Mastering Transaction Work Flow with Justin Sliva (LA 867)
Steven Butala: Steve and Justin here, welcome to the Land Academy show, entertaining land investment talk. I’m Steven Jack Butala broadcasting from sunny southern California. Today we talk about mastering transaction workflow with Justin Sliva. This is day two of having Justin here fortunately to profess his wisdom on how to do real estate transactions but worry not, Jill is going to be permanent.
Justin Sliva: Did you miss me? You getting lonely with me?
Steven Butala: The permanent cohost.
Justin Sliva: You feel the little lack of spooning going on over here? I’ll hold your hand under the camera if you’d like. I don’t mind.
Steven Butala: Justin’s like, “Really? Do our shoulders have to really touch?”
Justin Sliva: I told you I don’t mind.
Steven Butala: I don’t either that’s … yeah, let’s just stop that right there.
Justin Sliva: Yep, rated G show, rated G.
Steven Butala: Before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community. All right I’m going to have you answer this question [inaudible 00:00:58] if I ask it.
Steven Butala: Alex asks, “Hey everyone, currently trying to find three counties to send my first mailers to. The issue I’m running into is finding enough properties on RealQuest to warrant a data scrubbing. I enter the exact criteria list into RealQuest as shown on the Land Academy video but I keep getting extremely low amounts of records for every county. Most counties return between 20 and 40 records that match. Am I overthinking the land use portion of RealQuest or am I just missing something altogether? Searching for unapproved lots between four and a half and six acres with a land value between zero to 10000.” That’s the problem. The land value between zero to 10000 is way too small.
Justin Sliva: Yeah, especially if you’re in part of the eastern states.
Steven Butala: Yeah. “Most of my searches have been in the eastern states like Pennsylvania and Georgia and other random counties scattered all over the east coast. Not sure what matters or not?” I think we answered the question. He answered his own question.
Justin Sliva: Yeah. Yeah.
Steven Butala: Nine times out of 10, everybody answers their own question.
Justin Sliva: Yeah, the one thing, you’re doing 4.6 to six acres, why don’t we ramp that up and try 20?
Steven Butala: In those states too, I would go … I was actually going to recommend going down.
Justin Sliva: Going down? No.
Steven Butala: ‘Cause there’s a lot more smaller parcels than there are larger ones, especially east coast.
Justin Sliva: Yeah, you have some rural parts there that you forget about that come back with these … when you start looking at the Virginias and things like that, you have some areas that are pretty rural and they’re old farm lands and things like that to where you can make a good amount of money on the margin there. I’d say go up in property size maybe.
Steven Butala: Just go both.
Justin Sliva: Yeah. Go up and down.
Steven Butala: Just mail it all.
Justin Sliva: One to one hundred and adjust the pricing.
Steven Butala: You ever done that?
Justin Sliva: Yes.
Steven Butala: So have I.
Justin Sliva: Yeah.
Steven Butala: Does it work for you?
Justin Sliva: Yeah. I had a guy we were talking yesterday or the day before, he goes, “So you just stop at 40 acres?” I told him to do 20 to 40 acres at 1000 dollars an acre. I said, “No, that’s a rough number. I do up to 200.” He goes, “Are you good at that?” I was like, “Yeah, I bought a 135 acre property for 50 grand, sold it for 115.” He goes, “What?” So you’re like, “Yeah.” Don’t be scared of that and if you have a problem with the funding, we know people that can take care of that too.
Steven Butala: Yeah, like Justin.
Justin Sliva: I’m not plugging anything, but …
Steven Butala: Go ahead, plug.
Justin Sliva: Yeah, we’ll help you out there if you get a property that you’re getting at 30 cents, 35 cents on the dollar and it’s too big.
Steven Butala: Let me be super clear. You should never stop sending out mail because you only have 14000 dollars and you only want to spend 10 of it. If you find a great deal, just bring it to Justin. If the deal’s truly good, he’ll find 100% of it and split the margin with you, split 50-50 right?
Justin Sliva: Yeah.
Steven Butala: Is that online?
Justin Sliva: Yeah. We had the HUD, so everybody sees everything. It’s not any special tricks there.
Steven Butala: Right. I think there’s one thing that I’ve learned in the last three or four months about doing these live events and stuff is that I think people are afraid of the funding part of this. Justin’s got it all worked out but here’s the thing, it’s got to be a good deal. In fact, it’s got to be a great deal.
Justin Sliva: Yeah. I’ve had some deals that were great deals for somebody by themself, but they weren’t great deals for us. I was like, “Man, that’s a great deal for you. If it were my property I would do it.” I’ve had a few people offer to give it to me and I’m like, “No, no, no, it’s your property, make the money. Do it. Go ahead.”
Steven Butala: I think that it [inaudible 00:04:11] should answer the question. In general, if we’re moving parameters … I put a lot of parameters in the Cashflow from Land program that 1.0? If you put in all those parameters and you’re not getting the numbers that you think you should? One by one, remove those parameters and you’ll get the counts that you need.
Justin Sliva: Yeah.
Steven Butala: In some weird cases, I don’t know about those states specifically, there’s just not a lot of land.
Justin Sliva: Yeah.
Steven Butala: I don’t see it very often but it does happen or the assessor data from which RealQuest pulls and DataTree and the rest of them pull is just bad weird rural data. That’s possible.
Justin Sliva: Yeah.
Steven Butala: You don’t see it too often but it happens once in a while.
Justin Sliva: You can also shift to different counties and different part of the country too. You may be eastern focus on that, find you another county, another area and you have a couple different areas going. It’s easy to know what you’re going to be priced for each one.
Steven Butala: It’s very frequent for me to pull data from a identified county that I think works for a lot of reasons and different product types. Get in there, start pulling the data and finding out the quality of the data sucks and it’s just in the end when the purchase agreements come back. I’m not going to be able to research with that level, that low quality data, it’s just too hard to get a deal done so I’ll just move on.
Justin Sliva: Yeah.
Steven Butala: There’s 3400 counties in the country and 14000 zip codes I think? I think that there’s enough dirt out there.
Justin Sliva: Yeah. Throw a dart.
Steven Butala: Today’s topic: Mastering Transaction Workflow with Justin Sliva. This is the meat of the show. How do you … walk us through a deal, this is not as a lender now, or a partner but a deal that … walk us through your workflow on a deal that you direct.
Justin Sliva: Yeah, I’m not as VA fitted as a lot of people, but for a deal for … you want to start mailer or you want to start?
Steven Butala: Yeah, right. You chose a county, just choose a county out of the hat. You chose a county in Montana.
Justin Sliva: Okay, so if I chose a county in Montana, I’d pull that county up and I would look at Land Watch, Lands of America, lands of whatever land at Farm Land, [Pen 00:06:06] Land, Land Moto and see what’s in that county and to get a pricing. I’ll put it all together in a sheet, start running through the numbers see what it … for like kind of properties of what I’m going to shop so if it’s 20 acre or 15 acre to 60 acre, that’s all rural, unimproved, run through that like kind, shoot out a number on my little spread sheet that I’ve made for myself. It’s not anything special, it’s just average, average, average, averages everything up and then what’s 30, 35, 40% of that? I kind of go from there.
Steven Butala: For pricing?
Justin Sliva: Yeah, for pricing. Then put that out there, then I send it to [Offers2Owners 00:06:37]. I let them mail merge it because it’s one last thing I actually have to do, they’ll do it for me for free. Send that in that-a-way and then we wait for Pat Live to start calling which is about two weeks.
Steven Butala: Two weeks, yeah.
Justin Sliva: 16 days, start getting calls.
Steven Butala: Pat Live is a answering service and as a member of Land Academy, you get 20% off. We don’t take any money from it, it’s just a courtesy deal.
Justin Sliva: Yeah and they’ve been great. The trick is, a lot of people got into a lot of trouble ’cause they wanted all these questions answered by Pat Live. I have a real quick script that says, “Hey, what county, what state are you in? APN? Or the reference number that was on my letter. Do you accept the agreement price, yes or no?”
Steven Butala: Yeah, does that price work?
Justin Sliva: Yeah. No. If it’s yes, then they say, “Okay. Great. Cool. Have the purchasing manager contact you.” If you say no, “What price would you sell it for? Can we have your email? We’ll get back in touch with you.” It’s quick, you don’t really go over your minutes too much because Pat Live charges by the minute, but you have all the information you need. You get that APN number, you plug it into Parcel Fact. Now I see my property. I’m looking for a road to it. Okay, it looks like it’s got a road. That’s a county road, so it’s not a …
Steven Butala: Right.
Justin Sliva: … two track with a fence that I can’t see a barbed wire fence ’cause I have been burned but that’s a lesson learned for me that I’m sharing with you for free here. You get that then I call the person back once I have the information in front of me. I like to see the sales information in Parcel Fact, that’s great. Hey, they bought it in ’94 for 35000 dollars and I’m offering 28 and they called me back and they said yes. Great well I know I bought all that equity from all those years. I’m doing okay. If it matches what my numbers are showing anyways, then you’ve got two sets of data. You got old data, you got new data and it gives you a good litmus test.
Steven Butala: Awesome.
Justin Sliva: From there, we get it in. If it’s that big of a property, we run it through title so I get a hold of them, say, “Hey, I know we said three day close with the cashier’s check. This property this big, we run it through title to get good title insurance. Is everybody that could sign on a deed still alive?” Most times it’s, “Yeah.” Then if not, “Don’t worry about it, we’ll let title get it cleaned up.” Send it to title, get a hold of a title agent there and then just wait to wire the money. Sign. Once we get it back, we start broadcasting it out.
Steven Butala: Mm-hmm (affirmative). Have you used Info Lots yet? Info Lots that are … sorry, Info Reports.
Justin Sliva: I have not. I have not.
Steven Butala: We just launched it last week and we’re getting a huge response.
Justin Sliva: Okay.
Steven Butala: You should listen or you should check that out. It’s a company that we started because our members were requesting, “How do I know if this property’s buildable? Where are the utilities?” It answers all … it’s a technical engineering report on a property where all the utilities are. It’s very sophisticated and a preliminary title report’s included in the price.
Justin Sliva: Oh, wow.
Steven Butala: If you go on the site, I am plugging our site now, InfoReports.com. It helps you make a very informed acquisition decision and it gives you I think it’s a 25 page report about and it grades the property between one and three. Three being, “Yep, it’s absolutely buildable the way that it is,” or there’s some sections have a twos that need to be utilities need to be brought to the lot line. Then, in some cases you get a one where it’s just never going to happen or it’s not going to happen without a tremendous amount of zoning change or things like that. The guy that I developed it with, I asked him where he was in my life in 2004 ’cause it would’ve dramatically changed the properties that we purchased and sold and for how much we sold them specifically.
Justin Sliva: Wow.
Steven Butala: It’s kick ass. We’re thinking very seriously and I’m not … ’cause Jill’s got to weigh in on it but giving the first one away for free, the first report just so you can see how valuable it is but there’s a bunch of sample reports in there.
Justin Sliva: Yeah.
Steven Butala: It’s truly a great tool. Walk us through now the second type of deal that you typically do as a lender or a partner.
Justin Sliva: Okay. Second type of deal we normally do, we will take a personal reach out to us and it’ll say via- it may be Facebook, it may be through our website where you can book a deal review or a consulting, “Hey, we’re looking for a partnership,” email and with all the different social medias, it may be a DM in Instagram that says, “Hey, we see you do this.” Ask for the county for the state … the state, the county, the APN and once you have a contract price, then we take a look at it and we run it the same way we do on ours. I treat it just like it were one of my deals.
Steven Butala: Okay, good.
Justin Sliva: I don’t get too far into the due diligence because we’re going to run it through title so we’ll get it to L check and make sure the people are alive, “Hey, is both people alive?” So we know if you got anything coming up. Access, double check the access for us ’cause that’s a real big thing we’re seeing is access usually breaks about out of every five deals we get back that’s a yes, it breaks two or three of them.
Steven Butala: Yeah.
Justin Sliva: Verifying that access is good legal …
Steven Butala: It’s a huge issue for us and everybody.
Justin Sliva: Yep. Legal and physical access. Going from there and then we get it to the title company. We hold it in our LLC name just because we have the money out on it. The person is the manager of it so they have equitable interest in it.
Steven Butala: It’s just like a mortgage.
Justin Sliva: Yep.
Steven Butala: It’s just like a lien on it except for the …
Justin Sliva: Yeah, we don’t actually put a lien on it, we just hold it in our name and then we take care of that from there and send it back out. Title takes care of both sides of it for us. We’ve run into some issues with some counties. The title companies, they want to deal directly with me and not with the manager of the property, which isn’t a problem. We handle that.
Steven Butala: Mm-hmm (affirmative).
Justin Sliva: It’s not a big deal.
Steven Butala: It’s a smoking deal. For anybody who’s in the [inaudible 00:11:53] I can’t express this enough. If you’re somebody who understands data, you’re a member of the group, you may have send a lot of blind offers out, you just don’t have the dough? Which is totally … it’s not that I feel bad about, maybe you’re young and you’re starting up. These scale your business up dramatically. If you can find undervalued property using the mail direct and then you can buy … these guys will buy anything if it’s a good deal.
Justin Sliva: Yeah. That’s the crazy thing, we see people that they don’t believe it at first, they follow the steps all the way through. We tell them, “Hey, this is the kind of properties we like.” Those guys come back a month later and they’ve got two or three deals sitting in a hopper and they can’t afford them all and they have the potential to make an 80000 on three or four deals and you’re like, “Told you. I told you it’s not rocket science. There’s no magic county list, just go out there and run the numbers for the county, offer a percentage below that, buy it for less than it’s worth and resell it. It’s pretty simple.”
Steven Butala: Is there someplace you have your acquisition criteria, the perfect deal, published so that members could actually tailor their mailers to that?
Justin Sliva: No, what we’re starting to do is we’re starting to put pictures of the properties up, of the property area so people can see what properties we are buying right now. But as we start going through, we’ll start saying, “Hey, past deals. What they look like, what they funded, what the person made.” If somebody’s willing to put the thousand dollars of marketing material they’re going to have for 2000 mailers then they come back and they’re making 10 grand a pop on a 10000 dollar property we funded. It sells for 30, they make 10000, all they had was 1000 or 2000 bucks in it. They could do those left and right and we’ll fund them all day.
Steven Butala: You could accumulate a quarter of a million bucks in two months doing that.
Justin Sliva: Really quickly, yeah. Really quickly.
Steven Butala: A big, big deal too, that you’re getting a professional acquisitions person’s set of eyes on the deal and they’re telling him whether or not it’s a good deal for free.
Justin Sliva: Yeah. That’s a big thing ’cause a lot of guys we had, the costs don’t justify. It’s just my opinion, it’s not gospel, it’s not right or wrong. We ran into a property that everywhere around it this was a acre lot, it’s probably worth every comp of 75000 dollars for this acre lot. Guy was getting it for, I want to say, 20. Looked like a smoking deal on the surface but as we start to get into the consult, everyone of the comps were in a subdivision and this one wasn’t and it was outside, it didn’t have utilities and it was next to a church so you’re like, “Man, it could go either way.” Dollar General just built on a lot next to it. It wasn’t zoned residential or commercial, it was up for the grabs still. Could’ve been a home run, but to me that’s the long term play and that’s not what we do. We’re here to get you scale fast. That’s our whole business is getting you over the hump so you don’t have to use me anymore. I’d love it if you do, but I don’t need you to. I want you to be successful and that’s what we’re here for. We’re here to partner and makes you successful, not be somebody that’s just taking money every deal from me.
Steven Butala: It’s really a … everybody wins.
Justin Sliva: Yep. Yeah.
Steven Butala: Yeah. I think we talked about it yesterday. The percentages, most lenders … or maybe we did not when the camera was on. Most lenders charge 10%.
Justin Sliva: Yep.
Steven Butala: They’re not taking the risk with you. They just want their 10% regardless of something goes wrong or whatever. The way you guys have this structured it makes a lot of sense.
Justin Sliva: Yep. Yeah. The people that sticker shock of the 50 … Hey, we want 50% of the profit, yeah we’re profit sharing. We’re doing a joint venture. We’re doing a partnership.
Steven Butala: Taking a risk!
Justin Sliva: Yeah, but you’re not on that juice, you don’t give me two points at front and 14% interest on the back side like the hard money would on a house that has a little bit more value.
Steven Butala: Hard money costs you money.
Justin Sliva: It does.
Steven Butala: Partnership costs you nothing.
Justin Sliva: Yep.
Steven Butala: Is it nothing or is it just?
Justin Sliva: You’re making money, so that you’re only paying if you make money so I think that’s the good part about it right?
Steven Butala: I don’t think it costs you money.
Justin Sliva: Yeah.
Steven Butala: Well, you’ve done it again, you spent another fifteen minutes or so listening to the Land Academy show. Join us next time where we discuss how to get acquisition funding which you just sort of covered now from Justin Sliva. We answer your questions online, posted at the LandInvestors.com community. You are not alone in your real estate ambition.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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