How to get Acquisition Funding from Justin Sliva (LA 868)

How to get Acquisition Funding from Justin Sliva (LA 868)

Transcript:

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 how to get acquisition funding with Justin and we also we’re gonna throw in the definition of just because she says yes, doesn’t necessarily mean yes.

Steven Butala:                   And what do we mean by that? I was just talking to Justin before the show and a lot of people contact him and ask him to partnership deals which is really his main business. Aside from doing his own deals which he does a ton of.

Justin Sliva:                         Yep.

Steven Butala:                   Every month he funds other people’s acquisitions that are good, splits the margin with them. And he says a lot of people are coming to him especially really brand new people really excited about a transaction. They’re kind of seeing something in the deal that’s not there. Like do you have a recent example maybe?

Justin Sliva:                         Yeah we had, here recently we were in a small county out in Texas and one of the guys brought his first, it was his first mailer, his first yes and it was 40 acres for say $4200 or something like that. And you know he’s excited, he’s like, “This shit really works. Stuff really works.” Sorry about that.

Steven Butala:                   It’s all right.

Justin Sliva:                         “Stuff really works.” And then you’re like, “Yeah it does. We told you that.” And we go through the deal and soon as I pull it up on ParcelFact there’s just, there’s no road. And I’m like, “Well how do you get to the property?” He says, “Well it says it has easement.” I said, “Well literally you can’t drive to the property it’s got, the topography there’s beautiful. Beautiful land it’d be perfect to go hike, go camp, maybe go hunt on, but you can’t drive a car there so how are you gonna actually go enjoy it if you’re the end user?” So you know that excited part she said yes.

Justin Sliva:                         You know they wrote me yes, yes they want to sell me the property. You know make sure it meets your contingencies. You don’t have to buy it if she says yes to it so …

Steven Butala:                   I struggled you know people ask me you know what did I struggle with when I started in the 90s? I call it seeing something in the deal that’s just not there.

Justin Sliva:                         Yep.

Steven Butala:                   I wanted to work so bad and you want to get that first deal done maybe the first year you’re trying to like justify not working at your regular job anymore and make enough and just start, you don’t want to make bad decisions.

Justin Sliva:                         Yeah.

Steven Butala:                   That’s another reason to call this guy ’cause he’ll look at the deal and tell you. Like you saved this guy.

Justin Sliva:                         Yeah.

Steven Butala:                   You saved him losing a bunch of money.

Justin Sliva:                         And had I been in his shoes my, first deal we bought a couple of those properties. I knew exactly-

Steven Butala:                   We all have.

Justin Sliva:                         I took the lumps for him. So I was like you know just move on. And within 30 seconds he looks at me and say, “Are you sure?” And I’m like, “Yeah just go.” And that’s the good part about partnering with somebody or doing those joint ventures you get to pick up on that wisdom. Now is that something that cost him? No it was free. We had a conversation about it. We moved forward and he was gonna be better off with that, but you now the three deals I lost money on in my investment history were deals that I didn’t follow that basic thing that y’all taught, the access. It looked-

Steven Butala:                   The four A’s.

Justin Sliva:                         Yeah the four A’s and the access portion of it was all of ’em and there was a barb wire fence that I couldn’t see on a two track. You know it’s got a two track to it. It’s supposed to have easement. Well some farmers working some adverse possession in a rural county and they’ve got a survey and they’re 9 or 10 into their adverse possession lawsuit and so you can lose some money on that. We think we lost a total of $1300 in three deals

Steven Butala:                   That’s nothing.

Justin Sliva:                         Yeah over the course of 150, 160 transactions now.

Steven Butala:                   The four A’s are access, you have to have legal and physical access especially in the beginning of your career.

Justin Sliva:                         Mm-hmm (affirmative).

Steven Butala:                   Later on when you’re a little more experienced you can do without one or the other. Please look that up it’s very important. Acreage, more is better. This is for rural vacant land now. Attributes, like does it have great mountain views. Like Justin you can tell, he believe in this piece of property and you can look at real estate even on a satellite images on Google Earth or whatnot and you can find out very quickly if it’s got attributes.

Justin Sliva:                         Yep. And attribute doesn’t have to necessarily be the property. It could be next to a big State park. You know we see some, I was talking to somebody on a property like, “We don’t know what the attributes are for this piece of property?” And I’m like, “It’s got views in every direction. There’s mountains about. You have a town that’s within two miles of it. Three miles of it.” So if I have a rural piece of land and I’ve got a town that’s within three miles I can go grab supplies real quick whether it’s just a gas station or a little general stor that’s an attribute. You put that out there.

Steven Butala:                   Could be utility locations. An attribute could actually be something that has nothing to do with the actual real estate at all and everything to do with the paper situation. Like it doesn’t have any debt or there’s a lot of things that make transactions hard or easy on the paper side. So that could be an attribute too.

Justin Sliva:                         Taxes are current. Any of that.

Steven Butala:                   And then the fourth A is affordability.

Justin Sliva:                         Yep.

Steven Butala:                   Cheaper’s better. And those will keep you out of trouble. If you have a property that’s got all four A’s you’re gonna do just fine. Before we get into the actual show which we kind of just did there, let’s take a question posted by one of our members from our LandInvestors.com online community.

Steven Butala:                   John H. asks, “Justin what are your plans for 2019? What do you foresee in your business?”

Justin Sliva:                         So for 2019 like pipe dream or the vision is a lot of people have is to have this like car gallery that has my real estate office with my assistant working above it looking down at these cars that have a license so I can buy and sell whatever exotic car that I want.

Steven Butala:                   Comes out of cars.

Justin Sliva:                         Yeah goes out of cars, but my scalability of the land business is that’s up on top and that’s where the money is being made. The car gallery is just paying for itself. The rent for the building for me to have the think tank for some of these investors that want to get involved and have a place to go everyday. They left their job. They don’t want to work in their dining room.

Justin Sliva:                         Since, I mean that’s where we started. We started in our third bedroom. Went to the dining room. Turned the dining room into an office and now we’re getting to the point where we’re outgrowing that to where I need to have that other piece of staff in place to keep managing the other stuff. So whatever those think tank looks like if it’s land mule, if it’s plumb, if it’s the whatever car gallery name we come up with or whatever the next two businesses that we put together. It’s whatever that looks like, what that staff looks like and how that fits together.

Justin Sliva:                         So for 2019 I see that scale and go into that direction versus doing more, instead of doing more like five acre properties or 10 acre properties kind of not necessarily there, but a couple big margin properties to know that hey the years paid for.

Steven Butala:                   Yeah.

Justin Sliva:                         You know we got bills. Everybody’s got bills. And then setting up the recurring income to where that’s set up and in place and then seeing that scalability on your passion projects too.

Steven Butala:                   That’s great. We’re launching Land Academy Lights which is, Jill, that’s kind of Jill’s thing.

Justin Sliva:                         I love that idea.

Steven Butala:                   It’s an easier way to get your, it’s a way cheaper way to join Land Academy with a lot of the more intermediate benefits removed that are unnecessary so you’re not charged for them.

Justin Sliva:                         Yeah.

Steven Butala:                   And then we’re also, I’m launching, House Academy and probably around January of 2019 and then from there we’re gonna add zeros as you perfectly put in our meeting this morning. We’ll add zeros to the transactions, namely doing a larger movie star ranches that sell a little bit more slowly and then we’ll mix in a lot of SFR’s in southern California with a $7000 price tag or more. We’re gonna try and make a $100000 a deal wholesale on every transaction we do. Several times a month.

Justin Sliva:                         And to think when you start like when you start your real estate business you hear of pipe dreams like that and you don’t think about the scalability that we have and everything comes down to the deal flow that we talk about. How we can bring these deals in and then pricing methodology on top of that and it’s just percentage on percentage and it snowballs and it just gets going it’s exciting and it’s crazy to see what you can do with those things.

Steven Butala:                   Yeah.

Justin Sliva:                         And it’s nuts to me to see that all come into play.

Steven Butala:                   Making a few million dollars like a couple of, a few of our members do is totally realistic. You just have to be organized about it.

Justin Sliva:                         Yep. I think that’s where my hook came from is when we did our first property. We did $100 an acre property, our first one. We bought 21 and I’m looking at my wife, ’cause again, it was her business and I was like this a million dollar company. All you got to do is put the mail in a box and buy the property and just keep turning it.

Steven Butala:                   Yeah.

Justin Sliva:                         And just don’t take any money out of it and I think that’s where we see a lot of people get their self in trouble ’cause they can’t scale out of that. So …

Steven Butala:                   I had a classic car dealership one time. Licensed and everything. Did I ever tell you this?

Justin Sliva:                         No.

Steven Butala:                   It was a financial disaster.

Justin Sliva:                         Oh great so 2019’s looking pretty bad for me.

Steven Butala:                   And here’s why ’cause I love cars.

Justin Sliva:                         Yeah.

Steven Butala:                   As much as you do and when you love something like that it’s just you make decisions from your heart and not from your head and that was bad for me.

Justin Sliva:                         Yeah my goal is to pay the rent of the building that the car sit in with the cars and drive ’em. So-

Steven Butala:                   Okay so that should be all right then because you got a subsidiary, but upstairs.

Justin Sliva:                         Yeah upstairs and I have a vision board or a picture of what I want and how I want it and I have a commercial real estate friend. He’s building some buildings and he called me ’cause I had shown it to him. He’s like, “Hey man-”

Steven Butala:                   This is the worse thing that can happen.

Justin Sliva:                         “Can I get you a prelease?” I was like, “If you get me a prelease price. I need it to hold four cars inside.” ‘Cause you need that for the license in Texas and he said, “Perfect.” And I said, “I want a loft above it.” And he’s like, “Perfect, we got to take-”

Steven Butala:                   So this is gonna happen?

Justin Sliva:                         It could. It’s long.

Steven Butala:                   Oh my God.

Justin Sliva:                         We’re gonna have to, we’ll have to make some deals go through to, I’m the type of person I like to plan a year two ahead. To where I want to have bills taken care of four a year or two so an event that something happens we’re not struggling to make ends meet and we’re in good shape now, but as we continue to grow in scale having that out there so I’ll probably pay him for a year in advance for lease.

Steven Butala:                   Uh-huh (agreement).

Justin Sliva:                         Put the car dealership in there and if it pays me back on that I’m loaning myself money.

Steven Butala:                   Do you have the cars right now to put in there?

Justin Sliva:                         No I’ll have to go buy ’em. That’s the fun part.

Steven Butala:                   I do.

Justin Sliva:                         Yeah.

Steven Butala:                   I’ll ship some cars to you. I have a 1970 Cutlass convertible triple black.

Justin Sliva:                         Oh when this one come about?

Steven Butala:                   I’ve had it for a long time. My buddy, I’ve talked about it on the show a few times, but my buddy came to me one day and said, this is when we still were in Arizona. He said, “I’ve had this car for 20, almost 15 years and I love it, but I need some dough. Here’s the price come and get it.” And it was just sitting in this car it needed 4, it needed new differential and stuff.

Justin Sliva:                         Yeah.

Steven Butala:                   But the body and the interior was great so it was all under the hood, under the carriage.

Justin Sliva:                         Mm-hmm (affirmative).

Steven Butala:                   So I put 4000 into it and it’s just beautiful. We don’t have the space for it so it’s in storage here.

Justin Sliva:                         So all your cars are in storage here?

Steven Butala:                   Yeah.

Justin Sliva:                         Oh I didn’t realize that. I thought you’d gotten rid of all of ’em.

Steven Butala:                   Well that, I have gotten rid of all the cars except that car, which I have like an emotional tie to. It’s probably worth 50000 and it doesn’t matter. Let’s talk about real estate.

Justin Sliva:                         Okay. Back to the meat of the show.

Steven Butala:                   Plus Jill’s gonna find out the truth if I keep talking. We’ve kind of passed the meat show of the show here.

Justin Sliva:                         So does that make me your inspiration now?

Steven Butala:                   And we kind of covered the topic so we talked about this seeing something in a deal that’s not there. What else do you see from newer people, newer Land Academy members that come in with deal and big fatal flaws to it they’re not getting it just from lack of experience that’s all.

Justin Sliva:                         Well it’s, the access is a big thing and it seems like one of the more simple things, but it’s that and the pricing. Going into a deal and willing to pay a little bit too much for something because I didn’t, they were a little scared to negotiate down and I’ve seen deals where guys had a bunch of hair on it. Like there’s back taxes, they’re wanting to say, “Well the person wants this.” What do you want it for? And make that decision and just stick it. And some deals you have to walk away from. People come back, some people won’t. I mean it’s, you can’t get emotional in it and that’s the big thing.

Steven Butala:                   Absolutely.

Justin Sliva:                         A lot of people get emotional and forget that it’s a number. It’s a number on a spreadsheet. You’re gonna add you’re gonna multiply it by three when you sell it. Whatever that is. If it’s 100 or it’s a 1000 or if it’s 2000 or $5000. Knowing that price and methodology and going through there so don’t get too excited if somebody says they want to negotiate with you, but on the flip side if the margins there and you’re gonna make 50000 on a property and they want to raise you $5000. So you made $45000 on a deal.

Steven Butala:                   That’s the problem I see.

Justin Sliva:                         Yep. And that’s you know we-

Steven Butala:                   Reverse negotiation.

Justin Sliva:                         Yep and it-

Steven Butala:                   Just negotiate just to negotiate.

Justin Sliva:                         Yeah and so if that’s the deal and you’re still on your threshold take the deal make your money and move on. So …

Steven Butala:                   We have multiple sets of boots on the ground in certain markets in the southwest part of the country and we have one set who are personal friends of ours, they actually answer the phone. So they’re, because we trust them, they’re the transaction coordinator for that little submarket. It’s a submarket outside of Phoenix and we’re still kind of, I don’t want to use the word training, we’re still guiding them because they have experience.

Justin Sliva:                         Yeah.

Steven Butala:                   But one of the thing, every single deal, a deal comes in they throw it in the spreadsheet, we all get excited about it and look at it and I’m trying to train them on the very first conversation when it comes in to say, “Does this price work for you? Does the price work on the sheet that we sent on the purchase agreement that we sent. Does it work for you?”

Justin Sliva:                         Yep.

Steven Butala:                   And for whatever reason-

Justin Sliva:                         They’re scared.

Steven Butala:                   It’s out of their comfort zone.

Justin Sliva:                         Yeah.

Steven Butala:                   And so weeks go by and a lot of conversations go by and then we find out, oh no that price doesn’t work at all.

Justin Sliva:                         Yeah and that’s, in my dialogue with [Pat Live 00:13:22] we talked about that yesterday is to have that question in there. If you’re scared to say it have Pat Live do it for you. I mean they take the hate for you so let Pat Live ask the question, “Hey do you accept our price.” “No. What price do you want for it?” Well now I know if it’s a hot lead or if it’s not. If I offer them a $100000 on a house and they said, “No I’ll take 150.” Well if I offered them a 100000 I know the cost probably about 165, 170 so you know it’s not a great deal at 150 I’m not going to waste my time.

Justin Sliva:                         I may call ’em back and have the conversation, just touch base and say, “Hey I can’t get to 150. This is where I’m at and this is what I’m gonna have to do.” I haven’t even looked at it, but if it’s 110 and a difference of 100, 110 the question is, “Hey let me get inside the house and go from there.”

Steven Butala:                   Exactly. Yeah that’s interesting. I don’t even, the last probably 15 SFR deals we’ve done, I’ve never seen the house at all. I just looked at pictures and that’s it.

Justin Sliva:                         Well that’s ’cause I shot my market and you have boots on the ground. You’ll have that. I don’t have my boots on the ground yet. I’m gonna borrow yours.

Steven Butala:                   Well yeah you’re welcome to. Well you’ve done it again. You’ve spent another 15 minutes or so listening to the Land Academy show. Join us next time where we discuss another interesting episode and we answer your questions online at LandInvestors.com.

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

Justin Sliva:                         No problem.

If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.

If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.

The BuWit Family of Companies include:

https://BuWit.com

https://offers2owners.com

https://landinvestors.com

https://landacademy.com

https://landpin.com

https://parcelfact.com

https://countywise.com

https://deedperfect.com

https://houseacademy.com

https://ownersdata.com

https://houseacademy.com

I would like to think it’s entertaining and informative and in the end profitable.

And finally, don’t forget to subscribe to the show on iTunes.