Land Investing Described at a Cocktail Party (CFFL 502)
Land Investing Described at a Cocktail Party (CFFL 502)
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hi.
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about land investing as described at a cocktail party. It’s harder to do than you would think. You know how we always say this is a fun show? This is a serious show, this is a fun show.
Jill DeWit: Oh, yeah.
Jack Butala: Before we get into it let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit: Okay. Luke asks, he says I bought eight properties and I have signed purchase agreements for ten more with more sellers calling everyday.
Jack Butala: Congratulations Luke.
Jill DeWit: Yay. I’m starting to run out of money.
Jack Butala: This is not Luke Smith.
Jill DeWit: Nope.
Jack Butala: This is a different Luke in our group.
Jill DeWit: From the research I’ve done doing deals without money requires one of the following and he has three things here. One, buying one an option. From what I understand the only way to do this with zero dollars is to find a company that will do a dual closing. I have been unsuccessful in doing this so far but I’m working on it, and we’re going to cover all these. I’m going to finish this question.
Jack Butala: Yeah.
Jill DeWit: To assigning the contract. All the offers I send out have a clause in them allowing me to sign the contract but I have not taken advantage of this yet.
Jack Butala: Brilliant.
Jill DeWit: Can I advertise a property for sale with the intent of signing the contract I have on it and without yet owning it?
Jack Butala: Yes.
Jill DeWit: Okay, and we’re going to get to that. Three, finding an investor. Jack and Jill as well as other land investors talk about doing deals together. Does this entail some kind of written agreement? Is it typically one person doing the work and the other person putting the money down?
Jack Butala: Yeah.
Jill DeWit: Which one of these three do your recommend?
Jack Butala: All of them.
Jill DeWit: Are there more options that I am unaware of? Are you interested in doing a deal, or are any of you interested in doing a deal with me? So, I’m going to circle back around.
Jack Butala: Okay.
Jill DeWit: Okay.
Jack Butala: Great question, Luke.
Jill DeWit: I love this because we’ve all been here, Luke. It’s great.
Jack Butala: We have all been right where you are and out of money.
Jill DeWit: Exactly and it’s funny because I have had these conversations with people back in the day, where I literally had to say no, seriously. I understand you’re excited to sell. Really, I only have X amount of money left over right now, period and if you want that you could have it but that’s all I have, you know, and I’m being totally legitimate and sometimes somebody will go, okay I’ll take it and I’m like, oh shoot. Now how am I going to pull this one in? You know?
Jack Butala: I never have said, oh shoot the sellers find my stuff.
Jill DeWit: I know, but no but it’s so funny because it’s like, you have so many deals I don’t know what to do which is a good thing. That’s what Luke going through right now. All right. So, let’s explain all three and then we’re going to give our little critique on them please.
Jack Butala: Okay. So number one, buying on an option. Jill, go ahead.
Jill DeWit: Okay.
Jack Butala: I’ll get the other two.
Jill DeWit: All right. You’re so funny. So, you don’t, Luke talked about putting basically doing a dual escrow, a dual closing and finding an escrow company and opening an escrow and like letting it sit there. You don’t have to go that far and you could almost, really you could, with an option what we call an option agreement is hey Mr. Smith, here’s the deal. I really want your property and I’d love to give you you know, three thousand dollars today for it. I’m out of my funds right now but here is what I’d like to do. If you’re okay with it, I’m going to market your property and see how fast I can sell it and you know, as fast as I can sell it I’ll hand you over three thousand dollars. Would you give me 90 days to go out there and here’s a one page agreement that we’re each going to sign.
So it’s all, you know, we’re on the same page you know and I’m not giving you any money by the way but I’m going to go out and try to sell your property for you and then I’m going to get you three thousand and I get to you three thousand dollars and I get to keep the rest. Are you okay with that, Mr. Smith and nine times out of ten they’re going to go heck yeah, nobody else is doing anything. What have I got to lose? I just name my price. I’m going to sit tight and see what you can come up with and knowing that, yeah, I’m going to go out and really try to sell and you know, get it done. So …
Jack Butala: It’s, number one and number two here are what’s technically called equitable title.
Jill DeWit: Uh-huh (affirmative).
Jack Butala: You don’t own the property. You don’t have any equity in it but you do have some power to buy and sell it and I would highly recommend in all three of these. In fact I would, some of our members are successfully doing it without doing this in writing. I think that’s silly, because they’re just one page agreements and why wouldn’t you just, you know, we always did it in writing. It’s one simple page agreement.
Jill DeWit: Even though, you know, it’s not like it’s notarized. It’s not like I’m really going, I’m not really, I’m not going to take anybody to court over it or something. Like, say let’s just, just to give you an example, you know what if I did get a buyer, because what will happen is I’ll have a buyer and then before I collect their money real quick I’m going to hang up and call Mr. Smith and say, are we still cool? Are you happy with three thousand dollars? It’s look like I’m going to have it for you in about three days and they’re going to go okay, yeah I do. Great. Now we’re going to follow through but just that one page little something kind of seals the deal. You know? Like Jack’s saying, I’m not going to sue anybody over it but it’s a little more than a handshake.
Jack Butala: Right. Number two is assigning the contract. A little while ago Jill and I, just for fun Jill and I go incognito to somebody’s real estate. Like, did you ever see on late night TV, join us, we’re going to be here at this hotel and you know and then they try to sale you something? Jill and I go out, we obviously never buy anything. We put baseball hats on and sit in the back and pass notes to each other like we’re in, you know, twelfth grade or whatever. So, assigning the contract, the one that we went to was for the people on HG TV, the two that flip this, not, flip or flop, that show.
Jill DeWit: It was Tarek and Christina.
Jack Butala: Yeah. So, they opened a you know an academy and it was all about assigning the contract. So, in the end what we do is they get you to sign up which obviously we would never, I don’t recommend doing this at all. Why, because it’s so easy. Just do it yourself. You find somebody who wants to sell a house or a piece of property, any type of property for less than it’s worth. That’s what we do here and you get them, they sign the agreement. They say yep, I do really want to, Jack, I want you to buy my property. They sign the thing and you assign it to somebody else and I would highly recommend assigning it somebody you know and trust and you know they’re going to follow through.
Jill DeWit: Uh-huh (affirmative).
Jack Butala: Jill and I do this with houses all the time and we do it with people that we are on an first name basis with. We never buy the houses ourselves.
Jill DeWit: Right.
Jack Butala: We never go see the houses. We don’t care.
Jill DeWit: Okay, so number three, this is my favorite.
Jack Butala: Find an investor.
Jill DeWit: Yeah.
Jack Butala: There’s two ways to do this. There’s a ton of people in our group are just, they’re just money people.
Jill DeWit: Uh-huh (affirmative).
Jack Butala: So, the number one way is, just exactly what I described in the previous, I have a piece of property that’s under contract that’s less than it’s worth. Hey, money partner, let’s buy it. You pay a hundred percent of it and then I’ll go sell it and we’ll split it 50/50. Here is the economics, four thousand dollar four acre property, Mr. Investor sends four thousand dollars. Now you own it together. You sell it for eight, Mr. Investor gets six back and you keep two.
Jill DeWit: Uh-huh (affirmative). What’s your paper work way of making sure everybody’s going to follow through, Jack?
Jack Butala: I would do a letter of understanding on a deal by deal basis in the beginning where it simply says, you’re the money guy. I’m the seller, buyer, seller. I’m going to do all the work, you’re going to pay for the money and I would highly recommend, the way we’ve done this in the past is that if the guy pays, the money guy pays for the cost of the property and the closing cost associated with it only. They don’t pay for data. They don’t pay for the electric bill. Just keep it real simple that way, which leads me to my final second point with an investor where it’s the other way. So, you get somebody’s, you put a hundred thousand dollars into a bank, you form an LLC, you’re a 50/50 partner. The money guy’s a 50/50 partner and you talk a lot and you talk about stuff. Members in our group they have knocked it out of the park with this concept. Okay? They’re real go getters. It’s not my favorite way of doing business. I like to just pull guy, it’s the equivalent of hard money, right, but it’s equity.
Jill DeWit: Uh-huh (affirmative).
Jack Butala: I hate hard money. I hate it. I hate lending of all time. Just take a partner on.
Jill DeWit: Yeah. I love it. If you have a question or you want to be on the show reach out to either one of us on Landinvestors.com.
Jack Butala: Today’s topic, land investing described at a cocktail party. It’s harder than you think.
Jill DeWit: It is.
Jack Butala: This is the meat of the show believe it or not.
Jill DeWit: Exactly.
Jack Butala: The premise is to be silly.
Jill DeWit: This came up because Jack and I recently had, we did a combined birthday party this year and it was a blowout reggae blast. We had a local reggae band and pulled a police permit. We’re talking we did a, we had a party.
Jack Butala: The cops showed up.
Jill DeWit: Oh it was awesome. We had the neighbors all around. I mean, we had informed the neighbors obviously. We’re not crazy. We invited all the neighbors and it was so darn fun. We had people flying from Chicago and Maine and Arizona and it was here at the beach and it was so, I mean we made a lot of friends, obviously because we had a cool party. So, it was really fun.
Jack Butala: Jill, you’re so cool.
Jill DeWit: Thank you. We had a bouncer out on the street. It was pretty cool, actually. We had an open bar. I mean, catered, it was awesome. So, what’s funny is, so we were talking about this and Jack was asking me the next day, hey, how many people came up to you and asked what you do and I’m like, you know it’s funny, not as many as I would’ve though and he’s like, well how do you describe it and I’m like, it’s hard, you know? It’s really funny. So, that’s when we said you know what, we should talk about this because it is …
Jack Butala: Oh yeah, we buy and sell land. Well wait a minute. What do you mean, you buy and sell land?
Jill DeWit: Oh you’re a realtor?
Jack Butala: yeah.
Jill DeWit: I’m like, no.
Jack Butala: Every question leads to more questions.
Jill DeWit: Exactly.
Jack Butala: So, I started to lie.
Jill DeWit: Exactly.
Jack Butala: Oh you’re a realtor, then? Oh yeah that’s what I do.
Jill DeWit: Yeah. We’re just going to go with that. No we’re not. You’re a realtor that does very well. Yeah, right. You think?
Jack Butala: I own a real estate data company. Well, how does that work?
Jill DeWit: Then, that’s even more questions.
Jack Butala: What do you mean you send offers to all of these, does that work?
Jill DeWit: Oh my gosh.
Jack Butala: No it doesn’t. Just take a look around.
Jill DeWit: Isn’t that funny.
Jack Butala: We’re putting food on the table.
Jill DeWit: That’s so good. I love that. Yeah, well we’re just getting by. Can I get to the drink? Garson.
Jack Butala: [inaudible 00:10:57] send them back. So, you take advantage of old people then?
Jill DeWit: Yeah.
Jack Butala: These are the kinds of responses I get. Why would anyone ever sign a letter for a piece of property that they own, an offer?
Jill DeWit: I don’t even get that far.
Jack Butala: I do because it’s a, honestly, it’s a gender thing.
Jill DeWit: Oh, okay yeah I usually, I try to be vague and change the subject.
Jack Butala: Jill and I have like a beach garage, a beach bath, a bathroom and a garage where it’s just typical in these beach communities to get all the sand off and stuff before you go in the house and so that’s the bathroom we used for the party and I’m not afraid to tell you that the cars that are parked in the garage are, they’re not economy cars and it’s sparked a lot of questions about what do you mean, and then there’s just more questions and questions and questions.
Jill DeWit: You know it’s funny that we actually kind of blew our cover now too by the way by having this party, because a lot of our friends our new friends that we made had no idea what we did, where we lived. We could’ve been riding the bus to the beach for all they know.
Jack Butala: Right.
Jill DeWit: Now they know we don’t ride the bus to the beach. So, but it was so funny because you know and everyone in our community, everyone who’s, all of our members listening to this call you know how hard it is.
Jack Butala: Yeah, our members know. I bet our members have, we should talk that on the call today.
Jill DeWit: I would love to hear how they describe it.
Jack Butala: How they lie.
Jill DeWit: Well, what’s really funny is if you ever bring up your ROI on what you typically do, your flip on these deals when you double your money next thing you know people have got their checkbooks out and that’s not what we want or not, you know and then I have to explain to them, no, no, no, it’s our money. I don’t think you’re, no I am good. I don’t want your money and I’m not going to touch your money. You know? Can you do it for me? No but I could tell you how.
Jack Butala: You could sign up like every other, one of the other people. You know? The stuff’s all here.
Jill DeWit: Exactly.
Jack Butala: All the answers are here.
Jill DeWit: I could help you with the data. I could help you with this, help you with that.
Jack Butala: Then they start saying, oh no, no, no. I don’t want to be a member. I don’t want to do any work.
Jill DeWit: Right. You know then it’s even funny too because some of our real close friends, you know, we’ve tried to help them and they, like what is it, Jack? They don’t get it.
Jack Butala: There’s some, there’s just a handful of people that our friends that are doing well, very very well in other areas and they’re like you know what? I really do want to do this. Right?
Jill DeWit: Right.
Jack Butala: So we hook them up and it’s failed every single time.
Jill DeWit: Totally.
Jack Butala: The people who pay for the program and take it seriously and are motivated, whatever motivates them, kill it.
Jill DeWit: Totally.
Jack Butala: You know?
Jill DeWit: Yeah, I’ve given up even to my friends. I’m like yeah whatever. You’re not going to follow through because nobody does. I would love it if somebody did because I would really, you know and help them and everything but I mean I do that anyway. It’s nothing different but I’d like to see one of my friends be successful with this side gig but they don’t have it in them and that’s okay but they’re happy to come to our parties.
Jack Butala: And ask a lot of questions.
Jill DeWit: It is so funny.
Jack Butala: The real estate data thing, you know, we own a real estate data company and we’re licensed providers for RealQuest Pro. You know, we’re one of a select few. That seems to shut people up pretty good.
Jill DeWit: If they know what that is, because usually they don’t.
Jack Butala: We used to say we parked cars for the NBA.
Jill DeWit: Yeah, exactly.
Jack Butala: Remember that?
Jill DeWit: Well no, you know, this was my job a long time ago. I was a, say I’m a college basketball sports analyst.
Jack Butala: That’s it.
Jill DeWit: That was it.
Jack Butala: For the NCAA.
Jill DeWit: That’s like a man’s dream.
Jack Butala: Yeah.
Jill DeWit: You know and then, because I knew just enough that you know if someone started, had asked questions at a bar I could talk, I could talk but then if they got real detailed I’d say oh I don’t want to talk about work right now. I talk about it all day long. If it’s okay with you I’d just rather just stop.
Jack Butala: You don’t even have to really lie about it. You’ve had some cool jobs.
Jill DeWit: I have?
Jack Butala: Yeah. You’re a pilot.
Jill DeWit: Oh yeah, and that was it. Well, there we go. Maybe one. I don’t know.
Jack Butala: I don’t want to throw you under the bus, here. You’ve had some cool jobs.
Jill DeWit: Thank you.
Jack Butala: 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 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.
Jill DeWit: Well, what do you think was your coolest job? Like, most fun job. Don’t say …
Jack Butala: I was describing this to you and some other people a couple of days ago and I was trying to impress a girl one time and I told her, I said hey I was a partner at KPMG and she said, really? I was a manager at TGIF and we both had a good laugh about it and that like totally put me in my place about that forever. I used to stop forever like describing that stuff.
Jill DeWit: Exactly. That’s really good. Yeah.
Jack Butala: Cool jobs. I had a job with my buddy from high school who is now a multi-billionaire and I worked as an internal auditor and really I, that is what changed my life. It set the stage as a teenager to show me what was possible, that you can go out and start an LLC, work really hard and you get systematized stuff and do acquisitions and sales of companies and kinds of stuff which is what, Jill and I don’t talk about but that is really what we do. We buy and sell companies and you know that was, it’s not a sexy job being an accountant but you know really the nuts and bolts are there, which is what you’re supposed to do when you’re young. Learn the nuts and bolts and then go do fun stuff which is what we did.
Jill DeWit: Well I did it backwards. I started with the fun stuff.
Jack Butala: I know you did. Oh really, and this isn’t fun, right?
Jill DeWit: Oh, this is true. I know, this is more fun. That’s true.
Jack Butala: Stop. You’re one big ball of fire.
Jill DeWit: I never stopped. I always made sure I had funny. Sorry. You’re not complaining are you?
Jack Butala: No.
Jill DeWit: Okay.
Jack Butala: No
Jill DeWit: Good.
Jack Butala: Information and inspiration to buy undervalued property.
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