3 Critical Success Points in Every Land Deal (LA 1694)
3 Critical Success Points in Every Land Deal (LA 1694)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Good day.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWit broadcasting for the Valley of the Sun.
Steven Jack Butala:
Today, Jill and I talk about the three critical success points in every land deal. If you can envision a flow chart, a chart of all little events that happen starting from when you find an area that you want to send mail to all the way to when you get that check in your hand or that wire transfer on the sale, there’s all these little points in between, but there’s three of them that I think are imperative and critical. And we’ll talk about that.
Jill K DeWit:
Okay. I was thinking something funny-
Steven Jack Butala:
What’s your interest level in land today, Jill?
Jill K DeWit:
Well, first of all, I notice have an earring and that’s kind of falling out. So I want to fix that.
Steven Jack Butala:
You should do a whole show about…
Jill K DeWit:
I’ve got that taken care of.
Steven Jack Butala:
How interested is Jill in this really?
Jill K DeWit:
Oh my goodness. I feel so bad. I was really trying to hang in there yesterday when we were doing some… It’s career path and we were, you were in a deep discussion and it’s just your side of the sheet. And it’s data stuff that like the back of your hand.
Jill K DeWit:
And everybody’s leaning in and drooling and I’m like, “Stay awake, stay awake, stay awake.” So funny. I’m like, “Don’t zone out. They can probably see that.” As I’m trying to. So that’s not happening here, but my mind goes other places. I’ll be honest.
Steven Jack Butala:
Before we get into it, let’s see if this will wake Jill up.
Jill K DeWit:
Oh, good, let’s take a question posted by one of our members on the landinvestors.com online community, it’s free and don’t forget to subscribe on the Land Academy YouTube channel and comment on this shows you like.
Jill K DeWit:
Kim wrote, is there a dollar amount for a sale? Would it make sense to involve an agent? Oh, I like this question. This is kind of a, my question. Thank you for doing this.
Steven Jack Butala:
Sure. Sure.
Jill K DeWit:
We’re buying a property for $8,500 and based on comps, expect to sell it for a minimum of $25,000, maybe up to $40,000. Hey, nice numbers, Kim. This is where I would like the experience of a local agent, but I’m curious your thoughts. We plan to self close, but would need tile insurance, et cetera, on the sell side. All right, this is shaping up great. This is an awesome deal. I love these kind of a numbers-
Steven Jack Butala:
She’s interested now.
Jill K DeWit:
Shucks. You could do 20 these a month. Think about that. And with the person that you hired from the show yesterday that we talked about and no, I think those are great numbers. So that’s a good number. I think 25 to 40,000 number. I have brokers that will get involved and they are interested.
Jill K DeWit:
But what they will do is like, the good ones we’ll have this conversation with you go look, all right, here’s the deal though. I’m happy to take the deal down, but I need a minimum of X, maybe it’s $4,000 or something like that because my cost costs, I have assistance. I have to get the photographs. I have a team. So if I can make a minimum of X, I’m happy to do it because my percentage would leave me with negative $10.
Jill K DeWit:
That’s not going to work by the time I’m done. And I’m totally good with that. And you may need to offer that and maybe you found someone great, but they’re worried about it. Commission wise, the percentage is so small. You could say, look, what is a minimum flat dollar amount that you would be interested in, that you could get?
Jill K DeWit:
And I think that’s wonderful, the sweet spot, I have a relationship with these guys. So now that I bring them whatever size and they’re good with it. But until you have that, I know that they get interested pretty much north of $75,000. That gets their attention. Then they’re definitely on board and it all makes sense to them.
Steven Jack Butala:
I want to really dispel this, it’s not a myth necessarily, but this thought, if you self close, that’s it, you can’t get title insurance. The only way that you can get title insurance is through escrow. Because they go through a lot of things to ensure that the sale is done properly, a lot of research type things for the chain of title. If you plan to sell a property with title insurance, which is the only way we do it now, it’s not what we’ve done in the past. You need to go through escrow.
Jill K DeWit:
Or an attorney.
Steven Jack Butala:
Or an attorney. Same thing.
Jill K DeWit:
Don’t forget. You can do an attorney.
Steven Jack Butala:
That’s exactly. Then you can go ahead and sell it without a real estate agent, but you still need to go through a escrow title.
Jill K DeWit:
Garage sale property doesn’t count, FYI.
Steven Jack Butala:
Yeah. That’s tiny little property.
Jill K DeWit:
That’s totally little things. But our major deals that we’re doing, when Steven says always, it’s usually, I mean, [inaudible 00:04:56] this right now. I’d love you. But he’s so good at like I never do this. I’m like, “Well, I kind of did one yesterday.”
Steven Jack Butala:
I don’t know what [crosstalk 00:05:07].
Jill K DeWit:
So I don’t know.
Steven Jack Butala:
I know what I do.
Jill K DeWit:
There we go.
Steven Jack Butala:
I don’t know what Jill does.
Jill K DeWit:
Let me back up. He may think that’s how it goes. But so yeah, but to answer the question, you could buy yourself, right? You want to a self close on the buy side and then sell through escrow with tile insurance. I have one right now that I’m doing, so no big deal and they’ll fix it all up for your buyer. Don’t even worry about that, Kim. You’re doing great.
Steven Jack Butala:
Today’s topic, three critical success points in every land deal. This is why you’re listening. When every education program that Jill and I do, regardless of the venue, whether it’s Live, whether it’s Land Academy 3.0 or Career Path, I always start out with the anatomy of a real estate deal or a land deal for us, the Land Academy way.
Steven Jack Butala:
So I’ll do that here and be brief. You find a place where you want to send mail. You then send it, gather all the ownership data, send it out, send out blind offers within a very intelligent pricing. And so that it makes sense to some of the sellers not everybody.
Steven Jack Butala:
You manage the inbound back in, they’re going to respond to those offers. You manage the inbound flow of offers, good, bad orotherwise, you buy the property, the ones that you like, and then you sell it. That’s the anatomy of a real estate deal.
Jill K DeWit:
Well heck why do I need to be listening to all this fluff? That’s it?
Steven Jack Butala:
Yep.
Jill K DeWit:
And you’re done just kidding. There’s a lot to it.
Steven Jack Butala:
There’s a lot of moving parts. This keeps a lot of people out of the business.
Jill K DeWit:
It’s true.
Steven Jack Butala:
Out of the real estate business. I don’t mean real estate agents. There’s a lot of ding dogs, real estate agents out there. Doesn’t keep real estate agents. It keeps real estate agents out of our business buy and selling land.
Jill K DeWit:
That’s true.
Steven Jack Butala:
Because they don’t understand it. I don’t think they have the… Most of them have the raw IQ score to actually understand it.
Jill K DeWit:
There’s several good ones.
Steven Jack Butala:
There’s a few good ones out there.
Jill K DeWit:
Okay.
Steven Jack Butala:
All of them are [crosstalk 00:07:12].
Jill K DeWit:
I know all 23, and if you’re listening now and you’re one of my 23, you know who you are.
Steven Jack Butala:
Yes, you do. If you’ve talked to Jill in the last 30 days, you’re on that list.
Jill K DeWit:
Yeah, you are.
Steven Jack Butala:
So those are the points of doing a real estate deal. I’m going to tell you a short story here. When I was in healthcare, I started out buying and selling long-term care facilities, big nursing homes that had hundreds and hundreds of patients in them and eventually were involved in healthcare systems.
Steven Jack Butala:
So the first company that we started and eventually took public, if you’ve ever been in healthcare, you know that there’s kind of two camps in every healthcare operation, there’s the money administrative people.
Steven Jack Butala:
And then there’s the people that deliver care, doctors, nurses, even the people that sweep the floors, make the food, all of that. Those are all responsible for delivery of care. And I’ll tell you what, they don’t necessarily get along. The people who deliver the care don’t think that the administrative people are necessary.
Steven Jack Butala:
And the administrative people are always wondering why it’s so expensive to deliver care. And so there’s this ying and the yang that goes on that makes healthcare in life, move forward. There’s radios clicking off everywhere around the world.
Jill K DeWit:
Yeah. I’m kind of a little curious where we’re…
Steven Jack Butala:
Every once in a while, everybody reaches across the aisle and it’s a beautiful thing. We had a huge convention in Las Vegas one year and one of the guys that was above me, the VP of of care, let’s just call it, gave a little speech.
Steven Jack Butala:
And he said, “There’s a moment of truth in every healthcare model. And if you don’t succeed at this, you can forget about money and reimbursement and administration and all of it.”
Steven Jack Butala:
And it’s that moment at the bed bedside, where you’re delivering the care for this person and they might be there for a year. They might be there for three days. We don’t know. It doesn’t matter. It’s very patient specific.
Steven Jack Butala:
But if you don’t deliver at that moment, the way that the customer and the customer’s family think is appropriate, you might as well pack it up. And that was his way of telling everybody who is on my side, the administrative money side, that thanks for showing up, but this has to happen.
Steven Jack Butala:
Well, that’s what this show is about. There’s a lot of stuff going on. There’s money people like me and data people and there’s sales people, or the people part of this business like Jill. And so along that continuum of how to do a real estate deal, the four or five or six points to doing a deal, there’s three critical.
Steven Jack Butala:
And I bring this up out of, we have several people in Career Path who say things like this, all Career Paths, not just this one. I sent all this mail out. “I got all these amazing responses. I can’t get a deal done. Something’s wrong with this business model.” So I’m going to of dispel that right now.
Steven Jack Butala:
You have to do a really good job at getting a mailer set up, which concierge data will do for you, but you have to price it right. In a really hot market, you can’t go in at 20% or you’re not going to get the response that you want. In a really rural market, you should go in at 20%, you’re going to get the response you want.
Steven Jack Butala:
This is why we teach all this stuff. So you have to put some thought into pricing mailers correctly and testing them and retesting them and making sure that if all the offers come back, that they’re what you want.
Steven Jack Butala:
You have to test it for reason, that’s critical point number one, getting that mailer out correctly, and priced correctly. Critical point number two, I believe is the most in all this. And this is where Jill comes in.
Jill K DeWit:
Thanks.
Steven Jack Butala:
There’s a moment in time where a person receives an offer and they open it and they say some version of this to themselves and maybe to their spouse or their partner. I don’t want that property anyway, this person’s offer, I mean $34,000 and they say they can close in three weeks.
Steven Jack Butala:
I’m going to call them and just see if this is what the deal is. I think 34,000 bucks would be great. We’re never going to go see that property again. And so they do, they call your company or some of them sign it and they send it back. And there’s that first 30 seconds of contact that they have with you.
Steven Jack Butala:
Hopefully it’s on the phone, hopefully it’s with Jill in my world. And that will push the whole entire relationship and deal forward. Jill has written and speaks on this topic. So she’s blue in the face sometimes.
Jill K DeWit:
Thanks.
Steven Jack Butala:
And that’s why Career Path is forward to really open the discussion up on this topic, because we’ve had people in the past, in our group who believe that they don’t want to talk to anybody. They just want to email back and forth or try to keep somebody’s… It just doesn’t work.
Jill K DeWit:
Like automated, use the Philippines for it, something like that.
Steven Jack Butala:
All kinds of ways to avoid talking on the phone.
Jill K DeWit:
Yeah. Can I just hand it to escrow then when it comes back, I just give it to escrow and don’t even have a conversation. Hold on.
Steven Jack Butala:
That is absolutely critical, that moment. It’s usually the first 30 seconds. If you talk the first 30 seconds, I’ve never talked to Jill, I was sold.
Jill K DeWit:
Aww.
Steven Jack Butala:
I’m not trying to get anything out of this. That’s just the truth.
Jill K DeWit:
That’s nice. Thank you.
Steven Jack Butala:
It’s like dating. So that’s critical point number two.
Jill K DeWit:
You set this foundation. I know this is a whole another show, but that instant that they befriend you, hopefully they befriend you and they trust you, now you’re in, then you two are now in a partnership to get the deal done. And then the bad guy is escrow company, or the bank because they’re taking too long, whatever it is. So yeah.
Steven Jack Butala:
This is also the entire solution for solving any perceived competition you think that’s out there.
Jill K DeWit:
That’s true.
Steven Jack Butala:
If they get three letters and they call on letter number one-
Jill K DeWit:
They get voicemail. They get cranky person.
Steven Jack Butala:
And then they get Jill.
Jill K DeWit:
Thank you.
Steven Jack Butala:
Even if it’s cheaper, even if it’s a smaller dollar amount, they’re going to sell it to Jill.
Jill K DeWit:
Yep.
Steven Jack Butala:
I’ve watched it time and time and time again. I mean there’s times when I walk by Jill’s office, I hear her on the phone with the seller and just I’m floored at how fast she can develop a relationship with that person and get a deal done.
Jill K DeWit:
Thanks.
Steven Jack Butala:
Critical point number three is when you make a decision that you’re going to buy this property and you’ve said, yep, it passes the six A tests, it passes the use test, all the stuff that we teach. You need to get a second opinion so that there’s, you need to remove the risk and the doubt in your mind for an acceptable range that you can sell the property.
Steven Jack Butala:
So if you’re going to buy for 20, you believe you can sell for 40 or $50,000, you need confirmation on that. And there’s several ways to do that. And again, we’ve set these up. Ask us about it on our Thursday call, that’s would you do this deal is every Thursday we do it, going to ask about it on discord.
Steven Jack Butala:
There’s all kinds of people that are way further ahead in their careers. I don’t care who you are, including me, the further ahead in their careers that are going to give you a real solid opinion.
Jill K DeWit:
And they maybe have been working in that area for a while. They may know that state, and things like that. I use our peers by the way.
Steven Jack Butala:
Me too, all the time. And the best point is somebody local, hopefully a really good real estate agent who understands land and has an amazing track record. They’ve sold two or 300 properties in the last few years that are like kind, rural land or land in that area where you’re looking to buy this property.
Steven Jack Butala:
And they’re going to tell you, oh yeah, this happens to us all the time and all the time, Jill and I get really excited about a deal. We send it to a local real estate agent where we work in the area. And he says, “That’s just a big hole in the ground. You guys-”
Jill K DeWit:
Yeah, you don’t want this one.
Steven Jack Butala:
“… You shouldn’t buy this at any price.”
Jill K DeWit:
But that other one, those other two I looked at last week, those are golden.
Steven Jack Butala:
Yeah. Oh, you think you can sell it for 40? I think we should list this for 75. So there’s three critical points. You’re not as bored about this as I thought, maybe it’s because you like the middle one.
Jill K DeWit:
I like the middle one. At least I’m in par with this. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow the episode on The House Academy Show is called The Real Difference Between a Land and a House Flip Deal. You are not alone in your real estate ambition. How’s your earring by the way?
Jill K DeWit:
Oh, it’s all fixed. Thank you.
Steven Jack Butala:
Okay, good.
Jill K DeWit:
That was good. Thank you for tuning in. If you’re a Land Academy member, be sure that you are communicating with us and your peers like we just talked about on discord. We are Steve and Jill.
Steven Jack Butala:
Information…
Jill K DeWit:
And inspiration…
Steven Jack Butala:
To buy undervalued property.
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