Why Having Someone Else Fund Your Deals is Smart – We Do it Too (LA 1472)
| Why Having Someone Else Fund Your Deals is Smart – We Do it Too (LA 1472) |
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:
I’m Jill DeWit, broadcasting from sunny Scottsdale, Arizona.
Steven Butala:
I think it’s sunny is the staple.
Jill DeWit:
Just leave it as sunny. [crosstalk 00:00:17].
Steven Butala:
But it is sunny here, more than California.
Jill DeWit:
That’s true.
Steven Butala:
Today, jill and I talk about why having someone else’s deal, why having someone else fund your deal is actually a good idea. In fact, we do it all the time. We actually seek out partners to fund some of our deals, and the short version is, it depends on the deal. 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. And if you’re already a member, join us on Discord, it’s worth it.
Jill DeWit:
All right. So Andy wrote, and there’s a note here that he’s not a member, “In the process of browsing counties, I often come across areas where sorting low to high brings up similarly priced lots, but the acreage of the lots varies wildly. For example, I’m currently looking at a zip code in X state where half acre lots and 20 acre lots all seem to be in the 10 to $20,000 price range. I tend to avoid areas like this because of the huge discrepancy and it throws off my confidence in pricing. It would feel unwise of me to mail the half acre lots, offering 3 to $4,000, and then go on and mail 20 acre lots and offer the same amount. Any thoughts on how divided areas like this or how to get a better read? Do you ever just blanket mail a county with one offer price and then disregard acreage? Any thoughts? I appreciate it.”
Steven Butala:
Always. What’s important here is to get the mail out. This discrepancy in data, get used to it. This is one big… If you’re a data person in another field or you’re a retired pilot, or you got 30 years in public accounting, or you’re a mechanical engineer, maybe you’re retired. You know what looking at a data set like this and how frustrating it can be. And you’ve been doing it for decades. Welcome to Land Academy and welcome to real estate investing in general. Andy’s already light years ahead of the clubhouse discussion that Jill was involved in this morning. Whereas they drive around and they’d look for dilapidated houses. They write down the address, they find the owner’s name and they send them a kind little note saying, “Your house is a pile of crap. I’m happy to… Why don’t you give me a call? I’ll take it off your hands.”
Steven Butala:
So Andy’s already looking at data sets. He’s realizing the data’s not perfect. It’s a little bit wonky and he’s trying to figure it out and get into that real estate market through data, not through the actual real estate. So, if you’re new and you’re listening to these sentences that I’m saying, and the light bulb’s going off over your head, this is for you. And expect some weird data because I know exactly where he’s talking about him in New Mexico, and I know how I would do it, but it’s all based on experience. So honestly, my opinion on this is just based on… Jill and I’ve done thousands of deals in New Mexico. So, in the beginning, this is frustrating for me, but not really. If you can crack through this data and figure it out, get it in a spreadsheet, go price per acre.
Steven Butala:
You’re going to find similarities. You’re going to dig through that data and scrub yourself down to a point where you actually do have confidence that this 20 acre property in this zip code is actually probably worth $12,000. So I’m going to go out. I’m going to offer everybody 2000 bucks. And so you have to just deconstruct the whole thing, chill out, get a good cup of coffee, make yourself a sandwich, turn all the lights off, spend three hours in a dark room, lock your kids up, whatever has to happen. I shouldn’t say that. I should probably say, get a babysitter, get a nice sweet, old lady babysitter for your awesome children, because I’m sure your children-
Jill DeWit:
Get Mrs. Doubtfire.
Steven Butala:
I’m sure your kids are well-behaved and love to be a part of your family, just like our kids.
Jill DeWit:
Sounds like, you just started to go… You know what my dad used to tell us? Why don’t you guys go play on the freeway?
Steven Butala:
There’s a lot of stuff back then, that you could never, ever say now. My parents said some stuff to us regularly. Like it wasn’t just, “Oh, there was one time. My dad was really mad and he slammed a book down in the…” No, every day they would say stuff like, “You’re good for nothing.” My mom used to say, “Well, the world needs ditch diggers, too.”
Jill DeWit:
I never got that.
Steven Butala:
All the time.
Jill DeWit:
No, I never got that.
Steven Butala:
That’s not okay.
Jill DeWit:
Just to go play on the freeway, which we all knew like, hahaha.
Steven Butala:
It’s pretty bad, too, though.
Jill DeWit:
I know, but he wasn’t serious. I get it. That was the Archie Bunker in him coming out.
Steven Butala:
These datasets, these data to this… The end of this.
Jill DeWit:
Oh good. [crosstalk 00:05:18]
Steven Butala:
No matter how wacky these… You know the reason that… There’s a big discussion in discord about there’s some former Land Academy members developed a pricing tool and people are asking about it. They’re like, “Wow. This like takes all the brain damage out of pricing a mailer.” No. There is no easy bus into this. That’s the problem with any pricing tool. If there was a pricing tool where you could hit a button and it would scrape data or API drive data and price it for you, it would be called a Land Academy pricing tool.
Jill DeWit:
This is true.
Steven Butala:
There’s a reason for that, that we don’t have a pricing tool yet because we will, at some point. I’m working on it now. Jill doesn’t even know about this, with somebody.
Jill DeWit:
But it does involve… It’s not all… It could be an AI, but it involves an AI level/human interaction to make sure the right things are removed.
Steven Butala:
What Andy is saying here, he’s like, “What the hell. Twenty acres is the same as a half an acre in this exact little tiny area.” Well, these pricing tools that people have little tiny children that are-
Jill DeWit:
Automated pricing tools.
Steven Butala:
These automated pricing tools that child developers have created with no real knowledge of real estate, can’t make sense of this.
Jill DeWit:
Right.
Steven Butala:
There’s no gray hair, real world knowledge in it. So yeah, if you deconstruct it, get it in a spreadsheet, pull it all apart. You’re going to find the similarities and you’re going to price it correctly. Even in weird… Even the way Zillow presents it. It’s like this doesn’t make sense, but it does. Today’s topic. Why having someone else fund your deals is smart. We do it too. This is the meat of the show.
Steven Butala:
How many deals are you involved in, where there’s other people that are funding it and it’s a partnership situation. I can think of five right now.
Jill DeWit:
We have five with the [inaudible 00:07:19].
Steven Butala:
I’m thinking of the deals together that’re in the system.
Jill DeWit:
That’s about right.
Steven Butala:
Yeah, there’s some, sometimes they’re huge.
Jill DeWit:
We’re a percentage on them. We’re one of a couple deals.
Steven Butala:
So why don’t you just do the deal… why wouldn’t you just do it entirely yourself? The conventional logic and this, I hear a lot of new people say this. And I said this when I was new. “Well, if it’s such a good deal, why don’t you just keep it for yourself and do it all?”
Jill DeWit:
Well, there’s a couple of things. I wrote down three things about this. I have three good points of why it’s good to have someone else fund your deals. So I don’t mean to not answer your question, but maybe I think this will answer the question. So number one is having a partner is an extra pair of eyes. It’s really kind of nice. Especially the people that we partner with. I have a good trust with them, but I also look at it too. So, and I know they know that, and I know that they like that, that we’re both making sure none of us is making a bad decision here. Number one.
Jill DeWit:
Number two, it kind of feels good having a partner. I’m not in this alone. We can bounce things off each other and say, “What do you think about this? What do you think about that? I think we should change the posting to this. I think we need to tweak that.” Whatever it is, that’s kind of nice, but the third thing and the number one reason why you should have someone else fund some deals with you and why it’s so smart is because you can take down more deals at a time, and it’s faster.
Jill DeWit:
You’re not going to run out of acquisition funds, because let me back up and say. Here’s what used to happen for us. I had so much money in this revolving account that was our acquisition funds. And then depending on how much mail Steven would send out, I might run out of money and like, “Shoot.” So if you look on my acquisition, the Land Academy inbound caller checklist, that sheet there, that you find on landinvestors.com. There’s a thing on there is how fast do they want to close?
Jill DeWit:
How urgent is this? I used to need to use that. And, I’d rank them, one through five. It was like take your time. Well I might do the deal next month, because I’m almost out of funds right now. So, and I didn’t have anybody else back then. This is years and years, years ago. It was just our funds to get money from. We hadn’t even thought about creating this whole thing. Had I thought about it, we could have brought in other people, but we always like to… It was people that didn’t know land very well. It was really just him and I. It was before Land Academy. And I don’t want to explain what I do to my mom or anybody exactly to say, “Hey, I need some money,” because it was just a whole can of worms.
Jill DeWit:
So anyway, but I’d have to space out deals. And if you do that, you risk them selling to somebody else, just changing their mind, going dark, whatever. So, that’s my number one thing. And so many people, it’s another way… So for me, as I’ve got the deal, A, I can handle more deals myself, because I’m never out of money. It’s like I have an unlimited fund. I just bring in whoever I want by putting it on land taken. And we’ll talk more about that, I’m sure another time. But also, it’s great for me as a funder because I can too, as being the bank, I’m taking now more deals at the same time. So it’s a win-win for both of us.
Steven Butala:
You should start practicing this mindset. You have unlimited source of funds for land acquisitions. I don’t mean buying marinas or used cars or wholesale diamonds. I mean, you have unlimited resources as a Land Academy member for any type of vacant land transaction. The only thing is this. It’s got to be a good deal. For us, it’s got to be a great deal, but if it’s a pretty good deal, somebody’s going to fund it in our group.
Jill DeWit:
Love it. Did you want anything else?
Steven Butala:
No, I’m happy that they could join us today.
Jill DeWit:
Oh, good. And so am I, because five days a week, you can find us right here on the Land Academy show.
Steven Butala:
Tomorrow, the episode of the Land Academy show is called how to fund deals and what you should look for if you’re the bank. You are not alone in your real estate ambition.
Jill DeWit:
Are we doing air quotes?
Steven Butala:
No. Tomorrow, Jill and I are… I actually cut myself off and paid attention to the script for once. Tomorrow, we’re going to talk about being the bank, like us. And the right way to do it and the wrong way to do it and how to leverage your money correctly. If you’re in a position to fund deals, you probably know this already, but I’m actually, I’m going to talk about, Jill and I are going to talk about how we do it, how we do it for land specifically and how it’s appropriate to do it for a Land Academy member. More so, because I think that the people who are trying to get funding need to understand how you think, as a lender.
Jill DeWit:
Do you understand how I think?
Steven Butala:
Not at all.
Jill DeWit:
Okay.
Steven Butala:
As a lender, I have a shot. As a-
Jill DeWit:
As a male.
Steven Butala:
As a, I don’t know how to say this. Jill and I introduce each other as life partners all the time. And it’s like, because we’re not married. I mean, it’s just, that’s becoming weird. Have you noticed that?
Jill DeWit:
It kind of is. In Canada, it’s a normal thing, where everybody says, “Yeah, my life partner-”
Steven Butala:
In Canada?
Jill DeWit:
In Canada, [crosstalk 00:12:48].
Steven Butala:
How do you know what goes on in Canada? [crosstalk 00:12:54]
Jill DeWit:
I want to say one time, well, that one day we were in Vancouver, and a couple of times I heard a husband and wife call each other partners. So it’s a readily intertwined thing here in Canada. I don’t know.
Steven Butala:
I can’t say my wife. I can’t say my lover. I don’t know what to say.
Jill DeWit:
The guy I share everything with. How’s that? The guy I share my bills with.
Steven Butala:
I used to just for awhile, I introduced Jill as my sort of wife and-
Jill DeWit:
You did do that.
Steven Butala:
… and everyone got really mad about that.
Jill DeWit:
They were offended by that.
Steven Butala:
Not a Pappy. That was California. So maybe. I’m going to try it in Arizona and see what happens.
Jill DeWit:
I don’t know. I don’t know if I like it. Sort of wife’s kind of weird, too. We have to come up with a good term. Maybe here’s not the time or the place to… Need to send out a few thousand offers to property owners like us. Check out offers2owners.com. It’s offers, the number two, owners.com. No setup fees, free mail merge, and exceptional service. We should know, as it is our company. Give offers2owners a call today.
Steve and Jill:
We are Steve and Jill.
Steven Butala:
Information-
Jill DeWit:
And inspiration-
Steven Butala:
To buy undervalued property.
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