I’ve been working with my own sons teaching them how to flip land, so it was really great to talk with Willie G about his experience in the vacant land business. Willie started out as a banker at Wells Fargo, but quickly realized that being an entrepreneur was a better route to success than the corporate world. He gives some great advice on how he has scaled up his land flipping business, and some predictions on where it will go in the future.
One of the really great parts about flipping vacant land is the scalability. You don’t have to manage a big team to do it. Willie did his real estate flipping on the side of his regular banker job until he made $50,000 in net profit for two months in a row, and then he realized that he had enough cash flow to just walk away. He realized pretty early on that very few people can pay cash for land, so he increased his buyer pool by offering term sales and found that that’s where the real money’s at for land flipping.
My sons and I have been using neutral mailers to target vacant landowners, but Willie’s found that he can offer a specific price in his mailers by targeting uniform markets and is getting a great response rate. He also aims for deals where he’s offering 25 cents on the dollar because this lets him sell it for three or four times what he paid for it.
Because Willie offers term rates on his vacant lots, he does have to factor in a default rate. But one of the beauties of term rates is that he can break even in about 12 months, and he’s still left with a property to sell if a buyer stops paying.
We talk about the up and coming markets for vacant land, and you might be surprised where it’s at. Willie shares a final piece of advice: Diversify and buy a lot of properties, and trust that they’ll sell.
Joe: Hey everybody. How you doing? Joe McCall here, the Real Estate Investing Mastery podcast. And I'm excited about this because we get to talk about land investing on this podcast and something that I've been excited about for the last couple of years. And we're actually starting to do deals, do land investing deals right now. And my boys are 16 and 14 and they're starting to get into the business and just, I like land, I like kind of diversifying into other types of investing. I understand the power of focus, right? And we'll talk about that with Willie a little bit here.
Joe: But my boys, they want to start doing deals and I thought why don't you do land? Because you don't have to really negotiate with sellers. You don't have to worry about looking at the house. You don't have to… Like, it's just easier to do virtually. And there's a lot of stuff that they can do, cause they're busy with school and extracurricular activities, there's a lot of things that they can do online, like without talking to anybody. And then I can outsource the other parts of the business to other people that I know that are in the land investing business.
Joe: So, we're going to be talking about that on this podcast. I'm excited about it and I got Willie G, Willie Goldberg, we're going to be talking about how what he's doing in his land investing business and how he's crushing it. And I've been kind of following him a little bit over the last little bit, six months, 12 months on YouTube. And I heard you on a podcast, I think it was Seth Williams' podcast, maybe REtipster.
Willie: Gotcha. Gotcha.
Joe: Have you got my book yet. REI : Daily nuggets of real estate investing wisdom to help you get more leads and close more deals… whether you're doing land investing or subject tos, lease options, wholesaling, buy-and-hold, apartments, commercial real estate… this book is for you because it talks about, you know, how to stay motivated, how to focus on the right things. I talk a lot about marketing. www.RealEstateInvestingMastery.com 2
Joe: What's the number one rule in real estate? It's not location, location, location. It's made offers, make offers, make offers, and that's the same whether you're doing land houses, commercial, multi-families, no matter what your strategy is, you need to make sure you're focusing on the right things. And so, each of these chapters are little two to three-page, kind of like a daily devotional that you can read and that you should check out in. This book is free. You can get this book for free. Just pay a little bit of shipping and handling. Go to REIsecrets.com, REIsecrets.com. Check that out.
Joe: One final thing I'll say here is, if you are listening to this podcast on iTunes, actually it's now Apple podcasts… I keep on calling it iTunes. Go subscribe and leave a review. I'd really appreciate it. I don't know what's going on, but over the last six months or so, my downloads have almost doubled. And we also have released, I have two special announcements here. This is cool. Check this out.
Joe: I've released volumes one and two of all the previous episodes. I've been doing this podcast since 2011 and I started doing this podcast with a good friend of mine. We're still friends, Alex Youngblood. And we did a couple of hundred podcasts together and then we stopped doing them together for just no particular reason, but we were both so busy, we couldn't mesh our schedules together. But you get to listen to all the volumes one and two. They're now new podcasts that you can subscribe to and get on Apple podcasts or Spotify or Stitcher or Google play or TuneIn radio or iHeartRadio. It's all there. So, go check that out.
Joe: The second announcement I got is, I'm going to be starting a new podcast on lease option investing, and so it's going to be called Easy Lease Options. It's a new podcast I'm starting that should be coming out in the next one to two weeks and it's all about lease options, just lease options. That's all we're going to be talking about. So, I'm excited about that. So enough of that.
Joe: Willie, how are you, my man?
Willie: I'm doing well. Thanks for having me, Joe. Appreciate it.
Joe: I'm glad you're here. Glad you're here. Why don't you start by telling a little bit about your background? You know, you're a young guy. I'm going to guess that your mid to late twenties. www.RealEstateInvestingMastery.com 3
Willie: Yeah. 27.
Joe: 27, good. And you were in corporate, you went to college, got the degree like everybody told you that you're supposed to do, right? You got a little discouraged, disenfranchised, disillusioned with corporate America. So, I like your story. It's funny. Go ahead and tell it a little bit.
Willie: Sure. Yeah. So, I went to a college out on the West coast. So, I was out in Southern California. I went to Pomona College and while I was there, it was like pretty gung-ho on finance and getting into that kind of career path. So, first job out of college, at Wells Fargo for about a year. I switched to another firm out in Boston called Jefferies, another investment bank. Really, really tough hours for both the firms, particularly the second firm. I was given a lot of responsibility. I was the only analyst in that group and pretty miserable to be honest with the kind of culture and the lifestyle that I was going through. And just while I was, honestly, it was toward the end of my, my time at, at Wells Fargo where I was starting to think about like real estate, it piqued my interest.
Willie: One of my buddies started or proposed the idea of flipping a house and I was like, well, we could try it. We've got some, we've got a bonus… we could, we could try to kind of go into that. And so it got me thinking and I started listening to a bunch of podcasts and I started to realize that real estate was going to be the niche that was going to get me out of that path I thought I wanted to like pursue, a career in corporate America and do the more traditional route. I never really thought about being an entrepreneur, at least in this sort of fashion, but then I really found like, really, I tried to find ways of which I could make real estate like a full-time career.
Willie: And so I found a few different ways, house flipping, wholesaling houses and those were really the two niches that I spent a lot of time looking into and diving into and so I started to like think about how to get started and, and try to, actually did try to get started in wholesaling houses. I found that to be a little bit more appealing to me because there's a little bit less capital commitment, a little less risk in my view. You don't need to worry about repairs and capital improvements to properties. You could just market and sell the property and put it under contract and sell the contract. So, that was a bit more appealing to me. www.RealEstateInvestingMastery.com 4
Willie: But it was hard for me. I was out in Boston and I was from Chicago. I have a lot of family and friends out in Chicago, so I knew I wanted to be out there and it was hard to find kind of my market to get started while I was in Boston. So, I kept digging and kept digging and I found…
Joe: I just realized something. You're from Chicago. Are you a Cubs fan or a White Sox fan?
Willie: I'm a Cubs fan. Are you a Sox fan?
Joe: No, I'm a Cardinals fan.
Willie: Oh, got it. Got it. Okay.
Joe: Yeah, I'm a, I'm a Cubs fan, you see my hat right there?
Willie: I got ya. You're from St Louis?
Joe: I live here now. I've been here since the last 17-18 years, but okay. So, it's alright. You know, a little bit of rivalry. I should've, I should've caught that before I invited you on the show, you know? I'm just kidding.
Willie: It's all good. But yeah, I kept digging because I, it was hard for me to start while I was out in Boston and do doing the wholesaling thing and going out to the houses. That was really the big thing for me. And I needed a way to virtually do everything. So, I kept digging and found, another podcast on Atlanta investing and it spoke to me as I'm, I'm a finance guy and some of the returns that people were getting in the niche, it like, it seems stupid and silly, but I thought there was like even if it, it wasn't 500%, like I could reasonably be okay at 300% on a return on an investment within a couple of months… 300% is pretty reasonable.
Willie: So, I mean that's really what sold me on the niche was the margins and the ability to do it remotely. So, those were really the two things that sold me and from now getting started now, I've been doing this about three years and I mean… Really, what's attracted to me more than anything in this niche is the scalability and the fact that I don't need to spend any time buying and selling property. I don't need to go onsite. I don't need to manage a team of people going onsite to make an offer on these, on these lots. It's literally reviewed www.RealEstateInvestingMastery.com 5 deal, five to ten seconds of diligence, looking at a property online and checking quick tax records. And then on the sell side, like it's all automated. And so, at this point I'm not really in the weeds on either the buy side or the sell side.
Willie: All I'm doing on the buy side is reviewing deals and then acquisition manager closes the deals. On the sell side, I'm almost entirely removed. So, in terms of scalability, I mean that's really, really what's attractive to me. You don't have to manage a very big team and you could totally remove yourself and make it more of a passive investment and just, yeah, I mean it's really, you could make it, you could grow it as big, pretty big as, as, as you really want.
Joe: So, when did, when did you quit your job?
Willie: I quit my job in June of 2018.
Joe: June of 2018, so, not even two years ago.
Willie: Not even two years ago. So, I did it full time for about a little over a year. I'm sorry… I was part-time for about a year.
Joe: So, what, what gave you the comfort level to quit your job? Were you at a certain level, did you have a certain amount of savings set aside?
Willie: So, at the time I quit my job, I was making about like three times what I was at the current job. So, I just felt like alright, now's the time to. It didn't make sense to continue on. I mean obviously we took a little bit of a leap, but I mean in terms of how the business was performing, it just didn't make sense. And I held on longer than I probably could've. I probably could've quit a little bit earlier. But I, in terms of my like risk tolerance and like, I mean I was single guy, no responsibility, low overhead, no kids or family to take care of. So, for me I was just like, if I fail then I mean, what's really the worst-case scenario? I'm still a young kid like, not a lot of responsibility.
Joe: So, you know, that is, that's a good point. Cause I remember when I quit my job too, I did have that to fall back on. I didn't want to have anything to fall back on, but I was married and I did have kids. And I remember thinking, you know what, if this doesn't work out, I can get another job… because I had a good degree, I had a degree in civil engineering and it www.RealEstateInvestingMastery.com 6 helped maybe mentally to have that to fall back on. I think though I could've quit my job a lot earlier if I didn't have that to fall back on. Right. No, it's a catch 22 but you were in a good position regardless. That's where you were at.
Joe: Now let's talk numbers though, if you don't mind. Like what were you making at your job and then what were you making in land and were you making that money like, cause I'm gonna ask you the difference of like, you can wholesale land or you can sell it on financing, right? So, what was your income at the time at your job and then what were you making on a monthly basis doing land and what percent of that was wholesaling and or terms?
Willie: Yeah. So, in terms of, I mean, so I transitioned from investment banking while I was out in the East coast to back to Chicago where I was in corporate banking. So, in terms of what, in terms of a monthly basis I was doing the month that I quit my job, or the two months before I had done like over 10 deals each of those past few months. So that, and I sell a lot of these things on terms, but I had a couple of months where it was at that point, there's two months in a row that were like around $50K in terms of just, I mean, so I sell a lot of these things on term, so the vast majority of the cash wasn't collected on those deals. But in terms of just total deal price, like sales price less, what I bought them for was $50K for about two months in a row and I was like, all right, there's no reason to continue on there.
Joe: So, you had about $50K in net profits, in a row, right? So about $100K in two months. Net profit.
Willie: Yeah. The majority of those aren't realized until a couple of years while people are making payments. But that is like the total sales price less the cost.
Joe: Okay. So, when you were still working your job, what percentage of your deals were just wholesale? You make a quick nickel versus selling on terms make a slow dime, you understand? Like a mix.
Willie: So, about 80% of my deals probably since have been probably term sales since I started offering terms, which was, I didn't offer terms my first year doing it. But like right after the first year I started offering terms and since then it's been about 80% term sales and the rest cash. www.RealEstateInvestingMastery.com 7
Joe: Okay. So, I want to ask you like, because I thought about this when I was working my full- time job back in '08 starting to do deals. I was on that track of trying to just buy a bunch of houses that would cashflow $200 or $300 a month, right? And my ROIs looked good but then I was like, you know what? This sucks cause I'm going to have to own 40 homes before I make enough cashflow to quit my job and that's gonna take me two or three years to do that. And so, I didn't, I never looked at wholesaling as like, I looked at wholesaling as like the rookies do that. The beginners do that, you know? Like, I want to do the bigger, sexier deals. I want to build long-term "rich dad, poor dad escape the rat race”wealth.
Joe: But that was going to take way too long. So, I started wholesaling and I realized, shoot man, I only need to do like two deals a month wholesaling to replace my income and I could quit my job in like three months. Just, and so that's what I did. Like I had three months consistently where I wholesaled and made more money than I'd get in my full-time job. And so that's when I quit my job and I just kept on wholesaling ever since then. So, like, why do you, you can wholesale a deal, make five grand, but if you buy a deal and sell it on terms, it's going to take you a couple of years to make five grand on that one deal. So, what's your philosophy in that? Why do you sell on terms so much?
Willie: Because I mean in terms of like what the buyer base is, so when you're in these markets and you're actually dealing with these buyers, the market demand is for these terms, there's, from my experience and going through this, there's very few people who are able, in terms of percent basis, who are able and willing to pay cash for land. But if you get someone who's, literally all they need to do to get a commitment is like $250 or $300 or $400 or $500, then the buyer pool is just massive. Like there's, like you, I would say you increased the buyer pool by, I don't even, probably by 10X. I honestly, I don't know. That's just a hunch.
Joe: That's a real good point because you're saying, you know, I can sell it for cash, make a quick five grand. Well, I could sell it and make a five-grand profit, but it's gonna take me maybe three or four months to find that buyer. You're going to be able to, if you want more a bigger pool of buyers, I get a lot more, it's easier to sell these things faster is what you're saying. Right?
Willie: Yeah. I mean that's just where the market is. Like if, I mean if the market is demanding owner financing, which it is, and if you're offering cash and the market's just not there for www.RealEstateInvestingMastery.com 8 cash, like you're just not catering to the market. So, I would say it depends on the price point like and the neighborhoods in the areas that you're buying in some. Yeah.
Willie: So, I would say it really depends on like how you're marketing it too. If you're marketing on the MLS and your marketing on Zillow, those are going to be more cash sale oriented. And that's not really my focus. My focus is more on Facebook and other avenues. And just being able to, to find buyers who are willing to put a few hundred dollars down. So, I'm catering towards that audience and I think that audience is just a lot bigger. So, I mean that's just the logic for me.
Joe: Alright, well some people are not even heard of land investing before and we're getting way ahead of ourselves and I want to like, I've done some really good interviews in the past, guys. If you want to check out some other interviews, I've done with folks doing land investing, go to RealEstateInvestingMastery.com. Go to the search bar and just type in there land or land investing or something like that. And you'll find about four or five of the guys I've interviewed in the past about land investing.
Joe: So, let's go through the steps like, and maybe you can talk about like the deals that you were doing when you were working and the deals you're doing now, cause I'm imagining your, your business has evolved a little bit since then, right? So, so what kind of deals were you doing then to help you quit your job?
Willie: So, I was probably, I would say the deals haven't changed too much. My margins have gotten a lot, a lot fatter just because I'm more comfortable selling it at higher price points and I know how to sell these things and I know where to look and I know my markets way better than I did before. So, in terms of when I got started, I was probably buying properties for $1,000 to $2,000 bucks selling them for, I don’t know… I had some bigger deals, but I would say yeah, buy $1,000 to $2,000, selling from $8,000 to $10,000 maybe. I honestly can't remember the margins when I first started. Now I would say average is probably buy $3,000 to $4,000, sell for $15K, probably $15K-$16K average.
Joe: You buy them for three or 4,000, sell them for $10K to $15K on terms?
Willie: Right. So, in terms of the, I mean the type of property, it hasn't changed too much. Like I definitely have a lot bigger mix of properties right now. I still am buying the cheap, really cheap, properties between one and two grand… Some properties at higher price points up www.RealEstateInvestingMastery.com 9 to, I mean, up to five grand, but I'm also buying lots that are $10K, $15K, $20K. I just have a bit more confidence in terms of analyzing a deal and I know how to analyze markets and I have a, yeah, I'm just more comfortable spending more, more money on property. And so I would say the biggest thing is my inventory mix is, is just a bit more diverse now than it was when I got started. But I'm still doing those type deals that I did, I did right when I first got started.
Joe: Okay. So let's talk about how a deal works. How do, how do you, how do you find these deals? What kind of discounts are you making? What kind of discounts are you getting when you're buying them? Does that make sense?
Willie: Yeah. So, I would say I probably buy them at 20 to 25 cents on the dollar and I'm buying cheaper lots and yeah, cheap lots, probably 20-25 cents on the dollar. It's, we send out direct mail. So, we send out offer letters with a purchase price on there stating, if you're interested, this is what we could pay. That's a net price to you. There's, there's no closing costs, no realtor fees. And that's a pretty big selling point. And there's a lot of people who want to just get out of their property. They've been paying taxes on it, they haven't really thought about the property.
Willie: And while when they bought it, they thought it was a good investment. But over the years they've just kept paying taxes. They have no intention of using it any more. So, in house wholesaling, like the list that you're using is, one of the main lists is owner unoccupied homes, but with land, every single property out there is owner unoccupied. So, I literally, in terms of the list that I'm sending out, it's literally to all owners in the area because I mean every list out there is owner unoccupied. So, it's therefore kind of a distress list just by the nature of it, or at least the results are.
Joe: So, these are vacant rural lots, right? Absentee owners, right?
Willie: Right, absentee owners. Sorry, that's the type of list. Yeah.
Joe: Alright, so you send mail, you send offers at 20 cents on the dollar, right? Blind off. Okay. So, define 20 cents on the dollar because this is something I've been thinking about lately, like if I'm looking at comps in an area, most of the comps there are investor comps. Like these are prices that investors are buying properties for. So, are you making offers at 20% of what other investors are making offers on? www.RealEstateInvestingMastery.com 10
Willie: No. So, in terms of how I think about pricing it, it depends on kind of… I'm analyzing a market; I want to pick a very specific market. I don't want to, I'm not blanketing mail to a whole county, so I'm, I'm analyzing a specific area, specific cities or subdivisions where I think there's significant market demand there. I know the area well and I know that I'll be able to sell property. So, first and foremost, I'm finding a uniform market that like I can reasonably make offers on and have it not been like I'm making an offer of two grand for a property that's worth $85,000 because I'm blasting a whole area. So, I need to find, first I need to find an area that where there's at least some uniform pricing and a distribution of pricing, it's not all over the place. And then I'm really looking at the cheaper end of the market.
Willie: And so, I'm pretty, I'm pretty much pricing below. The one thing I do need to do is price below the cheapest properties in the area because I mean if I'm going to be getting a deal like it's gotta be lower than those prices that are on the market.
Joe: You're talking about looking at active comps, right? So, like you can go to LandWatch.com, LandsOfAmerica.com right? And you can see that 10 acres are selling for $10,000. If you see that, that's like the active listing, what they're currently listed for, how do you then calculate your offer?
Willie: Yeah. So, I'll look at the cheapest lot. So, if that's the cheapest 10 acres on the market, I will price mine to be below that. And, and how far below that really depends on the distribution of the pricing in the, in the, in that market. So, if, if the average pricing in that market is like, like $20 grand, then I'm going to be pricing it differently than if the average price is like $15 grand. But I try to base it off of, I will certainly make it lower than the lowest few comps on the market. And it's a little bit of an art rather than a science. And so, I would say on average, if the cheapest properties on the market at 10 grand, I'll probably price around six grand and $7,500… in that range.
Joe: So, you'll sell yours if like comps are 10 grand, like that's what they're selling for, that's what they're actively listed for now… You'll sell yours for $6,000 or $7,000 on financing on terms, right?
Willie: No. So, I will sell mine closer to retail. In fact, I would say the majority of my properties in terms of what the owner finance price is probably even above retail cause I'm pretty damn good at marketing these things and selling them and way better than these realtors or www.RealEstateInvestingMastery.com 11 other people in the market. And so I feel very comfortable that like I will be able to sell them on terms at retail or even above retail. On terms, it's almost certain it can be, it'll be higher and probably closer to retail.
Joe: Okay. So, if you see similar 10 acre lots currently actively listed for $10 grand, what will you sell yours for on terms?
Willie: So, if I, if I think the market is at 10 grand, I'll probably sell close to 10 grand, but then I'll offer financing. Like at 0.5% interest or whatever. And so, the, the terms outcomes turn out to be a little bit more.
Joe: And so, what will you offer then to buy that lot for?
Willie: Well, if I'm selling a lot for cash at 10 grand , I mean the numbers in this situation probably don't work. But if I'm selling something for 10 grand, I'm probably buying that thing for two grand.
Joe: Okay. Now if you're going to, if you know you're going to sell it on terms, you still, you're offering two grand still? $2,000?
Willie: Yeah, if I were selling that for terms, I'd probably sell it for, I don't know, maybe $13K on terms. Bought it, bought it for $2,000.
Joe: So, then what would you buy it for?
Willie: Yeah, probably if I were selling for $10K cash, probably buy, buy for two sell for $10K cash or $13K on terms or something like that.
Joe: Oh, I get it now. So you, if this lot is worth 10 grand, you would offer $2,000 and sell it for cash for six or seven but sell it on terms for $12K or $13K.
Willie: So, I would probably list the cash price at around $10K and with the financing it comes out to be about $13K.
Joe: And you're hoping that you could sell it on financing? www.RealEstateInvestingMastery.com 12
Willie: Yeah. So, the goal is really to funnel people towards the financing.
Joe: Okay. So, let's say this property, then you're selling it for $12 grand on terms, what, what, what would you typically do? You keep it really simple, don't you, like certain amount down certain amount per month?
Willie: Yeah. So, in terms of just getting, getting people in the door, I like to, yeah, just keep, keep down payments pretty reasonable. I charge say all in costs around 300 bucks and then get them on monthly payments thereafter. So, I want them to have like a commitment that they're able and willing to purchase the property and then have people start making payments thereafter.
Joe: So, what's your typical goal? $200 to 300 a month for payments?
Willie: Yeah, around there.
Joe: Usually they last how long? How many months?
Willie: About, I would say, around 48 months.
Joe: 48 months. So, you got four to five years you're try to do it? And I know a lot of people are wondering about like default rates. So, you're doing a lot of these properties on terms. What's your, do you know yet an average default rate?
Willie: Yes, I have the numbers in terms of currently have, I don't know, 180 to 200 people making payments and then I've had in terms of defaults around 25. Yeah, so a little above, probably 10% around. And in terms of, I mean what those people have paid, they'd probably put in terms of the data they've put, let's see, they've put about a little over 25 grand and on those payments, each default probably has put in about, yeah, about $1,000 bucks.
Joe: A lot of the ones that do default, you've already recovered your money. How long does it take you to break even on an average note or property that you're doing?
Willie: Try to do it within 12 months. www.RealEstateInvestingMastery.com 13
Joe: Okay, so you break even usually in about 12 months. What's your average payment on those 180 to 200 notes that you have?
Willie: I would say probably $250.
Joe: Do you mind if I run the numbers here? 250 times 180. You're doing about $40K to $50K, $45K grand a month in income from these notes.
Willie: Yeah, I think it's a little bit, it's actually, I think it's just North of $50K.
Joe: That's pretty stinking good, man.
Willie: Yeah, it's a…
Willie: Things are turning a little bit. Yeah.
Joe: Alright, so let's talk about I've, I've got, I've got a lot I wanted to ask you about. Do you see, guys, why I'm interested and excited about land investing? You've got Willie G, not even two years from quitting his job; now he's been doing it for about, he's been doing land for three or four years already, right around $45K-$50K-something a month in cashflow. Now obviously has some expenses. Taxes. Don't forget the tax man, but like, he's getting some income and there's certain things like with land you can't depreciate land, so you don't get the same tax deductions with land that you do with houses. That's his gross number. Right?
Joe: But let's just say he's netting half of that. That's pretty stinking good. And he's not married, doesn't have kids yet. Alright, so let's, let's talk about, so you got to buy these deals, right? You got to… If you took some capital to buy 180 200 lots, even if it's at, you know, you're spending an average of two to three grand on each one, that's a lot of money. So, are you using your own money or are you borrowing money from private investors to buy this land? What do you have going there?
Willie: So, I would say the majority has been just self-funding and over time people will start paying off properties. They, people pay cash and that helps a bit. And then more recently have taken on some leverage and I think leverage is going to play a bigger piece going www.RealEstateInvestingMastery.com 14 forward. So yeah, obviously capital…. As you try to sell these lots and try to replace the inventory, you've got to just keep… It takes 12 months to recover your costs. It's just, it spins over time. So
Joe: Would you give advice to somebody that would like who's getting started? Would you tell them, listen, if you want to do notes, I'm just asking is this good or bad advice? If you want to, if your goal is cashflow and you want to get recurring income, you know, wholesale your first couple, three deals every month for cash, then use that money to buy a lot that you sell on terms.
Willie: I think like in theory it makes sense, but just in practice, I don't think it's going to work that well because, okay. I think it's just going to be a lot better just selling these things on terms because there's just not that many people who want to pay cash. I mean it depends. I know there's plenty of people who just do only sell cash and they do well, but in terms of what I've got going on in terms of my model, it's just not like in terms of just churning deals, it's not as feasible.
Joe: So, I mean, we've done about 20, 25 land flips, last couple, three years. And I have some friends who go to our church and we've partnered together on these and we've done 20, 25 and they've all been cash flips. But they were a little higher end, you know, I think we pay on average about seven to 10K on these lots and we'll turn around and sell them for $15K to $20K. So, they're bigger lots.
Joe: But you're absolutely right. They were harder to sell and we got probably three to one. You know for every one call we got from an interest in cash buyer, we got three calls from people wanting to know if we will sell them with owner financing, in terms, right? So, yeah, I mean, I look back and think, man, if we would have just sold those on terms, it'd be nice. That cashflow would have been nice. So, you know, as you, as you grow though, you start to, where do you borrow the money from? You can't go borrow the money from a bank, can you?
Willie: Yeah. So, I mean, we actually thought about raising a fund and then we've got some investor feedback. We actually created a deck and a model to just kind of get that up and running, but then talk to a number of different people in private equity and finance. And I've gotten feedback that the percentage that they'd want in terms of like what IRR expected for an investor, it's just more than what we want. So, in terms of just financing, www.RealEstateInvestingMastery.com 15 it's raising debt from family and friends. And then I guess longer term we'll see if we can get some bank financing. But short, short term has been family and friends financing.
Joe: Okay. And if you want to grow, is it just a matter of if you… Do have to borrow money to grow or if you were, if you were even more disciplined, could you use your own money to acquire more properties?
Willie: I think you got to get some money, I think, I wouldn't say it's a discipline thing. I, I honestly view it as just a very lucrative investment, like plan investing. This, it's not really, while it's an active strategy, it's really something that you're just getting a return on your money from. So, in terms of just like you need more, to make more money, you need more money. Like I think it's pretty, pretty simple. It's just there's, you get a return on the capital that you put to work and the more capital that you put work, the more money you make. So, I, it's, it's really, in my view, it's just, it's all about how much money can you put or how much money can you put to work and how many deals can you buy? And I don't think it's about you being savvy.
Willie: You're not going to be able to like disrupt the fundamentals of what the market is like. You're not gonna be able to sell property faster just cause you're savvier because like it's, it's just, it's a function of the market, not really a function of how well you're marketing. I mean like to an extent you could, you could do a better job marketing, but I think, I think it's more of a function of, it's a combination really of how good you are marketing. But more, more than that, the driving force is just how much money you can put to work.
Joe: Okay. I want to, I want to ask you about minimum criteria when you're looking to buy a property and what's the, what are your yes or no's like, yeah, I'm going to buy this. No, I'm not. Is there like certain rules that you follow for that?
Willie: Yeah, I mean I would say the biggest thing is like the return. I try to diversify and buy a lot of property rather than buy a few properties that are higher dollar. So, I think it's, it's important to have a diverse portfolio. So, I would say number one criteria would be just make sure you're, you're not putting all your eggs in one basket, so buy a bunch of property. And then number two is I would say the margin needs to be there. So, if I don't think I could make, if I don't think I could sell it for three, four or five times what I bought it for, I'm not going to buy it. If it's just a deal I think I'm just going to double it, I'm just not going to do the deal. So, I have been pickier over time and at this point, like we sent out a www.RealEstateInvestingMastery.com 16 ton of mail and review and all these deals and I'm definitely less than probably less than a quarter of the deals that I'm reviewing.
Joe: So, you're only buying about 25% of the deals that come through? Yeah. At least probably even lower. So
Willie: Yeah, I'm passing on most deals for sure.
Joe: And why are you passing on them? Is it like access? Is it, in other words, there's no direct access to it? Are you becoming more and more picky with that or is it because there's, there's maybe issues that are clouding the title that are going to be just to take too long to close on?
Willie: Yeah, I mean I think it's a lot of it's over time. I pick up on things. I would say a lot of it, I mean access would be an issue. Buildability is an issue. How far is it from town is an issue? I mean, and the price, I mean those are really most things.
Joe: What if you started sending neutral letters instead, right?
Willie: I would drive myself insane.
Joe: You would? Because, well listen to this, like let's say it is a property that has bad access. It's too far from town and it's, you know, there's, there's no, they'll never be utilities there, but there's somebody out there that will want that property. Why not offer 500 bucks for it, you know?
Willie: So neutral offers, like in terms of scalability of the business, like it's, I don't think that's a very scalable way to operate. Just because you're sending out this offer, you're going to be like, get a lot of people raise their hand, say I'm interested in these properties or in selling my property, and then you're going to spend all day long copying these properties. Even if you have like people processing your leads on the front end like, yeah, and they say, okay, this person is now interested. Now, rather than having like 20 deals to view today, now you've got like a hundred deals review today.
Willie: Now you're like copying every single one and you're going back and forth. Alright, alright, this one price here, this one price here, this one price here, and then they go back and then www.RealEstateInvestingMastery.com 17 there's negotiation. It's just, it's just not, it doesn't make sense in terms of if you're trying to scale. I mean if you're trying to do a deal, like you could definitely get deals done doing that and you, and it might be, I mean there's, there's no doubt about that. It's just in terms of if you, if you're trying to grow and scale this thing, it doesn't make any sense whatsoever.
Joe: So, you're making blind offers, right? When you make your blind offers, are you sending them out to the entire county? Are you sending to like pockets in the county?
Willie: I'll send to pockets. Yeah. I don't ever blast the county.
Joe: How do you figure out what those pockets are?
Willie: So, there's a few criteria. I, I mean, I try to find out where I think there's an existing market and where there will be more market demand, mostly based on solid data. And, and I mean, just for the markets that I work in, I know those so well. So it's, it's where I think there's existing demands and the areas that I, that I've worked in before that I, that I know and, or I'm missing inventory where I need to buy inventory and where people are, I'm talking to people on the phone, they're asking for property in this area and there's then… Talk to a hundred people, a million people, and you start to get a sense of where the market is and what people want. And then you just buy in those areas.
Joe: Okay. how much mail are you doing a month right now?
Willie: So, probably 10,000 to 15,000 units a month.
Joe: 10 to 15,000 pieces of direct mail a month. Alright. And what are your numbers like on terms of these are 10,000- or 15,000-blind offers and what are you getting? What are some of your response rates and acceptance rates and things like that? Do you know those numbers?
Willie: So, I don't track any of the response rates because there's an overwhelming amount and like there's no question about the ROI on the mail. Like every, all the mail that's sent out has a stupid ROI and like I needed to just keep sending out more mail because it's overwhelming, the response. So, in terms of tracking it, I don't think it matters. It doesn't make sense to track because the, the outcome and like the just the return that again in the www.RealEstateInvestingMastery.com 18 mail is so silly that it just doesn't like, it's not worth keeping the metric of, okay, here's my response rate because I know I'm making so much money from sending out mail. I just need to send out as much mail as possible that I could like reasonably track and have the capital to buy a good amount of properties in those markets.
Willie: So, I don't think it makes sense to keep data on, on the mail.
Joe: Let's just say it's better than houses.
Willie: Yeah. From what I hear on like house wholesaling, it's like nah, it's not comparable.
Joe: Now you were doing at one time a lot of vacant lots in the desert in Southern California. Are you still focusing on that area or do you have other areas you're looking at?
Willie: So, expanding outside of there, I've now realized it got too much, probably too much inventory there and I just happened to end up in that market from the data that I'm looking at it, it doesn't appear to be like that's any special market. I just happened to when I got started, go there and now I kind of understand a little bit better on how to think about choosing markets and selecting markets. So, I just happened to start there. I don't think it's a great market by any means. I think it’s; I think it's, it's good, but yeah, I'm trying to get, get out of there. I've got too much inventory there and diversify into other.
Joe: So, when you say, when you say you got too much inventory there, do you mean like that's where your highest default rates are? Or is it getting harder and harder to sell the land that you have there right now?
Willie: So, I've got a bunch of, I've got too many properties in the same cities in the same subdivision, the same areas. And when I'm throwing them on a, on a website, then it's hard to, at some point there's diminishing returns on the putting an additional property in that market on the site.
Joe: So, do you have a higher than, you have too many properties there, they're taking longer to fill or are your default rates higher in those counties?
Willie: No, not necessarily higher. No, I just think I have too much, too much property in some, some areas. www.RealEstateInvestingMastery.com 19
Joe: So, I think what you're saying is like if you've got 20 lots in a certain area, you don't want to start marketing them all at once. You do a certain number of them at a time. Right?
Joe: So are there people that will, cause you used to have a lot of lots that you would, you'd sell for five, six grand on terms in the desert. People look at that thing. Who on earth would want to live here? Right? Like this is out there in nowhere land. These are two and a half acre, five acre lots. Do you make money on those things?
Willie: Yeah, I mean if I, so at this point I don't want to sell anything for under like $7K-$8K. I probably have one or two properties that are under that right now.
Willie: Seven or eight grand you mean?
Joe: Right. But in terms of what I, if I were to buy those, I mean if I bought something for $500 bucks, maybe like sell for that price. But in terms of what my, I don't want anything on the, on the site at like at that price point because I don't want that to cannibalize a different sale where there's a bit bigger margin where someone else would be inclined to buy it. So, I don't even, I don't, I don't even want to mess around with those deals, really.
Joe: Okay. And that's what you're getting away from. But you're still making money on those, you're still finding buyers for those.
Willie: Yeah, no, there's, there's definitely buyers. There's a ton of buyers that price point. It's just like, I don't want to make like the am I'm past the point of being interested in making five grand on a deal.
Joe: That's real interesting cause I'm and I haven't looked at it that way… If you've got a property where you can make $400 a month cashflow and make 500% of your money and a cheaper property where you can make 200% on your money, both are good. But that buyer who's at your website, they're looking at the, probably the cheaper property. And so having cheaper properties hurts your sales sometimes on the higher, the better ROI properties that you're trying to sell. Is that right? www.RealEstateInvestingMastery.com 20
Willie: I mean that's a thought. I haven't really tested it, but I mean just that's, that's my thought process. I don't want people to see, be interested in land and they say, Oh wow, I can buy property at $300 and that's all I need to pay today, but this one's for six grand, so I'll just take that one because I just want to own land. But if the cheapest one of them on the website were $10K they would spend an extra four grand.
Joe: Okay, you're sending out blind offers at 20 cents on the dollar for what you feel like the property's worth. You're making offers at 20 cents on the dollar. They come in, the responses, they say, yeah, I'll take your offer. But right now, you're only accepting, you're only closing on about 25% of them. Is that right?
Willie: Right. If that.
Joe: Okay. Do you do counter offer or do you offer, I mean, do you offer them a cheaper price then or is it just not, I'm not interested.
Willie: It depends. If, if like, if we're way off, I won't even bother. But yeah, counteroffer all the time. So, I'll just, yeah, I'll try to renegotiate and if they accept it great and get it at a good price. I think, I think it'sa good start, it's worthwhile renegotiating on every deal because every deal is worth it at some sort of price point. Yeah. So, yeah, I mean I think if you're not super pumped about property, you can just renegotiate at a lower price and yeah, just get it lower and then that'll like fix your margin. Cause any property, I don't know if you bought a property at $100 then like, a really crappy property, but you've got it at hundred bucks, you can still make huge, huge ROIs on that. So yeah.
Joe: Okay, cool. What are some of your favorite tools when you're analyzing property or doing research? What tools do you like to use?
Willie: So, I use DataTree. I would say I'm on that quite a bit throughout the day.
Joe: I love DataTree!
Willie: Yes, DataTree's great. Just analyzing property. They have so much data on there about properties and markets. You can see what's on the market, what's, what's sold in the area. www.RealEstateInvestingMastery.com 21
Joe: So, you're looking, when you're looking at a neighborhood in a county, you can go to DataTree and pull out sold comps. Right?
Willie: So, you pull out sold comps. I think that feeds from the MLS too, they've got what's currently for sale. So, I think both those metrics are relevant that I use. I'm back and forth between DataTree and Zillow.
Joe: Yeah. Well that's good. I like DataTree. I was wondering if other people are using it. I guess they are. And this is something I wondered about too. Like when I'm looking for sold comps on a lot, are you going back a couple of years or all of it?
Willie: I'll just keep, I mean it depends how much, how many data points I have. If there's enough data points within the past year, I, I'd prefer to use that. But if there's not enough data points, I want more data points. So, I'll just do however far I can get data for.
Joe: Okay. And so, when you're looking at it, do you do like the polygon where you kind of draw out the area you're looking at? Are you to go by zip code or city? You know what I mean?
Willie: Yeah, I've done both. You could, you could, you could probably leverage both.
Joe: If you're wondering what we're talking about, it's like you're looking at your area that you're researching and you can do, you need to look at, okay, well what are the homes in this area or what are the vacant lots in this area worth? And you gotta be careful that you're not like looking at lots next to a lake and lots that are over here five miles away in the plains or whatever. So, there's different ways to do that research in DataTree. Okay.
Joe: So, when you're seeing, Willie, that, you know, properties are selling for an average of $1,000 an acre in this area, you will make an offer for $200 an acre to properties there, right? Okay. Simple.
Willie: But yeah, I can't remember the last time I bought a property for $200 bucks. But per acre. Yeah. Oh, per acre. Yeah. Yeah. Fair.
Joe: Do you use things like ParcelFact or Report All USA or any of those other tools?
Willie: I used to use ParcelFact, not much anymore just because DataTree is a lot better. www.RealEstateInvestingMastery.com 22
Joe: I've been using Report All USA, which is interesting. And the other thing I like about that is you can look on the map to see all of the sold prices on all the lots surrounding yours. And it could have been 10 years ago, but you see the prices that all those lots sold for in one of the layers. Okay, cool. What other tools do you like to use? Websites?
Willie: Not really. Other than DataTree and Zillow. Those are, I would say probably the two tools I use the most. Other than that, Excel, I'm always in Excel. I'm doing tinkering around.
Joe: You have a CRM that you use to track your leads?
Willie: Yeah, I use monday.com for the buy-side.
Willie: Yeah, Monday now, then, yeah. And then in terms of, I mean Google Sheets, like most, most of our tracking is in, is in spreadsheets.
Joe: Okay. Do you have a different, do you use monday.com to buy and monday.com to sell?
Willie: It's mostly for buy side and task management.
Joe: And then what do you use for selling and managing your properties after you've already purchased them?
Willie: Yeah, so we have a, there's a sales guy. He, I honestly don't know the name of the CRM, the software that they've been using, but it's kinda like HubSpot, I think so… I think HubSpot's a good one. It's, it's, I'm not sure. I think it was the reason we didn't use it is cause it's a little costly but I can't remember.
Joe: What do you have a payment processing for your terms, what do you use for that?
Willie: I use MoonClerk and Stripe. So it's just a, yeah, Stripe is the processor. Moonclerk is like the front end. Maybe changing that soon, but that's what I've been using for the past couple of years.
Joe: Have you looked at GeekPay? www.RealEstateInvestingMastery.com 23
Willie: I started using it and then it was too complicated or is a little bit more complicated and cumbersome than I wanted in terms of as an extra step. And I think just having the credit card processor is a little bit simpler. So, that's why I stuck with Just using the credit card payments.
Joe: I'm running out of questions; you're doing a good job answering these questions. Dah, dah, dah, dah, dah. What advice would you give now, Willy, to somebody who's thinking about, they were interested in land and Oh I remember what I was gonna ask you before I get to that. That's one of my favorite questions to end interviews with. What areas of the country are you excited about? You don't have to tell us what areas you're investing in now, but like where do you see kind of like going forward in the next year or two are some good areas of the country to look at?
Willie: So, in terms of land, I would say the East coast has a lot of good markets. In terms of where property is currently selling it seems that there's a lot more land activity in terms of just demand for land and where there's actually buyers, just looking at data on various sites. It seems like some of the places in the East coast where it doesn't appear there's a ton of land investors seems to be where there's a lot of opportunity and at least there appears to be markets, places like Georgia, South Carolina, Tennessee, those areas, they have a lot of activity but not a lot of investors.
Willie: So, I think those could be up and coming places. So, I would, yeah, a lot of people buy out on the, in a desert because it's cheaper. But in terms of where the actual market demand is in terms of even for cheaper properties, it seems to make quite a bit more sense to go to toward the East coast though. And I think academies are doing pretty well down there and people are moving over there. So, I think those would be decent areas to kind of consider as you're getting started.
Joe: Let's talk about politics for a minute.
Willie: Sure. Alright. I'm not big into politics but sure.
Joe: But this is something that's going to be, you guys got to think about. If a liberal Democrat gets elected, I am super bullish on land. Why? Because all of the right left, right leaning, conservative gun carrying Republicans are going to start looking at land too, cause they're going to think the, the world's coming to an end and they want a place to hide their guns. www.RealEstateInvestingMastery.com 24 They want a place to bug out. And then when the government tries to declares martial law and tries to take over all of our civil liberties and rights, you watch.
Joe: It happened when Bill Clinton was elected president and it happened when Obama was elected. You look at gun sales, they went through the roof. People started reading more about survival and the, the big bad evil government coming away to take all of our rights and take all of our guns and our freedoms. And they started going and looking more into that like, like a long-term food, self-defense. You understand what I'm saying, Willie?
Willie: Yeah, no, I definitely understand. Alright, so if the election starts to take a turn, this is the niche to be in.
Joe: Yes. Small, rural, vacant land that people can buy for cheap. They're going to want a place that they can bug out and hide from the government because the government is going to come and take all their guns. And I hope that doesn't happen. I'm not, I'm not trying to make fun of either side, but you watch, I don't know if Trump's gonna win or not, but if he loses, I guarantee that's gonna start happening. If he, and if I could invest in stocks of gun manufacturing companies, companies that sell survival gear and survival food and, and preppers, like an industry that serve the preppers out there, I would definitely start looking at that. What do you think?
Willie: Yeah, I have not put any thought into that, but I think the logic sounds so what I like about this niche though is that like even under any like reasonable market circumstance, I think if the market goes up, the real estate market goes up or down, I think in terms of what this niche is, is just buying and selling property. I think its pretty recession resistant. And I think in a, in a downside scenario, even if a downside scenario, I think the vacant land niche without being levered, you don't have any interest payments, mortgage, anything like that associated with it. And taxes are all super cheap. I think it's a very good niche to be in.
Willie: So, I don't know whether it's going to start booming if politics change or if it's going to bust with politics change. But I think it's pretty in terms of what the risk of this niche is, it's pretty low relative to other niches in real estate. So, I think whatever the market climate is, I think it's suited to just be very suited to be fruitful. And I don't think there's a lot of downside risk with it. www.RealEstateInvestingMastery.com 25
Joe: What's interesting too is I've talked to Jack Bosch about this, we're friends, and I've asked him, listen, when the market crashed last time and 07-08 weren't your default rates higher? And he said, yeah, they were higher. They were at about 30 to 35% but I had already paid those, I had already owned all those properties and it wasn't like I was hemorrhaging cash. My cash flow wasn't as great as it was before. Yeah. But it wasn't a… 35% is a high default rate. Granted…
Willie: He said 35 percent in the recession?
Joe: In the last recession. Right.
Willie: Okay. That's not that bad.
Joe: No, it's not. And especially if you're, if you already recovered, you know, recovered your investment in those.
Willie: Yeah. And then like those 35 people, they lost everything they put in and you get your, you get your property back at market. So, I think it's pretty brilliant. Like in terms of like that is not a bad scenario for you. Like as the owner of land at all, like in fact that's probably even, I mean just to be transparent, it's, it's better for you when people default because you get your property back and you could sell it at the full price and you got likely got your principle out and your investment out. So, in a recession, if people start defaulting that, from a financial standpoint, that's a good thing for you as the land buyer, the land owner.
Joe: Good. Alright. So, final question. What are some of your, what's some advice that you'd give to people who are interested in land investing? Who are looking at maybe doing this as a side hustle, you know, who want to diversify and not just be doing one strategy or not just be doing houses or something like that? What advice would you give?
Willie: I would say just diversify and buy a lot of property in markets that you think are where there's significant market demand. Diversify it. Don't, don't put all your eggs in just a few properties, buy as many as your budget will allow and trust that they'll sell because everything sells and just stay focused and everything should turn out well for you.
Joe: Now you used to do some coaching? You used to have a course, I think you said, one time that you're doing less of that so you can focus more on doing deals and stuff. Yeah. are www.RealEstateInvestingMastery.com 26 you, do you still do any, do you have a product you sell or any coaching that you do anymore or is it just you're focused on land?
Willie: Yeah, so I just, I stopped doing one on one coaching and to an extent I've been doing deal partnering. I may or may not entertain that going forward. I still have, like I've been doing it a little bit, but I'm trying to wean myself away. If people are interested, they can reach out to me. But I definitely am offering group coaching, so I have a complete course and then group coaching calls are once a week. So, if people are interested, they can go to that. WillieGCoaching.com. WillieGCoaching.com. Or they can download a free mini course I put together at FreeLandFlippingCourse.com.
Joe: FreeLandFlippingCourse.com. FreeLandFlippingCourse.com. And what was the other site?
Joe: WillieGCoaching.com, right? Good. And guys, you can get all those links in the show notes at RealEstateInvestingMastery.com. RealEstateInvestingMastery.com and just do a search at the top search bar for Willie and you will find this podcast there along with the transcript of this entire show and the show notes and the links and all of that good stuff. Cool.
Joe: Hey, thank you, Willie. Sure, appreciate it, man.
Willie: I appreciate your time, Joe. Thanks for having me on.
Joe: It's been a pleasure and I've enjoyed this podcast very much. We'll see you guys later. Take care of. Go to RealEstateInvestingMastery.com, RealEstateInvestingMastery.com and don't forget my book, REIsecrets.com. I have some chapters on land in here right now. We're getting about a 10% response rate on our direct mail for land. 10%. We're sending neutral letters. Willie doesn't like neutral letters. I do because it gives my boys some work to do. My boys can do the research and the comps. So, we talk about things like that in REI Secrets. You can get my book for free at REIsecrets.com. REIsecrets.com and we'll see you guys later. Take care. Thank, Willie.
Willie: Thanks Joe.