Less Deals but More Money per Deal (JJ 597)
Less Deals but More Money per Deal
Transcript:
Jack Butala: Jack, Jill here.
Jill DeWitt: Hi.
Jack Butala: Welcome to the Jill Jack Show. I’m Jack Butala.
Jill DeWitt: And I’m Jill DeWitt, broadcasting this week still from sunny Southern California, where nobody seems to talk about the inevitable earthquake. Although I just heard an article about that. I don’t know. It was really kind of funny, because it was all about this woman that just did a talk recently that really letting us know that you guys are way … we’re like 100 years overdue from something really massive. It was funny because she was trying to educate everybody, and one of the people in the article piped in that what we all do is we all stock up on supplies like water, but then we use them all, which is true. We’re even as guilty-
Jack Butala: I know.
Jill DeWitt: … like we’ll buy these extra cases of water, and then we drink them all down to nothing.
Jack Butala: I know.
Jill DeWitt: And then we go a buy bunch of them; we drink them all down to nothing.
Jack Butala: Right.
Jill DeWitt: So, we’re really never stocked up. Fully stocked up.
Jack Butala: There’s a boat solution for this.
Jill DeWitt: Yeah, but is there a ton of water on the boat?
Jack Butala: Yes, there is.
Jill DeWitt: Oh I did not know that, but I got to make it to the boat. That’s the only thing. So, if I get to the boat … if I’m at home [inaudible 00:01:02] for bed.
Jack Butala: We’ll be okay. I mean, I think it’s just funny, because you watch on the news, it’s like, “Oh man. There’s a really bad earthquake in Peru.” And everybody sits around, and says, “Well, it’s not going to happen here.”
Jill DeWitt: That’s too bad. Yeah, we all say, “Oh wow. Look what happened to them.”
Jack Butala: I know. It’s terrible. It’s terrible.
Jill DeWitt: Totally. I was watching I think the other night too on social media. And here in Palos Verdes Inn, it was showing right by Terranea — this big resort — and it showed the last however many years, how the land has eroded, and this … It was like all these photos from 100 years ago and 50 years ago, and how the cliffs have changed, and how much less there is.
Jack Butala: Smart Jill.
Jill DeWitt: Thank you.
Jack Butala: You looked into this stuff.
Jill DeWitt: From stuff that fell off into the water.
Jack Butala: It’s nice to talk to you. This is the only time we talk to each other.
Jill DeWitt: It’s kind of funny.
Jack Butala: Right on the show.
Jill DeWitt: You know what? Even though we might we three doors from the beach, in 50 years we will be front and center.
Jack Butala: That’s exactly-
Jill DeWitt: Exactly. That’s why we live here.
Jack Butala: Riverside might be … if this earthquake happens, that might be ocean [crosstalk 00:02:04].
Jill DeWitt: That might be front and center. That’s true. We’re going to be like Catalina out there.
Jack Butala: This show is supposed to be entertaining but also about real estate investment.
Jill DeWitt: Right. Oh I’m sorry. We have something to talk about. I thought that was the show.
Jack Butala: Today, Jill and I talk about less deals but more money per deal. Anybody can understand that, right?
Jill DeWitt: Oh we all want this.
Jack Butala: Before we get into that topic, let’s take a question, a quite lengthy question but worth, and promise, posted by one of our members on the jackjill.com online community. It’s free.
Jill DeWitt: Okay, now, before I start this one, I have to profess this and ask you Jack, can I get through the whole thing? Will you let me get through the whole thing?
Jack Butala: Sure.
Jill DeWitt: Okay, cool. All right. So, Greg asks, “I’ve sold the free … ” Oh this is cool. So, once upon a time, we used to give away … I’d have promotions. We’ve been talking about doing this again. We might do this with some other things we have coming up, where, now and then, I’d acquire a lot of property. It just happens. There’s times that I’ve given some away.
Jack Butala: Here’s an example. Once in a while someone calls us, and they say, “Jack, Jill, we’re a group in your group,” or whatever.
Jill DeWitt: I’ve got 50.
Jack Butala: They find us on the internet. We have 50 properties. Can you just take them, please? Just take them. I’m selling my dad’s estate and we don’t want to do the paperwork. Or can you send us a thousand bucks, and when that happens-
Jill DeWitt: Or it’s just a smoking deal.
Jack Butala: … we give away a lot of the property to our members and to people for signing up.
Jill DeWitt: Exactly. I haven’t done it in a while. So that’s what this is about. He said he sold a free property of the program and made a few hundred bucks and, “Now, I found, negotiated, and sold my first deal.” End to end, awesome, or soup to nuts, if you prefer.
Jack Butala: Really, Jill is in a vacuum and has never heard the phrase.
Jill DeWitt: Throw that in for [Curea 00:04:03] and myself. So, anyway, she’s going to love that. Greg says, “I sent out one mailer to a county in Nevada, offering $100 in acre. Didn’t get a single bite. And Jill afterwards found out $1,000 in acre would’ve been a better offer price. Lesson learned. Hate mail did overflow through. LOL.”
Jack Butala: Got that out of the way.
Jill DeWitt: Okay, so now we send our second mailer to a county. By the way, this is classic stuff.
Jack Butala: This is how it works.
Jill DeWitt: Totally. Greg made a mistake, picked himself up, figured it out, moved on, and won’t do that again.
Jack Butala: Hallelujah.
Jill DeWitt: So, now, on the second mailer to a county in Colorado, “Found a buyer who agree to sell me 10 acres at $13,000. I offered nine. The comps are 45 to $60,000. And I looked at the records and found out that they paid $12,000 in 1997 to buy the property. So, I figured it was a low risk. Good. Wasn’t sure about the access. There’s a physical private road but not legal access. So, I did about a half hour with Jack. Totally worth it. And he said I should at least double my money.”
Jack Butala: Greg, he did a deal review.
Jill DeWitt: Right, with you.
Jack Butala: And I wonder what I said.
Jill DeWitt: Like a consulting call with Jack. And this is one of the cool things and we do this. “So, I finally bought it.”
Jack Butala: We are reachable.
Jill DeWitt: “I paid $13,438 all in with closing cost. Didn’t get title insurance.” Sounds like you didn’t need it, which is totally cool. Did his homework. “Listed it for $53,000, which was a lower end of the market. Most of the listed prices were $45,000 and up to $75,000. It took about a month to sell, but a buyer agreed to pay $50,000, but wanted to do my research. Came back and said there’s no way we’d pay more than $20,000 for it. Said we’d do $32,500 with financing and 0% interest and no prepaid penalty. She said, she was like, ‘We’ll pay it off soon, but rather sooner rather than later,’ and she agreed immediately. I could’ve probably gotten her to $38,000 or $39,000, but I’d rather sell it and then just find new deals than lose this most serious buyer.”
Got it. So, he said … kind of a recap here. So, 13,500 to buy the property. A 32,500 sale price. $7,500 down. And $1,000 a month for 25 months at 0% interest. This is going great.
Jack Butala: This is beautiful.
Jill DeWitt: I love it. “Once she sent me this sign-purchase contract, I signed it and sent it to her in First American, and she wired the $7,500 to my account. I put the $7,500 as earnest money. Not a down payment. I got the money a week ago in auto payments for $1,000 starting on November 1st.” Awesome. “I can’t honestly explain how grateful I am to Jack and Jill for this program. And there’s plenty of small deals that are included in the package. That’s what the forums are for, but not an exaggeration to say this is life-changing.”
“My first deal more than covered the cost of getting my business set up, the whole cashflow from the program, and subsidize my unfortunate mistake in the ‘Land Dork’ program too.” I’m quoting him. “It’s covering my rent and savings of $100 a month for the next two years.”
Jack Butala: Wow. One deal. Oh my gosh.
Jill DeWitt: “Plus gave me enough capital to start deals in the process. Thank you Jack and Jill and Luke. You guys really have legitimately changed my life. Picking my next counties now. Looking for smaller deals. Having one big deal is more stressful than five smaller ones and easier to do cash sales. I want to build up the watch list.”
Jack Butala: Watch list.
Jill DeWitt: God bless you, Greg. That’s so cool.
Jack Butala: Lengthy, but I’ll tell you … isn’t that just-
Jill DeWitt: There’s a lot of great information in there for everyone, and thank you. This ties into our show too. He went for a bigger one it sounds like. So, you can do that, or go for a bunch of smaller ones. Flip them. Build up your money, then do a mix of both. Whatever you want to do.
Jack Butala: He’s going to make 25, 30,000 buck … $35,000 on his first deal.
Jill DeWitt: I love it.
Jack Butala: Plus the one that we gave him, with signing up a while ago.
Jill DeWitt: Yeah.
Jack Butala: Truly amazing.
Jill DeWitt: I love it too. The way he’s thinking about it, which is huge. Like, “Okay. These payments he’s making me are paying my rent for the next two years.” That’s awesome.
Jack Butala: It’s a good time to say, “We don’t need to do this show, but this is why I do it personally.” I know for you, it’s super important too. This is why we have these companies: Land Academy, Land Pin, Offers 2 Owners, ParcelFact. All of them, so that people can be successful.
Jill DeWitt: Get these [crosstalk 00:09:11] on.
Jack Butala: And not to have to go through the learning curves that we had to.
Jill DeWitt: And solving these problems. A lot of the companies that we start … you’re right, Jack … there are no … It’s not like we’re doing it for the competition. There is no solution out there. We’re creating this … companies are solving-
Jack Butala: We’re providing the actual tools.
Jill DeWitt: … these problems. It’s huge.
Jack Butala: I feel proud when we get it. It’s like this …
Jill DeWitt: Me too.
Jack Butala: Today’s topic: Less deals but more money per deal. Boy, I’ll tell you, that couldn’t be a more appropriate topic for the question that just happened: Less deals but more money per deal. This is the meat of the show. You have a couple of choices, and Greg made his choice very clearly. He’s mailed out a county for a higher cost property, but higher margin and higher dollars per deals. So, let’s run through a couple of very simple math scenarios. You could buy 10 properties for 100 grand, $10,000 each, or you can buy one property for $100,000. Let’s say you follow along the Jack-Jill theory of doubling your money.
Those 10 properties, let’s say they’re relatively close to each other or maybe not. Let’s just say they’re in separate states. The 10 properties that you sell double your money. You sell them for $20,000 each. At the end, you have $200,000. Or you can buy one property, and exercise one-tenth of the work and effort. But if you buy it right and sell it really quickly, you’re going to end up with $200,000, just like in the original example. Here’s the thing. The variable in all this is your time. If you have time to do 10 deals, why not do 10 $100,000 deals and end up with two million bucks at the end instead of 200,000?
Jill DeWitt: What I was going to add to is that when you’re looking at these markets and these buyers too, I find that I’m going to make my money faster on these $10,000 deals. It’s a lot easier for me to find a bunch of people that are willing to put $20,000 down than people to put $200,000 down. Do you know what I’m saying, Jack?
Jack Butala: Yeah. Not in the form of down payment, but this in the form with the purchase price.
Jill DeWitt: I’m just saying that that just have that cash available. One of my little things is time, not just your time, but transaction time.
Jack Butala: Oh I see, yeah.
Jill DeWitt: So, that’s what I’m saying. You’re going to probably double your money faster on a mix of maybe even some smaller properties. It’s like, for example, selling a $300,000 house, there’s a bigger market out there. A lot more people that can afford that than selling a $3 million house. I mean, tell me I’m wrong. Am I wrong?
Jack Butala: With those exact numbers, you are not wrong, but here’s how to hedge this off. And I respect what you’re saying, but there’s a way to hedge that risk off. If you go to a market and you look at days on market, and you do a tremendous amount of research … I think two days ago we talked about pre-mailer research. You can just smoke all the risk out.
Jill DeWitt: True.
Jack Butala: This is not necessarily the case with land but with houses, especially in a higher-price market. I would argue it’s less risky to buy a $300,000 for relatively undervalue. But if you’ve done all your research and you’re in a 30-day days-on-market scenario, you are going to sell it before you buy it.
Jill DeWitt: Thank you. I was just playing devil’s advocate.
Jack Butala: No, that’s good, but would I do that right out of the shoot? No, I would not.
Jill DeWitt: But you know what? Here’s the thing. So, to contribute to what you’re saying is you’re just working it backwards.
Jack Butala: You’re working it backwards.
Jill DeWitt: That’s it.
Jack Butala: Well said.
Jill DeWitt: So, the whole topic is less deals but more money per deal, so you know what? Figure out what those markets are. Maybe it’s Manhattan, New York. You know what I mean?
Jack Butala: Maybe it’s Cleveland.
Jill DeWitt: Maybe.
Jack Butala: Maybe it’s the suburb of-
Jill DeWitt: Where are the multiple big deals happening?
Jack Butala: … Des Moines.
Jill DeWitt: And figure out what it is, and then work it backwards-
Jack Butala: That’s if you show us [crosstalk 00:13:27].
Jill DeWitt: … because you have all the knowledge. You have all the tools. You can be a bird dog for whatever property type. You might be a bird dog for finding those … It’s just like we talk about with the Santa Barbara ranches. You’re the bird dog of finding million-dollar properties, buying them for a million, because they’re worth four or three and a half, but you’re buying them for a million and selling it for two or two and a half, and everybody wins.
Jack Butala: That’s exactly right. So, if you do that, the Santa Barbara ranches is a great example. In Santa Barbara County, California, there is where Oprah and Michael Jackson used to live. There are a lot of subdivisions that where somebody went in a long time ago and subdivided large acre ranches and they’re very, very expensive. So, right now, how we’re doing the show right now, there’s a handful of people that want to buy a ranch there and they have cash. Or maybe they don’t. Maybe they are going to finance it, which is fine. Our job is to get there first and pay several hundred thousand dollars less than we’re going to sell it to somebody there for.
Jill DeWitt: And queue it up.
Jack Butala: For us, there is no risk in this.
Jill DeWitt: That’s true.
Jack Butala: I mean, zero risks, because we know what’s going to happen. Borrowing the earthquake we talked about earlier, which may actually delay the deal, but I don’t think it’s going to stop it.
Jill DeWitt: It’s true.
Jack Butala: So, I would argue that’s exactly what I wanted to talk about in the show was, I wanted to like debate this a little bit, because there’s always two ways you can go about it. You can buy property that you know you’re going to put up for sale, or you can buy property that you know you’re going to sell with a high degree of certainty, and I mean like 98%.
Jill DeWitt: Or it’s already sold.
Jack Butala: Yeah, I mean, that’s-
Jill DeWitt: Let’s back it up even that way. Trevor talked about that. That’s what he’s doing right now. We just did a show with one of our members. He’s meeting and really getting to know these buyers. He’s got this certain market area he’s working with and this is stuff anybody can do. Get to really know the buyers. You know what they want and go get exactly what they want. You’ve already sold it.
Jack Butala: That’s what we do.
Jill DeWitt: And by the way, you don’t pull the trigger yet until they sing off on it. They’ve already said, “Yep, we’re going to buy it. This is what we’re going to pay. Okay, now, we’re all pulling the trigger.” There’s no risk.
Jack Butala: That’s my point. Now, after you have the experience. Trevor also said … and that hasn’t aired yet. It will air. Remember Trevor [inaudible 00:15:37]?
Jill DeWitt: Mm-hmm (affirmative).
Jack Butala: He also said that you got to spend a significant amount of time in the industry and get comfortable with all the terminology. He said that’s something that people … and quite frankly, I think he meant us. We are so experienced that we take a lot of that terminology and the confidence for granted.
Jill DeWitt: Experience.
Jack Butala: Yeah, you got to get your feet, like Greg did, where he sold the property, his free property, and he’s got a bet first deal under his belt.
Jill DeWitt: That’s why I talk about my 10, and I love it when people … I talk to people in the phone and they come back. And they go, “Jill, I’m going to do what you said. I’m on number nine. Now, I get it.”
Jack Butala: What’s your 10?
Jill DeWitt: “I’ve done my 10.” Do 10 deals all the way start to finish, and I guarantee you’re going to feel differently after 10 than you did at one. By 10 deals, now you really know what you’re doing. You understand the transactions. You’ve got a lot of the kinks out. Now at 10 deals under your belt, now you can start making some different decisions. And thank you, Jack.
Jack Butala: Well said.
Jill DeWitt: Thank you.
Jack Butala: I prefer to do less deals but make more money per deal. That is not what I did the first three or four or five years of my career. It was exactly the opposite, because I felt like, back then, I was averse in buying my risk. It’s all risk based.
Jill DeWitt: I agree with you. I think when you’re that’s really what I talk to people about. I’m like, “I understand you want to come at it like this. You want to buy it for 100,000, sell it for 200,000, and then coast for a month,” or whatever it is. But especially when you’re brand new, you have all your eggs in that one basket. I think that that could be a little scary, because we all know we’re going to make some mistakes. So, that’s why I really want people to really think about, let’s just buy … like the example you just shared. Buy 10 at $10,000 each, because what if one of them goes a little sideways? You paid too much. Who knows what? You didn’t sell it for what you thought did. The other nine are going to carry it. You’re going to be just fine.
Jack Butala: Those first few deals aren’t designed for you to make a tremendous amount of money. They’re designed for you to get the experience and find out if this is for you.
Jill DeWitt: That’s true.
Jack Butala: Being a librarian is not for me.
Jill DeWitt: Are you sure?
Jack Butala: What’s a couple of careers that you know just never going to work for you?
Jill DeWitt: That’s really funny.
Jack Butala: What are a couple?
Jill DeWitt: That’s a really good question. What would be … Attorney. Well, I don’t know. I could argue. Wait a minute. I don’t know. Let me think.
Jack Butala: I would be a great lawyer. I just couldn’t do it.
Jill DeWitt: You know what? An attorney, I’d have a hard time representing someone that I knew was a bad person. So, I think I would not be a good attorney.
Jack Butala: I had a problem with this in accounting. I just have trouble with the billable hour concept. All it does is encourage me to spend time doing crap that I know is not necessary. It’s so inefficient.
Jill DeWitt: That’s true.
Jack Butala: And now the whole legal industry’s built on inefficiency and silliness and dragging things out.
Jill DeWitt: I have a career that I would suck at. School teacher, elementary school teacher, like little kid-
Jack Butala: Oh really? No patience.
Jill DeWitt: Oh Come on, yeah, yeah.
Jack Butala: Babysitting.
Jill DeWitt: I could do it for like a little bit. Then I’m going to be like, “I’m out.”
Jack Butala: Like a week, yeah. Like less about a week in that.
Jill DeWitt: Yeah, I would want to kill them.
Jack Butala: That’s classic.
Jill DeWitt: I’d have them … oh my gosh. If I was a school teacher, I would have cubes. All my kids would be in cubes so they can’t talk to each other.
Jack Butala: You know what cracks me up about that, Jill, is you’re the worst one of all.
Jill DeWitt: That’s why.
Jack Butala: You’re the class disrupter of all of that.
Jill DeWitt: I absolutely am. You’re 100% correct, yep.
Jack Butala: Well, you’ve done it. You’ve wasted another 20 minutes listening to the Jack and Jill Show. Join us tomorrow where we discuss neighborhood-specific pricing.
Jill DeWitt: And we answer your question. If you have one, post it on jackjill.com, our online community.
Jack Butala: You are not alone in your real estate ambition. Well done, Jill.
Jill DeWitt: I’m not that bad. You’re talking about my experience with poor Mr. Tinsman, and moving me to the front of the room and that didn’t work.
Jack Butala: When you’re bored-
Jill DeWitt: And even through the back of the room, and that didn’t work.
Jack Butala: … the whole world knows it.
Jill DeWitt: What? When I’m bored?
Jack Butala: Yep. And bored, or like, don’t want to be there. I’ll tell you what? I’m not throwing you under the bus, because I’m the same way.
Jill DeWitt: Did I do this on the show? I’m not bored here.
Jack Butala: I just mean like, when we’re just stuck doing some stuff, and I’m the same way.
Jill DeWitt: I know.
Jack Butala: We made the mistake of-
Jill DeWitt: We can’t hide that.
Jack Butala: This is almost a year ago now, going to a real estate meetup full of brand new people. I couldn’t get out of there fast enough.
Jill DeWitt: “Can we go now? Can we go now? Can we go now?” That’s Jack.
Jack Butala: You’re silly.
Jill DeWitt: Totally.
Jack Butala: I’m all for helping people, but man, there’s a point where … Here’s really what happens [inaudible 00:20:34]. So, we’re available as we know a lot about this topic, this industry a lot. We have 20 years of experience, transaction experience. There’s no denying it. There’s two types of questions that we get. They can fall into two categories. One, really good questions about real estate transactions. Those are the types of questions that make it to the show. And then there’s another type of question that has nothing to do with that except … nothing to do with what our expertise is, and everything to do with the fact that the person who’s asking the question is lazy and a nonlinear thinker. So, unfortunately-
Jill DeWitt: I’m okay with the nonlinear thinker. I’m just not happy with the lazy part. Please try.
Jack Butala: Yeah, try to get it done as a last resort. There’s a million other places you can go-
Jill DeWitt: Don’t make me do your homework for you.
Jack Butala: Million other places you can find the answer to questions like, “Where’s a certain county in Iowa?”
Jill DeWitt: Exactly.
Jack Butala: Or, “My computer’s not working correctly.”
Jill DeWitt: Oh my gosh.
Jack Butala: And on and on and on.
Jill DeWitt: Right. “I can’t get this file to download.” Seriously? Seriously.
Jack Butala: That, all of those. So, unfortunately, when you get to be our size and the larger group and things, those types of questions just prevail. We have full-time staff dealing with it. Some of that stuff don’t … this sounds like a rant now.
Jill DeWitt: Oh boy. Let me cut it off quick. Share in the fun by subscribing on … share in the rant by subscribing on iTunes or wherever you’re listening. And while you’re at it, rate us, please.
Jack Butala: We are Jack and Jill. Information-
Jill DeWitt: And inspiration.
Jack Butala: To buy undervalued 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@jackjill.com.
The JackJill Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.
