Monday Deal Review Valueless Lots We are Buying (CFFL 0261)
Monday Deal Review Valueless Lots We are Buying
Jack Butala: Monday Deal Review Valueless Lots We are Buying. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack Butala: Jack Butala and Jill DeWit
Jill DeWit: Hello.
Jack Butala: Welcome to our show today. In this episode Jill and I talk about … It’s our Monday deal review. It’s Monday actually and we talk about buying valueless lots. Great show today Jill, let’s take a question posted by one of our members on successplant.com our free online community.
Jill DeWit: Dave asked, “I have a seller whom holds the property in an LLC. If I close via a mobile notary what documentation does he need to show the notary to prove he can sign for the LLC prior to handing him the cashier’s check? Is it the operating agreement?” Jack?
Jack Butala: I’ll tell you, this is a great question. It’s an excellent question. You know, we buy properties and you do or will buy properties from legal entities and LLCs and all that stuff. How do you know the guy is signing or the person signing for the LLC has the authority to sign? The thing about an operating agreement is it’s a legal entity that can hold property just like a trust but what’s interesting is I don’t think it gets as much attention about checking these signatures as let’s say a trust does. I know Jill has a standard procedure to make sure that this is okay that goes pretty quickly and I bet it’s the exact same procedure as a title agent would use. Right?
Jill DeWit: Probably.
Jack Butala: Go ahead. How do you do it?
Jill DeWit: Well, I do my homework first. Here’s the thing Dave. Long before I’m ever even looking at a notary and all of that stuff I would’ve made sure that the person I’m talking to and making this agreement and everything really is the person, they need to really be the managing member and it’s so easy to check this. You can go on to the state board, business board. I don’ know what the LLC commission is called, but anyway. I’m trying to think.
Jack Butala: Corporate commission.
Jill DeWit: Thank you. You can easily search by their LLC name or even maybe the member name and it’ll pull up and you can see right that that’s the right person’s.
Jack Butala: That’s a good question.
Jill DeWit: Then you can see too if there’s other people that are listed, but you want to make sure you have the managing member. If there’s a board, and there might be two managing members or something, then they both need to sign. You do that homework ahead of time. Then, I was going to say too, when I’m sending it to my notary, most notaries, that’s not their job. Their job is to verify that the person signing is the person named. They’re not going to do the homework or even know how to do the homework often to verify if, “Is this the right person that should be signing?” You don’t want it to get to that point anyway.
Jack Butala: The job of a notary is just to verify that the person that’s actually signing the document is actually that person.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: Their job is to do nothing other than that.
Jill DeWit: Right. Not supposed to verify they really do work for ABC and whatever.
Jack Butala: They don’t eve read this stuff and they shouldn’t.
Jill DeWit: Exactly. That’s right. I don’t need an operating agreement, I have it right there. Maybe there’s a couple people listed and there’s some questions, but I’ve never had that situation. I can check it myself.
Jack Butala: Right. In the beginning … By the way, the country recorder will not check this at all. If it’s XYZ LLC an Arizona corporation and John Smith signs for it and John Smith of XYZ corporation was on the vesting deed, that’s all they look at.
Jill DeWit: Good point. They’ll even say it won’t be on the vesting deed, it’ll say the corporation name.
Jack Butala: Yep.
Jill DeWit: They don’t even know if it’s really the managing member or not, it just says the corporation. They trust that you did your homework and they record it.
Jack Butala: Right. It’s up to you. It’s not that hard.
Jill DeWit: Good point, Jack.
Jack Butala: Just look it up on the Internet and then … I’ll tell you, if you’re brand new I would take it a step further if the person who’s signing has a really typical name like Steve Smith or John Smith or any name like that. Just take it a couple of steps further if not for any other reason just to learn.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: It’s Monday.
Jill DeWit: Yay!
Jack Butala: We looked at our deals. We looked in our database and our deals and we’re going to talk about them. Some of them anyway. What did you do this weekend Jill? Some funny stuff? Do you have any funny things that happened to us recently?
Jill DeWit: I’m sure I do.
Jack Butala: I don’t mean to blindside you.
Jill DeWit: It’s such a good question. If it’s a blur is that a good thing?
Jack Butala: Yes.
Jill DeWit: Okay.
Jack Butala: Yeah, it does.
Jill DeWit: We had so many people … Here’s good news, bad news. Good news is we’re set up out here in California. Bad news is we have a spare room.
Jack Butala: I know. Oh my gosh, you’re exactly right. You’d think it’s a good thing.
Jill DeWit: Bad news is we’re sure that we have a spare room. Oops. Good news is we have a lot more friends than I realized that we have.
Jack Butala: We have a calendar on our refrigerator like it’s 1971, you know? Jill’s got color coded crayons or markers or something.
Jill DeWit: Totally.
Jack Butala: There’s a schedule of when people are coming and leaving.
Jill DeWit: You know, I bought pillow for my friend a couple of years ago and now I need the same pillow and it says, “You never know how many friends you have until you live at the beach.” Which is so true.
Jack Butala: You know, that’s the same with boats. When you get a boat you find out who your friends are. That’s actually what the pillow says on that. Well, it’s not a pillow for boats, it’s like a plaque.
Jill DeWit: You know what’s really cool though? I’ve got to tell you. My wardrobe consists of nothing but shorts, tops, flip flops, and if I’m dressing up sandals.
Jack Butala: Somebody asked me this recently, it’s totally off topic. They said, “Do you find it hard to work in an environment like that?” Everybody’s having fun, it’s sunny all the time. Do you get anything done? Really?
Jill DeWit: I think it’s totally person specific. I think you and I, one of the reason we’re together and we’re so good together is we have a unusual self discipline that many people do not have. You and I will get up and go, “Gosh, I really want to go play today.” You want to go surf and I want to just go goof off on my bike and we’re going to go, “All right. I guess we’re going to get up at 5 and kill it so by noon we can go play.”
Jack Butala: I had the same answer, but just slightly different. I plan my day in my head like I do some stuff in the morning whether it’s exercise, take a motorcycle ride, all kinds of different stuff. I don’t exercise, I play and I burn calories that way. When that happens I sort of plan my day and when I get that itch, because you always get it. I can see it when you get it and it’s like, “I got to get the heck out of here.”
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: Well, I get that itch all the time so I think a lot of people do too so I just plan it out. I say, “By 3 o’clock all this stuff is going to get done”, or like right now we happen to be in a week where there’s a lot of IT stuff and some changes going on in our back office function. I have it in my head, it’s a mental thing that I’m not going to do it. I work on this stuff and that’s it and around 6 o’clock that’s it. We can go down to the beach or something crazy.
Jill DeWit: Exactly.
Jack Butala: It’s all in your head.
Jill DeWit: It is.
Jack Butala: That’s all.
Jill DeWit: It’s true.
Jack Butala: I’ll tell you what I don’t like because I’m from Michigan is when it’s overcast 320 days a year and I get a lot done. I don’t sit back and say, “Wow, I got a lot done because it’s overcast.” No. All I think about is going out here.
Jill DeWit: Got it. Good.
Jack Butala: I don’t think you ever had the misfortune of experiencing that Jill.
Jill DeWit: No, I have not.
Jack Butala: It’s awesome.
Jill DeWit: Never lived anywhere like [crosstalk 00:07:33].
Jack Butala: Another thing I adore about you is you don’t even know how bad it is back there.
Jill DeWit: Thanks. Want to talk about Monday?
Jack Butala: Today’s topic is Monday deal review. Every Monday we look at our deals that we’re doing and we talk about them.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: I put a trick topic in here. Valueless lots we’re buying. Are there any such thing as valueless lots? I don’t think so. What there are are things called paper subdivision and you hear this a lot from older more seasoned real estate guys and they scoff at it. “Aw, that’s a paper subdivision.” I’m here to tell you, forget about what those guys say. You want to gauge your property whether you buy it and then resell it based on the 4 As. We talk about it a million times. Attributes. Is it close to something? Does it have mountain views? Affordability. Is it cheap? Acreage, the larger the better and Access. Did I get them right? Access. Can you get to it? If it has all those 4 things, who cares? Who cares when it was subdivided? Who cares what the situation is? If it past all your tests and you could resell it and make some money, that’s what I say.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: Lot of the older guys say no. Anyway, I think … We’re not even buying any of those. I just wanted to bring that topic up.
Jill DeWit: Okay.
Jack Butala: What’s on deck? I know you looked at the acquisition thing. You live and eat and breath it. What are you buying right now that’s interesting?
Jill DeWit: It was awesome. The other day we had a run to the bank situation which is great. Run to the bank, get this in the mail. Quick, don’t let this go. That’s what happened. We’re buying, probably happening today, 10 parcels … Actually, I know it’s happening today. It’s 10 …
Jack Butala: I love that you don’t actually really … I mean, you don’t see the papers go out of the office, right?
Jill DeWit: No, I just like, “Quick! Run ! Go! Do this now!” There are 10 1-1/4 acre properties, one seller. What made it so exciting for me is, a couple of reasons. A) It’s 10 at one time. I love that. B) What they’re valued at. I could only find a few of the similar properties for sale out there and they’re listed at $2,500 to $3,000 and what I’m buying them for is $2,000 less than that.
Jack Butala: That’s good.
Jill DeWit: It’s a quick guaranteed double your money if you get it wrong and if you do it right you could make 4 times your money and you’re still under everybody else.
Jack Butala: It’s the same deal as the one that’s right at the top in the database and I looked at it too and I’m very familiar with that subdivision in that area. We’ll sell them for $3,000, for cash. We’re going to pay, I didn’t exacly look and I know you don’t like to disclose this, but I’m going to disclose it anyway.
Jill DeWit: Approximately.
Jack Butala: Approximately, we generally don’t pay less than $500 per property. I just think it’s silly to go through it. Let’s just say we’re going to pay $500 and I bet that’s about what we’re going to pay and we sell 10 of these things for $3,000 – $3,500. Let’s say we clear $3,000, and we will. That’s $30,000. How much time are you going to have in this whole thing?
Jill DeWit: Gosh, me personally?
Jack Butala: That’s a great [crosstalk 00:10:47]. If you’re a one man show, how much time?
Jill DeWit: Okay, if I’m a one man show … That’s a very good question. I spend a couple of hours researching them. Double checking they pass all my tests and then I have to go to the bank, I get a cashier’s check.
Jack Butala: Oh my God, that’s painful.
Jill DeWit: Gosh, that’s a lot of time. Let’s see here. I don’t know. Half a day maybe.
Jack Butala: I’m going to say end to end if you’re brand new 8 hours.
Jill DeWit: Okay.
Jack Butala: For us it’s probably closer to 2.
Jill DeWit: I say a whole day because on the buy site and then I’m recording and all that good stuff. 8 hours of work for … How much did we say, $30,000?
Jack Butala: 20 or 30. You can bank on 20.
Jill DeWit: I like those numbers because then it makes people think, “If I do it all wrong.”
Jack Butala: You do like, I don’t know, 10 of those a year. What? 10 of those a year. What’s $30,000 x 10?
Jill DeWit: Hmm, 300.
Jack Butala: Ten deals a year, $300,000.
Jill DeWit: I gotcha.
Jack Butala: My point in all this is that … I’m so glad that you chose that set of properties to talk about because there’s other things in there, big properties. 160 acres and that’s going to cost $30,000 go buy it and we’re going to make 40. Those are tougher deals to do for a lot of reasons. This is what I would say is a mitigated risk, pretty much a zero risk deal. There’s no such thing as zero risk, but it’s 99.9% going to happen.
Jill DeWit: They’re easy to sell. It’s stuff that I can put on the website and people can go and check out with their credit card. People are going to have $2,800. They’re not going to have $30,000 available on their credit card. From my one deal that I’m holding out for like you just said Jack.
Jack Butala: Right.
Jill DeWit: That’s a whole different thing. That’s like you said and I have people who come to us with these really lofty goals. I’m like, “Let’s think about this.”
Jack Butala: Let’s get the first deal done.
Jill DeWit: Yeah. Do a couple of these and it’s so much less risk doing 10 of these versus 1 biggie. This was easier, so much easier.
Jack Butala: Exactly, Jill and it really mitigates risk. Multiple unit deals are the best. If you listen to this show at all, we always talk about it. You can do one signature, one deed, and buy 10, 15, 20 properties all at once. It’s the exact same amount of work in my opinion as buying one property, but you make 10 or 20 times more.
Jill DeWit: Mm-hmm (affirmative). I was going cover too just a couple of things that were important that I want people to know about. When you run to the bank situations. One, it’s priced right. It’s a multi unit deal. You’ve done your homework. It’s really easy and clear to see where they’re coming from. There’s no issues about title or anybody’s … This is one of those so straight forward it’s not even funny deals. Also, another key thing while I had everybody running to the bank is because there’s so few of … There’s some comps, but not a lot, and that’s not a bad thing. That’s a good thing because that means that, “Oh my gosh. This is not a saturated or whatever. There’s not 1,000 of these for sale on this market. There’s less than 5. That’s all I could find.”
Jack Butala: That brings up a great point.
Jill DeWit: I’m excited.
Jack Butala: I’m sorry. You have another one?
Jill DeWit: No, go ahead.
Jack Butala: That brings up a great point. If you’re walking around or driving around a market looking for a house and every house is for sale, it’s got a sign in front of it or if there’s like 4 houses that have signs in front or there’s none. Which one would you choose as a buyer?
Jill DeWit: I’m in the middle or … As a buyer?
Jack Butala: As a buyer.
Jill DeWit: As a buyer. Well, definitely in the middle or the none.
Jack Butala: As a buyer I would choose a million real estate signs because I think that the price is lower.
Jill DeWit: Interesting. Well there is that.
Jack Butala: There’s a lot more competition.
Jill DeWit: Well, that’s true too.
Jack Butala: That’s why we teach, just check the county that you choose to work in, check to see if there’s a lot of stuff that has back taxes on it. That’s one of the reasons. It’s very simple. You can just to … There’s websites all over the place that list it. That’s kind of like their business. In one convenient place they show you how many back tax properties are listed and when the auctions are and all that. I’m not advocating in any way that you buy back tax property. A lot of people talk about that, I don’t think it’s the right way at all. All I’m saying is it’s an indicator that you might get it cheaper. That’s all I’m saying.
Jill DeWit: You’re right, I answered that wrong. That’s kind of funny. No, I’m going to pay top dollar.
Jack Butala: I think it’s Monday and it’s early and I know why.
Jill DeWit: Well, you know what? You know what it is?
Jack Butala: I was involved in most of it.
Jill DeWit: I don’t know how to buy that way because I don’t drive around looking at signs.
Jack Butala: There you go.
Jill DeWit: Which by the way is a whole other thing. The two guys in the elevator.
Jack Butala: You got to tell that story.
Jill DeWit: All right, here’s the story.
Jack Butala: I was just thinking the same thing.
Jill DeWit: Oh my gosh. This is the funniest thing. All right, I’m sure they’re not listening, but it’s just hilarious. I am here at South Bay at a public library in an elevator and these two guys are in this elevator and they’re talking about properties so my ears perk up. this guy’s talking about … This one guys says, “Well, where do you find the properties?” He’s like, “Driving around and I have this person now who’s got some data.” I’m like, “Oh.” Whatever they said, I wish I could remember. It was something I had never ever heard of and I’m like, “This is not sounding promising.” He even kind of said that whatever they’re getting this from it’s not promising. I couldn’t help it, I had to pipe up and I said, “Are you talking about driving for dollars?” They kind of both looked at me and they’re like, “What’s that?” I’m like, I said, “You know, like driving around.” They’re like, “Uh.” I said, “Driving for dollars is driving around looking for distressed properties because you want to research it and see about buying it. They’re like, “Well, yeah. We just have never heard of it called that.”
Jack Butala: I forget what they call it.
Jill DeWit: I know and then it was so funny because the one guy goes, “Yeah, I was just saying I don’t do enough of that.” I just wanted to pound my head against the wall and I said, “Hold on. There’s a better way.” Anyway, we didn’t … It was really weird how it ended. I didn’t get a chance to … I was in a hurry, they were in a hurry and I didn’t want to sound like, “I’m trying to sell you something”, but I was just trying to help the guy out saying, “You’re not doing it wrong. Go with the data. There’s a better way.” You know, kind of thing. Actually, I think I did say, “Why don’t you just send a letter to them all, let them call you if they ever want to sell”, kind of thing and I could see the wheels kind of turning. Here’s what’s funny. The one guy had to run and he kind of went with him and you can see he’s thinking about it and I had to run into the library and take care of my thing. I just had this feeling and I was in and out of there in 5 minutes. I just had this feeling too that those poor guys are probably looking for me in the library and they couldn’t find me after I planted that little seed and then I split.
Jack Butala: I love it.
Jill DeWit: It was really funny, but yeah what the heck. A) Oh my gosh, they’re doing it wrong. B) What do they call it?
Jack Butala: It’s funny.
Jill DeWit: Right.
Jack Butala: It gets you thinking about how many people are out there today, especially real estate agents, who are out getting listings.
Jill DeWit: Right. Literally driving.
Jack Butala: That’s not how it works.
Jill DeWit: Like it’s 1979.
Jack Butala: I explain all this at datatodoorstep.com. I’m not selling anything, I’m really not. If you go there I explain why so many people fail at this. I know because I did. I did it all wrong.
Jill DeWit: Well here’s my thing. No wonder those people are exhausted. Do you why? They have to work so hard for every one deal. I really would love to know their numbers. If I’m, I’m just curious. I might spend 3 days of driving.
Jack Butala: We calculated it one time.
Jill DeWit: Maybe I come up with 10 of them in a research. What do you even find if that many?
Jack Butala: It’s terrible to think about it. Just send some mail out. Send a bunch of offers out.
Jill DeWit: Jack, you and I know this. We all know because we’ve done this, we’ve all looked at them, that dilapidated house in that fantastic area has been sitting untouched for 6 months for a reason. There’s an issue. There’s a title issue.
Jack Butala: Yep. Somebody died.
Jill DeWit: Because trust us, if money could solve it, it would’ve been solved.
Jack Butala: That’s not the deal you want to do right away.
Jill DeWit: Exactly.
Jack Butala: You want to send an offer to everybody in that market that you’ve chosen and see which one sends it back.
Jill DeWit: Exactly.
Jack Butala: You want to send them an offer price that you’re going to, Like Jill said 3 times today, where you run to the bank to get the money. That before that seller changes their mind. The condition of the asset has nothing to do with a good deal.
Jill DeWit: You want to get there before anybody else, but before they’re not even on the MLS.
Jack Butala: I bet 50-80% of the people that invest in real estate – and I was one of them – the first few years of your life are doing it wrong.
Jill DeWit: Yeah.
Jack Butala: You want to find somebody who just that day said, “Man, I’m selling this.”
Jill DeWit: I don’t want to work that hard. You know what? I’m very happy not working that hard and making a lot more money. Next.
Jack Butala: This is The Technical Two. Two minutes of property investment advice from our 15 year, 15,000 transaction experience. As I said earlier, do not listen to these old school commercial real estate guys that use phrases like, “That property’s out there in the middle of nowhere. It’s worthless. Oh that’s a paper subdivision, ha ha ha. That’s worthless.” Listen to your gut. Listen to people who are making money right now and doing it the right way, but most importantly listen to your gut. There’s no such thing in my opinion as absolutely valueless real estate. If you have a question or you want to be on the show call 800-725-8816. My personal favorite part of the show, Jill’s inspiration of the day.
Jill DeWit: There’s a lot of negativity out there folks. Don’t get sucked up in it.
Jack Butala: “This is a paper subdivision.”
Jill DeWit: Well, yeah. That could be one of them.
Jack Butala: “That property’s in the middle of nowhere.”
Jill DeWit: There’s a lot of … Yeah, I mean that’s really not where … That’s good though. You’re right. You know Jack, you’re right. That’s a really good example that I hadn’t even thought about. Just that kind of negativity, but I’m just saying …
Jack Butala: “Don’t take a chance young man. Go get a job. Work that job till your sick. Be a man.” No, I like doing that. I’m sorry go ahead.
Jill DeWit: It’s okay. It’s easy to get sucked up in it. You could start off having a really good day and then …
Jack Butala: Are you done now?
Jill DeWit: Listen Mr. negative over there. Are you done yet?
Jack Butala: You know it turns out that I’ve got a tremendous amount of examples that I could say right now at the drop of a hat about being negative.
Jill DeWit: Yeah, I bet you could. Thank you. Oh my goodness.
Jack Butala: That’s the name of a show. How to be negative by Jack. Jill won’t be attending.
Jill DeWit: Exactly. I will not be there. No, you’re right. I think I made my point.
Jack Butala: Anyway, I keep interrupting you. I’m going to zip it now.
Jill DeWit: You helped me make my point.
Jack Butala: I agree. You’ve got to be positive about the whole thing. You’ve got to trust your gut, right?
Jill DeWit: No. I love you Jack, it’s still not my point. There’s people out there … It’s not your gut, it’s your head. Don’t let people get in your head and mess with you. You’re having a good day. Make it a good day. People are going to be yelling at you. People are going to be putting demands on you. People are going to be saying you’re driving too slow and you didn’t take off fast enough at the light. I mean, just silly stuff, but it adds up. There’s so much negativity out there and I don’t know why and it sucks and I know it, but don’t let it get to you and don’t let it get in your head. That’s it.
Jack Butala: Excellent advice.
Jill DeWit: Thanks.
Jack Butala: Hey, join us in another episode where Jack and Jill discuss how to use information, that’s me.
Jill DeWit: And inspiration, that’s me.
Jack Butala: To get just about anything you want including being positive.
Jill DeWit: Thanks. We use it everyday to buy property for half of what it’s worth and sell it immediately.
Jack Butala: You are not alone in your real estate ambition. You know what somebody else said to me recently?
Jill DeWit: What’s that?
Jack Butala: “Hey, have you gotten over the honeymoon period so to speak of spending a lot of time in Southern California?”
Jill DeWit: Who said that? I’m curious. Is it someone I know?
Jack Butala: One of your immediate friends. Yes. Well, you know who. You know who it is. They live very close.
Jill DeWit: Oh, really?
Jack Butala: Mm-hmm (affirmative). They wear dresses, not pants. It was one of those answers where you don’t even think. I said, “No. No way and I don’t think that’s going to happen anytime soon.” I’ve been to Paris a million times and I got over that in two days. It’s going to take … I don’t think it’s ever going to happen. I love it here. I love the attitude of the people. I love the weather. I love the neighborhoods.
Jill DeWit: That’s very interesting. Maybe too because we don’t that … We have a different life than a lot of people. It doesn’t get to us. You and I were talking about that the other day like, the people that live where we live, but they have to commute to L.A. everyday. That would get on my nerves really fast.
Jack Butala: There’s a lot of alternative ways to get downtown. I was riding really early this morning and I saw that there’s commuter buses and some of them are lickety-split. They don’t even stop.
Jill DeWit: They only stop at like a few stops.
Jack Butala: Yeah, this neighborhood and then downtown L.A.
Jill DeWit: Right.
Jack Butala: What a great way to get a ton of work done.
Jill DeWit: Exactly.
Jack Butala: Like you said earlier in the thing, in your inspiration piece. A commute is a negative thing, let’s turn it into a positive. Let’s make it an hour long work session and get a bus pass. Probably cheaper than driving a car anyway because you’ve got to park and the whole thing.
Jill DeWit: Totally. Exactly.
Jack Butala: No, I have not. This is my little talk at the end. I have not gotten over through the honeymoon period here. I’m still elated to wake up in the morning. It’s a lot of fun. Hey, information and inspiration to buy undervalued property.
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