Land Investment Diversification (LA 760)
Land Investment Diversification (LA 760)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy show, and happy Friday. Entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m Jill DeWit broadcasting from beautiful southern California.
Steven Butala: Today Jill and I talk about land investment diversification.
Jill DeWit: That’s a mouthful. Say that three times fast.
Steven Butala: Land investment diversification. I can do it.
Jill DeWit: Land investment diversification. Land investment diversification. That’s hard.
Steven Butala: How complicated could this possibly be, Steve?
Jill DeWit: Were you clearly not … were you going for the SEO on this show or something?
Steven Butala: No.
Jill DeWit: Does that come up a lot? No one else uses that, that’s for sure. If anybody typed in land investment diversification, we would pop to the top. Thank you, Steven, for thinking ahead.
Steven Butala: Jill, that’s why we have you on this program, to lighten the whole thing up and make sure we don’t take ourselves too seriously.
Jill DeWit: Wow. That is way too serious. Yeah, I’m here to save everyone, and starting with you.
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. Hi Milan. Milan asks, “You have a land you bought for $4,000.00 and self-closed. You sell it for $25,000.00 on a four year payment plan-“
Steven Butala: That’s good.
Jill DeWit: “At the end of your term the buyer asks you for a title close. Title finds some issues and refuses to insure it. Are you obligated to give a refund to your buyer? How would you guys handle a situation like that?”
Well, I have a couple of things to say.
Steven Butala: I have a bunch of stuff to say. Go ahead.
Jill DeWit: Number one, I happen to know who this person is, and he’s been with us, following us, for many, many, many years. I don’t … he’s not actually a member-
Steven Butala: Oh.
Jill DeWit: So I don’t know if he’s able to do his due diligence like the rest of us do-
Steven Butala: Oh.
Jill DeWit: And unfortunately, if he did have access to all the things that we do, like with Title Pro and all the stuff that we have-
Steven Butala: Oh, Jill-
Jill DeWit: If he would have saved himself a little bit.
Steven Butala: You’re nailing it, actually.
Jill DeWit: So, I mean that’s my first gut instinct, because that’s one of the things we all do, Milan, is we all do our own homework. We’re pretty much doing our own title work-
Steven Butala: Our own title work, yeah.
Jill DeWit: Ahead of time before we act on the transaction, and purchase it ourselves. If you had all that stuff, and you could easily pull a report, or whatever they had just come up, just even going back and checking the transfer of title more than just who you bought it from-
Steven Butala: Yeah.
Jill DeWit: Because that’s what it sounds like happened. I’m guessing you bought it from somebody and it all looked legit at that point, but you weren’t able to go back to the person before that, and the person before that, and make sure there’re no clouds on the title, basically. We do that, and we have access to that, so-
Steven Butala: Yeah.
Jill DeWit: My number one recommendation would be maybe if you don’t want to invest in getting all the right tools and the resources yourself, maybe you should buy. If you had bought it with title insurance, you wouldn’t be in this situation.
Steven Butala: Yeah, I mean $4,000.00 is a threshold to actually purchase … I have a few things to say if you’re done.
Jill DeWit: Okay. I think I’m done.
Steven Butala: Number one, on a $4,000.00 property, you should probably buy it with title insurance.
Jill DeWit: Especially if you’re not a member, and you can’t do this.
Steven Butala: Especially if you think it’s worth $25,000.00.
Jill DeWit: Right.
Steven Butala: Which means it’s probably worth 50. So, please consider that next time. Number two, just find another buyer. I mean, find another title company. I would go through rolls and rolls of the title company.
Jill DeWit: Well but what if there is really an issue and he goofed up-
Steven Butala: Here’s another option you could do-
Jill DeWit: I would refund it.
Steven Butala: He could do a quiet title. He’d refund $25,000.00. No, you would solve it. You would solve it.
Jill DeWit: Wait, wait, wait. I would … but you’d have to work it out. But if I really bought it wrong, I mean that’s the whole thing we’re not talking about, too.
Steven Butala: We’re not going to never ever want to screw the buyer.
Jill DeWit: Right, that’s my point. Do the right thing, even if it costs money.
Steven Butala: There’s 50 things that can happen to rectify this situation before you start doing refunds. Are you obligated? That’s your question. Are you obligated to give a refund to your buyer? Probably.
Jill DeWit: That’s what I think. I do, too.
Steven Butala: Yeah, it’s the right thing to do.
Jill DeWit: It really is. For me, too, whatever the issue was, now you have to go and solve that. What if the issue is simply that two owners ago it wasn’t recorded correctly? So, you’re right there, Steven. The right title company is going to go back and solve that stuff, so-
Steven Butala: Yeah, more than likely.
Jill DeWit: That’s what you gotta do.
Steven Butala: There’s just my gut, with all this experience we have. Maybe a few people back in the title, it got sold at a tax sale. Somebody got it at a tax sale and resold it, and resold it, and maybe just the guy even Milan bought it from. That’s more than likely what causes a title company to stop, to not want to be involved – the big ones. There’re tons and tons of mom-and-pop title companies that love these deals, and will do them all day.
Jill DeWit: There you go.
Steven Butala: If you go to SourceOfTitle.com, that’s where they all hang out.
Jill DeWit: Right.
Steven Butala: It’s like their little anti-establishment portal. I love it. They have terrible attitudes, and they can’t stand the huge corporations, and they yell about counties. It’s beautiful.
Jill DeWit: That’s funny.
Steven Butala: It’s a snarky little club that I pay for to belong to, because I love it.
Jill DeWit: That’s funny. Yes. My question is, I go back to you can’t get title insurance now. Do I have to give the guy his money back? Yeah, I’m with you, too. It’s just like do you want the reputation? Do you want what this person could do to you? No. I don’t want it. I don’t want my name out there with a bad reputation, number one. I don’t want someone really unhappy. I don’t want to even … and if you could afford $25,000.00 in four years, you could probably afford an attorney.
Steven Butala: Yeah.
Jill DeWit: No, I’m serious.
Steven Butala: No-
Jill DeWit: I’m being all legit.
Steven Butala: You never want to let it get to that.
Jill DeWit: Exactly.
Steven Butala: Never.
Jill DeWit: So I wouldn’t even think about that. And you know what? That’s the thing, too, that’s how we roll. If I have … we have sold properties, and it took people a year to go out and look at them. They love it-
Steven Butala: Oh, yeah.
Jill DeWit: They bought them, they’re all excited, and then when they finally got out there, it was not what they wanted, or whatever it is. You know what? It’s not worth it.
Steven Butala: Right.
Jill DeWit: I’m not going to argue, I’m not going to give someone a hard time. I’m not going to say, “You’re stuck with it. It was a 90 day return policy.” No. I’m never going to do that. We’re going to do the right thing.
Steven Butala: You know what Jill’s done in the past, too, is-
Jill DeWit: Swap it?
Steven Butala: Swap it.
Jill DeWit: Yeah, I’ll swap it for something else. I’ll say, “What’s missing?” And honestly, too, because here’s what’s happened – four years later often the property is worth more.
Steven Butala: Yeah.
Jill DeWit: So I’m like, “Fine. You want your money back? Here you go.” You now? This $25,000.00 property, maybe it is 30 now.
Steven Butala: Right, Jill.
Jill DeWit: So you know what? Yeah, I’ll give you your money back. Now, I’m going to go do it this way, and get the title insurance on the front end, sell it for cash now. You know, whatever it is. There’s a lot of ways-
Steven Butala: $4,000.00 and then a $25,000.00 sale. For whatever reason, I purchase a $4,000.00 piece of property without getting title insurance, and then I sold it for $25,000.00, I would immediately actually then go re-close the property. I would probably just deed it to Jill, and we would buy it with title insurance-
Jill DeWit: Right.
Steven Butala: Before I collected any money, because … just don’t put yourself-
Jill DeWit: I want to make sure.
Steven Butala: In this position again, Milan.
Jill DeWit: That’s it.
Steven Butala: That’s my point. That’s what you need to take away from this, and everybody else listening.
Jill DeWit: Great advice. Thank you, Steven.
Steven Butala: How much money did you save by not doing this?
Jill DeWit: Right?
Steven Butala: You saved $600.00, maybe $700.00 up front on a $25,000.00-$50,000.00 piece of property, and now it’s a mess.
Jill DeWit: Exactly.
Steven Butala: You just didn’t … you really didn’t save any money at all.
Jill DeWit: No, you’ve got a guy that’s been paying you for four years and he might want his money back, and you get to come up with the $25,000.00 real quick.
Steven Butala: Or, at the very least, part of our group had access to all the professional tools that we have, you would have solved this long-
Jill DeWit: You wouldn’t have done it.
Steven Butala: Before the [inaudible 00:07:57] ever happened.
Jill DeWit: You would have figured this out.
Steven Butala: Maybe you wouldn’t have bought it if the title flaw is so bad-
Jill DeWit: That’s my point.
Steven Butala: So, you’re saving yourself $250.00 a month, but did you save any money?
Jill DeWit: Exactly.
Steven Butala: Because you’re doing a $25,000.00 refund now. I’m not picking on you, Milan. But there are a lot of people that are just … I don’t understand. I don’t understand that.
Jill DeWit: I know.
Steven Butala: That’s okay. I believe in using professional-grade tools to buy real estate.
Jill DeWit: Well, and it’s like … this is a perfect thing too. Do you want to learn, do you want to do this all on your own? There’s a lot of people that want to do this on their own, and just learn and take 10, 20 years, whatever it is. Or, do you want to cut to the chase and we can help you?
Steven Butala: Yeah, and make some dough.
Jill DeWit: Thank you.
Steven Butala: And do it right.
Today’s topic: Land Investment Diversification. This is the meat of the show. It’s also the topic of humor for Jill. Here’s my point, I’m going to cut right to the chase so we can have some fun. Believe it or not there’s a bunch of types of land. There’s rural vacant land, that’s usually county property; there’s agricultural land; there’s urban “buildable” in-fill lots; there’s heavy industrial property; there’s recreational land like in Michigan and in Florida.
Jill’s getting a call. I’ll handle the show. Go ahead.
Jill DeWit: Hi, Chris.
Steven Butala: Jill is literally-
Jill DeWit: I’m good. How are you?
Steven Butala: Purchasing a large piece of property in a very urban area-
Jill DeWit: Good. I can. Yes.
Steven Butala: I’m going to put it on pause.
Jill DeWit: So now, are you on your … this is a family vacation-
Steven Butala: Okay, Jill, so tell us. We’re back. We’re back. Tell us how it went.
Jill DeWit: You know what? I hesitate to share too much, but I think we can make $100,000.00 on this deal-
Steven Butala: That’s what I think.
Jill DeWit: Which is so interesting-
Steven Butala: I went through all the numbers.
Jill DeWit: I’ll share a little bit, though. This woman and I have been talking for months, and I really kind of said, “We don’t want this deal because it’s … I do know it’s a house, and it’s in rough shape.” And she wasn’t quite ready still to move on. Well, apparently where she lives, it’s heating up and it’s getting hot. She can’t take it anymore, poor thing. So, she’s calling to say, “I gotta get out of here.” Kind of thing. And you know what? What’s interesting about this deal is its one of those that I think that the reason she’s talking to us, I’m sure other people have offered her … made her offers, because it’s a paid-off house in an awesome area.
Steven Butala: Mm-hmm (affirmative). Mm-hmm (affirmative).
Jill DeWit: So she trips people’s radars, but they don’t connect with her. I’ve really been a listener, sometimes too much of a listener, and I think she trusts me because she has said things like, “I don’t really want people to come here. [inaudible 00:10:47] come in here and look at it.” She’s not going to call We Buy Ugly Houses, or stuff like that-
Steven Butala: Right.
Jill DeWit: She’s a little uncomfortable, and she lives alone, and I get that.
Steven Butala: Mm-hmm (affirmative).
Jill DeWit: So it’s a good opportunity. It’s going to need some work.
Steven Butala: That’s fine.
Jill DeWit: And that’s okay.
Steven Butala: Well, I know it’s priced right, and I know she asked for a purchase agreement, so-
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: She asked for a fresh purchase agreement with the new dates on it-
Jill DeWit: Yep.
Steven Butala: So that’s all I care about-
Jill DeWit: It’s going to be awesome.
Steven Butala: And I’m happy about that. Great work, Jill.
Jill DeWit: Thank you.
Steven Butala: [inaudible 00:11:14] constantly.
Jill DeWit: Thank you.
Steven Butala: I’m surprised we don’t get … well, you know what? Usually we record really early in the morning. It’s not so early today.
Jill DeWit: No, it’s not.
Steven Butala: I was just thinking, we usually-
Jill DeWit: Where is my phone? Where is … and I’m not usually dealing with these transactions, but a few of them I do want to be involved in.
Steven Butala: Yeah.
Jill DeWit: So, thank you. That’s why I needed to take the call.
Steven Butala: No problem.
Jill DeWit: I love this. Okay, so land investment diversification. I love this topic. Man, this I great. Okay, I heard you talk about we had everything we talked about … Did you talk about commercial yet? I don’t think we got into commercial.
Steven Butala: Yeah, industrial/commercial.
Jill DeWit: Industrial/commercial. There’s-
Steven Butala: Let’s talk about them one by one.
Jill DeWit: Okay.
Steven Butala: So, there’s rural vacant land, that we talk about all the time. It’s always really … not always, but it’s a vast majority and very inexpensive. There may or may not be potential access issues, so you really got to review it, but by and large, you can get pretty good deals and sell them for more.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: Mostly because you just want to get rid of it. The seller just wants to get rid of it.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: There’s in-fill lots, like a property that you drive down the street maybe where you live, and there’s a vacant lot between two houses. That’s an in-fill lot. Same situation. They’re priced a little bit more closely and tied to housing prices and things, but you still can get a smoking deal.
Jill DeWit: Yes.
Steven Butala: There’s agriculture property, like in the center of the country. That is almost a commodity where if you ask a group of guys at a coffee shop in Iowa what an acre is going for right now, they’re all going to give you some version of $8,000.00 an acre.
Jill DeWit: Right.
Steven Butala: Or, $18,000.00 an acre. They’re going to say, “Oh, maybe $18,500.00,” and then they’ll all get into it with themselves, but one’s not going to say 30, and one’s not going to say five.
Jill DeWit: Right.
Steven Butala: So, it’s more of a commodity with the single use kind of thing. Then there’s commercial development property, which is what Jill just said. Commercial property that could potentially be rezoned and reused. That, you can make hordes of money on.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: When you change the use of a property, we’re going through this right now on a property. Change the zoning and change the use, you’re creating a tremendous amount of equity for yourself. The key is you have to be able to understand the municipality and know if they’re going to be willing to do this.
Jill DeWit: Correct, before you buy it.
Steven Butala: Yeah, before you take the risk.
Jill DeWit: Right.
Steven Butala: So, you are taking more risks, but there is more reward.
Jill DeWit: Well, and one of the things we haven’t talked about in a while is depending on the property that you’re looking at, it’s easier, traditionally, to zone down than it is to zone up. So, if you have a commercial property, you want to go to Mobile Vacant Rural … something like that, that’s usually pretty easy. Going the other way is harder.
Steven Butala: Exactly.
Jill DeWit: And it’s for … which is great, because for our property types that we’re dealing with, we’re dealing with residential traditionally. That’s what we’re looking for.
Steven Butala: Right.
Jill DeWit: So I love getting some of those funky ones. Honestly, the funky … I don’t really want to often change the zoning, let’s be honest. Because a lot of commercial property is valuable. There’s a reason why it’s zoned that way.
Steven Butala: Yep.
Jill DeWit: I’m going to keep it commercial, sell it commercial, and maybe make more money.
Steven Butala: Exactly. You just have to weight what it’s worth doing that-
Jill DeWit: Right.
Steven Butala: Or what it’s worth, let’s say, splitting a parcel up-
Jill DeWit: Right.
Steven Butala: Which we have a lot of experience doing, or even doing a full blown subdivision. So, there’s a lot of different ways to slice it, but what’s the point of this show today?
Jill DeWit: What is the point, Steve?
Steven Butala: Diversify it, man. Do a bunch of stuff. There are people in our group who specialize in not necessarily the actual product type, the property type, but they specialize in the [inaudible 00:14:53] situation the seller might be in.
Jill DeWit: That’s true.
Steven Butala: So there’s … my point is try a lot of different things when you’re sending out mailers, forget about if you have the money or don’t have the money. If you find a good deal, you’ll always find somebody-
Jill DeWit: Right.
Steven Butala: To invest in it.
Jill DeWit: That’s true. The money always comes.
Steven Butala: It pays out to diversify and to shoot for the moon.
Jill DeWit: Don’t be afraid, too. That’s a big one that I talk to people, like oh, I don’t want to even learn that. Why? Don’t be afraid of it. You’ll learn it-
Steven Butala: Yeah.
Jill DeWit: It’s okay.
Steven Butala: Right.
Jill DeWit: We’re here to help you. That’s the whole point of our community, too, by the way. That’s all these questions, these questions that we share in the beginning of each show is real legit … go read them for yourself. People going, “I don’t know what to do here.”
Steven Butala: Yeah.
Jill DeWit: You watch everybody weigh in and help each other. The next thing you know, then three responses down is, “Hey, I just did one six months ago. I did this, I did that, call this lady at the county, and talk to that guy.” Whatever it is. And, you’ll get it done.
Steven Butala: Right.
Jill DeWit: That’s the beauty of this, too, is we have … we’re here to help. We really are here to help.
Steven Butala: We’ll you’ve done it again. You’ve spent another 15 minutes or so listening to the Land Academy Show. Join us next week, where it’s staying on track in your land investment career week.
Jill DeWit: I am looking forward to that. And, we answer your questions posted on LandInvestors.com. It’s our online community I just talked about, and it’s free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: Are you happy to be home?
Steven Butala: Yes, I am actually.
Jill DeWit: You’ve been traveling a lot.
Steven Butala: I love traveling though.
Jill DeWit: I do, too. It’s so good to get out there and see this stuff.
Steven Butala: Yeah.
Jill DeWit: You know, as much as we talk about … it’s kind of funny, “You don’t have to go see it. You don’t have to stand on it,” which is true. That is all true. With maps, and Google Earth, and all this stuff that we can look at now, and Parcel Fact that we have to find our properties, it’s not a deal breaker. However, what happens to you and I is we get … I almost think that if we go out and look at the property we’re going to come back and up the price-
Steven Butala: Yeah.
Jill DeWit: Because I go, “Wow-“
Steven Butala: That’s what happened this trip.
Jill DeWit: “This is even better than I thought this was.”
Steven Butala: Yeah.
Jill DeWit: “Shucks. I am giving this stuff away.” You know what I mean? It’s so funny, but it is good to get out and really see it. I mean, we had just so much beautiful property out there, too. People go, “Oh, it’s real vacant land.” You know what? Go out there and look at it. You’re going to stand there and go, “This is breathtaking.”
Steven Butala: People who say that-
Jill DeWit: Thank you.
Steven Butala: They’re just not into it. I learned this the hard way, because I didn’t accept … I had a real problem with that really early in my career, like, “Oh, my gosh. Maybe they’re right. Maybe it isn’t worth-” You know what? You’re not a land person. You’re a city person who wants to have your laundry picked up, and that’s fine.
Jill DeWit: In a high rise, and that’s okay.
Steven Butala: It’s fine, and I’m not knocking your lifestyle, and if that’s what you want, then I’m happy for you. But, don’t knock my stuff.
Jill DeWit: Exactly. Share the fun by subscribing on iTunes, or wherever you are listening. While you’re at it, please rate us there.
Steve & Jill: We are Steve and Jill.
Steven Butala: Information.
Jill DeWit: And inspiration.
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