So You Made 100K on a Land Deal Now What (LA 1302)
So You Made 100K on a Land Deal Now What (LA 1302)
Transcript:
Steve:
Steve and Jill here.
Jill:
Hey.
Steve:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala
Jill:
And I’m Jill Dewitt broadcasting from sunny Southern California
Steve:
Today Jill and I talk about, so you made a hundred grand on that last land deal, now what?
Jill:
I know what.
Steve:
Well.
Jill:
Do it again.
Steve:
Celebrate. Yes, first you need to take 10 minutes and celebrate. Maybe do shot of tequila or something.
Jill:
Yeah, tens good. Ten minutes is good.
Steve:
Whatever works for you. Eat a piece of chocolate cake, I don’t know whatever works for you.
Jill:
What is yours?
Steve:
And that’s the whole show.
Jill:
Quick. You want to celebrate? What? Can I have a budget? I made a hundred thousand dollars. How much money can I spend from my separation?
Steve:
You know, Jill and I made a huge amount of money one time on a real estate deal. You know what we did? Bought new computers.
Jill:
Yeah. It went to the business and it made us more effective and it, and I was just so happy. Yep. All right. Quick, you give yourself $500. What are you going to do?
Steve:
God, I haven’t thought about something like this in a long time. Because usually I just go do whatever I want.
Jill:
I know but-
Steve:
For 500 bucks, what would I do? You know what I would do? Call up my buddies, probably bring you and your friends, girlfriends, and just pay for everybody’s night out.
Jill:
That’s very sweet. Well, now I feel like a little bit like a heel because mine’s different. Mine is I call no one.
Steve:
Oh my God. Is this a spa day at that MZ diamond acquisitions?
Jill:
No because I have $500, it’s just a spa day. That’s it. I call no one, I turn off my phone, I leave it in the car and I’m gone for several hours. That’s how I celebrate.
Steve:
Jill, I speak frankly, here. You should be doing that once a week anyway.
Jill:
I know. I should but spa’s are kind of closed right now.
Steve:
Why don’t you schedule that?
Jill:
Because the spa’s are closed right now. That’s, trust me, don’t you, don’t think I’m not, that’s not on my list.
Steve:
Can’t you have like a masseuse come to the house?
Jill:
I haven’t really tried that hard but I could probably work on that. So, but thank you, that’s not what this show’s about. Thank you.
Steve:
Yes it is. This is about a hundred grand. It’s totally about this.
Jill:
Okay, I guess so. Okay, yes because I just learned, I didn’t know of any that would come to the house. And I just heard from somebody recently that they know someone. So that’s in the works. But do you know what? I still don’t want to do it in my own house. I have to go somewhere because I don’t want to have to hide. And you know, I want to just, I’d like to go and be treated.
Steve:
You want to go somewhere and do that? Huh? What if I leave the house? And then-
Jill:
It’s still not that great. I want to go be treated.
Steve:
This is interesting.
Jill:
You know what I want to do?
Steve:
You learn new stuff about your mate every day.
Jill:
I want to go to Terranea, or something equivalent, and just really have a nice, nice time. Thank you.
Steve:
Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill:
Okay. Mohad wrote, I’ve been practicing using Real Quest Pro to pull data in an area I’m looking to send my first mailer. Once I enter all the criteria and submit, it seems like a lot of the data I pull has some sort of housing on it. I’m entering in zero to 0% improvement and I’m still getting many buildings slash houses. I don’t want to waste money on records with houses. I’ve gone through each land use to figure out which is pulling the records with the houses, but it looks like they are just blended in with several uses. Any suggestions on how to get rid of the houses, to be sure I’m doing something wrong?
Steve:
You use the phrase, waste of money. We don’t waste money here. What you need to look at when you do data and mail, it’s the cost of doing, it’s a cost of business. So there’s a reoccurring theme that happens with these questions. And it’s all over land investors and generally all over Facebook and social media when it comes to do doing what we do for a living. And it all is maximizing the mail from, and from a yield standpoint, and from a money standpoint, and I don’t get it. And I’m not picking on this writer.
Let’s say you spend $1,500 on a mail campaign, including, you know, mail and …
Jill:
Data and mail.
Steve:
… data and mail. And you do everything right and you spend 1250 instead of $1,250. You do everything like we do it right in the middle, the top of the bell curve, 1500.
Maybe you do everything wrong, you spend 2000 and you buy a couple of properties. You make 30 to 40,000 bucks each on them. Does it matter?
Jill:
True.
Steve:
Does it matter that you spent $500 more on the mail? No.
Jill:
True.
Steve:
It’s completely insignificant. In fact, I would argue, and I don’t have the data support this, I can just go from kind of how I feel about it and my experience. That sending more mail and downloading more records is going to actually, and making it less efficient, is actually going to improve the mailer. Because you always get stuff in there where it’s like, wow, I can’t believe I’m buying this property. And if you’re, you know, it’s, this is a hundred thousand dollar property, we’re buying it for $9,000. We just closed a deal like that just now, like last week. If I didn’t incorrectly, if I didn’t download, just over download the data and over mail on that mailer, we wouldn’t have done the deal.
Jill:
Right.
Steve:
And to directly answer this person’s question about an improvement percentage. Here’s what happens with, that assessor, we’re only as good as our assessor data, okay? So if you look at, let’s say a couple of counties in Arkansas, Arkansas is famous for having terrible assessor data. So this person’s probably in one of those types of environments where the assessor doesn’t take the data that seriously. And so there’s houses in there with improvement values are all wrong and stuff like that. So what? You still send them an offer. You know? We have a member of, I personally don’t do zero improvement mailers anymore. I do it like up to 30% because I want partially-
Jill:
I want to get a house on there. I want to get something on there.
Steve:
Yeah, I want partially approved property. And we buy those all the time.
Jill:
I’ll take it.
Steve:
So this notion of maximizing efficiency on a mailer, both from a mail standpoint and a data standpoint, is antiquated and silly and should stop.
Jill:
I was going to add, what I’ve learned from you is, you got to get in there. You know, what’s going to happen Mohad? Is that, look, the reality is you need to, you’re going to have to spend some time on this. And once you get to know one county, not even the state, once you get to know one county and the way they do it and the way they put the stuff in there, and you’re going to come up from that.
You go what he does, go into a dark room, spend a weekend on this because you’re bound and determined to make this area work. This zip code, or this County work, you will. But it’s going to take that. There’s no easy button. Like what you’re asking is, is there one thing I can do to solve it forever with Real Quest Pro? Nope. Because you’re going to get to know that county, guess what? Now you’re going to be doing this next county over because you saturated this county, you did so well over here. Now you move one county over, guess what? Now you get to relearn this again and figure out why are there nuances and how they input the data.
Steve:
That’s right, Jill. That’s great advice.
Jill:
How they see the zoning. Do they even use a zoning category? Is it put in there correctly? So you just, that’s where I just see, there’s no easy button on any of this. You have to invest the time and you will do just fine.
Steve:
That’s right. There’s a lot of tools out there to price mailers and they’re all wrong. It’s not right.
Jill:
Oh it’s breaking my heart right now.
Steve:
You should never use those tools.
Jill:
This easy button. People say, Oh, I just do it and it tells me exactly what to do. There is a way to, of course, like … Because you do it, you take masses of amounts of data and input things to very clearly see where to send offers. But it’s not the same thing as an easy button that’s just going to go run through the whole, everything in the country and have it be perfect.
Steve:
When you press a button. It, assuming that it’s even any kind of quality button at all, and what you’re doing is trying to save time. What you’re losing is the day in that dark room where you’re getting to know the data and you’re feeling it and saying, you know what, there’s no way this could be right. Or there’s every way that this can be right. And here’s the list, a current list of key words that I scrub out. So I’ll download 10,000 records and a keyword like the word state or USA, or county, or municipal, or flood, or town and on and on and on.
I scrub out all that data. So if I download 10,000 records what ends up getting in the mail, maybe 5,000, maybe 6,000 units. Did I waste money or time? No, no. Maybe through the scrub, maybe I find out that 80% of the data that I downloaded is in wetlands or I chose a County, I got the data, I looked at it and it’s all USA owned, or BLM owned property. Or it’s a native American reservation.
That’s very common in Arizona. And then I don’t send out the mail. Did I waste money? No.
Jill:
No.
Steve:
No. But I learned that I’m never going to do that in Apache County, again. 80%, 80 or 90% of that property in Apache and Navajo County has native American reservation. So that doesn’t mean you shouldn’t mail it, it just means that that’s what it is. And I know that from doing this data, so I’m just going to say it again. You know what? Jill hates when I repeat myself. But I am going to say it again. If you were trying to be an incredibly efficient data manager slash mailer, you’re in the wrong business. This is not, we’re not here to be efficient. We’re here to get acquisitions.
Jill:
And then be efficient.
Steve:
Yeah. Yeah.
Jill:
Thank you.
Steve:
The costs, you know, our moderator said it best. The cost of trashed data and mail is offset by one 10th of 1% of the profit in one deal.
Jill:
That’s good.
Steve:
People freak about it because it’s a cash outlay, I think.
Jill:
I understand.
Steve:
And I think that keeps a lot of people out of this business in a good way. I think the notion of … It’s really funny because people in the advanced group, like we just did an interview with Lori Phillips. It’s just, it cracks me up because the people in the advanced group are like, oh yeah, I just spent $50,000 on my last mailer. And I’ve spent hundreds of thousands of dollars on a mailer to make millions.
Jill:
Yep, exactly.
Steve:
I’m hot about this.
Jill:
It sounds crazy I know, but it’s not.
Steve:
I get upset about this topic.
Jill:
Yep.
Steve:
I don’t get it.
Jill:
That’s what you do.
Steve:
Jill and I, you know, developed, we are the licensed providers of the three best data companies, I believe, in the country, in the world really. And we also own the mail company, we set this up for you. And we have tools like Neighbor Scoop and Parcel Fact, which I think are incredibly inexpensive for actually what they provide.
Jill:
Oh my God, yes.
Steve:
And we don’t, you know, we’re not getting rich on this stuff.
Jill:
No.
Steve:
By any stretch. If there was an easy button product, a SAS product out there that I thought was worth doing, people come to us all the time and say, “Hey, would you want to partner on this?” I would have done it. I would have developed it.
Jill:
Right. Thank you.
Steve:
I sound like a father.
Jill:
Totally. Today’s topic.
Steve:
Today’s topic. Go ahead Jill.
Jill:
So you made a hundred thousand dollars on a land deal, now what? This is the meat of the show.
That’s fun.
Steve:
So in reality. I don’t know. I can tell you how it works for us. We’re always going to constant state of acquisition and sales. There’s always properties coming in, properties going out. So there’s like, our cash goes like this. So it’s never like, hey, we just made a hundred thousand bucks. You know? Maybe I guess on the first deal I ever did, it was like that, but that was in the nineties, early nineties. So it’s not like, hey, we made a hundred grand on that. It’s like, that’s not the moment.
Jill:
No, the moment is, you know it when you buy it, that’s it. The moment is-
Steve:
The moment is when you get that purchase agreement in.
Jill:
And you’re looking at it going, wait a minute, wait a minute. He just signed this for $18,377.42, am I looking at this right? I got to be missing something.
Steve:
We got some properties in Santa Barbara.
Jill:
Wow, this one’s on the water?
Steve:
They’re like a million dollars. And we’re buying them for $22,000.
Jill:
This one’s got a view? It’s 40 acres and you can drive right up to it. And it’s got, it’s lake access, you know, something crazy like that. And you’re like, I can’t, I must be missing something. There must have been a horrible fire. You know? Not that that matters anyway.
Steve:
Or it’s a, the owner’s deceased. That’s the first thing we check.
Jill:
But no, I’m just saying that, but the numbers, it’s the number part of it. So you, when we get excited is when the offer comes in, I’m staring at it, it’s signed and I’m like, I’m missing something, something’s wrong. So then I spend the next, however many minutes, trying to figure out what could I have missed? And then after the next five or 10 minutes, I realize, oh no, this is a good one. Then it’s like, how fast can we open escrow? That’s the excited moment. Because we know how it’s going to go, you know? And you know, too. You know when you’re staring at this. You bought a car, we’ve all bought something and knowing that we got a really good deal on it. If you haven’t, I’m sorry,
Steve:
This is not the show for you. If you don’t like to buy stuff below it’s value.
Jill:
No. If you like to not go to a sale, you prefer to pay full price for everything, including airline tickets, then I’m sorry. But even that, hey even people walk around doing that by the way. They’re like, hey did you see how cheap it is right now to fly to X? I never thought I’d see that. You can get a ticket to, you know, wherever. This was a couple weeks ago.
Steve:
Yeah. Somewhere out there I bet there’s a show called how to overpay for everything. And then you should go check that out.
Jill:
And feel good about it. That’d be awesome.
Oh, that’s great. How to make enough money to overpay for everything
Steve:
Overpay on your taxes. Make sure, make sure that the government gets-
Jill:
I’m going to add a little more in there just in case because they’re probably going to ask for it.
Could you imagine? That’s funny. Okay.
But yeah, so that’s … Okay so back to what you were saying.
Steve:
Yeah, so there’s always, you’re always in a state of, if we made a hundred grand on a deal last week, there’s probably, it’s what you want to make sure is that you’re going to do it this week too.
Jill:
Right.
Steve:
Or you’re in some state of moving through that. There’s been a couple of occasions where we’ve got some pretty big payouts, and we all stop and kind of high five each other.
Jill:
Yeah.
Steve:
I’m trying to think if we had lost on any deals. And I think maybe once a year I might lose a couple thousand bucks on a deal, but not really.
Jill:
I have one right now. There’s one right now.
Steve:
You know what ends up happening is it just takes a lot longer to solve this.
Jill:
Well, I have one right now that’s going to be like, it wasn’t me it was a deal funding deal. And I took it back because the guy kind of threw it to me and walked away. He’s like, “I screwed up.” I’m like, “Yeah, you did.” And it’s like, I’m, it’s killing me.
Steve:
[crosstalk 00:15:54].
Jill:
Well, yeah because I didn’t, I trusted that person. Anyway, it’s like, I could break even right now, but I refuse to break even. So I’m kind of hanging onto it.
Steve:
Exactly, it just takes longer.
Jill:
I’m not going to sell it for exactly what I paid for it. Heck no.
Steve:
It’s that property in LA County?
Jill:
Yes. So I’m like, I’ll just hang onto it for a little while. I don’t care, it’s paid for, it’s not like I’m hurting, I’m not hurting for the cash. It’s fine. So, and then-
Steve:
There’s no carrying cost on it.
Jill:
That’s it too. And then I keep wondering, we talked about doing something with it, improving it in some way, by the way, that’s a bust. It’s just not possible.
Steve:
You tried?
Jill:
Oh gosh. Yes we tried. So my new person went to the end, like the end to end bitter end to try to do something, you know, and improve on it in some way that would make sense to us financially now. And it’s like no.
Steve:
It’s in LA County.
Jill:
Yeah.
Steve:
You know, God forbid you can improve your property in LA County.
Jill:
Exactly, that’s so funny.
All right. So what’s your, so my goal with this show is you made a hundred thousand dollars, now what? You just do it again. You don’t stop. I don’t want you to stop.
Steve:
Don’t stop.
Jill:
I don’t want you to say, great now I’m going to pay off this part of my mortgage. I’m going to do this, this and this. I want you to reinvest it. If you’re going to treat yourself, I totally get that. And I’m a fan of that. But don’t $50,000 treat yourself. $500 treat yourself. Take the whole family out to a really nice dinner, something great like that.
Steve:
I just got an email from a guy. It was actually in What’s App. And he said, I just hit $10,000 a month in notes. You know, this is a person who sells a property on terms. 10,000 bucks a month and he went and bought a 2015 Ford F150. A used pickup truck because he’s never had like a newer model truck. And I’m like, you know what? That is absolutely, you are perfect for this group. Perfect. I’m like, congratulations.
Jill:
My car’s five years old.
Steve:
Mine’s like eight. I have a 50 year old car too. And so I’ve never, you know, that’s not, that’s just not our personality types.
Jill:
Right.
Steve:
You know, you shouldn’t have isolated deals except for the first one. You should have, should always be in a state of, you create a business.
Jill:
Yeah.
Steve:
That’s my answer. What do you do when you make a hundred grand?
Now you make a business out of it, not just a one deal.
Jill:
It’s not a hobby.
Steve:
And I’ll tell you, a long time ago, long before I met Jill, I used to be surprised. I used to say, “Wow, I’m never going to do a deal like that again. That was fantastic.” And you know what? Every single year we have one of these deals where we make like six or seven digits. High six, low seven digits on a single deal. I stopped saying it. So don’t be shocked about it is my point. This is a regular occurrence for everybody.
Jill:
I liked that. I got distracted by the guy walking behind me. Did you see him? There’s some interesting things. If you’re not watching us right now, especially with this, we’re in an interesting state of, do I wear a mask? Do I not wear a mask? And not only did this gentleman behind me not wear a mask, he wasn’t wearing a shirt. And trust me, he should have been wearing. I’ll pick the shirt over the mask in this situation.
Steve:
Jill and I live at the beach here in Los Angeles.
Jill:
And it’s summertime.
Steve:
I cannot get over the tiniest swimsuit there ever was with a mask. For some reason, people just walking around with very much no clothes on at all and a mask.
Jill:
Yes. The mask has more material than the swimsuit. How that made sense in their world this morning, I am not sure. Happy you could join us today. Five days a week you can find us right here on The Land Academy Show.
Steve:
Tomorrow. The episode on The Land Academy Show is called 2020 Land Sale Marketing Trends. So all tomorrow we’ll talk all about what’s brand new. 2020, I don’t think anyone can disagree with this, is all new to us.
Jill:
Yeah. You can say that again.
Steve:
And real estate is no different. You’re not alone in your real estate ambition.
Jill:
Oh my gosh. We were out to dinner the other night remember? And someone was saying, God, I just want to start over. I just want to erase 2020.
Steve:
Me too.
Jill:
Now they’re like excited. I’m glad it’s August. Can we hurry up and get to the end of year? And just like, pretend it didn’t happen?
Steve:
We are going to throw, you don’t know this yet, but we are going to throw the biggest, Jill, the biggest-
Jill:
I’m sure we are.
Steve:
January 31st party there ever was in the history of ever. Granted in 2021.
Jill:
I have the wrist bands that I didn’t need for the 4th of July party we couldn’t have. Oh, I am excited. And I know you’re right. The Land Academy Show remains commercial free for you, our loyal listener. So wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill.
Steve:
We are Steve and Jill, information.
Jill:
And inspiration.
Steve:
To buy undervalued property.
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