Steven Jack Butala:
Jack and Jill here.

Jill K DeWit:
Hello. Welcome to the Land Academy Show, entertaining land investment talk.

Steven Jack Butala:
I’m Steven Jack Butala.

Jill K DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.

Steven Jack Butala:
Today’s topic, how much land acquisition due diligence is too much.

Jill K DeWit:
This comes up. I wanted you to know this is not a newbie question. This has come up this week in…

Steven Jack Butala:
Career path.

Jill K DeWit:
Career path.

Steven Jack Butala:
We spent an hour on this.

Jill K DeWit:
I’m trying to think because this week we also had our advanced call, too. I don’t think it comes up too much there, but I think it does. I think we touched on it in both environments this week and that’s why we wanted to talk about it.

Steven Jack Butala:
There’s a deeper issue, a rooted psyche type issue under what’s going on here, which I’ll talk about when Jill’s done here. Before we get into it though, let’s take a question posted by one of our members on the landinvestors.com online community, it’s free.

Jill K DeWit:
By the way, did you know we have now solved your data pulling and scrubbing and getting sold and active comps? Fill in the blank so you can accurately price your mailer and get it in the mail. It’s called concierge pricing. Is that the right name?

Steven Jack Butala:
Concierge data.

Jill K DeWit:
Concierge data.

Steven Jack Butala:
Concierge data plus.

Jill K DeWit:
There we go.

Steven Jack Butala:
What’s the plus? The plus is from start to finish, we get it in the mail for you.

Jill K DeWit:
Yep, exactly. Where do you find out more? Go to offers2owners.com and you’ll find everything there and there’s a phone number there. Give them a call. Or you can also send note to support at offers2owners.com.

Steven Jack Butala:
I will tell you, every month how many orders we process for concierge doubles. It doubles. Recently, we asked the staff who is the customer? Who is concierge’s customer?

Jill K DeWit:
Are they brand new people? Who is doing it?

Steven Jack Butala:
They said the vast majority are people that just want outsource their mailing operation.

Jill K DeWit:
They’re pros.

Steven Jack Butala:
Yeah.

Jill K DeWit:
They’re busy pros.

Steven Jack Butala:
They’re long time Land Academy members that aren’t interested in doing a mailer anymore.

Jill K DeWit:
Exactly. It’s not just someone that can’t figure it out. They know what to do, they just don’t want to do it. You’re not nuts. Start there. All right, here’s the question. Is it Juan Gecoo wrote, “Hi there. I’m calculating price per acre in a zip code and the prices are ranging wildly from half a million dollars to $5000. How can I get the most efficient, accurate measure price per acre for a 1500 unit count mailer?”

Steven Jack Butala:
Incredibly good question and concise. When you go out to solve for the retail price per acre in any given zip code, because you’re going to send mail there, you can’t just throw a dart at a board, you need to know where to start when you price a mailer. The way to do that is to get active listings in a zip code and sold listings in a zip code. You take them all together in a spreadsheet, you get averages or means, however you’d like to use it, and you determine that zip code, 12345, properties that have sold there for the last 12 months or active, the price per acres, $2,200.
I’m going to offer something lower than that because I’m going to sell it for 2200 or even lower. Well, great. What happens when one of my comparison values is a million bucks, one of my comparison values is 5000? This happens a lot. This is an extreme example. A more realistic example is one sold for $25,000, one sold for 15, one sold for 32. And so my average might be too high, might be too low. This is what you have to do in an extreme situation. You really need to dig deeper. You need to then get all the data in one place and look into block by block pricing or APN based pricing if it’s in a rural area.
Yo have to really, really dig in and find out. Otherwise, you run a pretty serious risk of overpricing your mail, which you don’t want to do. That’s option one. And that’s what I do. Option two is you say, I’m just going to offer 10% and see what comes back. And we ran our company that way for years and years and years and years and years. Very, very successfully. The dart boards are out of our offices now because we have access to all this data. Data tree is relatively new.

Jill K DeWit:
There’re different things on the dart board now.

Steven Jack Butala:
Yeah.

Jill K DeWit:
Not math. Might be a photograph.

Steven Jack Butala:
There might be a picture of a governor.

Jill K DeWit:
Someone running for office. There we go.

Steven Jack Butala:
That’s a great question.

Jill K DeWit:
Maybe the Cox bill. That’s on the dart port.

Steven Jack Butala:
Go to Discord, if you’re a member and look at the answers. How people answered it. They basically answered it the way I did. But I will tell you, if you have a 1500 unit surgical mailer, it’s not so bad to just go in there and price them all individually. You can be very, very successful. You’re going to have a great success rate if you do that, if you price it right. Today’s topic, how much land acquisition due diligence is too much. This is the meat of the show.

Jill K DeWit:
It’s interesting. This ties into the question a little bit because when this person, when he’s running the mailer, he’s got all priced out and staring at the end product and realizing, “I offered too much. I offered too little.” Part of that is a little bit of due diligence as you’re checking your mailer, testing for reason is what we call it. If these all went out and they came back signed, would I buy it? Do I like these numbers?

Steven Jack Butala:
Before Jill really gets into the actual due diligence and how much is too much, there is this underlying issue here. And it has to do with personality. A lot of years ago, I went to my lawyer who was also one of my good friends. I don’t even remember what it was about. But I said, “There’s this thing going on and I got to deal with it.” And after I got done ranting and stuff, he looked at me and said, “You need to care a lot less, in general, about everything. You’re going to be a happier person.”

Jill K DeWit:
I totally agree.

Steven Jack Butala:
For some reason, this due diligence topic, for a certain personality type, and I think in the real core root of it is confidence. If you buy a piece of property for too much money and end up selling it for less, it doesn’t happen. I haven’t heard of it happening, really ever. The way that we do it. But if that actually happens, is it the end of the world? Does it mean that you’re a terrible land investor and a bad person? Do you take it personally? No. You laugh about it and buy another one and make up for it. I don’t understand this. It goes beyond a regular learning curve. I don’t understand taking two weeks to look at a piece of property to see whether or not you’re going to buy it. Because if you look at it for two weeks, you won’t buy it.

Jill K DeWit:
You’ll find something wrong.

Steven Jack Butala:
You will not buy it. You’ll find something wrong. That’s right.

Jill K DeWit:
That’s true. Before we get into the real topic, even think about your house, where we live right now. You get into it, you think you’re only going to do these renovations and you decide to do these renovations. If we really sat down ahead of time, because you don’t do that. You fall in love with the neighborhood. You fall in love with the white picket fence. You fall in love with the school district, the size. There’s a couple, they’re like, “Look, it’s more closets than we had.” You know what I mean?

Steven Jack Butala:
More closets?

Jill K DeWit:
Yes. It could be something like that. Come on. This is how girls pick houses. You know that’s what goes on.

Steven Jack Butala:
Closets?

Jill K DeWit:
Sure.

Steven Jack Butala:
Are you serious, Jill?

Jill K DeWit:
Are you kidding me? Are you flipping? You don’t know that?

Steven Jack Butala:
No. No, I don’t know that.

Jill K DeWit:
Goodness.

Steven Jack Butala:
Never thought about closets in my life.

Jill K DeWit:
Because you’re a man, thank goodness. But my point is, you could pick apart anything, pick apart anything. I’m not kidding, if you really try to.

Steven Jack Butala:
Do not look into your relationship this hard.

Jill K DeWit:
Just like that. Exactly. Do not sit there and pick apart your significant other at the dining room table. Then I go, “Damn, I could have done better.” Because if you try, you probably will realize you could. Okay, let me end this one little thing and I’ll dive in. My mom told me a long time ago, something I was going to buy and I was really into it. She’s like, “Okay, before I say anything, do you want me to justify pro this or con? How do you want me to go because I can sell you either way?” I’m like, “She’s right.” That’s really true. Back to the real topic here is. How much due diligence is too much. Here’s what I want you to do. Due diligence is, the offers go out. The sign letters or phone calls or things come back.
You have a seller. You have an agreed upon price, whether or not it’s the price that you started with, you got a price out of them because you did everything right. And now you’re trying to decide do I want to buy the property? And you’re really doing your real due diligence. There’s two phases. Phase one is minutes. Phase two is where people get hung up, I think. Or they turn phase one into phase two into phase eight, which is stupid. There should be two phases and that’s all. Phase one is minutes. Phase one is, “Okay, I got this price, I know I offered 25, the guy wants 40. If it’s worth 150 I could do 40. Let me go do some more digging. Now let me look at the property. Does it have the six As?” And this is minutes. This is you on parcel fact.
And then you push that button where it automatically takes you to Google Earth. You can look around even more on Google Earth. You can drop a guy down there. You can maybe scroll back over the years, see if there’s anything on the property. All the little things that you do. And for me, it’s three to five minutes. For you it might be 15, 20 minutes. I’m good with that because you’re new.

Steven Jack Butala:
Half hour.

Jill K DeWit:
That’s fine. Totally fine with that. That’s it though, by the way. And that’s your level one due diligence. Like I said, you went through all the six As and you’re like, “I don’t see anything wrong with this. Now I’m going to move it forward.”

Steven Jack Butala:
Including the price.

Jill K DeWit:
Yeah. Your initial thoughts are, “This price is $40,000. This guy might not be nuts because I see some other value here that he just pointed out to me. The proximity to this. And oh it does have a creek. Wow, I see, these waterfront properties do command more money.” Fill in the blank. That’s level one. And that’s it. You had 20 to look through this week because you did everything that we told you and 5000 offers went out. Of these 20 that you got back, you got five that you’re taking to your level two due diligence. This is where the problems really start. People start going, “Let’s see what the zoning is. Let me call the county. And they said this.”

Steven Jack Butala:
I wonder if this legal description is correct?

Jill K DeWit:
And then we do this.

Steven Jack Butala:
It perced over here, but it didn’t perc on the other side.

Jill K DeWit:
Maybe I should do a survey. Maybe I should call around and see how long it’s going to take to get a survey.

Steven Jack Butala:
Maybe I should clear the land so it shows better.

Jill K DeWit:
That’s a good idea. Maybe I should do that. Go down all these things you don’t necessarily need to do.

Steven Jack Butala:
The county said we can build a house and the setbacks are this.

Jill K DeWit:
Need to measure myself.

Steven Jack Butala:
Can I really? Can I really build a house?

Jill K DeWit:
Do you know there’s a tool on Google Earth that I can sit and figure out the setbacks myself. And I could almost draw my own. I should draw a blueprint of the house.

Steven Jack Butala:
I just don’t know.

Jill K DeWit:
See the size.

Steven Jack Butala:
I just don’t know if I should buy this property. What if I’m wrong? What did I miss? Why isn’t there a checklist? Why doesn’t Jill have an absolute checklist for every property where I can go down the list, check them off, every single one, and get to the bottom and then I know for sure I’m going to make money.

Jill K DeWit:
Anyway. You see where we’re going? You could be lost. You could go down that rabbit hole for weeks. Especially a simple little thing like what can it be used for? I don’t understand what this code is. Is it agriculture? Is it recreation? Is it this? Is it that? You call the county and the guy’s not there. You leave a message. Wait for him to call you back, by the way. You could, and I’ve seen it, you could accidentally come up for air and now you’ve spent 32 hours this week on this one property. And guess what? Then in the end, the math doesn’t work and or seller changes his mind. Things happen. Time is really important here for two reasons. One, your time. Your time is so valuable that you can’t be doing this. You’re going to need to do your very, very best. Make some decisions. If you have any questions about it, then you need to solve that issue. If it’s an issue that can be solved, do it. And often it can be solved with money.

Steven Jack Butala:
The best way to hedge off risk in a land acquisition is to do a lot of deals.

Jill K DeWit:
Right. Get yourself busy.

Steven Jack Butala:
Really, really off chance with all the tools and resources that we have to prevent you from making a bad decision is to offset that risk by doing 20 deals.

Jill K DeWit:
My two things are, I gave you one. My two things were, why time is important. And you can’t go down this rabbit hole and spend all your time on one property or even the 20. This is your whole month. What’s going to happen? All you did was your due diligence this month. Congratulations, you haven’t bought anything. And two, you give people time to change your minds. You give them time to back out. You give them time to answer somebody else’s call. Or something like that. I’ve been in this situation, and let me give you a good example. I’ve been in this situation where I got a guy, we’ve been talking, we agreed on a price. My price was five grand. We’re ready to roll. And he says, “I just got an offer in the mail, Jill. This guy wants to give me 20.”
I said, “Congratulations, take it.” I said, “But you and I both know that this guy hasn’t done any work. You and I have been talking for a week now. I’m ready to go. We agreed on five and I’m ready to pay you $5000. Here’s how we’re going to do it. And how fast it’s going to close. You think that this guy’s going to really be 20, he’s got to dig in, do his due diligence. How much time is that going to take? And is his 20 still going to be 20? We all talked about that. We all know that it’s really not worth that much. And here’s why.” And the guy said, “Let me call you tomorrow.” And he slept on it. And calling me up the next day and said, “I realize you’re right. I’ll take your five.”
Like I said, two things why you can’t do it. Your time is valuable and you need to move on these properties. You need to keep them going through the system. You need to keep these sellers engaged. And buy them and turn them. That’s the whole thing here. How much time is too much? Like I said, 20 hours. I think 20 hours is too much. My level due diligence is phase one, three to five minutes. Phase two, two hours. All in. And it’s not even me, it’s my team. That might be two hours of making a call to county, waiting for the call back. Checking with a couple brokers’ opinion, by the way. That counts in those two hours of your time. That’s all I want you to spend.

Steven Jack Butala:
To make it even more simple. Phase one is the six As and phase two is use. Can this property be used for fill in the blank. Like building a house.

Jill K DeWit:
You have to figure out. Maybe I don’t know about the access. I see physical. I know there’s physical. I had a guy go out there and take pictures of for it so I know where there’s physical access.

Steven Jack Butala:
That’s it.

Jill K DeWit:
Now, I got to dig in a little bit more on the legal access. There you go. That did go long. Sorry. I got all excited. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.

Steven Jack Butala:
Tomorrow is Jack Thursday. And I’m going to talk about what is your financial end. You are not alone in your real estate ambition. You have to have a financial end. Otherwise, you’ll go nuts. You will go crazy before you get rich. You want to get rich then go crazy.

Jill K DeWit:
I talked to these two gals the other day as they were getting ready to join Land Academy and we were talking numbers and the numbers that they’ve been doing. They’ve been doing all kinds of deals in California. They’re both real estate agents. They’re hung up on these big, big deals that take a long time to close. We did some math together. It was really cute. They were throwing around, this ties into tomorrow’s show. We did some math together and I had to talk to them and say, “Look, if you two can’t live on a $100,000 a month, we got to talk.” And they both laughed and said, “All right, we get it. You’re right.” Because they’re working really hard and you don’t have to work that hard to hit that.
I laid it all out. And they said, “We get it. We see it.” Thank you for tuning in. We would, by the way, love to connect with you on clubhouse. Clubhouse is a really cool, fun environment where we are live on the first and third Thursday. It’s like a radio show on your phone where you can just raise your hand and pipe in and talk to us. First and third Thursday of every month at 12:00 Pacific time. Go to Clubhouse, get the app, find the Land Investing club, follow that, and follow us.

Steven Jack Butala:
We are Jack and Jill. Information.

Jill K DeWit:
Inspiration.

Steven Jack Butala:
To buy undervalued property.