Our $100K Exit Strategy on a Rural Land Deal

Dan Austin: [0:00] Welcome back to another episode of the Collecting Keys Real Estate Investing Podcast, the podcast where we teach you how to make massive income, not just passive income. I think we have another tagline we're coming up with, like, the real estate investing podcast for real estate investors. I I don't know what it is. Michael, though. He says it all the time. Anyways, it doesn't matter. Today, you have me as your host for the solo episode, Dan Austin, also known as Investor Man Dan. I hope you enjoy this episode. It's going to be a deal breakdown. We have really taken the feedback from our listeners, and from our scale community members that listening to us break down deals, and how we go through things really helps people understand the logic that we go through when doing deals, and it helps that people understand, like it's kinda like one of those things, you know, teach by doing, and we are definitely doing. You know, we have 11 or 12 deals right now in escrow. So we're out there every day. I I'm focused on the dispo for our business. You know, I've played many roles in the business, and right now the role for me is disposition, and that's where I'm focused at. So I'm working with the deals on the front end to help underwrite them, and figure out what buyer it's going to fit.

Dan Austin: [1:12] And then obviously, selling the property on the back end. And on on the deal I wanna talk about, it's a land deal. It's five acres of rural land North Of Spokane. It's about thirty minute drive from from Spokane. So it's not super rural, but it's decently rural, know, everything up there's five or 10 acres. And so you go up, drive up, right off of a main paved road, maybe like a quarter mile down a nice little dirt road, so it's not even a bad access. There's this flat five acre piece of property that a seller called in and said, yeah, I'd love to sell this. They tried selling it over a hunt for over 100 k, 100 something k, can't remember what the price was, a couple years ago. They've had some issues selling it in the past, It just couldn't do anything. So we were able to negotiate with them. They, you know, originally, of course, wanted more than we could offer, and then they countered with, well, I want $60. And we're like, well, the only way we can make $60 is if you do seller financing. So we negotiated $10,000 down because we knew he wanted some money in his pocket. So a no money down deal wasn't going to work. And with the interest rate he wanted, which is like 7%, we ended up playing around the amortization, getting the payment down to about $300 a month.

Dan Austin: [2:17] And we're not gonna try to wholesale it because the guy's like, hey, I if you're wholesalers, I don't wanna dick around with you guys. I'd rather just sell to the person who's gonna buy it. So we're gonna buy it. And we figured, know, for $10 down, $300 a month, this just feels like a deal. Sometimes you walk into a deal, and you don't know exactly what you're gonna do to exit with it, but you just kinda feel it in your bones that there's money to be made here. And we didn't really have super accurate comps when we were first negotiating this. You know, we pulled some good comps, and we're kinda looking at it. But it's vacant land, so it doesn't and it's in a rural area that doesn't sell very often, you're looking like two year old comps and those sorts of things. But anyways, we get the thing locked up, seller's happy, we're happy, so we're just gonna close on this thing. I started doing more deep dive research on it. So the property has has a well system on it for water, which is good because it's rural, it needs water. There's no city water up there. It has an old septic tank and system that we're probably gonna have to abandon, and it has power. The thing used to have a single wide on it, and then the seller, you know, trashed the single wide out and cut off all the utilities and all that sort of stuff. But it has the infrastructure that it needs.

Dan Austin: [3:17] So I just started breaking this deal down, and I said, okay, we've got it for 60. I got a quote for a septic system for like $15. So now we're at 75. Say we gotta spend a few $3.04, $5,000 on the well just to make sure all the equipment's up and running. Right? So maybe that's, you know, what what does that put us at? 80,000 all in on on this deal. Pull my comps, there's land selling out there for a $140 with, you know, wells and septic, and some of them don't have that infrastructure. Some of it's just flat land, five, ten acres. So I'm pretty confident that, you know, we can list this thing and sell it for 140 once we get the well and septic on it. We may not even need to do the well and septic and still sell it. But if we did it, you know, we could easily sell for $1.40. So say say, you know, we're netting $60 on that. I think we could wholesale it for a 100 right now, maybe a little bit more, 110. But so that's like a quick 40 or $50. We haven't dispoed it, so we don't know that that's the case. The other exit that we're looking at is what if we find a single wide or double wide that somebody wants to sell? So we've got some leads on a few of those, and we're just trying to figure out what price works best for for this deal. We haven't quite dialed that in yet. But, you know, say we can pull one out here, set it, you know, there's moving costs, probably 15 to 20 k to move it all.

Dan Austin: [4:35] And then you're gonna buy the unit, of course. But, know, we could probably sell it then for 250 to 300,000. So you're looking at essentially different ways to make 50 or $60 with the first two options, or maybe make a 100 k with the third option. And the way we are breaking this down is really like look at what our needs are now as a company. We have we're gonna be buying another flip here soon. We still have a flip deep into progress, so kind of a larger flip than we wanted it to be. And you know, we're ramping up our marketing expense. So we have to we have to pay attention to the liquidity we have in our business. Can we sit on this cash that we're gonna have to outlay? Because when you go and buy a mobile home, you have to put that cash out there, you know, or you have to get a loan, so there's some debt servicing and some risk there. You know, and and it maybe takes two months to sell, maybe a month, six weeks to figure it all out once we get it closed and move a mobile out there. But I would say that we are, as we're investigating, we're leaning towards that option, because we do have the ability to make that long term play, and drag something out there, and make a $100. Which in my opinion, the goal of being in this business is popping off your wholesale deals until you come across a $100,000, $200,000 deal, because that's where you start blowing the roof off or the lid off of off of your P and L, and really scaling your business. Everything else is just nice little single singles doubles, and then you hit these home runs, and that's what makes that's where you build wealth in this business super fast. You're in the game, doing your wholesale deals, so that you can find the big deals.

Dan Austin: [6:04] And sometimes those big deals are things you take down and you keep yourself. That's what Mike and I did, and how we build a big chunk of our wealth early on in this business, is we bought almost all those good deals. And we were strapped for cash for a while, but we're definitely happy we did that because we have a lot of equity in these properties now. If you're just starting out, you might choose like, hey, if I just sell this and I take $50 and wholesale it right now and make 50, that could be life changing to your business because it could pump in more marketing into your business, where you get three or four more deals that are worth 20 k each, and now you're rolling and you're steaming. Now you have a full on business, because you're able to reinvest some of that immediate capital from that that wholesale fee. And and $50 is nothing to shake a stick at. Right? It's it's a good fee, a double what our average fee is, and so more than double that. And so you you don't wanna just kind of overlook it because you see the $100 down at the end of it. Because one mistake Mike and I will always go back to is because we bought a lot of properties up front, we were pretty cash strapped, and it probably slowed the growth of our wholesale business down.

Dan Austin: [7:04] We've fortunately recovered from that, and we've wholesaled hundreds of deals since, and we continue to. But it's something you should really take into account when you're looking at how to break down the exit when you got something so juicy in front of you. But I'll close this out with the lesson of like, when you feel a deal in your bones as a deal, shoot your shot, man. Like we honestly weren't sure when we were negotiating with the seller what we could do with this property until we really started getting into the due diligence piece of it. But it just felt like a deal. Like where else in this area can you buy five acres of flat land where somebody could literally just drag a trailer out there or build a house, and just have a house on it. Right? Usually, you're dealing with like, oh, you gotta break it off this piece of lot, or it's in this weird area on the side of a hill with a giant rock in the middle, you know? Like, there's always these like weird things that you end up dealing with. This one didn't have it. So it just felt like there was value here. So listen to that intuition, and then go and work your butt off to figure out how you're gonna make your money on it. And sometimes they turn out to be 6 figure deals. So anyways, I hope you go out there and you find your 6 figure deal this week. If not, it'll happen.

Dan Austin: [8:06] Just stay in the game long enough. Consistency is the master of all of this business. Hope you enjoyed this. Hit me up on Instagram at investor mandan if you have questions on how I broke this deal down any deeper. If not, have a good weekend. See you.