Land Due Diligence – the 4 As are Now the 5 As (LA 1355)

Land Due Diligence – the 4 As are Now the 5 As (LA 1355)

Transcript:

Steven Jack Butala:
Steve and Jill here.

Jill DeWit:
Howdy.

Steven Jack 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 Park City, Utah.

Steven Jack Butala:
Today, Jill and I talk about land due diligence and how the four As have now become the five As.

Jill DeWit:
This is funny.

Steven Jack Butala:
It’s an interesting story. You want to let everybody in on it.

Jill DeWit:
No, I’m going to drag it out. We talked about it last week. If you listened last week, you know what I’m going to talk about. But I’m going to explain a little more about it. Four wasn’t enough. This number five almost getting overlooked a little too much, and so now, it’s one of the official As and I’ll go into more detail here in a moment.

Steven Jack Butala:
Due diligence is a checklist, a really simple checklist. When you’re thinking about buying a property, it’s like, well, does it have this? Does it have this? While there used to be four simple checklists to make sure you want to buy it. Jill added a fifth, and she was right. You know what? I was thinking about it. It’s long overdue.

Jill DeWit:
It is.

Steven Jack Butala:
It was something we’ve been doing anyway. It just needs to be done every single time now.

Jill DeWit:
Exactly.

Steven Jack Butala:
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:
Chuck wrote, I was listening to old Land Academy podcast today and on the subject of building a buyers list. Steven curves listeners to go to the Land Academy YouTube page and check out his video on scraping email addresses from LandWatch. I forgot about that, that was really smart. I’ve been all over that YouTube channel, and there are lots of interesting and valuable lessons here, but not this one. That was as real as it gets. That’s awesome. Hate to call you out, Steve, just kidding.

Steven Jack Butala:
It’s like a conversation with your wife.

Jill DeWit:
It’s hilarious.

Steven Jack Butala:
You’re good at these things, but not this one.

Jill DeWit:
You suck here.

Steven Jack Butala:
Not so much.

Jill DeWit:
You know what? You’re cooking, we need to talk. So there’s a reason why we got out to eat a lot. Just kidding. I think this is a great idea, but I do not know how to do it. The mini scraping technologies offered do not seem to apply to a site like LandWatch, because it’s different. I know you’ll explain this. I have three properties under contract and would like to add this to my marketing. Any suggestions would be greatly appreciated. Thanks.

Steven Jack Butala:
There’s two things going on here. By the way, Chuck’s a 100% correct. I used to be at LandWatch, it was owned by a small independent startup company, that is in the business of starting up companies and selling them to larger tech companies. In this case, they started the company up and sold it to-

Jill DeWit:
CoStar.

Steven Jack Butala:
… to CoStar, which owns LoopNet-

Jill DeWit:
Learning Farm.

Steven Jack Butala:
… Learning Farm. CoStar, they have-

Jill DeWit:
Lands of America.

Steven Jack Butala:
… almost all the ticket over… They’re a good company. I like CoStar. They’re expensive to sell to advertise on, which is my only gripe, but their exposure numbers are great. So they tightened up their security and tightened up a lot of things. And they used to have what’s called a signature level membership in LandWatch, which was like… And we were signature members for years. We still might be, I’m not sure. In each state there’s four or five people that are land specialists, whether they’re brokers or owners like us, or investors.
That section was, you didn’t even have to scrape it. You could just hire your VA to go in there and copy and paste it for you. That’s really what I was talking about. For a little while after that, you can scrape the whole site. Kind of go to bed, run these scraping agents and pull out a ton of email addresses. The internet police are really cracking down on this, which begs to be… Is it ethical? Not really. I have a much larger point to make too, but go ahead.

Jill DeWit:
I’m sorry. There’s a new way of scraping nowadays, Chuck, too, it’s called a VA. And that’s not scraping and you won’t get in trouble for any of that.

Steven Jack Butala:
There’s two types of scraping, there is scraping it for information that is borderline not ethical, which is what this is. And then they’re scraping for information about… On Zillow, we scrape all the time. We just consolidate information into a spreadsheet form so we can make decisions. It’s not like we’re spamming people or contacting people against email rules or any of that stuff.

Jill DeWit:
Or using this in a not ethical way.

Steven Jack Butala:
Think about looking at Zillow, there’s two or 3000 properties for sale in a couple of counties that you’re interested in. But you can’t analyze the data the way you need it, so you scrape it all, put it all into a spreadsheet. And then however that makes sense to you, you look at it and say, “yeah, I do want to mail this County, and I’m going to mail it for X price per acre.” That’s, I think an ethical way of scraping. Do I think that’s going to go away soon too? Yeah. I think it’s too easy for these sites, whoever the administrators for these sites are just to lock scraping down. And it’s going to happen. It happened on LandWatch already. So the bigger point is this, he went back, probably looked at a podcast from… How many years ago?

Jill DeWit:
That was like 2015 or 16. I remember when they changed the relationship that we had with them.

Steven Jack Butala:
We had a run on with LandWatch.

Jill DeWit:
We did not-

Steven Jack Butala:
[crosstalk 00:05:23] CEO.

Jill DeWit:
There was a change-

Steven Jack Butala:
That was in the past.

Jill DeWit:
… of management years ago that resulted in us going, oh. You know what it was? They stopped listening to, loving and being there for investors. They were there for themselves. And I think it was money driven. But when they first started, they were all on our team and we were all on the same page. So anyway, it was really kind of cool though. The end result was we made LandPin. We’re like, you know what? We’ll make our own land selling site and we’ll make it free to our people. And we can really say by investors, for investors, that’s who we are. Done.

Steven Jack Butala:
The big picture point is this, we’re a technology company. And all of us are technology companies that happen to buy and sell land and real estate. Stuff changes all the time in that landscape, both with real estate now, and especially with tech. So you can’t go back… And I know I’m not picking on you Chuck-

Jill DeWit:
Chuck.

Steven Jack Butala:
… at all. This is just an example. The tools and the concepts change often about how we buy and sell real estate. So some of the stuff in the program are education programs. So we have some of the stuff that we’ve talked about over the years on the show, and there’s [inaudible 00:06:40], gets antiquated and it gets replaced with better ways to do it. This is a huge issue for us internally, both Jill… Not so much Jill, but me and my staff at Land Academy, because the material percentage of people, the questions that people have are, Steve talked about this stuff back in 1871, it doesn’t work anymore.

Jill DeWit:
I have something I would like to share, just to cut to the chase. The most important thing here is, Chuck’s trying to build a buyers list. So what do you do? You need to have a place that you can collect their email, collect their information, they can opt in if they want to be on your buyers list. It’s like we have been doing for years. On our land selling site, LandStay, at the very top, get on the buyers list. You get the new properties in right away, it’s easy, it’s simple. And they’re all opt-in, and that’s what we’ve been doing for years.
And you tell people about it, put it on your website, put it out there. We always have people that call us when the mailers go out. Every single mailer have a handful of other investors say, “Hey, I got your letter. I don’t want to sell, but now I know what you’re doing. I want to be on your buyers list.” Fantastic. I either point them to it or I’ll even add them myself. No problem, I’ll put you on my list. What’s your name? What’s your email? Okay, you’re in there. Watch for me. Good, done. And thank you. That’s the best thing. I just want to get that out. That’s what you should be doing right now.

Steven Jack Butala:
Do you want to address this other issue?

Jill DeWit:
What other issue?

Steven Jack Butala:
Really what this is about.

Jill DeWit:
I thought it just about the buyers list, building a buyers list. Because the reason you want a buyers list is because you can sell property really fast without even posting it. That’s my goal.

Steven Jack Butala:
Here’s the big picture point. The tools. Sending blind offers to people who own real estate for the price where you want to buy it, that’s less than what you think the actual value is. It’s been going on since there’s been rent rolls. Not rent rolls, but tax rolls at counties. So 1800, even earlier. What’s changed it’s tools. And so we’re no different. This scraping tool that I talked about in whatever, 2015 or 2016, has been long replaced. That’s the way education is. And that’s the way buying and selling real estate is. So the vast majority… Not the vast majority, a very material percentage of the inquiries that me and my staff got, they are along the lines of this. He talked about it in 2015, meaning me, and it doesn’t work.

Jill DeWit:
No kidding. Is that what you’re trying to say?

Steven Jack Butala:
Yes.

Jill DeWit:
Okay.

Steven Jack Butala:
No kidding it doesn’t work.

Jill DeWit:
I just want to get across.

Steven Jack Butala:
It has long since been replaced. And there’s like…

Jill DeWit:
It’s like having a video on there that says, “here’s how you do it with my Motorola flip phone.” And you’re going, where do you get a Motorola flip phone right now, kind of thing? You don’t.

Steven Jack Butala:
Land Academy itself is not a YouTube video on how to change the light bulb. There’s some free thinking intelligence stuff that’s got to go on. And logic applies to everything.

Jill DeWit:
You needed to get that out.

Steven Jack Butala:
Today’s topic, land due diligence. The four As are now the five As. This is why you’re listening.

Jill DeWit:
And I understand. Okay. So here’s the scoop. As Steven alluded to a few minutes ago, one of the things… This is a Steven created… What do you call it? I can’t remember what you call it when you have these As., Is an acronym?

Steven Jack Butala:
It’s not so much an acronym. I don’t know what it is.

Jill DeWit:
Anyway. Many years ago, way before me, Steven had this buying criteria, it was kind of like around the office. Everybody knock it off, if it doesn’t have the four As. It was because Steven created the four As and then shared it with other people as he was growing, back in the day. It needs to have these four As. If not, I’m not even going to look at it, kind of thing. So what are the four As? They are, number one, access. Can I get to the property? Does it have physical legal access? What kind of access is it? I’m going to go into detail on all of these, but some of this is your comfort zone. I personally want legal access, period, on the properties that I buy now. Because I’m paying big dollars and I want physical access in some form.

Steven Jack Butala:
Access.

Jill DeWit:
And if it’s four wheel drive, I don’t care. I just need to know. How do you get the heck up there? Because there’s always buyers that want different things. There’s some buyers that want to roll their caddy up to it. There’s other buyers that just want to roll up in their ATV, on their Polaris. And they’re thrilled with that, and go hunting with their buddies.

Steven Jack Butala:
Very few buyers want to take their helicopter in.

Jill DeWit:
This is true. That’s the number one A. The number two A is acreage. And it used to be the bigger, the better. In most scenarios, it still is/however, sometimes we’re buying unique properties, maybe waterfront, maybe a certain cabin. I’m going for something else that I need enough… Its acreage that’s appropriate, like enough acreage to build the cabin that we think should be there. Who our buyer’s going to…. What going to do with it. So just enough acreage for the mobile home and the ranch that we envision, everybody seems to be wanting in this area. So acreage that’s appropriate to the use that you’re kind of going for here. Number three is affordability. And that one never changes.

Steven Jack Butala:
Cheaper is better.

Jill DeWit:
Exactly. You need to feel so good about the amount of money that you’re spending on these purchases that you never lose any sleep at all. And that’s how I feel. You want to know that, if I did it all wrong, I’m still going to double my money and do just fine, kind of thing. Okay, good. Then number four, attribute. He’s adjusting some equipment here. Number four is attribute. That again is kind of… It varies depending on the property. An attribute would be waterfront, an attribute would be near this part of the town. An attribute would be amazing hunting opportunities, an attribute could be the views, the trees and the stream behind it. Something like that.

Steven Jack Butala:
Next to McDonald.

Jill DeWit:
Next to McDonald, that’s true too. You’re going for a commercial type property, that would be an attribute. We were happily coasting along with those four As and telling everyone, “if you’re new or getting into it, you better have all four As.” Later on you get experienced, you’re looking at some different things. You might back off on the acreage, you might back off on the attribute, because these other things are so stellar. It makes up for that. And you know what you’re doing. You know the area, you know what you’re doing.

Steven Jack Butala:
It’s not your first deal.

Jill DeWit:
Exactly.

Steven Jack Butala:
It’s so cheap, I can overlook the fact that there’s no attribute.

Jill DeWit:
Right. That kind of a thing.

Steven Jack Butala:
It’s so cheap in one of the As. The affordability is so good.

Jill DeWit:
So cruising along. And there’s always been this one fifth A that I’ve always talked about. I’ve already told people about, and I have it on my due diligence checklist. I have a sheet that I share with the planet. You could have it too if you would like, just go to landinvestors.com and you’ll find it. It’s my inbound land color sheet. The inbound land seller checklist, basically. These guys call back, what do I ask? So I make sure I get the four As. I’m aware of the access, I’m aware of all this stuff. And people have been forgetting it a little bit. So we decided to make it a fifth A. It’s officially a fifth A, and that is alive. It sounds silly, but it’s a really important thing that some people overlook. They get so excited about the property. So excited about the access. So excited about the affordability. So excited how big it is, they don’t realize the reason this property exists is because transferring title is a disaster-

Steven Jack Butala:
Or impossible.

Jill DeWit:
… or impossible, because somebody passed on and now it’s a jumbled mess. My legal ball of yarn.

Steven Jack Butala:
Your legal ball of yarn.

Jill DeWit:
It’s a legal ball of yarn to undo, to buy this property. The reason why this is so important is, I have passed on properties for the sole reason. And usually it’s because it’s either impossible or the legal costs and the time, almost more the time than the legal costs, they go hand in hand, far outweigh what the property is worth. I’m not going to buy a property… Sure, I can buy it for 4,000 and sell it for 12. But it’s going to cost me 5,000 and six months or more to get this attorney involved and undo everything. Well, there goes my profit. It doesn’t make sense anymore. So that’s why we now have five As and not four.

Steven Jack Butala:
Alive comes in all types of forms. Alive is the best word that we could think of-

Jill DeWit:
Because it starts with an A.

Steven Jack Butala:
… because it starts with an A, for ownership issues. And this comes in all forms. A deceased husband, a deceased wife, inheritance issues. It comes in all kinds of forms and there’s too many… But once you get into this and find out, really what it is is I love all these things about this property. The guy that’s on the other end of the phone, does he own the property? Is he going to sign for it or is it his brother?

Jill DeWit:
I can tell you exactly the words that I use on the phone. This is exactly what I say, and it’s okay. I kind of giggle about it and they think it’s funny and sweet, we’re all on the same page. Seller calls in, I’m talking to Mr. Jones, and I’m looking up at the same time on NeighborScoop. I look and I see, Oh my gosh, Robert and Carol Jones, and I’m talking to Robert. Okay that check. Then I actually say these words, I say, “all right, I know you’re one half of the property here is, is Carol…” I got to ask this. “Is Carol alive and able to assign?” Yes. She’s in the kitchen putting the finishing touches on dinner right now. Fantastic. That’s all I need. And that’s when I came up with the A, alive and able to sign. That’s what exactly I call that term. And because that’s what you’re trying to find out.

Steven Jack Butala:
You think they’ll ever be six As.

Jill DeWit:
There probably will be six As.

Steven Jack Butala:
I think so too.

Jill DeWit:
There’s going to be six As. I’m trying to think what the sixth A might be. I’m trying to think what else is really important?

Steven Jack Butala:
We have thousands, and Jill and I have done almost 16,000 deals. I bet we have at least 11,000 deals in our database that. Four As are fantastic, we couldn’t get past the fifth A.

Jill DeWit:
Do you know what I think would be a sixth A? Something along the lines of future potential use for a property, especially right now in COVID times. I am seeing-

Steven Jack Butala:
Yeah, some word for usable.

Jill DeWit:
Right. What could this space be used for? For example, pre-COVID you might be saying, “perfect place for a hotel.” Hospitality has taken a hit, so that’s not a thing. This is a perfect place for a cute little shop. Okay, retail has taken a hit.

Steven Jack Butala:
Usable. So we need an A word for usable.

Jill DeWit:
What potential use… [inaudible 00:18:15]. If you’ve got an A, will you-

Steven Jack Butala:
[crosstalk 00:18:16].

Jill DeWit:
… please put it in YouTube or put it in Facebook where the show is, so we can see it and it’ll get to us. Like A number six idea, because I’m now thinking of that. I’m looking at… You know what? I’m only for commercial. I’ll tell you right now, only commercial, because-

Steven Jack Butala:
[inaudible 00:18:35].

Jill DeWit:
… all my residential, my rural land, someone’s going to live on it, camp on it, fish on it, put their RV on it, put a mobile on it. That hasn’t changed. But as far as commercial properties, some of the uses, that’s going to be really interesting. That’s got to be more fluid and change. And I hope the counties see that. I hope they’re ready for that. Like, Hey County XYZ, we all know that all the retail space in your little area is closing, it’s shutting down/however, we need more medical facilities. Maybe there’s a medical something.

Steven Jack Butala:
I think that’s highest and best use, which is really important. But I don’t think maximizing use, unless you’re in a super urban setting matters.

Jill DeWit:
Correct.

Steven Jack Butala:
I think just usable. All the five As are past, there’s deals that we turn down, not a ton of them. Because you know what? I just don’t think we can… Because it’s too sloppy.

Jill DeWit:
That what I just going to say, because the slope sucks.

Steven Jack Butala:
Is it usable? [crosstalk 00:19:35].

Jill DeWit:
Good luck getting there. But it’s going to take you a million dollars-

Steven Jack Butala:
And a zoning variance.

Jill DeWit:
… and an architect from three States over who knows how to build this kind of a property.

Steven Jack Butala:
Yeah, exactly.

Jill DeWit:
Which can be done/however, the whole point is here. Think of how your buyers pool is. It’s a real small buyers pool.

Steven Jack Butala:
But I’d love to fit that Jill.

Jill DeWit:
Thank you very much. Happy you could join us today. Five days a week you can find us right here on The Land Academy Show.

Steven Jack Butala:
Tomorrow, the episode on The Land Academy Show is called the relationship between real estate and paper. You are not alone in your real estate ambition.

Jill DeWit:
Thank you for letting me go on that. There’s times that I obviously have a lot to say.

Steven Jack Butala:
Jill has taken over in a real positive way, due diligence. So she’s become… Once Jill and I joined forces about 10 years ago, I was well into my career and doing very well. And if you follow us, you know that once we got together it was times 10. So there’s stuff that I’ve taken over and stuff that Jill’s taken over just naturally, and due diligence for some reason is her. She really enjoys it. It can make or break a deal. I can get the mail out and send her. I can make her phone ring and make a million offers come in. So she’s staring at them, but they have to pass all these tests. I have these cute little sayings, but she’s formulated a way to say in the end, “hell yes, we’re buying this property. I’m going to go to the bank right now.” This happened two days ago, by the way. “Or you know what? I like everything about it, except X, I’m going to pass.”

Jill DeWit:
Thank you. That’s quite a compliment. I know I have my version of that with you. By the time you bring some of your tech ideas or some of the things that… Company ideas, by the time they get to me, I know you have run formulas forwards, backwards, upside down. And it’s going to be a hit. And I never question it. I like to think that I know that about this situation, you don’t question me and I really appreciate that.

Steven Jack Butala:
covered.

Jill DeWit:
You don’t even have to… It’s kind of funny.

Steven Jack Butala:
I don’t even look at it.

Jill DeWit:
You’re like bored now. I don’t even ask. Does it meet this? I’m like, we haven’t even had that discussion in a long time. So thank you. And thank you for tuning in. We appreciate your support. We appreciate your listening. We appreciate your comments, and we’d really appreciate it if you check out our YouTube channel, hit the subscribe button. We are Steve and Jill.

Steven Jack Butala:
We are Steve and Jill. Information.

Jill DeWit:
And inspiration.

Steven Jack Butala:
To buy undervalued property.

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