Time and Patience are Required in REI
Jack Butala: Time and Patience are Required in REI. Leave us your feedback for this podcast on iTunes and get the free ebook at landacademy.com, you don't even have to read it. Thanks for listening.
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hello.
Jack Butala: Welcome to our show today. In this episode Jill and I talk about the time and patience that are required in REI. First, before we get into it, let's take a question posted by one of our members on the LandAcademy.com online community. It's free.
Jill DeWit: Claire asked, "Have you ever kicked squatters off their land? Did they resist? Did you press charges?" I haven't, have you?
Jack Butala: No, no and no. There's three questions there and no. I looked at this just before we started the show. Here's the thing, I'm of the theory and I'm full blown in this camp, pretty sure Jill is too, I don't want to and I'm not interested in looking at every piece of real estate that closely. I'm a data person and a software person, all that and a real estate person, so on a much larger deals that we do, I love going to look at the real estate, but on a 40 acre property, lets say in southern California, southeastern California, that you're going to buy for four or five grand and sell it for twelve, I just don't look at it that hard. I look at it to make sure I'm not going to lose money, I look at it to make sure the person who's selling it to me actually owns it, things like that. My big question, Jill, is how does she know this?
Jill DeWit: True. It could've been, I've had people go out and they go look at the property and then they've called me back and said, "Hey, that road was a little rough," or duh, duh, duh, an that's the only way I know that. I found it, but this is what went on. Great. Otherwise I wouldn't know. You know what my gut tells me? Somebody wants the property so I guess they're actually already using it. That tells me something good about it. It's obviously worthwhile, then that's my number two is, "Look, since you're using it anyway, I happen to own that, let's make a deal." That would be my thing. "You're either going to make a deal and you're going to buy it, or somebody else is going to buy it and you're going to have to move. Which would you prefer?"
Jack Butala: You and I have a friend who buys notes, who buys foreclosed on notes. Somebody's living in a house, they had a mortgage on it, or they have a mortgage and they just stopped paying it years ago. That's basically squatting. He's got a long list of ways to deal with this. He loves this by the way. It's Joe.
Jill DeWit: Uh-huh (affirmative). I was just thinking that.
Jack Butala: He'll go to a bank and a bank will say, "These awful, non-performing mortgages over here, here's 25 of them, we can't give these things away. Here they are for 10 cents on the dollar, knock yourself out," so he does. He buys a 100 thousand dollar mortgage on a property that's probably worth 200 thousand, he buys it for 10 grand, literally. He doesn't own the property, he owns the mortgage. It's foreclosable. He can choose to do all kinds of stuff so he has like a flow chart if you can picture a flow chart.
The first thing he does is contact the person and he tells me the numbers on this stuff. Fifty, sixty percent of the time they say, "I don't know where to send the check. A lot of stuff's changed. I'm happy to do it. Is it priced the same?" That just solves it right there. Reaching out to the people in the situation like that, in opening the line of communication, so that everybody knows the other person's not kooks, that's number one. There's lots of ways, Jill, you're exactly right, you totally nailed it. There's a good, easy way to turn this into a real positive situation for everybody.
The other thing he does, and I think this is really, really interesting, is no matter what the price is, or no matter what the person was paying on the mortgage in the past,