Transcript:

Steven Jack Butala:
Jack and Jill here.

Jill DeWit:
Hello.

Steven Jack 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 Jack Butala:
Today Jill and I talk about why land ownership is ideal against 2023 inflation.

Jill DeWit:
I sleep really well at night. I always have.

Steven Jack Butala:
Yeah, me too.

Jill DeWit:
I always have, the way we buy and sell land. There’s nothing better. I don’t care what it is. Even over having a safe full of precious metals, seriously, which is good to have too, don’t get me wrong. But having land, it’s just like, wow. It’s different.

Steven Jack Butala:
There’s no feeling like it, quite like owning a bunch of land.

Jill DeWit:
Yep. So even if I complain, “Oh, it’s not selling fast enough,” or you’re complaining it’s not selling fast enough, hold on a moment. Let’s take a step back and realize what’s going on here. You’re in a good spot.

Steven Jack Butala:
Before you get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free. Last year a ton of Land Academy members came to Jill and I needing extra help to get their blind offer campaigns in the mail. So I took a look at how we were personally sending out mail with our key employees and ultimately made the same people available to Land Academy members to get their mail campaigns out. We now call it Concierge Data and we launched a new product recently called Concierge Data Plus. It allows you to send out or outsource your entire mailer to offers to owners. Give us a call or actually just go to offers, the number two owners.com. Poke around and check it out, see if it’s for you.

Jill DeWit:
Cool. Kevin wrote, “Hello. Newbie question. On the Zillow sold comps, why might the time between pending sale and sold be a long time, three months plus? And does that potentially make it a worse comp to use?” I have one reason, right now, Kevin. That’s manually entered by a real person who did the listing. That’s it. So it’s not automatically marked sold or pending. I’m surprised they even put pending in there. Some agents don’t even do that. They’ll just put listed, price change and then sold because they’re busy. They’re doing other deals, too. So I take that with a grain of salt because it is totally, like I said, a manual entry if used it all.

Steven Jack Butala:
If you list a piece of property with a real estate agent, they’re going to put it on the multiple listing service, the MLS, and they’re very regulated on how they input the data. If you’ve ever posted anything on the MLS or been involved in it, it’s a one day process. So there’s a lot involved. And they’re required by their broker and all kinds of stuff so that when it goes under contract, it goes to pending. When it’s sold, it gets removed from the MLS or it gets marked sold. That is absolutely not the case with Zillow. Zillow as a for sale by owner, we can put stuff in Zillow. There’s no regulations about taking it off the market when… Jill’s exactly right. There’s no rules.
So very often people just leave it on there and it’s not for sale at all. Or they’ll post something that’s fictitious. So you have to be careful about how you use Zillow and how you look at the comparison values. The exact same thing is true with Land Watch, exactly the same thing. So there’s MLS places, multiple listing service ways to post property, and then freeform, user content driven. Redfin is an IDX feed just like realtor.com. Those are all real estate agent driven with rules. I like to use all of them.

Jill DeWit:
You know what, I’m sorry, I have to just say I don’t mean to disagree with you, but I have to disagree with you on something. Yes, they have rules, but once again they’re people. Do they make mistakes? Hell yes. How many times have you seen, you go, “Wait a minute, there’s no way that property sold for that price.” And you know why? Because a person typed in an extra zero and they left it there.

Steven Jack Butala:
Or left a zero out.

Jill DeWit:
Or something like that too. Because why? They’re an agent. Sure, their broker has rules, but do they check them? Nope. Do they make mistakes? Yep. So it happens. So I’m just back to my thing. It’s real people. I look for the general consensus. All right, more than half of them, here’s the situation and more than half of them, whatever. That’s what I would recommend. So just know that. Thank you, Kevin. Good question.

Steven Jack Butala:
Today’s topic, why land ownership is ideal against fighting 2023 inflation. This is the meat of the show.

Jill DeWit:
I would like to start.

Steven Jack Butala:
Sure.

Jill DeWit:
And like I was saying, what a great place to be, especially right now, owning a bunch of land the way we do, where we know how you bought it. It was very inexpensive and you paid cash for it or somebody paid cash for it. Maybe your partner paid cash for it. Whatever it is, it’s paid for. There’s no financing, things like that. So if it takes three weeks or three months or you’re waiting for the summer, it’s not a bad place to be. And I’m going to argue that right now we’re watching the… It’s like the stock market. You win money When there’s all this volatility, that’s when people make money. If it’s just constant, it’s hard to make money in these environments.
But in our world, I’m getting a little excited because I’m watching better deals happen. We’re buying them in places that are even a little bit better than it was six months ago. And I’m selling them just fine because there’s other people like me out there who are looking for some more land, other investors. That’s my favorite transaction is when I buy from the seller and then I queue it up and sell it to another investor because they have a long-term plan or something like that. It’s great.

Steven Jack Butala:
So what’s inflation? Inflation is the increase in price or cost of goods and services. If you look at the pure definition of that, anywhere, that’s what it is. A loaf of bread three months ago costed less than it does now. Inflation got ahold of it and a loaf of bread costs more. Next year, it’s a pretty solid argument that a loaf of bread’s going to cost more in 2023 than it does right now, which is the end of 2022.
So why is land a good way to hedge that off? So if I bought a piece of property this year for $100,000 and all the price of everything is going up around me, everything, cars, precious metals, stock in the stock market, which are commodities that go up and down depending on what happens, those are all very affected. The components of those cars cost more. They’re subject to inflation. All the things that companies do in the stock market, they’re subject to inflation. Prices go up, they go down whatever they’re making or selling, they’re all subject to that. Your lonely little piece of land that you paid $100,000 for is subject to none of that. Nothing, with the possible exception of the tax bill might go up, which is relatively insignificant in most or all cases.
And so what does it cost to really own land? Nothing. The only thing it costs is the fact that you put a bunch of money into a piece of land and there maybe would’ve been something better to put it into. But we’re here. We’ve created this environment to make sure you don’t overspend on land.

Jill DeWit:
True.

Steven Jack Butala:
In the greatest of times you’re still buying land at 20 to 30% of its actual retail value.

Jill DeWit:
True.

Steven Jack Butala:
So now when you spend a $100,000 on a piece of property and do nothing except stare at it, in our case we never go see it at all. It’s just a number on a computer screen and it’s worth $120,000, $130,000 the next year, subject to all this inflationary nonsense that’s going around, it’s a great investment.

Jill DeWit:
Well if I paid a $100 for it’s probably worth $350.

Steven Jack Butala:
I just checked interest rates on mutual funds because Jill and I are constantly like everybody wondering where we should put our money and why and filling up non-risk buckets and risk buckets and all of that.

Jill DeWit:
That’s good.

Steven Jack Butala:
You can effectively get a mutual fund for 4% to 5% right now, 4% let’s say. If I buy a piece of property for $100,000, that’s worth $200 when I buy it, and then the value of the property either holds or goes higher on that $200,000 valuation that I just spent a $100,000 for, what’s it going to be worth next year? $220, $230. And I have $100,000 into it and it costs me nothing to operate it. If you’re bored, please go on to Google and ask what the best, just type in questions like this. Best thing to buy during inflationary times, land.

Jill DeWit:
That’s a good one. I haven’t done that. I will Google that. That’s cool. But we watch. Nobody argues this. Everybody agrees. Who always makes the most money? Oh, the guys that own real estate.

Steven Jack Butala:
And land specifically.

Jill DeWit:
Yeah, exactly. Yeah, true. I’m not dealing with tenants that don’t pay and need to get evicted. Imagine all that too, by the way. We haven’t even touched on that. That’s one of the beautiful things about land .

Steven Jack Butala:
Houses are subject a little bit more to inflationary issues. But houses are great too, especially if they’re rented out and especially if you paid cash or if you have a fixed mortgage.

Jill DeWit:
That’s a lot of it.

Steven Jack Butala:
Those are really good inflationary hedges, also.

Jill DeWit:
Yeah, thanks. Happy you could join us today. Five days a week. You can find us here on the Land Academy Show.

Steven Jack Butala:
It’s [inaudible 00:10:11] Jack Thursday and I’m going to talk about why creating a subdivision is so alluring. You are not alone in your real estate ambition.

Jill DeWit:
It’s funny, so many people come in the LAN Academy and they’re like, “I need to do something. I need to do something more than just buy it and sell it.” I’m like-

Steven Jack Butala:
I know. Why is that?

Jill DeWit:
It’s the silliest thing. I don’t get it. I don’t get it.

Steven Jack Butala:
I think you should expound upon that. Because I’ve always wondered this too. I think that’s what it is.

Jill DeWit:
Well, I think because a lot of people come to us from other real estate. They’re professionals in other real estate niches and they realize that this is a way to buy property or any kind of a real estate thing, whether it’s an apartment building or a piece of land in a better way. And they’re so used to doing so much more work, they don’t quite get it. So they’re looking for something else to do. So if that’s you, I personally don’t have that problem. I personally like to buy a beautiful piece of property with nothing on it, sell it and let the money go into the bank and then do that again. And then all the while, hm, I might be away for Christmas or I might be in my RV for two months. That’s how I like to roll. I don’t need to do more to it to try to squeeze out a little more money or give myself something to do. It’s kind of funny. There is some money you can make in it and he’ll talk about.

Steven Jack Butala:
I think the source of confusion is in the traditional real estate, there’s two components. There’s that balance sheet component and the income state component. I’ll use a house as an example. You buy a house for cash and you rent it out. Let’s say you buy a house for a hundred grand, you rent it out for a thousand dollars a month. You write a $100,000 check and then you have a theoretically a $1,000 check coming in every month in the simplest of terms. While they’re paying, while the tenant’s in there paying you whatever, $12,000 a year, the value, the balance sheet of the whole operation is going up for 3, 4, 5, 10% a year, whatever the market dictates. So there’s that dual component. So you’ve got income coming in and you have equity being built all at the same time for doing relatively little theoretically. It’s never little. It’s always a lot. Yeah.
With land, it’s a single component scenario. It’s just a balance sheet. But you turn that into an income statement. I’ve been arguing this for years and years and years and you’re right. People have a difficult time digesting this.

Jill DeWit:
Exactly.

Steven Jack Butala:
Your balance sheet becomes your income statement. They become one because you’re just constantly buying and selling land. Your balance sheet is a combination of cash and land that just keeps getting bigger and bigger and bigger.

Jill DeWit:
Exactly. Thank you. Hey, thanks for tuning in. We’d love to connect with you by the way, on Clubhouse. It’s awesome. It’s your way to go on right now and talk to us live when we’re there. So join us every first and third Thursday at 12 o’clock Pacific time in the Land Investing Club. We are Jack and Jill.

Steven Jack Butala:
We are Jack and Jill, information-

Jill DeWit:
And inspiration-

Steven Jack Butala:
To buy undervalued property.