Why Debt is the Root of All Evil
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hi!
Jack Butala: Welcome to our show today! In this episode Jill and I talk about why debt is the root of all evil. Maybe literally. Before I get into it, let's take a question posted by one of members on the Landinvestors.com online community, it's free.
Jill DeWit: Nick asked, "My initial offer was $6,500 but I paid $7,500 and all of closing."
Jack Butala: For a piece of real estate.
Jill DeWit: Right. It's a 20 acre piece of real estate. Now I'm in for $8,520. Love it. My sales price is $18,499. I decided I would go down to $17,000 I four buyer negotiated. Well, Nick has got an offer. The buyer offered $15,000 and they pay all closing costs, which is approximately $1,000 - $1,200. All right.
Nick says, "I want to double my money, but $6,500 net is nothing to turn my nose up to."
Jack Butala: No it's not.
Jill DeWit: This is right. Nick, I think you kind of won.
Jack Butala: I think you knocked it out of the park.
Jill DeWit: I think you're fine. Are we really going to say? Oh man, I mean 85, I really want to double my money. And extra $2,000 I can say I doubled my money. But come on, I think we did just fine. This is the thing that we always talk about, on what planet and in what industry can you still get something north of 50% profit consistently.
Jack Butala: Consistently.
Jill DeWit: It's not the norm. Don't ... you did nothing wrong. Don't get greedy and don't hold out, don't say I'm going to pass on this offer because I'm going to hang out for 18.5 and just sit on it for six months. Don't do that. Take the money, reinvest, and do it again, and again, and again.
Jack Butala: Right. So you're going to get $15,000 in a couple of weeks or lets say just 30 days. It looks like if their closing costs like that, you're going to escrow. Which I think you really can reduce by the way. $1,000 - $1,200 for closing a property like this is way too much. Should be closer to $300. Anyway, you're going to get a $15,000 check here soon. You'd better be ready and know, here's a key to really maximizing your profit. It's not about this one deal, you've just to keep using that $15,000.
You make that $15,000, $20,000. And then 25, then 30, then 50, then 150, then 250.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: $250,000 is right around the corner if you keep this attitude that you have right here.
Jill DeWit: Yeah.
Jack Butala: And a personal preference thing. We have members that we can call all the time, Jill and I, they wouldn't do this deal they pound on their desk, my sales price is $17,000 and that's it. Then six months later, they're like, "I should have taken that $15,000 offer."
Jill DeWit: Mm-hmm (affirmative). And that's okay. What was I going to say? I love when I hear people, this situation. Even right now, he's like, "Guys, should I take this?" Heck yeah! We've had people often on our weekly member calls that are saying, "I screwed it all up with these numbers." We're like, what do you mean you screwed it all up? Hello? Let's do the math together, shall we? This is winning. You did fantastic, this is an awesome deal. Go.
Jack Butala: Here's what I always say to member.
Jill DeWit: Keep doing it.
Jack Butala: Or people I'm talking to, I always say, "If there are 10 deals exactly like this right now, would you do the deal? Instead of $6,500 net it's $65,000 net.