Financial Goals First, Then Plan Backwards (LA 765)
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m Jill DeWitt, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk about your financial goals come first, and then plan backwards from there, so that you actually make sure that they happen.
Jill DeWit: Hmmm … I think we’re gonna be a little bit different here.
Steven Butala: I do too.
Jill DeWit: It’s kind of funny.
Steven Butala: I know that’s why I wrote it.
Jill DeWit: I love it.
Steven Butala: Before Jill and I get into it, almost literally, let’s take a question posted by one of the members on the Land Investors online community. It’s free.
Jill DeWit: Wouldn’t it be hilarious if we like totally got into it?
Steven Butala: Remember that one time we were in a car listening to another couple’s podcast?
Jill DeWit: Oh yeah they did get into it.
Steven Butala: They got in a huge argument and then that whole show ended. Not the episode, but the whole show.
Jill DeWit: Yeah. They were not having fun.
Steven Butala: Yeah.
Jill DeWit: Yeah, I remember that.
Steven Butala: We were laughing our [crosstalk 00:00:55] we were crying laughing in the car too.
Jill DeWit: You could just tell …
Steven Butala: Like we’ve been in that spot.
Jill DeWit: Like they’re trying to cover up. I’m like there’s no love there right now. She’s pissed off.
Steven Butala: You know what I remember about that? What she was mad about was, there was no schedule. She’s like, “Oh you just decided that we’re gonna do the podcast right now. It’s 6pm instead of have dinner.” I wouldn’t be happy about that either. Like we do it the same time. That’s kinda along the lines of what we’re talking about this week.
Jill DeWit: Hmm-hmm.
Steven Butala: We do the show at the exact same time every … all the shows. Every Thursday morning.
Jill DeWit: That was so darn funny. Okay, Stewart asks, “I’m working to configure my site to accept credit card payments with Heartland.” Yay! “And I’m wondering what business process to establish around this. I’ve looked at a number of other sites, and it appears that different investors use different processes. In many cases I’m not certain exactly what they are doing.”
So let me give a little background. Stewart is a member, I’m assuming, he’s looking at some of our other member websites, and he’s setting up to accept credit cards and things are like, do you have a refund process, and how the deeds are gonna be done, how your whole … ’cause they’re gonna click and pay … and then how you’re gonna follow through, and what your company protocol is gonna be, and all that good stuff. Stewart goes on to say, “Should I, one, capture the full payment and then send a purchase agreement? Two, authorize payment, send agreement, and capture when signed? Three, capture down payment, send purchase agreement, and then invoice or process the remaining balance? Four, build the agreement into the payment process, IE: by clicking ‘buy now’ you are agreeing to x,y,z?”
Steven Butala: Can I answer?
Jill DeWit: No.
Steven Butala: There’s a lot more to the question, but this is complicated.
Jill DeWit: Okay.
Steven Butala: One and four are correct. Capture the full payment and then send a purchase agreement.
Jill DeWit: If they want it.
Steven Butala: Yeah, I mean I wouldn’t even have a purchase agreement. That’s just, capture the payment and send the deed is what I mean.
Jill DeWit: That’s what I mean, too.
Steven Butala: And then number four, build the agreement into the payment process? No, you build the deed into the payment process.
Jill DeWit: But I would do both. By clicking now, you’re agreeing that you’re paying to the full thing, and the steps will be, a deed will be mailed to you within 24/48 hours. Whatever you decide. Along with recording instructions and however you want to do it. That’s what I would do. That’s the easiest thing. Never just give them an opportunity to pay little bit now, and little bit later. ‘Cause all you’re doing is making a mess for yourself or you’re chasing them now for the rest of the money, number one. And number two, now they’re tying up the property when a real legitimate person wants to check out and pay. And as you do number one or number four, however you’re doing this, which is really just check out and pay, you wanna have it set up so it immediately marks your property sold on your website.
Steven Butala: That’s right.
Jill DeWit: And that’s how they know by looking … when they’re reading the thing, if it says it’s available, it is available. There’s a first come, first serve, kind of thing.
Steven Butala: Look at our site, LandStay.com. You can buy cheap property there and look at the whole process.
Jill DeWit: Yep.
Steven Butala: Or look at, there’s a couple other sites that very successful members do this every day, people buy property every day. Landio.com and RuralVacantLand.com. Between the three of us, you should find your zen.
Jill DeWit: And then Stewart goes on to say, “My goal is to remove friction for the buyer, but also to force potential buyers to put skin in the game to secure the property. I’ve had several buyers agree to purchase and back out before paying. In the meantime, I lost other potential buyers waiting on the first guy to pay an invoice. I know that’s part of the business, but I’d like to set this up to reduce that inefficiency.”
I’m gonna pause here and say, this is the whole reason that we do credit cards online, and I just said what I said. And so when I’m talking to these people, they’re like, “Oh I wanna buy it.” Even if they said, “I’m gonna buy it,” well, that’s great. When you are ready go check out. If you see it available, you know it’s still there. If it’s already gone, it’s gone. This is a first come, first serve kind of thing, that’s just how it is.
Steven Butala: This brings up this whole notion of 21st century. So everything that you’re describing is really how it was done in 1979.
Jill DeWit: True.
Steven Butala: So just adding credit card payments without adding all the other stuff that I’m about to tell you, is really only a small percentage of it. Jill’s a hundred percent right. You have to just, first of all there’s no talking about a property. If you’re posting it and you’re do a video on it, that’s everything you know about it. There’s no reason to talk to a buyer at all. If they’re interested in a property, they need to go to your website, look at all the stuff that’s there, and click on it and get a deed from you. The exact same way that you buy something on Amazon. You don’t call a seller and [crosstalk 00:05:57].
Jill DeWit: Call them and say, “Do you really only have two left?”
Steven Butala: “I just wanna put half down.”
Jill DeWit: “Yeah, okay, yeah. I’m not sure …”
Steven Butala: “Can you convince me?” ‘Cause that’s really what they’re saying.
Jill DeWit: Right.
Steven Butala: “Can you convince me I don’t know.”
Jill DeWit: And you don’t wanna convince them.
Steven Butala: No, no, you don’t want that buyer.
Jill DeWit: You wanna them to be sure about it. I wanna add one more thing, too. This is what I do, a lot of people will find you on other sites, ’cause that’s what we do, correct? Right? We have our properties on LandWatch. You have your property on LandPin. Maybe you have your property on Craig’s List and everything too. The goal is, and this what I tell everyone, you know, you would drive them to your website. That’s the only place, by the way, that they can click and pay, is on your direct website where you are putting that process. So it’s very easy for you to say, “Look, I know where you saw it. Gotta go here. And if you see it available here, have it, it’s there.” Done. So easy.
And the last part to the question is, “As I get into details, I realize that a lot isn’t clear, and there are variables of course based on the size of the sale, whether or not I’ll go through title, and whether or not terms are being offered.”
Steven Butala: That’s right.
Jill DeWit: “How are others handling the processes around credit card or online payments?”
Steven Butala: Okay, so I can tell you, in Landio’s case, he puts the whole purchase price up and processes it, processes credit card payments for 50, 80 thousand dollars all the time. He has a credit card processor you can see everything. So you can see if somebody tried to check out and they couldn’t for whatever reason; their card was expired, or hit the limit, or all that. And you can respond to that, however you may see fit. If the person got that far, that they tried to check out, but it didn’t happen, they’re pretty darn interested. So you have to decide how you’re gonna handle that yourself. But I’ll tell you, taking partial payments, not a good idea.
And for terms, you can collect the down payment and get them set up on auto pay and that’s it. So there’s not, I would not accept a partial payment at all.
Jill DeWit: The only thing I would add is, if you’re doing a terms, or you wanna do something like that is, make it a non-refundable deposit. Then you’re covered no matter what. Because if it’s a serious … say you’re gonna sell a 50 thousand dollar property on terms, where it’s five thousand dollars down, five hundred dollars a month for x amount of time. That’s not crazy. So, and I would also have a cash option too, by the way. If you’re doing it, make it a good cash price, too. So what I would do is, and you just have to be very, very crystal clear, put it in three different spots. As you see it when I click here, see it in the terms and conditions, and whatever else, that this five thousand dollars is a non-refundable deposit, because I’m pulling it off the market, or whatever it is.
Steven Butala: Yeah, you wanna make sure that that’s a subscription, too. So that the payments are now on auto pay. And that the buyer really understands that.
Jill DeWit: Good point.
Steven Butala: Because invariably you’re gonna get people who say, “Ah, I get paid on the third, and I really need to have it done on the tenth, because my mortgage hits, and this hits, and that hits,” and you just don’t wanna play those games. There’s too many deals to do to handle all that.
Jill DeWit: You know what’s so funny, and here’s the thing too, you’ll realize this too, as you go on, I think it was Stewart I’m guessing? Yes. Is that every time it seems like you bend over backwards, and I remember Juval said this together on our Thursday calls, is, “Gosh I just did this deal for this guy and made it happen for him, and it’s such a big pain, and then the next day, a guy calls who was gonna pay me the full price, cash. Darn I goofed.” So I’d be hesitant spending too much time on some of these people. Just wait for the right guy.
Steven Butala: Yeah. Good advice.
Jill DeWit: Thank you.
Steven Butala: It’s like … No, I’m not gonna bring it up. Sometimes.
Jill DeWit: What do you mean sometimes?
Steven Butala: I was gonna make a marriage analogy, but it’s probably not a good idea. Today’s topic, your financial goals.
Jill DeWit: If you have to rethink it for a minute then it’s definitely not a good idea.
Steven Butala: Yeah if I stop myself from saying stuff …
Jill DeWit: Then it was probably really bad.
Steven Butala: Yeah.
Jill DeWit: Thank you.
Steven Butala: Today’s topic, financial goals first, then plan backwards. This is the meat of the show. Lemme be really, really simple about this. If you wanna make a million bucks a year, you generally need to make about $80,000 a month, which is about $200,000 a week. Which sounds daunting, but it’s really not.
Jill DeWit: Well wait. $20,000 a week.
Steven Butala: Yeah 20. Oh I’m sorry, $20,000 a week, now it doesn’t sound that bad. And then on and on and on. So, let’s say that’s your goal. So to make $20,000 a week, you can do that with one house deal easy. One 40 acre property in a good area easy. Every week. Well how many mailers do I have to send out in general to get a super star 40 acre property that I can make 20 grand on?
Jill DeWit: Bingo.
Steven Butala: Let’s say it’s 3000. Now you have to send out 12,000 mailers a month. Or let’s say 3000 mailers a week to get that perfect property.
Jill DeWit: Ding ding.
Steven Butala: It all starts with that million dollar number in the beginning. Let’s say you wanna make 10 million. It’s the same thing. Let’s say you wanna do a lot less deals ’cause you’re experienced now, but you wanna make a lot more money. Then you need to only send out mail for property that’s gonna make you a hundred thousand dollars or five hundred thousand dollars. Let’s say you wanna do one deal a year, and sub divide it, and just sell off the rest of it. Spend the whole year selling it. You need to have sales goals and marketing goals and it all starts, all of it, with how much money you wanna make at the beginning.
And then work your way backwards and implement all the stuff that we’ve been talking about all week. Break it all down into tasks, and into calendars, and budgets, and you know. Anytime I start something new, I stare at a blank Excel file that’s sitting there opening and blinking at me. Taunting me. Invariably I adjust it and readjust it and scrub it down until I get to the number that I want. Then I show it to Jill and she says, “That’s the most unrealistic thing I’ve ever seen in my life.”
She didn’t hear me.
Jill DeWit: I did. I did. You know what I was thinking about? I was just gonna give another comparison. This is something that we talked about with our kids. What job do you want? What career do you want? What lifestyle do you want even? You can even think about that. Think of the lifestyle that you want. All right, well you’re not gonna make that doing you know, waiting tables. Or you’re not gonna do that doing this.
Steven Butala: Or you’re not gonna do that without a Master’s Degree.
Jill DeWit: Right. So you have to think about the career then, and what makes you … you want something too that you’re gonna enjoy. We all think, “Well if I’m paid well I’m gonna enjoy it.” We’ve all proven that wrong.
Steven Butala: Boy that’s awful.
Jill DeWit: Isn’t that funny?
Steven Butala: Yeah.
Jill DeWit: But we all thought that I think. If I get paid that much I can do it. And how many people …
Steven Butala: You just described my whole accounting career.
Jill DeWit: I know! That’s what I’m … I was not gonna throw you under the bus, you did it yourself.
Steven Butala: It’s fine. Show me somebody that’s happy with their career that works for someone else.
Jill DeWit: Hold on a moment. What I am shocked and amazed at, is how many of our community people are those exact people. They are constantly saying, “Money’s not the issue here. I just can’t stand it. I get paid great. I’m smart. I did what I needed to do. I have my PhD.” Whatever it is. They’re like, “I just can’t do it. I’m just done with it.” And most of the time, they will say, “I will make less money to not have to do this. To be my own boss, to do this, flip property, this is so much more fun. I love it.”
Like we do. And that’s what they’re looking for. But anyway, my point was, so we talked to the kids about that. So think about what you wanna be. Okay, now let’s find someone in that position and then talk to them, and work it backwards. How did they get there? Stop wasting time. Which is again why we are here by the way, I wasn’t bringing … kind of working out this way, I wasn’t thinking ahead like this. So, but how many people that are in our community, that’s it. ‘Cause we were their mentors, they see us, they know what can happen here. They wanna work it backwards. They wanna be like us today. They wanna do the number of properties that you’ve done, Steven.
Steven Butala: Right.
Jill DeWit: And so they’re here in our community to cut to the chase, not waste time, learn from you the right way, not spend five years catching up, and get there faster. Anyway so, the kids, find your mentor, figure out the right way, and the right person like us will tell you, “All right don’t do this, that’s a waste of time. Here’s what I did. I wish I wouldn’t of gone to that school. I wish I would’ve gone to this school. I wish I hadn’t got that extra certification here. I found out I didn’t need it.”
Steven Butala: Okay, you go first.
Jill DeWit: Oh, like what? I think I was [crosstalk 00:15:26].
Steven Butala: Oh, let’s just stop that, you would just totally change if you could go back and change it, in your career.
Jill DeWit: Ummm …
Steven Butala: Before land.
Jill DeWit: Well I didn’t go … I don’t have a good example for me.
Steven Butala: Oh I’ve got 90.
Jill DeWit: Well, okay. I’m thinking education wise, and mentor wise, and stuff. I just jumped into a career thinking that was, you know, was gonna lead to something and it didn’t. So that was my whole thing. I got hung up there and I didn’t need to be hung up working for a big company.
Steven Butala: Let’s just stick to land, then. Since we’ve been doing this together, is there anything you would’ve changed?
Jill DeWit: No, ’cause I found the best mentor on the planet, Steven, and that was you.
Steven Butala: That’s really nice of you to say.
Jill DeWit: So no, I’m serious.
Steven Butala: You know what I would’ve changed? The size of the deals would’ve gotten bigger faster. Like I was implementing, right before that …
Jill DeWit: That’s a good one.
Steven Butala: … real estate crash …
Jill DeWit: That’s good.
Steven Butala: We were implementing a 40 acre only, purchase for four to five thousand, and sell it for 15, and it was going great. I mean we were killing it. And so for a lot of reasons, well that was all marketure, and we couldn’t, we had to stop. But when we got back into it, you and I, together, we kind of loosened our acquisition criteria and probably did a ton of deals that didn’t make a whole lot of money, but we spent a whole lot of time. And I would’ve changed that. But I don’t think you can start out of the gate like that. So if you’re brand new and listening to this, don’t do that. Don’t start something like that right in the beginning. But you certainly can do it after a few months.
Jill DeWit: Yeah, get your feet wet.
Steven Butala: Yeah.
Jill DeWit: And then jump up.
Steven Butala: The whole point is to make some mistakes on some small deals that don’t matter. And then hone your skill.
Jill DeWit: And you know, can we talk real quick about this? What do you think Steven, are realistic goals?
Steven Butala: For the first year?
Jill DeWit: No, no. ‘Cause I’m eight years and I’m gonna say this, ’cause you and I have different opinions on this. As far as I’m concerned, I’m in my dream house. I’ve got every … there’s nothing I would be doing differently right now, from …
Steven Butala: Yeah, me too.
Jill DeWit: I wouldn’t be traveling any more, I wouldn’t be changing it at all. But, I know that you have some bigger, loftier goals. You know why? Because I’m thinking, to compliment you, and to throw myself under the bus a little bit …
Steven Butala: What!
Jill DeWit: Well, I’m thinking more day to day. I know the kids are good, everybody’s fed, happy. I look into the future, but I don’t look as far into the future as you do.
Steven Butala: Oh yeah, okay.
Jill DeWit: So you are the pro. You are thinking of us, you are looking at us, our lifetime financial goals. And I’m looking at us to growing and building, and growing and building, year by year. So, kudos to you and that’s why I have you. And I love you. [crosstalk 00:18:14].
Steven Butala: Wow, what a great episode! That’s very nice.
Jill DeWit: There you go.
Steven Butala: Yeah, I look at my financial goals, we’re done. Let’s just be honest about it. However, there’s two parts to that. One is, monthly revenue and expenses, which we all have a huge handle on. Revenue goes up, and expenses either stay the same or go down, every single month. We have like, I don’t know, six lines of revenue. Six revenue streams. Five or six major ones. Some are from websites and a lot of it’s from property sales. And then there’s that balance sheet number where, it’s just how much money you have with all your assets. We are, the monthly piece is completely done, which really is a contributor to the balance sheet piece which is that number. And so, that number needs to be a little bit bigger. But could we all make it work? Yeah.
Jill DeWit: Exactly.
Steven Butala: You know what the thing is? It’s fun doing this. When it stops being fun, I mean I love doing the real … the types of real estate deals that we’re doing now are the best. I’ve done huge commercial deals and they suck.
Jill DeWit: Right. Take forever.
Steven Butala: Lot of people have to sign off on it. There’s tons of financing. There’s always some kid that just got out of college …
Jill DeWit: Legal stuff.
Steven Butala: … that think he knows more than everybody.
Jill DeWit: Right.
Steven Butala: I used to be that kid. But anyway, the stuff that we’re doing now, we’re buying properties for cash for less than a quarter of a million bucks, and seeling them for half a million, after we do some stuff to it. Which is basically land [inaudible 00:19:51] stuff not vertical. What’s better than that?
Jill DeWit: Exactly.
Steven Butala: We have no one to report to, except each other.
Jill DeWit: Can I end on one thing …
Steven Butala: Yeah.
Jill DeWit: … with a question? What would you tell someone new, someone 20 something, 20 to 30 year old man, you know give him your worldly advice on this topic, thinking about his financial goals?
Steven Butala: Well number one, it’s not so much … let’s say you figured it all out, and you understand you gotta work backwards. I think that’s our … most of the people that listen to this show have, they listen to it because they’ve figured that piece out.
Jill DeWit: Would you tell them don’t get greedy. That’s what I’m thinking.
Steven Butala: You know what I would do? I would tell them to be very, very careful about getting married. So all non real estate stuff is what I would tell them.
Jill DeWit: Really?
Steven Butala: Yeah.
Jill DeWit: Okay.
Steven Butala: Be very careful about getting married. We joke about it all the time. But you really need the right person in your foxhole for this whole thing. Number two, be very careful about how and when, not how, but when, you have children or if you have children. Those are the things that really can really slow everything down.
Jill DeWit: It’s true.
Steven Butala: And so I think that a million bucks a month is a great long term goal, to get to put a machine in place. And then number two is, you’re never … that was, I was very wrong about this my whole life … you’re never gonna walk away from a company that you own, and just go live on a beach.
Jill DeWit: Right.
Steven Butala: If you have what it takes, and you have the ambition, and the whole thing to get to making a million bucks a month, at whatever you’re doing, or even if it’s a million bucks a year, anybody can live on that, you’re not just gonna hand the keys over to somebody after you’ve trained them. It’s just not how it works. You have to grow. You have to be involved. Even if it’s just daily looking at reports and calling in, and talking to some people, and maybe providing those people motivation. I was under the impression that, for a lot of years that, there’s this magical … as soon as you hit a number you just go to live on a beach.
Jill DeWit: Right. Or the back of a boat.
Steven Butala: Yeah, and you know what we live on a beach two blocks from a back of a boat. And we worked every single day. And I would have it that way over being drunk on a beach somewhere all day long. Oh, she wants to end on that!
Jill DeWit: That was fantastic! There’s nothing better than that.
Steven Butala: Well, you’ve done it again, you spent another 22 minutes listening to the Land Academy Show. Join us next time for another interesting episode.
Jill DeWit: And we answer your questions posted on landinvestors.com. It’s free.
Steven Butala: You’re not alone in your real estate ambition. We went over on that one, too.
Jill DeWit: I know but what a great, great …
Steven Butala: I got interviewed.
Jill DeWit: … moment. I mean that was just really great valuable stuff to share. Everyone will benefit from that.
Steven Butala: Start with the money first. Start with the revenue you wanna make and then just figure out how to get there.
Jill DeWit: And when you work it backwards, and you get it down to like a weekly number, and you really sit and stare at it, and you tell yourself wow well I just did a deal that made $2000, all I could do is 10 of those in one week, there’s $20000, or huh, maybe two four or five thousand dollar deals in one week, or something like that. It doesn’t seem that crazy.
Steven Butala: Or a deal a month.
Jill DeWit: Yeah.
Steven Butala: Or a $100,000 deal a month. And here in California, if you wanna buy and sell houses, the average house where we live is like what, two million bucks?
Jill DeWit: Right.
Steven Butala: Buy a property. Even off the MLS for two million bucks and marking it up to 2.1, where the days on market are like 18.
Jill DeWit: Right.
Steven Butala: You’re gonna sell the house!
Jill DeWit: You make a hundred thousand dollars, they’re big flipping deal, no one’s gonna notice a hundred thousand dollars in the transaction …
Steven Butala: It’s not hard.
Jill DeWit: … that you brought to them.
Steven Butala: If you wanna insure that that’s gonna happen, send out mail. And make it easy on yourself, cause then they call you. You don’t have to call them.
Jill DeWit: Share the fun by subscribing on iTunes or wherever you are listening, and while you are at it, please rate us there. We are Steve and Jill …
Steven Butala: Information …
Jill DeWit: … And inspiration …
Steven Butala: … To buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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