This is episode number 2059, and we’re talking about the importance of doing your due diligence, let’s say, instead of outsourcing it to a virtual assistant overseas. Here’s what I think and we’ll get into it in a minute. There are all kinds of roadblocks, real specific ones in this career, and the ones that we don’t like individually, due diligence seems to be a popular one. We try to figure out how to get someone else to do it.

People are afraid of it, too. That’s the bigger picture. That’s what I want to hit home. Think about this. When you outsource your due diligence and you trust everything that a VA says because they filled in your checklist, that doesn’t mean you should plop down your money because it’s your money, by the way. It makes me a little bit nervous, but we can talk about what are we guys talking about? I could even outsource this stuff. If you are asking that question, that’s good.

Outsourcing is an essential part of being successful with this and probably anything else in this day and age. We’ll talk about what is healthy outsourcing and what’s probably avoidance. Jill and I are talking about five of our most popular questions or topics that we have gotten after several years running Land Academy.

Could you imagine? We’re 38 years in the Land Academy. I don’t even want to tell you how old we’re going to be at that point but go ahead.

Thirty-eight years of Land Academy, we’d be saying, “You should probably send some more mail out.” Thirty-eight years would be bad.

That would be a good series if we did the questions that have not changed in ten years of Land Academy. That would be cool because there are a lot of things that have not changed 1%.

Some version of that is happening. We’re going to talk about doing your due diligence instead of outsourcing it overseas. We’re also going to talk about “Does texting and emailing real estate sellers work?” “How to end a listing agreement with the wrong real estate agent.” “What’s an acceptable HOA in your land acquisition?” There are different types of HOAs. It’s too easy to say, “We don’t buy HOA property.” You might be missing some opportunity.

Land Academy Member Question

We’ll talk about the personality traits of successful land investors that Jill and I have seen over the last several years. Largely, as we started the career path, the fall/winter career path, everybody has a very consistent number of personality traits and you and I share those for the most part. Each day on the show, we answer a question from our Land Academy member Discord forum and take a deep dive into a land-related topic by popular request.

James wrote “I started in the land business with a total of $15,000, looking to see if this idea of sending offers would work for me. For November, I’m on pace to send out $15,000 in mail crazy, but if you rinse and repeat, the deals will keep coming. Isn’t that great?”

This is short of poetry.

That’s good. It’s funny, too, when you think about how your numbers change. What’s a big deal to you at one point in your career or your life is like drinking water later on. I think about that in my career path. We got started. We’ve scratched the surface with everyone’s goals, including financial goals, and it’s amazing to me. Sometimes people are like, “You want me to send out offers for what?” Week one and by week eight, they are sending out mail for offers even more expensive than that. They’re like, “Add a zero, no problem. I got this. I will add another zero if you want me to.” It’s funny.

This ties directly into what we are going to talk about, and that topic is personality traits. We get a ton of questions and always have comments, let’s say, that are the exact opposite of this. What James said here is, “You guys told me to send out some mail and you told me how to do it, and I did it and it worked. As simple as that.” We spend a lot of time in Land Academy addressing questions like, “Have you guys ever considered texting and emailing? It’s easier, and it’s cheaper.”

I’m going to argue it’s harder.

They have a personality where they don’t research and focus on what other people who have done this for 30-plus years are saying. For some reason, they need to put a twist on it right up front. “Have you ever looked at it this way?” Yes, I have looked at it this way. We could talk all about the ways that I have failed over the years, and there are too many to fill a whole week of topics. I would rather talk about how it works.

I’m going to say one thing about James’s comment here, which is cool. $15,000 was spent in the mail in November. That’s going to generate 25,000 units of mail.

Let’s say three viable transactions.

Do you think only three? I’m going to say James has been doing this for a couple of years. I’m going to say for every $5,000, he gets 2 good deals. It may not happen immediately. 2 times 25 is 50. Every $5,000 it’s 5. Let’s say 10 good deals back, and let’s say he buys 7 of them. Just throwing out numbers. He buys 7 out of this $15,000 investment and he makes sure that he only makes a minimum of $25,000. 1 unit is a $15,000 investment worth all that, and then more will trickle in later. It happens. It’s so good. Thank you.

DIY Due Diligence

Congratulations, James. You have figured it out. You are not afraid and you have made it simple because it is simple to follow a path. We’re going to talk about the importance of doing your due diligence instead of outsourcing it to an overseas VA. At the front part of the episode here, there are pain points for everybody in this business model including Jill and I, believe it or not.

It’s like, “I’m so sorry. Can we talk about pain points for a moment?” I’m sorry. It’s each other.

May or may not be working with your spouse.

Some days it’s not, some days it is. That was good. Sometimes it’s our staff. Some days it’s weather problems. I don’t know, but yeah.

Do you know what it’s never hitting our financial goals? Isn’t that interesting?

That’s true. Bank balance is not a pain point. That’s good. I’m sorry. I had to interject there because that was good.

Here’s how I define due diligence, and you are welcome to continue that theme throughout the episode of working with your spouse because I’m not happy about it right now either. Everybody has a pain point in this journey getting leads to drive down your pipeline, closing the acquisition, and reselling it. For whatever reason, due diligence is a pain point for many people and I define due diligence in six great terms. Should I buy it or not? Is it priced? I sent the mail out like Jack says to do it, and I priced it the way that he says to do it, but I don’t know for sure. How do I find out for sure if I should be doing this deal? What have I missed? Those were important things, and they happened to not be pain points for Jill and I for whatever reason. I have never heard you sit down and say, “Should we do this deal this is why I’m concerned?”

It’s because I know what to look for because you gave me the eight As. Back then it was four, and now that is what it is. Due diligence is your checklist, however long it is. Ours are eight of the important things you need to confirm before moving forward to purchase a property.

Here’s why Jill is going to agree with this times ten. I’m sure of it. At the price where we buy properties, at what the end acquisition price involves me, in the back of my head, mostly subconsciously saying, “It doesn’t matter if there’s something crazy wrong with this. I still can get out of it because I’m buying it so cheap.”

We did a deal where there were nine exits out of it. The one that would maximize the most money was going to take the longest time and it’s okay. If we get sick of it at some point, we can liquidate it and still make a couple hundred $100,000 or whatever it ends up being. Here’s the key and we’ll talk about the Philippines in a second. The key to due diligence is buying it so inexpensively that if it doesn’t perk, you miss the product, now there’s no access to it but I thought there was all this stuff. “It’s so inexpensive. I still can get out of it.” That’s why Jill and I are so nonchalant and have been for years about due diligence shaking our heads and going, “What’s the big deal with due diligence?”

I have to say that there are times when I don’t even pull the trigger. There are properties that are too cheap. I have had people try to give me property and you too over the years that I’m like, “I don’t want it.” They are like, “Take it off my plate.” I’m like, “I’m so sorry. That sub didn’t work.”

Yeah, but that’s not our product type.

I want to point this out to everyone. It’s not every property. It doesn’t mean every single thing you’re like, “That guy gave it to me for free.” Great, now it’s your problem. Do you want to have that in your inventory and you stare at it and you’re mad at it and the tax bills come? Whatever. I want to make it clear that it’s not always money in the end that makes the decision.

What she means is there are product types. They usually do their squares. It’s so over-trafficked. There are too many of them and they have been beaten. The horse is dead. Deming, New Mexico is a great example. There are properties in San Bernardino County and far west Texas like Culberson County, that there’s no demand for. There’s no real natural supply and demand for it.

Outsourcing

That’s why you go through this whole due diligence checklist. Can I interject here on due diligence? I’m making sure. I don’t want to be a pain point. Instead of thinking 1 or 2 things, we are going to be pain point 1 and pain point 2.

Which one is number one?

You. Where Jack is going with this, he is trying to explain due diligence. The mail goes out and it comes back. It’s a natural thing. You want to outsource some of the things, either because you are afraid of them or you don’t have the time, and so it’s very easy to set up an Airtable base, which we have done. We give it for free in Land Academy, and there are columns in there. I’m not kidding. All the eight As you could, and I’m sure some people in Land Academy do have VAs that they have access to, into their Airtable base that, I’m sure, go in and fill in all those As. Is there access? They probably put a checkmark, yes or no. Is it affordable? They probably do some comps and put some comps in there.

You want to outsource some of the things either because you're afraid of them or you don't have the time. Share on X

Are they alive? They probably do some little digging to make sure of the name of the seller, whatever it is. I’m sure that they have them do all this stuff for them and queue them up for them. There’s some of that I’m great with like checking the back taxes. No problem. Things that are black-and-white facts like access, and waterfront. Something like physical and legal access, the things I described. I’m peachy with that.

When it comes to even the affordable one, queuing up some comps for me is, “Did they look at it the way I would have looked at it?” Having an overseas VA to me, it’s a little bit like artificial intelligence. There are some things I’m not comfortable with making decisions for me. I’m not going to pull up a VA or an AI tool right now and say, “I have $1 million. Please go invest it and make the most return you can.” I’m not doing that. I’m going to be involved in that. It’s the same thing. I’m not going to give a VA or use a VA 100% in that way, no matter how smart they are or how long they have been with me because it’s my business. It’s my company. I just don’t think it’s the best thing to do.

There’s an art and a science to this. If you picture an older neighborhood, not in a master-planned community, five houses in a row that were built by what ended up back then, different builders, different floor plans, and now they are in place. They are all in different conditions. One of them is original, one of them has been completely redone, and you look at those five houses. Do you think somebody from the Philippines is going to say, “That one’s better,” or, “This one’s better,” or, “This one justifies the price that the seller wants?” Those are very nebulous feelings. Art and not science and that will never, ever go away. No algorithm will justify or compensate for that. There are no number of statistics that will be available, in my lifetime anyway, in a dataset that is going to say, “This is why you should make the decision, Jack.”

Even this estimate hasn’t caught you. You can’t trust that 100%.

Zillow’s way of valuing real estate is the very beginning of a long journey. Our relationship between data and valuing real estate is the very first part. What we’ll see over the next couple of months when it comes to that is amazing and probably will go toward more accurate valuations of all types of real estate. AI is only as good as the dataset that it’s drawing from, and that will happen. In the end, you are going to stare at those five houses, and you are going to say, “It didn’t account for the fact that it’s orange, and orange is a very unpopular color.”

AI is only as good as the dataset it's drawing from. Share on X

Do you think it’s going to be able to tie together like fast forward for me now several years I wonder if there’s going to be a Zestimate version where it has comps. It knows what sells in the neighborhood, but then it has to know that it was a remodeled house, not a 1935 house. Then is it going to be able to mirror that with Google, driving down Google streets and see that there was a dumpster out front? It’s guessing this house is being remodeled.

That will happen. Here’s the thing. Younger generations are always smarter than older generations for several reasons. Number one, they are motivated to make more money or be more successful than their parents, or they are younger. They have more energy. They are not jaded with reality. That motivation is priceless. It’s the reason that young people make great soldiers. They have no idea what they are getting into, and it’s for that reason.

What’s happening now with this very young generation is that AI is something that our generation, Jill and I, aren’t that familiar with. We understand how it works, we know what it is, and we understand the applications that, but certainly are not writing scripts to manage it or to utilize it to its fullest capacity in what we do. Instead, we rely on decades and decades of experience. All that stuff is going to happen, and I see it happening more and more. This very young generation in their early twenties are winking at each other saying, “Grandma and Grandpa don’t understand this.” That’s fine, but Grandma and Grandpa also have all the money.

Due diligence. Think about this as a topic and we will end on this. All the stuff that we said that’s not AI-driven available, we’re still required to talk to the seller on the phone. Talk about what Jill does, talk about, “Grandma died, and we are buying the house and this is what’s going on.” “The original 1950s kitchen is still in it,” or “This piece of land was built up all around it. You can’t see it in the data.” This is why it’s worth more, and we have to make a judgment about that and not rely on a nineteen-year-old from anywhere in a completely different socioeconomic cultural situation. Make a decision for us about whether or not we should buy a piece of land in Arkansas. It doesn’t make sense. Join next time where pain point number two talks about texting and emailing and whether or not it works for capturing the attention of real estate sellers.

Thank you. We will talk about it together.

You are not alone and your real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.