When you Don’t need Title Insurance (CFFL 0297)
When you Don’t need Title Insurance
Jack Butala: When you Don’t need Title Insurance. 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 with Jill DeWit
Jill DeWit: Hello.
Jack Butala: Welcome to our show today, in this episode, Jill and I talk about, when you don’t need title insurance. This is going to be a shocker. Great show today, Jill, before we get started share something funny that happened to you recently.
Jill DeWit: Happened to me? I’d like it to be all about me.
Jack Butala: JustJill.com
Jill DeWit: That’s right, that’s so funny. No I promised you a story, so I have a good one. Thursday night in Boca Raton, we are at, this resort is huge by the way, it’s 300 and 60 acre property.
Jack Butala: Geez. 300 and 60 acres.
Jill DeWit: I am not kidding. We are talking retired professional tennis players are who you get lessons from there. They do cost $6,000 a day for the lesson, but, that’s what’s there. I’m like holy cow. My girlfriend and I, we decide we’re going to go over to the beach resort, you could either get there by boat ferry during the day or there’s a shuttle at night. We took the shuttle over, because it was at night, all right, it’s Thursday night, we’re here at the beach part, it’s got to be more happening than the main resort, let’s see what’s going on, and there was like a couple restaurants, a couple bars, but nothing really good happening. We’re walking around trying to find someone who could really tell us, where to go here, come on we’re in Boca Raton there’s a lot to do here, there’s a lot of money here obviously.
Where’s everybody hanging out? They told us where to go, and we’re trying to figure out how we want to get there. We were just going to grab an Uber or something, and they kind of look at us, and go, hey you know, this guy, his name is Steve, Steve can give you a ride. Steve looks around and goes, yeah, I guess I can. Steve runs in, grabs the keys, walks out, and puts us in the back of a Mazarati. It’s a hotel Mazarati.
Jack Butala: Wow.
Jill DeWit: This is where it’s so funny, it’s technically for emergencies. We’re all laughing about, we had a dinner, girl night emergency that we needed a ride. It was cute, because he’s always looking for a reason to drive the hotel Mazarati around. He delivered us to where we needed to go, and we had a nice time. It was really funny though.
Jack Butala: Please tell me you got a picture of this?
Jill DeWit: I do have picture of the hotel Mazarati, and it has a personalized license plate, it says beach something, I don’t know what it was. I think it says beach club. That’s it. The car is set up to stay at the beach club part of the resort. It was just hilarious. Good stuff.
Jack Butala: Hey let’s take a question posted by one of our members on SucessPlant.com our free online community.
Jill DeWit: Okay. Curtis asks; Hey guys, got a few different signed offer letters back on a recent campaign but the properties are surrounded by BLM, Bureau of Land Management, and private properties. In order to get access on to the properties, you’d have to go through BLM, Bureau of Land Management, from the main roads. I asked the county if that was okay, and they said to get permission from the Bureau of Land Management.
Jack Butala: That’s you’re right answer.
Jill DeWit: Yep, I’ve reached out to them a few times, but I haven’t heard back to confirm, BLM’s website, seems like it may be okay to drive through, but I didn’t want to assume anything. Have any of you guys bought land surrounded by Bureau of Land Management, if so, do you need anything formal granting permission to cut through to get to your parcel? Thanks.
Jack Butala: This is an excellent question, and just like yesterday, man we’re getting some great questions.
Jill DeWit: Yeah.
Jack Butala: Proud of our members. The answer is, yes I have purchased tons of property that’s all surrounded by Bureau of Land Management, and it’s a huge attribute. We haven’t talked about it in awhile but, we’ve judged the quality of the properties that we buy, by the four A’s. Acreage, the larger the better. Affordability, the cheaper the better. What is it, access, the better access, access is ultra important, and then four is, what. Attribute.
Jill DeWit: Attribute.
Jack Butala: Well, BLM, it’s never going to be built on. Faring some strange stuff, there’s an extremely good chance, so being surrounded by Bureau of Land Management property is great. Do you technically have to have permission to access it? I think the answer is no, and I would sell it that way. I would say, look, this is surrounded by BLM, isn’t that great, it adjoins all this property. If you want to get technical about it, if you want to build a cabin on it or something like that, you might have to get permission. From what I hear, it’ doesn’t take too long. You have to go through the process, every office is different, and sometimes they are really good about it, and they do it really quickly, sometimes not. I don’t think this is going to deter anyone from purchasing the property. In fact I think it’s a great attribute. I hope that answers it Jill.
Jill DeWit: Yeah, I have a question, my understanding, tell me if I’m wrong, maybe it’s Army Corps of Engineer. Okay, I’m getting BLM confused with Corps of Engineer. Corps of Engineer land, is for like irrigation, and things like that right okay? Does BLM every serve those kind of needs too?
Jack Butala: Honestly, the property that I’ve seen with Corps of Engineer issues, it’s in the deed. It’s actually in the legal description.
Jill DeWit: Okay.
Jack Butala: You’re going to find usually find it there.
Jill DeWit: I can’t imagine to, even if it was one big circle, of BLM land, around your big property, that they would restrict.
Jack Butala: No.
Jill DeWit: No legal way that they could do that.
Jack Butala: Unless it’s like an area 51, X-Files thing, the feds are going to do whatever they want. That’s the reality of it.
Jill DeWit: Love it, that’s it.
Jack Butala: Here’s a funny story. I purchased a bunch of property one time, it was like 10 lots. It was the 10 lots in the middle of a federal park. It turned out that they were incredible valuable, it was the only private property for hundreds of miles.
Jill DeWit: That it made it more of an attribute.
Jack Butala: Oh my gosh. This was a long time ago, we did fantastic on those properties. I talked to another member, our senior member of our group who did the same thing, and he had the same, I can’t buy these, I can’t get to them, and I said man, you better buy those as fast as you can.
Jill DeWit: Yeah.
Jack Butala: He did great on them to. In his particular case, there were no roads to the property, but I said, you still should buy these because, it’s just a great thing. Nothing’s going to be built there. What a great attribute, this whole topic, I went thought his in exact detail with a different member recently on a call, and he was very concerned about it. I guess, I’ve never been concerned about it, but I guess it’s good that they are.
Jill DeWit: Honestly, once or twice you have buyers that really sincerely want property, that’s it’s hard for people to get to. They want a GPS, they want an adventure. They want to four wheel, and go out and put a tent up, and camp there, and that’s all they can do there. You have one or two of those buyers, and you go okay, I get it. That’s one of the things that I constantly tell our new members, is that, hey hold on a moment, just because it’s not your cup of tea doesn’t meant that somebody else won’t love it. I’ve learned that over time, I want to be in a small place, by the water because I love all the people and the commotion. For a lot of people where I want to be, they would go oh gosh, get me the heck out of here. I hate it, you can’t you can never tell.
Jack Butala: It’s funny you bring that up because from where I’m doing the show with you, and you know this Jill, from our town house in Old Town, Old Town Scottsdale Arizona.
Jill DeWit: Yeah.
Jack Butala: About 20 yards from us a micro developer just put up three houses, and they range from $900 thousand to $1.4 million, you want to talk about attributes, Jill and I paid $80 thousand dollars cash from the bank during the downturn for the town house that we live in. It’s the same lifestyle, we’re access to the same restaurants, it’s the same thing.
Jill DeWit: Exactly.
Jack Butala: They have a lot more square footage, but so what.
Jill DeWit: Yeah.
Jack Butala: I mean that much more, that’s just so. In a round about way, we’re saying the same thing.
Jill DeWit: Wonder what that place is worth right now, I don’t want to look ’cause we’re not going to sell, okay. Yeah I don’t want to know.
Jack Butala: I’ve give you multiples.
Jill DeWit: With the upgrades and everything, let’s see.
Jack Butala: It’s about worth about 4 times.
Jill DeWit: Yeah okay.
Jack Butala: Just below 4 times what we paid. What we [inaudible 00:08:53].
Jill DeWit: I still don’t want to sell.
Jack Butala: Oh heck no. Jill gutted the thing, it’s gorgeous now.
Jill DeWit: Thanks.
Jack Butala: I love it more than living in a big huge house. Way more.
Jill DeWit: Yep, thank you.
Jack Butala: What’s this show about?
Jill DeWit: Oh yeah.
Jack Butala: If you have a question or you want to be on the show, reach out to either one of us on SuccessPlants.Com. I was told by our staff, that we have the busiest weekend since we opened that website.
Jill DeWit: On SuccessPlants?
Jack Butala: SuccessPlant, yeah from a number of questions and the bandwidth and the whole thing. It’s working out really well.
Jill DeWit: Good, I was in there a bit last night, so I’m glad.
Jack Butala: Maybe it was you.
Jill DeWit: Maybe it was me.
Jack Butala: Did you just hit the enter key like 7 thousand times?
Jill DeWit: Yeah, totally, logged in, logged out, I was having all kinds of tech issues, just kidding. No.
Jack Butala: Today’s topic, when do you need title insurance and when don’t you. Well a lot of people are shocked by this, a lot of people say, you always need title insurance, absolutely you need car insurance 100% of the time, it’s the law. You have to have your house insured, right? What if it burns down? Well, that’s not the case with real estate and people are shocked by this, and it takes a little bit of a learning curve to understand how and why.
Here’s our rule, and then I’ll back up from there and you may or may not apply it to yourself. In this asset type, what’s so funny?
Jill DeWit: I’m sorry, that’s a good, you may or may not apply this to yourself.
Jack Butala: Well, a lot of people clicked off.
Jill DeWit: The case Jack says.
Jack Butala: A lot of people clicked off the whole show just now.
Jill DeWit: Crap Jack says, that’s hilarious. I wrote that one down.
Jack Butala: With our asset type, which is land, vacant land. Most of the time, you can’t. If it’s unimproved get financing, so you have to pay cash or you’re not going to own it. That prompts a lot of people to sell their property, and it drives prices down in my opinion.
When we pay less than $5 thousand dollars for a property or a group of properties, we do not, consciously do not, get title insurance. Just because, I don’t believe that there’s really anything that’s going to go wrong with the property.
It’s for a number of reasons, number 1, we look at, we kind of do a title agent thing ourselves. We look at the vesting deed, we go through the motions probably 80% or 90% of the motions of what a regular title agent would do anyway. Does this person own it, is it changed title before it okay, is there basic access, and on and on and on. We elect not to add $800 to $1,000 to the price to get a title policy.
Now does somebody sometimes the people who buy it from us they say, oh I’m going to put a house on this and live there. Then they come back to us and say, help us get title insurance and that’s fine. In general there are many many times, I would say Jill, probably 50% of what we buy, maybe 60% we don’t get title insurance. It’s not as unsafe as people thing.
Now, should you buy a sky scraper this way? Absolutely not, and I want to bring up now to, that there’s a schedule B exception in all title policies and if you’re in the business or thinking about trying to get in the business. Try to get a policy and take a look at those schedule B exceptions. You’re going to be shocked at what’s accepted. It’s what is excluded in a regular title policy. It’s a lot of the normal stuff that you think would be included.
My whole point to this podcast is, you don’t need title insurance all the time. You think you do probably because all most all the real estate that you’ve been exposed to contains a lender, and lenders make you get it.
Jill DeWit: I was just going to add, like an exception here and there, just so you know, there’s always going to be an exception. I don’t want anyone to take it like, they never do under $5000, so I never do under $5000. There are times that we do, there are properties that are worth way way more than that, maybe I’m buying it for $3000. I have just done this recently, and you know what, it was such a great deal and there was a need for title insurance because one of the family members was not still with us, and then there was like, I can’t remember, someone in the hospital not really coherent.
Jack Butala: I remember that.
Jill DeWit: There are now and then, might be a need, where you go, you know what, this is one of those. I know I’m only buying it for $3000 and I’m going to sell it for $15, I could afford to put a little into it, to do the title insurance, which I think is like $800 or something like that in the end, $750, $800, it was worth it. In the end of course, what I’d do then, of course is like Jack said, now the property’s even more valuable because it comes with title insurance. That’s a good thing.
The other thing I wanted to point out for me is, when you were describing Jack, how we go back and we really are looking up and doing our own homework, and we’re going back and looking at the vesting deed, and even sometimes beyond the vesting deed, because we have access to that, I’m acting as a title agent.
That’s why I feel so good about these. If I’m buying a property for $1000 and I have the vesting deed in my hand, and the same husband and wife, are selling it and they are alive today, and they’ve owned it since 1962, and they pay the taxes all the way up till today, I’m feeling pretty good about this, that I don’t need title insurance.
Jack Butala: That’s a good boots on the ground way to describe it.
Jill DeWit: That’s exactly how I do it.
Jack Butala: When we began, when I began this whole thing, I like most people, I never knew that you could buy it without title insurance so I was getting policies out. I was buying property for $500 and spending $800 on a title policy, and I finally wised up to and said, eh, I don’t think I need to do this.
Jill DeWit: You know what I think to. Here’s a good way to think about it, it’s got to be really clear cut, number 1. If the title policy is more than the property that you’re buying, then you really should think about it. No seriously, because if that went all sideways, and you refunded the buyer, you know what I mean or whatever, you’re still ahead.
Jack Butala: Here’s another thing, if you’re buying a group of properties. Jill and I do this all the time, I love multi-unit deals, if you’re buying 10, 15, 0r 20 properties from one person and you can allocate the costs of an $800 policy throughout. It doesn’t cost very much for multiple properties to get title insurance. It’s still $800 or $900 for all of them. Then you really want to do it, and when you do it, you want to take that PDF, scan it in and put it on the posting all over the internet. It makes it more valuable, so they can do a little more research. It just separates you from the next person, the next seller down the line.
Jill DeWit: Sometimes, it just doesn’t make financial sense. I have an ad campaign I was putting together last night and this morning, that I found one of our members put in SuccessPlant. He’s just non stop buying properties for $100, selling them for $1000. All day long, and it was like, thank you for sharing that, and I thought, I’m going to make a little campaign and I’m going to do a little thing and put it out there to show everybody. This is the real stuff.
Am I going to sit and buy with a $100 selling it for $1000.
Jack Butala: Can you give the persons first name or not?
Jill DeWit: It starts with an L.
Jack Butala: Oh so it’s Luke? We’ve got multiple Lukes.
Jill DeWit: We have multiple Lukes. I think it’s the first Luke, but it’s just so darn funny. He just put a little note in, about I just found a little niche here, I’m just going to keep on doing these. I’m like, brilliant, people don’t believe that it happens and it happens all the time. Think about it, $100 to $1000, just do that all the time. That’s all you do, if that’s your business model, you’ll be just fine.
Jack Butala: We have a membership call, every Thursday, we host it Jill and I, we host it and it’s all Q&A we talk about stuff. This question came up, I’m buying more expensive property, how should I write the offer. Obviously, I’m not going to buy $100 for this, it’s more expensive. I said, that’s great because and you should offer a little bit more for more expensive property and there’s formulas we talk about and all that, but in the end what you’re really doing is finding a situation not a property. I can hear everybody go OHHHHHHHH on the other end of this thing. You’re not looking for property, you’re looking for a situation.
Jill DeWit: Yes.
Jack Butala: A seller situation. Whether they have $100 thousand property or a $4000 or $10,000 or $1000 property, you want to offer them less, and a lot less in most cases, so price doesn’t matter.
Jill DeWit: Jack you just touched on it, that is the key. People go what do you mean you don’t look at it, I’m not looking at it like that, like you just said. To you and I, it’s numbers, to everybody else it’s a sunset, we don’t look at it like that.
Jack Butala: It’s not the real estate.
Jill DeWit: I’m not going to stand on it and think about how pretty my cabin’s going to be. That’s for the end user. I’m the flipper in the middle. I’m like yep, this makes sense, buy it, flip it, move on. There yeah go.
Jack Butala: Join us on 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.
Jill DeWit: We use it everyday, to buy property for half of what it’s worth, then sell it immediately.
Jack Butala: You are not alone in your real estate ambition. I’m so jealous that you’re in California right now.
Jill DeWit: I know, I’m sorry you’re not here.
Jack Butala: I’m sorry.
Jill DeWit: How fast can you get out here?
Jack Butala: Soon enough it’ll happen. We are, our new operations guy’s killing it. He and I worked all weekend on about 4 projects and some amazing stuffs going to come up.
Jill DeWit: Cool.
Jack Butala: We’re right on schedule and we’re web enabling our CRM application really a lot faster than I thought it was going to happen. We’re going to develop our product so that our members, certain members can access that and use the exact same. I spent a couple hundred thousand dollars developing this tool, about 4 or 5 years ago, we’re going to put it up on the web so you can access it and use it as a CRM, use it the same way we use it.
Jill DeWit: Cool.
Jack Butala: Pretty exciting, there’s like 6 or 7 other things happening so. I do need to be here but, what a different lifestyle, I don’t want to spend a lot of time on it. I swear I’ve gained 5lbs. In California, you know, we don’t even have a television. There’s just too much fun stuff to do, and it’s right at the doorstep.
Jill DeWit: You want to hear something funny about that?
Jack Butala: I’m not knocking Scottsdale, I’m just saying.
Jill DeWit: Kid number 2, totally agrees with the no TV.
Jack Butala: Oh, wow, what’d you do to him?
Jill DeWit: [inaudible 00:19:29] No, but he say’s you’re right, he says TV’s stupid who watches TV, if you want to watch something, you watch Netflix or Youtube or whatever.
Jack Butala: Number 3 said, why would you watch TV because you can’t do anything with it. You can’t, you just have to sit there and watch it, it controls you. Instead of doing something, on a computer or whatever. You can do stuff, and that makes complete sense.
Jill DeWit: You know what kid number 2 got to meet one of his YouTube idols, like literally on Saturday.
Jack Butala: Oh really?
Jill DeWit: Yeah.
Jack Butala: What’d you guys do?
Jill DeWit: Yeah, it’s really cool. I didn’t realize, he’s gotten into these, he likes the Japanese Classic cars, there’s a Japanese Classic car show out here, we’ll how’d he find out about it? From this You Tuber that he watches that lives in New Jersey. Who’s a former BMX guy, his name’s Ryan, I don’t know his last name. He’s a BMX guy gone viral and he has all this money, dad did shop and whatever, and now he’s into Japanese classic cars, and he does YouTube thing, like daily about cars and all this good stuff. Kid number 2 has been watching this guy, he found out through YouTube that the guy’s going to be in California when he’s in California, when he’s at the Long Beach car show. Of course we went to the Long Beach car show, it’s so funny.
He got to bump into the guy, and shake his hand and take some pictures. It’s not like the guy’s really famous, I think he’s at, he doesn’t have a million followers, but he’s in the 500 thousand follower range, and growing. It’s kind of funny.
Jack Butala: I saw the stuff you guys posted on facebook, it looked like a lot of fun.
Jill DeWit: Yeah, it was really good. Cool.
Jack Butala: Information and Inspiration to buy undervalued property.
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