Want to know the secret to finding profitable properties? In this episode, Steven Jack Butala and Jill K DeWit explore the importance of acquisition criteria in real estate investing. They discuss how to define your criteria, identify properties that fit, and avoid common mistakes that can lead to losses. Tune in to learn how to make smart investments that generate profits and support your financial goals.

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How To Find Profitable Properties: The Power Of Acquisition Criteria

This is episode number 2,102. Our topic is how we buy profitable properties that fit our acquisition criteria. There’s some good information in this.

Versus is all the other ones?

No. Sometimes, the most simple sentences and topics are, “How do you guys do it?” We’ll talk about that. Jill and I are talking about how we’re setting ourselves up to make about $2.5 million buying and selling property. The underlying theme here all this week is, “What’s the secret sauce? You guys throw these million-dollar numbers around. Let’s tell us how you really do it.” We’ll do that. This episode is no exception. Each day on the show, we answer a question from our Land Academy Member Discord Forum, and we take a deep dive into land-related topics at your request.

Land Academy Member Question: One-Page Vs. Two-Page Mailers

Zane and Tara wrote, “Good evening, all. Reaching out to ask the community if you can share, given your experience, any pros or cons of sending a 1-page mailer versus a 2-page mailer complete with a purchase agreement. I’ve been sending out 2-page mailers for the past year, but considering cutting back to 1. I feel a one-page letter could simplify for the seller, as a two-page aspect sometimes throws off potential sellers. Thanks.”

I’m glad you brought this up because we’re doing multiple mailers in new places and we’re buying and selling a lot of houses. Every single mailer we send out, we change. We don’t dramatically change it. We change little nuances that I put in there that I think are going to help us respond better. One of the things that we’re doing that’s a little bit different from the past is, in some markets, not all of them, getting a local phone number in a local mailbox. Not every single one, but for a bunch of reasons.

We’re rolling with the changes, like Jill likes to say. A lot of that is a result of the world that we live in now, this post-COVID world where people judge people from a certain state or have a predetermined opinion of people from Texas versus California versus Arizona and all of that. I love that you’re questioning this. You never want to send a mailer that’s going to make it complicated, hard or confusing. You want to do everything you possibly can, like a television commercial or posting on the internet, if you’re selling something, it’s like, deliver one message and making it as simple as possible for them to understand and give them a call to action or what to do the next step.

Never send a mailer that's going to make it complicated, hard, or confusing to buyers. Share on X

It’s like, click here thing.

For years, if you want to sell your property, sign the attached purchase agreement and send it back, or take a picture of it and just let us know. A lot of people do that. For land mailers, I wouldn’t do it any other way. For house mailers. I changed the content of that to serve that specific purpose. If they know that you’re a local person, you’re going to get a much higher response or they think you are or just read the room kind of thing. I would heavily encourage you to go with your gut on this stuff.

For anyone that’s going, “What are you guys talking about?” Our typical mailer, which has been developed, massaged, tested, and used over the many years of Jack doing this, now has two pages. It’s not front and back. It’s not a, “Rip off this thing and tear it in here, too.” It’s very professional. The first page introductory letter is who we are, our company, how we got your information and why we’re reaching out to you, which is, “We’d love to buy this land.” It’s this land, not your land. It’s not generic. It’s a beautiful mailer, so it looks like a personal letter to that person about that particular property. The second page goes with it, which is, “If this sings to you, here’s a purchase agreement. Sign it, and send it back. I’ll open an escrow and we can get this started right now,” kind of thing. That’s the gist of it.

I like that. I think that if I only had the one-page introductory letter, I would be looking for more. I’d be waiting for just something else, like even a postcard with a coupon for a pizza thing. They make it look like you cut out the coupon. It’s like there’s some action to be taken to get this result, if you will. Never mind that I can still call Dominoes and say, “I’m doing the 2 medium pizzas for $10.99 with 2 toppings.”

That sounds really specific, Jill. Do you get chicken wings with that?

That’s a whole different promotion. We’ll get there.

We have to have pizza for lunch.

Two medium two-topping pizzas for $10.99. May I take your order, please?

That’s strangely attractive when you do stuff like that.

I didn’t work at Domino’s. I worked at Straw Hat Pizza. That’s a whole another story. There’s a call to action that I can now interact and get your letter and go, “We’re doing this and sign it and send it to you.” I question you’re going to miss some good juice and people from that. We don’t take that out.

For houses, I think in this day and age, I do not think you should send a purchase agreement like that. I think you should send a letter with a clear next step because everybody’s so used to it. Years ago, things are different. Everybody’s so used to having that stupid realtor and licensed real estate agent.

What if you change the name? What if you called it something else then? This is stuff you could play with. For land, you call it a purchase agreement.

Questioning it is great.

Zane and Tara might, I’m not sure, but maybe for houses, you call it like a letter of interest.

Letter of intent, technically. A letter of intent and then you celebrate and we’ll do all the paperwork for you. This is just an indication of your price acceptance or something like that.

Your interest to open escrow and all that. That would be cool.

I like that.

We know Zane and Tara very well. Obviously, they’re in Land Academy. We’ll talk about this more.

Finding Profitable Properties With The Acquisition Criteria

We’re talking about how we buy profitable properties that fit our acquisition criteria. The point to this is our acquisition criteria. We all know, if you’ve been following along, that we want to make $2.5 million a year. Jill doesn’t think it’s enough, but we’ll start with that anyway. If you read the episode from Monday, we want to do a couple of deals a month. We want to generate about $200,000 monthly in gross margin and profit, and we only want to do two deals.

I followed that train of thought and only sent out offers to places where that’s conducive, without even actually calling it acquisition criteria. I’m developing our acquisition criteria. Jill mentioned before that there are millions and millions of offers out there. We get calls from people from years ago all the time. I’ll tell you, some of the deals that come back from those are good. Is it going to help me accomplish my $2.5 million a year? If somebody’s got three small properties in Deming ranchettes that I know I can make $3,000 each on, I’m not going to do that deal. Maybe $1,000 each.

Maybe $300 each.

That was really important to us years ago when, especially when I was sending mail out before Jill joined our group here. Those types of deals are just not as important to me anymore. You have to have, and this really gets overlooked all the time. It’s really important, as are the acquisition criteria, and you need to stick with it. I’m not saying if you get a great deal in a Deming ranchette, post it on Discord. Somebody else wants to make $2,000 or $3,000.

Don’t kick everything to the curb, but the goal is to not be chasing something shiny like, “Now I’m becoming a commercial property pro and I spent six weeks on that because this can happen because I thought this was a good deal and then I took my eyes off the ball and all these other things that were over here. I should have just been putting my head down doing it.” Speaking from experience, that’s what can happen.

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I learned this the hard way. Here’s what happened. I cut my teeth on buying and selling long-term care facilities, like I mentioned earlier. I have the Land Academy presentation here for the last ten years. I would represent companies that were going public or on the way to going public, and they needed a lot of acquisitions. They would submit their acquisition criteria to me and it would all be some version of the same thing.

They developed that acquisition criteria. I was very young. I just wanted to do a deal. There are these complicated acquisition criteria got in my way. They got in my way of doing transactions. One deal in particular was I want to buy a licensed nursing home that has 120 beds with 1 nursing station. You can picture a wheel, the nursing station is in the middle and that always bothered me. I can find all kinds of buildings with 3 nursing stations, but I can only find a few with 1. It’s because of the way that it’s staffed and how you staff nurses and the techs, and all of that stuff is easier. The staffing ratios are easier.

It’s easier to manage it. Now I’m at this age and we own multiple companies and we’re trying to accomplish and fit our acquisition criteria, I understand. It needs to be a property that I know I can sell for whatever. Buy for $100,000, sell for $200,000 kind of thing, or $180,000 or some number like that. If it’s a property I’m going to make $30,000, what it’s doing really in the end is distracting me from pursuing properties that only fit my acquisition criteria. Why? It’s because I want to make $2.5 million. I don’t want to make $800,000. That’s the path that I would go down on $30,000. You have to make it up in volume then. Walking away from $30,000 deal is very hard.

The Importance Of Picking One Criteria

It’s interesting. At the level we’re at, we do it. We literally have mailers that go out, but it’s the funniest thing on the planet. We have a personal property mailer that we have sending out. At the same time, we have a house mailer going out. At the same time, we have other land mailers going out. It takes a while to be able to juggle all those things. It’s like the call comes in. I may negotiate the deal, and I’ve got to initiate the boots on the ground for that one. “This is land, it doesn’t need that. Let’s just open escrow.” There are all these different things. What makes me think of this is I just did a coaching call at the end of Career Path with a member who was picking her criteria.

I said, “No, hold on.” She has experience in both. She has more experience in houses than she does in land and she really wants to do the easier of the two, which is land. I’m like, “I really strongly suggest that you pick one and go with it. Never mind that you are very experienced in lots of different types of real estate, but in other ways, For what you’re doing right now, it’s going to be so much easier if you just pick a criteria, put your head down and go with it.”

“Even staying in the same state, you’re going to build a nice team. You’re going to get some agents that you can work with. You’re going to get title companies that you get going with. If you do 5 or 10 deals in Texas, let’s just say, you’re going to get a little team and you’re going to be real comfortable. You’re going to just move through the system. While that’s all paying all the bills, start branching out to other things, adding that.” That’s my favorite. When I have this state over here with this team and this state over here with this team and this state over here with this team, I’m in my happy spot. Do you like that?

Yeah. Do you know what’s interesting? We’re reinforcing the topic, but we’re doing it Jill’s way and my way. We both want the same thing, and we end up accomplishing it. She’s looking at it from her perspective like what do I have to change?

What hat I’ve got to put on today. It’s really like that. I’ve got to put on my house hat, my land hat, and my fill-in-the-blank hat.

Join us next time. We’re going to talk about how we resell properties to ensure profitability. As silly as that sounds, we’ll talk about how we do it. You are not alone in your real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.

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