How would you like to add an extra $12,000 per year straight to the bottom line? Don't think it's possible? Well think again. On this episode of the land MBA podcast, we will show you how to increase your land profits with one simple trick.
This is a pretty provocative topic for a podcast. Adding additional $12,000 bucks a year without increasing my deal volume. It definitely sounds too good to be true. There's always pressure on every business to increase revenue and profits. If you're in a public company, the pressure is even higher.
There's really only three ways that you can increase profits. It starts with either increasing your revenue, reducing your costs or increasing your deal volume. The best way to reliably increase your profits is by reducing your costs.
When you are negotiating your deals there is simple trick to maximize your success rate. Whatever you ask for, you must come across humble. It must be presented as a very reasonable thing. You have to explain why you're asking for that price and why it's reasonable.
So what about this $12,000 we keep talking about. Where does that number come from? If you are currently doing 10 deals a month, that would be about 120 a year. Your goal should be to average about $100 decrease per property in that final negotiation between due diligence and closing. Sometimes it doesn't work out at all, or sometimes you do less. But if you can average $100, and you're doing 10 properties a month, that's $1,000 a month, that's $12,000 a year. Obviously if you're doing a smaller deal flow, the number is smaller, but proportionally, it's the same.
When you first start to do this in your negotiations, it may feel a little bit uncomfortable. It may feel like you’re pulling a bait and switch. But after a few times, it'll feel perfectly natural. It’s important emphasize this point . What what you're doing is ethical. It's appropriate. It is a natural part of business, which is price discovery. And at any point in time, if they don't like it, they can say no. And if they say no, you could still do the deal. I mean, there's no reason you can't change your mindset.
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