This Is episode number 2081. We’re going to talk about the pros and cons of being a real estate flipper, in our case, land. We’re talking about career choices that you have in real estate and it’s a vast, massive, multi-billion-dollar industry that probably touches your lives multiple times a day. You just don’t think about it or talk about it.

Real estate is a vast, massive, multi-billion-dollar industry that probably touches your lives multiple times a day. Share on X

It touches my life.

Does it touch your heart?

Every day. It just pulls on my heartstrings. I tell you. It really does.

It’s so much fun to talk about real estate with you. In all the years that I’ve known you, I don’t think we’ve covered maybe 1% or 2% we really should be talking about all the time.

That’s a very good point. What do normal people talk about? I’m not sure.

They talk about how much they love each other know and how successful their kids are.

How great things are going, how they love their landscaping and there’s nothing they would change at all in their home or their appearance.

Did you see As Good As It Gets with Jack Nicholson?

Of course.

They’re in the car on the way somewhere.

That dumb little dog.

The two people are sitting there saying, “Life is terrible and people are idiots.” He says, “Stop the car.” He is just mentally ill and says, “Are you kidding me? There are people right now and they have noodle salad and beautiful conversations and complement each other. It’s us. We’re the problem.”

I don’t remember that part, but that’s good. We are the problem sometimes.

We’re noodle salad less landlord talk. That’s what I say.

I would like a noodle salad. Thank you.

The Importance Of Consistent Mailing

Anyway, we’re going to talk about real estate flipping. Each day on the show, we answer a question from our Land Academy member Discord forum. We take a deep dive in land-related topics by popular request.

Chris and Chris wrote, “Hello, everyone. We are Chris F. And Chris P. We joined Land Academy about 60 days ago and have been digging into the content for a while. We are very excited that our first mailer hit offers to owners on Tuesday. We were very fortunate to find the Jack and Jill partnership right away with each other. Chris F. Has a degree in Mechanical Engineering and an MBA and is very analytical while also being generally fed up with the corporate world. I, Chris P., come from a background in customer service operations, call center management and sales. I have a degree in Mathematics.” I was going to say it sounded just like me until the last part. This is great. “I have owned several businesses over the last few years and have completely fell in love with the Land Academy model earlier this year. Chris F. Also has started some businesses in the past, so both of us are entrepreneurs at heart.”

Good for you, guys. No real question here. Congratulations.

You guys are going to kill it. I’m excited.

I’ll say this to both of you and obviously to everybody else. If you get yourself into a mailer schedule, there’s no way. I was thinking about this when I chose this question. We all have lives. We’re all doing stuff all day, whether it’s personal, professional or whatever, but if you set yourself on an automatic mailer schedule with offers to owners, so I don’t know, 10,000 units go out every month or 2,000 a week or however you decide to do it, you start to not have choices except to answer the phone and do real estate deals. It’s a lot like, “We’re out of toilet paper. I got to answer the phone because there might be a real estate deal there.” It just becomes part of your life. I thought about that with us because that happened to us a long time ago. Now just real estate deals are in the fabric of our lives together.

That’s part of the problem.

I’m really not joking about it.

It’s funny. I’m thinking of a touchy-feely commercial along the fabric of our lives.

The real estate deals of our lives.

It could be a soap opera. Go ahead. It is a soap opera. Good. Congratulations. I’m glad you guys are here.

Creating Equity In Real Estate

You guys are smashing it. I don’t think I could design a better background for two people. This episode’s topic, the pros and cons of the real estate flipping model. Come back to the spreadsheet, it’s got to work on paper first. There are two ways to create equity in real estate. Number one, you buy something, a piece of real estate, and clean it up and make it better. Add to it, construct it, deconstruct it, do something to it. It enables you to sell it for more.

The sum and purchase price, the sale price for you, purchase price for somebody else is higher than the sum of what you put together. The acquisition cost and the improvement cost, that’s number one. The most popular, thanks to HGTV. Number two is what we do, flipping, and we do it with land. We buy a piece of land for 20% or 30% of what’s what it’s worth, fully knowing there’s some probably in the bitter end on each deal, some unknowns and we resell it for more. Usually, it’s about twice what we paid.

We buy for $30,000, sell for $60,000. Usually, we end up trying to buy for $30,000 or $40,000 or $50,000. We target $99,000 and it ends up being less than that most of the time. If I look back on the 16,000 deals that we’ve done, it’s almost double. If I just add it all up, we have doubled our money really as it goes.

Especially a lot of them were, we did triple, so yeah.

We’re talking about different types of careers you can have in real estate. This is by far the most profitable and the easiest to get into. The learning curves is the least steepest.

The learning curve is the least steep in flipping land. It’s the easiest to get into. Share on X

I’m trying to think of the cons. You did a good job describing the pros. I would say some of the cons are the way to do it and win is you pay cash so you need to have money saved up. A lot of people don’t have the dough.

Also, partner with money.

Correct. I’m trying to think what else. That’s the only one.

I don’t have any cons.

I hear you saying it’s an easier model, but I would argue that there’s still a learning curve there, so I’m not sure because when we put into the mailer scenario, we’re not trolling the MLS and just grabbing something and then turning around and reselling it kind of thing. There is still some education and a lot of analytical work that you put into this.

Comparing Flipping Models

There’s a right way and a wrong way to do it, just like everything else. We’ve been forced over the years because of lack of success to revert back to using a data model that tells us what to do. Just take all the emotion and feeling out of it for the most part.

That is the best way.

Look at data and it tells you where to send mail, and whether or not to do the deal.

How to price it.

If that’s a con for you, then this isn’t the place. It’s not a con for Chris and Chris up here. A degree in Math and a lot of customer service and engineering. Also, former business ownership experience.

Some of the cons, like I’m thinking of the flipper thing, too. We covered, here’s how you make either buy it cheap and you already have equity in it the day you own it no problem or you do something to it. Those are the two options.

Improve it.

We do it with vacant land and by do and improve it, which I think we covered 99.9% of the time. The answer is no, we do not improve it. We just buy it great and move on because that’s who we are. Some call it disorder. I’m going to call it an asset. I’m going to call it an attribute. You can call it a disorder. You think of like, “You guys are just glossing over this whole HGTV and those guys look like they’re doing great. Can we talk about that model?” I don’t even want to think about all the things that can go wrong.

That’s an improvement model.

True. It is lumped in there. I want to talk about it because I think that’s where everybody gets all excited. They don’t get excited in what we do. I’ll never forget years ago, it was early Land Academy and I talked to a guy one summer and I’m like, “What are you doing?” He was asking me all these questions. I’m like, “You’d be a great fit.” He’s like, “I don’t know about Land Academy. I don’t know if this is for me.” I’m like, “What are you talking about? You are doing all this stuff. Look how much energy and time it takes you. You just described to me how you can’t take this trip and go with your family to Europe because you got to sit around and babysit this flip because you’re not sure these contractors are showing up. I don’t have to do that.”

He goes, “Jill, it’s just not sexy to me.” That’s what he said. That was one summer. I can’t remember what it was. Maybe 2017 or something. 2018, here he comes. He’s like, “I’m over it,” because my answer was, “My bank account is sexy and I can go to Europe.” He is like, “Yeah, okay, whatever.” One year later, here he comes and said, “You’re right. I’m done. I can’t take it. I want a different life. I want to make just as much money if not more and I can have the time with my family. I don’t have to babysit a contractor showing up or be there when something goes sideways and they open up and find mold.”

Commercial real estate where I cut my teeth is packed full of self-absorbed people who spend too much time looking at themselves in the mirror. When I started in commercial real estate, right out of school, while I was in accounting, I had a boss who was driving around and had new suits all the time. We all had to inadvertently choose a specialization and I immediately chose healthcare because it was so prevalent and easy to do deals and specifically ultimately went into buying and selling nursing homes. Least sexy freaking real estate type there ever was. Everybody looked at me. It was just my skillset and it worked out really well for me because it kept everybody out.

Nobody wanted it. That’s nice. Don’t you want to do an office building?

That’s what it was back then. Office buildings were how you got a date. “See that office building? I leased all that space,” or, “I own part of that office building.” I guess that gets you a girl. I don’t know.

Not now.

I went from long-term care real estate to land and got the right girl. The sexy thing doesn’t even register.

That’s the thing, you have to really take a good look at it and go, “What’s important here?”

You have to take a good look and know what's important. Share on X

“That’s great, Jack. There are pros and cons of flipping. Why doesn’t everybody do it?” Here’s why. It costs money upfront.

As anything does.

No, I disagree. This is a good segue. In the next episode, we’re going to talk about real estate agents and the real estate service industry. Here’s a spoil alert. It costs nothing to get into these professions where you effectively get your fingers in someone else’s real estate deal. Namely, Jill and I’s deal. You are not alone in your real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.