JF1992: Software Developer David Lecko Creates an App to Assist in Contacting Distressed Properties

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David Lecko is from Indianapolis and the CEO of Deal Machine. Deal Machine is a real estate investing app that puts you in touch with any property owner via direct mail, phone, and email. All you have to do is simply take a photo and you instantly see who owns it, then choose how you want to get in touch with the owner. David also shares how his app can help you hire drivers to help you find more properties. 

David Lecko Real Estate Background:

  • CEO Of Deal Machine –  a real estate investing app that puts you in touch with any property owner via direct mail, phone, and email. When you see a house, simply take a photo and instantly see who owns it, then choose how you want to get in touch with the owner.
  • Last year app been used to capture 4 Million Potential deals 
  • Based in Indianapolis
  • Say hi to him at https://dealmachine.com/

Best Ever Tweet:

“Obviously you don’t want to Lock up a Property that you know you can’t honor the purchase price, but if after your inspection you realize it’s going to cost more than what you thought to fix, then it’s perfectly fine to go renegotiate with the seller”- David Lecko

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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, David Lecko. How are you doing, David?

David Lecko: Good. How are you doing?

Joe Fairless: I am doing well, and looking forward to our conversation.

David Lecko: Me too.

Joe Fairless: A little bit about David – he is the CEO of Deal Machine, an app that enables real estate investors to find off-market deals and contact any property owner via direct mail, email and phone, with a single click. In the last year the app has been used to capture over 4 million potential deals by driving for dollar teams. Based in Indianapolis.

With that being said, do you wanna give everyone hanging out — and by the way, if you’re listening to us on the podcast, we are filming this live in Cincinnati. If you wanna hang out with us, go to BestEverMeetup.com. We meet the last Tuesday of every month. So with that being said, do you wanna give everyone here and the Best Ever listeners a little bit more about your background and your current focus?

David Lecko: Sure. So who’s read Rich Dad, Poor Dad? Awesome. That’s exactly what motivated me in 2016 to actually buy a rental property. I had always been really interested in retiring early, but I was on a career path, and then I was putting money away in a 401K type deal, but I didn’t have a lot of control over that, because the market would go up, and so would the money, and then it’d go down… So I loved how the rental properties would give you predictable cashflow.

That’s when I started figuring out “Okay, how do I buy one?” I was looking at what was available online, on the MLS or Zillow, and really nothing had numbers that worked. So if I bought it at the prices they were asking, it wasn’t gonna cashflow, because they were charging too much. Have you guys ever encountered that? Yeah, you know what I’m talking about.

So I had to take things into my own hand and find my own deal. I went to a meetup just like this in Indianapolis, where I live, and I heard them talk about driving for dollars; how many of you guys have heard of driving for dollars? Cool. If you guys have heard of that, you know it’s a fantastic list; that’s what I was told, and that’s why I started driving, looking for houses that looked rundown, so that I could contact them and ask if they wanted to sell their property.

The idea is if their property is rundown, and they need to sell it, then they either need to  dump a bunch of money into it and fix it themselves to sell it on the market, or sell it at a discount to me. So that’s what I was looking for. I was gonna provide and speed and convenience, and they were gonna provide the discount.

So I struggled with the follow-up… This is where I had the big issue. I wrote down about 40 addresses, over about 3-4 weeks, and then I actually drove by the same house twice on accident, and somebody was out there renovating it. I was like “Oh, that house looks familiar. I am pretty sure I wrote that down”, and sure enough, I had… But I hadn’t done anything with my list.

So I had this moment when I was like “Oh man, I’m totally missing out on this deal. Somebody recently bought it, and it wasn’t me”, because I hadn’t even reached out to the owner yet. So I had that follow-through issues, and that’s when I decided that I needed to make something on my phone that would allow me to look up the property and then send out a piece of mail right there on the spot, and then automatically repeat that. I had a software development background, so that weekend I developed a very basic app just for my own phone, that would do that.

Joe Fairless: And what does this app do now, that that app did not do originally?

David Lecko: The biggest difference now is I had started as a beginner, and it was all about me inputting the properties… And I realize that investors that are already doing 10 deals a year plus, they’re buying these lists, but they’re spending a lot of money sending mail to those lists… Because if you can buy a list online, every other investor can have that same list. Do you guys agree with that? You go to ListSource and your competitors are doing that, too.

So I realized that as I  was doing more deals, you’ve gotta spend a lot more money to do deals that way at scale. So now the app has a lot of tools for actually training people from Craigslist or on your team already, and onboarding them and actually getting them to add properties for  you.

So when I first started to have somebody drive for me, you get to a point where if you’ve done a few deals, you wanna scale; you’ve gotta hire somebody else to go do certain tasks. And to hire somebody else, you could hire somebody to drive for like $15/hour. So I realized when I got to a certain point I needed to leverage my time, and it was worth paying somebody to do a very basic task. Because if you’re doing one, two deals a month, your time is already worth a lot more than $15/hour. So the app gives you a lot of tools to systematize you building a team.

Joe Fairless: So user flow, or just the linear experience from “I download it, and then implementing it”, how does that experience look like?

David Lecko: For the team?

Joe Fairless: Yeah, from the team aspect.

David Lecko: I’m glad you asked. So when I first started, I looked at Craigslist, because I thought Uber drivers — Uber is recruiting on Craigslist; I’m looking for the same type of person, so I’m gonna post an ad on Craigslist to make $15/hour. So I had set up five interviews with people who were interested to drive for me for $15/hour, and then here’s what happened. Four of the interviewees never showed up, and then the fifth one did show up, and I was very energized about it… But then the next day she called me back and she said “Hey, I’m gonna move to Florida with my mom, so I’m not gonna be able to do this job.” I was like “What’s going on? I thought you guys wanted this job, and nobody’s showing  up”,  and they’re all flaking out. Then I realized that building  team of people that make $15/hour can be very challenging when you’re recruiting from Craigslist.

Basically, you can post this ad on Craigslist, you can write it yourself. We’ve got a template. But you wanna actually direct them to be able to jump through the same hoops they’re gonna have to do for their job, before you spend any time scheduling with them or talking to them.

As an example, what I started to realize was if I’m hiring them to add properties, before I  meet them or train them I want them to sign up for the app and add 20 properties that day, and I’ll pay them that day as well via Venmo. But if somebody does that, that really weeds out a lot of the riff-raff and people that don’t’ really want the job seriously, or they’re not stable enough to follow through on their commitment to meet you for an interview.

So the portal is all about — they can go to this page, learn about how you’re gonna pay them, what they’re gonna have to do, what the requirements are, like a driver’s license and insurance etc.

They can self-signup, and then they go through six training videos that you choose. We’ve produced some, but you can choose, like “I want a high level of distress, low level of distress, you could focus on these areas…” So it lets them go through this whole process that’s normally a very big pain, and then on your side, the properties kind of flow through to you, and you can approve them and have mail sent out, and you can also see where this driver is actually driving; it has route tracking, so you can see “Oh, they drove three miles today. It took them 25 minutes.” That way they’re not like “I drove an hour”, and then you can see they only drove 20 minutes.

So it gives you all that insight to what your team is doing, and if you’re got more than one driver, it’ll prevent them from overlapping, because they can see where everyone else has gone.

Joe Fairless: And why not compensate them based on results versus hourly rate?

David Lecko: So when you’re first starting out, I might suggest having your mom or a relative that is gonna be somebody you know is gonna stick and wants to help you out, and pay them something when you close the deal. However, if you recruit outside of a very small inner circle, in a lot of areas there’s realtor laws that prevent you from paying when a deal closes, because that’s too close to how a realtor would act when you’re transacting real estate, and you need  a license to do that. So that’s something you need to double-check, if you’re gonna pay based on the performance like that.

Joe Fairless: Well, I’m not talking about not performance of closing, which would be the ultimate alignment of interest; I’m talking about performance of X number of leads.

David Lecko: Oh. So I think that’s a really cool way, too. If you do that, you could pay like a dollar per lead, and then you could expect to add 15 properties an hour, for example. But what I’ve found is it makes a lot of sense to us, but for somebody who wants to drive Uber, they’d much, much, much appreciate having a very steady income that they can predict, rather than “Oh, I’m just getting a dollar every time I do this activity.

It doesn’t really feel like a job to them, and they won’t treat it as such. If you want them to stick around and do this regularly, they’re gonna have a lot better chance of sticking if you do the hourly. When you do that though, you still wanna set a goal, an expectation of “Hey, I need you to add at least 12-15 properties during each one of these hours.”

Joe Fairless: Is that the average amount that they would do?

David Lecko: Good question. It totally depends on what neighborhood you’re looking at. You could go in a neighborhood and add 70 properties in an hour if literally everything is terrible-looking. It just depends on if that’s where you personally wanna look. When I’m buying a rental, I would prefer to go to an area that is not totally in bad shape, but one where the neighborhood was built in the ’60s and maybe wasn’t updated yet, so you’re gonna have every third house that’s gonna be rough, but others are pretty well kept.

Joe Fairless: So now from the real estate investor’s perspective, what’s that experience from start to finish, in terms of all the different steps that they take?

David Lecko: Sure. If you’re just starting out, there’s a 14-day trial. You can add unlimited properties, you can add your own house, sending yourself a postcard from there… And if you wanna start adding team members, that’s a whole other module. But if you have those team members, you’re gonna see when they’re self-signing up, like I talked about, you’re gonna see where they’ve driven, and you’re gonna see those properties coming in, so that you can actually approve those. None of the drivers are spending are spending your money without you approving “Yeah, you’re adding the right kind of properties.”

Joe Fairless: And what are the different revenue streams for you as the developer?

David Lecko: So the app has a monthly fee; it’s $49/month. The mail pieces – we’ve got seven types, and they range from 49 cents to $1,50. The $1,50 is actually a piece that’s written by hand, with a pen, that we send on your behalf, so you can choose what mail piece you’d like to send.

Joe Fairless: Any profit sharing on the hourly rates for the drivers?

David Lecko: Good question. We provide the technology, but you would actually hire the drivers directly yourself, through the technology.

Joe Fairless: What’s a feature that you all tried in the app – and I’m assuming there is one; if there’s not, that’s fine –  and it’s no longer there because it didn’t test well, for whatever reason?

David Lecko: That’s a good question. I will say we started with the app being free, and then the mail pieces were $2. It’s pretty pricey for a mail piece, but if you’re just doing one-off, it’s like “Oh, that’ll probably save me money.” But we kind of switched the model and lowered the mail cost as much as possible, and people use it a lot better. So that’s a major thing that we definitely changed.

Joe Fairless: What’s been the biggest challenge?

David Lecko: The biggest challenge that I feel really passionate about is that people actually quit too early. When they’re first starting out, they might try adding 10 properties, and they’ll be like “Oh, this didn’t work for me.” But really, you need to add 200+ properties.

A story I always like to tell is when you’re starting a business – for me, I’ve started the first version of deal machine in 2016, and I actually worked a whole year and a half before it was earning any money for me to pay myself a salary. So when I see a lot of people getting started with something, I feel like they don’t have a proper expectation of how much work it’ll take… And the payoff is there, but they get discouraged and they move on to something else too quickly. So they’re kind of chasing their tail, because they’re moving on from one thing to the next before they fully understand that it’s a numbers game, and it takes 200+ properties to find that are rundown, and contact them several times over the 2-3 months, before you decide that “Oh, this is not for you.”

Joe Fairless: Is there a feature on that, is there a feature that you follow-up mail campaigns to the same list?

David Lecko: Yeah. You can repeat the same thing, or you can have it send a different message the second time. But I think when you’re just starting out, just keep it really simple and just keep repeating the same one. It actually features the picture of the house on it, so it’s already gonna stick out compared to any other mail they’re receiving from any other investors like that.

Joe Fairless: And you have different options, for postcards vs. put in an envelope, and then a different variety of those?

David Lecko: Yeah, there’s the postcards that feature the picture, and people look at that, and they’re like “Oh, they were actually in front of my house. You can tell.”

Joe Fairless: Is that pulled from the county website, or the picture that the driver takes?

David Lecko: The driver takes it, with the app. So it looks a lot more clear and personal than a Google Street View picture, for example. So what was the question?

Joe Fairless: You answered it.

David Lecko: Okay, good.

Joe Fairless: For an investor who wants to scale quicker, and does not want to work directly with the drivers, is there a concierge option, where someone on your team handles the drivers stuff? The investor simply comes to you and says “Hey, I have a budget of X amount. Please handle the drivers stuff. I want this area of distressed properties identified and then mailed to.”

David Lecko: Yeah, if you’re interested in that — it’s not on our pricing page, but if you’re interested in that, you should ask for it in the chat and we’ll do a one-on-one meeting with you and discover  your goals and manage the drivers for you.

Joe Fairless: What markets are you all in?

David Lecko: Well, it actually works across the United States. The four million properties that were added – that was across the whole United States. But I live in Indianapolis. It works everywhere.

Joe Fairless: I assumed it worked everywhere. I also imagine three years into it — and this is my guess, but maybe it’s a wrong assumption… That you all have a heavy concentration, it’s top-heavy on certain top 10% markets, or three markets weigh heavily in that four million. Is that accurate or not?

David Lecko: Yeah. I would say it just naturally follows where people are heavily investing, so markets like Phoenix, and Houston. Those are pretty heavy for us. But there’s a whole lot of people doing real estate investing, specifically wholesaling there. That’s the primary person that uses the app… So we kind of follow those trends as well.

Joe Fairless: Got it. You were a software developer before?

David Lecko: Yeah, I was.

Joe Fairless: Okay. And usually I ask what skills did you acquire there that apply to what you’re doing, but that’s a dumb question in this case… [laughter] Well, you can answer it…

David Lecko: I think a lot of people are interested in developing just an app in general; they’re not familiar with the process… So I was gonna share that developing an app is very similar to actually developing a house. For an application you’ve got the database, it stores all the members’ data, all the users’ data; you’ve got the user interface, which is what you see, and then you’ve got  a layer that connects the two. And that’s called an API.

So a house – you lay a foundation and there’s like an expert for that. You frame it, and there’s a carpenter for that. And then you put the roof on, and there’s an expert for that, too. Same is true if you’re developing an app – you would need three different developers that had expertise in each of those levels.

I just thought I’d throw that in there, because people typically ask me questions about software.

Joe Fairless: So on the investing front, your own investing, what have you purchased?

David Lecko: The best story is I bought this $4,000 house, and I didn’t have the money to do the full renovation, so I put $60,000 on these credit cards. I got these no-interest credit cards and I maxed them out. It was scary. And I actually got sucked into this position where I thought “As soon as I renovate this house, I’ll be able to refinance it out for 70k or 100k, and I’ll be good. I’m gonna pay off those credit cards.” But the problem was this house was pretty unique; it was half the square footage of anything else on the block, and it was the nicest house on the block now, since I came and fixed it up… So no banks that I could find would give me a loan, because there’s no comps. But it’s rented right now for $1,800/month, and I’m only 70k into it. So it’s way better than a  traditional rental would even be.

Joe Fairless: Not factoring the interest rates from the credit cards.

David Lecko: Well, those were zero. But eventually they kicked in, yeah… So what I ended up doing was a friend from Chicago had another friend that’s like a stock trader, or something; he does something like that. And apparently, those guys have a lot of money, so he lent me the money to pay off my credit cards. That is how I handled not paying the high interest on those… Because that would have been insane.

And then luckily, the business had kind of taken off, to where I did have enough cash to pay him back in time, so like “Phew!” I don’t know what I would have done, but it could have been bad.

Joe Fairless: What were the terms?

David Lecko: The terms was he would just get the house if I didn’t pay him back.

Joe Fairless: Zero percent interest?

David Lecko: I forget… I just remember it was four months…

Joe Fairless: Okay, a very short-term loan.

David Lecko: Yeah. It was supposed to be a bridge loan, because I was trying to get that bank financing… So that was another reason. Before they didn’t give me comps, they actually were like “Hey, your credit score is pretty bad.” And that was because I was utilizing all those credit cards. So the first step I was doing was “Alright, I’ve gotta pay off these credit cards so I can get a mortgage in the first place.” So that’s why I did the bridge loan. Then I found out, “Oh, they won’t have a comp for me.” Anyway… So I definitely learned a lot on that first deal… But it’s still performing well. Yeah, I can’t get  a loan on it…

Joe Fairless: How did you find the $4,000 house?

David Lecko: It had a tarp on the roof, and I took a picture of it and added it to the Deal Machine app, and I actually got a call from him on the 7th postcard. So it was like 5-7 months later. And he called me — it was the first deal I’d ever done this way, and it was so easy, because he was just like “Hey, I’ve got this postcard thing and I need to sell my house.” And I was like “Okay. Do you wanna meet up?” And he was like “Yes.”

I came over that night, and I was like “Hey, I’m gonna take a bunch of pictures and then I’ll give you an offer two days later”, mainly because I didn’t know what to offer. I was gonna offer him $10,000, and then I don’t know why – I did some numbers, and I was like “Every other  house around here is much larger, and since yours is so much smaller, dollar per square foot I need to offer $4,700.” So I showed him that math, and then he accepted it a day later. So it was actually a really easy transaction, especially since I didn’t know what I was doing. [laughter]

Joe Fairless: You said that was the seventh postcard he received in approximately 5-7 months…

David Lecko: Right.

Joe Fairless: So we’ll call it seven months… Is  that what you all have found, one follow-up per month is the most effective, or is it a different frequency than that?

David Lecko: We recommend doing every 21 days, actually. So it’s a little bit sooner than every month. We want to make sure everyone is following up at least three times. We just want people to get out of the mindset of “Oh, I sent one and they didn’t call me back.” As this example showed me, it was all about timing for him, because his house has been in bad shape for years. That was obvious.

So he didn’t need to sell it until a life event happened where he then needed to sell it. And for him – he had had surgery, and he couldn’t mow his grass anymore. In his words, “I couldn’t keep up with the maintenance of the property.” He didn’t have high standards for that, but he couldn’t do anything now, so… He was moving out to an assisted living place where they were gonna take close care of him, so that’s when he decided he needed to sell it. So it’s a lot about timing. It’s like a timing and numbers game, as well as identifying the right distressed house.

Joe Fairless: And 21 days, you said… Why not 20, why not 50, why not 12? How did that come about?

David Lecko: At the time it wasn’t super-scientific, because I was just reading articles about sales follow-ups in general, and… I had that experience of within 3-4 weeks not sending a postcard and then somebody buying it in that period. So I was like “I need to strike the right balance of being pretty timely, so that I’m always kind of there. But I wanna watch my budget too, so I’m not gonna send it every two weeks.”

Now we say if you do 22 days, it’ll arrive on a different day of the week every time. I don’t really know if that’s important. It’s just kind of like a nerdy thing.

Joe Fairless: Yeah. Let’s say it’s seven cycles of 21 days.

David Lecko: Yeah.

Joe Fairless: Within each cycle, does the postcard change at all, or is it the same postcard every time?

David Lecko: I recommend sending the same one. The default that we send – it just says “Is this your property?” There’s a photo of the property, and it says “If you’re interested in selling, I can close quickly and with cash. Please give me a call or text. Have a great day.” So it’s simple enough that it just works. There’s no magic postcard out there… And if you’ve got a pretty decent message, I think it’s okay to send the same one.

Those guys who are doing tend deals a year plus – they get a little bit more sophisticated sometimes when they’ve mapped out “This is the sequence that we wanna use.” So you do have that option as well to switch it up.

Joe Fairless: What’s a deal you’ve lost money on?

David Lecko: Let’s see… I will say I offered on a property that I was planning on buying and renovating myself, and it was the second one, after this $4,000 one. And I actually shopped it around to some of the other wholesalers that I knew actually take down properties, and they were all 10k below what I had it locked up as… So in order to be safe myself, I was just like “I need to lower this down, because the cigarette smoke damage in the walls is actually gonna require us to replace that drywall, to get rid of the smell… So that’s gonna cost an additional 10k.” And that seller did actually agree, “Let’s get this deal done. I still wanna do the deal, I just have to do it a little bit lower.”

Obviously, you don’t wanna purposefully lock up a property that you know you can’t honor that purchase price, but when it’s a real scenario like it was for me, that I did a little bit more inspection and realized “Hey, this is gonna cost more than I thought to fix”, then I think it’s perfectly fine to go renegotiate with that seller. So we didn’t lose money on it, because we had gotten that lower price.

Joe Fairless: Last question and then we’ll open it up to everyone… Best real estate investing advice ever?

David Lecko: I think that whatever you choose, you should be consistent. You don’t need to blindly do that thing forever, but I think you should talk to an expert who’s had a lot of success doing that thing. And if it’s driving for dollars, or if it is doing cold-calling from the absentee owner list, I would encourage you to find somebody who’s had the success that you want in that area, and then get an idea for “How many calls do I actually have to make?” And then be really consistent, even above and beyond that, a bit… Because you might be newer at it, so you’re gonna have a little bit more work to put in as you’re figuring things out.

I would just say the  best ever advice is whatever you choose, be consistent and have the right expectations.

Joe Fairless: Amen! Alright, questions.

Audience Member: For all the deals that the drivers are gathering that customers don’t act on – what do you do with those?

David Lecko: Well, I personally  don’t do anything. We don’t do anything.

Audience Member: Could you monetize those, or could those be bought by other customers?

David Lecko: Great question. We’ve just totally stayed away from doing anything quite like that, mainly because we just want everybody to be super-clear that their leads that they’re putting in the system are totally there, and nobody else is looking at those in any way.

But it’d be really interesting if somebody decided that they wanted to sell those leads to somebody else, I think.

Audience Member: [unintelligible [00:25:41].01]

David Lecko: It’s a huge number, and I’ll tell you what – most people aren’t doing the follow-ups they should be. That’s the differentiator between somebody who’s successful and not. So – great question; we just haven’t explored that yet.

Audience Member: [unintelligible [00:26:00].00]

David Lecko: It’s a really good question. We provide the technology for you to input the leads and have the team inputting leads, and then actually sending out marketing. We don’t have anything official to offer as far as like a call script or whatnot. There’s a lot more to it than what we currently provide, but it’s a good thing to point out.

Audience Member: Do you have financial calculators in there at all?

David Lecko: We don’t. There’s other apps that you can use for that. Deal Machine is really focused on the scaling a driving team for your business.

Joe Fairless: Literally and figuratively… Do you have one?

Audience Member: [unintelligible [00:26:50].18] I’m curious, with your app, do you know when the deal goes through? And if you do know that, what’s the follow-up like? Is it like 500 properties equals one deal, or…? Do you know that?

David Lecko: Great question. So from all the success stories that we hear about, there’s tons that we just don’t hear about. We always give the advice that it takes at least 200 rundown properties, and you mail three times each. And we always say “at least.” And a lot of people will have random deals that happen before that point, and there’s certainly stuff that happens after that… But that’s kind of what we offer, to really help you to at least have an expectation of “I need to do this much work at least, in order to try this out, to get a deal>”

Joe Fairless: What are those numbers based on?

David Lecko: They’re based on all the anecdotal testimonials and reviews that we’ve done over the last couple of years from all these investors that are using our platform. So it’s the ones we hear about, that we’ve kind of just boiled that down to like an easily rememberable number of what you should try to be hitting.

Audience Member: Great presentation, by the way. It was really informative.

David Lecko: Thank you.

Audience Member: As far as capturing the data – that’s always interesting to me, because I have a software background, too.

David Lecko: Cool!

Audience Member: It was really interesting. But is that an opportunity for you guys to capture some metrics? For example, if I close a deal, and let’s say I had 200 properties I”ve inputted in this particular app, and I’ve signified you guys that “Yes, this is the transaction that I closed”, I’m assuming that would probably be helpful for you guys as well, right?

David Lecko: Yeah. So actually, there is a place where you can mark the deal as like a deal that you actually closed… And then there’s a screen that’s like “What was your exit strategy?” And you can put in what your profit was. And that’s really helpful to you too, because we’ll show you on the analytics graph how many dollars did you spend on the Deal Machine or doing this marketing method, versus what’s your profit been. So it’s really powerful to see that graph for the investor side. That’s the closest thing to what you’re suggesting that we’ve got. It’s good to see those results. If that’s not there, [unintelligible [00:28:51].03]

Audience Member: This is very cool stuff. This obviously works for residential, but how about apartments? Has anyone used it for apartment properties, or commercial?

David Lecko: Yeah, it actually works with anything that has an address. So if a building is owned by an entity or a person, it’s gonna actually work the same way it would for a single-family home. So you could most definitely use that.

Audience Member: My question is about campaigns. I know you talk about just keeping it consistent throughout… Do you have a divide between certain subdivisions of properties? Like, “This one’s a much nicer subdivision. I wanna split this kind of campaign/mailer for this subdivision, and have a different one where it’s a really different setup of mailing and all that stuff”?

David Lecko: Yeah. Actually, what we have – they’re called tags; so you could tag all these properties as a certain campaign or a certain area, and then that’s how you could actually filter out the types of deals.

Audience Member: Do you also provide other information, like email addresses, or telephone numbers at all?

David Lecko: There’s an instant skip tracing in the app that I didn’t mention. It’s a separate button. Instead of sending a mailer, you could get their phone number, email, and a list of other addresses where they’ve registered the utilities.

Audience Member: Is that kind of an add-on cost, or…?

David Lecko: It is, just like sending a piece of postcard is. Because it’s just a cost for us to be able to provide that, for a look-up for you.

Audience Member: Does the postcard have your return address on it?

David Lecko: It does. It has your return address, that’s right.

Audience Member: And what do you do if it gets returned? If the postcard comes back.

David Lecko: Yeah, skip tracing and calling. That’s the best thing to do. Here’s something I didn’t realize… I just joined this mastermind called Collective Genius, and a lot of people there are doing 50 deals per year plus… And that looks like probably 20k to 40k/month on marketing spent for those guys. So I sat down with this guy named Martin, and he was telling me if he gets a postcard returned, he’s doing so many deals he doesn’t take the extra time to dig deeper. So all these really big real estate investors in your city – they’re doing too much scale in order to properly research returned mail.

So if you’re not at that level, you can compete with the really big investors by taking those opportunities such as return mail, and actually using your time to investigate that a little bit further, because they’re not doing that. They’re so busy doing things at scale… You know what I mean? Does that answer your question?

Audience Member: Oh, absolutely.

David Lecko: The return mail is gold.

Audience Member: I have two questions… Can I cheat? Okay… First – quick question. I am a realtor, so whenever I solicit someone to buy their property, I have to disclose that I’m a realtor.

David Lecko: Okay.

Audience Member: Do your mailers take that into account?

David Lecko: We actually created a disclosure section that’s smaller print and at the bottom, that you can put in wherever you want. So you can put “I’m a realtor number XYZ” if that’s something that you’ve gotta do.

Audience Member: Okay. Awesome. Let’s say I’m amateur, I’m new to real estate, I wanna find a deal… I’m willing to spend about $100-$200/month on marketing, and I have some time that I can go looking, driving for dollars. How do you recommend that I spend my time and my $100 to $200/month? Give me some specifics.

David Lecko: Man, I think you need a budget of $700 total to get a deal, at a minimum. So if your budget is like $200/month, I would drive myself and I would try to add 200 properties as soon as possible, and repeat those mailers over the course of 2-3 months. That would cost you about $100 to $200/month. Does that make sense?

Audience Member: Yeah.

David Lecko: So you could do it.

Audience Member: In your app, let’s say you have 200 properties in there. You do some skip tracing, you get some emails… Does it have the ability to export all that information?

David Lecko: Yes, sir. Our philosophy is you went out there and got those leads, so any piece of data like that that’s in the system is yours… So you could definitely export that. We’ve got several different options for doing that, like different formats… So you can do whatever you want with it. If you’ve got an existing CRM, you can actually connect it to Deal Machine as well, so that when you or your team inputs a property, it automatically forwards to your CRM, and then you might have a follow-up sequence built in there already, for example.

Audience Member: What CRMs does it interface to?

David Lecko: We actually have a Zapier integration. If you don’t know what that is, it connects to like 1,000+ apps online. So if you guys use Podio – a real popular one – it definitely has a Zapier integration, too. There’s just too many CRMs to name, but that’s our approach right now – we provide the connection to Zapier, and that thing can send it all over the place.

Joe Fairless: We’ll do three more questions.

Audience Member: [unintelligible [00:33:48].18]

David Lecko: Yeah. I actually don’t say anything negative at all… But it’s got the picture, so… [laughter]

Audience Member: [unintelligible [00:34:10].17]

David Lecko: So the picture is just factual about what their house looks like, and all I’m saying is “Is this your property? If you wanna sell it, please call me. I can close quickly and with cash.” So it’s all positive focus, and then the picture is factual about what it looks like. So if they’re out of state, they might not know what their house looks like. They might not know it’s in such bad condition. So it could be an eye-opener for them to see that photo. And if they live there – again, you’re not saying “Your house is ugly”, you’re not saying “I’m calling you because your house looks really bad.” You’re just saying “I really like your house. Here it is… I wanna buy it.”

Audience Member: Or “I buy houses in this area.”

David Lecko: Right, yeah, or “I buy houses in this area.”

Joe Fairless: And they can customize their message, right?

David Lecko: You can customize it. We’ve got the default in there that works pretty well, but you can definitely customize it yourself if you wanna say something unique.

Joe Fairless: Two more.

Audience Member: How accurate is the data, the API? …because the auditor’s website – you know, it’s kind of like “junk in, junk out…”?

David Lecko: Yeah. We get the data from the county, so it’s gonna be as accurate as your auditor is. In Indianapolis when I’ve bought a house, it takes up to a month-and-a-half for that to update sometimes… So I would expect the same when you’re using the Deal Machine app. It might be a little bit delayed like that.

Audience Member: I’ve worked at customer success in a software company…

David Lecko: Oh, amazing.

Audience Member: Yeah. Do you think that there might be a pricing option where you could say “Verified by natural human” and then you can sell that dataset for  a higher price? Because it’s not that it’s super inaccurate, but it’s verified first. Someone went and they either drove to the house, or they sent a mailer first… It seems like a good feature to have.

David Lecko: That’s interesting, yeah. It’s definitely interesting. We don’t offer that currently, but…

Audience Member: I’ll send you an invoice. [laughter]

Joe Fairless: Last one.

Audience Member: Do you have an idea percentage-wise in your app, based on research on follow-up,  of how many are primary residence abandonment, versus secondarily-owned? Is there an alternative to find those?

David Lecko: Let me back up and say – when you say primary residence abandonment, do you mean like you lived in Florida, there’s a hurricane that destroyed your house, and then you fled, but it’s still registered as owner-occupied? Is that what you mean?

Audience Member: Not exactly… Like, you go buy something — like, I went to buy something the other day and the papers are on the windows… Okay, great. So not necessarily an out-of-state owner there, right?

David Lecko: Okay. When you say papers, you mean like notices?

Audience Member: I guess my example would be the mailer would go to that residence, because that’s what’s on the auditor’s site… Versus it’s kind of rundown, it may be going into foreclosure…

David Lecko: Okay. So I think the real important thing to understand is if it is an absentee owner, the mailpiece is gonna go to where the owner lives, not the house. And if it’s registered as owner-occupied, but it’s totally vacant – so where’s the owner? …then that’s when I would use the skip tracing in order to call them, email them, and then get a list of other addresses where they’ve registered their utilities… Because if they’ve moved into an apartment, they’ve got utilities there and that will show there. So you can send mail to that address too, in that case.

And then I’ll tag on a personal note… I know that a lot of people talk about the absentee owners are the best leads. But when you’re looking for distressed properties, the owner-occupied ones are just as good leads, that a lot of people ignore. And the reason is if their house – like in my case – is in bad shape, at some point they’re probably gonna need to sell that, and they’re not gonna wanna put the money in to fix it… So don’t ignore the owner-occupied ones either.

Joe Fairless: David, thank you so much.

David Lecko: Yeah, thank you. It was a pleasure to be here.

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