How to Find a Money Partner (LA 796)

How to Find a Money Partner (LA 796)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Good day.

Steven Butala:                   Welcome to the Land Academy show, entertaining land investment talk. I am Steven Jack Butala.

Jill DeWit:                            And I am Jill DeWit, and we are broadcasting from sunny Southern California.

Steven Butala:                   Today Jill and I talk about how to find a money partner. It’s our number one frequently asked question.

Jill DeWit:                            Yeah, funny. I see it all over social media, not even just in our area, too. So many people are … There’s like three things that they are hung up on, and this is one of them.

Steven Butala:                   Yeah.

Jill DeWit:                            First, it’s finding the deals, and then they find the deals, and then they’re like, “I don’t know how to fund the deal.”

Steven Butala:                   Yeah.

Jill DeWit:                            Well that … No kidding.

Steven Butala:                   Well, finding the deal is like 80% of the battle.

Jill DeWit:                            Right.

Steven Butala:                   I think. That’s what we talk about constantly.

Jill DeWit:                            And if you have the right deal, I know it sounds silly, but I feel like a good deal, the money’s there.

Steven Butala:                   Oh, yeah.

Jill DeWit:                            That’s the thing that people don’t understand, so I know you’re going to cover all that.

Steven Butala:                   I’m filming Land Academy 2.0 right now-

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   And we make … It’s all about creating equity, so-

Jill DeWit:                            Yeah.

Steven Butala:                   Very, very quickly, I mean the way you create equity is by buying a property for less than it’s worth that day, or-

Jill DeWit:                            Exactly.

Steven Butala:                   Buying it and fixing it up.

Jill DeWit:                            Exactly.

Steven Butala:                   Which one do you want to do? I know which one I want to do.

Jill DeWit:                            Me, too.

Steven Butala:                   Before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.

Jill DeWit:                            Matt asks, “Hey everyone. I’ve been working on building out my own Podio CRM for my acquisition virtual assistant.” VA, good job. “I recently sent a 2,000 unit mailer that put about 30 leads, I’m probably going to close on three to five of those sellers-”

Steven Butala:                   Good numbers.

Jill DeWit:                            “Through the CRM funnel with her, and we were really getting that part of the process streamlined. Now, I’d like to expand her role to be the person who sends a Purchase Agreement off to the title company, and manages that interaction. I was hoping to leverage the collective experience of the group to see if anyone has outsourced their interactions with the title companies.”

Steven Butala:                   That’s a good question.

Jill DeWit:                            “How do you structure your staff to interact with title companies? Does anyone have experience trying to outsource this part of the business? What has worked for you?” Of course, we’ve done this.

Steven Butala:                   Yeah.

Jill DeWit:                            “How have you made sure that your staff is prepared for this role? I’d love to talk the processes with anyone who has successfully outsourced this role. I certainly don’t need to be the one hounding the title companies-”

Steven Butala:                   Yeah.

Jill DeWit:                            “For the five or six deals that I have in closing. Thanks in advance.” So that’s the beauty of it.

Steven Butala:                   Yeah.

Jill DeWit:                            I mean, the big picture is so you find a deal, if you have the seller, they accept your offer, now you have the offer, it’s a bigger dollar amount-

Steven Butala:                   Yeah.

Jill DeWit:                            That’s why we’re running it through title, or there’s some special circumstance to why you’re going through a title, you want to close it yourself, which is great.

Steven Butala:                   That’s a bigger deal.

Jill DeWit:                            Because it’s easier anyway. They technically do the work. So now it goes to the title company, so Matt’s asking, my person, I want them … When I say yeah, we’re going to buy that one, I want my person now, my VA, to call the title company, get them all the details, get them the Purchase Agreement-

Steven Butala:                   Right.

Jill DeWit:                            Open escrow. You know, hopefully, Matt, you already have a negotiated rate, with a company … You should have that, by the way, have a pre-negotiated rate with a title company all ready to go so that part’s done for the VA. All they’re doing is kind of passing the torch. And then what your assistant is doing is managing the transaction all the way through, because that’s the part that is also a pain in the rear for us.

Steven Butala:                   I was wondering when it was going to come to that.

Jill DeWit:                            Even though that technically, we all agree on hey, we want to close in 10 days, it’s cash, we’re all in agreement here. Knowing Matt, this is probably just a bigger in-fill lot, this is a lot of what he’s doing.

Steven Butala:                   Yeah, if it’s the same Matt we think, yeah.

Jill DeWit:                            So it’s not like there’s an inspection needed.

Steven Butala:                   Yeah.

Jill DeWit:                            Yeah, there’s no … It’s all cash. There’s no inspection.

Steven Butala:                   Right.

Jill DeWit:                            It’s an in-fill lot. It’s a nice transaction-

Steven Butala:                   Yeah.

Jill DeWit:                            It’s just a bigger dollar amount. Maybe it’s a $50,000.00, or a $100,000.00 deal. That’s kind of the whole point of it all. But, every time these title agents, they just get distracted. So, someone has to keep kind of babysitting them and pushing them along.

Steven Butala:                   Yeah.

Jill DeWit:                            And it’s until your person has the experience of these transactions, they won’t even know what to ask the person, too-

Steven Butala:                   Yeah.

Jill DeWit:                            And that’s the hard part. What we have found in the past is honestly, we have not outsourced that to someone outside of our office. We actually have … There’s a few things that keep tight control over, and that’s one of them. I have the in-house staff to do that, which I’m very, very fortunate that we can do that. So, Matt, we do it in-house, and our person has us right there. And they’ve been doing deals, and they babysit and push them along.

Any moment that they call the title rep, which sometimes it could be once a day when it’s dragging out, it might be, “Hey, where are? What do you need?” And the title rep says, “Well I sent X to the seller, I’m waiting for them to sign it and send it back.” And then what should not happen is, “Okay, thank you,” and then nothing. What should then happen at that point, and this is the stuff you have to train your person, is you don’t trust the title agent that they’re going to keep up with it, because they won’t.

Steven Butala:                   Yeah.

Jill DeWit:                            They send out one email, and they just wait. It might take a week, and they just say, “Well, the seller didn’t respond.” So your person should be following … Then your person would hang up with the title agent and call the seller and go, “Hi, did you know that Susie at ABC Title sent you that one document, and we only need that signature and then we can close tomorrow?”

Steven Butala:                   Yeah.

Jill DeWit:                            “Oh, okay.” That’s what needs to happen.

Steven Butala:                   That’s right. It needs to be managed.

Jill DeWit:                            Totally. So I guess … You know, I just … To help you, Matt, in doing with a VA, I would do it with your VA the first couple of transactions, get them comfortable, and then I would have a checklist.

Steven Butala:                   Yeah.

Jill DeWit:                            And your VA needs to-

Steven Butala:                   Yeah, checklist.

Jill DeWit:                            So they know generally they have the flow, and they a checklist, and they can basically babysit the transaction as it goes through because if you don’t, because this has happened, time kills deals, even in escrow-

Steven Butala:                   Time kills deals.

Jill DeWit:                            I mean, it’s happened to us and by us. I mean, I have had transactions that I’m like, “You know what? This is taking too long.” I’ve got money over here that I’m-

Steven Butala:                   Yeah.

Jill DeWit:                            That I’ve got … You know, it really happens that I’ll have great acquisitions, I committed on one, we’re in escrow, it’s taking way too long, now there’s something that somebody needs, and my money is burning a hole in my pocket.

Steven Butala:                   Yeah.

Jill DeWit:                            And I have sat there and gone, “You know what? I’m actually not going to make as much money on this deal, even though I committed to it, as I will on this one over here,” and I’ve even pulled my funding. I will be totally honest. I’m not a bad person, but I’m like, “Hey guys, you snooze, you loose.”

Steven Butala:                   You’re not a bad person at all.

Jill DeWit:                            No, I’m like, “I’m trying to get this deal done. If you guys don’t want it to get done, I’m out.” And that’s what I’ve said, and I’ve done it. I’ve acted on it. I said, “You guys, we’ve got to get this done. If not, I’m walking.” And I walk.

Steven Butala:                   You are amped up today.

Jill DeWit:                            Gee, are you surprised? Four cups of coffee.

Steven Butala:                   I have a different answer.

Jill DeWit:                            Oh, that was my whole long answer. What’s yours?

Steven Butala:                   Your nuts if you think an overseas VA is going to close a real estate deal for you.

Jill DeWit:                            Thanks.

Steven Butala:                   Nuts.

Jill DeWit:                            That’s a good way-

Steven Butala:                   I can explain it.

Jill DeWit:                            Well I think I kind of did. Because you know what-

Steven Butala:                   It’s not going to … I mean, unless you have a virtual assistant who’s not in this country, who doesn’t really fully understanding the real estate process, and has never been through this, especially if they’re from a different country because it’s a completely different way to close real estate in other countries.

Jill DeWit:                            It’s true.

Steven Butala:                   It’s completely different. Like night and day. It’s too important … The impression that you’re going to leave on the escrow agent is imperative. You want them to close your deals on time and the whole thing. You’ve got to sweet talk them. In an earlier show, Jill sends some chocolate and stuff. And cake, to the escrow agents.

Jill DeWit:                            If I need to, to remind you of-

Steven Butala:                   To get on … Yeah.

Jill DeWit:                            Yeah. For the ones that I want.

Steven Butala:                   It’s hard enough to get a deal done. So, I personally … I haven’t even tried. There’s a long list of things in this business model, a long, long checklist of things, and you can literally go down there and say a VA can do that, yes, yes, no, no, no. And once the property gets into escrow, you either do it yourself, or you have an assistant sitting next to you closing the deal.

Jill DeWit:                            Yeah, because you’re reiterating that. Because what could happen, and Steven’s right, is you’re going to be babysitting your VA, who’s babysitting the escrow agent.

Steven Butala:                   Yeah. Yeah, and now you have two people-

Jill DeWit:                            Why do that?

Steven Butala:                   To babysit, instead of one.

Jill DeWit:                            Exactly. So, you don’t want to do that.

Steven Butala:                   I mean, there’s a small chance that you could train them after like a year.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   But they’re still going to miss stuff.

Jill DeWit:                            Yeah.

Steven Butala:                   There’s stuff that comes up. Here’s an example. Okay, we’re ready to sign, so they send all the stuff to the VA, who’s, let’s say, in China.

Jill DeWit:                            That’s true.

Steven Butala:                   And you have to sign all the documents and the VA gets them in China electronically and sends them to you.

Jill DeWit:                            Right.

Steven Butala:                   I mean, that doesn’t make any sense.

Jill DeWit:                            Exactly.

Steven Butala:                   You know, we’re-

Jill DeWit:                            And you want your VA to look through and make sure it’s all right. I wouldn’t trust that, either.

Steven Butala:                   The other thing, too, is that-

Jill DeWit:                            Yeah.

Steven Butala:                   Piecing out these deals … So one person over here does this little part, and one person does this little part, and then someone goes and gets a cashier’s check because it’s, I’m telling you, the way that these transactions, and every real estate transaction is set up, is the person who starts it needs to finish it. They know the people by … They get to know each other, they get to know how they work, and-

Jill DeWit:                            It’s true.

Steven Butala:                   And I think that … I know you’re trying to save money. This is not one of the things to save money on.

Jill DeWit:                            Thanks. Good answer.

Steven Butala:                   That’s my take on that. Today’s topic, how to find a money partner. This is the meat of the show. Again, like I said in the beginning, this is the number one or number two requested question that we get in the Bu-Wit family of companies, not just in Land Academy, but everything that we teach. And really, I think the real question is I really know that I can do this, or I am doing it, or I’m capable of finding super cheap property, or undervalued property, let’s say, and the whole equity thing? I get it. I get that we can create equity by buying cheap property, but I don’t have enough money personally to fund these deals. What’s the disconnect, or how can I get connected to-

Jill DeWit:                            Excuse me.

Steven Butala:                   How can I get connected … Are you okay?

Jill DeWit:                            Yeah, yeah, I started to cough.

Steven Butala:                   You know, you can take a drink of water on this show.

Jill DeWit:                            Thank you, I will. Thank you.

Steven Butala:                   So, where’s the connection? I’ll start with the absolute perfect example, and this is a dreamy example. I actually listened to somebody’s else’s podcast, and he answered this question. This guy buys and sells houses in the center part of the country, like Kansas and stuff, for $80,000.00 or $90,000.00, paint and carpet, sells them for $120,000.00-$130,000.00 over and over and over again, like 100 a month. He was on vacation skiing overseas in a group. The guy met a guy, a rich guy, from like Switzerland or someplace in Scandinavia. He’s his money partner, and that’s it.

Jill DeWit:                            Got it. Exactly.

Steven Butala:                   That’s the best case scenario, and it happens all the time.

Jill DeWit:                            Right.

Steven Butala:                   So if you’re sitting around saying, “Great, that’s for the movies, it’s not for me,” that’s wrong.

Jill DeWit:                            It’s true.

Steven Butala:                   These people are trolling Craigslist for deals every day.

Jill DeWit:                            It’s true. They’re standing in the back of the room at REI meet-ups.

Steven Butala:                   Yes.

Jill DeWit:                            They’re around-

Steven Butala:                   That’s a good place. They’re in our group.

Jill DeWit:                            Mm-hmm (affirmative), they’re in our group.

Steven Butala:                   There’s a ton of them in our group.

Jill DeWit:                            They’re on our deal board.

Steven Butala:                   We do deals with people like this in our group all the time.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   So that’s one of the reasons we created this group.

Jill DeWit:                            Yep.

Steven Butala:                   Is there an easy way to click [inaudible 00:11:41] your way to getting funded? No. Not yet, but we’re in the process of launching a company, and don’t wait for it, called Land Crowdfund, where theoretically, we don’t know if it’s going to work either. We’re responding to requests from money people, and requests from people who need money for deals.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   And we’re going to try to put them together and see if it works. Chances are, some version of it is going to work.

Jill DeWit:                            Exactly.

Steven Butala:                   But that doesn’t replace you, on your own, going out and trying to find money people on your own.

Jill DeWit:                            Right.

Steven Butala:                   So here’s … Now that we’ve talked about that, here’s how to fail at getting a money partner and then having it explode in your face. So, if you’re fortunate enough and organized enough to get a good money partner who trusts you and has looked at your track record, and wants to work with you … And this is my suggestion, you only really want to get funded on a deal by deal basis. So, in Matt’s suggestion, he buys an $80,000.00 in-fill lot somewhere. He knows it’s worth $150,000.00 easy, right?

Jill DeWit:                            Right.

Steven Butala:                   It’s a slam dunk deal. It’s not, “Oh, maybe we’ll wait and see what happens.” It’s a slam dunk deal. Then you bring the guy in on that deal, and you negotiate a split, whatever you’re comfortable with, and you get the deal done that way. What you don’t want to do is say, “Hey money guy, would you like to invest in my sure thing company? I need $150,000.00-”

Jill DeWit:                            Yeah.

Steven Butala:                   “And for that, I will give you 15%.” That’s for Wall Street, and there’re fees attached, and then everybody ends up in somebody’s office crying and then there’re lawsuits with lawyers. More often than not, that’s how those things end. Maybe, after you 10 or 15 or 20 deals the way that I described, you can put a little LLC together. Everybody trusts each other, nobody’s in tears, and you could work something out that way. Even then, I mean, Jill and I don’t do that even now.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   We just do it on an asset by asset basis because if something implodes, everybody owns that asset, or the guy that’s the lender, the private lender, he owns that asset, and it’s over.

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

Steven Butala:                   We have a single page agreement-

Jill DeWit:                            It’s a nice safety-

Steven Butala:                   That we use.

Jill DeWit:                            It’s a safety net for everyone.

Steven Butala:                   Yeah.

Jill DeWit:                            And it’s really good. Is this in 2.0?

Steven Butala:                   Yeah.

Jill DeWit:                            Oh, good.

Steven Butala:                   Absolutely, it is.

Jill DeWit:                            Okay, so I want to just back up and just preface this, too. One of the things that Steven’s working on, and why this is so important, too, is Land Academy-

Steven Butala:                   This is a whole chapter in 2.0.

Jill DeWit:                            We are working on the second version of our Land Academy Education Program, and it’s Land Academy 2.0. One of the reasons we’re doing Land Academy 2.0 is because of the new things that our members are facing. Back when we first launched it, it was just teaching our whole business model. And now everyone is … They’re all, how do I say this, no one’s beginners … We have a lot of not-beginners. We have a lot of pretty far along in this process, and flipping big deal people-

Steven Butala:                   Yeah.

Jill DeWit:                            And this is the next phase of what they need. So a lot of Land Academy 2.0 is taking it to the next level. I know we’re going to have things above that, too.

Steven Butala:                   I mean, here’s how I described it in a program, in one sentence or less. Land Academy 1.0, or Cash Flow from Land, was about us. It was about the 15,000 deals that we did, and sharing our experience and helping people replicate that.

Jill DeWit:                            Exactly.

Steven Butala:                   2.0 is about you.

Jill DeWit:                            Yeah.

Steven Butala:                   It’s about our members and how what we’ve learned since we released that program … And I’ll tell you what-

Jill DeWit:                            Yeah.

Steven Butala:                   I mean, I had no idea.

Jill DeWit:                            Yeah.

Steven Butala:                   So 2.0 is all about our members’ successes and their failures, and overcoming failure, and the tool … I mean, we’ve created a million … This is not an advertisement by any stretch. We’ve created a ton of tools that they request, like Parcel Fact and Offers to Owners-

Jill DeWit:                            That we didn’t have.

Steven Butala:                   That was stuff that we typically, we used.

Jill DeWit:                            Yeah.

Steven Butala:                   We just made it available to everybody because they kept requesting it. 2.0 is truly an exploration of our members from start to finish, of their success and why. We’ve got a handful of members that do way better than we do financially at buying and selling land.

Jill DeWit:                            Mm-hmm (affirmative), and growing their businesses.

Steven Butala:                   Yeah.

Jill DeWit:                            I mean, that’s a lot of, too. Automating it. People, they’re at a different level. But anyway, I didn’t want to side track you too much.

Steven Butala:                   No, that’s okay.

Jill DeWit:                            But see, that’s … This is one of the main things that is now prevalent. I got the finding the deals part down. I know how to price offers, I know how to pick a county, I know how to do all that. I’m staring at $600,000.00 transactions, and I can’t fund them all, and they’re worth it. We need to get these done. And that’s what finding a money partner is about.

Steven Butala:                   For some reason, this topic, I’m going to wrap this up, too, this way. This topic of finding a money partner is people shy away from it. This whole concept of other people’s money, and I’m not a huge fan of that phrase-

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   It’s gotten such … This whole generation, mine included, and the one that’s younger than us, Wall Street has gotten so bashed for taking people’s money-

Jill DeWit:                            Right.

Steven Butala:                   And wasting it. We have the solution for that. The solution is asset-based lending, very rational splits, you don’t throw a bunch of money at it and walk away and just see what happens-

Jill DeWit:                            Right.

Steven Butala:                   Which is really what the stock market is, and you have to have some trust. It’s all old school grassroots stuff.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   You have to have some trust in the other person, they trust you, you have good communication, and you understand land. Like, you can’t ask somebody who’s a private investors in companies, like convenience stores let’s say, to invest in land. They just don’t understand it, and they don’t see the value of it.

Jill DeWit:                            Right.

Steven Butala:                   Jill and I were talking about that this morning.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   Very few people understand land.

Jill DeWit:                            It’s true.

Steven Butala:                   Really seasoned real estate people will look at you and say, “Why would you ever want to buy a piece of land?”

Jill DeWit:                            Exactly.

Steven Butala:                   You can’t really rent it out.

Jill DeWit:                            Yeah, what are you going to do with it?

Steven Butala:                   It’s not … Yeah.

Jill DeWit:                            Yeah, so you’re going to improve it somehow? No.

Steven Butala:                   We have been through this a million times at public events.

Jill DeWit:                            Nope. I’m not doing anything to it.

Steven Butala:                   They just shake their heads and say, “Well, I’ll see you in bankruptcy court.”

Jill DeWit:                            Right.

Steven Butala:                   And it’s just not the case.

Jill DeWit:                            That’s hilarious, and that is fine.

Steven Butala:                   We know better than that.

Jill DeWit:                            Yeah.

Steven Butala:                   Well, you’ve done it again. You’ve spent another 15 minutes listening to the Land Academy show. Join us next time where we discuss how to price a mailer.

Jill DeWit:                            And, we answer your questions posted on our online community found at LandInvestors.com, and it is free.

Steven Butala:                   You are not alone in your real estate ambition.

Jill DeWit:                            That’s a good helpful show. I know that’s really important. A lot of people are-

Steven Butala:                   I feel like it’s empty because a lot of times, we really answer, like literally answer, “This is how you do it. You go to Offers to Owners, you do X, Y, and Z, you plug it in, you send it to Mail Merge, and wait for people to call back.”

Jill DeWit:                            That’s right. Yeah, as long as you can-

Steven Butala:                   The private lender thing is more nebulous.

Jill DeWit:                            It’s true. It’s not like you can mail out, “Hi, I have these deals. Do you want to partner with me?” You don’t want to do that, too.

Steven Butala:                   No, you don’t.

Jill DeWit:                            So my bottom line is the best things that our people in our community, you have to be with like-minded people, and that’s what we do. Part of, I think, of Land Academy, I mean, I know this. It’s not just our education, but it’s our community, and we’re putting people together.

Steven Butala:                   Right.

Jill DeWit:                            That’s it. In the back of … Like we just mentioned our online community, LandInvestors.com, what people who aren’t members don’t know is there’s a whole hidden back area back there where these conversations are going on.

Steven Butala:                   Mm-hmm (affirmative).

Jill DeWit:                            Where people are doing deals together, and they’re even at the point like … That’s where Land Crowdfund comes in. They’re like, “Can you help us take it to the next level?” And so we’re doing that.

Steven Butala:                   Yeah.

Jill DeWit:                            It’s awesome. Share the fun by subscribing on iTunes, or wherever you’re listening, or even watching. Maybe you’re watching us on YouTube right now. And while you’re at it, please rate us there.

Steve & Jill:                         We are Steve and Jill.

Steven Butala:                   Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

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