Matt explains how to use yield as a metric to justify higher land purchase prices and move inventory faster. Wholesale deals lower intake costs, letting you pay more while keeping returns strong. Train your team to apply yield rules independently rather than fixating on arbitrary price anchors.
Which I love the yield because it allows me to really, it shows you that you know, sometimes you can, sometimes you can pay more for a property than you think you can. You know, like there's some properties I've been buying for around thousand to fourteen hundred and I have someone who wants to sell me three for eighteen hundred and I've been like, no, I'm not going higher than this number. Then I put in the yield and I'm like why, why am I doing that? Because I'm so thick headed that I, I, I, I have this set number in my head. But when I play out the yield, I could buy it for 2000 and have a great yield. So what, why am I holding? It's funny how many you guys think about that. Like you can pay more than you think you can.
Yeah.
And when you start to look at, you know, your return and, and we're just like, no, I'm mere principal, I won't pay that much for this property. These three properties as I, I buy them all the time for this price. So why would I spend four to five hundred dollars more? And I think that speaks to the power of wholesale because you know, you don't have, in the wholesale situation, you don't have a mailing cost or an intake cost and so, or not as much of an intake cost, you might still have it outsourced but you can pay more for that property and still have a great return. So I'm actually finally doing what Scott Todd does. Training my intake team to be, you know, schooled on what yield is and have that as a metric for deciding whether or not we buy a property. So that's kind of cool too. So I don't have to, I still do make the decision to buy or not. I do, I don't know what you're doing.
So that's awesome, right? Because that's really how it should be done. But you got to be pretty far along to do that. I think.
I still like to evaluate. You know, years ago someone told me one of the best things you should be doing in this business is have a, at the time it was paper, but like it's virtual. Have a stack of deals and sift through them and pick out the best one. Right. And like where are you going to invest your money? I feel like a mini Warren Buffett. Like what company am I taking down? What deal am I taking down? You know, I'm going to use my money to the, you know, to really crush a deal. And so I don't mind doing that. But that being said, I'm sort of excited by the idea of empowering the. Not sort of. I'm very excited by empowering the team to make. Like, look at. It's just a decision I make based upon numbers. So they can do that too.
Yeah, exactly. It's just a number. It's a number. You just set the parameters and say. Say I'll go from here to here and that's it. Outside of that, you need a really good reason as to why. And yield doesn't lie. It's impartial.
Right, right, right. So that's pretty exciting. I'm really happy about that. And I think on the sell side too, you can look, I think we talked about this last week or maybe the week before. Like, there are people out there that are not. They're hearing us celebrate these wins and they're sitting there saying, well, I can't sell my property. But then they look at the numbers and it's like, oh, I want 250 down. 250 dock fee. 250amonth. And this is a property I bought for fifteen hundred dollars. Right. And it's like, do you realize you could like crush all that in half or a third, still have a crazy yield, a great use of your money, and just go on to the next deal? Don't. Don't get so, so focused on like these numbers. You. Because we're making these numbers up, right? Really, in a sense, like, it's inefficient. Like, just what's the number that's gonna move that property and get it done, you know, don't hold out for. Yeah, just do it right. Don't be like, ah, no, no, I wanna. That's the inverse of what, like the opposite side. When I'm like, well, I'm not paying an extra $500. This property. It's like, no, I'm not gonna sell this for, you know, 129amonth. I want 250amonth. Well, 129amonth just might get you like 100 and something yield. So why, what is this reason why you're hold. What's the reason?
I got a good friend in this business who makes spreadsheets all the time. And he looks at yield and he looks at percentages and he gets caught. And he gets caught doing dumb crap because he's not looking at the deal going like, yeah, I could go make eight grand. Done. He's looking at a percentage. The yield might be okay, but the percentage is wrong. And you're like, oh my God. Or might be inverted every time I talk to him and he's in one of these like moods where he's like, oh, he's just hemming and hawing. I'm like, you bought this for $5,000, you sell it for $18,000. What do you want? 18,001. It's a no brainer. Just go do it. Just sell it. Just shut your pie hole. Like it's enough. We're not, it's not like we're in the grocery store and we're making 1% or 1 1/2% margin. Right. It's okay.
Yeah. You know, and it's not just the numbers. You're right. It's a great point. Because this is the process that going to go through the team. It's not just like, okay, here's a number. You got it. See you later. That's a recipe for disaster. Like there's, you know, you have to teach them to think like you do. Like what? And really comes down to why do I decide to buy a property or not? What are the different factors that go through my mind? And you have to start to impart that upon your team, but then work with them. You know, Scott Todd always says and take months, but when it's done, it's done. And that's really cool. Right. So it's not just like, you're right, Matt. It's not just like, take a look at this number, we're good to go.
I'm out.
That'd be bad, right? I want this other reason. Other things I look at. And you need to have them think and you need to empower them. Right. To sort of. I like that. Jocko. Is that how you say his name? Jocko Willink.
Jocko Willinek. The seal.
Yeah. William. And he's got the extreme ownership idea and the dichotomy of leadership and that's like decentralized command. First of all, it's simple. So it's a simple few metrics you give them, but then you have to empower them. Right. Ultimately you take responsibility. That's the extreme ownership part. Right. But you have to empower them to make decisions. And if you do that, they start. I really feel like they begin to look at it as like their business too. Right. And they're going to want to, you know, represent that business well. So you empower them. So it's really kind of a cool transformation. Sam.
How to find funding partners: How to Scale Land Without Using Your Own Capital
