Finance Friday with Steven, Jill & Justin (LA 938)

Finance Friday with Steven, Jill & Justin (LA 938)

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 Butala.

Jill DeWit:                            I’m Jill DeWit, broadcasting from sunny Southern California.

Steven Butala:                   Today Jill and I talk about, talk with our guest Justin [inaudible 00:00:17] just like we do on every Friday about the transactions we’re doing this week. Welcome, Justin.

Justin:                                   Hey. How’s it going.

Steven Butala:                   Good. What’s been going on this week?

Justin:                                   Oh man. It’s been a busy week. We had the live event last weekend and great turnout there. It was, y’all came and spoke at it a little bit. To resume, we had some complications with the wireless but it was great feedback. 33 people total so it’s huge, good time.

Steven Butala:                   Awesome.

Jill DeWit:                            What was the reason that people were there? Were they, did they need to get over a hurdle?

Justin:                                   Yeah. It was a big mix. We had some people that had just kind of read our E book and y’all’s E book and then just didn’t really know what to do next for land investing and happened to reach out as we were getting this ready. Two people that were wanting to get to talk to us, 35 year land appraiser and sub divider. We had the [inaudible 00:01:07] there, they came, father and son. Trevor, we all know Trevor. So his dad came in and they spent the morning with us and went over some case studies on appraising and the sub dividing.

Justin:                                   So it was a good mix. And that was one of the things of putting that together, was the worry of, do you add value for every person there? You don’t wanna speak too high over people’s heads to not having enough information. But it turned out really, really good. We got a bunch of people over the analysis paralysis that they have when they get, when you’re looking at all the data and you’re going, “What do I do with this?” And we got them over that and how to pick counties and states really fast and kind of, one of the things that I took back from that, it was like, ‘Hey, I price for margin.” And we’ve always talked about how I shop, is just margin, margin. This is what I wanna pay for acre and this is what I’m gonna offer. I want it to sell so I don’t wanna offer and I worry about the spread there.

Justin:                                   So went through and did the whole country yesterday morning and for margin and priced every county in the whole country to see what margins were there. 115 counties in the country matched the margins I want and so that’s something I’m starting to work through. I’ve mailed three counties yesterday. I’ve got another two on the desktop that I’m finalizing the pricing on. I’ll probably get those out today or tomorrow.

Steven Butala:                   So what data did you make those decisions based on?

Justin:                                   Just the active market that’s out there. So say if somebody wants to buy something, they wanna sell 15 hundred dollar an acre property. You’re gonna offer a lot less than that, 25, 30, 35 percent of that. So the math is really easy if you take 15 hundred bucks an acre times 20 acres is 30 thousand dollars. So you just shop everything is 20 acre to 20 acre, under 30 thousand dollars by state and then it spits out property. And then you just look at the counties and say, “Okay, this county has potential.” And go from there. It’s super rudimentary. It’s not super scientific. But it gets you a list, gives you a direction to start working in.

Steven Butala:                   It’ll work.

Justin:                                   Yeah.

Steven Butala:                   That’s step one and then it drills you down to the next step.

Justin:                                   Then you pick, so say, I think we, I can’t even pronounce some of the counties I shopped yesterday but I’ll say the state ’cause I don’t mind doing that. It’s already out in the mail so you can’t beat me to it. And it’s gonna be next Friday. But Maine, have you ever thought about mailing Maine?

Steven Butala:                   Yeah, I did mail Maine and I had a great success.

Justin:                                   Did you? So we found three counties that work for us there that thin our margins. So we mailed all three of those. One super big mailers, but again, just getting mail in a box and start spreading it out.

Steven Butala:                   That’s great.

Justin:                                   But that was the cool thing about this is that some people had been spending two and three weeks trying to get their data together and their mailers together when they realized that we did it in an hour and a half. We went from the crowd picking a state to us mailing a county in an hour and a half.

Steven Butala:                   That’s fantastic.

Jill DeWit:                            That’s very tricky. That’s like what we did at our first one to show, it’s just to get you over that hump. [inaudible 00:03:42] you’ll learn it and you’re gonna make mistakes, who cares?

Justin:                                   Oh yeah, and that’s what we told them. We said, “You’re gonna be he difference of us doing it this way and you’ve been doing it is probably 10 dollars an acre.” So at 20 dollars an acre, you’re talking a 200 dollar difference. So what does that really matter? You’re gonna negotiate that anyways. So just get it in the mail, get it out. So it’s definitely a neat experience. And it seemed like everybody had a great time. We fed them well, they had drinks at the end of the night, played some [inaudible 00:04:06]. So that was cool.

Jill DeWit:                            Awesome. Hey, since we’re talking about mail, can I throw something in there right now?

Steven Butala:                   Sure.

Jill DeWit:                            So we’ve been talking about this all week. Today is the last day to save 10 percent for everyone across the board on all our orders through OfferstoOwners.com. So if you’ve already used the code, even if you’ve already used the code, I have a note here from my team, you can use it again. So if you mail on Monday, send mail on Friday, I don’t care. OfferstoOwners.com and use the code March Mail at checkout.

Jill DeWit:                            So it’s already cheap, now it just got a little bit cheaper.

Justin:                                   I wish I had known this yesterday. I missed that code. March Mail.

Jill DeWit:                            March Mail. Use March Mail.

Justin:                                   Awesome.

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

Jill DeWit:                            Kent Johnson asks, “Greetings, folks. I’ve been listening to the Land Academy podcast for a while in addition to another land investment podcast. I decided to take the plunge and join Land Academy. In the past, I have flipped a few houses and currently own some rentals but I’m really intrigued by this investment model. I’m looking forward to learning from and along with you guys.” Kent. So it wasn’t really a question, it was just kind of a hi.

Steven Butala:                   Well Mike and I had essentially put this in here. My question to both you guys is, what, I know you’re coming from different places both of you. What do you think, somebody’s already in the real estate business, he’s already got some rentals, he knows some basic stuff, what advice would you give somebody like Kent?

Justin:                                   I’d say, yes, go ahead Jill.

Jill DeWit:                            I know what I’d do because I talk to these guys all the time. I say, “Well congratulations. You’ve dealt with the hardest, most problematic properties. You are going to love this. This is gonna be a breath of fresh air and you might not go back and you might never swing a hammer again.” And I’ve had many, many members that said, “Yep, you’re right. Done.” And they feed deals to their friends and wish them well.

Steven Butala:                   What do you think, Justin?

Justin:                                   I would just say yes, it is that simple. It is that easy. It’s counter intuitive to what they believe. Because with houses, you’re so much more involved. You’re trying to get right on repairs and things like this. With land, you don’t have that. You put the mail out, the price comes back and you sell it quick. This price for the velocity of money. I know y’all talked about that last week. Velocity of money is one of my favorite terms just because land, it’s all about how quick can you turn it and keep snowballing it?

Jill DeWit:                            Exactly.

Steven Butala:                   Today’s topic, Finance Friday with me Steven, Jill, and Justin [inaudible 00:06:43]. This is the meat of the show. Last time we talked, speaking of houses, Justin, you’re closing on a couple of them and it seemed like they were kind of the last ones that you were doing for the moment at least.

Jill DeWit:                            How’s that going?

Justin:                                   Yeah, so appraisal was two days ago. Appraiser didn’t see anything they would see was wrong. Get that back. But that one closes, I want to post on the 19th, that’s the last one for a little while. We actually put an offer on one yesterday as well which, it’s a wholesale deal so it’s already sold if it goes through. So that’s kind of one of those type deals. But yeah, it’s last one for a little while. I wanna put that money towards land for a little bit. And we tied up quite a bit of funds between Plum and the houses, it backed up quite a bit of our funds and it kind of slowed down the land business. So it’s time to ramp that back up and so we’ll get back active in that. Because you can’t beat returns that you get on land. It’s hard to justify it. So I spent three months playing in houses and back on land now.

Jill DeWit:                            Isn’t it funny? Well you know, and like you just said, we had one, I’m like, “Doggonit, we’re not gonna do retail again.” We had a beautiful one land in our lap that it took us, it’s now closing right now. I’m like, “Thank goodness.” The wholesale ones, I can flip really, really fast. The wholesale houses like you do. We have the buyers lined up, they wanna flip it, they’re ready to go, they have the cash. But this retial one, we won’t do that again.

Steven Butala:                   It’s a fantastic return.

Jill DeWit:                            It is.

Steven Butala:                   It’s an amazing ROI and there’s no real work at all because we had the BOG handle it. It just took a long time.

Justin:                                   It’s the speed of the deal. And then you get those things out there. I mean on one house, it wasn’t worth our time. After the market stalled in the winter. The second house, it actually was worth it. It’s gonna, at the end of the day, after everything’s said and done, I think it makes 30, 35 thousand bucks. So it’s not a bad turn. It pays for the time that we spent. I had two months in it. It’s not a bad, but what would that money have done in land? The same amount of money. So that’s the big question is, you put 110 thousand dollars into a house or 110 in the land, what do you get a better return at?

Steven Butala:                   We’re doing both right now and I’m recording House Academy so when I look at the mailer, I’m basing the Mesa, Arizona, that’s the whole, start to finish the Mesa mailer. What we purchase and what we sold, we’re selling the last house onto that mailer.

Justin:                                   Nice.

Steven Butala:                   So it may not be the last one. And when you look at the return on them, it’s just actually truly amazing. We’re so spoiled, we’re land people. We’re used to buying a piece of property in different state, who cares really what it looks like? They just are in it so fast, it’s so easy. To each his own.

Jill DeWit:                            That’s [inaudible 00:09:23]. He’s gonna share our spreadsheet showing all our calls when they came in and the ones that are still coming in. It’s really cool.

Justin:                                   I’ve had quite a few people actually reach out to me about House Academy to say, “Hey, when is it coming?” I had a consulting call yesterday about that and I said, “They’re recording it, so it’s coming soon enough.”

Jill DeWit:                            It’s coming.

Steven Butala:                   It’s just a pleasure to record because it’s so organized. I had it in my head from the beginning about, and then we’ve got everything recorded so we have all the-

Jill DeWit:                            Calls.

Steven Butala:                   All the calls came in where they’re recorded and I can point to it. It’s really well organized.

Justin:                                   So imagine your technology difference, your knowledge base from when you shot the first Land Academy one for the cash flow for land to what you know now. Because I’ve seen y’all studio firsthand so I know the state of art features that you’ve had and I’m sure it’s developed as it got into this point. So I just imagine it goes a lot easier now.

Jill DeWit:                            We talked about that last Thursday or a week ago Thursday on the second call, the member call. They were joking about, “We miss seeing the gardeners in the background.”

Justin:                                   Was it a fly that was on that thing too that would just fly around on your, I feel like I remember when we’d go to different-

Jill DeWit:                            It’s like a bird.

Justin:                                   Is it a bird? There was like a fly or bird that used to fly around outside.

Jill DeWit:                            Yeah. It was hilarious.

Steven Butala:                   I recorded that on a, I still kept the computer just for nostalgia but I found a 300 dollar office computer from a former life and it had separate cameras and it was all, the audio was all wrong and it was just funny.

Justin:                                   But it worked.

Jill DeWit:                            It did.

Justin:                                   And that’s the idea behind all this. Sometimes you just have to try, whatever it is, whether it’s a piece of mail or it’s a letter or tweak to your business. If you don’t try, you’re never gonna know. And then three years later, here you are.

Jill DeWit:                            Amazing, here we are.

Steven Butala:                   All right, so here we are today’s Finance Friday to talk about the deals that you guys are funding, each of you. Justin go first please.

Justin:                                   We had some interesting stuff come in. Florida, just kind of the same gambit of states we’ve been in. We’ve had some stuff that sold, ran into some issues and title on some, the title company missed some stuff on the first buy, then on the sale. The next title company didn’t, cost us a bit of money. But overall, we’ve got some stuff coming in. East coast still, it’s been real hot east of the Mississippi and I’m not gonna go into too many specifics on the states but pretty hot on that side. And then a couple deals on the west side of the Mississippi. But it’s good to see some people reaching out with some deals all over the country.

Steven Butala:                   Did you guys talk about deal funding at the live event?

Justin:                                   We did. I didn’t actually do a commercial with it just because everybody, they see us on Finance Friday, they hear about it on casual Friday, our podcast, and some of those guys actually started and it was cool, they brought their wives with them. They actually started from a consulting call with us and then now they’re 50 deals in their first year, about 50 deals later and one of their wives actually know, “Hey, this actually works. Come meet the people that we worked with on it.”

Justin:                                   And as we tell them, we didn’t teach them the education, we just kind of helped you along where you got stuck. And that’s kind of what our whole mantra is. Y’all teach education better than us, but we can help you where you get stuck and push you through.

Justin:                                   And there was a range of people that shopped different places there. The farthest traveled was from LA, 11 hundred miles. We had from Wisconsin attend. Phoenix, Arizona and then the gambit of Texas. It was a huge crew and everybody shopped different type properties and were different areas. And so it was neat to see that.

Jill DeWit:                            Super cool.

Justin:                                   But on the finance side for us with Plum right now, real heavy on the east side of the United States and a few deals popping up on the West side. How about you Jill?

Jill DeWit:                            That’s what I’m doing. I’m doing a lot of, I have a lot of Florida, Georgia, Oregon one. I had one, it was so funny, I was talking to a guy the other day who is a flipper who’s up in Oregon. And we’re talking about properties and I was kind of telling him about the deal funding and one that came in and next thing, he’s like, “What are you selling it for?” I’m like, “Hold on a moment.” He’s like, I told him, it was actually totally fine. I even gave him the sub division because I know right where that is. I’m like, “It’s a big plot.”

Jill DeWit:                            And this house, it’s like, it’s in Oregon, I’ll say that. We have it under contract for 13 thousand dollars and the house right next to it, it’s totally a beautiful sub division, the house next door is priced on realtor for 226, valued at 226. There’s not a lot available on that area. It’s a perfect little thing. So he’s like, he wanted to pick it up. I said, “Wait a minute, I’m gonna market at least double. How about I just show you how to do this? Sit tight, it’s coming.” Or just get what we have right now.

Jill DeWit:                            And then I had one, it was a bummer, it was a person that you know very well too that we were working on a Georgia property. We went all the way down through it, we pulled the info report, we’ve all looked at it, this property, together-

Steven Butala:                   All signed off on it.

Jill DeWit:                            We all signed off on it. We had Mike Marshall involved in it. And at the very bitter end, the manager and I both had to say it’s not worth it because the setbacks to make it buildable pushed the house so far back on the property up against a commercial thing behind it, they were like, “Shucks, this is gonna make it. It’s gonna have to be the right buyer and the right builder.” And we looked at how long we could possibly be staring at this property in our inventory together that I kind of waited for him to call it and he said, “Yeah, let’s pass.” I said, “Thank you. I think that’s a good decision.”

Jill DeWit:                            And good thing we have all these tools. I’m glad that we, we both said, “Hey, it was money well spent.” Paying for the info report, going through the whole thing because not getting stuck with it was so much better.

Justin:                                   That’s a great thing to see. And usually we’ll take [inaudible 00:15:11] take the polygon, throw that on Google Earth and look at it. If it’s in an HOA and I know they’re gonna have setbacks, and you see houses all around it, you can kind of measure back with the houses and you’ll see a consistent setback and you start laying it out. And then when you throw topography on top of that and you have it in 3D, those are things that we look at really quickly. And some people get so excited, they skip that step when they bring the deals to us. And they’re like, “Oh yeah, I got this deal. Look at it this way.” And then you look at it and you’re like, “That one doesn’t necessarily, look at where you’re gonna be. So we’re gonna have to add this fill in here to get it there,” and they’re mad because all the numbers work. Well the numbers look great, but the buildability at the end doesn’t.

Jill DeWit:                            You go all the way through a soils report and get the point where they had to test what could handle, this part of the property could handle structure and this part couldn’t.

Justin:                                   Oh wow.

Jill DeWit:                            It’s like, we went all the way down.

Steven Butala:                   Buildability’s a huge, huge issue. And people, the people that I’ve spoken with that submit funding deals and they look like great deals, but it’s like, and they find out themselves it’s not buildable and they still wanna do the deal. And it’s like, it’s a hard conversation to have.

Justin:                                   That’s the hardest part about the whole funding thing for me is that tough conversation because you have it so many times and then you know that it’s affecting them because they reach out to you and they’re like, “Hey, I wanna be somebody that at least gets you one good deal because I know I’ve sent you all these bad deals.” And you feel bad about that. You know, I’ve got a conscience. I’m like, “Yeah, hey, don’t worry about it.” I always tell them, “There’s always somebody that’s been worse than you.” But it’s part of it. We try to mitigate the risk for all of us involved.

Jill DeWit:                            Exactly.

Steven Butala:                   We don’t check for buildability on a 40 acre property because it’s five thousand dollars and that’s got access anywhere.

Justin:                                   You’re exactly right. And that’s what I tell a lot of people is, “Hey, that 20 acre’s great but when we get down to this five acre or 1.3 acre in the middle of the subdivision, then you have to start getting a little bit more honed in on what you need and that’s where info reports comes in.

Jill DeWit:                            Exactly.

Steven Butala:                   So what’s up for next week, both of you?

Justin:                                   Spring break here. So we’ve got the kids out but we’ve got a couple one on one consulting things that people are getting their first mailers, getting them out, and then running through that. And then we’re gonna do their funding. Like we told y’all originally, we had that giveaway in our tenth episode. She’s bought eight properties so far, they’re coming back, she’ll sell those and she’s gonna do her first mailer and buy with that money. So how to go from zero to land investor really quickly. And so we’re gonna walk through that. So we’ll have a series on that as it comes up. But that’s gonna be a fun part of that. So that starts Friday, we do that Friday.

Steven Butala:                   Excellent.

Jill DeWit:                            That is awesome. I’m just loving right now. Just before this call, I pulled up my spreadsheet with my team and I’m looking at the deals and I’m seeing two of them, they say manager found issue with hood one, being sent back. And another one manager found this issue, something, I’m like, “This is great.” Everybody’s now doing what they’re supposed to be doing and they’re only calling me at the end. And I have to tell you, i have it down to a system with my team. So today, Friday, at noon, is a deadline. I need an email to me by noon telling me what deals are gonna close next week and how much money needs to be allocated so I can make sure it’s all where it needs to be. We have set days that I’m available for signings, days I’m not available for signings, like recording and things. So it’s like, yeah, we have it down to a science. Now it’s like, “Ah, I can breathe.” And now I’m getting, at first, I’m overwhelmed with all the deals coming in. It was so cool. Now I can sit back and go, “All right, come on guys, I’m ready now. Send them my way.”

Steven Butala:                   Systems are beautiful.

Jill DeWit:                            Everybody’s trained and figured it out.

Steven Butala:                   The whole week we already recorded the shows for all this week that’s all about staying on track with systems and inspiration on how to delegate and all that stuff.

Jill DeWit:                            Staying motivated.

Steven Butala:                   It was fun. It was nice to record.

Justin:                                   Yeah, I bet.

Jill DeWit:                            ‘Cause I’m sure you talked about that. I hope, did you guys talk about that actually at your event? Because that comes up. People are like, “Yeah this is great, but god, just getting started.”

Justin:                                   We actually did and we actually had Beth, our transaction coordinator, she was there. She actually spoke negotiations. Because we found a lot of our clients are managers or having problems with negotiating with people that actually have a little bit of negotiating training. So we put in some basic negotiating but then she’s there to answer the questions. How she does that is a system, transaction coordinator takes it from first escrow through the seller of the second one. And so what that looks like and how she does that, so she was able to answer some questions for some people. And as you know, we have people in this group to say, “Hey, I’ve got money, I just want somebody to do it. I don’t mind mailing, I’ll just do everything else.” And that’s where she fits into that. So it works out pretty well.

Jill DeWit:                            Cool.

Steven Butala:                   Awesome. Well you’ve done it again, you spent another 15 or 20 minutes listening to the Land Academy Show. Join us next time for another interesting episode.

Jill DeWit:                            And we answer your questions. Post it on our online community at LandInvestors.com. It is free.

Steven Butala:                   You are not alone in your real estate ambition. Justin, it’s always great to talk to you.

Justin:                                   Good talking to y’all as well.

Steven Butala:                   Assuming you need more deal flow, let us know where we can find you on the internet.

Justin:                                   Www.Pluminvestmentgroup.com or you can reach out to any of our social media pages, Facebook, Instagram. You can find us on all those. And then casual Fridays are [inaudible 00:20:09] podcast, Monday, Wednesday and Friday.

Jill DeWit:                            Awesome. Thank you. Hey, wherever you’re watching, wherever you’re listening, please rate us there. We are Steve and Jill.

Steven Butala:                   And Justin. Information.

Jill DeWit:                            Inspiration.

Steven Butala:                   To buy undervalued properties. Thanks, man.

Justin:                                   See y’all. I missed the [inaudible 00:20:26] sorry Jill.

Jill DeWit:                            All good.

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