Never Maximize Land Sales Price (CFFL 479)
Never Maximize Land Sales Price
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hey there.
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about why it’s never a good idea to maximize your land sales price. What?
Jill DeWit: What? Why would I leave money on the table, Jack? That sounds crazy.
Jack Butala: Okay.
Jill DeWit: That’s crazy talk.
Jack Butala: Before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community, its free.
Jill DeWit: Amy asked, “Okay doin’ some research here, I’ve looked at back tax websites and lists, where do I go now?”
Jack Butala: Like where do you find it?
Jill DeWit: Actually, maybe that’s what she’s asking, that could be it. Where do I go?
Jack Butala: There’s a few places on the internet.
Jill DeWit: Where do I get this information? Why do I need it? You what, can I make this two parts, Jack?
Jack Butala: Yeah, sure.
Jill DeWit: I would like to explain why the heck we even want this information, ’cause we all know we don’t just mail back tax properties so, why do I even need this information? And then where do I go to get it?
Jack Butala: It’s always a good idea to feel out or test for reason the back tax situation in a given county, like for some reason in northern Utah and Idaho there are no back tax sales ever. It’s been like that since I’ve been in the business in the 90s, I don’t know why.
Jill DeWit: I have a guess but I’m not gonna say on here. What if its- Go ahead.
Jack Butala: So, in general, this may or may not be true, but in general for us, where there’s no back tax issues, no back tax properties in any way, properties don’t go back, there’s no real opportunity for rock bottom price. The business that we’re kind of in, scrapin’ the bottom of the real estate market. Can you buy houses there for a lot less than they’re worth, heck yes. Can you buy land there for a lot less than its worth, yeah but you can’t do it in a scrape the bottom, $100 an acre fashion. What we teach is, feel out the county to see if there’s a bunch of back tax, like Mohave county, Arizona’s got like 48,000 back tax properties.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: And we do really well there.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: And so do some of our members. That’s why its important.
Jill DeWit: It’s an indicator.
Jack Butala: It’s an indicator. Well, once again, less than one sentence.
Jill DeWit: ‘kay.
Jack Butala: If you listened to the show yesterday- Jill’s behind the bookcase right now.
Jill DeWit: Yeah. Thanks a lot. “Hi, over here, its me.”
Jack Butala: So, where the hell do you get this information? I got tired of answering this question so, I posted it on LandAcademy permanently. If you go to the resources section on LandAcademy.com and look for back tax lists, you’ll click on it and there’s an XML table in there of like 24,000 lines of data-
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: For historical back tax, which counties have ’em, which counties don’t. Just search for that county name and you’ll see it in there, it’ll indicate it. It’ll help you chose a county about where to mail.
Jill DeWit: It was so great, I had a member just the other day- Well that’s why I was thinking of this too. I had a member the other day reach out to me and he hadn’t seen that and I directed him to ’em and it was so nice ’cause he wrote me back and said, “Holy cow, this is fantastic. I completely downloaded this whole list, put it in an Excel spreadsheet, saved it. This thing is gold.”, is what he said and I said, “Thank you.”
Jack Butala: It really is.
Jill DeWit: Yeah.
Jack Butala: You don’t have to be a member, its free.
Jill DeWit: Yeah, its free for everybody. Go on there and there’s census maps on there, the population density maps.
Jack Butala: Yeah.
Jill DeWit: That’s another indicator, gauge, a research that we use when we’re picking a county to send our offers. It’s there for everybody to see.
Jack Butala: We’re about to release a website, which is entirely free, you don’t even have to be a member at all, called CountyWise.com and its, literally, go to the website and it’s a map of the United States, click on one of the states, click on one of the counties, and there’s just a ridiculous amount of information that I paid an army of overseas virtual assistants to keep up to date. One of the parts of data there is a whole scenario of back tax situation of that county specifically.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Its amazing actually, that website, how its coming together is truly amazing.
Jill DeWit: Mm-hmm (affirmative). It’s gonna be awesome. Thank you, Jack.
Jack Butala: This is one of the nice things we get to do for everybody, Jill.
Jill DeWit: Thank you, Jack.
Jack Butala: Its costing a fortune, by the way, and we’re not gonna charge for it.
Jill DeWit: No. Thank you, Jack.
Jack Butala: Hey, bookcase.
Jill DeWit: “Over here, I’m over here.”
Jack Butala: If you have a question or you wanna be on the show, reach out to either one of us on LandInvestors.com. Today’s topic, Never, ever maximize your land sales price. Well, that’s counterintuitive.
Jill DeWit: Yeah, that doesn’t make sense. Why would I not?
Jack Butala: Why wouldn’t you want to squeeze every single penny out of that real estate deal you have? Why wouldn’t you?
Jill DeWit: Maybe I[inaudible 00:04:49]
Jack Butala: Let’s say you have $5,000 and you buy a property that’s worth 20, you have two choices, you own the property now and you’re gonna sit there and say, “I own a $20,000 property and my arm is sore from pattin’ myself on the back.” Or would you sell it for 10, really fast? It takes six months to sell it for 20 or one week to sell it for 10, which one would you chose?
Jill DeWit: Hmm, let me think. I’ll take take the money and run for 500, please.
Jack Butala: Take the money and run, that’s what this should be called. Here’s why, in that six months that it would take to sell that property of 20,000 how many more $5,000 properties can you buy to sell ’em for 10 in that six month period, let’s say you do one a month.
Jill DeWit: I’m getting more money here.
Jack Butala: If you do one transaction a month and you spend all your money, let’s think about this. I have $5,000, in one month I have 10, in two months I have 20, in three months I have 40, four months I have 80, five months I have 160-
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Six months I have $320,000.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: This is an academic exercise. Can you really do that, we have members who do that, literally.
Jill DeWit: Yep.
Jack Butala: Who have done that with $5,000.
Jill DeWit: Yep.
Jack Butala: And we’ve done it.
Jill DeWit: I would like to add something to this also.
Jack Butala: So, do you $320,000 or $20,000 on the same $5,000 number?
Jill DeWit: Bingo. Here’s another advantage to this whole concept, the guy that just bought it from you, you just doubled your money, you put in five, you got 10, you just doubled your money like Jack said. Well, that guy just bought a $20,000 property of $10,000, you better believe that guy’s gonna come back to you for property.
Jack Butala: Where do you think-
Jill DeWit: Again and again and again.
Jack Butala: Exactly, where is he logically gonna go after he does sell it for $20,000 and doubles his money? He doesn’t know how to send that mail out, he doesn’t want to.
Jill DeWit: Yep, you just have a customer for life.
Jack Butala: He’s gonna go straight back to you.
Jill DeWit: Exactly.
Jack Butala: We have a list of people like this that have made it their career to buy property from us at wholesale prices and sell it on terms.
Jill DeWit: Its true. I love it, it makes me feel so good. I get excited when hear, “I just sold that for X.” I never get, “Aww, shot, I shoulda hung on to it, hung out, waited.” No, I don’t care about that, I’m happy they made money. I’m like, “Yeehaw, what else do ya need? I’ll get ya some more.”
Jack Butala: Here’s some of the things I see brand new people- A lot of mistakes that they make. We’ve seen our parents do a real estate deal or our uncles or somebody, friends, and its just failing. They’re trying to sell a house and here’s why, they are not letting the market set the price. They are ramming their concept of what that real estate should be purchased or sold for down everybody’s throats and its not working, they’re spittin’ it back out.
Jill DeWit: They’re getting emotional.
Jack Butala: The market’s gonna drive the price that your property sells.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Period.
Jill DeWit: Exactly.
Jack Butala: If you wanna fight that, you should just go be an attorney instead and fight and yell and argue.
Jill DeWit: Or sit for six months and see what happens.
Jack Butala: Or sulk. Yeah.
Jill DeWit: Or a year.
Jack Butala: Sit and sulk and wonder why the property didn’t sell and yell at somebody.
Jill DeWit: Right.
Jack Butala: Don’t fight- That’s our natural- We’ve all been taught that.
Jill DeWit: Right.
Jack Butala: Well, its time to stop fighting the market. You can’t fight a market.
Jill DeWit: No.
Jack Butala: The market’s gonna do what it’s gonna do. Make sure you get in below it, that’s your job.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Make sure you’re buying a property that there’s no way you can lose on it.
Jill DeWit: Right.
Jack Butala: You’re buyin’ it so cheap.
Jill DeWit: So, back to your example, too. Someone’s trying to sell it and they only want “X” price, well you know what, maybe they only want “X” price because they paid whatever price. Well ’cause they overpaid right when they went into it so, now they’re trying to get something out of it. They may have screwed up way back when they bought it.
Jack Butala: And that’s not your problem.
Jill DeWit: Right.
Jack Butala: Every week Jill and I have a open call, let’s call it a webinar, we just really call it the weekly call, on Thursday and every single week somebody says some version of this, usually it’s a member, “Yeah, I bought this property for $3,000 and I only doubled my money. I sold it for six, I coulda gotten more but I just did it ’cause I kinda wanted to sell it.” And I’m like, “Well, that’s too bad.”
Jill DeWit: ‘Cause they feel like they failed. “I only sold it for six.”
“Well how much did you spend?”
“Two.”
Jack Butala: Boo freakin’ who.
Jill DeWit: What the heck? “Yeah, i coulda sold it for 10.”
Jack Butala: “I only doubled my money.”
Jill DeWit: Hold on a moment. That was not a failure. You’re right, every week we have to remind everybody since when is double your money a failure, never.
Jack Butala: You know what Target makes, they just put out there, in general? Target, the retailer, every year.
Jill DeWit: This is good to know, what?
Jack Butala: Three percent.
Jill DeWit: Really?
Jack Butala: They make a three percent, not return investment, three percent of revenue.
Jill DeWit: Wow, and is that like a banner number or is five percent a banner year? Do you know?
Jack Butala: A fantastic profit margin for an extremely successful, let’s say manufacturing company, is 20%.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: We double our money here every day.
Jill DeWit: Right. Isn’t that crazy.
Jack Butala: Every day.
Jill DeWit: Yeah, I know.
Jack Butala: If you look at our return on investment, let’s say you start with $100,000 and you see what you have at the end of the year. It’s staggering how much money this makes.
Jill DeWit: Remember that time we did that show? We did a show with one of our members, Michelle, a couple months ago, and it was really great because he said, “You know, I thought I’d sit down before the show and add up the numbers and see how much money I made so far this year.” and he’s like, “I didn’t even know how much I made, its way more than what I thought.” It was really, really funny.
Jack Butala: Now that you said his name, I do remember the numbers but never said his name and I can’t tell ya. It was high six digits.
Jill DeWit: But it was really good.
Jack Butala: He was like, “I’m afraid to tell my wife.”
Jill DeWit: “I don’t want to get divorced.”
Jack Butala: “‘Cause she’s gonna say, “Where’s all the money?”
Jill DeWit: Exactly.
Jack Butala: So, what ends up happening is, and this is very typical for us and its typical for our top performing members, you pour it back into land.
Jill DeWit: Exactly.
Jack Butala: You have to look at two numbers. You have to look at your cash balance and wholesale value of the real estate that you own free and clear.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: And I’ll tell ya, it’s in the seven digits, sometimes in the eight digits.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: There’s one member I talk to regularly, he’s a black level number who generates almost seven digits a month.
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: He makes almost a million dollars a month and he never has any money.
Jill DeWit: Yeah.
Jack Butala: It’s all real estate ’cause he’s churnin’ it so hard.
Jill DeWit: Yeah, it’s good.
Jack Butala: We had a real long talk about that two weeks ago. I said, “Dude, you gotta look at your cash balance but you have to really create a balance sheet. Your assets are in the form of cash and also in the form of real estate.”
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: Historically, real estates not a current asset. The definition of a current asset versus a long term asset is can you liquidate it within a year.
Jill DeWit: Right.
Jack Butala: And that’s funny ’cause it use to be, real estate is not a liquid asset, well malarkey.
Jill DeWit: Watch me.
Jack Butala: It’s the 21st century and there’s this thing called the internet and real estate’s a liquid asset.
Jill DeWit: Yeah, I mean, how fast do ya wanna sell it? There are ways you can sell it really, really fast, if you want to or need to.
Jack Butala: That’s right.
Jill DeWit: And still make a profit.
Jack Butala: If you’re not borrowing against it you can sell it for anything you want.
Jill DeWit: Sure.
Jack Butala: As fast as you want.
Jill DeWit: Exactly.
Jack Butala: This is a good show.
Jill DeWit: Thank you.
Jack Butala: So, never maximize price and never sit around sulking. If you’re not selling your property-
Jill DeWit: Yeah.
Jack Butala: It’s because you want too much money for it or the mortgage company’s tellin’ ya you want too much money for it or the right people don’t know that it’s for sale.
Jill DeWit: Right.
Jack Butala: Every time I go on to LandWatch or LandandFarm, I don’t see it on LandPin ’cause we don’t allow it, we own LandPin, I see somebody post a property up there with no picture, no APN, and it says, “I got 39 acres in northern Arizona with fantastic mountain views, give me a call.”
Jill DeWit: Yeah.
Jack Butala: Who’s gonna buy a piece a property like-
Jill DeWit: Exactly.
Jack Butala: You wonder why the property doesn’t sell, come on.
Jill DeWit: Right.
Jack Butala: You gotta celebrate the fact that that property rocks and give all kinds of information and do a video and dance around like a cuke.
Jill DeWit: Have a map.
Jack Butala: Yeah, a lot of maps.
Jill DeWit: All kinds of details.
Jack Butala: Graphics.
Jill DeWit: Have all the questions answered so people can look it up and know what it is.
Jack Butala: And then have a way they can check out, right click on it and buy it on a credit card situation and then you’re gonna wake up in the morning and money’s gonna be in your bank account and you’re gonna laugh.
Jill DeWit: Exactly. Thank you.
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’s worth and sell it immediately.
Jack Butala: You’re not alone in your real estate ambition. That was a good show because-
Jill DeWit: Mm-hmm (affirmative)
Jack Butala: That’s a Captain Obvious scenario.
Jill DeWit: Mm-hmm (affirmative). It’s worth talking about it.
Jack Butala: But you have to say it because every week somebody says-
Jill DeWit: “Oh man.”
Jack Butala: “I just don’t know why this property isn’t selling.”
Jill DeWit: I hear like, “Oh man, I sold it. I was worried so, then I dropped the price and I sold it on Tuesday. And, oh man, the next day I had three more people call me and they woulda paid even more.” I’m like, “And you didn’t do anything wrong.”
Jack Butala: There’s a few Thursdays ago, they literally sold the property while we were on the call-
Jill DeWit: Yes.
Jack Butala: And they were complaining about it.
Jill DeWit: Yeah.
Jack Butala: Remember that? “This property- Oh hold on, it just sold.”
Jill DeWit: Yeah. Exactly.
Jack Butala: Information and inspiration to buy undervalued property.
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