one that I use is called Agent Pro 247.
Josh: Okay.
Seth: It’s a—I was actually just doing some research on that earlier this morning. I’m trying to figure out what the differences are between that and list source because I know that’s a hugely popular one.
Josh: Yes.
Seth: Really as far as what I can see, I’m pretty sure they both pulled their data from the same places. It’s about as recent. ListSource appears to be a little bit more user friendly and you can buy stuff on a per lead basis if you want to. AgentPro is significantly less expensive. It’s set up more as like a subscription type service.
Josh: Got you.
Seth: I pay $18 bucks a month for it. It’s, you know, they basically—I think with that, you can get like 2,000 leads a month, which is more than enough for what I need.
Josh: Yes.
Brandon: Yes.
Seth: Not only can you pull lists, but it’s also great for property research so if you just give any partial anywhere in the country, I can go and find out pretty much everything I’m going to need to know about that in order to make an educated buying decision. It’s kind of a 1-2 punch where it’s not only for pulling lists, but also for property research.
Brandon: Yes.
Josh: Now you said Agent Pro is significantly less expensive? How does ListSource fair in terms of pricing on their data.
Brandon: Yes.
Josh: Or at least in your research.
Seth: Yes, I was just talking with somebody at ListSources more and they were telling me that their monthly subscription I think is $300 bucks a month. That allows you to pull up to 5,000 leads or if you wanted to buy them on a per lead basis. I believe it is 80 cents per lead so even if I want a list of a thousand people, that’s $80 bucks right there.
Josh: Yes.
Seth: We’re talking pretty significant price difference and you’ve got the ability to do all the research and all of that so.
Josh: Yes, interesting. We’ll put links to both in the show notes.
Seth: Sure.
Josh: Anybody can check them out and it’s BiggerPockets.com/Show39. Alright, so let’s get into a little more specifics into the direct mail stuff. You’ve got this list right? You’ve gone out. You’ve acquired a list of a thousand, a couple hundred, whatever you’ve got.
Seth: Yes.
Josh: What do you do then presumably you can send mail to them. Are you doing it by hand? Are you paying a service? What kind messaging? What kind of actual mail are you sending? Yellow letters or postcards or? Fill us in on the details.
Seth: Sure. Yes, I’ve actually, just being in the BiggerPockets forum and just hearing different ideas and philosophies in how people handle direct mail, I was kind of surprised to see people do it differently than I do. What I do, I don’t do repetition. I hit everybody once and that’s it. If they don’t call me back, I’m done with them. The reason for that is.
Josh: You’re dead to me. Exactly. You’re not listening to Sharon Vornholt’s advice now are you?
Seth: No, I’ve actually—I think everybody I’ve really heard has said the repetition is what you’re supposed to do and you know I mean that’s maybe that makes sense for what they’re doing. When it comes to delinquent taxes, it’s a problem that’s not going to be around forever. Either they’re going to pay their taxes off or they’re going to loose their property and you know, repetition just doesn’t make sense.
Josh: Really quick, what’s the time frame? Right so I get a notice that, you know, I haven’t paid my taxes.
Seth: Yes.
Josh: How long can parcel have delinquent taxes?
Seth: Yes.
Josh: How quickly do they like deal with it?
Seth: That depends what state you’re in. I know in Michigan, it’s two years. I think I want to say, don’t quote me on this. I think in California it’s five years or something like that so you just kind of have to know your state’s laws and where you’re working. Also in Michigan, I want to say the date at which properties are seized after two years is on like March 31st every year.
Josh: Yes.
Seth: It also helps to know that because if you send something out on say January 1, people are going to have a little bit more desperation if they understand the situation or you can at least say, look man, you’ve got four weeks to pay this off or you’re done.
Josh: Yes.
Seth: What’s it going to be? That kind of thing.
Josh: Yes, that seems like a great strategy.
Seth: Yes, absolutely.
Josh: With two and five years.
Seth: Yes.
Josh: You know, I mean, that—you know, let me call you out here man, yes, that gives you some time to send more than one mailer right? I mean, come on now.
Seth: It does.
Josh: Alright.
Seth: Really, I mean I know when I’m—the sweet spot for me that I’ve found, usually sending them out when people have two years of delinquent taxes and they’re about to get permanently foreclosed on has been the time that works best for me. At times, if you wait too long, it can kind of kill a deal because I mean it depends on the county and the certain situation that’s going on, but I mean, usually these taxes, once they become delinquent, they start multiplying because the county starts adding all these fees to the mix because you’re late.
Josh: Oh.
Seth: I mean, I’ve seen some ridiculous tax bills where it’s like, dude, this makes it not worth it by a long stretch because paying off your taxes is going to totally eat up all of my potential profit on this deal. If you wait too long, like say, in California, if you waited four years or something, you could have no hope.
Josh: Yes.
Seth: It’s kind of a matter of just keeping that piece of it in mind as well.
Josh: Do you find out how delinquent a property actually is?
Seth: Yes, usually when I’m sending out the offer, before I send it I’ll actually call the county and talk to the treasurer and say, “Hey, here’s the parcel number, can you tell me if I wanted to pay these taxes off this month, what would the balance be?” They’d tell me the number and I just sort of insert that into my offer so they’re aware not only are you getting this cash, but your taxes of this amount are also being paid off. That kind of thing.
Brandon: That’s great.
Josh: Do they care who pays it off? I mean or?
Seth: I see what you’re saying do they care if I pay it off?
Josh: Yes.
Seth: No, they don’t care at all. That’s just if somebody gives them the money. They’re good.
Josh: Got it.
Brandon: Are you sending postcards then or yellow letters or?
Seth: Yes, I am sending yellow postcards that are sized 4.25 by six and usually they’re double sided. I’ve found about an equal success rate with both single sided and double sided.
Brandon: Okay.
Seth: The reason I do postcards is because couple reasons, first of all, they’re a lot cheaper. When you’re talking about sending out thousands of pieces of mail, I mean, it’s about, maybe a little bit less than half the price of doing a full letter. That’s a pretty big deal and then also, with the postcard, I mean, again a lot of it has to do with the message you’re putting on that and how persuasive you’re being and what kind of attention you’re able to grab from people. I’ve done a lot of experimenting with that over the years. It’s kind of fun, but with a postcard, a person literally has to look at your message before they throw it away. With a letter, I don’t know about you guys, but I mean I get stuff and I just know it’s junk mail and I don’t even look at it. I just chuck it.
Josh: Yes.
Seth: Those are the two main reasons why I do postcards.
Brandon: Yes.
Josh: That makes sense. Do you do any kind of like spud testing or tweaking your message. I’m assuming you do some of that.
Seth: Yes, I—I mean in the past I have tried letters and I’ve tried, you know, a lot of things like, you know, printing them off on my own computer and using the handwriting font and all that stuff. I mean I don’t know that I have done enough to really know definitively, but I honestly didn’t see really any difference in my response rate. It was more about the situation these recipients were in and the solution that I was proposing to them versus, you know, the type of card stock I was using or something like that, so.
Josh: Got you.
Brandon: What kind of conversion rates are those?
Josh: That was my question.
Seth: Yes, it varies, like, I know, I mean from most generic, direct mail marketers out there who are selling who knows what, response rates are just pretty terrible in general. I mean it’s obviously worth enough for them to do it, but it’s not great. Usually my response rate, the lowest I think I’ve ever seen is like four or five percent. The highest I’ve ever seen it is probably like 18%.
Brandon: Wow.
Seth: It—again, it’s really. It’s tough for me to tell you specifically why that happens. Sometimes it’s just luck. Sometimes it’s what you’re saying on your postcards. Sometimes it’s the information you’re working with. It could be timing. It’s just who knows, but.
Brandon: Are you printing those—you said you experimented with different things.
Seth: Yes.
Brandon: Are you ordering the postcards from a company out there or are you making them on your printer now.
Seth: Yes, pretty much for almost all of my mailings, I’ve done it through Click2Mail.
Brandon: Okay.
Seth: I tried doing some stuff at home just to try some experimentation stuff, but for all intents and purposes, Click2Mail is like my go to spot.
Josh: Got you.
Brandon: If anybody wants to, we’re going to have a link to that in the show notes, but we do have an affiliate relationship with them so if you order through Click2Mail, and you go through our link, you help out the BiggerPockets podcast so do it.
Seth: Yes, definitely.
Josh: Yes, there you go, that’s awesome. Cool, so we’ve got your conversion rates. We know that you’re sending these letters, you’re getting hit back by these folks, you know, a lot of our investors who do direct marketing to folks in distressed situations find themselves on the other end of a phone call of somebody who’s pretty pissed off, you know, whether it’s you’re going to lose your house to foreclosure, divorce, whatever it is, is that something that you deal with? Do you deal with you know, the real angry folks or is that not really an issue, people are like, “Yes, I’ve given up hope. Help me out here.”
Seth: Yes, no that’s a—I have learned that that’s one of the fun parts of the business that I get to laugh at because the first time—like I got angry voicemail I got it back from somebody, I was like oh man, my feelings are hurt, you know, it kind of hurts my heart that they’re so mad at me. I mean, it’s not awesome, I’ll say that, but when it does happen, I’ve gotten some really funny letters back from people. You know, one time a guy tore up my offer sheet and put it in an envelope and mailed it back to me. I’ve had people send me letters just saying your offer was hilarious. I’m saving it to show people I know. You know, whenever I get those voicemails where somebody is cussing me out, I actually have a folder on my computer where I save them all so when I want a good laugh, I can go back and listen to them.
Josh: Alright, why don’t we play some of those for listeners.
Seth: Yes, I’ll upload the file, have a link to it.
Josh: Put it next to your animated GIF collection.
Seth: There you go. Thanks, but yes, I mean really, I mean to me, in a really strange way it’s telling me that I’m doing something right because I want every offer I send out to just be laughable. I mean something where I am embarrassed at how low it is because that’s how I know, or one of the ways that I know that if this person says yes, there’s going to be a celebration in my house. It’s going to be a good day. I don’t want to be sending some, you know, offer I’m not really sure about or if somebody accepts it, I’m like oh shoot, I don’t know if that’s really the best thing for me to do, you know so I, when I get those kind of responses I’m like, “It’s okay, no problem.”
Josh: What do you do? I mean, let’s get into some of the philosophy here a little bit on this because you know, that is something that a lot of investors do and you know, I’d say most investors that are, you know, that do particularly well tend to have that as a philosophy, “I’m going to send embarrassing offers out.”
Seth: Yes.
Josh: You know, one of the challenges is, you know, as a group, that is one of those things does give us all a bad name, right? You know, “Hey, these guys are trying to lowball me.” I like to wonder and think if there were better offers, they would take them, right?
Seth: Yes.
Josh: Ultimately, given the situation, given the timing, and given the price, you’re bailing them out, right? You’re helping them. You know, granted you’re not giving them, you know, you’re not making them rich getting them out of there, but you’re getting them out with something instead of nothing. What’s your take on it because you know, sure, you’re giving an embarrassing laughable offer, but in the end you’re still kind of saving their back sides aren’t you?
Seth: Yes, no, that’s a good ethical question, I guess. I think it kind of comes down to what you said where, yes, I mean, it’s a free market society and if somebody wants to work hard to find a buyer like I do for all my properties then you know what, you might be able to sell for market value or just below it. Everybody has the ability to do that. It’s funny because for example, on one of my websites, where people submit offers to me, I laugh every time because they send me these things and they indicate, “You know, I’m just desperate, I need this thing sold yesterday, please buy my property.” One questions on there is “Is this property currently listed with a realtor?” The answer is always, no. It’s like dude like, just try a little bit. I mean you might be surprised.
Josh: Yes.
Seth: I mean, essentially, I don’t know if it’s laziness or just apathy or what, but and again, I don’t want to group everybody into any particular category.
Josh: No, no.
Seth: I mean, for whatever reason, I mean they don’t care enough to accept my offer and you know, that’s really what I’m looking for, is people who are in that boat and willing to play that game.
Josh: Yes, yes. Well so speaking about the website, you know, you blog on BiggerPockets, you’ve got your own blog, you’re active on social media, let’s talk about internet marketing for leads. What are you doing to use the internet beyond just obviously, hanging out on BP and finding people. I’m assuming you probably aren’t doing deals with BP guys, but you know, maybe just using the site for strategies. You know, how’s the blogging working to build the biz, what are you lead sites kind of look like. It sounds like you’ve got a couple of them and so what’s your take on that.
Seth: Yes, well, my purpose for blogging, is actually, doesn’t have a lot to do with the land acquisition business. It’s really more, you know, I have learned a lot of lessons, sometimes the hard way, sometimes you just sort of learn things from doing them. It’s just good stuff that’s helped me out a lot and it’s like you know, why not just put it out there and if it helps somebody else, great. That’s, I’ve really enjoyed it a lot because one of my favorite things is just seeing the interaction that comes from people when I put something out to there that really just like man, that totally answered my question.
It’s—I kind of do it for you know, I guess partial enjoyment, partially just to set up just a different string of income which it’s just kind of a side thing that I do. As far the actual lead generation website, it’s really a stand alone very, very simple website. I think it consists of like four different pages. One of which is just a form where people can fill out all the information about the property and yes, it’s—I’d say on average I probably get, I don’t know, a submission everyday or every other day on that. When you consider the fact that what I would have to pay with direct mail to get those and the fact that they’re just coming in for free, it’s like that’s worth something. I’ll definitely look at those and send out offers whenever I can.
Josh: How are you driving traffic to that side? Is that all organic search engine optimization or are you actually pointing links there or doing Craigslist stuff.
Seth: Yes.
Josh: What do you do?
Seth: Yes, I tried the Craigslist thing for a little bit. It didn’t really work that well. Really, the primary way that I’ve gotten traffic there is just SEO. I found somebody on Elance and paid him, I think it was like $600 bucks to really just go to work for a few months for me and just do some of their work and it works. It’s—depending on what you’re searching for, I’ll show up on number two or three or sometimes even number one on Google and it just targets those particular people pretty well.
Josh: Come on tell us what you’re targeting. Come on.
Seth: I don’t want to do that Josh. I don’t want to create competition for myself.
Josh: Yes, you’re like, come on man, you got no competition to start with. You know, up your game baby. Come on.
Seth: Well.
Brandon: These people, they’re actually searching Google for like sell vacant land or something like that?
Josh: He’s not going to tell you, Brandon.
Seth: I don’t know Brandon. I don’t know what they’re searching.
Brandon: I know, I’m hinting
Josh: Although, nobody really knows anymore at least through Google because Google doesn’t really share what people are searching for anymore.
Brandon: Yes, that makes things tougher.
Seth: Oh, yes. Yes, it’s, I mean, really whatever your business is.
Josh: Yes.
Seth: I mean, it’s you know, you guys probably already know, it’s just buy houses, you know, Denver or wherever you live. That kind of thing, or I’m sorry, sell houses fast Denver or that kind of thing, so anybody can do it. It’s just a matter of having the patience and being willing to invest that kind of money for the SEO work so.
Brandon: Are you doing any pay per click advertising? Google or Facebook?
Seth: Nope, no I’m not.
Brandon: Okay, would you at all? I mean, have you considered that?
Seth: You know I’m not against it. It’s a realm that’s I know a little bit about, but I don’t consider myself to be an expert there so I’m a little hesitant to jump into that in a big way. Maybe at some point I’ll go down that road.
Brandon: Yes, we’ve had a couple of guests on the show who’ve said that that’s one of their main drivers of traffic now so. I don’t do a lot of it. I’ve done very very little back one year ago, but it’s definitely an avenue I want to look more into so.
Seth: Sure, yes.
Josh: Nice. Alright, so we’ve got blogging, you’ve got the SEO, you’re not doing pay per click, your site is driving traffic. Do you have multiple—you said you’ve got your blog and then you’ve got your whatever that vacant land lead magnet site.
Seth: Sure.
Josh: Is it “We buy vacant land in Michigan?” Is that what you’re targeting?
Seth: No. I’m not sure where you got that name from?
Josh: Oh okay, alright. Do you have other—I mean are there multiple sites for multiple keywords?
Seth: Yes, it’s—I’ve got, I want to say four different websites. One of them is my selling website. Then the other one is my buying one or the one where I accept submissions from people and these two do not reference each other at all.
Josh: Got you.
Seth: The reason for that is I don’t want people submitting their property and then I buy it for a hundred bucks and then they see that I’m listing it for five million dollars the next week and selling it so.
Josh: Yes.
Seth: Yes, and then I’ve got a squeeze page and then the blog.
Josh: What’s a squeeze page?
Seth: A squeeze page, in most cases is just a one page website and the only purpose of it is to collect somebody’s information so that you can solicit them in the future.
Josh: Yes.
Seth: The purpose for mine is create a buyer’s list, so.
Josh: Got it. You know, I’m always this skeptic, you know, if I ever end up on a page and it’s like a squeeze page, collect my information to do something, I’m gone.
Seth: Yes, no, I am too.
Josh: In six seconds you know, but it works. I mean people, some people will do it and it’s an effective technique so.
Seth: There’s really there’s an art to it. I mean, I think most people are not good at doing what you need to do to get the leads, but you know, there are definitely ways to catch people’s attention and kind of keep them on the line and that kind of thing, so.
Josh: Yes, yes, awesome. Alright, so tell us, kind of overall what, you know, what’s the good, the bad, and the ugly about what you do. Right? You know, what are the highs, the lows, the positives, the negatives, just you know, kind of throw that here.
Seth: Yes, well I’d say probably the good with the land in particular in that it’s low maintenance. There’s very little you have to worry about. I mean, you can buy a piece of land and then forget about it for five years and nothing will be any different. I mean it’s just dirt, you know so from that standpoint, I mean, if you’re looking for something that’s just low stress, excuse me, something that is inexpensive to get into, it’s not going to require mortgage payments, that kind of thing. That’s why I think land is just awesome. It’s a great way to get into real estate. The bad, I guess would be, land requires quite a bit of due diligence before you purchase it. A lot of times if the property is vacant, there’s usually a reason behind that, either, you know, you literally can’t build anything on it because the zoning is messed up. It doesn’t perc or you know, there’s a slew of different issues that can prohibit somebody from building on it.
Josh: What’s perc really quick? Sorry.
Seth: Oh, sure. It stands for percolation and that’s basically, when you drop water on the soil, how fast it drains away and the reason that’s important is because land has to perc if you want to put in a septic thank, which a lot of times out in the sticks, that’s only way to handle sewers of any kind.
Josh: Yes.
Seth: If it doesn’t perc, then you really can’t build a house there because you can’t put a septic tank there, so.
Josh: Got it.
Seth: That’s just an example and it is very easy to buy land, especially when it’s this cheap without really thinking things through and really doing your research. You know, I’ve made that mistake on a couple of occasions. I’ve never gotten burned really badly by it, but I mean it’s definitely possible to you know, walk half heartedly into a decision and end up with a property you can really sell very easily because it’s not that useful to people.
Josh: Yes, yes, I’ve—you know it’s funny. Land investing is one of those things that I kind of dream about and I have for a long time. I know when I used to live in LA, I would do the LA-Vegas drive.
Seth: Oh yes.
Josh: All the time and you’ll always see plots that are in the middle of the dessert that are for sale and I’m like, man, you know at some point that, that quarter is going to fill in, you know. You’re like well, this is a place, you know, I may have to hold it for a long time.
Seth: Yes.
Josh: This is a good opportunity if the quarter fills in. Denver, Boulder is the same thing. You know, I’ve been here for seven years and now it’s really, really filling in and I kind of kick myself. I’m like, you know, maybe I should have stepped out and looked at some of those plots that were available because you know, it’s worth much much more money today that it was.
Seth: Yes.
Josh: You know, when I first looked at it and everything is kind of developing around it so I think on the vacant land side, you know that’s, that’s it’s kind of a—I guess it is still kind of a gamble right? You’re speculating for sure.
Seth: Yes, I mean, there are definitely ways, it’s referred to as land banking where you basically buy land with the assumption that over time it’s going to go up in value. There are ways to kind figure out which direction growth is going in, but I mean, I think you’re right. Nobody knows the future and you know, nobody knew that 2008 and 2009 were going to happen where everything just stopped. I mean, there’s always those mysterious things that can happen. I know like just for example, I think John Jacob Astor who’s like with the fourth.
Josh: With the [Inaudible][51:19].
Seth: Yes, he’s like the fourth richest person in American history. The way that he did it was he bought up all the land that now know of as Manhattan and he just bought that when nobody else saw the opportunity and he made a ton of money.
Josh: Yes.
Seth: Tens of billions of dollars in today’s currency so yeah.
Josh: Got you, so in terms of you know, eliminating the speculation, you do that in the same way that you would with a buy and hold. You buy it with a significant discount and you sell it?
Seth: Yes.
Josh: You’re not sitting there and holding based upon the appreciation, but I suppose if you can get one of those properties at a discount to land bank it. I mean that’s kind of the best of all worlds isn’t it?
Seth: Yes. I think with the land banking, the thing to keep in mind is what you’re costs are going to be over how ever many years you’re going to hold that.
Josh: Right.
Seth: The nice thing is with land, there’s generally not much cost, but there are property taxes and a lot of times property taxes on land is very, very low, but there can be, you know, odd ball situations where the local township is charging some weird assessment each month and it really brings the cost up, so. It’s just a matter of understanding, what are my property taxes going to be over the next ten, or 20, or 30 years and you know, if it makes sense and the math works then go for it.
Brandon: Cool, alright, well, I’m wondering, what’s an example of a good deal. Somebody can do with like—what’s a success story that you’ve had, I guess. What’s your best deal or best story?
Seth: Sure, well the best deal I’ve to date, it was a couple years ago. I sent out a direct mail campaign in northern Michigan and I was able to buy a 12 acre parcel of land right on Lake Huron about, I don’t know, five or six miles away from Mackinac Bridge really really nice area. When I got this call from this lady, she was just explaining it to me and I’m like, “Wow, this is a sweet property.” My assumption is that the market value at that time was probably around like, you know, $300, $400, $500,000, like a lot of money for this thing and at that point I didn’t have a lot cash available to me and I was like, “You know, whatever. What can happen? I’ll just send her and offer.” I sent her an offer for about $4,500 and she accepted. I bought this thing and I listed it.
Josh: 12 acres? On the lake?
Seth: Yes, exactly, and there was a little of an issue with it because like a lot of this land was not buildable because it was right on the lake. The army corps of engineers has to approve it in order for you to be able to build there.
Josh: Okay.
Seth: There was just kind of a small section on it where it did perc and you could build a house. It was buildable, but not in the most optimal place on the property, but anyway, I got this thing and listed it for $45,000 and sold it within a couple of months and just like that, I made more money from that than I did the entire year from my day job at the time so.
Brandon: That’s awesome.
Josh: Nice.
Seth: Yes, it was a great deal.
Josh: Yes, that’s great.
Brandon: Congrats.
Josh: That’s awesome so what about the worst mistake you’ve made. What was the biggest flub that you did and what would you do differently to avoid such a thing?
Seth: Yes, I mean, when I first was trying to do this. I was just excited to get going. I bought anything that anybody would accept. I mean just was like hey I’m going to just spew offers out to people and if they accept, well, we’re doing it. I just kind of figured because I’m getting it so cheap I can’t wrong, but I ended up buying a really odd property. It was this little triangle. It was probably like, I don’t know 30 feet long. I mean you literally couldn’t do anything with it. It was pointless piece of land and I bought the thing and I just wasn’t really thinking about it and I wasn’t thinking things through and I was stuck with it. Basically, what I ended up doing. I only paid $300 bucks for it, but I ended up just literally giving it to the person who lived right next door to it. They just added it onto their property for free.
Josh: Nice.
Seth: It was just an example of my lack of foresight and willing to do research and all this stuff. I guess foolishness for a lack of a better word. It cost me, so.
Josh: Fantastic. Really quickly, before we move to the next section here, what are some of the biggest misconceptions out there about what you do?
Seth: Yes, I think the biggest misconceptions would be, people just hear the word land and they think it’s boring. They think it doesn’t cash flow. They just don’t understand. They think it’s for hunters and farmers, but not people who actually want to make money. That’s just—it’s not true. I’ve found that to be just a huge oversight. There’s tons of opportunities especially for people who don’t have gobs of money at their disposal. To get into these properties for really cheap and the risk is, I don’t want to say it’s zero because it’s not, but I mean it’s about as close as zero as you can get when it comes to property ownership. You know, the whole seller-financing piece of it and there’s just for a lot of reasons, it makes a lot of sense and a lot of people don’t get that and you know, I’m not really going to complain because they’re just not my competition as a result.
Josh: Yes, yes and so. We didn’t really dig in on the seller financing side, but I’ll just ask the one quick time the—are you always holding the note on the seller finance? Are you always seller financing? Or are you—it sounds like you’re also just flipping some of the properties as well, yes.
Seth: Yes, it really depends on what my cash situation is at that point in time.
Josh: Okay.
Seth: If I don’t need the cash then absolutely I’ll seller finance it because I can make a lot more money in the long run and I’ll have passive income and all this so yes.
Brandon: Very cool. Well, before we go to the final sections here, do you do any other kind of investing? Are you a landlord at all?
Seth: Yes, I actually, I bought a duplex a couple of years ago and that’s kind of the direction I intend to go. I was using some of the cash that the land throws off to buy, you know, more multi-family rental properties. Yes, it’s been good. I mean I’d say the first year or so after I bought it. It didn’t really generate much because it was—you know it was a 100 year old property and just a lot of sins of the prior owner that I had to pay for, but yes, I mean it’s pretty much up to speed now and it’s throwing off money every month so. Yes, it’s been going good so I plan to keep doing it.
Josh: Was that a tax distress property as well?
Seth: No, no actually just one of the realtors I knew, he just. He knew I was in the market for that and he brought it to me before it went for sale and you know, things were still pretty slow at that point so I was able to get pretty good deal on it.
Josh: Fantastic.
Brandon: Do you manage it yourself then?
Seth: Nope. I went into it with the intention of being completely hands off so I have property managers doing everything.
Brandon: You know, that’s one I wrote in an article today about that how even if you plan on managing yourself, always plan on not managing yourself.
Seth: Yes.
Brandon: Otherwise you get to a point where you get too many properties, your life gets to busy or you get sick or whatever and all of the sudden.
Seth: Yes.
Brandon: Then your cash flow positive properties is now a cash flow of negative because you didn’t plan for that.
Seth: Yes and I, I mean, we’ve all. We all know the horror stories of you know management of property. I mean, I was definitely not blind to that and I just knew—I mean if I had to manage the thing myself, it would be a huge obstacle to me doing a lot of other things that intend to do with my life so and I know it’s you know, there are times when it’s, you know, not that difficult and not. It doesn’t require much and other times where it takes a lot, but I just wanted to take that out of my mind and give it to somebody else that knew what they were doing.
Josh: Nice, no that’s awesome.
Brandon: Smart.
Josh: Cool, well listen, moving forward, what do you think Brandon? I think it’s time what do you?
Brandon: I also think it’s time for our.
Josh: It’s time.
Fire Round Announcer: It’s time for the Fire Round.
Brandon: Wow, alright. I love Fiverr. You know, we made that on Fiverr.
Seth: Awesome.
Brandon: Anyway, let’s jump into the Fire Round. These are all questions that come from the forums. You have no idea what’s coming so we’re just going to fire them at you and share what you have to say.
Seth: Sure.
Brandon: Alright, number one, driving around, you’re just driving around, you see a vacant lot, do you pursue it or do you just stick to direct mail?
Seth: If I just like see a random vacant lot? No, I probably wouldn’t do anything about it.
Brandon: Okay.
Josh: There you go, alright. Yes, it’s that what you wanted Brandon? Is that the answer you were looking?
Brandon: I’m just curious. Yes, I’m curious.
Seth: I mean really what I’m after is properties that have a lot of equity as far as like the beauty of the property or you know, all of that stuff. I mean, there’s really, there’s not a lot of emotion involved with what I do. It’s just the numbers make sense. Is the value there and you know, I spend my efforts pursuing that specific kind of thing so.
Josh: He wants property that has green in it, Brandon.
Seth: There you go, exactly.
Brandon: Get it.
Josh: Alright, how much do you—how much does somebody start with budget-wise for direct mail? What would you say?
Seth: Well, I know when I started this, I had about $3,000 bucks to my name so I mean, that was enough to get me through it. I think you could probably do it with less, but I mean my typical direct mail campaign is usually a few hundred bucks at least and of course that’s with no guarantee of anything. Just go into it realizing that that’s a possibility. Not a very likely possibility, but it could happen. Yes, so I’d say if you’ve got enough to do that and then you know, a thousand, $2,000 to buy some of those really entry level low end properties. That would probably be enough to get you started.
Brandon: Yes, that’s always my fear with direct mail is let’s say you’ve got $10,000 to work with and you send out a thousand dollars a month in direct mail. Yes, you’ll probably get a deal in the first ten months, but what if you don’t?
Seth: Yes.
Brandon: Then you’re out of money. I mean that’s the fear that people—you have to get over or you have to get more money.
Josh: It may happen.
Brandon: It may happen.
Josh: There is a chance that that’ll happen.
Seth: Yes, no I.
Josh: Go ahead. I’m sorry go ahead.
Seth: Well, I was just going to say, that’s I felt that same way. I think probably the reason I was able to, you know, get okay with it was cause the course that I learned it from, I mean, this guy had been doing it for a lot of years and I mean, it was very specific about exactly who you need to target and all of that. I just—I mean having that much clear direction, it was like okay, well, there’s something to this. I mean it’s not just me wildly throwing money at stuff and hoping things are going to happen so.
Brandon: Yes, and that’s the benefit from learning from people who have done it before and not just, you know, trying to figure everything out on your own. Again, that’s why BiggerPockets is so cool so.
Seth: Sure.
Brandon: Alright, let’s move on to the next question, which is if, this is actually my question from the forums. You call someone—somebody calls you from a letter your send out and then you offer to them. They reject your offer, do you follow up with them then? I mean, like, they’ll say you’re close. I mean like, you just can’t quite come terms.
Seth: Yes.
Brandon: Do you keep following up?
Seth: Yes, it kind of depends on the property and how much of a chance I think there is of working with this person. Often times, I have followed up. I have a one-page letter that I send to people which basically just keeps the lines of communication open. It’s telling them, “Look, I mean, clearly something about our offer wasn’t acceptable to you and that’s totally fine. It doesn’t hurt my feelings, but I’m giving you few options here. You can just tell me, I mean, I guess, why exactly didn’t you accept it? What I do is I have a little line where they can say I will accept blank for my offer and that’s my—or for my property and that’s my rock bottom price. Another box says, “I don’t want to sell anymore, stop sending mail to me.” That kind of thing.
Josh: Yes.
Seth: Basically, just it gives some sort of opportunity for us to keep in contact. I’d say maybe, 10%, 20% of the time that, you know, results in a deal getting done, as opposed to just being done and not talking to them anymore so yes, it’s worth doing.
Josh: Yes, yes, for sure. Alright, vacant land that once had a gas station on it. Do you pursue?
Seth: Well, I guess it, I mean the straight answer is no. I would not, but that kind of depends on you know, I guess what your intent is with the property. I know environmental laws are kind of a big deal to follow because if you end up buying a property that’s contaminated and then you can’t prove that it’s not your fault that it’s contaminated, you could have a huge liability on your hands. For that reason, I mean, it’s just not how my business model works so I wouldn’t, but that’s not to say it’s not worth doing depending on what your goals is.
Josh: What you’re trying to say is like you know, you find a plot of land that has like toxic waste on it, you’re not going to buy it. Is that what you’re saying?
Seth: Personally, I would not.
Josh: No.
Seth: If you want to, I mean. It’s your thing.
Josh: Nice, that’s awesome. Cool alright, so why don’t we run into our famous four here and wrap it up.
Brandon: Let’s do it.
Josh: First question of the Famous Four.
Brandon: Famous Four.
Josh: That wasn’t very melodic.
Brandon: Nope. We’ll get a Fiverr gig for that one too.
Josh: Yes, we will. Alright, Famous Four, first question, what is your favorite real estate book?
Seth: Not Rich Dad, Poor Dad. You like that?
Brandon: Wow! You’re the first one. It’s a great book, but I’d say—I was just actually looking at my bookshelf this morning in anticipation of this question.
Josh: Nice.
Seth: Yes, I think and I know Brandon, you ‘ve read it and you’ve talked about it a lot. It’s the ABCs of Real Estate Investing by Ken McElroy.
Brandon: Yes.
Seth: It’s a great book. It’s been a couple years since I’ve been through it, but it really just opened my eyes to a totally different way of looking at real estate so I thought it was awesome.
Brandon: Hey, if anybody knows Ken, you should tell him to get in touch with me. We want to have him on the show so.
Seth: Sure. I’ve actually emailed with him back and forth.
Brandon: Nice.
Seth: I’m kind of an acquaintance I guess, but I can.
Brandon: Yes. Hook us up.
Seth: I can send him an email on your behalf. Yes.
Brandon: Hook us up. Alright, next up. Favorite business book non-real estate?
Seth: Yes, I’d say probably one that I was reading a couple years ago. It was called Necessary Endings by a guy named Henry Cloud and the purpose of that book or the idea behind it is for people like both of you guys and myself where we just have tons of stuff going on in our lives just like millions of things pulling us in different directions for our attention, our time, how do you figure out what to get out of your life? How do you say no to things? How do you—one of the illustrations he has in that book is your life is kind of like a bush or a tree that’s growing and to keep anything like that healthy, you have to prune it. I mean things have to be cut out of it. You can’t say yes to everything. It’s about just, you know, strategically picking the right things and making your life grow in the way that you want it to go so it was a big eye opening book for me.
Josh: That’s great. I do that without reading that book. My philosophy is kind of I’m going to work with who I want to work with, you know. It’s like I want to work with people who are nice and who are fun to be around and you know, I don’t care how big or bad your company is and how much money you’re going to make me if it’s going to be a head ache to work with you, I’m not going to work with you.
Brandon: That’s why you don’t return my phone calls Josh.
Josh: You’re just a headache to just begin with, but you know, I love you Brandon.
Brandon: Thanks.
Josh: You know, but anyway, yes. I think you know that’s great. That seems like a cool book to check out and help folks refine I guess their philosophies on what’s going to work best for them.
Seth: Sure.
Josh: That’s awesome. How about hobbies? What do you do for fun?
Seth: Yes, I guess just in the past year or so, the things that I’ve been spending a lot of time on. I got the blogs. I spend a lot of time on that. That’s been a lot of fun. There’s a really cool website that I found called Learning DSLR Video and it’s about this guy who basically just makes videos using his DSLR camera.
Brandon: Ooh, I’ll have to check that out.
Seth: This stuff is amazing quality. I mean this guy does an awesome job and I just literally following his direction, I got a lot of the same equipment that he has and uses. Learned some really cool tricks about how to make video that really rises above what a lot of other people are posting on Youtube.
Brandon: You do have good videos. I’ve always been impressed.
Seth: Yes, thank you.
Brandon: What camera do you have?
Seth: I use the Cannon T3i.
Brandon: I have the same one. Nice.
Seth: Oh yes, cool. Yes man, you can start doing it today if you want.
Josh: The guy who runs that site, his name is Dave. He’s actually a friend of mine out here.
Seth: Are you serious?
Josh: Yes.
Seth: No way.
Josh: He’s a super super cool dude.
Seth: That’s awesome.
Josh: Yes, Dave Dugdale he’s got a.
Seth: Where did you meet him? Like what’s the connection?
Josh: He had a rental site called RentVine I think or is called and we just connected. He’s awesome. His photography is amazing. His videos incredible. He’s one of the coolest guys so if ever you just want to link up with him, hit him up. He’s super super nice.
Seth: I’ve sent him a bunch of emails and he always replies and I mean you can just tell from the videos, he’s very down to earth, nice guy and yes. He’s got an awesome website.
Josh: Yes. That’s great.
Seth: Cool.
Brandon: We will link to that and the books and the show notes at BiggerPockets.com/Show39.
Seth: Sure.
Brandon: Alright, last question of the day. What do you believe sets apart real estate investors who succeed and make actually a go at this, a living at this and those who just come and leave without ever having any kind of impact.
Seth: Yes, no, that’s a great question. I think there is—I have a couple thoughts on that. First would be, the people who really succeed and just knock it out of the park over the long term, the people who I guess figure out what kinds of specific actions result in making money. I mean really, I mean the goal, generally speaking for all investors is to make money and to get financial freedom and to do all that. It’s a matter of just understanding like what do I have to do that’s actually going to result in that. You know, if I waste five hours a day on Facebook, is that going to do it? Or if I go out and send offers to people is that going to do it, you know. A lot of times it’s very easy for people like us to think we’re doing good work by trying to build up our following and all this stuff. You know, that comes into play in some way shape or form, but I mean, that is not the specific actions that I think people should be taking if they really want to start making a lot of money.
Josh: Yes.
Seth: Josh, I heard you say in a—one of the forum posts awhile back, impulsiveness just gets a lot of people, you know, I mean they hear about the next new thing. They start wasting time.
Josh: Shy me. Squirrel.
Seth: Yes, exactly. It’s, I mean I’m guilty of that too. I’ve done that over the past, you know, years of trying to do this. It takes a lot of discipline to just learn what works and just focus on that and become an expert in that and remembering that an expert is somebody who knows more and more about lesson life. It’s not a jack of all trades and somebody who knows how to do everything. It’s just a—I’d say just focus and you know, not getting distracted by the things that waste time and money.
Josh: Great advice for Brandon.
Brandon: I don’t waste money or time. What are you talking about?
Josh: Just mine.
Brandon: Just yours. Speaking of that, I needed that new computer we talked about.
Josh: Oh yes. True story. I got to buy him a new one. He likes to take his laptop and throw it around or something.
Brandon: Apparently.
Josh: Alright, listen, Seth, it’s been awesome. Definitely been a pleasure. I had to say awesome because I don’t think we’ve said it the whole show.
Brandon: Yes, people are laughing right now. We probably said it a hundred times. Anyway.
Josh: Listen, been a pleasure having you on.
Seth: Yes, thanks for having me guys.
Josh: We definitely appreciate it and you know, Seth is blogging for us on BP so definitely check out his posts on the BiggerPockets blog and also check him out on his own site at REtipster.com.
Seth: REtipster.com
Josh: He’s got the radio voice to go with it. Alright Seth, take it easy man.
Seth: Awesome. Thanks guys.
Josh: Good having you.
Seth: Appreciate your time. Yes.
Brandon: Thank you.
Josh: Alright guys, and that was our show with Seth Williams, the REtipster and you definitely should make sure to link up with him on BiggerPockets. Smart and savvy guy who’s more than welcome to share his feedback, advice, tips, so on and so forth via BiggerPockets and he’s all over the web. He’s a funny dude. He likes to share crazy, silly stuff and he really honestly likes helping people out so certainly make sure you follow him.
Brandon: Hey, real quick, today, if you’re listening on Thursday, there’s a post coming out which is my absolute favorite post ever on the BiggerPockets blog and Seth wrote it. It’s 20 GIFS that only BiggerPockets forum members would get so definitely check that out. It’s on the blog today, later today so.
Josh: At BiggerPockets.com/REnewsblog.
Brandon: Yes, so check it out.
Josh: Awesome.
Brandon: Very very very funny. My favorite thing I’ve read in a long time.
Josh: Great, wonderful, alright, and if you are a regular listener, you’ll know that we’re going to tell you to go listen. Check us out on Facebook, Twitter, G+. We’re there, follow us, get involved, connect, and most importantly make sure to join us on BiggerPockets. Create a profile, and don’t just create a profile and disappear guys. I mean there’s really no point in doing that. You might as well not even show up. You know, it’s, you know the value comes from interacting with people. You know certainly BiggerPockets is an awesome place to read, but you know, if you want to get the full power of this community. Get involved, participate, connect, ask questions, answer questions. That’s pretty much what I got for you. We appreciate having you on board. We appreciate having you as a listener. This is me signing off.
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