Land Funding with Integrity (LA 1606)
Land Funding with Integrity (LA 1606)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Howdy.
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 from the Valley of the Sun.
Steven Butala:
Today Jill and I talk about land funding with integrity.
Jill DeWit:
Why is that funny?
Steven Butala:
I’m just looking at you, waiting.
Jill DeWit:
Oh.
Steven Butala:
I’ll start.
Jill DeWit:
Well, do we really need to talk about this? But I guess we do. There’s a lot … It’s in everything.
Steven Butala:
We created what I think … And I’ve been thinking about this lately, because I’m trying to figure out, like everybody, what to do with the rest of my life, and this is a good thing. This land thing is a good thing. We’ve created an environment, a total full-blown, pure supply and demand, laissez-faire environment, called Land Academy. And one of the unintended consequences of that, which is really what laissez-faire is, is just let the market solve itself, is personal land funding. And so new people come in, they don’t have a lot of money. They’re starting out. It’s totally normal and ordinary, and there’s older people in the group that have less energy and a lot more money because they’ve had success. They want to fund and help the young people, which I think is amazing consequence.
Jill DeWit:
I love it.
Steven Butala:
But like everything, it comes with a little bit of responsibility and ultimately integrity. And it’s starting to show signs of, oh, there’s not such fair play going on. Look, we all want the unfair advantage, all of us. This is kind of the show now, but we do have some responsibility to do it correctly, so we’ll talk about that. Before that’s-
Jill DeWit:
Yeah.
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 don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like.
Jill DeWit:
Okay, let me just pause for just a moment here. Sometimes you’re like, “Can’t you be a little more agreeable? Can’t you just kind of say ‘Okay’? Do you have to comment on everything?” This is actually in our personal life, not really on this environment.
Steven Butala:
Well, it’s not personal anymore.
Jill DeWit:
Yeah, I know. I’m sharing this. So, maybe, I don’t know, 10 minutes ago … So anyway, so then I sit down and I do it and he’s like, “What’s wrong?” Like, “Hold on a moment.”
Steven Butala:
I just wonder if you’re still breathing if you don’t have any snide comments about stuff that I’m saying even on or off the camera.
Jill DeWit:
Oh. Oh yeah. I’ll save them for off. Just kidding. Oh.
Steven Butala:
You know, if you’ve ever lived with somebody for a number of years consecutively, that’s a show. That’s a call-in show.
Jill DeWit:
Ah, ha, that’s really funny. Okay.
Jill DeWit:
Ty wrote, “First potential deal. Just how risky is doing a notary close on a larger deal? I have a seller who needs their money faster or it’s a deal breaker.” He says, like, “three or four days. It’s a 10-acre buy at $28,000 deal to sell for $80,000ish. Very confident on the numbers, county-verified ownership and no tax issues, legal access via gravel road to the property. I guess I’m asking how bad can it be? Anybody ever just roll the dice? Thinking a warranty deed would cover me, and I’m sure he would have no issues with this. Seller owns his main residence and is not giving any signs of being sketchy. By the way, the $28,000 wouldn’t kill me to lose, but I’d prefer to avoid it if possible. Basically if the consensus is there’s less than 10% chance of this going sideways, I think I would risk it.”
Jill DeWit:
I know what I would do.
Steven Butala:
I do too. I bet it’s the same thing.
Jill DeWit:
Okay. Wait. We’re going to give our answer and it’s going to be either, “Buy it,” or “Not.” That’s what his only choice is, buy it or not.
Steven Butala:
Well, after we answer the same way, I’m going to tell you what the risk is. I’m going to answer the question.
Jill DeWit:
Okay. Three, two, one. Buy it.
Steven Butala:
Buy it.
Jill DeWit:
And then get title afterwards, asking [crosstalk 00:04:13]
Steven Butala:
But before you do that, you have three to four days, and this question’s not super, super fresh. And when this airs it’ll be a lot more than three, four day from when we’re recording this.
Jill DeWit:
He’ll own it by then, I hope.
Steven Butala:
He could seek out, and maybe should seek this out in dis court and say, “Hey, what happened?”
Jill DeWit:
Yeah.
Steven Butala:
Here’s a real risk in that. There’s a few risks, but the biggest risk is, four days earlier, he did the same thing with somebody else. So, that’s a real serious concern that I would have. This is you’re the second or third person he’s done that with, and you’re going to end up with no property at all. And even the recorder might not know that.
Jill DeWit:
Right.
Steven Butala:
The assessor for sure will not know that, so that’s concern. Sounds like that’s not the case because the recorder … Now you’re 80, 90% sure, by talking to the recorder. The recorder would say, “What the hell’s going on with this property? I’ve had three of these here now.”
Jill DeWit:
True. That’s [crosstalk 00:05:03]
Steven Butala:
So you’re probably good there.
Steven Butala:
The second concern is there’s something pretty serious going on with the physical, actual property that you can’t see from Google Earth, i.e. some environmental issue.
Jill DeWit:
Right.
Steven Butala:
But that wouldn’t be necessarily … That’s not going to be smoked out in any way by a title process or any of that. So, guy probably just needs the money.
Jill DeWit:
Right. Usually-
Steven Butala:
So I would make him sign really quickly. I would make him sign a one-page agreement that says, “I’m happy to do this for you,” and I would put it in the closing package. I want you to sign off that there’s no liens on this property, and I want you to make a commitment to me. This is probably unenforceable, but you want him to sign it just so he knows what’s going to happen. I am going to go through title on this as soon as we close and you get your money, and I’m going to need you to sign a bunch of documents. It’s not to … correctly not break the chain.
Jill DeWit:
Mm-hmm (affirmative).
Steven Butala:
And if he was like, “Yep, yep, yep.” We’ve done deals like this.
Jill DeWit:
Yeah, yeah, totally. I just need the cash now. I will totally do that with you. Mm-hmm (affirmative).
Steven Butala:
So did I just take away the [crosstalk 00:06:04]
Jill DeWit:
No, no, that was perfect. No, no, it was good.
Steven Butala:
Oh, Jill’s quiet today. Today’s topic, land funding with integrity. This is the meat of the show.
Jill DeWit:
Oh, don’t worry, babe. I have lots to say.
Steven Butala:
I bet you do on this.
Jill DeWit:
Yeah.
Steven Butala:
It’s a hot topic right now in discord in our group.
Jill DeWit:
Oh, I just think it’s sad we have to bring this up, but we do. I just want to say, it even happens to us sometimes. People aren’t always in there for the right reasons. They don’t always follow through with what they say. So, your job is to be aware of it, trust your gut, and make sure you’re doing the right thing. That’s how I roll.
Jill DeWit:
And sometimes it takes time. It’s interesting how many people … We’re over it now. But even when we launched Land Academy, people are like, “Who are you guys? And how do we know you can successfully show me how to buy and sell land as well as you do?”
Steven Butala:
Tell me why you’re not a crook.
Jill DeWit:
That kind of thing. And then now we’re six, almost seven … We’re over six years? It’s six years now? I can’t even remember. Yeah, six years now going on year seven in the Land Academy with-
Steven Butala:
Just started year seven.
Jill DeWit:
… many successful people behind us that we have helped and taught, and have a track record of them going, “Yeah.” And again, some of them are making more money than we are, which is great. I love that. Go ahead.
Steven Butala:
Let me explain lending. Around 2009, I became aware of a new phrase, predatory lending, and it sunk Wall Street in the Great Recession, which consequently … Bond issuing at the root of it, there was lack of credit, which is a faulty bond issuings and ratings. Just shady stuff in Wall Street, and so it affected people with mortgages, and that’s not going to happen now, but a lot of it was because of subprime lending and predatory lending.
Steven Butala:
Come with me for a minute on what’s going on inside the head of a lender, both in a mortgage broker, who’s out to write loans, and a person who might own a mortgage company, and then the money guy behind them. There’s three people. If I own a mortgage company, I went off long before I hired any sales people and I went and secured a source of capital, and these sources of capital work like this.
Steven Butala:
“Hi, Mr. Mortgage Company Owner. You now have, congratulations, an unlimited source of capital, literally billions and billions and billions of dollars. All you have to do is get a great sales team together, have them issue mortgages for 3-1/2%,” or whatever the numbers are, “and you have all these sources of banks and people to go back …” I’m oversimplifying, but I, as a person who makes myself look like a lender, which I’m not at all, I’m just a triage person. All I’m doing is putting, through my sales staff, putting together the end user who needs a mortgage for their house and a bank who’s got tons and tons of money, access to money.
Steven Butala:
And the bank doesn’t even have their own money. They’re still borrowing it. So, if I can get a little spread between a 2% mortgage and a 3% mortgage I’m charging the end user … Wait a minute. You mean, my only job is to sign up people and get mortgages done? And if I do two, I make the triage on two mortgages, or if I do 200,000, I make the triage on that? It’s totally scalable? Let’s get started.
Jill DeWit:
Right.
Steven Butala:
So, it fosters this mentality of, I’ll do anything to sign more people up. And so we’re seeing that in our group. We’re seeing people, regular people, people that we’ve had on our show that are great at buying and selling land and have an amazing resume, way more impressive than ours, resort to things that are, in my opinion, not within the integrity. It’s not integrity decisions.
Steven Butala:
Here’s an example.
Jill DeWit:
Thanks.
Steven Butala:
On a Thursday call, Jill … For years now, we’ve been doing, why’d you do this deal? So people have, in our group on a webinar, submit deals to us, and we usually have a guest on, like Brandan Coon, or if there’s all kinds of other people in our group that help out, give us their opinions, another set of eyes.
Jill DeWit:
Yeah.
Steven Butala:
And in one case … well, probably several cases, but I know of at least one case, there are other members who just want to be a lender, just want to be a deal-funder. When we love a deal … This is all in real time, it’s live.
Jill DeWit:
Mm-hmm (affirmative).
Steven Butala:
Oh my gosh, we love this deal. Congratulations. You’re going to make a ton of money on it. You did a great job. You sent out the mail, you did everything you’re supposed to do, and they’re like, “Oh, my phone’s ringing.” And so within that split second, truly in real time, we’ve got people in our group that are calling them saying, “I’m going to loan you the money and here’s my deal, and don’t do it with anybody else.” It’s just, it’s out of bounds.
Jill DeWit:
A little bit.
Steven Butala:
This is a single example of … Now this is a lot of stuff going on, and you know, Jill and I’ve-
Jill DeWit:
It’s going to be everywhere. It’s-
Steven Butala:
So we have to make a choice with this and a lot of other stuff as leaders or as the founders of this group, should we get involved? Should we let it solve itself? And so, my biggest answer, and we talked about this a lot, our answer is to provide some direction and create awareness, or establish awareness. A lot of it happens on this podcast. That’s what this episode’s about. You have a ton of choices. Your job is to get … finding secure, great deals.
Jill DeWit:
Yeah.
Steven Butala:
And if you’re not comfortable with the person who’s blowing up your phone, just like in any other part of your life-
Jill DeWit:
Someone’s chasing you.
Steven Butala:
… cold calling you to lend you money, just because it’s 2% cheaper or a percentage cheaper, as your partner, please don’t do it. Find your own source of capital, which is why Jill and I created landfunding.com. If you submit it there, we will do our best to hook you up with somebody, including us, if it’s the right deal for us. The vast majority are not, but we will hook you up with somebody in our group who’s participating in that program. And there’s no guarantees here. We think they’re okay.
Jill DeWit:
Right. We’re doing our best. So-
Steven Butala:
Please be aware of it.
Jill DeWit:
Uh-huh (affirmative).
Steven Butala:
And if you’re in our group just to lend money, don’t be a ding-dong. Please. The vast majority, on both sides, whether you’re a lender or an investor, everything’s fine.
Jill DeWit:
Exactly. Its really small, but we want you to be aware.
Steven Butala:
That’s it.
Jill DeWit:
That’s it.
Steven Butala:
And we can’t police this.
Jill DeWit:
We can’t what it?
Steven Butala:
Police it.
Jill DeWit:
Oh yeah.
Steven Butala:
And we don’t want to.
Jill DeWit:
Yeah, no.
Steven Butala:
We want everyone to make … We want to have fun and make money, just like we-
Jill DeWit:
You know what I love? Because we’re all running our own companies. We’re all running our own companies, which is nice, so you can say “Yes,” you can say “No.” It’s beautiful. Happy you joined us today. Five days a week, you can find us here on the Land Academy Show.
Steven Butala:
Tomorrow is Jack Thursday.
Jill DeWit:
And the show is What’s Possible, What’s Fair. You are not alone in your real estate forgetfulness.
Steven Butala:
You are not alone in your incorrect script writing, and Jill, you’re not alone in helping.
Jill DeWit:
I’m great.
Steven Butala:
You’ve been saving me all week.
Jill DeWit:
I’m looking for my notes. I know. You sometimes pooh-pooh my note-taking and right now you’re really happy with my note-taking. That’s really good.
Steven Butala:
I never pooh-pooh your note-taking.
Jill DeWit:
Okay. Thank you.
Steven Butala:
It’s always a better show with notes.
Jill DeWit:
Aw, thank you very much.
Steven Butala:
See all my notes here?
Jill DeWit:
That’s true. Well, then, now we see the problem.
Jill DeWit:
Thank you for tuning in. We would love to connect with you tomorrow on Clubhouse. Join me, or us. It has been every Thursday. Hold, please. It’s going to be going to the first and third Thursday at 1:00 Pacific Time in the Land Investing Club. If you’re not sure what’s going on, just go to Clubhouse, go to the Land Investing Club, and the dates are current right now, so you can follow me there.
Steven Butala:
And follow the club so you’ll get notifications.
Jill DeWit:
Yeah, exactly. We are Steve and Jill.
Steven Butala:
We are Steve and Jill. Information …
Jill DeWit:
And inspiration …
Steven Butala:
… to buy undervalued property.
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