Only Buy Deals You’ve Personally Negotiated

Share This:

Episode Summary

Listen on iTunes
Listen on Spotify
Watch on YouTube

Many real estate investors have a mentality of “I don’t care where the deals come from as long as they make sense.” These investors are more than happy to buy properties from wholesalers, through real estate agents, or any other source.  But as Thoughtful Real Estate Entrepreneurs, we aren’t interested in buying properties negotiated by other people—at all.  In this episode, Jeff explains why TREES are so committed to negotiating their own purchases, and discusses the critical differences between buying “properties” and buying “opportunities.”

Episode Transcript

Hey, can I put you on my buyers list? That’s a pretty common question that many of us who are active real estate entrepreneurs field often, and I think probably for most people, the simple answer is yeah, sure, why not. But I don’t say yes to that. I actually say no to that. And it really got me thinking down a whole line of thought about why I only buy deals that I’ve personally negotiated. And to take that even a step further, I realized that that’s my hope for all of my thoughtful real estate entrepreneurs for all of my trees to adopt that policy as they grow and move forward to so we’re gonna talk about why that policy makes sense for us as thoughtful real estate entrepreneurs in today’s episode, Let’s cue up the theme song we’ll jump right in. 

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 are just looking for “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.

Thank you very much for joining me for another episode of Racking Up Rentals. Show notes for this episode can be found at www.thoughtfulre.com/e198. Please do us a big favor by hitting that subscribe button in your podcast app, it does make a big difference in helping other fellow thoughtful real estate entrepreneurs who are searching for a community in a message like this to find it. Alright, so onward with today’s episode.

The other day, two people messaged me on Facebook and right about the same time. Now this isn’t an unusual occurrence. But when it happened, kind of twice in quick succession. I found myself pondering the topic just a little bit more. And these two people I believe one was a realtor and one was getting involved in wholesaling both very nice people sincere in their requests and polite in their communication and everything. asked me if I was willing to share like what I was looking for. And I said, sure I can tell you what I’m looking for. And they said, Great. Do you want me to call you if I find something like that? And I said, No. And I said no, easily. Now, it must be noted, first and foremost that my quote unquote Buy Box, my properties that I focus on are quite narrow and specific in scope. And these people are not local to me anyway. So the chances of them having something that would fit my box under any circumstances is pretty limited. But even if they did, even if they did, and even if I receive the same request from somebody local in my markets, my answer is simply no, thank you. I appreciate the offer. But no, you don’t need to reach out to me about those deals. The thing is, I only buy deals that I’ve personally negotiated. 

Now, I want to unpack that statement in this episode, because I had no hesitation in saying that to this person the other day or these people. But I had also never quite articulated it in that exact manner. Until that moment, which I think is why this struck me that that was probably the simplest and most elegant way to say what I was trying to say to other people all along. I’ve said I only source my own deals and things like that before. But in this case, I said I only buy deals that I’ve personally negotiated. 

So it just got me thinking why was that such an incredibly easy answer for me to make? Why didn’t I have to, to think about it? And what can if anything, we learned from that. And I do think that there are some stuff that we can all benefit from thinking through and discussing together. I was on a coaching call recently where I was the coach and I find myself on both types of coaching calls. As you know, I have a longtime mentor myself, and I have the pleasure and honor of being a mentor for other people. So I was on one of these calls where I was the coach. And one of my great coaching clients said that, you know, he was taking a look at this wholesale deal that had come to him and so he was telling me a little bit about it. And as we were talking I found myself having this this feeling I’m begging On metaphors, and analogies, and I’m pretty good at making silly combinations of metaphors and analogies that don’t always go together like a cookie analogy mixed with a fishing analogy. But in this particular case, I had this visual in my mind of a water glass. And, you know, if somebody were to hand you a water glass, maybe in the process of handing it to you, you know, they’d kind of raise it up. And maybe in that moment, as they’re handing it to you, it kind of catches the light in the room. And if you were to see that water glass that they’re handing you had all sorts of greasy fingerprints all over it, it would be pretty unappetizing, pretty quickly, right? You think to yourself, no, Okay, nevermind, I don’t think I want that. I’d rather have a fresh glass with no fingerprints on it. And I feel like when somebody else is handing a deal over, that, that’s what we’re getting. 

Now. It’s not to say they’re gross and disgusting and greasy, but you can’t help but get your fingerprints on on a glass, if you are handling and you can’t help but get your fingerprints on a deal. If you are handling it. Now, that means that as the recipient of this glass, or this, this deal being passed to us, we are now subject to all of the things they did in their own pursuit of and negotiation of this particular deal. And I personally don’t think that I often want those trace markings of how they did business on a deal that I would end up buying it. I want a glass that has no fingerprints on it, I want a glass that is like a virgin glass looks like it’s never been touched by human or if it had, certainly it just came out of the dishwasher and was nicely nicely cleaned. So what is a glass with no fingerprints that just came out of a out of a box from the factory or just came out of the nice steamy dishwasher. That metaphorically, in my little analogy is a seller conversation that has not already been tainted by other people. Now tainted sounds like a harsh word. And I guess perhaps it is. But it hasn’t been affected by other people, it hasn’t been influenced by other people, I don’t really want to receive something that has already been influenced by other people, I want to start with a nice blank slate with that seller relationship from the very, very get go. I mean, before we even talk, I want our first conversation you might say before we’ve actually spoken to be this nice clean virgin glass with no fingerprints on it. And that is what we tend to create with the type of marketing that we do. 

So I think what all this does is it leads us to a big question like a philosophical question that starts to become the foundation and explain this whole kind of thought process. And that big question is this. When I buy a property, what am I really buying? Am I just buying the dirt, the sticks and the bricks? That property itself? Or am I actually buying a whole all inclusive, cohesive negotiated package and a relationship? So for me, big surprise coming, I am not just buying a property. And I hope that you will begin to feel the same way. I am buying that cohesive negotiated package and relationship that yes includes the property absolutely does. But it might include certain terms, it certainly includes the dynamics of our relationship. It includes the dynamics of that relationship that not only affect what’s happening in this exact moment, but what would happen down the road for future business with this particular seller. Future things we might need to do if say like their seller financing, for instance, having the relationship at the outset of the purchase can be absolutely critical to adjustments down the road that could take place with the seller financing package that we have gotten this would be under the umbrella of things we call supercharged seller financing, where in the future, there may be some modification to the financing package and the collateral that secures that particular kind of loan. So the question is, what are we actually buying? And to even sort of drill down a little bit more on that? 

I think we have to ask ourselves the question. How is it that we actually Make money in this business, when we look at the whole spectrum of things that take place in the course of the real estate investing business, right, from initial lead generation, to negotiation, to financing, to purchasing, to management, to construction, to refinance all of these things to property management, leasing all the things. Where in that whole spectrum, is it that we actually as individuals, add the most value we recently had this conversation for, I’d say, at least a good 30 minutes or so in one of our weekly live zoom calls in the deals workshop. And it was, it was an awesome conversation, and really nice and vibrant. But we all helped to unpack this topic of where do we add the most value? Now, the thing is, there’s not a right answer or a wrong answer for like all of us collectively, but for each of us individually, there is absolutely, for me personally, and I’m guessing for maybe a lot of you if you are still listening to a podcast, like the one we have here on the thoughtful real estate entrepreneur type of approach to doing business. If you’re like me, the answer is not you know, I make money by having enough things that are broken that I can fix and improve. Do we break? Or do we fix broken things and improve them? Yes, absolutely, we do. But that is not the crux of how I add value, and ultimately, how I make financial progress. And in my world, mine is simply the developments in the cultivation of the relationship and navigating those relationships towards the right type of overall package and negotiated package and relationship that optimizes the opportunity to me. 

Now let’s just think about a completely different type of real estate investor, a person who comes to real estate investing from a place of maybe being a contractor from a place of having skills and talents and experience in construction and maintenance and things along those lines. Now, if I were that person, I might absolutely look at this and say, Well, you know, the the area of this whole business where I personally add the most value is actually in the physical improvements to a piece of property. And if that was the case, then I might be inclined to see each piece of property as inventory, like a widget. Like I’m in the business of taking broken widgets, and fixing them, and getting paid for the upside that I create when I fix the widgets. And I need to have like a whole store room full of these widgets just waiting for me to get to the next one. So that I can fix it up and resell it. And that’s what I do. But that’s not my business as Jeff as the thoughtful real estate entrepreneur. That’s not how I create my financial progress. That’s not how I create value. 

If I was that person, or for those people, it’s understandable why they would have a mentality that says you know what, all I need to know, all I need to do is make sure that my my log and my pipeline of widgets that are broken and need to be fixed. Is is big enough, and that the widgets I have access to I’m able to buy at the right price. Because my business is simply making them better and then reselling them. And if that were my business, that would make sense as well. But that’s not my business. I barely know which end of the hammer to grab, as I’ve been reminded and is absolutely true. And I’m totally fine with that. So I can’t as a thoughtful real estate entrepreneur just think of properties as inventory. I can’t just think of it as a set of widgets, because that’s not where I actually add value and thus make money. You see, there’s no opportunity to be thoughtful when all you’re buying is a widget. When you’re buying a deal that’s been negotiated by somebody else. You don’t even get to talk to the seller, let alone ever develop any relationship with him ever let alone Deville develop your own perspective on what the full opportunity is never let alone open your own ears and mind and heart up to hearing what they’re saying and maybe seeing something different than the wholesaler or realtor whoever brought you the deal. saw or heard or perceived. There’s no opportunity to be thoughtful when all you’re buying is a widget. And I personally if I were to buy a property like that which I have lived Early in, in my career, which is now 10 years full time, and six or seven years before that part time, literally never bought a property from a wholesaler or anything else. 

I can’t stand wondering what this deal could have been if I had negotiated it. Right? If somebody hands me, this glass, fingerprints, and all this glass is this glass, it it is what it is at that point. There’s no improving it, there’s no modifying it, there’s none of that. It’s just it is what it is. And if I were to take that glass from their hand, it would absolutely drive me bananas, wondering what this glass could have been like, had it been free of fingerprints when I was introduced to it. Because I know that I tend to see and hear and witness and use all of my senses and my mind and my heart to perceive different things than other buyers often do. And I don’t think I’d be able to take it just thinking to myself, What could this have been, if it had been me who got to meet them? Now, it’s not saying that other people do a bad job. So st wholesalers or Realtors do a bad job. I’m sure some of them do a truly bad job. But it’s not like a categorical indictment on, you know, other people not named Jeff, is just that I know how I would approach it, I know what I would be likely to see in and hear and perceive. And it makes me really uncomfortable to buy something that I’m not sure was completely optimized as best as it possibly could be. Because there’s a big difference between buying a property, dirt, sticks, bricks, and an opportunity. And if I want to buy an opportunity, I have to know that this opportunity has been maximized. And I can’t do that if I’m just taking the baton from somebody else. 

As thoughtful real estate entrepreneurs, our value add is not fixing things. We do fix things. Yes, absolutely. But that’s not really how we make this not the engine of our progress. The engine of our progress is solving the person. The engine of our progress is the development of relationship capital. Putting relationship capital coins in the piggy bank of relationship capital. Our value add is is in getting not just the property, but the terms the relationship, the relationship that we utilize. Now, the relationship that is further down the road with future opportunities for business with this person future little tweaks of renegotiation, potentially here and there with the terms it is the whole package. And our job as trees is to have access to that whole package. 

Now, I do want to make one quick, really quick caveat here at the end about what is okay, what is slightly different. My coach Greg refers to the topic of informants on the street, this would be like if the mailman or you know, a meter reader or a barber or the person pulling espresso shots at the coffee shop, if they know the kind of thing you are looking for in your market. And if they hear about something that’s not listed, of course, and they call you, to give you a tip in that direction, that’s completely fine. That’s a totally different situation, because they’re not handing you a negotiated deal. They’re handing you a lead, they’re handing you an introduction to a person that you can then go and start the negotiation with fresh, they’re basically pointing at a clean, untouched glass sitting on the counter and saying, Hey, you should grab that glass and see if you can make something out of it. Now that is a completely fine situation. It’s very, very different than taking on somebody else’s negotiated deal. So we absolutely welcome those types of referrals and introductions. And I make that point because I don’t want you to take this topic as me saying it’s really important that we just sit in our office and never talk to anybody else who’s in the business about any opportunities here there. It’s not it’s not it’s not like that. But we are saying I’m not going to buy something that somebody else’s smudgy fingerprints are all over. So my hope for you, my fellow thoughtful real estate entrepreneurs is that over time, you will get comfortable as I have adopting that this policy, that I only buy deals I’ve personally negotiated part of I think what we have to do is rid ourselves of the FOMO that might come with feeling like, well, if I don’t open every email from every wholesaler What if I’m missing out on an opportunity to that, I would say, get comfortable feeling like maybe you miss out on an opportunity because that’s okay. It wasn’t the opportunity for you. It might have been an opportunity for somebody else with a different business model with a different skill set with a different approach to doing business. But there is nothing in my email inbox. I am confident from somebody else who is prepackaged a deal that is meant and destined for me, I’m destined to meet and work with those sellers directly myself and negotiate the deals the best way that I personally know how. 

That is it for today’s episode of Racking Up Rentals. Again, show notes for today’s episode are at www.thoughtfulre.com/e198. Please do us a big favor by hitting that subscribe button would be so appreciated. And if you would rate and review this show just real quickly, doesn’t have to be long or eloquent. Just a rating there and a couple words would be super, super helpful and very appreciated.

Did you know that we have a Facebook group for Thoughtful Real Estate Entrepreneurs too? We do and you should be a part of it. It’s called Rental Portfolio Wealth Builders and we would love to have you join us there. Just go to group.thoughtfulre.com and you will be taken right to that page we can hit the Join button. If you liked this episode, please take a screenshot of that and post it to Instagram and tag us; we are @thoughtfulrealestate. I will see you in the next episode. 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 win-win dealmakers. Remember: solve the person to unlock the deal and solve the financing to unlock the profits.

Leave a Reply

Your email address will not be published. Required fields are marked *