No One Understands Land (LA 1050)
No One Understands Land (LA 1050)
Transcript:
Steven Butala: Steven 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 how no one really understands land
Jill DeWit: And no one really understands women. I had to get that in there.
Steven Butala: Is that how this is going to go?
Jill DeWit: [inaudible 00:00:23] set this up. Yeah. Well, I think when I wrote the … I don’t know when we were doing the topics if I wrote a [inaudible 00:00:28] like that. That was your … I’m being funny. I’m trying to be funny.
Steven Butala: So yesterday’s episode was called What to Expect From Your First Mailer and all I kept thinking was that silly book when you have your first baby, what to expect when you’re expecting.
Jill DeWit: Exactly.
Steven Butala: But I actually held that in unlike what just happened with you.
Jill DeWit: Oh, sorry. I guess you’re a better person than me.
Steven Butala: No, not that. Just no. No.
Jill DeWit: Okay.
Steven Butala: But now I know how it’s going to go, so I’m just going to let it all out.
Jill DeWit: Oh okay.
Steven Butala: Before we get into the topic, 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 finally got a good response to a mailer I sent out but everything coming back is either wholly covered or partially covered in wetlands.” Interesting. “I have no idea how to price this or if I should even bother since it’s not buildable. Any suggestions on how to come up with a value for wetlands or do you just automatically turn them down? Thanks.”
Steven Butala: It’s one of those topics where I stared at it and I said, “Should I include this? Shouldn’t I include this?” We haven’t talked about wetlands in probably two years on this show. Wetlands are a property that is either intentionally designated by a municipality, like the city of Los Angeles. There’s big expansive open spaces of real estate that … specifically close to Marina Delray, that have been designated as wetlands either for environmental reasons, like there’s special ducks that live there, or it’s real estate that needs to be included in the development from a drainage standpoint and all that. A lot of reasons for wetlands.
Jill DeWit: Is it like corporate engineering too?
Steven Butala: Yes, yes, exactly Jill. Explaining how that all works is beyond the scope of this podcast but if you’re into it you can get into it on Google and find out what it’s all about really quickly.
Steven Butala: And then the other type of wetlands is what you find in Florida, which is just marshland. It’s bayou type stuff and there’s not as much in the West coast, but there’s tons in the Southeastern part of the country. And that over the years people have figured out it seems. They’ll build on floating houses or they’ll adjust to the environment so there’s a lot of regulations this day and age, both environmental and just building code stuff that unfortunately make it harder for people that are creative and how they want to live. They make it harder, so.
Steven Butala: Wetlands themselves, to answer the question directly, we don’t buy at all. And if you made a mistake and sent out a bunch of mail, and we’ve all done something like this, and it ends up being a lot of wetlands, I personally would just walk away and start over. What would you do?
Jill DeWit: Well you know what’s interesting, when I think of wetlands I think of all the areas around New Orleans and it exists because they need the brush and they need the stuff to build up because in the storm it actually can slow down the storm and slow down the impact. All I remember is after Katrina, how it was all wiped out and they’re just saying, “Gosh, it’s going to take years for it to build back up to protect the city.” It’s natural, it needs to be there and that’s what I think of.
Jill DeWit: So there’s going to be real strict rules, like you just said, about what you can do with it. So if you have a bunch in one area and they all came back and … I would make a phone call just to even see what’s possible. Maybe it’s a good fishing environment for somebody, they might like to say, “I can own it and fish in my own property and camp out here once in a while,” something like that. There might be-
Steven Butala: Yeah. If Luke Smith in our group was on this call you know what he would say? Oh buy it, buy it super cheap because someone’s going to want to fish on it. There’s crazy people out there that will buy real estate that they know it’s wet and can never be built on. My big question is why is it subdivided? This happens in Florida a lot. Before there were subdivision regulations at all somebody went in and subdivided a bunch of wetlands and created APNs. Yeah, the onus is on us as investors to make sure that that’s … if you want to buy that property, that’s great but we specifically don’t. We’re onto different other things.
Steven Butala: So a little bit more research on the front probably would have been appropriate here but don’t beat yourself up about it. Just move on.
Jill DeWit: That’s right.
Steven Butala: Today’s topic, No One Understands Land and this is the meat of the show. What does this mean to you, Jill, no one understands land? Like no one understands women? Do women understand women? That’s my question.
Jill DeWit: That’s a good one. Well, in the teen years the answer is no. They don’t even understand themselves, I think as you get older you understand yourself. But I was just making a joke. We don’t have to dive deep into that unless you really want it.
Steven Butala: Well, the comparison that I’m making here is when I say no one understands the land, what I mean is there’s so many flippant comments I’ve gotten over the last 20 or 30 years in my land career where people say stuff like, “Why would anyone want to buy property way out there?” That or this whole term ‘junk land’, “That’s just junk land out there.” No it’s not, it’s worth something. It’s going to be used at some point for something and the internet is just times tenning this whole rural vacant land industry that we’re in because for once you could … if you have a job on the internet, like Jill and I both do where 100% of it’s on the internet, we can live anywhere including some rural town in Arizona if we wanted to.
Jill DeWit: I think that in the whole tiny houses movement. I was just watching this really cool thing someone had posted on Facebook and everybody’s all excited about it. Just showing what’s possible, taking an old school bus and making it into a home. And you can do that and you can move it all around. It’s fantastic.
Steven Butala: Alternative living’s never been more popular.
Jill DeWit: Mm-hmm (affirmative). It’s really, really true. I wrote some notes about what I think why no one understands land. I think number one is that the property types … sometimes it’s a little … I think it’s confusing because it’s a little too easy. Like, “Okay, there’s no utilities I have to think about, there’s no this I have to think about.” There’s so many things you don’t have to think about. There’s no keys or a door roof or-
Steven Butala: Or a tenant.
Jill DeWit: Yeah a tenant or remodel or a lease.
Steven Butala: Or a structure.
Jill DeWit: Yeah, they’re a little too confused, like, “Well gosh, that just such sounds too easy.” Yeah, it is. Thank you. And the second thing I was thinking is everyone has this vision that they don’t think it’s valuable unless it’s got something on it.
Steven Butala: Or it’s improved somehow.
Jill DeWit: Right.
Steven Butala: That’s pure fiction.
Jill DeWit: Correct.
Steven Butala: Where you are making money is in the purchase price.
Jill DeWit: Correct. They don’t-
Steven Butala: And then you resell it for more, so.
Jill DeWit: And that person-
Steven Butala: It’s a perfect storm of a real estate transaction. On one hand you have a seller who’s just uninterested in this property any longer at all, if they ever were, maybe they were just never interested in it at all. They inherited it or bought it on a whim 10 years ago or their spouse bought it or on and on and on. So you’re solving their problem and you’ve got a buyer on the other hand who wants to get into the real estate business or wants to maybe subdivide some property or wants to live in a rural environment. Or maybe they’re a wholesaler like we are and they want to resell property on terms so now you got that person thanking you. So you have a seller thanking you and a buyer thanking you and you’re marketing it up in between and you’re thanking yourself. So that in 30 seconds or less is … that’s what you need to know about land.
Jill DeWit: Yeah. Do you know what’s funny about this too? I don’t know what the percentage is, but the percentage of sellers that have not ever laid eyes on their own property or even know how to find it is high. It’s really funny how many, they just know that they own this piece of property out there, they don’t know where it really is. Someone passed down a map at one point, it sounded like a good idea at the time and they just have it. So, yeah.
Jill DeWit: My other thing I think is … why people don’t understand land is it’s harder to price, not for us, but I think for the general public because there’s no … you can’t put it in Zillow and get a Zestimate, you know what I mean? You can’t put in … if you can put an APN in Zillow and get a Zestimate of the value, then people might see it but that doesn’t exist.
Jill DeWit: And so many times comps are either A, not reported or B, reported incorrectly. Maybe it was a package of 10 properties, a whole big section and then they just put in the one … somebody just throws in a price, but nevermind that was the price for all 10 properties. It’s not really accurate. So people don’t understand how to price it, they don’t really know how to figure out the value.
Steven Butala: Our members do.
Jill DeWit: Oh, well that’s our members, yes.
Steven Butala: What you’re describing is … could be construed as, “Wow, this is really complicated.” Do you think it’s complicated?
Jill DeWit: It’s not.
Steven Butala: I don’t think it is either.
Jill DeWit: No, no, I think … That’s a good question, thank you. It’s like people try to over complicate it. That’s my point. These are the things that they think and on all of them I can say, “Here’s why you need to look at it this way.” And then once you wrap your head around it, you go, “Oh, I get it.” And, “Here’s how you get around that.” “Oh, okay, I get it.” And, “Here’s how you really price things.” “Oh-”
Steven Butala: And here’s how you really price things. If you think there’s a darn good chance you can sell a 40 acre property in New Mexico for about $12,000 then you should be, in general, willing to pay $6,000. But you want a little bit more insurance? Okay, $5,000 or maybe let’s just say $4,500. So if some stuff goes wrong, you’re still making a few grand and it’s not the end of the world. And that’s how you price rural vacant land. It starts with the price you think you can sell it. That’s exactly how we price houses, but I’m not supposed to talk about houses on this show.
Jill DeWit: Land Academy. Too funny.
Steven Butala: The numbers are different on houses, you don’t double your money, but it’s a dollar amount. That’s for a different show.
Jill DeWit: Exactly.
Steven Butala: Yeah, I know your time’s valuable. Thanks for spending some of it with us today. Anyway, join us next time for the episode called The Rental Trap Defined.
Jill DeWit: 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. If you had to explain what women are and why they behave the way that they do to a 22 year old man who’s confused as hell, what would you do?
Jill DeWit: Oh man. I would just sit down and sympathize with them.
Steven Butala: You’d sympathize with the guy?
Jill DeWit: Yeah because it is this confusing. We do change our mind-
Steven Butala: Because we change our minds?
Jill DeWit: Especially at that young age, we’re not really sure what we want. This looks good, I think that’s great and then we think, “Oh then I want this lifestyle and this guy,” we think that’s great. We really don’t know. It’s all over the place.
Jill DeWit: There’s not a lot of women … you think men are all over the map? Well we’re even more all over the map. Let me give you an example, staying with us in our home right now is our nephew and his girlfriend, right? And you ask him where he’s going to be in five years, what … Do you remember this? He’s one year older than her and he’s … so he’s almost 21 and she’s just barely 20 and you ask him where he’s going to be in five years, he spit it right out. We ask her, she was all over the place. Did you notice?
Steven Butala: Yeah.
Jill DeWit: She’s like, “Well I kind of want a suit, I want to keep my options open.” They’re both sophomores in college. She was like, “I still have some time to pick my major so I think I’m going to try this, try that, try this, try that.” So does that answer the question?
Steven Butala: Yeah. Actually it was the best description I’ve received so far in my life and I’m 50.
Jill DeWit: Okay.
Steven Butala: I still have a hundred more questions but we’re actually out of time. I heard Oprah respond … she answered this question once, a really long time ago and she said, “Every man seems they have a plan and women don’t have that.”
Jill DeWit: Yeah. It’s true.
Steven Butala: So I think you just said the same thing.
Jill DeWit: Exactly. Yup.
Steven Butala: Now we heard it from Jill and Oprah so it’s probably true.
Jill DeWit: Wherever you’re watching, wherever you’re listening, please subscribe and rate us there.
Steven Butala: We are Steve and Jill. Information-
Jill DeWit: And inspiration-
Steven Butala: To buy undervalued property.
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