This is episode number 2240. In this episode, Jill and I talk about the end is near for double closing real estate deals. If you don’t know what a double closing real estate deal is, also known as wholesaling, I’ll explain it very briefly here. You send out a mailer or you contact sellers in some way. A seller calls you back and says, “Yes, I’m real interested in selling my property for $20,000.”

If you’re us, this is camp number one. You review the property as an acquisition candidate. It was priced that way for a reason. It’s all very consistent and produces very predictable and accurate results based on data. The property comes back, “I’d like to sell my property for $20,000.” I offered you $18,000. I go and review the property. I decide, “Yes, it’s a great deal. I’m going to buy for $20,000 and sell for $50,000. Let’s do the deal.” I open escrow, I buy it, I find a real estate agent and I resell it.

It sounds like we’re totally into the topic. Are we going to do the topic or are we just doing the intro?

Cell Tower Leases: A Land Investor’s Dream

Each episode on the show, we answer a question from our Land Academy Member Discord Forum and take a deep dive deep dive into land-related topics by popular requests.

I’m making them hold the deep dive. Hopefully that wet your whistle enough like, “I really got to know,” so don’t worry. I’ll make them go back and re-explain. Double closing call. People call it wholesaling. It never was wholesaling. I don’t know how it got that term, but people just adopted it. I don’t like it. We’ll unpack that further. The question for this episode is from Lizette and Lizette wrote, “Hi. Anyone with experience flipping land with a cell tower lease on the property?”

Yes.

Yeah, that’s a good one. These are taken out of our Land Academy Closed Discord Forum, where there all the chats and things are going on. I just want to say this is one of the values of that. I wish I had that resource when I was starting and learning this with you because once they said, “Yeah, do you want to sell this? There’s a tower,” I’d be like, “What the heck do I do?” I didn’t have a group of people I could reach out to. It was you and me and that was it. For Lizette, she’s okay. Do you want to answer what some of the people responded in there or your experience?

Yeah. Everybody had the exact same response that I have, which is heck, yes. A cell tower lease on your property means that somebody who owned the property prior to you, a cell tower company, went to them and said, “We’ve identified your piece of land as a great place to put a cell tower and here’s what we’re willing to offer. If you allow us to do that, we’re going to pay you $185 a month.” If it’s a more urban area, could be $280,000 a month. It depends on what the value is or whatever. Almost always, this is an amazingly good idea.

What you need to do list set is get the agreement that’s in in place because it’s largely transferable. I think the cell tower companies, it would cost them so much money to move it two doors down. They’re going to do just about anything to keep it there. Get a hold of the contract, make sure it’s transferable. If you’re not comfortable with this stuff like Jill and I are, get a lawyer. Hopefully, get one that is really like a communications tower lawyer. It doesn’t have to be in your state and ask them to review the lease with you.

Easy. This is really not a big deal at all.

This is an endless revenue stream for you. We have people in our group, in Texas specifically, that have bought properties like this and they’re getting $1,500 a month forever.

I love these. When you sell it, these are all attributes. This is all a little something that makes your property a little bit better and unique. Cell tower, maybe it’s being leased because there’s cattle that graze on it. There are all kinds of little things that people might have in place on their property and then they still want to sell. You’re like, “Why is this person selling?” Who knows what’s going on in their world? They need the dough versus more than the $180 a month that they’re getting. They need your bigger chunk. It might be priced a little bit differently because of that. I respect that and I will certainly look at that and maybe make changes to my offer price based on that.

How do you calculate a capitalization rate on an endless income stream or a yield to maturity? It’s infinite. There are to no circumstances, if any, where I would pass on this deal. I would somehow make it work unless there’s some crazy things involved. This episode’s topic, the end is near for double closing real estate deals.

How do you calculate a capitalization rate on an endless income stream or yield to maturity? It’s infinite. Share on X

The Legal & Ethical Issues With Double Closing

As I was talking about earlier, I jumped the gun because I got a little excited about burning this thing down. You can buy our way is to go buy a piece of property, send out the mail, price it, buy a piece of property. In my example earlier, we’re going to buy for $20,000 and sell for $50,000. We open escrow and actually buy it. We either buy it with our own money or we get funding from other Land Academy members and then we go to resell it for what we think we can resell it with a real estate agent.

We wipe our hands of that deal because it’s going to theoretically go off and close itself with a little bit of management on our part or on the part of our employees. We live happily ever after in making $30,000. Double closing is this. The seller calls back and says, “Yes, I would like to sell it for $20,000.” The person who sent the mail out, they’re not in the Land Academy group, they’re somewhere else, says to themselves, “I have nothing to lose. I’m not going to put up any money on this. I’m not even going to see if it’s a good deal. I splattered mail all over the place. I’m going to make a big huge mess. I’m going to accept every single offer that comes back and I’m going to let the market work itself out. I’m going to let 5% of these deals close and I’m going to cash the check.”

Now I’ve got a contract and not open escrow. I just have a contract that I’m staring at that says, “I’m going to buy this property for $20,000. I tell the seller I need six months to close the deal.” Seller’s probably, in a lot of cases, going to say, “Okay, I guess that’s normal. I don’t know. I don’t sell a lot of real estate.” I go shop it. I have a predetermined list or I got one on the internet to send it off. Jill and I are on all these lists and I attempt to wholesale it for $35,000 or $30,000, or in a lot of cases, $22,000. I just want to make a couple of thousand dollars.

What it is, is lying to everybody involved. You’re lying to the seller. You’re lying to yourself because you don’t know how to analyze real estate. It’s all bad. At some point in every one of these transactions, the seller finds out what you’re doing. They might talk to their real estate agent about it, their wife, but they’re going to be upset finding out that you’re marking it up and reselling it. Most importantly, and I’ll end on this, Jill, more and more municipalities, counties, and states are making this not an option any longer from a legal standpoint.

Thank you, Jack. That was good. That was great. I obviously agree with you. I just word it differently and I look at it a little differently. Let me back up and I’m going to give you my terminology on this. The only reason you’re doing this is because you don’t owe the money or you don’t believe in the deal. That’s it. You send out the mail, stuff comes back, you want to buy it. “I don’t have the $20,000. I’m not even sure it’s worth $20,000. Let me do this. Let me get equitable title so I can run around and sell it, so I’m legally okay. Have them sign something.” We would call it an options agreement, something like that where they know I’m doing this. That’s the way to do it, by the way. If you really want to do this, you need to be upfront and honest and just say, “I think I can make this deal work at your number. I need six months to try to find a buyer.”

They’re going to look at you like you’re a real estate agent or something. However they see it is fine, but there are legalities you have to watch out for. You run around and do it. Back in the day, truthfully, have I done something like this in the past? Yeah, because I was out of dough and I was very upfront and honest with like, “I don’t have the money right now, but I will. I’m going to still try to work on this deal. Are you okay with this? This is what I’m going to do. As soon as I get the dough, we’re buying it,” kind of thing. It was a real small window. I totally believed in it.

However, it got misused and abused and I don’t like it because you get distracted too, by the way. Any deal that I don’t have really money in it, I lose interest like, “I didn’t put anything down anyway.” I am really half trying versus I bought it, my $20,000 tied up in it or I’m trying to sell it. Your mindset is different with these.

The other bigger issue is, nowadays, and one of the reasons like we don’t do it at all, we put our money where our mouth is, I don’t want anyone to think that I’m representing somebody and I’m not a licensed agent. If I’m running around selling someone’s property and I just have equitable title, it could be misconstrued as I’m representing them. That is the gray area.

That’s where title companies are putting their foot down. States are putting their foot down. All kinds of entities are saying, “This is not okay. You’re not a licensed agent. You shouldn’t be trying to sell somebody’s property that you don’t own.” When I own it, it’s me. I can sell however I want for whatever price I want. I call the shots and that stops everything right there. Do you have any questions? Do you think that I covered it?

Negative Impacts & Safer Alternatives To Double Closing

You covered it. The net effect on the industry has been very negative because the vast majority of these deals don’t go through and everybody’s upset with the exception of the narcissist who started the transaction in the first place. What happens is they then they get our letter or they get your letter as a Land Academy member and they have bad taste in their mouth and the whole thing.

Let’s cover that for just a second, too, because here’s what could happen. The problem right now is there are a bunch of people running around making a big mess. They have all these properties tied up. I don’t know if I heard about it much lately, but a couple of years ago, I would hear people filing certain things with the county to really lock up these properties and make a mess for these poor sellers. I’m like, “Tie it up for six months or a year and maybe the seller did get a real buyer that came along and they can’t because this guy’s in the middle, half interested in these properties.” There are a lot of people just get it in their contract, like an agent.

There’s nothing good about double closing deals—except that they don’t require any money. But they do require a lot of slick, fast talking, like a politician. Share on X

Get the listing. Don’t really try, just get the listing. That’s all I want to do. You’re not a good person. That is what really bothers me, too. If you believe in the property, just buy it and then sell it. Nowadays, if you don’t have the dough, I do, and Jack does, there are so many people out there standing by with open checkbooks for really good deals who will fund deals for you and you guys work out some split on the profit. That’s really the answer in how it should be happening.

You’re stringing everybody along. You’re stringing the seller along. If you actually did open escrow, you’re going to string the escrow up person along. As soon as you open escrow on a real estate deal, escrow agent asks you for all kinds of stuff. How are you going to pay? Here’s the stuff you need to sign. We’re going to travel down the path of ordering a title policy. If you don’t take their calls or you just open it, you get an escrow number, you’re just stringing them along too.

The buyer’s going to find out, by the way. If you do the 5% that actually get sold, the buyer finds out, “Wait a minute. You’re buying this for $20,000 and I’m buying it from you for $30,000? That’s ridiculous.” As with everyone on the planet now, I’ll go on the internet, skip trace the person and say, “This is ridiculous. How about you and I do a deal together?”

That’s the reality of what could happen. That’s part of why I think the end is coming near on this too. There’s nothing keeping them from going behind your back and doing the deal themselves and not telling you. At the end, when you’re all done, you’re trying to do whatever, maybe find a different buyer, the seller’s dark. He’s long gone and got paid out and what are you going to do? Sue him? No, that’s not worth your time or worth your money. It’s done and gone and sold. Sorry.

There’s nothing good about this business model. Except this. It doesn’t require any money. It requires a lot of slick, fast talking like a politician. If that’s what your talent is, then use it for something else. Join us next time where we discuss the truth about cold calling, emailing and texting for land and house deals. You are not alone and you’re real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.