Finance Friday with Steven Butala and Justin Sliva (LA 893)
Finance Friday with Steven Butala and Justin Sliva (LA 893)
Transcript:
Steven Butala: Steve and Justin here, welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala with Justin Sliva. Broadcasting from sunny Southern California and from Dallas Fort Worth today.
Justin and I introduce Finance Friday… well, let’s just get into it actually. The person who wrote my script doesn’t understand Finance Friday, and I think that’s fine. This is what, our third show I think, Justin?
Justin Sliva: Yeah, third official under Finance Friday.
Steven Butala: Jill is actually… you know cause you were out shooting coyotes I think last week?
Justin Sliva: Yep, yep. We shot 7.
Steven Butala: Did you really?
Justin Sliva: Yeah, yeah. They weren’t very great; there was a lot of mange on them, but we did shoot 3 that really looked good. And the cool thing about it was, this is a fourth generation ranch that we were on, and there’s a feed lot next to it, so these coyotes come through this canyon on this fifty-eight hundred acre ranch and eat the cows at the feed lot. And then they come back across. So, we actually just set up on a canyon and just picked them off as they came in and out. It was pretty nice.
Steven Butala: Well, I’ll tell you, we’re gonna lose several listeners over this.
Justin Sliva: Oh, sorry about that.
Steven Butala: That’s alright.
Justin Sliva: I mean, they’re predators, so that’s kind of why we do that.
Steven Butala: I get it completely. I personally get it.
Anyway, Jill covered for Justin last week, which was kind of fun. If you haven’t had a chance to… actually I think it airs tomorrow Justin so you probably haven’t heard it yet but… Before we get into it though, let’s take a question posted by one of our members on the landinvesters.com online community, it’s free. Marcus asks, “I’m in the process of selecting counties for my first mailer, and because I’m working with very little cash, the last thing I wanna do is hit the south-west for cheap properties and compete with a million… within a million other people who try to buy the same property. So, I’m staying in the mid-west here, where I live, and looking at population trends in nearby states and my goal is to find counties in rural or semi-rural areas that aren’t far from counties where people are currently living or moving. Thinking that’s the way that there’s a better chance of property will sell and sell quickly, not 8 months from now. I’d love any feedback that you have.” This is a perfect question, actually, Justin for you.
Justin Sliva: Yeah, we get this question a lot. The two big things we are is hey, which counties should we shop and what prize should we offer. Those are the two big questions and we’ve had fifty-five people reach out in the last week for questions like that. So its been insane with how much people have reached out, you know, wanting to know that stuff.
What I tell people to do is to find an asset class they like, so if its county in the mid-west, you have some great states and find something you like about it that excites you because, when you’re excited about what you’re shopping, you’re going to tend to do better, do more and you’re going to work at a faster pace versus being, “ah crap its this desert piece of property;” doesn’t excite you. In the mid-west, you have a ton of options up there, you could go through Tennessee, through Kentucky, through Georgia, through the south-east. You have all the states there, and find stuff that you like about them and then start working through them. Find a price you feel comfortable with. I use the same example a thousand to two thousand dollar sell price and then try to offer twenty-five, thirty-five percent and that. It varies, it’s not a hard line, but look for what you have and make sure its affordable, that you have the margins to cover your business.
It works anywhere. I’ll just run through the states that we talked about and talked with people on in the last week. California, Texas, Washington, Arizona, New Mexico, Virginia, Nevada, Georgia, South Carolina, North Carolina and what was the other state… and Oregon, sorry. That was just in the last week, so you have got plethora of states across the country there. We have green lit Washington, Arizona, two in New Mexico and one in Nevada, just this week and we’ve been out of office for a couple of days.
Steven Butala: Yeah, that’s awesome. I mean it works everywhere, quite honestly, the other thing I would add is that you really want to avoid lawyer states. Do you avoid those too?
Justin Sliva: No, we don’t. We just find a good lawyer.
Steven Butala: Oh good.
Justin Sliva: And that’s the thing, we always talk about learning these counties and trying to figure out all its laws and that’s what scares a lot of people is, we talk about, now in 2.0, we talk about outsourcing and getting that transaction coordinator, the right people and the right team in place. An attorney that closes for you, is part of your team. Its just like a title company, so find an attorney that does real estate in that county, call ’em up and say, “Hey, I’ve got a property I need to close,” send ’em the contract, they handle it for you. And now you have an expert on your team, for that county, that state, for that asset class and now you’re covered. And you’re paying them their percentage or whatever that fee is.
Steven Butala: That’s great.
Justin Sliva: So that’s kind of how we’ve taken that approach.
Steven Butala: Justin, you always have a positive work around mentality for everything and I think that its really good and its really a good instructor quality to have.
Justin Sliva: Well, I appreciate that.
Steven Butala: You’re a little bit younger than me so you’re still positive.
Justin Sliva: I’m not bitter yet. I’m not jaded. We’ve tried to build our business as simple as possible and keeping it simple and you know, with the realtors or the flat list MLS, you have two options on the listing side. They know your market, they do it for you, they’re part of that team for you. And closing you have your title companies, you have your attorneys, those people can handle that for you. You hand them, they’re professionals in that craft. Some suck, some aren’t great at all but some of them are really good. But all of them still know what they’re supposed to do.
Steven Butala: Yeah, so tell us about some exciting, some of the better deals that you got in the last week.
Justin Sliva: We actually just had one in Texas that looks pretty good. We’re finalizing that, we can walk through that one a little bit if you want.
Steven Butala: Sure.
Justin Sliva: It’s about twelve and a half acres, its in an area that’s central Texas. It looks like its got some growth to it. Its price pretty good. Purchase price is around 30k and it looks like its gonna comp around 75-80k. So its not, we hear a lot of people say, “Oh, you want triple your money.” That ones not a triple your money deal, but it has margin to cover for both people to make a pretty good return. So, it looks like a good deal for somebody there.
Steven Butala: Great.
Justin Sliva: It’s got some acres with it. We’ve had a couple that were, some smaller deals come in, that were, I think we have fifty-six hundred bucks in them. List price on those, they’re going to market this week and they’re gonna be in the mid fourteen-fifteen range. So it’s a pretty good turn there and a couple in Arizona that we had come in, that look pretty good.
Steven Butala: So, I know you’ve been at this for a while now. Are there any properties that are not selling as fast as you want ’em to sell?
Justin Sliva: I’ve got a few up in Wisconsin that have been kinda sitting a little bit. We closed on them the first week of October and so they’ve been on the market since mid-October. So its kinda gotten to the snowy season. We’ve got great pictures on ’em. So we caught it before the snow, with the pictures but its kinda slowed down with that. So that’s kinda ones we’re seeing that’s slow. We have on in Texas, its been sitting. We had a couple offers on it that were owner-finance offers, but the partner didn’t want to go that way yet. The investor we’re working with.
Steven Butala: I mean, I’m from the mid-west and that doesn’t surprise me at all. Real estate is seasonal, especially land.
Justin Sliva: Yep, and these pictures look great. So when it shows that spring time, its just going to kill it up there. They’re great looking properties.
Steven Butala: Yeah, I mean, that’s fantastic. Is it like recreational property or cabin property?
Justin Sliva: Yeah, its perfect cabin property. I think they range in size from two acres. They’re 2 two acres side by side to a ten acre that’s on a river. We’ve got four or five up there and half of them do have water on them. Its like a river or a creek running through them.
Steven Butala: Wow.
Justin Sliva: Big trees, access is good. It’s just real neat properties, will be perfect for cabin for somebody up in the mid-west. So we’re excited about those.
Steven Butala: That excites me. I mean, the notion of owning property and using property like that, is the reason I got into land in the first place. I guess property to some extent, the reason. Well you just hit on it earlier, you got to be interested in the property yourself.
Justin Sliva: Yeah, we’ve seen some stuff up in the Pacific Northwest that just got me super excited. I’m just ready just to move and buy a little off-grid cabin and disappear for a while. My wife’s even getting excited about it. She’s like, “Wow, this is beautiful.” They don’t believe some of the deals we’re seeing come back and telling these people, saying, “hey man, it’s just find a class that you like and get a photographer that can get that piece of that excitement for you through on a camera.” It’s great. You talk about the Landeos Site and what his photographer does for his site, but we see those pictures come back from other guys and videos come back. We had a video up in the Pacific Northwest, man it’s beautiful. I’m just like amped up when I see it, it’s just exciting.
Steven Butala: That’s fantastic man. So you mentioned, you received fifty-five phone calls or fifty-five properties.
Justin Sliva: No fifty-five emails or requests to book a meeting with us, to discuss how to price, how to pick a county. You know, what we look at and kinda its the same questions over and over, which is great because it’s gearing up for 2019. Its gonna be a huge year for Land Academy. For the Land Academy members. And the non-Academy members, the listers to the podcast, ’cause the questions they’re asking, and what they’re going after and then the goals they’re setting for themselves in 2019 and working backwards on that. And it scary to me because of how much confident these guys are getting in what they’re looking for and what their asset class is and how they’re wanting to center that down so its gonna be huge.
Steven Butala: I mean, that’s like mission accomplished for us. The stuff that we’ve been talking about that’s possible is happening.
Justin Sliva: Ya’ll too should be super excited about because you see these little ducklings get up and they’re flying across the country now and its just crazy to see. Its crazy to see that growth and that exponential growth happening.
Steven Butala: We had an unbelievable December as a land revenue month and as a new Land Academy member month. It was truly amazing actually.
Justin Sliva: Yeah, I think four came through Plum that ended up signing up with ya’ll. And they took advantage of the half price deal, which is huge. That’s a great savings for them, so that’s huge for them. So its awesome to see them come out and they reach out and they don’t have the tools in place yet and you say, “Hey, Land Academy provides these tools,” and push them that-a-way. They realize and see that great deal that ya’ll had and they sign up and they run with it. It’s awesome.
Steven Butala: I mean, how was your December? How was your 2018 in general?
Justin Sliva: 2018 was solid. Well deep into the six figures for profit. For just our businesses, it looked good. Plum is on pace, 2019 is on pace to already have over six figures on the books. So that’s huge. We have the podcast starting up, so that’s gonna be cool. Kinda off-shooting some of the stuff that we talk about with Land Academy and you know, some of the things that we’re seeing across our niche. A great year, a solid year. I’m trying to look at my notes here to see what we had but I have got two houses that are trying to finish up now and once those are done, our land is super, hyper-focused on a certain asset class and we’re gonna run through that and just kill it. I’m excited about that.
Steven Butala: That’s great man. Yeah, we’re on scheduled to hit five million bucks in 2019.
Justin Sliva: Wow.
Steven Butala: It’s working out.
Justin Sliva: Yeah, we had eight clients that worked through Plum or consulting and we helped them all reach six figures this year. So that was solid deal for us. Combined, I think net worth was, they created over two million dollars in profit. Just actual cash in the bank for these guys all together. Equity was somewhere in the six or seven million dollars off-market equity. So its huge, huge year for everybody. But 2019 just looks like its about to blow it out.
Steven Butala: That’s what I think too and I know we are now technically into, kind of a market down turn but I mean, what are your thoughts on that?
Justin Sliva: We’re seeing stuff still sell, it kinda slowed down for the Christmas and the holidays but the leads that we’re getting in now have picked back up. We’ve still seen the owner-financed stuff, people wanting to do that but they’re willing to pay a little bit more down. Then they’re just wanting to hold onto their money a little bit. So they’re willing to pay the ten percent. They want to know what they can do to pay it off early but they’re willing to give thousand to two thousand dollars down, five thousand dollars down. So you get somebody with a little more skin in the game. So, I don’t want to say owner-finance is dead, but it seems to be a viable option for a lot of people. We’ve had four offers on properties we partner on, this week, on four different properties that people wanted to owner-finance and they’re willing to put more than one ninety-nine down and one ninety-nine a month. They’re wanting to do the two or three thousand up to five thousand down and hey, what can I finance it for for over the next five years.
Steven Butala: Right.
Justin Sliva: So its a great thing to look at, so some of the people aren’t doing the owner-finance, you may look at that if your business is kind of stalling a little bit.
Steven Butala: Right. I think its largely single family residential slow-down. More than anything else.
Justin Sliva: Yeah.
Steven Butala: I don’t think, this is like, I think my third time. Its my second time for sure, in a land business, that we’ve had a down-turn. And, there’s no replacement for buying cheap property, in fact, I think, [inaudible], people come out of the woodwork to provide money to buy cheap property during a down-turn; and its easy to re-sell it cheap. Its like everything, acquisitions go down and sales go down. Prices. Not the volume. I’m not concerned about it at all.
Justin Sliva: Yeah, we see Dallas has kind of slowed down a little bit on the single family but you still, like one of our houses, we’re still priced where we are and we’re getting showings couple times a week.
Steven Butala: Yeah.
Justin Sliva: They’re pricing the market still and kinda wondering whether new home is the way to go, ’cause we have a ton of builders building in the area. Or if a current house, that’s already on the markets there.
Steven Butala: Awesome. So give us an example of a couple other deals that you’re doing. If you can.
Justin Sliva: Okay, yeah, we have, one in Nevada, I think its five thousand dollars. It’s gonna list for fifteen. Its forty acres. Its a smaller one but its a newer guy, he wanted to try it out. Been in the family since 1978, so clean title. He’ll be able to work around through title companies with that so we’ll self-close. It’s his first deal so we’re walking him through self-closing with it. So it’s kinda cool
Steven Butala: Oh good.
Justin Sliva: Yeah, so he’ll get to see that first hand. Said Texas, we talked about that one a little bit. Washington, we have one up there and we got a couple that are kinda slated to go in the books. Had a few in California that topography was kind of an issue and pricing was a little bit high. Seems like that’s been a big issue for us in California, with the smaller five acre up to one hundred acre we’ve seen, with topography that you can’t even get a road onto the property.
Steven Butala: Yeah.
Justin Sliva: So that’s kinda tough, kinda limits what you can do with it so.
Steven Butala: Yeah.
Justin Sliva: One of the big things we’ve talked about this week with people is, what are your exit strategies? And understanding how you get out of the deal too. So the down-turn coming, people holding their money a little bit tighter, what’s your exit strategies and kind of discussing that a little bit farther.
Steven Butala: Have they thought that through in general, before they get to you?
Justin Sliva: The typical response, well I think it sells for this, and that’s an idea, okay well who’s your end user and what are they gonna do with it? You know, you can talk about different asset classes, whether its agricultural, whether a guy plows a field, subs divides it into five acre lots and you’re like, I’ve got 5 five acre lots, they’re flat, they’ve got access. These are gonna be great and they’re gonna pull this kinda money. But when you look at it, its just a plowed field and its just paper sub-divided. Or you get to a big recreational piece in California, we had a section come up and the roads were too small for fire so you couldn’t do anything. You couldn’t build an off-grid cabin, you couldn’t do anything with it. It was literally just gonna be a recreational piece of property.
Steven Butala: Yeah.
Justin Sliva: And it was three hundred grand and then next to it, the road was wider and that same piece of property is selling for like three million bucks. And it just makes that big a difference on the comps, you know, so things like that. But its one of those things, I think as we start to evolve and get into these better properties and these better asset classes, we start understanding what our exit strategies are to get in and out of these deals. And knowing who your end buyer is going to be and kinda getting to that sniper mentality of how we know exactly how its gonna progress through, whether its wholesale deals, its a terms deal or its a cash buyer, that’s, you know a middle class family. Or if its a commercial buyer.
Steven Butala: You know, the exit shows itself something, you know when you really dig into the property, it’ll reveal itself pretty quickly.
Justin Sliva: Yeah.
Steven Butala: As will, the decision whether or not to buy it.
Justin Sliva: Yep. You’re exactly right.
Steven Butala: My first reaction on that section is, can you rectify the access at all, do you think?
Justin Sliva: Yeah, and they said no because it was too steep. The cliff on each side was too steep. The other one we had, it was a hundred and twenty five acres and it was in a national forest, had good road access but only about eight to twelve acres of it was usable. Everything else was a side of a mountain. And so, this beautiful piece of property, really beautiful; been in the family since the fifties, you could see the natural trails through it from people hiking in that area. So, it wasn’t that people were staying off of that. So it was almost like it was part of the park so, kinda led that okay, what do you do with it? Can you use it for free? Do you really need to pay for it? Could you actually use the property?
And you know, it was priced okay, I think that one was, maybe, a hundred thousand bucks. To me, it looked like it sold for about one seventy five. So it wasn’t a home run, but it had pretty good margins in it still, but it had been on the market for a while. It was on the market for a half million dollars in 2016 and just every year, they’re just dropping the price and dropping the price. And they’re mid two’s and you’re like okay, what are we gonna do, what are we gonna do different, they have a great ad, they have this, they have that. What do we do differently?
Steven Butala: That’s a big red flag for me. If it’s been on the MLS even in the last few years and it just didn’t work out. I don’t why that just trips me for some reason.
Justin Sliva: It does. I look at the ad and say, can I do better than this ad? And if its a pretty good ad, say if its a nine out of ten, I’m like well they’ve got a pretty good ad, I don’t know what I’m gonna do to be better, you know, does a drone video make it pop? Does just a lower price make it pop? You know, what’s gonna make somebody pull the trigger on it.
Steven Butala: There’s just a stigma for some reason, after its been on the market.
Justin Sliva: Yeah, it goes stale. And so, what do you do to get around that?
Steven Butala: Alright. Hey, let everybody know please how to get ahold of you and I’ll wrap it up here.
Justin Sliva: Okay, justin@pluminvestmentgroup.com. And then I’m going to throw in Beyond the Lookout, as we talked about casual Fridays, [inaudible] podcast is going through the iTunes rigamarole right now so we’re looking three to ten days and it should be live.
Steven Butala: Awesome. I will be your first listener.
Justin Sliva: Yeah, thank you.
Steven Butala: Well you’ve done it again, you’ve spent another fifteen minutes or so listening to the Land Academy Show. Join us next time for another interesting episode and we’ll answer your questions posted on your online community at Land Investors. It’s free.
Justin, thanks again and super interesting. I’m so happy for your success dude. You and I have spent a little bit of personal time together over the last, whatever, lets just say sixty days and I’m really glad everything’s working out for you and I wish you the best in 2019.
Justin Sliva: I do appreciate that, I really do. Appreciate all the help.
Steven Butala: Alright, have a good week.
Justin Sliva: You the same sir.
Steven Butala: Bye.
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