How Much Money Is Needed to be an Investor (CFFL 417)
How Much Money Is Needed to be an Investor (CFFL 417)
Recording Location: LAT (i.e. 33.488237) (LONG i.e. -111.921540)
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hello there.
Jack Butala: Welcome to our show today. In this episode Jill and I talk about how much money is really needed to be an investor, a land investor that is.
Before we get into it, though, let’s take a question posted by one of our members on the landacademy.com online community. It’s free.
Jill DeWit: You got it. Soon to be land investors.
Jack Butala: Yeah.
Jill DeWit: This is a good one. Thank you, Jack. First person asked the question, and then the second part I’ll tell one of our people weighed in and answered the question, and then Jack and I will add in on our comments. So, here we go.
Rob asked, “I’m a real estate broker, full-time, who invests on land on the side. I would be curious to hear any strategies real estate agents are using to cultivate listings from your investment mailings. As I am sure you know, I come across a lot of property that is not a good fit on the investment side because of the numbers, however, many of these properties would make nice listings. Any thoughts on turning that corner?”
Our first … our person weighed in, Adam said, “I think it’s a great idea. I have a good relationship with a realtor in one of the areas where I invest. When I talk to people and they want way, way more than I can pay, and they’re admen about getting retial, I suggest they list it with a realtor and I recommend my friend. I pass the listing over to her, she helps me by taking pictures of various parcels in the county where she works. Everyone wins.”
I have pretty much nothing to add.
Jack Butala: The reason I put all this in here is because I have nothing to add either. I think you align yourself the same way that you do with a buyer. When you wholesale houses, you align yourself with a couple of good buyers and you say, “Hey, do you want to do the deal?” They say, “Yeah.” Then, you just walk away.
Jill DeWit: I would add one thing because this goes both ways because I have the opposite. I have not been doing what Adam does, but what I have been doing is aligning myself with a realtor who gives me listings that are too small for him.
He’s often … I’m like, “Dude, why don you want this? Why don’t you buy that?” He’s like, “Oh, no. It’s not my thing. I don’t want to do it.” It’s a realtor that people come to him and they want to sell retial, and he says, “That’s great but I won’t take your listing just because there’s not enough money in it for me.”
Jack Butala: Let me get this straight-
Jill DeWit: So then he gives them to me.
Jack Butala: I know this goes on, but it cracks me up every time you bring it up. There’s real estate that he’s aware of, this agent, that’s priced too low for him to make any money on it-
Jill DeWit: As a commission, for commission.
Jack Butala: Does that just reek defined irony?
Jill DeWit: Right. He says-
Jack Butala: “No, no, no, it’s priced too low.”
Jill DeWit: Then he gives them to me and I’m like-
Jack Butala: I don’t want any low-priced real estate.
Jill DeWit: I’m like, “Well, then … ” I’m like, “Guy, why aren’t you buying these yourself?” “Oh, no. It’s not my thing.”
Jack Butala: What’s his answer to that?
Jill DeWit: It’s not his thing. Some people … I think that it’s just people are on a narrow path and that doesn’t meet his criteria.
I give him credit because maybe he’s so busy in his retail world that he doesn’t have time to do somebody’s deals that might be too small for him. Hey, fine. But it rolls into what we do, so it’s great.
Jack Butala: That made my week.
Jill DeWit: Good.
Jack Butala: No, I don’t want any of that low-priced real estate. Bring the high-priced real estate over here.
Jill DeWit: It’s funny is I keep saying, “Wait a minute. Let’s look at some of these deals.” I’m like, “Dude, you should just be buying this yourself.” He’s like, “I know. I just … I don’t want to. It’s not my thing.” Maybe that’s a code for, “I don’t understand how it works. I’m afraid of the transaction.” It could be all kinds of things. I don’t know.
Jack Butala: I don’t want any of that old wine. Bring the real fresh wine.
Jill DeWit: I don’t know.
Jack Butala: Only the best, fresh wine for me and my family.
Jill DeWit: I don’t know. It’s so funny, I tell you. Wait, let’s go even better, don’t say wine. Wine can’t go bad. How about that silver?
Jack Butala: Oh, yeah, that old tarnished silver.
Jill DeWit: Yeah, it’s kind of old.
Jack Butala: I like it Jill. No, that’s perfect.
Jill DeWit: Give me some silver. Maybe it’s silver or gold. Maybe it’s that, I don’t know.
No, no, no, mine has to have that label on it.
Jack Butala: Oh, here we go. That’s what the show could be like.
Jill DeWit: No, but it’s a good thing. That’s the whole point, I think, to all of this is once you wrap your head around we’re all helping each other, it may not make sense to you, but we are. When you can understand you are helping someone by taking an unwanted asset off their plate, and they’re thrilled to let it go for less because they’re getting rid of it in their mind, and you see it like that, then you go it. That’s the reality.
Jack Butala: Right.
Jill DeWit: So, there you go. Then, “I’m helping somebody else because I bought it so low, I can in turn sell it to somebody who really, really wants a piece of property that can’t afford retail, but they can afford to buy from me, and they make payments for me because they have a limited income.” Whatever it is. There’s a lot of our people that are making payments that are on a limited income, and they’re like, “Wow. I never thought I could even own a piece of property. Thanks to you, we are.”
Jack Butala: I love the way I see you guys answer each other’s questions and … it is probably better and more eloquently stated than I could.
Jill DeWit: It’s good.
Jack Butala: If you have a question, or you want to be on the show, reach out to either one of us on landacademy.com. When do you think we can start saying landinvestors.com?
Jill DeWit: I think we should now.
Jack Butala: All right.
Jill DeWit: It’s coming.
Jack Butala: Next show.
Jill DeWit: It’s almost ready.
Jack Butala: Today’s topic, how much money is needed to be an investor? Today’s topic, by the way, all five of them, were handwritten by Jill-
Jill DeWit: This week’s.
Jack Butala: This week, I’m sorry.
Jill DeWit: Yeah.
Jack Butala: Yeah, this week, purely because here’s some behind the scenes [inaudible 00:05:50] from land show purely behind the scenes because she’s tired of answering these questions.
Jill DeWit: Well, I thought these are … Yeah, all this week, these are questions that come up to me when I do my … do member calls, and people who are just thinking about this, they can go on our website, and … If you don’t know this, you can go on our website and there’s a place to schedule a call with me and you get a free 15-minute call.
These are a lot of the questions that people ask, and so I thought, ” All right, I’m answering enough there that this is a big deal.” I wanted to bring them up this week to answer for any more people.
Here is the answer, how much money is needed to be an investor/land investor? You need some money.
Jack Butala: Well said, Jill.
Jill DeWit: You cannot … If you think you’re going to come into this with $500, and you’re going to hand write some offers, and you’re just going to get something out there, and you’re going to not even going to buy anything, you’re just going to try to … what we call is an option, you’re just going to have an agreement with the seller, and you’re going to go market it like yours, and try to split the … You’re just going to start off that way, that is not the way to do this.
Jack Butala: Well said.
Jill DeWit: Thank you.
Jack Butala: I love my backseat position in this. I’m serious.
Jill DeWit: This week, this is realistic. You don’t need to have $100,000 in the bank, no … I mean, it depends on what you want to buy, but do you need to have a couple of thousand dollars behind you? Yes, if you want to do this right.
You don’t want to take out a credit card, you don’t want to do a second mortgage or something. You want to spend six months putting $5,000 or $10,000 away so you can turn that into … so you can double that in 60 days or less, depending on your timing and your schedule, your … whatever, and then go from there. I mean, that’s the reality.
Jack Butala: Okay. Can I pipe in on this?
Jill DeWit: Sure. He’s like, “This is the Jill show.”
Jack Butala: Yeah. I like the Jill show.
Jill DeWit: You know what? You know what you could do? You could raise your hand … Just kidding.
Jack Butala: I’m a huge fan of the Jill show, by the way.
Jill DeWit: Thank you.
Jack Butala: Usually in person.
Jill DeWit: Oh, boy.
Jack Butala: You need about five grand. That’s a magic perfect number. If you don’t have $5,000, you’re going to be okay, but you need to concentrate on learning how to manipulate and use data and the tools that we make available because that’s really your career in the very beginning. All right?
People would not be asking this if they’re further in their career. This is a question for a new person. Everybody wants to go into everything with $500,000 in the bag, just as a bunch of cushion. That’s not realistic. If you first concentrate on not how much money you need or any of that stuff, just learning how to use data to send it to offers, to owners … send offers to owners, the money is going to find you. I know it sounds like a cliché but it’s true. I don’t want to sound like your father.
Jill DeWit: I want you go get going first.
Jack Butala: Just as many people in our group, or who are watching our group, or somehow involved somewhere, trust me on this … that have way more money, they have no interest in learning how to use data. They only have interest in either instituting their version of hard-money lending, which we don’t allow actually for a bunch of reasons, but we allow … freely encourage a partnership, if you want to partnership a 90-10 deal, and it’s not … You can do anything you want out of the group, but we encourage partnership in transactions. I think if you’re a money person, you’re going to make way more than 10%.
Jill DeWit: Right. If they go into it right … To add to that, come in with some money, get some deals done, get your own transactions under your belt, iron out some of the kinks, learn how to really use the data, and do it well before you do some of these things. Like Jack said, the money will find you. Yeah.
As you’re going through these and you’re … It happens all the time, people, our people reaching out to us all the time. There’s two I need to call back right now that have found these awesome deals, like, “Oh my gosh. This guy called me back and I hit him up for one and he’s got 50, and he wants to give them all to me, and it’s going to be this great price. I have enough for three. I don’t have enough for 50. What do we do?” That’s where Jack and I come in, we’ll partner up.
Jack Butala: Yeah, we don’t … and we generally don’t get involved. Jill might not even know this now but I turned deals down with other members or people in the real estate environment, unless we all can make $100,000 each.
These two big deals specifically, the ones that you’re talking about, that passes that test times 80. They’re not large acres deals, they’re multi-unit deal that are in great places both of them. They’re both great deals. The point is to get the offers out there. No matter who you are, get them out there, get some deal flow coming in, make a bunch of mistakes.
Jill DeWit: Exactly.
Jack Butala: But for some reason, no matter how much I say that, and Jill’s version too, everybody just wants a number.
Jill DeWit: Well, I was going to say 5 to 10. That’s what I think.
Jack Butala: Well, can I ask you a couple of questions?
Jill DeWit: Yeah.
Jack Butala: You think you can do it with 1,500?
Jill DeWit: No. Well .. no, because I don’t have any acquisition money left. Let me be honest, and here’s why-
Jack Butala: Well, I mean $1,500 after-
Jill DeWit: Oh, to buy a couple of assets?
Jack Butala: Let’s say you have a job, you have a pretty good job, all your bills are getting paid, your wife is happy, or your husband is happy … Husbands are never happy or sad by the way, they just-
Jill DeWit: Exist.
Jack Butala: They’re just there. “Is he still there? That’s fine. Don’t bother him.”
Jill DeWit: “He’ll come home. Don’t worry, honey.”
Jack Butala: “Don’t poke him with a stick anymore.”
Jill DeWit: Oh, boy. Okay. What are your questions? Okay. Can I be … Let me back up, I want you to first budget and invest in education and affording to do this, meaning money every month to access data, to download records and send out mailers.
I mean, one batch of mailers, just to give everyone an idea, Jack always recommends 1,500 so that’s 750 in mailing costs because it’s $.49 an offer that we send. So, they’re you go. You got $750 tied up in that. Now you have to think about the data that you downloaded and getting access to that data, which we all have, but … After all that, can I … There’s no one getting close to my 1,500 so now I have … or my 5,000. I have $1,500 left over, easy, I’ll have more than that.
Jack Butala: Yeah. Okay. That’s fair enough.
Jill DeWit: I’ll have $2,000, $3,000 left over that I can-
Jack Butala: Five grand it is.
Jill DeWit: Five grand is good because then I can pick up-
Jack Butala: When I say $1,500, I mean $1,500 for buying property.
Jill DeWit: Yeah. I can buy three good properties for $500 each, and double that really fast.
Jack Butala: I know. No, I agree with you. I was just … I think now it’s a semantic issue because I just assumed the guy … somebody has got a pretty good job, they got the extra money to get involved in the program, and then they still have some money set aside for acquisitions. It depends on the person.
Jill DeWit: Then, what traditionally happens is, or I see it happen a lot, is they do exactly what we just said, and then the next thing you know they go, “oh, boy,” and they’re calling their brother, and their father-in-law, and they’re like, “Okay. We got to do this.” Then they all get involved, which is really great.
Jack Butala: That’s exactly what happens because they … It’s hilarious. You’re exactly right. Send a bunch of offers out, you get them back, you’re shocked that it even worked at all, and you’re staring at … you know that if you do these deals that are sitting on your desk, signed, that you’re going to make 10,000 or 15,000 grand. You just need five or six grand to buy them and flip them. Then … Yeah, exactly right, Jill.
Then it’s … the this question stopped. Have you noticed that?
Jill DeWit: That’s very true.
Jack Butala: It’s like, “What happened to her? She joined us three months ago. I didn’t hear anything. Now she pops and … ” “Yeah, okay. I just made $72,000.” That’s an exact comment I heard this week.
Jill DeWit: Oh my gosh. Exactly. We had an email the other day, we shared it at our event that in six weeks we had a guy just … he said, “I’m not even worried about this job, replacing this job when I got laid off. I made $50,000 already.” I’m like, “Okay.”
Jack Butala: In the first month of the year.
Jill DeWit: Yeah. Thank you.
Jack Butala: So, how much money do you need, Jill, to start this?
Jill DeWit: I’m going to line up $5,000.
Jack Butala: All right.
Jill DeWit: I’m going to line up $5,000-
Jack Butala: I like your hard answer style.
Jill DeWit: Thank. If you have more, it’s even better. If you have close to 10, that’s even better because you can buy that much better and more properties with it. But if you have $5,000, you could do the whole program, you’d be safe with your mailers, you could get stuff rolling, and you have money to buy stuff.
Jack Butala: I talked to a guy today on a call, a consulting call, and he said … this guy, he says an amazing story. He started out very young as a time share salesman and and found out he didn’t want to do that really quick, and then he went to work for an auction company, a live gavel action company in the deep south where they sell real estate that way like it’s 1961. He’s got this built-in buyer group and he’s just … he’s killing it! He’s absolutely killing it because he’s … Remember I say the most successful people in our group are the ones that are a little bit creative?
Jill DeWit: Yeah.
Jack Butala: Because they apply the basic concepts to whatever their situation is.
Jill DeWit: You know what else? They don’t get hung up on details.
Jack Butala: Yeah. This guy … He had another incredibly cool creative way to do it. He didn’t tell me how much money he has or hasn’t, but he’s got buyers lined up, so it doesn’t matter.
Jill DeWit: It doesn’t matter.
Jack Butala: Now he’s just trying to find his sellers, and he is finding them.
Jill DeWit: That’s the best possible scenario.
Jack Butala: Do you want to see another episode where Jack and Jill discuss how do use information? That’s me.
Jill DeWit: An inspiration, that’s me.
Jack Butala: To get just about anything you want.
Jill DeWit: We use it everyday to buy property for half of what its worth and sell it immediately.
Jack Butala: You are not alone in your real estate ambition. Do you feel better now?
Jill DeWit: I do. I just need to do that sometimes.
Jack Butala: Jill, I know that … I know you get that question a lot.
Jill DeWit: What did somebody say … Just recently, we did a podcast with one of our people and he said, “Jill, I know what you’re saying when you say ‘lay off the back tax.'” I’m like, “Thank you!” I love how he referred to only me, not you, because he knows that that is just one of my issues that I have, driving for dollars. We should … That’s like … Remember we used to … We should bring that back. Somebody started a thread a long time in success plan-
Jack Butala: Yeah. You know what? That hasn’t come up a lot.
Jill DeWit: It hasn’t, and it was something funny about … It was your … some of your Michigan things and some of the Jack things that was just … We were all rolling over some of your things. Someone could do a … now that I say [inaudible 00:17:22], so someone could make List Jill’s pet peeves thread, and successfully-
Jack Butala: Oh my gosh.
Jill DeWit: I wonder when-
Jack Butala: I might be the author of that.
Jill DeWit: You can get it all rolling. Let’s see, what would be a good pet peeve?
Jack Butala: You know what Jill doesn’t like? Carrots.
Jill DeWit: No, I think … Yeah. Carrots are a waste of calories for me. I don’t want to figure out the benefit of carrots.
Jack Butala: No, no, it’s not that. No, I’ve seen you have absolute disdain for carrots and stuff.
Jill DeWit: Yeah, I’m not a big fan of carrots.
Jack Butala: That’s your nice way of just covering for the fact that you can’t stand-
Jill DeWit: I don’t hate it, but I’m just not a fan. That’s funny. Give me another one. What’s a pet peeve of mine? This is good. I like this game.
Jack Butala: I don’t think you can have more than one pet peeve. I think a pet peeve is the Mac daddy of all your regular peeves.
Jill DeWit: A pet peeve … Oh. So, what’s one of my peeves?
Jack Butala: Yeah, driving for dollars.
Jill DeWit: Yeah. Mean people.
Jack Butala: Yeah, mean people in all forms. I was just going to say that. Sending out a mailer that really messes-
Jill DeWit: Threatens the people.
Jack Butala: Yes, threatening.
Jill DeWit: That is one of my things.
Jack Butala: Final note.
Jill DeWit: Yeah, that’s right. “You will lose your property tomorrow. Call this number. Don’t be … whatever” Yeah, that’s one. Okay. Thanks.
Jack Butala: All right, I’m on it. This isn’t even fun. Information and inspiration to buy undervalue property.
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