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Being a great off-market real estate investor—and a Thoughtful Real Estate Entrepreneur—is like being a great travel agent: you need to know where the Seller wants to go, and then you need to present them with an amazing plan and vehicle to get them there. In this episode, Jeff discusses the art of approaching Sellers with this mentality, how to understand what they really want, how to make proposals they will accept.
Episode Transcript
every seller you talk to has got something in common. And that is that they want to go somewhere. Now, that doesn’t necessarily mean go somewhere physically, it could. But what it means is they have a current situation. And there is a different situation that they think could possibly be at least a little bit better than their current situation. And they’re interested in exploring, getting from point A to point B. Well, what does that mean for us as buyers that what that means for us as buyers, is that we are like travel agents when we’re doing our job? Well, we’re helping sellers get from where they are, to where they want to be. And that is such a powerful thing to do. And it’s a powerful framework and a mentality for us to think of ourselves through. So in this episode, we’re going to discuss what it means to be an amazing travel agent. So let’s keep the theme song we’ll jump right into this. 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, we’re just looking for quote, motivated sellers to make lowball offers to you see, we are people oriented deal makers, 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 the 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. Hey, thank you for joining me for another episode of racking up rentals show notes for this episode can be found at WWW dot thoughtfull. Our e.com/e 134 Please do us a big favor by hitting the subscribe button and your podcast app really, really helps fellow thoughtful real estate entrepreneurs to find the show. And of course, make sure that you don’t miss any upcoming episodes onward with today’s episode. And I want to tell you a little story about a deal that I did. Last year, I sent out my normal letter campaign and I got actually first an email from a guy and this guy, we’ll call him Bob. Bob sent me a message and said, Yeah, we’re interested in selling this rental property. And let’s talk about it. So I said great, I wrote back and then we started to talk on the phone, we immediately had great rapport, he’s just a nice guy. And we got along well. And so he said, great, well, let’s let’s meet this property you want to sell is actually is vacant. So he wanted to meet over there. I always like to meet people at their homes, of course. But in this particular case, that was his preference, and it made logical sense. So I just went with it. And we started talking over at the house and I can kind of see where the opportunity was. And I was I was liking what I was seeing. And he was saying, Yeah, you know, we just want to get out of this city. In terms of being landlords, I think we’re going to invest in somewhere else. I said no, interesting. Okay, well, what’s driving you to not want to invest here? And well, you know, prices and tenant landlord law and stuff is not ideal anymore here. And you know, so we’re just think we might go somewhere else. Oh, okay. Great. So I just sort of left it at that. But the more that we started talking, I realized that it wasn’t so much that Bob really wanted to buy another property somewhere else. It’s really that he wanted to get some cash out of this purchase for a very specific project that he had in mind. And then the rest of the money that he didn’t need, he didn’t want to get taxed on it. So he just felt like he had to buy a different piece of property. And he thought, well, you know, I’m hearing people complain about this city now. So let’s go ahead and buy something elsewhere. So right away, I’m starting to get a sense for where Bob is wants to go is a little different than where I thought it was in our very first conversation. And it turned out that the project that he wanted to do was he and his wife wanted to move out of their home, they live in a very nice home in a very nice neighborhood. And at some point in the future, they wanted to move out of that home and into a floating home on the river. They had already purchased a floating home, but it needed some repairs, it needed repairs of the floats like literally the things underneath the structure of the house that help the help the home float on the water. And that’s a very specialized repair. Not a lot of vendors do that. And so he needed a certain amount of money to do that. And that amount of money was $60,000. So it was just an interesting insight about actually what Bob wanted was different than what it seemed like at the beginning. So I’m going to circle back to how the story played out at the end, but let’s talk about a few minutes. certain concepts first. It’s funny for me right now to talk about a travel agent, because depending on how old you are, as you listen to this, you might not remember the travel agents were very common. As recently, as you know, even 15 or 20 years ago, before, with three clicks, you know, or taps even on your phone, you could buy plane tickets to anywhere on the internet, when you wanted to go somewhere, you kind of had to go either directly to an airline, or more likely, you’d go to a travel agent, you’d say, hey, travel agent, we want to take a trip to, you know, the Bahamas, and here are the dates we want, we need flight, we need a rental car, and we need a hotel, and the travel agent would find all the options and then present you with options. And they would handle all of that for you. Now that concept is a little outdated. In today’s world, obviously, we tend to book a lot of the stuff directly ourselves. But what a travel agent does, is trying to do a great job of understanding where you want to go the exact experience you want to have when you get there. And they look at where you are, which is normally sitting in their office in your hometown. And they say how can I get this person to where they want to go in the way that they want to go there and so that they can have the experience they want to have. And I think this idea of being a travel agent is just a super, super powerful and important metaphor for exactly what we do as buyers off market using the thoughtful approach and the yeses framework for getting off market sellers to accept our proposals. So here’s the thing, every seller wants to get somewhere. If they didn’t want to get somewhere that’s a little different than where they are right now. They wouldn’t be talking to us, they wouldn’t have called us back. And so when they call us back from a letter, there’s one thing that we know for sure. They have in their mind, an idea of a destination, a place that they could be that is at least a little bit better than their current situation. And they think there’s at least a tiny fraction modicum of a possibility that if they talk to us, we might be able to help them get there. So we know that about our sellers, when they call us they wouldn’t be calling us back. So there’s two key points I want to make for you on this. Now the seller is almost never consciously thinking of you. As a travel agent, you know, they’re not even in their own mind. Are they going? Oh, I sure hope that Susan can help me get from point A to point B. But indirectly subconsciously, that’s of course, the the thing they’re thinking they’re like, Well, you know, I’ve got this current situation as relates to this property. You know, it could be better if XY and Z were true, I wonder if there’s any way that that could happen. If I talk to this person who just sent me this nice letter. So they don’t, they’re not literally thinking of you that way. And they’re not thinking of you as somebody that they’re going to hire to do this for them, but subconsciously and indirectly, that’s exactly what is actually going on. So the travel agent model is much more about how you should think of yourself, not necessarily exactly how they’re going to think of you in the most literal terms, but it’s how you should think of yourself, because ultimately, at the end of the day to put a proposal in front of somebody that they will say yes to, you need to understand where they are, where they would rather be and how you could get them there in the best possible way. The second key point I want to make here is that where they want to go, it might be a million miles from where they are right now. Or it might be close, right? So you might have a rental property owner who’s collecting $100 a month in net cash flow, and wants 5000. That would be like a million miles away destination. Or they might say, well, I collect $500 a month in cash flow right now. I wonder if I could get 550 That would be a much nearer destination. So our job is not to judge how far the distances between where they are and where they want to be or to only look for people who want to go a long distance or anything like that. Our goal is simply to understand what it is. And the second thing on this just similarly, while they might be looking for a really huge change, or might be happy with a smaller change. Similarly, this potential change could matter a ton to them. Or it could just matter a little bit. It could be something that’s critical to them or it’s something that would just be a nice to have. So how much change they want and how intense their desire for change is varies tremendously from seller to seller, and it’s not our job to go out and find people who have drastic needs. It’s just our job to understand whatever those needs are. In other words, it doesn’t really matter how far they want to go or matter how intensely they want to get there. It doesn’t matter those things what matters is that we understand what those things are, it matters that those things exist and that we know what they are. Because now we know what we are aiming at. And I feel like this is a perfect time to just interject such an important point, to me into this the thoughtful approach that we practice here on this podcast. And then this community of thoughtful real estate entrepreneurs, we too have a common definition together of what a problem is, right? The regular real estate industry, real estate investors off market acquisitions, their idea of a problem is something where the person the seller is really in a bind, and they have to get out of it, there’s a lot of pain involved, etc. And that’s not really how we think about it at all. In our world, the seller doesn’t even always feel like they have a quote, problem. Now, as we’ve discussed, already, the seller does feel like they’re in a current situation, and there is another world somewhere in which that situation could at least be a little bit better. And we know that if the seller is engaging us in a conversation that they’ve returned the call from our letter, or however we might have met them, it shows that they believe there’s at least that tiny modicum of chance, maybe they think it’s a big chance, but they know at least, they think there’s at least a tiny chance that if they talk to us, their life could get better, in some way. So it’s very important that we reframe the idea of problems. And don’t just look for people who have like very obvious signs of like, Oh, I am stuck right now. And I am in a bad spot. And if I don’t get out of this soon, then I am hosed. And that means I’m willing to, you know, give away as much equity or anything as I as I can just to get out of this problem. That’s not the situation that we are looking for. Sometimes we will find ourselves talking to those people. But I just feel like this is an important thing to point out. Because while the regular real estate industry is out there trying to find people who are, you know, just in a rock between a rock and a hard place, we don’t necessarily need to do that, because we’re thinking like travel agents. And we’re thinking, Alright, you might want to get from where you are to a place that’s only slightly better. And you might only kind of want that, but that’s okay. That’s okay, because we can work with that, using our approach. So being a travel agent isn’t about finding a lot of distress, necessarily, it’s about getting to know where else they would prefer to be. And the funny thing is, many of these sellers will not just come right out and tell you, and there’s a couple reasons for that. Frankly, they always don’t necessarily No, they don’t even have the ability to articulate it to you super clearly right there in the moment, because they don’t even necessarily know it might just be more like a feeling in their gut, you know, a feeling that says, this property is kind of bugging me, it doesn’t feel like it’s going that well doesn’t feel like it’s optimized, I always feel just a little bit of a sense of worry about it. But if it’s just a feeling in their stomach, they might have a hard time articulating that to you. Or the alternative is they actually do know, you know where they are and what could be better. But they don’t always, especially at first want to share that because it makes them feel like they’re putting all their cards right on the table. And it makes them feel exposed, or vulnerable. So sometimes that process can just take a little bit of time in the story of Bob, I started this episode with, you know, Bob didn’t just send me the first email and say, Okay, Jeff, let’s get down to business. I want to repair the floats on this house. You know, we it took a little rapport building a little time spent together before really started to understand because he started to open up a little bit more, as well. So how do you do it? How do you be a great travel agent? Well, it’s really kind of I think about two things. And we’ve had lots of episodes on these topics before. The first one is you have to solve the person right? This is the key element in the yeses framework that we’ve talked about at length on this show. And that, that the SS framework is really kind of woven into everything we talk about all the time, but we have to solve the person, we can’t just look at an email full of numbers about ARV and current values and repair costs and rents and market rents. We can’t do that because we have no insight into the person at all, we have to understand the person we have to solve the person before we can solve the deal. And once we’ve solved the person, we really have a good sense of where they are now how they feel about where they are now. Where they want to go, how they feel about where they want to go, why they feel like that would be better. And then we really have what we need to put together a compelling proposal and that is the second thing that we have to do is that we have to put together a compelling proposal but we have to present it to them framed in light of their desired travel. Okay, so they have now seen shared with us where it is they would like to go that’s different from where they are now. And as we present our proposal, they have to see our proposal as the vehicle that gets them there, right? It’s funny, I didn’t put this down in my notes. But that’s really what our proposal is, right? If we’re talking about travel agents, they are where they are. Now, they want to go to the Bahamas, and our proposal is the airplane, that’s going to get them there. I really like that I’m gonna have to keep that and use that in future episodes and coaching calls. Our proposal is the vehicle that gets them from where they are, to where they want to be. So when we share it with them, we wouldn’t just walk up and say, Hey, how about an airplane, you know, we’d need to say, Okay, here’s what I understand you are trying to accomplish, you’ve got this rental property. And it’s going, it’s going pretty well, actually. But there’s other things that you would like to do. And so here’s my proposal, about how we get you from where you are to doing the projects that you told me you want to do. And you tell me now, Mr. Seller, do you agree that this proposal gets you from where you are to where you’ve told me that you want to go? Is there anything about this proposal that could be better in terms of getting you from here to there. And that’s the nature of the conversation we have. So I want to finish by sharing the rest of this story about Bob, right? So Bob, at the beginning said, I want to sell my property. And the whole nature of the conversation was, I want to sell my property for, you know, in a conventional manner, either someone pays cash, or they go get a loan. But Bob wanted to be cashed out, because what Bob was going to do was going to take, he was going to carve off some of the proceeds. And presumably can’t pay capital gains on those. But that’s fine, he needed the $60,000 to repair the floats on this house, then he was going to take the rest of it and do a 1031 exchange, to defer his capital gains. But the more I talked to him, it was very clear, Bob didn’t really care about buying another property, he just didn’t want to pay the capital gains. And he wanted the the $60,000 he needed. So I went back to Bob. And I said, Bob, I’ve got an idea that I understand where you are now. And I understand where you’re trying to go. And thank you for sharing the story of the floating home with me, it sounds super cool. I don’t know anybody who lives in a floating home, and I can’t wait to visit you there sometime after you’ve got it all remodeled. But here’s my thought, you don’t really enjoy being a landlord, you don’t want to be a landlord, again, for another chapter. You don’t want to be a landlord, again, for another chapter where the property’s you know, 400 miles away. I’ve got an idea What if I give you a downpayment of $60,000, and that $60,000 will be the cash that you will use to repair the floats on this home, then the bounce of our purchase price, which would be $240,000, we’ll put on a promissory note. And here’s the thing with the promissory note, I will make monthly payments to you, that will be very similar to what you would get in monthly cash flow. If you were to go buy another property elsewhere. So at the end of the day, Bob, what you’ve got here is you’ve got the cash you need for the floats project, you’ve got the income you need, that you wanted, was the whole purpose of owning rental properties in the first place. But you’re not worrying about tenants, you’re not worrying about management, you’re not worrying about any of that stuff. You’re just receiving a monthly check from me. What do you think Bob? Does that? Did I hit the target? Did I did I do a good job of putting together something that gets you from where you are to where you want to be? And of course, his answer was, yes, he had a tiny bit of feedback, we made a couple little tiny adjustments. But the plane I presented him, got him from point A to point B better than the plane he had envisioned in his mind before he ever talked to me. Right, the plane he envisioned in his mind was a 1031 exchange. And that plane was fine, it would have got the job done. But the plane that I presented him to get him as a travel agent from point A to point B was better than the plane he even envisioned. And I could only have come up with that plane, once I knew what he was really trying to accomplish, where he was really trying to go. So get out there and be a travel agent, focus on understanding exactly where the seller is now, what they feel about their current situation, and what they think could be better, what they think could be perfect. And then your job is to look at point A and point B and say how can I build a plan that gets them from one to the next. That’s it for today’s episode of racking up rental. So again, show notes here can be found at thoughtful our e.com/e 134 Please do us a massive favor by hitting that subscribe button in your podcast app and rating and reviewing the show. Did you know that we have a Facebook group for thoughtful real estate entrepreneurs who we do and you If you’re on Facebook should be in it with us. It’s called rental portfolio wealth builders. You can of course just look up rental portfolio wealth builders on Facebook. Or if you want to just type group dot thoughtful rv.com into your browser. We have set it up so that the magic of the internet will take you right there and you can join our group. If you liked this episode, you know it’d be awesome as if you took a screenshot of it on your phone and posted that screenshot to Instagram and tagged us we are at thoughtful real estate. So I’ll see you in the next episode. Thanks so much for listening. 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 when when dealmakers remember solve the person to unlock the deal, and solve the financing to unlock the profits.
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