6 Biggest Mistakes In Land Investing » 1431

Welcome.

This is the real estate investing mastery podcast.

All right, welcome everybody, Joe McCall here.

There's some things I want to talk about because I'm seeing some people, not a lot, but some

people really struggle in this land investment game.

These mistakes I'm going to be talking about for you today are the things that you need

to be focusing on.

You got to understand something here.

We are not in the real estate investing business.

We're not in the land investing business, we're not in the whole selling business.

What are business are we in?

We're in the marketing business.

So mistake number one, stopping your marketing too early.

How many of you, let me ask you, have sent some mail in the past, but you stopped?

Or you made a few calls and you thought, man, this just isn't work.

I want you guys to start thinking of a marketing as an investment instead of an expense.

It makes sense.

I told you before I did 58 deals in a 12 month period, 93% of those deals came from follow

up.

Came from three to four months of marketing.

It came after seven to eight touches.

We just got a call a week ago in one of our markets that we're in from a seller that

kept our letter for three years, three years.

And then she called us and said, hey, I, I decide I want to sell my property now.

Are you still interested?

Do you think that maybe because we're still in the game that we got that call, it came

in.

If we would have quit, it would have been a deal that we lost or she would have never been

able to get us.

Consistency is the most important key in this business.

You've got to be consistently doing the market.

Okay.

You've got to keep the momentum going.

If you're just dabbling, you're like, I'm just going to try this for a month and

see if it works.

And if it doesn't, I'm going to quit and do something else.

Don't even start.

You've got to be committed to do this for at least three to six months of continuous

marketing without stopping consistently, not a 30 day test.

This consistency will compound over time.

Pro is when it gets difficult, professionals will double down and do more marketing, amateurs

will quit.

Mistake number two, being inconsistent with your marketing.

You send mail one month and then you stop the next month and then you do it the next

month after that.

You send it and then you stop.

You make calls for a week and then you stop making any calls.

You're on again, you're off again, it eliminates all of your momentum, kind of related to what

I was talking about before, being consistent without slowing down without stopping.

You need to do what I call setting it and forgetting it.

And sometimes like, it's too much.

You want to do all of this stuff, all this marketing every day, but you're too busy.

Life gets in the way and you just can't do it all yourself.

You need to automate your marketing cadence with virtual assistants or done for you services

or something like that.

And I like to call this marketing done for you and spider.

Now, it can be a software, it can be a mail house.

It could be, you know, you're hiring VA's to do cold calling for you or whatever, but

it's something that consistently is getting done all the time and automation can solve this.

That was Mistake number two, kind of related to number one.

The other big mistake that I see, getting up too early after a no from a seller or after

rejection.

This is huge.

You do the market.

Okay, John, I'm doing the market.

I'm getting the leads.

It's all coming in, but like, I've talked to 20 sellers and they've all said no.

I've made 20 offers and they've all said no.

You cannot give up too early after a no.

No means not yet.

You need to make sure you're following up consistently with these sellers.

I can't tell you how many times I've sent an offer three times to the sellers or more

and they finally call me back and say, yeah, I got your offer.

I said, oh, great.

Did you get the other offers?

I said, no, this is the first time I've gotten your offer.

Well, I don't know what happened.

They made it.

Might have gotten it before.

Maybe they threw it away, but they got that fourth offer that I sent with a third offer

that I sent.

They're finally ready.

They're like, yep, okay.

I'm ready to sell now.

Maybe they just were busy.

Maybe they were traveling.

Something happened and they lost your letter or your offer and now they're finally

ready.

They tried listing it with an agent.

Hasn't sold yet.

He took somebody else's offer who canceled on them or backed out and they're like, this

guy Joe must really want my property because he has followed up.

So I do not treat nose as final.

93% of your deals will come from the follow up.

So continually follow up.

Next big mistake.

Focusing on $5 an hour activity tasks instead of the $500 an hour activities.

People get stuck.

They start asking, how do I do this instead of who can do this for me?

So you might be spending hours on comping deals, on polling lists, on skip tracing, on sending

handwritten letters, wearing busy as a badge of honor.

You might think I can't afford to do outsourcing yet.

I'll delegate that after I start making money.

But the problem is if you get stuck in this, how can I do this mode and I have to do it

all myself first before I outsource it, you're going to get really stuck and you're going

to get on this vicious trap of doing $5 an hour activities when you should be asking

bigger and better questions.

In other words, who can I get to do this stuff for me?

What you need to be focusing on, like I already mentioned before, is talking to sellers

making offers and following up.

That's what you need to be making sure you're doing outsource everything else.

I used to do my own skip tracing, yeah, that was bad.

I used to handwrite my own letters and that was bad.

I remember a long time ago I was doing marketing to landlords who were going through evictions.

So every day I would go to the court website and find the evictions and I'd find the owner

of the rental property where the tenant was getting evicted and I would send that landlord

a letter.

Hey, you want to sell your property because I was getting them right when it was in the

middle of an eviction.

And I was doing the right things, but like I can get somebody else to do this.

So I had the idea of like, I don't remember how I found I was a friend of somebody that

I knew who wanted to make some extra money.

It was a stay at home mom.

I called her and I said, Hey, do you want to do this for me?

Can you handwrite 20 to 30 yellow letters a day?

When you handwrite them, I want you to crumple up the letters, fold them back up and

fold them into fourths and put them in an invitation envelope and hand address the envelope.

And I remember so clearly she was like, that is the dumbest thing I've ever heard.

Why on earth would you want to do that?

It is so unprofessional.

I was a little offended that she was calling what I was telling her to do dumb and telling

me it was unprofessional and saying it doesn't work.

I remember selling her.

How do you know it doesn't work?

Have you ever done it before?

So I went and I bought her a couple hundred envelopes, bunch of stamps and some yellow legal

pads of paper.

So she started doing the letters for me, but then I was still adding, I was populating

the data from the county courthouse website into a spreadsheet.

I thought, wait a minute, I can get a VA to do this for me.

So I started getting a virtual assistant every day going to the court website and putting

in the evictions on the spreadsheet.

And then this lady would go to that Google sheet every day and handwrite 20 to 30 letters,

crumple them up, fold them, invitation envelope.

I tell you, this is the best marketing I've ever done at that point.

And I don't remember the exact numbers, but we were getting an insane response rate.

It was really, really good.

And that example is my time better spent handwriting letters or actually talking to the sellers

who are calling me in response to the letters.

Another big mistake that I see a lot of people make is sometimes your offers are either

going to be too high or too low, big mistake I see.

So let's say your offers are too high.

Guess what's going to happen?

You're going to get too many offers accepted.

That's not good.

It is fixable.

But you don't want to be in a place where all of a sudden now you've got five, ten properties

under contract.

You think this is great and awesome, but now you put them on the market and crickets.

You start advertising on nobody's interested in them.

You offered too much.

It's easy to fix though because you can go back to the sellers and say, hey, you know

what?

It's a big mistake.

I reviewed the numbers, blame it on your investors, blame it on the numbers.

I reviewed the deal with my investors.

We looked at the numbers and this isn't going to work.

Unfortunately, we have to either cancel this agreement or renegotiate a lower price.

What would you rather do?

And the contract gives you that 90 days where you can cancel or renegotiate for any reason.

What's the difference?

When you offer too much, guess what?

You're not going to be able to sell your deals and the market will tell you pretty quickly

whether you have a good deal or not.

The other mistake on the other side is offering too low because then what happens?

When you're offering too low, you're not getting enough offers accepted.

Everybody's going to tell you no.

You might go from getting one, if you're offering too high, you get one out of every 10

or 15 accepted.

If you're offering too low, you're going to go from maybe one out of 100 being accepted

or one out of none being accepted.

So you need to find that balance.

Be really careful about offering too much.

Make sure you're not offering too low.

And let me give you an example.

I was just working with one of our high end apprentice clients this morning.

We were looking into some markets and he wants to go into an area where there's a lot

of competition.

Competition's a good thing.

This is an area where there's a lot of land flipping right now.

I mean a lot.

So I told him, okay, so you have to do it a little differently when you're in this kind

of a market.

You can't just use that standard 40% formula.

If you see everything is selling for 100, you can't just go in and offer 40 grand.

If everything's selling for 20, you can't offer $8,000.

These sellers are getting a lot of mail.

They're getting a lot of offers and the offers they're getting are going to be all higher

than yours.

By the way, this is an area where you can do a lot of assignments.

Assignments are easier.

You don't have to close on the deals.

You can get a realtor to help you find a buyer without buying the deal yourself.

So it's a lot easier to do in assignment.

Now when you do an assignment, you're not going to have to pay realtor commissions or

closing costs.

You don't have to buy the property and take it down.

You don't need any private investors to close on the deal.

You just assign it.

And so it's easy to find the buyers.

You just make a few phone calls and you can assign your deal for a quick three to $5,000

profits.

So I was telling this guy, are you okay with that?

Are you okay with in this area getting a lot of little base hits?

A lot of little $3,000, $5,000, $7,000 deals profits.

Instead of getting maybe one big deal every couple of months.

And yeah, he was.

So I would rather see you guys do five little $3,000 deals a month than one or two bigger $10,000,

$15,000 deals a month.

You might say, well, Joe, it's the same amount of work.

Why do I even want to go after those small deals?

So here's the problem.

The bigger deals and the bigger profit deals, they take longer.

There's more risk involved on those bigger deals.

I want you to focus on those little small base hits, like three grand five grand.

Okay.

So that means if you're going to do those little base hits because it's easier in that

market to do an assignment, just make some phone calls and sell them really quickly.

You can be in and out of these deals in one or two weeks.

If everything else is selling for $40,000, you're going to sell your deal for maybe $38,000.

So you should just offer maybe eight grand less, offer 30 for yours.

Does that make sense when I'm saying there?

Another mistake, then, is let's say you get a deal under contract and your due diligence

is no good.

What do you do during a due diligence time?

Kind of already talked about it.

You're putting the property out there to see if the other buyers are interested in it.

If you're not getting any interest, there's a reason.

There's only two reasons why your properties don't sell.

It's overpriced or you're not putting it in front of the right buyers.

During the due diligence period, after you have it under contract, you might have gotten

that offer wrong.

You might have offered too much.

This is now during the due diligence period, you're going to figure this out.

If nobody is calling you back, if everybody's giving you the cold shoulder, if nobody's

interested in the deal, you're selling it for too much.

The first part of due diligence is making sure you have a good deal that other buyers

will want.

The other thing you have to think about is what are the physical characteristics of the

property that might be making it hard to sell?

If it has negative characteristics, that's okay.

There's a saying in land that there's a pig for every barn and ugly property will sell

for the right price.

A landlocked property, that's 100% wetlands, that's on the mountain, side of a mountain,

will sell at the right price.

So due diligence is very important.

It's not complicated.

You need to look for things like road access.

Wetlands floodplains?

What's the terrain like?

Are there utilities on the property or not?

It's fine if it's not.

And you can still sell deals that are landlocked.

You can still sell deals that are in floodplain, but you just need to know this stuff.

And you might find out you missed some things.

You thought it was worth this.

You thought that thing that looked like a road was a road, but it's actually the neighbor's

driveway or whatever, right?

You find this stuff out after you put the property on the market.

We just got one of our clients in the apprentice program.

He sent a photographer to the property to go take pictures of it.

And there were signs from the neighbor on the road saying no trespassing.

He was asking me, what do I do about this?

I said, well, you need to ask the seller, why is there signs that say no trespassing

from the neighbors on your properties?

And then you need to get that neighbor's phone number and call them and ask them and talk

to them about it.

Other part of due diligence that you need to be aware of are the homeowners association

rules.

They have high fees.

Usually it's not a big deal because we're only going into areas where there's already

been a lot of sales.

So if we go into an area where it is an HOA and there are restrictions on the HOA dues

are high, maybe it's not a big deal because there are properties already selling there.

One of the things I tell sellers is that, okay, I'm going to need time to do due diligence

to see what I want to do with the property.

I don't know if I'm going to build a house on it.

I don't know if I'm going to flip it or sell it with owner financing.

Or just hold it for 50 years.

I don't know what I'm going to do with it yet.

So during that due diligence time, that's when you're calling realtors.

You're calling buyers.

You're calling investors who bought land before.

You're calling the neighbors.

You're calling realtors.

And they say that already.

And you're calling the county and you're trying to see, can I build a house here?

What needs to be done to build a house on this vacant lot?

Not that you're going to do anything.

You're not going to add aesthetic systems.

You're not going to add a well.

You're not going to add bring utilities in.

You're not going to clear a road.

You're not going to cut the grass.

You're not going to do anything.

But you need to know what this stuff is.

If you realize, man, I don't have a good deal.

You can go back to the seller and say, hey, I'm sorry, this isn't going to work out.

We either need to lower the price or cancel the agreement.

That's why you have the due diligence period.

That's why you have the 90 days.