Large Acreage Deals We are Doing Now (CFFL 326)

Large Acreage Deals We are Doing Now

Jack Butala: Large Acreage Deals We are Doing Now. Leave us your feedback for this podcast on iTunes and 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: Welcome to today.

Jack Butala: Welcome to our show. In this episode, Jill and I talk about large acreage deals that we’re dealing, right now. It was a highly requested show for some reason.

First, let’s take a question posted by one of our members on the LandAcademy.com, online community, it’s free.

Jill DeWit: Cool. John asked, “hey guys. I read again and again that subdivisions and their respective POAs/HOAs,” those are home owner’s associations, “are no good, and to avoid. Is there a way to determine if a piece of land is or isn’t in one? Would you just look for a legal description without a subdivision name? Should I really be avoiding HOAs?” All good little questions.

Jack Butala: There’s like three questions in here Jill, but can you just answer the big basic one first? Should you avoid HOAs or POAs?

Jill DeWit: Not at all.

Jack Butala: That’s what I think!

Jill DeWit: No, it doesn’t scare me at all/however you want to go in with your eyes open. You want to know, what are the fees, so you can properly advise your buyer. You want to make sure you don’t have … You’re not buying one that has 500 dollars in … Or whatever it is. You just need to know if there are any back fees that are due on it because when you buy a new property, you don’t get to start from zero. If there’s some back … Just like back taxes, if there’s some old HOA fees that are carrying over from the former owner, you get those. You just want to make sure you go in with your eyes wide open on that.

Jack Butala: There’s no way I can improve on that answer.

Jill DeWit: Thank you very much.

Jack Butala: It’s treated just like taxes.

Jill DeWit: Yeah exactly.

Jack Butala: You have to call around. The easiest way is just call around and find out if that subdivision’s got an HOA. They’re very, very not common. The properties, they’re … I mean, I can list probably six or seven subdivisions around the country where I know they have HOAs, and then … I’m almost never surprised by, “oh my gosh, that, I didn’t check, that one didn’t have one.”

This question … This person’s new and that’s awesome, it’s a good question, but you might not want to just worry about it too much. Just check.

Jill DeWit: Yeah, just know what you’re doing. To find out, an easy way to do it, is call the county and you can quickly ask them, “hey, this is Southwestern Estates, is there an HOA?” You can even do that as you’re looking at it. Google “Southwestern Estates”, or whatever it is, and you’ll probably find the association. Their webpage will probably pop up, a lot of them are “.orgs” I’ve found. One little nice tip, if you’re ever buying bulk stuff like that, in an HOA, it is not crazy to talk to them about negotiating the back fees on an HOA.

Jack Butala: Yes, all those fees, unlike taxes, are all negotiable.

Jill DeWit: You can actually call them and go, “look, I’m buying 10 parcels in your area, talk to me. What can we do to get these guys back on track.”

Jack Butala: Yep.

Jill DeWit: Good question.

Jack Butala: Intertwined, was on the last question, would you just look for a legal description without a subdivision name? No, there’s no way to tell, as far as I’ve ever seen. No way to tell whether or not there is an HOA associated with a piece of property in a legal description. The vast, vast majorities of subdivided properties do not have HOAs attached. You don’t want to just look for properties that are unsubdivided. You’re going to miss a ton if you do that.

Jill DeWit: You’ll miss a lot. We’ll buy them all, but you won’t catch that.

Jack Butala: That would truly be tragic. You’d be leaving a ton of property out.

Jill DeWit: A lot of money on the table. Is that what you started to say?

Jack Butala: Yeah.

Jill DeWit: Got it.

Jack Butala: Do you have a question, or you want to be on the show, reach out to either one of us on LandAcademy.com. Today’s topic, this is the meat of the show, large acreage deals, we’re doing right now. Jill, this is a blast.

Jill DeWit: I know.

Jack Butala: I was thinking about it a little bit recently and before we started this episode, we’ve kind of migrated, not even consciously, to doing larger acreage deals. It’s because they’re just, from a dollar standpoint, more profitable. We’re doing some huge deals right now. We’ve got multiple 160 acre properties in multiple states that we’re purchasing between nine and 16,000 dollars, which is between 50 … Let’s say 60 to 100 dollars and acre, and reselling them for, between 250 and 500 dollars and acre. If you’re not in your car, do the math on that.

Jill DeWit: I used to think that –

Jack Butala: It’s profitable.

Jill DeWit: I used to think that anything north of 20 acres was large acreage. For some people, I’m sure they think five acres is large acreage. Isn’t that funny? We’re not even talking 40 acre parcels, like eh, it’s just 40. Now when we talk … It’s funny how the conversations go. I see this in our members. I see the look of awe in their eyes when they go, “Did I … They’re talking about a section like it’s nothing. Like I’m buying an infill lot, when I’m picking up a section which is 640 acres.”

Jack Butala: A section in one square mile and 640 acres are all synonymous. They’re all the same thing.

Jill DeWit: It’s funny, you get into this business and you’re thinking changes, and you’re terminology changes. Especially if you’re doing it right, because you’re looking at it as an asset. You’re not looking at it like, “oh how pretty are the trees here.” That’s not how you make money, that’s how you lose money. You get emotion … You’re going to win emotionally or financially, so think about it financially.

Jack Butala: Exactly.

Jill DeWit: It’s really funny.

Jack Butala: Here’s the thing about large acreage deals. They take longer to sell, because the people that you’re selling them to have to come up with 50, 80, 100,000 dollars cash. They can’t … Unless they are very special, the person who’s buying it, does not seek financing, they just have a lot of money. People who have a lot of money and are used to doing real estate deals, are infinitely easier to deal with than … Correct me if I’m wrong here Jill, Infinitely easier to deal with than new people that want to put a mobile home on a quarter acre of property.

Jill DeWit: Oh my goodness yes. I know. They know.

Jack Butala: Jill always … She says this saying frequently, and I honestly never get tired of it. She says, “you know, larger” … She’s a pilot. “Larger airplanes are easier to fly. They have more electronics on them” –

Jill DeWit: Bigger it is.

Jack Butala: “The bigger it is, the easier it is.” The same thing with boats and yachts in my opinion. This is no exception. These larger acreage deals are … They a little longer, but they’re easier to do. The people that are involved … If you do everything right. You have to buy it really well, as always. It has to have some pretty cool attributes. If you buy a 640 acre property for 64,000 dollars, that’s 100 bucks an acre, and it has no access and it is really, literally in the middle of a state somewhere, you can’t get to it, there’s no mountains, you’re going to be stuck with that for some time. You want to make sure these larger acreage deals have really good access, usually on multiple sides. Maybe county road access may be even better. You want to make sure they have a mountain view, or they’re waterfront. All the ones that we do, without exception, have all of those, regardless of price.

If we got a letter back, an offer back that we sent out, for a 640 acre property with no access, and they said, “you know what, I’m going to see you this for 1,000 bucks.” Would you buy it?

Jill DeWit: Heck … Oh, no access?

Jack Butala: No access at all.

Jill DeWit: But it’s 1,000 dollars?

Jack Butala: Yeah.

Jill DeWit: Yeah, I could double my money and get out.

Jack Butala: At this point in our career, I would remove it out the system.

Jill DeWit: There’s a lot that I pass on, I know.

Jack Butala: I would remove it out of the system without telling you. There’s a … You really want to make sure these large acreage deals, that you can double and triple your money on. Follow all the rules that we have.

Jill DeWit: Jack, do you want to tell us about one of the reasons we’re talking … There’s two that I wrote down that why we’re talking about this today.

Jack Butala: There’s a property that we’re doing … There’s a deal that we’re partnering with, one of our members found it. Two partnered up members, who didn’t know each other prior… Well, they did know each other prior to this, found these properties and called me and said, “are you interested in getting involved in this, and here’s the deal.” They packaged them all up, just like I always ask, AP and a little bit of description, state, county, they put it all, packaged it up and sent it. I fell out of my chair. One of them has an operating oil operation on it. [crosstalk 00:08:37].

Jill DeWit: That’s the best.

Jack Butala: One of them is waterfront property and one of them is in a small town, in an urban area in a small town. These are huge acreage properties. We’re going to turn these things. They’re all for 16,000 dollars or less.

Jill DeWit: Here’s what I was going to … This is what we talked about this morning at breakfast before the show. I said, so what’s the backstory … That’s what’s so amazing to me, Jack. Why is this … Who owns these and what’s going on?

Jack Butala: It’s all in a trust, which is great. Owned by an older guy who purchased the property and he’s just done. His kids don’t want it, or there’s no heirs. I’m not 100% so sure what the backstory, because the guys that sourced the deal, our members, sent blind offers out. The one said, “quite honestly, the guy just likes me.” That’s what we talk about all the time, Jill, that’s one of the reasons … He just likes dealing with them.

Jill DeWit: Isn’t that great? I’ve had that too, and I love it when that happens. They say, “I don’t care, I like you. I want to sell this to you, and I hope you do very, very well with it.” Send me on my way, great. That’s so good.

Tell me about … I was going to bring up the other one, is our Santa Barbara weekend, with the other large acreage stuff that we’re working on.

Jack Butala: If you watch Facebook at all, we did a couple of Facebook live announcements from the Santa Barbara County building. We’re going to talk about it in a future show in detail actually this week. Jill and I have consciously decided to make an example out of why this system works so well and to really just go for the gold. We’re going to buy some very large ranch type properties in Santa Barbara, that are pretty high end. They go for multimillion dollars and we’re going to, just to make a point, and to make some money, buy them for as cheap as we can. It’s not going to be 100 bucks an acre, it’s not 100 dollars an acre operation but we will be spending 100 to 200,000 dollars on an asset that’s worth north of half a million, probably way more.

Jill DeWit: I’m calling it movie star ranches.

Jack Butala: That’s good. That’s a lot of it, what it is.

Jill DeWit: Exactly. Without sharing any names, I can just say movie star ranches.

Jack Butala: Yeah, that’s the name of this project, let’s call it that.

Jill DeWit: Yeah, okay good, because that’s some of the deals that we’re working on right now. They came to us kind of, which is really kind of funny. We have some people that –

Jack Butala: We have some people that are –

Jill DeWit: Property is not their number one way of doing things, or making money.

Jack Butala: We have some friends, it started as friends, who are, they are movie stars. Let’s just be honest. They had an extremely positive experience financially, with buying … Making a ton of money doing what they do for a living, and buying some property and then selling it and just falling out of their chair because they made 10 times or more. They lived there for two or three years, and made 10 times what they purchased it for.

Jill DeWit: Yeah, I bought it two and I sold it for 20 million. Let’s think about this everybody.

Jack Butala: Those are the exact –

Jill DeWit: Those numbers.

Jack Butala: Jill and I are looking at each other going well –

Jill DeWit: We can help you with that!

Jack Butala: This is my business. Why don’t we just go do it on purpose now.

Jill DeWit: Why’d you spend two, you could probably have spent one? Just kidding. I’m just teasing.

Jack Butala: It’s a slightly new business model for us. I’ve done it with infill lots. I’ve done it this way. I look at a very expensive subdivision with existing houses in it, and they lots for a couple 100,000 bucks and I send out offers for 40 to 50,000 dollars and then sell them for 100. That works like a dream. We haven’t done it recently, because we’re focusing on these larger acreage deals, but it works great.

All the time, in the background, we’re doing the regular business. The machine just keeps going with the smaller lots and rural acreage properties for 100 dollars an acre. Some of those specialization we’re trying and it’s working.

Jill DeWit: And it’s an excuse to go hang out in some cool places.

Jack Butala: There’s that.

Jill DeWit: That’s what’s so funny about this too. Especially when you’re new, we talk about, if you can go see some properties, kind of get an idea of what you’re doing, and getting into it and and seeing it and feeling it, it’s not crazy/however, if you’re buying two states over, do you have to take a family vacation, tell your whole family, this is what we’re doing. No, you do not have to go and do that. That’s the beauty with maps and Google Earth and everything that you can see now, you don’t have … I’ve had some people say, “oh no, I can’t get away to go see the property.” That’s okay, you don’t have to go see the property/however, if you want an excuse, this is one.

Jack Butala: We have a competitor who goes to Hawaii every year to look at his land.

Jill DeWit: Yeah, I don’t think that’s crazy.

Jack Butala: I don’t either.

Jill DeWit: I think that’s great. I’m going to buy an eenie, teeny little thing in Santa Barbara, and I’m going to go make sure there’s fresh flowers there every Spring. Let’s see, where else do I want to have an excuse to go visit?

Jack Butala: The way the internet is now, and the way you can hire people to take pictures and do drone shots and everything else … A big acreage property, you don’t ever have to really go see it. It is however, a lot of fun.

Jill DeWit: It is a lot of fun.

Jack Butala: I just love land.

Jill DeWit: Yeah, you know –

Jack Butala: I love driving on a dirt road for whatever, two or three hours to get to some property and you get there and it’s unbelievable.

Jill DeWit: The other thing, I got to tell you, it was really nice the other day … I hadn’t been in an assessor’s office, zoning department or a recorder’s office in quite some time. I really had a good time, going in there and saying hello, talking to them and bringing them cupcakes. We brought them cupcakes. It was really nice.

Jack Butala: They loved us.

Jill DeWit: Yeah.

Jack Butala: They loved you.

Jill DeWit: It was really good. They’re –

Jack Butala: That’s all it takes. Here’s my advice. All it takes, is to go in there and be super nice and say … This is the sentence every time, “we deal with counties all over the country and you guys are the best, by far.” It’s a little white lie and they love it.

Jill DeWit: Oh yeah. The other one was … Remember that old guy … So sweet, this old man came in and he was kind of wanting to negotiate his taxes for his mobile home and he had a lot of questions. Bless their heart, the girl came up and really spent, I don’t know, 45 minutes with the guy explaining it [crosstalk 00:15:00] …

Jack Butala: He just wanted to vent.

Jill DeWit: Talking to him, he did.

Jack Butala: I don’t think he expected anything to happen.

Jill DeWit: No, it was really nice. He just wanted to go, “why is this going on?” She explained it all and said, “it might go down again, we’ll see.” Anyway, it was so cute, after he left, Jack made a nice point to say, “you guys don’t get paid enough here.” That was really funny. It’s fun to be there and just to see that now and then.

Jack Butala: If you have a question or you want to be on the show, reach out to either one of us on LandAcademy.com. 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.

Jill DeWit: We use it every day to buy property for half of what it’s worth and sell it immediately.

Jack Butala: Let’s go buy some property. That was a blast.

Jill DeWit: That was so fun.

Jack Butala: This new project is a blast.

Jill DeWit: Yeah, that was really nice –

Jack Butala: What do you call it, celebrity ranches?

Jill DeWit: Movie star ranches.

Jack Butala: Movie star ranches.

Jill DeWit: I just wrote it down, movie star ranches. I think that’s a good name going forward.

Jack Butala: Me too.

Jill DeWit: It’ll be really good.

Jack Butala: This property is not any different. When you stand right on it, and you close your eyes and forget about the state you’re in, it is no different than all the property West of the Mississippi. There’s slight differences, maybe climate differences and things. It is amazing to me that … Let’s say a 640 acre ranch, in Santa Barbara County in the right location, is 25 million dollars, and a 640 acre ranch in Northern Arizona … Basically the same property, not as close to the ocean, there’s some stuff. Physically, basically the same, same access and all that, is 64,000 dollars.

Jill DeWit: It’s interesting.

Jack Butala: There are unbelievable variances in bargains out there, for a large acreage property like this. Here’s another thing, I was speaking about it with our member … I should have brought it up on the regular show. When you get a letter in the mail that says, “here’s 16,000 dollars,” you really read … “We’d like to send you 16,000 dollars for some stuff that you’re not using anymore.” If you get a letter, “we’d like to send you 500 dollars for some stuff you’re not using.” You sit up straight. 16 grand, I don’t care who you are, is a bunch of money.

Jill DeWit: It’s true. It checks something off everybody’s list. Maybe get that woman out of my life. I’m just kidding, I don’t know, this is the after show.

Jack Butala: You’re stealing my lines now.

Jill DeWit: It’s the first thing that came to my mind, I don’t know why. I’ve been hanging out with you way too long.

Jack Butala: I know. Maybe we spend too much time with each other.

Jill DeWit: That’s it.

Jack Butala: Well said though. On that note. This is information and awesome inspiration by Jill, about dropping a bad woman out of your life, to buy undervalued property.

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