Truth about Land Flipping Time Commitment
Recording Location: 33.841318 -118.391593
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Happy Wednesday!
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about the truth about your time commitment when flipping land.
Jill DeWit: Great.
Jack Butala: Like all topics, this came from a question I received and dealt with in a consulting call -
Jill DeWit: Cool!
Jack Butala: How much time does it really take to get to do this and do it right? Before we get into it though, let's take a question posted by one of our members on landacademy.com, the community there, it's free!
Jill DeWit: All right. David asked this question, "I've got an opportunity to buy six properties. I've learned that one of these properties has an oil and gas lease on it dating back to 2009. It will expire-
Jack Butala: Oil and gas leak?
Jill DeWit: Lease.
Jack Butala: Oh, lease! It was like a car that I have.
Jill DeWit: You're silly. Lease, lease. "dating back to 2009, it will expire in 2019. It gives the lessee, the right to use the property to access oil and gas, if any, that lies underneath. The agreement would move to me upon buying the parcel, and then onto the person I sell the property to. It includes a one eighth share." I'm liking how this is going here, by the way-
Jack Butala: These people are so smart, our members.
Jill DeWit: This is great.
Jack Butala: My hat's off to you David. By the way, I know which David this is.
Jill DeWit: This is great. "It includes a one eighth share of the produced oil/gas, which doesn't sound bad, unless you were just wanting to build a weekend cabin. Do I, A: Buy it, then showcase the fact that this has an oil and gas lease associated with it? Or B: Take a pass and avoid unforeseeable consequences of having an oil and gas extraction facility sitting on my lot in a vacation area?"
Jack Butala: Here's a couple things. We're going to assume-
Jill DeWit: That's good.
Jack Butala: ... The economics of this work, because I know you David and you don't buy property that's ... You don't pay retail for property. You buy it substantially below-
Jill DeWit: Exactly.
Jack Butala: What it's worth and flip it real fast. So, what I would do is, if the economics work ... This is going to sound silly and I'm going to get a bunch of emails. All this other stuff complicate your transactions. While I would not let it kill a deal, I think I would just zip it, I would just buy the thing, forget about the oil and gas deal, and just sell it like you're selling everything else.
Jill DeWit: But you disclose it?
Jack Butala: Yeah, I mean I would put it in there.
Jill DeWit: Exactly.
Jack Butala: I would say in the lease that there is an inactive lease, oil and gas lease until 2019, then I would say something snarky like, but you don't care about that anyway because you're going to put a cabin on it.
Jill DeWit: It's true. So, you want to hear my answer?
Jack Butala: Yeah. You know what too, and all kidding aside, see if other people are drilling around there. If they are drilling around there,