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Land Investing Online

Land Investing VS. Traditional Real Estate: Which Has the Better ROI?

In this episode, the Apke Brothers Daniel & Ron discuss which property investment will get you better ROI if you invest $5,000. 
They focus on the most popular forms of real estate investing: house flipping, rental units, wholesaling and land flipping, breaking down each opportunity and determining how far $5,000 can get you.

House Flipping

House flipping requires leveraging banks and credit scores, making it riskier and more time-consuming compared to land flipping.

Rental Properties

While rental units can provide long-term cash flow, they require more upfront investment and are less likely to help you get out of your 9-5. 

Wholesaling

The wholesaling industry is similar to land flipping, but it is a more competitive market and has tighter margins. This makes it harder to achieve significant profits with $5,000.

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Land Flipping

Land flipping or land investing, offers a unique opportunity with zero risk and zero down payment, making it an attractive option for those with limited funds.

It also offers the potential for significant profits with less time and effort put in compared to other real estate investment methods. The big returns and lack of competition also make it the great option to invest your $5,000 in. 

Ultimately, choosing which investment strategy is up to you and the kind of work you want to put in. 

Land investing can get you the biggest ROI with the least amount of effort, but it can be an intimidating place to start since the margins are much larger than other strategies. 

Interested in land flipping, but don't know where to start?

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Listen or watch the full episode below ⬇️ to find out where to invest your $5,000 for the best ROI!

Listen to the Podcast Here

View Transcript here

Dan: When you’re flipping a house, typically you have to leverage a bank or credit score, all that type of stuff. And you have to put a down payment down and you’re paying monthly interest, things like that. The cool thing about land flipping that I want to point out here is we are not leveraging banks. We have systems and people that fund your deal for a profit split on the end with zero risk, zero down payment, zero credit check.

Any of that traditional stuff, 5, 000 isn’t got to do anything with the land. 99. 5 or more percent of your money should go into finding leads. You can get distracted with buying software. Buying this, buying that there’s a CRM, you know, all this different stuff. But the fact is, if you have 5, 000, you’re going to make money off acquiring properties.

Ron: So do you think of these three methods, cold calling, texting, mail, do you think mail is the most risky in terms of going to zero?

Dan: Hey everyone. Welcome back to the real estate investing podcast. Today’s episode, we’re discussing what are your possibilities? If you take your 5, 000 of investment and put it into land flipping, what are the possibilities? I’m your host, Andrew Apke, joined again by my brother and business partner, Ron Apke.

This is one of the most common questions we get in the community, in my email inbox, my Instagram inbox. How much money do I need? So let’s address that here because this episode we’re going to be talking about how much, what, what can 5, 000 do for you in land flipping versus traditional methods of real estate also.

Cause I do want to get into wholesaling. I do want to compare it to house flipping and, and the other alternative. So we’re going to talk about what 5, 000 can get. Where to put that 5, 000 and what kind of possibilities are and kind of setting up your 2024 for taking 5, 000 and putting it where you want and getting the best out of, out of that money.

Ron: Yeah, for sure. And I mean, you want, when you have a limited amount of money, 5, 000 is a limited amount of money. If you’re trying to start a business, if you have big goals, if you want to turn that into 100, 200, 000, whatever it is, you have a limited amount of money. You need to put that in a good opportunity.

Like you could work as hard as you want. But if you put it in a level one opportunity place, it’s a good chance that 5, 000 is going to be barely over 5, 000 or it could go to zero. If you put it in a level 10 opportunity, that’s how you can turn 5, 000 into, uh, I don’t know, six figures relatively fast.

Dan: Exactly. And we just had an episode, I want to talk about alternatives of land flipping with 5, 000 and put it into three categories. We’re gonna, or four categories, I guess, if you include land flipping. We’re gonna compare land flipping with 5, 000 compared to wholesaling. House flipping and rental properties.

So let’s start with house flipping. Because we had an episode recently on this, so it’s on the top of my mind. And a lot of people come from house flipping as well. But the difference of what 5, 000 can do in land flipping versus house flipping is where I want to start. When you’re flipping a house, typically you have to leverage a bank, you know, your credit score, all that type of stuff.

And you have to put a down payment down, and you’re paying monthly interest, things like that. And it can be very risky, but it’s also a ton of work. The cool thing about land flipping that I want to point out here is we are not leveraging banks. We have systems and people that fund your deal for a profit split on the end with zero risk, zero down payment, zero credit check, any of that traditional stuff.

And that’s why I think it’s so cool. So this 5, 000 isn’t got to do anything with the land. It’s got to do all with marketing and finding the deals. So land flipping is a strategy where you can take that 5, 000 and put it into a hundred percent in the marketing. Whereas house flipping. 5, 000 is going to get you a lead, but usually you need more than that.

You need a down payment. You need some sort of, you know, you’re paying for labor and materials and all this other stuff and things come up and there’s so much risk associated with it as well.

Ron: Yeah. I mean a bank or a hard money person’s most likely not going to. Want to put a hundred percent money into that 300, 000 house, a brand new land flipper.

Like they’re going to want you to have some leverage as well. Uh, even if they have the house collateral, that house flipper, sorry. And even if the house is collateral, all that stuff, that bank or that hard money lender is gonna want you to put some money into the deal and you just don’t have it, at 5,000 dollars.

Dan: You got to pay it monthly.

Typically, unless it’s when it sells, you can work different things out, but it’s tough when you’re a beginner from day one and land flipping, you can come in and get a profit split type of deal funding.

Ron: Yep, for sure. And then going on to like rental properties, which you also said, Dan, I, I, I don’t know if this one needs to be talked about too long, like 5, 000 minimum you can get is like a three and a half percent loan.

So that’s going to get you 105, 000 property or something like that with 5, 000, not even including closing costs and stuff. So I mean, rental properties, it’s not a way to quit your job.

Dan: Yeah. And typically you’ll have to leverage more than that, but you can find ways to leverage money if you really know what you’re doing.

You can get, you can raise money in rental properties so you don’t really need anything out of your pocket. But we’re just talking about the average, the traditional, right? The average land flipper doesn’t spend money on buying their deals. They spend it on getting it. The average house or rental property investor spends money on getting their deals.

They put the down payment down. They put it down, payment down, and it’s required by the bank. And there’s syndications and things obviously to get around that, but there’s exceptions in all these business models still. So, house, yeah, like Ron said, uh, rental properties, you’re, you’re invested, you get a small amount of cash flow every month.

And in return, you’re investing in the future value of the property, assuming it’s going to appreciate and you’re paying down the mortgage every month, you know, you’re paying down the note because you leveraged it and things like that. So it’s a good long term play, but as The housing market boom, the last few years, it’s gotten tighter and tighter with cashflow.

So it’s not a good job. It’s not a good answer to getting out of your job.

Ron: Not at all. Yeah. I mean, you’re not going to, you’re not going to get out of your job anytime soon from rental properties unless you’re improving and you’re refinancing out. Like those are completely different things than what we’re talking about.

Um, but yeah, cashflow and it’s not. Passive like rental properties are not passive cashflow by any means. And then what was the last one we said? Wholesaling wholesaling is probably the most realistic one where you can, if you become really good, like you need to be good at getting deals. You need to be a good salesperson.

It’s just a more saturated business model where you’re, you, you’re trying to do this wholesale houses or whatever it is in these hot, hot markets and 5, 000 of marketing money. Like there’s a chance that doesn’t get you anything. Yeah,

Dan: Yeah, exactly. Wholesaling is very similar business models to land flipping in terms of what’s, how it’s actually done.

In terms of wholesaling houses, like the, the difference is there’s a lot of differences and we’ve had episodes on this, but we actually put our properties on the MLS. We take them down ourselves and we, we leverage other people’s money. Um, wholesalers do not leverage other people’s money unless they need transactional funding or something like that for a double close.

But traditionally. you’re just assigning it and taking that assignment fee. Um, there’s a lot of advantages to doing that, but there’s a lot of disadvantages as well. Wholesaling is extremely competitive, which has forced tight margins, high competition, uh, tight margins on bad properties essentially. So if you don’t have a good investor group to buy that property, a lot of times you put in all this work and you’re getting a four or 5, 000 assignment fee and you’re putting in so much work.

For not that much of a reward. And that’s why wholesalers come to land flipping. They do so well. They’re used to fighting that uphill battle. And they land and they come to land investing. And it’s like landing on a zero gravity moon. And you’re just, you know, it’s not an uphill battle anymore.

Ron: Yeah, exactly.

Yeah, wholesalers. The thing, yeah, like you said, the people that come from wholesaling to land flipping, they kill it. Yeah. Um, we have a few people right now that I can think of off the top of my head that are making, I don’t know, 50, 60, 000 a month probably. And like, they don’t bat an eye at the marketing money or anything like that, because how much more efficient our marketing is than if you’re doing it for houses or stuff like that.

Dan: Yeah, exactly. And the efficiency of land flipping is where it really gets neat. Like if you have a job, it’s not that much time. I talked to a coaching member yesterday. And he said he’s going to make seven figures this year off land flipping and he spends ten, ten. This is a true story. It was with John.

Yeah. And he said he spends ten hours a week, ten to fifteen hours, I think he said, a week. And he said he’s going to make seven figures. Like, that’s the plan. And that’s why he loves the business is because you can keep scaling it. And we have strategies to do that without as much time and effort. It’s more about consistency than the actual amount of time you put.

Ron: Yeah. And he’s got one, I think he’s got one virtual assistant, right?

Dan: He’s got one virtual assistant in him. Yeah. And then he has a company where he wholesales and has rental properties and all that too, where he said he’s, uh, I mean, he has 14 employees. It’s a full time job and he sees the upside of land investing.

He just loves the efficiency of it.

Ron: Yeah. It’s extremely efficient and you can add, and that like his time, he’s putting into the business is the same time that someone who is a nine to five could put in this business. Right. Um, He’s probably a little more, I mean, he’s got experience. He’s done wholesale and stuff like that, but getting into it, Dan, like where should that 5, 000 go in terms of you’re starting out, you have 5, 000 in the bank, you’re ready to go.

Like, what should you be spending 5, 000 on?

Dan: Yeah. So now we’re diving just into land flipping and what to spend that money in. So 99. 5 or more percent of your money should go into finding leads. You can get distracted. There’s too many distractions out there. You can get distracted with buying softwares, buying this, buying that.

There’s a CRM, you know, all this different stuff. But the fact is if you have 5, 000, You’re going to make money off acquiring properties and you acquire properties from getting leads. So you have to pump your money into texting, cold calling, mail, whatever your strategies are. Mail has been the most efficient for us.

So I like to pump money into mail because it’s almost guaranteed some sort of return if you stay consistent with it. But. You have to stay consistent with mark. That’s, that’s where your money should be spent. Period. What do you think about education? Education as well, or else you’re just going to waste that 5, 000.

Ron: Yeah, it’s key and that’s what I was kind of wondering, like, if you do invest in education, like you’re going to have 4, 000 or whatever it is. Um, but the problem is like, if you don’t know what to do, can you learn it off YouTube? Maybe like piecing things together. I think it’s. I don’t know. I’m kind of like you want to, you, you’re going to have a lot of mistakes without it.

You’re probably going to make some mistakes even with education. But I think like Dan said, after that part, like after you know what to do, you need to spend 99 percent of your money on marketing. How can you get leads? How can you get deals? It is not by buying a, uh, expensive software, some list, not buying just like a list from someone who says they can get you a deal.

Like it’s about grinding it out. Getting mail out, getting cold calls out, getting texts out and reaching out the potential sellers.

Dan: Yeah. And I’m biased with courses in education because I’ve taken so many and we also have an education business, but I built an education business selling courses and programs because that’s how I learned.

That’s how I built and sold a seven figure business. I, I didn’t know anything coming into this. I didn’t watch that many YouTubes and stuff. I did, but. I bought courses. I bought Google ads, courses, Facebook ads, courses, marketing, all kinds of stuff on how to drop ship. Every business I’ve ever had, Kindle publishing, I bought courses on it and then I consolidated and that’s how I get started in something.

You know what I mean? I don’t, if you have to re, you don’t want to reinvent the wheel because there’s some competition and people teaching it. That’s a good thing. That means you can learn from them. If you start something from completely scratch, it’s going to take you years and years to learn what, you know, if you buy, and I’m saying there are bad courses out there too.

But if you buy a good course, it’s going to get you there much, much faster.

Ron: And probably cheaper, like that’s what people don’t realize like, okay, it’s 1, 500 for a course, 2, 000 for a course, whatever it is, like what kind of mistake, like one, the time aspect, like, that’s something I’m not even talking about, like how much time is it going to take for you to actually learn this in different places?

Um, and then how much money are you going to lose by doing something the wrong way? I think you can, we never like the way we teach our course, and I don’t want to get too off topic with this, the way we teach it, it’s, Um, it’s like, uh, we want people to bring in their own niches. We want wholesalers to come in and use some of their own marketing things.

You got, you need to piece together like different things. And our most successful people are, are piecing together our education with what they’ve already learned maybe in the past or what they learned from experience after the fact. Um, and that’s what makes it so just picking, picking little pieces.

Dan: And there’s not one way. That’s what I really like about it is there’s not one way to do anything. Things evolve, things change. Eight months ago, we weren’t teaching cold calling and texting. And, you know, 12 months ago, we weren’t teaching texting. We, I don’t care what it is. You got to find a way to get.

leads to get people landowners to want to sell their land for undermarket value. You know what? That’s the name of the game. How you get there is, is it’s very relevant, but at the same time, it doesn’t matter, like we got to find a way to get there and we work backwards from that equation because in this business you buy you get, make money by getting, you know, acquisitions and leads essentially.

Um, and, and that’s a good point. You said, there, of how much money you’re going to lose if you don’t educate yourself. I was, for this is an example, someone in my Instagram yesterday was messaging me and they’re using a data source that’s known to be very bad for vacant land and it’s having a lot of structures on it.

And he said, I’m just using it because it’s very cheap data and it’s saving me a lot of money right now. I don’t have that much money and I’m spending it all on mail. And I said, okay, that’s a good point. I said, you’re spending your money on mail, mail, 65 cents, whatever, 70 cents per mailer, whatever it is with what he was using.

And I said, you’re taking data with some houses on it. Say it had 10 percent of houses. You sent 2000 out. That’s 200 with houses, 200 times 70 cents. I was like, just from that alone, you’re losing money because you’re sending mail out to bad. I was like, mail is expensive. Data is cheap. And that’s just one of the things that courses can address is that spend money on good quality data, but that’s kind of, it was just hitting your point that you talked there.

Ron: Yeah, For sure. Like those mistakes add up for sure. So getting into a damn, like those 5, 000 we have, what does that like marketing look like? So I’ll kind of break down the mail aspect, you know, texting pretty well. So you can talk about that. So if you were to come in and that’s what I would probably tell you to do if you’re coming in.

Is I think I would tell you to put it on the mail to be honest with you. 5, 000 we said 99%. So let’s say 4, 800. Um, on mail, if you bought education, 3, 900. Um, but what you’re going to get out of that is. Anywhere from eight to 9, 000 mailers, you’re going to be able to reach out to eight to 9, 000 sellers, which is very powerful.

We get a deal for about every 22 to 2, 500 mailers. You’re going to make some mistakes in there. It’s going to happen whether you have education. It’s your first time doing something. You’re going to make mistakes. So I would probably say 3, 000 mailers a month for three months is going to, uh, you should get a deal that first or second month without a doubt.

That’s going to turn your profit. And what we see when people come in with that kind of money is. By the time they’re in month three, they’re flipping their first deal and they’re reinvesting profit. So that’s, that’s what I would do. Yeah. It’s going all to one place in terms of mail, but you want to touch base a little bit on texting.

What that can look like is you can get a ton of texts out for 5000 dollars.

Dan: And there’s variables too. Like if you have 5, 000 now, and maybe you can save 500 a month and then you have some ongoing too. You can go past that three months. If you have 500 coming in and the goal is to get you your first deal as quick as possible.

With the least amount of money spent typically in the most efficient way, right? So what Ron’s saying is 8, 000 people on average, we’re going to get three to four deals and Per deal we’re getting 25, 000 of profit. So you can do the math. It’s a great ROI to put it in mail It is a little scarier because you know, we’re spending thirteen fourteen hundred dollars on acquisition.

That’s not guaranteed Yeah, you know, that’s just average over a long period of time. So it’s important to stay consistent But there’s so many variables to that. You got to ask yourself. Do you have ongoing money? What happens if I don’t get a deal from this? What if I get a deal month one? Do you want to up your mail?

Can you, how much can you save a month outside of this five? There’s a lot of different variables to ask yourself too. But going into texting, texting is really good for getting cheap leads. It’s, it’s the cheapest outside of cold call and cold calling is cheap. If you do it yourself, obviously a lot of people outsource it and it can get more expensive to do cold calling.

But those are three really good ways to reach people. You have mail that they’re getting a physical copy. We send out blind offers. They’re getting a physical copy with an offer that we’re pricing out to their home and they open it. That’s the most efficient for us texting. For anyone who has a cell phone, which you know, be, you guys might be surprised.

A lot of landowners, if you’re not in the industry are old school and might not have texting, but it’s a good way to reach landowners typically. And then cold calling. I mean, those are the three that’s the bread and butter that’s been around for a long, long time. There’s obviously Google PPC emailing all kinds of other things, but texting is about, I mean, you can do it cheaper, but 500 a month, what gives you 10, 000 texts out?

You still need the data. And you still need to skip Tracy to get the phone numbers. Right. And that stuff adds up. If you have a thousand dollars a month, you can probably reach 10, 000 people. Yeah. I would think. And, and then cold calling from there, like pick up the phone and start calling. That’s the cheapest way you can grind a deal.

If you guys just need one deal and you don’t have money. Cold calling is the best way to start. Like if you have less than $5,000, if you have a thousand, $2,000 cold calling, maybe text, I would probably cold call. Try to lock up a deal, be educate yourself. Um, but there’s ways to get it with less than 5,000 too we’ve talked about in previous episodes.

Ron: So do you think. Of these three methods, cold calling, texting, mail, do you think mail is the most risky in terms of going to zero? Absolutely. Yeah, I, I agree. So you send 8, 000, 9, 000 mailers. We’ve had times, like we send 30, 000, 300, 000 mailers a year, like there are times where we’ll go 8, mailers without a deal.

Um, at scale, it works out to deal every 20 to 2, 400 mailers, but like you are going to have laws in that. And I think mail, because you’re not reaching as many people, there’s naturally a little more risk.

Dan: I agree. And it’s. It has the most upside to, and it’s not going to take you nearly as much time, obviously as texting and cold calling.

And you can spend so much time texting and cold calling on bad leads and, and just unqualified leads. So the number one thing if you’re going into cold calling, you’re going into texting is figure out how to get rid of the unmotivated sellers. All of them want market value, you know, 40, like so high, high percentage of your leads are going to want market value.

How do you get rid of them as quick as possible and get to the people who are motivated and will sell at 40, 50%. And that’s the key there because you can waste a lot of time, but we’re not saying you’re going to send out 8, 9, 000 texts and automatically get a deal. What Ron’s saying is per the money you’re spending on that 9, 000 mailers, is that the highest risk comparing the price?

Um, because you go 8, 9, 000 dollars and or 8, 9, 000. Or 5, 000 in texting, it’s going to get you more than 8- 9 thousand.

Ron: Yeah, you’re going to reach the most people with texting and cold calling for 5, 000. And it’s going to take the most time. Where mail is going to be the most efficient. Like you could, from that 8, 000 mailers, you could easily make two, like in a month or two, you can make 100, 000, 200, 000.

It’s very possible. We’ve seen it happen all the time. So if you go and spend that 5, 000 on mail and 8, 500 mailers or so, You’re most likely going to get a solid return. Like, I don’t want to scare you off, like saying you’re going to go to zero. There’s a chance for sure. Like I said, there is a chance.

There’s always a chance. I think mail is the best chance of going to zero, unfortunately, with something like this, starting with 5, 000. But that being said, normal return is going to be, you’re going to get two to three deals from that, and you’re going to make 40, 50, 000. I think you spend 5, 000. We always see like a 10 X return on your ad spend on your marketing spend with mail.

So that’s a very normal thing. But overall. If you’re getting into this business with four or five, 6, 000, less than 4, 000. Look in, look into texting, look into cold call and look into those options. You can still get into this business. It is not like you can’t do this because you can’t send mail. But, um, yeah, I think mail, if you have 5, 000 or more is the way to go.

Dan: Yeah. I completely agree with everything you just said. I don’t, I don’t have much more to add there.

Ron: Awesome. Well if you guys haven’t already hit the subscribe button below, hit the bell below to get notifications. When we have more videos come out, if you have any more additional podcasts you want us to touch base on, let us know in the YouTube comments below.

Other than that, thank you so much. We’ll see you next time. Thanks guys.

Dan: 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