Listener Questions # 5 - Cash Management in the Land Business

So, Dan, how do you use cash in your business day to day? Is it mostly earmarked for acquisitions or operations, reserve, ongoing costs? What's that look like?

Yeah, it's a mix.

I feel like I go through phases of acquisitions with cash, with lines of credit as well, and then a sales cycle.

And in this last couple of years, I've sold so many on terms that I didn't necessarily get all the cash or I didn't get all the cash back, which is fine.

And so lately it's been a lot of paying down lines of credit so that my note portfolio is essentially free and clear.

And then, of course, there is an allocation for operations every month, payroll, health insurance, all the different softwares, mail, et cetera.

But yeah, in the last couple of years, the last year I have paid down lines of credit, mostly with my cash.

And beyond that, I still use the extra just for our own acquisitions.

Yeah, very, very similar on my side of just ongoing operating expenses, software, marketing, that sort of thing.

You know, paying myself just because now I'm the only employee within my company that I'm still operating.

And, you know, I think paying back lenders too.

Most of the deals we've acquired recently have come from lenders that want a fair return rather than, you know, crazy equity splits and stuff like that.

paying them off as deals close and everything like that.

And still pay yourself too.

I think that's a important thing to mention to business owners is you don't know how much money you're actually making if you're not paying yourself because you still need to survive and everything like that.

I wouldn't necessarily, you know, allocate all of the returns that I get in my business just to keep the business going, you know, treat yourself a little bit.

Yeah, I'm glad you mentioned lenders because that is something that has held me back.

Probably one of my biggest mistakes has been just a few deals that ended up being mistakes.

They took a long time to sell.

I cashed my lenders out, paid them off, and then I have had a good amount of cash stuck in those deals.

And now at this point...

Thankfully, I've sold almost all of them, but many of them were on term.

So it's slowly coming back and the return is marginal.

And so that is something top of mind is just being absolutely sure that our due diligence is 100 percent before we buy anything so that I don't repeat that mistake and have hundreds and hundreds of thousands of dollars stuck in marginal deals.

Yeah, agreed.

So, Dan, how do you use cash in your business day to day? Is it mostly earmarked for acquisitions or operations, reserve, ongoing costs? What's that look like?

Yeah, it's a mix.

I feel like I go through phases of acquisitions with cash, with lines of credit as well, and then a sales cycle.

And in this last couple of years, I've sold so many on terms that I didn't necessarily get all the cash or I didn't get all the cash back, which is fine.

And so lately it's been a lot of paying down lines of credit so that my note portfolio is essentially free and clear.

And then, of course, there is an allocation for operations every month, payroll, health insurance, all the different softwares, mail, et cetera.

But yeah, in the last couple of years, the last year I have paid down lines of credit, mostly with my cash.

And beyond that, I still use the extra just for our own acquisitions.

Yeah, very, very similar on my side of just ongoing operating expenses, software, marketing, that sort of thing.

You know, paying myself just because now I'm the only employee within my company that I'm still operating.

And, you know, I think paying back lenders too.

Most of the deals we've acquired recently have come from lenders that want a fair return rather than, you know, crazy equity splits and stuff like that.

paying them off as deals close and everything like that.

And still pay yourself too.

I think that's a important thing to mention to business owners is you don't know how much money you're actually making if you're not paying yourself because you still need to survive and everything like that.

I wouldn't necessarily, you know, allocate all of the returns that I get in my business just to keep the business going, you know, treat yourself a little bit.

Yeah, I'm glad you mentioned lenders because that is something that has held me back.

Probably one of my biggest mistakes has been just a few deals that ended up being mistakes.

They took a long time to sell.

I cashed my lenders out, paid them off, and then I have had a good amount of cash stuck in those deals.

And now at this point...

Thankfully, I've sold almost all of them, but many of them were on term.

So it's slowly coming back and the return is marginal.

And so that is something top of mind is just being absolutely sure that our due diligence is 100 percent before we buy anything so that I don't repeat that mistake and have hundreds and hundreds of thousands of dollars stuck in marginal deals.

Yeah, agreed.