Risking Your Reputation in the Land Business (LA 1079)

Risking Your Reputation in the Land Business (LA 1079)

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 risking your reputation in the land business. What’s this topic all about?

Jill DeWit:                            Well, it comes up now and then, and it’s important to talk about doing the right thing. As it relates to land and kind of in life, you want to be that person. I know that we have a lot of listeners and a lot of people in our world because we’re honest, we’re transparent, and if we say we’re going to do it, we do it. You want to have the reputation because the benefits are overwhelming, and if you don’t do it, on the flip side, it will come back to bite you.

Steven Butala:                   When you have a group of people like this in any group, I don’t care if it’s a church group or people in an office, there’s always people, the vast majority of the people, in fact, all of them that I can, that I know of are really stand up people. There’s always a couple, one or two, that just decide that they’re smarter and better and just troublemakers.

Jill DeWit:                            It’s like you tell all the kids when they’re in school. Last summer, our kid number three had to take a summer school class, and it was not because he had to it was because it was either that or take a zero period. He’s like, “I’m not doing zero period for a semester.”

Steven Butala:                   For three years.

Jill DeWit:                            Exactly. He’s like, “I can’t do it. I’d rather do summer school and suck it up.” So, we get it. In the summer school, there was one kid that was really a pain in the ass for… Can I say that?

Steven Butala:                   I guess, yeah.

Jill DeWit:                            Okay. Anyway, for not only the teacher, but for everyone in the class. You would always say, “Well, there’s always one,” and I think you’re right.

Steven Butala:                   Let’s just get right into it.

Jill DeWit:                            Okay.

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

Jill DeWit:                            Brian asks, “I have a seller with 10 acres of unplanted land. I realize this is land that hasn’t been platted/plotted by the county. I’m curious if anyone has experience with this. Will I need to incur additional costs on the acquisition or sales side?”

Steven Butala:                   Our moderator, Kevin, answered this question perfectly, and after Jill reads his answer, I’ll make a couple of comments because this is a very, very good question. This comes up with rural vacant land all the time.

Jill DeWit:                            All right. Kevin wrote in Brian from the Oklahoma state website FAQ page on abstracting, “What is the difference between platted and unplatted land?” Platted land is a parcel of land divided into lots, as in a subdivision, the platted lots are filed with the County clerk in a plat book. Unplatted land, which is not following a plot book, and the legal description is described using a section township and range, and won’t cost you anymore or any less.

Steven Butala:                   Yeah, so unplatted land, if you’ve ever seen a plat map, and it’s not a plot, plat map, it’s usually a white piece of paper with pencil drawings. Sometimes they’re even hand drawn, from a surveyor. They go back in time, a tremendous amount of time. The old really old ones are hand drawn. There’s a lot of unplatted property in our business. It comes from taking a piece of property. Back before the 1950s, there were no laws about subdividing land. You could take a 40 acre property and make it-

Jill DeWit:                            A couple of twenties.

Steven Butala:                   Or you can make 40, one acre properties with no easements or anything, and you you didn’t have to file a plat map with the County. That’s the real issue. The real answer to this question is, it’s just not filed with the County, like Kevin said.

Jill DeWit:                            Yeah. It doesn’t have to be. I look at it as, I could buy a 40 acre parcel of land, and the legal description is section, township range, the East half of the bottom fourth of the… If you’re in this business, you know what I’m talking about. You’ve seen that. I don’t have to do anything with it. I just [inaudible 00:04:19] like that. There’s nothing wrong with that. That person then, in turn, can A: divide it up if they want to, or B: just go live on it like it is.

Steven Butala:                   Yeah. I mean there’s real specific rules about this. They’re all tied into where the property’s located. Even in Arizona and in California, you can split up property pretty effectively, but there’s real specific ways to do it and you really have to follow those rules.

Jill DeWit:                            That’s it. That’s exactly it. My first choice is don’t do anything with it because like Steven just said, if you think you’re going to go in and I’m going to plat it out, then I’ve got to have an easement. They might require all these things. They might require a certain size. They might require a report that each buyer gets, depending on how many parcels you split it up into. I mean, there’s all kinds of interesting, weird things. If you do go that path, yes. In many situations that can be very profitable because you could divide them up and sell them for more money than one big chunk slash however. Now, you got a lot more work.

Steven Butala:                   Yeah. I mean, I’ll end it with this. Splitting properties up, taking a 40 and making it four tens is incredibly profitable. It’s so tempting to just do it the way you want to do it, but it’s not a good idea. Just follow the rules and do it. We choose not to do that. Jill and I choose to buy a piece of property and immediately resell it in a machine. We have lots of members who, for whatever reasons, members who like to stick close to home and buy property where they live. Go down to talk to the County clerk, split some property up, do it the right way, file all the right stuff-

Jill DeWit:                            That’s the best scenario.

Steven Butala:                   Then, do it again and get to know the people at the County. You can make a whole career out of that. We have one member, specifically, who does that in Texas, in the same County. He’s only ever worked one County, dividing property. I guess it’s working for him great.

Steven Butala:                   Today’s topic, risking your reputation in the land business. This is the meat of the show.

Steven Butala:                   Your reputation is everything. We all know that. Jill actually wrote this title, and it’s so important. This isn’t the most teaching about the land business episode we’ve ever done.

Jill DeWit:                            Yes it is. Yes it is.

Steven Butala:                   Integrity really, really matters in this and everything else. Unfortunately, we have a couple of members who have no integrity at all and have made some pretty bad decisions that are ending up in legal action is required. It’s just too bad. I don’t know. What do you want to say about it?

Jill DeWit:                            Well, I was going to talk about just in your land business, you want to have… How do I say this? Here’s my notes. My notes say, “Don’t do it. Don’t be that person.” We’ve always said this, we still see it, and we mean it. Whether it’s with our land sales or even just in our staff, it’s important to do the right thing, even if it costs money.

Jill DeWit:                            When you say you’re going to do something, follow through. I was taking it to kind of that level. I’ll give you an example. Say you’re buying a property, you sent on an offer, you talk to the person three times, you all agree on, whatever the purchase price is. You miss something. Next thing you know, it comes back and you’re going through escrow, and your like, “Doggone it.” This person owed $700 in back taxes I didn’t catch. If it’s within reason, you’re buying it for 3000, let’s just say… Whatever. Maybe 30,000 and you’re going to sell it for 90, are you really going to go back over that? This is the kind of thing, and you go, “Now we’re going to talk again because this $700 came up.” I wouldn’t. I would do the right thing. I promised them that price. My bad. I didn’t catch it. That’s kind of on me. I’m going to follow through because I committed and that’s just the way I roll. I everybody to be thinking about that. Be that person.

Jill DeWit:                            For example, too, say you have someone that buys a property, they’re not happy with the property. That happens.

Steven Butala:                   That was my exact thing. You just-

Jill DeWit:                            I’m sorry.

Steven Butala:                   You can read my mind.

Jill DeWit:                            Oh, sorry.

Steven Butala:                   I was going to ask you a series of questions, and that was the next one I was going to ask.

Jill DeWit:                            Okay.

Steven Butala:                   This is a great example of doing the right thing, I think.

Jill DeWit:                            Yeah. This is really where I wanted this show to go. There are other things going on in our world that you address, and that’s another thing too. Don’t do that.

Steven Butala:                   We’re done with that.

Jill DeWit:                            Yeah. Okay. But, say you have a buyer, for whatever reason, that they bought it even six months ago. They hadn’t been out to see it and they finally go out and they see the property, and man, it is not what they thought it was. The pictures… And it’s not you. Let’s call a spade a spade. You properly conveyed the property. Your pictures were real legit. You had a beautiful drone, but they stood on there, and the sky is not as blue as they thought it was going to be. It could even be something like that. Do you really want to argue with that person? Do you really want to get into it with that person? It’s not worth it. Most of the time, that’s not going to come up. But, now and then, it might, especially when you do the volume that we do.

Jill DeWit:                            They stood out there, their wife hates it. The sky is not as blue. The Walmart is way further than they thought it was. Whatever came up, I would just try to swap out. “Hey, do you want something better? Here’s what else I have.” Then otherwise, they want a refund. I would give them a refund.

Steven Butala:                   I’ve been doing refunds my whole career, since the 90s. Almost without exception, we go and resell the property for more. There’s some paperwork involved, and there’s some stuff that you have to do. It takes your valuable time to undo… It’s hard to undo and do a real estate deal. There’s a lot of stuff. But I’ll tell you, it’s better than having them call the governing California Board of Real Estate or wherever you are and filing a complaint and all that stuff. You don’t want that. By the way, all the departments of real estate, that I’m aware of, all the state departments of real estate that govern real estate agents’ licensing, subdivisions, and the stuff that we do, there’s a lot less regs for investors than there are for the other things that I just mentioned. They’re all complaint-driven. Every single one of them. They don’t go out and see if you’re in compliance with the property split or how you’re running your land business. They only get involved in anything if you upset a customer to the point where they file some stuff.

Jill DeWit:                            Exactly.

Steven Butala:                   So, you don’t want to upset them.

Jill DeWit:                            No.

Steven Butala:                   You just want to do the right thing.

Jill DeWit:                            It’s just so much easier. I mean, when you really think about it, the time and energy you’re going to put in talking to this customer and just doing a refund, is way less than what you just said. Just the arguing about or going back and forth, “Hey, you had X amount of time.” You don’t want to do that. The calls and the stress on you, carrying this around and the worry about, “Are they going to call somebody and complain,” because they can, even though you’re not in the Better Business Bureau, they’ll still try that one. It’s funny. People still think that’s a big deal. Can you imagine? I can’t remember the last time I saw Better Business Bureau, A+. Like really? We’re going to hang our hat on that? Anyway, it’s kind of funny. But, Yelp is more is more effective to me than the Better Business Bureau. You got a good Yelp rating, you’re on my list.

Steven Butala:                   Well, wherever you sell real estate. If you’re selling real estate on eBay or or whatever, there’s a rating system.

Jill DeWit:                            That’s true, too.

Steven Butala:                   This is a lengthy way of saying… You know what? Just do the right thing.

Jill DeWit:                            Whatever it is-

Steven Butala:                   Integrity counts. It matters.

Jill DeWit:                            It does.

Steven Butala:                   Integrity matters.

Jill DeWit:                            Don’t try to get separate LLCs and spread up properties because you’re trying to work a system. Please don’t do that. Do the right thing.

Steven Butala:                   Right.

Jill DeWit:                            I’ll get off this topic now.

Steven Butala:                   Join us next time for a much better episode. Next time, for the episode called The Mystery of Omar and offerstoowners.com.

Jill DeWit:                            Can’t wait to hear. We answer your questions posted on our online community at landinvestors.com. It’s free.

Steven Butala:                   You are not alone in your real estate ambition. No, it’s important to talk about this stuff. I don’t know. About once or twice a year, we just come across doing business with somebody that just doesn’t have the same, let’s say, values that we have.

Jill DeWit:                            I agree.

Steven Butala:                   That’s happening to us right now and prompted the show.

Jill DeWit:                            I agree. Thank you. The Land Academy daily show remains commercial free for you, our loyal listener. Wherever you’re watching, wherever you are listening, please subscribe and rate us there.

Jill DeWit:                            We are Steve and Jill.

Steven Butala:                   We are Steve and Jill.

Steven Butala:                   Information…

Jill DeWit:                            And inspiration…

Steven Butala:                   To buy undervalued property.

 

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