Why Our West Virginia Land Acquisitions Failed (LA 1379)
Why Our West Virginia Land Acquisitions Failed (LA 1379)
Transcript:
Steve Jack Butala:
Steve and Jill here. Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWitt:
And I’m Jill DeWitt, broadcasting from sunny Southern California, but you are not.
Steve Jack Butala:
Sunny Central Scottsdale for me.
Jill DeWitt:
Very cool. Is this the first time we’ve done this? No.
Steve Jack Butala:
It’s the first time.
Jill DeWitt:
It can’t be the first time we’ve done it like this.
Steve Jack Butala:
I think it really is. Maybe, you know what I think we’ve done in the past? Is we’ve just done audio only from separate places.
Jill DeWitt:
This is cool.
Steve Jack Butala:
[crosstalk 00:00:33].
Jill DeWitt:
The power of technology.
Steve Jack Butala:
Jill booked us a fantastic place in Scottsdale Resort. This hotel room’s like 3,000 square feet. It’s got its own pool table and everything.
Jill DeWitt:
Yup. It was so cool. There’s a mirror behind you, and I can see my reflection on the mirror behind you. It’s really kind of weird.
Steve Jack Butala:
Oh my God.
Jill DeWitt:
Behind the pool table and the bar.
Steve Jack Butala:
You guys sit and talk about yourselves. Aren’t you going to talk about land?
Jill DeWitt:
Sorry.
Steve Jack Butala:
Today, Jill and I talk about why our West Virginia land acquisitions failed. Jill and I sent out a pretty substantial mailer to buy land in West Virginia. And tragically, they have what I call a multi APN system, and Jill’s going to tell us all about it, which it precluded us, and probably, anybody in our group from buying dirt, right?
Jill DeWitt:
Mm-hmm (affirmative). I’ll fill you in.
Steve Jack Butala:
Is that the whole show there?
Jill DeWitt:
Pretty much, but I’ll fill you in.
Steve Jack 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 DeWitt:
Lucas wrote, “Hi, everyone. One of my goals for Land Academy is to someday return to my home state of Vermont. Is there anyone in this community that’s experienced in the state of Vermont? If so, I would really appreciate some pointers. I had looked into purchasing property for myself over the last few years, and I was stunned by the high cost of septic to design and build. It’s not uncommon for people to spend $35 to $45,000 on a septic system. I’m told that mining and new quarry activity has been halted in Vermont, so all the mound systems need to be transported in from out-of-state, and that drives the cost up.” That’s making me not want to live there. That’s a hassle. Aside from that, land can be…
Steve Jack Butala:
Where do you want to live, Jill?
Jill DeWitt:
We’ll get to that in a minute too. Land can be expensive there anyway. Welcome to our club. “I’d love to speak with someone who has success buying and selling in Vermont. I have a feeling they are a non-solicit state.” You know what’s funny? This is truth time that we do with Jan and I right now. We have so many deals coming back at us right now that I’m getting even pickier than I ever have been. And I have a two to three strike system.
Steve Jack Butala:
[crosstalk 00:03:12].
Jill DeWitt:
And this is the thing that I wrote just yesterday. I went through 10 properties, and anyone that had… I’ll tell you my three strike system here. What I wrote most of the time was, and it was flipping funny. Here’s what’s happening, and it ties into this show. One strike was access. Two strike was, I don’t think the guy owns the whole thing. And three strike was, it’s West Virginia.
Steve Jack Butala:
What?
Jill DeWitt:
Automatically, that was one of the strikes, and I’ll tell you more why in a minute. And I’m like, “Nope, canceled due to location.” That was it. So, anyway, it’s funny for me because with Lucas’s question, it makes me think about… There’s a reason why people like us are successful overcoming obstacles. And then, there’s a time when you have to take a step back and go, “All right. How many obstacles are just too many?”
Steve Jack Butala:
Is it worth it?
Jill DeWitt:
And yeah. And that’s like you and I. This whole show is truth time, even though I say “truth time.” We always speak truth time. You and I are personally discussing, hardcore, our next primary residence state. And you’re having this discussion with yourself, Lucas, about Vermont. We’re having to take a good look and have discussions, hard ones, about California, and we’re not alone. That’s the beautiful thing. I don’t know what’s going on there, if a lot of people are having a mass exodus out of Vermont. I haven’t heard of it. But the planet has heard of people mass exodus out of California because of all the things going on here. So, anyway.
Steve Jack Butala:
Well, people are definitely moving around.
Jill DeWitt:
Yeah.
Steve Jack Butala:
There’s all kinds of migration. No one can disagree with that. That’s what’s propping up… That’s not even propping up. That’s what’s just pouring fuel on one of the craziest real estate environments I’ve ever seen, in a good way.
Jill DeWitt:
It’s amazing. And that turmoil, it’s kicking up the bottom of the muck at the ocean and turning it around. So, now, places that weren’t hot markets are hot markets, and places that were hot markets are now even hotter markets, like exactly where we’re looking and what we’re doing. It’s just nuts. I hope [crosstalk 00:05:38].
Steve Jack Butala:
Vermont’s…
Jill DeWitt:
Yeah.
Steve Jack Butala:
I’ll answer your questions about Vermont. And then, we can talk about some of this other stuff. Vermont has, and always has had, at the opinion of themselves, that they should be succeeding the country, just like Texas. So, they have very different rules there. They’re the opposite of Texas. In Vermont, you’re taxed when you buy and sell real estate in escrow. I have purchased and sold property there. So, it’s just like Canada. I purchased a sold property in Canada too. And so, there’s taxes that are in escrow on the way in and on the way out that could change your mind about buying property there. I’m not aware of any other state that does it like that. So, would that stop me from buying and selling property there? Probably not. I think it’s still okay because everybody gets charged. The sheer expense of it, that wouldn’t scare me at all. I think we’ve been buying, selling property in California, and I’m not sure where it’s more expensive than that.
So, no, I wouldn’t have any issues with… And I think that as far as septic systems, Jill and I are doing two or three septic systems in California and Arizona right now, and the whole thing is three grand installed. So, I don’t know what… There’s something going on with how whatever Vermont does that, and that doesn’t surprise me. It’s just like Texas that for on very different right and left ways, are wont to be independent. So, none of that would stop me from buying and selling property in Vermont. And I do believe, this needs to be confirmed for sure, that it is a non-solicit state, meaning you can’t send mail there, or you shouldn’t be sending mail there. They’ve opted out of that too.
Jill DeWitt:
Right. If you wrote a compelling…
Steve Jack Butala:
I can speak for Jill. All of this would add up. I know it. I can take the words right out of her mouth, and I will. All of this adds up to, just go to New Hampshire or buy property somewhere else.
Jill DeWitt:
[crosstalk 00:07:40] Actually, that’s not what I would do. You want to hear what I would do?
Steve Jack Butala:
Yes, yes. I do.
Jill DeWitt:
I would stick with Lucas’s plan. I would, like we always do, make sure that if this is the case, this is a cost that I’ve got to factor into my decision. I’ve got to buy something that’s going to have at least that amount of equity built into it the day that I close. So, I’m accounting for this, taking this hit on this extra cost that I’m going to incur to build there. I would be looking for something that’s already there, and these costs are already done.
Steve Jack Butala:
So would I. So would I.
Jill DeWitt:
And even if you have to take a house all the way down to foundation and start over again, that’s not my idea of fun, but some people do it. I’d rather come in and find something that the bones are good, and remodel. You can make a kitchen bigger. You could make a bathroom bigger. There’s lots of things that you can do and not start all the way over.
Steve Jack Butala:
If you’re going to build a house, a single house, it’s [crosstalk 00:08:55].
Jill DeWitt:
You could rebuild a house and make it look great.
Steve Jack Butala:
The math on building a single house is almost always does not work in your favor. If you’re building a subdivision, it works in your favor fantastically well, as a builder. That’s why there’s publicly-traded companies that are like Toll Brothers, who build thousands and thousands of properties every year, but there’s no publicly-traded companies that do one offs.
Jill DeWitt:
Right. Well, that’s the thing. Lucas is doing his primary, it sounds like his forever home, and I get that. That’s cool. Oh, the other thing I was going to say about the mail. If this is a situation, I would be very picky. I would still go in, download some data, but I would spend a week on it, kind of thing, sitting down with my wife, looking at all the areas and going, “All right. We’re about to piss off 2,000 people. Let’s make sure we piss off the right people, number one, and really only send offers to the ones that we really would consider.” It may just be around a single school system. I think that’s what a lot of people are doing right now.
And then, I would write a very compelling letter that, “I don’t mean to offend you.” I would really write a heartfelt thing like I’m buying your house. Some people write a letter and attach it with an offer to convince a seller to pick them. So, I would write it like that. And just say, “If you have any questions or I offended you in any way, please call me,” or just go write a very different personal letter kind of thing.
Steve Jack Butala:
Yeah. I have to completely disagree with you on this, Jill.
Jill DeWitt:
Really?
Steve Jack Butala:
Yeah. Non-solicit state, there’s heavy fines.
Jill DeWitt:
Well, that’s what I would do. I would write the letter like, “Call me before you do anything else.”
Steve Jack Butala:
Jill, I don’t think…
Jill DeWitt:
If you’re thinking I’ll call your attorney… You don’t think so?
Steve Jack Butala:
No. It’s a primary residence. You might have to buy something off the MLS that’s cheap. These non-solicit states, it could be a class action lawsuit. You’re not supposed to send mail there. And there’s real specific, usually specific statutes that say, “If you do this, and you’re convicted of it, it’s going to cost you $250 every time you sent a letter.”
Jill DeWitt:
You need to research this and make sure because my middle name is Workaround.
Steve Jack Butala:
And mine’s not. So, that’s why we’re partners.
Jill DeWitt:
Got it. Okay. I’ll stop.
Steve Jack Butala:
Why? Today’s topic? Why our West Virginia land acquisitions failed. This is the meat of the show. Go Jill. Or did they fail?
Jill DeWitt:
I don’t want to throw you under the bus.
Steve Jack Butala:
Oh, please do it. Are you kidding? You know what? Potential members, or existing members of Land Academy, or whoever you are, you need to know that 25 or 30 years into your real estate career, you don’t have some golden… You’re not a golden child. I made a huge mistake here. I didn’t do enough research to find out what’s going on in West Virginia before I sent out what ended up being probably a $3,500 mailer, some number like that. So, go ahead, Jill. Tell us what happened.
Jill DeWitt:
So, that’s data and cheap mail. We made it so easy. Steven just willy nilly sends out offers. So, that happened…
Steve Jack Butala:
Extremely liberal with offer sending right now.
Jill DeWitt:
Totally. He’s like, “Hey, I got your [inaudible 00:12:22]. I got all your stuff. I’m putting together… Hey, roll West Virginia in there?” I’m like, “I don’t flipping care. Go for it. They can handle it.” So, that’s what happened. And so, “Oh, great. We got a great response.” Holy cow. And just the other day, by the time this airs, it was last week. I was on one of our Land Academy accountability group calls. And I told them all right there, and I said, “Let me do you all a favor. Don’t mail West Virginia.”
And it was funny because that came up later on in a Facebook post because our staff said, “What the heck are you talking about? Everybody’s saying you said something about West Virginia.” I’m like, “Yeah, I did. That’s a hundred percent true. I did.” And if they’re leaking that out to everybody, that’s totally fine. I want to share that with the planet. So, there’s a couple problems with West Virginia. Number one, the biggest problem is there’s no way of telling that an APN is a partial ownership. That happened years ago in a lot of states that you know, Steven, that now, they don’t do it anymore.
Steve Jack Butala:
California.
Jill DeWitt:
Well, apparently West Virginia is still behind the times. So, you might own one sixth of a property, and you have your own APN, and it looks like you own the whole thing, and you don’t know until you dig in there. So, shucks. That’s problem number one.
Steve Jack Butala:
That’s it.
Jill DeWitt:
Go ahead.
Steve Jack Butala:
You’re an experienced land investor. This is a problem number… This is a huge, huge problem. When you buy a property and go to resell it, you don’t want some other person coming back and saying, “Well, I own half of that.” You don’t want that to conversation to even be possible. And so, California did this in a couple of the southern counties, specifically, San Bernardino, and they stopped it very quickly. They rectified it. But you still can buy partial ownership properties. Undivided interest is what they’re called. And my ownership, it could have an APN, and Joe’s ownership could have an APN, and Joe could live in Mexico, and I could live in Canada. Or all kinds of stuff can happen and change. So, you need to make sure… California was nice enough to write in their legal description, tell you if that’s what’s going on. They changed their legal scriptures to… So, what I’m hearing, Jill, is that didn’t happen in West Virginia.
Jill DeWitt:
They don’t call it undivided interest, but if you look closely, some of them do have a percentage amount. It will say one, five sixth or something like that. Like, shucks. And we just it. But we missed it. And the majority of these people do not know who owns that other piece.
Steve Jack Butala:
Oh, jeez. So, did we strike out?
Jill DeWitt:
[crosstalk 00:15:03] can say, “It’s your brother,” kind of thing. They majority don’t. So, more than half of the calls and the offers that got returned, they don’t own all of it. Done. So, those were kicked to the curb right away. I’m not doing that. The second thing, of course, is no change, is access. There’s just so much property out there. Why they didn’t plan for this? I don’t know. I hear there’s a turnoff off of this road. Well, that’s great. But that doesn’t mean it’s legal access, and they don’t really care. And I’m not going to undo that when I have so many other good offers in other areas coming in. It’s not worth my time. And then, number three, the majority of the counties that we sent the offers in, when I really dig down, and it was missed. This was missed by me, as far as doing a last test for reason, didn’t happen. Because if I had done a test for reason, I would have said, “Oh gosh, too high, too high, too high.”
Steve Jack Butala:
The prices are too high?
Jill DeWitt:
Yeah.
Steve Jack Butala:
Did I misprice the mailer? Not only did I incorrectly choose where to send mail, I incorrectly priced it?
Jill DeWitt:
You thought that West Virginia property is a little more valuable than it is right now today, and it’s not. But you know [crosstalk 00:16:28]? Because here’s why. This is a good thing. There’s not a lot of cops. Because there’s not a lot for sale. There’s not a lot of movement. So, you correctly found an area where you go, “Look, nobody’s selling anything. This is great. We’re going to have some of the very few properties in the area. Fantastic.” So, that would have totally triggered me to… Because that is a good indication of a good area to do this because there’s not a lot of competition.
And then, the other reason is now, when you really do dig, it takes a little bit, but you can find some stuff. I’m like, “Darn it.” Because here’s why. I looked at NOAA land comps. No problem. I go looking at house comps, I can buy a house for $8,000. That’s the problem right there. In that same city. It’s Richardson, West Virginia or something like. It’s either Richardson or Rogersville. I can’t remember the name of them. But there’s places in West Virginia I can buy a house for $8,000. I’m like, “Darn it.” That means buying a piece of dirt for $3,000 doesn’t make sense.
Steve Jack Butala:
Are you going to abandon the whole thing?
Jill DeWitt:
Pretty much. I don’t have anyone yet. So, I’ve told my team as their watch, they do exactly what they’re supposed to do. The calls come in. They field the calls. They input it. We have a signed purchase agreement. They put it in Airtable, and they tag me. I go look at it, and I go, “Shoot.” And then, all they see is me going, “Nope, nope, nope, nope.” And they’re like, “Okay.” So, now, they’re saying to themselves, “Jill, as we get these calls coming in, what should we do different?” And I’m just saying, “Don’t even bother tagging me if you see this or this. If it has great access, and it looks like the guy owns a whole thing, and you’ve talked, now loop me in. Then I’ll look at that.” But if it didn’t [inaudible 00:18:21] of that, we are just immediately kicking them to the curb.
And I’m even telling them, “When the calls come in…” There’s no reason to put them in Airtable. That’s the thing. It’s great to have a huge database slash, however, when these calls come in, and you can quickly, on the phone, weed them out, and the guy can say, “Yeah, I own 45%.” Or even if he says, “I own 90% of it. I own nine tenths of this property.” Who’s the other guy? I don’t know. That’s it. That’s enough. That’s out. I’m not going to track down who that other person is. It’s not worth it. And you don’t know because you don’t… When you go into NeighborScoop, by the way, and you put in the APN, it’s not like it shows, “Hey, it’s connected with this seller.” It’s not there. You got to dig or call. And so, anyway.
Steve Jack Butala:
So, you may be saying to yourself…
Jill DeWitt:
For those reasons… I was going to say, like Shark Tank, “And for those reasons, I’m out.”
Steve Jack Butala:
So, you may be saying to yourself, “All right, I get it. West Virginia doesn’t work for those multiple ownership.” How do I know that this next mailer that I’m about to send out to wherever doesn’t have the same problem? And this is what you do. You go into Land Investors, and you ask your heart out. “Has anybody had any…” That’s why I put this Vermont question in [inaudible 00:19:41] the intended use for landinvestors.com… And I would even go so far as to make sure you have a BiggerPockets username, and start asking about things there too. We don’t have any affiliation with them in any way, but it’s a really good resource, and it’s all free, to get as much information as you can.
And then, finally, there’s all kinds of outlets that JILL and I are developing or have been developed so that we can really take a look at a mailer for you and with you, and help you decide. We have a full-blown consulting situation that you can book consulting calls for she and I. And Jill is developing a further education program for women only, where that would be a perfect use of that, where you can say, “Has anybody…” And we can all… That’s why we started Land Academy. I know this is kind of a negative thing, but the truth is, for every, I don’t know, 500 mailers that we do, one or two of them just don’t work out for stuff that we just missed.
Jill DeWitt:
It’s okay.
Steve Jack Butala:
Stuff happens.
Jill DeWitt:
You know what? I think you’re right.
Steve Jack Butala:
I’m just laughing about it, aren’t you? I think it’s funny.
Jill DeWitt:
Yeah. That’s the thing. Worst things could happen. At least we know, and we can help you. And I didn’t accidentally buy a bunch of property. Could have happened. Somebody starting out, doesn’t catch this stuff, and now, you own nine tenths of a property. Great, kind of thing.
Steve Jack Butala:
That would be the tragedy is if we bought 20 of these things. That would be tragic. So, good work.
Jill DeWitt:
True. True. Exactly. And it’s real. This is just further proof that we are right here with you, doing our own deals, making our own mistakes. And we continue to try to save you in your investment future by being two minutes ahead of you making some bad decisions and sharing it with you. Thank you for tuning in. We hope you find our content valuable, and we appreciate your support. If you haven’t already, please check out our YouTube channel, and click the “subscribe” button.
Steve Jack Butala:
And your comments and suggestions help us to create the type of content you’re here for. Hitting the “like” button helps to support our channel’s algorithm and gauge your interest future shows. We are Steve and Jill.
Jill DeWitt:
We are Steve and Jill.
Steve Jack Butala:
Want to try it again?
Jill DeWitt:
Okay. I thought we did okay.
Steve Jack Butala:
Oh, I don’t think it was synced at all.
Jill DeWitt:
Oh, okay. We’ll try again. Ready? Three, two, one.
Steve Jack Butala:
We are Steve and Jill.
Jill DeWitt:
We are Steve and Jill.
Steve Jack Butala:
Information…
Jill DeWitt:
… And inspiration…
Steve Jack Butala:
… To buy undervalued property.
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