Difference Between a Wholesale and Retail Deal (LA 982)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hello.

Steven Butala:                   Welcome to the Land Academy Show. Entertaining land investment talk. I'm Steven Jack Butala.

Jill DeWit:                            I'm Jill DeWitt. Broadcasting from sunny, Southern California.

Steven Butala:                   Today Jill and I talk about the difference between wholesale and retail transactions.

Jill DeWit:                            There's a difference? Hey, you keep saying I'm crowding you. Am I okay? You want to come a little-

Steven Butala:                   No, you're fine.

Jill DeWit:                            Am I okay? All right, good.

Steven Butala:                   It's all good.

Jill DeWit:                            Okay.

Steven Butala:                   Both of our shoulders are in the frame, it's perfect.

Jill DeWit:                            Cool. Nice.

Steven Butala:                   Before we get into it, let's take a question posted by one of our members on the landinvestors.com online community, it's free.

Jill DeWit:                            Brian asks, "I'm looking at picking up six adjacent parcels in Riverside County, California, in a developed area that has other small apartment complexes in the same block area. This is a high density zoning, as well as SFR residential, and I would like to target developers interested in putting in apartments. How would you recommend finding such potential buyers?"

Steven Butala:                   This is a great question. It's the kind of question I love answering on the show, because it's a complicated question on the face of it, and very advanced, I'd say, but the answer is so simple. The answer applies to every person who's listening to this that's ever owned a piece of real estate or aspires to own a piece of real estate. When you find specific use property like this, high density residential apartments, they're very specifically zoned, typically, or there's a range of zones, like multi-unit one to multi-unit four, that kind of thing. It's just for sake of argument.

Steven Butala:                   In that county, or in that zip code, or the adjacent zip codes, are going to be other owners that own the property that you can see in the data based on how it's zoned, or being used. I mean, and I'm talking about in less than two minutes you can find these, because you already pulled the data, you sent the mail out. These are the people who are going to buy these properties, and if they don't, 50% of all property gets sold. All property and all property types gets sold to people who live or work in the immediate one mile radius of that property. Small apartments and specialty use properties, no different.

Steven Butala:                   If you talk to anybody who owns any type of real estate, or any business for that matter, they're going to say one of two things. "Oh, this company ... if I had two of these companies, I'd be done. I love this company. I love going to work there, and it's great." Or, "I hate this apartment building. If I could sell it right now, I would, it's just not working."

Steven Butala:                   So, by sending a letter to these people, whether it's companies or [inaudible 00:02:43] owners, you're looking for the ones who say, "Man, I really want another one, or another. I'm looking for another development project, this one's really close to the one I already own." You're going to smoke those people out really quickly.

Steven Butala:                   This kind of deal is how I started in real estate back in the early '90's, before the internet and stuff. It's a very special ... in my case, it was healthcare facilities, like assisted living buildings and stuff. It's specialty use, there's only a limited number of owners in certain markets, and they're going to buy the stuff if they're happy with t...