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Land Investing Online

In this episode, Ron Apke is joined by guest and fellow land flipping expert Anthony Weiler. They discuss how crucial cash flow is in entrepreneurship, especially when it comes to real estate, and the pros and cons of holding onto deals.

Holding out for higher offers may not actually be worth the time and resources you think it is.

Pros

While holding out for asking price may not always the best strategy for maximizing cash flow, project based deals on the other hand can ABSOLUTELY be worth holding onto. 

Take subdividing for example, this type of project can take 6-8 months to close vs the typical 1-2 months for individual parcels.

The difference? A profit 4 higher than $100,000. 
Projects like subdivisions can lead to much higher profits than traditional land flipping. Imagine if you stack this strategy on top of flipping individual parcels, then you will have truly maximized your cash flow!

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Cons

Holding out for higher offers may not be worth the time and resources.
For example, we recently bought a property and had a sell price goal of $100,000. No one seemed to be biting for that price, but we did get an offer for $92,000. Instead of holding out for just $10k more, we decided to close the deal at $92k to keep our cash flow going.

There are times when you also may feel an emotional attachment to deals, and forcing the deal to happen can be detrimental to success.

Ultimately, it comes down to each individual deal. Determining the best course of action can be tough, but knowing how to evaluate a situation and becoming an expert in the land industry will guarantee you maximize your cash flow!

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Listen or watch the full episode below ⬇️ to find out how to maximize your ROI on every land flipping deal! It’s not just about knowing when to step away from a deal, it’s about knowing which ones to take action on.

Listen to the Podcast Here

View Transcript here

Ron: You know, a lot of people, I think when they’re getting into their first entrepreneurship venture, like they struggle with the idea of cashflow.

Anthony: So in terms of cashflow, I think that’s really important because people get emotionally tied to deals. For me, it just, it doesn’t make any sense because people, they want to maximize their profits.

I totally get that. And that’s when people would get in tricky situations. You have it on the market for a little bit longer because you think you can make more, but people that. You that it’s like, Hey, it’s been on the market for a while. I’m gonna shoot you a lower offer. Yep. ’cause you’re probably desperate.

Ron: Minor subdivisions is the number one thing for just crazy, crazy profits.

Anthony: I think it really isn’t that difficult as long as you do your due diligence and the numbers check out. But that’s, that’s where things get very fun, and that’s where we see people really start to scale their business and get excited.

Ron: Hey everybody, welcome back to the Real Estate Investing Podcast. I’m your host, Ron Apke. Today we have Anthony Weiler with us. As a co host, really excited to have Anthony here. He’s got great experience, some great input on this topic. And what we are talking about today is maximizing your profit on the land deal.

And when I say this, and what we’re going to go over today, Anthony is a couple of different things, not just like holding out for the best offer, but also doing projects, things like really trying to get the best ROI in terms of buy price, sell price minus buy price. But, um, there’s other things to talk about when you’re talking about maximizing your profit.

Like, is it worth it waiting six more months for five more thousand dollars on a deal? Um, and that’s what I really want to get into, but what are your thoughts on that kind of topic as a whole?

Anthony: I, I think it’s really important and we’re actually getting a big, I feel like a big want in the community because there’s a lot of people that come from info lots like, Oh, my typical deal is like.

Two to 4, 000 this, like, it just doesn’t make sense. I’m wasting so much time and I can go after bigger deals. So I’m really excited to get into this topic. I’ve had a lot of conversations with people in the community and I think people can get a lot of benefit from it.

Ron: Yeah. And a lot of people, like you said, um, like it is like when you look at it on the front end, we’re talking about time to put into a deal, like a lot of it, a hundred thousand dollar deal is the same as a 5, 000 deal.

But when we’re talking about like you bought a property. For 50, 000 and you think you can sell it for by tomorrow for 90, 000, but you can sell it in the next six months for 100, 000. Like what is that? look like in terms of like decision making? Like, does it make sense ever to hold out six months for another 10, 000 or something like that?

Anthony: For, for me personally, I don’t think so. And I tell other people in the community, like it, it doesn’t make sense because it’s a 10, 000 difference. Imagine if you got that 90, 000 quick and you could just redeploy that and you can get multiple deals. But if you’re waiting out for six months, you’re wasting time in terms of.

I mean, you’re just not, unless you’re continuously marketing. But for me, that just doesn’t make sense. I want that money back quickly. I don’t want to deploy as much resources into it. Cause again, it’s a 10, 000 difference and you can use that money into more marketing. It just makes more sense to me.

Ron: Yeah. And a lot of people, I think when they’re getting into their first entrepreneurship venture, like they struggle with the idea of cashflow and how important cashflow is. Because in this business in particular, or really any business, not just this business, but this business is a higher ticket in terms of flipping 100, 000 piece of land or selling 100, 000 piece of land.

So, I mean, I think understanding that, like, what can you do with that 90, 000 tomorrow or in two weeks when it closes? Versus holding out for market value. And the thing about this business is nothing’s guaranteed. Like, even though you think market value is a hundred thousand dollars and you want to wait out and you have it posted for a hundred and you think you deserve that, like you could shoot that person a hundred thousand dollars, but if they say no, and like, you can get them up the 92 or 93.

It’s a good offer, stuff like that. Like, I don’t know, it just, the cashflow and the ability for what that money can do is, uh, extreme.

Anthony: So in terms of cashflow, I think that’s really important because people get emotionally tied to deals. And for me, it just, it doesn’t make any sense because like you said, you could redeploy that, um, into marketing dollars and you have to really understand what is your time actually worth and people, they want to maximize their profits.

I totally get that. And I encourage people like, Hey. You know, especially on their first few deals, they want to fund it themselves. They want to squeeze out as much money as they can. And that’s when people would get in tricky situations. You have it on the market for a little bit longer because you think you can make more, but people that see that it’s like, Hey, it’s been on the market for a while.

I’m going to shoot you a lower offer because you’re probably desperate. Or if you fund the first few deals yourself. I mean, I can tell you numerous conversations I’ve had with members that are like, Hey, I funded deals myself, but unfortunately sitting on the market a little bit longer than I wanted to.

And now you don’t have that money to redeploy into your marketing. So I think that that’s where it gets really important and you’re wasting all of that time on disposition when you could still have some in disposition. But as you’re building that acquisition pipeline is so, so important. Um, so yeah, those are things that I definitely have been seeing lately.

Ron: And if you just look at it from like an ROI perspective, not an ROI perspective with time in terms of that, like if you’re saying you can sell it in two weeks for a 40, 000 profit, let’s just keep this 50, 000 deal, uh, that we’ve been talking about versus selling for six months, like your ROI on that two weeks, 30 days, that property was out is way better buying for sell for 50 and selling for 90, 000.

Versus buying for 50 selling for 100, 000 in six months. It’s not even close, honestly. But let’s kind of get into Anthony. Project based things. ’cause these are more like front end decisions. Yeah. You have a property that you could subdivide. You have a property that you could maybe put a driveway, you could clear some land, and there is a lot of opportunity in making money on those.

And let’s say, I don’t know, you’re buying a hundred thousand dollars piece of land. You can sell it for $200,000 or you can do a six, 12 month project and you can sell it for three month, $300,000, like. That is a lot more enticing to me than the first situation. We’re talking about holding out for asking price, holding out for a little more money when you’re selling it.

But the opportunity to do projects in land, I think it’s a future of land for one. Yes. And just like the opportunity to make more money by slight, slight improvements. Subdividing is, minor subdivisions is the number one thing for just crazy, crazy profits, I think.

Anthony: Yeah, I, I completely agree. And this is where it gets really fun too.

Cause we’re seeing people in the community and we we’ve been encouraging this as well, too, to go after these bigger deals, but, um, they’re, they’re the funnest to partner with. You can really get creative and. I mean, you’re, you’re holding your money out, but if the numbers that you just gave, I mean, that’s a great return on investment and you can still keep the lifeline of your business, of your simple, like.

Buy for 30 of self like 65 70, like keep that cashflow coming while you go after these bigger deals. And I think people have the misconception of how complicated or how difficult it can be, but it really isn’t that difficult as long as you do your due diligence and the numbers check out. But that’s, that’s where things get very fun.

And that’s where we see people really start to scale their business and get excited.

Ron: And the nice thing about like subdivision stuff like that is you, you’re going to be making some money along the way. It’s not a 12 month thing. It might take 12 months for you to sell it. Like, let’s say you break up a hundred acres into 10, 10 acre parcels, for example.

Um, it might take a year to sell all 10 of those parcels, but throughout that year, like you’re going to be getting money back. Like you’re going to be selling that 10 acre parcel of 50, 000, that next 10 acre parcel 45, 000, whatever the case is. It’s not like it’s a lump sum of you selling that for 300, 000.

So the ROI really does change with things like subdivisions, because it’s not like you’re waiting 12 months to get all your money back versus maybe if you put an improvement, you put a mobile home on land, a different type of improvement. That’s going to be, it’s going to be selling as one versus subdivision.

Like you can slowly sell those off and maybe have a hundred percent of your money back within six months.

Anthony: Yeah. Not only that there’s people in the community too, that it’s like, Oh, maybe I should fund this myself or how do we even get funding for this? It’s, I mean, there’s plenty of. plenty of people in the community, including us, like, please, you know, we’d love to take a look at those deals.

We’d love partnering with people on deals like that. Um, but yeah, you get your, you don’t have to put all of your marketing capital into that. You can partner with somebody, someone that has experience, and then you can get that under your belt and then you just keep scaling from there. But yeah, little value adds like that.

And just finding out what those zoning regulations are, again, not that complicated, especially if you are unsure. Definitely partner with people that know what they’re doing, but I mean, you can even do like a preliminary plot map. And we’ve done that on a handful of subdivisions, have it mapped out. It doesn’t even have to be recorded yet until you get one under contract.

I mean, it’s, it’s a very smooth process and the returns are great.

Ron: It’s not hard. Like we’re not geniuses the way we’re, what we’re doing with this in terms of minor subdivisions in rural America. Uh, it’s not a difficult thing to make a couple hundred thousand dollars on a deal. Uh, sometimes I see with.

Not just subdivisions, but other improvements to people try to force deals and then their margins get too tight. And that’s when I see people kind of get in trouble, I think, or they can’t get funding for a deal. It’s like they’re trying to buy for 50, 000. Uh, it might be worth 60, 000. They can break it up and sell it for 85, 000 like doing if you’re not doubling your money on a subdivision to get out, like it’s not, you’re, you’re doing too much work for not enough money in my opinion.

So I mean, I think, is that what you kind of see with people forcing? Improvements a little bit.

Anthony: Yeah. And that’s, that goes into just being more emotionally tied to deals too. Cause for me, subdivisions are very exciting, right? Like there’s so many options that you can do, but once you start running the numbers, like, Oh, actually, if I split it up this way or the County got back to me and I can subdivide lower than like 10 acres, right.

That’s going to change your margins. But like, shoot, I really want to salvage this deal. This is amazing. What can I do with it? And then they try to squeeze and squeeze. It’s harder to get funding. You’re keeping the seller on board. And then if you try to force it, I mean, it’s just going to be difficult.

You don’t want to build a bad relationship with the funder. You don’t want to have your money sitting out for a long period of time. And that’s when people can really get bit, um, like bit in the ass in terms of just not evaluating things properly. So. Really? And I tell people this all the time, try to, you know, step back, look at it from someone else’s perspective and don’t be so emotionally tied to it because you will try to force it and you’ll be put in a bad situation.

 

Ron: Yeah. It’s just, it’s a common thing for people who get calls back from interested sellers and like. Just try to force every single deal and it’s not the way, like, sometimes the best thing you can do is negotiate with that seller and try to get them down to a price where the deal makes sense, opposed to really forcing, because that’s where I’ve seen it in the past.

Um, we’ve made the mistake of forcing some deals, not necessarily subdivision deals, because I’m pretty careful with those in terms of numbers. And I understand the number, the amount of work we need to put in to sell 6, 7, 8, 10 properties, whatever it is. But, uh, that, that’s where you can get yourself in a little bit of a pickle is if you are not evaluating the deal, you’re being biased with your underwriting, everything like that.

So always getting second sets of eyes, I think is important and it can eliminate some of those, uh, errors, I think, and lose, not necessarily losing money, but just working for too low of a margin.

Anthony: Yeah. And Dan actually mentions this a few times and he says, you know, you have to put on different hats, especially if it’s just you in the business.

Like if you’re acquiring land, like, okay, first, or trying to get something under contract, put on your sales hat, do what you need to do. If you need to negotiate, you know, get it under contract. But then once it’s under contract, okay, let me put on my, um, um, my, um, Like, let’s say, um, transaction coordinator hat, for example, right?

What does it look like in title? Is there anything that, should I actually buy this deal? Is it actually worth it? Is anything showing up in due diligence, right? So you have to wear multiple hats and you kind of, again, step back and really evaluate things. Because if you’re just a one man shop, it’s so easy to be, and again, I mean, I flip land and when I first started, I would try to squeeze whatever I could.

It’s very exciting, especially if you need the money. But again, you can really get bit if you don’t properly evaluate things and put your emotions aside.

Ron: Yeah. You start getting biased towards your deals because you’re the one that talked to the seller and you heard the seller’s story about it and everything like that.

Like you need to come put on or get third parties, like bring it to our deal reviews, everything like that. You need to get an unbiased, it can be you, like you can be the unbiased person, but it is a legitimately like putting on a different hat, putting on a different position. Like for me, uh, for when we have salespeople, it’s the salesperson has a number that they’re trying to get it at.

The salesperson is not going to sell me on what we should buy the property at. I’m going to make that determination separate from them. If I think we need to negotiate, I’m going to send it back. We need to get it down to X dollars for X reason. And you can do both of those positions, but obviously emotions get tied into it.

And it’s. A lot easier said than done. Like that’s multiple personality disorder or something like that.

Anthony: Yeah. And again, the biggest thing is just run the numbers. Cause if you’re doing a subdivision deal and it’s like, well, this could sit from anywhere from six months to a year, maybe even longer. And if you’re only getting like.

20, 000 out of that. It’s like, is that really worth your time? You have to, and this is where you kind of have to do self evaluation. What is your time actually worth? If you had to put a number on it and go after that number, like really, really strategize in terms of, cause ultimately we want people to reach financial freedom.

And part of that though, too, is like. Getting your time back is really important. So if you’re spending all this time and you’re getting 20, 000 worth again, you know, accent move on to the next one. More opportunities will come learn about subdivision regulations, parting with the County and what that process looks like.

And at the end of the day, even though you didn’t end up with the deal. You have that knowledge and you’re ready to go after the next one.

Ron: Yeah, for sure. And it’s really everything in your business guys. So first off, we talked about kind of recap a little bit. We talked about basically holding out for a higher price.

Like, is it worth it? Sometimes maybe if they are really low balling you, but if you have a good offer at 90 percent of what you’re asking, 95 percent of what you’re asking, take the offer. Unless you have multiple offers or something like that, and you can kind of put them up against each other. You need, this is a cashflow business.

And then secondly is the project based thing. I love projects. I love, love, love project for a future of this business. I think there’s so much opportunity in big land, big land deals, doing different things like that. Uh, and you can, it is worth it for sure to be attacking those longer, longer deals that are project based to make an extra 5, And those are the real numbers that can happen.

But other than that, Anthony, you have anything else to add?

Anthony: No, I think it was a great episode. I think just really focusing on what your time is actually worth. If you had to put a dollar to it and just go after that goal and just analyze deals, put on different hats and do your thing, but don’t overthink it.

Ron: Awesome. Well, thank you guys so much for joining. If you guys have not already, please hit that subscribe button below. If you’re listening on YouTube, if you’re listening on Apple or Spotify, please share this with a friend, leave us a review. Everything like that is so, so helpful and we really, really appreciate it.

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