Good Acquisitions (LA 786)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hi.

Steven Butala:                   Welcome to The Land Academy Show, entertaining land investment talk. I'm Steven Jack Butala.

Jill DeWit:                            And I'm Jill DeWit broadcasting from sunny Southern California.

Steven Butala:                   Today jill and I talk about good acquisitions, one of my favorite topics. In fact, all week this week.

Jill DeWit:                            That's probably my most favorite-

Steven Butala:                   Is acquisition week. Yeah.

Jill DeWit:                            My most favorite topic.  What's better than that?

Steven Butala:                   Like, what are some of the titles here? Yeah. What's better than good acquisitions? I mean, there's a few things.

Jill DeWit:                            Well, you and I talk about it all of the time, is that so many problems, I know you're gonna get into this, pretty much most of your problems can be solved by good acquisitions.

Steven Butala:                   Yeah, so all week we'll talk about good acquisitions, bad acquisitions, how to fund your acquisitions, all that stuff. Keep you out of trouble completely.

Jill DeWit:                            Yay!

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

Jill DeWit:                            Okay. Scott asks: "What paperwork ... excuse me ... what extra paperwork tax disclosures, et cetera, are involved once you charge an interest rate. I've always just embedded the interest by charging a higher price for a term sale then dividing by the number of payments, so the rate isn't specifically stated anywhere. There's the financing price, then a discounted cash price, but I like the idea of charging interest though, because you can say it upfront, the price of the property's actually lower. It appears more attractive, but you end up getting the same at the end once the interest is added on top. Most buyers won't care to calculate the interest they will pay over the course of the note."

Steven Butala:                   This is a great question.

Jill DeWit:                            Which is true. It's nice, because it's like, when you say, "I'm selling this for $21,000, and 3.5% interest. They do hear $21,000, and they hear, "Well, 3.5%. Gosh, my credit cards are 14, 15, and my car is XO. Gosh, 3.5% sounds good." I understand the process. The thoughts.

Steven Butala:                   This is very, very, very, heavily regulated, this topic of financing. If you ever look at your credit card, the thing that you sign off on when you get a credit card or your mortgage, it's very regulated. Federally, and I think there's a bunch of state regs involved-

Jill DeWit:                            Right.

Steven Butala:                   But federal for sure, and I don't think, don't quote me on this, it used to be this way, I'm not sure now, that it's legal to not charge interest. You do have to charge .0001 interest-

Jill DeWit:                            On seller financing stuff?

Steven Butala:                   Yeah, you have to charge an interest rate-

Jill DeWit:                            But it varies by state?

Steven Butala:                   By the question. We all know that almost always the buyer doesn't care. They just want to know what their payment is.

Jill DeWit:                            It's true.