JF1852: From No Real Estate Knowledge To Over $40 Million AUM with Michelle Bosch

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Michelle immigrated to the states to study business and work a normal job like most people expected. She did that, and she was not happy. Thankfully she came across real estate investing as a way out of that. Now doing syndications and buying and selling land, Michelle and her team are doing really well and she’s here today to share her story and knowledge with us. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“I wish he had focused on the who of our business a lot sooner, we’ve been focusing a lot on the team” – Michelle Bosch

 

Michelle Bosch Real Estate Background:

  • Co-founder and CFO of Orbit Investments and a full time real estate investor since 2002
  • They have over $40 Million AUM
  • She has bought and sold over 4,000 pieces of real estate and built the 3rd largest land investment and auction company in the US
  • Based in Phoenix, AZ
  • Say hi to her at https://www.michellebosch.com/
  • Best Ever Book: This is how we rise

 


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TRANSCRIPTION

Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I am your host today, Theo Hicks, and today we’ll be talking with Michelle Bosch. Michelle, how are you doing today?

Michelle Bosch: Wonderful, Theo. Thank you for having me.

Theo Hicks: Absolutely, and thank you for joining us. Looking forward to our conversation. A little bit about Michelle, she is the co-founder and CFO of Orbit Investments, as well as she’s been a full-time real estate investor since 2002. Currently, she has over 40 million dollars worth of assets under management. She has bought and sold over 4,000 pieces of real estate and built the third-largest land investment and auction company in the U.S. She’s based out of Phoenix, Arizona, and you can say hi to her at MichelleBosch.com.

Before we get into the meat of the conversation, do you mind telling us a little bit more about your background and what you’re focused on now?

Michelle Bosch: Sure, absolutely. I am originally from Honduras, so just to give you a little bit of background – I’m an immigrant to the U.S. I came here in 1995 to study Business School, then an MBA. I went to work, like everyone expected, and hated it, and started looking into real estate — well, before real estate, into other business opportunities, but then looked into real estate. We knew absolutely nothing about real estate, nothing regarding how to build a home. My husband’s also from Germany, so how we build and construction in general was completely different.

It was a little bit overwhelming for us, because most people start with houses, and that’s what we wanted to start with… And we had no clue, so then we decided to focus actually on land. The reason why we focused on land was because, like I said, we didn’t know anything about how to estimate repairs, how to deal with tenants, or deal with toilets; they were getting broken, or roofs, or repairs, or molds, or anything of that sort.

So I had humble beginnings in the land space, and then we were able to really quickly scale that, and we went from doing our first year 60 land deals, to the next year doing a little bit over 100, and then the third year deciding, “Okay, we are working our butts off. Either we go big, or shrink back up.” We decided to go big and started selling our land through live auctions. Here in Phoenix we would have about one a quarter, so about 250 pieces of land in one day… That’s kind of where we started.

Then in 2009 we were in the incredibly fortunate situation of having created incredible large cash profits from selling land, either through cash or through seller financing, so quite a bit of cashflow coming in as well… And we were sitting in quite a bit of liquidity. And Phoenix was for sale, so we just went crazy shopping for homes. We could get them for anywhere between $30,000 and $50,000 and we could rent for $950 to $1,100 every month.

Then just three years ago, in 2016, we started in the multifamily space, syndicating our first deal, partnering with someone that knew how to do this really well, and now three years later we’re getting actually ready to sell that first asset. Then we moved on to two additional syndications in two other markets… So that’s where we are now. But we continue to this day to do land, just because it is so simple to work. You have virtually no competition, you don’t have the typical three T’s, of the tenants, toilets and termites. You don’t have to deal with mold, you don’t have to deal with anyone letting you into the property, getting a key to get into the property, because there is no key… [laughs] You just walk into the dirt.

At this point, all of the land that we do right now flip, we do it site unseen. We don’t need to be going to the property anymore, and that’s who we were able to actually scale, by just using Google Earth, maps, coordinates that we can send our buyers to, or when we’re buying, to really assess and do our due diligence upfront. We really don’t need to visit the property.

So it’s simple – we have developed a really good process to find sellers that don’t want their property anymore, and it’s a numbers game at this point. We have a team that is a very well-oiled machine, that we can really rely on to operate as we would operate. And I know you’re gonna ask me this a little bit later, but I wish we would have focused on the Who much, much sooner in our business. I would say during the last maybe six to seven years, our major emphasis has been on developing our team, on making sure that we hire based on core values, that even if someone has the expertise and skillset, that they must also align in core values and in our mission in order to join our company. That has really brought an incredible amount of ease and effortlessness for my husband and I.

We work together on this business. We’re one of those weird couples that can actually work together… And really just having that unique ability team to rely on has been just instrumental in us being able to move from being generators of results inside of our business to really being creators of opportunities for our business.

Theo Hicks: I appreciate going through all that; lots of things to hit on… We’re gonna break it into first talking about land, and then your syndication deals, and then some more high-level stuff about building your team. First, what part of Germany is your husband from?

Michelle Bosch: He is from the very South, from an area called the Lake of Konstanz. This is absolutely beautiful. It borders to Switzerland on one end, to Austria on the other… We actually fly into Zurich when we go visit every year. We’ve been doing that yearly pilgrimage thanks to real estate, for the last 22 years. He’s just right across the border, so 45 minutes after landing and getting out of customs in Zurich, we are on the German side and enjoying a beautiful area of Germany. Just incredibly orderly, clean, flowers everywhere, vineyards… I always tell him, “What a pity that the Germans don’t really advertise this area so well”, because it has nothing to be envious about or jealous about if you compare it to Tuscany. It’s just that Tuscany has an incredible amount of advertising that is being done for that area and that region in Italy… But it’s beautiful. It’s very, very quaint.

Theo Hicks: Yeah, that’s great. I just ask because my mom was born in Munich, so it’s always interesting to see people–

Michelle Bosch: Oh, yeah? About a 4-hour car ride or 3 hours by train. We’re actually going to be right now in September at Oktoberfest. I’ve heard for years about Oktoberfest, and I’m like “Jack, we need to make it out there sometime.” Especially since we had our daughter – we have an 11-year old daughter – we’re restricted to that school schedule. She’s usually back in school by the time Oktoberfest comes around, but I’m like “We’re just gonna go ahead and do it. We’re gonna pull her out for a week.” We already have tickets to it, our flight’s booked, and we’re excited. [laughs] Yeah, because he’s been talking about it for 22 years, and I’m like “I finally want to experience this.”

Theo Hicks: There you go. Alrighty, so let’s start off by talking about the land. In particular, you mentioned that you’re able to buy these properties sight-unseen. I know some people do that for properties as well. You mentioned a few things that allow you to do that – Google Earth, maps, coordinates… We don’t have to necessarily dive into that, but you did say you’ve got a well-oiled machine process, and I just wanted to go over that process of how you’re finding these deals… You said that  you’ve got a good way of finding people who no longer wanna have their land… So how are you finding them, how are you evaluating them, and how are you finding sellers in the back-end?

Michelle Bosch: The first step is basically identifying an area that you want to buy land in. Usually, there’s three types of properties that we’re after. Either an infill lot in the city, a lot that is in the path of growth, so on the outskirts of the city, or a recreational property, which can be out in the boonies, or close to lakes, or ski areas, or anything that you can think of recreational.

Here in Arizona it’s usually — I say “out in the boonies”, people that wanna go and set up a camper, or come out there with their RV on the weekends, or wanna go riding their ATVs… And the more washes the piece of land has, the more attractive it is for them. So we have to be open-minded when thinking about land. We always think of like “Oh my gosh, it’s got a ton of washes”, and that’s actually — a property that I can think of, one of our very first 40 acres in really rural Arizona, had quite a bit of washes, and we’re like “Oh my gosh, we’re gonna be stuck with this. What are we gonna do?”

And then there comes along a buyer that says “I am actually looking to pan gold, and I want a property that has quite a bit of washes”, because the mineral rights actually come with the property here in Arizona. In some other states the railroad companies own the mineral rights, but here in Arizona you have that situation. Or someone says “I don’t want it flat, I don’t care if it’s buildable, because I just wanna take it out there with my kids and ride our ATVs on the weekend.”

So the first part is basically identifying an area, and then once you have identified an area, you wanna procure a list of owners in that area, and you want to sort that list  by vacant land list owners only. Ideally, that list should have the owner’s mailing address, so you can actually contact them. And then what we do is we send them what we call our land profit generator proven letters. We tested quite a bit at the beginning until we ended up with the letter that we have been using now for quite some time. It is signed by me.

We even tested at the beginning having Jack sign the letters, and we had higher response rates when it was a lady soliciting them. So they go out with my signature. Invariably, there’s some people that still cannot conceive that a lady is soliciting them, so they will ask for Michael instead of Michelle.. But that’s okay… [laughter] And you send them a letter, pretty much. Then people will call you based on that letter, and they will raise their hand and say “Yeah, I do have this piece of land. I am interested in selling.” And we basically go through a script that we’ve developed to find as much information as we can, and gauge motivation from the seller.

We make offers. In the process of making offers we don’t take very long, because at this point we still don’t have our property under contract… So we do a relatively quick value analysis just to give us a ballpark. Most of our offers are anywhere on the 5 cents to 25 cents on the dollar of value of the property. We send those offers out, and then invariably, contracts will come back in accepted. You send that to a title company, close on the deal, and if you have been doing this for quite some time, you will more than likely the moment that you have an acceptance, you will start marketing the property, so that you can start doing that in parallel.

You also have the scenario where you don’t even have to use your own money, but you could do what we call a double-close, where you find a buyer and then that buyer really pays your salary, and the difference – they cut you a check, and there’s no money in the deal. Or you can assign a contract to another investor. So there’ different ways to do it, you don’t have to buy it. It’s just that for us it’s such lower price amounts that we just go ahead and buy it. Unless it’s a higher-priced property, then we’ll either put an option on it, or do a double close to find a buyer first, and then close on that transaction.

So that’s pretty much the process… And a lot of the selling can be done online as well. You don’t have to have your own website, you don’t have to really be tech-savvy. You just need to go to the places where people are already looking for real estate. We list our properties on Craigslist, on Zillow, on LandWatch, on Facebook Marketplace. Actually, Facebook Marketplace for the last year and a half has been fantastic… So we’ve been using and shifting a lot of our focus towards Facebook Marketplace to sell quite a bit of our land… And there, again, you can send them coordinates, plat maps…

This is all information that you will probably acquire upfront, in the process of the purchase, but basically as you are accumulating all this information in the process of you purchasing it, or putting it under contract, this is the same information that you’re gonna be using to market your property and find your buyer and send your buyer out there if they need to go look at the property before they invest.

Theo Hicks: That’s a really good, succinct six-step process for essentially going from beginning to end. There’s a few follow-up questions, starting with your script in your letters. Do you mind just telling us what you’re — you don’t have to tell exactly what it is if you don’t want to, but what’s the letter… Don’t go through the entire script, but…

Michelle Bosch: Yeah, yeah. I don’t have it handy, so I don’t know it off of my head anymore. On the letters it is a numbers game, but the number of mailings that we have to do in comparison to houses is minimal to get a deal. You can expect from a mailing of 100 letters to get anywhere between 8 and 16 callbacks, and then probably 2-3 deals, depending on the area and the property that you’re after. If it’s rural or infill lot. An infill lot will probably require a little bit more, just because it’s in a city and there’ll be a little bit more competition… So that’s what I wanted to say on the letter side.

It’s basically a letter that says “Hey, I know you own property in such-and-such county here in Arizona (or Texas, or wherever you’re at), and I’m really interested in buying it from you. I can pay you cash, I can help you get rid of the burden of property ownership. I close quickly, I have a track record. I’ve been doing this for so many years now.” Or if you don’t have that track record, you can say “My company is looking to buy and acquire in this area we’re moving in, and if you would be interested in having a quick cash sale, please give me a call.” And you give them the contact information. There’s a little reference.

We have actually developed a proprietary software, so that helps us manage all our deal flow… So part of that letter, when it goes out, there’s a little reference number on the side, that even if someone calls me back and I miss their call, they can leave a voicemail and I have an outgoing recording that says “Leave me your reference number, and with that I can look up your information, and I can look up your property, and I can call you back”, if that’s what they want, a callback. Otherwise I’ll just send them an offer. Because that’s all I need really from them; it’s nice to talk to them on the phone, just because, like I said, you can talk to people on the phone and you probably get a higher acceptance rate, but it limits you in terms of either you hire three people to help you, or you outsource it to a call center, so that they can help you receive those inbound calls, and you are able to personalize that call a little bit more… But there’s only so much volume you’ll be able to handle.

Or you can decide  – if you still have a job – that you’re gonna let it go to voicemail, or outsource it, whichever way… And perhaps you personally are not gonna make that relationship with your seller on the phone, but it’s gonna give you the ability to scale, basically, and send out much more letters, send out much more direct mail, and be able to service many more inbound calls, and therefore send out many more offers, and get more contracts accepted, and so on and so forth. So that’s just on the letter side.

When you’re receiving the call, the questions that you wanna ask people are along the lines of “Are  you the owner of record?” More than likely, I would say about maybe a little bit over 50% of the people that we get either they inherited it, there is a divorce of some sorts… Some kind of a hardship has happened, or mainly they’ve inherited it and they’re miles away from that property, and they don’t wanna have to deal with it… And it’s either in the name of their parents, or of the estate, or whatever… So you wanna ask them, “Am I dealing with the owner of record, or who are you in relation to the owner of record?” You wanna make sure that you are talking to the person that has decision power.

Then you wanna ask them about the property. “Can you confirm the size? Does it have access? Does it have utilities? Electricity? Is the road access paved or unpaved? (Because we’re talking land here) Do you know if it’s difficult to get in a septic tank, or have you had your land percolation test?” It’s basically a test that they do to figure out how fast water drains in order for you to be able to put in a standard septic system… So you basically go through a series of those questions to try to see what is out there in terms of value already in the property; any improvements that they have done, fencing it, or anything of that sort… And then  you can ask if they have an idea of what they would like to get for their property. That’s pretty much the gist of the script.

What you’ll find out is that during the course of that conversation, if you are servicing the calls, which is how we started — actually, both Jack and I would take all those inbound calls, and because when we had just moved here in the U.S. our English wasn’t so good, we struggled at the beginning. I’m like “No, you take that call.” “No, no, YOU take the call.” “No, YOU take the call.” Because we were really concerned and self-conscious about our accent, and people feeling like they could do business with someone that sounded like a foreigner.

Honestly, we were very concerned about that. And actually, it was never an issue. People loved talking to me and telling me their stories of how they had purchased that piece of land… If it was here in Arizona along with another lot in Florida, but they had decided to go ahead and retire in Florida, and now they didn’t want their property… A lot of out-of-state owners. And it really gives you the opportunity, when you take the call, to really connect and hear from your seller as to what’s going on with the property.

Theo Hicks: Very detailed. This is a very solid episode for those who want to get into the land game. The last question before the best real estate investing advice ever question, which is “How are you formulating the offer price?” I know you ask them what they want, I know you said that you do between 5 and 25 cents on the dollar of the value of the property, but how are you determining that actual value? Do you have software that you use, is there a formula? How does that work?

Michelle Bosch: Yeah, our software actually is tied in with Trulia and Zillow, so we can see comparables very quickly. Otherwise, a simple Google search if it’s a subdivision and I don’t find anything on Zillow or Trulia; I can just google it and get a feeling for 5-10 minutes at most for value, and go ahead and make my offer anywhere between 5 to 20 cents on the percent of that… And send it out, and see what happens.

There’s gonna be people always that are not gonna be accepting that offer, and they might even write you back, saying “Hello, how do you dare write me such a low-ball offer?” But then you have a ton of others that actually accept your offer and wanna do business with you. That was your question, right? What was it?

Theo Hicks: Yeah, that was the question, how you’re valuing the property. So basically all the properties are comparables.

Michelle Bosch: Well, one more thing is in an infill lot situation, that’s where it would vary a little bit. You might not have comparables, because say a subdivision is completely built out, and perhaps you’re looking at the last infill lot there to acquire. So how you would do that is you would basically look at the average price sale of homes in that area, and then figure out basically per square foot what a builder would be having to spend in terms of building a similar-sized property now, and then from there say “Okay, about 20%-30% of that value is going to be going to the land. So the land is really worth this much, and of that I’m going to offer 10%, 15%, 20%.” So you kind of like back into the value of the land based on the value of the house. So that’s the only place where you kind of need to back into it. Otherwise it’s pretty much straightforward for the most part, and it’s just looking at comparables, and size, proximity, price per acreage that has sold in the area that you’re looking at.

Theo Hicks: Alright, Michelle, what’s your best real estate investing advice ever?

Michelle Bosch: I think the best advice ever – and even to this day we continue to apply it and we need to remind ourselves, because as we have transitioned in our journey as investors, you get so enamored with “Oh my god, I can entertain so much complexity now.” But my best advice would be to always, no matter what it is, even if it’s an apartment syndication, to keep things simple. The key to prosperity is simplicity, and to keep things simple. That would be one. And then the second would be to really focus on your Who and on building your team that is rock-solid, that is people that share your same core values, that are going to have the same intentions that you are, that really rally behind your vision and the mission that you have for your company as a business owner; that is the biggest a-ha.

Theo Hicks: Alright, Michelle, are you ready for the Best Ever Lightning Round?

Michelle Bosch: Sure! I can do this! [laughs]

Theo Hicks: Alright. I’ve got faith. First, a quick word from our sponsor.

Break: [00:22:49].28] to [00:23:50].14]

Theo Hicks: Alright, what is the best ever book you’ve recently read?

Michelle Bosch: I am actually in the process of reading it right now, and it’s called “This is how we rise.” It is by a lady by the name of Claudia Chan. She is the founder of the S.H.E. Summit. Part of what I’m really interested right now is in really advancing women and getting many more women into real estate. So it’s a leadership book, and I would highly recommend it. She talks a lot about whole life leadership – in order for you to become a business leader, you really have to develop yourself personally, and in order to develop yourself personally, you really need to develop yourself spiritually. When you go to that place of spirit, because nobody wants to talk about that too openly — but when you do go to that place of developing yourself spiritually, you start thinking about leading in your life with a purpose, and everything that you do in leading in your business, and in your community, with a purpose. I would highly, highly recommend that book, “This is how we rise.”

Theo Hicks: If you had to start over today with little or no capital, how would you do that?

Michelle Bosch: I would go back to doing land. When we started doing land, how we did it was lower-priced property, high volume. I would probably turn that around, just because I can entertain a little bit more complexity now, and I would have had the benefit of that experience… So I would now focus on slightly larger-priced properties when it comes to the land, but I would definitely go back to the land… Because what I like about land is that it gives you the opportunity to create large cash profits if you just do a quick flip… Which we call one-time cash, by the way, in our family.

And if we decide to do seller financing and really carry the note, become a bank, and have someone pay us monthly payments every month on our land, that’s temporary cash… So it allows us to go from one-time cash, to temporary cash, and then use that money to go and park it into passive cashflow type of investments such as apartments. So that’s what I would do – I would build my team around core values much quicker than I did in the beginning, for sure, and leverage the knowledge that we have, the capability, the confidence, the courage.

We always say that our process has been a process of following what we call the four C’s, which is we committed to something simple, which was land… But that helped us build the courage, the capability and the confidence to move into the next asset class, which was houses. And then after doing that for some time, and 50 rentals later, in three different markets, we’re like “Okay, we committed to that, we mustered the courage, we gained the capability, now we have the confidence to move to the next big project.” So leverage that, leverage our network, and then move as quickly as possible again into passive investments and get what we call our Security Plan in place through passive investing in plays as quickly as possible.

Theo Hicks: Alright, and then lastly, what’s the best ever place to reach you?

Michelle Bosch: The best ever place to reach me I think would be to just go to my website. It’s www.michellebosch.com. Of course, Facebook, Michelle Bosch, Instagram @MichelleBoschOfficial. We have a free Facebook group called The Land Profit Generator Real Estate Investing Group – very active; it’s an incredible community of very generous people; generous with their time, with their knowledge, that really help each other just figure out land deals if you’re starting at the beginning, or if you don’t know what the heck you’re doing. It’s an amazing resource to have. And just a source of inspiration every single week. “I have three offers accepted. I just closed on a deal.” Just last week we had a gentleman – his first deal was $18,000. Another guy said “I just sold something for $35,000.” The next lady had another offer that go accepted, and so on. It’s a place to come in and celebrate your wins, and really share your struggles, because everyone else there is going to help you get over those. They’re a very, very giving community.

Theo Hicks: Well, Michelle, I really appreciate you coming on the show today and going into extreme detail on how to get started in land. This episode should be called “The Ultimate Blueprint to Buying Land.” I’ll quickly summarize the six steps… Number one, identify the area, and you went over the types of land you can look at. Step two is you get a list of owners – you said specifically sort by vacant land only – contact those owners, and then send them your letter… And you went over exactly what to include in that letter.

We talked about the pretty high conversion rate of these rate of these letters for land, compared to other real estate niches.

Three is to screen the calls. You went through some of the questions to ask and how to approach actually screening the calls from a logistics perspective. Four, make offers… Again, you went over exactly how to calculate the value of your offer.

Five is as the signed contracts come in, send those to your title company to close, and then step six, which kind of like 5.b) at the same time, once you get that contract, you can start to market those properties, and you gave us examples on how to do that.

And then your best ever advice was two parts. One, keep things simple; don’t make things super-complex and just confuse yourself; if it ain’t broke, don’t fix it, as they say. And then you also talked about how you should focus on building a team that shares the same core values and mission and you, and that trumps someone who’s highly skilled in land, for example, but doesn’t share those values.

Again, I really appreciate taking the time to speak with us today. Best Ever listeners, thank you to everyone who listened. Have a best ever day, and we’ll talk to you soon.

Michelle Bosch: Thank you for the opportunity.

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