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Land Investing Online

Build a $1 Million Land Business (Using Other People's Money)

In this podcast episode, Apke Brothers, Daniel and Ron Apke discuss ways to build a $1 Million land flipping business without using your own capital or worrying about risk.

They stress the importance of deal funding, scaling your marketing tactics, alternative funding options, and lastly, they discuss what types of funding to AVOID so that your business can stay free of any unnecessary risks.

Why Use Other People's Money?

There are a lot of variables that go into answering this question, but we are going to go over the main points. 

Ability to Chase Large Deals

You will be able to go after large deals that you wouldn’t normally be able to go after if you are using an investors money.

You may even have $15k in the bank, but we don’t recommend using that money to purchase the land.

Use that money for marketing, sending mail or texts and hiring drone photographers.

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Low Risk

The land flipping business is already a low-risk operation, but utilizing deal funding will provide an even better barrier against risk mitigation.

The funder/investor is the one taking the risk, you are only the deal manager and won’t be putting any cash towards purchasing the property. 
You won’t owe any money to the investor until the property sells and if it doesn’t sell, the investor takes over the property. 

Listen or watch the full episode below ⬇️ for an in-depth breakdown on how you could be making 6 figures in land without using any of your own capital!

Listen to the Podcast Here

View Transcript here

Dan: I know people who have only used this method and they’d multi, multi, multi million dollar businesses. Like people come in thinking they have to use their own money, which is a huge misconception.

Ron: It allows you to go after deals that you couldn’t do yourself. It allows you to go after six figure deals, seven figure deals, and those deals are all realistic if you’ve been in this business for one month or you’ve been in this business for 10 years.

Dan: Hey everyone, welcome back to the real estate investing podcast. Today’s topic. We’re talking about scaling your business with other people’s money. I’m your host, Daniel Apke, joined again by my brother and business partner, Ron Apke. And I wanted to talk about this one around scaling your business with other people’s money, because there’s a lot of options for funding.

Um, there’s your own money and people come in thinking they have to use their own money, which is a huge misconception. There’s traditional financing, which is risky. There’s so many different ways to fund. Um, and one of the main things I want to talk about too, is using other people’s money so you can get bigger deals.

But here we’re going to talk about not just deal funding, right? We’re going to talk about other, other alternatives to raise money. We’re going to talk about the risk involved of the other opportunity, the other options to raise money, and just, uh, the risk involved with hard money versus friends and family versus your own money and everything else that goes into it, because.

There’s a dollar sign above every single option run, whether it’s risk free, like the risk adds. It adds something to it that we can’t really count. Like what does a risk percentage, like 20%, what does the risk add to the deal? And we’re going to talk about these in depth guys, so stay with me, but I want to start Ron with talking about why deal funding is so important in general.

Ron: Yeah. I think it, number one, like first and foremost, it allows you to go after deals that you couldn’t do yourself. It allows you to go after six figure deals, seven figure deals. And those deals are all realistic. If you’ve been in this business for one month, or you’ve been in this business for 10 years, like doing a seven figure business or doing a seven figure deal next month is possible for anyone listening to this.

With deal funding with other options with outside money. Like you cannot, you cannot grow your business if you are limited to the amount of money in your bank account. And that’s what the basis of why deal funding is so powerful and so important. Like there are people who come into this with 5, 000.

Their first deal was 150, 000, but sell for 300, 000 and they make 75, 80, 000 after splits.

Dan: Exactly. And not only that. You can get bigger deals. Absolutely. And that’s huge, but you can also get multiple smaller deals too. It allows it. So you don’t need to just to go to one on one deal funding. So you don’t need to go and have 10, 000 to get your first 10, 000 deal.

And then you buy that 10, 000. It allows you to scale your marketing and, and, you know, really put all your money towards. Mail. So you don’t need to worry about, you know, putting up money for 15, 20, 25, a hundred thousand dollar deal, whatever it is. It allows you to completely outsource your financing to scale your business.

If you guys were just doing this with your own money, 10, 000. Um, say you came in with 10, 000, you had to buy your first deal that limits you extremely. I would never ever recommend that instead of coming in with 10, 000, send a ton of mail, text out whatever it is and get a 50, 000 deal, get 100, 000 deal.

Then you’ll make 30, 40, 50 grand off one deal, potentially even more. And that’s your first deal. And then you get your feet wet and the system starts turning for you. And eventually you pile up a lot of money and you can start funding your own deals. Um, which is one of the options and using deal funding and some of these other traditional ones that we’re going to be talking about today.

Ron: Yeah, for sure. So we kind of talk about, or we have two kind of for when we fund deals, guys, there’s two types of deal funding strategies that we use when we’re funding people’s deals. And you have the option for these, if you’re in our community. And the first one is traditional, Dan, and that’s profit split.

That’s you get a 50, 000 deal. We fund it. Someone funds it within the community and there’s a profit spill on the back end. It can go from anywhere from 25 percent to us all the way up to 50 percent for us. And that’s the profit. So 100, 000 minus 50, 000, then that 50, 000 of profit will be what that profit split is based on.

Uh, and you don’t have any risk on this. Like I know we’re going to get more into risk as we go, but this traditional deal funding route, both of these routes, Dan, we don’t have any risk on. What’s your thoughts on just that traditional deal funding route?

Dan: Yeah, it’s a great option. And the splits based on your, your experience is based on the deal.

It’s based on a lot of different things. It goes anywhere from you keep 80 percent of the profit, uh, you keep 50 percent of the profit and anything in between there, if you’re new or it’s usually 40%, 50 percent standard. Um, but it’s very powerful because there is zero risk. You’re not pulling your credit.

You’re not pulling any loans. You don’t have any banks involved. This is someone who knows land, which is Ron and I who fund deals or other people in the community. We’re going to analyze the land. And that’s what the risk is on, right? We’re going to take that land over if you don’t sell it within six to 12 months, whatever the contract states, and then it’s going to become ours.

Uh, and that’s what the risk is on. So it’s not on yourself. You don’t owe that money after a certain amount of time. You don’t have a down payment. You have 0 out of your pocket. So it’s very, very powerful for scaling a business. I know people who have only used this method. And they multi multi multi million dollar businesses, like huge, but there’s something beautiful about just thinking of one, getting all the money that you, that you make, because you start funding your own deals.

I’ve been down this rabbit hole, you start funding your own deals and you keep plowing all your money into them. And, and we’re going to talk about ways to do it. You’ll not see any money in your bank. You won’t see any of it. You’ll, you’ll say on paper, you made a million dollars, 1. 5 million, and you’ll get taxed 400, 500 grand.

And then all of that will be into other deals because you keep plowing it back into the system, which is good in theory, but you have to using deal funding, allows you to get your money out of the system, using other people’s money and get it to yourself. So you can do other things with it as well, because you start making a lot of money.

You can keep pushing it in. Oh, you made 200, 000 last month. Great. Well, you have 300, 000 to buy this month and you got to plow that all back in. You know what I mean? Like it’s just cycle. It’s a cycle. And it’s really hard to get. It’s cool on paper because you can look at your assets and be like, Wow. We have 3 million of properties for sale right now.

Things like that. But you want to pay yourself still and get your money out and invest in other things and whatever Whatever you end up doing like it’s it’s a you can get stuck in that cycle.

Ron: Yeah. We use a ton of deal funding within our business in terms of our own deals like we use deal funders all the time Because of this because we’ve gone down that rabbit hole and it’s tough to get out like it’s always like okay You look at this you buy for 50 sell for 100, 000.

I have X dollars in the bank. I have plenty to pay for it. But like you start, you keep putting that 50, 000, a hundred thousand dollars into these deals. You don’t have money in your bank. Like it is just a cycle and it’s hard to get out of, but that’s the one traditional deal funding. We’ve also started a new program recently, which is called fast cash.

So you find a deal. Let’s keep that same deal, Dan buy for 50. Sell for a hundred thousand or we think it’s worth a hundred thousand dollars. This is fast cash. You get cash when the property is purchased. Once the property is purchased, you get paid 10 or 15, 000. We’ve paid up to a hundred thousand dollars for fast cash options.

Um, you get that money. You don’t have to sell the property. We take care of everything after it’s purchased. And we basically pay you what’s looked at in a lot of industries as an assignment fee, but we call it fast cash. Like you get your cash just for getting that purchase agreement, essentially getting through title.

Dan: You don’t need to sell it. You don’t need to worry about disposition. You get the money. Now you can put it back in the system in the mail. It’s for when you want that money. Don’t want to, you know, there’s risk to holding a deal for six months. To listing your, we, we have a value. We think it’s going to sell for a hundred thousand dollars.

What’s it actually going to sell for and how long is it going to take? And what are the fees behind it? And, uh, you know, are you using realtor? There’s so many things that go into it. So that’s another option to get you completely out of it, outsource your disposition and just get scale your marketing, scale your marketing.

Um, and it’s, um, it’s something we offer to everyone. So you come in the, we’ll give you both options, option one. Uh, fast cash option to deal funding because we’ve noticed a lot of people are taking the fast cash because they want the money in the run and to go get their next deals. We just got one today.

We got two last week. We’re constantly getting them because the value is there. And that’s just another way to add to your disposition process. If you just want to get rid of it, get your money now, don’t have time to sell, don’t have time to sell. Um, want more money from mail, whatever it is. And it can be like lucrative too.

You can make a lot of money off it depending on the deal. It’s all about how. Yeah. Everyone asks how much are you going to pay for it? It depends on every deal on the margin. Like if you have great mark, the beggar, the margins are, the more we’re willing to pay, obviously.

Ron: Yeah. And then It increases our risk without a doubt.

Like it increases our potential money that we can make on the deal. No doubt about it. Uh, but it reduces your risk to zero and it increases our risk because we have a higher buy price. Um, so I think it balanced out really well for the people who are looking. To maybe they’re low on marketing money and they have a deal that like just doesn’t make a hundred percent sense.

Like bringing that for that is a, like Daniel said, you get an option for that every time. And I really liked that. I don’t think it should be a hundred percent of anyone’s business, uh, in the longterm doing fast cash, but I think. At scale. Like if you pick and choose when to use fast, fast cash, it can be very, very powerful.

So let’s get into just other ways to raise money, money, Dan, family, friends, banks, hard money, everything like that, that probably has a little more risk associated with it. Uh, what are your thoughts on that?

Dan: Yeah. So traditional funding, just like we said with the profit splits. You can go to friends and family with them and you can get decent splits.

Like we’ve done that. We’ve done that a lot. I know a lot of other people that done. It’s a good place to start when you’re raising money like that for deal. And you can go to friends and family and you can get traditional funding from them. Another thing you can do is get more of like a hard money loan, um, which is just a fixed interest rate, right?

So maybe we have that 50, 000 property. We’ve been talking about. So for a hundred, we have that property under contract. Um, we go to them, we offer them 17 percent annually or something like that. Or if you think it’s going to sell within six months, you give them 15 percent or something like that. And that’s fixed.

Like I’m going to pay you that no matter what you put a mortgage against it. Very easy and simple to do. It sounds more complicated than it is. You put a mortgage and a promissory note on it and attach it. It’s risky because now you like, if you don’t pay them, they’re going to foreclose on you and you start to get into the risk aspect, but it’s cheaper money also.

And that goes back to the thing. Like you can get hard money loans. You can, um, and that’s through friends and family typically, or other investors. But those are fairly easy to get if you have decent connections and if not start to build those connections up So you can do that you can do traditional funding through friends and family I know people who have done he locks, you know If they have a lot of equity and they want you got a killer deal be selective choose that buy for 30 sell for 90 Very good deal like find a way to pay for that yourself, you know That can really really set you apart and I think those are a few of the options that I’m thinking of.

Ron: Yeah. I mean, I’ve heard people take credit, like a cash out on their credit card. Like I don’t suggest that stuff. The one thing I typically do not suggest, but even if you’re not new and you have some experiences taking out loans for marketing, like I want your marketing, take out loans to do deals, to have bigger profit on deals, whatever that is, uh, get that hard money loan, all that different stuff.

I’ve, we also hear people kind of like try to get a 20, 000 loan for marketing. Um, You have a lot of risk associated with that, Dan, in this business.

Dan: Yeah. Cause you have no collateral. There’s no asset backing, at least when you have a deal and you get a loan out, you have that asset. Yeah. You know, so that’s a big difference.

Ron: For sure. I like, I would use like, if I was starting over, I would use more experienced land investors for my first few deals for sure. Because if you come to us, like we help you guys out throughout the deal so much with traditional deal funding. Um, it can be very valuable just learning and then like, you can start after six months, eight months, like start looking for some cheaper ways to get money.

Don’t over force it and don’t over leverage. Like that’s the biggest thing. Like how risk tolerant are you? And we’re getting into risk of types of funding, Dan. Like I think it’s. How risk tolerant are you? Um, and that’s kind of what should drive the type of funding you’re looking for.

Dan: Yeah, and you’d never want to go one way or the other really.

You always want to scatter it. Like traditional deal funding, how we do it is 100 percent risk free. You know, it just is. Like it’s risk free. These other types are all associated with risk. So you want to balance it out like a third, a third, a third. Um, and you, you, cause the thing is, if you do all of these fixed interest, 15%, six months, something like that.

Let’s just throw that out there. So you got, you own 15 percent in six months. You get four deals this month. You do it all with them. Those don’t sell within six months or whatever that timeframe shows. You’re going to owe that. And that can get really, really scary. You can get foreclosed on. That’s how businesses go belly up.

You over leverage. This business is so cool. And this is part of the reason I got into it was because you don’t need to leverage to make this business work. You have deal funding options with 0 percent leverage, essentially. So that is just such a beautiful, I’m so like. As you scale the business and you do those 15 percent loans or whatever you end up doing hard money, you’ll see the more, you’ll see the pros of traditional deal funding more and more because we used to get out a ton of these 15 percent loans.

We still do, but we balance it out with different things also. And it’s just, um, it gets scary quick. Like you might owe a million dollars. You do a bunch of deals, you owe 300, 000 in six months, you know, and it just, it can get scary.

Ron: Yeah. Look for options. There’s so many options. We can’t get into every option for sure.

Look at options and then weigh like how risky you want to be in this business. Yeah. Don’t over leverage is like the number one thing the land market can change like firepole things can change On the drop of a hat and you have a million dollars of loans out on 15 percent interest Then you all of a sudden Oh 1.

1 5 million or whatever it is It’s scary it can it builds up fast and like it might look good your potential equity your potential profit might look amazing But it can things can go wrong Fast in this business if you over leverage.

Dan: Yeah. And it’s, and you got to look at the difference too. So say you got that 15 percent loan and then you’re experienced land investor, experienced land investors can get good rates with traditional deal funding too.

Um, if you’ve proven yourself, you’re dealt, you’re doing good doubling your money. You’re selling it relatively quick. Yes. Speed you’re on it. You’re giving updates like things like that. You can get pretty good rates for deal funding. So compare the two, like The 15, 18, 20 percent hard money versus that deal funding.

And then come up with the risk. Like some, a lot of times if you have a deal for 50, 000, you sell it for a hundred, there’s fees and realtor and all that stuff involved. You’re at 90, 000, you have 40, 000 profit, Ron. Um, maybe 38 after everything, you know, and then, you know, you take that times the profit split and you look at the difference between your hard money and what it actually is.

Cause you’re not, you’re doubling your money, but after the fees and stuff, you’re not. And you want to look at the difference too, and then also look at the risk associated with it. And when you do that, it balances out a lot of times.

Ron: Yeah. Uh, if you guys are first starting in this business, starting to build those relationships, Dan, even before you have deals, like shooting us a DM and like, I’m trying to, I’m going after 250, 000 plus deals.

I want deals in this area. I want to use you guys for deal funding, like setting that out, starting those relationships, I think is so important. Don’t look for the cheapest money off the bat. Like, I think if there’s one thing I can tell you guys. is do not look for the cheapest money off the bat. You’re going to make mistakes and I see that happen.

Dan: Prove yourself first. Yeah, prove yourself first. But, yeah, the whole name of the game, like, you can scale to infinite with deal funding. You can’t really scale to infinite with any other methods. You know? Yeah. Without overleveraging and getting into some trouble. And that’s what I like. Cause the deal, traditional deal funding pretty much is infinite.

Ron: Without a doubt. Like the money is out there. There’s tens of millions of dollars out there.

Dan: And one thing we didn’t talk about is the relationships in the longterm that, you know, I want to touch on that because. We’re, we’ve been looking at it from such a financial aspect. We kind of pushed aside everything else for this episode on purpose, but there’s a big relationship side.

You can only scale this business to how much money you have access to. So if you only have access to a hundred thousand dollars, um, and it’s your, it’s your brother or your uncle or something, you can only buy a hundred thousand dollars worth of properties. You got to network, you got to build relationships.

Like Ron said, don’t only look at the money in the returns. You got to look at longterm, like how many people out there have 4 million, 5 million for you. You know, you want to build that up, do a good deal with them, uh, build that rapport. And that’s the thing when people, when, uh, people come to us, Ron, like we, We can be picky with the managers we work with, but when we actually work, you know, enjoy working with someone, I’ll, I’ll fork up five, 10 million.

No doubt. If, if they’re, you know, and that’s what you want to look at too, is cause you can only scale this business with the available funds. So if you’re using people with only 50, 000, which is fine, or only a few hundred thousand dollars, which is fine to do. As you scale your business up, you have more inventory to buy.

You need to have more relationships or bigger relationships. So you can scale to that.

Ron: Yeah. And I’m not saying we’ll say no to your million dollar deal if we’ve never done work with you, but it’s going to be more difficult if you gave, uh, your brother, your sister, your dad, those 25, deals, which is fine, but like, you got to understand like the, the lack of you, you’re sacrificing some relationship, uh, with some people that could kind of fund those seven figure deals.

Those, Three, four, 5 million deals, whatever it is. And it’s all about balance. Honestly, don’t forget the relationship aspect.

Dan: And you don’t want to go in one area over the other. Like you want to balance it out. And that’s the whole point of this episode. Do a little bit here and do a little bit there.

Whatever your situation is, get some hard money out, get you some friends and family use traditional deal funding in the LIO group, whatever it is. Guys, there’s so much money in the land investing online group. It’s ridiculous. And I love it. And there’s more and more money every year because more and more people are making millions of dollars and scaling their businesses up and have extra money to work with.

So if you guys feel like you can’t find money for deal funding. I would look more internally because I’ve talked to so many people and it’s just like you, um, look internally, look what you can be doing better as a manager because once you have these relationships with these people, it’s very, very easy to get money.

Ron: Yep. Yeah. Get good deals. Like that’s the main thing like that we look at it’s manager and it’s the deal quality. But other than that, Dan, I don’t think I have anything else to add.

Dan: No, it was a good, uh, good episode, Ron. But other than that, guys, thank you for joining. Please like, and subscribe our YouTube channel.

It really helps drive our mission forward. Thanks for joining. And we’ll see you guys next episode. 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