Land Deal Case Study – Buy for 25K and Sell for 51K a Year Later (LA 1815)

Land Deal Case Study – Buy for 25K and Sell for 51K a Year Later (LA 1815)

Transcript:

Steven Jack Butala:
Steven and Jill here. Welcome.

Jill K DeWit:
Hi.

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 DeWitt broadcasting from sunny Southern California.

Steven Jack Butala:
Today, Jill talks about a land deal case study. She did a whole land deal case study.

Jill K DeWit:
Boy, do I have some notes here for you.

Steven Jack Butala:
We bought a property for $25,000, sold it for about $51,000, but it took a year and we’re in great detail… See about why.

Jill K DeWit:
Exactly.

Steven Jack Butala:
Before we get into it, let’s take a question posted by one of the members on our landinvestors.com online community. It’s free and I need to tell you that we, Jill and I, released a program about a year ago called “Concierge Data”, where you can completely and totally outsource your mail campaign. If you’re sending out a ton of letters already, this is for you. This will remove a lot of time consuming data manipulation and all of that. Or if you’re brand new and you quite simply want to get that first mailer out and you’re having trouble, go to offers2owners.com and ask them about concierge data. They’ll help you out for sure.

Jill K DeWit:
Thank you very much. Tammy wrote: “Hi. I must have been listening to your old podcast that played again during the holidays about the next live event. I thought there’s one in October, but I haven’t seen anything. Does anyone know if one’s coming up?” Why do we put this in here? Because we keep going back and forth on this.

Steven Jack Butala:
Well, I wanted to know because I’m kind of putting you on the spot to see if we’re going to have a live event.

Jill K DeWit:
I don’t know. We kind of accidentally did.

Steven Jack Butala:
Cause I’d like to know.

Jill K DeWit:
We had a post career path session for…

Steven Jack Butala:
I want to know if we’re going to have one too.

Jill K DeWit:
Eight people came out to hang out with us and just have an evening and go to dinner. That was really fun. And most of them did it on their dime and I really appreciate that. And we did feel the love and happy. We got to see you and talk with you and have dinner with you and have a drink with you and laugh with you. That was really cool.

Steven Jack Butala:
We don’t know.

Jill K DeWit:
So yeah, I don’t know, Tammy, I go back and forth. It just takes so much. It’s so involved and I got to do it right. We’ve been thinking about doing it for just career path only. When you finish your career path, you get added to the advanced group and that group really knows what they’re doing. And we really have some great, high level discussions. Right now we’re thinking if we do one, it’ll be early 2023, before we do it. And we will do it probably for that group.

Steven Jack Butala:
Yeah, that’s what I think too.

Jill K DeWit:
That’s our latest.

Steven Jack Butala:
Today’s topic, Jill’s going to talk about her land deal case study, where she buys property for 25 grand, sells it for $51,000, but a year later.

Jill K DeWit:
Right.

Steven Jack Butala:
This is the meat of the show.

Jill K DeWit:
And this is just a deep dive. This is not that I’m picking on anybody. It’s not like this sucked. These are just the facts, man. I want to tell you how some of these deals can go. So you’re like, “God, what did I do wrong?” You know what? It happens. It happens all the time. So many things can happen and you got to roll with it. By the way, you can’t get hung up on this. So I’m going to go through the calendar here. I’m going to give you my real numbers and information as best I can. And you’re going to get the picture of this whole thing. And then at the end I will open it up to Q&A from Jack.

Steven Jack Butala:
That’s code for sip it while I talk.

Jill K DeWit:
Right? Exactly. So, first thing that happened was in May of 2021, we reviewed this deal and liked it on our Thursday call. So we obviously said, “Hey person, if you need money for this…” So what it was is someone said, “Hey, would you do this deal? It’s 4.2 acres in… Missouri.” We’ll leave it at that. And we said, “This is a great deal. Wow. It’s 25,000 bucks. Hey, if you need the money, let me know we’ll fund the deal.” And then we did and we bought it. That was in early May. It was bought and closed on June 2nd, 2021, $25,000. And the person by the way, got $858 or something worth of closing cost. I got a smoking deal on that. So it was great.

Steven Jack Butala:
This is a deal funding deal from one of our members.

Jill K DeWit:
That’s what I just said.

Steven Jack Butala:
Okay.

Jill K DeWit:
Yeah.

Steven Jack Butala:
And was a member that have a great relationship with.

Jill K DeWit:
They were in career path.

Steven Jack Butala:
Yeah, we work well together.

Jill K DeWit:
By the way, a little interesting thing about this, why I got so excited about it, was the deal had physical access, but didn’t have legal access. The seller had already paid out of their own hot pocket to get legal access for the property and it had a creek. I’m like, “These are some nice little extra attributes. Sure. Here’s 25 grand.” We thought it would sell fairly quickly for $75,000. So June 9th, it’s listed with a broker. We’re just going to say “broker number one”. So you can see where this is going. And after several calls, the agent finally came to us and said, “You know what? I’m actually changing my mind. I’m not sure how to price this thing because there’s going to be some work needed to build on it.” I’m like, “Well, duh.”

Steven Jack Butala:
It’s a piece of land.

Jill K DeWit:
That’s normal. Hello? Now we’re cruising along, June 29th. I reviewed their listing and I went, “So we’re going June 9 to June 29, what’s going on?” Not hearing anything. So I do a little recon myself. I look at the listing and I told the manager to tell their agent, because they’re the one that’s handling the transaction. So this is how it goes. I’m the bank over here. But I’m kind of overseeing things and I’m involved with decisions or help, like a little tweaking. But it’s really up to the person who brought the deal to me. We brought to call to the manager, it’s their deal. They found it. They’re working with the agent to sell it. They’re doing all that work.
So I went, “I’m going to go check this out. What a boring listing. This person had seven pictures, no blue sky, zero pictures of the area, zero videos. And they wrote two sentences.” So I wrote back to the manager, “All right, you got to fix this. This guy’s a dud.” And the manager went to the agent, the agent said, “I don’t think it’s me. I think we need to drop the price of $70,000.” And every call I got, the person said, and they went and looked at it, “I wish it was flatter.” I’m like, “Really? This is ridiculous.” So by seven…

Steven Jack Butala:
That’s so silly.

Jill K DeWit:
Isn’t this hilarious? So I go, “You can’t be really telling me this.” So by July 6th, after a little back and forth, the agent finally said, “It sounds like I’m not the right guy to market your property.” He’s tapping himself out. It’s fine if you want to cancel the agreement. And I’m like, “Heck yes, this guy’s a dork.” So on July 21, took that long by the way, we canceled it and we listed it with agent number two. You see where I’m going with this? So this new agent comes off great. It’s listed on August 4th. This is July 21. We sign it. They’re getting 20 pictures or got drone video. This agent even reached out to some builders, got some feedback. And they said, “Hm, not really good for building. Maybe it’s more ag. or rec. use.” Okay that’s fine, it’s another option. And then, here it comes again. This was on August 4.

Steven Jack Butala:
By the way, if you have multiple uses for a property, that’s a really good thing. If you have a single use property, you’re kind of backing yourself into a corner. We’ve done a lot of single use property deals. That’s that’s okay.

Jill K DeWit:
It’s 4.2 acres. It’s not small. We can do a lot with this. By the way, have you noticed too? No one said the word perk. Perk never comes up in this. That’s not what this is about. Anyway, August 25th, the broker goes, “Hmm. I changed my mind. I don’t want this listing because now I know for sure. After I talked to a couple builders, it’s only going to be for ag. or recreational use. So I don’t want your listing.” What the heck is that all about? Then our manager, the guy was doing the deal directly, contacted the builder and said, “Yeah, it can be built on. It can be totally done.” And the manager even said to me, “This is so weird, why didn’t this person just move forward with this listing. But whatever, have a nice life.” is what we did.
Now were still on August. We’re working with our third broker, 7% interest. I don’t remember what the other two were, but they were right in there, 6% or 7%. And this is on August 25th. We had it listed around 70, we was hanging out at 70,000. On September 19th, we got an offer, $65,000. This was great. And then 10 days later, the buyer backed out. I don’t remember why. I think they made some rule. They were looking for an excuse. They changed their mind. So we fast forward another month, now we’re at October 27th. The deal funding manager, spoke to the county and try to reach out and go, “What’s heck going on”?
So the county changed their answer from what he got before we pulled the trigger on the property. The county changed their answer about buildability. And they said due to setbacks and the frontage required, that they were actually incorrect. I’m like, “Are you flipping kidding me”? But still, you could do ag., it could be recreation, have fun with it. Like, again, this is still not bad, but it kind of stinks that happened. All right, fine. So I wrote back and I told our manager, “You know what? Let’s just sell it and move on.” So November 17th, we reduced the price of 54.9. We’re like, “We’re going to cut our losses here. We’re still going to double our money. But it’s not going to be as great as we thought it was at 75. We bought for 25.”
Now December 8th, the manager’s getting involved. I’m like, “What’s going on?”, because we’re way over our six months that we were trying to do this? That was the trigger, because we did this in June and now we’re in December. So the manager’s getting involved and he’s doing his own neighbor letters and trying to market the property. We go back and forth without, “Let’s get it on Zillow. Let’s look at a flat rat listing service.”, all that good stuff.
January rolls around, January 2022, people are visiting the property, but winter of course is slowing it down now. And we kind of missed the window. When we’d started off great, if we had the right guy, it would’ve gone great, but we didn’t. That’s okay. Winter’s slowing this down. So now we’ve got months of interest and no offers again. So then April 1st, we received an offer, $42,000. They did more recon, they backed out and then I’m like, “Are you kidding me?” So this is what happened. Then we talked, we connected again May 11th of this year, we listed it with agent number four, who happened to be the right guy. It was a Mossy Oak guy, knew what he was doing, 6% commission, listed it for $51,000. June 14th, we got a full price offer. And we’re closing in three days. We’re still doubling our money.

Steven Jack Butala:
We’re easily doubling our money. It’s a very realistic story that happens. It’s certainly not the norm, but a lot of people ask us what this story reminds me of. Well, wait a second, you send all these offers out. You buy this property. You know how many times have you been burned? And the answer is zero, because we don’t get burned. We just wait. They all sell for great margins. Sometimes we don’t double our money. But what happened here is that the people involved, Jill, her transaction coordinator and the manager didn’t stop.

Jill K DeWit:
Right? You have to keep going.

Steven Jack Butala:
We get reports back from people, “Well, we bought the property when you listed it for sale. It’s a month later, it’s not sold. This doesn’t work.”

Jill K DeWit:
Right.

Steven Jack Butala:
I’m going to do a show tomorrow about how there’s always a solution.

Jill K DeWit:
Right.

Steven Jack Butala:
They did not stop until they found the right broker and it was sold.

Jill K DeWit:
It was a fourth guy.

Steven Jack Butala:
And if they found that Mossy Oak broker the first week of when we all owned, it would’ve been sold then.

Jill K DeWit:
Yeah.

Steven Jack Butala:
So what? Stuff happens.

Jill K DeWit:
I want you to know this has happens. Don’t get defeated, like you said. Because you might say, “It’s me, not them”, after the third broker. No, it still might be them. It’s probably not you, it doesn’t mean you can’t buy a great property.

Steven Jack Butala:
What Jill means is, “Wow, I’d made a terrible acquisition decision.” No, it’s fine. It was one of the reasons we buy property and it ended up here for half of what we sold it, which means it was probably worth $70,000, $80,000 retail. I’m really glad you did this.

Jill K DeWit:
Yeah. Thank you.

Steven Jack Butala:
It’s very, very, very informative. And I think that it’s a very real situation that can and does happen. When you’re doing 10 or 20 or 50 or a hundred deals a year, this is going to happen.

Jill K DeWit:
It does.

Steven Jack Butala:
Is it tragic? No. Especially if it’s our money. By the way, we funded this a hundred percent. So the manager wasn’t…

Jill K DeWit:
Wasn’t out any money.

Steven Jack Butala:
Wasn’t out a dollar.

Jill K DeWit:
And he’s still going to get paid. And this is why too you just have to keep pushing through the system, have multiple deals going on at one time. Like dating one person, don’t get hung up on that one person to see what works out. Don’t get hung up on that one property waiting for it to work out.

Steven Jack Butala:
That’s right.

Jill K DeWit:
Move on, get more, have this, go that, and then you’re going to look up and go, “Oh fine, well it took four guys, but we got it sold.”

Steven Jack Butala:
Right.

Jill K DeWit:
That’s fine. It’s all good. Thank you. Thank you for letting me share that. Happy you could join us today. I had to get that off my chest, just kidding. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.

Steven Jack Butala:
So browse Jack’s Thursday and I’m going to talk about how there’s always a solution. Jill just described it. You are not alone in your real estate ambition.

Jill K DeWit:
Yep. Speaking of Thursdays, by the way, thanks for tuning in we’re on Clubhouse. Did you know that? We are live on Clubhouse at noon Pacific time on the first and third Thursday of every month. So how do you find us? Go to Clubhouse, search for us, follow us, find our land investing club and follow that and join us there. It’s fun.

Both Speakers:
We are Jack and Jill.

Steven Jack Butala:
Information.

Jill K DeWit:
And inspiration.

Steven Jack Butala:
To buy undervalued property.

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