Two Camps Of Land Investment: Cash Vs. Notes

This is episode number 2239. Jill and I are talking about the truth about chasing land note buyers in 2025. If you’re in this business at all or you’re thinking about being in this business and you’re doing a little bit of research on the internet and I hope some of those things are true. You know there’s a bifurcation like two camps of land investment. One, by the properties, sell it on time, sell it on notes, which we’ll talk about a little bit, then our way, which is buy for cash and sell for cash. There’s pros and cons to both. You have to decide for yourself, which one’s better and which one’s not.

I just got to say, you put chasing in the title here. That’s very appropriate. When I think of selling and having notes to sell land, basically, seller financing. There’s going to be chasing and I don’t want to do it.

Spoiler alert. Jill and I completely agree on this topic and we don’t agree on everything for sure. If you see steam coming out of Jill’s ears soon here, you’ll know why.

I may or may not have some experience with this.

This week, all week is land truth week. Our customer service department and our operations people at Land Academy suggested these topics and I love them. In this episode, the truth about chasing land note buyers in 2025. On Tuesday, we’re going to talk about how the end is near for double closing real estate deals also known as wholesaling.

On Wednesday, the truth about cold calling, emailing and texting for land and house deals. On Thursday, the truth about adding houses to your land business. Spoiler alert, you got to do it. On Friday, the truth about neutral letters, an open-ended land offers. They don’t work. Each day on the show, we answer a question from our Land Academy Member Discord Forum and take a deep dive into land-related topics by your request.

NM wrote, “Since my company is not registered. Can I use my name as a buyer on the purchase agreement section of the land mailer template?” Yes. I suggest that.

Here’s a deal. Our forefathers set up an amazing system for all of us, which is still completely and totally used in existence. There are entities out there that can own stuff. There are people, first and foremost, and stuff and real property is first on the list. People like Jill DeWit can own a piece of property. Jill can file and create a company for herself like an LLC or limited liability company. She owns the LLC but the LLC owns the property.

She can start a trust. She can create a trust and put all the properties. These are holding entities of real property and in a lot of cases, personal property. The point to that is to limit liability or it creates a veil. If you can imagine a veil around a bed or veil like getting married. You got to pierce the veil. If somebody got to set up the entity that owns a piece of real estate. They sue the entity. Not the individual. Our topic is the truth about chasing land note buyers in 2025.

Can I go back to the question real quick? I just want to add. This is very common when you’re just starting out. It’s like, “I don’t have that set up. I don’t have this set up but I’ve already just barreled ahead. I’ve got some opportunities here and I want to buy them. Is there anything wrong with putting it in my name?” No, it’s getting your feet wet.

This was a common practice that Jack used to talk about years ago too when you’re just starting. Do your first handful of deals in your name. Make sure you like this. You don’t necessarily have to go all that way, too. Make sure you’re into it and then you’re like, “I bought 10 and sold 10. Now, I’m going to set my business all up and take them out of my name going forward and put them in this entity.”

Great advice.

Thank you.

Kiss before you marry. Our topic is the truth about chasing land note buyers in 2025. Jack says weird stuff.

He does. It’s like, Jack has a marriage to rent. If you haven’t noticed.

It’s just marriage. It’s just relationships and it’s not just relationships with the girl. It’s all kinds of relationships.

No, I think sitting around marriage is your hot one. What do you think is your other hot to rent thing? I should say, employees but marriage.

It’s not employees. It’s relationships.

It’s just having a lot of people in your world. Is that it?

Let’s talk about this. Let’s say you’re at Walmart and you’re done shopping. You have successfully avoided eye contact with every single person in the entire place. Except the person you’re with and in my case, Jill. You get to the checkout line. You have to talk to that person. “Hello. How are you doing?” “I’m doing great. How are you?” That’s how I should go.

Everybody looks at each other for a minute. You check out and you pay. Maybe in a best-case scenario, you exchange a little bit of small talk with that person in the clerk but this is what happens instead. “How are you?” There’s no more communication and if there ever was, I’m not sure. All you can do is just be nice.

You and I shop very differently. I walk through the store saying hello, good morning, how are you, and that looks great on you.

The Relationship & Workload Burden Of Seller-Financed Notes

I could spend 2 or 3 hours showing people and groups of people what to avoid, what to embrace and why you have to. You have no choice but to deal with it in your life or go live on a sailboat in the middle of the ocean. Our topic is the truth about chasing land note buyers in 2025. As I said, there’s two camps in the land investment business. You buy a piece of property for cash, usually and you sell the property on terms.

You buy property. Very typical for low-end properties. You buy property for $5,000 and you sell the property for $200,000 or $300,000 down or $500,000 down, $150,000 to $200,000 a month until the note is paid off. You travel down that path. You now have a relationship, since we’re talking about relationships. Relationship with the buyer. You know their name and they’re in your database. You expect their payment every month.

You can either engage them and indulge them because you’re going to have to do that from a relationship standpoint because at some point, they’re going to stop paying or they’re going to pay late or you can do it our way. You’d buy the property. You have a brief relationship with the seller and you sell the property. In most cases and all cases for us, we have no relationship with the buyer at all. The real estate agent does.

Our staff or title people.

What we found or what I found and, hopefully, Jill is going to add something to this. It was the type of personality that does well with land or selling land on terms. Somebody that’s already in the bill collection business because you end up being a collector, a bill collector. The statistics are overwhelmingly, depending on who you are, positive or negative. Only maybe 4% or 5% of these notes ever get paid off.

I had one paid. I was a note seller. I sold property on terms right in the very beginning. I did a deal of 5 or 8 transactions in one subdivision. This is in 1996 or something like that or in the mid-‘90s and I did it through escrow. All of them defaulted and I had to go through the foreclosure process to get them back except for one. They paid that off. Remember that?

I do. I had one that paid off that we had done a long time ago and I’m like, “Where did this come from?” I wasn’t even paying attention. It was old. Do you know how old it was? It was a fresh-books account that they were quietly paying for and I long forgot about it. It was dumped into some other count. The amount was so small. It was insignificant in our bank balance so that’s why I missed it. I’m like, “We got to a deed and get this officially to this person.” You touched on it correctly.

The big picture is, you have the two options. Let’s talk about math for a minute because that, to me, is the most important part. There’s two parts. One, as you said, the relationship. Things happen. They go late and dark. Now, you’re picking up the phone and having to get involved and get them back on track. As you just said too, what if they don’t want to get back on track? They just want to bolt. Now you have to take the property back, relist it and start this whole thing all over again and there are steps and processes to do it the right way and the legal way.

Even though they have it all out on your permit, it’s like, “Now, I got to do stuff.” The second point is, that is huge. It’s monumental, the work involved. Everybody says, “It’s passive income.” I defy you to tell me how that’s passive. You got one person that has more than, let’s say 25 notes getting a couple of hundred dollars a month, which sounds glamorous. Ask them if it’s passive and now ask them how much and who they hired to do their customer service.

Ask them if they’re happy.

Exactly, because it’s not. The second part is, is the money part of it? We are here to run a business, make some money and not make it at $99 a month, because $99 a month times ten years is a whole lot of time to build wealth and also save up more property. $99 a time is not going to afford me a lot of property to reinvest in right away. That’s the thing versus Jack’s scenario. You bought it for $5,000. What if you just sell it now for $12,000?

I do two of those next month because I made my money back. Buy for $5,000 and sell for $12,000. Look how much faster I can build up wealth in one year versus by for $5,000 and $500 dollars down and $99 or $149 or whatever it is a month. At the end of the year, I could afford a couple more. That’s it. They buy for $5,000 and sell for $12,000 immediately, I could afford a lot more. By the end of the year, it’s moving and by the end of that year, I’m not buying for $5,000 anymore. Now I’m buying for $20,000 and selling for $50,000.

The Financial & Operational Superiority Of Cash Deals

Let’s complete Jill’s total thought on this because this is how I was going to end it and it’s excellent. I buy ten pieces of property for $5,000 each. It costs me $50,000. I sell the properties, all ten of them, for $500 down and $100 a month. Every month now on those ten properties, I’m collecting $1,000 a month. I’m out $50,000 and I’m collecting $1,000 every month. That sucks. Let’s do it our way.

We’re going to buy ten properties. On each of those ten properties, we’re going to mark them up $20,000 and resell them. A little bit harder but I would argue it’s not. Now you bought ten properties and you’re going to make $20,000 on each property. You’re making $200,000. Do you want $1,000 a month or do you want $200,000 in the bank? This topic, when it came up, could have been the shortest topic in the history of Land Academy just by doing that math.

Do you want $1,000 a month or $200,000 in the bank? Just do the math. Share on X

That’s it.

Why do people deal with them? Here’s why because people love the theory of payments. I just want to get a bunch of payments like rent. People love to just sit on math on selling terms like this. It’s the same as buying a house or an apartment building, which is if you’re expensive up front and then collecting a tiny little small amount forever, theoretically. We’re not wired for that. The other thing too and the thing that sends me at the end, this is a kicker for me.

The reason that we chose this business, Jill and I. I actively chose this business out of many businesses I could have gotten into when I was a lot younger because I can turn it on and off at any minute. I can send out a 25,000-unit mailer. Jill and I do five deals, probably or maybe ten. Make a bunch of money and then turn it off. I could have bought a convenience store, too. Maybe I had ten convenience stores or twenty by now. I get to know all my customers, my vendors and my landlord. I’m in it.

Rent hike and this happens and that happens and inventory issues. You couldn’t do it.

Join us in the next episode where we discuss the end is near for double closing real estate deals. You are not alone in this real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.