Do You Have Startup Capital (LA 807)
Do You Have Startup Capital (LA 807)
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, do you have enough startup capital? This is frequently asked question week.
Jill DeWit: I like this one.
Steven Butala: I do, too.
Jill DeWit: Because-
Steven Butala: Because the answer’s yes.
Jill DeWit: Right. Do you have some? Then yes. You know?
Steven Butala: Before we get into it, though, we’ll take a question. We’ll take a question posted. Jill has the answer to this question memorized, and she just started down that path, so we’ll save it for after the question.
Jill DeWit: Oh, okay.
Steven Butala: And then I have a lot of snarky stuff to say.
Jill DeWit: You always do.
Steven Butala: I know. 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: Amy asks, “A potential buyer doesn’t have legal documents to get a loan, and she will provide the down payment in cash.” Wait, wait, wait. Can we back up there? I’m sorry. I wonder if-
Steven Butala: She means legal documents as a citizen.
Jill DeWit: Oh. That’s what I meant. I’m like, what? Does she not have … Did she lose the paperwork on the way to the bank? Okay. Thank you.
Steven Butala: I think that’s what she means.
Jill DeWit: I was confused by that. All right. But she does have cash to do a down payment. All right. “My website claims that there are no qualifications for seller financing, but I’m kind of worried about the legal issues if she’s unable to meet the note requirements. Now I’m wondering about the potential problems I may be taking on if she doesn’t have the proper documentation. What do you think?” I don’t really worry about that stuff.
Steven Butala: You’re so the right girl for me.
Jill DeWit: Let me back up here. Let me just … Because this myth comes up often, that people think that you have to be a citizen of the United States to own property in the United States, and that is absolutely not true.
Steven Butala: She’s right.
Jill DeWit: I can be a citizen of India. I can be a citizen of Italy. I can be a citizen of Indonesia. I picked all the I’s. A little theme there. So, it doesn’t matter. You can own property here. So, what legal documents are you looking for? I’m not looking for any, number one.
Number two is, I really don’t worry about it. If someone can provide the down payment that I ask, and they’re gonna start making payments on it, fine. I’m still gonna have them sign my documents, and in my documents, I’m going to clearly state that this deposit is nonrefundable. If you stop paying on the property-
Steven Butala: As you do, as all these documents that we do, regardless of citizenship.
Jill DeWit: Right. Regardless of anything. It doesn’t matter who you are, or what paperwork you have.
Steven Butala: It’s a good question, though, actually.
Jill DeWit: Yeah. I like to have it. It’s a nice thing. But I’m still not gonna let it hold up the deal, if they’re willing to pay the deposit. Maybe they have something that can prove that, “Hey, I have an income. I have a job. Here’s paychecks.” You know, whatever. If you want to go that route, that’s fine. You know, just to show that they could pay for it. Because that’s really all you really want to do, is make sure that this person can follow through, because you’re gonna pull it off the market now after they make the deposit, make the down payment. So, that’s it.
And like I said, so now they’re gonna sign all these papers showing that, “I agree to your terms. I know that if I stop paying for any reason, you could take the property back.” So now, I’m comfortable with the transaction. And then another note is, I want to say, if this person … How do I say this? They might be so darn happy that you took them on, and they don’t have, quote-unquote, “legal documents,” you know, for whatever that you’re asking for-
Steven Butala: Talk about loyalty.
Jill DeWit: … to own this property. Yeah. They’re gonna pay this thing off, and not want to miss a beat. I mean, they’re giving you their hard-earned money to own this property, and they’re just hoping that you’re not gonna … You know, whatever. Collect on them if they miss one. So, they’re gonna really try. So, I think it’s a good situation.
Steven Butala: I can’t add anything to that.
Jill DeWit: Thanks.
Steven Butala: I mean, I would run to process this.
Jill DeWit: Right. So, yeah. They have some legal documents. They have something, even if it’s from another country. That counts, so maybe we’re looking at this wrong. I mean-
Steven Butala: What’s the worst thing that could happen? They’d make a down payment. They make six or seven or 10 payments, and you just never hear from them again.
Jill DeWit: Exactly.
Steven Butala: Which happens often, regardless of where they’re from or who they are.
Jill DeWit: You’re not gonna chase them. You got good money.
Steven Butala: So, that’s how you need to look at this. Forget about the other stuff.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: It’s a good question. I think actually we’ve never talked about it, and I think that-
Jill DeWit: Right.
Steven Butala: That I can remember. It’s a great question, but I would actually look at this thing as a way positive, not a negative.
Jill DeWit: Exactly. Thanks.
Steven Butala: Today’s topic, do you have the startup capital to start buying and selling land? This is the meat of the show. My short answer is, yes. Jill’s answer is …
Jill DeWit: Probably.
Steven Butala: If you have zero capital, then that’s a problem. And I mean zero, where you’re trying to pay your electric bill and stuff.
Jill DeWit: Yeah.
Steven Butala: That’s a problem.
Jill DeWit: That might … Yeah.
Steven Butala: But if you’re chugging along in life, and your bills are getting paid and you’re saving a little bit of money, like most of us, and you’re just not satisfied with your job or whatever else, and you want to try something new … The answer is probably. It would help to have … I’ve heard Jill answer this a million times on the phone while I’m passing her office in the hallway, and she recommends 5,000 bucks, right?
Jill DeWit: You know, there’s so many ways to look at this, depending how you want to go at it. Usually, I mean, to be realistic, to be really successful, I’d like you to have $5,000 to $10,000 in the bank. Then I know you’re not sweating it. I know you could afford the education. I know you can afford sending out mail, and you can afford downloading data. I know you can afford buying the property. Things like that. So, that’s kind of a good rule of thumb. Have I seen people do it with less? Heck yeah. And have people come at it with more? Oh, yeah.
It’s funny. I’ve talked to those people, and here’s what’s so funny. I talk to people of all kinds of extremes. Some people say, “I only have $10,000. Can I really do this?” And I have also had people say, “I only have $100,000. Can I do this?” Because they’re thinking, like, house numbers. You know.
Steven Butala: Yeah.
Jill DeWit: The person with $100,000 here in southern California knows they can’t buy a house for cash, you know?
Steven Butala: That’s right.
Jill DeWit: But in other places, you can.
Steven Butala: In Kansas, you can.
Jill DeWit: Right? And-
Steven Butala: In Arizona, you can.
Jill DeWit: Exactly. And as far as in raw, vacant land all over the country, heck yeah. You can buy some great properties.
Steven Butala: Oh, major.
Jill DeWit: You know, buy some-
Steven Butala: You can buy home run properties.
Jill DeWit: … $10,000, $20,000 properties and sell them for $50,000. Those are my favorites.
Steven Butala: Jill and I spent $40,000 on a property, and sold it for $400,000. Does that happen every single time? No way.
Jill DeWit: Nope.
Steven Butala: Not even every year.
Jill DeWit: Right.
Steven Butala: But, it happens.
Jill DeWit: Exactly.
Steven Butala: You’re setting yourself up to walk down the path of doing that, for sure.
Jill DeWit: Mm-hmm (affirmative). Right.
Steven Butala: So, instead of … This is one of those questions. I think it’s a good question, and you should actually be thinking about it. But don’t let it stop you, because with the group of people that we have now, no good acquisition is gonna go to waste.
Jill DeWit: It’s true.
Steven Butala: We’re not gonna let … That deal that I just described?
Jill DeWit: Right.
Steven Butala: I mean, we get calls every week from our members that say, “Look, I just stumbled on this transaction. I know we can make 150,000 bucks, but I don’t have a mechanism. I don’t have the money to tie up to control the deal.”
Jill DeWit: Right.
Steven Butala: And we send them to different places, different members. All the house transactions that Jill and I do for House Academy are … Not all of them, but 50% of them are funded from external sources, just to prove our point.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: Because it allows us to do more deals. Believe it or not, the money that we’ve allocated for acquisitions, we run out of that all the time. So it’s not like we’re looking down on everybody, saying, “Well, we don’t have that problem, but here’s how you solve it for yourself.” That’s not the case at all. If you’re good at this, you’re always gonna run out of money. And then you’re gonna sell a bunch of property, and you’re gonna have too much money.
Jill DeWit: Yeah.
Steven Butala: It just goes like this.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: So, it’s never even like you think.
Jill DeWit: Right.
Steven Butala: And this is a great question, and you have to have a little bit of money just to buy and sell those first 10 properties, to practice, to see if you want to do it.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: We just started, and it’s not live yet, a company called Land Crowd Fund, where members of our group … It’s closed to the group only, for legal reasons and SCC reasons … Where the members of our group fund other members who don’t have the cash, and you put it up there on the Internet. It brings what we’ve been doing for many, many years anyway, being private investors with each other … It brings to the Internet, so it makes it easier. Theoretically. I don’t know, but we’re gonna find out. It might blow up in our face. We’ll see.
Jill DeWit: It’s been happening behind the scenes already.
Steven Butala: You have enough money. If you even ask that question, you’re already in the right spot, in my opinion.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: And then Jill’s advice about if you really don’t have five grand, just wait five or six months, and save the money.
Jill DeWit: Save it up. Because my whole thing is, you don’t want to come in this sweating it. Going, “Okay, I got … Okay. I just borrowed this money. I just took out this whatever. I gotta come up with some cash in 30 days or less.” You don’t want to be sweating it. You want to come in relaxed, cool, and ready to kill it and do it right and methodically, and then you’ll be so much more ahead.
Steven Butala: Yes, exactly.
Jill DeWit: Thank you.
Steven Butala: You want to learn correctly, unlike … I don’t know. Did you ever take a college class? I started down the path of getting a Master’s degree, and I had a full-time job and my head just wasn’t in it, and all I did was waste money.
Jill DeWit: Right.
Steven Butala: You don’t want that. You want to be able to focus on it and finish it.
Jill DeWit: That’s … I’m sorry.
Steven Butala: It’s all right. It worked out for the best, actually.
Jill DeWit: It’s true.
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 is learning the guitar possible for you? What the heck is he talking about?
Jill DeWit: This’ll be funny. And we answer your questions posted on landinvestors.com. It is our own online community, and it’s free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: You know, I just saw something really funny on social media. I think Seth posted it, and I think I’m gonna share it on mine. It’s a really cool Ferrari, and his license plate says, “2.7 GPA.” That was good. I really liked that. The only thing is, I don’t want the kids to see it-
Steven Butala: I know.
Jill DeWit: … and say, “Well then it’s okay, right?”
Steven Butala: No.
Jill DeWit: Hold on a moment.
Steven Butala: Unfortunately, though, in general those times are gone.
Jill DeWit: Right. But it’s-
Steven Butala: If you have the choice … You know, if grades come … Well, yeah. I’m not even gonna finish that sentence. Get good grades.
Jill DeWit: Yeah. Exactly.
Steven Butala: It’s not that hard.
Jill DeWit: Yeah, for all you kids listening in the car, your parents are torturing you right now, and making you listen to this on the ride home from school … Get good grades.
Steven Butala: You know that old saying, that A students-
Jill DeWit: Teach-
Steven Butala: … learn from the B … Oh, the A students teach the B students, who work for the C students.
Jill DeWit: That’s it. Mm-hmm (affirmative).
Steven Butala: I wonder why that is.
Jill DeWit: I think that’s awesome. Share the fun by subscribing on iTunes or YouTube, wherever you are watching or listening. And while you’re at it, please rate us there. We are Steve and Jill.
Steven Butala: We are Steve and Jill. Information …
Jill DeWit: And inspiration …
Steven Butala: To buy undervalued property.
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