Infill Lots Explained (LA 1040)
Infill Lots Explained (LA 1040)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: 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: Today Jill and I talk about the topic, Infill Lots Explained.
Jill DeWit: I’m trying to think about how can I make a funny topic out of this and you really kind of can’t.
Steven Butala: I’m trying to think about that too.
Jill DeWit: Like a little more entertaining.
Steven Butala: That’s exactly the same thought I just had.
Jill DeWit: So the three of you that are listening, because you saw the title, good for you. Everybody else said, “Pass. I’ll wait till the next show.”
Steven Butala: Everybody else is like, “I hope they’re entertaining again.”
Jill DeWit: Yeah, what the heck.
Steven Butala: A few of them are like, “Let’s just watch these guys fail.”
Jill DeWit: Yeah, there we go.
Steven Butala: It’s like watching a car accident.
Jill DeWit: This is good. Like a car accident. “Look at these two clowns trying to make infill lots entertaining.” Entertaining real estate investment talk, except for today. Just kidding.
Steven Butala: Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit: Ben shares, “I have two adjoining parcels under contract in Virginia. One is owned by my contact, the other, he owns 75% of, the other 25% does not have a clear ownership. His dad is the last in the listed owner, but he died after we divorced and remarried.” Oh boy, this is going to be a good one. “The lady he married died several years ago, and no one has any clue who her heirs are, if any. I have talked to the contact several times and he really doesn’t know. Apparently, he didn’t really know his step mom, much less her heirs.”
Jill DeWit: “Title insurance won’t insure with, and at this point I’m stuck. My title company isn’t offering any ideas-”
Steven Butala: Surprise, surprise.
Jill DeWit: “But it seems like the scenario has come up some times. What ways are there to deal with this, if any? Here are the numbers. The deal is 87 acres, purchase price of $60,000.00, and we’re looking at doubling our money on the flip, so it’s worth putting in the effort.” Ah, you wrote in it. Did you write this answer in the thing, or just no?
Steven Butala: I paraphrased. Well, let’s just say Kevin and I had the same opinion.
Jill DeWit: Oh, all right.
Steven Butala: Kevin, the moderator.
Jill DeWit: Right. So here’s Steven’s answer. “Benjamin, you should call an attorney. They will need to do a quiet title suit. Yeah, it will probably cost $2,000.00-$3,000.00 and takes three months-”
Steven Butala: Six months.
Jill DeWit: Six months. “That will clear all of the possible errors and give you a clear title.” That’s worth it, man for… Let me think. Spend $2,000.00 or $3,000.00, wait three months to make $60,000.00. Yeah, I’d do that.
Steven Butala: So would I. This is a great situation you’ve found yourself in, because even if somebody did get get there before you, they probably walked away cause it’s just too much work. It’s not too much work for us. It’s not too much work for the people in Land Academy at all. Quiet title actions are something that Jill and I go through all the time, and it is very, very, very prosperous and confuses everybody for some reason when in fact it’s just a checklist. Just like you check off a bunch of stuff before you fly an airplane.
Steven Butala: It’s as simple as that. It just takes longer, and so the good news here is that the first property that you buy is going to pay for the second property. So if I understand your numbers right, you’re going to buy a property… There’s two properties sitting next to each other where you’re going to buy one, the first one, no problem. $60,000 bucks. Sell it for 120. Now you have $60,000.00 to buy the second one and do the quiet title action. And you don’t have to front the money at all.
Steven Butala: You just have to sign an agreement that says, “Look, we’re going to go through this quiet title action. Here’s $500.00 or $1,000.00 down payment toward the property, and let’s move forward on it.” I mean, that’s how it happens out west. Virginia may or may not be slightly different, but they’re all a different version of the same thing. So this is not a problem.
Jill DeWit: No.
Steven Butala: This is a a lemonade out of lemons situation, and you’re going to walk away with $120,000.00 inside of six months. It’s better than winning the lottery.
Jill DeWit: You know what’s great too? That’s the whole point. You’re paying a little money for this attorney. He’s doing the work.
Steven Butala: Yeah.
Jill DeWit: You just kind of sit back, and I would be in constant contact obviously and checking on him, but he’s doing the work for you.
Steven Butala: And here’s what I’d like you to do too, throughout this whole process, is really microscopically look at how they go through this judicial foreclosure action, because that’s technically what it is. Hopefully, in Virginia it is. It is in Arizona and California. If this works and you’re staring at all this money, you can actively seek out problems with title prop issues like this. And they’re not hard to find.
Jill DeWit: Do you know what’s funny? People don’t realize that there are scenarios of things that once you learn the steps, you don’t have to be an attorney to do them. You only have to follow the exact steps. Things have to be recorded and documented with the county a certain way. Certain forms, certain time limits, and you just have to follow it to the letter and then you can do it too.
Steven Butala: Yeah. This is a good situation. I’m getting a little bit jealous.
Jill DeWit: Yeah.
Steven Butala: Jill and I have done a lot-
Jill DeWit: I love those numbers.
Steven Butala: Of transactions in Virginia in the last six to eight months for some reason through deal funding, and they couldn’t have gone better.
Jill DeWit: Right, [crosstalk 00:05:17].
Steven Butala: Some of our money… Yeah, there’s a lust for Virginia property for some reason.
Jill DeWit: Yep.
Steven Butala: Today’s topic, Infill Lots Explained. This is the meat of the show.
Jill DeWit: You know, just to piggyback on that, I was reading something the other day and I wanted to say that DC’s one of the top growing cities.
Steven Butala: I’ve heard that through the grapevine socially, and I’ve heard that now from many channels. DC used to be a rust belt ghetto.
Jill DeWit: Exactly.
Steven Butala: And apparently it’s just all turned around and for the better. So everybody wins. Everybody wins.
Jill DeWit: Yeah.
Steven Butala: When a fallen neighborhood gets turned around like that, I think.
Jill DeWit: I agree. Okay. So today’s topic, Infill Lots Explained. This is the meat of the show.
Steven Butala: I already did that.
Jill DeWit: Oh, sorry. I got you sidetracked.
Steven Butala: Jill reads my lines.
Jill DeWit: Isn’t that funny?
Steven Butala: It says it right there.
Jill DeWit: I thought you forgot because it’s not there. So let me back up here. So if it’s okay with you, I would like to interview you and ask you. So let’s see. I have three questions, and I think it’ll cover this. Number one, what are infill lots?
Steven Butala: Infill lots are property that is buildable or usable, this is my definition, in a similar manner to the properties that are immediately in it’s surroundings. So if you picture of vacant lot that’s between two houses, that just never got developed. That’s an infill lot. Picture two vacant properties in an industrial park where there’s properties that have been developed all around it and they’re just kinda sitting there usually with a sign in front of them and saying, “For sale. Build to suit.” That’s an infill lot.
Jill DeWit: Question number two, what makes them great?
Steven Butala: What makes them great is that you find them in non-master plan communities or planned urban developments, depending on what part of the country. And those two phrases are synonymous. What makes them great is that they’re just kind of forgotten and leftover, and so you can take a property and usually apply the stuff that goes on with Land Academy, and buy it very, very inexpensively.
Steven Butala: At night, you’re completely in the driver’s seat. You’ve got a property that you paid, hopefully half of what it’s worth right now, you can read the resell it to a developer or you can develop it yourself if you’re a home builder. You get three or four of these in a row in strong market conditions and stuff, you’re going to make a bunch of dough. We just turned a deal down that we would have made because we didn’t want to go through the hassle. We would have made $1.2 million dollars on, and… It wasn’t Eureka. Where was it? Just south of Santa Barbara.
Steven Butala: So these are not… Like in the question, that person’s gonna make a hundred grand, which is nothing to shake a stick at. These are, in a lot of times, multimillion dollar opportunities.
Jill DeWit: Do you know what I think is great about them on the sales side? It’s very clear to see what’s possible, because you might have a Denny’s on one side, and a Dairy Queen on the other, or whatever it is. So your buyer can envision what should be right there. Hopefully they have a dry cleaner, or some something, whatever they want. It’s perfect. Or a McDonald’s.
Steven Butala: This is easy and fun, the way you’re interviewing.
Jill DeWit: Thank you. All right, so then my third question is, and we talk about these often on our member calls, what are the things that I should look for really checkout when buying an infill lot so I know it’s a good one?
Steven Butala: Excellent. So let me give you an example of stuff that I’ve been through. In the past, I’ve sent mailers out to let’s say a place like Mesa, Arizona, where there’s tons and tons of residential real estate, and I look up the dataset and I successfully download all the properties that don’t have any structure on them. And now I’m staring at a dataset that’s got just land in an urban, urban, urban area like Mesa, Arizona.
Steven Butala: So I send the mail out. Let’s say I go crazy and I just say, “You know what? I’m going to send out all these mailers for $3,500.00 each. I’m going to shotgun approach this,” which sometimes you do. Not Rifle it. And a certain number come back. Let’s say 10 or 15 come back. This is actually a real story. 10, or 15, or 20 come back. Of those 10, or 15, or 20 there’s only going to be a few that I’m going to buy. Why? That’s really what you’re asking me, right?
Jill DeWit: Right.
Steven Butala: Because the other ones aren’t usable in a manner that I think works.
Jill DeWit: Please explain if you don’t mind.
Steven Butala: Meaning-
Jill DeWit: Okay.
Steven Butala: They might be in a flood plain. They might be too small for the zoning. There’s a lot of… Look, again a little checklist that we go through that after you talked to Mesa, the community, the government, and say, “Is this property buildable?” “Oh no, it isn’t because it’s slightly smaller than what it’s sown for, which is one acre in that area,” or, “No, it’s not. It’s got an APN, but it’s just an easement.” So I’m not over-complicating this. This is actually pretty simple. Once you get in there and talk to them, and find out what’s going on, what you’re looking for are the properties that are completely buildable in their current state without any kind of zoning change.
Jill DeWit: One last comment that I have, that I would love for you to share a little more on, like if I was new and I’m not that into it… Not that into it, but I’m not that far into it, I’m not sure exactly what to ask or what not to ask. I could probably get something, an infill report from infillreport.com. Can you explain a little bit about that?
Steven Butala: Yeah, so Jill and I started a company called infillreports.com or infillreport.com with an employee. His name is Mike Marshall, and he’s a member too, but he’s an employee of Los Angeles County and incredibly bright. Actually, he’s going to speak at our live event in October. You can order a report that answers all those questions in it’s current state, can I build on this or does it need something to change? And it’s number coded.
Jill DeWit: Right.
Steven Butala: You know, if you get all threes, you’re good to go. You get a couple of twos and all threes, it probably just need some paper-type changes and that’s it. But if you get some ones in there, that might mean you’ve got to change zoning, which is tough.
Jill DeWit: Right.
Steven Butala: Or it’s in a flood plain, which is tough. there’s a lot of drainage-type properties in urban scenarios, that for whatever reason haven’t been assigned APNs long, long ago and they’re just not usable how we want to use them.
Jill DeWit: Right.
Steven Butala: That’s not to say they’re not usable. And let me be real clear about this. Out here in California, every time you see property which is technically probably an easement, but property under these massive power lines, there’s a nursery.
Jill DeWit: Yeah, it’s funny.
Steven Butala: Isn’t it crazy?
Jill DeWit: They figured it out. You and I would be like, you know, you can’t put a house or shorten the camp at a hospital there. You can’t [crosstalk 00:11:57]-
Steven Butala: But you can grow trees there.
Jill DeWit: But you can put a nice little nursery there and flowers.
Steven Butala: You can sell landscape gravel.
Jill DeWit: Sure, exactly. It’s really funny.
Steven Butala: Just because it’s on paper it’s like, “Wow, that’s just an easement.”
Jill DeWit: “What am I going to do with it?”
Steven Butala: You can use it.
Jill DeWit: Sure, there’s lots of uses.
Steven Butala: There’s all kinds of stuff that could go on.
Jill DeWit: Exactly, get creative. Well, I love it. Thank you.
Steven Butala: Infill lots are awesome.
Jill DeWit: I really like them.
Steven Butala: We did a separate program that is included with Land Academy called Land Academy 2.0 Infill Lots, and I separate out and all the concepts about how to identify markets where your mailers are going to work through red, green, yellow testing and bringing it down to ZIP codes, and how to, as a percentage, if a house is selling for $250,000.00, you know, an infill lot, a developer’s usually willing to pay about 20% of that, which you should be willing to pay about 10% and on and on.
Steven Butala: I don’t want to be all complicated about this right here, but infill lots rock. They’re hugely profitable.
Jill DeWit: I agree. Thanks. That’s the end of my questions.
Steven Butala: Is that explained?
Jill DeWit: That’s it.
Steven Butala: [crosstalk 00:13:04]
Jill DeWit: I think you did it perfectly.
Steven Butala: Hey, we know your time’s valuable. Thanks for spending some of it with us today. Join us in the next episode called Member [Beizing 00:13:15] Shares House Academy Success Stories with Jill.
Jill DeWit: Yup, and we answer your questions posted on our online community found at landinvestors.com. It is free.
Steven Butala: You are not alone in your real estate ambition. We didn’t talk about dating, or girls, or anything this time.
Jill DeWit: Is that okay? Are you okay?
Steven Butala: It’s not as fun for me.
Jill DeWit: Okay.
Steven Butala: How about you?
Jill DeWit: Sometimes I could use a little break. Wherever you’re watching, wherever you’re listening, please subscribe and rate us there.
Steve & Jill: We are Steve and Jill.
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Jill DeWit: And inspiration.
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