FCP 103: How To Generate $250k In Profits In 12 Months

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Jack: All right. Hello everyone. This is Jack Bosch speaking and welcome to another episode of “The Forever Cash Life Real Estate Podcast.” I’m super excited to be here again and today we’re going to talk about land flipping with one of our superstar land flippers who is doing, on track to do over 100 deals this year. So, before we get started, let’s quickly go into this.

Jack: Hello and welcome to “Forever Cash Life Real Estate Podcast” where we talk about cash and cash flow, particularly with a focus on land flipping and how to make cash and cash flow from that. In today’s episode, I’m going to lay out how you can get to a quarter million dollars a year income. And we’re going to actually break it down into the daily, weekly, monthly steps that you need to do in order to get to that income in a matter of one year. All right, so with that, let’s get started in just a second.

Man: Welcome to the “Forever Cash Life Real Estate Investing Podcast” with your host Jack and Michelle Bosh. Together, let’s uncover the secrets to building true wealth through real estate and living a purpose-driven life.

Jack: All right, so here we are again. So let me first get in and let you know that the episode that we’re going to do today about basically reengineering how to get to a quarter million or more, you can do the same thing, you just double them if you want to get to half a million or a million and we’re going to do that. The reason why we do this is that this episode, a similar episode is I think Episode Number 23 or 24 of the original podcast has been one of our best received podcast of all times. So because back then though the podcasts were all audio and now they’re video, you have the double benefit of actually seeing me move my hands and stuff like that.

Plus, if you’re watching this on YouTube, where we all post our podcast episodes too, you now for the first time have the opportunity of seeing me explain exactly how that works. So here’s the thing, $250,000. So, why did I pick that number? Because it’s a number that, in my opinion, is high enough to get people excited and low enough for people to be realizing that they can actually achieve it. So if I say, like, a long time ago, in our team I asked around like what’s your number? And the question was meant to say, like, you know, in television they do, like, retirement kind of things. They talk about what’s your number? And what is your retirement number? How much do you have to have in the bank or in net worth or so in order to be able to retire?

And one of the ladies says like, “Well, I would like to have $10 million.” And it’s, like, it struck me as a random number and as I asked a few more questions to that particular team member, it became clear that it was truly a random number that had nothing to do with the reality of being able to sustain a family on. So instead, what I want to do is I want to teach you, in essence, the concept of taking a goal and breaking it into pieces and scheduling them out and realizing that if you can think in that way, that you can basically break anything apart and make it possible. Any goal now becomes achievable. So that’s a high goal that I set for this podcast, but I think we can achieve it.

So therefore the goal is not…that’s why I picked the number $250,000 because $250,000 a year in income is a number that I think almost everyone would be comfortable with. And at the same time, it’s not this pie in the sky $10 million kind of thing that nobody knows how to get. So let’s take $250,000 in active income. And then perhaps we do another episode where we talk about $250,000 in cash flow or perhaps we would enter this one a little bit. So let’s talk about the end goal. Twelve months from now, the goal would be that you have made $250,000. So, okay, if we do this with our lead flipping method, following our www.landprofitgenerator.com method, then I can tell you that the average profit one of our students is doing is anywhere around, let’s say, the $8,000 to $10,000 range. Now that’s the average profit. If you do an average deal, it means some deals have $3,000, some deals have $30,000 of profit.

So the average is $8,000 to $10,000. So let’s take $10,000 because it makes for easier math. So in other words, that means that if you want to do $250,000 a year in income, you have to do 25 deals in a year. So first we need to take the big number and break it out into units of the thing that we are actually doing. So if you have a goal of making $500,000 income or $250,000 income in selling industrial sewing machines and you know that each sewing machine costs $5,000, then you know that your goal is to sell 50 of those machines, right? So now you have the next factor in that thing is…let’s go back to our land, the average profit, let’s say, $10,000. So the next part of that is that means that now we need to look into how many weeks do we have of the year. So in the year we have 52 weeks, let’s say we take a few weeks’ vacation, let’s round that down to 50 weeks because of Christmas and holiday nothing happens.

So let’s say if we operate this business for 50 weeks of the year, then we need to do 25 deals. That means we need to do a deal every two weeks, right? Every two weeks a deal needs to be able to come in. And every 2 weeks, we need to able to sell that deal with an average profit of $10,000 a month. Now that drives us now into what kind of neighborhoods we need to go in? What kind of areas that we need to focus on where we can get deals that make us $8,000 or $10,000 a deal? So first of all, there is, in the land flipping area, that you can do land flipping anywhere in the country, anywhere in the world, for that matter, but particularly the United States, it works everywhere, where there’s land. But there’s land in very much different price ranges. For example, there’s land that is only worth $3,000. So if you focus on that kind of land, a lot of the rural areas of the United States in the South and in the West, they have that kind of land, also in the Southeast there’s lots of these kind of properties around.

So if you focus on those, you will not get to $250,000 by doing 25 deals or doing two deals a month basically or one deal every two weeks. And because your average profit will only be $1,500 a piece. Now, if you’re happy with that profit, then we need to change the number. So we can skin this cat from a totally different direction. We can restart this entire analysis and say, like, well, let’s focus on the kind of properties we want to do. What if your comfort level is in the $3,000 to $5,000 properties that you buy for $600 and sell for $4,000 or $4,500? So you make, let’s say, $4,000 profit. But if your average profit is only $4,000, and you want to do $250,000, then I gotta use my calculator for that, but in essence, then you have to do $250,000 divided by $4,000 per deal is you got to do 62.5 deals in that year.

So in other words, you now have to do a deal every about five days in order to get to the quarter million, right? So you choose which price range you’re only going to be and you also choose your financial goal, right? So therefore, if we go for the average deal, which our students do from anywhere between $3,000 to about $30,000, that’s like the average range, and with some of them being smaller and some of them being the $50,000 to $100,000 range. But if the average is in that and the average of that becomes about $10,000, then our numbers make sense. So, first of all, though, we need to therefore focus on areas that has that kind of unexpected profit margin. And usually that is areas where the value of the properties is no lower than $5,000 and probably no higher than $100,000 because that’s where you make those kind of a profit.

So then, now that we have that, we have identified the kind of areas that allows us to go look into the market. And now look at do we do…let’s just pick an area. There’s an area in Arizona called Navajo County and the northern part of Navajo County is really low value properties. There’s an entire few square miles where properties are literally only worth $1,000 for an acre. An acre and a quarter is worth $1,000 or $1,500 and you can even buy them a tax sale for $500 a piece. So you could sell it for $1,500 perhaps even seller financing for $2,500. But your profit margins are not where they need to be in order to make this example work. But in essence, all you do is you break it down into those pieces. Now the next part is if we now know that our average student gets a deal for every let’s just say four to 600 letters, let’s round that, let’s average that out to about 500 letters. So the first student gets a deal for every 500 letters they need to send out.

And if we also know that we need to get about for every 25 to 30 offers we get a deal accepted, we need to basically send out enough mailings to get 25 offers in and then over the scale that it will revert back to the average. And then we get a deal for every 25 offers. So let’s say therefore if we get a five, and let’s say a low percentage response rate in some markets, you get below that and in some many markets you get above that, but let’s just say we get a 5% response rate, which is, by the way, still five times as much as the house flippers get. And many of our land flippers get 10% and 15% response rates, but let’s just take a 5% response rate. And if we send 1,000 letters out, then we should be able to get 50 phone calls, make 50 offers and get 2 deals from that.

So now if you get a 10% response rate and your offer ratio still hold true with about 25 or 30 offers per deal, now in that case, you probably can send out only either a little bit less letters to get to the same number of deals or you get to the same number of deals quicker. So in other words, let’s say you’re getting a 10% response rate and you’re getting a deal for every 25 offers that you make, which is somewhat average. But of course, it’s not a guarantee guys. If you were listening to me here, we have guys that do get an offer accepted for every 16 or 17 offers they make and we got guys they get an offer accepted for every 50 properties that you accept. That all depends on how much follow up you do on the offers and how elaborate your offers are and tons of fun and there’s much more detail about that in the www.landprofitgenerator.com program.

So the point here is now let’s say we assume right now that we get a 10% response rate and that 25 offers thing still holds true. So therefore now when we send out 1,000 letters, we get 100 phone calls. We make 100 offers, we get 4 deals accepted. So therefore, now we come to the point we need to pace our mailings. In order to pace for our mailings therefore, if we need to get to a deal every two weeks, right, and let’s say that every month…actually it doesn’t have four weeks. A month usually has like 4.3 weeks or so. So that means that basically over…let’s see. It doesn’t matter. Every two weeks. So that means every two weeks, we need to send out enough letters to get two deals.

Now if 2 deals in this case happened on 250 letters already, then we need to send out 500 letters. If we get 2 deals based on 500 letters each, then we need to send out 1,000 letters. So basically, depending on which area you operate, and at the beginning we do a quick test phase when we come into this business. So we first test a few counties, test our response rates then we hone in on the ones where we get the biggest bank for the buck. But as we do that, you’re going to be somewhere in that range of, like, having to send out 1,000 letters for a couple of deals or 500, 600 for a couple of deals. But let’s say it’s 1,000 letters for 2 deals. So if you need to do 2 deals, right, it’s 50 weeks you need to have 25 deals, you need to do 1 deal every 2 weeks. That means in other words, you need to send out 500 letters every 2 weeks in order to get one deal.

Now again, this is a low number example, as a low number example and it might very well be that the market that you’re in, those numbers have to double that you might have to send out 1,000 letters every 2 weeks, 500 letters a week. Once you hone in to your target area that has shown in the test phase to already bring you some results, right? This is not for the first month or two months or of you doing that, this is usually after you have done some testing of different counties and you found your sweet spot already. But then once you found your sweet spot, you want to go and you want to drop them very consistently, because if you know that on average, you get a deal every 2 weeks by dropping about 500 to 600 or so letters every 2 weeks. Then you can know that if you send out about 1,000 letters a month, you get 2 deals a month.

Now, if you do 2 deals a month, that’s 24 deals a year. That is very close to your target range. Now at the same time, you…and that’s when you start going, right? So you spend your first couple of months testing this and then lastly as you then hone in on your sweet spot and then you see the results you’re getting and you see what the profit margins is. If your profit margins end up being low or more to $4,000 to $6,000 range, then you probably want to crank up the mailings, right, so that you can catch up over the course of the year. Also, if you spent the first two months testing different counties and testing with different response rates until you find your sweet spot, in order to get to your yearly goal, you got to accelerate a little bit later. You got to catch up because you basically the first two months, you might not have gotten the deal yet. You might have only or might have gotten only one deal or two deals under contract in the first two months, so you’re kind of behind, right? Because you kind of a few deals behind.

So therefore, as you figure this out and putting your systems, you got to know accelerate a little bit more and have a few months where you get three or four deals in that month so that you can leverage out to the level that you need to…where you can accelerate out and average out to the level that you need to be there in order to make it to the $250,000 a year. And just to remind again, if your profit margins are lower, then you need to have more deals per month going. If your profit margins are higher, then obviously you don’t stop, right, you just go for a higher dollar month. You adjust your goal. Now your goal might not be $250,000 a year anymore. Now your goal might have accelerated to $300,000, $400,000, $500,000 a year if you consistently get $20,000 deals. Because then you just go and get two $20,000 deals a month and now you’re making $40,000 a month.

And then after 12 months, that’s $480,000 in profits. So you can get there just as well. But the key is to monitor, is to break down your end goal into what that means in terms of response rates, what that means in terms of area, and then therefore what that means in terms of letters that you need to send out and responses. And therefore also, now it’s going a little deeper, it means that if you get 50 offers, you need to ask yourself the question, “Does your current life situation allow you to analyze 50 properties a month,” right? Because if you get a deal for every 25 offers accepted, right, and now you send out 25 offers, well, before you send out the 25 offers you got to analyze those deals. So do you have the time to analyze 25 deals every other week so there’s 12.5 deals a week? Can you analyze 12.5 deals a week? Or are you running three jobs and so on?

And if you’re running three jobs, perhaps the better way would be to go into a higher price range. And then in the higher price range, send out perhaps more letters, get fewer responses, few analysis, but therefore, when you get a deal you make like $40,000 or $50,000 a deal. In which case, you only need 4 to 6 deals in action in order to get to your $250,000 or 5 to 6 deals in order to get to $250,000 profit. So there’s a lot of moving pieces but you gotta put them in place. And in summary, the moving pieces are again what? It’s, first of all, it’s how much do you want to make? Secondly, is what response rates do you expect? What price range do you want to go after? Based on the price range, you select your counties. Based on the counties, you now experiment and you see the response rates.

Based on the response rates, you know, you level up or level down the number of letters that you need to send out, the amount of direct mail that you need to send out. And then based on that, you then send your offers and then you monitor what your response rate is, what the acceptance rates are, and what your profit margins are. If you see you’re falling behind, you crank it up. If you see you’re ahead of the game, you still crank it up, right? But if you’re just tagging along and it becomes a really nice structure of doing deals, then you stay right there. If your workload is then such that you can say, “Yeah. I can go back to part time in my job and therefore I can analyze more properties. I can do more deals.” Then you can do that too. Or also if you realize you don’t have the time to analyze the deals, you can perhaps then start outsourcing. Do the first few deals. And then start outsourcing the deal analysis to somebody else, right, to a call center, to a virtual assistant service or to a just hire a virtual assistant or hire your kids or your uncle or your parents or whoever you think can do the job, right?

So that’s when you then start scaling your business. But it all starts with knowing that there’s a number at the end of the tunnel where usually it’s like a 12-month number is a good number, and then basically breaking it down into steps. So now you know every Monday, you send out letters. Every Tuesday, perhaps you’re doing deal analysis, right? Every Wednesday, you make offers, right? Every Thursday, you prepare your listings and ongoing you talk to your buyers and you sell those properties, right, and you post them. Every Friday, you post the listings in different places. Every Saturday, you refresh the listings or look for other ones. And on a daily basis, you spend a little bit time just perhaps 20 minutes or so when there’s a need to it, responding to buyer requests to buy the property.

And now you got a nice little rhythm that just takes perhaps an hour or so every night or a couple of hours every two nights or three, four hours twice a week and you’re in a nice rhythm that will consistently get you towards your goal. The key here is not to send out 10,000 letters in 1 week and then be overwhelmed with 1,000 phone calls that will take months for you to process. The key is to pace yourself with looking at whether or not you’re falling behind or you’re meeting or you’re ahead of your self-proclaimed goal for financials. Now, how do we do the same thing with seller financing?

Well, we’re doing the same thing with seller financing is, you know, one of the ways we sell our land property generator process properties, right, or pieces of land is we love selling them with seller financing. And so now your goal might not be $250,000 a year, your goal might be to get to $10,000 a month in passive income within one year. $10,000 a month in a passive income within one year. So how do you go about that? Well, first of all, it’s exact same thing. You figure out that what kind of properties you focus on? What is the monthly payment that these properties will spit out? So if you focus on the $10,000 properties, chances are their monthly payments are going to be probably in the $200 to $300 range.

So if you have, let’s say, $250 a month monthly payments, that means in order to get to $10,000 a month you will need 40 seller financing deals where they pay you $250 a month on each of these 40 pieces. Forty times 250 equals $10,000. You’re now receiving $10,000 a month. Now if your monthly payments are higher, right, then you probably if you want to do less deals, you probably going to have to focus on higher and a little bit higher price deals. So perhaps you focus on $30,000 properties which you put on a contract for 5, sell with a $5,000 down payment and $500 a month. Now if you want to get to $500 and if you want to do these deals, then you only need 20 deals over the course of the year. And that’s the nice part, 20 deals over the course of the year in order to, at the end of the year, get to a $10,000 a month monthly payment. And that is the same kind of situation.

So what kind of counties have $30,000 properties? It’s usually the larger acre properties in the rural areas with a larger acreage that’s easily worth $30,000 to $50,000. Or it’s the properties in the outskirts of town that are worth like an acre to 5 acres are worth about $30,000 or $40,000, $50,000. And so you focus on those and then you gotta do some test mailing, you figure out what your response rate is, based on that you figure out how many offers you can make, based on that, again, the 25 to about 35 offers per deal, except that in some areas, it’s also higher, you might have to send 50 offers to get one accepted. So you gotta play with that depending on price, the neighborhood, and area. These numbers always of course all different. But let’s say, if you have the point where you get for every 30 offers that you make, you now need to basically send enough mailing in order to be able to get 60 responses a month, you know, 60 responses because 60 responses equal two deals.

So every five weeks, you need to send out enough letters in order to get two deals that you can sell with seller financing at $500 a piece and that’ll add every 5 weeks $1,000 to your passive cash flow and therefore over 50 weeks which is basically a year, it ads $10,000 in cash flow. Obviously if your numbers a little different, you monitor it. If you get a bunch of $150 month payments in, you got to do more of those in order to get to the $10,000. And if you get a bunch of $1,000 a month payments and you got to do less of them in order to get to the $10,000 a month. But that is while you then adjust and look at as the year goes on, you go look at after a quarter you see how many deals have I done? Usually just in the beginning you have gotten a few deals under contract, perhaps some sold already.

After half a year, you’re like, “Oh, my God now, this is rolling. I got 17 contracts and now you need to focus on selling them with the right down payments and the right monthly payments.” And then you take after that on a monthly basis, you take an account of where you are towards your goal. And then if you miss your goal and you only got to $8,000 a month, are you going to be mad? And the answer is of course not. You’re not going to be mad. But the point is this is how you do that. This is how you focus on this. This is how we do everything we do. This is how we look at everything. Like, it’s always a matter of here’s the goal line, here’s where we are right now, how do we get there? And how do we get there by taking into consideration Thanksgiving and taking into consideration Christmas and taking into consideration our annual four to six-week European world trip that we usually do. And then we basically say, “Okay, we have these windows of time over the course of the year.” It adds up to 20 weeks of the 26 weeks of the half a year. Let’s say in those next 6 months, we only have 20 working weeks because 6 weeks we’re taking off.

So this means in this 20 weeks now you basically say, “In order to get to my goal, I need to do, on a weekly basis, send out those many letters, get that many offers out and get that many deal under contract in order to accomplish my goal.” And if after two, three months, see I’m not there, I gotta crank it up. But if I’m seeing I’m well there perhaps or I’m too stressed, there’s too much going on, then you either reset your goal or you reset the work or you start using outside resources like a call center or something like that or you hire coaching. We offer coaching, of course, that somebody takes you by the hand and guides you through that exact process. That’s how it is and that’s the beautiful part about this. This is one of the very few things that probably were taught to Michelle and I in business school on how to properly plan, how to properties project management, right? You break.

How do you eat an elephant? One piece at a time. How do you accomplish a million dollar year? Like, a week at a time, a day at a time. But you don’t let 10 months pass and then realize I still need to make a million dollars in the last two months. You start the year in a way that you know in order to make a million dollars. Everything we just said works for the million dollars too. The average deal is $10,000. Then you need 100 deals for the year. If your average profit, if your target is $20,000, you’ll need 50 deals for the year. So you got to go step up your game in areas if you want to go up to $20,000, $30,000 profits, you got to be aware that you’re going to have to send some more letters in order to…and you’ll probably get a little bit less responses but then you make $20,000 to $30,000 a deal.

If you make $25,000 a deal, you only need 40 such properties. Forty such properties over time of 50 weeks is basically every…what is that? I’m losing the thing but basically you get my point. It’s like every month I need to have, let’s say, 3.5 deals or so. In order to that, after 10 months, I have like 33, 34 and then after 12 months I have my 40 deals at $25,000 apiece. So it’s the exact same thing. That’s how it works. That’s how you break it down and it works with a million dollars just as well as it works on…I mean, look at guys like Grant Cardone, they’re doing it for the billion dollar now. His goal is to be a billionaire. So he figures out that his method for that is a certain asset class that he needs to buy a certain number of units of properties a year and we’re doing the same thing.

As we move our assets and as we move our money from land flipping into increasingly multifamily, we have a certain goal of financial cash flow, the certain goal of how much money we want to have come in every single month. That’s a pretty hefty goal. And in order to get that goal done now, this is generational income, not from land flipping, land flipping is very nice and high, but from the other kind of stuff. So therefore, in part of what we do is we do our land flipping to generate cash flow. And then we roll that over and we put it into what we call Forever Cash, apartment complexes in our case, that we syndicate with investors. Sometimes we do some with our own cash.

But then the point is that every single one of those ends up bringing cash flow. And so we know how many we need to do in order to get to the financial cash flow goal that we want to get to be done in a sense. It’s a fun goal to pursue. We’re already financially done for many years, but it’s a fun goal to pursue because we love the actual subject matter. We love dealing with that in any kind of real estate. So we set this out.

And then we know if we want to get this done in 10 years, it means we have to buy, I don’t know, one or two of these buildings a year. We want to get it done in five years, we know we need to buy probably three or four of them in one year. If we want to get this done in two years, you know, we have to buy more than probably something like 10 a year, which is therefore…and then we look at it and then we look at from the point of view as how much effort does it take to buy 10 a year? Well, it’s more effort than I want to do so let’s not do that. Let’s stretch our goal over five years so that we know we can buy three or four a year. Okay, that sounds good.

And then you scale towards that and then you accomplish your goal. And any goal accomplishing in life happens that way. Most goals are accomplished in that particular way. You don’t just stumble into goal accomplishing, it occasionally happens. But the best way to accomplish your life goals is by breaking it down, looking into different pieces, and have them work together.

All right, so if this was a value, please give us a five-star review on iTunes. If you’re watching this on YouTube, please go below and give us a five-star review there, comment, post questions. And if you want to know more about it, there’s a link below to our land flipping method for cash and cash flow. With that, thank you very much. My name is Jack Bosch, and I’ll see you in the next episode of “The Forever Cash Life Real Estate Podcast.” Bye-bye.

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