One of the big values that members of the Land Investing Masterclass get access to is the free “Office Hours” group coaching calls we do each month.
Not long ago, someone suggested that I take one of these members-only calls and publish it as a podcast episode.
I thought it was a great idea, so I put together a sampler of some of the various questions and answers from these sessions over the past few months.
If you're a land investor and/or if you've ever wondered what these calls are like, this Q&A mash-up should give you a pretty good idea of what it's all about. Enjoy!
Links and Resources
- Land Investing Masterclass Review
- VIDEO: How to Identify and Understand Easements (Title Search Tutorial)
- BLOG POST: Land Contract or Deed of Trust? Which is Better for Seller Financing?
- BLOG POST: How To Do Your Own Title Search
- BLOG POST: How to Read a Preliminary Title Commitment
- TERMS ARTICLE: What is a DBA (Doing Business As)?
- BLOG POST: Never Rely On One Business Name. Here's Why…
- SuperchargedOffers.com (affiliate link)
- Rocket Print & Mail (affiliate link)
- VIDEO: Sending Mail With Rocket Print & Mail (Review and Tutorial)
- BLOG POST: How Land-Specialized Real Estate Agents Can Change The Game For Land Investors
- BLOG POST: Traveling Mailbox Review: Here's Why I Switched
- TravelingMailbox.com (affiliate link)
- BLOG POST: Profit First Changed My Life. It Will Change Yours Too.
- Mercury Bank
- PATLive Review: How Helpful is a Virtual Receptionist for Busy Entrepreneurs?
- PATLive (affiliate link)
Episode 115 Transcription
Seth: Hey, how's it going? This is Seth and you're listening to the REtipster podcast. In today's episode, I'm doing something a little bit different. I've never done this before, but this has been suggested to me on more than one occasion by various people.
The idea with this episode is just to play for you a bunch of different excerpts from different “Office Hours” sessions that we've held with members of the Land Investing Masterclass.
If you're somebody who is interested in the land investing business, if that's why you are paying attention or following REtipster in the first place, I think you'll find this one pretty interesting. And if you're already a member of the Land Investing Masterclass, you probably already know exactly what “Office Hours” are, but just in case you're not familiar with this, the idea is everybody who signs up for the Land Investing Masterclass gets access to a monthly group coaching call with me and Jaren.
Sometimes it's just one of us, sometimes it’s just me, but most of the time, both of us are on the line. This is kind of like if you've ever been to college, a lot of times professors have certain hours of the day or of the week where they're just hanging out in their office available to answer questions.
And the idea is similar here, where we're just hanging out on a Zoom call available to answer questions that anybody has. It doesn't mean we're going to have all the answers for everybody, but most of the time we do, or we can at least point people in the right direction.
We get questions that are all over the place. Sometimes they're like really beginner questions. Sometimes they're more intermediate or advanced questions. And it's just helpful for people to have a sounding board to get feedback and just hear ideas on what we would do if we were in that situation. And sometimes other members who are right there in the meeting look chime in with their own ideas on what they would do.
We don't really show up to these “Office Hours” webinars with a presentation or a sales pitch or an agenda or anything like that. We're literally just hanging out there. And if nobody has questions then Jaren and I will just talk amongst ourselves, but usually, a lot of questions come in and fill up the entire hour.
And also, just so you understand the context of what's going on as you listen to these. Like I mentioned, these happen on a Zoom webinar. We'll usually get anywhere from like 15 to 20 people showing up at these things. And one way that we can do this is to have people share their webcam and their mic. And they can talk to us face to face if it's a really complicated question or subject that they want to talk about.
But usually, the most efficient orderly way to do this is for people to just use the chat function and type out their questions. And then we'll just go down the list one by one until everybody's question is answered. And if people have follow-up questions, they can ask more questions. But it just helps us make sure that we're hitting everybody.
And the reason I say all this is because as we go through these questions, the way that I will do it is I will read the question that I'm reading from the chatbox. So, as you are listening, you're going to hear me read the question, and then I or Jaren will start to answer that question. I just wanted to make sure that was clear.
And also, the questions and answers you're about to hear in this episode are not all from the same “Office Hours” session. Again, we have these once a month and they are free. They don't cost anybody anything to join them as long as they're a member of the Land Investing Masterclass.
But what I usually do is I just take some mental notes whenever I hear a really good question that I feel like we're able to nail pretty well. So, I'm going to find some of those and some more generic questions just to kind of give you a feel for what these things normally sound like.
If you want to check out the show notes for this episode, there's actually going to be a lot of links to the things that we're talking about in these questions and answers. You can find the show notes at retipster.com/115.
And if you do have any interest in checking out the Land Investing Masterclass and just understanding what all comes with that and what that's all about, you can find everything you need to know at landinvestingmasterclass.com.
I hope you enjoy this. I hope you'll walk away with a few helpful gems. And, yeah, let's get this started.
Seth: He's asking, “I am planning to send some neighbor letters to try and sell properties bought at a tax deed sale. Would it be better to have a selling website and phone system set up before sending the mail? Or is that not too important?”
I wouldn't worry about it. I guess I don't know how many neighbor letters you're talking about. If you mean like four or six or eight of them. I guess if you want to shield your phone number, like your personal phone number and have a business one set up, Google Voice is a cheap, free, easy way to do it, or you could do their RingCentral thing if you're going to be doing it soon anyway.
But on the website, a similar thing, it's probably even less important than the phone number. The website is a great long-term tool. If you're going to be around and be in business for a long time, it's just really good, almost like an online business card where you can send people to find out everything you want them to know about you. You can project the image you want to project. You can put all your properties out there, like you can serve a lot of different purposes, but none of them are critical. There are people who don't have websites at all and they're okay.
The main websites that really matter for getting properties sold are actual listing sites where millions of people go in every month. It certainly helps to have a home base that you can point people to. But I guess what I'm saying is I wouldn't hold myself back from making progress, just in the name of, “Oh, my website's not up yet.” Like it's not worth putting everything on hold. But again, if you're going to be around long-term, absolutely. I think it's a great thing to have.
Another question. “What documents should I search for besides the previous deeds when I'm doing a title search and where should I look for them?”
If you're doing your own title search one way is to have a title company, do it for you. That's probably the most expensive way. Another way is to find a local abstractor. And really what you're looking for are the previous deeds. And you want to see any liens or mortgages of record and any easements that might come up.
Actually, I just put together a video that was suggested at last month's “Office Hours” about easements and how to make sense of those. But you basically just want to, first of all, make sure that you're buying the property from the person who actually owns it. There's not like a gap in the chain of title. And you want to make sure that with vacant land, it's going to be extremely rare that you'll ever find a mortgage on that. Because most banks won't finance that anyway. But if there ever was one, you would want to know that, be aware of it so you could pay it off, or just walk away from the deal and not do it.
The easement thing is just to verify does somebody else have access to or through my property? And it's usually you're going to find easements from utility companies and that kind of thing, which is very normal. But if somebody were to put a road through your property, and have the right to do that, you would want to be aware of that.
There are usually no big surprises coming from that. And if you're not planning to build on it yourself, it’s just rare that that is a problem, but still, it's something you want to just be aware of.
And then, "What is a deed of trust? A deed of trust is a document that is commonly used in not every state, but some states, with seller financing. And even banks will use it for normal conventional loans.
The idea is with the deed of trust, when the borrower/buyer purchases the property, they get a literal deed to the property in the form of a deed of trust. What that means is that if they ever stop paying the process that the lender then goes through they have to auction that property off at a public auction. And whatever proceeds they make from that they use to recoup their losses.
It's different from a foreclosure situation where you're foreclosing and getting the property back. You're not really getting the property back. You're just selling it off to somebody else and taking that cash and running with it.
The reason you would use a deed of trust is that in some states, like I think Texas is one of them. If you use a land contract or a contract for deed in a seller-financing situation, the state law, and again, I’m not an attorney so don't listen to me. But state law makes it really hard to clean that up and get your property back to get the person off the title.
If you're trying to do it repeatedly and seriously without causing issues and you want to follow the best practices, there are some states where you want to use a deed of trust instead of the land contract or seller financing deal.
It's one of those things where you want to understand what is the correct document to use and what should it say before you start diving headfirst into it and closing hundreds of seller finance deals the wrong way. You want to make sure you've got the right document with the right language.
And the way to do that is to find a local real estate attorney in that state who handles seller financing and have them prepare your documents the first time. And they use that as a template for all your future deals in that state so that you're not doing it wrong dozens of times.
In the course in module eight, you can download a package for the land contract version and another one for the deed of trust version. But even those are just like kind of FYI templates. They're not meant to be copied and used all over the place. The land contract package was developed for Michigan. So, if you're closing deals in Michigan, it could be used for that. And the deed of trust one was developed by an attorney in Utah. So, if you're seller financing in Utah, it could be used for that. But in any other state, you would want to find out the correct way and get your own attorney to do it right for you.
Follow-up question. “The property I am buying had a deed of trust with the bank. Then after some time, there was a full release of the deed of trust. That means the owner owns it free and clear now and can be transferred to me. Am I seeing that correctly?”
That's my understanding. Yeah. Once the loan is paid off, there are different terms for it. Some people call it a deed of reconveyance. It looks like a release of deed trust. That's basically the lender saying, “Okay, they paid us off. We're done.” If they had done a mortgage, they might call it like a mortgage discharge or release of a mortgage.
Basically, what you want to see in the language of that document is referring to the original deed of trust and just explaining “They've paid it off. They don't owe us any more money. We're releasing that.” And usually when you're getting a title search through a title company, when they see that original deed of trust, and then they also see the release, they sort of cancel each other out. So, they won't even mention it to you.
Because it's like, yeah, we saw this mortgage, but it was also discharged. So, it's gone. It's still on record, but because it's been resolved, they don't show you in the big list of documentation. And again, I’m not an attorney, I have not looked at your documents. I don't know what they say. So, if I'm wrong, don't come back and sue me because I don't know what I'm talking about.
All that stuff is good stuff to understand, even if you're not going to close deals yourself. But it's part of the burden you have to bear if you are doing self-closing. It’s understanding this stuff and trying not to make mistakes and the time it takes to go through all this back and forth.
This is why some people try to pursue bigger deals where a title company is easy to pay for because it just removes a lot of these questions and all that hassle can be on the title company instead of you.
“In that case, would you recommend getting title insurance on that deal? I promise I won't hold you liable for legal advice.”
Yeah. If you order a title insurance commitment, and I've got a video on the course explaining what that is and how to make sense of that. But if you get a title insurance commitment, that's effectively what it will do. The title company will do their own title search and they will highlight any problems that they see. And it's called Schedule B part 2, the exceptions.
They will list out, “We notice this problem, this problem, and this problem. We're not going to ensure over that.” And basically, what they're saying is you might want to take care of these problems because our insurance policy is not going to cover this. If you got a title insurance commitment, what it's basically saying is all these things need to be true in order for us to issue this policy with these exceptions. And we're not going to ensure these things.
It's kind of like giving you your marching orders of what you have to do and providing to them in order to get that policy. And the thing about those policies is that you don't technically owe anybody anything until the policy is actually issued. You're sort of getting a free title search. And if you can't get all those documents, then you don't pay anybody anything.
And some titled companies, if you do that to them once or repeatedly, will send you a bill saying, “Hey, we don't just do this work for free.” But if it's a title company that you use a lot, then it's pretty normal for a lot of them to just be like, “Yep, this one's on us. That's too bad. Just bring us your next deals.” That kind of thing. It can be sort of a hack or a way to screw over the title company, but it's basically an alternative way to get those answers.
And in terms of recommending that, for a lot of people this idea of self-closing is unthinkable. They can't even imagine anybody would do that. And I get why they're saying that because in their mind a normal deal is like a $100,000 house with a mortgage. So yeah, like you would never risk it on that. But when we're talking about deals that are like $500, it just changes the picture a little bit.
Dow is saying, “I'm trying to set up my selling side DBA. I found out for Nevada and California you need to register at the county level. Attorney advice is to file for trademark with USPTO if I want to make sure nobody will use my selling side name. What do you think?”
Yeah, I don't know. We're officially getting into legal advice so we can't really say anything on that, but I've never heard that about California, Nevada. I believe it. I'm not denying it, but I've never heard that.
And in a lot of the states that I've looked into, say if I wanted to file an LLC name for ABC Properties LLC. If somebody else already has that and I try to register for that name, the state will not let me do it. They'll kick it back to me and say, “Nope, sorry somebody else already has this.” So, it's not technically a trademark at the federal level. Somebody else in another state could take that name because it’s a whole different system. But just in terms of that state level, you're sort of already protected by default.
In terms of if it matters to you that much then yeah, I think you'd have to do that. But I have a feeling this could be one of those things where the attorney's like, “Hmm, how can I squeeze as much money out of this person as possible? There we go. I could have them file for a trademark and handle that too.”
That's kind of how it strikes me just because I've never heard any attorney say that. I think they're technically right. That is the way to truly protect yourself, protect that name. But honestly, if somebody forced me today to make up a new brand for my selling side, it wouldn't be that hard. I guess it'd be annoying to get a new domain name and stuff and get a new logo.
But I think once you get to the point of ruralvacantland.com or LANDiO or one of these companies that worked really hard on branding themselves and they are known far and wide for their name. At that point, it's probably worth a trademark in it.
But for most people, the purpose of that brand name is to sell properties and sell as fast as you can and build a buyer's list. But a lot of the time the sales that happen will come in from these common listing sets we all know about. Or if you're using an agent, the agent will handle it all anyway. It's not like a critical life or death situation to make sure you lock up that brand name. That's just my take on it though.
Do you have any different thoughts, Jaren?
Jaren: No, man. I think you hit the nail road on the head. I've never heard of that before. Talking about branding, I've been talking quite a bit over with Alicia over at Supercharged Offers. Those guys for the right people, if you're in the right stage in the growth of a land business can be an incredible solution.
I'm surprised that what they offer is available because I've not even heard of that stuff for houses, like wholesaling houses or anything. The land business has just some incredible resources. For how small the niche we are, I think we attract smart people or something. But the tools that we have available are just not how it's in other types of real estate.
Seth: Yeah. Supercharged Offers can and do that for house people too. But the land is just kind of like their home base and that's how most people know about them. Yeah. It is kind of interesting. I'm actually surprised certain services in software even exist at all in the land space because it's not a huge audience. There are not a whole lot of people there to even buy it up. So, it's like a heck of a lot of effort to put into something that has a ceiling and how many people will really be able to buy it and use it.
I've been learning a lot about development stuff lately, stuff I never really wanted to know about, but I have to with this project I'm working on. All the stuff you're signing up for when you decide to actually take land and do something with it and build something, it's a lot. I get why I didn't do this. Hopefully, it will pay off. But, yeah, it's just been an interesting thing.
The costs just go on and on and the time just goes so slow. There are lots of unknowns and lots of uncertainty. I ordered a feasibility study, which is basically like a really detailed report on what I'm trying to do, which is build a storage facility where they assess the supply and demand in the market and whether there is demand and what kind of pricing I could probably charge and what it's going to cost me to build it. It’s really helpful to see that from an unbiased third party to get their assessment on what the chances are of success at this.
So, I got that about a week ago now and it is pretty eye-opening. There were actually a bunch of things they assumed incorrectly. So, they're having to redo a bunch of it for me. They assumed that I was going to build a climate-controlled facility, which I'm not. They assumed that I was building class A storage and that's totally not what I'm after. It made the costs way higher and totally changed the projections and how much money it would make and how quickly it would lease up and all this stuff.
Jaren: That's interesting that they would just assume that instead of asking. Did you have to pay any extra money for them to correct it?
Seth: I’m assuming no. They haven't asked me for more money.
Jaren: That's very interesting.
Seth: Yeah. I don't know why those assumptions were made. It was kind of baffling to me because I never said any of that stuff. They just kind of assume, well, we want you to build this, so we're going to do it this way. And I'm just like, no, sorry. But enough about me. There are some questions coming here.
“Hey everybody, what's your experience with your recent mailer? I don't know if I'm having issues with the Rocket Print or the post office is just slow. Standard mail percent delivered two weeks 20%, three weeks 50%, four weeks 90%. I've never experienced this kind of delay before.”
So, if you're using standard presort mail, there is no strict timeline. I don’t know when it's going to get there. It's not like first-class mail where it's out there the next day and going to its place. It's like when we have time for you and when we have room, we'll get it there. It's kind of the equivalent of media mail. If you're sending a package to somebody, it's the cheapest thing by far, but it can take a long time to get there.
That is a little long, usually when I've been doing this, it's like two to three weeks is when it's done, like all delivered. And also, I know with Rocket Print, the way that they confirm delivery, I forget what Deb was telling me, but it was something like the receiving post office will scan an entire bin of mail at one time. Or sometimes they miss it or they miss some of the items in there.
And so, just because it doesn't say it's delivered doesn't mean it isn't. It's not a perfect system, basically. It's not the same as when you FedEx a package and somebody signs to receive it. It's not that level of certainty. It's more like, “We're pretty sure it's there now.”
Jaren: Another thing too, I don't know if this is your first mailer. I'm assuming it's not based on the context of your question, but I know the first mailer that you do with Rocket Print can take a little bit longer than ones that come after because they have to set you up in their system and all of that. I changed my mail piece this last time around.
And I don't know if that was late, but I noticed my last campaign was a bit delayed as well. Things started dropping just this week. I got everything finalized and stuff by the 17th, which isn't crazy. It's not like what you're experiencing, but I normally am seeing about on average probably a 10-day turnaround or so with them. The campaigns after that or after the first initial one.
Seth: Yeah. And I know I was hearing this a lot last November, December. This was a very common thing where it's taken months for people's mail to get anywhere with a combination of the Christmas traffic and also COVID stuff. And the post office may be shutting down, all this stuff. So, it can get pretty ugly, but usually, that's not the case. It's just the drawback to when you want to save money and not buy first-class mail.
Jaren: I'm also testing out not doing blind offers for the first time in like three-ish years or something.
Seth: Yeah. Cool. Is this still a letter or is it some other form of mail?
Jaren: Yes. I'm doing a letter. It's a letter and it's still very similar, lots of colors. I put my picture there. And something else that I find helpful that's a little bit risky is I qualify by putting it out there very clear that, “Hey, I am a real estate investor and I cannot pay full market value for any property that I buy. So, if you're wanting full value, pretty much in a lot nicer words, don't call me.” And that's risky because you think that you're deterring a lot of people, but I actually found it to really help because it minimizes the number of people who call me who want market value and just kind of tire kick and waste time.
Seth: Has it minimized the anger responses at all?
Jaren: No. I mean, maybe. It's hard to say because I've done that with blind offers for a while. So maybe my perspective is a bit skewed, but I think not doing blind offers because the market has adjusted so rapidly that sold comps are actually pretty hard to wrap your head around. I don't know if they're an accurate picture of market value. So, I would just rather deal with one at a time right now and just have agents come in on each property, and help me with valuation.
Seth: Are they doing an evaluation before you make the offer then?
Seth: So, you are keeping it pretty busy, right?
Seth: Just given that most offers are not going to get accepted. They're probably running around doing a lot of work.
Jaren: I'm going to do basic valuation beforehand, if it's very clear that the comps are off or if the numbers are off, I'll talk to them. But I'll say and try to get some kind of idea of what they want for the property and then see if we're anywhere close. And I'm going to try to not waste my agent's time as much as possible, but the people that I have relationships with, they're happy to work with me and go the extra mile because I’m at this point proven that I'm going to be bringing continual business their way.
Seth: Rachel is saying, “My apologies if this is a redundant question, but is there a land realtor agreement template available on the website? I did see the agent questions which are very helpful.”
Jaren: She's probably referring to a listing agreement.
Seth: Yeah. Just like the standard six months. Is that how long you do it for, Jaren? Six months?
Jaren: It depends. If I'm not confident in the person, if I'm questioning whether or not they're going to work out, I'll probably roll the dice on a three month. I think asking for a three month is a good way to check their heart and their arrangement. Because if they're like, “No, no, no, I need six months.” That's kind of weird. It would be a red flag for me. But I do six months forms with the agents that I have relationships with.
Seth: That would be typical to do a three month one. I mean, that's not like the normal thing that most agents do, correct?
Jaren: No, it's not.
Seth: It's not that they shouldn't agree to it, but that wouldn't be the norm necessarily.
Jaren: The kind of standard is six months.
Seth: Yeah. That would be kind of a state-specific form, Rachel. Every state has its own different realtor agreements and forms that they use. But whenever you do get the one for whoever you choose to work with, that would be one thing, Jaren said, just try to make it three months, if you can. And also, when I've done it, I've inserted a little provision basically just saying that if I find the buyer on my own, I don't pay them a commission.
Jaren: And just on that, I would walk through in your head what you are comfortable with. I know a lot of agents would probably shy away from agreeing to that listing. If you want to have the ability to bring on buyers yourself, there's a lot of work that they do on the front end for free. And they're kind of like guaranteeing compensation. It’s that exclusive right to sell.
Seth: Yeah. That's a good point, Jaren. I should give more context to that. When I did that, it was at a time when I had never used a realtor before and I was not confident they would be able to do the job because I was working with a house realtor at the time. So, I had plenty of reasons to not think they'd be able to do it, but I wanted to try it anyway. That was why I put that provision in there. And that was a six-month agreement for them and they agreed to it.
But I think if you're going at this the way Jaren is where you're planning on this working out, you know this land agent is a good one. They're worth their salt. Even if they don't succeed at this, you're pretty confident in them. If that's your situation then you probably shouldn't even be wasting your time trying to sell it on your own because that's their job. So, good point, Jaren.
Jaren: When I was even transitioning from generating my own leads and I started working with agents, any leads that I got I literally just said, “Hey, call my agent.”
Seth: Jerry is saying, “I'm very early in the course. I was wondering what is everyone's experience with using Traveling Mailbox versus UPS, et cetera? Has it been pretty reliable or would you recommend against it? I did see Jaren’s video and he definitely seems to think it's solid all around.” We were actually talking about this earlier this week, weren't we, Jaren?
Jaren: We were.
Seth: Jaren, you are currently using a Traveling Mailbox, right?
Jaren: I am. Yes.
Seth: And I am not. I'm using Pak Mail, which is basically the UPS store where it's a physical location. I still have to go there in person. Total first-world problem but every time I have to go there, I hate it. I wish I had a Traveling Mailbox.
If I could start over, I would totally do Traveling Mailbox. However, one thing to be aware of is that the way Traveling Mailbox works is when you see a lot of these different mailing address locations all over the country that you can choose from, those are basically other storefront mail companies. And Traveling Mailbox is subcontracting with them to do the job. And some of them do the job very well and some of them don't.
I think I've seen in the comments in that video on YouTube, some people have complained about it and one person chimed in and explained that. I was like, “Oh yeah, that makes sense.” It's because Traveling Mailbox, the company, does have a headquarters in North Carolina.
Jaren actually has his address through them at their headquarters. So, it's probably more reliable that way. But a lot of them, probably all the other ones around the country, are not actually staffed by Traveling Mailbox. It's by some other company as they kind of lose control over the quality of service. It's usually probably fine, but it's not a guarantee. So, it's just something to be aware of.
Jaren: And there are other options that are similar, like competitors to Traveling Mailbox. I actually wrote out an outline as a potential future blog post to explore the pros and cons of those. But I always come back to Traveling Mailbox because it's really affordable and I like their virtual office component.
They have a lot of cool features. If you had a phone provider or didn't have a fax line, you could use the Traveling Mailbox fax line. And as long as they specify your unique ID number, then the fax is going to come to you just like mail would.
You can actually send out checks, you can send out mail, have them actually send out a physical letter, and all that through their system. So, there are just a lot of cool features there. It's not perfect. And I know I've noticed they're doing some digging that there are mixed reviews. And I think it's probably because of what Seth said, people probably were dealing with a specific location that had some issues.
One of the reasons why I moved to the North Carolina address is because my Florida address got shut down. They discontinued working with him as a third-party vendor. So, my address that I was using for my legal documents and like my LLC stuff, all of that had to get redone.
Seth: Oh, that's such a pain.
Jaren: Yeah. So, I was like, “Well, to avoid this,” and they actually said in the email, when they let me know about this. They said, “Hey, anybody who is at this address, if you want to avoid this from happening in the future, your best bet is to just use our North Carolina address. Because as long as we're in business, that one's not going to go anywhere.”
Seth: I feel like I should know this, but that doesn't affect where you should incorporate, does it? The state where your mailing address is?
Jaren: I don't think so. I don't know.
Seth: I'm pretty sure it doesn't.
Jaren: But it's an interesting question though, but I hope not.
Seth: Yeah. I'm like 90% sure it doesn't. There are a bunch of different things to consider when you define what doing business is considered. Like where are your employees? Where's your office? Where are all the deals that you do? All this stuff. So, just the mailing address, I don't think is that significant of an issue.
Jaren: I will tell you that you may run into issues with establishing business bank accounts with local banks without a state-specific address. I ran into that with Indiana. I defaulted to using internet-based banks because they don't really care where your address is.
Seth: “Currently I’m working in an attorney's state and wanted to know a little bit more about how to handle the closing process. I have looked up two different title companies and attorneys. One, to refer my sellers to close with since I know the cost of the attorney fees. And another form to represent me. Is this okay? And is this how you would commonly close in an attorney state?”
In attorney states, it basically just means it's not a title company doing the closing, it's an attorney. And usually, that attorney basically has a title company in their office, but there needs to be an attorney in charge somewhere. Usually like running the ship, even if they're not doing hardly the end of the work.
Usually, that attorney is the person who handles everything for both parties involved. It's not like representing anything. It's just handling the facilitation of the closing. So, it’s not legal advice, but I don't think you need to go out and get yet another attorney to represent anything. It's just a matter of, “Here's a job attorney for both of us. Handle it, please in accordance with the purchase agreement,” and they will do that for you.
Jaren: Both, title company and closing attorneys are looked at as a third party. So, you don't have to worry about conflict of interest or anything like that.
Seth: Yeah. Some states have just decided that they want to make a rule that you have to be an attorney to be a title company basically. And as a result, it costs twice as much to do the same thing.
And then GT is saying,, “In some states, attorneys state they are explicitly representing only one party. In Georgia, that's the buyer.” Oh, interesting. Huh?
Jaren: When I did my deal in Georgia, it was only one attorney.
Seth: Maybe it’s kind of like when you use a real estate agent and if they're handling both sides and they get in the full 6% commission, they're technically only representing one party. So, they kind of align themselves with one of the two parties. But that doesn't necessarily mean another realtor has to be involved.
I guess that kind of makes sense. They basically have to state, “This is the person who hired me. So, I'm looking out for their best interest in getting this deal closed. But that doesn't mean it's not going to serve both parties.” That kind of thing. If I’m wrong, GT, let us know.
Jaren: It’s so funny how all this stuff is so different. Because I think in Indiana, even in that situation where an agent is representing both sides, I forget the technical verbiage, but I remember I had an agent representing both sides. And when that started happening, they were very careful to not favor one side over the other. And I had to sign a special agreement to acknowledge the fact that they're entering into a situation where they're representing both sides and they have to remain more neutral.
But that could be completely different in Michigan or in other states. It's funny how even though you've been in this business for years and years and years, there are always weird nuances that you run into.
Seth: Yeah. A lot of the state law stuff, like if you've ever done business in any way, shape, or form in another country like Canada or U.K. or Australia or whatever, there are a lot of basic assumptions about how the law works or just how everything works that we kind of take for granted in the U.S.
And you go to someplace else and it's like, “Nope, that doesn't work.” Like trying to get lists of property owners in Canada. It doesn't happen. This is not publicly available data. It's just not how it works up there. It's just got to hit the big reset button on your understanding of how things work. Sometimes it feels like going from one state to another. It's almost like you're in another country. It's like, why can't we get on the same page with more stuff?
Jaren: Yeah. And I was complaining the other day actually to somebody about that. And I was like, “I wish we could just federally unify all property codes and all this stuff.” And then he told me, “Jaren, the minute you do that, the land business is gone.” The reason why we can capitalize on this business is that there's so much discrepancy in the market. So counter blessings. I was like, you're right.
Seth: Yeah. I actually saw this documentary. This is a little tangential, but this thing was talking about the formation of the United States back when there were only 13 states. Each state was kind of acting like its own country. We are our own little independent group of people here. And the whole reason the United States formed one big reason was that it's too costly for every state to have its own individual military. Let's just get together on this stuff and band together and share the burden a little bit. And that's why it's called the United States.
Jaren: It's really interesting. There's a weird tension there, right? Where federal law has grown in power and all this stuff. But at our core, I do think the foundation is that each state is almost its unique place.
Seth: “Also, I was noticing that it appears you all commonly use a title company local to the property you are purchasing and selling. Is there a reason for that? Maybe easier for the purchaser or buy or maybe local title companies are more familiar with local requirements?”
Jaren: I'll just chime in there. I have a relationship with a title company based out of state, Augustine in Florida. And they will service stuff statewide. I do think you have to have a title company that is licensed to do title work within whatever state the property is located in.
But generally speaking, you don't have to have one local. I do think that a lot of title companies prefer to specialize locally because they like customers to be able to come in.
But what my title company will do for both me being out of state and then a lot of the buyers or sellers that I'm working with, they'll overnight the documents or email the documents with a return prepaid label. And then I just go to my local notary and then the other party does likewise and we are just mailing the docs. I don't know what other people are doing, but my title company is based in the state that I do business in. But other than that, their proximity to the property doesn't really matter.
Seth: Yeah. Usually, it’s like a state-by-state thing. And there are some big nationwide title cut companies like Chicago Title and First American that do stuff everywhere. I usually find they're a little bit more expensive for some reason, but there are also some really small mom and pop title companies that are a lot cheaper and sometimes they will just focus on one county or a few counties. It's not that they can't do stuff statewide. They just sort of choose not to because they learn a few counties really well. But yeah, pretty much what Jaren said there.
Dow is saying, “Business structure. In the forum, Seth, you've mentioned if you could do this again, you would have the buying side be the main LLC and the selling side be the DBA. Can you explain the benefit?”
Yeah, I think it's because the selling side is sort of like the more flashy, waving a flag trying to get people's attention. It's probably more important to brand that side than it is on the buying side. Not that the buying side isn't important at all, but if I had to pick one to highlight more, it would be the selling side, because I'm trying to become known as an entity that sells land and gets repeat business and referrals from other people and that kind of thing.
Whereas on the buying side, that business comes from my direct mail and my other online SEO efforts and that kind of stuff. If I had to focus on branding one over the other, it would be the selling side. And that's not how I did it. And again, it's not hugely consequential one way or another, but if I could hit the reset button and start over, that's how I would've done it.
“Is there a lesson where you cover setting up a separate bank account for your LLC?” Is that a question for me? That second part?
Jaren: I think he is referring to me, but I'm not understanding the question.
Seth: Okay. “I still need to set up an LLC. Is there an advantage to using a bank or a risky credit union?” I guess this is a question for us. There is not a lesson where I talk about setting up a bank account for your LLC, but it's not hard. You have to typically go in in-person, like in the flesh, at least I do at my bank, which I think is kind of crazy, but I do.
You got to bring your corporate documentation to prove that the entity exists and that you're the person that controls it and your own driver's license and stuff like that. Proving you're an American citizen and go through the steps that they require to set that up. And in terms of whether it's a bank or credit union, I actually have one LLC that's with a bank and another LLC that's with a credit union.
I don't remember why I did the one through the credit union because I kind of regret it all the time. It's not like a huge regret, but it's just annoying to me because surprisingly my credit union charges a monthly fee just to have the account and my bank does not, which is kind of backward. Usually, banks are more fee-heavy than credit unions.
But I think it's because my credit union anyway is really geared toward the consumer side of banking, not the business side. But they allow business bank accounts just because some members want that, but that's not their specialties.
It's almost like out of their specialty or comfort zone to have business bank accounts. So that's why they charge a fee. It's not a big enough problem for me to spend a whole lot of time trying to fix. But if I could go back, I probably would've just kept everything with the bank. And that's Chase bank. That’s the bank that I use.
Jaren: On my end, because I'm a big advocate for a Profit First. In the Profit First system, there are some criteria that I look for in a business bank. I like to look for at least 10 checking accounts that you can set up underneath one LLC. I want to look for things that are 100% fee-free, and a number of different things.
And I actually did a huge research project recently for the big update we did for the coaching program. And eventually, I want to come out with a blog post since I've done the research. I found a handful of truly Profit First-friendly banks.
My most favorite one is Mercury Bank, which is an online bank. If you do a lot of cash transactions, I don't even know what situation it would be, but I think if you do some more self-closings you might have some issues if you run into having to deposit cash itself. But checks, wire transfers, all the wires are free, including both domestic and international.
And so, it's a pretty phenomenal bank that I'm enjoying using. They allow up to 15 accounts underneath one LLC and there are no fees and so on and so forth. Out of all of my research, that's the one that went out. There are some other ones that are definitely worth mentioning. But for me, that's the one that I went to because they're based online. You can set them up in any state.
Seth: Leslie is saying, “I came across a list of property owners looking to sell on an HOA website. And I'm thinking about reaching out to a few. When making offers, would you offer any more or less than non-HOA land? The HOA imposes pretty strict regulations on land use. Nothing can be done other than build a house on it, but it seems like a fair number of parcels in that area have sold recently.”
Yeah, that's really two of the major issues or considerations to think about in an HOA is the cost of their HOA fees. Is that going to be a problem for you and or more importantly, the future buyer? If they're just charging ridiculous amounts for land that nobody really wants in the first place, it can be a big problem.
And also, are those restrictions the reason why nobody wants to live there? Because there's not a demand or a neighborhood with those specific types of properties for that specific use.
That and also the cost of the fees is a huge source of motivation for a lot of HOA property owners and the reason why they'll just walk away from their property for nothing in some cases is that they can't use it themselves and they can't find somebody to sell it to.
And sometimes that's a big red flag and a reason for you to not mess with it, but you kind of have to just look at it and assess, is there a demand for this stuff? Could it be that this property owner just doesn't want to deal with it and I am willing to deal with it and I can put a deal together? It really just depends on what the costs are and what the restrictions are. I think what you're saying there, if you can see other parcels have sold recently, that's a pretty good sign. That shows that there is demand.
There can be other issues with HOAs too. I think somebody was posting in our forum over the past day about how they came across one where there's no apparent person to contact and people are just ghosting them.
And sometimes you'll find HOAs that are defunct. They exist on paper, but nobody's taking care of it. There's no money in the bank account. And I don't even know what you're supposed to do in that case, because it still exists, the restrictions are still there, but nobody's taking care of anything. I don't even know how to handle that. But yeah, HOAs can be problematic. I would just proceed with caution and do the research that it sounds like you're doing.
He is also saying, “I learned a little bit about ranged offers recently. I think there was some discussion about that in our Facebook group recently. The theory is that you offer a spread of a blind offer instead of a single number, like $8,000 to $15,000. This is supposed to be a better approach than neutral letters? Any thoughts on this approach?”
Yeah, I mean, “better” is just relative. I don't know that you could definitely say that, but I have heard of this quite a bit in dealing with houses. The approach is a little bit different where it's not like a range of like $8,000 to $15,000 per se, but it's like, “I can give you a cash offer for $8,000 or I can pay you your full asking price at $15,000, but I'll pay this to you in payments over the next five years. Or I can pay you up above your asking price, but there will be no money down payments over the next 15 years.”
The idea being, when you're doing this, you're also bringing in a tenant. So, it is cash flowing and you don't have to get banks to finance this stuff because the sellers are doing it for you.
I totally get it on that end. In terms of the range for vacant land, I think you might be better off just spending more time to get your office right in the first place. Just find out what the actual number is going to be so you don't have to mess around with going back and forth.
I've never done this. So, I can't really tell you definitively from my experience. And even if I had, still, it isn't like a blanket statement I can say about every situation everywhere. So, I can say to the people that I know who have done it, I haven't heard them say like, “Yeah, it's just been amazing. A total game-changer.” And that's just with the few people I've talked to who have done it. And maybe there are other stories that would say otherwise, but I guess there's a long-winded way of saying “I don't know.” Have you heard any reports on that, Jaren?
Jaren: I haven't. I've seen a lot of people talking about it, but I agree with you. I don't have personal experience or experience of people that I know and trust to say one way or the other. But in my head, I'm trying to figure out what would be the major benefit to doing that versus doing a natural offer amount or just a neutral letter.
If you're in a market where it's really hard for you to nail a very specific price that's accurate, in my mind, North Carolina comes to mind. Indiana comes to mind. I think you'd be better off just doing a neutral letter and running comps after you start the conversation. Even though it's more ideal, all things being equal, to have blind offers because it streamlines the communication.
You don't have to wait 30 minutes to figure out who you're talking to is even motivated to sell or not. You're either having somebody rejecting your offer or accepting your offer or negotiating your offer. If you don't have good data, then you just don't have good data and you have to look at things on an individual basis.
Something that I do in my letter when I send a blind offer is I say verbatim, “This offer was generated with limited knowledge and resources. And sometimes my numbers are completely off. I'm an investor and I can't pay for any property I buy at full market value. But if you're willing to make a deal happen, I'm happy to pay you more as long as my numbers work. If my offer is wrong, feel free to give me a call, and let's see if we can make something happen.”
I've seen really good benefits from that because I've had countless sellers call me and say, “Your offer on here was completely wrong but I'm giving you the benefit of the doubt because your letter seemed really nice,” and et cetera, et cetera. And so, I would say okay. And then I would run my numbers and give them a substantially higher offer than my original offer, but was still able to have it be a deal.
I kind of throw that disclaimer in there so that I can still have the door open if I make a mistake with the offer. And maybe that's what they're trying to do with having a range. But if your range is you're offering $8,000 to $15,000 but the property values are like $30,000 to $50,000 and you're just completely off, you're still off. I don't know if you could remedy that by having a range like that.
Seth: Next question. “Your phone number for the business. What's your recommendation for buying or selling? Local or toll-free? I'm not sure because personally, I don't pick up any toll-free numbers.”
We'll deal with that first question here. Personally, I've got both. The toll-free number that I use is what I put on my mail campaigns when I tell people to call me. That's the toll-free number and that's where they would either go to PATLive or hear my pre-recorded voicemail greeting.
And I also have a local one though, and that would be the one that I used to call people. If they see something like the caller ID, that's coming from my 616-area code. And if you're going to be doing stuff all over the country, inevitably, you're going to be calling people that are not in your area code.
I hear what you're saying about the toll-free number thing. I get that. I don't have any data to prove if that's an issue or not, but that's how I handle it. And I know the toll-free number thing.
Originally the whole idea behind that, at least one of the big ideas was so that people didn't have to pay long-distance charges when they called. And it's kind of not really a big thing anymore with cell phones and all this stuff.
So, I guess it's also a way to hide your area code if you don't want people to know that you are coming from someplace else, but it also does have that possibly spammy vibe to it. I don't know, but that's how I do it. How do you do that, Jaren?
Jaren: I just don't think it matters. I originally put a lot more stake into this than I needed to. And I was like, “Okay, I got to get an afforded number or have a number specific to the market. At least one area code that's specific to the state that I'm doing business in.” But I've come to terms with the fact that it really doesn't matter.
Seth: I agree. It is probably one of those things, kind of like, “How do I get my logo and letterhead figured out?” All this stuff. It doesn't really mean a whole lot. I'm not saying there's zero consequence to it, but very, very little. You're probably much better off just moving forward on other stuff. It's easy to get sidetracked with that kind of thing.
“I am currently closing five properties in the same subdivision that are all roughly the same shape and size. How would you go about selling them in this case? Do you put them all up for sale at the same time and risk someone coming in underneath your price? Or do you post a couple at a time so that you can always be sure to have the lowest sale price in that subdivision?”
If it were me, I would just create individual listings for each one and come up with the standalone price for that one and post them all at the same time. Even though they may be very similar, they're not the same property. And a person might love the location of one, but not the other, even though they're pretty similar. Well, that's what I would do. Would you do anything different Jaren? Or any other thoughts on that?
Jaren: I would do exactly what you said because it depends on if they're all right next to each other. If they're all right next to each other, maybe you could consider selling them all as kind of a package deal. Because it’s kind of in practice is more of one large parcel, but if they're kind of scattered, it would only make sense for me to do it that way. And I think you're going to get the most bang for your buck that way.
As you're talking to potential buyers, if they recognize that you have other lots in the same subdivision, you might be able to work a package deal or say, “Hey, well, if you don't like this one, check out this one down the street,” or whatever. But I think, by and large, you're probably going to get the most bang for your buck by listing them individually.
Seth: Follow up question here from the earlier questions about banks versus credit unions. She's asking, “Does your bank charge or doesn't your bank charge a monthly fee?” Because my earlier comment was about how the bank didn't and that credit union did. And the bank does, but they waive the fee if you keep a certain balance in the checking account. And that's what I do. So, they would, but because I've got enough cash in there at all times, I don't have to pay the fee for them.
All right. So, there you go. Hopefully, that gives you a good taste of what “Office Hours” is all about. And as you can see, some of the stuff is pretty minor league softball questions and answers, and some of them can be more complicated.
The idea here is not that we know all the answers and have all the answers to everybody's questions. A lot of times we do, but sometimes these questions get into tax and legal stuff that we can't really talk about with any authority. And when we don't know the answer, a lot of times we'll just say that, like, “I don't know,” or “Maybe you want to talk to this person,” or “Go look for this professional.”
Anyway, I hope you guys enjoyed that. Thanks again for listening. If you guys want to check out the show notes for this episode, you can do that at retipster.com/115.
There are actually a lot of different links and various things that we referenced in a lot of those questions and answers. So, I think you actually will find it pretty useful if you want to check any of that still about.
And also again, if you ever want to actually take part in any of these “Office Hours” conversations, all you got to do is join the Land Investing Masterclass community, and you can find out everything you need to know about that at landinvestingmasterclass.com. And I'm going to link to that in the show notes as well.
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