Assignment Deals – Do We Do Them? (LA 1520)
Assignment Deals – Do We Do Them? (LA 1520)
Transcript:
Jack Butala:
Steve and Jill here.
Jill Dewitt:
Hello.
Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala
Jill Dewitt:
And I’m Jill Dewitt broadcasting from hot and not so perfect Paradise Valley, Arizona today.
Jack Butala:
Today Jill and I talk about assignment deals. Do we do them?
Jill Dewitt:
Oh I have a lot to say.
Jack Butala:
This topic comes from a lot of questions that we’re getting about assignment deals, because there’s always this buzz, not so much in our group, but this buzz about assignment deals.
Jill Dewitt:
On the planet.
Jack Butala:
And why they’re…
Jill Dewitt:
The planet thinks they’re awesome.
Jack Butala:
How you can make a fortune. Yeah.
Jill Dewitt:
I’m here to tell you they suck.
Jack Butala:
They do suck.
Jill Dewitt:
And I’m going to tell you why. I’m going to explain what this is. I’m going to tell you all the things that can go wrong.
Jack Butala:
That’s excellent.
Jill Dewitt:
And why I have chosen to go, “Nope, not doing that.”
Jack Butala:
I can’t wait to hear it and I bet I agree. 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. If you’re already with us in the Land Academy group, join us on Discord. You won’t be disappointed.
Jill Dewitt:
Which is another way that we communicate. It’s like We Chat or Teams or something. What the heck is discord? That’s what it is. And it’s pretty cool. Scott wrote, “Question for the land veterans in a situation like this, where the property just went back to the tax authority, is it worth it to pay the former owner a few hundred bucks and get her to assign you the right of redemption and a quick claim deed. Then someone could pick it up for basically the cost of the back taxes. Sounds like there’s enough meat on the bone for the extra trouble.”
Jack Butala:
May I?
Jill Dewitt:
Mm-hmm (affirmative).
Jack Butala:
We do this all the time. I’ve been doing this for 25 years. There’s all kinds of education out there about how to do this too. Do I think it should completely and totally focus on this? Absolutely not. Do I think you should focus on back tax properties only? Nope. But what happens is we send all this mail out and invariably someone calls you back. Usually on every single mailer and says, “Yeah, I’m going to let this go back anyway. I don’t want this property. It’s been five years. I haven’t paid the taxes. Here’s the APN. Well, you know the APN, you sent it to me on my letter. So knock yourself out. Maybe send me $500.” Or maybe you suggest that you give them $500 to let you to undo all this mess for them, depending on how much back taxes there are, it may or may not be worth it.
Jack Butala:
It’s just a math situation. If there’s too much more back taxes than the properties, then you can sell it for, then it’s not…
Jill Dewitt:
Then you walk away.
Jack Butala:
Right. There are people in our space, other people who have a land academy like environments, where they teach how to buy and sell land, that only focus on this. Which to think of silly. Why would you focus on just one small little part of the revenue stream? No, in the vast majority of these situations, we win, you would win as the investor because you’re dealing with somebody who just doesn’t care anymore. They already gave up, stopped paying the taxes and you have to solve their problem usually from a legal standpoint. The deed might be in a deceased mom’s name.
Jill Dewitt:
Yeah. You got to make sure it’s undoable and they’re into it.
Jack Butala:
Yeah. I’m skipping along the top of this topic.
Jill Dewitt:
Because we have one right now, that’s majorly hard to undo and they’re not into it. It’s a double thing working against us. So then you have to decide is my time worth it?
Jack Butala:
I put this in here for a reason, among many, many questions. This is something to expect. We have a personal friend who sent her first mailer and the first deal I came back was just like this. I’ve been working on it with her, it looks like a great deal.
Jill Dewitt:
Cool.
Jack Butala:
In Colorado.
Jill Dewitt:
Is she going to take it down?
Jack Butala:
I don’t know.
Jill Dewitt:
Okay. Good. Hope so.
Jack Butala:
Today’s topic, assignment deals. Let’s just say, what are they? And do we do them? This is why you’re listening.
Jill Dewitt:
Okay. Let’s talk, everyone. There’s a few words out there that are getting a negative buzz, some unjustly and some should have a negative buzz around them. One of the ones that I don’t think is right, that gets a negative buzz or negative connotation is, “Wholesale.” We really do buy and in a way I wholesale price and try to wholesale property.
Jack Butala:
Can you really bring us down to the eighth grade level and tell us what definitions of some of these words are? What is wholesaling?
Jill Dewitt:
Okay. Wholesaling is buying… Think of something you get on a ship from China, think of a store. You’re the middleman supplying something to somebody else to a store. You’re the wholesaler. Maybe buy all kinds of carpet from who knows where. You bring them into your warehouse and you wholesale them to carpet stores. That’s kind of how you do it. You price it that way. You bought it really inexpensively and you’re selling it really expensive, but you’re just getting a certain margin that, that makes your business run smoothly. And then the guy who buys it from you, he marks it up and he retails it. It’s all for the end user. He installs it. He sells the pad. That’s another wholesaler or whatever it is. It’s something like that. There’s a way you can do that with land.
Jill Dewitt:
That’s what we set up our company to be many, many, many years ago. That was our focus. When I came, not originally, but during the time when I jumped on board, that was my focus because it naturally went that way. We would buy property so cheap, bring them in our inventory. I found that 99% of my buyers were their investors who are marking them up and selling them for more. I’m like, “This is great. I love this.” Being a wholesaler too, we communicate, I’m not talking to the end user, the end buyer. They understand what I’m doing. Is that enough for you?
Jack Butala:
A wholesaler is a person who sources the product. It’s the middle person from either the owner or their manufacturer and sells it to the retailer.
Jill Dewitt:
And then they sell it to their customers.
Jack Butala:
In real estate, a wholesaler is the person who contacts the owner of the real estate, buys it for as little as possible. They don’t buy it though. They just control the deal.
Jill Dewitt:
Or they do buy it.
Jack Butala:
Sometimes they buy it. Sometimes they don’t. That’s where the problem is. That’s where assignments come in.
Jill Dewitt:
What I was talking about is two different things.
Jack Butala:
My point is in both the assignment situation and the wholesaling situation, you’re the first person that’s talked to that owner.
Jill Dewitt:
Right, and you have options.
Jack Butala:
You get there, you get there first. And so depending on what you call it, you’re going to communicate this deal to the person, the end user. There’s two ways to do that. You can wholesale it or assign it, which Jill’s going to, in a second, talk about.
Jill Dewitt:
Thank you.
Jack Butala:
I try to just make it simple.
Jill Dewitt:
What the heck. Did you catch that?
Jack Butala:
Usually I like to do this.
Jill Dewitt:
That was a, “Oh, sweetheart, just sit down and let me take this.”
Jack Butala:
Here’s the way I like to do this, just get the information to them in an eighth grade manner, with the shortest number of sentences as possible, and then have fun with it.
Jill Dewitt:
I started to do that.
Jack Butala:
No you started with the fun.
Jill Dewitt:
I started to go up high and you said, bring it down. So I did. I just brought it down to kindergarten, not eighth grade. Sorry.
Jack Butala:
Everything’s all just fun and games all the way through. Instead of definitions.
Jill Dewitt:
Are you done now?
Jack Butala:
Yes. Now have fun with them please.
Jill Dewitt:
All right.
Jack Butala:
I’m information, you’re inspiration.
Jill Dewitt:
Yeah. And frustration. That’s my other one too.
Jack Butala:
And disappointment.
Jill Dewitt:
Yeah. That too.
Jill Dewitt:
Okay. Anyway, I was explaining wholesale. My whole reason I was talking about wholesale too, is it gets a bad vibe. People now throw that term around, they use it wrong. What makes me mad is wholesale has tripped into assignment. And people think that every wholesaler is assigning every deal and nobody’s doing any money, all you’re doing in queuing them up? You want some money here and walk away and they don’t want to do any other work, kind of thing. Which part of that is true. Back to the whole point though, what are assignment deals? Assignment deals is let’s just say… Jack just said, you go to the seller, you got the deal first you have a controlling interest in it. You have a signed purchase agreement. It probably says on your signed purchase agreement that it’s it’s…
Jack Butala:
Assignable.
Jill Dewitt:
To you or your assigners kind of thing. That’s what it might say to buy it. You have a lot of options. The guy disagreed on the price and you’re in control. Now you could buy yourself.
Jack Butala:
Which issue in case, if you bought it yourself, you’re a wholesaler. If you don’t, you assign it, you’re an assigner. That’s the differences between these two.
Jill Dewitt:
How are you doing that? You’re either talking amongst your friends. You’re on social media. Usually you have your email, your quiet email blast list. You’re just trying to assign the deal to somebody else. Because all you want to do is take your cut in the middle. Maybe it’s 10 grand, maybe it’s 50 grand. It probably depends on the deal. It really does depend on the deal and whatever you want to do, and everybody’s comfortable with. If I go out and find a seller right now today, and I sent out my purchase agreement. He agrees on my property and he’s going to sell it to me or my assigners for $30,000. I’ll walk around this piece of paper now, and now I’m going to shop it to everybody because I know what’s worth 90. I could buy it, sell it myself for 90, but I don’t want to do all that work. I just want to give to somebody else, maybe I’ll take 20. Maybe I will take 30. Maybe I’ll take 10, whatever it is. And then they do all the work. I don’t like this for two reasons. One, is the whole process, sometimes there’s slimy people that do this and they’ve given it a bad name.
Jack Butala:
Why are slimy people attracted to this?
Jill Dewitt:
Because they don’t have to do anything.
Jack Butala:
Because you don’t have to pay. Because it doesn’t cost them anything to do this.
Jill Dewitt:
I don’t think they believe in the deal enough to buy it.
Jack Butala:
No. That has nothing to do with it.
Jill Dewitt:
If you believe in the deal enough, you would buy it. You don’t think so?
Jack Butala:
That’s just a different personality type. Yeah. Their personality type is, “Ha ha, I got it.”
Jill Dewitt:
Yeah.
Jack Butala:
It’s a used car salesman situation, high five, after somebody walks out of the dealership.
Jill Dewitt:
If you’re lucky, I’ll pick you and you pay me and you can have it.
Jack Butala:
Yeah.
Jill Dewitt:
And if it goes sideways, I don’t care. I got my money.
Jack Butala:
That’s it.
Jill Dewitt:
That’s part of it.
Jack Butala:
It’s a real estate agent mentality. I deserve a fee on this deal for getting in the middle of it.
Jill Dewitt:
I hate that.
Jack Butala:
It’s a different way of wrecking somebody else’s deal.
Jill Dewitt:
My other thing is, too many things can go wrong. If you’re trying to do this, there’s a chance that you assign it to somebody else, you’re not paid yet, and they’re talking right now, your buyer’s talking to your seller, they could cut you out of the deal tomorrow. What do you do? Go sue them?
Jack Butala:
There’s all kinds of stuff that can happen.
Jack Butala:
You could, but do you want to go through the work and the time and expense and all that? I don’t.
Jack Butala:
So what’s the right thing to do, Jill?
Jill Dewitt:
Buy it.
Jack Butala:
Buy the property.
Jill Dewitt:
That’s how I feel with deal funding. I think we talk about that on another day, but we’ve talked about that anyway a lot. If you feel this strong about a deal and you just don’t have the cash, there’s somebody standing right behind you with the cash, like us. That’s one of the things that I feel really confident about. And I know that when I’m talking on other panels or talking with other people, I chat about what we do. They think all I’m doing is assigning. I’m like, “No, no, no. I’m buying the property, my name’s on the deed.” That stops it all right there. They know I’m real. I’m legit. I believe in the transaction. All of that is correct.
Jack Butala:
Perfect.
Jill Dewitt:
Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show. Join us tomorrow.
Jack Butala:
Tomorrow, the episode on the land academy show is called, creative deal structuring. You are not alone in your real estate ambition. It Comes down to this, buy the real estate. You have a hundred options when you buy it and not just control it. If you buy the property, you can rent it. You can clean it up and fix it. It’s just the right thing to do. Is it a little bit more expensive? Yeah. Because there’s two closings on the buy side and the close side, but usually less than $1,500 more. That poor person that you’re buying this property from, who is usually, it’s a time sensitive thing, then they’re cashed out correctly and everybody’s telling the truth. It’s the right thing to do.
Jill Dewitt:
I agree. I’m glad you stopped me. Cause I could have gone on for days and beat this whole thing up.
Jack Butala:
Yeah. Because this is a thing with Jill.
Jill Dewitt:
It’s kind of a Jill rant. It really is.
Jack Butala:
Rightfully so. Jill, I’m right on the same page with you.
Jill Dewitt:
I don’t like it. It doesn’t feel good. Like I said, when people think that I do that and I put them in their place, they’re like, “Okay.” I’m like, “Nope.” So it’s good. By the way, if you’re interested in learning more about us or what we do, please check out landacademy.com or houseacademy.com. We provide the education tools and experience you need to be flipping property like the probe.
Jack Butala:
We’re Steve and Jill.
Jill Dewitt:
We’re Steve and Jill.
Jack Butala:
Information.
Jill Dewitt:
And inspiration.
Jack Butala:
To buy undervalued property.
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