Land Investors Mitigating Risk

Recording Location: 33.841318  -118.391593

Transcript:

Jack Butala:                            Jack Butala with Jill DeWit.

Jill DeWit:                               Happy Friday!

Jack Butala:                            Welcome to our show today. In this episode, Jill and I talk about how land investors mitigate risk. And I have to admit, I'm excited about talking about this. I talked about it a little bit on our weekly call-in Thursday, and decided to do a whole show on it, because I haven't thought about it in a while but man, this is so much less risky than flipping houses.

Jill DeWit:                               Totally.

Jack Butala:                            Before we get into it, let's take a question posted by one of our members on the Land Academy community website. It's free.

Jill DeWit:                               Okay, Ryan asked, "What is fractional ownership of a parcel?"

Jack Butala:                            I can tell you, I found out what this is the hard way.

Jill DeWit:                               This is gonna be good. All right, we're not picking on you Ryan, I promise. This is funny. "Is there anything I can do about it when I'm trying to acquire a parcel with fractional ownership?"

Jack Butala:                            Don't, don't, don't do it.

Jill DeWit:                               Don't.

Jack Butala:                            Don't buy-

Jill DeWit:                               Great, do you really want one third of that property?

Jack Butala:                            Quite some time ago, somebody in California got the bright idea to assign APNs, assessor's parcel numbers, to individual owners of fractional ownership. Like if Jill and I went and bought a piece of property, 40 acre property, it would get two APNs.

Jill DeWit:                               Right.

Jack Butala:                            You can predict what's going to happen. It turned out to be a massive mess. One person passes away, what happens? We don't know.

Jill DeWit:                               Exactly.

Jack Butala:                            It said, to rectify it now, title companies and attorneys, they rectified it by different ways to take title.

Jill DeWit:                               Right. Tenants in common.

Jack Butala:                            Tenants in common, joint tenants, lots of different ways. So if one person passes away, the way that title is taken it addresses that upon-

Jill DeWit:                               Dictates what's going to happen.

Jack Butala:                            Yeah, that's right, and that's the right way to do it. I have percentile letters, like all of us, offers over the years, and incorrectly sent them to fractional ownership. It's hard itself, you're looking at a list of APNs, which ones are and which ones aren't.

Jill DeWit:                               Right.

Jack Butala:                            And accidentally bought a fractional, you know, closed the deal. And you don't want to do that.

Jill DeWit:                               Don't want to do that.

Jack Butala:                            Because it's just impossible to track the other person down. Maybe they passed away, their heirs are wherever. It's a mess. It can be a mess.

Jill DeWit:                               I still see it, by the way.

Jack Butala:                            The only way to rectify is quiet settling it.

Jill DeWit:                               Yeah, well I would say, we still have one or two that we just said we're not going to worry about it. We just let it go. And I still see the taxings coming through where it shows our company name with this other guy's name on it.

Jack Butala:                            This is from like eight years ago.

Jill DeWit:                               Ivan something, and I'm like, 'This is hilarious.