This is episode number 2,037 and this episode’s topic is called, Does The Presence of Water and Sewer Add Value To Any Given Land Acquisition? By the way, the whole theme in this episode is adding value to your land deal. What’s the deal with utilities? Do you them or do you not? 

Let me tell you. I like to shower and I like to brush my teeth. I like them. What about you? This is good. This is funny. I want to play a game. I’m going to answer for women and you’re going to answer for men. You tell me whether it’s a deal, you got to have it, or no, I could deal without it. Ready? Toilet.

I think it’s important to have water and sewer without getting personal at all.

Guys can go outside. Never mind. Maybe this isn’t a good game.

She wants to take it to a place that shouldn’t go. I’ll say this. This is personal. I have to have a reasonable temperature shower every single day or the world’s not right.

We have talked about this. This is good. We’re going to share a little personal information.

We live in an RV right now.

It’s great. As you can see, we’re not roughing it, but we’ve talked about tent camping, putting things on our Jeep, and getting a pickup with a camper on the back so we can go out and be off the grid, need no hookups, and need nothing. I could go for a couple of days and Jack said, “No. I don’t know.”

Here’s why. It’s because I never knew this about myself. I don’t walk around beating my chest saying I need to take a shower or I don’t. Stuff happens to most men and then they realize, “Yes, that’s not what I want.”

Like marriage and kids?

Yes. That’s exactly what I mean.

I changed my mind.

We had a rig before this, one of those little Mercedes Sprinter.

I gave back a dog once, but that’s about it.

Those Mercedes look great on paper. They get twenty miles to the gallon theoretically and we had one of those for almost a whole season and among all kinds of issues with that rig, what pushed me over the edge was the shower and it wasn’t that bad.

It was a great shower.

It just wasn’t like what we have now. We’re in Newmar’s Dutch Star now, and I’m not sure what’s better than this, but they have very different price points and different camping experiences. What I learned in my mid-50s was that I needed to have a reasonable shower experience just to be human. It’s not a luxury for me. It’s a nest to happen.

That’s what the hats are for. Hats and a ponytail. Get over it.

We’re gender opposite. The show’s about water and sewer. Having utilities present in my way or at least knowing getting them there and what it’s going to cost is pretty important. Is it imperative? No. I’ve done thousands and thousands of deals without thinking about what has to happen from a utility standpoint. It depends on the piece of land.

I’m going to add it here, too. When we get into this, I’m going to make sure we talk about does that changes my offer price and buy because that comes out a lot in Land Academy. I got it back and the guy said it’s worth way more because there’s a well and septic. Even though he didn’t build on it, this is what’s there. How do I price it now? We’ll cover that, too.

Starting Your Land Investing Career

We’ll talk all about it. My big beef with this topic is that very often, somebody who’s new to buying and selling land brings in a deal and they let the utilities, wag tailways like a dog. Too much time gets spent on this in general. I know Jill agrees with this. With perk tests and all kinds of stuff. We’ll talk all about it. You just can’t let this be 80% of your due diligence. Each day on the show, we answer a question from our Land Academy member Discord forum and we take a deep dive into land-related topics at your request. Let’s take your question, Jill.

You just can't let utilities be 80% of your due diligence. Share on X

Mike wrote, “Hi, everyone. We are Mike and Ava. We live in southern California and we have three daughters or little ones, 5, 3, and 1. Mike works full-time as a civil engineer. I work full time and Ava stays home with our beautiful girls. We have experienced wholesaling and flipping houses. I came across a land lead a few months back, which ended up falling through, but the numbers on it were amazing.”

“Buy for $15,000, sell for $45,000 and it opened my eyes to land flipping. Here we are. We are ready and eager to start doing deals. We would love to connect with as many of you as possible. For the more experienced investors, if you were starting your land investing career over, what is my advice you would give to yourself?”

This is the second question in a week with people introducing themselves. I have a ton of choices about which questions I put on here and this is the second one from new people who are engineers and who fell into this backward. It was a logical next step in their career or a great way to add. It just makes sense to engineers, for my reason.

I’m a former accountant, and Jill’s career was as a salesperson. I bet 50 to 60, maybe even higher, the people who join the Land Academy and its works are in STEM-type professions, former, mostly engineering, or career sales. What I’m saying is if you are in a STEM profession and you’re seeing the brick wall ahead of you with the W-2 income and understand real estate or if you’re a career salesperson and can see the end of it, Land Academy is the place for you.

Jill and I have had those careers and we’ve been exactly where you are and we’re here now. We know how to do that every single step of the way. You guys are very welcome to this group. If you were starting your land business, Jill, and your career over, what advice would you give yourself if you were a young 39-year-old Jill?

I would do bigger deals right out of the gate, not worry about the money and use other people’s money if I didn’t have the dough to do it. That’s it. That’d be the one thing I would do differently. I wouldn’t stare at my bank balance and say, “I’ve got $50,000 right now to spend. I want to buy this and I also want to buy that.” This is true of what was happening back then, and I had to decide which one was in a dire situation.

Put the deals in priority because I don’t want to lose them all, too. I say, “If I hurry up and sell this one, then I could afford that and that.” It was quite a bit of juggling and again, I was looking at what I could afford instead of saying, “Let’s look at what I could make a $100,000 on.” Buy for $40,000, sell for $150,000 kind of thing. Let’s look at those deals and then I could figure it out. That would be the one thing. What about you, Jack? What would you do? If you started all over again, what advice would you give yourself?

There’s not a lot I would change about buying and selling land. What I did was, and this is wrong on my part, beat my chest with pride about not needing any type of leverage. I’m saying what Jill said but with a different caveat. I used to walk around and say that we’ve done this without borrowing a dollar, which is true.

I did the first land deal. I don’t remember the numbers. It’s in the eBook. I think I bought it for $4,000 or $8,000 and sold it for $16,000 to $20,000 very quickly and very easily off of eBay. That was the seed capital and then I closed a huge deal as a commercial real estate agent and allocated about $80,000. We’ve never put money back into this. The top line is staggering.

It approaches $100 million in sales. I can’t look back and say, “I should have done something differently.” The choice that we would have had, the other direction we could have gone is to align ourselves with the large developers that need farmland, publicly traded developers Shea Homes, and buy property for them, which we did.

Jill and I tried that and I cut my teeth buying and selling nursing homes as an outsource for publicly traded companies a very long time ago in the early ‘90s. It’s very hard to represent somebody else. It’s very easy, for whatever reason, for you and I to represent each other as partners. We have the shortest meetings in the world.

Should we buy it? No? Okay. That’s not what happens when you go buy farmland to be converted into a subdivision. That would have been the other path that we would have taken and I don’t think we would have done financially what we do. It takes two years to do a deal and the whole thing, we’re deal junkies, both of us.

We would have ended at the same spot saying, “Screw it. We’re doing our deals.”

Buying desperate squares for $1,000 and selling for $3,000 is what Jill said she would have avoided, but at that time, it was very profitable and it was the right decision, I think. Now, it’s harder. There are a lot of other people in this space, largely because a lot of people are incorrectly teaching this and that’ll work itself out.

Now, we do maybe two or four deals a month, and we try to make a $100,000 deal. That would be my advice for you as an engineer and with house flipping experience, it’s hard to make that money consistently, wholesaling houses. If you are wholesaling the house and listening to this, you should abandon it. Forget about the implications of wholesaling, which Jill and I don’t agree with, and we’re pretty loud about it.

Water And Sewer

I’m not talking about that. I’m talking about the actual money. You should buy a piece of property with a partner if you don’t have the money, resell it, and control the deal. It wouldn’t change much. I would have met you earlier. That’s what I would have changed. I have control over that. This episode’s topic is, does the presence of water and sewer add value to your land acquisition? The answer is, maybe.

Depends on what you’ve spent on it.

What’s important is you know the situation of the water and sewer.

Can we start from the beginning? Let’s start back and then just quickly explain the situation. I’m explaining it/asking a question at the same time because I think I know where he’s going with this, but I didn’t write the topic. 

I didn’t either. These topics all week were written by all our staff okay. The customer service. These are popular questions that people call in with.

I think what this topic is, I’m not putting it in. It’s like I’ve identified a property. The person wants to sell. They have water and sewer. How do I now value this acquisition? It also says, does it add value? The answer is yes, it does add value. Let’s just start with that.

Here’s my start with this topic.

The question is, do you put it in? No, but is it if it’s there, do I still buy it? Yes and how do I value that?

Water and sewer are always possible. The question is and the title should have been, does the value of installing or making present water and sewer exceed the value of the deal? You could be looking at a piece of property that’s surrounded out here in the northwestern part of the country where we are right now. You have ten pieces of property, they’re all five acres each, most of them have houses on them and they’re happily flushing the toilets and taking a shower in the morning.

That is an indication to me that the well that they’re on whether it’s shared or specific, the water table is at a reasonable level and a traditional septic system with a tank in a field is possible and economical for the value of the property. That’s what you’re asking yourself. There are places in the middle of the desert where I’ve seen people drill 500 or 800-foot wells.

That’s crazy on a $4,000 piece of property! That doesn’t make any sense, but it’s possible. Does the presence of these utilities add value? Probably, but what’s important for you to know as a land investor is does it makes economic sense. If the answer is no, I can get water in the desert. Doesn’t it matter? Every people is trucking it in because it’s too expensive to do as well.

For me, as a land acquisition person, it now justifies a $4,000 purchase price. No one’s ever going to drill a well. It’s too expensive. The cost of drilling a well goes up, probably more than the actual land value. Can you put a septic system in there? No, but you can dig a hole and use it the way our forefathers did. That’s what the value of that property warrants. I don’t want to get all economic here.

What ends up happening is we see a lot of people who bring up deals on our Thursday webinar, our closed webinar for everybody in Land Academy and all they talk about is how the property failed the perk test and whether that should kill the deal. First of all, why are you doing a perk test? Are we Civil Engineers?

I’m trying hard to find something wrong with this to justify making this decision and buying it because I’m afraid. That’s what that is.

You’re my favorite person.

I know that. Maybe not now.

No. I’m saying it’s serious. Are you trying to kill your deal?

That’s the thing. You don’t need to do that. Let’s back up. I’m going to cover my three little scenarios. 1) Do I put it in? No, you don’t. You buy the land in the condition it’s in, and you’re going to make money in the condition it’s in. That’s scenario number 1. 2) Goal, great. This particular property, Jill, happens to have water and or sewer access and or a septic system already. Now, what do I do? Great. You’re still buying the property at a great price in the condition it’s in and then how much value does?

How do you assess the value of that? That does vary depending on the area, but it does make a difference. It is worthy of you saying, “I heard you,” and because of this, it is worth double my offer because you’re going to just sell it for double what you thought you were going to get for it. That all makes sense. Instead of buying it for $4,000, you’re now buying it for $8,000 or $10,000 because now it’s a $50,000 property. We all agree on that. I guess that’s for the two scenarios. I never put it in. It’s already there and that’s it.

That’s a mic-drop moment, I think. You decide, do utilities or access to utilities increase the value of the land? Probably, but it doesn’t increase it more than any of the other properties that are relative to it in that area because they all have it too. Especially on a on a sewer in a city system. You should spend less than ten minutes on utilities in any given land acquisition.

You should spend less than ten minutes on utilities in any given land acquisition. Share on X

I think that’s where you were going.

This is my gripe. It just becomes this black hole. Yes, septic could go there, but it’s going to be a little bit rocky. The back half of the property’s perk tested, but this property looks all around what’s going on. That’s going to tell you 98% of what you need to know. If all the properties around it are on a well and a septic system, you’re good.

Jack wrote this topic clearly to criticize about due diligence.

Yes. I did.

Let’s hold on a moment. Let’s take a step back. Jack’s big point he’s trying to make is, yes, it adds value. Stop spending too much time trying to perfect it. You shouldn’t be all done with your due diligence, have bought the property, and are ready to sell the property, having done everything but book the appointment to have the well done. I think that’s where you’re going. You went all the way. I made sure I did a septic. I know where the power lines are. I know how far it needs to reach. I know the contractor. I got a quote for it. I know who’s going to inspect it. All the stuff’s going to be done. You don’t need to go that far.

You’re approaching the end of your land career if that’s how you go. You’re setting that up.

Congratulations. You’re doing a deal a month.

A deal? I think you’re doing a deal a year.

One a month at that pace and I hope you make $50,000. That’s not what you should be doing. 

That’s right.

Do you feel better? Did we cover it?

We’re running out of time.

I just need to take that hot shower. We went full circle. This is why Jack needs that hot shower every day, just to get that due diligence.

The due diligence stinks off.

That’s it. The due diligence stinks of walking the property and measuring it for yourself because you shouldn’t do that, too.

We teach a class called Career Path. There are about twenty people in it every time. Sometimes, we do it twice a year, sometimes once. There are people in there who make millions and millions of dollars doing this a year and have been doing it, some of them, for a lot of years. We get brand new people in there, too.

I’ve never heard anyone who makes a lot of money and is incredibly successful talk about utilities or due diligence one single time. I’m saying this positively, Jill, not to everybody, not negatively. Do not obsess over due diligence. It’s an indication of something else mental going on with you where you don’t want to do deals and you don’t want to get rich. It’s an indication to me that you do not want to make a mistake.

Do not obsess over due diligence. It's an indication of something else mentally going on with you where you don't want to do deals and you don't want to get rich. Share on X

You still want to get rich, but you’re just overthinking it.

This effort is riddled with failure. Every time I send out a mailer, I don’t care if it’s 30,000 units or 300. We’ve done both of those recently. It goes out and I wipe my hands off it and say I’m finally done. It probably isn’t going to work. The mailer is probably not going to get anything out of this. All kinds of calls come in and Jill converts stuff into real estate deals. I’m not afraid of failure and if a property doesn’t perk, I’d rather not know that. I would rather buy it and resell it. If the utilities are a disaster, then it is. Which rarely happens because we don’t care about it.

There are always options.

We never get hung up on due diligence, you and I.

It is because I go through the eight days. Yes, no, yes, yes, maybe, no, sorta. Done. Cool. I’m trying to get rid of this. I need to end the show and put him in the shower. Join us next time when we discuss establishing access to a parcel of land where there is none to possibly add value to the deal. You are not alone in your real estate ambition.

We are Jack and Jill. Information and inspiration to buy undervalued property.