Transcript: Steve Butala: Steve and Jill here. Jill DeWitt: Hey. Steve Butala: Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala. Jill DeWitt: I’m Jill DeWitt broadcasting from beautiful Southern Arizona. Steve Butala: Today, jill and I talk about Structuring Infill Lot Development Deals with Home Builders and it’s Infill Lot. I-N-F-I-L-L. It’s pretty funny, because I’ve heard people call it infield. Jill DeWitt: Oh. Steve Butala: And, inful. Jill DeWitt: Inful? Steve Butala: I-N-F- Jill DeWitt: F-U-L? Steve Butala: Or, something. F-O-O-L. Jill DeWitt: Infilt? Infold? Unfold? Steve Butala: So you’re filling in a lot between two houses. We’ll talk all about that. There’s a deal we’re involved in that’s pretty pertinent, but 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. Jill DeWitt: Hey, by the way, if you are a Land Academy member, you can also find us on Discord. So Julius wrote, “Hi everyone. My name is Julius, and I’m just jumping into land investing 100% fresh. I had been thinking about it from my own personal property purchases for a while now, but after some research found this business model to be rather incredible.” Steve Butala: Good. Jill DeWitt: Yeah, you’re right. “I’m currently a grad student. I’m in the process of saving up to join Land Academy. I have some extra capital from my actual mailers and deals when that time comes. My question is this. For someone who is totally new, how would you recommend someone who has a couple months to prep make the most of their time doing so before diving in? What are some good resources to really map out the process, and maybe even get a feel for searching for, scrubbing and playing with some data? I’d also be super grateful to get the chance to speak with someone who’s been through it, to see how they learn from those first steps. In any case, it’s a pleasure to be here and very excited to start. Thanks very much and wishing everyone all the best. Cheers, Julius.” Oh. That’s awesome. You want to answer first? Or, you want me to answer? Steve Butala: Yeah. I mean, Land Academy is very much like Alcoholics Anonymous. Jill DeWitt: Oh my gosh. Not at all what I was going to say. Steve Butala: You’re in a group, and there’s some steps to complete before you can get a chip. Jill DeWitt: Move forward. Steve Butala: Instead of getting a chip, you get a big bank balance. Jill DeWitt: Or a deed. Steve Butala: Then, if you’re lucky, you can find somebody who will, on a personal one-to-one basis, mentor you. Just like AA. Jill DeWitt: Like your sponsor. Mentor. We call it mentor, some call it sponsor, pick a word. Oh my gosh. Steve Butala: Jill’s going to answer. Jill DeWitt: Well, I was going to say, you’re doing everything right. Start communicating. Steve Butala: That’s what I think too. Yeah. Jill DeWitt: Communicate with everyone. Okay. Yeah. If you don’t know Excel, get to be a wiz in Excel. You don’t have to know exactly what we’re scrubbing, just get really good at maneuvering and not looking at the keys when using Excel. That’s a lot of it. Just, I think that there’s so much out there. Listening to this show is one. There’s so much free content that you and I put out over the years now, five going on six years, that you can really get a lot of information right there. I would just spend time listening, watching, following, writing, communicating, then you’re going to get a real good idea. Enough that you think, “I got this,” but wait for it. Then, when you’re ready and you join, it’s going to put all the little moving parts in place. You’re going to know, “Oh, I put this before that, then I do this. That’s the nuances. I really need to know about that,” because it’s impossible here for you and I to really… We do, but it just puts it all in place, then spills it out. Steve Butala: I can tell how this is written, how you’re presenting yourself, the fact that you’re a grad student. Jill DeWitt: Mm-hmm (affirmative). You’re saving money. Steve Butala: You’re saving money. I would encourage this for anybody, regardless of age or search circumstance. Do a ton of research before you ever decide to plop some money down with anything. Jill DeWitt: Right. Steve Butala: Anything. I don’t care if you’re buying a convenience store. Your timing’s great. The biggest reason, these things, when we do exit interviews when people, when they rarely do, but they do leave Land Academy. Jill DeWitt: Right. Steve Butala: The vast majority of the time that they leave is because they had some life event. It’s not because they couldn’t send mail out, they didn’t understand it, or there was some big, huge roadblock. It was just because one of their parents passed away, or just a life event happened. They couldn’t devote the time that they originally thought they could. Jill DeWitt: No, it’s funny. So many people, that they don’t really leave, they go on pause, then they come back. Steve Butala: Yeah. Right. Here’s the steps really quickly for you and everybody else. You find a County or a zip code, where you think people are going to respond to a lower priced offer. We use what’s called a red, green, yellow test for that. If you want details in this, just continue to ask questions in Land Investors like you are. When it passes those tasks, or you find a location and it passes, you download data. Jill and I are licensed providers for the three large data companies in the country. Download the data and get an offer out in the mail with a very specific price to thousands and thousands of people. Playing the averages, we’ve sent millions and millions of offers out, 400,000 or 500,000 offers, our group sends out all over the country every month with massive success. It’s all about how much time you develop to it. If you have, hopefully when you graduate or right before you do, you can work this in, because this is a perfect time in your life, a massive proponent of doing life things in order. Steve Butala: You don’t want to get married when you’re 17, have three kids, graduate from high school, then try to go to college and have a career. That’s backwards. Smart people can get themselves out of that. Smart, dedicated people. Jill DeWitt: Mm-hmm (affirmative). That’s true. Steve Butala: Boy, I’m not sitting here telling you I did even half of that right, but we’re sitting here for a reason. You have a huge, huge advantage is my point. Jill DeWitt: I was thinking. Oh, I’m sorry. The other thing I was going to say to, Julius, is, because you’re just trying to grasp your head, get a little head before you dive in. I understand that. Start watching markets too. Start paying attention to where people are going and why. Start watching trends, start watching where land… You can start watching and learning like, “Oh. Look at all these five to 10 acres over here, they sell really fast.” Start getting ideas where you’re going to send mail out, when you’re ready to pull the trigger. Steve Butala: Great. I mean, there’s tons and tons of stuff that you can do. Jill DeWitt: Yep. Steve Butala: Today’s topic, Structuring Infill Lot Development with Builders. This is the meat of the show. Jill DeWitt: Well, now we define infill lot, I-N-F-I-L-L. It’s funny how many people, they even spell it wrong all the time, they’ll say right, and they spell it wrong. I’m like, “Two Ls.” Steve Butala: It’s okay. I completely understand that. There’s infill lot opportunities all over this country. There’s people in our group that are dedicated to them. While I don’t, in a dedicated manner, necessarily send out what we have in the past with a lot of success. We’re more recreational land. That’s just our stable, or like ranches and stuff. Infill lots, we’re starting to see a lot of deals, because this is such a hot market, come through on our deal funding side. In one deal, which we’re involved in is a multiunit deal in a small town in the Southwest, that’s just on fire. The market’s on fire. The people that own all the profits of one owner, are retiring. We’re lucky enough, they’re all contiguous lots in a subdivision that’s completely developed except these lots. Rather than Jill and I writing a check, this is actually the meat of the show, this is how we’re structuring it. I went to the developer of all the other. There are two or three other builders in there, I should say builders. Steve Butala: I went to them and said, “We control these lots. We would like to cut a deal with you, where we make 5% of the sale price of the property when it’s done, when you’re done building it. For that, you will not have to come up with any cash for the land.” The regular sale price that we would have sold to the developer, believe me, they’re jumping up and down. They don’t have to come up with any money for the land. They only have to go get construction financing, or in one case, the guy’s got the money to do it, build the house, sell it, pay us what we originally were asking, which is a pretty high profit margin on a lot anyway, plus 5% of the top line. The math is fantastic for everybody. It’s a huge win-win for everyone. The sale price is the same as it would have been for all the other properties in the subdivision. Those properties are real easy to val- Jill DeWitt: I’m going to interview you here in a second. Okay? Steve Butala: Yeah. Jill DeWitt: How do you find these builders? Steve Butala: Oh, you just go to the County and you look up… It’s very easy to find, because they had to pull permits. The vertical development company for the properties had to pull up permits to get it, to build. Their phone number’s in there and everything. It’s incredibly simple. Jill DeWitt: How did you reach out to them, initially? Steve Butala: I called. I actually called. In one case, I emailed their email address in there, and said, “We’ve just got a hold of the rest of the properties in Subdivision Acts. I know you built 14,” it was very specific. “I know you built 28 of these yourself, and the price ranges were from X to Y,” because you can do all this research, extremely high level of accuracy. Some people drop the phone when you call them, with a phone call like this. People aren’t used to that level of… It’s the same reason our mailers work. Jill DeWitt: Isn’t that funny? Some people, that’s some of the hangups, is just, “How do I reach out to these people?” You pick up the phone. It’s not that hard. Then really quickly, early on, state who you are, what’s going on, what deal you have. Then like you just said, watch him go, “What’d you say? Hold on a moment.” Like, “Everybody leave my office. I got to take this call,” kind of thing. Steve Butala: We’re going down the path, and that’s a structure. You know where I got this idea? For movie stars, because Tom Hanks and some of the A list movie stars, they don’t take salaries anymore. They want a percentage of the revenue. Jill DeWitt: Yeah. That’s true. Steve Butala: We were due… When you tell a developer, “Hey, you don’t have to pay for any land,” you’re going to have to deal with the land. “I’m the land person. We got it covered.” Let’s get- Jill DeWitt: Don’t deal with it now, we’ll deal with it later, kind of thing? Steve Butala: Yeah. Well, just pay me when it’s sold. I’ll take the risks with you. They jump. They jump out of their share, because it’s hard. If you ask any builder, any builder, anywhere, the only reason they’re not building a 7,000,000 more units right now is because they can’t find the land or structure land deals, or they don’t know how to talk to landowners. Jill DeWitt: It’s too much money. That kind of thing too. Steve Butala: We’ll net probably 1.2 on this when it’s done, and it should be done, let’s just say, a year from now. I think it might be less, because they’re contiguous lots. They’re going to take them down in five to eight unit tranches. Jill DeWitt: That’s awesome. Time to go to other questions I want to ask you. Did you need an attorney to get this paperwork done? Steve Butala: Yes. Jill DeWitt: Okay. Steve Butala: Hell yes. Jill DeWitt: All right. Steve Butala: They have one too. Jill DeWitt: Okay, cool. All right. Steve Butala: That’s a good question. Jill DeWitt: Thank you very much. I’m trying to think, what does everybody want to know about this? Yeah. What is the risk? Steve Butala: Jill really doesn’t know about this deal. I mean, what is it? Jill DeWitt: I’m about to find- Steve Butala: We do separate stuff. Jill DeWitt: What’s the risk? Steve Butala: The risk is this. The market may stop, but I don’t see that as a risk. Jill DeWitt: You want to see what I see, by the way? Here’s why I don’t see it as a risk, because you control the asset, you hold the land. Anything they do on that land, if there’s any risk and they change their mind and back out, great. Now I’ve got the land and a slab, and plans. Steve Butala: And a half built house. Jill DeWitt: And everything like. I’m sure you write that into the contract. That’s like, “Hey, if anything goes sideways, it’s mine to take.” Steve Butala: Right. Jill DeWitt: “You have the appliances, but the rest of the structure, that stays with me.” Steve Butala: On the flip side of that, the developer gets to walk away, Jill DeWitt: Right. Steve Butala: They don’t- Jill DeWitt: No one’s going to sue them. Steve Butala: No one’s suing. That’s right. He’s only lost, whatever he’s put into it, and his subcontractors. That’s for them to deal with, not me. Jill DeWitt: Mm-hmm (affirmative). That’s awesome. Steve Butala: Lucky to get good… We’re in a high… Say we’re doing incentives in a very high development state. If you’re going to do this in Indiana, it’d be tough. It’s just not… The Midwest has not classically seen the surge of development, SFR development. Jill DeWitt: Right. You’re picking hot areas, where days on market are obviously low, and they’re running out of inventory? Steve Butala: Yeah. I mean, this is a deal funding deal. It came to us. Jill DeWitt: Yeah. Did I miss anything? Steve Butala: I don’t think so. I mean, this is not the longest episode in the world, but here’s the thing. This is really what… I can close on this. Gee Steve, don’t you tell us to not veer from what you’re- Jill DeWitt: From what you do. Steve Butala: Yeah. Why- Jill DeWitt: Is this something shiny? Steve Butala: Right. why- Jill DeWitt: What are you thinking? Steve Butala: What’s next? Golf courses? Are you going to buy a- Jill DeWitt: Great- Steve Butala: Marina? Multifamily properties? No. This is a land deal. This is a land deal in a crazy hot market, that my first choice, I could very easily say, “We’re buying these properties. All these properties for $800 grand. We’re going to sell them for 1.6, make 800,000 bucks. We’re going to sell them to these developers. They would go get financing. They would do all this stuff and take all the risks. We would be cashed out, and that’s it.” Or, I could say, “I’m going to get that money anyway. I’m going to take the risk. I’ll wait a year. I don’t care. We have the properties. They’re all tied up, and I’m going to get 6% on top of whatever 600 times 20 is.” That’s a lot. 600 times two million. No, 600 times 20, yeah. Jill DeWitt: Okay. Awesome. Steve Butala: It’s a great deal for us. I’m happy to take the risk, and the builders could not be happier. Jill DeWitt: Awesome. Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show. Steve Butala: Tomorrow, the episode on the Land Academy Show is called Personal Career Advice from Steven and Jill. You Are Not Alone in Your Real Estate Ambition. Jill DeWitt: I can’t wait to hear what you have to say about that tomorrow. I think we’re going to have different things. I know we’re going to have different things. Steve Butala: Well, it’s like Julius’s thing here. We’re just going to expound on that. Jill DeWitt: Cool. That’s super cool. If you need to access to any ownership or property details, including owner phone numbers and FEMA flood overlays, check out neighborscoop.com. Can’t even say that today, neighborscoop.com, created by investors, that’s us, for investors like you. We are Steve and Jill. Steve Butala: We are Steve and Jill. Information- Jill DeWitt: And inspiration- Steve Butala: To buy undervalued property. —————————————- If you have any questions or comments, please feel free to email me directly at steven@BuWit.com. The BuWit Family of Companies include: https://BuWit.com https://offers2owners.com https://landinvestors.com https://landacademy.com https://landpin.com https://parcelfact.com https://countywise.com https://deedperfect.com https://ownersdata.com https://houseacademy.com I would like to think it’s entertaining and informative and in the end profitable. And finally, don’t forget to subscribe to the show on Apple Podcasts.