How to Partner a Flip (CFFL 0154)
How to Partner a Flip
Jack Butala: How to Partner a Flip. 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:
This is Steven Jack Butala for Land Academy. Welcome to our show. We show you how to buy property for half of what it’s worth and resell it the next day. Great information and instruction from Jack, that’s me.
Jill DeWit:
And inspiration from Jill, that’s me.
Jack Butala:
In this episode, Jill and I talk about how to partner a flip, and why the heck would you want to partner a flip, first of all. We call it an option, and there’s a bunch of other names. We’ll get into that in a minute. Jill, it sounds like fun. Before we start, let’s take a question posted by one of our members on successplan.com, our free online community.
Jill DeWit:
Sure. [Moniesha 00:00:43] from Charlotte asks, “I was wondering if you could share how you allocate your earning inside your business? How much do you set aside for taxes? How much do you leave in the business for new acquisition, et cetera? I thought this would be extremely helpful, in terms of, structuring a healthy business model. A lot of people asks how to make the money, but nobody asks what do with once it’s made. Thanks for all your help.” Great.
Jack Butala:
That’s easy. Jill and I have a 91/9 partnership split. She gets 91 percent of everything that the company makes, and I make 9 percent, and that’s how it rolls.
Jill DeWit:
Yep. That’s perfect. That the way it should be. If you don’t have it similar like this … You started to say ’91/9′, I’m like, “Shoot, is that like a tax code I hadn’t heard of? I know 1099. I don’t know 9199.”
Jack Butala:
All right, so let’s start. I’m not going to make this a lengthy thing. What I think you’re asking is, let’s say you start with $10,000 buck. How you use it? Then, after you make $100,00 because you’re doing everything right, what do you do? What is the best way to maximize, move the money around and make it work for you the best. This is what I tell everybody when we start out. By the way, if you have a question or you want to be on the show, call 800-725-8816. We’d love to have you right on the show with us live. You can’t be boring though.
Jill DeWit:
Can’t be boring.
Jack Butala:
Let’s say $10 grand just for fun, I don’t know, $1,000 to start. What you want to do is use that money toward real estate as much as possible and nothing else. What we teach in our program is to set up a few things because you’re going to get real busy once you sent the mailers out. You want to set aside enough money to send out a couple thousand mailers with the offers for the property, and on all the rest of the money, with very few exceptions, you want to put into the actual real estate because what we teach is to buy a property for $500 or $1,000 dollars, or some number like that, some low number and double your money very quickly. $1,000 becomes $2,000, becomes $4, becomes $8, becomes $16, and very quickly, our members, our successful members, the ones that stick to it and follow our instructions, and going to have $50, $60, $70 thousand bucks to work with. Then you spend some time on marketing and allocate things where you think it’s most appropriate.
We don’t spend too much money on marketing. I’m not a big marketing budget fan. A lot of people are. If somebody’s reaching you as a consumer or as a land buyer or as a podcast listener and products suck, it’s because their marketing person. They’re good at marketing and they suck at the show. I’m a fan of the other way around. I think you should put your money into what makes a good show and where your talent is and actual real estate that your selling and not spend it on marketing.
As far as taxed go, don’t worry about it. You need to make sure that there’s enough money to pay taxes. I keep a little spreadsheet, make sure it’s enough cash comes around for tax time. Even if … don’t worry about taxes, and don’t worry about offices and all that stuff. You can start this with your back bedroom or with a desk next to a bed [inaudible 00:04:14]. Don’t worry about what you’re going to do with the money once you start making it. I’ll tell you exactly what’s going to happen, you’re going to say, “Why the heck would I ever invest in anything else?” Where else can you double your money pretty quickly, like immediately, in our case. I hope that answers the question.
Jill DeWit:
You’re just saying, just keep reinvesting it and you will be fine. You will have that. You will have a cash cushion when you need it.
Jack Butala:
When I look back at all the stuff when I started in early 2000s, the greatest moment that I had ever was, I was just making a ton of money and working by myself. I started the whole thing myself, and that first person I hired, I gave that person all the stuff that I really just did not enjoy doing. Basically, paperwork and a lot of internet stuff. That, I celebrated for a year. It freed me up to get out of the minutia and really, really start making some good decisions and going to tax sales and really just freed me up from a time and responsibility standpoint. Plan for that moment because then you can really take it to the moon. We have several members who are now hiring people and outsourcing now. Outsourcing’s a lot more popular than it was back then, so that’s a cool moment.
Jill DeWit:
Especially nowadays. It’s easy to find a task-specific person and use them for that task.
Jack Butala:
Exactly, Jill. We have several task-specific people outsource stuff, where they just do one thing and we get a bill for, literally, like $20 a week.
Jill DeWit:
Right.
Jack Butala:
So, how to partner flip. First of all, why the hell would you … Why do you need a partner, Jill? I mean, not a partner like you and I, but let’s say you find a great piece of property, you know it’s worth twice as much as what you’re paying, let’s say it’s a house. Let’s say you find a house, you negotiate a deal. It’s $80,000. You know wholesale it’s worth $110,000. The person who’s selling it, they got to close because they need the money. How do you find a partner? Why do you need a partner?
Jill DeWit:
There’s something missing. [inaudible 00:06:21]
Jack Butala:
That’s right.
Jill DeWit:
There’s something missing, and I need to bring somebody in.
Jack Butala:
Gosh, you’re smart.
Jill DeWit:
Thank you.
Jack Butala:
They’re feeling in need.
Jill DeWit:
[inaudible 00:06:28]. It might be cash. It might be knowledge. It might be who knows what, but otherwise, you don’t need a partner.
Jack Butala:
I don’t think you do almost ever. If it’s a deal that I just described, all you got to do is find the person that’s going to buy it. We call it ‘optioning’. All you got to do is find the person that’s going to buy it from you, and then have that person go buy the deal. The original no money down real estate investment. Here’s how it works.
You’re great by now at sourcing real estate, under valued real estate. That’s what we teach here. That’s the whole point to this: how to buy it for half with direct mail. Make you a thousand offers and buy a couple properties. Now you got this property, you negotiated a deal. The whole system worked exactly how it should, but you don’t have any money. This is what you do.
You find the person that you’re going to flip the thing to, wholesale it to, not the end user, even in land, not the end user. It’s somebody on your A-list that you developed, and you say, “Will you buy this property, in this case, a house for $110,000, because you can clean it up and fix it, and it’s worth $180,000.” They’re going to say, “Heck yes. Where have you been all my life? Tell me exactly what to do. I’m all yours.” Then you’ll never get rid of them. Ever. They will be coming back to you every month, because they’re good at renovating houses and selling them. They are not good at sourcing real estate. That’s your gig. That’s how you partner a flip.
Jill DeWit:
But, wait. That sounds like a buyers list now. Are you just saying that now I have a great list of resources when I find these properties that are just standing by ready to do it?
Jack Butala:
Yeah.
Jill DeWit:
Thank you.
Jack Butala:
That’s exactly what I’m saying. How do find a buyers list, Jack?
Jill DeWit:
Oh, wait.
Jack Butala:
How do I find it? If you’re a land investor like us, go to landwatch.com. There’s thousands an thousands of properties either listed by the owner or the real estate agent. Wherever your property is, let’s say it’s in Montana, go collect all the names of the people that are selling stuff in Montana. Get their information, it’s not going to happen in 35 seconds … Get their information, if you’re a phone person, they’re phone number, your email, whatever, and tell them that you have had to pass on some transactions recently that were smoking deals because you didn’t have the money, and you hate to see … Use this sentence … You hate to see good acquisitions go to waist because there’s no money. They will flock to you, trust me. Flock. That’s how you partner a flip, you don’t really partner at all.
Your other option is in that house deal. You’re actually call your brother-in-law because he’s loaded and then now you got to split it. He fronts the $80,000. You own it for 35 seconds and you guys split the margin. What? Split the margin. No splitting margin. I do sound like I’m from Detroit.
Jill DeWit:
Yes.
Jack Butala:
Now I’m conscious of it.
Jill DeWit:
It’s okay. It’s … That’s where you’re from. It’s a good thing.
Jack Butala:
Every time I talk to my sister, who lives in [inaudible 00:09:25] City, I’d speak total Michigan accent for a week. I have to wash it out of my mouth with soap.
Jill DeWit:
Maybe that’s where it’s coming from. Remember the girl you met the other day from Michigan?
Jack Butala:
Oh, maybe it is. That’s it.
Jill DeWit:
It’s coming up again, too, because of that. Hey, it’s a good thing. It’s nothing wrong with that.
Jack Butala:
This is the if/then segment of the show. If you do ‘x’ then ‘y’ will happen. If you secure a deal that is well below market value, then partners will come and find you not the other way around. Huge misconception in real estate, “If I only could find a money back.”
Jill DeWit:
Right.
Jack Butala:
Money-backers are looking for people like you. There’s way more money other than talent. Nobody knows who to source under valued transactions, except you.
Jill DeWit:
Exactly.
Jack Butala:
Jill, if you have any questions or you want to be on the show, call 800-725-8816 and put your happy voice on please.
Jill DeWit:
I was going to say one rule thing about the if/then statement in this topic is, it happens to us all the time. You and I both get emails from people.
Jack Butala:
Daily, to partner with you.
Jill DeWit:
Yeah, all over the country. It’s great. Because that’s my business, I expect it, I want it. I’m either going to pay attention to it or I’m going to deleting. It doesn’t matter reach out to those people.
Jack Butala:
Now’s a good time to mention that, if you do want to partner a deal with us, if you’re an existing member, there’s a real specific protocol. There’s so many deals come in we needed to them … how we review then, we have to have all the information. If you go to FAQ section of the any of the website, success plan. It all goes back to one FAQ landcademy. Check that out. There real specific instructions. You fill out an online form and we review the deal just as if you were a seller, and then we put it together. There’s some smoking stuff in there. There some smoking stuff in there. There’s some multi-unit deals in there that I haven’t seen in quite some time. There’s a deal in there right now, Jill, it’s 34 five acres property in Southern California, $500 each.
Jill DeWit:
That’s fantastic.
Jack Butala:
While you do the inspiration thing, I’m going to do the math on how much we’re going to make on that.
Jill DeWit:
Okay. Here is my inspiration for the day. You ready for this?
Jack Butala:
Yeah.
Jill DeWit:
What do you do when you need inspiration? We all need to have a little something when we’re just … You need a pick-me-up. You need to be inspired. You need to keep on going. You dragging for whatever reason. You really are doing a lot of math over there.
Jack Butala:
Yeah.
Jill DeWit:
Here is what I do, and you know this, Steven. I physically removed myself from the environment to mentally regroup. I need to be inspired. I’m going to get up. I’m going to that my coffee. I’m going to go for a walk. I might go run an errand. I might leave, I might not come back. That happens sometimes. I’m like, “You know what, I’m just going to take a day.
Jack Butala:
Where’s Jill? Oh, no, that’s it. She’s done.
Jill DeWit:
She’s gone. She’s not coming back.
Jack Butala:
Not for today.
Jill DeWit:
Not today.
Jack Butala:
She’s just not coming back.
Jill DeWit:
No, I had a boss call it a mental health day before, years ago. That such with me, and we all need a mental health day sometimes, so you need to be inspired, and you have to do that. Because you know what, if you don’t figure out whatever it is to help get you through and back on track, you might not get through and you might not get back on track, and that is not what you want. Stepping aside from the math, I want to hear the math hear in a minute. What do you do when you need inspiration?
Jack Butala:
When I need a source of inspiration I come to you, and I’m not joking around. You have a different way of looking at things. I look at everything very analytically and without emotion, and you have … I’m not saying it’s overemotional, I’m just saying you apply a different view of looking at stuff.
Jill DeWit:
Because I have ovaries.
Jack Butala:
Yes you do. It comes with a set of ovaries, yes. Yes it does. It really doesn’t. It comes with your ovaries. Why are ovaries such a funny, endearing word and testicles are awful and yucky.
Jill DeWit:
It’s very true. You can say out load, “Oh, no, no, no, you can pick you check you have ovaries,” and everybody goes, “Oh, okay.” [inaudible 00:14:12] but you can’t say, “Hey, you’re picking up the check because you have testicles.”
Jack Butala:
Right. Yeah, that’s the end of date, end of relationship right there.
Jill DeWit:
Could you imagine? I should drop that one tonight. When we’re out in going to go ask him, he’s got the testicles. I’m going to totally, totally drop that. I want to see how well it goes over and see how many of them go, “What did she just say?”
Jack Butala:
No, he can’t ask for directions, he’s got testicles.
Jill DeWit:
Exactly. Okay.
Jack Butala:
You know what I do when I need to get away from it all? I’ll go to a moving on like a Wednesday at 11:00, and it really … Movies, for some reason … Sitting if a theater movie, not at home because there’s six retired people in there. I just watch the movie in that time. It’s ice cold in there, it’s just really nice. You just forget. You totally take your mind off anything that’s going on.
Jill DeWit:
That’s perfect. [inaudible 00:15:17] get out of whatever it is. Good. There’s your inspiration for today. Just figure out what it is. Have it in your back pocket. Maybe it’s a bunch of different things, I don’t know. Stuff is going to happen.
Jack Butala:
Play with your kids.
Jill DeWit:
Yeah. [inaudible 00:15:29] maybe it is.
Jack Butala:
Take the dog for a walk. Everybody wins then. Now the kids … you’re being a good parent and everybody wins. Same thing with the dogs.
Jill DeWit:
I agree.
Jack Butala:
Join us in another episode where Jack and Jill discuss how to use information, that’s me.
Jill DeWit:
And inspiration, that’s me.
Jack Butala:
To get just about anything you want. You use the together. We use it everyday to but property for half of what it’s worth and resell it immediately. Good show, ovaries.
Jill DeWit:
Thank you testicles.
Jack Butala:
See, it’s soo … It’s just awful. It makes me think of the …
Jill DeWit:
The t-shirt thing. Remember the Georges. Could you imagine if I walked around like ovaries on my shirt.
Jack Butala:
Hey, listeners, I saw a woman walking down the street here in Southern California and it’s probably a Hollywood thing, and she had a shirt and across here chest was gorgeous. That was the words on it. I have not forgotten it. But if you have to, as a person, tell people that you’re gorgeous by writing it on the front of your shirt and you have ovaries. I want to you to ask some questions because I want you to ask a lot of serious questions and possibly seek professional help. Not joking at all.
Jill DeWit:
I have heard about this once a day for the last … actually … it’s gone down to once a day. It was 5x a day in the beginning. What’s hilarious is, I think I was with you and I didn’t even see it.
Jack Butala:
The person that was wearing the shirt, you can. I almost guarantee you what you’re puckering in your head, because the image that you’re picture in your help is exactly what it looked like.
Jill DeWit:
I know. I guess, right? Because I asked.
Jack Butala:
What kind of person needs to tell somebody that through a thing at the shirt, through a board on their shirt. If you a psychiatrist or a psychologist, please contact me and solve this mystery for me.
Jill DeWit:
Put it successplan.com. There a thread.
Jack Butala:
Here’s the thing on the 34 five acres properties for $500 each. Cost $17,000 to but this thing to get it done and probably maybe an hour of physical work, Jill. Maybe two hours max on everybody part. We can immediately sell it. We probably won’t ever post it on the internet because I know exactly who’s going to buy it and so do you. For about $2,000-$3,000 bucks a unit. Then they’re going to sell it on terms for a lot more than that. The person that buys it from us, almost always when. They make more than us.
The book [inaudible 00:18:18] will sell for around $100,000 between $85 and $100,000 for all for them and probably net $70 to $80 depending on how the numbers go out. Not bad for 2 hours of work. The only reason the member called us is, I’m not sure they have the $17,000 and that’s great. Everybody wins.
Jill DeWit:
Yep. Let’s go buy something for half price today and resell it. Jack and Jill information and inspiration..
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