Income Report – July 2022

August 03, 2022

Welcome to the July 2022 Income Report. This report is where I document our monthly statistics and progress with our land flipping and development business.

I’m a big fan of the land flipping model of real estate investing. As you’ll see, it can be very lucrative and also rewarding.

We resold our first property using this model in March of 2021 and we’ve been on an accelerating path ever since. 

We’re passionate about real estate investing in general. Land flipping is just one of the many business models that you can choose to pursue as a real estate investor. We dive deep into this model and many others in our real estate investing podcast called Turning Profit. You can find us on Youtube and all the other major podcast platforms.

July 2022 Income Report – Total Revenue: $495,885.83

I do my best to make these reports insightful.

I don’t hold back. I realize your time is valuable, so I want you to get as much out of this as possible.

So why in the world would I publish a report like this for the whole world to see?

I’ve got 2 big reasons for doing this:

#1 – Motivate ourselves to improve our business (nothing like putting it out there to the public in order to drive progress). 

#2 – Motivate you! You’ll see what’s possible and learn valuable lessons (at my expense) which will allow you to become a better real estate investor yourself.

We also like to connect with other investors or private lenders that have similar goals. You can find us on social media on Instagram, YouTube, Twitter, TikTok, or by email.

Without further delay, let’s get into the good stuff.

 

July 2022 was an awesome month! Here are the details:

Now for a little insight into these numbers.

Our revenue this month was just shy of a half a million dollars. That’s the actual money that was wired into our accounts from the properties we sold. This was our best revenue month ever! July just beat out March of this year to take the title. Now, I’m gaining confidence that I will be able to repeat and surpass these kind of numbers. I can feel the momentum building and I know that I am just stretching the surface of what is possible.

Our gross profit this month was a very respectable $188,100.00. This was a 37.9% gross profit margin which is actually below our average. My goal is to hit 50% gross margins on average, so this falls below that. I can’t complain though. This margin would sufficient to sustain a healthy and growing business.

We sold a total of 9 properties this month which was another record. We’re still not hitting my benchmark of 10, but getting very close. Ultimately it’s less about the number of transactions, and more about the profitability of each transaction. But I do think this is a completely doable goal in the near term with our current team and when we hit this number getting our average returns, this will only be a positive.

Our average gross profit per deal was $20,900. This is below our historical average, but not that bad either. Over time I want push the figure higher and higher.

The average days in inventory figure crept up again this month again to 71.3 days. This is over our target of 60 days. This issue was that we cleared out some our oldest properties in our inventory. I don’t like holding properties very long at all, and it’s important to keep our money moving to get the best returns. Plus, the quicker we can move our inventory, the less susceptible to market fluctuations we are.

The other main metric that I look at is the number of pieces mailed. This month we mailed 84,132 letters. This is about $42,000 in direct mail expenses. While this is a lot of money, it will likely payoff much bigger than that in the future months.

Keep reading the report for a deal by deal breakdown of all the properties we sold this past month.

Deal by Deal Breakdown:

In this section, I break down each deal. The goal of this is to show you how deals vary in their profitability and what is possible in this business.

These are all the deals that closed in July 2022. We purchased the property (normally in a previous month), and then resold the property to a new buyer. 

***details of the properties have not been shared to protect the anonymity of the parties to these transactions.

Purchase Price = The amount we paid for a property including closing costs

Revenue: This is the amount we received after paying commissions and closing costs

Gross Profit = Revenue – Purchase Price – Property Specific Expenses

Days in Inventory = # of days we owned the property

Return on Investment = Gross Profit /Purchase Price

Deal #1 – Webb St

Deal #1 notes: This was a very unique property. It is located in a rural town with a marginal amount of activity happening. This is a property that I initially declined purchasing about 6 months previously because I was concerned about the market in this area. Plus, there are large electrical transmission lines that cut throught the property. This is normally always an issue and decreases it’s value. The seller came back to us and asked if we would still be interested. We offered a price that was very low thinking they wouldn’t accept. But, they did and we closed. As soon as we closed we put it back on the market for an aggressive price and found a buyer right away. The end result was a 245.9% return on investment in 58 days of ownership. The gross profit was below our average deal, but it was still worth the time and effort.

Deal #2 – HWY 258 N

Deal #2 notes:This property purchase in hindsight was a mistake. During our due diligence on the property, we found out that the property had failed a perk test with the County. But, our research indicated that there was a sewer connection available so we assumed it was buildable. We never verified with the city regarding the sewer and we found out afterwards that the sewer connection was too far away. Due to these reasons, it would be really difficult to build on this property. We were under contract to resell this property and then this issue arose. It fell out of contract and then we began to market the property as a potential agricultural property or area for a roadside fruit/vegetable stand since it was on a busy road. The property is small, so there weren’t a lot of other potential uses. Eventually we found a new buyer and sold the property. After a long hold time and lot’s of ups and downs we profited about $1,000. Lesson learned: verify sewer connections whenever possible for smaller properties.

Deal #3 – Evan Rd

Deal #3 notes:The numbers on this deal are a little deceiving. While the gross profit shows as $5,000, that is not the whole story. We purchase 2 properties from this seller for $41,152.60. We resold just one of the properties for $47,156.23 (this one). We now have another property that we’re marketing that is a similar value to this one. When that one sells, it will be 100% profit. Buying a package of properties from a seller is a great strategy in many cases. Since there are many landowners that own multiple properties, we always ask if there are other properties they would like to sell as well.

Deal #4 – Mill Rd

Deal #4 notes: This is a quality property. It is commercially zoned and has frontage on a major freeway. There was the potential for many different uses, but I believe the buyer was planning to put a billboard on this property. The return on investment on this property may have been our best yet at 307.26% in only 44 days of ownership.

Deal #5 – Chapel Rd

Deal #5 notes: This is a really nice property that had a bigger purchase price than our normal purchases. After I bought this property, I took the initial steps to develop it into a tiny home community. The idea was to develop it, then hold it as a long term investment. Before I got too far in the process, a buyer stepped forward to purchase it at an amount that made sense for me. So, I decided to let it go. It was probably for the better as this project would have distracted me from my main business.

Deal #6 – Rasco Rd

Deal #6 notes: This property ended up being a pretty profitable deal for us at 113.53% return after holding it for 76 days. We held it a little longer than we wanted because it fell out of contract with the initial buyer because it failed a perk test. I then hired a soil scientist to evaluate every part of the property (much of it wasn’t tested by the other soil scientist) and he found some areas suitable for an alternative system. With this information, we put the property back on the market and found a new buyer right away.

Deal #7 – Warren Rd

Deal #7 notes: This was my worst deal ever. I only profited $100. But, I didn’t lose any money which keeps my streak alive. This property was located in an area where there was very limited buyer activity. So, I just kept reducing it until I couldn’t reduce it anymore to try and drum up a buyer. We did eventually get it under contract, but there was no profit left. That’s ok, I was happy to move on from it and I learned a lesson in the process: The location for smaller properties like this are very important. It’s too small to be a recreational property, so you’re only option is to sell it to someone that wants to live there. In this particular case, there were very few buyers that wanted to live in this location.

Deal #8 – Cowboy Trail

Deal #8 notes: This was a good deal all around. The best part is that we only held the property for 22 days total. As soon as we put it on the market, we found a buyer right away and they were able to close with cash in a couple of weeks. Our gross profit was $38,000 which was very strong as well. I’d love to have more deals like this!

Deal #9 – Quarter Rd

Deal #9 notes:You can’t go wrong with a 90.75% return on investment in 50 days! This was a nice homesite lot in a growing area. It had road frontage, nice trees, and a great potential building site. I knew these factors would attract a buyer pretty quickly, and they did. Although the gross profit was below our average, it was still worth it.

Year to Date 2022:  

2022 Year to Date (YTD) Statistics

We’ve now got one month in the books for the 2nd half of 2022.

We’re below where I hoped we’d be at this point, but the business is still strong and growing rapidly. I feel like I’m putting the necessary steps in place to grow and I know it’s simply a matter of time until we achieve my near term goals.

At $1,899,11.19 in revenue so far this year, that’s an average of $271,301.60 per month. Not bad at all!

The gross profit is also inching towards a million. Maybe we’ll get there next month!

So far, we’ve sold 38 properties in 2022. That’s an average of 5.43 per month. We’re getting closer to the 10 properties per month that I’d like to hit.

The average gross profit per deal is just over $22,000. That’s substantially higher than 2021, so we are on the right track. The higher we can get this figure, the faster we will be able to grow.

We’re also still holding under 60 days for our average days in inventory. This means that we are turning our purchases over quickly which is critical for this business.

Overall, July 2022 was a banner month! I’m looking forward to repeating and improving upon these numbers in the months to come.

The returns detailed above are very substantial. That is especially true when you consider the hold time and annualize the Return on Investment.

Let’s use Deal #9 as an example as it is a pretty typical deal.

The return on investment was 90.75%, which is amazing in the world of investments. What really makes this special though is the fact that we only held this property for 50 days. When you do the math and annualize this return (if you were to keep this money invested for the whole year), the annualized return on investment would be 662.48%!!

Where are you going to find returns like that?

In the stock market, if you’re getting a steady 10% a year, you’re crushing it

But, if 10% a year is crushing it, what is 662.48% per year called?

How can you do the same thing as an investor and get these kind of returns? 

The first thing you’ve got to do is start learning.

It’s not rocket science, but it’s also not as basic as it seems.

Here’s a short list of some of the basics you’ve got to learn to make this work:

  • How the business model itself works
  • How to get the leads coming in
  • Where are the best regions to find deals?
  • How to evaluate properties. What makes a good property and what makes a property not desirable
  • What software and tools to use to give yourself an unfair advantage
  • How to talk with property owners that want to sell
  • How to navigate the escrow/title process in multiple different states to buy a property
  • How to find the best on the ground partners in each location
  • How to find a buyer for your property in a short amount of time for a good price
  • How to negotiate with sellers and buyers.
  • How to build a team so you’re not doing everything yourself
  • How to put a business system in place to automate processes and keep your business organized

In the future, I may decide to offer a training program to teach these skills. For now, I’ve got nothing to sell you. But, you can find a bunch of free content on our Youtube channel and on our podcast that discusses real estate investing.

Just as a disclaimer, investing money comes with risk. Because without risk, there are no returns. Research any investments heavily before putting any of your money at risk.

And, you can check out this page that will feature other podcasts and outlets where I’ve been interviewed.

If you’ve got funds that you would like a better return on, please fill out this form. I’m looking for private money lenders that want to earn a great return on their money secured by these deeply discounted properties we’re buying.

We know that the figures in this report may seem unattainable at first glance, but this did not just “happen” overnight. Like any business, we made progress and improvements over time to get to our current income level.

One last thing, if you liked this, you’ll also learn a lot from this video I filmed. It’s our 50 First Deals that we did in the land flipping business. It’s a very detailed breakdown and it gives you a good idea how our business started and how we did on each deal. Get it here.

That wraps up the July 2022 Income Report. Sign up here to be notified the minute a new report is published.

P.S. In case you missed it, here are links to some of my past income reports:

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