Sources of Investment Capital for Land Acquisitions (LA 712)
Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: Welcome to the Land Academy show “Entertaining Land Investment Talk.” I’m Steven Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk about the sources of investment capital for land acquisitions. You don’t necessarily have to have your own money.
Jill DeWit: A rich uncle.
Steven Butala: You don’t have to have your own money to do this. In fact, I have a saying that goes like this, “Never, ever let a good acquisition go to waste, especially if you don’t have the money.” Because everybody in our group, go poke around for free on LandInvestors.com. You’ll find some guys that’ll love to share in your profitability, your real estate. They lurk there. They love it.
Jill DeWit: Mm-hmm (affirmative). What I meant too, was when I said, “rich uncle,” you don’t have to have a rich uncle.
Steven Butala: It helps though.
Jill DeWit: And actually … But you know what’s so funny? There’s a lot of people that I know, they’ll think, “Oh, I can never get in the game because I don’t have any money.”
Steven Butala: You know, it just occurred to me that we are somebody’s rich aunt and uncle, a couple people.
Jill DeWit: We are. That’s very true.
Steven Butala: If my niece or nephew came to me and said …
Jill DeWit: I need for money for x.
Steven Butala: “I need some money. Look at this deal.”
Jill DeWit: I’d be like …
Steven Butala: “And you can’t lose on this thing. We’ll just sell it immediately.”
Jill DeWit: Yep, we’d be in.
Steven Butala: I’d be, “Sign me up.”
Jill DeWit: Exactly.
Steven Butala: Plus, it’d be fun.
Jill DeWit: Totally.
Steven Butala: It’s fun to watch little kids be successful. Before we get into it, let’s take a question, posted by one of our members on the LandAcademy.com online community. It’s free.
Jill DeWit: It’s better than watching little kids fall down.
Steven Butala: I mean, little kids like 22-year-olds.
Jill DeWit: All right, thank you. All right, Luke asks, “Hey, all. I’d love to hear ideas and input on whether to offer refund/money back guarantees. Do you guys do that?” I used to. But when you get a number of people taking advantage of it, it really sucks.
Steven Butala: Here’s what we do, we don’t post it anywhere, this is for land only, not for houses, not for Land Academy, not for House Academy, not for Parcel Fact, not for all the services we provide, I’m talking about land sales only. We offer, like a diamond dealer does, an unconditional no questions asked, money back guaranty lifelong, but we publish what I just said no where. We don’t give anybody a reason to go look it up and say, “Yeah, you know what? It turns out I need to that $10,000 that I bought for this property 10 years ago from these guys.” If they go to look it up, they’re not gonna find it anywhere. But I’ll tell you this, all the problems that arise from the Department of Real Estate in any state or county, they’re all complaint driven. They don’t have police officers driving around seeing if you’re complying. They only respond to problems. And problems start where there’s money involved.
Jill DeWit: And unhappy people.
Steven Butala: So, if you’ve got a person that’s like, “You know what? Turns out …” even five years later, “turns out I just don’t want this property. I really need the money back.” And this is not for term sales by the way, just for cash sales. Nine times out of ten, we’re gonna run to the bank, because we can sell it for more. Actually 10 times out of 10.
Jill DeWit: And we don’t want them unhappy.
Steven Butala: Yeah.
Jill DeWit: But usually that’s not how it goes, honestly. Usually how it goes is they’re buying it sight unseen, and it doesn’t happen very often. It’s a very small percentage. But it’s either sight unseen, and it’s not what they thought it was, and I totally respect that. The first time they go out there, they say, “Oh my gosh, I thought this was gonna work, but you know what? I can’t get my property, I can’t get this stable like I wanted it to be,” whatever it was. Totally cool. They reach out, we’re gonna be cool. It’s all good. You know what happens?
Steven Butala: Stable?
Jill DeWit: A horse stable or something. Here’s more what would happen, this is so funny.
Steven Butala: I have a more realistic version too.
Jill DeWit: Okay, well, here’s a realistic of what does happen. My wife found out.
Steven Butala: My wife.
Jill DeWit: And I’m in big trouble.
Steven Butala: That’s what I was just gonna say. Turns out I was not supposed to spend that $8,000 on a family retreat.
Jill DeWit: Exactly. And you what’s really sad? Here’s what’s really sad about those calls, the highest claim is like, “I know what this is worth, and this is killing me. I have talked to her about this for three weeks before calling you. I just can’t get her to wrap her head around it. As painful as it is, I need to ask you for my money back.” And I feel sorry for them.
Steven Butala: Choosing my marriage over this piece of real estate.
Jill DeWit: Yeah. Exactly.
Steven Butala: Which is probably wise.
Jill DeWit: Yeah, it’s probably wise. So, anyway, that’s what happens. And again, it’s a very small, but like you said, Steven.
Steven Butala: It’s usually fast. My example of five to ten years never happens.
Jill DeWit: Oh, yeah, after a while, they’re in love with is, using it. It’s no big deal.
Steven Butala: We’ve almost done 16,000 deals now, and I’m gonna just kind of guess that we’ve done less than 50, probably closer to 30 actual returns. Here’s why, too, what you need to know. You’ve already deeded the property in their name, so the wife finds out about it three months later, and the property’s in the guy’s name. In fact, if they’re married, it’s probably in her name too, and she doesn’t even know it. So, you have to undo all that. It’s not like going back to Walmart and returning an unopened package of bath towels. It’s complicated. You have to-
Jill DeWit: You have to deed it back. If it’s recorded.
Steven Butala: So how many people are gonna respond to this statement: That’s no problem sir. I’m happy to give you your money back. Please recreate the deed, so it puts it back in our name, and go record it. And they’re not gonna know how to do that, and they’re not gonna do it right. There’s an old rule, I think it came from actually Dale Carnegie or some sales thing, where if somebody wants something from you, always say yes, and then give them something to do. Even if it’s small, like make a phone call or talk to some guy, “Happy to help. Please go do this, this, and this, and then we’ll get you all set and squared away.” And nine times out of ten, they don’t do it.
Jill DeWit: It wasn’t Dale Carnegie, I can tell you that. That’s not what that is.
Steven Butala: Okay, I haven’t … When’s the last time we even-
Jill DeWit: You picked on that.
Steven Butala: When is the last time we even flipped through that book?
Jill DeWit: You have a Dale Carnegie hangup.
Steven Butala: You know what? I don’t. I actually believe-
Jill DeWit: It sounds like you do.
Steven Butala: I believe in most of what they say. I just think it gets misused.
Jill DeWit: By people that give it a negative spin.
Steven Butala: By people in my life, named Jill.
Jill DeWit: No. You know what? Again, I want you to really study Dale Carnegie, because I don’t think you totally understand it.
Steven Butala: All right.
Jill DeWit: No offense to you, man.
Steven Butala: I’m sure you’re right.
Jill DeWit: It’d be like me … you know what I mean. I don’t need to finish that sentence, I think.
Steven Butala: Let’s not argue in front of the kids.
Jill DeWit: All right. Thank you. Okay.
Steven Butala: Today’s topic, sources of investment capital for land acquisitions. You’ve found a great deal, where the heck do you get the money? This is the meat of the show. I know you made a list before the show, Jill. What do you think?
Jill DeWit: I have four.
Steven Butala: Go ahead.
Jill DeWit: All right, you want me to run through all four? Or do you want one at a time and talk about them?
Steven Butala: Sure. One at a time and talk about them. Oh yeah, run through them, and then we’ll talk about them each.
Jill DeWit: Okay, my four that I came up with: number one, peers.
Steven Butala: Peers, like you’re land selling friends?
Jill DeWit: Associates, exactly.
Steven Butala: Not like the guy next door.
Jill DeWit: No, the other investors that are in your group, like say our members. For our members, I would have them do deals with other members. That’s peers.
Steven Butala: That’s great. That’s the number one place, actually.
Jill DeWit: Two, I put not family, although some do, just be careful there. And we’ll talk about that.
Steven Butala: The guy next door. Go ahead.
Jill DeWit: Well, I mean, no, family. You know, literally like your uncle or your brother or your dad or your mom or somebody like that.
Steven Butala: Let’s put that at the bottom of the list.
Jill DeWit: But that’s one. Number three is clear investors of like kind from selling sites like Land Watch, Land Pin, etc. And then number four is you probably saw investors in your mailer data, those people. So that’s my four. So you wanna go throw them in … Do you have more you wanna add or do you wanna go through my four?
Steven Butala: No, I think that … The one source of investment capital for this, my whole big point to this whole episode is why just stop at one? Do a deal with a guy, but set yourself up so that you’re gonna have him fund the rest of your company. So, while I understand the peer thing, and that’s great, you’re learning, you wanna buy a 40-acre property with a guy and split the profit. I understand all that, but in the end, what you really wanna do is set yourself up for the long haul with somebody’s who got a ton of money and really understands the value that you’re bringing, and the value of flipping real estate for a return on investment.
Jill DeWit: Well, that’s what this whole list is for.
Steven Butala: I know.
Jill DeWit: You’re gonna use all my four things to source out that guy.
Steven Butala: Yeah, so I think what you’re saying is, another way to say it is, use all the sources, not just one. So, a deal comes in, you decide who it goes to. You have all the control.
Jill DeWit: Right. Well, for more people … So the reason that I thought we were doing this show is because this is a common thing that people come up with. They’re like, “I don’t have the money.” And they don’t even know the first thing about where to get the money. That’s for me what this is about.
Steven Butala: Okay. So, let’s … No, that’s good.
Jill DeWit: Okay.
Steven Butala: We’re totally saying the same thing, you and I, we’re just approaching it differently, and that’s okay.
Jill DeWit: Okay good. That’s true. You know what it is? Because you’re dealing with different people right now. I think that’s it. You’re dealing right now with more-
Steven Butala: $80 million, yeah.
Jill DeWit: Right.
Steven Butala: $80 million of line of credit to circle through purchasing and selling massive quantities of houses and land.
Jill DeWit: Well, and here’s a valuable thing, this is why we’re here: we deal with everybody. I deal more with, it seems like, a lot of people that are learning and getting started, and all that good stuff. And by the time they get to you, though, they’re way past that.
Steven Butala: Past me, usually. Which is awesome.
Jill DeWit: Right. So we deal with everybody no matter where you are in your career. We got this.
Steven Butala: Well said.
Jill DeWit: Thank you. So, can we spend a little more time on these real quick? Because I want to-
Steven Butala: Sure. Let’s set the stage.
Jill DeWit: All right.
Steven Butala: You send a bunch of mail out. You’re a member, you send a bunch of mail out, a bunch of properties come back, and let’s say you send out only 40-acre properties in, I don’t know, Montana, in a county in Montana. I’m just picking one out of the sky. A bunch of people sign them, and it turns out you run out of money. So now you’ve got a 40-acre property that you sent offers out for 10, 12, 20,000 bucks, something like that. You know they’re worth $40,000 to $80,000. And your turning deals as fast as you can. It’s all working great. You’re just out of money. This happens to everybody. Honest to God, it happens to us.
Jill DeWit: You bought three of them, and there’s three more sitting there, is usually how it goes. So, where do you go?
Steven Butala: What do you do, Jill?
Jill DeWit: Yeah, you don’t want these deals to go to waste, and you don’t want … they’re hot.
Steven Butala: You’re selling them left and right.
Jill DeWit: Exactly. But the money’s just not coming in fast enough, and that’s perfect, but again, so one way is reach out to your peers. Okay, so you’re a member, great. That’s our deal board.
Steven Butala: That’s the first thing I would do on Land Investors deal board, yeah.
Jill DeWit: Yep. Go on the back of our thing, hit the deal board. This is what’s happening all day, every day. And these guys are getting together. And what’s great about this source one, if you will, is that you guys understand each other. You guys are on the same page. You guys are buying and selling property the same way. There’s no explaining it that you have to-
Steven Butala: There’s no selling.
Jill DeWit: All you’re doing is posting it, this is what happens on our deal board. Because it’s really just members back there. 40-acres, I’m out of capital, here’s the APN, here’s what I can buy it for. Here’s the lowest price, whatever. Who’s in? And then six people will weigh in on that. So, that’s one. And there’s no talking about it.
Steven Butala: By leaps and bounds, for what we do, that’s the best option.
Jill DeWit: Totally.
Steven Butala: Because it’s usually immediate.
Jill DeWit: Exactly.
Steven Butala: And there’s no sales. I can’t emphasize that enough. If you’re gonna raise money somewhere in any capacity, you do not wanna give somebody a sales pitch.
Jill DeWit: Right. “Here’s what I’m doing.”
Steven Butala: If you have to sell … Like Shark Tank. If you’ve gotta sit there and say, “Here’s why it’s great. I wanna be partners with you,” and then spend 20 minutes explaining it, it’s the wrong person.
Jill DeWit: Well, then that goes into number two perfectly. Because number two is, maybe it’s family member, your rich uncle has a lot of money and he can do this real quick, and he trusts you. But he’s still gonna have some questions, and like you just said Steven, you’re gonna have to explain it to him and maybe even sell it to him. So that’s why, although it made my list, it’s not one of my most popular items, because number one, you gotta sell it, and number two, you gotta be careful. Because some members get it, some don’t. Some are gonna say, “When am I gonna see my money? I thought that you said this was gonna happen overnight,” when overnight to us is like in a week, and maybe they thought it literally meant overnight. Who knows. There’s little nuances and variables.
My other thing is-
Steven Butala: I have a story.
Jill DeWit: Well, okay, good. Well, my other thing is you gotta be careful because it might be a little too good, and now they want a piece of the action, they want all your deals. You’re like, “Well, hold on a moment. This is my business, not yours.”
Steven Butala: That always happens. That always happens.
Jill DeWit: That’s the thing, you’re like, “I was trying to share this one with you, not share my whole business with you.” Okay, go ahead. What’s your story?
Steven Butala: So one time, there was the girl.
Jill DeWit: Uh oh.
Steven Butala: This is a long time ago, before I got into real estate actually. And she had an ex-boyfriend who had this cockamamie scheme to start a condiment company called Arizona Gunslinger. And he came to me, because this is my girlfriend now, you know … This guy comes to me and says, “I need $5,000 to start Arizona Gunslinger. I’ll give you a substantial percentage of the company.” And I said, “Not only no, but I think I might knock you out, because this is so far out of bounds, it’s ridiculous. I don’t need any of it.” So, what’s on every single restaurant table right now?
Jill DeWit: I know.
Steven Butala: Arizona freaking’ Gunslinger hot sauce.
Jill DeWit: I know.
Steven Butala: And years later, an employee’s sister came to me and said, “I just moved to Arizona. And back in … ” wherever they were from, “We had this wrecking company where we would tow people’s cars when it was posted, if you park here, you’re gonna get towed, call this number.” And I said … And they since went on, and they’re just killing it.
Jill DeWit: Did you invest in that one?
Steven Butala: And I said, “Look, why would I invest in something so negative? What else do you want me to … how about a bail bonds company? How about I invest in a police department. This is all negative crap. I don’t understand the business. I hate getting my car towed.” So, if you have to … They were sitting there trying to sell me on it. “Oh, but wait, you don’t understand. It’s this, it’s this, it’s this.” It’s just not my thing.
Jill DeWit: You weren’t a good fit.
Steven Butala: I’m a huge fan of making money. I’m not a fan of towing cars or making food.
Jill DeWit: Okay.
Steven Butala: And there’s tons of people out there with hordes of money that don’t understand or care about real estate. And that’s when … Don’t waste your time with them. Find people that understand dirt and houses and skyscrapers.
Jill DeWit: Exactly. All right, so number three, great, I have this deal, where do I go? I’m not a member and I have no rich family members. Well, how about clear investors of like kind property that you can easily find on selling sites? Because they’re buying and selling property right alongside you, the same size and the same area. They would love to do the deal to you. You already found it. You did the hard work. Where do you find them? Go to those sites. Our site is perfect. Go to LandPin, no brainer there. Go to LandWatch. Go to LandandFarm. There’s more. So, maybe even on eBay, who knows. So, I’m not gonna save number four here, but do you have anything to add to that one?
Steven Butala: Nope.
Jill DeWit: Okay. So, that’s so easy. It’s too easy to get their contact information, because if they’re investors, you can look up their website, find their contact, and give them a call, tell them what you have, and let’s do this together. And then number four is, when you downloaded your data, where does your data come from? You have a list of all these sellers, right there you will find, easy to see, someone that goes, “Wow, look at all these parcels. As I’m going along, this name keeps popping up, XYZ Investment Company. They’re obviously buying and selling property in this same area. They obviously own a bunch of property in this area.” Awesome. As another thing, they might just wanna flat out buy it, and you could work something out that way. But anyway.
Steven Butala: How many times have you gotten this phone call or email: I got your letter, and I own a bunch of property, and no, I’m not interested in selling and I own a bunch of property in this area. But I will say, I’m a very logical buyer, so if you do find any property that’s priced at how you sent this letter to me, I’m happy to buy it.
Jill DeWit: Exactly.
Steven Butala: I’m happy to invest in it. That person has got money to burn.
Jill DeWit: Exactly. They’re doing it.
Steven Butala: So they go straight on our A list, and that is a very, very logical source there. You’ve skipped to the last step. They understand the process. They already have invested in it. They know how great it is. They enjoy it, and they’re in that business for a reason. They are gonna be elated to either buy some property from you without actually even having to spend a dollar. You just assign it to them, an option deal. Or they can become your lifelong partner-
Jill DeWit: In that state or that county or whatever.
Steven Butala: Yeah, that state or county, yeah. And then it’ll lead to different mailings. Now you’re all of a sudden doing a specific mailer for this guy that’s your partner, and that’s the premise of House Academy, a topic for a different day.
Jill DeWit: Awesome.
Steven Butala: These shows are going long this week.
Jill DeWit: I know. We have a lot to share.
Steven Butala: Well, you’ve done it again. You spent another 25 minutes listening to the Land Academy Show. Join us tomorrow for another interesting episode where we discuss how to scale up your land business after those first 10 deals.
Jill DeWit: And we answer your questions posted on our online community, which is free. You can find it directly at LandInvestors.com, or you can get to it from LandAcademy.com.
Steven Butala: You are not alone in your real estate ambition. Finding money, you know, when you start out a business or your start any kind of thing, you had to subconsciously, at least I do anyway, in the back of your head the stuff that’s gonna be hard and the stuff that’s gonna be easy. Finding money is about the easiest thing there ever was. And I always thought it would be like, “Who the hell is gonna give me any money?”
Jill DeWit: Isn’t that funny?
Steven Butala: They throw money at you.
Jill DeWit: I know. And what’s funny is it’s one of the things that new people starting out think it’s gonna be hard.
Steven Butala: Right.
Jill DeWit: They have a hang up with, “I can’t afford this. I can’t do this.” And I’m like, “Well, it doesn’t have to be your money. If you run out of funds, don’t let them go to waste.” No one’s gonna say no. I mean, that’s the whole thing. People go … It’s like, hey, what if I came to you with a classic car worth $35,000 and we can buy it for $10,000? We’re gonna come up with $10,000 together, it’s just nuts. No one’s gonna say no to that.
Steven Butala: Exactly.
Jill DeWit: There you go.
Steven Butala: That’s exactly right.
Jill DeWit: Thank you.
Steven Butala: Use your parents as the last dying resort, trust me, for getting money.
Jill DeWit: Yes. There you go.
Steven Butala: Unless they’re saying, “Oh, you’re beautiful and I respect you, and here’s 20 grand. Never pay me back. This is my gift to you.”
Jill DeWit: Yeah, I don’t want it.
Steven Butala: If it’s like, “Oh, I don’t know if I should be doing …” Then run away.
Jill DeWit: Exactly. Hey, share the fun by subscribing on iTunes or wherever you are listening. And while you’re at it, please rate us there. We are Steve and Jill.
Steven Butala: Information.
Jill DeWit: And inspiration.
Steven Butala: To buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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