Deal Funding Transactions in Virus Times (1218)
Deal Funding Transactions in Virus Times (1218)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hello.
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 deal funding transactions in these virus times. Why do you have to put virus in every single thing that’s [crosstalk 00:00:18].
Jill DeWit:
Yeah, I was kind of wondering that. Is this is a new thing for you?
Steven Butala:
No, it turns out there’s a virus.
Jill DeWit:
I know, I’m aware of that. Really?
Steven Butala:
Yeah.
Jill DeWit:
Could you imagine?
Steven Butala:
The world is stopped.
Jill DeWit:
I wonder if that’s still happening. I don’t know if you’ve heard this. There’s a show, I think it’s called Big Brother and they put people in an apartment or something, do you know what I’m talking about?
Steven Butala:
Yeah, I get it.
Jill DeWit:
Okay. They put them in an apartment and they-
Steven Butala:
That started on MTV back in the ’80s.
Jill DeWit:
Okay. And they had cut them off-
Steven Butala:
Real World or something.
Jill DeWit:
… from the outside world and when this whole thing started to happen, they didn’t know. They’re inside and it’s closed, vacuum of a space. They didn’t know what was going on outside. They didn’t know that people are not being allowed to leave because they’re already in that situation by the way, with no change to them.
Steven Butala:
Yeah, we’re all on that show now.
Jill DeWit:
Right? We’re on the… That’s right, Big Brother can’t leave anyway, so I wonder if they have now let them in on, “Hey, this is what’s going on. We’re all feeling the same thing.”
Steven Butala:
Probably the German show, yeah.
Jill DeWit:
Yeah. I thought that was kind of interesting.
Steven Butala:
Deal funding and transaction virus time. Oh, you know what? Before we get into it, let’s take a question posted by one of our members on landinvestors.com online community. It’s free.
Jill DeWit:
Rick asks, I’m having a hard time deciding if a 35 to 45 acre property in Pima County, Arizona sort of near-
Steven Butala:
Diamond Bell Ranch.
Jill DeWit:
… would be worth buying at about $40,000. It has dirt road access and the highways about six miles away. I’ve looked up properties in the Pima area and many are over $200,000 at this size, which makes this seem reasonable, but there are outliers that are lower. I figure some of you are experienced with the area. What do you think best? Rick.
Steven Butala:
I’m very experienced with this area, but this question is not about Pima County or Diamond Bell Ranch. Every single County has these outlier weird anomalies for pricing that either make it very more expensive than the regular property or less. And it’s for a lot of reasons. Somebody went in… We’re going to use Pima County as an example. If you’re sitting and saying to yourself right now, I don’t care about Arizona and I don’t care about Pima County, I buy property in Vermont, please don’t stop listening because it applies to you.
Steven Butala:
Somebody went in and created this brand called Diamond Bell Ranch. It’s the exact same property as the stuff that’s a mile away. Exactly the same 40 acre property. What they did is they went in and bladed in roads and created this brand and they advertise the hell out of it, probably on TV or in newspapers or whatever, and now it’s at a premium. And a couple of people probably went in there and built these beautiful right out of a movie ranches.
Jill DeWit:
Ranch. Right.
Steven Butala:
They put the little gates in the front and the whole thing and put a lot-
Jill DeWit:
Had their brand above there.
Steven Butala:
Yeah, like that. And put a-
Jill DeWit:
Double R.
Steven Butala:
…. dead cow skull on the front.
Jill DeWit:
That’s it, yes.
Steven Butala:
All of that. So now it’s at a premium. And by the way, whoever subdivided Diamond Bell Ranch in Pima County is charging you an HOA. They’ve convinced you that the premium that you’re paying for this 40 acre property, because they maintain the roads once a year is worth 30 or 40 or 50 or $80 a month in an HOA fee. I say it’s malarkey. You all knew where was this going. Do you think I was going to say, “Oh yeah, buy HOA property, it’s worth it.”?
Jill DeWit:
I know. I’m laughing about malarkey.
Steven Butala:
Is it worth it to pay a premium for HOA property that somebody branded and spent a hundred grand on advertising? No, it’s not.
Jill DeWit:
Right.
Steven Butala:
It’s ridiculous. Who the hell wants HOA property? If you’re an HOA person either for houses or for land and you’re the kind of person who sitting… First of all, you’re not listening or watching to this, you’ve turned this off 25 episodes ago. If you’re sitting around saying, “I want to live in an HOA community. I want the blades of grass in my front yard to not exceed an inch and a half ever. I love it. I love clean everything. I don’t want anyone to have a camper in the front yard ever, and parking on the street overnight is not allowed.” If you’re that kind of person, go away. This is not the show for you. This is not the business model for you.
Jill DeWit:
It’s Steven’s rant time in case you weren’t sure it’s not what the question is actually about, but bear with him. He’s got a few HOA things to say. Go ahead, sir.
Steven Butala:
I’ll take a rant for five minutes.
Jill DeWit:
That’s right. I’ll take what do you want to bitch about today for 300.
Steven Butala:
The only reason an HOA is ever a good idea is if you’re the person who’s subdivided the property and created the HOA and you make the money.
Jill DeWit:
Okay, this enough.
Steven Butala:
It serves no purpose. It’s a joke. It’s a-
Jill DeWit:
Tell me when you’re done and I’ll answer Ricks question.
Steven Butala:
… it’s tarnished. It’s makes real estate bad. It’s one of the very few things that’s bad about land and buying it and selling it. Okay, I’m done.
Jill DeWit:
Thank you Steven. Now Rick, I’m going to answer your question. Is it worth it because it’s near that? No, so that’s the whole thing. That’s a tough one.
Steven Butala:
Oh, Jill going to say the same thing. Watch, she’s just going to say it in a real nice like Jill…
Jill DeWit:
No, this [crosstalk 00:05:50] it.
Steven Butala:
She’s going to Jillify. Watch this, she’s going to Jillify this whole thing.
Jill DeWit:
No, I don’t think that was Rick’s question is like, what do you think about this be near this HOA? Does it make a difference price-wise? That’s the question.
Steven Butala:
No.
Jill DeWit:
No, and you-
Steven Butala:
Doesn’t matter at all.
Jill DeWit:
…. shouldn’t look at it like that because it’s going to be… If you buy it thinking that’s worth the value, now you got to turn and sell it to someone and tell them that that’s worth the value of being near these people. I don’t believe that to be true. Like Steven said ever so ever so briefly and delicately.
Steven Butala:
There’s a bunch of stuff we’d never talked about on the show and we never will, politics and stuff. So I just… I get it on an HOA.
Jill DeWit:
In those ways.
Steven Butala:
Take it out on the HOA.
Jill DeWit:
Or the title agent or the real estate agent. That’s about his three. Okay.
Steven Butala:
Today’s topic.
Jill DeWit:
Oh yeah, I wasn’t done.
Steven Butala:
Oh sorry. Yeah, I’m sorry.
Jill DeWit:
No, I’m not done. My question… I want really want to say this for Rick. Okay, Rick don’t leave it like that way. I would throw those out. As you’re trying to assess the value-
Steven Butala:
[crosstalk 00:06:58].
Jill DeWit:
… and you’re comparing it to those properties, do we have enough comps with properties that are the outliers that are more like this one, not in this HOA? That’s what I’d compare it to. The question is probably $40,000 might be kind of high based on this just because it’s near there. It has a dirt and such and such and such. I want you to really look at it, forget where it is. Just look at it with similar comps because that area might not be a similar comp.
Steven Butala:
Well said.
Jill DeWit:
Thank you.
Steven Butala:
It’s an anomaly.
Jill DeWit:
Right.
Steven Butala:
Get it out of there.
Jill DeWit:
Yeah.
Steven Butala:
There’s always in data scrub, every single one.
Jill DeWit:
Yeah.
Steven Butala:
If you sort for value, however you see that, however you value property before you send your mailer out. If you sort for that at the top, there’s going to be some crazy weird stuff that’s millions of dollars and you just take it out and at the bottom there’s going to be zero, zero, zero, zero, take them out.
Jill DeWit:
Weird ones.
Steven Butala:
Just take them out.
Jill DeWit:
That’s good. [crosstalk 00:07:58].
Steven Butala:
In our education, we talked a lot about pricing.
Jill DeWit:
Perfect. Thank you.
Steven Butala:
Can I go now?
Jill DeWit:
Yes please.
Steven Butala:
Today’s topic, deal funding transactions in these virus times. This is the meat of the show. Our customer service people every week when I write the titles for these shows, I say, “Hey, what’s on everybody’s mind right now?” And this is one of those things. What kind of deals are Jack and Jill doing?
Jill DeWit:
Mm-hmm (affirmative).
Steven Butala:
What kind of deals are you doing right now Jill?
Jill DeWit:
Okay, here’s what I want. If you’re out looking for deals and you’re looking to me to fund them, that’s what this is about. I want even more crazy home runs because I know the opportunities are out there because I’m doing on myself. That’s what I’m looking for, number one. What you would have spent $40,000 on Rick, you know what? Right now it’s eight.
Steven Butala:
That’s right.
Jill DeWit:
So you’re like, “Jill, we got to buy this.” And if I run out of money, it’s such a good deal that I’m going to pull up my own personal money if I have to fund it kind of thing. That’s what I’m looking for. I want you scratching your head going, this can’t be right. I was trying to get out of the deal and the guy just accepted this crazy number, we have to do it. That’s what I’m looking for, number one. Because that’s how we’re going to benefit, then I know we can mark it up, we can still double our money. You and I are going to get out of it just great. It’s going to be fast and easy. That’s why.
Jill DeWit:
And then the second thing I want to say is there’s a sweet spot, there’s people that… I don’t love to cheap property because we all know what those buyers are like, that’s not fun. People that are scraping together two, three, $4,000 to buy a piece of property. That’s typically a lot of work. There’s a sweet spot which is I want to sell properties that are, say… The bottom is $40,000 a property and the top is…. Now there’s going to be some outliers obviously, so this number will change, but 250, $250,000 there are a lot of people out there that can happily afford to spend between 40 and $250,000 cash right now today in our current times. That is what I’m looking for in deal funding. Having said that, there are some crazy outliers right there and here’s my other thinking between 40 and 250… Thank you for letting me just talk all this here.
Steven Butala:
Sure.
Jill DeWit:
Okay.
Steven Butala:
I’m going to take all the lipstick off of this in a minute.
Jill DeWit:
Okay. Between 40 and 250, I can sell it quickly for cash too. That’s my other thing is time. I don’t want to hold onto these things that long. Having said that, there are going to be some random weird things that I am still going to buy. I know it’s going to take six months to sell, but I know we’re going to make an insane amount of money and it doesn’t fall into this category. It’s above 250 and I’m okay with that. Go ahead Steve.
Steven Butala:
Look, we’re all entrepreneurs here. If you’re not a natural born entrepreneur, you’re not listening to this.
Jill DeWit:
Wait, if you’re not an entrepreneur, you’re not listening to this? Okay, got it. Sorry.
Steven Butala:
It’s a double negative.
Jill DeWit:
That’s right. If you’re an entrepreneur, you’re in the right place.
Steven Butala:
Yeah.
Jill DeWit:
There we go.
Steven Butala:
Well, that’s a positive.
Jill DeWit:
Thank you.
Steven Butala:
We’re all entrepreneurs here. If you’ve done more than 10 deals, you know that when you look at these deals, every once in a while a deal comes along. I don’t care what you do for a living. If it’s deal driven, I don’t care if you buy convenience stores, you look at one and you’re like, “Wow, what? This is too good to be true. I’m going to try to find out what’s wrong with this thing. It’s not priced right. I’m going to kill it. I’m going kill it. If I do this deal, I’m going to run to the bank and get it done.” That’s what we’re looking at for right now and we always look for that, but in high economic times and we’re not, we’re in a low economic time right now, economic downturn we can afford… We have allowed ourselves to be incredibly choosing and picky. And that’s the kind of deals that we’re doing for funding and her own deals.
Steven Butala:
If it’s not… Entrepreneurs are risk adverse. I want a risk free deal. I want a deal that… We’re doing a deal right now that’s 50,000 bucks. It should be maybe 800,000 that’s the kind of deals we’re looking for. And we’re always looking for those deals, but they’re really, really can be prevalent now. And so that’s it. And I’m talking about land, houses, I want a house to be 50% of probably what the smart pricing is.
Jill DeWit:
That’s-
Steven Butala:
That’s the truth of it. And I’m not sugarcoating it and I’m being real honest, and we can do that.
Jill DeWit:
But it’s going to vary by region. Can I sit at the houses?
Steven Butala:
Oh, yes Steve, you guys are being stingy and that’s not nice. Why are you guys being so hard? Why can’t you just… Be a little bit more-
Jill DeWit:
Compassionate.
Steven Butala:
… compassionate and mushy. And can you see it from my point of view? I sent a bunch of mail out and I got all these deals and this one could work. Can’t you see the light in it? No, I can’t see the light.
Jill DeWit:
I hear you.
Steven Butala:
I can’t.
Jill DeWit:
You mean from the person who’s presenting the deal?
Steven Butala:
Or anybody.
Jill DeWit:
Oh, okay. Got it.
Steven Butala:
Now’s the time-
Jill DeWit:
Okay.
Steven Butala:
… to turn the screws.
Jill DeWit:
What the heck? This is what happens when he’s cooped up for a couple of weeks. Woo. What’s it going to be like?
Steven Butala:
You know why?
Jill DeWit:
I can’t wait to hear what the show’s going to be like at the end of April. We’re going to both start smoking again. I’ve never smoked, but I’ll learn. This is going to be funny. I’m going to be just looking like whatever. I’m going to be disheveled smoking and just ranting.
Steven Butala:
Here’s what happens after you’ve done 16,000 transactions, you’re done with mediocre transactions. That’s where Jill and I are in our careers.
Jill DeWit:
Yeah. Even now more so.
Steven Butala:
This is what you have to look forward to when you get really… Let’s leave age out of it. When you get to have a bunch of deals under your belt, you’re only looking for the best deals.
Jill DeWit:
Experienced.
Steven Butala:
Yeah.
Jill DeWit:
You know there’s another one around the corner-
Steven Butala:
Yep.
Jill DeWit:
… because you’ve been there-
Steven Butala:
That’s it.
Jill DeWit:
… again and again, and again, that’s the best part.
Steven Butala:
Just when you think you’ve done the best deal of your career, it’s going to happen next week.
Jill DeWit:
Exactly.
Steven Butala:
And so eventually-
Jill DeWit:
That’s good.
Steven Butala:
… you just want to do the once a week deals.
Jill DeWit:
Yeah. Because I don’t… Who wouldn’t? You want to have a home run every week or do you want to do a bunch of singles? What’s easier?
Steven Butala:
Yep.
Jill DeWit:
A home run, let’s just do that.
Steven Butala:
It doesn’t apply to everything in life.
Jill DeWit:
True.
Steven Butala:
Some people really care about what they eat. They want that home run meal every day. They want four Michelin star food. I’m not that person. I’ll eat swill.
Jill DeWit:
This is true.
Steven Butala:
Bt for real estate deals, yeah, I want the Michelin stars.
Jill DeWit:
Okay.
Steven Butala:
What’s your analogy?
Jill DeWit:
Oh, I don’t know. I can’t tell…
Steven Butala:
Will you drink bad vodka? I will. I don’t care.
Jill DeWit:
Yeah, I’ll drink bad vodka. I’m trying to think what I really don’t care about. I mean, vodka then I guess I don’t know, is that a good one?
Steven Butala:
You know what, Jill? Jill is very and rightfully so because she’s earned it, interested in driving a really nice car. I think that you don’t compromise on certain stuff. I think even a lot of years ago you compromised on a lot of stuff or you just didn’t care as much. Now I think you really want some-
Jill DeWit:
I don’t care.
Steven Butala:
… I think that-
Jill DeWit:
I think I’ve earned it. That’s it. For a long time, it’s true, I wasn’t real picky about stuff and I’m like, “No, I don’t really want that. Thank you. I’m going to be picky.” Thank you. Happy you could join us today.
Steven Butala:
She ends it.
Jill DeWit:
Uh-huh (affirmative).
Steven Butala:
She ends the show.
Jill DeWit:
Every Monday, Wednesday and Friday, you can find this right here on The Land Academy Show and Tuesdays and Thursdays we are on The House Academy Show.
Steven Butala:
Next week join us on The Land Academy show for another interesting episode. You are not alone in your real estate ambition.
Jill DeWit:
Yes, I was trying to-
Steven Butala:
It’s really interesting, I didn’t even think about it until I actually said it out loud. I don’t have any patience for bad real estate deals ever, any more at all. It’s got to be a great deal and then everybody wins and there’s no disappointment in all of it. And we can, in the first five seconds of looking at a deal, I can tell.
Jill DeWit:
Right.
Steven Butala:
But I do have patience for other stuff. I don’t know, I’ve had a bunch of race cars in my life-
Jill DeWit:
Children.
Steven Butala:
… I just don’t care about that anymore.
Jill DeWit:
You have child patience-
Steven Butala:
The older I get-
Jill DeWit:
… that’s good.
Steven Butala:
I do have child patience.
Jill DeWit:
Mm-hmm (affirmative). I’m shocked how much child patience you have actually.
Steven Butala:
Why do you think?
Jill DeWit:
I don’t know.
Steven Butala:
I’m really asking.
Jill DeWit:
I don’t know.
Steven Butala:
Why don’t we have patience for certain stuff and then some stuff, nope, I just won’t have one second of it.
Jill DeWit:
It’s kind of funny. I think it’s-
Steven Butala:
It’s personality disorder.
Jill DeWit:
Maybe that’s it. We’ll go with that. The Land Academy Show remains commercial free for you, our loyal listeners. So wherever you’re watching, wherever you are listening, please subscribe and rate us there. We are Steve and Jill.
Steven Butala:
We are Steve and Jill, information-
Jill DeWit:
… and inspiration.
Steven Butala:
… to buy undervalued property.
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