Deal Case Study - Maximizing Your Assignment Fee with Otto Kinn

Mike DeHaan: [0:00] What is going on guys? On today's deal case study, we are here with our Instant Investor member, Otto Kinn. And my man, I'm super excited to have you on the show. You have been one of our rising stars in the program this year, and you have been doing some major deals. So I'm super excited to dive into this one. So appreciate you go on the show, man. Right. And just I guess people like a two second overview about where you're from and what kind of deals you do.

Otto Kinn: [0:28] Yeah. From North Dakota, not a lot of us out here, not a lot of operators. And I've done, I mean, kind of everything. Right now, going all into wholesaling, I mean, that's been the best thing for me, so.

Mike DeHaan: [0:41] Awesome. And I'm gonna retract what you said, and you are in a heavily saturated market and everyone should definitely stay away from North Dakota. But to be fair, I do think that if you weren't there, it would be a very hard market to get started in because it seems like a lot of your deals are kind of like reputation based and they wanna Yeah. You know shake hands and meet up and go to breakfast and you're always going out there and getting stuff done.

Otto Kinn: [1:04] Yeah for sure.

Mike DeHaan: [1:05] Awesome man. So cool. Really appreciate

Otto Kinn: [1:07] you coming on the show.

Mike DeHaan: [1:08] So this is your first time hearing a deal case study. How this works is we're going to do a deep dive on a real deal that was done by a real investor. And we ask the same four questions here on every one of these episodes, so we can get a nice thorough look into what exactly the deal consisted of and what your deals can look like to you if you take action and start putting in the work. So to start, first question, what kind of property was this?

Otto Kinn: [1:34] Yeah. So this is a single family home, had been vacant for quite a few years. It's four bedrooms, two and a half bath, and you could tell it's been vacant

Mike DeHaan: [1:45] for a while. Soon as you walk in. Pretty rough. Okay. Awesome. So second question, how did you find this deal?

Otto Kinn: [1:52] So this one came in from a batch of mailers that went out in May. It was high equity, absentee, out of state owner, and it was just kind of an inbound lead from that direct mail campaign in May.

Mike DeHaan: [2:04] Perfect. High equity absentee, but you can't find any deals from that list, Otto, that list is And far too there's no deals to be found there, so you shouldn't waste your money. Yep, exactly. So, alright. So what kind of seller was this? What was kind of the persona? I imagine if it was a vacant property, high owner absentee, can kind of imagine, but give us a little more details there.

Otto Kinn: [2:27] Yeah. So this is somebody who they've owned the property for like thirty years, they used to live in Minot. Mhmm. This part of the state is like highly transient, so there's a lot of people in and out of the area. They kinda like all of their kids grew up at this house, but 20 ago after everybody kinda moved out, they went down to North Carolina. And every once in while, kinda like bebop back and forth between North Dakota and North Carolina. By the time that my mailer had hit them, they had just gotten to the point where they had played around with the idea of relocating back to the area because they really liked North Dakota, But they were elderly at this point, they didn't wanna deal with the snow, and they were like, well, came at a good time, let's just sell the thing. That's kind of the persona of this one, know, they just Cool. They were ready to get rid of it.

Mike DeHaan: [3:17] Super exhausted landlord that had been trying a bunch of stuff and at the end, they just you were in the right place at the right time. And when they made the decision because you've been marking consistently over a long period of time, you were there right in front of them to do the deal. So perfect. That's what it's all about. Awesome. So let's get the full story of the deal. We wanna talk numbers, we wanna talk challenges that you face, we wanna talk about like, you know, any speed bumps or super fun and exciting things that you discovered along the way.

Otto Kinn: [3:44] So they'd called in early May, so I mean just probably a couple of days after the mail had hit, and the intake call was like fifteen minutes long, and it was just

Mike DeHaan: [3:53] No way.

Otto Kinn: [3:53] It just it was a couple months into me dealing with the with the inbound and the off market. It was kind of not necessarily painful to listen to, but it was just a lot of stuff that I've improved on since that point in time. But Yeah. You know, the gist at the time was, hey, I have this house, I wanna sell it. And I was on the road, I had no idea really what kind of a deal it was. He had described the house to me and he said, I'm gonna be back up in the area in July, and this was in May. And I said, okay, Well, when you're in the area, let's make sure that we connect so that we can get you an offer and and get this thing figured out. So I got back home, I looked at it, pulled up on like the tax assessor's website, saw that it was you know, a nice sized house. It was tax assessed for 200,000. And so my thoughts were, I had it in my head like 150 or something along those lines. I followed up with him about a month later or a couple of weeks later as we were getting closer to July to say, hey, are you still coming out here? Are we still gonna meet to walk through this place? And he's like, yeah. Yeah. No. I'm thinking it's gonna be the tenth. And I said, okay. So I wrote it down and I set like five reminders that I'd go out and meet this guy on the tenth. Mhmm. And the chaos of fourth of July weekend goes through, and the beginning of that week, I called him.

Otto Kinn: [5:12] I don't think he picked up the first couple of times, and so I'd like it was getting closer to to the tenth, I tried him again, and he was like, yep, you know, I'm still gonna be out there, still love to meet you out there, you know, committed to it. When the tenth came, I went out and I met him and here he had driven all the way, had like a really short timeline, he was only gonna be up here for two days.

Mike DeHaan: [5:36] And this is from North Carolina, he drove all the way up there just to meet with you.

Otto Kinn: [5:39] In North Carolina, he just drove all the way through. I remember him telling me that he stopped once to take a bathroom break and he just kept going. He's He an old school truck driver, and he's just like northbound and down.

Mike DeHaan: [5:51] Yeah.

Otto Kinn: [5:52] We met at the house, and I remember kinda thinking like, I couldn't imagine if this guy put that amount of trust into somebody who wasn't really in it or didn't really follow through with their commitments. Yeah. Because imagine driving, I think it was like 36 for him to get there.

Mike DeHaan: [6:09] To cross the freaking country.

Otto Kinn: [6:10] Yeah. Just have somebody blow him off or whatever. He needed to stop and just see how the house was doing cause it's just been sitting vacant. He had a neighbor who was kinda like overseeing things for him, but I mean it's still a vacant house. But we kinda, I mean we sat and talked for a while, but when we went through to actually walk the thing, the first thing that I noticed, so it's a flat roof and in North Dakota, if there's a flat roof, that means that you're gonna get a mountain of snow that just sits on top of this flat roof.

Mike DeHaan: [6:38] Yeah.

Otto Kinn: [6:39] And for him, the living room

Mike DeHaan: [6:41] Midwest snow too, so it's really heavy.

Otto Kinn: [6:44] Yeah, exactly. So what had happened was it was like a rubber roof and by the time I'd gone up to see from the roof, it wasn't that bad. But down below in the living room, the entire ceiling was like caving in just because Yeah.

Mike DeHaan: [6:59] It's like a probably big wallow, I would imagine.

Otto Kinn: [7:02] Yeah. And so when water has nowhere else to go, it'll just like take the path of least resistance.

Mike DeHaan: [7:07] Mhmm.

Otto Kinn: [7:08] So it had gone in through these little holes in the tar patch, whatever, and so that it caused everything to kinda cave in. Going into the basement, there were some other pretty funky things going on with like the water lines. The water had been disconnected from like the city main and all this other stuff. There was black mold growing. Nice. And I remember kinda thinking at the time, we had just been going through it on a really nasty flip that had cost way too much money. We were way over budget. And so as I was walking through it with this guy, I was like, my budget just started like going higher and higher in my head. I was like, oh man, and I don't have a good contractor, this is gonna be way too expensive.

Mike DeHaan: [7:50] How did he feel about it? Like was he shocked at this condition, or did he already kinda know it was gonna be this way?

Otto Kinn: [7:54] He kinda knew it, but as we were walking through it, I just kinda picked out some of the things. Not trying to tear it down, but just bring the reality of your ceiling is caving in if we don't do something about it, this is gonna be a bigger problem.

Mike DeHaan: [8:10] It

Otto Kinn: [8:11] was funny because where I had it in my mind, like one fifty going in, by the time we had gone through the whole thing, came back up, we're in his living room, I was like, this is gonna be I'm probably at $80,000 just because there's so many things that we need to do to this house. And he was kinda like I think he was in that one fifty ballpark too. Yeah. And so he was kinda shocked. He was like, Haiti? Oh, I don't know. And so he kinda talked about everything. I told him my thoughts, like roughing contractors are expensive. It's that time of year where like you just you couldn't find anybody at a good price. So we talked through it and I was like, well, I'm no expert and by all means, if you wanna talk to some other folks and get some other opinions, you're welcome to do so. And I was like, I'm kind of at this price, but let me tell you what, I'll go home, I'll do my homework, I'll make sure that my budget's tight on this. And we sat and visited for like four hours at his house.

Mike DeHaan: [9:08] That's how deals go in the Midwest though, man. Yeah. You guys are so friendly, just just hanging out, chatting. Yeah. I'm driving some of these markets, like get on to Florida, or like you go like the Northeast, if you're talking to any seller for four hours, probably because you're in court, you don't have choice. Things are getting weird real fast.

Otto Kinn: [9:26] Yeah. It was good though. Mean it a solid rapport to the point where when I finally got back home, I ran my numbers. I had offered 80, and after I ran my numbers again and really padded that budget because I was just nervous at this point from this other project we were doing, I was like, shoot, I need to be at 70,000. Eighty's too much. So I called him. The next day I called him because he was only gonna be there for one more day and he's going back to North Carolina. And I was like, hey, I looked back at the budget. I'm gonna be honest with you. It actually came back worse. It looks like I would need to be at 70,000, but I'm gonna honor the fact that I told you 80 in person, and that that's just gonna remain my number. And I think he definitely appreciated that, and he was like, okay, well, he was gonna pocket over with his daughter, And it was like a couple hours later, they called back and they're like, well, let's see if we can meet somewhere in the middle. And where his thoughts were originally one fifty, I was thinking somewhere in the middle is probably like one ten, and I don't know that I'm gonna be able to go that high. He's like, could you do 85? And I was like, yes.

Mike DeHaan: [10:33] Yeah. For sure.

Otto Kinn: [10:34] So the next day, I met with him that morning before he had gone back home, and shook his hand at the title company, went under contract. We didn't close it, sign around or anything, but just got everything, got keys from him so I could get a lockbox on the door. And that was July, second week of July. And so we were set to close the second week of August. Mhmm. And soon as we were under contract, I just pretty much got to work sending it out to I mean, I had like four buyers and pretty much all of

Mike DeHaan: [11:08] them Yeah, the whole market.

Otto Kinn: [11:09] Yeah. And no, just because they had other projects going on, like it wasn't good timing for them.

Mike DeHaan: [11:15] Yeah. All their numbers were at 75.

Otto Kinn: [11:17] Yeah, exactly.

Mike DeHaan: [11:17] Right? Exactly.

Otto Kinn: [11:19] Yeah. I remember I ended up just calling some contractors that I knew.

Mike DeHaan: [11:22] Mhmm.

Otto Kinn: [11:23] And this one was really interested in it. So he went out and he took a look at things. His mom's like a realtor and so he comes back and he was like, well, you know, everything looks really good. I definitely wanna try this. He wants to kinda start his hand at at investing. And so he had offered me $1.27.

Mike DeHaan: [11:44] And 7. Do you have any idea where you were at that point or just like fired out that number?

Otto Kinn: [11:49] No. He had no idea. Well, and I I can't remember. I mean, I steered him that direction. I steered him high because I I think we were on a coaching call like close to that time where you had said just because you would take it at I don't remember how exactly it went, but just because you would take it doesn't mean that you shouldn't try to negotiate higher.

Mike DeHaan: [12:09] You should always expect that people are gonna negotiate with you. Right. Right? You know, just think if you're trying to sell something on Facebook marketplace, you know, that goes everyone comes in and lows balls you. Buyers are gonna kinda do the same thing. And also one of the big things to realize is that if you're doing this full time, your numbers are going to be different than somebody who does like one flip a year or one flip in their life. Yeah. They're gonna be willing to walk away with a lot less money because they're gonna do the experience. They're gonna want that experience, especially if they're a contractor and they're be doing the work themselves. That's a whole other ballgame.

Otto Kinn: [12:41] Right. Yeah. That's exactly it. I think that's kinda how it went. Had it in my mind, obviously, anything over 20,000 was huge. So I was hoping to get a 100. And so Mhmm. My thoughts were I was gonna push for one forty just because I think prior to this, I had gotten some really solid comps at an ARV closer to like two thirty, two forty. So that was kind of the time too where I realized that my budget may not necessarily be the same as somebody else's, and that's where in talking to this contractor realizing how much cheaper he could do it for, it all just kind of aligned. And so yeah, being at $1.27, we had a deal, we set it up, I had them get the contract signed, $5,000 down, but I remember still kinda having to baby them through the process. Yep. I think that they were having a hard time lining up the financing for it, like they didn't have the cash for it, so then they had to work with a lender, but they were working with like a local lender. And so it all ended up working out well going through. I remember talking to Dan for the transactional funding.

Mike DeHaan: [13:50] Yeah yeah yeah.

Otto Kinn: [13:50] Because I actually used your guys' SirLens a lot, which is an awesome name that I love.

Mike DeHaan: [13:55] Yeah. Yeah, It's our lending business that we have exclusively for Ansett investor members.

Otto Kinn: [14:00] That was a super cool experience in just like working with a private lender. That was my first time being able to work with him and the title company, getting to see how that all worked. That actually set me up for later on. Now I have a private partner who does all of my deals with me, and Yes. You know, that experience with Dan coming into the closing allowed me to figure out what that looks like, you know, as we've begun to navigate other deals now. But, yeah, this was cool. I mean, it was the highest revenue deal that I've done to date. Yeah. Ended up netting 42,000.

Mike DeHaan: [14:33] Perfect. Yeah. You have probably 40,000 after the transactional funding cost. Mhmm. But nice, man. I mean, that that's a great deal. And that was pretty early on too, I think, because you were still start you were starting to get some real momentum. Yeah. So if I remember right, that that sort of teed you up to really start leaning into stuff to round out the year, and since then you've just been getting after it.

Otto Kinn: [14:54] Yeah. It it was my experience is going into it. My first batch went out in January, and I remember you telling me that it takes really like give it three, four months in order to see some sort of like results. And the first two deals that I did, those came through in March. So it

Mike DeHaan: [15:12] was January,

Otto Kinn: [15:13] February, March, that was three months. I was like, oh, okay. That works. There you go. And well, this May batch was the exact same thing. That batch of billings went out May 1 and we closed August.

Mike DeHaan: [15:25] Yeah. I think that's one of the hardest things for people trying to get into this business is just that patience and going through it and doing the consistent work over that period of time. Because it's uncomfortable, especially when you're paying that bill for your marketing and you don't know when the money's gonna come back. But if you're committed to it, you do it consistently enough, eventually you can start to see like that pattern about what exactly the you know closing timeline's going to be. And the best thing too is that once you've done it a ton, you now have like pieces of your business that are out there forever and you'll start to get deals that you know you mailed six months ago and finally just called you for the first time. Yeah. And that's just gonna be a recurring pattern here pretty much forever as long as you continue marketing.

Otto Kinn: [16:05] Yeah. I know one thing that I've learned since then, my mailings have been, like prior to this, kind of sporadic and now it's been very consistent. And Mhmm. Since I've had that month to month consistency, I've seen the lead flow remain very consistent.

Mike DeHaan: [16:19] Awesome.

Otto Kinn: [16:20] I actually, I noticed a lot of people in the group saw leads go down over like the Thanksgiving time period.

Mike DeHaan: [16:27] Mhmm. I

Otto Kinn: [16:27] went up. Yeah. I I I've been averaging

Mike DeHaan: [16:30] Interesting.

Otto Kinn: [16:30] 30 to 40 leads. I had 70 leads through November.

Mike DeHaan: [16:34] Oh, wow.

Otto Kinn: [16:35] And so I'm still kind of getting through that.

Mike DeHaan: [16:37] That's interesting. Do have any idea why that was?

Otto Kinn: [16:39] You know, I'm not sure. I I I have to look back and see if I did something different in my actually, I had my VA send out that batch, and I just kinda vetted it. So I don't wonder if maybe something was maybe maybe we just let loose on a bunch of mobile homes that I didn't filter out, but it was I mean it was still, I like to see that uptake so.

Mike DeHaan: [17:00] Nice man, yeah, it's probably good to do little auto gen for getting it out. Yeah. Awesome man, well auto buddy, appreciate you sharing that deal, congrats on success, so that's $40,000 and you know, realistically like a month of work, but it was three months in the making, that's not a bad little payday right there at all. Yeah. But awesome man. So cool, well appreciate you coming on the show and you guys, that is what a real deal looks like. Know, So many sort of textbook things there, he had a highly distressed property, he had a motivated individual that had probably been marketed to before by other people, but Otto because he'd been marketing consistently was in the right place at the right time, And then at the end of it, he found a hungry buyer who wanted to buy a deal, was willing to pay a premium for it because it fit his criteria and because Otto was willing to walk him through the purchase process and make that go very well. As a result, he made the average salary in The United States in any couple months. So not a bad kick at all. But awesome, man. Well, I appreciate you for coming on the show. Yeah. And you guys, if you like this deal case study, then you should check out the instant investor program and you could potentially come on here and talk about a deal as well that you closed as part of being a member. So anyways, everybody, thanks so much for listening and we'll talk to you all next week.