Transcript:

Steven Butala:
Jack and Jill here.

Jill DeWit:
Hello.

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 for the Valley of the Sun.

Steven Butala:
Today’s Jack Thursday. And I’m going to talk about why creating a subdivision is so alluring.

Jill DeWit:
Not for me, man.

Steven Butala:
You know how… Not for me either.

Jill DeWit:
But I know you out there that have this condition, we’ll call it.

Steven Butala:
Every time I hear somebody say that, that cliché, “Hey, buy land, they’re not making anymore.” I laugh to myself.

Jill DeWit:
Buy dirt.

Steven Butala:
Because we are constantly making more land by subdividing it.

Jill DeWit:
That’s true. Like, what are you talking about?

Steven 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 please don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like.

Jill DeWit:
Mark wrote.

Steven Butala:
I mean it. The YouTube channel thing. Seriously.

Jill DeWit:
You done?

Steven Butala:
Yeah.

Jill DeWit:
Okay. Mark wrote, “I did my first mailing with offers to owners. A 7,500 piece mailer. So far…” Wow. “I have 16 signed contracts. Now I need to get funding for it. Wish me luck.” Is there more to the question?

Steven Butala:
Nope.

Jill DeWit:
Okay.

Steven Butala:
Because that’s enough said.

Jill DeWit:
Aw, isn’t that great?

Steven Butala:
Because he probably did everything right. Went out and found a unique place to send mail, got help pricing his mailer from people.

Jill DeWit:
Did the [inaudible 00:01:34] test to double-check it all.

Steven Butala:
All of it.

Jill DeWit:
Make sure he is making a good decision. Send out… That was a nice amount. I get so frustrated when people say, “Well, I sent out 900 units.” I’m like, that’s not going to get you that much. 75 hundreds going to get you some juice.

Steven Butala:
Right.

Jill DeWit:
And then he’s got 16 now to go through and pick the best ones. Even if he picks one that yields $50,000 in there, that’s worth it.

Steven Butala:
That’s it. That’s the right thing, Jill.

Jill DeWit:
That covers it.

Steven Butala:
That’s how I look at it. Just do one great deal out of 7,500, you’re smashing it.

Jill DeWit:
Quit trying to… I could hear these people like, “Oh, mailer yield. I should have 50.” Stop it. Think. Take a step back and realize nowhere on the planet can you put that money out and make that money back that fast.

Steven Butala:
That’s right.

Jill DeWit:
Kind of thing. I don’t care what it is. And trust me, this one’s tested it. He’s got them all.

Steven Butala:
Tested and failed at everything.

Jill DeWit:
Everything.

Steven Butala:
Everything in my social and professional life.

Jill DeWit:
I come up with some new business idea and I’m going to tell you how Jack has probably already been down that road, or I stopped him just in time.

Steven Butala:
Yep. It’s all true. This business can… Not this business, but fill in the blank business can work for you if you enjoy paying.

Jill DeWit:
So you know what, let me just lead this… Say this comment because it ties into the show today, right? This one, if you do it all right and you do it exactly how we show you, you too will have a successful land business, making money, coasting. And then what does that do to you? Because you’re an entrepreneur, you’re looking for something else. So this one is constantly saying, “Well, land stuff’s so easy, why don’t we fill in the blank with X? Let’s try something.” And it’s totally different. So that’s what happens in our world and that ties into today’s show because some of you are looking for other things to do.

Steven Butala:
Some of you are looking at creating problems for yourself in the land industry. Land investment world. And this is one of them. Today’s Jack Thursday. And I’m going to talk about why creating a subdivision is so alluring. This is the meat of the show. Let’s start with the math, the real simple math. I buy a hundred acres for $100,000 and I’m patting myself on the back. I spent $100,000 an acre in a market. We did everything the Land Academy way, we did everything right. And we know if we go to resell it right now, generally can sell it for about $200,000 from using huge, round, basic numbers. So I bought a hundred acres for $100,000 and then I do it the Land Academy way. I list it with the property, go get a broker. The broker says, “Oh yeah, we can get $200,000 for this. Let’s do it.” And so you list it. And a few weeks, maybe a month, month and a half, two months goes by you, you get an offer.
You sell it for close to $200,000 or some numbers like that, and you take the $200,000 and put it back in to buy more land. Everything’s… We’re all happy. We’re a month into this thing. Two months into it, we generated a bunch of money and we are acquisition specialists. That’s what we are for land. What’s so alluring about subdividing property in the subdivisions is this. You buy that same piece of property for $100,000, a hundred acres, and you cut it into… This is theory now, 100 one acre properties and you sell them all for $10,000 each over time.

Jill DeWit:
What?

Steven Butala:
So $10,000 is… How much is 10,000 times 100? I think it’s a million.

Jill DeWit:
How sad is that?

Steven Butala:
Jill is literally doing long multiplication.

Jill DeWit:
0, 0, 1. That’s a million.

Steven Butala:
I have never in 20 years seen somebody break out a pad. I’m proud of you.

Jill DeWit:
It’s on my lap.

Steven Butala:
I’m going to kiss you right now.

Jill DeWit:
You don’t do that?

Steven Butala:
I’ve never seen our children do that in their entire…

Jill DeWit:
That’s true. Everybody goes to their phone and they put it in there. No, I have a notepad on my lap and a pen in my hand. I can do the math, add two zeros on the end and move the…

Steven Butala:
That’s respectable, Jill.

Jill DeWit:
Move the commas over.

Steven Butala:
I don’t even know if I could do that and not really question whether I’m doing it right. And all I do is map all day.

Jill DeWit:
That’s funny. You are an Excel PhD that I think taking you out of Excel…

Steven Butala:
So much so that I can’t do that in my head.

Jill DeWit:
Giving you a pad of paper and a pen doesn’t work.

Steven Butala:
So now you’ve got that same $100,000 asset that you just paid for and you are about to generate a million dollars instead of my measly little $200,000 example.

Jill DeWit:
Totally.

Steven Butala:
“Well Jack, why wouldn’t everybody do that? Your way’s wrong.” Okay, here’s what happens when you subdivide property. Long, long, long before you ever send that mailer out… I mean, let’s just stop right there. That’s very alluring. Would you rather make $100,000 or $900,000? A two-year-old can answer that.
Well, what’s really involved long before you ever send that mailer out, ever, you have to make sure that the municipality where you’re sending this mail to is conducive to subdivisions the way that we just described. Now, do you really buy 100 acres and get 100 one acre lots out of it? No. You’ve got… You have to place roads in there. There’s all kinds of other stuff that goes on. But what’s so alluring about it is how I just described it, $900,000 versus $100,000. Here’s the reality of it. Number one, the municipality, 9.5 times out of 10 is going to say, “Absolutely not. This is not how we do subdivisions. If you want to do a subdivision… We love subdivisions, by the way. We love increasing our tax base. Here’s the rules and the regulations of creating a subdivision.” And if you printed them out, they’re going to be several inches thick.
And the short of it is they want utilities available. They want you to file all kinds of things that are called some version of a public report. How far is the closest hospital? Can a fire truck get through there? When the fire truck gets there, is there water? So you need fire hydrants. So now you have water, utilities and power all through the subdivision and roads and all that. “Well, wait, wait, wait. I thought you said I could make $900,000.” No, you can’t. You’re going to make a lot less than that. And how long is this going to take? Years.

Jill DeWit:
That’s going to… That’s the key right there for me.

Steven Butala:
So my question is… And I can go into this in great detail, but this is not the venue to do that. My question is, I put $100,000 in and I got $200,000 out in a month or two months, let’s say. I took that $200,000 and I bought a couple more properties that are $100,000 each and sold them both for $200,000. I’m doubling my money every two months or so. Doubling it and doubling it and doubling down and doubling down and making millions. And so the second year, it’s 24 months, now you’ve got a couple million dollars to spend to buy land. Why? Because you’re an acquisition specialist. You’re not a subdivision specialist. Here’s when it works.

Jill DeWit:
By the way, are we talking your velocity of money?

Steven Butala:
Yeah.

Jill DeWit:
Thank you.

Steven Butala:
Exactly. Because you have one skill that you learned at Land Academy, which is how to buy really inexpensive property. You didn’t learn about what utilities go where and how a fire hydrant works and all of that.

Jill DeWit:
We could, and those discussions are going on. There’s people in our group that doing.

Steven Butala:
That’s right.

Jill DeWit:
And if you want to make that your niche, it’s not nuts. We’re just kind of explaining what’s possible.

Steven Butala:
So there are places in the country, Texas is one of them, where you can take a piece of property and divide it up like that, blade some roads in without utilities and resell the property. So without incurring a tremendous amount of those costs. Not everywhere in Texas, but there are places. And over the years since the land grab of the 1800s, there are ranchers that have a full blown ranching operation over here. And they’re happily going about their lives raising cattle. Or in Texas’ case they’ve got oil. And so they decide to buy some property a couple miles down the road or a few counties over, or however it ends up being subdivided, like I’m talking about. Blade the roads in and very quietly and casually start to sell off those 100 properties for $2,000 down and $400 a month. And it takes maybe five years and they sell all the property and they’re taking on the payments.
Some people default, some people don’t. It’s something that maybe the rancher and his wife, they deal with it every Sunday for a couple hours. They look at the books, the checks come in. And so that’s a fantastic way to subdivide property on the side. That is not a good way, I don’t think, as a primary income source for people like us. There’s offshoot groups from Land Academy, I’ll just say it, that make this sound very alluring. And what it ends up being is you put $1000 into something, this big, huge investment pile, 100,000 or 50,000 or whatever the number is, and you don’t see it out there out of there for years. So you might be a subdivision person. $900,000…

Jill DeWit:
I love subdivision people. You know why? I sell them great property. I get in, I get out.

Steven Butala:
You might be the person who sells the property so they can go subdivide it.

Jill DeWit:
It’s kind of like what we do, our house academy. I’m not the one doing the renovations. I’ve been there, done that. I’m like, that’s not my forte. And I don’t want to be that way. And I don’t have the stomach for it or the patience for it. So I’m happy to go find these deals because that’s what we’re good at. And queue up for them and let them run with them.

Steven Butala:
I agree with that.

Jill DeWit:
That’s what I want to do.

Steven Butala:
Do you know what else you can do?

Jill DeWit:
Sorry.

Steven Butala:
With real estate?

Jill DeWit:
What’s that?

Steven Butala:
All kinds of stuff. You can buy a piece of property and put an office building on it. You can buy a piece of property and put an apartment building…

Jill DeWit:
Storage facility.

Steven Butala:
Storage facilities. Great example.

Jill DeWit:
Or just even make it a parking lot.

Steven Butala:
Is that what you want to do?

Jill DeWit:
Yeah.

Steven Butala:
You have to answer to… No one can answer that except you.

Jill DeWit:
Exactly.

Steven Butala:
That’s not what we want to do.

Jill DeWit:
Right.

Steven Butala:
And we have tried a lot of these things and ultimately decided just reselling the land is a lot better.

Jill DeWit:
Well, remember the guy that we talked to? Was it… I can’t remember. I think it was before this last Career Path. I think it was his… I think he’s in Career Path, maybe. But he was like, “Man, I wish I hadn’t gone down this path. My family’s leaving on a flight to fill in the blank Europe. And I can’t go today because I have to come two days after them because this property needs my attention.” I don’t want to do that too. There’s something to be said about these simple, very profitable, easy, fun, happy transactions. That’s what I like.

Steven Butala:
We’re deal makers. We’re not construction specialists.

Jill DeWit:
I want to go play and have fun.

Steven Butala:
Or tenant managers.

Jill DeWit:
I agree. Happy to join us today. Five days a week. You can find us here on the Land Academy Show.

Steven Butala:
It’s almost Jill Friday. And she’s going to talk about how to make it as a female land investor. You are not alone in your real estate ambition. It’s an interesting topic choice, Jill.

Jill DeWit:
Why?

Steven Butala:
Well, the whole world’s trying to undo gender right now. And you’re like, “If you’re a woman, you can make it too.”

Jill DeWit:
Sorry. But it’s true.

Steven Butala:
No, I just love that you just buck these trends.

Jill DeWit:
Come on. Well, look at all the women in business things that are popping up. It’s important. We should support each other and help each other. And we can… You could… No offense, but we can do this on… We can do these things too.

Steven Butala:
I’m going to ask you. I know that’s not… That’s what I’m saying. I see everyone equally.

Jill DeWit:
I know you do, but not everybody does.

Steven Butala:
So I’m going to ask you questions for this tomorrow.

Jill DeWit:
Oh good. I like that. That would be good. Just a little reminder, thank you for tuning in. We really do appreciate your support and we hope you find this all valuable. So don’t forget, you can see us if you’re just listening to us by checking it out on our YouTube channel. And by the way, there’s so much new content that is added on there almost every single day. There’s snippets from not just this, but our weekly member calls, deals that we’re reviewing and doing, career path stuff, all kinds of great things. So check out our YouTube channel and check out for your member. Don’t forget, you need to be communicating on Discord. That’s the place to be.

Steven Butala:
We are Jack and Jill. Information…

Jill DeWit:
And inspiration.

Steven Butala:
To buy undervalued property.