This is episode number 2175. Jill and I are talking about how to successfully buy land when values are going down, not up. Values are rapidly going down in the real estate market for all types of real estate, specifically residential-related property, which is land and houses, and condos, and stuff like that. We’ll talk in general about how to get through it, how to prosper through this period. This is my fourth recession, and I have done reasonably well during those recessions. This one we’re doing extremely well, and I’ll tell you why. Each day on the show, we answer a question from our Land Academy member Discord Forum and take a deep dive into land-related questions by your request.

Dealing With Private Road Access Issues On Land Parcels

Alex wrote, “Good morning, everyone. Does anyone have any experience with access issues on a parcel? I’m buying a property in Blank County, Arkansas.” I can say Garland County, Arkansas. “It’s on what I now know to be a private road in the name of the previous owner. I’m using a title company to close. I started talking to them on February 13th. The access issue is still unresolved. The title company says it’s in the hands of their underwriter, but I’m getting very frustrated, as it will soon be two months since this has been going on.

I checked, and I don’t have a contract with the closing company. The closing company was recommended by the seller’s son. They aren’t even in the same county in Arkansas, which is certainly slowing things down. How do private road access issues get resolved? Also, should I be looking for another title company to close this, or just keep pushing on with this company? Any suggestions are welcome. This would have been my first deal, but there’s a good chance I will self-close another deal elsewhere before this even gets done.” That’s funny.

A private road, on a personal note, I picked the weirdest, deepest, darkest roads when Jill and I were in the RV, and I took my motorcycle down there just to see what that’s all about. Probably 6 times out of 10, I get to a gate. While it looks like on the Google Maps or whatever I’m using, the fact is I was on a private road. It was a private road that would access multiple residences or farms or ranches, or whatever, which makes it legally similar to your driveway.

If you have a shared driveway, a lot of people around here do in Arizona, that’s it. You’re on a private road. Somebody owns the road. They provided a hopefully, an easement, whether it’s in the owner’s deed or the deed of the properties where the people are utilizing the easement. They’re driving over someone’s property to get to their own property. They’re doing it legally via an easement. That’s the legal part of this. It all comes down to whether or not the person who owns that road wants to grant you access.

If you’re somebody like Jill and you call that person, you say, “I just bought the property down the street.” She’s going to sweet-talk her way into getting an easement. In some cases, she might have to pay a few hundred dollars, maybe a thousand dollars. She does all the paperwork, and now we have access to the property. If you think that the title company or the escrow company, I think you call it a closing company here, is going to do any of this for you. That’s just not realistic. In fact, they should be telling you, “We’ll do your deal, but we’re going to put this in a Schedule B exception and we will not be insuring it.”

I get somebody else to do the easement part of it. What I’ve done in the past in these situations, Alex, is get an attorney. I’ve had better luck with real estate attorneys who are used to writing an easement and things like that into documents. That makes more sense to me. By the way, the underwriter is most title companies have an attorney on staff, too, so it’s interesting. I’m confused by in the hands of the underwriter what that lingo means to them.

It’s the title company.

Just kicking it down the road or something, like they don’t know what to do.

Whoever’s on the other end of the telephone who’s closing your deal is using terminology incorrectly, doesn’t really know the process, and is probably brand new. Just like every other customer experience I’ve experienced in the last five years.

You need it. The big picture is here to answer the question. First, you need to get to the bottom of it. Previous seller, meaning not the current seller, the previous seller. Should the previous seller give access to the current owner from whom you’re buying this? First, we have to determine that. The answer is yes. There’s probably a document somewhere. We just need to get our hands on it.

That’s it.

If they did not, now you’ve got a bigger pickle. Now you need to go back to who really does have that road. The name it’s in. We need to get that person and say, “Would you grant me access because we need to write in an easement?” The easiest thing is really to find an attorney to get that done.

Creating Value Through Solving Easement Problems

What you’re doing is creating value. That’s the good news. Now you’re able to sell it for a lot more because you solved this problem. There are people in our group, and this is what they do. They create value through easements.

To sweeten the pot for this attorney, if you can get an attorney who’s like, “Yeah, I can do this. No problem.” Say, “Will you close the deal too? Will you also do that because that would be better?” Have more than just do one-stop shopping. They’ll do the whole thing for you with tile insurance.

Here’s the most basic thing about it. You’re driving over somebody’s property to get to your own. Whoever owns that property, you have to talk to them about it. You can circumvent whatever title company, whatever lawyer, just pick up the phone, get their phone number, and give them a call. Very often, they just say, “Sure. Everybody else drives down the road. Why not? You can drive down it.”

Just create these men and the deed. “Jack, that’s complicated. I just want to buy a piece of land and sell it for more.” So do we. That’s what we do. The good news is that when you get a deed back like this, and you open escrow and our deal goes back like this, and this is not your thing, you have a couple of choices. You can say, “Yeah, I’m not going to. I’m not going through this.”

Two months of how much work to make $8,000 might not be worth it.

Buying Land In A Down Market

Next deal. Our topic is, How to Successfully Buy Land When Land Values Are Going Down, Not Up. May I?

Of course.

Please picture a graph with an X and Y axis, and then a line just going down. It almost makes a triangle. The line’s just going straight down on the bottom. There’s time. The more time that goes on and on, the other axis is value. Rapidly over time, values are going down. Somewhere on there, a dot is your purchase price. If you are going to buy at a purchase price, the values are going down.

Wherever values are today, wherever they are today, let’s say they were right in the middle of that graph. Do you want to buy there? No, you want to buy way lower. The way that you make money in a market where values are declining, like the one that we’re in now, is you double down on how cheap you’re buying property because you have a little crystal ball. Those values are going down. Values in residential real estate are sinking fast for a bunch of reasons that I don’t want to get into on this show, but they are.

We’ve been through this many times before, and I, sometimes just me, sometimes we’ve done it together. You have to buy real estate way cheaper than you think. Not 20% less than its current value because it’s going to be at the value where you’re buying it shortly. You need to buy it 80% cheaper than its value. Sell it at 60% before it hits that 80%. We do this all the time. “Jack, what you’re telling me to buy real estate at 20% of its current value?”

You need to buy real estate way cheaper than you think — not 20% less than its current value — because it's going to be at the value where you're buying it shortly. So you need to buy it 80% cheaper than its value right now. Sell it at 60% before… Share on X

“Yes. Why?” “How can I get away with that?” I’ll tell you why. There’s so much property on the market. This is not a regular buyer’s market. They see this all the time. Real estate agents love to say this. It’s a buyer’s market or it’s a seller’s market. Most of them don’t know what that is. The fact is it’s a buyer’s market, but not a regular buyer’s market. It’s a severe real estate recessionary buyer’s market. We haven’t seen the bottom anywhere near the bottom.

I don’t know when that’s going to be, but you’re right. You have to plan for the worst-case scenario. You really do. We just reviewed a deal with a person earlier. It was a mobile home in Florida. I’m like, “I don’t feel good about it.” I might feel good about it today, but six months from now, I’m going to feel horrible at this price, potentially the way things are going. Like you just said with your X Y axis and how it’s trending down, not trending up.

I have to account for that. Also, we just looked at some numbers you showed me earlier. 30% more active listings for the week ending that we’re in over last year. I’m like, “That’s a lot more properties. 30% over the same time period last year nationwide is a huge amount of inventory.” That’s where we’re coming into, why I say buyer’s market. I’m like, “There’s 30% more. I could go to the next store, guy.” That’s what I told this person, too, when we looked at that property.

I said, “You need to, if you decide to act on this property, or part of your decision.” I should say, should be, “If I pass on this property, I have a 30% chance the guy next door is going to put his up for sale and I’m going to get it at the price I want.” That could happen. There’s just so much out there. For me, when I was thinking about this topic, How to Successfully Buy Land When Land Values Are Going Down, Not Up, it means you have to be picky. I do two things.

I do them anyway, but now I’m hyper-focused on them. I’m making sure our properties are spectacular. That means they have all the A days. Like this access issue, I wouldn’t have dealt with it. I would have moved on. Unless it was like, “I’m standing to make $80,000 or $100,000, then I might do it. I’m still not going to spend all my time on it. I’m going to make sure it’s in front of the right people and I’m going to babysit it, but I’m not going to give up my time and energy for all these other amazing deals I need to be doing things.”

I’ll let this one run in the background. That’s one of the things, all the A’s, it has everything that’s spectacular. It’s like, “This is gorgeous property.” I’m buying it at even less than I normally would because, like Jack said, we’ve been through this before. The way we buy and sell land and how well we do it, and Jack’s always been real upfront and honest about it, we’re acquisition machines. It’s cheap. In these down times, I might sell things for less than I thought I wanted to back when I bought it, because it’s trending down. It doesn’t matter. I bought it for $20,000, thinking I was selling it for $80,000, and now I’m selling it for $60,000, maybe even $50,000.

Perfect example.

I’m okay with those numbers. I want to keep food on the table.

That’s realistic. We do this stuff like that all the time. It’s a very realistic example.

It is. That’s what’s going on. You need to be really picky, get them at great prices. If it doesn’t work out price-wise, it’s not you. It’s just you have to think about you and your business, and just move on to the next area. We’ll get out of this.

We’ll get a bunch of dough on the way.

It’s going to be okay.

Markets are always trying to find the bottom and the top. The market’s on the way to the bottom, and pure supply and demand, and a bunch of other factors that will lead to pure supply and demand. The market will find the bottom and the same with the top through the next cycle. We’re just along for the ride to try to manipulate where we buy and sell real estate, in our case, along that journey. What’s important to grasp, and I’m serious about this. I had trouble grasping this, even just maybe 10 or 15 years ago, is waiting for the bottom, or waiting for the top. If you wait for the bottom, nothing will ever happen. You’ll never make it.

If you wait for the bottom, nothing will ever happen — you’ll never make it. What you want to do is manipulate both on the way down and on the way up. Share on X

You’ll miss it. You won’t know it, and you’ll miss it.

What you want to do is manipulate on the way down and on the way up.

I like that. In a perfect world, you’re buying on the way down like we all are, and then it hits bottom and it starts to recover a little bit, and that’s when you’re selling.

If you think about it, surfing on the ocean, you catch a wave, hopefully, right at the very beginning. If you wait until the very end, you’re going to crash into the shore. You don’t want to do that.

Tumbling on the sand.

You want to enjoy the wave as it’s cresting, and then no one to get out. It’s just like that with real estate in any market stock market. Join us tomorrow, where Jill and I discuss which parts of your land business should be outsourced. You are not alone in your real estate ambition. We are Jack and Jill, information and inspiration to buy undervalued property.