There are Con Artists All Around You (LA 1062)
There are Con Artists All Around You (LA 1062)
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 Dewitt, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk about how there are con artists all around you. And here’s the show that Jill and I talked about right before we started.
Jill DeWit: Yep.
Steven Butala: This has that potential to be so negative and we won’t let that happen.
Jill DeWit: Because that’s not who we are.
Steven Butala: We’re going to just give you our take on our industry and the land industry and the education industry and we’re going to laugh about it. And it’s not negative.
Jill DeWit: Nope. But we want you to be aware.
Steven Butala: Yeah.
Jill DeWit: And we’re going to talk about that.
Steven Butala: A couple of days ago, we had an interview with Travis Jenkins.
Jill DeWit: Yesterday.
Steven Butala: Yeah. Yeah. Yesterday. And he flat out said, I don’t know if it was in the after show or in the actual show, he said, “I think that you guys have an obligation to do the show like this to really, because you’re the ones who have the experience at all of it.” So we’ll get into it in a second, but-
Jill DeWit: I forgot that part.
Steven Butala: It was a good compliment.
Jill DeWit: It was nice.
Steven Butala: And this is my way of relieving my obligation to Travis Jenkins.
Jill DeWit: Nice.
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: Jim W. wrote, “Hi, all. I’ve been selling lower-cost properties on terms without title. I’m closing my first larger sale with title and they are preparing a payoff deed to be recorded. I have heard we do not want to use a deed of trust as then you need to go through foreclosure to recover property if there’s any default. Is anyone familiar with a payoff deed and what is necessary if the buyer defaults? Thanks, James.” This is all your thing.
Steven Butala: A payoff deed? So he’s exactly exactly right. What he’s going down the path of doing a deed of trust. There’s two ways to sell property on terms with with seller financing. A deed of trust, which is very similar to how you would buy a house. The property gets recorded in your name. There’s a mortgage on it, and they have a lien. So in the case of a deed of trust here with land, it’s the exact same thing. That property goes into the new buyer’s name and you, the seller, are essentially acting as the bank and in between you is a trustee. And the deed of trust outlines all of this. In fact, it’s just like a car title. They’re actually on the actual deed so that when the property gets all paid off years from now, that pay off deed, just like you get a new title to your car, the Toyota Financial or whatever’s on there gets removed and would get removed as a seller and you get a pay off deed.
Steven Butala: That’s the mechanics of it. The other way is a land contract where I’m a seller. I sell a property to Jill. We sign a contract, the deed, property stays in my name until she pays it off. Then I deed it to her. And that way if you’re out of compliance, if she’s out of compliance in any way during the course of the deal, there’s terms and conditions in there and procedures about what happens. And essentially it’s if she’s 30 days late-
Jill DeWit: Whatever you outline.
Steven Butala: … for any reason, it’s over. I own the property and it’s all done. So you have to be real careful. If you’re listening to this, please pay attention to this. Every state and some jurisdictions like counties have rules about this and they have very, very strong opinions and a lot of cases they have case law to back up these opinions. So what I just described may work in some states, but what I described may not be appropriate at all. These are just the basic concepts of the two types of ways to deed property to people and provide seller financing. So please check your-
Jill DeWit: Check your state.
Steven Butala: And the contracts. Some states even go so far as to say you need to use this contract.
Jill DeWit: We prefer the latter and and we would only do them in the states that accept the latter because on the first part, right, you like that, which is true. Well, because the first part, if there’s so much to undo, that’s the whole thing.
Steven Butala: It’s expensive.
Jill DeWit: It really is. And I’ll tell you, truth be told, this is why we do not do this really at all anymore. I’d rather buy for cash, sell for cash, than have to babysit payments. Because it’s true. There’s a lot that goes into it. It sounds great. A lot of people like it because they feel they can sell property faster and higher. And probably, yes, at some point, you get in the end more money, but I’d rather have it double my cash right now and move on. I don’t need to wait three years to triple my investment at a hundred dollars a month and babysit the deal because there’s always something. “Oh, it’s Christmas. Can I move my date? Oh, I lost my job.” It’s a lot of work.
Steven Butala: It’s not passive by any stretch.
Jill DeWit: This is true. Yeah, there isn’t anything passive about it.
Steven Butala: I mean, here’s some Steve and Joel reality. Here’s some reality checks on this, on term sales. The default rate for rural vacant land is between 50 and 75%, sometimes 95%, in certain cases. The difference between rural vacant land and infill lots is that there’s an intended use and like we said it earlier in the week, the use of this property has already been mapped out. So people usually, when they buy property on terms, they go use it and so that they want to pay it off.
Jill DeWit: Right.
Steven Butala: People who buy rural vacant land for all different types of reasons on terms might lose interest in the whole thing in six months and you don’t want to get stuck holding… To have to spend… To foreclose on a property through a trust deed is on a low end, 1200. On the high end, 35 to $5,500. So in a lot of cases that’s more than the whole property’s worth.
Jill DeWit: And a lot of steps and a lot of work.
Steven Butala: Yeah.
Jill DeWit: Thank you.
Steven Butala: Yeah, that’s the whole deal. Stick to cash in the beginning. We could have just said that in the beginning.
Jill DeWit: This is true.
Steven Butala: Today’s topic. There are con artists all around you. This is the meat of the show. In this space that Jill and I have put ourselves into, for better or for worse, educating people about how to buy and sell real estate, there’s just a lot of crooks. And you have a choice. I’m making this as positive as possible and I would encourage you heavily to do this. What separates us and just about everybody else that I’m aware of it in this space is our experience and our education and our commitment to doing a daily show and our advice. And the fact that we do every single Thursday, multiple webinars for our members and on and on and on.
Jill DeWit: Transactions.
Steven Butala: And the services that we provide and the 16,000 deals that we’ve done should tell you, and I’m not selling anything here, that we’re serious about this. And we’re here to stay. I mean, we’re on episode 1100 almost now. And we have just as many weekly webinars. We started doing it in 2015. I think we missed one week, one or two weeks because of holidays. So there are other people who take this concept unfortunately and make it not legit. And in every case that I’ve seen this happen and it never ends up being a real threat to us, by any stretch, or our members. Because the type of members that we have see right through this stuff, anyway.
Jill DeWit: Good point.
Steven Butala: But what it ends up doing is for newer people, who really need the most help in a lot of different ways, confuses them.
Jill DeWit: It’s true.
Steven Butala: And in the worst case thing that can happen is they start down the… New people might start down this path, get some bad information or some information that from people that are just doing it halfheartedly and it ends their career because they don’t have a good experience with their first few deals. Or they get sold some stuff that’s too expensive, not land but education and all of it. So there are con artists all around you. And it’s not just this industry. It’s every single industry.
Jill DeWit: Everywhere. Exactly.
Steven Butala: I bet you a dollar wherever you work, you could sit there. If you really sit there, sit around and think about who’s basically a crook that I work with. Who’s a great person and who’s a crook?
Jill DeWit: This is true. Exactly. Exactly. And we’re only bringing it up because we’ve had a recent, a reminder to be on our toes about this and we just wanted to bring it to your attention. So I was going to say, be aware, like you just said, Steven. We all know where… You all kind of know. You have a sense. And like I said, it came to us recently and I thought I saw it, but I missed it, man. So I’m going back to my own instincts and trusting my gut a little bit more. I want you to trust your gut. And not just, just even in transactions, I’m even talking dealing with buyers, dealing with sellers. Everything. No matter what you’re doing, please trust your gut. You’ve got to do this. Do your homework. Take action before it’s too late. Don’t squash it down. I really want you to-
Steven Butala: Don’t see something that’s not there.
Jill DeWit: Yes, exactly.
Steven Butala: Women are famous for having this sixth sense about, no, something’s off, man.
Jill DeWit: Exactly.
Steven Butala: Men are famous for the exact opposite. Let’s just barrel through it and see what happens at the other end.
Jill DeWit: Right.
Steven Butala: And then it’s all ends in a fiery ball of tragedy. And the woman that’s standing next to him is going…
Jill DeWit: I tried to tell you.
Steven Butala: This didn’t feel right for me from the beginning. How many times you ever heard that sentence?
Jill DeWit: Right.
Steven Butala: This didn’t feel right for me from the beginning. And even men have it and they just try to see something that’s not there, both in real estate deals and then in dealing with various business partners and things like that. So just tread cautiously. Ask yourself a lot of questions. In a perfect world, if I were, I’ll tell you, here’s an example. Way earlier in my career, way before Land Academy was even a thought, I took almost a week long seminar on tax lien foreclosures in Las Vegas. It was very expensive, extremely expensive.
Steven Butala: It’s the only time I’ve ever kind of taken any online education that way. And the reason that I chose to do it and chose this guy, he’s a former owner of taxellis.com, was because I did, I don’t know, two or three months of research. I listened to, he had a show. He wrote a very, very intelligent blog as a writer. It was incredibly intelligent. And had crazy, crazy amount of experience. He had an airplane collection, which didn’t hurt anything, because he’s a serious pilot. So that’s lends itself some credibility. And he did tons and tons and tons of deals. His first name was John. I don’t remember. So I’d go to the seminar by myself.
Steven Butala: There’s probably 10 or 15 people in there. It’s not.. Just like our live events. I think there’s what, 20 or 30 people at our live events? It’s not a stadium full of people and I learned so much. I would’ve paid twice or what I… So that’s how Jill and I have set Land Academy up. We want you to feel like you are-
Jill DeWit: It is. Part of a tight community.
Steven Butala: It’s like I got so much value for my money, it’s silly. It’s silly. I would’ve paid twice as much for that. If that’s what you think at the end of all this, then I did my job.
Jill DeWit: Yep.
Steven Butala: And that’s how seriously I take this.
Jill DeWit: I agree. Thank you. My other thing I was going to say, my last point is, don’t be that person. And you might find yourself staring at a deal that you kind of scratch your head going, huh, I could probably get away with this. Or someone might bring you something that’s a little bit borderline, in your gut, let’s just say it, unethical. Don’t. Please don’t do that. Don’t be that person. I look at every deal, every transaction that way and there’s things that we flat out, we will not do. We will not. I’ll make half the money and do the right thing. We mean it when we say it, too, with our team. We’re like, “All right, everybody. We’re always going to do the right thing. Even if it cost more, whatever it is.”
Steven Butala: Here’s some red flags for me. This is just me. Other people do fantastic. They build a career on this. When someone asks me for money, “Hey, you want to put 50,000 bucks into this?” It sends out a massive red flag for me.
Jill DeWit: Right.
Steven Butala: Here’s the way around it. And here’s what Jill and I do all the time. “Hey, I’ve got this great property. Here’s the APN. I’ve got it under contract for this. I know we can sell it for Y, but I’d love your opinion, Steve. Do you want to invest in it with me? It’s just a one time deal. If it works, maybe we’ll do some other deals together.” So now I have control over the deal and they’re not blindly asking me for money, which for some reason it just sends me to the moon and everybody’s role’s defined. Maybe I’m the money person. Maybe they’re the manager on the deal. Maybe it’s the opposite. And so I’ve done a lot of deals on both sides that way and it seems to work out great. Do you have any immediate red flags when people come to you?
Jill DeWit: Well, yeah, I do. A lot of it is just kind of that. I need to see a deal. I need to really see a deal. Yeah, like you just said, don’t come to me like, “Hey, I need X amount. Don’t worry about it.” Well, I am going to worry about it.
Steven Butala: Here’s another really good example where there’s a guy in our group who is an accomplished Los Angeles County employee. And he has a tremendous amount of experience in the zoning and all kinds of stuff in there. So he came to us and said, “I’ve got several clients who are trying to find this property type.” So now I’m really sitting up straight and listening because he’s got a ton of experience. He’s actually got some real clients and he needs our expertise to locate properties that are very strategic. And he’s got it all spelled out in a spreadsheet and he wants to split it 50/50 and together we’re better.
Jill DeWit: Bingo.
Steven Butala: And so we’re immediately better and we both are set up to succeed based on what we bring to the table. He brings something that’s so unique to the table and I’d like to think we do, too. And it’s all based in experience.
Jill DeWit: Exactly.
Steven Butala: So we have several lines of business like this, and now’s not the time to bring it up, with members who have proven themselves-
Jill DeWit: It’s true.
Steven Butala: … and it’s cash flowing and they’re happy and we’re happy and they’re using their resources. We’re using ours. And in every case they brought something to the table where they’re already better at it than we are.
Jill DeWit: Right.
Steven Butala: And I’d like to think we did on our end, too. That’s not a red flag situation.
Jill DeWit: I would, for me, I’m going to end it on this. Our group is 99.999% awesome, trustworthy, fantastic. And I feel great about them.
Steven Butala: Yep. Next, we’re going to introduce-
Jill DeWit: And I’m very lucky.
Steven Butala: Yeah. I’m proud. I’m proud to be the ringleader.
Jill DeWit: Yeah.
Steven Butala: Next week, we’re going to do a show about the typical Land Academy member profile and I can’t wait. We’re going to interview some of our staff because they’re on the front lines. And I have a lot of questions. Some of the questions I have are like even with brand new members, what’s the difference in their personality type? And I think it’d be really interesting.
Jill DeWit: That’s a good show.
Steven Butala: Hey, we know your time’s valuable. Thanks for spending some of it with us today. Join us next time for an episode called Run to the Bank, Notary Close, and Then Get Title Insurance Afterward.
Jill DeWit: Interesting. 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. That crazy title that I came up with there. We’re going to talk about it tomorrow is based on an actual deal that Jill is doing that’s closing. Well, it’ll be closed by the time this airs, for sure.
Jill DeWit: Yep.
Steven Butala: It’s a really, really interesting deal. This doesn’t happen to us very often, but once in a while we do deals that are… This deal happens to be very financially feasible for us, but it also is really helping to seller out and it’s ensuring that… It’s just a little bit unorthodox the way we’re doing this deal, but we’ll share all the details. I find these deals extremely interesting.
Jill DeWit: Exactly. Wherever you’re watching, wherever you are listening, please subscribe and rate us there.
Steven Butala: We are Steve and Jill.
Jill DeWit: We are Steve and Jill.
Steven Butala: Information.
Jill DeWit: And inspiration.
Steven Butala: To buy undervalued property.
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