Signs That You Need a Transaction Manager (CFFL 0130)

Signs That You Need a Transaction Manager

Jack Butala: Signs That You Need a Transaction Manager. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.

Jack Butala:
Jack Butala here for Land Academy. Welcome to our Cash Flow from Land show. In this episode, Jill and I talk about the signs that you might need a transaction manager, like a property transaction completion manager. Jill, great show today. Before we get to it though, let’s take a question from a caller like we always do.

Jill DeWit:
Sure. Okay. Kelly from Sacramento called in and asked, “Are there tax issues I need to be aware of in this business?” Great question. I wonder if she’s saying that because she’s in California and because there’s always different things in California. You know how that goes.

Jack Butala:
We get a lot of tax questions.

Jill DeWit:
This is kind of your area.

Jack Butala:
I guess, a valid concern.

Jill DeWit:
Aren’t you an accountant?

Jack Butala:
No, I’m not an accountant.

Jill DeWit:
I’m just kidding.

Jack Butala:
I used to be a sort of accountant.

Jill DeWit:
I’m teasing.

Jack Butala:
You know what’s funny about when you tell people, “I have an accounting background,” everybody assumes that I just sat around and did tax returns for an H&R Block, which is …

Jill DeWit:
That’s why I like to tease you. I think it’s funny.

Jack Butala:
There’s so much more in accounting than taxes. No, I’m in by no stretch a tax expert or an accounting expert. I do know a little bit about buy-and-sell and real estate, just like you do though.

Jill DeWit:
You do.

Jack Butala:
Are there tax issues? No. I’ll give you my spiel here. I think she’s talking about income tax issues versus property tax. We’re going to assume that. No. It’s not treated any differently than any other business. There’s property gains, the capital gains taxes versus ordinary income. There’s a lot of stuff like that, but we’re long past those issues. People who use those terms are usually at my age or older. The taxes have gotten a lot more simple.

I will give you some pre-advice. The way that Jill and I have structured it … I’ve structured it in my whole career this way is that I always take a salary. Even an incredibly small salary, always take one, so that you have some W-2 income to report every year. That’s a very, very healthy way to do this. Get with an accountant to make sure that you manage how you’re expensing your business expenses and whether you need more or less to maximize how you’re utilizing your taxes.

Jill DeWit:
Awesome.

Jack Butala:
Tax is not a bad word. Everybody’s just, “Oh, tax.” You can make taxes really work towards your benefit in a lot of different ways. This is not a tax show and I’m not an expert, but get a good accountant, like anything. We did a show recently about hiring experts. Getting a tax person and a bookkeeper and an accountant is no different.

Jill DeWit:
I love it. I think that’s the big thing is it seems scary for a bit. You just got to say, “No, it’s okay. It’s not scary.” Like you just said, dude, there’s a couple of other things you should consider. When you don’t have the right team person working with you, don’t even think about it.

Jack Butala:
I’ll tell you this. For people who have had a job for their whole lives and then they start a company like this or any kind of company, they’re shocked and amazed how little taxes you actually pay versus just being a W-2 employee somewhere.

Jill and I have 2 very, very, very successful friends who work for a very large company, an international company. They make together pretty close to half a million bucks a year. The amount of taxes that they pay make me want to throw up.

Jill DeWit:
Totally.

Jack Butala:
There’s nothing they can do about it because they’re W-2 income. As an owner of a business, you can set your salary pretty low. Maybe just set it to the point where you’re just covering your expenses every month, and then the rest of your beautiful money just sits there. You have a lot of control with owning your own company.

Jill DeWit:
That’s true.

Jack Butala:
Let’s leave it at that.

Jill DeWit:
Very good.

Jack Butala:
I think that answers it, Jill.

Jill DeWit:
I think that was perfect.

Jack Butala:
You don’t want to have any part.

Jill DeWit:
Quit while you’re ahead.

Jack Butala:
You don’t even want to have any part of answering this question.

Jill DeWit:
No. I’ll leave that to you. I’m a W-2. I’m employed. Just kidding.

Jack Butala:
No, you’re not.

Jill DeWit:
I know. I’m not.

Jack Butala:
Jill has her own company, by the way. We have multiple companies. Jill is more than qualified. She knows these questions. She just doesn’t like these topics.

Jill DeWit:
I don’t like the topics, and I refer to my people. It’s much easier. Get a good team and don’t be afraid of anything. It is much easier than you think it is and you do it better.

Jack Butala:
Jill, what are the signs that you need a transaction manager? What’s happening in your world, where you just can’t do all the work anymore? What would you [inaudible 04:24]?

Jimmy John’s, funny thing to say about the guy that started Jimmy John’s recently, and we were in the car. That’s a good way to lead this off. The guy who started Jimmy John’s-

Jill DeWit:
Oh, the Jimmy John’s story. Yeah.

Jack Butala:
Go ahead.

Jill DeWit:
That was a good story I read on somebody else’s blog that they had done. He had 1 sandwich shop. It was killing him. He was doing all kinds of things all by himself, taking on every last task. He was stretched too thin. He was deciding then he wanted more than 1 shop. “How the hell am I going to do this?” Kind of thing. “I’m doing everything myself.”

He forced himself to create his own standard operating procedures, SOP, and really think about, “All right. In the morning, what needs to happen? What do I need to order, when? What is this? What is that?” He created his own thing. It fortunately led to a beautiful system, where now, he could have employees. Okay, great. He could franchise. Now, a lot of us know the Jimmy John’s thing, but he really was one guy with 1 store for a while, killing himself, and doing it all wrong because he was doing everything.

Jack Butala:
I think it fell on your leg. If you’re a perfectionist and you have to do everything yourself, you need to stop it.

Jill DeWit:
That was a whole another show we watched, but you’re right. That’s very true. You can’t be a perfectionist, I think, as a good owner because it’s going to fail.

Jack Butala:
That’s right.

Jill DeWit:
Here, I wrote down 3 things about what I think are signs that you need a transaction manager, someone handling your buying, your selling, all those details for you. Number 1 is, like the Jimmy John’s guy, you’re just overwhelmed and you are losing money. In our world, you’re losing deals. That’s number 1 for me.

Jack Butala:
Before we started this show, I wrote down some stuff. I think it would be really helpful if you and I describe the typical land transaction, not spending a ton of time, but starting right from the beginning and just bullet pointing the thing, and then talking about the things that I think really, really matter why people are successful or maybe not successful in this business or any business, and then the stuff that you can shove off to a transaction manager.

Jill DeWit:
Love it.

Jack Butala:
How we do it is this. Step 1, we choose a market or an area to send out a bunch of mailers. In our educational programs, we talk about how do you do that? I think that is not something you should ever sub out, whether you’re going to send out a bunch of mailers through a county in Upstate New York versus Middle State Michigan versus all the state of Nevada except Las Vegas kind of thing. That’s pretty important. That’s step 1. You get a bunch of offers in the mail and sellers respond to them.

Jill DeWit:
What you can sub out though is the whole printing stuff in the envelope. Get a good printer for that.

Jack Butala:
Excellent.

Jill DeWit:
Thank you.

Jack Butala:
Which we have.

Jill DeWit:
Exactly.

Jack Butala:
Which we provide in our day-to-day doorstep products. The cheapest, best printer in the country for what we do, in my opinion. You can sub the task of actually getting the stuff in the mail out, but in doing the mailer itself, I don’t think I would sub that out in the beginning. I think you should learn how to do it.

Jill DeWit:
But not stuff the envelopes.

Jack Butala:
A lot of people get these letters or offers and they call you back or they send them back in the mail. Do you open the mail, Jill?

Jill DeWit:
Do I open the mail? No.

Jack Butala:
Neither do I. That’s a task that a transaction manager can do.

Jill DeWit:
Right.

Jack Butala:
Do you call the people back when they send the mail in, the seller, and they sign it and say, “Heck, yes, I want to sell my property for $800?”

Jill DeWit:
Sometimes.

Jack Butala:
I think it’s great when you do. I don’t think anyone should sub this out.

Jill DeWit:
I know.

Jack Butala:
Until it gets great, until you have a pile of mail like Santa Claus mail. You should do it yourself.

Jill DeWit:
Sometimes, I do. Usually, I make the deal, and then my people follow through the transaction.

Jack Butala:
Okay, great. Excellent.

Jill DeWit:
Which is the next step.

Jack Butala:
If you have a willing buyer, you have a willing seller, the deal is negotiated, that’s when, in my opinion, you get that transaction manager involved and they close the deal. Just for fun. What happens at that point is Jill calls a notary.

Jill DeWit:
No. My people.

Jack Butala:
Or a staff member calls a notary. When I say, Jill, I mean, under Jill’s direction.

Jill DeWit:
There we go.

Jack Butala:
She might be at the beach, but somebody’s calling it.

Jill DeWit:
That’s right. Someone’s getting it done.

Jack Butala:
They arrange for a notary to deliver the documents that we generate, the deed to be signed. They deliver a cashier’s check, and then send it all back to us. Jill or her people send it into the county to be recorded. This is all transaction manager stuff. After that, now, you own a property, what do you do? You sell it. Selling a property, in my opinion, the way that we do it is very mechanical. In fact, we are not very involved in this at all. Our transaction managers are. It involves putting some nice graphics together, maps, presenting the property online the way that properties should be presented, and then posting it everywhere, on your own website, if you have a buyer’s list, you email it out to them, Zillow, Trulia, Land and Farm.

There’s a 5 or 8, 10-step process that you need to go through when you buy a piece of property to sell it effectively. I personally don’t think it’s important in any way. I think it’s a lot of paperwork shuffling and graphics design. Don’t you think?

Jill DeWit:
Mm-hmm (affirmative). I agree, totally.

Jack Butala:
As long as you’re giving your people the right direction or your transaction manager the right direction.

Jill DeWit:
You set the pricing and you set some of those parameters, but the other stuff speaks for itself. You’ve taught them how to take the right pictures and what looks good and all of that.

Jack Butala:
Right.

Jill DeWit:
Back to my number 2 … That’s the transactions. Is there anything else that we’re missing on that?

Jack Butala:
You sell the property and someone’s got to facilitate that. I think a transaction manager does that.

Jill DeWit:
Same. Transaction manager’s going to do that one too because it’s … Although you’re going to make sure the deal’s what you want, if someone’s going to negotiate the price maybe.

Jack Butala:
Let’s try it in a more simple way. The stuff that you should not have a transaction manager do is as follows: You shouldn’t have them choose an area to find a property. You should not have them handle the actual data mailer situation. You should do that yourself because you’re going to pick and choose who receives an offer. After that, you hand it off.

Jill DeWit:
Yeah, but you negotiate the purchases, and you negotiate the purchase price, and then you negotiate the property.

Jack Butala:
There’s not a lot of negotiating because they send out for 800 and they sign it and send it back 80% of the time. Sometimes, there’s a negotiation. There are certain people who love to negotiate every deal, and they spend a lot of time doing it. We have a lot of members like that. We have some people who work here that are like that.

Jill DeWit:
Yeah. We got it.

Jack Butala:
It’s not my big … I’m not a fan of it. Anyway.

Jill DeWit:
It’s hard when the deals are 5 years old and the property’s not worth that or not the same, but that happens.

Jack Butala:
The signs that you need a transaction manager are quite simply this. All these little details along the way, if it’s stopping you from doing deals, the stuff that you’re supposed to do as the owner and not a transaction manager, those are the signs where you need to think about hiring somebody, whether outsourcing it or hire somebody full time.

Jill DeWit:
That’s my step 2. The second thing is you’re ready to take it to the next level. You’re like the Jimmy John’s guy. You can’t … You want more than 1 store. You’re going to do more than 1 deal a month. You’re going to do more than 1 deal a week. We have members doing deals a day. You’re at that level, and you want to take it to the next level. You need a transaction manager to help you with all that.

Jack Butala:
Right.

Jill DeWit:
Cool. My third thing is … You’re going to love this. My third point is your family members are not working out. A lot of people enlist their family members. This is totally true. We all know this happens. Come on! “Hey honey, will you help me with this?” It’s totally true. How many husbands enlist their wives and wives also enlist their husbands to help with this stuff, because they’re just overwhelmed. It gets to the point where it might not be working out best for the family. I’m totally serious. You guys are all laughing, but this is a sign that you might need a transaction manager or you might get divorced. Let’s not go there.

Jack Butala:
Actually, Jill and I talked to somebody recently. She has a stay-at-home husband/father, who’s an artist. He literally does art shows and stuff. They were trying to work together on some things, and it went sideways. I love artists. I love hanging out with them, but sometimes, they may not be the best transaction manager. Let’s leave it at that.

Jill DeWit:
Got it. I think we’ve covered.

Jack Butala:
I do too.

Jill DeWit:
I’m trying to think if there’s anything else that there’s a sign you need a transaction manager. You know what, I have one more too. I will admit myself here there’s things that I’m not as good at. You know what, I have had transaction managers come in and clean up my messes and make what I thought was a system even better. I admit that’s another reason.

Jack Butala:
Boy, that’s true to all of us. Isn’t it?

Jill DeWit:
Mm-hmm (affirmative). There’s things I’m good at and things I’m not good at.

Jack Butala:
I have people come in often and clean up my IT messes.

Jill DeWit:
You are a pro. You’re good, Steven. There’s things that you accomplish. Oh my gosh.

Jack Butala:
I’m a self-taught hack.

Jill DeWit:
You’re so good.

Jack Butala:
I know just enough about a lot of the IT staff to really be dangerous and mess it up good.

Jill DeWit:
You never mess it up.

Jack Butala:
No.

Jill DeWit:
You do great.

Jack Butala:
Once in a while.

Jill DeWit:
You do great. If you mess it up, I don’t know and that’s even better.

Jack Butala:
That’s perfect. That’s exactly what happens, actually. That’s fine. There’s a lot of stuff that goes on around here.

Jill DeWit:
“Gee, the website was down.” “I didn’t know.” I wouldn’t know what didn’t go through. I didn’t know.

Jack Butala:
Hey, join us in another episode, where Jill and I discuss your all important success and property investment and in life. It’s not that bad here, Jill.

Jill DeWit:
No. This is a really good topic for people that need to be prepared for it, start planning on it, have been thinking on it. Everybody … We all think about, “When am I going to leave my day job and then go into this full time?”

All right. That’s great. That’s step 1, but don’t forget step 2, 3, and 4. Your goal’s on a perfect run. You’re going to be really good at this. You’re going to grow this business, and you’re going to need some help. Soon, you’re going to be thinking about, “When do I get someone to help me? What do they do? What do I sub out? What do I not sub out?”

Jack Butala:
In this business, specifically, I always remember the day that I hired somebody. It was just not me in the back bedroom.

Jill DeWit:
Right.

Jack Butala:
It worked out great for probably 4 months, and then I fully realized how it wasn’t working out. Everything’s a stepping stone, I guess. The idea of having an assistant and doing all the stuff that I didn’t want to do … This was a lot of years ago. This was in 2001.

Jill DeWit:
Right.

Jack Butala:
I realize that it was the wrong person. I waited way too long to release them.

Jill DeWit:
That’s hard.

Jack Butala:
It is. Managing people …

Jill DeWit:
It’s hard. I know.

Jack Butala:
I think it is. I’m going to leave you with this. Think of how many sports stars are just … They’re the best of their game like Michael Jordan or Wayne Gretzky. They will have records maybe forever or you believe forever. They both tried to be a manager, owner, in some capacity, or a coach, after their athletic careers. Those 2 guys, specifically, dismally failed in all of it.

Jill DeWit:
You’re right.

Jack Butala:
Some people can make a transition as a manager or an owner after … Some people can and some people can’t. Think about that, I guess. Managing somebody just because you’re good at something, I would argue. Maybe even that it’s harder because you expect people to perform the way that you did or the way that you do. Now, you’re just setting yourself up to fail because nobody’s as good with this stuff as you are.

Jill DeWit:
Correct. That’s a good point. Thank you, Steven.

Jack Butala:
On that note, let’s try to go buy some property.

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