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YOU: Step 1 in The Y.E.S.S.E.S Framework

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In the last episode, Jeff introduced the Y.E.S.S.E.S Framework for Getting Off-Market Sellers to Accept Your Offers, explained why it is so powerful, and walked through each of the six steps in the framework. In today’s episode, Jeff begins a deep dive into each of the six steps of the framework, starting with Y: YOU. Learn why it’s so important to start with yourself—what YOU are trying to accomplish, who YOU are trying to become, and what YOUR own investment strategy is.—before you begin trying to locate and purchase off-market deals.

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Episode Transcript

In the last episode, I introduced to you the YESSES framework for getting off market sellers to accept your offers, and in today’s episode, we’re gonna dive deep into the first of the six steps in the YESSES framework and that is the letter Y. And y is for you. It’s all about you for right now let’s dive right in after the cube the theme song.

Welcome to Racking Up Rentals, a show about how regular people, those of us without huge war chest of capital or insider connections can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans nor are we posting We Buy Houses signs or just looking for quote, motivated sellers to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from a Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.

Thanks for joining me for another episode of Racking Up Rentals. This is gonna be Episode 45, so that means that show notes for today’s episode are at www.thoughtfulre.com/e45. Please do yourself a big favor, also does us a huge favor when you hit the subscribe button in the podcast app because it sends a message back to iTunes and your podcast providers that this is a show people like you like and it will help them share this show with other thoughtful real estate entrepreneurs who are out there looking for their people to join like us. Okay, onward with today’s episode.

Now as you probably recall from last episode, I introduced to you the YESSES framework for getting off market sellers to accept your offers. And what this is really a six step process, a simple six-step process for likeable people to find and negotiate quality off market real estate deals through a relationship-oriented approach to directly negotiating with sellers, and that’s all without using words like we buy houses and all the other typical real estate investor stuff. This is really the thoughtful real estate entrepreneur’s framework for buying properties. This is the framework for the thoughtful way that applies to any type of property you might be trying to buy. So in the last episode, I introduced the framework to you and we talked about it as a whole on the big picture level. And today, we’re gonna start diving in and looking at each of the six steps individually, one at a time. But I want to recap for you real quickly again, the overall YESSES framework. YESSES is Y-E-S-S-E-S, and it’s a six-step framework, Y is for YOU, it has to start with you and what you are trying to accomplish and that’s what we’re going to discuss in today’s episode. Secondly is E — E stands for engage thoughtfully. It is about how you approach the seller to introduce yourself and establish the conversation. S stands for solve the person. This is what most real estate investors don’t even really realize they need to do at all, let alone make a high priority in the overall approach. Once we have solved the person, then the second S is solve the deal. Now we can take a look at actually putting a transaction together. That is going to make sense. The fifth step is E for empathetic proposal. Now that we have solved the person, we have solved the deal, we are now going to make a proposal which most investors would call an offer but we’re going to make a proposal empathetically to the seller. And then lastly, the sixth step, the S there stands for sharpen and agree. And in that step, we’re going to refine our proposal with the seller alongside them collaboratively, to get to a point where we can both say yes to it.

But today, we’re going to start at the top, we’re going to start with the first step, the first letter, and that’s the letter Y and Y stands for Y-O-U. YOU. Now it is kind of funny because I think our approach as thoughtful real estate entrepreneurs is actually so much not about us, you know, it’s really it’s about understanding that there are other people involved and it’s actually more about them and what they’re trying to accomplish if we’re going to unlock an opportunity. But in terms of the YESSES framework, we have to start with ourselves. We have to start with you. And I just want to point out I think a risk is that this is a kind of a self-reflective state. It doesn’t necessarily feel like progress to some people. And so thus, there can be a tendency to want to just fast forward through this and skip it and say, well, that, you know, I’m not going to make any money since sitting here thinking about myself, I need to get out there and talk to sellers. But I really would encourage you just to slow down, back up for just a minute, and don’t skip this important step. Because if you don’t have a real clear idea of what your own objectives are very, very clear. And what some of the parameters are that you want to, you know, do conduct yourself within, you’re never going to know, if you were successful, you know. Think about this — if we were going to take a trip, and we’re just going to set out and take a trip. And we didn’t know where we were trying to go. How would we ever know if we had gotten there? We wouldn’t. We have to say, Okay, I’m going to San Diego. That’s step number one, then we can figure out what are some of the things that we want to say, Well, I’m not willing to walk any of the way to San Diego. Okay, great. Well, that’s off the table so now we’re narrowing in more and more and more, and we will know ultimately, if we achieve our goal of getting to San Diego, by asking yourself the question, did we get to San Diego? We’re not just setting out to flail around and do a bunch of stuff in real estate investing, we’re going a specific place, in a specific direction. So if you were to just to ask a lot of people, what is it they want from their real estate entrepreneurship efforts, you know, they’ve just say, well, gosh, this is easy. I don’t need to think about this. I want to make money. Okay, well, again, that might be true. I mean, I’m sure that’s true. Actually, I’m sure it’s pretty much true for all of us to some degree. But what does that actually mean? You know, make money, it can mean a lot of different things and a lot of different contexts. Are you saying you want 10 grand, like next week? Because you have something you need to do with that money? Are you saying that, you know, you could happily wait a couple months, but you’d actually like a bigger chunk of cash after waiting a couple months and working towards it? Are you saying actually that what you want is to have enough monthly cash flow coming in so that it covers your expenses? And now you are kind of quote financially independent? Or are you saying when you want to make money, you actually want to increase your net worth, you want your you want to become a millionaire, for instance. All of those are different ways of saying make money. But each of those, each of those specific, more specific objectives would have a different path to get there.

So then the next question you have to ask yourself is what types of deals do you want to do? And, you know, one thing you need to do is take a look at what your answer was to the question of what does make money mean. And then you can pair those types of deals with your monetary goals accordingly, right. So if you want a small cash, a pile of cash to land on your desk, next Tuesday, then you’re probably not going to go buy a long term hold rental property. Because that’s not gonna that’s not a match between the type of deal and that type of outcome you are looking for. You might instead say “How could I put together a wholesale transaction that would deliver that quick, small, quick cash outcome to me”, or if you might say, “I need or I want to $50,000 in two and a half months from now”, then you actually might be trying to find an opportunity to flip a property perhaps, maybe you would also find a wholesale deal. Or maybe you’d find two or three wholesale deals, that might be different way to do it. Maybe you’d wholesale a bigger property, say a small apartment building. But again, you need to match the deal type to the outcome that you are looking for. If you are saying to yourself, what I really want is to create cash flow so that the excess money coming in each month for my rental properties, it you know, meets and exceeds what my own personal living expenses are. That’s how a lot of people define financial freedom, financial independence, then clearly you are going to want to be buying rental properties. But not only are you going to want to be buying rental properties, you’re going to want to be structuring those deals in a way that maximizes their cash flow you’re going to want to be shopping for deals in markets where cash flow is going to be easier to accomplish then sometimes in other markets. So you’re going to be not only buying rental properties, but you’re going to be focusing on doing those deals in a way that’s going to maximize that one particular outcome, which is cash flow. Or maybe you your goal you defined as your definition for making money is about building wealth and having your balance sheet get bigger, having your net worth get bigger so that you can say I am a millionaire. So in that case, maybe you’re looking to buy rental properties that you will hold on to but maybe in case you’re not really quite so worried about cash flow, you’re worried about finding things that you can add value to and make them worth a lot more, right? Maybe you buy this duplex for $400,000, put 50 into it, and now it’s worth $600,000. Well, you have now just, “forced appreciation” of $150,000, which has increased your overall wealth. So we have to start with the question of what does make money mean to us? And then what types of deals do we want to do, that are going to match up with those financial outcomes that we want? Again, this is all about us. Because if we don’t know what we’re setting out to do, we’re never gonna have any idea if we’ve actually accomplished it.

Now, you might also have non-monetary goals, I mean, heck, you, you might have an objective that you want to help people, maybe it’s helped people in a certain neighborhood, maybe it’s helped people have a certain category of a certain class, maybe you want to become an expert in something specific, you know, maybe you say, hey, I want to be the world’s foremost authority on duplexes. Maybe you want to become an expert in building accessory dwelling units at us, you might have non-monetary goals as well, they’re gonna impact what you know, you decide you want to put your focus on. Maybe you just got a real estate license, and you want to create opportunities to use that real estate license more so that you can generate more commissions. You might have a mix of goals that may or may not be monetary, has certainly some of them probably are monetary, if you’re listening to this podcast, but some might also not be monetary. So all of these things really are under the banner of this topic of what is your objective? Like, what are you trying to accomplish? And once we know what we’re trying to accomplish, then we can start to put our strategy together. And alongside the topic of strategy, I want to talk with you about investment philosophy.

To me, investment philosophy means what things do you believe in? What are some of the non-negotiables that you just must have in order to feel good about how you’re doing business or the types of deals you do, and things along those lines? Like, let me give you a few examples. There are a lot of people these days who invest in properties all over the place. No correlation whatsoever with where they live, you know, there’s a popular expression shared by the real estate guys who have an amazing podcast themselves. It says live where you want to live and invest where the numbers make sense. Well, that that is one investment philosophy, I would say, my investment philosophy is a little bit different. Personally, I believe that I want to be involved in fewer markets but know those markets really, really well. I love the fact that in my market, you could pretty much give me an address. And I could more or less picture the neighborhood and have a pretty good idea without even looking at up what’s going on there, if this is an area, I’d want to be in what the overall property values and the rents would be and things like that. So local, not local, like investing out of state, right? You know, there are a lot of people who their investment philosophy says, I want to live yeah, I want to live where I want to live. But I’m living in a big city on the west coast and cash flow is tight, and I want to buy properties. So I’m going to the Midwest, where the price to rent ratios are completely different. And I’m buying more property there because my money goes further. And I can develop a lot more cash flow. That’s just a different investment philosophy. And then there are people who invest, quote virtually and maybe it’s not so much investing as it is doing deals and things like wholesaling. But they’re happy to live in, you know, in Kansas and to put a house in contract that’s in New Jersey, and they don’t they don’t care so much as long as the numbers make sense to them. So those are very different investment philosophies, though. And without having a stance or point of view or perspective on that yourself, you’re just going to be all over the place as you try to put a strategy together.

Maybe your investment philosophy is about specific sort of sub classes of property or genres of property, you might say. For instance, maybe you say, I really only am comfortable with residential real estate. I don’t believe in the future of commercial real estate. It’s a different game to different animals, different tenants, different laws, I don’t like it. Or you might say exactly the opposite. You might say I only like commercial properties, because those leases tend to be more landlord favoring and there’s not all the landlord tenant law things in favor of residential tenants because you’re not really dealing with, you’re dealing with people who are trying to make a profit and instead of people who are trying to just have a roof over their heads and so the laws are better and more favorable and commercial and maybe you like the lending and commercial better. There could be any, any number of reasons you might have one perspective or another. But if you have some kind of a focus and you say, I really like these types of properties, then that’s extremely helpful to keep you from being random and all over the place, right? So again, in my case, I said before, I like to be local to myself, well, I also like, I like what I would call infill properties, I like residential properties in neighborhoods, if I’m going to do commercial investing, I would probably rather be inside of a neighborhood there too, so like, I would call that neighborhood commercial, like, maybe the small building where your local coffee shop is that people walk to, rather than being in a suburban area, rather than being in an industrial area, because that’s just my preference. That’s my comfort level. And I feel like I’ve got, I feel like I’ve got a feel for those types of properties in my particular areas.

And you might have any other number of rules or standards about how you want to go about it, you know, I know somebody who’s extremely successful. And he really has done most of his business and building his portfolio with a simple rule about he doesn’t buy properties that are above a certain threshold for replacement cost, right? So he looks at a commercial property, oftentimes it is and says, well, in today’s market, it would cost $2 million to build this property. And so that means I am not willing to pay more than, you know, what would that be a $1.4 million to buy it. And that’s as simple standard, and anything that breaks the rule, he just doesn’t even consider it. Other people have simple metrics for cash on cash return, for instance, they say, if I put 100,000 into something, I better be getting $10,000 back each year, because I have a 10% cash on cash return threshold.

So again, your investment philosophy now dictates how you are going to go about creating the results that you are specifically trying to create. And there’s no right or wrong answer for your investment philosophy. But if you don’t take the time to think these things through, you’re going to be randomly looking at every listing from, you know, an industrial building in Georgia, to a house in Portland, to a storage facility in Michigan, and you’re gonna have a hard time getting any traction without any level of focus like that.

Okay, so now at this point, now we have got a really clear idea of what we’re trying to accomplish, we’ve got a really clear idea of what types of deals are going to get us there. And we know kind of what our parameters are in our standards and our investment philosophy that we need to work within. So now we’ve got a nice little kind of outline of, of what is going to be possible for us and what we’re willing to do what we’re not willing to do, and which things we think are going to get us to the Promised Land of what we’re trying to accomplish. That means that we now have the ability to pull a list of properties and sellers, more importantly, but properties and sellers together who we believe are high probability properties that we could buy sellers we could work with, that are going to allow us to do the exact type of deals that we want to do, right. So once you know what it is you want to buy, you can ask yourself, who is likely to have that thing that I want to buy, right? So if you want to buy small, you know, commercial buildings, like I mentioned, neighborhood commercial, in your particular town, that’s a very specific list that you can buy, or that you can source rather, but you might not want to target people who just bought commercial properties within the last 12 months, because you might think, you know, as I would, chances of them wanting to resell their property to me within a year of after having bought it probably not the highest probability shot, so I probably don’t want to talk to those people. But if I can find those specific people who’ve owned their properties for 20 or more years, that sounds like a great audience for me to talk to you. So now we can define what our target list is going to be. And we can then reach out to our partners who provide us list to acquire that list, right? And if you are familiar at all, with our approach, seller direct mail mastery program, we advise that you have partnerships with your local title company, who are is an organization who is incentivized to help you do deals. And so they have access to that information and are often more than happy to provide it to you at no cost. So you acquire your list that’s very focused, your list is very focused on delivering certain results to you, and now you’ve got a list of leads that is really well suited to help you get the type of deals done that you want to get done and to accomplish the results that you are trying to accomplish.

So in summary, with this step it all starts with you. You know, if we don’t take the time to do this, we’re just going to be all over the place, scrambling around flailing around trying to get deals done but without knowing exactly what we’re trying to accomplish and what we think the most efficient way to get there is. So the Y step YOU have the YESSES framework has to be first. And in the next episode, we’re going to talk about the next letter in the YESSES framework, which is E and E stands for engage thoughtfully now that you know exactly who you should be engaging with. How are we going to go about getting ourselves in front of these people?

That’s it for today’s episode of Racking Up Rentals. Again, show notes for today’s episode is at www.thoughtfulre.com/e45. Please do us a big favor by hitting that subscribe button in the podcast app. Just rate and review the show if you wouldn’t mind, we’d so appreciate that. Just give us an honest rating and honest review. And also check out, if you didn’t know we already have a Facebook group. If you’re not a part of the Facebook group for TREEs already thoughtful real estate entrepreneurs. Check it out. It’s called Rental Portfolio Wealth Builders and we would love to have you join us over there. If you just go to group.thoughtfulre.com,  it’ll redirect you and take you right there so you can hit that Join button. If you liked this episode, please share it take a screenshot of it off your phone and post that screenshot to Instagram and let people know you’re watching this and are listening to this and tag us on Instagram, we are @thoughtfulrealestate.

So I will see you in the next episode. And until then this is Jeff from the Thoughtful Real Estate Entrepreneur signing off. Thanks for listening to Racking Up Rentals where we build long term wealth by being a win-win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.

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