Set Your Net Income Per Deal Parameters (CFFL 454)

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Set Your Net Income Per Deal Parameters (CFFL 454)

Set Your Net Income Per Deal Parameters (CFFL 454)

Jack Butala:                       Jack Butala with [inaudible 00:00:01].

Jill DeWit:                           Hi, there. I was trying to slow you down.

Jack Butala:                       Why?

Jill DeWit:                           I don’t know. Sometimes I can barely say hello, and you’re like, “Moving on.”

Jack Butala:                       Welcome to our show today. This episode is just like life. In this episode,-

Jill DeWit:                           We also-

Jack Butala:                       … Jill and I talk about setting your net income per deal parameters. I figured we do a whole show on this because we talk about it a lot. We talk about it, and it’s time to get into it in detail.

Jill DeWit:                           Okay.

Jack Butala:                       Let’s take a question posted by one of our members on landinvestors.com online community. It’s free.

Jill DeWit:                           Okay. Michael asked, “After a recent mailing, I have a seller who wants to see me his property.”

Jack Butala:                       Yeah.

Jill DeWit:                           That’s the goal. “After doing my research, I found out that the property was sold with a deed of trust 20 years ago.”

Jack Butala:                       Yeah.

Jill DeWit:                           “The owner said that they have the deed, or maybe just a copy. After further investigation, it looks like the previous seller sold the property on terms, and then sold the note to a retired couple. It was the retired couples’ duty to notify the county with a release of deed when the note was paid off. The retired couple is now in their 80s, and they live in Arizona with no working phone number.”

Jack Butala:                       Oh my God. Good for them.

Jill DeWit:                           Oh, this is great. “How do I-

Jack Butala:                       I would love to have a non working phone.

Jill DeWit:                           … cleared up. Should I only buy this property by going through a title company?”

Jack Butala:                       Yeah.

Jill DeWit:                           Yeah, that’s the easiest way, too.

Jack Butala:                       Yes.

Jill DeWit:                           If it’s that good.

Jack Butala:                       Even then, they’re gonna-

Jill DeWit:                           That’s what I’m saying.

Jack Butala:                       So, turns out that title agents and title companies in general, they have thresholds for stuff, too. And if they get into it and find out it’s just beyond their threshold to insure it, they won’t close the deal.

Jill DeWit:                           What’s so funny about title companies, too, I think their threshold is really short. Because they’ll dump deals really fast. I’m like, “Wait, why are we not doing this?” They’re like, “Oh, because he wouldn’t return my calls.” All right. Well, then let’s try another way. You know.

Jack Butala:                       This sounds [crosstalk 00:01:57].

Jill DeWit:                           Hello.

Jack Butala:                       This property sounds like it may have multiple liens on it that are unresolved.

Jill DeWit:                           With this note-

Jack Butala:                       Yeah.

Jill DeWit:                           … and this stuff, too. So, this is one that even now, I may or may not do it. It depends on the spread because if I can’t make enough money on this one, I’m not doing it. It’s already, right now, a headache.

Jack Butala:                       Yeah. Quiet title action might be appropriate here.

Jill DeWit:                           If it’s appropriate.

Jack Butala:                       Yeah.

Jill DeWit:                           I’m not sure.

Jack Butala:                       The other thing, too, is that this is a great way to negotiate the price of the situation, Jill. I’ve seen you do this before.

Jill DeWit:                           That’s true. If I have to do this, I’m gonna pay you this.

Jack Butala:                       If I have to do this, I know the [inaudible 00:02:46] price is 10,000 bucks right now, but if I have to get into this, it’s gonna take me two months. There’s gonna be legal fees and a bunch of other stuff. I tell you what,-

Jill DeWit:                           You’ll walk with five.

Jack Butala:                       … because no one will-

Jill DeWit:                           Will touch it.

Jack Butala:                       … do this deal with you.

Jill DeWit:                           Yeah.

Jack Butala:                       So, I’ll give you a 1,000 bucks to walk away right now.

Jill DeWit:                           Or something like that.

Jack Butala:                       It’s not kicking somebody when their down. They let the situation happen to themselves.

Jill DeWit:                           That’s true.

Jack Butala:                       So, if you’re gonna fix it for them, they need to compensate you.

Jill DeWit:                           You’re right. I have had that conversation. I have said, “Look, this is it.” In a very nice way, I have said, “You have no other choices. I’ll help you undo this mess, and you’ll get something out of it, or you can just let it go.” [crosstalk 00:03:24]. And I’ve actually said, “You can just stop paying the taxes and let it go.” I’ve canceled people. Or you want to get something out of it, I’ll make sure you can get something out of it.

Jack Butala:                       Remember we did that deal a long time ago? I think it was last year. The guy called and said, “I’m settling this. My dad just died. I’m selling the estate. We don’t want any money for these properties, but can you guys just [crosstalk 00:03:45], and you can have it all.” That was a good deal for us. We made, like 80 or 100,000 bucks on it.

Jill DeWit:                           It was good. I remember, yeah. So, that’s out there. This is a good point. My last point on this, until you get into this business, and you start doing this, these people know. They often know that it’s a pickle. It’s a mess. They know that they’re not gonna get anything out of it. They really are thrilled you came along, and that’s why-

Jack Butala:                       Right.

Jill DeWit:                           … no one was offering the money, or anyone that really tried to, once they get into it, they walk.

Jack Butala:                       Yep.

Jill DeWit:                           So, it’s okay.

Jack Butala:                       If you have a question, or you want to be on the show, reach out to either one of us on landinvestors.com. Today’s topic, set your net income per deal parameters. What the heck does that mean, Jill?

Jill DeWit:                           What does that mean, Jack?

Jack Butala:                       It means if you’re gonna make 20 cents on a deal, are you gonna do it or not?

Jill DeWit:                           No.

Jack Butala:                       Are you gonna make 20,000? How about 10,000? How about 500? That’s my point. Throughout your career, it changes. You know, Jill and I only do land deals now, where we make a 100 grand. That’s out bottom threshold.

Jill DeWit:                           Or more.

Jack Butala:                       Or more. Bottom threshold, yeah.

Jill DeWit:                           Yeah.

Jack Butala:                       And then, for houses, we cap it at 10,000 to keep the buyers coming back. We want our buyers, the wholesale buyers for our houses to make way more money than we do. So, those are our net income parameters. If you’re brand new at this … I think Jill said she’d have about five grand, right?

Jill DeWit:                           Yeah, I’ll say at five grand.

Jack Butala:                       For acquisitions.

Jill DeWit:                           And I’m gonna buy 10 properties at 500 bucks a pop.

Jack Butala:                       Or something like that, or even one, or two. And make sure you double your money.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       We have several members now who are … Well, Land Academy is more than a year old now. So, we have some members that have been with us, very successful first year. So, they up the ante.

Jill DeWit:                           Yeah.

Jack Butala:                       One specifically, a stay at home mom, she only does large acreage deals in really high end areas. She does a lot fewer deals for way more money, Claire.

Jill DeWit:                           I know.

Jack Butala:                       That seems to be working out great for her.

Jill DeWit:                           Yeah, it’s kinda funny how she transitioned into that. It sounds like she was kinda testing it a little bit, and said, “Wow, this works.”

Jack Butala:                       Yeah.

Jill DeWit:                           “I’m gonna do a lot less work now, and do these big, big deals.”

Jack Butala:                       Right.

Jill DeWit:                           You had to go through the other stuff to get to that point to really know what you’re doing, and then-

Jack Butala:                       Right.

Jill DeWit:                           … pick the right properties, and do all that, and be comfortable sitting there. So, that’s the thing, too. Some of these bigger transactions, it’s like selling a house above a million dollars. You don’t have a big market for that.

Jack Butala:                       Right.

Jill DeWit:                           So, you’re gonna hold on to this asset for a little bit longer.

Jack Butala:                       Right.

Jill DeWit:                           When you’re buying properties for, you know. When you’re selling them in the 5, 10,000 dollar range, that’s really easy for people to even put on a credit card, seriously. Or they have a 401k,-

Jack Butala:                       Yeah.

Jill DeWit:                           … or they’ll have some savings. They’re ready to act on that.

Jack Butala:                       Right.

Jill DeWit:                           You flip those fast. But these bigger ones, you need to be ready.

Jack Butala:                       Yeah, I mean take a look at the big picture when you set that number, too. So, if you want to do a deal a month because you have a job … Several members start like this, they want to do one deal a month, and they want to make 10 grand on it. So, it adds up to $120,000 a year. If that’s consistent, you’ve done that for a couple years, 24 months straight, or sometimes more, sometimes less, give or take, now you’ve got a leg to stand on about justifying leaving your job, and doubling it.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       Or asking your spouse to leave to help you, or whatever the situation is. So, my point is the title is set your income per deal parameter. My point is this, like yesterday. Do this before you get all into it. Don’t feel your way through it, and kinda decide later.

Jill DeWit:                           Well, your net income per deal should be when you’re putting your mailer together, and you’re pricing the properties.

Jack Butala:                       Right.

Jill DeWit:                           Because you’re picking that country for a reason-

Jack Butala:                       That’s exactly right, Jill.

Jill DeWit:                           You’re really working it all the way back. All right. It’s like me sitting down and going, “Okay, I’m gonna pick a county where I can buy 10 properties at 500 bucks a pop, and I know they’re worth 3,000.”

Jack Butala:                       Right.

Jill DeWit:                           So, I’m like, “Okay, great.” So, I know that my net income per deal I’m looking for is $500 to $1,000.

Jack Butala:                       Here’s a desert 40 model, desert 40 acre property model. Buy for 100 bucks an acre, $4,000, and sell them for 8.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       Double your money. You can do those deals all day long if you do it properly, and the person who buys it from you, it can sell for 20 on terms. And it’s a great model for everybody wins, including the end user.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       So, there’s something for everybody in this. Jill and I happen to be cash people for some reason. We both are. I’ve done deals with people in the past. I have a deal on my desk right now with a member who has a very wealthy nephew, and he wants to put a million bucks into a company, and have us buy property, and just generate terms. That’s it. He wants us to do all the work. He’s gonna fund the whole thing.

Jill DeWit:                           Right.

Jack Butala:                       It’s hard to say no to that.

Jill DeWit:                           Right.

Jack Butala:                       Because everybody wins.

Jill DeWit:                           Yeah.

Jack Butala:                       The return for the investor,-

Jill DeWit:                           Oh my god.

Jack Butala:                       … he really wins. It’s totally-

Jill DeWit:                           Yeah.

Jack Butala:                       … safe because you’re buying real estate that’s cheap.

Jill DeWit:                           Right.

Jack Butala:                       We’re gonna win because we’re taking one 1/3 or whatever the thing ends up being-

Jill DeWit:                           Right.

Jack Butala:                       … without having to put money into it, and I’m doing something I can do in my sleep.

Jill DeWit:                           Right.

Jack Butala:                       Really, I’m not gonna do it at all. My people are.

Jill DeWit:                           Right.

Jack Butala:                       That’s something that I would consider that’s out of our normal deal parameters. I know I’m kinda talking out of both sides of my mouth, but there are certain situations where you’re not veering too far from what you do regularly do for a living, and still do okay.

Jill DeWit:                           Mm-hmm (affirmative).

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.

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

Jack Butala:                       You’re not alone in your real estate ambition. You know, my deal parameter scenario it gets reset constantly.

Jill DeWit:                           Yeah.

Jack Butala:                       It doesn’t just go up, and up, and up. You know, it gets reset constantly.

Jill DeWit:                           I like that. I agree. It should.

Jack Butala:                       Right.

Jill DeWit:                           We have how many years into this, and how many transactions? A lot. 16,000? I don’t know.

Jack Butala:                       Not yet.

Jill DeWit:                           So,-

Jack Butala:                       15,000 deals since, really my whole life, but since ’99.

Jill DeWit:                           Exactly.

Jack Butala:                       We made it count.

Jill DeWit:                           We might be closer to that, but still. The point is we’re now in a position that we can look at properties all over the country in all different markets. I only tell people not to go that way first, because it’s too nutty to try to learn all these things at once. I always tell them, “Let’s be smart here. Let’s focus on one county. Let’s focus on one area. Let’s focus on one property type. Let’s get your feet wet.”-

Jack Butala:                       Yeah.

Jill DeWit:                           … and then expand, expand, expand. And before you know it, you’re dealing with the whole west of the country, and now you added in the south of the country, and now you’re adding in this part of the country. And you’re adding in all these different sides, and then, you’re looking at, “Hmm, now I’m looking at commercial properties.”

Jack Butala:                       Yeah.

Jill DeWit:                           So, just don’t try to take it all on at once. You’ll go nuts, and you’re spreading yourself too thin.

Jack Butala:                       We know what [inaudible 00:11:28] we say go do this in Ohio.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       It’s a different version of what happens out west.

Jill DeWit:                           Mm-hmm (affirmative).

Jack Butala:                       But I know all the question to ask. You don’t want to put yourself through that right at the beginning.

Jill DeWit:                           Yep.

Jack Butala:                       Information and inspiration to buy undervalue property.

If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.

If you have any questions or comments, please feel free to email me directly at jack@LandAcademy.com.

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6,000 mailers
PatLive introduction at no cost We will help you establish your first script and get PatLive set up on your behalf to answer your phones.
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AirTable Ready-for-you CRM managed by your personal Land Academy Pro Transaction Coordinator
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ParcelFact ParcelFact is included in your LA Pro membership with unlimited pulls.
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$7,500 value
AirTable Ready-for-you CRM managed by your personal Land Academy Pro Transaction Coordinator
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PatLive introduction at no cost We will help you establish your first script and get PatLive set up on your behalf to answer your phones.
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$7,500 value
AirTable Ready-for-you CRM managed by your personal Land Academy Pro Transaction Coordinator
$100 value
Personal Consulting 1 on 1 personal consulting with our Transaction Coordinator each week.
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Regular Office Hours Regular office hours with Jack and Jill + our staff. Private for LA Pro Members Only. (Think Career Path Office Hours)
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ParcelFact ParcelFact is included in your LA Pro membership with unlimited pulls.
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