Jill Gets Miffed about Access with Jason Hartman
Jason: It's my pleasure to welcome Jill DeWit and Jack Butala. They are the principals at the Land Academy and host of the Land Academy Contest. Was it Will Rogers that said, "Buy land, they're not making more of that." I could be misquoting, I don't know who said it, but anyway, welcome guys. I'm anxious to hear about what you do and talk to the audience about that as well. Welcome, how are you?
Steve: We're great, Jason. Thank you so much, it's an honor to be on the show.
Jason: Good to have you. Tell us a little bit about why land? I got to just prefix this with saying that until recently, I've never been a fan of vacant land. Like so many investors, I like cash flowing properties, but I interviewed someone on my show, another land guy recently and he kind of move the needle quite a bit I must admit. I was pretty interested and I have a feeling you're going to move it even more. Next time I get a tenant calling me saying something is broken, I'm going to think, "If I owned land, I wouldn't have any tenants." I know the model is different, it's a different strategy, so why don't you tell us about it?
Steve: I'm happy to. This is probably the top 1, 2 or 3 questions that I've gotten for the last 15 years since I've been in this business and it's a misconception about rural vacant land that doesn't cash flow or that it's unwanted, that there's no real market for it. In fact, I think it's quite the opposite. Vacant land is a very, very asset type to retail customer who just want to get away from it all. Vacant land is incredibly inexpensive to purchase because there's a general lack of financing that's available for it, so sellers are very ... Because there's no financing associated with land, it's very easy to negotiate a very good price, if you know what I mean.
Jason: Right. It's not really a credit based asset, when you buy it, you pay cash but when you sell it, you turn it into a credit based asset, and the old saying is, you can either have price or terms, but you can't have both. That's the strategy to increase the value was turn it into a credit based asset, right?
Steve: Right. For the most part ... It's a little bit ironic but people who were very seasoned to real estate investors like you seem to have that opinion, and I guess it's been accumulated over years that vacant land doesn't cash flow. We purchase ton of it and we sell it on terms for years and years and years, so we have made it cash flow and it's been a great niche choice for us for more than 15 years for us Jill, right?
Jill: We actually tested other models like doing renovations and flips and I'll tell you Jason, every time we stood there, scratched our heads going, how much time we spend on this, I could have made so much more just flipping some land. It's easy and it's fun and it's very profitable.
Jason: Interesting. Tell us about your typical deal like ... There may not be a typical deal. First of all, how many transactions have you done in the world of land?
Steve: I've completed 15,000 ... Almost 16,000 transactions now since 1999.
Jason: Flocks, listeners, I have to apologize, we're talking to couple of amatures here. That's a little bit of experience for you, right?
Steve: Yeah.
Jason: That's a lot of deals, tell us about the typical deal, what's it look like?
Steve: The typical transaction that we complete is, we purchase a piece of property for cash, that's anywhere between 5 and 40 acres, usually west to Mississippi, for anywhere between, I don't know 500 to 4 to $5,000 depending on the quality of the property. That's not the down payment, that's the actual total cash purchased for the property.