199: Secret Weapon to Acquire Off-Market Real Estate Deals

SHOW NOTES FOR EPISODE 199: SECRET WEAPON TO ACQUIRE OFF-MARKET REAL ESTATE DEALS

Dave Lecko is an electrical engineer and real estate investor who would “drive for dollars” to find distressed properties to purchase, rehab and rent out. The process of acquiring the property owner’s address and phone number, however, was lengthy and took too long. In this podcast episode, Dave shares how his frustration motivated him to develop an app (that is now publicly available) that instantly provides the property owner’s name, address, email and phone number by simply taking a picture of the property with your smart phone.

What You Will Learn

• How to find profitable off-market real estate deals
• A way to immediately contact owners of properties from the curb, in front of the property
• What are the criteria in judging a good off-market deal?
• How to find rental properties in hot markets for only $5,000
• Direct mail strategies that work
• How many prospective properties does it take to find one “good deal?”
• Organizing an army of “bird dogs” to find out-of-state properties
• Why it’s important to send a direct mail piece a minimum of three times to each person on your prospect mailing list

About Our Guest

Dave Lecko

David Lecko is the CEO of DealMachine, a real estate investing app that puts you in touch with any property owner via direct mail, phone, and email by simply taking a picture of the property with your phone.  A graduate of Missouri University of Science and Technology with a degree in electrical engineering, David has worked with a company that re-engineered a GM SUV into a hydrogen fuel-cell plug-in hybrid electric vehicle, worked as a Network Engineer for AT&T, developed a bulk mail application for USPS, and has created innovative technologies to help fraternities and sororities grow.

David started out like a lot of us, reading Rich Dad Poor Dad and taking action by investing in real estate. He began driving for dollars, writing down addresses of interesting properties and looking up the owners at home after driving.  Realizing that finding the owners was taking too long, David went to work on a solution.  The outcome was the DealMachine app, which can look up a property owners information in real time, while you’re still in front of the property.  He launched Deal Machine in the summer of 2017 and it has taken off with great success.

More About DAVE

• Grew up in St. Louis, MO
• After college, created a recruitment app for fraternities and sororities
• Became full-time job
• Moved to Indiana because many fraternities and sororities headquarters are there
• Today the app is used by half of the fraternities ad sororities around the country
• Became very entrepreneurial but job required many hours to produce income and very little freedom
• Dave sought more freedom to work on different things whenever he wanted
• Read Rich Dad Poor Dad by Robert Kiyosaki and saw real estate investing as the means to generate enough cash flow so he could have the financial freedom he sought
• Also, found an online version and app of Kiyosaki’s Cash Flow Game
• Joined real estate meet-up
• Tried to find below-market properties to purchase on MLS but with little luck
• Dave began “driving for dollars” through various local neighborhoods trying to find abandoned or vacant house or even occupied houses that seem to need repairs.
• Would write down the addresses of interesting properties, went home to look up the owners info, then would send out mail or try to call but the process took a long time and he would often miss out on on good deals
• In search for a solution to his dilemma, he created a basic app that he could use on his phone that would allow him to look-up properties on the spot and send a postcard to the property owner
• He bought 3 properties that allowed him to quit his job
• The app was put in the App Store in the summer of 2017 and it has taken off with great success
• The company has grown, he has helped others to do the same and he continues to invest in more properties

The DealMachine App

• The DealMachine App is a real estate investing app that will put you in touch with the property owner via direct mail, phone and email by simply taking a picture of the house with your phone and get real time information.
• You can send a postcard, with a picture of the property on the postcard, directly to the owner, while you are sitting in your car in front of the property
• Property address goes into database on your phone and you can set it up to send a series of customizable templates for your postcards, over time (Dave does it every 21 days), to the owner
• Can even link the app to your existing CRM to coordinate longer term mailings
• When you get a call back from the owner, you can link it to the database on your phone

One of Dave’s Most Recent Properties Purchases With DealMachine

• Dave actually purchases his properties using the DealMachine App.
• The most recent purchase is a very special deal in Indianapolis.
• In August 2017, he was driving around the “16 tech area” of Indianapolis (16 Tech is an innovation community located on the near west side of Indianapolis, with easy access to miles of trails connecting adjacent parks, neighborhoods and cultural districts, 16 Tech offers a new environment for driving global impact in health, technology, manufacturing and the arts.)
• Dave saw this property had a tarp on the roof and thought, very likely, the owner of the property has financial problem and that he would offer a solution.
• Owner received 4 postcards from Dave
• Contacted Dave in November of 2017 saying he wanted an offer on the house
• Dave asked him a few questions and ask to come see the property
• Usually people look for vacant properties but this had someone living there
• The owner had lived in house for 40 years and was ready to move somewhere where he didn’t have to cut the lawn and maintain the property
• He had received the 4th postcard right after he had surgery
• Dave was able to buy a property for less than $5,000.00 worth of property that he is planning it out for $1,000.00 a month
• Currently he is doing renovations of approximately $30K.  To claim a projection of $1,000 rent per month, Dave needs to upgrade the property estimated at $30,000.
• Dave’follows the 1% rule – Rent should be 1% to 2% of the total purchase price
• He has seen, firsthand, how the DealMachineApp is successful because it helps him personally in his own real estate investing
• Currently, Dave has bought three (3) properties and he plans to acquire six (6) properties in total, which he believes will provide security for himself and his family in the future

Multifamily Applications

• Dave has used it with multifamily
• Tested it on a 100-unit apartment.  Was able to find out:
  • How much it was purchased for
  • When it was purchased
  • Type of mortgage
  • Owner’s address
• Used on duplexes

Recent Upgrades

• Able to get info on the”business owner” of property if owned by an LLC – can also get email and phone number
• Skip tracing function

The DealMachineApp Pricing

• $49 per month
• $.99 per postcard (includes postage and custom printed postcard)
• $.99 for phone numbers and email

Property Search Stats

• Takes about 200 properties to find a good deal
• Need to mail at least 3 times
• Cost of about $650

Bird Dog Application for Out-of-State Buyers

• If you are out-of-state buyer, you can recruit up to 3 people in your market of choice,  who go out and take photos of potential properties that are added to your database and whom you can call
• Detailed information is in your app on who added what property so you can know how to pay your bird dogs

Advice for Old Dawgs Interested in Getting Started With Real Estate Investing

• To find good deals for properties, get to know the people and places in your market
• Start attending local real estate meet-ups, meet people, ask questions.  You’ll meet people who want to buy and sell properties
• Get a feel for where the good neighborhoods are.  Go and look at those neighborhoods.  Find the run-down properties and contact the owners to see if they want to sell
• Have a goal to build a database of 200 properties and work that database
  • Mail a minimum of three times

Where He Sees His Business in the Future

• Within the next three (3) to five (5) years, his vision, together with his business partner, is to spent full-time on the business
• Hiring new staff to bolster great customer support
• Work on constant upgrades and enhancements to make the app even easier and more functional

Rap-It-Up

• Favorite real estate book: The Book on Estimating Rehab Costs by J. Scott and Brandon Turner
• Favorite business book: The E-Myth by Michael E. Gerber
• Most valuable web site for success (other than your own):  Iwillteachyoutoberich.com
• Favorite app: Headspace
• Favorite quote: “The secret of life is enjoying the passage of time” by musician James Taylor
• If you had to start all over, knowing what you know, and you only had $1,000 cash, what would you do to launch your real estate investing business? Create a blog in a niche area, write good content, build email list and continue to write blog posts for people who wants to be financially free and eventually build an app product and start building a business from there.

How to Reach Dave

• dealmachineapp.com
• david@dealmachineapp.com

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