4 Types of Land Business Specializations (LA 1327)
4 Types of Land Business Specializations (LA 1327)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Howdy.
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 we talk about the four types of land business specializations that you can choose from and make money on. And hint, we do all four.
Jill DeWit:
Yes we do.
Steven Butala:
Should you?
Jill DeWit:
Got ’em.
Steven Butala:
Should you do all four? Eventually.
Jill DeWit:
I think so.
Steven Butala:
You know what? I’m going to list them, then we’ll take the question, and we’ll get into the details.
Jill DeWit:
You’re not going to save it?
Steven Butala:
Nah, here’s the list.
Jill DeWit:
Okay.
Steven Butala:
Extremely rural, extremely inexpensive property, that really the middle of nowhere property, incredibly inexpensive. Number two, recreational/homestead type property, that’s two hours to three, maybe four hours drive from a major city. 20 acres, it could be a homestead, you could build a cabin on it. There’s lots of stuff that you can do. This is our favorite type. Number three, infill lots. Property that’s in a very urban setting that is incredibly attractive to people who build houses, home builders. Super easy properties to find, difficult to negotiate price, really easy to sell because you know who your buyer is going to be. It’s just a finite group of builders. And number four, specialization property. Property that’s pre-zoned, for let’s say a nursing home, a Walmart type property that’s zoned for big box along with freeway, or heavy industrial property or industrial park type property.
Jill and I, some of the most successful deals that we’ve done have been those types of properties. High risk, long term deals. 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’m going to preface that this is a little bit longer here, just so you know. “I have two acquisitions people fielding my incoming seller calls. My first person ran out of bandwidth and I feel like we streamlined the process efficiently that it makes sense to bring on a second person.” Bandwidth-
Steven Butala:
Bandwidth meaning he ran out of gas.
Jill DeWit:
Okay.
Steven Butala:
Just ran out of interest.
Jill DeWit:
So they’re going to bring in another person to replace that one. “Also it’s nice to have some redundancy, and my first acquisition person does other roles in the business.”
Steven Butala:
One second, so I’m going to stop you there.
Jill DeWit:
Okay.
Steven Butala:
There’s a reason airplanes have two engines, there’s a reason that boats have two engines, long-haul boats.
Jill DeWit:
There’s a reason why kids have two parents hopefully.
Steven Butala:
Yeah.
Jill DeWit:
Because one of them is going to run out of bandwidth.
Steven Butala:
Redundancy is always a good idea. Redundancy is always a good idea. This is the definition of a split test by the way. Go ahead.
Jill DeWit:
Okay. “Does anyone have more than one person as an acquisitions person?”
Steven Butala:
We do.
Jill DeWit:
“I’m trying to find a way to streamline the business while still being personal. For example, my mail piece says, name@company.com, not acquisitions@company.com, or sellmyland@company.com kind of thing. I like that it has a name there, a real name of a person. However, as the years go by and acquisitions people inevitably leave the company, I suppose my direct mail letters will become out of date and people will be getting different people when they call in. Not to mention, I’ll have to track down those emails and make sure they always forward so I don’t lose leads from old mailers. Does anyone feel like they’ve found a good way to people-proof and time-proof?”
Steven Butala:
I’m going to use this.
Jill DeWit:
This is good.
Steven Butala:
I’m going to use this somewhere. I’d like to people-proof this place.
Jill DeWit:
“How we handle the incoming emails-”
Steven Butala:
Jill doesn’t think it’s that funny.
Jill DeWit:
“Is it better to change to generic email addresses and then stop referencing individuals all together? Should everyone email through on team@company.com email, or support@company.com? Any thoughts or advice would be appreciated.” I know what makes sense to me.
Steven Butala:
Go ahead Jill.
Jill DeWit:
Okay. It does make sense to me on the sell side. Sales@LandStay.com, support@LandStay.com, that stuff makes sense to me because you’re used to having a team on sales or customer service. It’s very interesting. Because you know what? Matt’s kind of right on that. I don’t see it weird on that one, but when someone emails me to want my business, which is kind of like this. With a seller, “You want my property?” I want it to be personal, isn’t that funny? I like having a name on that, and we have a name on that. Right now it’s my name on that.
Steven Butala:
We get mailers in from years, decades ago, and I can tell you exactly when the letters went out with the person’s name on it.
Jill DeWit:
Right. And I’ll tell you, years later it doesn’t matter.
Steven Butala:
Doesn’t matter one bit, the seller just wants some dough.
Jill DeWit:
They just want the email to get answered. The most important thing for us is, more than the email, it has been the phone number over the years. That hasn’t changed. We’ll get calls going, “Is this ABC company?” “Yep, actually that’s still us, we’re here.” Between you and me, friend, listener, we don’t go by that anymore, but everybody who answers the phone knows that that was one of our entities 15 years ago or so.
Steven Butala:
Yeah.
Jill DeWit:
And they’re just happy that someone answered the phone. So that part’s not so weird, and they would expect it too. “Of course Suzy’s not there anymore, that was 20 years ago, or eight years ago even that you sent me the letter. Things change, I totally understand.” I hope that answers the question. And that’s how I would do it.
Steven Butala:
I’m taking notes you’re answers are so good.
Jill DeWit:
Aww.
Steven Butala:
I’m serious. You know what the answer is? Matt, it doesn’t matter. Email forwarding is, as a real business expense, tiny, and it’s real easy. Don’t worry if Janice@LandAcademy.com is no longer there, you can forward those emails through a system. We use Microsoft 365, that couldn’t make it any easier and self-contained.
Jill DeWit:
And that happens-
Steven Butala:
In fact, a lot of that stuff’s just an ancillary, it’s not even a cost, it’s just free.
Jill DeWit:
That’s true, because we’ve had people that have left the company, voluntarily and involuntarily, and all you do is … Thank you, I was waiting for you to get that. But it’s very easy to forward those emails to somebody else. So someone else is tracking and monitoring that email, and that you could do for yourself too, so if that person leaves … That’s the only thing I would say, is I would never … One thing I would never do is say, “Okay, you’re the acquisitions person, put whatever email you want on there,” and it’s going to their Gmail account and you never can keep track of it, you can never get it.
Steven Butala:
That’s exactly what you don’t want.
Jill DeWit:
I would never do something like that. It’s your company email coming through you. So Suzy@MattsLand.com, I love and I prefer when you’re buying the property, because they’re going to call and want to talk to Suzy, or at least know Suzy’s around, or Suzy’s a person, and it just seems better. And you’re not, We Buy Ugly Land to do this, that makes a difference.
Steven Butala:
Yeah.
Jill DeWit:
And then like I said, on the sell side.
Steven Butala:
So all of that’s true, but in the end it doesn’t matter. You’re going to … You may increase or decrease. It’s a statistical plus or minus 3%, but you’ll never know because you don’t do it the other way. The split test thing in the beginning I love. Get two acquisition people and put them against each other.
Jill DeWit:
See who’s better.
Steven Butala:
We have a person in our advanced group that hires interns, like 20 of them at a time, and she just throws all this stuff on their desks and says, “Whoever wins gets $100,” or some number like that. It’s probably 100 grand actually at her level.
Jill DeWit:
I was going to say.
Steven Butala:
And they do, they’re just like sharks, they just eat each other for these deals, they send mailers out, they run it like their own businesses. You put 10 brilliant college kids in a room like that and give them some incentive, two of them are going to win and they’re going to make you a bunch of dough. They’re also going to go off and do it on their own.
Jill DeWit:
That true.
Steven Butala:
But it’s not a bad model.
Jill DeWit:
That’s true.
Steven Butala:
Today’s topic, four types of land business specializations. This is why you’re listening. Maybe you’re listening just listen to Jill.
Jill DeWit:
This is one of those topics that I’m going to do my best to make it a little more shiny, and fun, and entertaining.
Steven Butala:
That’s code for, “Oh my god, you’re going to be boring again.”
Jill DeWit:
I promise I won’t let it go there. I’ll throw zingers in there, I’ll make it good. Ready? Go.
Steven Butala:
Picture a grid, it’s four by four. You’ve got four types of land businesses down the column. And they’re what I mentioned early in the show, extremely rural property, recreational property, infill lots, and special property like farmland. And at the top, in the grid, you have price, affordability, resale time, like hold time, and profit margin let’s say. Let’s start with ultra rural property. A great example is San Bernardino County, California. When I started, we were buying everything we could get our hands on regardless of even looking at it in San Bernardino County between $50 and $100 an acre. And guess what? You can still buy property all day long for $50 to $100 an acre there. It’s very, very hard to sell for $200 an acre. Why? Because there’s too many people doing it. If there’s too many red dots on Realtor, too much property for sale, it’s just overdone.
When I started in this there was no … The MLS wasn’t online, so we would sell it on Craigslist, or eBay, or whatever, and everything we bought sold for a lot. I’m not saying don’t do that, because there’s all kinds of places, rural areas like Montana, and even Vermont, super rural areas where you can make a ton of money with this rural acreage. Usually it doesn’t have access, incredibly cheap, and because it’s so cheap, you’re buyer base is huge. Who’s not going to spend four grand for a 40 acre property in Maine? Very few people. In fact, you’re going to sell it that day. Even if there is no access, as long as you disclose that there’s nothing wrong with that. If that’s your niche. We made millions of dollars in this niche. Millions and millions of dollars, there was one point we were making one or two million dollars a year doing this. And we still do it, that’s the truth. We still buy and sell property, very specific types of property that are easy to buy and easy to sell. And we do it with the younger people in our company to teach them. It’s a great way to start and learn the mechanics of doing deeds and all that.
The second type, our favorite, recreational property … Is this boring?
Jill DeWit:
Not at all.
Steven Butala:
All right, good.
Jill DeWit:
No, I’m loving it. Do you need me for anything, I’ll be right over here.
Steven Butala:
No. No, that color of nail polish looks great on you.
Jill DeWit:
Thanks.
Steven Butala:
The second type, which we call recreational property, which may or may not be the best way to describe it, is property that’s a two to four hour drive out of town, let’s say Chicago. If you drive two hours out of Chicago in every direction you’re going to go to northern Michigan, northern Wisconsin, or middle Wisconsin, southern Illinois, southern Indiana. There’s a lot of property two to three miles … Even Tennessee. Two to three miles out of Chicago, more property than you could ever buy and sell in a lifetime, right out of that one city.
The goal there is to buy property for half of what you’re going to sell it, and you can very easily back into the purchase price by looking at what’s for sale and what sold in the market in places like Redfin, or Zillow, or Realtor, look at completed sales. Or even on DataTree through the data that we provide in our membership. So it’s not hard to get those mailers out, price them correctly, and turn property. Your market, the people that you’re marketing to is huge. Think about how many people want to get the hell out of Chicago.
Jill DeWit:
Especially now.
Steven Butala:
A typical deal for us in this niche is buy for 20 or 30, sell for 60 or 70, or even 100. Jill’s got multiple properties in the California area and in the center of the country where we’re buying for 10, 20, 30, selling for 60, 70, 80, 110. And we have deals like that closing every single month. The property is easy to close, it’s easy to find a seller because they bought it for the same reason that they guy that you’re going to sell it to, bought it. Stuff changes in their life. They bought it 10 years go, they were going to build a house, just didn’t pan out. Maybe somebody got ill, they had to take care of their parents, life happens, happy to sell it to you. Happy to take it off my hands please. Like an old boat.
Number three, perhaps the easiest-
Jill DeWit:
Thanks for not saying wife.
Steven Butala:
I was boat/wife in my head.
Jill DeWit:
Thank you.
Steven Butala:
Third specialization is infill lots. Theses are properties that are totally build-able in the state that they’re in, you don’t have to change zoning. There’s all these other groups that talk about, “Let’s change the zoning. Let’s stick a needle in our head.” I would rather stick a needle in my head than change zoning.
Jill DeWit:
I agree.
Steven Butala:
They’re properties that are already zoned for usually a single family residential or small multi tenent, four units or less. You’ve done a feasibility study on it, you know that there’s probably 20 people in an MSA or a market that are … You know this because you pulled the building permits and they’re building properties. They’re building single family residences, one, or two, or five at a time. And so you know that they’re going to buy your land if it’s priced right. This is a niche that I see people doing, we have a whole educational program on it in Land Academy called Land Academy 2.0: Infill Lots. What is great about this is after you do one or two deals with these home builders, they’ll come back for more forever. They will never leave you alone. They’ll say, “I need more land, I need more land. Can we send a mailer out to this zip code? Can we please do it over here.” It’s easy to get a career rolling in about 24 months that will feed you forever in these types of scenarios. And it’s a closed market. This infinite desert lot, like property specialization one and two, it’s very infinite. You can just do it forever, there’s millions, and millions, and tens of millions literally of properties that you can buy. It’s just all about sending the mail out. With infill lots it’s very strategic, and that works for some people’s personalities.
It’s very strategic by MSA, and by zip code. You can find out very quickly by going into DataTree, or any of the data providers that we have, how many vacant lots there are in a zip code. There’s maybe 20, 30, 80, 100. Let’s say you buy four of them, you go to the next zip code over. And you collaborate with the guy that’s going to buy it from you, so it’s built in. So that works great for certain personalities. Jill and I do infill lots every year, we don’t seek them out as much. You’re never going to hit a home run with an infill lot, you’re only going to hit singles, and that’s okay. Some people are singles type of people. You’re going to hit a home run with recreational property, property type two. One a year, maybe three a year. You’re going to stand over the deal when you’re signing it on the sales side and say, “Well, enjoy it because it’s never going to happen again.” Then it happens like eight months later.
Fourth property type, specialization property. This is the highest margin property that you can possibly buy. It’s what people in the olden days referred land man as.
Jill DeWit:
Olden days.
Steven Butala:
I mean in the 1800s.
Jill DeWit:
Land man.
Steven Butala:
You know, “You’re a land man.”
Jill DeWit:
Oh, okay. With a land man ask.
Steven Butala:
“I think the railroad is going to go here … ”
Jill DeWit:
That’s … Yeah.
Steven Butala:
That. It’s land speculation. We have the luxury now where most communities, urban communities anyway, are pre-zoned, pre-planned, they’re master planned. They know that the school is going to go over here when there’s enough growth, they know that the industrial park is going to go over here, they know that all the farmland is going to be over here, and a master plan subdivision is over there. You can very, very easily, from a data standpoint, send out mail that is, let’s say hospitality specific. All the properties that are zoned for motels or hotels in, let’s say a three county area, pull the data, you can see it, and you send them mail. I cut my teeth, my career, on doing deals like this. I would go to the buyer first, and I did it with long term care, and specifically publicly traded nursing homes, because they have to do acquisitions.
Every quarter they have to announce, “Oh, we’re buying 14 buildings.” So I’d talk to the acquisition person there, they would say, “We love Tennessee, Kentucky, and Ohio.” I would send everybody an offer, a data driven offer, four or five would come back, I’d go back to these owners of publicly traded and they’d say, “Yeah, we want this one and this one, and not these two.” And so that becomes a very high end closed market like infill lots, and it’s extremely, extremely profitable. It’s also some of the most painful transactions I have every been through. They take a long time, you don’t know if they’re going to close. A lot of times they don’t close. You get right down to the end, it takes a year to do these deals sometimes because of the approval process, and the zoning, and all kinds of soil testing and stuff that’s got to go on to make sure they can do what they want to do with it.
So the close rate is a lot lower. When they close though, it’s a six digit check for you. In summary, you should do some version of all of those at some point in your career. And maybe, like us, we do some version of all of them now. We just heavily lean on number two. But all the people in our advanced group at Land Academy have a lot of opinions about this. They’re all different. They have all a different way of making six or seven digits a month doing this. So those are your four options. This is actually a chapter in Land Academy 3.0.
Jill DeWit:
I have nothing.
Steven Butala:
Nothing?
Jill DeWit:
Well, I have little comments. I mean, that was beautiful, that was great. I can’t make that any better obviously.
Steven Butala:
What are the four types of men-
Jill DeWit:
Oh gosh.
Steven Butala:
To avoid?
Jill DeWit:
Oh no, really?
Steven Butala:
Yep.
Jill DeWit:
Okay.
Steven Butala:
Not on behalf of all women, I want to hear Jill.
Jill DeWit:
Oh, what do I avoid?
Steven Butala:
Four types of men that you know through experience you should just avoid that kind of guy.
Jill DeWit:
Oh no, I can’t do that. I’m not going to be personal.
Steven Butala:
Don’t name any names.
Jill DeWit:
No, no, no. I had one question I wanted … You touched on one thing that was big enough to me, in that speech that you gave that was beautiful by the way, thank you very, very much. One thing jumped out at me that I wanted to … It just makes me mad whenever I hear it. You know those sayings that it’s like nails on a chalkboard? It’s like if one more … I’ll tell you, I’ll give you an example. “The new normal.” If I hear the new normal again, I’m going to scream.
Steven Butala:
“Stay safe.”
Jill DeWit:
Yeah, oh yeah, that one too. “Stay safe.” Really? That’s what we’re doing now? Okay. Well, we always … Isn’t this always this, and isn’t normal always normal? I don’t understand. I’m so confused.
Steven Butala:
We’re going to bring this to the COVID, I got a lot to say too.
Jill DeWit:
Okay.
Steven Butala:
This is better than four types of men.
Jill DeWit:
Yeah, it is. One of the things that you brought up that is nails on a chalkboard for me is running into a property, picking … This is in your category number three … No, four. Category four. “I know it’s agricultural, but it’s going to be much better commercial. I’m going to change the zoning.” On what planet is this a good idea? Because let me give you the two scenarios. Number one, you don’t have a buyer, you’re guessing. You might drastically change a … Why wreck, with a perfectly good property that’s happily doing whatever it is zoned for because you have a hunch that you think it would be better off zoned a different way? I think that’s nuts.
My other thought is, now let’s just say you do have a buyer and they only will buy it if you can change the zoning. That’s so scary to me too. That’s a little roll of the dice. How long you going to string them along? How long are you going to keep them happy while you’re trying to get this done before he says, “Oh, I’m sorry, I bought the one across the street. It was ready to go?”
Steven Butala:
This all falls under the age old myth, real estate myth, that you have to improve property to sell it for more.
Jill DeWit:
Yes.
Steven Butala:
I’m here to tell you, you don’t have to improve property. In fact, you shouldn’t, you should just buy it cheap and resell it for more.
Jill DeWit:
There are creative things that you can do, that we do to do … But the underlying theme is, it stands by itself. You know what? Because if you have to do that, here’s my last thing on the zoning. If it’s only valuable if you change the zoning you shouldn’t have bought it, you made a mistake.
Steven Butala:
Let me tell you, I’m going to break some myths here. I just wrote this down because we’re going to do a show on this. But here’s a myth, you’re going to change the zoning and sell it. It’s never going to happen, not in your entire career. People who can change zoning are companies like Walmart, and they almost always zone down from agriculture, and that’s it.
Jill DeWit:
I didn’t mean to interrupt you, the reason they’re changing the zoning is because they’re buying it for that purpose and they’re the buyer.
Steven Butala:
And-
Jill DeWit:
They’re changing it for their purposes, not to sell it to somebody.
Steven Butala:
And whoever is making decisions about changing that zoning, it’s prefaced with a company like Walmart saying, “Well, we’re going to create 10,000 jobs in your market when this thing is done.”
Jill DeWit:
Right.
Steven Butala:
It’s not just the zoning stands on its own two feet.
Jill DeWit:
Right.
Steven Butala:
People like Shea Homes take agricultural property regularly in markets like Phoenix and change it to SFR.
Jill DeWit:
Right.
Steven Butala:
That’s all very feasible, that never going to happen to independent people like us.
Jill DeWit:
It’s the buyer, it’s not us. It’s not the seller.
Steven Butala:
People who say, “You can change some zoning,” and then they do a show about it, let’s say, like let’s say last week. The reason that they’re saying that is because they’re like a lawyer that can say, “We should sue these people. It’s going to take two years and I can collect a bunch of fees.” And that’s the only motivation there.
Here’s myth number two, you can homestead property. Homesteading stopped in 1976 in Alaska, and before that on the mainland, in the main country, it was in the ’20s and ’30s and even before … I’m not sure even then. That great land grab thing happened in the 1800s, it’s over. You’re not going to put a fence around some government property and get it for free 20 years later, it’s not going to happen.
Jill DeWit:
And not pay taxes on it.
Steven Butala:
Yeah.
Jill DeWit:
I had a guy argue with me about that, I just like, “Keep smoking what you’re smoking.”
Steven Butala:
What you can do instead of homesteading, and I would encourage you to go on Google and look this up. This is a real estate show, it’s not a joking around show. Sorry.
Jill DeWit:
No, I’m with you. I’m sorry, did I get-
Steven Butala:
No, we’re just been horsing around all week and it’s like-
Jill DeWit:
Woops.
Steven Butala:
We’re just talking about real estate today.
Jill DeWit:
Crap. I just got in trouble.
Steven Butala:
No you didn’t. It’s not that at all.
Jill DeWit:
Darn it, here it comes, it’s sixth grade being in the back of the room just came rushing back.
Steven Butala:
If you want cheap property … Oh Jill, I’m going to kiss you on the ear right now. [inaudible 00:23:58] at all.
Jill DeWit:
Okay.
Steven Butala:
What you can do and should do if you’re bored right now is go onto Google and look at where to get free property, and you’re going to see there’s tons of municipalities, usually in the deep south or the center of the country, places like Kentucky, Tennessee, and Alabama, or Indiana. Tiny little municipalities that have populations of 800 that have a defunct subdivision that’s right in town and they say, “We will happily give you this property, but we need you to build a house on it by a certain amount of time. And you need to pass all these tests. And we’ll give it to you tax free for a certain amount, but your tax is going to be X at a certain point.”
They’re trying to encourage people to move in, and increase their tax base, and their population, and all that stuff, spending power, and all of it. Homesteading is dead, getting cheap property from small municipalities is very much alive and very feasible. There’s a bunch of other myths I can go into but I don’t …
Jill DeWit:
Were you alluding to a myth busters show? I think that would be awesome.
Steven Butala:
Yes, either an episode or some type of thing.
Jill DeWit:
I think that would be fantastic.
Steven Butala:
To wrap this up, from a real estate standpoint, Jill doesn’t want to talk about dating, so we won’t. The four types of … If you’re brand new you should do the number one first. And hopefully if it makes sense to you, the [inaudible 00:25:20] process and all the details, you should rapidly get into number two. Rapidly, as fast as you can. And then after you’re seasoned for a couple of years, three and four.
Jill DeWit:
I love it. Happy you could join us today. Five days a week you can find us right here on the Land Academy Show.
Steven Butala:
Tomorrow the episode on the Land Academy Show is called An Interview With Advanced Land Academy Member [BaiZang 00:25:43]. You are not alone in your real estate ambition.
Jill DeWit:
I love Bai.
Steven Butala:
Bai has been with us since … Almost from minute one. Probably from month two.
Jill DeWit:
She comes to every live event, sick or not, she gets herself here. Last year she had lost her voice and it was so sweet. But she’s here with us and we love Bai. Every time we do these, we’ve done two or three, I can’t remember, interviews with Bai like this. Everybody loves it, she has a lot to say, and it’s really good and different. She’s has a very wonderful outlook on life and how she incorporates that into her business, and her family, and her wellbeing, and I appreciate that.
Steven Butala:
She’s formerly a professional brand manager for a huge company, and walked away from an extremely lucrative lifelong career, and is now full-time buying and selling land and houses. I just learned that in this interview.
Jill DeWit:
Mm-hmm (affirmative). It’s wonderful. Thank you for tuning in, we hope you find our content valuable and we appreciate your support. If you haven’t already, please zip on over to our YouTube channel and hit the subscribe button.
Steven Butala:
She actually means that. This isn’t just an extra that we read, this really helps us.
Jill DeWit:
And it’s on video, it’s true.
Steven Butala:
The comments and suggestions help us to create the type of content that you’re here for, and hitting the like button on your favorite episodes helps to support our channel’s algorithm and gauge your interest for future shows.
Jill DeWit:
We’re Steve and Jill.
Steven Butala:
We’re Steve and Jill. Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
—————————————-
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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