How Your Land Business Compares to Other Small Businesses (LA 1839)
How Your Land Business Compares to Other Small Businesses (LA 1839)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Howdy.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.
Steven Jack Butala:
Today Jill and I talk about how your land business compares to other types of small businesses. And believe me, it’s almost all good news, especially the way we have it set up now with the Land Academy membership group and funding and all of that stuff. So I’ll go through the list here in a minute.
Jill K DeWit:
Cool.
Steven Jack Butala:
Before we get into it, let’s take a question posted by one of our members on the landinvestors.com community, online community. It’s free. We have, Jill and I started quite some time ago, several years ago, a full blown commercial printing company to help you get your offers to owners. In fact, that’s what it’s called offers2owners.com. We send out between 600,000 and a million offers on behalf of members and non-members.
Jill K DeWit:
Every month.
Steven Jack Butala:
Every single month.
Jill K DeWit:
Yeah.
Steven Jack Butala:
Check it out, offers2owners.com.
Jill K DeWit:
Cool. Now back to the question, which is coming on the teleprompter. Charlie responds. Okay, so this is a response to something else?
Steven Jack Butala:
No, Charlie just-
Jill K DeWit:
Oh.
Steven Jack Butala:
You can’t believe everything you read on the teleprompter.
Jill K DeWit:
Oh, okay.
Steven Jack Butala:
Charlie’s got a question.
Jill K DeWit:
Okay. Charlie wrote this question. “Anybody ever had an old communications tower on their land? I’m looking at one that has a tower. It appears to be in good shape, but is not currently being used. How would you go about advertising that you have spots for lease on your tower? Or maybe that’s not how it works at all?”
Steven Jack Butala:
So when people are new in this business, they have, and we picked up all of these real estate habits our whole lives, and then all of a sudden we’re a Land Academy member buying and selling land and we can’t help it but to apply all this stuff that we’ve picked up along the way.
Jill K DeWit:
Right.
Steven Jack Butala:
This, in my opinion, is a massive attribute. And so many people think that they need to clear the land and make it presentable and change it somehow. Or if there’s structures on it or an antenna, that it’s bad. The fact is, and everybody piped in on Discord about this, this is a ham radio operator’s dream. And I would try to market this property to them.
A lot of years ago, Jill and I accidentally bought a property, because we didn’t have all the tools that we are available to us now like Google Earth, that was on the side of a mountain. It was literally and some rock climbers bought it so that they could rock climb on their own land.
Jill K DeWit:
That’s one of the things I always say, I want to stress is, whatever the property, I try to turn everything into a positive. You just have to accurately convey what’s really going on in the property. Whether it’s a serious slope or no slope at all. It’s flat, grassy, perfect for fill in the blank. Or own your own rock climbing cliff kind of thing. Whatever it is, do it. Don’t advertise is as, “Oh, you can build anywhere,” when it’s a rock climbing cliff, because you can’t build on the side of that. You know what I mean? Unless you hang one of those tents on the side, but we’re not even going to go there.
Because if you don’t properly convey what it is, you’re going to have a refund on your hands or unhappy buyers kind of thing. But this is a good example. It’s a positive for somebody. Every little thing is a positive for somebody. Even a falling down, it’s funny we talk about this often, a falling down mobile home, that’s a positive for people.
Steven Jack Butala:
Absolutely.
Jill K DeWit:
People often see that as an eyesore especially the sellers are like, “Who’s going to want this?” But you know what? Somebody would love to come in and maybe fix it up or maybe move it and put something beautiful there. Because guess what? It’s got the utilities already figured out. There’s something positive there.
Steven Jack Butala:
So I want to stress this though. This antenna, is not making this property more valuable.
Jill K DeWit:
True.
Steven Jack Butala:
It’s still the same old Land Academy model. You buy for 20 or 30% of what the property’s worth, sell it for 60 or 70% of what it’s worth.
Jill K DeWit:
It’s just a bonus.
Steven Jack Butala:
So what it is, it’s allowing you to very, in a micro way, seek out specialized potential buyers or a real estate agent, you can direct your real estate agent as on the sell side to do that. So there’s always people in our group who are like, “Hey, I bought this property. It’s got a bunch of old cars on it and an old house. And we’re in the process of removing everything.” and I’m like, “Stop, stop.”
Jill K DeWit:
Yeah.
Steven Jack Butala:
That’s somebody’s, many, many people-
Jill K DeWit:
That’s their dream. Leave it alone.
Steven Jack Butala:
People don’t see that junk. What they see is, “Oh my gosh, this is why this property’s so cheap. I should buy it.”
Jill K DeWit:
Yeah.
Steven Jack Butala:
“Maybe I’ll keep the cars. Maybe I’ll sell the cars. Maybe I’ll go in there and clean it up. But it’s causing me to get a great deal.” That’s what the buyer’s thinking in their head.
Jill K DeWit:
That’s true. That’s true.
Steven Jack Butala:
Congratulations on the antenna. I think it’s cool. I hope you send us a picture.
Today’s topic, how your land business compares to other small businesses. This is why you’re listening.
In old school accounting, we would value and look at businesses based on fixed costs and variable costs. So in a land business, it’s almost all variable costs, which is what you want. And here’s why? Think about a manufacturing plant. You need a building, you need a bunch of machines. You need people to work there to work those machines. This is all before you ever generate a dollar. So you got to plow in all this time and energy and money and capital resources to get that first part out. It’s very expensive. Those are all fixed costs. Those people are going to work every day, for the most part. You’re paying rents or you’re owning the building or you’re incurring those costs of property ownership in that business, whether you make any money or not. Those are fixed costs.
We don’t like that. We like variable costs. So as a land investor, all of our costs are variable. Every single one with the exception of tiny little expenses like you need to get a new phone number, you need to have a mailbox, a place where the offers get sent back. And so all the other costs are variable. If you don’t buy and sell any land, you don’t incur any costs. In fact, I would argue maybe you could get your costs down to a $100 a month, maybe less, in this entire business. You send out 20, 30,000 mailers. Now you’ve got properties coming in. You’ve got the cost of the mailer. Maybe you’re paying Pat Live or maybe you’re answering your own phone. So those are all variable costs.
And so when it gets expensive and we’ve addressed this, is when you start buying real estate. If you don’t have any money, but you’re a pretty bright person and you have figured out because of the education in our community, you’ve figured out how to source-
Jill K DeWit:
How it works?
Steven Jack Butala:
Source great real estate deals. We have a massive community with their checkbook open. This whole topic started because Jill did a live Facebook slash YouTube presentation last week. And there was a guy who happened to be in the audience, in the viewer listening audience, who we’ve known for a really long time. His name’s Mike. And he was answering questions along with us, which I think is great. And we’ve done a lot of real estate deals with him. Jill knows him really well. We’ve seen him at auctions. It was a long time ago and I’m glad he’s still in business and doing well.
And somebody, “Asked how much does this really cost to start?” And he said, “I started years ago with $500.” There’s no other place.
Jill K DeWit:
Can you do that.
Steven Jack Butala:
And maybe this should have been the title, no other place that I know of can you start with 500 or $1000 and become a multimillionaire inside of just a couple of years or a few years, depending on how hard you work.
Jill K DeWit:
I’m going to be realistic though. If you really want to do it right? So what this person was talking about, he said, “I started with $500 and it took me a couple years to get it going. Took me $500 dollars and I learned myself, took a couple years.” So to which I say, you could do it with a little more money, get education, and do it in a couple weeks. Weeks slash months to learn this and be on your way.
Steven Jack Butala:
Yeah.
Jill K DeWit:
And realistically, this is the Land Academy. If you’re in Land Academy you probably had five or 10 grand put aside to start something. And you came to us and here you are. Now you’re probably happily making half a million dollars a year. That’s a good probable average, I’d say, in our group.
Steven Jack Butala:
And so comparing a land business to let’s say a manufacturing facility is kind of a stretch. It’s really an academic comparison for fixed and variable costs.
Jill K DeWit:
Right.
Steven Jack Butala:
But let’s compare a couple other types of businesses that are a lot more realistic. And you might be saying, :Hey, should I be a day trader? Or should I buy and sell land?”
Jill K DeWit:
How bout just opening a pizza joint?
Steven Jack Butala:
To which I say, on the day trader situation, you might as well become a professional gambler, because it’s about the same. There’s just so much risk. I don’t believe that there’s any risk here. The only risk is that you don’t buy as much property as you thought based on how many mailers you sent out. And you know what? That happens.
Jill K DeWit:
So you send more mail.
Steven Jack Butala:
Yeah, so you send more mail. Or you try a new place to send mail or whatever. And if you buy, you have an entire community where you can bounce off the idea, “Should I be doing this deal?” And if 16 people in Discord say, “No, I would not do this deal,” or, “Yeah, I love the deal, but you need to get it for a lot cheaper.” That’s priceless. That’s priceless advice. It’s stopping you from failing and losing a lot of money.
Jill K DeWit:
I’d just like to take a step back and look at where can you come to something with five or 10 grand and really have a career? It’s really hard. I remember a long time ago, this is in a past life, I was looking out with my dad and my brother, not kidding, a long time ago, buying a couple of ice cream places. They were established.
Steven Jack Butala:
Oh, jeez.
Jill K DeWit:
There were three of them. And I remember comparing that to, and back then, I don’t know if it was Panera or who it is now, but there was a neat kind of a salad kind of thing where they were all franchised, but they wanted you to have it was like $500,000 was the startup costs coming into it. I’m like, “Geez.” Even though they have it all figured out, it’s a franchise, everything’s spelled out for you and they build it out for you, so much money. I can’t think of anything. We even did with a little pizza joint. I’m here to tell you can’t even start your own sweet, one operation, pizza establishment with that little bit of money. That barely gets your lease going. So fill the blank.
Steven Jack Butala:
That’s right.
Jill K DeWit:
You could afford your lease and some pizza boxes. That’s about it.
Steven Jack Butala:
So let’s say it costs 100,000 bucks to buy a place or start it on your own. And then the day you open it for business, now, let’s say everything’s great and you’re making-
Jill K DeWit:
Couple hundred dollars.
Steven Jack Butala:
Two or $300 a day.
Jill K DeWit:
Yeah.
Steven Jack Butala:
How long does it take to recoup that money you outlaid?
Jill K DeWit:
Exactly.
Steven Jack Butala:
Nothing like that happens in this business.
Jill K DeWit:
Right.
Steven Jack Butala:
You buy property for five or $8,000 or you get us to fund it, now it cost you zero. It makes 10 grand. You get $5,000.
Jill K DeWit:
Yeah.
Steven Jack Butala:
You get $5,000 and you just keep going. I mean, it’s immediately profitable.
Jill K DeWit:
Exactly.
Steven Jack Butala:
If you know how to appeal it to mail and buy and locate great real estate deals. That’s all this is.
Jill K DeWit:
Which is why we’re here. And 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 called, we actually review about 20 properties for every one or two properties that we buy. Why? And I’ll talk about it tomorrow, but we not only now like to reduce our risk, Jill likes to eliminate it. You are not alone in your real estate ambition.
Jill K DeWit:
Thank you. Yep. I’m picky. I mean, I’m picky and I’ve gotten pickier. And we’re going to talk about it tomorrow.
Steven Jack Butala:
Yeah. What we found is I would rather send out twice as much mail and incur the cost of doing that and do half the number of real estate deals with eliminating our risks. So we really, really are choosy about what we buy.
Jill K DeWit:
Exactly. Hey, by the way, as this airs, this is Tuesday, August 30th, two days left, by the way, I just wanted to let you know. The biggest savings that we have offered so far this year is happening right now and tomorrow’s the last day. August 31st is when it ends. So what am I talking about? Go to landacademy.com and check it out. I have a great, great promotion going on right now to get you, and it’s like almost cut in half. Not kidding.
Steven Jack Butala:
It’s the cheapest it’s ever been this year.
Jill K DeWit:
And to make it even awesome, everybody who joins between now and the end of August gets into a drawing for a free 10 acre property in Oklahoma. It’s awesome. Check it out.
Together:
We are Jack and Jill.
Steven Jack Butala:
Information
Jill K DeWit:
and inspiration.
Steven Jack Butala:
To buy undervalued property.
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