Deal Case Study: Using Direct Mail to Find Your First Deal w/ Eric Clunn

Dan Austin: [0:00] Hey there. Welcome back to another episode of the collecting keys Friday focus. Today, we are doing one of our fan favorites, the deal case study. I am here with a an awesome member of our scale community, Eric Klahn. Like fun as he told me. A lot of fun with Eric. Eric's here, he's gonna go over one of a really slam dunk wholesale deal, deal case study. So we have some of these where they're super interesting, fantastic, crazy, wild stories, but I promise you, they're not all like that. Some of them are actually just run of the mill business transactions that that we do, and those are some of our favorite ones, because they take the least amount of logistics. Eric is also a member of our scale community. When did you join the community, Eric? How long have you been in?

Eric Clunn: [0:43] I think it was back in July, August maybe?

Dan Austin: [0:45] Yep, so like July, August 2023, we're now, we're recording this in January, so essentially like six, seven months that you've been in the community, and you've done or doing your first four deals, as you and I chatted pre show, and so this is pretty cool. Give the sixty second elevator pitch of like who Eric is, what you're doing, what your business looks like, what you do today. So yeah, I'm pretty brand new into real estate investing and wholesaling generally. So I quit my w two a couple years ago, started on my own business doing mobile notary services, that I realized there was

Eric Clunn: [1:12] kind of a, you know, financial ceiling to doing that type of work, reset ceiling, I had some friends also doing real estate, and they were making a bunch of money, I actually sold an investment property that I had through a wholesaler. And I was very interested with how he got my information, know, sent me a yellow letter in the mail. It was a pretty easy transaction, I was able to, know, sell my property and make a good bit of money.

Dan Austin: [1:33] And then I got interested in direct to seller marketing, and then I signed you all, and here we are. Wow. So you sold your house to a wholesaler, you're like, damn, that was awesome. I wanna do that myself. Yep. That is a good origin story, you never hear that. So good for you. That is super cool. And that is good that you worked with somebody that was actually a good it sounds like a great wholesaler, or somebody that obviously didn't piss you off, it wasn't scummy, so it was a good experience.

Eric Clunn: [1:56] Yeah, easy transaction. I responded to his letter. Yep. I made some money, he made some money, it all worked out.

Dan Austin: [2:01] Yep. You're new to real estate, new to wholesaling, what market are

Eric Clunn: [2:03] you in? South Central Wisconsin. So I've mainly focused on the Rock County area, which is between the the large cities in Milwaukee and Madison.

Dan Austin: [2:10] Gotcha. Rock County. I'm gonna remember that one. So let's dive into your deal. We got the four questions, same questions we ask for all these deals. First question is, what kind of property is this?

Eric Clunn: [2:19] So this was a single family home.

Dan Austin: [2:21] What, like three bed, two bath, was it kind of standard? What anything unique about it?

Eric Clunn: [2:25] It was a five bedroom, one and a half bath. It was a it was a large historical property that had, you know, had a bunch of turnover throughout the years. I believe it's last iteration, it was just one person was subletting a bunch of rooms.

Dan Austin: [2:37] Oh, okay.

Eric Clunn: [2:37] And the place was falling into disrepair. Yeah.

Dan Austin: [2:39] I was gonna say, must be an older house because you typically will see these older houses, they'll be like five bedrooms, they'll have a tiny kitchen and one bathroom where I got like one and a half bath like you said, so it doesn't surprise me. How did you find it?

Eric Clunn: [2:51] So this was a direct mail deal, so I got on your all's program, guys filed the script, and so it was direct mail, was my first set of mailings that went out, was the r o s postcards with the offer, which I feel was was definitely a clutch. Mhmm. And then I got a callback, it was on the vacancy list, so the absentee owner, vacant list.

Dan Austin: [3:08] Okay, absentee owner, okay, so that was my next question, what what was the seller profile, so is it is it absentee owner, why was it on the vacant list, is it because they were renting by the room or was it actually completely vacant and there was nobody in it?

Eric Clunn: [3:19] So it got reported, know, USPS reports the vacancies back to them. Mhmm. This was a older landlord, a husband and wife couple, they kinda owned their principal residence and they owned all the houses on the block around there. Oh, nice. And it's a bit of historic district in Janesville, Wisconsin. Mhmm. So this place, I guess, it just fell into disrepair, they had renters in there, and then they kinda left and that was vacant, and then a bunch of squatters got in there, and then they had the the sheriff came in, they you know, posted everything, got them out of there. And then what they did, they did a full clean out and kinda started some demo, like they were gonna rehab it themselves, just in time for my letter to hit their mailbox. Yep. And they were like, you know what, we don't really feel like doing this anymore. So so they called me and see what I could do for them.

Dan Austin: [3:59] That's awesome, and that ROS postcard, that's an open letter marketing product that we that we always put in our actual, our marketing plan, our marketing cycle, which we usually operate on like a six month cycle. It's not for the faint of heart, because those offers, they use their own little algorithm, they can be high, they can be low, and you can kinda select like ranges of ARV you wanna be in, but they're really, we like them, because they they are conversation starters. You might get people coming in saying, yeah, I'll take that offer, and you're looking at it like, oh crap, that's a really high offer, or they're pissed off because it's too low of offer. The goal here is that you're having conversations with people, that's what you wanna do, and if they will raise your hand, they're on a list, you're mailing them for a reason, it's not like they don't need to sell their house, or don't want to sell their house, in some cases that's true, but most often, if it's an absentee landlord, and they're on a vacant list, there might be, nobody really wants to own a property that's vacant, and so there's a good chance they'll wanna sell it, you know, sometimes not always, but anyhow, yeah, let's dive into that, let's dive into the story, so it was a, like you said, an older landlord couple, they owned a bunch of those houses, they were mid renovation, so how did this deal play out, like walk us through, you sent out the postcards, how long before they called in, how did that negotiation process look, like what did that look like for you?

Eric Clunn: [5:10] Well, yeah, first off, being, you know, I'm pretty new at this, so sending out those cards was a, you know, that was a huge risk for me, I was, know, I put myself out there, was like, man, I really hope this works, had my fingers crossed, and then immediately the phone started ringing, and the postcards with the offer on it was definitely a conversation starter. Everybody was very interested with that number. Mhmm. You know, nobody gets the number, but it's like,

Dan Austin: [5:31] how did you get that number, you know? Like, where'd you come up with, you know, they start asking all these questions and, yeah, it's a good conversation starter.

Eric Clunn: [5:37] Yeah, really is, it helps the phone ring. So, yeah, the phone started ringing off the hook, much to surprise. So this gentleman called, I was able to get out there same day and walk the property with him. I saw great potential of being an old historic property, had really good bones. So then went back to the office, told him I had to crunch some numbers and things like that, came back based

Dan Austin: [5:54] on your program, came back with my offer, they were ready to accept, and yeah, it was pretty pretty much a slam dunk. Couldn't be easier. Wow. So okay. So did you use the calculator from our courses, how you ended up calculating these things, the instant investor calculator that we throw up there? How did you come up with the numbers? I'm just curious. So I'm a very, know, get on

Eric Clunn: [6:11] the program and follow the blueprint kinda guy. I'm not straying, I'm not adding my own flavor to it, yeah.

Dan Austin: [6:16] Yeah. Just yep.

Eric Clunn: [6:16] So you

Dan Austin: [6:17] went and found your comps, you kinda estimated repair costs, and I'm I'm trying to I'm asking this because I'm actually blown away right now, that you're new, you don't have a lot of real estate experience, if any, you do this, now you have a person that's called, wants to sell their house, and you have to come up with an offer price by pulling comps, and building an after restored value, that is predicated on a certain level of renovations, that are the calculator we offer has all that in it. But it's you know, you still need to still need to kinda you know, put your effort into it, so it sounds like you did that, and that came up with your offer and then the same, was it the same day that you made that offer to him?

Eric Clunn: [6:50] I told them I had to go back and do some, you know, crunch the numbers, gave it a few days and then I was able to come back. I actually drove back out to them and had them sign it in person. Like I said, they're older Mhmm. They appreciated that type of touch, like building that type of rapport. Yep. I figured they wouldn't be, you know, oh hey, you know, DocuSign, let me just email this to you. Totally. So definitely I got that vibe that they were old school, so I drove back out there, you know, presented them the offer and things like that, and they were happy with it, they signed,

Dan Austin: [7:13] and yep, that was it. That's big on you to recognize that, because oftentimes we get stuck in like, oh, we need to you know, do an e sign to these people because that's our process, or that's what Mike and Dan said to do that one time, it's like no, you gotta, you still have to judge your sellers, judge whoever you're interacting with, and make that right decision of what's going to work best for them, and how you can best present your offer to them, so good job for that. So you got it under contract, they accepted it when you went there, they signed the contract, what did you do next?

Eric Clunn: [7:40] So well then I knew I had to find a buyer, so again, followed your process online, started doing this Facebook groups, basically applied for every group in the area, created an an offer sheet with a lot of information on the property and things like that. I was messaging that out out on Facebook. And then I had a large buyer in the area reach out to me. Evidently, he's a huge buyer in our area. He had sent some contractors out. We went back out, walked the property with his contractors, and they were when you mentioned the Excel sheet that for doing comps there, I actually I had that up when they were walking the property and they were blown away by it, with all the you know, the SKU numbers, everything that were linked to Home Depot, and we're able to calculate all the buzzing and the costs. So yeah, that worked out and then they were able to get me a price and I was able to get a spread right in the middle at $8,500.

Dan Austin: [8:25] That's incredible. Honestly, so I'm gonna be presumptuous here, so you're in, you said Southern Wisconsin, I'm gonna guess there's not like 5,000,000 people living there, like what what is like the area of the population size?

Eric Clunn: [8:36] So this county is about 260 to 300,000 people?

Dan Austin: [8:39] I mean, not tiny, but it's not large, right?

Eric Clunn: [8:41] Right, so the the area I live, the county just north of here was, which is Madison, Wisconsin, so that's the capital. You know, really large area, and then just east of us is Milwaukee, and Milwaukee County, another huge area. And this is kind of like a county in between. It's emerging, it's it's been on some

Dan Austin: [8:55] Yeah. Yeah.

Eric Clunn: [8:56] You know, some lists about like emerging markets, you'll see, you know, a pop up here and there, you know, these cities are the next new markets to get into, it's kinda like that third tier. Yeah, which

Dan Austin: [9:04] is good and I bring that up because when you're finding a buyer, oftentimes people will be worried like, oh, it's not a it's maybe more rural, or it's just less known, so I'm not gonna be able to find buyers, but you obviously were, and you were able to also, sounds like, was your buyer in like one of the neighboring counties then, but they would actually buy and invest down there, but they lived and did a lot of their investing in like Madison for example?

Eric Clunn: [9:23] Oh, this buyer actually lives in Vermont, so all the way across the country, he Why?

Dan Austin: [9:27] He invests in this area, yeah, so he evidently, he's a huge buyer in this area. Wow, okay, so that's also another thing I'm kinda blown away with, because you did follow textbook the process, which is you know, we talk about like how to develop a buyers list, because ultimately, you gotta have a buyers list, and you gotta start somewhere. We always talk about you know, scraping Facebook groups, you know, Rias, anywhere you can you know, get in contact with people that are investors. Sounds like it worked, and you said you made $8,500?

Eric Clunn: [9:53] Yep, yeah, was the spread on

Dan Austin: [9:55] this one. So from when you put it under a contract, when was the close date? Because I'm assuming these, were, you know, absentee owners, they didn't care when you close, could you close fast, or did the buyer need more time, how did that work out?

Eric Clunn: [10:05] They were concerned about what tax year it was gonna hit. So this was all happening late last year, kind of like through December, and they were like, oh, well, so it closes this year, they want to report our taxes. I explained to them that it it doesn't really matter if you can close on December 29 and then still report on '24 as tax. They didn't care. It just kinda ended up going past the year, you know, because of the holidays. Yep. Nobody wants to work too much. So it ended up closing January 6. Perfect.

Dan Austin: [10:28] Yeah. And that that that is a concern, especially with our older landlords, especially especially if they're like on social security, or some sort of like Medicaid or anything like that, where they're in, where it's income based, and they don't want their income to be a certain amount, or they're just worried about capital gains, maybe they have other liquidity events, you know, in their life, maybe they sold two other properties for you, so that they want to make sure that they're below a threshold, so it doesn't push them into another category. So it's always something to be conscious about. If you can know a little bit about it, don't be a tax expert. But if you can know a little bit about it, you can cater to what their needs are, and point them in the right direction, that's always a positive. Mike and I run-in this quite often, the at end of the year, and it's quite honestly, it can be a selling point, because oftentimes if they're like, no, I talked to my accountant, and it would be best for me to sell it this year, and like, well we have two weeks. If you can move it in two weeks, you're the best choice and best option for them to save them money on taxes, and so it's just a selling point that you can offer to them, so glad you brought that up. Okay, so that was your first wholesale deal

Eric Clunn: [11:24] Yes.

Dan Austin: [11:24] That you've done ever? Yeah. $8,500? It's so funny because our first wholesale deal, think we made $7,500, and so it's like that seems to be like that number, like for a lot of people, some people go out, you know, come out the gates with a $50,000 win, that's never happened to us on our first deal in any market, but they are out there, you just gotta be in the game long enough to get them if you haven't got one yet, so. Okay Eric, thank you for sharing all that, that was awesome, I appreciate it. I think, dude, you're kicking butt, man. The way you come in the community, you put in the time, I honestly think, know, I can see the folks that show up every day and and put or every, you know, coaching call, put in the time, seem to be the ones that are the most successful over time, and do you have any thoughts behind why that is? Is it just being able to consume the information, or is it getting to, you know, benchmark against the other community members? Like for you, is there anything in there that you're like, yeah, that's that's kind of my silver bullet? No, you all created a blueprint, I'm

Eric Clunn: [12:13] just following the blueprint, yeah, blueprint to your success. Yeah, just following your footsteps. Perfect.

Dan Austin: [12:18] Maybe that's what we should have called it, dang it, we should have called it the blueprint to success. Okay, Eric, well I appreciate that. If anybody happens to be wanting to invest in the Rock County or Southern Wisconsin area, do they have a way that they can reach out to you?

Eric Clunn: [12:30] Yeah, really simply you could just email me at e clunngmail dot com,

Dan Austin: [12:35] so that's just eclunn@gmail.com. That's easy, awesome. Well, Eric, thank you so much. For those listeners out there, definitely reach out to him. If you wanna invest in that market, Eric's got other deals, and he is doing a pretty good job generating leads and deals at a pretty fast clip for being a newbie to this game. If you wanna learn more about the community, go to collectingkeys.com/scale. As a reminder, the Scale community is our all inclusive off market real estate community where we take people who are doing one to two deals already and get them beyond that and help them scale their business, scale their cash flow, their assets, leverage, and appreciation through real estate. Also, you don't think you're ready for that, you're not already doing one or two deals a month, go to collectingkeys.com/instantinvestor. That's where we have our end to end course that teaches newbies how to get from point a to point b in real estate, you get to watch it at your own leisure. So yeah, if you're interested in that, go to collectingkeys.com/instantinvestorprogram. Other than that, we will see you all next week.