Bank Financing on Land 101 (LA 1569)
Bank Financing on Land 101 (LA 1569)
Transcript:
Jack Butala:
Steve and Jill here.
Jill DeWit:
Hello.
Jack 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 sweet Scottsdale, Arizona.
Jack Butala:
Today, Jill and I talk about bank financing on land 101. You have a great deal, you don’t have enough money. Or you already bought a piece of property with your own money or any way else, and you’re going to want to sell it to somebody who’s going to go to a bank and get financing. We’re seeing that a lot now.
Jill DeWit:
I would like to pause for a moment and just talk about, for those of you who are not watching, I just got stopped with the funniest comment which was, Jill, where’s the bottom of your blouse? You can’t tell, it looks like it goes way down on the screen. It’s there, it exists.
Jack Butala:
Then I said, is that okay? And then I corrected myself and said-
Jill DeWit:
Might improve our numbers.
Jack Butala:
Yeah, that’s where [inaudible 00:01:01].
Jill DeWit:
Let’s see what Jill’s wearing today.
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. And if you’re already a Land Academy member, please join us on Discord.
Jill DeWit:
Vic wrote, “I have a closing next week and there is physical access, but it’s via a private road. The title company [inaudible 00:01:27] the following in the exception sections, that would be called schedule B, and I wanted to see if that clause is normal and if it would be a problem for me when I’m selling the property.”
Jack Butala:
Like always-
Jill DeWit:
I was looking for the comment.
Jack Butala:
Like I said, there’s a lot of comments on this.
Jack Butala:
Here’s my take on it. The vast majority of schedule B exceptions on title policies say we don’t ensure the fact that this property has access.
Jill DeWit:
Good, bad, or otherwise.
Jack Butala:
Yeah. That’s just-
Jill DeWit:
We’re not going to promise anything.
Jack Butala:
They don’t even check it. It’s just a sentence that they include in there among several other things that the title policy doesn’t-
Jill DeWit:
Cover.
Jack Butala:
Yeah, it doesn’t cover. So, no, I wouldn’t. This doesn’t concern me at all. I would check out the physical details of the private road. Is there a gate? That might cause some problems. That may change your mind. If the private road is maintained by a neighbor and the access to your property is through that private road, if this is actually the truth and it’s not just template language in the schedule B title exception for the title policy, that could pretty dramatically affect how people get there to see the property to see if they want to buy it. And/or if they do buy it and somebody puts up a gate because it is their private road, that’s a problem.
Jill DeWit:
I think there’s two kinds of private. There’s your neighbor’s private road, and then there’s the public utility. There’s APS, the power service private road. So you have to do some digging.
Jill DeWit:
I was going to add, I had this come up yesterday, and people say things, too. You have to really do your own homework. Don’t believe everything that one person says. Someone said, “Oh, that’s a private road,” and now you’re believing it. It might not be true.
Jill DeWit:
An agent came up, we have a property that we’re selling ourselves, and we got a phone call from an agent in the area who said, “I’d love to help you guys sell this property.” We put a sign in the ground and she obviously saw it and called the sign. She told my transaction coordinator, “By the way, because it’s only a half acre, you need an acre to build in this area.” But she’s all excited to list and sell the property. I’m like, I’m not sure I believe her. And so my transaction coordinator passed that on and I said, that’s nice.
Jill DeWit:
Just because one person says that, doesn’t mean it’s right. She could have heard that from somebody else. She could have heard in this area, and maybe it’s a subdivision. Maybe it’s this part, not the whole county, kind of thing. And she’s just regurgitating it because it applied to her on one situation.
Jack Butala:
This is a topic for the Showing Up for Life program that Joe and I are launching this fall. It falls under this title: question everything. This goes for everything in life, question everything. Don’t take people’s words for it. Especially this day and age where everyone has a vested interest to be as loud as they can on the internet and to get as much attention as they can, including with just saying completely false stuff.
Jack Butala:
I agree with you completely, Jill.
Jill DeWit:
Thank you.
Jack Butala:
You got to check it out. Not even two times. I would find out for real.
Jill DeWit:
Dig a little bit. Spend a couple hours-
Jack Butala:
Get a flat map.
Jill DeWit:
… dig to the bottom of it.
Jack Butala:
Get a lawyer if you need to, if there’s enough money in the deal. Find out whether there’s physical and legal access on your property. The last person I would ask is a real estate agent.
Jill DeWit:
That’s true.
Jill DeWit:
Perfect.
Jack Butala:
Yeah, “Your property sucks. You need an acre to build. It’s only a half acre and there’s no access-
Jill DeWit:
“I’d love to list it for you.”
Jack Butala:
… “But I’d love to list it. I think it’s worth $40,000.”
Jill DeWit:
“I can handle this.” What the heck?
Jack Butala:
Today’s topic, bank financing on land 101.
Jack Butala:
This is the meat of the show.
Jill DeWit:
Why would I ever want bank financing on land?
Jack Butala:
There’s a couple of situations. Let’s say you’re buying it.
Jill DeWit:
And I don’t have the money?
Jack Butala:
On the acquisition side.
Jill DeWit:
Oh, I got ways around that.
Jack Butala:
You got a great deal. You don’t have the money. Land Academy is totally set up for that. We encourage that. We encourage you, if you have the right personality type and you understand data a little bit, or you have Jill’s happiness factor-
Jill DeWit:
Or a good deal. Just flat out, a good deal.
Jack Butala:
My point is if you have any of that and no money, it doesn’t matter. All you need to do is find a great deal. That’s why we’re here.
Jill DeWit:
Exactly.
Jack Butala:
We have a whole section of Land Academy called landfunding.com. In fact, it has its own phone number and email address now.
Jill DeWit:
I’ll share all that at the end.
Jack Butala:
We’ll happily, happily take a look at your deal. No deal is too big, no deal is too small, and no deal is too stupid. We’re finding out. We’ve had deal funding for a long time, we’re calling it land funding now. We’re finding out after talking to people that they’re like, I don’t know if my deal is good enough. Well, submit it, we’ll take a look.
Jill DeWit:
We’ll check it out.
Jack Butala:
We’ll tell you.
Jill DeWit:
Well, that’s part of it. I’ll help you. I’ll teach you. I’ll make sure you don’t make a mistake. And boy, we’ve done that. You better believe. We wouldn’t be sliding in on 16,000 deals without making a mistake, or several.
Jack Butala:
Sliding in on. I like it.
Jill DeWit:
Thank you.
Jill DeWit:
So-
Jack Butala:
That’s one scenario.
Jack Butala:
Go ahead.
Jill DeWit:
I think a lot of people do this on houses, and they think that you have to. It’s like a normal thing. People are like, I need to get bank financing. And you just said, you don’t. What are the best cases and worst case scenarios here?
Jack Butala:
Well, for on the acquisition side, we just covered it. To get acquisition financing just for a flip, it doesn’t make sense at all, in my opinion, to go anywhere except for private financing, which is what land funding Land Academy financing is. There’s all kinds of people all over the place that do this, not just us. We just happen to be the best and the easiest to get through.
Jill DeWit:
And experienced.
Jack Butala:
Right. But there’s a huge other component which will open up your sales channel times 80 is, we’re seeing now, Jill and I are seeing now conventional normal financing from companies like Bank of America-
Jill DeWit:
Oh, I saw Wells Fargo.
Jack Butala:
… and Wells Fargo. Huge mainstream banks. I’m not plugging those banks at all because most of the people here will agree with me, big banks suck. The local ones and smaller ones are great. And so you bring them, in general, a property that has pretty good access. Not pretty good access. County road access, and it’s okay from a size standpoint, it’s got all the five As, then they’re going to take a look at your deal.
Jack Butala:
This is the first time in my career I can say that. My first time in a land career that they really will look at … We’re seeing deals. We don’t have any personal experience selling property with financing like that.
Jack Butala:
Actually, we do. There’s a couple of deals now that I’m thinking about that got sold with financing on them. But we’re seeing our members are popping up everywhere, our Land Academy members saying, “I just sold this and it’s got Wells Fargo buyer went to their bank and got a mortgage that’s secured by the piece of land.” So this is the first time for me saying this in my career, and it’s great news because everybody can afford it now.
Jill DeWit:
There’s better ways to do it though. I thought the show was going to be bank financing on land 101, don’t do it.
Jack Butala:
Oh, really?
Jill DeWit:
That’s what I thought. So it happens. It’s out there, but-
Jack Butala:
The summary is on the-
Jill DeWit:
I guess it depends on, are you the long-term person?
Jack Butala:
On the acquisition side?
Jill DeWit:
Yeah.
Jack Butala:
I think it’s doesn’t make any sense at all. Forget it. When you go to buy it, private financing is the only way to go. But when you’ve got it, you’ve got a great deal and it’s for sale and there’s a young couple driving down from Chicago to take a look at your property in Arkansas, and they’re thinking about moving or putting a second home on it-
Jill DeWit:
Building a house or a farm.
Jack Butala:
… it makes complete sense to inform them that wherever they do their banking-
Jill DeWit:
This exists.
Jack Butala:
… just make a call.
Jill DeWit:
I was going to say, too, here’s one of the things, say you’re doing what we do on the front end. You’re buying it to try and resell it. The last thing you need is a bank now weighing in on the transaction. Talk about slowing things down. It’s hard enough with escrow and the hang ups right now that things are slowed down, but it sure helps when you can say, “Don’t worry about the money. It’s going to be all cash. This guy over here is going to wire it when you tell me when.” That’s how it goes with the private funding. It does not go that way with a bank. Could you imagine? Here’s the conversation, “Hi, Carol at Title One. When you’re ready, just call Susie at Bank of America and she’s going to wire that right over.” Nope. “She’ll even answer the phone and wire it right now with you there.” It’s not going to happen.
Jack Butala:
Like many, many-
Jill DeWit:
I’ll do it, but they won’t.
Jack Butala:
Like many topics on the show, it’s just something that you need to be aware of.
Jill DeWit:
It’s true.
Jack Butala:
That financing property through conventional means on the sell side, with you as a seller and your buyer going to get financing, is rearing its head now. Just be aware of it. There’s nothing better than having the neighbor call you and say, “You only want $35,000 for this? Where do I send the money?” That’s your ultimate goal.
Jill DeWit:
Right. After you own it.
Jack Butala:
Yeah.
Jill DeWit:
By the way, a side note, what else should we be aware of? Wearing seat belts is important.
Jack Butala:
[inaudible 00:10:43]
Jill DeWit:
I heard the dad in you jumped in and give me a little advice, “You need to be aware, son.” What else? This is a G-rated show so I can’t say the obvious things.
Jack Butala:
There’s a difference between heavy drinking and being an alcoholic.
Jill DeWit:
There is that. You need to be aware of that.
Jack Butala:
You need to figure which one of those might be you.
Jill DeWit:
Let’s see. Women. I’m going to give a woman one you need to be aware of.
Jack Butala:
Well, you just said this morning-
Jill DeWit:
Wait, if he’s sleeping on his parents’ couch, might not want to date him. Need to be aware of that.
Jack Butala:
Here’s my impression of Jill drinking her coffee this morning, “Oh no. There’s a real big difference between the guy you bring home when you’re 16, and the guy that you bring home when you’re 22.”
Jill DeWit:
Yep. That’s exactly what I said.
Jack Butala:
What are the differences, Jill?
Jill DeWit:
Every woman listening goes, “Oh yeah, that’s true. Oh yeah. Totally.”
Jack Butala:
Well, fill me in.
Jill DeWit:
The guy you bring home at 16 is in a band. That’s it. That’s all it is. And it’s a crappy band and it’s in somebody’s garage. They’re trying to get going, but he’s still in a band and you’re all into that. That’s the guy you’re after at 16.
Jill DeWit:
At 22, you’re like, well, that was a waste of three years because he’s still on his parents’ couch, he’s still in somebody’s garage, and they still have not cut that single. They’re getting closer.
Jack Butala:
Oh my gosh.
Jill DeWit:
What?
Jack Butala:
What happens at 22, then?
Jill DeWit:
At 22, you come up for air and you’re like, I’m not wasting any time now. I got some [inaudible 00:12:21] I got to get going here. There’s some things I want to do and things I want to see and houses I want to buy and achievements I want to accomplish. You look around and realize, now I’m looking for the steady guy who had his own place and probably has a good haircut.
Jack Butala:
Oh my gosh.
Jill DeWit:
I don’t know.
Jack Butala:
What about 32?
Jill DeWit:
Oh, huh. That’s very interesting. The guy at 32? As a woman with a guy at 32, actually, that’s probably the best age. In a perfect world, they’ve got their career locked down, they probably are paying off their own mortgage. I like this.
Jack Butala:
Now we’re getting somewhere.
Jill DeWit:
Renting out a couple of rooms to some buddies because they’re smart and making some money there. Then at some point, when everybody’s ready to settle down, they can just ask the roommates to move out.
Jill DeWit:
You think I’m kidding?
Jack Butala:
You’ve really thought about this.
Jill DeWit:
And there you go.
Jack Butala:
Here’s the man side of that.
Jill DeWit:
Okay, good.
Jack Butala:
At 32, you asked your buddies to move out. The house is a disaster and so-
Jill DeWit:
Well, then the girl remodels. I forgot that part.
Jack Butala:
That’s a man’s nightmare, Jill. You don’t want a woman coming in and changing everything.
Jill DeWit:
No. Well, if you have to.
Jill DeWit:
How about this? She won’t remodel, but she’ll call in a cleaning crew. Can I do that?
Jack Butala:
Of course.
Jill DeWit:
Okay. We’ll at least do that. Give it a good clean.
Jack Butala:
Remodel.
Jill DeWit:
Well, how about I didn’t mean remodel? No, I didn’t mean remodel. Let me leave it on this. I meant repair the holes in the walls.
Jack Butala:
Okay.
Jill DeWit:
That’s it.
Jack Butala:
I can live with that.
Jill DeWit:
Thank you.
Jack Butala:
Maybe change the carpet out.
Jill DeWit:
That would be helpful.
Jack Butala:
But not pink and stuff.
Jill DeWit:
Oh goodness, no.
Jack Butala:
Just women want to come in and change everything.
Jill DeWit:
Oh, no. I didn’t mean remodel. I meant make it habitable.
Jack Butala:
Okay. That, I understand.
Jill DeWit:
Thank you.
Jill DeWit:
Happy you could join us today. Five days a week you can find us right here on the Land Academy Show.
Jack Butala:
Tomorrow, the episode on the Land Academy Show is called, Onsite Land Improvements Never Pencil Out. Said another way, doing stuff to your land after you buy it to make more money almost doesn’t ever make sense. Just resell it in the same situation, same condition.
Jill DeWit:
Noted.
Jack Butala:
You are not alone in your real estate ambition.
Jack Butala:
Jill and I just got a new teleprompter and I’m just excited as hell.
Jill DeWit:
I know. I’m so happy.
Jill DeWit:
I want to say real quick, I’m going to share that phone number I didn’t share. Seriously, we are ready. We are ready, available. I have a team set up. I’ve got money set up. We mean it when we say, no good deal should go to waste. You can call this number (480)855-0045. So (480)855-0045. That’s Land Academy land funding.
Jill DeWit:
By the way, if you need access to any sort of ownership or property details, including owner phone numbers and FEMA flood map overlays, check out NeighborScoop or ParcelFact.com. Created by investors, that’s us, for investors like you.
Jack Butala:
We are Steve and Jill.
Jill DeWit:
We are Steve and Jill.
Jack Butala:
Information …
Jill DeWit:
And inspiration …
Jack Butala:
To buy undervalued property.
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