Return on Investment Analysis per Land Deal (LA 721)

Return on Investment Analysis per Land Deal (LA 721)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hi.

Steven Butala:                   Welcome to the Land Academy Show. Entertaining land investment talk, we hope. I’m Steven Jack Butala.

Jill DeWit:                            Are you alluding to the show? And I’m Jill DeWit, broadcasting from sunny Southern California.

Steven Butala:                   Today, Jill and I talk about return on investment analysis, per land deal. Jill, could it be anymore-

Jill DeWit:                            What the heck?

Steven Butala:                   … boring for you, today?

Jill DeWit:                            What were you thinking when you came up with this title.

Steven Butala:                   This is stuff that we need to know.

Jill DeWit:                            Wow.

Steven Butala:                   This is stuff that we need to talk about, and that’s why you’re here, to lighten this whole thing up.

Jill DeWit:                            ROI analysis. Oh, this is going to be fun. I’m excited. Do I really have to be here? Can I just go?

Steven Butala:                   We can shorten the show. Here’s the spoiler alert. When you sell land, you double it, you double your money. So, you buy it for four grand, you sell it for eight. That’s 100% ROI … That’s my knob.

Jill DeWit:                            Oh, sorry.

Steven Butala:                   I know. I actually changed it up on you.

Jill DeWit:                            Oh, you did? Okay, thank you.

Steven Butala:                   She just turned it up so loud that I can’t even hear myself talk.

Jill DeWit:                            I am so sorry. Anything’s better than this show … Just kidding.

Steven Butala:                   I’m old and hearing loss has set in, quite honestly.

Jill DeWit:                            I’m sorry.

Steven Butala:                   Spoiler alert, you get 100% return, and we almost … The challenge is to keep it at 100, instead of making it 200, but we’ll talk about that in a minute.

Jill DeWit:                            Cool.

Steven Butala:                   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:                            Okay. Jay asks, “I’ve been coming across some counties which are starting to not share the owner name on their assessor, or appraisal, district website for privacy.”

Steven Butala:                   California?

Jill DeWit:                            Hilarious.

Steven Butala:                   I come across the same thing.

Jill DeWit:                            This is awesome. “If this trend continues, will that make getting data, to mail these counties, more difficult in the future?”

Steven Butala:                   No.

Jill DeWit:                            Nope. “Just curious if others are seeing this trend of hiding owner names in other counties, and if there are any consequences for us as land investors? Thanks.”

Steven Butala:                   No. This is a great question, Jay. It’s right up my alley, because as we all know, data’s my thing, and I had the same concern because Kern in San Bernardino, who apparently have the same IT department, or similar people, decided about a year, or two years ago, to stop sharing the name. But, by the way, the law requires that this is public information, but the law doesn’t say make it hard or make it easy.

Jill DeWit:                            Right.

Steven Butala:                   There are some counties in Arizona, not anymore, but it used to be, I had to drive up there, I don’t even know if Jill knows this, this is before Jill’s time. Drive up there, sit at a IBM System 36 terminal-

Jill DeWit:                            I remember you telling me.

Steven Butala:                   … with the green flashing cursor, and do the research, and pull the data. This is long before even RealQuest. So, here’s the deal, we are licensed subscribers for RealQuest Pro, TitlePro247, and DataTree, which is First American Titles Deal.

Jill DeWit:                            Providers, actually.

Steven Butala:                   Licensed providers. What did I say?

Jill DeWit:                            Subscribers? Which we are, but we’re also licensed providers, too.

Steven Butala:                   Licensed providers, thank you. So, their job in life is to aggregate this data from the county. Some counties, literally they have people that type it in, every month. So, is it going to be a problem for us? No. Is it going to be a problem for regular schmoes who want to get the data directly from the county? Yeah.

Jill DeWit:                            This is one of the things I love about title, probably, when you think about this-

Steven Butala:                   We’re exempt.

Jill DeWit:                            … So, that’s the whole point. It’s like what we have is access to the same data, as if you were a title agent, and you have to be able to do your due diligence as a title agent, check ownership-

Steven Butala:                   Well said.

Jill DeWit:                            … pretty far back. One of the best sources we have, right now, for Land Academy is TitlePro247. That’s what it is. So, Jay, for us, this doesn’t apply.

Steven Butala:                   You know, Jill and I were talking recently … it doesn’t apply.

Jill DeWit:                            It doesn’t apply to us, so it’s great. We’re exempt.

Steven Butala:                   That’s the reason, we’re exempt. We have the inside track, so that’s why you would be a member with us.

Jill DeWit:                            That’s right.

Steven Butala:                   Jill and I were talking about this last night, this exact topic, like what are we providing-

Jill DeWit:                            Oh, my gosh!

Steven Butala:                   … as a member. Like a lot of people think that our education … I’m not selling anything here, I’m just being honest, because this conversation that we had at the Italian restaurant, last night.

Jill DeWit:                            Right.

Steven Butala:                   What we’re providing is access to data. I look at the education that we provide, as free.

Jill DeWit:                            It’s true. That’s not the meat of this.

Steven Butala:                   That’s right. When you’re part of our group, you have access to all the stuff. That’s very timely that this question happened.

Jill DeWit:                            It changed.

Steven Butala:                   Access to all the stuff that normal people don’t have.

Jill DeWit:                            It used to be, when we first launched this, right? We showed our business model, got it, check, obviously, and that’s still there, but we were only able to show you where you got what tools we used and how to be like us, basically, which is pretty darn expensive for the normal person to go and have access to this stuff, and some of it you can’t get access, as an individual.

Steven Butala:                   Right.

Jill DeWit:                            That’s the other thing, too.

Steven Butala:                   Yeah, you can’t.

Jill DeWit:                            I just talked to a guy the other day, it was so darn funny. He’s like, “Well, I have access to title stuff from my friend who’s a title agent.” I said, “Well,-

Steven Butala:                   Oh, good for you.

Jill DeWit:                            I said, “That’s great. Number one, please, I hope they never get fired, or they never are let go. Number two, I would be sending them brownies every week. So, that’s great-

Steven Butala:                   Yeah, that’s right.

Jill DeWit:                            … because they could change their mind, or their company could catch up with you, too, by the way, and say who or why are you sharing your password.” With us, it is a license legit, and for everybody.

Steven Butala:                   They get-

Jill DeWit:                            All people.

Steven Butala:                   By the way, that person, they get charged for that. A title company gets charged for the record pull, just like we do.

Jill DeWit:                            It’s not free … Exactly.

Steven Butala:                   We just are smart enough to negotiate a ridiculously great rate.

Jill DeWit:                            Exactly.

Steven Butala:                   It’s 50 cents a record.

Jill DeWit:                            Well, did you see, 52 is what came up on-

Steven Butala:                   What are our-

Jill DeWit:                            We had a goof up. So, here’s the thing, we had a goof up, the other day, and it was so darn funny, I sent out an email letting everybody know it’s fixed, but-

Steven Butala:                   50 cents a record, that’s how much a stamp costs.

Jill DeWit:                            52 cents. Core Logic somehow did a little update on their site, RealQuest Pro, and instead of showing what our members pay, it showed 52 cents. That’s one of their customers, too, by the way. I don’t even know if that’s the highest, I’m not sure.

Steven Butala:                   Right.

Jill DeWit:                            But it was a good example of look what you get for 10 cents a pull, and they charge 52 cents.

Steven Butala:                   Does it say 10 cents? We charge 10 cents.

Jill DeWit:                            Yeah, we charge 10.

Steven Butala:                   Wow. We should talk about raising our prices. Wow.

Jill DeWit:                            So, that’s it.

Steven Butala:                   That’s amazingly cheap.

Jill DeWit:                            It is amazing. So, can we think about this? This guy, Jay, whose going to the county, if he knew that, “Wait a minute. 10 cents for a line of data, of all of the assessor data, and I don’t have to deal with this stuff. Game over.”

Steven Butala:                   It is a game over.

Jill DeWit:                            That’s what I’m saying. So, that’s where my whole point with this was that we’ve shifted from being more education to we’re really about the tools and the resources. You know? If you know what you’re doing, you only want to be in our club, to have access to this stuff.

Steven Butala:                   Right.

Jill DeWit:                            That’s it, and we have a lot of people that do that.

Steven Butala:                   If you’re bored one day, listener, call the county that you live in and say, “I would like to have the assessors tax roll, or the treasurers tax roll.”

Jill DeWit:                            In five minutes.

Steven Butala:                   And they’ll push you over to different departments and stuff, and they’ll say, okay, it finally gets to the right person. There’s 3,200 counties, by the way.

Jill DeWit:                            Yeah.

Steven Butala:                   Imagine doing this 3,200 times. They’re going to send you to the person, eventually, you’re going to get to the right person, and they’re going to say, “Please mail a cheque for 52 dollars and 41 cents, and we’ll send you the CD of data. Oh, by the way, it’s two years old, but that’s because when the IT guy stopped by.”

Jill DeWit:                            Right.

Steven Butala:                   Then you wait, you’re going to send your cheque. Now, two weeks later, it arrives in the mail like it’s 1958, and you stick it in your computer, and you see Bill Gates-type data, like the stuff that will make your head spin, and you’re going to say, “What the heck is this?”-

Jill DeWit:                            What column is this? What column is that?

Steven Butala:                   That’s right, you’ll try to figure it out, and then you’ll open, if you even have a CD player on your computer anymore-

Jill DeWit:                            This is true.

Steven Butala:                   … you’re going to open it, and throw it away, and you’re going to forget about being in this business. That’s the tragedy here, instead of doing it our way. Believe me, I used to do that stuff. Instead of doing it our way, we just access a website, pull down the data, like it’s 2018, and really pull up the data that you need.

Jill DeWit:                            Well, something, an important point too, here, with this question, if he’s going per owner to a site, it sounds like he’s doing it property, by property, by property, not the way we do it. We’re just hitting them all, it’s too easy.

Steven Butala:                   Jay’s not a member, I don’t think.

Jill DeWit:                            Oh, okay.

Steven Butala:                   I mean, I don’t think. I don’t know.

Jill DeWit:                            Okay.

Steven Butala:                   I think a seasoned member would not ask this question, because they’re so far past it.

Jill DeWit:                            But that’s okay, that’s why we’re here. We can help Jay.

Steven Butala:                   I’m not busting on Jay.

Jill DeWit:                            Exactly.

Steven Butala:                   Today’s topic, return on investment analysis per land deal. See, this topic wasn’t that bad, Jill. It ended up being we had a good question, so it’s not that bad.

Jill DeWit:                            Okay, thank you. I’ll see how it goes.

Steven Butala:                   This is the meat of the show.

Jill DeWit:                            I reserve the right to pass judgment after this.

Steven Butala:                   Oh, really.

Jill DeWit:                            You’re like, “Oh, come on.”

Steven Butala:                   Oh, what you mean, only right now you reserve the right to pass judgment?

Jill DeWit:                            I do.

Steven Butala:                   Oh, I don’t think that’s how it goes in our life, Jill.

Jill DeWit:                            Yeah, well …

Steven Butala:                   I think there’s a little bit of judgment passing in a normal course of the day.

Jill DeWit:                            Ah. Steven, you are awful.

Steven Butala:                   Return on investment analysis per land deal. This is about this easiest topic we’ve ever had. Here’s the deal, yeah, you just keep messing with my knob.

Jill DeWit:                            No, I mess with my knob. I promise I did not touch your knob.

Steven Butala:                   Oh, my gosh! It just occurred to me what we’re actually talking about.

Jill DeWit:                            I know that.

Steven Butala:                   Did you think about that the first time I said it?

Jill DeWit:                            No, that was all you, babe. You’re the one that keeps going there.

Steven Butala:                   When you buy a piece of property, rural vacant land, we buy 40 acres regularly, in the south western, or western United States, for $4,000, and regularly sell it for eight. That’s 100% return on investment. Yeah, there’s people out there saying, “Well, it costs $300 to close a deal, and all that.”

Jill DeWit:                            I’ve got to do the data.

Steven Butala:                   Great, 98%, for all you accountants out there.

Jill DeWit:                            Got to get the mail out.

Steven Butala:                   I can bust on accountants, because I used to be one.

Jill DeWit:                            You can.

Steven Butala:                   Yeah, I’ve got to get the mail out, that’s right. In general, you double your money when you sell it for cash, but if you really want to get into this, actually, and Jill doesn’t. Go to landinvestors.com, on the bottom left hand side you’ll see a little button that says, “Steve’s land ROI investment analysis” and download it there. It’s the actual one that we use every day, if we need it.

                                                Well, you really don’t need it if you buy something for six grand and sell it for twelve. You’re actually making money there. Where you need it is when you price terms transactions, and the ROI analysis that you’ll pull down shows about a 550% return. In reality, that is if you buy a 40 acre property for four or five thousand dollars, and sell it for twenty. On terms, $200 on, $200 a month. Jill and I had a whole career of that, a while ago, we’re cash people now, for a lot of reasons, but in a terms transaction. So, my whole point of doing this topic, it was actually a request by somebody.

Jill DeWit:                            Is there one?

Steven Butala:                   My whole point-

Jill DeWit:                            I’m teasing.

Steven Butala:                   … honestly, is to really look at … Now we’ve got that out of the way. 100% return on cash, five or six through a 1000% return on terms, and we flippantly talk about this. Name a business.

Jill DeWit:                            I know.

Steven Butala:                   Name another business, or another side business, that you can get into-

Jill DeWit:                            Isn’t it amazing.

Steven Butala:                   … while you have your job, you have your kids, you have your wife. What is a side business that you can start, for four or five grand, for that first deal, immediately resell the property, double your money, put the original investment back in the bank? Now, you can name one.

Jill DeWit:                            I know, none.

Steven Butala:                   None.

Jill DeWit:                            I can’t think of anything.

Steven Butala:                   Not buying a house and renting it. Hey, if you buy a house and flip it, Jill and I do this all the time. We spend three, four hundred thousand dollars on a house, and make twenty grand. You know what the ROI on that is? Tiny.

Jill DeWit:                            Right.

Steven Butala:                   It’s a tiny little return.

Jill DeWit:                            That’s why you’ve got to do a lot of them.

Steven Butala:                   Right. If you buy a $200,000 house, and you resell it, and you make twenty grand on the whole sale flip, you’ve made 10% of money on your return. If you buy a $400,000 house, which is what we do. $400,000 dollar house, and make twenty grand on it, that’s 5% return on your money.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   We’re talking about land making 100%.

Jill DeWit:                            Its amazing.

Steven Butala:                   Everybody forgets about it.

Jill DeWit:                            I know. They think it’s not sexy.

Steven Butala:                   And often, you have to hold yourself back.

Jill DeWit:                            And it’s not on HD TV.

Steven Butala:                   So, I was thinking about this 40 acre property that’s got ranches around it, that you bought for four or five grand, you’re selling it for ten. It’s worth like fifty.

Jill DeWit:                            I know.

Steven Butala:                   Maybe one hundred. That’s where the discipline is. I talk about it in the program, I’m like, “Keep a bottle of freaking Maalox on your desk, because it hurts to let property go that cheap.”

Jill DeWit:                            I know, but that’s the way you do it, babe.

Steven Butala:                   I know, I know. I know. So, return on investment analysis per land deal, it’s fantastic.

Jill DeWit:                            I stopped looking. You know what’s funny? I don’t even care anymore. I’m really in the mindset like, you know what? I seriously feel this way too, good for them. When I hear people going, “Huh,” they’re not being mean, but sometimes they’ll comment like, “Hey, thanks a lot. Do you have any more, because I just sold that thing for …” like they’re almost embarrassed to tell me what they sold it for, but they bought it from us from, because they’re coming back for more. They’re a little uncomfortable, like, “Do I tell this to Jill? Because I kind of don’t want her to know. She could have really marked it up.”

Steven Butala:                   This is our business.

Jill DeWit:                            Right, I know, but they don’t understand that.

Steven Butala:                   We’re whole sellers.

Jill DeWit:                            So I have to remind them, like, “I don’t flipping care. I’m so glad. I hope that you made four times. You know what? Because you put the work in, you want to do it. I don’t want to do all that.”

Steven Butala:                   Right.

Jill DeWit:                            I’m not going to go stand there with my lawn chair, and show it’s really me. Remember when we used to do that?

Steven Butala:                   I know.

Jill DeWit:                            Ah, they still do it, but they would take pictures and show it was really them standing there, on the property, as part of their selling technique kind of thing. So the end user can say, “Oh, you really have seen it.” And something like that, whatever it is.

Steven Butala:                   Boy, that’s a rookie mistake.

Jill DeWit:                            Right? And then-

Steven Butala:                   When’s the last time you looked at a piece of property, recently?

Jill DeWit:                            Not only that, or like really try to talk to a seller about it. Could you imagine? This is a whole other problem, here, like what we don’t do is can you imagine if I took a half hour and talked to a seller and said, “You know the drive up there is just beautiful. You’re going to love it. Now, when you get to that part, now before you leave town, that’s where you want to gas up and get your food and your ice, and then when you head up that hill, but it’s just dreamy.” You know what I mean?

Steven Butala:                   What the-

Jill DeWit:                            You do. I did.

Steven Butala:                   No!

Jill DeWit:                            If you’re trying to sell to the end user, that would be like the conversation.

Steven Butala:                   First of all, don’t talk to a person who buys real estate for them.

Jill DeWit:                            It would be very-

Steven Butala:                   They’re supposed to just check out everything.

Jill DeWit:                            It’s not that I can’t do it, it’s that I just don’t have time. See, that’s the point, I could do that, right? I could be really trying to make three or four times, but it’s going to slow me down.

Steven Butala:                   Yeah. Yeah, yeah, yeah.

Jill DeWit:                            There you go.

Steven Butala:                   Don’t go look at the property.

Jill DeWit:                            And have those conversations with people, it doesn’t make sense.

Steven Butala:                   It’s too time consuming, yeah.

Jill DeWit:                            So, I tell all our employees. We kind of cycle through employees that are in charge of our land selling company, because it really is a talent to talk yet not talk to buyers. You know what I mean? I have to train them every time, like, “That was too much information, get off the phone.” You know?

Steven Butala:                   Oh, really? Yeah, yeah.

Jill DeWit:                            Yeah, so we end up passing that along, like, “All right, you get to try it for a little while.”

Steven Butala:                   There’s so many things that you have to undo. All the stuff you’ve learned about real estate, it’s not your fault, listener. It’s your parents’ fault, and they didn’t know.

Jill DeWit:                            Oh, that’s true.

Steven Butala:                   You’ve learned all this stuff by talking to real estate agents, and you’ve watch your parents buy and sell one or two houses, probably, and you just have to unlearn that. It’s so unnecessary. Who were we talking to, recently, that said … Somebody. An incredibly intelligent person said, “Somebody owns a house that’s in Las Vegas, and they’re going to sell it.” And we said, “That’s great, you should sell it. You don’t need a real estate agent. Save yourself whatever, twelve or twenty thousand bucks.” And everybody piped in, they’re like, “Well, who is going to show the house?”

Jill DeWit:                            Exactly.

Steven Butala:                   “You can’t. You have to have a real estate agent.”

Jill DeWit:                            Who’s going to show the house. Ha.

Steven Butala:                   Jill and I went to Santa Barbara recently, we were looking at open houses because, not that we intended to, but that’s just what always happens. We end up looking at real estate whenever we go. And the real estate agent that was holding the open house said, “You guys aren’t licensed?” “No.” “Is that legal?”

Jill DeWit:                            Mm-hmm (affirmative). Yeah.

Steven Butala:                   This is a seasoned, older than us, real estate agent.

Jill DeWit:                            Southern California for years.

Steven Butala:                   Didn’t realize. As a career, didn’t know you could buy and sell a piece of real estate without a license.

Jill DeWit:                            Exactly.

Steven Butala:                   Classic stuff.

Jill DeWit:                            Yup.

Steven Butala:                   We have successfully avoided talking about return on analysis this whole episode.

Jill DeWit:                            Ah. I think you covered it. You covered it very early on, and it’s beautiful. You’re right, the whole point, I think, was I really have tried. Man, if there’s something with a better ROI, bring it.

Steven Butala:                   Right.

Jill DeWit:                            And we’ve tried other companies, trying to do this, and there is nothing. It all comes back to the land.

Steven Butala:                   No. It’s the greatest business ever.

Jill DeWit:                            Thank you.

Steven Butala:                   The only thing I can think of, and it’s a full-time job, not a part-time job, is manufacturing some type of specialty part that you mark up 1000 times, because you’re the only person on the planet … What are the chances of a regular person, like people like us, starting a company like that? It’s not going to happen.

Jill DeWit:                            It’s true. You’re an engineer in a factory, and you just noticed a better way to make the car, or the airplane.

Steven Butala:                   Somebody in China’s going to get hold of it eventually, anyway, and copy it.

Jill DeWit:                            That’s true, and the minute you go to try and get it made, they’re making it, too.

Steven Butala:                   Right.

Jill DeWit:                            Congratulations, now they have your prototype.

Steven Butala:                   Exactly. Well, you did it, again. You’ve spent another almost 20 minutes listening to the Land Academy Show with us. Join us tomorrow for another interesting episode, where we discuss cash deals make more money over terms.

Jill DeWit:                            And we answer your questions. Should you have one, post it on our free online community found off of landacademy.com.

Steven Butala:                   You’re not alone in your real estate ambition. What does that mean? Cash deals make more money over terms? I just got done saying you make way more money with terms transaction. What the heck is he talking about?

Jill DeWit:                            Oh, I’m so confused. Are you going to explain it for us?

Steven Butala:                   You’ll have to wait until tomorrow.

Jill DeWit:                            Okay. I will tune in. I’ll be there. I will be there.

Steven Butala:                   So, all kidding aside, how much do you just can’t stand listening to me talk about this stuff, honestly?

Jill DeWit:                            Sweetheart, I wouldn’t be here if-

Steven Butala:                   Is it awful?

Jill DeWit:                            I would not be here if I couldn’t handle it. I can handle the truth. Some people cannot, but I can handle the truth.

Steven Butala:                   We should do a whole show on You Can’t Handle the Truth.

Jill DeWit:                            That would be awesome.

Steven Butala:                   That would be fun.

Jill DeWit:                            That would be great, and if you can handle the truth, share the fun and the truth, by subscribing on iTunes or wherever you are listening. While you’re at it, please rate us there.

Steven Butala:                   We’re Steve and Jill.

Jill DeWit:                            We’re Steve and Jill.

Steven Butala:                   Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

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