Monday Deal Review 40 Acre WonderLand
Jack Butala: Monday Deal Review 40 Acre WonderLand. 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 with Jill DeWit.
Jill DeWit: Hello.
Jack Butala: Welcome to this show. Cash Flow from Land. In this episode Jill and I talk about, like every Monday, our Monday Deal Review. In this case it’s a 40 acre wonderland. Great show today Jill. Let’s take a question before we get into it. Posted by one of our members on successplant.com, our free online community.
Jill DeWit: Cool. All right. Joe asked, “Hey everyone. I was thinking about this strategy. Wouldn’t it make more sense to target property that has more value and higher sales comps?” Here’s his thinking. “This way your spread will hypothetically be larger and you can do this all on an option kind of a deal so you’re not really using your own money. Like it? To me it makes more sense to do a few deals like this rather than hundreds of small deals.” I know you’re going to love this Jack. “Has anyone done this with success? I’d like to hop on a Skype call to further discuss with anyone.”
I sent Joe a little note so he knows we’re discussing it here. You know what’s funny? I sent Joe a little note and he already wrote me back saying “Yay great I can’t wait to hear it.” Hi Joe. I know you’re listening.
Jack Butala: Awesome question Joe. The answer’s yes. Today’s topic is Monday Deal Review. Wouldn’t that be funny? Wouldn’t that be awesome if I could shut up and do the show properly?
Jill DeWit: Has anyone ever done it? Yep. Sure have. Okay. Moving on. Poor Joe’s like what, what, what? Wait.
Jack Butala: Hey. Kudos man. You’re thinking out of the box and that’s what this whole program, our Cash Flow from Land program and this whole membership deal is all about teaching you how to think, leading you to the water, showing you how to drink, and then walking away so you can do it forever. Yes. The answer’s yes.
Jill DeWit: Drink forever. I drink heavily.
Jack Butala: To directly answer your questions, you have to ask yourself which situation you’re in. If you have $500 allocated for this whole business model, that’s fine. Spend 500 bucks, double it, 1,000, double it, 2,000, 4,000, 8,000, 16,000. If you have a rich Uncle Skeleton, that’s the name of a band when I was growing up. Rich Uncle Skeleton.
Jill DeWit: Cool.
Jack Butala: Like a rockabilly band. Anyway. If you have a rich Uncle Skeleton and he’s allocating 17 million bucks for acquisitions, then your way’s better. In fact I would even suggest that you move straight into something extremely large like ranches or apartment buildings. If you’re like the rest of us who are somewhere in between, you do both.
It’s all about, for me, putting a machine in place and then throwing a bunch of products in there that make a lot of money. We have a ton of members who, Seth Williams is like this, a ton of members who their whole goal is to do one deal a month and make 10,000 bucks. Frankly that’s what Jill and I do with houses, not with land. At the end of the year, we do it a lot more often than once a month, but at the end of the year if you do one deal a month and you just got a regular job and you’re working on the weekends doing this stuff, you’re going to make 120,000 bucks on the side. Not working a lot of hours.
Yes it does make sense. It sounds like to me this makes sense to you so I would recommend it. We have a member who buys canal lots in Florida in a $3-400,000 retail value. Just for the lots, not anything built on it. He buys them for 200 and sells them for three. Makes $100,000 a deal. He sells medical devices, that’s his real job. He’s killing it.
He bought our program and his whole concept was this. I’m going to do this because- he wants a house there, he wanted a house there, and he did it. He sent a bunch of mail out, he bought three properties. His whole goal was to just use the proceeds from these lots so that he could have a lot free and clear to build his house on. Like any entrepreneur he just couldn’t stop there. Who could?
Jill DeWit: Exactly.
Jack Butala: 200,000 bucks on a couple of land deals, you’re going to stop there? Oh no that’s enough money. I’m done. If you’re that kind of person find a different podcast to listen to. We’re packed full of inspiration and crazy money making stuff. All real estate based.
Jill DeWit: Yep.
Jack Butala: Does that answer the question Jill?
Jill DeWit: Uh huh. Yeah. Thank you.
Jack Butala: Do you have anything to add there?
Jill DeWit: No no.
Jack Butala: What’s your favorite kind?
Jill DeWit: No. I like [inaudible 00:04:35]
Jack Butala: You like to make 300 percent on a deal but only three grand?
Jill DeWit: Here’s my thoughts on this.
Jack Butala: You like to make 20 grand at 10 percent.
Jill DeWit: Here’s my thoughts on this. I do like the little bit of both. I like the consistent cash coming in on the smaller deals and if I’ve got 25 small deals and something goes crazy on one, I don’t know, something doesn’t work out, who knows, it’s not going to sink the ship. That’s my thing. I like to have those going in the background all the time, like you said Jack, I have that system. Then/however Joe, these things come along. There’s going to be deals that are bigger, maybe we don’t agree on a price, something like I’m not going to dish out the cash for, but you know what? This could be something really good. I’m going to do it as an options deal and I’m going to roll it in my inventory and let’s ride it out and see how it goes.
The thing is too, if I’m only doing those though, then I’m kind of hanging and waiting and waiting and waiting and waiting is my only thing. What if I did this option deal …
Jack Butala: We have a staff and a full time job man. We got to keep it moving forward.
Jill DeWit: Right. It’s 90 days we’re all just sitting here staring at each other waiting for this one deal. I’d rather have all these other ones going on at the same time so when the right buyer comes along for that deal then I’m like, okay great. Check. Let’s do that again.
Jack Butala: We have a member who I speak with on Skype frequently and his whole model is he only purchases properties that are more than 40 acres, but he prefers to buy 320 and 640s, like whole sections. He marks everything up more than $100,000 or he won’t do the deal. He is killing it. The guy’s probably going to make a million bucks this year.
Jill DeWit: Cool.
Jack Butala: Not exaggerating.
Jill DeWit: I know.
Jack Butala: Yes Joe. Kill it.
Jill DeWit: Cool.
Jack Butala: Today’s topic, our Monday Deal Review. It’s very- Jill, this question is very pertinent to our topic today. Monday Deal Review, 40 acre wonderland. That was a perfect lead. This is the meat of the show.
Yes. Exactly. 40 acre wonderland is exactly what Joe was talking about. Here’s a typical 40 acre transaction for us cash. Then I’ll give a terms example. We purchase a property out west, west of the Mississippi, for about $4,000 in a pretty rural location. We make sure it has good access, good attributes. Now’s maybe a good time to bring up the four A’s that we talk about a million times [until 00:07:02] Wednesday.
We buy properties that typically have some version of the four A’s, hopefully all four. Access. Attribute, like is it close to the Grand Canyon, does it have mountain views, close to the ocean, anything that sets it out from the ordinary. Is it affordable? The cheaper the better. What’s the fourth A?
Jill DeWit: Access.
Jack Butala: Access?
Jill DeWit: Wait access- how funny is this?
Jack Butala: Affordability.
Jill DeWit: Attribute.
Jack Butala: Attribute.
Jill DeWit: Oh my gosh.
Jack Butala: Wow. What generation am I?
Jill DeWit: Hello. I’m embarrassed.
Jack Butala: What’s my last name?
Jill DeWit: Access, affordability. Oh acreage.
Jack Butala: Acreage. Large is better. Thank you. Wow.
Jill DeWit: That’s hilarious. That’s a good one. That’s the first time we’ve ever done that.
Jack Butala: You and I need to go to a clinic together.
Jill DeWit: Wow. We are clearly overworked today. I’m serious.
Jack Butala: This is the 92nd show that we’ve recorded today. That’s what’s going on.
Yes. A typical 40 acre deal’s got those four attributes, I mean those four A’s. We buy for about 100 bucks an acre and we sell it for cash for between $8-10,000 total, which is 200 to, it doesn’t matter, 200, 250 an acre. We make 4-6,000 bucks. We do this extremely often. The person that buys it from us kills it. They go and sell it for what it’s worth. 30, 40,000 bucks. It takes them awhile.
Why the heck don’t we just do that? Why don’t we take awhile? Sometimes we do. Sometimes we hold onto them and we ask retail. In that case we usually sell it on terms, thus cash flow from land. We sell it $200 down. We front the four grand and we sell it $200 down, $200 a month forever, and collect the payments forever. That’s the $10,000 a month for life kind of thing. It’s a lot more than 10 grand because we’ve been doing this for 15 years.
That’s what a typical deal looks like. For most people, again, they don’t have the rich Uncle Skeleton, so those cash deals, that $4-6,000 profit margin fuels the term sales. You got to do both. I talk all about this in our education programs. Not just talk about it but show exactly how to do it. All the details. No stone left unturned.
Jill’s painting her nails again.
Jill DeWit: No I’m just listening.
Jack Butala: What color is it today?
Jill DeWit: No no I am not. That’s so funny.
Jack Butala: I can smell it.
Jill DeWit: Jack. There’s plenty of shows that you … No. This is good. I’m enjoying this.
Jack Butala: It brings up what Joe was asking earlier in the show. Do you want to do these acreage deals in a machine like fashion and make 46,000 bucks all the time or do you want to horse around with smaller lots and make double, triple your money on a $500 investment?
What ends up happening in reality is you send a lot of mail out. You send a ton of offers out. They call back and let’s say Jill answers and a guy says, “Heck yes. I have 10 40 acre properties and I will happily sell them for $100 an acre.” Jill says, “That’s great. Do you have any more real estate?” They say, “Oh my gosh yes. What kind do you like?” “We like all kinds.” You’re going to end up with small lots regardless of how you do it.
We just cut to the chase and send it all out. All of it. From a cash standpoint, not a profit margin standpoint, 40 acre properties rock. They’ve always been my favorite. From a margin standpoint, five acre properties rock. This is west of the Mississippi. East of the Mississippi this doesn’t work. What works east of the Mississippi? Maybe that’s a topic for another show. Maybe I’ll tell you right now though.
We buy and sell what we call vacation lots. In northern Michigan, buy a property that’s maybe close to some body of water. Even in Minnesota, anywhere where people vacation. People from Chicago and Detroit and those big cities in the Rust Belt, they all go up there in the summertime and have a blast. This Rust Belt thing kills Jill. Why’s it so funny?
Jill DeWit: Your accent is coming. The Minnesota. The “sota” and then the Rust Belt. I’m like oh my gosh, here he goes. Here it comes.
Jack Butala: This is what I said to the kids the other day. I saw a Canadian license plate. I said, “Oh that car’s from Saskatchewan, eh?” They all just laughed. They just started laughing. I can speak Canadian. We should have a Canadian show, eh?
Jill DeWit: Totally.
Jack Butala: Can you turn off your cell phone, eh?
Jill DeWit: Yeah.
Jack Butala: Hey hoser. Turn your cell phone down, eh.
Jill DeWit: Exactly.
Jack Butala: 40 acres rocks. It’s a sweet spot. The vacation properties you can make, same deal. You can buy a vacation property for 1,000 bucks or 2,000 doing the same thing. Sending out a massive amount of offers and then you can sell it for four to eight grand and then there’s still a ton of room, especially in some of these hot vacation spots. There’s a ton of room for the person who buys it from you to make some dough.
Jill DeWit: Everybody’s happy and then they keep coming back. Those are my favorites.
Jack Butala: Me too. That’s wholesaling by the way.
Jill DeWit: Yep. That’s it.
Jack Butala: This is the Technical Two. Two minutes of property investment advice from our 15 year, 15,000 transaction experience. Establish your acquisition criteria, for us part of it is a 40 acre wonderland situation, and stick with it. If somebody sends us a hotel deal, which they do all the time, do I look at it? For about 30 seconds I do. Then I promptly say thanks very much, thanks for thinking of us, that’s not our acquisition criteria, and we move on to our real bread and butter money making operation.
Jill DeWit: It’s hard not to get excited. It’s funny too sometimes because you and I have had some great deals come to us. For a brief moment we go oh look what we could do. We could do this, this, this, and this. One of us catches us and goes uh oh.
Jack Butala: Usually it’s me.
Jill DeWit: Right. You find yourself doing a driving for dollars. Did we just do that?
Jack Butala: We just-
Jill DeWit: Knock it off.
Jack Butala: Jill and I just had a driving for dollars moment. All we ever do on this show is knock driving for dollars because it’s silly and it’s awful. She and I took a Sunday drive situation and we found a tiny little shack, falling down property, in an extremely nice neighborhood and we’re like yeah that’s going to be cheap.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Then we both looked at each other and started laughing. That’s- tell everybody not to do that.
Jill DeWit: Mm-hmm (affirmative) it’s hard not to. You can’t help it. It’s okay. You catch yourself.
Jack Butala: My point is, and this is the end of the Technical Two, establish your acquisition criteria. The one that you start with will probably not be the one that you end with. You could send a ton of offers out, a bunch of them are going to come back, you’re going to do a few deals, and you’re going to say wow, that’s what I want to do. I want to do this vacation lot thing all the time. Forget about these forties over here. I want to do this Florida canal lot thing all the time. I don’t want to horse around with the smaller acreage properties in Montana. Whatever it is it’ll find you.
If you have a question or you want to be on the show or you want to know what color Jill just painted her nails, call 800-725-8816. It’s my time to not talk. Jill inspire us.
Jill DeWit: Do you have a routine that sets you up so you are ready for your day? It sounds silly sometimes, but consistency and having a routine and knowing how your- will set you up so you know how your morning’s going to go. I was thinking to … Remember like babies. Wake them up at a certain time and you feed them and you dress them and you bathe them [dadadadada 00:14:48]. It’s just a little comforting consistency and it applies to adults too.
I want to make sure, Jack and I do, there’s a consistent morning coffee thing and there’s a vitamin thing and it’s kind of silly.
Jack Butala: Oh my gosh. We do. I never thought about that.
Jill DeWit: Uh huh. It’s really really- and it may be different times, but you and I do have a consistent routine. It’s so funny because it’s even down to who’s in charge of what, and it’s a good thing. If anybody’s not here …
Jack Butala: It’s weird. [crosstalk 00:15:19]
Jill DeWit: It’s like shoot who’s going to bring me my coffee.
Jack Butala: How do you work this thing? How do you work this coffee machine?
Jill DeWit: Exactly.
Jack Butala: Do you know how to work the coffee machine?
Jill DeWit: I do. Six scoops. I didn’t know for awhile. It’s funny. It’s comforting and it’s a good thing.
Jack Butala: I have no idea. No idea.
Jill DeWit: I encourage everyone to have a morning routine and really try to stick with it.
Here’s another one that I did in the past when I used to have to commute to work. I knew that if my morning routine was off in any way and I left the house five or ten minutes late, it made a huge difference on the traffic and that would totally mess me up and totally mess up my day. It was just like if I was stuck in traffic and I’m late for work, it’s hard to recover sometimes from that.
I had to really work hard at sticking to the routine.
Jack Butala: Yep. I know there’s a lot of stuff that I think should be routine and then there’s a lot of thinking out of the box. I think of the execution portion of anything and it should be a routine. Then there should be an isolated amount, in that structure, there should be an isolated time where there’s free play.
Google does that. I read that they have a … they literally have experimented with having their employees take a 10 minute nap. One time a day they can go in for 10 or 15 minutes in this dark cool place and just chill out, not in front of screens or any of that stuff. I love those ideas. It’s structured, but it’s like now’s your time to just not think.
Jill DeWit: [Exactly 00:16:54]
Jack Butala: There’s something totally missing in the morning. I do not know how to make the bed by the way.
Jill DeWit: What’s funny is you talk about routine and not thinking or a little break in that thinking, when you get a good routine in place you don’t think about it.
Jack Butala: Yeah.
Jill DeWit: It’s just you just get up, you know where to go, everything’s right where it’s supposed to be. It’s easy, and for me, calming.
Jack Butala: Yeah. It fuels creativity I think too.
Jill DeWit: You can think about other stuff if you want or think about nothing if you want. I catch myself sometimes when I’m getting ready, sometimes my head gets racing and I’m thinking about my day. I’m like [ugh 00:17:33]. For me that’s not a good thing because it makes me start my day a little too early and then it’s nutty. I need quiet time.
Jack Butala: You know what I’ve been doing lately? Listening to extremely loud classic rock with headphones.
Jill DeWit: Okay. Isn’t that funny?
Jack Butala: I feel like it’s five minutes. While I’m working.
Jill DeWit: That’s calming to you and it’s awful to me.
Jack Butala: It’s like Ritalin.
Jill DeWit: I have to go in- I close my office door. I need to be quiet for me. It’s kind of funny. It’s always funny when I hire …
Jack Butala: While you’re doing your yoga I’m pounding it out with Led Zeppelin, man.
Jill DeWit: When I’ve had new employees in there working with me and they’re maybe in my office as we’re getting stuff started and whatever, it’s so darn quiet I wonder what they’re thinking. I just need it quiet.
Jack Butala: Some people in law offices and stuff they listen to a little clock radio. I don’t understand that.
Jill DeWit: Yeah. I know.
Jack Butala: Makes me want to- never mind.
Jill DeWit: That’s funny.
Jack Butala: You know some people leave their cell phone on during a podcast?
Jill DeWit: Yeah. That’s so … yes I’m noticing that, thank you. Thank you.
Jack Butala: Every time that sound goes off that you just heard on my cell phone, somebody bought something. That makes me so happy.
Jill DeWit: Maybe it’s a 40. It’s probably a 40. Let’s go check it.
Jack Butala: Join us in another episode where Jack and Jill discuss how to use a coffee machine, that’s me.
Jill DeWit: And inspiration and everything else, 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: You are not alone in your real estate ambition.
I love forties.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: I love writing the check on the outbound and i love getting it on the inbound.
Jill DeWit: Exactly.
Jack Butala: I do not hesitate, I don’t hesitate with almost all of it but …
Jill DeWit: Yeah.
Jack Butala: Tiny little lots for a few hundred bucks, a great way to start, get your feet wet, learn the whole thing, especially if you’re buying them a thousand at a time, but forties just rock.
Jill DeWit: Totally.
Jack Butala: They sell fast, you buy them fast. What’s your favorite?
Jill DeWit: Fives. I like fives. You know what’s interesting? I notice different customers buy different things.
Jack Butala: I like fives too.
Jill DeWit: Fives are good. I get a good mix of … My favorite is five acre ranch properties somewhere pretty where there’s a view and stuff. Those people.
Jack Butala: We did a deal recently where a guy called in. We sent some 40 acre mailers out and he called back and said yeah. I’ve got like 40 of these though. What do you want to do? No, okay.
Jill DeWit: Yeah.
Jack Butala: You know how you can’t jump up and down on the phone. You say, oh yeah, okay. That’s cool. Then you hit the hang up button on the phone and you just do the … I do the happy dance.
Jill DeWit: Exactly.
Jack Butala: I call it something else I can’t say it on the air.
Jill DeWit: Right. It’s all good.
Jack Butala: Information and inspiration. I just got the- you know how when your loved one does the thing like the cut off at the neck, that silent [kkk 00:20:26] cut it, zip it. I just got that.
Information and inspiration to buy- I just got it again. Inspiration to buy under valued property.
If you have any questions or comments, please feel free to email me directly at steve@LandAcademy.com.
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