On Site Land Improvements Never Pencil (LA 1570)
On Site Land Improvements Never Pencil (LA 1570)
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 Dewitt broadcasting from pretty Phoenix, Arizona.
Jack Butala:
Today, Jill and I talk about how on-site land improvements never pencil.
Jill DeWit:
Okay, explain this again. Please.
Jack Butala:
Land improvements are stuff that you buy a piece of land, and there’s always this question, especially with our super new Land Academy members, “Well, I should probably clear it, and make sure you can see it, and then maybe I should put a well in.” Yet, there’s all kinds of stuff, and we’ll talk about all the possible things that you can do. And I’ll tell you the vast majority of the time it doesn’t pencil. It doesn’t make sense financially.
Jill DeWit:
Who came up with that? Who came up with the whole pencil thing?
Jack Butala:
I have an accounting background and I’m from the ’80s.
Jill DeWit:
I know, but who came up with it? I was ready to say I have a kind of background from the ’80s, and I still don’t know who came up with that saying.
Jack Butala:
Well, you’re from California too, so that there’s a lot probably involved in that too. Penciling is just a way of saying, “Hey, let’s make it-”
Jill DeWit:
You heard that.
Jack Butala:
“… Let’s pencil this thing out before we actually go do it.”
Jill DeWit:
Okay.
Jack Butala:
“Before we spend any money on it.”
Jill DeWit:
Thank you, got it. Listen, soup to nuts, I’ll give you soup to nuts.
Jack Butala:
Jill’s constantly making fun of the sayings that I think are normal and everybody understands.
Jill DeWit:
No one in the planet says soup to nuts, or bajillion.
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:
Michael wrote, “Hi, I’ve a signed purchase agreement from a recent mailer for a 10 acre parcel in Northern Arizona. Initially I felt that I over offered in the price, but then I talked to the seller who stated there’s a shared well on the property. I reviewed the docs and feel comfortable with this being a great deal, that was until I visited the property and saw two derelict abandoned trailers with no wheels and a vehicle on the property, as well as two generators, and a heap of put trash and debris. Apparently this belongs to the uncle who willed the property to the current owners before he died. Otherwise this could be a great deal, which I think I could sell for three times our purchase price. Just not sure how to deal with the abandoned trailers and vehicles, any ideas would be greatly appreciated.” Ready? Go.
Jack Butala:
If there’s stuff on the property already 99% of the time it’s better than just having big vacant land, unless, and there’s only really one exception that I can think of, where the EPA might have an opinion about it, like an old storage tank, fuel tank, or tanks underground.
Jill DeWit:
Or, Refrigerator.
Jack Butala:
Or, 500 refrigerators leaking Freon. Doesn’t sound like that’s the case here at all. Sounds like you’ve got a couple of generators, which might be great. You know, the vast majority of the people that are going to want really rural property are really interested in all the things you described. They don’t want… It’s not like buying a house where it’s you want to walk in and there’s music playing and you move your stuff in, and it’s beautiful. It’s just not, it’s a completely different mindset.
Jill DeWit:
This is…
Jack Butala:
People, they want a rural piece of land to get away from everybody and put their own trailer, and fix a trailer up. There’s generators out there, I’m telling you, if there’s two generators out there…
Jill DeWit:
That’s worth something.
Jack Butala:
I would put that in the title land with generators and a well.
Jill DeWit:
You know what? This is like Storage Wars. You know how people buy… like they’re racing to bid and outbid someone on what could be in the storage container.
Jack Butala:
Yeah.
Jill DeWit:
So you can look at it like that. Like, “Hey, FYI, who knows what you’re going to find, guy could have left cash under the mattress, we don’t know.”
Jack Butala:
So that said, but please hear me on this final point, there’s no reason you should ever pay more for a piece of property because it’s got stuff on it.
Jill DeWit:
True.
Jack Butala:
You should just pay like it’s got nothing on it and if you’re pricing it like we always do, 10, 20, 30% of the retail value. Those are just bonuses for help you sell it faster, not to reprice. Don’t reprice.
Jill DeWit:
Right. Isn’t that cool?
Jack Butala:
So it concerns me a little bit that you say, yeah, you offered this money, but then it’s got a well on it and this and this and this, and so now I’m justifying some price that he wants.
Jill DeWit:
Oh, I see what you’re saying.
Jack Butala:
That concerns me a lot.
Jill DeWit:
Okay, yeah don’t…
Jack Butala:
Sure it concerns Jill too.
Jill DeWit:
I hear you, and I agree.
Jack Butala:
Today’s topic, on-site land improvements never pencil. Just like I said, this is why you’re listening.
Jack Butala:
Why is that funny?
Jill DeWit:
I don’t know because you’re just digging in on that. Is it pick on Jill week?
Jack Butala:
No.
Jill DeWit:
Okay.
Jack Butala:
There’s tons of stuff you can do to your land to improve it.
Jill DeWit:
Right.
Jack Butala:
Almost all of which you should never do. Why? There’s two ways to create equity in a real estate deal. Number one, buy it really cheap. Love that way. Number two, do stuff to it to improve it. Think of an old car, an old classic car that’s been sitting in a barn or sitting outside for years and years and years and years and all cleaned up it’s worth $30,000. Not cleaned up it’s worth 5,000, so you can sell it to the person who’s going to clean it up and make the 30, they’re going to make more than you do. And you paid nothing for it, you found it in your barn.
Jack Butala:
I take the $5,000 any day over the work and the toil and the sweat to get 30,000. That’s for somebody else who’s an expert at that, they take it to their shop, they have all the tools, they have a crew, they have a television show, hopefully. So it’s the same thing with land, we’re not in the business of improving property, not houses. This isn’t an HGTV, we’re not home builders, we’re not well diggers. There’s people for all of that stuff. We’re in the business of buying inexpensive real estate through using data, and then having somebody on your team, whether it’s you or somebody like Jill, who’s a great deal maker who understands people and understands how to talk to them, and get the price that makes it worthwhile for us to be in business. That’s it. So please don’t… there’s all kinds of things you can do to improve your property, we just answered a few. Wells, and clearing, and driveways.
Jill DeWit:
Adding utilities.
Jack Butala:
Yeah. None of that pencils in my opinion, it never has for us.
Jill DeWit:
Exactly.
Jack Butala:
But if you’re lucky enough to find some stuff on the property when you get there, that’s all the more equity that you have built into the deal.
Jill DeWit:
You know, and here’s why we’re saying this too, it’s experience and it’s not just us, we’re constantly talking to people like, “It sounds good. It looks great on paper.” Right? And you get into it and go, “That was six months out of my life, and what I could have done in that six months.” You know, would have been A, so much easier. And B, I wouldn’t have to leave my desk and deal with all that hassle.
Jack Butala:
Do you want a man who doesn’t need any improvements?
Jill DeWit:
Uh-huh (affirmative).
Jack Butala:
Or, do you want a ten-year project to try to improve your man?
Jill DeWit:
I would love to know. Let’s pause for just a moment. Where would one say find a man that doesn’t need any improvements?
Jack Butala:
Cheap too.
Jill DeWit:
Yeah.
Jack Butala:
That’s the problem.
Jill DeWit:
I want a cheap man, right out of a box, ready to go, and is not going to need anything.
Jack Butala:
He’s got a six pack, and really good eating habits.
Jill DeWit:
Yeah, surely nobody says yes.
Jack Butala:
And really, really interested in you, and everything you have to say.
Jill DeWit:
Exactly. And every comment is, “If that’s what makes you happy, sure.” “I don’t care where we eat baby, I’ll drive around for an hour with you.” Where’s that guy?
Jack Butala:
“God, you look great today.” That kind of thing.
Jill DeWit:
Yeah, exactly.
Jack Butala:
“Thank you for being here.”
Jill DeWit:
“As a matter of fact sweetheart they look so nice, I will happily go to the mall for you and buy you five more pairs.”
Jack Butala:
There’s a whole list of stuff like this.
Jill DeWit:
Could you imagine?
Jack Butala:
You know, there’s a man side of this.
Jill DeWit:
I do, what kind of… You know what, here’s the total truth. I dated one time a long time ago, I dated a guy, this is 10 years before anybody, like… anyway and I thought it was great because he was very agreeable. Like everything I wanted to do, he thought it was a great idea, I’m serious. I’m like, “This is awesome.”
Jack Butala:
I know where this is going.
Jill DeWit:
I’m like, “This is the greatest thing.” And then it took all of a day before I realized this guy has no opinion about anything. It went from, “Oh, wow. I get to pick everything.” To like, “Oh my God, this is so boring. He has no opinion.”
Jack Butala:
Yeah. There’s no way that would work for you.
Jill DeWit:
No, no.
Jack Butala:
Jill’s all about backbone, and she’ll take the bad with a strong backbone.
Jill DeWit:
Yes, proven that.
Jack Butala:
There’s a whole male side to this that…
Jill DeWit:
What’s the male side?
Jack Butala:
Just, it’s like, “I really like this girl, but geez, I got to put up with this. There’s this, there’s this, and this. I know it’s never going to change.” And so it’s a flip side for a guy, it’s like… Well, just like yesterday, we said, “She’s moving into my house and she’s redecorating.”
Jill DeWit:
Oh.
Jack Butala:
So it’s that age old thing. Women want to change men, and men want women have stayed the same forever.
Jill DeWit:
I understand that, that’s a whole nother show.
Jack Butala:
The girl that you marry is not the girl you dated.
Jill DeWit:
Oh.
Jack Butala:
And that’s a show.
Jill DeWit:
Do you know what? Here’s the flip side of it…
Jack Butala:
Showing up for life.
Jill DeWit:
… the guy that you marry, is the guy that you dated. That’s what’s so [inaudible 00:09:54].
Jack Butala:
That’s why men have that expectation.
Jill DeWit:
I know, I’ve been telling my friends, and they’re like, “What?” I’m like, “You better love him right now in a way he is with everything because it is not going to change.
Jack Butala:
He’s going to get bigger.
Jill DeWit:
Oh, yeah.
Jack Butala:
And more quiet, you can bank on that.
Jill DeWit:
And the toys he has now, oh, that’s going to double.
Jack Butala:
Are going to get bigger. Let’s do this show.
Jill DeWit:
Hey, totally.
Jack Butala:
A different show.
Jill DeWit:
It is, that’s coming. We’re prepping for it. By the way… Oh, you have more comments on the topic?
Jack Butala:
Yeah.
Jill DeWit:
Sorry.
Jack Butala:
Don’t improve your property, just buy it real cheap and repackage it on the internet. However you do that, however we teach in Land Academy, and resell it for a lot more. That’s the business we’re in, never leave your desk.
Jill DeWit:
You’ll thank us later.
Jack Butala:
Yeah.
Jill DeWit:
Happy you could join us today. Five days a week you can find this right here on the Land Academy Show.
Jack Butala:
Tomorrow, the episode on the Land Academy Show is called, What Name to Use on Your Mailer? Should I use alias Mrs. Smith? Should I use managing member Jill Dewitt?
Jill DeWit:
I agree, there’s a lot of variations, a lot of things.
Jack Butala:
You are not alone in your real estate ambition.
Jill DeWit:
It’s funny that that is a topic, it’s a real topic. And I’m glad that we’re… We haven’t talked about of that before.
Jack Butala:
So I… And here’s a teaser, I’ve had lots of acquisition people over the years, and I’ve used various names on the mailers, including mine. We always use Jill’s now, but in the past I’ve had people that worked for me where we use their name and for the reasons that we talked about a couple of days ago. So we’ll talk all about it tomorrow, about transparency rules.
Jill DeWit:
Mm-hmm (affirmative), exactly. If you’re interested learning more about us or what we do, please check out landacademy.com or houseacademy.com. We provide the education, tools, and support you need to be flipping property like the pros. We are Steve and Jill…
Jack Butala:
We are Steve and Jill, information…
Jill DeWit:
…and inspiration.
Jack Butala:
To buy undervalued property.
______________________________________________________________________________________________________________________________
If you enjoyed the podcast, please review it in Apple Podcasts . Reviews are incredibly important for rankings on Apple Podcasts. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
The BuWit Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on Apple Podcasts.
