Land Investing Online

In this podcast episode, Daniel Apke & Ron Apke explore the contrast between small land deals (below $5,000) and larger ones (above $100,000).

They emphasize the challenges of scaling smaller deals due to operational strain and lower net profits.

After having done a few smaller deals, Dan & Ron experienced a mindset shift: The effort for a $100,000 deal is comparable to a $10,000 one.

They advocate for investors to target fewer but more substantial deals, Dan & Ron highlight the benefits of increased profit margins and operational efficiency.

They reveal their own personal goal to only chase six-figure deals to optimize resources and maintain a lean business model. 

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Listen or watch to the FULL podcast below to find out more about why going after larger deals could benefit you in a multitude of ways.

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View Transcript here

Dan: Welcome to the real estate investing podcast, where we help you unlock your potential freedom through land investing, real estate investing, and entrepreneurship. Hey everyone, welcome back to the real estate investing podcast. Today’s topic. We’re discussing the differences between a 10, 000 deal versus a hundred thousand dollar deal.

I’m your host, Daniel Apke, joined again by my brother and business partner, Ron Apke. Well, let’s get into the show, Ron, the difference between a 10, 000 deal to a 100, 000 deal. And people hear our mail rate often and our mail rate, we get one deal per every 2000 or so. And that’s alarming to some people.

Cause that’s. 1, 400 of cost. And when we were attacking smaller deals, and when people attack smaller deals that we’ll get into, you know, 3, 000 deals, 5, 000 deals, 1, 000 deals, you might get one per every 300. And in this episode, we’re going to dissect a lot of the differences between. The two deal is getting a 10, 000 deal or sub 10, 000 deal versus bigger deals.

And some of the differences and things you need to do to get those, because ultimately this can help you run a more profitable land flipping business. And I wanted to start by talking over desert squares and under 5, 000 deals. And some of the challenges with that, along with some, some aspects sound more appealing, like get a deal per every two to 300 mailers for a 700, 1, 000 property.

And some of that is appealing, but at the end of the day. A lot of this becomes tedious and monotonous and it’s not that much profit. And we’re going to talk about that. Let’s get into that first run. Let’s talk about desert squares and smaller deals.,

Ron: Yeah, absolutely. And, uh, yeah, that’s a good place to start.

Cause a lot of people do get started thinking they need to start on these two, three, four or 5, 000 deals, whatever it is, there’s a lot of work that really goes into every deal. Like it’s, you send the mail out. You market, you market to the sellers, however you do that, mail, text, email, cold, cold, cold, whatever it is, you have to take on leads.

You need to buy the property, which is going through title, more work. Then you got to sell on the back end and do it all over again. Like there’s a lot of work and to do that, all that work for 3, 000, we’ve done that before. And when you get that final check and you make 4, 000 on the deal, it’s like, what did I just do?

And that’s how I look at it. And that’s what desert squares are like. It’s just, it’s so, so difficult to scale, Dan, because the operational strain to do it, to make a hundred thousand dollars a month, you got to do 20, 20 deals. Opposed to doing two 50, 000 deals, whatever it is.

Dan: Exactly. And a lot of people doing this will, uh, do their title search themselves because a title search is going to cost you a thousand dollars.

That’s more than their property half the time. And 4, 000 check is more than a lot of these types of squares is going to get you profit wise to a lot of people would do seller financing on the backend too, and collect checks. There’s different strategies and you will get deals and you can profit. But Ron and I’s business is to make you guys good money, uh, as with, as little resistance as possible.

And this is a lot of resistance for not that much money. And that’s what we’re going to get into. And that’s the extreme side. That’s under, if you guys are attacking one, you know, below 5, 000 properties, just stop. Don’t do that. That’s like the, this is the base. We’re going to get into like the topic of this and the title of the show is 10, 000 versus a hundred thousand.

But if you guys are doing sub 5, 000, I am not really for that. I think it’s so much work for such little margin. Uh, margins are good, but such little profit in, in the deal. Uh, it’s just a lot of time. And when you scale business, there’s not a lot of differences. And you know, when we first started, our average buy was like 10 to 15, 000, maybe for a while.

And then we got our first big deal and let’s talk about that mindset shift from our average, which was 000 acquisition to getting our first big deal that net six figure on.

Ron: Yeah. I mean, we were expecting, I think, Dan, for it to be a whole lot different in terms of going from a 10, 000 deal to a hundred thousand dollar deal.

Six figure deal, whatever it is. Um, but to be honest, like there’s my, maybe a little bit more due diligence, a little bit more communication with the seller. I think that most of it’s internal though, Dan, to be honest with you, like if you can just do the same thing for that a hundred thousand dollar deal, as you do for a 10, 000 deal, it’s going to work out more times than not.

Sellers want to be, uh. Assured that they’re going to get their money. You need to build trust with them, obviously, but other than that, Dan, like it’s just a very similar amount of work for 10 times the amount of money, 20 times the amount of money, whatever the deal is.

Dan: And on the sell side, on the disposition side, you can also argue that the smaller sub 5, 000 sub 10, 000 deals are more difficult because you’re dealing with people.

Anytime you start going into the lowest price range of an asset class or anything, when you’re selling the cheapest thing. Um, example, if you’re Walmart verse, um, what’s luxury, if you’re Walmart verse at Nordstrom, the customer service in the, the quality of the leads deteriorates, you get a lot of bad leads, you get a lot of people just blowing smoke.

Um, they’re harder to deal with generally at the bottom like that. And I’m not saying it’s impossible, but it’s just disposition can be more challenging for some of the smaller properties when you’re the lowest in the game, that’s just how it is typically. So that’s one thing you can argue, but yeah, it’s not much.

And the mindset shift between. Our 10, 000 deal and, you know, the first time we got 100, 000 acquisition was huge because we realized that and the quality of the sellers were, were coming and they’re very qualified. They had loans. They were easy to talk to. Um, I mean, it was the same exact process on the acquisition price for the most part, like very little difference at all.

And that’s when we’re like, why don’t we just start attacking these bigger deals? Everyone’s going after 10, 20, 000 deals. That’s where majority of the competition is in the land space. Let’s differ. Let’s differentiate ourselves and go after some bigger deals. And a lot of people weren’t doing it at the time.

And then we saw how easy it was. To get the deals. It was just as easy. Yes. Our mailer rate might’ve went down, but still we’ll pay an extra 600 per acquisition to get 50, 000 plus more of profit. And that’s just what it comes down to. And let’s get into our, uh, our goals, Ron, this year, we were talking about one of our goals.

When you look back at our sheet, get more six figure deals. And that was something we really focused on coming into 2023, something we’re going to continue to focus on in 2024, get fewer deals, but bigger deals. We don’t want these sub 10, 000 profit deals. We really do not like those. We don’t go after them.

We say no to most of them just because the work and the operations it puts on us. But our goal for the year was to get more six figure deals.

Ron: Yeah. And, uh, I think that focus really helped in, like, it just shows what’s possible within this business because it was a huge focus of ours. And it just, it just worked out that way.

Like, once we started targeting more six figure properties, uh, 300, properties, those start coming your way. That’s all it is, is the marketing, the focus of your business. Some people come in and, Yeah. They don’t target those at all. And I just had a conversation with someone the other day and I told him like, let’s, he’s trying to get his first deal right now.

I told him, let’s just do a wide range of acreages. Don’t go, don’t cut it off and only do big deals. Don’t only do small deals. Let’s try to do a wide range of acreages. Um, but for us, like we just, We just looked at prices and we were not targeting deals that were under like 15, 000, 20, 000 a profit. Um, and we’re really amplified the amount of mail, the amount of marketing going towards six figure properties.

And that’s why we resulted in, I don’t know, we had a small goal that we thought like three six figure deals first quarter, I think. I think we had eight or nine and it just grew every quarter.

Dan: And the reason it grew. And our goals, you know, why was this our goal? And that was just because we have the operations.

We have the people in place. Uh, we’re paying for all these assets and resources and have these subscriptions and everything. Why not just up the margins and up the amount? It just makes so much more profitable of a company. We don’t need to hire more salespeople. We don’t need to hire more, uh, due diligence and, and transaction coordinators.

And it just really keeps the business lean in general doing few, but more deals and the profit is just so much better. And that’s really why. We came to this goal is just because we looked at our, our resources and what we have. And we said, we can really scale our numbers without scaling the amount of people at our company.

Essentially. That’s what, what our goal is. And that’s the goal of really any, you want to be as lean and as profitable as possible. So how do you take what we currently have and make it more profitable? We knew we had to get bigger deals. So that’s the origin behind it. And let’s get pretty black and white here with the pros and cons of bigger deals for smaller deals.

Ron: Yeah, for sure. Um, like you said, I think you just talked about a lot of the pros of bigger deals. Uh, you’re more efficient with your resources and resources. I mean, people, um, it’s a lot easier to do 10, 100 or 100, 000 deals, 1000, 000 deals to make a million dollars than 110, 000 deals. Like you are going to need.

Not necessarily. You can do that by yourself. You can obviously do 1000, 000 deals yourself an entire year and make a million dollars. Like it’s as simple as that. You cannot do a, maybe, maybe I shouldn’t say cannot, but it’s a lot more difficult to 10 X your deal volume and do 10, 000 deals. I think as a whole.

That is why doing bigger deals makes more sense. Uh, you just don’t need to do the same amount of volume. Your operational strain, you can be more efficient with everything. Um, cons, I guess, of bigger deals, Dan, I think it’s your, your going leads are fewer and farther between. So you need to really take advantage when you get leads, you need to be okay mentally like it’s okay if it takes 7, 8, mailers to get a deal, it’s going to pay off on the back end.

That’s 6, 000 of mail if you’re sending 10, 000 to get a 100, 000 profit deal, you’re profiting 90, 000. Uh, so I think mentally, I think that’s a hurdle for a lot of people.

Dan: I think that along with funding relationships, you need to have solid funding relationships when getting in. If you’re doing smaller deals, maybe you’ve funded them yourselves or have it, but all of a sudden you have a 150, 000 deal now, you need a good relationship to get that.

Ron and I fund those deals all day, so do plenty others in the community. So I don’t think that’s a problem, as long as you’re building up those relationships and you’re working hard. The people we don’t fund those for are the not as good managers who aren’t putting in the work or very responsive in that type of stuff.

But, uh, you got to build funding relationships. That’s another con of bigger deals, which you should be doing anyway. So one can argue that’s not even a con. I’m trying to think if there’s any other cons of those, I guess the risk profile, it’s more money, so it’s more risk technically. But once you get to analyze these, like if you can do your due diligence and underwrite the deal properly as we teach and look at, you know, not only the price.

but the property and the location and the desirability of it and you have a really good property. The risk doesn’t change whether it’s 5, 000 or a hundred thousand. It does because the dollar amount, but you can really mitigate that risk. We haven’t lost deals on, we haven’t lost money on anything besides one deal and that deal wasn’t even that big.

And we are some of our best margin deals have been a lot of the bigger properties that we’ve had. So I, I think. We used to have a barrier in our head that we can’t analyze this a hundred thousand dollars, 150, 250, whatever it is. And we keep upping that. And then as we up that we get more confident with it.

And now we’re not worried at all to go attack a 500, 000 property we want, but eventually maybe that will be 2 million and we keep upping that number. And that’s what I want you guys to do as well. Let’s get into that. What, what we think they should do from going from this episode, what are some changes?

Maybe they just want more margins because Ron, I was talking to Shelby yesterday on the phone. And I’m using her in a case study for the book and she had all these deals. I think she had 11 deals. I haven’t actually written down over here. I think she had 11 deals and I was looking through all the numbers and it’s great.

Like buy nine, sell 19. 2, um, buy 10. 8 sell for 20 by 88 sell one 80. Buy 6500, sell 13. Buy 15, sell 25. Buy 4, sell 14. And then, there’s the big one. And, there’s one deal where she made, buy 165 and sell for mid 400s I think. I’m trying to find it on here. But yeah, she was, she’s going to net or she’s going to have gross profit of, you know, what is it?

275, 000 or something like that. Um, which is unreal. So like you look at her 500, 000, she’s only been in this 12 months. She joined last October. So you look at her 500, 000 gross profit pile that she’s had the last 12 months. And keep in mind, she had a six month pause of getting no deals also. But you look at that and a meet half of it comes from one deal.

That she sold one in one week. She, so she split a property into two and she sold one in one week and she’s under contract on the other. I asked her about the process. It was really no different than anything else. Um, and she stated that yesterday. So that took 40, you know, that took. 50 percent of her gross profit and one 10th of the time when you can look at all the other deals, it’s the same effort from her perspective.

Ron: Yeah, that’s, that’s wild to think about. And, uh, I mean, she’s done an amazing job with that, but just like you listen out, those numbers is just. Shocking to see like how much one deal can carry a business. Um, and like I always say to people like those 10, 000 profit deals will keep your business kind of afloat, keep you moving.

And then those big deals are going to really make you money. Like that’s life changing. Making 275, 000 on a deal after she’s already made, I don’t know, a couple hundred on other deals. Uh, making that much money like that is, it’s life changing stuff. She quit her job because of it. She already quit her job.

So like it’s what she can do now. She can, now she has the power of having that much money to fund other deals, maybe fund other people’s deals, maybe just do more of her own acquisition and like she can hire now, like she can scale. That’s what that one deal can do. And if you’re targeting and just staying afloat with 10, 000 deals over and over, it’s really hard.

It’s really, really difficult to grow this business to what you want or to what we know is possible in this business. Uh, and I’m not saying go away. Neither of us are saying go away from 10, 15, 000 profit deals, but you need to be targeting those. If you’re not targeting those, it’s difficult. Like it really is our most successful members.

They’re going to do one of those deals every year, two of those deals every year. And then they’re also going to make another three, four or 500, 000 deals on our dollars on other deals. And that’s how they’re really making their money. If you’re it’s, it’s a grind. And if you’re only doing 10, 000 deals,

Dan: need 25 deals just to get the profit that she got from one, 25 deals to see all the way through, acquire, negotiate on the phones, get it closed by listed.

Negotiate on that disposition and sell side, all of that, we get pictures for it. 25. That’s a lot of work. Um, and you break down the one deal, one deal’s not that much work. So, like Ron said, we’re not trying to get you to go away from these deals at all. You know, the buy for 10, sell for 25, buy for 25, sell for 55.

Those type of deals are great and you’ll, you’ll pay your bills that way and you’ll have a good six figure business. You start trickling in these buy for 200, sell for 400, buy for 500, sell for a million. Buy for a hundred, sell for 200. And you do that a few times, you’re going to get gross profit. That’s how you get to a million dollars gross profit.

And that’s Shelby’s goal for 2024. You got to do some big ones, maybe a big one every month or two. Um, or every couple months or a few months at once a quarter. And then you have these 25, 000 profit deals, just paying the bills, paying your salaries, all of that. And then this is just extra. And that’s really how you take it.

So don’t go away from what we know works, which is, you know, Where do you start? Where, what do we teach 000 acquisition price? You’re going to get all day. Those are the deals you can get over and over and over again, fairly easily, low risk, um, easy to analyze the a hundred thousand plus same concept. You, you want to sprinkle those in there.

So maybe 70 percent of your 80 percent of your deals are the between 10 acquisition price. And which means you, if you’re buying for 40, you’re going to be selling for around 80, which is still good. Um, but you want to sprinkle these really big ones in, and those are going to get you to the next level and get you over that jump.

And you’re talking about Shelby here on who didn’t, like I said, didn’t get a deal for six months. We have an interview, go back and watch that if you guys haven’t, but she didn’t get a deal for six months and still was able to gross profit 500, 000. And it was mainly because of this one big deal. And I’m glad I talked to her yesterday, cause it makes sense with this.

Uh, topic that we’re discussing today, but the easiest place to start still focus on your, you know, buy for 10, buy for 40, buy for 50 out of those deals, and then sprinkle in these big ones. Like Ron said,

Ron: Yeah, I think that’s the best strategy guys. And we’re going to keep pushing bigger deals, Dan. Cause I.

Like you see it from every successful person we have, like they are not necessarily, obviously not a hundred percent on the big deals, but they are targeting them and they understand it’s a mindset thing. It really is like understanding you’re not going to get a hundred thousand dollar profit deal every month.

It might, like I said earlier, it might take 10, 000 mailers for it, but the numbers make sense at scale. There’s less competition for those deals, build funding relationships, do all that stuff. And these deals are out there. There, there’s just so many of them.

Dan: I completely agree. I think that was a good place to wrap up.

Do you have anything else to add, Ron? No, I don’t. As always, thank you for joining. Please do us a huge favor and like and subscribe our YouTube channel and share this with a friend. It really means the world to Ron and I, but more importantly, it could help change the life of someone else. Thanks for joining and we’ll see you next episode.

Watch the Full Episode Here