How to Structure Your Land Business (LA 1336)

Transcript:

Jack Butala:

Steve and Jill here. Welcome to the Land Academy Show, entertaining land investment talk. I'm Steven Jack Butala.

Jill DeWit:

And I'm Jill Dewitt broadcasting from sunny Southern California.

Jack Butala:

Today, Jill and I talk about how to structure your land business because it's business week this week.

Jill DeWit:

It is. I'm thinking of like people and roles and management. I'm sinking. You're probably thinking numbers and I'm thinking people.

Jack Butala:

I am. Well, I'm thinking of LLC structure.

Jill DeWit:

Exactly. So we all both have some different things to share.

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:

Greg wrote not a joke this was quick, "Two lots in a county side-by-side, lots 125 and 126, but both are assessed together and have a single tax bill from the county. Any reason to think I could not sell these as separate lots without an issue? Thank you." I'm curious if it's one APN.

Jack Butala:

Jill just nailed it. What we're in the business of is buying and reselling APNs, the way that a car dealer is in the business of buying and reselling VIN numbers. There's all kinds of ways to title property with legal descriptions and there's a million ways to buy and sell. Well, actually, you know what? There's only one way to title and license a car. They have a form, in Arizona it's green. What color is it here? Yellow?

Jill DeWit:

Which form?

Jack Butala:

Like the car title in California. It doesn't matter.

Jill DeWit:

I thought it was always called a pink slip, but I don't know if it's pink anymore, but yeah.

Jack Butala:

And you can only put one car in the form. The DMV's got it. And this confusion comes from the DMV because we've all titled cars. There's one form. One way to do it. One VIN number on that form. There's place to sign. There's a place to notarize in some states and that's it. And there's a process to submit it and you either do it right or wrong and it's over. With land, it's completely the opposite. There's a ton of different ways to do it and it's up to the recorder to make sure that it's correct. So you can take a thousand properties and in one case, Jill and I had a deed with 10,000 properties on it, one document with 10,000 properties and a signature page at the bottom. So what Greg is saying here is I've got a deed or I have a deal. The legal description says lots 125 and 126 in Garden Estates, Pinel County, Arizona, Maricopa County, APN 1234567. That's one piece of property period. If it's one APN, it's one piece of property.

Jill DeWit:

Then it's one piece of property. So to divide them up is a process. You have to go back to the county and there's a process to split them up. And then you're going to get assigned a separate APN to each property if they can be split as two. There might be reasons why. Sometimes they have building restrictions that you can only build on and this could be one reason that they combined them. I've seen this where it's a 0.1 acre and a 0.34 or something like that, and you have to have a minimum of point whatever to build on it.

So they'll lump them together, it just makes life easier and to build on because the 0.1's too small. So that's why it worked out this way. And it's probably somebody along the way did this on purpose and combine them into one. I'm restating it in a general way, which is you can't just willy nilly go in and do it because if you saw 125 with the same APN and you resell 126 of the same APN, now you got a problem. You sold the first guy, not the second guy. The second guy's got nothing.

Jack Butala:

Secondly, you would never ever be able to send it through title.

Jill DeWit:

They would catch it and that's good.

Jack Butala:

We have people in our group who have done this, sold properties just like this, parcels taken out,