Finance Friday with Steven, Jill & Justin (LA 958)

Finance Friday with Steven, Jill & Justin (LA 958)

Transcript:

Steven Butala:                   Steven and Jill here.

Jill DeWit:                            Hello.

Steven Butala:                   With guest Justin Sliva just because it’s Friday. 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:                   Like I just said, today Jill and I talk with guest Justin Sliva ’cause it’s Friday.

Jill DeWit:                            Yep.

Steven Butala:                   About the transactions we’re doing and anything else, quite frankly, that we’d like to talk about.

Jill DeWit:                            That’s because we all have so much free time. So much free time.

Justin Sliva:                         Yeah.

Steven Butala:                   I changed the time on ya Justin. Thanks for being flexible.

Justin Sliva:                         Oh yeah. No problem. It’s throwing me off. I’m already off this week on days of the week and so this one just made me all kind of confused. I don’t know quite where I’m at right now.

Jill DeWit:                            I understand.

Steven Butala:                   So, before we actually get into the whole show, how’s your eBook doing and consulting and what’s goin on?

Justin Sliva:                         The eBook’s doing good still, between five and seven sells a day. I didn’t expect a huge thing, but five to seven sells a day that just keep generating. It’s been consistent across all the platforms at that. You know, it’s something nice to see. To just, ah, somebody else got helped by this. So, the land business is going good. We just locked up a piece of property in Maine that touches the Canadian border, which I think is really cool. So, we have 66 acres that like backup to Canada, which to me is really neat. I don’t know why. I just find it really cool. So, we’re in it for, I think, $16 grand.

Steven Butala:                   Oh, that’s cheap, cheap.

Justin Sliva:                         Yeah. So, it’s a-

Steven Butala:                   You know, Years ago, I bought a ranch that was adjacent to Mexico.

Justin Sliva:                         Oh okay cool.

Steven Butala:                   It struck me the same way, like I had to buy it. It probably wasn’t the best deal I’ve ever done and it wasn’t the best deal, but it was adjacent to Mexico, so I had to do it.

Justin Sliva:                         Yeah.

Steven Butala:                   Yeah.

Justin Sliva:                         I’m thinking that, you know, as all the people that talk about wanting to move to Canada when different electorial people … I’m like, ah, I can make it like a toll bridge, right? They can camp on our side and then move across if they want.

Jill DeWit:                            Exactly.

Steven Butala:                   You know, they probably could just walk across from where it is.

Jill DeWit:                            Exactly.

Justin Sliva:                         Yeah. No, they could. They could. It’s great.

Jill DeWit:                            Straddle the line.

Justin Sliva:                         Yep. That’s all I need is somebody to get arrested for like illegal entry.

Jill DeWit:                            There we go.

Steven Butala:                   Yeah.

Jill DeWit:                            Love it.

Justin Sliva:                         Yeah, everything else is going pretty good. Yeah, no complaints.

Jill DeWit:                            Good.

Steven Butala:                   All right. Awesome. How’s it goin with you Jill?

Jill DeWit:                            Great.

Steven Butala:                   Is it a good transaction week?

Jill DeWit:                            Yeah. I’m great. I had some really good deals, I know I will talk to you in a minute, that came in this week that I’m really excited about.

Steven Butala:                   Nice.

Justin Sliva:                         Awesome.

Jill DeWit:                            Cool.

Steven Butala:                   All right, before we get into the show, let’s take a question posted by one of our land investor members online in our community. It’s free.

Jill DeWit:                            Mark says, “It seems my second mailer is somehow producing more response. Actually, I get a lot of nice F-U mailbox messages, but also a lot of hang ups. So, now I’m wondering how do you folks handle these calls? Do you call back the people that just hangup? Even call some angry ones back and try to convert to potential buyers or is it just not worth the effort? I guess if I call back I get a lot of nice F-U’s direct in the face. Just wondering? Nothing good came back yet.”

Steven Butala:                   So, I have to say, before you guys answer this, that there are probably twenty responses in landinvestors.com.

Justin Sliva:                         Oh I’m sure.

Steven Butala:                   Just a tremendous amount of people saying, and the vast majority are exactly probably what you guys are gonna say, just laugh at it.

Jill DeWit:                            Yeah.

Steven Butala:                   Blow it off. I wondered though, between both of you, do you call people back that actively say-

Jill DeWit:                            [crosstalk 00:03:22]hangs ups. Absolutely, if you get a missed call, I absolutely call them back and I just pretend like, hey I just sent out some offers the other day and I’m wondering if you got an offer from me to buy your property. “Oh, yes as a matter of fact I did.” So, and they could be mad or they could be happy. You don’t know until you get into there and they could say, “Yeah, I wanna talk to you about that.”

Steven Butala:                   What?

Jill DeWit:                            By the way, when you are calling them and they’re not expecting a call back too, they don’t have time to get heated. So, I find that it’s easier. But the other ones that they say, if they’re adamant and they leave a message like Pat Live or you know, through us, “take me off your list, jump in a lake,” you don’t call them back.

Steven Butala:                   Yeah. How about just caller ID?

Jill DeWit:                            Yeah, I call them back.

Steven Butala:                   Just if its on the caller ID with no message.

Jill DeWit:                            Yep. Call them back.

Steven Butala:                   That’s what I think too.

Jill DeWit:                            Because some little old lady who got freaked out, I always think of it this way because its often true, she got freaked out by the voicemail and she didn’t know if she dialed or just not comfortable leaving a message or something, I call them back.

Steven Butala:                   Right.

Jill DeWit:                            What about you Justin?

Justin Sliva:                         If they hang up on Pat Live, I won’t call them back. If they leave a message with Pat Live, I will call them back. If they hang up on my office or my google voice number that goes to an office number, I will call those back because those numbers are all everywhere so they can see that. I will call those people back, but for the most part, if they tell me F-U or send me a nice little love letter … I got one today that was a new one, it had a booger on it. They folded it up, circled all over the thing, tell me they are not gonna do it and smeared a booger across it and put in an envelope and sent it to me. That was a new one for me today.

Jill DeWit:                            Wow, I’ve not had that one.

Justin Sliva:                         Yeah, I told you all a couple of weeks ago, we sent out a bunch of mail. We’ve got more mail going out at the end of the week this week. I expected some more hate, but we had one this week that told us to take the letter and have fun with our lower half or I could make love to it and used the F word, a little bit different. They wrote personal and confidential on their return address but it had my contract and everything with their personal information on it anyways inside the thing. It was fun, fun week so far with that sort of stuff. But yeah, you laugh about it. For me, it bothers me because I’m like hey, why so mad? I wanna figure out that reason, but you just gotta laugh about it and move forward.

Jill DeWit:                            Yeah.

Steven Butala:                   Yeah.

Jill DeWit:                            There are those people. I’ve just determined over the years, you know, that’s the thing, it’s like, I really think that those people are the same people that call up when they get an excessive amount of credit card offers and they probably, you know? They get mad over the little things at the post office or in traffic. I just think that’s those people. If they’re that mad, it sucks to be you.

Steven Butala:                   I just think that it taps into a deeper issue of just this whole taking things so personally.

Justin Sliva:                         Yeah.

Steven Butala:                   We’ve all been in a car as a passenger when people … the driver goes nuts about some stuff that other people are driving and they take it personally.

Justin Sliva:                         Yep.

Steven Butala:                   I don’t know. I guess I don’t take anything personally. I just don’t get upset about this stuff. I don’t know why. I just think it’s really truly honestly a source of humor. The first time it happened in the 90’s and I’m sending these offers out, I thought it was funny then and I think its funny now.

Jill DeWit:                            That’s hilarious. I do find things so comical in the picture, why does this make you so mad?

Justin Sliva:                         Yeah.

Jill DeWit:                            All you say is no thank you. It’s the same as when I get mail. I don’t want your credit card and I don’t need a pizza tonight. I just throw it away.

Steven Butala:                   It’s the same kind a thing, you know, when girls get all dressed up and go out and then guys walk up and say, “Wow, you look great,” and they [inaudible 00:07:09].

Jill DeWit:                            What?

Steven Butala:                   They get all mad.

Justin Sliva:                         I understand exactly what he’s saying but I’m not going there. I know where that ones going.

Steven Butala:                   You just got all dressed up with your friends to attract a bunch of attention.

Jill DeWit:                            Okay. Right.

Steven Butala:                   Now we are giving you the attention and you’re going to reject it.

Jill DeWit:                            Oh, that’s wrong.

Steven Butala:                   It’s the same thing.

Jill DeWit:                            No.

Steven Butala:                   It’s the same problem. It’s the same personal, you know.

Jill DeWit:                            Oh.

Steven Butala:                   I think it’s the same thing.

Jill DeWit:                            I get it. I understand.

Steven Butala:                   Don’t you think Justin?

Justin Sliva:                         Yeah, but the reason they say, “it’s because I’m looking good for me, not for you.”

Jill DeWit:                            Oh, you put three hours into this for yourself?

Justin Sliva:                         You spent $90 on that hair, the nails, for what?

Jill DeWit:                            Exactly. I don’t care if you like it or not. I did it for me. Yeah that’s true. No it’s not.

Steven Butala:                   That’s actually a new one dude and I’ve never heard that. That’s new.

Jill DeWit:                            That’s so funny.

Justin Sliva:                         It’s peacocking for self confidence.

Jill DeWit:                            That’s right. That’s great. That’s good.

Justin Sliva:                         You’re gonna be walking around [inaudible 00:08:11] hey that girl’s peacocking over there. I can see it now.

Jill DeWit:                            We see a lot of it. I’ll tell ya. Oh man. Boy, it’s worse. Our peacocking is put some clothes on, you know?

Steven Butala:                   Yeah.

Jill DeWit:                            I mean that is not count as a bathing suit.

Steven Butala:                   That’s true. It’s like summertime now, but its spring break actually-

Jill DeWit:                            [crosstalk 00:08:34] Spring break right now. We’ve had a few good … On Sunday, it was like oh boy. We had to get off the strand. It was so crowded it was ridiculous. It was so darn … and Pier Avenue was a crack up. So, it was good though.

Steven Butala:                   All right, back to real estate now, 66 acres in Maine.

Justin Sliva:                         Yep.

Steven Butala:                   What do you think you can sell it for?

Justin Sliva:                         Probably, $45/$55 thousand. We are in it for $16. So, it’s not a home run, but a solid deal. Its got an easement access that has dirt road that’s maintained and its all recorded since the early 80’s where everybody is maintaining. It’s got power lines that run across. So, its got power to it. Its zone residential. So, and there is houses being built around it so its kinda cool. It’s just a neat little property. Its got a little bit of water on it. Its got a bunch of trees and the meadow area.

Steven Butala:                   Awesome.

Justin Sliva:                         That’s a good one. We got five back in Oregon that we’ve ok’d. We’re waiting to finalize terms on. Those are plum deals. So, we are funding those and they look good. I think we’re gonna be all in on that package $30 thousand, total value about $95. So, not a bad deal there. Had some properties sell this week. Florida and Georgia, we’re getting those done and we closed on a couple in Oklahoma.

Steven Butala:                   Great.

Justin Sliva:                         Still moving around, still looks pretty good. A couple little notes, just kind of for those listeners that are listening. If you fund with us, and I know you feel the same way, talk to us if you’re trying to do something that’s a little bit out of your norm. Like, if you have two properties wrapped into one and you think that since you’re funding with us, you need to separate everything, in the hud and everything, let us know so we can walk you through it because it makes a huge difference in your closing costs and that’s money straight out of all of our pockets. Let us kind of help you.

Justin Sliva:                         We had one we looked at and the numbers weren’t adding up. When we actually broke it down, I called the closing agent and I’m like hey, these fees are way too high. What do we need to do here? She goes, “well, you all have it split.” I was like well why are you splitting it? She goes, “I don’t know.” She goes, “You all requested it.” I was like, okay well, we haven’t signed anything. Can we change it? She goes, “yeah, just let me know what you want to do.” So I called our partner and find out and he’s like, “oh, I just thought we needed to keep the costs, because we’re funding it with you, we’d keep everything separate. I was like, well we’re going to probably sell them together. The guy was just trying to do what he thought was right. But we switched it and it saved us $700 bucks. That’s a $15 thousand dollar deal and $700 bucks is quite a bit, you know?

Steven Butala:                   Yeah.

Justin Sliva:                         So, it worked out and we saved the money and we kept moving forward. So, definitely a good one. Had a couple of properties that we had cash offers on that we had up in the North that we funded it, say at $4600 bucks for two one acre properties. The guy made us a cash offer for both of them. They’re adjacent or contiguous and the guy made us a cash offer for $8500 bucks. You know, sometimes we miss them. You know, we’ve sat on these properties for, we are at the six month mark. So, it’s like okay, well, let’s see if we can negotiate up a little bit, self close, and try to save some that. We’ve already sold some of the other property. This was part of a package and we made some money on it, but now its like fight or flight, get out and just keep moving. We don’t always win. We don’t always win.

Steven Butala:                   Still made money though right?

Justin Sliva:                         Yeah, we’re still making money, but it’s not a home run.

Jill DeWit:                            I’m having a great week. I mean we were like … Now we’re hitting good rotation of in and out. It’s slowly growing and I’ve got a couple … shucks, the Michigan one that came in last night that I’m not sure about. It’s not in the best area, but I like Michigan, obviously, especially Upper Peninsula is pretty. I have Georgia. I’ve got two in Virginia. I’ve been doing really well in Virginia right now.

Justin Sliva:                         Nice, nice.

Jill DeWit:                            Yeah, one partner in particular that we’ve been working with there that they are finding some great properties that we can quickly … I’m looking at some in for $12 out for $35. I’ve got one right now, in also Oregon, that in for about $40, we’ll get out for about $100.

Steven Butala:                   Nice.

Jill DeWit:                            I’m happy with that. Two this week. Colorado just sold like two days ago. Then I had another, I think it was a California, no it was another Colorado. Two Colorado’s that’s what it was.

Steven Butala:                   We’re finding our stride. We’re finding some consistency to it. I’m sure, you like you, the people that we are very like minded with are really sending us consistent deal flow now.

Jill DeWit:                            Right.

Justin Sliva:                         Yeah, we’re seeing the same thing. We’re getting some that it’s their first couple deals. So, its kinda slowed us down trying to work through technical or details that they’re maybe missing in a purchase and sells agreement or they don’t look at it if they’re … because we put everything on the MLS. We’re only buying stuff that’s got that quality to it so they are dealing with realtors on the back side and we’ve had that happen with negotiations going down with a realtor or missing something in the contract and when its brought to you, you’re looking at it and you’re, okay hey, this could cost us potential extra $3 grand. We need to know what this is and why that’s there and having to catch that before we sign off on anything. Its always fun, but you said you’re finding your stride and you start finding the people that are bringing consistent deal flow.

Jill DeWit:                            Exactly. Yeah, I love it.

Steven Butala:                   So, what else you working on? Anything fun?

Justin Sliva:                         I’m not ready to say yet. We’ve got a couple of things in the works. As you know, I’m always out there on the different spectrums of where I’m gonna go or what we’re gonna do next. We’ve got a couple things that we’ve got on the white board and I’ve gotta couple things that we’re gonna try out this week. So, it will be next week, because we record a little early, so this week, you’ll see it come out probably towards the end of the week and I’ll be able to talk about it next week. I just want to get a headstart on everybody before this is actually brought out.

Steven Butala:                   Awesome.

Jill DeWit:                            Cool.

Justin Sliva:                         Yeah. Its really just manipulation of data. As you’ve always said data real estate. You’re a data company that buys real estate with that data. We are going to manipulate the data a certain way and work on our inbound flow a little bit differently.

Jill DeWit:                            Good.

Justin Sliva:                         I’m curious to see how it’s going to work out. It’s a little out there, but its not too far out there to make it not work.

Steven Butala:                   Awesome.

Jill DeWit:                            Cool.

Steven Butala:                   We’re just neck deep in trying to get House Academy launched this month.

Justin Sliva:                         Ok, so you’re thinking end of April still?

Steven Butala:                   Yeah.

Justin Sliva:                         Okay, cool because I want to come out to L.A. I think I’m gonna try to come out in May then, if you’re gonna be wrapped up with House Academy.

Steven Butala:                   Good. Yeah, my part will be done.

Justin Sliva:                         Okay.

Steven Butala:                   The content part will be done on time, but its just the tech part is very, very, very complicated because there’s a whole additional component to these algorithms and getting the algorithms in. So-

Jill DeWit:                            It’s amazing.

Steven Butala:                   That one website, House Academy, is gonna do basically like five websites for Land Academy. So it’s-

Justin Sliva:                         Wow.

Steven Butala:                   It’s totally within our realm and our staff to handle it. Its just, we gotta get it right.

Justin Sliva:                         I understand that.

Steven Butala:                   Oh, its fun. Its fun working on you know … Its fun … pricing house mailers is a treat compared to some of the concepts of scattered brain rural vacant land. It all works. Its just, you know, it’s really laser like.

Justin Sliva:                         Yeah, you’re exactly right and as you know, we’ve done that. The partner I worked on it with here, we were talking today about how he’s got his master’s degree in statistics. So, when you talk about sample sizes and how to manipulate everything, we are running through our mailers and how we priced them. He bounces it off me, “hey, you did it this way.’ Then I tweaked it this way and now we’re here and this is where we’re at. Well he decided, “hey well, I got this wild hair to take some of those algorithms and test it against how we actually comp it with the brokerage stuff that we can see on MLS. We went back through and actually found a half a percent variance from one of the algorithms that’s out there versus what everything else was. So, we broke it down by section of house and splitting it up. So, it was really, really cool to see that, you know, the pricing we could actually do it a little bit quicker than sending it all out, but our VA time would be a lot less having them run some of the comp.

Justin Sliva:                         So, it was pretty neat to see. That’s our market. We know it changes when you throw in basements and things like that. So, we are kind of manipulating that a little bit and just playing with to see. I think he told me he sent out another 20,000 mailers on houses here in Dallas, Fort Worth area again. So, he’s hammering them right now. He says he’s showing up to look at these houses and there’s three other wholesalers that had business cards. So, they take his blind offer, they shop the wholesalers with it and then they all show up to inspect it.

Jill DeWit:                            That’s the hard part and then-

Justin Sliva:                         You’re fighting over $1000 bucks. It’s like okay, I’ll give one ten, I’ll give one twelve, I’ll give one twelve five.

Jill DeWit:                            Right and you don’t want that. That’s the last thing you want. You don’t want them shopping them. You gotta get in-

Justin Sliva:                         Get in and get closed.

Jill DeWit:                            Exactly. That’s a bummer and that can happen.

Justin Sliva:                         Yep.

Jill DeWit:                            Yeah.

Steven Butala:                   You think it’s Dallas specific or it happens everywhere?

Justin Sliva:                         I think it’s Dallas specific because you have a hot wholesale. It’s one of the last places that you can find these houses so cheap that you can come in 70% or 60%, 65%, make your $5 to $7 thousand dollars and move one. That’s what a lot of these wholesalers try to do is they just set their base at $5 grand and move it up and just kind of daisy chain it or they try to move it to a bigger fund buyer. You have a lot of fund buyers coming in because the house prices are cheap enough that they’re siloing their risk. So, we are seeing that quite a bit around here right now.

Steven Butala:                   Yeah, I mean the markets are still really moving well here in California and Arizona, we’re still getting consistent deal flow. We run into the occasional, you know, BS problem, but its all person specific. Its’ not because of a flooding of the market.

Justin Sliva:                         Yep.

Steven Butala:                   I mean, have you seen anything?

Jill DeWit:                            Mm-mm.

Steven Butala:                   Anything strange like that?

Jill DeWit:                            Mm-mm.

Steven Butala:                   I haven’t either.

Justin Sliva:                         Yeah, we’ve had a couple-

Jill DeWit:                            My parts for House Academy in the filming and the things that I did and going back and looking at the transactions that we’d done and the examples, I felt great. No, if anything, I’m like shoot, we’ve gotta send out some more mail now. We don’t have enough mail going out.

Steven Butala:                   I think Dallas … I mean don’t know like you do Justin, but I think Dallas and that Central Texas market are probably under valued anyway.

Justin Sliva:                         Oh yeah.

Steven Butala:                   It’s just so … houses are so cheap there.

Jill DeWit:                            It’s true.

Justin Sliva:                         The property taxes is what really plays into that. Our property taxes are extremely high so that adds quite a bit of money. So, say my house payment and insurance all together, you take the taxes out, my taxes are just as much as my house payment monthly. It just throws a big change in what people think. They’re like oh, I can buy this … They come from say … Our neighbors came from Ohio. They moved down here and they’re like, oh, I can buy this half million dollar home. Then they get their first years tax bill because it was figure on a … They just built the house so it was unimproved-

Jill DeWit:                            Right.

Justin Sliva:                         Their house payment doubled and they’re looking at it, “our house payment doubled. What’s going on?” I was like yeah, it’s the property taxes. You don’t pay a state income tax, you pay that.

Jill DeWit:                            Exactly.

Steven Butala:                   You gotta come from somewhere, that’s right. I was just gonna say the same thing.

Jill DeWit:                            It’s true.

Justin Sliva:                         Yeah, so that kind of plays into it. One of the things we’re seeing in our market is, we have some fund buyers that are paying over like, what we’d comp the house at, their paying four and five percent over that and putting them in their renter portfolios. They are just hoping to hold them and see a little bit of attrition and then get out. So, they’re making their eight to ten percent. That’s really what drives a market down for us is that institutional money dumping on us and them over paying and it saturates it for us.

Steven Butala:                   Well, for some reason, and that institutional money … it doesn’t happen on accident. They’re choosing that market for some reason. They see it as under value.

Justin Sliva:                         Yep. No, you’re exactly right. They see it … You still have people moving here. So, you know that your rent rates are gonna be there. You’re still gonna pull it and some of them are buying neighborhoods and buying brand new … like the brand new builds, buying 10 or 15 of them, putting them all together and doing that with that package and having these builders or developers just [inaudible 00:20:15] twenty of them from you. Then they sell them back out and in five to seven years.

Steven Butala:                   That was really popular in Arizona in 2010.

Justin Sliva:                         Was it?

Steven Butala:                   You’d buy, pre-buy 20% of what the developers building and then you had to be the one to sell it first.

Justin Sliva:                         Okay.

Steven Butala:                   [inaudible 00:20:35] themselves and you’d add 25% to the whole thing.

Justin Sliva:                         Wow.

Steven Butala:                   Over-inflate the market.

Justin Sliva:                         Yeah. Wow. Okay.

Steven Butala:                   It’s pretty high risk but it’s a new asset so it’s a whole different deal.

Justin Sliva:                         Yep.

Jill DeWit:                            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.

Jill DeWit:                            And the answer to your questions posted on our online community landinvestors.com. It’s free.

Steven Butala:                   You are not alone in your real estate ambition. Anything else Justin before we go.

Justin Sliva:                         No, no.

Steven Butala:                   All right man. Good talking to you this week.

Justin Sliva:                         Good talking to you as well. Talk to you all soon.

Jill DeWit:                            You got it. Take care.

Justin Sliva:                         Bye.

Jill DeWit:                            Bye.

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