Larger Than You Ever Imaged Acquisitions (LA 788)
Larger Than You Ever Imaged Acquisitions (LA 788)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
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 larger than you ever imagined acquisitions.
Jill DeWit: Larger is always better.
Steven Butala: Really?
Jill DeWit: I’m just kidding.
Steven Butala: You’re on a roll with that stuff lately.
Jill DeWit: Sorry.
Steven Butala: Is that true?
Jill DeWit: No.
Steven Butala: Is it?
Jill DeWit: No.
Steven Butala: Or just not absurdly small?
Jill DeWit: We’re not gonna talk about that.
Steven Butala: Oh. Here’s the thing that Jill and I were just talking about right before the show, we teach and guide people to buy and seel real estate. And a lot of what we talk about, to bring it down to meet them from where they’re coming is A to B to C to D, bang, you got some money. Do it again, a little bit more money. But we don’t talk about enough. And we designed a live event around this that’s happening in a few months to talk about this and what the whole show is about.
The sky’s the limit. People make 70, 80, 150 million dollars on a real estate deal. On land deals.
Jill DeWit: Exactly.
Steven Butala: What stops people, especially newer people in the first five years of their career is this concept … we’re actually talking about the show, I guess.
Jill DeWit: I guess we are.
Steven Butala: “Well, I only have $5,200 in my bank account, how the heck can I make 70 million bucks on a deal?” Well, the answer to that, I’ll give you the answer to that Mr. Bender next Saturday.
Jill DeWit: Oh.
Steven Butala: Before we get in to it, it’s the Breakfast Club.
Jill DeWit: I know that.
Steven Butala: Before we get into it, let’s take a question posted by one of the members, one of our members. On the Land Investors online community, it’s free.
Jill DeWit: Milan asked, “Title companies,” I feel your pain here Milan, “Title companies are driving me crazy with their long close. A few properties I’m buying through a couple of title companies are now in one month wait and counting. And still nothing happening.”
Steven Butala: A month is about right.
Jill DeWit: “When you contact them, they’re polite and they say, oh we’re still waiting for the title report.”
Steven Butala: Yeah, they’re not.
Jill DeWit: “Grrr,” he says. “My question for you guys is what is your strategy to make sure the seller doesn’t change his mind in this never ending wait?” I know, I know. They sign a purchase agreement, but I believe they can back out from the deal anytime if they want, which is true. “I’m thinking about sending the seller a check for $300 just to sort of keep them committed, what do you guys do?”
Steven Butala: I have an answer, go ahead.
Jill DeWit: Well, number one, I don’t send any money. I don’t do anything like that.
Steven Butala: Me either.
Jill DeWit: But slash, however, depending on the terms of the deal, I might have given a deposit in there, so they know I’m committed kind of thing.
Steven Butala: Yeah, a non-refundable deposit almost on the bigger deals we do, we always do that.
Jill DeWit: Yeah, and then we’re both committed at that point. I mean there’s money in there now, you’re committed. So, but I still wouldn’t do an out of escrow kind of thing, I’m not a fan of any of that. And same thing like when we do the options deals and things like that, I’m not a fan of sending them extra money. So anyway.
Number one, I do as much work. Sadly, I do, my team, we do as much work as we can on our end to help the title agent. Sometimes we pull stuff for them, we have access to all that. Milan, I know you’re not a member yet and you’re killing it outside of this.
Steven Butala: Seriously?
Jill DeWit: No, seriously, it’s awesome.
Steven Butala: He’s been around forever.
Jill DeWit: I know. It’s great, he’s killing it.
So unfortunately, this is stuff that could help, you could get some of this stuff that we have access too, could speed your process along. So that’s one of the things that we do. And then, number two, it’s babysitting. And I know it’s a lot of work, but we have to sometimes babysit our title agent. And that would be a daily call to the title agent, like you just say, “What are we waiting for? And the title agent says, “Well, I sent the seller the Hud One, I’m waiting for them to,” or whoever, whatever, “I’m waiting for them to acknowledge, sign it, send it back.” I say, “Okay, thank you.” My next phone call would be to the seller, “Did you see the document that the title agent sent?” “Oh, no. I didn’t see it.”
Because here is what how often it happens, the title agent just send out these emails and then just go work on something else. They don’t care. And it might’ve gone in the seller’s spam or they didn’t see it. And the title agent is not proactive enough to follow up with a phone call to say, “Hi, Mr. Seller, we’re waiting for you. Once you sign this we’ll close today.” And you have your money, and it’s the greatest thing on the planet. And because title agents don’t do that, a week will go by, it’s really ridiculous.
So, a lot of it is Milan, is you have to babysit that. And then another thing, a third thing is gonna be the title agent themselves. We’ve had these, they’re too busy. We had one that I found out just popped up … after she closed our eal, all week passed, she sends me an email she’s at a new company. I’m like ah, she had her foot out the door. She didn’t tell me that at the time. Now I know. She was getting whatever she could done because she’s leaving, going somewhere else kind of thing. So there’s all kinds of other things that could be going on. And sometimes it means a new title agent, we’ve done that, or even a new title company, we’ve done that.
Steven Butala: Don’t just use on. It sounds like you have a couple, and that’s good.
Jill DeWit: Yeah.
Steven Butala: Here’s what you wanna do too, is you wanna call the seller and say, “This title situation does not meet my expectation. Doe sit meet yours?” “Oh, no. It’s taking forever.” “So all right, good. You agree with me. I wanna get this thing done.” And you want your money. “Will you please call your title agent agent and make yourself available and let’s bug him together, let’s get this thing out of their life.” They just want it out of their life.
So yeah, but a 30 day close, I think Milan’s used to doing his own deals.
Jill DeWit: 30 days is a-
Steven Butala: 30 days is not bad.
Jill DeWit: But, that’s for bigger transactions, not just for regular land.
Steven Butala: But he says his deal isn’t-
Jill DeWit: True.
Steven Butala: No, I disagree.
Jill DeWit: Okay.
Steven Butala: I think 30 days … when you really look back at it.
Jill DeWit: Well, then I’m clearly killing it over here ’cause I think 30 days is way too long.
Steven Butala: Really?
Jill DeWit: I wanna ten day, if it’s a cash only transaction, I want ten days start to finish.
Steven Butala: You’re my girl.
Jill DeWit: Thank you. 30? Okay.
Steven Butala: Today’s topic, larger than you ever imagined acquisitions. This is the meat of the show. What does that mean? It means dream big, that’s what it means. And the reason that people don’t, I don’t think, are not aware of these deals. I’m not sure, but I think it all comes back to, “I don’t have enough money, so I can’t do the deal.” Which couldn’t be further from the truth. Quite honestly, doing other deals with money partners are easier. And the bigger the deal is, find a simple big deal where you know what’s gonna happen, you know how you’re gonna exit out of it, there’s people waiting everywhere to do those kinds of things. And you don’t need hard money or any of that stuff, we cover all that.
I’m recording the House Academy right now. And we do not use hard money. You’d need to find a private investor.
Jill DeWit: You know what I think? I think these deals, the larger than you ever imagined acquisition, is only a mindset. And I often see people that they’re like, “Oh, that’s too big, I’m not ready for that yet.” What the heck, what are you talking about? You did 150 transactions, so what that they were $10,000 or less on a purchase price, you did 150 transactions. You can absolutely do this big deal. There’s nothing wrong with that. Isn’t that funny? So I think that’s a lot of it.
And don’t think about the numbers, don’t think about the size, think about it as a transaction. So what it has some extra zeros on the end, it shouldn’t scare you away.
Steven Butala: There’s no difference if you go send a bunch of mailers out for 40 acre properties in a rural area for five grand, you get a couple back. You call your buddy on Land Investors and you say, “I don’t have 10 grand to do these two deals, do you?” “Oh, yeah. I got 10 grand. What are you gonna sell them for? 20?” And then you split the money. There’s absolutely no difference. You send money out, send offers out for 400 plus unit apartment buildings in New Jersey and a guy calls you back and says, “Absolutely I will sell my property.” And you finding an investor.
Typically an operator of those types of properties in that area and say, “I got this deal. I’m not so sure about apartments, I’m kind of a land person but if you sign this non-disclosure, maybe we’ll look at it together. I’ll learn from you.” So is there some risk in that? Yeah. But you got the land situation going on, you’re making money doing this other stuff anyway. So first deal is always the hardest.
Jill DeWit: Right.
Steven Butala: Apartments is just ana example. Ranches, let’s say. You can make hoards of money in ranches. And I’ll tell you, it takes longer, but ranch deals are almost never financed, so you find rich people and just pay cash.
Jill DeWit: Mm-hmm (affirmative)
Steven Butala: So dream much bigger than you ever imagined. Like if your criteria right now, our criteria is to make between 100 and $200,000 on info lots\ movie star ranch\ SFR, or groups of SFRs right now. And we do really well. In the past, I’ve purchased properties in health care that exceed 10, 20, 30 million dollars. And I just take a small piece of it.
Jill DeWit: One thing that we haven’t talked about in a while is the fact that, I think people are afraid, “Oh, I need to have this guy in my back pocket first. I need to have this person lined up.” It’s hard o get a private money lender ahead of time without having a deal to present to them. I see a lot of people doing it a little bit backwards. Yeah. It’s like you’re going to them, “Hey, in theory,” it’s like a publisher, “I think I’m gonna write this book, I really have a feeling it’s gonna be a best-seller. And I really feel strongly about this. No, I haven’t started it yet, but I really feel good about it. I’ve got this great idea and I want you to publish it. So can I lock you in now so when I come back in six months with my I know it’s gonna be a best-seller, we’re gonna do this deal.” No. They don’t want that. They wanna see it when it’s done, or close to done kind of thing.
So that’s the same with this. So, don’t, for me, don’t be afraid, don’t shy away. If this is what you wanna go for now, go for it. And when you have it locked in, I promise you, when you come to us, somebody out there, when you have locked in, on paper signed, “Holy cow, I don’t know how I did this but I just locked in a deal at 1.1 million dollars. This guy’s gonna sell to me, he is done, wants to cash out, ready to go.”
Steven Butala: And he wants to get the done deal fast.
Jill DeWit: “It’s worth three, he can’t stand it. He wants out.”
Steven Butala: And he hates brokers or something.
Jill DeWit: He’s retiring.
Steven Butala: Yeah, he’s retiring.
Jill DeWit: Whatever it is, he sold off all of whatever, and this is the last one, and he’s just giving I away because he’s sick of it. And this really happens.
Steven Butala: All the time.
Jill DeWit: People go, “I didn’t believe you guys until it happened to me.” I’m like right? It does. So anyway, so my point is now when you’re going … and this is a whole separate discussion, how much do I share ahead of time and you’ve gotta be careful about that. You don’t wanna disclose your whole thing because you can’t let someone come in and take your deal from under you. But we help you with that. But my point it, boy, do you think it’s hard to go to someone and say, “I need 1.1 ’cause were gonna make 1.9 and split that?” Boy, that’s pretty easy. They’re gonna be banging down your door type of thing. And then you get to pick, by the way.
Steven Butala: And this market too, it’s selling property, it’s automatic. So what I recommend going from 40 acre properties in a rural area to 22 million dollar apartments in New Jersey? No, but I think that houses is a great next step. ‘Cause in this market, if you buy property that’s anywhere priced properly, it’s gonna get gobbled up. If, this is acquisitions week, if you buy it right.
Jill DeWit: Exactly.
Steven Butala: You can’t get a letter back. Jill this happens, Jill said yesterday, we were ten to one. We sent a bunch of mail out. We get ten responses and we buy one. Maybe closer to two but it doesn’t matter. We get tons of people that write back and say, “If you add 20 grand to this, or if you had $30,000 bucks, we’ll talk.” Nope, next.
Jill DeWit: Nope. It’s too easy. I have a stack to open. I have 20 voicemails and a stack to open. I don’t need to waste my time.
Steven Butala: Yeah. And so unlike land, land people always come back. In six months they’ll say, “You know, I will take that offer.” The house people usually move on. Although, we just had one. She came in with two properties on an old mailer.
Jill DeWit: They come back. That’s ’cause of establishing rapport and that’s a whole other thing.
Steven Butala: And then moving on to maybe four unit buildings, which I’m not a fan of. Small apartments are tough. For what we do there, they’re great. But as an owner they’re awful.
Jill DeWit: Think of Tori, I like some just bigger properties. It’s a very easy transition too. If you’re not comfortable going to houses, I get it, but going to just large, large acreage, I don’t know, buy 120 acres or 160 acres. You know? That’s not crazy.
Steven Butala: Yeah, if it’s relatively usable and it’s not in these ultra-rural counties. Like in California specifically, 100 acres in the right county is worth 4 million dollars.
Jill DeWit: It’s true.
Steven Butala: Or farm land. Farm land’s commodity. If you can buy 2, 300 dollars an acre cheaper than what it’s going for, like four or five … you know?
Jill DeWit: Yeah, so agriculture.
Steven Butala: So that’s a commodity can sell it immediately.
Jill DeWit: Right.
Steven Butala: Absolutely sell it immediately to the people that are running farms real close to there.
Jill DeWit: Commercial properties good, I like that too. Not industrial. Don’t get confused. But commercial property. What if its own mobile home park? Actually that one, I argue to hang on too.
Steven Butala: Mobiles are, it’s a whole different thing.
Jill DeWit: Or bi-mobiles.
Steven Butala: I think in my mind, entirely different because the types of people that buy them and own them, unless they’re these ultra professional ones, there’s just stuff going on. They’re tough people to deal with. But, that’s not said that you can’t make tons of money doing it.
Jill DeWit: Exactly.
What about golf course?
Steven Butala: No way.
Jill DeWit: I’m gonna throw some out there just to be funny. And some good ones.
What about next to a gas station?
Steven Butala: I would never buy a property next to a gas station.
Jill DeWit: What about-
Steven Butala: For EPA reasons.
Jill DeWit: What about a big piece of dirt next to McDonald’s?
Steven Butala: Yeah, or like truck stop dirt? We’ve done that. Truck stop land is great. Land that’s right next to a functioning truck stop.
Jill DeWit: Next to the freeway?
Steven Butala: Next to the freeway property, nothing bad about it, love it. This is fun.
Jill DeWit: Okay, good.
What about ocean front?
Steven Butala: Yeah. I’ll tell ya, we just turned down an ocean front deal because it was slid into the ocean.
Jill DeWit: What about tippy-top mountain?
Steven Butala: There’s was no land left, it eroded to nothing.
Jill DeWit: Tippy-top mountain property? Heavily treed.
Steven Butala: I don’t think I would buy that. Only for access reasons.
Jill DeWit: Okay.
Steven Butala: I would look at it hard.
Jill DeWit: What about an abandoned hotel interesting he desert?
Steven Butala: I would take a hard look at that, absolutely.
Jill DeWit: This is interesting, I like this.
What about a parking lot-
Steven Butala: I saw a hotel on a tax sale list once. And it went to auction, and somebody bought it for like $12,000 and it was functioning.
Jill DeWit: Wow.
Steven Butala: And for reasons that we’re saying this week about good and bad acquisitions, I didn’t buy it because it was so far out of what we were trying to do.
Jill DeWit: Right. That would’ve just consumed us. And it would’ve kept us from doing other deals.
Steven Butala: Right. It was long before you.
Jill DeWit: Parking lot?
Steven Butala: Love parking lots.
Jill DeWit: Cool.
Steven Butala: One of the best, most profitable types of real estate you can possibly buy, and build, by the way.
Jill DeWit: Awesome.
Steven Butala: Think of buying a house and putting in a kitchen and stuff and not thinking about building a parking lot. All you’re doing is pouring concrete.
Jill DeWit: Isn’t that great? Painting some lines.
Steven Butala: If that, putting in a system to pay.
Jill DeWit: You know what you could do? Actually that’s the best. Here’s my ideal parking lot … I know we’re getting off topic, my perfect parking lot scenario, it’s dirt, it has a fence around it, and you pay one guy with a folding chair-
Steven Butala: If that-
Jill DeWit: No, but no, I want him to collect the money. No, I’m getting money off this parking lot.
Steven Butala: You want cash.
Jill DeWit: Yeah, I want cash.
Steven Butala: You better trust that guy then.
Jill DeWit: I have a guy in a metal folding chir, standing there all day long, charging 10 bucks a day for them to park there. That’s my thing, cash.
Steven Butala: That’s a beautiful fantasy, sweetheart.
Jill DeWit: It is a fantasy. Okay, that’s all I have.
Steven Butala: What about a marina?
Jill DeWit: I thought about that, I thought about telling you about that but that’s so out of my acquisition criteria, and I didn’t wanna think about it.
Steven Butala: What about a house with an extra lot on the side?
Jill DeWit: Heck yeah. Keep going.
Steven Butala: What about multifamily zoned property that’s way rural in a master plan community, if that hasn’t been developed yet?
Jill DeWit: I would buy that.
Steven Butala: Me too.
Jill DeWit: Well, larger than you imagine acquisitions movie start ranches, I’ve heard, yb the way-
Steven Butala: Fantastic buys.
Jill DeWit: I wonder who it is in our group, I don’t remember who, but somebody was asking us some very detailed questions on a member call on the last couple weeks about some pricing. I’m like oh.
Steven Butala: Well, it’s probably because-
Jill DeWit: That’s where they’re going, I’m like good for them.
Steven Butala: I’m thinking about movie star ranches and ranches in general, which makes it slightly more tricky is that they always have stuff on them. Like they might have a dumpy little house, so when you look at the data, it says there’s a 1,400 square foot house on there, or it says-
Jill DeWit: On the 40 acre property.
Steven Butala: Or 4,000 acres.
Jill DeWit: Right.
Steven Butala: Or there’s six 1,400 acres, so really the values become … we just value it all like dirt.
Jill DeWit: Right.
Steven Butala: So don’t get caught up in that if that’s what you’re doing. That’s what the question was about last Thursday.
Jill DeWit: Okay, got it.
Steven Butala: They’re all caught up with structures.
Jill DeWit: Right.
Steven Butala: Which confused the hell out of everybody, confuses the lender, confuses the appraiser and all that.
Jill DeWit: That’s very true.
Steven Butala: There’s not a lot of real estate that I would just automatically turn away. Except, heavy industrial property for EPA reasons.
Jill DeWit: That’s good. So for me, the whole point of this show is don’t be afraid of it, think of it like every other transaction. And like Steven talked about, there’s different ways you price things, obviously, because of that. And if you build it, they will come. If you find it, they will come.
Steven Butala: The people who will buy this property from you and partner with you are people that have property just like it already. I made a career really fast at a very young age selling commercial long-term care facilities. Nursing homes and assisted living facilities all over the country. And I had an immediate buyer list, immediate. Every CEO I called stopped what they’re doing and take my call to see if I had a new acquisition for them. So, it’s the same thing with land. They already have some land, they’re gonna buy it from you. You can cut the middle man out.
Jill DeWit: That’s the whole point here.
Steven Butala: Cut the lender out.
Jill DeWit: You should, you should.
Steven Butala: Well, you’ve done it again. You’ve spent another 15 minutes or so listening to the Land Academy Show, really closer to 20.
Join us next time where we talk about funding this acquisitions.
Jill DeWit: And we answer your questions posted on our free online community. It’s called Landinvestors.com.
Steven Butala: You are not alone in your real estate ambition.
That was a fun game.
Jill DeWit: That was a good game. I like that.
Steven Butala: We immediately just threw away when it comes in, like and so not the actual property.
Jill DeWit: Too small a property.
Steven Butala: Yeah, too small, me too.
Jill DeWit: Too cheap.
Steven Butala: And not small in size, just like dollars.
Jill DeWit: Yeah.
Steven Butala: But here’s my real question, what kind of seller just you say, “You know what? I can’t take this? This might be a great deal, but this seller, I can’t do it.”
Jill DeWit: Too many conditions, high maintenance, they need to talk a lot. They need to feel the whole thing. And I’ll do it for a few minutes.
Steven Butala: Select trust.
Jill DeWit: But then it gets no, no, no. It’s just they need somebody to talk too sometimes. Usually I give it to my team, but they get the calls but I have to kind of coach them like, “Okay, you don’t need to spend 20 minutes on this. Please don’t spend 20 minutes on this.” You know, kind of thing.
And so really, the ones that we pass on, not enough money, there’s certain area that just over the years we’re just like, “We don’t want that.”
Steven Butala: Certain geographic areas.
Jill DeWit: Yeah. We just know that it snot gonna move as fast as what it once was. And that’s fine. and then the other ones are all obvious. There’s something wrong, like there’s no access.
Steven Butala: No, I mean specifically seller type.
Jill DeWit: Oh, just about the seller?
Steven Butala: Yeah. We covered what not too buy real estate wise.
Jill DeWit: Oh. So seller wise? I mean, other than that, then there’s a problem on their end like it’s not an easily conveyed property because something passed on or having a fight with our brother and he’s on the deed. We’re five siblings, we all live in five different states, some of those things. I’m just am not gonna do it.
Steven Butala: People who want money too fast, that’s a red flag.
Jill DeWit: That’s true too.
Steven Butala: I’ve killed a lot of deals over the years because of that. Where they call two or three times a day because they want their money.
Jill DeWit: Yeah, like what’s going on here? What’s wrong with this deal? Why are you so excited?
Steven Butala: And you already said, “Look, it’ll close on the 21st,” and they call three times a day.
Jill DeWit: Right.
Steven Butala: That’s a mental issue.
Jill DeWit: We really have had that.
Steven Butala: Just nothing to do with the real estate deal, it’s just …
Jill DeWit: Yeah, it’s like this seller is giving me a bad vibe. I, curious that we’re missing something. Now I’m not sure about it.
Steven Butala: That was a smoking deal for us and we killed it.
Jill DeWit: I don’t know what the deal was, but I just remember that situation, so.
Steven Butala: I do.
Jill DeWit: Crazy.
Steven Butala: It was an urban multi land deal.
Jill DeWit: Thank you. Share the fun by subscribing at iTunes right wherever you are listening or wherever you are watching, maybe it’s YouTube. Please rate us there.
We are Steve and Jill.
Steven Butala: Information.
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Steven Butala: To buy under valued property.
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