Jack Thursday – Why I Killed Several Land Deals My Partners Already Approved (LA 1846)

Jack Thursday - Why I Killed Several Land Deals My Partners Already Approved (LA 1846) Transcript: Steven Jack Butala: Steve and Jill here. Jill K DeWit: Hi. Steven Jack Butala: Welcome to the Land Academy Show, entertaining land investment talk. I'm Steven Jack Butala. Jill K DeWit: And I'm Jill DeWitt, broadcasting from the Valley of the Sun. Steven Jack Butala: Today's Jack Thursday, and I'm going to talk about, in detail, why I killed, recently killed, several land deals my partners already proved. Jill K DeWit: This is fun. Steven Jack Butala: I think this is- Jill K DeWit: I get to sit back and let you... Because I kind of saw it in air table, kind of watched it happen, which is really nice. Steven Jack Butala: This is going to be informative, I think. Jill K DeWit: Yeah. This is cool. Steven Jack Butala: Before we get into it, let's take a question posted by one of our members on the landinvestors.com online community, it's free, and please don't forget to subscribe on the Land Academy YouTube channel. Comment on the shows you like. Jill K DeWit: Anthony wrote, "Infill lot advice from a builder," I read this the other day. This was really cool. "I recently had a conversation with a builder who took a chunk of lots off my books. It was a good talk. I asked him about the metrics he uses to decide where to build. The answers were eye-opening. He won't touch any area where new construction fetches under $400,000." Steven Jack Butala: Boy, that's the truth. Jill K DeWit: Yeah. "Though lumber costs have fallen from recent highs, he still budgets," this is more than I even thought right now, "he budgets 150 to $175,000 a square foot. I was shocked at all the fees and hurdles on new construction. My takeaways, number one, due to the high costs of new construction for infill lots, make sure the markets you mail have a medium home price of over $400,000." Steven Jack Butala: That's... One second before you run into number two. That's been the case for a long time. Jill K DeWit: Right. Steven Jack Butala: That number keeps moving, but it's been the case, because you need to make money. Jill K DeWit: Right. Steven Jack Butala: This is the antithesis of affordable housing. All you read about in the news, in real estate news, is, "Why the hell..." And all these articles are written by little tiny journalists that are maybe still in middle school, "We need more affordable housing." Well, great. Here's the reason we don't have it, because of this post. Go ahead. Jill K DeWit: Okay. "Number two, I will limit my infill offers with an eye towards an expected sale price of no more than 15% of the estimated new home price." So think about that. Steven Jack Butala: It's been that way for- Jill K DeWit: So $400,000, you'd go back... You could go back like 20%. Steven Jack Butala: Yeah. Jill K DeWit: Buy for 20, sell for- Steven Jack Butala: 40. Jill K DeWit: Or buy for 40, you could even sell for 80 maybe. But now, he's saying go even lower than that. Steven Jack Butala: Yeah, I agree with that. Jill K DeWit: Yeah. Totally. "Number three, since all these costs and the hurdles on new SFR construction, the demand for cheaper options will only increase going forward." So true. Steven Jack Butala: Cheap land. Jill K DeWit: Right. "I will be giving priority to mobile home zoned lots. I know there's a deep reservoir of knowledge on this subject here. So what do you guys think?" I didn't get to see what everybody else weighed in on. Steven Jack Butala: Yeah. And a lot of people had a lot of stuff to say, including me. This guy's been in our group for quite some time. He's very, very bright. And these are the types of people, fortunately, that Land Academy attracts. I do a whole module on Land Academy Mobile Home Land, and actually developing or dropping mobile homes on land in our Career Path. Jill K DeWit: Yeah. Steven Jack Butala: So check it out. Jill K DeWit: And you're going to add more about subdividing a c...