The Roll Data Plays in Property Acquisitions and Sales (1025)
Transcript:
Steven Butala: Steve & Jill here.
Jill DeWit: Hi.
Steven 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 sunny Southern California.
Steven Butala: Today, Jill and I talk about the role data plays in property acquisitions and sales.
Jill DeWit: I would like to just point out that we were talking about this topic and what Steven was thinking when he wrote this topic the other day and my comment was, "Why am I here today?"
Steven Butala: Well, why am I here then?
Jill DeWit: Why am I here today?
Steven Butala: Why do you need me?
Jill DeWit: Exactly. I'm just here to... I'm here for moral support.
Steven Butala: Jill, you make this whole thing work, trust me.
Jill DeWit: Thank you.
Steven Butala: Without you, I'm just a guy in front of a camera talking about real estate, and nobody wants that.
Jill DeWit: Okay.
Steven Butala: Before we get into it, let's take a question posted by one of our members on the Land Investors dot com online community. It's free.
Jill DeWit: All right. Paulani asks, "Has anyone ever sold a note before? Let's say that you're having a tough time selling a certain property for cash, but you sell a property under contract for terms. Package up that deal and sell the note to get your cash price. Example: You're trying to sell a property for $5,000 cash, but you're only getting people interested at $8,000 on terms. Once the property's under contract, sell the particular property at the terms price and then sell the contract to an investor to get $5,000 cash price. Has anyone ever done this? If so, what are the pros and cons to doing this?"
Steven Butala: Paulani, you're a genius.
Jill DeWit: That's good.
Steven Butala: I've done this many times, there's people in our group...
Jill DeWit: Sure there are.
Steven Butala: ...that do this. This is their business model. They pay cash for a piece of property, double the price, sell it on terms really quickly, but here's... there's only one thing I have to add to your logic. There are two things that a note buyer looks at when they assess that note. The credit-worthiness of the person who's making the payments.
Jill DeWit: Right.
Steven Butala: Oh great, everyone loves their credit score. So that can be a big problem, especially with people who are buying rural vacant land on terms. And number two, the age of the note. In my experience... I've done this many times. We don't do it anymore. We're cash buyers and sellers. What they want to see is a six month flawlessly paid-for, on time, note paying payment schedule at bare minimum.
Steven Butala: If it's two years, you're going to get... if you have a two year payment schedule, you're going to get a much more attractive discount rate to you, meaning if it's $8,000, you could sell the note for a lot more than five.
Jill DeWit: Right.
Steven Butala: So, just do a little bit more research. Maybe a day's more of research. But you've got a great concept. Selling property on terms is way, way easier than selling it for cash.
Jill DeWit: What I would do is I would look at who my buyer is first and ask them what they want, because most of the times, the reason we're selling these properties on terms is because they can't qualify,