Land Academy Deal Funding 101 – How Deal Funding Works (LA 1470)

Land Academy Deal Funding 101 - How Deal Funding Works (LA 1470) 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 Dewitt, coming to you from sizzling Scottsdale, Arizona. Soon we'll be saying a lot. Steven Butala: Today, Jill and I talk about Land Academy deal funding 101 and how deal funding works. Yesterday we talked about private equity and private lending and the basis of that and why I think it's the best way, we think it's the best way to raise capital to get deals done when you don't have your own money. Jill's going to walk us through the mechanics of when somebody sends her a deal, how she chooses it, how she analyzes it, why she says yes, why she says no. Maybe I'll actually submit a couple of fictitious deals to you and you can say, you're an idiot for this and you don't ever call me again. Jill DeWit: Yeah, I will happily play that game. Steven Butala: Or happily do this deal like right now. In fact, let's all stop what we're doing and fund it. Jill DeWit: Got it. Steven 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. If you're already with us in Land Academy, join us on Discord. It's nothing short of amazing. Jill DeWit: Anthony wrote, "In using the red, yellow, green test, I have found massive differences in days on market. I searched and found the base formula for days on market. It's a 12 month sold overactive for sale, then divided by 365. So let's say there were 3000 properties sold in the last 12 months and they are 500 sale for sale now. So 3000 divided by 500 is six divided by 365 divided by six, we got it, is 60.8 days on market. Zillow, Realtor, and Redfin all have different numbers for days on market. How do you guys account for the variance?" Steven Butala: This is very, very important question and it doesn't just apply to real estate or days on market. Where you have data sets from different sources it's very important not to mix them up. However, let's just pick on Redfin. However Redfin came about having properties in their dataset both for sale and sold is the same for sale and sold. But if you just look at for sale property in Redfin and then sold property in Zillow, it's an apples to oranges situation and you're mixing up two non-life kind data sets with different definitions. I don't mean to nitpick here, but this is actually pretty important because you're spending money on sending mail out based on data. So it's very important to just apples to apples it. So great, Jack. Steve, why are they different then? The real question is why are there's three sources of data? Steven Butala: I kept them separate. They're apples to apples to apples, all three. Why are they so different? Because the sources of data for Zillow, Zillow brags about the fact that they have all kinds of data in their dataset for properties. They could be Jill and I posting a property without a real estate agent as a for sale for owner. They could be the MLS. There's all kinds of places that you can get data to do this. Redfin goes the opposite way. They only have datasets in very specific areas based on which MLS is. There's three or 400 MLSs believe it or not, little local ones all over the country that roll up into the National Association of Realtors. So there's only certain local MLSs that participate with Redfin. And why is that? Because Redfin is not really interested in rural areas. They're really interested in urban areas where there's huge high volume of transactions. Steven Butala: That doesn't help us as much because we buy rural vacant land. And where that line cuts off, just imagine a boundary of the MLS is all geography based. So where one ends and one starts could be in the middle of a zip code. It could be in the middle of a county. So there's really,