Transcript:

Steven Jack Butala:
Jack and Jill here.

Jill K DeWit:
Howdy.

Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.

Jill K DeWit:
And I’m Jill DeWit, broadcasting from the Valley of the Sun.

Steven Jack Butala:
Today, Jill and I talk about the pros and cons of partial land ownership.

Jill K DeWit:
Are there pros?

Steven Jack Butala:
There are.

Jill K DeWit:
Okay.

Steven Jack Butala:
There’s a bunch.

Jill K DeWit:
I can think of one situation where there’s a pro, and I’m going to save it and see if you cover it, and if not I’ll throw it in at the end.

Steven Jack Butala:
There’s an equal number of pros and cons-

Jill K DeWit:
Huh?

Steven Jack Butala:
… that’s the fastest… Well, here’s a little tea, a little test, a little taste. If you own half of a property, you only have to come up with half the money. If you own 1/3, and on, and on, and on.

Jill K DeWit:
That’s my pro.

Steven Jack Butala:
It’s a great way to…

Jill K DeWit:
On the buy side. It’s not a pro on the sell side.

Steven Jack Butala:
On the sell side, you’re cutting it all up.

Jill K DeWit:
Like, great now I have to share half the profits. That stinks.

Steven Jack 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. Last year, a ton of people, Land Academy members actually-

Jill K DeWit:
Well actually, 2021.

Steven Jack Butala:
Two years ago?

Jill K DeWit:
Yeah.

Steven Jack Butala:
… needed help getting their mail campaigns in the mail, which I understand. There’s a lot of moving parts to that. We created a concept called Concierge Data Plus, which is an offshoot of our mail company, Offers2Owners, to help you get the amount of mail that you think you need to get in the mail monthly, and keep it on track so you can hit your goals. Go to Support@Offers2Owners.com, and check it all out. Or, just call those guys. They’ll tell you exact… We have a lot of customers utilizing this tool and doing deals.

Jill K DeWit:
Can I just add clarification for new people real quick? Here’s the big picture, this has been a thing forever, since people started joining Land Academy and following what we do, like “How the heck are you doing that?” There’s a mail merge involved. There’s getting the data, but there’s scrubbing the data, there’s pricing the data. I don’t have a PhD in Excel like you do, Jack, so this is why we solved this. We are letting you use our team to help you download, scrub, pull comps so you can price the mailers how you want. You tell them what percentage you want, and then they price it. Then they get it in the mail for you. It’s really awesome. It just takes that work out of it for you.
If it’s something you’re not into or not comfortable with, or you’re just frankly too busy, that’s the greatest thing for me. I really thought that the majority of people that would be using Concierge Data, which is a product of Offers2Owners.com, number two Owners, would be people that are just like, “I can’t handle this. This is just too much for me to grasp right now and figuring this all out.” But no, it’s our heavy hitters. The majority of the users are people that have been with us for several years. They’re like, “I’m just done doing my own mail. I use Concierge Data. It saves me time. It keeps me on track. It rocks.”

Steven Jack Butala:
We used to be the biggest customer of Concierge Data, and we no longer are not.

Jill K DeWit:
Yeah, now we’re not.

Steven Jack Butala:
By leaps and bounds we’re not.

Jill K DeWit:
There’s other people sending more mail than us, and it’s awesome.
Okay, so back to the question. Will wrote, “I have a counter offer on a commercial property. Is there someone that could chat with me about some of the due diligence steps, and how they would or should be different for a commercially zone property?” Well, there’s an easy answer, [inaudible 00:03:36] people have said, “Put the details here.”

Steven Jack Butala:
They did.

Jill K DeWit:
Okay, good. That’s all you have to do. There’s so many of us, myself included, have deals like this going on all the time that if you want to say, “Is this normal? Is this normal? Is this normal? Is this normal?” We’ll go, “Yes, yes, no, weird.”

Steven Jack Butala:
I can chat-

Jill K DeWit:
And help you.

Steven Jack Butala:
I can chat about it here with you too.

Jill K DeWit:
Cool.

Steven Jack Butala:
Commercial property comes in all different shapes and sizes, as all land does. Commercial property could be, depending on how it’s zoned, it could be zone agricultural or general, and so there’s a lot of uses for that kind of property. Everybody loves agricultural property because you can use it for so many different uses. All property originally was agricultural property. With that comes very loose rules, do whatever you want out there, it’s okay.
Well, now there’s industrial property and office use property. It’s all based on use. A lot of commercial property now has been master plan zoned where it’s zoned for one specific use. It might be zoned for light industrial, or warehouse, or heavy industrial. It might be zoned… Jill and I did a deal where a property was very specifically zoned for hotel/motel. It was in an interstate intersection or off ramp. It really comes down to how that property’s going to be used, and then finding [inaudible 00:05:02] compared property that’s either for sale or sold, and assigning it a value that where you know you can make some money.
I love commercial property. I love it.

Jill K DeWit:
Another thing I was going to say too, Will, about the due diligence, that’s usually a more lengthy, more time consuming… On a commercial type of property, my buyers traditionally ask for a 45-day due diligence process where they might be doing everything from traffic count, to getting their own soil analysis, to figuring out where the culverts are going to go kind of thing with the city. Fill in the blank. That kind of thing is not nuts.
I price it well, and they are that serious about it that they’re paying for that stuff, by the way. That’s usually how we work it out. There’s all kinds of variations to that. Just like I said, just like you did, put more specifics. Discord is a closed environment, and we will help you.

Steven Jack Butala:
It all comes down to use with commercial property. All of it. It starts and ends there on a buy and the sell side.
Today’s topic, the pros and cons of partial land ownership. This is the meat of the show. Every property that Jill and I buy, a vast majority of the properties that she and I buy together and then resell, are in an LLC that I own, an LLC that she owns. There’s LLCs that we both own. There’s all types of partial ownership that can come in all different shapes and sizes with land.
In general, I believe partial ownership is a great way to spread the profit and spread out your acquisition costs, and get another set of eyeballs on the deal that you’re doing. Jill and I, not so much anymore, but we used to have to agree. We had an unwritten rule. We’d both look at the deal and say, “Yeah, this is a good deal,” or it’s not. Not so much anymore. Jill just decides now because honestly her track record’s a little bit better than mine acquisition-wise.

Jill K DeWit:
Thank you. Appreciate it. Girl power.

Steven Jack Butala:
I don’t know if it’s gender or girl power, or lack of empathy on my part, or age, or what-

Jill K DeWit:
Or maybe it’s lack of empathy on my part because I was like, “Nope, not buying it. Nope. This is it. This is a take it or leave it number.”

Steven Jack Butala:
Apathy, not empathy.

Jill K DeWit:
Oh.

Steven Jack Butala:
No matter what, apathy is involved in I don’t know to what degree in both of our products.

Jill K DeWit:
That’s good.

Steven Jack Butala:
Partial ownership is great that way. Where we run into partial ownership that’s not so great, and this happens probably once a month at least, you send out a bunch of mail, a seller calls back real excited and says, “I’d love to sell this property. I own it with my two sisters and my brother who has been in Mexico for 28 years, and sometimes he calls me back and sometimes he doesn’t.” So now, you have four owners. They usually inherited it.

Jill K DeWit:
Yep, that’s how it happens.

Steven Jack Butala:
Sister A is all ready to sell it. The other two sisters, they don’t care, but you know where to reach them. Then there’s the brother.

Jill K DeWit:
And we don’t know where he is. He doesn’t have power in the evening, so good luck there too.

Steven Jack Butala:
This is actually a loosely-

Jill K DeWit:
He’s in remote Mexico.

Steven Jack Butala:
… based on a real example that we’ve experienced.

Jill K DeWit:
Yeah, exactly.

Steven Jack Butala:
This story. So, you know you’ve got a perfectly great piece of property, an amazing real estate deal.

Jill K DeWit:
I hate it when this happens.

Steven Jack Butala:
And you’ve got partial ownership standing in the way.

Jill K DeWit:
Yeah.

Steven Jack Butala:
All they had to do was, during the estate scenario, put it into a trust or with an executor, and hopefully Sister A, because she’s the more responsible one, is the executor of the trust. She can sign for it. The trust sells the property to Jill. They get a check, and then they can go chase Brother D down-

Jill K DeWit:
Maybe they will, maybe they won’t.

Steven Jack Butala:
Yeah. Maybe they’ll find him. Maybe they won’t work too hard at it.

Jill K DeWit:
Yeah, exactly. Would’ve given you the money, but we don’t know where you are.

Steven Jack Butala:
To make it worse, you can buy, on the con side of this pros and cons sheet here, you can get 10, 20, 15… You can syndicate a real estate transaction. You’ve got 100, 200, 300 donors just like let’s say Tesla who has thousands and thousands, and tens of thousands of shareholders. To organize that, you need to have a ring leader, and that’s what property managers are. If you develop a land trust, someone’s go to manage the trust.
Partial ownership is very powerful. It’s a lot easier to raise $5.00 from 25,000 people than it is $25 million from one person. Or however the math works. It’s powerful, just like leverages, just like loaning money or borrowing money, and loaning money can work great. You just can’t abuse it. You have to have a plan, and you need to point people to make decisions for the rest of the group.

Jill K DeWit:
The recent deals that I’m involved with… Number one, when I do deal funding, it’s already right there, partial ownership. Loosely. Usually, I’m putting up 100% of the money but we’re splitting the profit in our contract, so the deed is in my name, so I kind of own it, but we have an agreement that we’re sharing it. So, there’s that. The other thing is, sometimes we have deals going on, like right now, where I’m one of three, one of four, because it was a bigger deal and it just made sense. Everybody feels good putting in $100,000.00 versus putting in $400,000.00 by one person. I’m like, “I’m great with that.”
Then of course, the con is, “Well great, now I don’t get as much return on my money, but I didn’t have as much risk.” [inaudible 00:10:53].

Steven Jack Butala:
You don’t know before that happens, too. It’s really interesting, the psychology behind if there’s a $200,000.00 piece of property and you sell it for $400,000.00, on the buy side if you buy it, you get deal funding. Somebody writes a $200,000.00 check. You post it for sale. It sells in 35 seconds. And it’s like, “Well, if I knew it was going to sell in 35 seconds I would have done it myself, and I would have kept the $200,000.00 profit for myself.” But you don’t know.

Jill K DeWit:
You don’t know.

Steven Jack Butala:
Then maybe it takes a year and a half and you’re like, “Wow, I’m glad that I deal funded that.”

Jill K DeWit:
Yeah, that’s one right now. I think we’re going on two years on this deal. It wasn’t my deal. I was the last person to come in and throw some money in there, but that’s okay.

Steven Jack Butala:
Partial ownership, I’ll kind of end it on this, is an amazing tool. You just have to use it correctly, whatever that means for you, and not get in your Brother D situation.

Jill K DeWit:
Can I add one little thing?

Steven Jack Butala:
Sure.

Jill K DeWit:
The best thing you can do in this situation too, the one like I think we’re one of four or five, I can’t remember what it is seriously, parties in this deal because it’s a big deal, is you can’t all have all five. You can’t expect all five to be agreeing on it, so you have to pick one or two people to call the shots. Everybody agrees on that. So, we have that in writing, that two of us, I’m one of them, get to call the shots as far as if we get a new agent, if we change the price, if we accept a price. Something like that, you do have to spell that out now. It’ll make your life much easier.

Steven Jack Butala:
Yep.

Jill K DeWit:
The four people that did this, you’d have one person calling the shots in that family.
Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.

Steven Jack Butala:
Tomorrow is Jack Thursday, and since it’ the beginning of January here, I’m going to talk about confidence. You are not alone in your real estate ambition.

Jill K DeWit:
I look forward to tomorrow.

Steven Jack Butala:
I would be nowhere without some element of confidence, and I don’t think that Jill would either. I couldn’t get a girl like Jill if I didn’t have any confidence, first of all.

Jill K DeWit:
Aw, well thank you.

Steven Jack Butala:
Confidence is so underrated and so not talked about enough, in my opinion.

Jill K DeWit:
That’s good. That’s really good. I feel like we talk about it. Women talk about it, but maybe it’s just my own little inner circle.

Steven Jack Butala:
I’m going to have some questions for you tomorrow then.

Jill K DeWit:
Oh, good. I would look forward to that. Hey, thank you for tuning in. By the way, we would love to connect with you live on Clubhouse. It’s like a radio show on your phone. So, check it out. On your phone, whether you’re Android or Apple, doesn’t matter, find the Clubhouse app. Download that, log in. Join the Land Investing Club. Follow that. Follow us. You can connect us the first and third Thursday of every month at 12:00 Pacific time. Again, it’s live. You get to ask us questions. It’s a whole lot of fun. We really enjoy it.

Speaker 3:
We are Jack and Jill.

Steven Jack Butala:
Information-

Jill K DeWit:
… and inspiration.

Steven Jack Butala:
… to buy undervalued property.