Rational Growth and Cash Flow in the Land Business (LA 1644)
Rational Growth and Cash Flow in the Land Business (LA 1644)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill DeWit:
Good day.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.
Steven Jack Butala:
Today, Jill and I talk about rational growth and cashflow in your land business.
Jill DeWit:
What if I don’t want rational? I think I want through the roof growth.
Steven Jack Butala:
Well, that’s one of the reasons you’re the girl for me.
Jill DeWit:
There’s nothing rational about anything that I do, is there?Actually, that’s a whole nother show.
Steven Jack Butala:
Yesterday, we answered a question from a person who said, “I just sent out a thousand mailers. I got five calls back after about two weeks.” And you can go back and listen to the question, and the first 10, five calls or whatever were from people that-
Jill DeWit:
Not interested.
Steven Jack Butala:
… We call it the hate. Just get me off the list. So this person, for whatever reason, that is within their comfort zone to send out a thousand mailers.
Jill DeWit:
Our comfort zone is 20,000.
Steven Jack Butala:
20 to 80.
Jill DeWit:
I know. At a time. He just lets them rip, by the way. I don’t even know they’re coming.
Steven Jack Butala:
Would I do that my first week in the business? No.
Jill DeWit:
Nope.
Steven Jack Butala:
So, that’s what we’re going to talk about here. 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. And don’t forget to subscribe on the Land Academy Channel on YouTube and comment on the shows you like.
Jill DeWit:
Luke wrote, “I think it’s going to be interesting to start a poll for everyone’s average deal timeline from start to finish, meaning from the seller’s signature to the end of the buyer’s wire hitting the bank. Seems it’s been longer with the corona backing up everyone, combined with forbearance ending, to jumpstart more investors buying homes.” Is this home related or land related or anything related?
Steven Jack Butala:
It’s land. And I know … This is Luke, right?
Jill DeWit:
Yeah. Which Luke is it?
Steven Jack Butala:
It’s not the Luke you know.
Jill DeWit:
Okay. Got it. All right. So, it’s funny because I still have it all over the place. I have deals still where I put a sign in the ground and you go out and take pictures, and you have your photographer. If you’re not doing this, please do this. You’re in the process of buying the property. So while you’re buying the property, you’re already getting the photographer out there. So A, you get eyes on it by the way. Get your drone stuff done and you have everything ready to go. So when you own it, man, you can start marketing it right away. So one of the things that we also do too is put a stupid sign in the ground, as silly as this is. And I get calls and I’ll sell property with a sign on the ground. I never even get to post a property for sale. So it’s kind of all over the map.
Steven Jack Butala:
So let’s apply some deconstructive logic here. Jill covered the sales part, as she always does.
Jill DeWit:
Thank you. That’s all I know. I’m sorry. This is all I know.
Steven Jack Butala:
In every deal, there’s constants and variables. So let’s very quickly take a look at the variables. Variables are all about you. Well, I’m going to assume you bought it for a great price, because that’s what we do here, in a great area that has been vetted through the red, green, yellow test and the whole darn thing. So, you know it’s going to sell quickly, and it is. So now you’ve taken out all the stress of 100% of it. Here’s the constants.
Jill DeWit:
Constant. That’s a tough word.
Steven Jack Butala:
The constants, S-T-A-N-T-S, I think. The issue is freaking title agent. That’s the problem. Because we’ve had title agents … We have one right now in one specific state that can get a deal done easily-
Jill DeWit:
In days.
Steven Jack Butala:
… and with a smile on her face in about seven days.
Jill DeWit:
Days, yeah. She’s great.
Steven Jack Butala:
With title insurance and the whole thing. And what Jill’s referring to, we’ve done deals in two weeks from start to finish. Is that the norm? Heck no. In the end, it’s those constants that are tough. It’s not the price.
Jill DeWit:
Not you.
Steven Jack Butala:
If you buy it right and then you list it for the right price, not for a … That all is going to have happen very quickly. And you know how to market it, by namely putting a sign in the ground. It’s that title agent. So you need to spend a lot of time, it’s not going to happen overnight, finding the right one. It’s taken us about 20 years.
Jill DeWit:
You know what another variable is we’re not even talking about? Is how hot is the area.
Steven Jack Butala:
Well, that’s what I just said.
Jill DeWit:
Look at these-
Steven Jack Butala:
With the red, green, yellow test takes care of all that.
Jill DeWit:
Assuming you did it right.
Steven Jack Butala:
Yes. Yes.
Jill DeWit:
And you bought something in an area that things are just, you go on Zillow and you see, look, there’s only 20 for sale and 120 sold in the last six months. I think I should send mail here.
Steven Jack Butala:
It has nothing to do with corona. Nothing. I’ve been doing this since the ’90s. It’s the same amount of time and has nothing to do with forbearance.
Jill DeWit:
I agree.
Steven Jack Butala:
This forbearance thing is a drop in the bucket compared to what happened between 2007 and 2011 in this country with foreclosures.
Jill DeWit:
We have done homes start to finish in 30 days, like on the day.
Steven Jack Butala:
We’ve done rehabs in 45 days start to finish.
Jill DeWit:
Yeah. So you could do some crazy stuff. And I would argue too, that back then, things wasn’t even as hot as the market when you’re doing homes that it is now. So I mean, this will be fun to se. And I appreciate this. Everybody-
Steven Jack Butala:
This is a great question, by the way.
Jill DeWit:
Everyone now and then comes up with these interesting ways of looking at things, and then they’re pleasantly surprised when they realize how fast it really is moving. So that’s good. I was thinking back to the one that a guy did a whole thing on his own. He tested his, do I mail only back tax property. Let’s test back tax property versus let’s test the way Jack and Jill do it. And his results were don’t do the back tax properties. Let’s do the way Jack and Jill do it.
Steven Jack Butala:
Here’s the takeaway.
Jill DeWit:
But you need to do that and find out.
Steven Jack Butala:
Two final points here, for whatever reason, and it’s us, I’m sure, this group-
Jill DeWit:
We’re the problem.
Steven Jack Butala:
No, this group really attracts analytical people. So this is a very analytical and a very, very good question again. Just know that your job is to buy cheap property in great areas. So that’s easy because you’re a Land Academy member, and it’s going to take you some time to find the right title agent. It might take years. And always, always put a sign on the property as soon as you … If you can get out there yourself or if you’re going to get a drone shot or the photographer, get the photographer to drop a sign out there. You’ll be shocked and amazed. If it’s priced correctly, it might just sell right there.
Jill DeWit:
I’m not talking a fancy sign. You don’t need to call the local printing company because-
Steven Jack Butala:
In fact don’t do that. That defeats the purpose.
Jill DeWit:
I want a Home Depot sign nailed to a stake-
Steven Jack Butala:
With a Sharpie.
Jill DeWit:
… that says investor special and your phone number on it.
Steven Jack Butala:
Exactly.
Jill DeWit:
Not the price, by the way. Don’t put the price on there. You want them to call you.
Steven Jack Butala:
There’s stories all over Discord, where people, in the success stories area, about signs, and how properties were for sale for a year on the MLS and then they happened to be there on vacation one time, dropped a sign in the ground and sold it that day.
Jill DeWit:
Right.
Steven Jack Butala:
That is a story on there. Today’s topic, rational growth and cashflow in your land business. This is why you’re listening. Go ahead, note taker. Jill takes notes-
Jill DeWit:
I do.
Steven Jack Butala:
… about, I don’t know, 30 or 40% of the shows. She takes notes. She took a lot of notes on this one. So I’m always interested. Some of these topics sing to you and some of them are probably like a listener. Some topics are great. Some topics are, nope.
Jill DeWit:
This I actually think-
Steven Jack Butala:
My cohost is the first one to let us all know how that goes.
Jill DeWit:
Let’s just take a step back here. Shall we? Let’s think about what kind of students we were.
Steven Jack Butala:
I bet you, we were different types of students.
Jill DeWit:
We were very different types of students. I was the president of the National Honor Society. You were the president of the Student Body. Very different things. You had the social part covered. I had the academic part covered.
Steven Jack Butala:
That’s true.
Jill DeWit:
I’m very good at taking notes. You’re very good at talking to people. That’s the difference.
Steven Jack Butala:
I sat in the back of the class and Jill sat in the front.
Jill DeWit:
That’s exactly right. And it’s funny. And we ended up together. It’s all good. So, here’s my thoughts about this. First of all, you’ve got to figure out what your goals are. I think it’s good to have short term and long term goals, but know you’re going to change them, because once you get into it, they will change, I promise you. Some people say, “No goal is too crazy.” Yeah, some are kind of crazy. We don’t need to have a B, billion in there. I mean, you could, but I mean, I like to be realistic, but yet stuff I’m going to push myself for. So anyway, set goals is my first comment here. Really spend some time and think about why you’re here, what you want to do, what you want to get out of this, how much money you want to make. That’s it. It’s really how much money you want to make, how many deals you want to do, how hard you want to work. That’s really my main points.
Jill DeWit:
And then what you have to do, and this is in your equity planner that Jack created, which is awesome, that you work it backwards. You plug this number in at the end. In 12 months, I want to make this much money. I want to do this many kind of deals, because this is how hard I want to work. I only want to do a deal a month or one a week, whatever it is, and you could work it backwards. And then it’s really great because when you plug this in and you work it backwards, then you can really look at how hard you’re going to have to work.
Jill DeWit:
Like okay, so if I’m going to do this many deals a month to bring in this much money, this is how much mail’s going to have to go out. Now I can think about can I even handle the volume of the phone calls? Can I handle this? Can I handle that? So you can really set yourself up and adjust right away. Excuse me. Because you might do that right away and go, “Ooh, that’s too much for me right now. But in six months, I bet I can do it.” Good. Factor all that in.
Jill DeWit:
And then my third point, and I’ll let you have this back, is you’ve got to push through your fears. So, that’s a biggie that I see people do. They’re skittish. They’re afraid of some of these big goals. And I don’t want you to be. If you do what we just said, you put it in there, work it backwards, and see it as a monthly thing and a weekly thing and baby steps, then you can breathe and go, “All right, I got this. I can see how this can work.” Another way I want you to think about pushing through your fears, a great, great resource that you have is this community. That’s probably the number one thing I think of. If you’re fearful, like I don’t if I can do this, how did you guys do this? I mean, there’s people you can ask right now today. There’s always someone who’s six months ahead of you, and you could have a conversation with them and with us, and push through it.
Steven Jack Butala:
Let’s take a deconstructive analytical view at this now that we’ve covered the people happy part.
Jill DeWit:
The people happy part. What did you call it? That’s the people happy part.
Steven Jack Butala:
We approach things so differently. We both get to the same place. It shocks me every time.
Jill DeWit:
All right. You’re going to say, this should hurt. I’m just kidding.
Steven Jack Butala:
No, no, no.
Jill DeWit:
You should not sleep. Just kidding.
Steven Jack Butala:
There’s two real variables in anything that you want to accomplish, time and money. I’m going to throw a third one in sort of, talent.
Jill DeWit:
I like that.
Steven Jack Butala:
If I set out and said, “I am going to be a rockstar,” and I threw the money at it and the time at it, I wouldn’t have the talent to do it. I just don’t have the talent to get into that upper echelon part.
Jill DeWit:
Let’s think about this.
Steven Jack Butala:
Land Academy, and I’ll tell you this, my company, all the companies that I’ve had up to maybe three years ago were tied to cashflow. So think about that. Because I refuse to take on any debt of any kind. Equity, no problem. Debt, nope. For a lot of personal reasons, Jill and I have never taken on any type of debt at all, business and personal. So, the cash part of this, managing a company that’s limited by cashflow, meaning I’ve got $12,000 to spend on acquisitions this month. I spent all 12. My bills are paid for because I still have a job. I’m not going to do any more acquisitions. And that’s rational management and cashflow and that’s why I wrote the title this way.
Steven Jack Butala:
That’s no longer the case at all. We have deal funding. We have a massive number of people in our group that this is their whole entire process, is to find people that want to fund their deals. So now one of the two variables is completely removed from your life. So it becomes time, and that’s something you’re going to have to figure out with you and your family. How much time you want to devote to this. If you’re further on in your career, maybe even retired, we have a lot of people that are retired, they have all kinds of time. Now you’re all set. It just comes down to talent.
Steven Jack Butala:
You don’t need to be Eddie Van Halen here. You don’t need to be that level of a rockstar. You can do two or three deals a month pretty easily. So it all has to do with what gear you want to be in and how much gas you’re going to put into it. I really have spent a lot of time trying to put it together. I’ve spent my entire life, now that I think about it, trying to put together a group like Land Academy, where I’m removing these blocks, these huge obstacles. They’re not speed bumps. They’re brick walls.
Jill DeWit:
Yeah, that’s true. I’m back on the rockstar thing. You know what you would make? You would be a great manager.
Steven Jack Butala:
Yeah.
Jill DeWit:
Do you know what? Remember Milli Vanilli? They couldn’t sing either.
Steven Jack Butala:
No Jill, I don’t actually.
Jill DeWit:
You don’t?
Steven Jack Butala:
No.
Jill DeWit:
Are you being sarcastic?
Steven Jack Butala:
I mean, I remember … No, I don’t. I mean, I have a picture in my head of Hall & Oates, but I think it’s kind of the same.
Jill DeWit:
No, Hall & Oates had talent. These guys totally faked the whole thing. And they did very well until it came out. They were lip syncing somewhere and they figured out these guys can’t really sing. They really aren’t doing anything. But they clearly had a great manager and got them there. So I was thinking, okay, you too could be a rockstar just like Milli Vanilli.
Steven Jack Butala:
So, one of Jill’s middle names is workaround Jill.
Jill DeWit:
See? Yep.
Steven Jack Butala:
You just found a workaround.
Jill DeWit:
I totally did.
Steven Jack Butala:
How to be a rockstar with no talent by Jill.
Jill DeWit:
Exactly. Because they did it. For those of you listening, A, you know how old I am, Milli Vanilli. Everybody else is looking up like what the heck is she talking about. So yeah, that was them.
Steven Jack Butala:
I do remember this now. It was a class action lawsuit.
Jill DeWit:
Girl, you know it’s true.
Steven Jack Butala:
Oh, Jill.
Jill DeWit:
Sorry.
Steven Jack Butala:
The singing.
Jill DeWit:
I know I can’t. Sorry. I would be Milli Vanilli lip syncing it because I can’t sing.
Steven Jack Butala:
That was a terrible thing back then.
Jill DeWit:
It was. It was a big deal.
Steven Jack Butala:
Since then, I think it’s very normal.
Jill DeWit:
Because it was like a scam. Everybody was pissed off, like how dare they.
Steven Jack Butala:
It’s very normal now to have all, with the … That was before electronic music really kicked in. Now if you look at-
Jill DeWit:
It was kind of disco-y.
Steven Jack Butala:
There’s track behind everything now in a live venue.
Jill DeWit:
That’s true. That’s true. All the EDM.
Steven Jack Butala:
That’s what I mean.
Jill DeWit:
We all know there’s nobody up there.
Steven Jack Butala:
Absolutely.
Jill DeWit:
We all know it’s him doing the same.
Steven Jack Butala:
That’s what I mean.
Jill DeWit:
Nobody’s playing it.
Steven Jack Butala:
It’s very expected now. It’s normal.
Jill DeWit:
That’s true too. God, they were just 20 years too early.
Steven Jack Butala:
I wonder. You know what I’d like to know now? Why did that really come out for them?
Jill DeWit:
I think everybody got pissed.
Steven Jack Butala:
No, hold on. Did it work out in the end? Are they sitting in a jail cell somewhere? Or are they sitting in a-
Jill DeWit:
Did they refund everything?
Steven Jack Butala:
… seven bedroom Beverly Hills mansion laughing and saying, “You know what? Yeah, we got sued. So what? And we had to pay it out, but in the end it” … like a bank robber.
Jill DeWit:
Well, I’m going to look it up now. I’ll get back to you on this. It’s so funny. Oh, boy. Talk about off topic, but that was fun. Thank you. Happy you could join us today. Five days a week, you can find us here on the Land Academy and/or House Academy Show, which is coming up tomorrow.
Steven Jack Butala:
Tomorrow, the episode on the House Academy Show is called affordable housing versus affordable Cadillac Escalades. You are not alone in your real estate ambition.
Jill DeWit:
Oh, I’m going to take some good notes for that one. All right. I have a few things to say about that. That’s good.
Steven Jack Butala:
If you can’t afford a Cadillac Escalade, and most of can’t, do you complain about that? Do you say, “I can’t afford a Cadillac. It should be cheaper, darn it.” No, you don’t do that.
Jill DeWit:
You march on down there.
Steven Jack Butala:
You go buy a Honda like the rest of the planet. But that’s not what happens with houses.
Jill DeWit:
True.
Steven Jack Butala:
It’s someone else’s fault that you can’t live where you live. I don’t understand that.
Jill DeWit:
That’s so funny.
Steven Jack Butala:
Believe me, we’re going to talk about it tomorrow.
Jill DeWit:
That’s funny. Thank you for tuning in. By the way, if you’ve not checked it out or found this yet, go to Offers 2 Owners and find the page for concierge data. We will pull your data, scrub your data, queue it up for you to accurately price your data, and just take all the mystery out of it. It’s awesome. We are Steve and Jill.
Steven Jack Butala:
We are Steve and Jill. Information.
Jill DeWit:
Information and inspiration.
Steven Jack Butala:
To buy undervalued property.
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