Importance of REI Acquisition Criteria (CFFL 0194)   

Importance of REI Acquisition Criteria

Jack Butala: Importance of REI Acquisition Criteria. 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 from Land Academy. Welcome to our Cash Flow from Land show. Once again, we show you how to buy property for half of what it’s worth and resell it the very 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 the importance of REI acquisition criteria. It comes up every day. Jill, great show today, but before we start, here’s some funny stuff that happened to us recently.

Jill DeWit:
All right, what was it? The last five people we made job offers to turned us down. I don’t think it was five. I don’t think it was five.

Jack Butala:
We even convinced one to take us on as a client.

Jill DeWit:
Was it five? Are you sure?

Jack Butala:
It was some number like five.

Jill DeWit:
I just remember the guy that we really wanted and we couldn’t get him, but that’s okay.

Jack Butala:
We had like a four stage process to interviewing people and stuff.

Jill DeWit:
I know.

Jack Butala:
It’s funny.

Jill DeWit:
Do you know what? That’s fair. It is funny, though. It is fair.

Jack Butala:
I don’t take it seriously or personally at all, stuff happens.

Jill DeWit:
It’s got to be right, too, you know? For some reason, it’s kind of funny, I go, why didn’t they … They just didn’t feel it, and that’s okay.

Jack Butala:
It’s like dating. The worst thing that can happen is everybody’s forcing it and six months later it just falls apart like a car accident.

Jill DeWit:
That’s true.

Jack Butala:
We want it to just end right here.

Jill DeWit:
One good date and you think this is it, don’t do that. Oh boy, that’s right. Here we go. Red flags, dating, driving for dollars.

Jack Butala:
Before she rants.

Jill DeWit:
I have about three topics I think that you bring up something, I’ll go on it and that’s one of them.

Jack Butala:
I love working with you. Anyway, let’s take a question posted by one of our members on SuccessPlant.com, our free online community.

Jill DeWit:
Okay. Jared says, “I found a county, low population, and there’s vacation density in the state. Good access, but it has high prices on land and only two properties are for sale on the tax sale list. Is this one I should run from?” It’s kind of choppy. Can you please restate that?

Jack Butala:
He said, “I found a county, it’s got low population. It’s a vacation destination in the state.” Good, good, good. “It’s got good access, low population, once again, but it has high prices on land and only two properties are for sale on the tax list.” He says, “Should I run from this one?” What he’s asking is this, because I spend a whole chapter on our Cash Flow From Land Education Program in detail, showing you in the computer how to find areas to send letters to. We don’t tell you which county to do it in. A lot of people say, “Can you just tell me the county?” Jill’s got several canned answers to that, and I’m not going to say what they are now. You can lead a horse to water kind of thing. Instead of giving you a list of counties that we think are successful, instead we show you how to find one.

Jared’s clearly gone through this because there’s like four or five criteria. One is, you’ve got to find a county that’s got low population density. You don’t want to mail $500 per unit offers in Manhattan, New York. You just don’t want to do that. It does work in Manhattan, but it’s a different way and we’ll get to that later. One is a rural county. It has to have good access. It can’t be in the center of Alaska. It’s got to have some type of comparison values out there that you can see on LandWatch or Land and Farm, just going to check the prices, just to see if there’s anything selling or if there’s low or high volume or whatever.

Then, finally, I say go out and try to find an available tax list, and not because we mail tax bracket because we don’t, but it’s just a good gauge. There’s some counties out West here that had tens of thousands of existing back tax property, which is a real good indication that you can buy some super cheap property for this product type for land, not for houses or anything else. He’s concerned that there’s only two on the list. It’s got all the criteria, it sounds like, so my answer is this … I’m going to answer this one if it’s all right with you, Jill.

Jill DeWit:
Yeah.

Jack Butala:
Don’t worry. That’s one of the criteria, the tax list, and I think that you may or may not achieve the same percentages, but you will buy property there. What do we say? For every hundred you send out, you should probably buy one on your first round if you do it okay. It might be one out of two hundred. You might have to spend a little bit more in the beginning, but chances are you’re going to get more, and that’s how it works. Your ROI percentages on these deals are the same.

I mentioned Manhattan, so the way it works in Manhattan is if everything’s selling for five hundred bucks a foot, then you go out and send some letters out for four hundred. You might not double your money, but you’re going to do pretty well.

Jill DeWit:
Exactly.

Jack Butala:
The concept works. You’re on the right track, man, and that’s a great question. Don’t let the tax sale thing spook you, but adjust accordingly.

Jill DeWit:
Yeah.

Jack Butala:
Hey, if you have any questions or you want to be on the show, call 800-725-8816. Today’s show, the importance of REI acquisition criteria. This is the meat of the show.

Jill DeWit:
We’re getting kind of technical here, I got to tell you. We’re using some big words.

Jack Butala:
You know why? I’m so glad you brought that up. I hope we’re not losing listeners, but we’re not. People are really asking for this. The shows that give actual information versus us just horsing around and being spiritual, they just don’t do as well. People are sending me personal notes. They’re saying …

Jill DeWit:
Knock it off?

Jack Butala:
Yeah. Can you be more helpful in between the banter and the laughing with her?

Jill DeWit:
Exactly. With her?

Jack Butala:
Yeah.

Jill DeWit:
Okay. Her? I’m her now. You can just substitute any girl. Any Jill will do.

Jack Butala:
Oh my God. I got an email from a guy who’s like, “It’s all funny with her and everything, but …”

Jill DeWit:
Her. I can’t believe you just say things. Look, I have a name. It’s not “her”. Who wrote that email? I’m just kidding. I’m just kidding. No, and I do like this topic too because this came up, just the other day we were talking to somebody because they were getting sidetracked … Sorry if I’m jumping in on some of your material here.

Jack Butala:
No, it’s fine.

Jill DeWit:
Yeah, I watch people do this, too. They don’t have a firm starting out acquisition criteria. You can sure change it. Their acquisition criteria, it must say, anything that comes my way that sounds halfway good, I’ll look at it. No, wait a minute. Hold on, everybody. Let’s reel it back in. Go ahead, Jack.

Jack Butala:
No, so this is the meat of the show. You have to have an acquisition criteria. Imagine that your full time job is you’re the vice president of acquisition for a real estate investment trust in REIT. For whatever reason, there’s a bunch of Chicago and there’s a bunch of Newport Beach. I don’t know why.

Real estate investment trust is a syndication. A guy sits down, they’re usually publicly traded, and he raises a bunch of money and syndicates out real estate deals, which means everybody puts in a certain amount of money, let’s say five thousand, ten thousand, maybe twenty thousand dollars, and then you raise a ton of capital. Then, the syndicator or the REIT guy, the vice president of acquisition goes out and finds whatever the specialization is. Let’s just say it’s like assisted living facilities, because I know a little bit about that. Now you have all the money raised, you got all the forms filled out. There’s a mountain of forms to fill out, by the way, to raise money to syndicate the deal. Now you need the deals.

This guy goes out and he tries to find deals. What ends up happening is he gets a lot of other stuff like apartment buildings and office buildings and they’re great deals. You know what he does? He throws them in the trash can. I was in this position for a lot of years, and it killed me. What if I just send these deals out over there and take a couple percent? You can’t do that. You have to follow the acquisition criteria that was set out because you raised capital on the whole thing. That’s what I learned out of that, the whole thing in life, you have to do the same thing with land. You’re going to send a lot of letters out and people are going to call you back and say, “Yes, I will sell you that property, but I’ve got these 22 houses over here too, do you want to take a look?” When you’re starting out, you can waste years of your life going down some rabbit hole, chasing some crazy thing that’s never going to happen, or you can just stick to it and only buy stuff and sell stuff that’s in your acquisition criteria. I can’t stress this enough. Set it up and stick to it.

I didn’t put it in the program, honestly because I thought it was so sophomoric that it was so obvious. Some of our members are bringing it up often, “I got this great deal over here.” Somebody brought me a mine recently.

Jill DeWit:
I think, too, your criteria could be something as simple as your budget, by the way, that’s part of your criteria. I’m only looking to spend up to X for up to Y size properties.

Jack Butala:
Yeah. In the beginning, I think you should absolutely … That’s the Technical 10. That’s the meat of this show. This is the Technical 10, 10 minutes of property investment advice from out 15 year, 15,000 plus deal experience. Here’s my advice, and it’s probably not going to take ten minutes. I just said Technical 10 because it rhymes.

Jill DeWit:
You’re so funny.

Jack Butala:
It’s really Technical 2.

Jill DeWit:
Technical 2.

Jack Butala:
You want to call it Technical 2?

Jill DeWit:
I like that, I think Technical 2. I think that’s good.

Jack Butala:
Around our office, it’s a constant battle, and I mean a funny, healthy, laughing about it battle, about how short stuff has to be with Jill. If I write a three word sentence and we’re going to put it in some kind of publication, she wants it to be shorter.

Jill DeWit:
That’s not true.

Jack Butala:
You do.

Jill DeWit:
No, no, no.

Jack Butala:
I think it’s good. Keep it simple, Steve, jeez. Whatever the name is, Jack.

Jill DeWit:
I just think that for whatever reason, I didn’t grow up talking about things a lot. If we have to sit down and dissect it and talk about it, it’s very painful for me. For example, when I was a kid and I would get in trouble, the worst punishment, the worst punishment you could possibly do …

Jack Butala:
This is such good information.

Jill DeWit:
Right? Would be to sit me down and say, “Let’s discuss where this all went sideways. Let’s talk about why you made this decision and why you thought this was a good idea.” No, no, no. Can you just punch me and let’s move on? Whatever it is, I don’t care. I’m ready for it. Let’s just do it and move on. I’m grounded, fine, done. That’s all I needed. I really don’t need to talk about it. I don’t really care why. I know it was wrong. I knew it going into it. I just got caught. Next. Sorry.

Jack Butala:
You made me feel all warm and fuzzy when you said that. That’s probably not appropriate for the show.

Jill DeWit:
Okay.

Jack Butala:
Here’s my Technical 2 advice.

Jill DeWit:
Okay.

Jack Butala:
Write this down. Write down your acquisition criteria. If you’re out West, buy stuff for a hundred bucks an acre, sell it for two hundred. Nothing larger than forty acres, nothing smaller than five acres. You’re going to do great. I’m not saying you should do that. We have tons of members who are buying houses and info lots and all kinds of stuff all over the country that has nothing to do what they do, but they’re successful in part because they have a criteria and the discipline to follow it. The second that a different product type comes in or a seller says, “Yeah, I’ll do that deal but I got another one over here,” just say no.

Jill DeWit:
Just say no.

Jack Butala:
If you have a question or you want to be on the show, call 800-725-8816.

Jill DeWit:
My inspirational topic for today is, is too many phone calls a problem?

Jack Butala:
Heck yes.

Jill DeWit:
Isn’t that funny? I was … Hold on. Hold on a moment.

Jack Butala:
One phone call is too many.

Jill DeWit:
I was reading … That’s for you. I was reading about a woman that said she got … She did a direct mail and it worked. She sent out a lot of letters, too, it was really good. She got over twenty phone calls in twenty-four hours and she was a little bit panicking, but you know what? I think she priced it right. She may have found a little gold mine. I don’t think that’s bad. I think that’s motivational for me, like, wow.

Jack Butala:
Hey, I 100% agree with you. I’m, what, 15 years into this, this specific career. My whole life has been in real estate. My right ear, literally, this is not joking, has damage because of the phone.

Jill DeWit:
Yeah.

Jack Butala:
I’ve been on the phone my whole life and I’m fortunate enough to be successful enough where I don’t have to answer the phone anymore. If you’re just starting out, you got to … I joke around about that, but you got to talk on the phone.

Jill DeWit:
I think it’s motivational. I was just going to say, gosh, how great is that? Your phone’s ringing. That’s the whole goal here, everyone, is … That’s why you and I, Jack, are so good together. I tell people, and it’s true, Jack’s job is to make my phone ring, whatever it is that we’re doing. You go out, you’re the get into it, find it, get the people, you find the right people and all that good stuff and getting just the right people reaching out to me, whether it’s property or whatever else we might be working on. You make my phone ring and it’s good, motivated, excited people, and I love it. I think that was a really good … When I read that, that motivated me and I hope that motivated her. I read some of her numbers and it sounds like she’s doing everything right. A hundred dollars an acre stuff, and I don’t remember … I don’t think she put what county in there, but she had some other details in there that I looked at. I think it was just the initial, whoa, wow, kind of thing that kind of … It was funny, I should’ve asked her, “What did you expect? Were you expecting two phone calls?”

Jack Butala:
I think this is what goes on … I’m really glad you brought this up because what do you expect is in the back of my head all the time. It’s the first time they send it out, they’re just surprised. I think that they think it’s happened to everybody else, it’s not going to happen to me. Where’d I get wrong? I just don’t see … The only thing that I see that people don’t do right is send out a 200 mailer sampler. That’s the only thing you can really do that’s going to mess it up, in my opinion.

Jill DeWit:
Is not do enough.

Jack Butala:
Yeah.

Jill DeWit:
You can’t test it.

Jack Butala:
I was informed by one of our members that we have a competitor who suggests that you send out twenty letters a day, which I think is maybe the craziest thing I’ve ever heard in my life.

Jill DeWit:
Right.

Jack Butala:
If you’re going to do this, do it. If you’re going to buy a primary residence, your next house, if you’re going to buy your next house and you’re using this program because we’re releasing a program like that later this year, that’s appropriate. You want to do one deal and you want it to be a great deal. You’re going to move in and make it your own. That’s the kind of thing that’s required. If you’re making a business out of this, you want to make a side business and make a ton of money, let’s get cracking. Get some stuff out in the mail, get some phone calls, get the whole thing moving.

Jill DeWit:
I agree. Thank you. That was good.

Jack Butala:
Hey, 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.

Jill DeWit:
We use it every day to buy property for half of what it’s worth and sell it immediately.

Jack Butala:
Get there first. Great show, Jill. Good inspirational stuff. Are you pulling some of that out of Success Plant now?

Jill DeWit:
Some of that’s from that Facebook group.

Jack Butala:
Right, right. Yeah, there’s a bunch of good Facebook groups out there about real estate investment. Truth be told, I didn’t know much about that.

Jill DeWit:
There’s a couple good ones out there that we’re in.

Jack Butala:
It’s fun.

Jill DeWit:
It is.

Jack Butala:
I don’t have to be as professional out there as I do in Success Plant.

Jill DeWit:
That’s true. It’s fun, you get to meet … I say meet, but you’re communicating with different people from all over and it’s really good. It’s nice because some people are directly working with us and some are not, and you can kind of tell sometimes too, like whoops, where did that come from? Some are winging it. Some are winging it and doing a darn good job. I’m like, if you’re doing this good on your own, just figuring this out, imagine how good you could be if you had a …

Jack Butala:
You just took the words right out of my mouth. It’s just funny because there’s some people who are just crazy cheap. I’m one of those people, so I’m not going to buy anybody’s education … I’m going to go to the county. It just cracks me up because they find us eventually and they’re like, “Oh, I should’ve done this two years ago.”

Jill DeWit:
Yeah, that does happen.

Jack Butala:
You can’t tell somebody … Like me, I’m including myself, you can’t tell somebody that. They have to go through it themselves before they say, “This is crazy.”

Jill DeWit:
They got to figure it out for themselves, and that’s okay. It’s like they don’t appreciate it until they’ve had that, the other way.

Jack Butala:
Exactly.

Jill DeWit:
Very good. Jack and Jill, information and inspiration.

Jack Butala:
Let’s go buy some property for half price.

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