No Ones Looting my Rural Vacant Land (LA 1259)
No Ones Looting my Rural Vacant Land (LA 1259)
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 how no one’s looting our rural vacant land.
Jill DeWit:
You know, I didn’t want to be that guy and go there, but it’s worth talking about, just some of the, I’m going to say the positives, even though it sounds like a negative.
Steven Butala:
The positive of looting?
Jill DeWit:
No, the positives of rural vacant land, and what we’re doing. We’re going to get into it, I’m sure more, but I’m so grateful for our product type and what we do. And gosh, there’s sure a need for it right now. So, thank you.
Steven Butala:
It was a tragic, tragic week in our history last week.
Jill DeWit:
Yeah.
Steven Butala:
Seems like it’s either died down pretty dramatically or hopefully it’s over, but boy, I understand everybody’s point of view.
Jill DeWit:
It changes day by day too.
Steven Butala:
Yeah. Yeah, so hopefully it’s just that chapter has closed.
Jill DeWit:
Mm-hmm (affirmative).
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:
Just to add on that real quick too. We all search for consistency and normalcy and stuff. And I know me personally, some of those silly shows that I like, they’re not making them right now. So I’m stuck with reruns, but I want some normalcy now and some consistency.
Steven Butala:
Boy, Hollywood is shut down.
Jill DeWit:
I know.
Steven Butala:
Is that what you mean?
Jill DeWit:
Yes. I will say this though, I don’t know if you saw my Facebook post. Volleyball’s back, that makes me feel good. It’s a little something.
Steven Butala:
You just like to see men with no shirt on in our backyard.
Jill DeWit:
There is that too. Yeah, that’s true. It doesn’t suck. Okay. Ben wrote, “I have a property that an owner is wanting to sell. He is the listed owner on the data that I pulled. I found a deed from the ’50s, where his father owned it and it references that the children will have the property passed to them. After that, I couldn’t find a will anywhere. I have the date of death and everything. Does this kill the deal? I should hear back from the county clerk tomorrow, whether or not they can locate it.” I’m wondering wondering if they went ahead and recorded another deed and the kid doesn’t have it. That could have happened because usually there’s something that triggers it before they go changing stuff.
Steven Butala:
Well, there’s two big issues at play here and they’re very, very common and they don’t get talked about. Number one, the person who is on the deed, the vesting deed, which is the deed before the one where you’re going to buy, needs to be the person that you’re talking to and who is available to sign. This is a very, very common misconception in real estate where the person, somebody dies, they owned a bunch of property. They pass away. They have a will that says all my stuff, no matter what, goes to my daughter. And then everybody thinks it’s okay and it’s really not. It has to go through probate. There’s a big legal, depending … and every state’s very different. So we have thousands and thousands of properties in this situation. So the reason I included this question, albeit it’s not-
Jill DeWit:
Yeah, why did you include this question?
Steven Butala:
… a super positive thing to talk about, but it’s just everybody needs to know about it. It’s a reality, that sometimes you have to undo these things legally. Jill’s an expert at undoing these legal problems in some states to solve this problem. And consequently, here’s the positive. This is really why I included it. Because you can make a business out of that. They’re going to be very, very grateful. No one else is going to do this for them. So if you’re talking to a seller and you’re in a situation where it’s in the father’s name and you’re talking to the son or however it works, no one’s going to buy that property, and a title agent’s not going to undo it almost in all cases. So you need to have the expertise if you want to do these kinds of deals to undo this stuff.
Jill DeWit:
And you’re right to add, some states … Okay. So let’s assume, there’s two situations, I think. One is it could be all correct. We don’t know yet. He’s still waiting to find out. They could say, “Oh yeah, this is recorded. Right when dad passed, it was changed the kid’s name. I have a copy of it.” And it could be the kid doesn’t have it. Who knows? It got lost in the whatever, piles of things on his dining room table. Because that happens. And then two, like you’re saying, it could not have been all the way done, which is … And to go back, I want to add to, you said sometimes not even just calling the county and finding out.
Jill DeWit:
Pick up the phone and call an attorney. I have done that. In some states, I’ll go, look, once I get off the phone with the county and I’m like, “Oh, shucks, this is a whole lot of work.” I’m going to call a local attorney right by there. It’s really easy to go Google and find who’s near the courthouse and give them a buzz and say, “Hey, here’s a deal. This is the situation. Can you do something like this? How involved is it? How much does it take?”
Steven Butala:
How much is it?
Jill DeWit:
What does it cost? And good attorneys, call a couple. Good attorneys will either A, say, “No problem. I do six of these a week. I can do it for $500,” or whatever it is. Or sometimes it’s so easy, and I’ve literally had this situation. The attorney says, “All you’ve got to do is this special form and submit it with the will.” I’ve done it myself. You can do it. “And have a nice day.” And I’m like, I want to send the guy a treat like, thank you so much. I’ve just said, that’s all you’ve got to do.
Steven Butala:
Once you do one or two of those, you will start to even find out how easy it is, you’ll start to seek them out.
Jill DeWit:
Yeah. That’s the bigger point. Yeah, now you’re an expert on how to undo these messes and no one else will touch them. A lot of people pass and then you can do all those.
Steven Butala:
The second point here, the second picture point here, and Ben alludes to this. I can’t find the will. So, it’s very frequent. Not very frequent. In certain places like Oklahoma, it’s hard to find the property. So when it’s that old from the ’50s, sometimes it was replatted or things like that. So here’s the deal. Ben has a couple of choices. If Ben sent out 1500 letters and six of them came back, what are you going to do with this? You’re going to shove it up and to the side-
Jill DeWit:
Push it down to the bottom of the six.
Steven Butala:
… and you’re never going to do the deal.
Jill DeWit:
I’ll do the top five.
Steven Butala:
Because the other five … Yeah.
Jill DeWit:
And I may or may not get to it.
Steven Butala:
And in reality, that’s how these usually get resolved. There’s so many other deals, it just doesn’t matter. You do the easiest one. And if there’s two big problems, one, the owner of records has passed away and number two, you can’t find the property, you need to forget about this deal.
Jill DeWit:
Well here’s my other … A lot of it comes down to money though, too. Let’s just call a spade a spade. What if he’s buying for 50 and it’s worth 200? It might be worth the money. I might even get an attorney. You know, I spend a couple thousand on an attorney, big flipping deal, because I’m buying it for 50 and selling it for 200. I can do that.
Steven Butala:
Yep. Today’s topic. No, one’s looting my rural vacant land. This is the meat of the show.
Jill DeWit:
And that’s thousands, not $50 and $200 by the way. Because there are deals like that out there.
Steven Butala:
Oh yeah. I mean, we’ve done deals like that. I mean, in California, this situation is very easy to circumvent and rectify. In Arizona, it’s incredibly difficult. Those are just two examples. And we do a lot of deals in both of those states, a lot of land deals, and when it happens in Arizona, I just stop right there. When it happens in California, we call Jill’s lawyer.
Jill DeWit:
The numbers just have to work out too. I know we’re talking the meat of the show, but I was just thinking I’m doing a deal right now where I was funding it for the guy, but then I went back to, it’s buying it for 40,000, selling it for like 80,000. Okay. So it sounds good right now, but when you back out, what it’s going to cost on escrow on the buy side, escrow on the sell side, it’s a perfect candidate to go through a broker. So there’s 10% gone. So now we’re splitting $30,000 or less than $30,000. And I don’t want to tie up $40,000 to make $14,000. So I had to say, “Shucks.” I had to go back to the guy and say, “I’m not so interested.”
Steven Butala:
The seller?
Jill DeWit:
No, the manager of the property.
Steven Butala:
Oh, okay.
Jill DeWit:
No, it’s a deal funding deal, as a matter of fact. So I’m just talking about numbers and what’s possible since we’re talking about things. I really want everybody to know to be aiming towards those numbers. So I had said, “Shucks, I’m real sorry, but unless you can … It doesn’t meet my criteria, especially right now because I’m buying for 50 and selling for 200,000.” That’s the stuff … Then we’re all in. Buying for 40, selling for 80, backing on all the expenses doesn’t work.
Steven Butala:
Well, is 80 … This is a question we would have sitting there in your office.
Jill DeWit:
Hopefully.
Steven Butala:
Is it hopefully 80 or is it worth 150 and you’re selling it for 80?
Jill DeWit:
No, it’s maybe worth 100. So 80 might be 75. So I’m like, “Shucks.” So, I had to go back to the guy and just say, “Look, if you can get it for cheaper, I’m in. Otherwise,” I said, “there’s other places. We have Land Tank and things like that.” I said, “Yeah, I would suggest looking at this again.”
Steven Butala:
So the whole point of this call today is that we have statistics to back up this statement. The stuff that’s going on in the world right now is fueling people moving out of cities. It was already happening anyway because of the prevalence of the internet and working at home anyway, before all this crazy stuff happened. And then this pandemic happened. And now last week, these riots. I guess they’re riots. What do they call them?
Jill DeWit:
Looting.
Steven Butala:
Looting, yeah. It’s just looting and protests and stuff.
Jill DeWit:
Damage.
Steven Butala:
People who live in large cities like Los Angeles, we’re pretty close to downtown Los Angeles here. If we have figured out, like everybody on this call, or everybody who’s listening to this, have figured out some version of working at home on a computer. We don’t need this. On top of the incredibly high cost of living and MSAs. So unless you need to be here, if you’re a free thinking entrepreneur, like we all are on these podcasts, you still have to look in the mirror and ask yourself some questions, like I don’t need this. Do I need to really raise my kids in this environment? So, nobody’s doing this on … There’s no real issues in smaller towns in this country that you’re seeing on the news. There’s always exceptions. And there always will be exceptions, but it all works in our favor as investors, as rural vacant land investors and housing investors, House Academy investors in smaller towns.
Jill DeWit:
I often wonder how many people are doing a version of this. Like, “All right, I’m getting my family the heck out of Dodge. And then if I need to come back, I’ll get a little … I’ll rent something. I can buy something small,” whatever it is. Probably rent. That makes the most sense really. And just move. So I wrote down a couple of notes. I was thinking, it’s true. We joke about rural vacant land, you really can’t hurt it. No one’s going to go out and set our piece of dirt on fire, and if they did, great. Now it’s all cleared for us. You know what I mean? But it’s just not happening. There’s nothing really be of value that you can take off the land. So, it’s fine.
Jill DeWit:
The other thing we were thinking about, we were talking earlier today, is homes and foreclosure messes that are potentially coming with homes and people not being able to pay mortgages. Most rural vacant land is not lent upon, just by nature of A, the lenders don’t like it to. And that’s really kind of it. So you pretty much save up for it. Most of the properties that we … We buy for cash, sell for cash. We used to do, and we still have some people in our community that do, seller financing, but it’s not like you’re a bank. You’re the bank. You can still make your own decisions. It’s really easy, but you don’t have to deal with that mess. And three, we just have happy buyers. I’m so happy with our product type and what’s going on right now.
Steven Butala:
Me too.
Jill DeWit:
And how many people are looking for vacant land and how I’m sleeping. I sleep even better right now, knowing how much land that we have. And the only thing that’s funny is the only thing that I might lose sleep over right now is having too much cash in my pocket and wishing my cash was in land.
Steven Butala:
Was placed, yeah.
Jill DeWit:
Right?
Steven Butala:
Working for us.
Jill DeWit:
Because I feel better than-
Steven Butala:
Yeah, me too.
Jill DeWit:
Having it in a bank doesn’t make me feel as good as having it on a deed?
Steven Butala:
That’s right. That’s a very, very astute point, Jill. That’s like PhD level finance stuff. And it’s also from a personal standpoint, most people are not like that. I think you have to have a healthy cash balance and a healthy invested, what you see as relatively low risk or risk-free placed money. But there’s very, very few people and certainly not many wives that are really interested in placing equity.
Jill DeWit:
I just feel bad.
Steven Butala:
I didn’t know that about you.
Jill DeWit:
Yeah. I know. I’m looking at our bank balances, and I’m like, “I want to move this. I want to put this” … Again, I feel safer if I have all this property.
Steven Butala:
This is what she means. If you have a million bucks, you know you’re going to return 20% at the better end of the day. As fast as possible in buying and selling land, 20% is really low. Really, it’s closer to 100% historically for us. If you have a million bucks placed, if you have a million dollars cash, you have $500,000 of it placed and you’re generating, let’s just say 100%, your bank balance at the end of that, if it ever gets to the zero point, which it never should, now you’ve got a 1.5 million bucks if you have half a million dollars placed.
Jill DeWit:
That’s just one term of your money.
Steven Butala:
That’s just one term, which can happen in 60 to 90 days typically. So, if you have it all placed, it’s 2 million. And then you start, the numbers get pretty staggering. So placing equity is really … We don’t talk about this enough. Placing equity in this business is very, very important. And the velocity or the rate at which you turn the money is one of the biggest attractants about this business because you can place it for cash and just pull it all back out really quickly. We’re doing deals with a 35, 40 day turnaround right now. And it’s rural vacant land that we’re buying for 20% or 30% of what it’s worth. This is a typical month for us.
Steven Butala:
And so my real point to all this is that as these current events unfold, these negative current events, it’s only making it more attractive. Everybody who is, for us as investors, customers or buyers of these properties, every person that I’ve ever met, every guy that’s about my age, that lives in a city, who’s in a socioeconomic financial situation, has a couple of drinks and says some version of this. “I really would like to move. I’m so tired of living in,” fill in the blank. Downtown Chicago. XYZ just happened. ABC just happened over here. My neighbor’s friend just whatever. And it’s just, “I’d love to take my family and go live in southern Illinois.” I’m not picking on Illinois. It’s like that everywhere. So, these kinds of current events push these customers to us. And we’re directly seeing that. And it pushes the brokers who are dealing with a lot of this stuff for us into high gear. Every single one of them are reporting back to us saying, “We’re getting a huge amount of calls and way more than 2019 would have brought.”
Jill DeWit:
I got a guy right this morning who said, “I took a few days off and now I’m digging myself out.” That’s literally what he said. I’m like, “Yes.” It’s so good. Happy you could join us today. Every Monday, Wednesday, and Friday, you can find us right here on the Land Academy Show, Tuesdays and Thursdays, we are on the House Academy Show.
Steven Butala:
Tomorrow, the episode on the House Academy Show is called, there’s a waterfall of house foreclosures coming in the fall of 2020. You are not alone in your real estate ambition.
Jill DeWit:
I just was talking about, I don’t want to deal with those. And now we’re going to talk about them.
Steven Butala:
Tomorrow is the House Academy Show. Yeah. Why are you guys talking about foreclosures? That’s not your business model.
Jill DeWit:
Exactly.
Steven Butala:
Here’s why, foreclosures happen in pockets. They don’t just happen equally everywhere. And where those foreclosures are, where those pockets of foreclosures, you can very, very accurately predict where they are or where they’re going to happen because of what happened in 2010. That’s where the home values get devalued. That’s where you send mail.
Jill DeWit:
Thank you. Okay. Yep.
Steven Butala:
It’s all connected.
Jill DeWit:
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Steven Butala:
We are Steve and Jill. Information.
Jill DeWit:
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Steven Butala:
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