First Deal Should be a Huge Disaster Mess (LA 732)
First Deal Should be a Huge Disaster Mess (LA 732)
Transcript:
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 DeWitt, broadcasting from sunny Southern California.
Steven Butala: Today Jill and I talk about your first deal, should look like a huge disaster mess. By the way, it is a … man I wish somebody woulda told me [inaudible 00:00:19].
Jill DeWit: It’s hilarious. Just give me a description of what this should have physically … if i have, if an image comes to my mind, should you see someone … I mean what should be happening? Paint the picture.
Steven Butala: I’m gonna ask you to describe your first deal, I’m gonna certainly describe my first deal in the meat of the show here.
Jill DeWit: Okay.
Steven Butala: It’s gonna make … I guarantee you this, it will make everyone …
Jill DeWit: Feel better?
Steven Butala: Yes.
Jill DeWit: Good.
Steven Butala: I mean yours … your deal probably smelled like roses and looked pretty.
Jill DeWit: I know, I’m trying to rethink back.
Steven Butala: But you had me helping you
Jill DeWit: I know, that’s …
Steven Butala: I’m sitting at a coffee table, sitting at a coffee table with a full time job all stressed out …
Jill DeWit: Mm-hmm (affirmative) [inaudible 00:00:59] what I just do.
Steven Butala: … in Ohio, trying to close an 80 acre deal in Arizona, and I’ve never done this before.
Jill DeWit: Right.
Steven Butala: I have a lot to say.
Jill DeWit: I know you do.
Steven Butala: I know, I snoop for you.
Jill DeWit: You usually do.
Steven Butala: Before we get into it, let’s take a question posted by one of our members. On thelandacademy.com online community, it’s free.
Jill DeWit: Okay. Milan asks “Long story short: I bought 40 acres a few months ago for 4,000 dollars. Did all my due diligence and all was good. Count and recorded it, and I was a proud owner. The land wasn’t selling. Thank God it wasn’t, that would have been a serious mess. Last week I received a letter from the law office telling me that my property will be auctioned at a certain date. I can pay the lien of 4,000 dollars, not too big of a deal. The point is, if I resold the property, that would seriously destroy my reputation selling property to clueless, excited buyer. I’m learning intensively how to check for liens now, what is your process? There are a lot of questions about liens in this forum but no one really answered it.”
I do have one thing I would like to add first here, Steven.
Steven Butala: Yeah.
Jill DeWit: I don’t know how or where Milan is doing his due diligence because I know he doesn’t have the tools that we have.
Steven Butala: Oh, he’s not a member? Oh, Milan!
Jill DeWit: No, he’s not. He doesn’t have the title pro 24/7. He can’t pull a lien report like we all can in 30 seconds. Or 10.
Steven Butala: Okay, so his long story short … my answer’s gonna be short.
Jill DeWit: Yeah.
Steven Butala: Become a member, and this would never happen.
Jill DeWit: That’s the point.
Steven Butala: Because we have all the lien related tools, and all the due diligence tools. Let me read the first sentence again. Long story short, colon. I bought 40 acres a few months ago for 4 grand. Next sentence. Did all my due diligence, period. No you didn’t. Part of your due diligence is call the county and see how the … immediately, actually. After you check it on ParcelFact, you’re gonna send a bunch of letters out and a few are gonna come back. One … this one might be signed. The first thing you do, when you open the mail or take that phone call is, go into ParcelFact and see if it’s property you want to buy.
Is there access, does it have some attributes, the whole thing. The second thing you gotta do, is check the back taxes and pull a lien report like Jill said. So Milan, you’ve been … you come up a lot in land investors and things like that and we are really proud of you but it might be time.
Jill DeWit: That’s what I was gonna say, you know this is basically the 4,000 dollars that you just spent on that property and the 4,000 of a lien that you missed. That’s 8,000 dollars you could invest in an education and not have to do this again. I don’t mean to call out out Milan, I just want to say this is really good, and you’re doing … you made a big mistake, you did … [crosstalk 00:03:44]
Steven Butala: You did every single thing right.
Jill DeWit: … you did the best you could with what you had to work with.
Steven Butala: And you know you want to do this, and you’ve done a bunch of deals. [crosstalk 00:03:50] It’s time to get the professional grade tools. Which are not expensive at all.
Jill DeWit: Exactly. Eight grand is a lot to spend. Testing this out and doing it on my own, I’m not sure I would have done it on my own. At this point I’m gonna be going “Uh oh, now I really need some help.”
Steven Butala: Exactly.
Jill DeWit: But good job.
Steven Butala: See, I wonder where he’s … you know, I want to make this about this question.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: This is not to a regular listener, or even a new listener, this never happens.
Jill DeWit: Right, I don’t have these issues.
Steven Butala: I don’t want you to say “Oh my God, I don’t want to blindly buy 40 … ” That doesn’t happen. We have the tools to make sure with 99% accuracy that you’re not gonna be surprised about anything.
Jill DeWit: I want to say, correct me if I’m wrong Steven, I’m trying to remember. It’s some … sometimes liens pop up in our initial data pull … pool. I want to say that there’s category for liens, I might be wrong. No matter what, I know we can go back and pull separate lien reports per property for 20 dollars, if that.
Steven Butala: I don’t know why you’re getting a letter from a lawyer, either. Unless it’s some taxes. ‘Cause sometimes they send that out. If it’s anywhere out west here, there’s no … you don’t get a letter from a law office unless somebody’s being … so yeah, I question this whole thing. Last week I received a letter from a law office telling me that the property will be auctioned at a certain date. I’ve never received a letter from a law office saying my property will be auctioned.
Jill DeWit: This is some weird stuff …
Steven Butala: The other thing too is that if you want to check on … this is back tax situation. You wanna check on it, pull it up on the county website unless it’s ultra rural. Or at worst case, call the treasurer, they’ll tell you. Before you buy it.
Jill DeWit: It’s too easy. This is one of the things we teach all our members, how to do you due diligence. You need to check all this stuff ahead of time. Who knows? Maybe there’s an HOA that Milan hasn’t even found yet that’s gonna crop up. You know, it could be in some area that has a POA or an HOA and those fees are still yet to surface. This is all the stuff that you need to know and we …
Steven Butala: Do that before you buy the property
Jill DeWit: … share with everybody ahead of time so you’re going into this buying a good property.
Steven Butala: It’s all the stuff that a regular title does in a deal. And then I’ll add it so … I’m not sure I’d be running around without being, having a tool, access to the tools we have. Well I know I wouldn’t. I would not be running around spending four grand on property without access to the tools that we have. However, if I was bent on doing that, I would close this deal with a title agent.
Jill DeWit: When you bought it. If he … that’s true ’cause he woulda known right then as he was buying and would just say “You know what? Dude, I’m not buying it for 8,000, I’m out.”
Steven Butala: You know, this totally qualifies under the title of this episode.
Jill DeWit: Yes? Perfect, nice headway.
Steven Butala: Congratulations Milan, you’ve got a little bit of a mess on your hand. And you’re gonna figure it out. ‘Cause chances are, the property’s … that 40 acre property is worth a lot more than 8 grand.
Jill DeWit: Hopefully it’s worth 12, or 15 or 20.
Steven Butala: Right.
Jill DeWit: And that it’ll work out fine.
Steven Butala: Exactly. Today’s topic: your first deal should be a huge fireball, disaster mess. This is the meat of the show. So Jill, tell us about your first deal. Do you even remember your first deal?
Jill DeWit: Oh my gosh, I don’t. All I remember is the first deals were the small stuff that I was “practicing” on. I mean, they’re real properties. Didn’t expect to make much money on them, but I did. I was sitting there building up a nice little bank balance of property you just kinda tossed at me to see if I could figure it out. When you really think about it, there wasn’t a lot of “training.” When you really think about it, there wasn’t a lot of “training” that you gave me, you kinda just showed me some stuff and said “Here, copy this.”
There was no program obviously, back then. It’s not like I could watch videos that you had made or anything you’ve done. It was just me by myself, kinda learning and then, next thing you know, here we are. Fast forward.
Steven Butala: Here we are with the bank balance.
Jill DeWit: You know what’s so funny too, I was talking to our team right now about the number of properties that need to be posted and we’ve got in our inventory. I’m like, everyone … they look at this like it’s a lot, I’m like “This is not a lot.” You have no idea how many properties that I by myself managed and dealt with at one time.
Steven Butala: Thousands.
Jill DeWit: They’re like “Really?” And I’m like “Yeah. You guys better get it together because it’s not a lot of property.”
Steven Butala: Yeah, I have a lot to say about that off air.
Jill DeWit: Here’s my thing too, I’m trying to think about … I’m trying to answer your question and answer it with the topic. A huge disaster mess. Well number one I had you, if I needed you …
Steven Butala: I’m the huge disaster mess.
Jill DeWit: Number two, part of it is, I think my mindset that … I want to figure it out, I’m gonna try to figure it out, I’m not a give up kinda person.
Steven Butala: Yeah, you’re just born that way.
Jill DeWit: If anything, if anything it could be an attribute? It could be a flaw. You decide. But the minute you tell me that something can’t be done or I’m not capable of doing it, oh look out, here I come.
Steven Butala: You’re way so more than me.
Jill DeWit: Especially when people say “You’re a woman, let me handle this for you.” Ohh.
Steven Butala: Oh my gosh, that’s what I’m gonna say that when we get outta here.
Jill DeWit: Thanks a lot.
Steven Butala: Oh, I know Jill. You’re a woman, I’m sure can’t handle this.
Jill DeWit: Let me handle this for you. Well you know what? You wanna be dragging a leg down the street? That’s that … there you go. So that’s the way I am, but tell me about your huge disaster mess.
Steven Butala: Wasn’t that big of a disaster, it just wasn’t what I expected. Which … I bought a property on eBay. I had a full blown really good shop with [inaudible 00:09:57] in Ohio. I bought a property on eBay in Arizona because I was shocked, it was 80 acres for four, five thousand bucks and I bought it. It was presented horrifically, and that was my whole premise and my justification for buying it, is if this is legit. You know what? I said “I’m gonna spend four or six thousand bucks.” I don’t remember that number. Maybe it was eight. I think it was eight, it was 100 dollars an acre.
I said I had to rationalize it. This is before … any of this is happening, this is in the 90’s. If I just dressed this … the dress up, the posting, right? I’m looking at it only for marketing and money, I’m not looking at all the back and stuff, for deed and paperwork and administration and organization and how to make it a company and what people are going to look at and do I need a website?
None of that stuff. So I’m totally going into this thing naïve. I’m gonna re-dress this all up and sell it on the internet and make it look right, for more. And it all worked. Somebody bought it and then it was a massive fiery ball of disaster from there on out. I didn’t know how to do a deed, there’s no one I could call. I called the county and they’re like “Yeah, that’s a joke.” They put the fear of the whole thing in me. Like, oh I know this person owns the property … they have access, they’re looking at a computer screen with all this information that I didn’t even know existed. This guy’s a crook, he’s … so I’m just like, I lost a ton of money.
Jill DeWit: Right.
Steven Butala: So step by step by step, across the country i worked it out. That’s what happened. That’s just what you do. But, if I was afraid at all those things and really sat down with a piece of paper, with a pad and a pencil and “What can go wrong with this deal? What can go wrong with this whole, what I’m trying to do here?” I never would have never done it.
Jill DeWit: I just thought of something. One of the things that we teach our members to do when you’re starting out is not spend all you 8,000 dollars. Imagine, instead of spending 8,000 dollars on one property, you spent 1,000 on eight properties. And one of them went sideways, and the other seven were huge successes, then you really wouldn’t care. That’s a really … if you want to test this, that’s a good test. Doing it that way and by the … so one goes sideways, big deal. You sell the other eight for double or more, your 8,000 is right now 20,000 dollars, you’re trying to figure out “Wow, how did that happen? Now, I got this.” You just did eight deals and you sure made a lot on that other one.
Steven Butala: If I woke up this morning and the exact same thing happened, and now it’s 2018 and I’m staring at a deal on eBay or anywhere on the internet, and asking myself all these questions like “Well, this guy’s presenting this property pretty terribly. I know I can sell it for more.” The first thing I would do now is go to Land Investors, the community, and ask all these questions and find out “What the hell. Is this for real? I can’t believe you can buy these properties like this. Why is … if this is true, why is isn’t someone making five million bucks a month doing this?” Or, “Wait a minute,”
Jill DeWit: They just don’t know about …
Steven Butala: My point is, this is … wish I woulda, wish someone woulda told me that this week. That’s the theme this week.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: It perfectly falls under that, was my deal a huge mess? Yeah, it was an absolute mess and I bet if I was gonna do my first deal tomorrow, it would be a huge mess. But we have resources now.
Jill DeWit: Isn’t that amazing? That’s you back then … part of your mess was probably … you didn’t know what you were doing. You didn’t know who to call, you didn’t even know what to ask, you didn’t know, you were guessing, guessing, guessing. And it could have gon better, but you know what? Lucky for you, it still worked out great.
Steven Butala: I’ll tell you what happened after it was done and it was cleaned up and the deed got recorded and I got paid and the whole thing. I was absolutely hooked. You’re gonna know, most of you listening to this show have already done a few deals. You’re hooked. If you’re brand new, you’re gonna deal and you’re gonna find out. There’s somebody who joined our group several years ago, they set a deal and they emailed Jill and I remember this. They said “This is not for us. We don’t don’t … I don’t want to buy land. I don’t see the point.”
Jill DeWit: Huh, and that’s fine.
Steven Butala: They had a … people were calling, I posted on the internet and people were calling me and asking me all about this land and you guys tell us to not to look at the land so I couldn’t answer their questions. I said, “You know what? You’re right. This is not for you.”
Jill DeWit: Not for you. That’s okay.
Steven Butala: Because if you’ve got a better way to make ten grand on a deal, in about a week. That’s not your point? You can’t be bothered with answering the phone a few times and dealing with some emails, then I think you’re right.
Jill DeWit: That’s okay.
Steven Butala: But I was hooked.
Jill DeWit: It’s like saying, I’m trying to think of any major company owner, does he really need to stand there and bless every transaction? No, you have to take his hands off approach. And that’s this job too. You have to take a step back or you’re never gonna grow, by the way. If you think that you’re personally gonna drive out there and stand on it, put a chair and take a picture of you on every single property that you buy, and you’re gonna do it all over the country, you can’t get ahead.
Steven Butala: Sure. You know we say this a million times, what Jill’s saying. It’s not about the real estate. It’s all about the stuff we’re talking about. It’s about getting over, doing your first few deals. It’s about getting over the paperwork aspect and sending it out to the proper person and just being organized. Sticking to a schedule, it’s about everything … all the skills that you would need to own and operate a successful bakery are the same ones you need in real estate.
Jill DeWit: Especially if you want to have a second bakery and a third bakery, and a fourth bakery. If you think you’re going to … your first bakery, you might be the chef. You might be the pastry chef. That’s your thing and you’re there every day, but you know what? You can’t do it … you can’t be in two locations, three locations, four locations.
Steven Butala: Absolutely, well said.
Jill DeWit: Thank you. That is dragging a leg down the street!
Steven Butala: Oh my gosh, it’s not gonna go away.
Jill DeWit: I know, sorry.
Steven Butala: Join us tomorrow for another interesting episode where we discuss: you need time and smarts more than money.
Jill DeWit: Amen. And we answer your question, post it on to landacademy.com, our online community, it is free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: I think that was good. We don’t … even our members, you know it’s so funny. I haven’t seen or heard of a huge mess in a long time. Seems like on our monthly member call, I would hear about now and then like, “Oh man, I did it all wrong. I didn’t double my money.” Then you and I would ask them, “Well, how much did you make?” “Well I only made 80% profit.” What the heck?
Steven Butala: Yeah.
Jill DeWit: How is that a fail? That is not a fail.
Steven Butala: So what I didn’t talk about on the show is, when that happened I said, “Alright. This is a one off,” this is what I told myself. “It’s a one off deal …
Jill DeWit: Can never do it again.
Steven Butala: … I would love to make this a business. Completely cross-country.” How would I ever possibly get … put it in a system where I could just buy, cause I made eight grand. “How am I possibly gonna put this all in this system,” because if I could do this every month, that’s all I wanna do. One deal like that a month. Five to eight thousand bucks a month. At the time where I was in my life, I coulda walked away from my whole child, and my life and the whole thing. So I got on a plane and came out to Arizona and figured it out. Back then, this was long before mail. Sending the mail out makes it so easy.
Jill DeWit: It’s true.
Steven Butala: I had to go drive around the country going to auctions. Just before the internet really kicked in. These are all good things, we’ve made this so easy and systematic, it’s awesome.
Jill DeWit: It is. Share the fun by subscribing on iTunes or wherever you are listening, and while you’re at it, rate us there please.
Steven Butala: We are Steve and Jill.
Jill DeWit: We are Steve and Jill.
Steven Butala: Information.
Jill DeWit: And inspiration.
Steven Butala: To buy undervalued property.
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