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Due Diligence for Off Grid SFRs (LA 1700)

Transcript:

Steven Jack Butala:Steve and Jill here.

Jill K DeWit:Hi.

Steven Jack Butala:Welcome to the Land Academy Show. Sorry, the House Academy Show, this Wednesday, entertaining real estate investment talk. I'm Stephen Jack Butala.

Jill K DeWit:And I'm Jill DeWit, broadcasting from the valley of the sun.

Steven Jack Butala:Today, jill and I talk about due diligence for off grid houses or SFRs.

Jill K DeWit:This came up because of the one we went and looked at?

Steven Jack Butala:Yeah.

Jill K DeWit:Okay, cool. So we're going to tell you all about that. We drove, gosh, an hour and a half each way to check out a really cool property.

Steven Jack Butala:Full blown real ranch. Jill'll tell you all about it.

Jill K DeWit:Let me remind you, we drove an hour and a half each way. Am I going to do that every weekend, maybe not. And then it was a good least half hour from civilization.

Steven Jack Butala:Yeah. Easy. So in the end we didn't buy it. It was for personal use, but is it really ever for personal use? If somebody offers more, you always sell it.

Jill K DeWit:Right.

Steven Jack Butala:It's a lot of work. We'll explain it. But it was off grid.

Jill K DeWit:It was cool.

Steven Jack Butala:It was an interesting due diligence process.

Jill K DeWit:Really cool.

Steven Jack Butala:Before we get into it, let's take a question posted by one of our members on the land investors.com online community. It's free. Please don't forget to subscribe on the Land Academy YouTube channel, comment on the shows you liked.

Jill K DeWit:Erin and wrote, "Hi everyone. After receiving a signed purchase agreement, how often do you try to reduce the price? I got back to signed PAs today. I offered 12,500 and would probably sell for 20 to 24,000. And the other one I offered 7,000 and would probably sell for 12 to 15,000, not including title and agent costs. If they sell at the low end, each deal is a little skinny. At the same time, I have cash sitting around, and I'd like to keep it moving. A 30 to 50% return in a couple of months would be pretty awesome in any other context."

Jill K DeWit:You want to go first?

Steven Jack Butala:No.

Jill K DeWit:All right. I hate to be that guy. So I'm assuming you came in higher, obviously than you intended to on these offers or maybe you didn't come in higher, maybe now that you've looked at the properties, you realize, oh, because it's in this area or because the access is this situation or it doesn't have the attributes I thought it did, something like that means that your sales price is lower than what you were originally expecting. So there's a couple ways to look at this. There's a lot of ways to look at this, but first of all, I don't want you to go, if you have to adjust a sales price for something like that, I get it. But you don't want to be that guy and try to do that on every deal. You're going to be miserable with this, by the way, always talking to people down, it's harder to take away money than it is to add money.

Jill K DeWit:We always try to come in lower and then add to it when we find out some great things about the property. So you could go back to the seller and point out because I thought it had X and it doesn't, look, we have physical access, we don't have legal access. It's going to cost some money to obtain that. Or X solution, whatever it is, you could do that and try. I'm even wondering, these numbers to me are not bad anyway.

Jill K DeWit:You are holding back. You're sitting on your hands. Please, please share.

Steven Jack Butala:Negotiation, like marriage is too prevalent. There's too much negotiation going on-

Jill K DeWit:That's kind of what I'm trying to say.

Steven Jack Butala:On this planet. And it's all because it's been ingrained in our heads, especially with this personality type, real estate personality type, to try to get it cheaper. When in reality,