Where Not to Buy Property (CFFL 514)
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Howdy.
Jack Butala: Welcome to the show. In this episode, Jill and I talk about where not to buy property.
Jill DeWit: I like this.
Jack Butala: We're going to give names of counties and property types. We're going to get real detailed here, none of this fluff, and no fluffiness.
Jill DeWit: Dude, are you going to share some secrets?
Jack Butala: Yeah. All the secret counties. We're going to give all the secrets away.
Jill DeWit: All the secret counties. I love that.
Jack Butala: Before we get into it, though, let's take a question posted by one of our members on the LandInvestors.com online community. It's free.
Jill DeWit: Okay. Jason asks, "I am talking with a man that owns a 3,015 acre ranch in Edwards County, Texas."
Jack Butala: Jeez, how's that for specific?
Jill DeWit: I like this. Wow. "Land in this area is listed for $1,650 per acre. This could be a big deal ..." It's sure sounding like it. "But I'm not sure how to handle it. I'm thinking about proposing an option agreement for each section of the ranch that is divided by five different APN numbers ..." Okay, "and market each of the 600 acre ranches separately. I'm not sure what price will sell fast on such big properties. Any advice is appreciated."
Jack Butala: Wow. I mean, I'm totally impressed. This is great.
Jill DeWit: I got to do the math.
Jack Butala: Yeah. You should market it both ways. You should market it all as one, or you should market it separately. And then the first thing I would do, Jason, and I mean immediately, is try to subdivide it. Go to the county and see if you can split it down in a five ... Texas is famous for being a split-friendly state. Hopefully it's not in an incorporated area, like it's not in a city, it's just a county land, because it falls under a different set of rules in Texas, they're state rules, and it's pretty easy to get it subdivided. So you could have a retirement deal on your hands here. IF you can get these properties down to five acres, you're going to sell them for a heck of a lot more than 1,600 bucks an acre.
Jill DeWit: Could I just share some numbers with you? So I just did the math. If he came in and was able to negotiate a price, let's just say, $1,650 an acre, down to a little bit less than half of that. We're in the $2 million range, okay? So 2 million bucks out, but you double your money on that. You could easily double your money, and now you're going to make 3 million.
Jack Butala: You're going to make 3 million bucks on this deal. Yeah. Exactly, Jill.
Jill DeWit: Holy moly. I just did the numbers, so. And that's just flat, your numbers, but Jack's right, Jason. You could get creative with this and sell them as five acres, and 10 acres, and 20 acres, and ...
Jack Butala: There's a lot of people in our group that would be really interested in funding this with you, so it's good that you put that out there.
Jill DeWit: ... mm-hmm (affirmative), 40s. Yeah.
Jack Butala: Make sure you put this on DealBoard, too, because they will, there's lots of money guys in our group that would love to do this deal.
Here's the bad news: when you do this deal and you get it all subdivided, it's be careful what you wish for, because now you're going to have a bunch of property on your hands that's all similar, right?