Land Questions 101 From Our Nephew (LA 1574)
Land Questions 101 From Our Nephew (LA 1574)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hi.
Steven 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 beautiful Scottsdale, Arizona.
Steven Butala:
Today, Jill and I talk about land questions 101, directly from our nephew last night at dinner.
Jill DeWit:
It’s funny.
Steven Butala:
Knows nothing about land. And Jill said, “Hey. How about you ask us some questions about land? You know a lot about construction.” He’s involved in commercial construction, pretty successful for his age. He’s in his early 20s and he’s-
Jill DeWit:
About to graduate college.
Steven Butala:
In his own language, he asked us several questions.
Jill DeWit:
They were good questions.
Steven Butala:
Honestly, cracked me up.
Jill DeWit:
Yeah, it was kind of [inaudible 00:00:45].
Steven Butala:
I think about it now, I didn’t even answer the questions. I just collected the questions for the show and that’s it.
Jill DeWit:
That’s true.
Steven Butala:
And he’s never going to watch this or listen to it.
Jill DeWit:
That’s true. He won’t get the answers.
Steven Butala:
Before we get to the questions though, let’s take a question, actually, from a Land Academy member from our online community at landinvestors.com, or if you’re already a member, join us on Discord, Land Academy Discord.
Jill DeWit:
Okay.
Steven Butala:
I got a new teleprompter, and I don’t know how to you use yet.
Jill DeWit:
I know I like to know where the camera is. So here’s the scoop, by the way. Even if you are a member, whether you’re a member or not, we created an online community over five years ago, and it’s packed with information, so that’s landinvestors.com. So go in there, type in questions, get an account. It’s free. Have fun.
Steven Butala:
Thank you for saving me, here.
Jill DeWit:
You’re welcome. I’m just explaining it. Then Jack’s extra little PS is, by the way, if you’re a member, get in both environments because there’s a back area on the online community, Land Investors. And then we have a separate little thing with the Discord app that we have constant, banter, chats running too for members. We want to make sure that our members know about that. I think by now, they do, but just saying.
Steven Butala:
Before we get into the actual show.
Jill DeWit:
Here’s our question. Okay, here we go. So that was an explanation, so here’s the question. Spencer wrote, “Success story for a Friday. I bought this property before joining Land Academy. I made some mistakes, but I learned a lot along the way. I paid $45,000 for a 20 and a half acre, 20.5 acre property in the Southeast on April 5th, excuse me, March 5th. I interviewed a few local realtors. I went with one that my title company recommended.” That’s a good way to find them.
Steven Butala:
This is smart, I can tell already.
Jill DeWit:
He explained that I needed to get a survey done on the property to correctly identify the driveway easement going into the neighbor’s property. I listened and paid about $2000 for the survey. We listed on March 30th. So that was March 5th, now we’re March 30th, at 79,900 and had a full price offer in less than 24 hours. Woo hoo.
Steven Butala:
That’s how it works.
Jill DeWit:
Yep. The buyer was getting a bank loan on the property, red flag number one, oops. And then requested that I pay for a perc test, red flag number two. Yeah, everything was great up until here. My broker said the perc test-
Steven Butala:
This is how you learn.
Jill DeWit:
Would cost $500 and shouldn’t be a problem. I listened again.
Steven Butala:
Broker, broker, broker, broker. Spend money, spend money.
Jill DeWit:
Well, there’s that.
Steven Butala:
Spend it on a survey, spend it on a perc test. Spend your money. Give me your money.
Jill DeWit:
Are you done?
Steven Butala:
Not yet.
Jill DeWit:
Okay. Do you want to finish this, or should I go?
Steven Butala:
No, go ahead.
Jill DeWit:
Okay. Over three months later, one survey, two failed perc tests by the county, three site visits from regional [inaudible 00:03:38], one round of bush hogging for the perc sites and 7000 expenses later, we finally closed yesterday. Sheesh, Louise, you’re not kidding. I cleared over $20,000, so still very happy. Lessons learned. I will not pay for a preliminary survey.
Steven Butala:
Yay.
Jill DeWit:
I will not accept the very first offer within 24 hours of listing.
Steven Butala:
Yay.
Jill DeWit:
I will try my hardest to not do deals with banks involved, and I will not agree to pay for perc tests. That was good, Spencer. I mean, I’m proud of you. Now you know.
Steven Butala:
You took one for the team here, pal.
Jill DeWit:
Yeah.
Steven Butala:
And so we can all learn. Please don’t listen … The moral of the story is, and congratulations on your 20 grand, by the way, that’s outstanding. That’s where the real value here is, is you bought it so cheap, that all these things went wrong and you still made money, and that’s kind of the Land Academy way.
Jill DeWit:
Exactly.
Steven Butala:
But I’ll tell you, for the rest of us, the moral of the story is don’t listen to these brokers. They’ll tell you to change everything. They’ll tell you to spend all kinds of money for them so that they can make a fee.
Jill DeWit:
It’s kind of funny.
Steven Butala:
For doing pretty much nothing except telling you to spend money.
Jill DeWit:
You know what’s interesting, I don’t know. Do real estate agents walk in and say, “I can’t list this … Great, I’ll take your listing, but you’ve got to remodel the kitchen”?
Steven Butala:
Yes. Yes, they do. You haven’t had to do that.
Jill DeWit:
Because I haven’t talked to them. No I have not. I’ve never … Because I’ve not done that.
Steven Butala:
Here’s a list of things that you need to do, sir. Seriously.
Jill DeWit:
Oh, got it. Noted. I understand take down personal photos of the family. There’s little things you can do, but not remodel the kitchen.
Steven Butala:
I have a long, incredible story about that, where somebody that you and I know socially had a property for sale for 10 years because they refused to do any renovations in any way.
Jill DeWit:
Yeah, I know what you mean. I mean, there’s a time and a place for them, I guess.
Steven Butala:
Years on the market, not days on the market.
Jill DeWit:
Yeah.
Steven Butala:
Today’s topic, land questions 101 from our nephew. This is the meat of the show. Last night, Jill and I … Here’s a story, really quickly. I got our nephew a great internship with a super large, very successful commercial real estate contractor here in the Phoenix area, Hardison Downey. And he smashed it and got a job offer, and he was here for the whole summer. And last night was his last day. He’s going back to Michigan to finish his degree at Michigan State.
Jill DeWit:
Hopefully come back and accept the job offer.
Steven Butala:
Exactly.
Jill DeWit:
That’s a whole nother topic. I want to strangle the kid. Anyway.
Steven Butala:
Anyone out there understands children.
Jill DeWit:
Please tell us. Please help.
Steven Butala:
Please send me an email. Send me a summarization, please. Jack@landacademy. I’d like to understand children.
Jill DeWit:
Yeah.
Steven Butala:
I understand Jill.
Jill DeWit:
Thank you.
Steven Butala:
It took a bunch of tries, but I understand Jill.
Jill DeWit:
Oh, I don’t think so. Okay, maybe.
Steven Butala:
I generally understand Jill and I’m pretty sure she understands me. She’s got me snowed, actually, probably. And that’s fine too. But these kids, I don’t get it. Anyway.
Jill DeWit:
Yes.
Steven Butala:
We’re sitting down at dinner, and I said, “It occurred to me in the months that you’ve been here, we never really talked about land or anything. So ask me some questions.” So here they are. What’s the best … These are in his words. What are the best properties to buy as new person?
Jill DeWit:
These are all really good questions. There’s six questions here, or four questions. So are we going to answer them?
Steven Butala:
Absolutely.
Jill DeWit:
Okay.
Steven Butala:
So how would you answer that? Because this is somebody, because there’s probably a lot of listeners that have these exact questions. They don’t know the terminology, which is fine. Everybody’s got to start somewhere. I started somewhere. Jill started somewhere.
Jill DeWit:
This is like an interview. Okay. Yeah. What’s the best property to buy as a brand new person? I would not go small. I would not go huge because you’re starting out. I would not worry about the money because there’s plenty of people around there to fund money. You want to find the best property to buy is the property that after you spend a week of trolling the internet, this is my personal opinion, I know you’re going to have your own, and you find a market, and you find an area, the Land Academy way, by the way, that you’ve learned, and that’s moving the quickest. The environment with the shortest days on market, and I’m going to guess it’s somewhere in the country, you could buy for $10,000 or $20,000 and sell for $40,000 or $50,000. I’m sure that there’s plenty of areas like that. You could do that all day long. So I would focus on that.
Steven Butala:
So what I think that he’s asking here is: Where do I start? Look, we all have these preconceived notions about real estate from our parents, and usually our parents’ house. If it’s not our parents’ house, it’s somebody in our life when we were younger, whether it’s your friends’ parents, or just you know about a real estate deal for some reason. They bought a house for $80,000 and sold it for $110,000. That was actually the real numbers on my parents’ very first house. And then rolled that money, that $30,000 or $40,000 in equity that they had into a new house. And so that sinks in when you’re real young that’s how much real estate costs. Forget about crossing state lines, or going to the West Coast, or the East Coast.
Steven Butala:
So what he’s asking is: What are the best properties to buy as a new person? And here’s my answer. Cheap property. You have to sit down and stare at the screen and say, “I just paid $4000 for 40 acres on a county road in Northern California. That can’t be right.” And your hair needs to be blown back by how cheap property is. And that’s still the same way now. We still go through this. I reviewed a property. We had Career Path yesterday. Jill and I, we host this class, this advanced class called Career Path. And it was Jill’s turn to talk about sales and marketing. And I turned my camera off and my microphone off because the deal that came in blew me away, and we are doing it. So this never is … This is for new people and for people that have done tens of thousands of deals like us.
Steven Butala:
You need to be blown away by the acquisition price. So it’s not like you should buy houses in Detroit or rural land in Oregon. It’s not that. It’s cheap. So what are the best properties to buy as a new person? Cheap ass properties.
Jill DeWit:
Noted.
Steven Butala:
Relative to the next, to the properties next to it or around it.
Jill DeWit:
Right. And I would say rural, vacant land. I wouldn’t say a house. A lot of kids in college think I should buy a house, rent it out to my buddies, all that kind of a thing. Don’t get complicated. Make it really easy on yourself.
Steven Butala:
This is called The Land Academy Show, not Buy a House and Rent it Out Show.
Jill DeWit:
Exactly. Totally. What’s the next one?
Steven Butala:
Question number two. Where is the best place to buy land right now? Guess what my answer is.
Jill DeWit:
I have probably the same answer. Let’s do three, two, one. Ready? Three, two, one. Everywhere.
Steven Butala:
Where it’s cheap. I don’t mean, oh, my gosh, Nevada’s so much cheaper than New York.
Jill DeWit:
Not Hawaii, maybe. But maybe there is cheap land.
Steven Butala:
I don’t mean that. I mean, really inexpensive relative to the stuff around it. Oh, that’s great, Jack. That’s really easy for you to say. It’s really easy for you to have a whole show to say … Tell us how to do it. Tell us how to buy cheap.
Jill DeWit:
We do. Here we are again.
Steven Butala:
Listen to the next episode.
Jill DeWit:
This is the Land Academy Show.
Steven Butala:
This is episode number whatever, 1600 ish, so where it’s cheap is where you buy land. This is the next … There’s five questions, six questions here.
Jill DeWit:
Okay.
Steven Butala:
If there’s a house on it, does the age of the house matter?
Jill DeWit:
This is a great question. Nope, doesn’t matter. Doesn’t matter how new it is. Doesn’t matter how old it is. It matters how well you buy the property.
Steven Butala:
It matters if the property’s really cheap, inexpensive relative to the other properties.
Jill DeWit:
If it’s a new house, great, congratulations. You bought it cheap. You mark it up, sell it, move on. Either way, if it’s a falling down house. Who cares? You’re going to sell it to your renovator. You still buy it cheap, mark it up, sell it, move on. This is good.
Steven Butala:
Two more questions.
Jill DeWit:
What do you think about the house age? You agree with me. It doesn’t matter.
Steven Butala:
Well, if it’s got a house on it, regardless of its condition or age, that’s a bonus. But you’re still pricing the property as if it didn’t. That’s how you win. You have to buy it inexpensively. Next question. What’s the difference between buying with a partner, and when is it appropriate to become so successful that you leave that partnership?
Jill DeWit:
This is a very interesting one too.
Steven Butala:
It says a lot about personality because I have a partner, and I don’t plan on leaving ever because we’re better together.
Jill DeWit:
That’s true.
Steven Butala:
What are your thoughts on this partnership you’re in?
Jill DeWit:
Well.
Steven Butala:
I said, “I don’t plan on leaving.”
Jill DeWit:
Today’s a good day. But last night, it was touch and go. Just kidding. I’m totally kidding.
Steven Butala:
I think this is a really interesting question too. He’s all set up to have a partner, and then when he’s successful enough, just leave.
Jill DeWit:
Isn’t that funny? Why is that? Because he thinks he has no money, I guess. And I’m all about that. So let me back up. I think this is a very good plan. Bring in a money partner on a deal by deal basis, not like, “Hey, you have money, I have none. Let’s do all our deals together.” I want to say, “Hold on a moment. Let’s just do one deal together first. Make sure we all are on the same page. Let’s see how it goes. And then we’ll do another deal and another deal.”
Steven Butala:
So what he’s defining here is land funding, landfunding.com, which is our company where we loan people are partnership-
Jill DeWit:
Money.
Steven Butala:
Deals with people. And the whole deal, the whole concept is not to keep these partners forever, the concept is to, if you’re starting out, you find a great deal, call us. We’ll loan you, not loan you, we’ll buy the property for you, 100% of it. We’ll pay all the fees and all of it, and then split it with you. And so after 10 of those deals with us, we don’t expect you to stay around forever. You have your own money, go on with your life and be incredibly successful.
Jill DeWit:
And I hope you partner and fund other people.
Steven Butala:
Yeah. Yeah. So I think I understand that point. The way he phrased it, it was like … It was just an interesting … My jaw was a little honestly on the ground with this question, on the tabletop because how he phrased it was, “How can I use somebody to get what I want out of them and then leave?”
Jill DeWit:
True. Don’t go in … I mean-
Steven Butala:
I wouldn’t go in like that.
Jill DeWit:
You’re not going to have anybody signing up for that. What’s our next question?
Steven Butala:
Break down each phase of the process. So how do you look for new properties? He says costing them because he’s from construction. But what he means is: How do you fund them? How do you buy them? And then how do you sell it? How much time does each of that … How long does it take all these phases?
Jill DeWit:
I think the phases are, first, you have your research phase, picking an area. And I’d say spend a week on that. Then, I need to see the question. I’m sorry. Can I see the question? I’m going through the phases. Looking for new properties, that’s part of … That’s the phase there. Costing them I think for him is price per acre. How do I do that? Well, that’s easy. Spend a couple days on that. Download some data. Scrub some data. You can back into it, figure out what price per acre, things are posted for sale, what they’re selling for. There’s lots of places to get that information. Buying them, well, now you’ve sent out the mail. Pull the trigger, buy the best ones. That takes a couple weeks. And then selling them, if you do it right, that takes a couple days.
Jill DeWit:
I wrote a blog a while back, and it was 45 days. And it was like, “Say you only had four hours a week to spend on this,” and I said, “Week one is this. Week two is this. Week three is this.” And so it was six weeks, and so 42 days really, and cash in, cash out. And so that’s how long I think this whole thing should take when you’re brand new. You could do that.
Steven Butala:
I agree. I think that what you’re shooting for is 30 days, cash in, cash out. That almost never happens. What ends up really happening if you’re shooting for that and everybody’s going to work every morning, including the escrow company and all that, it ends up being 60 days. And so what he’s really asking is: How long does this … He’s probably thinking that you only can do one at a time, which one of the great things about this business is it’s totally scalable. So I like to say, “Look, you’re going to do 10 deals a year. Your first year, shoot to do 10 deals, one a month, using other people’s money, like ours.” If they’re great deals, try to make at the bare minimum, $10,000 to $20,000, net, net, net, per deal. And so now you’re making $200,000 net, $200,000 to $500,000 your first year. And then you’re going to decide if you like it and all that, or you’re not. So that’s what I really think he’s asking. How long does it take?
Jill DeWit:
Thank you. Is that it?
Steven Butala:
That’s it. That’s where we cut him off.
Jill DeWit:
That’s true.
Steven Butala:
Because he couldn’t take it.
Jill DeWit:
Dinner arrived. Happy you could join us today. Five days a week, you can find us right here on The Land Academy Show.
Steven Butala:
Tomorrow, the episode on The Land Academy Show is called The Land Academy 4:00 AM Club, described by Jill. Jill’s really impressed with this.
Jill DeWit:
I am. I think it’s a really good idea.
Steven Butala:
You are not alone in your real estate ambition.
Jill DeWit:
Yeah. I think it is a really good idea. By the way, this 4:00 AM Club, I can’t remember if it came up on the Thursday call, or if it came up on Clubhouse. But either way, we talk about this kind of stuff on Clubhouse. So if you’re going, “What the heck are you talking about, Jill?” Check your email. If you have done anything in our world and you get emails from us, on Thursday mornings, you usually see an email with a link to get access to Clubhouse if you don’t already have it. It’s not just iPhone by the way, too. Android and iPhone. And at 1:00 Thursdays, Pacific time, we’re on Clubhouse. And it’s like the Frazier Show. You know Frazier Crane. You can call in, ask us questions, that kind of a thing, so it’s really cool.
Steven Butala:
Direct live access to Jill and I, audio only. And it’s unrecorded.
Jill DeWit:
Unedited too.
Steven Butala:
Yeah.
Jill DeWit:
Of course. So cool. And by the way too, if you need access to any sort of ownership or property details, including owner phone numbers and FEMA flood overlays, check out neighborscoop.com or parcelfact.com, created by investors like us, that’s us, for investors like you. We’re Steve and Jill.
Steven Butala:
We’re Steve and Jill. Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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