How We Created Pro Land Investors of Individuals with Zero Experience (LA 1317)

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:
I’m Jill Dewitt broadcasting from sunny southern California.

Steven Butala:
Today Jill and I talk about how we created professional land investors for individuals with zero experience. I am just as intrigued and excited to hear about how we’ve done this.

Jill DeWit:
Because you don’t know?

Steven Butala:
No, I don’t. I don’t know.

Jill DeWit:
You sit there going “I don’t know what happened.” That’s hilarious. You have no idea.

Steven Butala:
I didn’t.

Jill DeWit:
I don’t know, I just threw it up and see if it would stick and it stuck.

Steven Butala:
That’s part of it.

Jill DeWit:
Okay.

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:
Matt wrote, “I’ve had some properties with funky old CCNRs,” which is conditions, covenants, and restrictions.

Steven Butala:
Good work, Jill.

Jill DeWit:
Thank you. I happened to have lived…

Steven Butala:
Makes me want to-

Jill DeWit:
What that is, is if you live in an HOA Homeowner’s Association or a POA Property Owners Association, they will often have these old rules and things about paint color and stuff like that. He says, okay, so he’s got these properties and they’re from the fifties that say things like, you can’t build without passing in the architectural review. I’ve heard of that, and almost certainly the review board is gone… That’s hilarious… and also they’ve all died. They also don’t have the… If the review board doesn’t reply within 30 days, then presumed it’s okay. Type of language that bails you out of the defunct CCNR situation. It’s hilarious. I also have a property that says a minimum of a hundred foot setback from the front, but the neighbor’s house is 50 feet and was built after the CCNR took effect so it’s not grandfathered. The same set of CCNR says, no pets. It’s hilarious. Bottom line… This is so good.

Steven Butala:
Is this for land?

Jill DeWit:
Could you imagine?

Steven Butala:
No pets on your land.

Jill DeWit:
Right. “If I’m flipping the land and the CCNRs are from the fifties, can I presume that nobody is enforcing them and basically ignoring them? There are a few homes, not obeying the hundred foot setback and I guarantee someone in the subdivision has a pet. LOL. The properties are less than 30,000 market sales price.” Well, here’s my first point. Who wrote.. I’m going to say who wrote this, Matt. I’ve never read them. Did you need to go that far into it? Was there really a question that somebody asked you?

Steven Butala:
This is probably on the acquisition side. He’s buying it and he’s got these CCNRs.

Jill DeWit:
Why are you getting this far into it? I guess I need… I mean, this is true, if there is an HOA and they still exist and they do have these weird restrictions, it is important to know the major ones. I’d know the major ones but then again, I’m wondering, based on what I’m reading here, if they’re even still around? Are people still paying into it? Where does the money go? And who’s answering the phone. I’m guessing it’s long gone.

Steven Butala:
Here I have two examples of CCA, CCNRs or HOAs. Number one, I bought a bunch of property in New Mexico one time and I found out later it had a CCA, there was an HOA and I was like, “Oh my god, this is going to wreck this whole thing.” The first thing I did… and you should too, Matt, everybody… is Google the thing, see if they exist, see if you can get a phone number and I did. I called them and it was a woman and I think she was cooking dinner at her home and said, “This is Jackie,” or something. I said exactly what Matt said, “I bought all this property in this HOA. What’s the deal?” She said, “Oh, that hasn’t been around for years and years. We don’t… Don’t worry about it. I wish you the best.”
The opposite extreme is, I bought a bunch of properties, same situation, they’re quarter acre properties and called the HOA and they said, “You can’t build on any of these properties at all unless you have three of them, three quarters of an acre,” which destroyed my real estate investment. Fortunately it wasn’t a lot of dollars and this is a lot of years ago. Here’s the deal with the CCNRs, they’re like old tax returns. They should be irrelevant, but you might have to pay attention to them and you don’t know. It’s like jaywalking, you just can’t tell so you got to pay attention to these. I think in general, when you’re new, you should stay out of HOA property entirely. You’re getting entangled in a web that you can’t get out of. Here’s a personal note…

Jill DeWit:
Good idea.

Steven Butala:
… by the way, here’s a personal note. The CCNR, the HOA themselves, those aren’t the nazis, those are the people that are trying to manage the checkbook, if there even is one.

Jill DeWit:
That’s true, they didn’t write the rules. They’re not the attorney that wrote the rules.

Steven Butala:
They’re complying with the purchases and sales and they’re collecting money and managing money. They’re trying to… They’re sitting around saying, “Should we cut the hedges this month?” The problem is the other people that are in the HOA, and I’ll tell ya, I’d pull a Jill and try to get their phone numbers and ask them. You’re implying here that there’s people that live there, and their setbacks, and their houses and stuff. You go to neighbor scoop, get their phone number.

Jill DeWit:
Call the people, the residents.

Steven Butala:
Call the people.

Jill DeWit:
Call the actual homeowner that built that? That’s a good idea. What’s the story?

Steven Butala:
The homeowners and say, “Hey, is someone driving around in a yellow vehicle with lights on top making sure your grass is not less than two inches long?” And on and on and on. The people will tell you immediately, they’ll tell you, “Yes, we all want to go over there and give them a peace of mind,” or they’re going to say, “We haven’t even heard from those people in 14 years,” but my advice is, if you’re new stay out of there.

Jill DeWit:
That’s a good one. That’s an easy way to call and find out.

Steven Butala:
Jill and I… Would you say that’s a deal killing issue for us now? Will you buy CCNR?

Jill DeWit:
Sure. [crosstalk 00:06:08]

Steven Butala:
…afraid of it?

Jill DeWit:
Not at all. You know what? The only deterrent for me is, is how bad are the dues?

Steven Butala:
Oh it’s the money piece.

Jill DeWit:
How bad are the dues? It’s really not about… [crosstalk 00:06:17] because usually. Yeah, because usually I see it as a good thing, because you know what, if you’re in a Homeowner Association there might be some nice amenities, they make sure the roads look good, they make sure the homes look good. That can bring up the property value and not have… That’s keeping 14 cars in some state of repair in everyone’s front yards, making it a pretty thing to drive through aesthetically, stuff like that. I don’t think it’s a bad thing.
What deters me is the fees are involved. I do like… and if it’s really too much, I still don’t even really care, honestly, I do not get into the CCNRs. I only want to know how much, how much does it cost when I transfer the property, because I’ve been hit with that one. When I bought a property, I know I’m going to take over the Homeowner Association fine, it’s $100 a month, I can wrap my head around that one. What I didn’t prepare myself for one time was how much it costs to do that transfer. They charge $2,000 every time so when I bought it, it was $2,000, and when I sold it, it was $2,000. I had to prepare my seller for that and I had to account for that in my sales price, because they need… it’s expensive.
That’s really what I care about and I don’t want to worry about, I’m afraid of HOAs, I don’t like them for the fact that a lot of people don’t want that extra $100 or $200 or whatever it is a month of the fees. Sure, it’s great to have a clubhouse, but I don’t want to pay $200 a month for it, and two, what if I’m holding onto this for six months while I’m trying to find the right seller. That’s $1,200 I got to prepare for.

Steven Butala:
Have you ever heard a buyer, whether it’s a home buyer or a land buyer, say this sentence, “No, no, no. I don’t want to look at that property. I want to look at the property that’s got an HOA.”

Jill DeWit:
Right, that’s not it.

Steven Butala:
Never, you’ve never heard anyone ever say that. This clubhouse… Now we’ve bled over to now personal. From a money standpoint or investor standpoint, HOA properties are almost always bad. From, apparently, and I just learned this about my life partner here. Apparently she seeks out HOA property with the clubhouse and rules.

Jill DeWit:
I don’t seek them, I’m just saying I’m not afraid of them.

Steven Butala:
I’m 180 degrees different. I want freedom, if I want to put an RV in my driveway for four years, that’s what I want. I’m going to do that.

Jill DeWit:
I’m not afraid of them. What I’m looking for is, it’s easier to sell if it’s… It’s easier to sell, if there’s no HOA period. The second choice is, if there is one, it’s got to be $50 a month or less, something silly like that. Maybe it’s $39 a month to keep up the one gate at the front that has a name on it. Fine. Thank you.

Steven Butala:
Today’s topic, how Jill created pro land investors from individuals with zero experience. This is why you’re listening.

Jill DeWit:
Why did you say it like that?

Steven Butala:
Because it’s like, I don’t… I want to hear this too, I really do. It’s an interesting… Some of these topics that come from customer service aren’t topics I would choose.

Jill DeWit:
It’s not how I did it, it’s how we did.

Steven Butala:
Okay, how we did it.

Jill DeWit:
It sounds like you’re trying to throw me under the bus here.

Steven Butala:
No.

Jill DeWit:
We’re coming up with topics, I asked the team and they said, “Here’s what comes up a lot.” People want to know how people went from zero to 60. How’d you get them from zero to 60, so I’m like, I didn’t think it was that difficult to figure out. First of all, I’ll say that the people that go from zero to 60 that are successful were already successful. They were already good at what they did and most of our pro members, they’ve got some background in running their own business, solving crazy problems, not being afraid to invest in some things and just going for it and trusting.
Basically, I’ll say there’s three things that answers this question. Number one is the obvious, it’s a business model and we sat down and put on paper, and you did more of it than me because the majority is you, I just brought in the sales and the different parts that I came along and added to and tweaked and improved upon, hopefully you agree. Later on with sales and things like that, and talking to people and talking to sellers and the buyers and getting them to want to sell to you. It’s our whole business model, we put at least a year by the time we… Gosh, from conception to releasing, over a year, our whole thing. Filming just took six months, writing and filming took six months, but we talked about and planned it out for a long time. It’s our whole business model, start to finish.
Imagine having a secret handbook to something, imagine saying, I want to have a credit card company and being able to get American Express’s handbook, showing you how they became American Express with all the steps, from the little ones to the big ones, and growing the team, and knowing when to do this, and knowing when to do that, and due diligence, and how to… everything. That’s what we did. Number one, we all see the value in that.
Number two is, I think what makes us unique too is we lead by example. We didn’t just put it out there and walk away. Some people write books and then they’re not doing what they wrote their book about. Why would I read your book and trust in you when you’re not doing it yourself? I have a lot of questions there.

Steven Butala:
Well said.

Jill DeWit:
Thank you. The business model that we wrote down, and we are forever tweaking is because we’re doing it too. We lead by example. I’m buying… As we transition to houses, we transition to infill lots, we transition to mobiles, we’re sharing the next parts of our business. Even right now, Land Academy, we have 1.0 and 2.0, you’re working on a 3.0, which is the changes that have happened now in 2020 and coming in 2021, how data’s changed and what we look at a little differently and pricing things, what really works, what doesn’t work. There’s a lot of things out there right now. By the way, I’ll stop everyone right now. If you think there’s a pricing easy button, you’re going down the wrong path. That’s probably the stuff I know that you’re working on in our new program. That’s the second thing, we lead by example.
The third thing, I think is how we created pros and why we have pros like us, is mentoring and helping. I made a note it’s, we mentor and help. In our community, you get mentoring and help, it’s for everyone and it’s by everyone. I just came up with that little thing, I’m like, oh yeah. You used to say, for investors by investors, but our mentoring is for everyone by everyone. What that means is I’m mentoring you, you’re mentoring that guy, that guy’s mentoring that guy, it’s a great big circle.
I was in BiggerPockets recently, which is a huge real estate forum. I hadn’t been in there in a while, I haven’t been real vocal in there. There are teams in there, they do things and they communicate with people. I hadn’t personally been in there in a little bit of time and I went in there and I’m trying to help someone. I really wrote a nice thing to help the guy. I was very careful. They’re real picky about wording and soliciting and everything and I’m really sincerely trying to help someone saying, “Hey, here’s what I do when I do direct mail, I would consider A,B and C.” Well, someone came along and just immediately attacked me and I was so sickened and frustrated.

Steven Butala:
Can you get into detail about this?

Jill DeWit:
Sure. This guy said, “Oh, you’re one of those wholesalers. You probably never disclose that you don’t take the title of the property. You incorrectly do this.” I wrote a book, you know what I did? He wrote six things down that was 100% wrong. He went right into attack mode and I wrote… I copied and pasted his exact six things and I answered them. I said, “You know what? I do take title and I can give you examples. I used to have examples here in BiggerPockets, but admin pulled them down.” I put in properties where you can go and look them up online and see my name on the title. I’m not assigning. I’m not trying to slide anything in there. I’m not… He’s like “You guys, you guys never put your necks on the line.” I said, “Oh boy, do I. I buy it. I pay for it. If I screwed it up, it’s on me. I really do follow through on all these things.”
My point of bringing that up was, we’re not those people, and I got frustrated by that community. The direction that community has gone, I think is hurting a lot of people. I’m like, you know what? I only want to play in your sandbox because I tried to something nice, and you guys don’t see it as nice, forget it. I know how our people are and we are not those people. It took us five years, didn’t even take us five years. It wasn’t even a battle. We just right out of the gate.

Steven Butala:
It’s just who we are.

Jill DeWit:
We’re just, right out of the gate are here to help and it’s received and people help back. You can write any question you want in our community or bring up any question you want on our live member calls. I’m never going to hold back. I’m not going to tell you you’re doing something wrong or it’s stupid. I’m going to help you and get you, and if it’s on the wrong path, I’m going to nicely tell you, “Hey, let’s look at it this way. This is going to get… this is going to work,” and that’s it. I think those three things are why we have pros. We are helping each other, we mean it. We’re getting better together. We’re doing bigger and better deals together and it’s gone beyond the level that I thought was even possible.

Steven Butala:
Oh my gosh, this went places that I never intended.

Jill DeWit:
Thank you.

Steven Butala:
In fact, I don’t even see where it’s going to go.

Jill DeWit:
I can’t even imagine.

Steven Butala:
I was talking to somebody recently, I don’t know what this is going to be in five years because if this is not… It’s all unintended consequences in a real positive way. It’s 98% positive and 2% negative, but that’s everything. I have two big points. Number one, I used to be in accounting and I remember distinctly remember having a conversation with the partner that I was working with at the time because we were in a huge hiring situation. We were constantly getting more work than we could handle, so he said… we’re looking through resumes and he’s like, “What do you think about this person? What do you think about this person?” We’ve all been here. I said, “You know what? If we have to train somebody to do this job, we shouldn’t hire them at all.”
I don’t believe that people need to be trained unless it’s some really specific job. I don’t believe all this two months of training, and this is how you talk to people, that’s just not my philosophy. I believe that’s what goes on here. I’m happy. I don’t train people. Let’s say in flight school, in flight school it’s like, all right, day one we’re going to do this, day two we’re going to do this, day three is this.

Jill DeWit:
You mean learning to be a pilot.

Steven Butala:
Yeah.

Jill DeWit:
Okay, pilot, that kind of a flight…

Steven Butala:
That’s not what this is, and Jill and I have choice here. There’s a person in our space that did a thing literally called Flight School. It’s over now and it doesn’t work. It’s for the reason that I’m saying, there are two stacks of resumes that we came up with in accounting and the people that we believed… We hired a lot of those people from my way, where we didn’t believe that they needed to be trained and you know what? They didn’t. That’s what some people call self starters. I carried that philosophy on all throughout… I’ve always had a group of people in an office selling real estate since the nineties, early nineties.
My big second point is this thing. I had a creative writing class in college, so they said here’s… It all started with theory… here’s some theories about how to write, the whole keyhole approach or the backwards keyhole approach. There’s a lot of theories. We studied them. Then we read some examples of what the instructor thought were good examples of effective creative writing, not just fiction, but all kinds of nonfiction, which is really what I do for a living now, is nonfiction creatively write, for The Land Academy anyway. Then they asked us to do it and we all did, probably let’s say there was 30 of us in the class, I don’t remember. I wrote my stuff, all of it, turned it in and they pulled me aside a week later and said, “You really need to do this for a living.” Well, it turns out I did. There’s a lot of stuff that happened in between.

Jill DeWit:
That’s cool.

Steven Butala:
Most of the other people, I think there were two or three people that, for whatever reason, they singled us out. It’s the same way here. I didn’t… I went into this with interest, I listened, I studied and I ultimately did my own stuff to their satisfaction and went on to do some portion of it all the way through my career. That’s what Land Academy is. A lot of people are going to go through it and it’s just not going to follow through. I think I brought a lot of natural ability in the end to the table in the beginning, the way that that one stack of resumes did, a lot of stuff they brought to the table on their own. This notion of the title of how we’ve created these pro land investors and visuals with zero experience, they did have some experience. They don’t have experience buying and selling land probably, or buying, selling houses, but they came with the right attitude and the right… You can call it attitude with the right goals, maybe the right work habits, they came to the table with something.

Jill DeWit:
Exactly. Happy you could join us today. Monday through Friday you can find us right here on The Land Academy Show.

Steven Butala:
Tomorrow the episode on The Land Academy Show is called Urban Exodus is Real, You are not Alone in your Real Estate Ambition. This is a title I wrote.

Jill DeWit:
Well good. I’m glad. Thank you for tuning in. We hope you find our content valuable and we appreciate your support. If you haven’t already, please zip over to our YouTube channel and hit the subscribe button.

Steven Butala:
Your comments and suggestions help us create the type of content that you’re here for. Hitting the like button on your favorite episodes helps to support our channels algorithms to gauge your interest for future shows. It’s all about the data. We’re Steve and Jill.

Jill DeWit:
We’re Steve and Jill.

Steven Butala:
Information…

Jill DeWit:
…and inspiration…

Steven Butala:
to buy undervalued property.