One Percent Difference Rule and Compound Interest in Your Land Business (LA 1774)
One Percent Difference Rule and Compound Interest in Your Land Business (LA 1774)
Transcript:
Steven Jack Butala:
Steven and Jill here.
Jill DeWit:
Hi.
Steven Jack Butala:
Welcome to the Land Academy Show entertaining, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill Dewitt, broadcasting from the valley of the sun.
Steven Jack Butala:
Today, jill and I talk about, really, it’s kind of my topic as Jill informed me just now, the 1% difference rule in compound interest and how it’s associated with your land business. I think it’s associated with everything, but that’s just me.
Jill DeWit:
Do you prefer pink nail polish or red? Because that’s what I’m going to work on right now.
Steven Jack Butala:
It’s wearer’s choice.
Jill DeWit:
Thank you. That’s how this is going to go right now.
Steven Jack Butala:
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 I hope you know that we have a full blown commercial printing company dedicated to sending offers to owners. In fact, that’s what it’s called offers, the number two, owners.com. Check it out. Get your mailers out. We do eight or 900,000 units a month now.
Jill DeWit:
Victor wrote, “After closing a land purchase, what am I supposed to receive from the title company? I closed on four properties for the first time about three weeks ago. Yay. Three in one state, and one in another. And I’ve not received anything from the title company. No title insurance papers or deed. Is this a typical routine?” No. They’re coming. It does take a while.
Steven Jack Butala:
This is all you, by the way.
Jill DeWit:
You’re not nuts, Victor. And yeah, they’re coming.
Steven Jack Butala:
Isn’t it fun to just pay all that money and then get nothing?
Jill DeWit:
And then just nothing. Oh, I know. So here’s how it really goes. So did he say he bought? Is this bought or sold?
Steven Jack Butala:
Bought.
Jill DeWit:
Bought. Okay. So you bought the properties. You sent the money in. You saw all the closing documents, because you signed everything on the purchase side. And now you’re like, “Well, the check cleared. What am I going to get back?” It’s coming. So a good title agent will send you back a copy of everything and then they’ll follow up with hard copies. But some title agents will just follow up with the hard copies, that’s what’s coming in the mail. Either way, I do trust them when they say it’s, “Hey, we’re recorded. I’m good with that. I’m running with it.” And you could check with the county if you needed to just before you run with it. But it’s common. I don’t know what it is. I don’t know if it’s a laziness or COVID, or COVID induced laziness or the new COVID schedule we have nowadays. I don’t know.
Steven Jack Butala:
Title agents in general are drunk with power.
Jill DeWit:
Yeah.
Steven Jack Butala:
They’re going to tell you how it goes, tell you what to sign, where to sign. And they’re playing off of the fact that they think you don’t know what you’re doing, which is not the case with our group. We all know what they’re doing. And we’re very lucky that Jill has a transaction coordinator who’s 30 years in the industry as a title manager, title agent, title supervisor, and all of it. She’s seen it all. So you can’t slip anything by her. But when Jo closes a deal, she hasn’t done it herself. She hasn’t done it recently. She’s on the phone on every single deal saying, “I’m not going to sign this. There’s no lead-based paint. This doesn’t apply because it’s a real piece of freaking land.”
Jill DeWit:
Exactly.
Steven Jack Butala:
And I don’t need to put a mask on because of COVID when we show the property. So there’s all kinds of stuff that goes on.
Jill DeWit:
And three states over.
Steven Jack Butala:
Yeah.
Jill DeWit:
I promise I’ll wear a mask when I call you. What? What? It’s almost like that.
Steven Jack Butala:
There was one time I heard her on the phone, this is a lot of years ago, about a key. Somebody wanted the key to go…
Jill DeWit:
Oh, here’s what this is. This is so good. Yeah. This buyer was going, “Well, aren’t you going to be there to show me the property?” I said, “I’ll leave a key under the mat.”
Steven Jack Butala:
That’s it.
Jill DeWit:
He didn’t quite get the humor. I thought that was awesome.
Steven Jack Butala:
Sure. Let’s go.
Jill DeWit:
It’s rural vacant land. What do you need me to do?
Steven Jack Butala:
I think you can show it yourself.
Jill DeWit:
I think so. We all know where it is. Just kind of stand there and look at it. You want me to stand there with you.
Steven Jack Butala:
It cracks me up. What this room makes me think of is just HGTV and when real estate agents are walking someone through the house. And to this day it cracks me up when real estate agents walk us through houses or an open house. It’s like, “Now these are the cupboards. Aren’t they beautiful?”
Jill DeWit:
I know.
Steven Jack Butala:
And this house has-
Jill DeWit:
Well, my favorite is, oh, sorry. Go ahead.
Steven Jack Butala:
No, go ahead. You’ll you’ll say it better, for sure.
Jill DeWit:
My favorite is when they’re showing you through and you’re like, “Oh darn, I hate this carpet.”
Steven Jack Butala:
Yeah.
Jill DeWit:
You know what I mean? And you need someone else to remind you that we can replace that. Oh, yeah. I guess there’s a thing called paint and carpet.
Steven Jack Butala:
Says right in the title, renovation required.
Jill DeWit:
Right? Exactly.
Steven Jack Butala:
Today’s topic, the 1% difference rule and compound interest in your land business. This is why you’re listening. The whole rule about 1% is this. If you concentrate on getting 1% better every day, every week, every month, amazing things can happen and will happen. Just like with compound interest. Here’s the math. Let’s just use it in a real simple scenario. If you’re sending out 5,000 letters in month one, increase it by 1% the next month, so now it’s 5,050. At about month, let’s say 60-ish-
Jill DeWit:
Five years.
Steven Jack Butala:
Yeah. Five years. You’ve doubled the amount of mail that you’ve sent out. Or you can ever do it every week or you can increase it 10%. It doesn’t necessarily have to be 1%. You just have to mentally accept that doing the same thing over and over and over and not responding to the changes in the market, the changes in how land is purchased and sold, maybe pricing differences, it’s not okay. I mean, if you have a successful relationship, I can tell you that what that relationship looks like to both people is not what it looked like the day you met. And it’s not what it looked like at the end of month one or the end of year one. It’s very, very different because everybody’s rolling with it. They’re rolling with the changes. There’s job changes. There’s children that you may have. All kinds of stuff happens.
So to get better, you need to make those changes. And even if it’s just 1% better a month or a day or whatever. The same with compound interest. Compound interest is an amazing concept. If you’ve got 50,000 bucks in the bank and it’s earning 3% a year, it’s going to double after about 20 years. And so 50,000 may not be what you have in there. You may have 5 million. And then it doesn’t take long on compound interest so you just leave it alone to have a ton of money. So the concept is the same.
Jill DeWit:
Too bad in the stock market it doesn’t work like that.
Steven Jack Butala:
It does.
Jill DeWit:
Well.
Steven Jack Butala:
I believe the stock market does. We’re having real tough time in the market right now. The whole world is. But on average, I think it’s 11%.
Jill DeWit:
Okay.
Steven Jack Butala:
I think the stock market gains 11% a year. This year it won’t, it’ll probably go down.
Jill DeWit:
I’m looking at your chart right here and you put down, okay, say you’re 20 and you put 50,000 in the bank at 3% interest. So when you’re 40, well, I’m going to look at 40. Hold on here. 20 years now. So then at 40, your 50,000 is on month 21, oh, you can just leave it right there, is $90,000. I’m going to say that’s not enough money.
Steven Jack Butala:
Well, if you put 500 in.
Jill DeWit:
I can turn 50 into 90,000 next week.
Steven Jack Butala:
Well, yes. We’ve addressed the topic.
Jill DeWit:
Why would I do this?
Steven Jack Butala:
We’ve addressed the topic. If you take 500,000 bucks, put it in a bank account, and start buying and selling land and you’re the typical career path member, now you’ve got $10 million.
Jill DeWit:
Again, next week.
Steven Jack Butala:
You should, at the end of 24 to 36 months, have-
Jill DeWit:
Your 50,000 should be a million.
Steven Jack Butala:
Yeah. That’s about right.
Jill DeWit:
You could get 50,000 in a million in a year, maybe two.
Steven Jack Butala:
About, I think 18 months.
Jill DeWit:
Okay. Two. I’ll give you two.
Steven Jack Butala:
18 months to 24 months.
Jill DeWit:
I’ll give you some time to screw it all up.
Steven Jack Butala:
Yes.
Jill DeWit:
And make some mistakes.
Steven Jack Butala:
That’s what the job and children and a spouse and all that.
Jill DeWit:
Yeah, exactly. You got to take summer vacation off. There’s all these things that get in the way.
Steven Jack Butala:
We have a lot of retired people in our group, and those are the ones for some reason that just seem to do incredibly well.
Jill DeWit:
Because they know how to manage their time.
Steven Jack Butala:
They have the dough.
Jill DeWit:
Yeah. They’re not afraid of anything.
Steven Jack Butala:
Kevin Ferrel’s like that.
Jill DeWit:
This is just fun for them. It’s gravy. They’re like, “Yeah. I thought maybe I’d just do this to pass the time. And now I’m making money.”
Steven Jack Butala:
People that are retired do really well in our group. And people who for some reason have little, tiny children, probably out of necessity, smash it out of the park. We’re going to-
Jill DeWit:
I think they’re motivated.
Steven Jack Butala:
Last week, we interviewed-
Jill DeWit:
And they’re used to not sleeping.
Steven Jack Butala:
We interviewed Dan Smart. He has four children.
Jill DeWit:
Yeah.
Steven Jack Butala:
One’s in college and one’s in the crib.
Jill DeWit:
Yeah.
Steven Jack Butala:
And he’s got no choice but to buy and sell land at a very rapid pace. We interviewed him last week, and it’s a good discussion.
Jill DeWit:
It’s coming in a couple weeks, so it’ll be cool. Happy you could join us today. Five days a week you can find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow, the episode on the Land Academy Show is an interview with Luke Smith. He’s going to talk about his vacant. He bought a vacant church and then resold it and it was just riddled with drama. It’s a pretty funny story. You are not alone in your real estate ambition.
Jill DeWit:
It’s fun catching up with Luke. Man, I ain’t talk to Luke in a while.
Steven Jack Butala:
Yeah. The whole points of this is to get better. It’s just get 1% better. That’s it.
Jill DeWit:
I get it. Thank you. And thank you for tuning in. Jack and I are really aware that not everyone has a lot of money lying around to buy this land. So just so you know, don’t worry. We fund many Land Academy members deals every week. It’s called landfunding.com. And then in addition to us, whew, our community has so much money behind us it’s not even funny.
Steven Jack Butala:
Yeah.
Jill DeWit:
And it’s something that we do all the time behind the scenes within Land Academy in our discord area. We commonly fund each other’s deals. So check it out. And I think if you go to landinvestors.com, our online community, you can get a sneak peek of some of the chats going on inside of our discord, by the way.
Steven Jack Butala:
Yeah. So go to land investors.com.
Jill DeWit:
Our secret discord channel.
Steven Jack Butala:
And just right on the front page there, you can horse around with and see in a view only situation what we’re doing and-
Jill DeWit:
Some of the chatter.
Steven Jack Butala:
… how we’re talking to each other. And there’s whole sections dedicated to doing each other’s deals.
Jill DeWit:
It’s awesome.
Steven Jack Butala:
We’re Jack and Jill.
Jill DeWit:
We’re Jack and Hill.
Steven Jack Butala:
Information.
Jill DeWit:
And inspiration.
Steven Jack Butala:
To buy undervalued property.
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