Five Good Rental Houses Will Feed Your Family for Generations (CFFL 0033)
Five Good Rental Houses Will Feed Your Family for Generations
Jill DeWit: This is Jill DeWit for Land Academy and this is the Cash Flow From Land Show. Today I get to interview Steven … I love it when I get to do this … about his recently posted and now award winning … award winning …
Jack Butala: Yeah.
Jill DeWit: Okay … blog …
Jack Butala: Can you believe that?
Jill DeWit: I know. I can believe it. Your blog is called Five Good Rental Houses Will Feed Your Family For Generations and I am excited to hear more about this as I’m sure our listeners are.
Jack Butala: I’m excited that you’re the host …
Jill DeWit: Welcome, Steven.
Jack Butala: … of the show because when you’re the [what 01:08]?
Jill DeWit: I said, “Welcome, Steven.”
Jack Butala: Thanks. I’m so excited when you do the show. You’re the most … it’s like half the work for us … for me specifically …
Jill DeWit: I’m good with it too. I kind of like being in charge of this now and then.
Jack Butala: Good.
Jill DeWit: It’s good. It’s fun to change up. I’ve got to dive in. What’s going on with this blog and why is it so successful?
Jack Butala: I was talking to a colleague. He’s a direct colleague in this business … Seth Williams and every once in a while … I have no control over it. You write blogs, and blogs, and blogs, and one just goes to the moon. It’s incredibly popular for whatever reason. I wish I had more control over it because I would do it every time. This has just happened to be one of those blogs that everybody read and it went sort of … not completely viral but sort or viral in the little niche that we’re in all over the internet with land and real estate.
Seth said the same thing. Probably once or twice a year he writes when he has no idea which one it’s going to be but it just goes to the moon. This one is called Five Good Rental Houses Will Feed Your Family For Generations and maybe it’s the title.
Jill DeWit: I don’t know. Well, it’s interesting too because I remember hearing you and Seth talk about it one time and he said something about it might be two years down the road too … that sometimes … He wrote a book a long time ago then all of a sudden it gets all this attention. What’s funny … yours is two days or … Is it even a week old?
Jack Butala: Yeah. It’s about 14 days old.
Jill DeWit: Okay.
Jack Butala: …just for the listeners I put a link or I will put a link right directly in the text portion of wherever this podcast is syndicated. It get’s syndicated in Stitcher and iTunes and I think a couple of other places. They’ll all have a direct link if you want to read the blog while you’re listening or afterward or whatever.
Jill DeWit: Perfect … That’s awesome. Can you give me the gist of it? What is this blog really about?
Jack Butala: This blog is very specifically about real estate investment so I started … like every blog … and I’m sure you go through this too, Jill. Actually, I’m not sure but I’d love to hear about it … how you write blogs because I … I don’t think we’ve ever really talked about it but …
Jill DeWit: It’s true.
Jack Butala: You sit down with a concept and every time I sit down to write a blog I’m like … The premise is why isn’t everybody doing this? It’s just really simple … and I come at it from all different kinds of angles. For us it’s land obviously. We buy and sell land. It’s always made sense to me since the 90’s but owning 5 rental houses and going slow while you still have your regular job and accumulating one or two or three houses … or five houses in this case … over a few years just seems like second nature. You and I have had several rental houses, Jill.
Jill DeWit: Mmmhmm.
Jack Butala: I’ll get it out of the way right now. I don’t have any rental houses right now because I keep getting blind offers from people that are just ridiculously more than I ever paid.
Jill DeWit: Right.
Jack Butala: When I get an offer on a rental house that I’ve had for a while to purchase it … For those of you that don’t know … If you have rental house and it’s rented it’s now all of a sudden usually way more expensive or way more …
Jill DeWit: Valuable?
Jack Butala: … valuable yeah … price-wise than if it was just sitting there vacant or ready just for the unused so what happens is you buy a house … You clean it up maybe. Phil and I have done this several times. Buy a house. Clean it up. Get it rented out and then everybody comes out of the woodwork because you’ve done all the hard work …
Jill DeWit: Exactly …
Jack Butala: They just want to buy it.
Jill DeWit: There’s a tenant and a lease and you don’t have to think about it.
Jack Butala: … last one Jill and I did was in not the best neighborhood in south Phoenix …
Jill DeWit: Mmmhmm.
Jack Butala: These are the numbers. We bought it for 25,000 bucks. I think we cleaned the carpet.
Jill DeWit: I think so. I remember that we …
Jack Butala: … a couple things …
Jill DeWit: There were things broken in the fence that we had our guy come out and just … the back yard … fix a few things that were falling down … wasn’t much …
Jack Butala: … got it rented out …
Jill DeWit: Uh huh …
Jack Butala: … and then sold it for 75,000 dollars.
Jill DeWit: That’s hilarious.
Jack Butala: … and the math in my head was, “All right, so how long is it going to take for me to make 50,000 bucks in rental income?” … and it was a long time.
Jill DeWit: Right.
Jack Butala: You know …
Jill DeWit: Exactly … What’s the whole process? You just gave me the big picture.
Jack Butala: Yeah.
Jill DeWit: You get in to it a little bit but … Go back to your blog.
Jack Butala: Okay.
Jill DeWit: … and give me the process for the blog of start to finish … get to this five rental houses …
Jack Butala: Yeah.
Jill DeWit: … explanation … thanks …
Jack Butala: Yeah. We all want financial security … all of us … You would not be listening to this podcast if you were all done and you own a couple of skyscrapers and that was over. We all want financial security. Single family residential investments as a real estate investment in general is maybe my least favorite real estate investment.
I love land and that’s why we do it and apartment buildings are great but for whatever reason there’s just a ton of people who have a connection with investing in houses. I think it’s rooted in the house they grew up in and they watched their parents make a bunch of money or whatever. I don’t know. Who knows why? Everybody has got a different reason for what they choose to make money in in real estate.
This blog is really about why that fails because a disproportionate amount of people that get in to it buy a rental house. I think they don’t have enough education or haven’t taken the time to really look in to what’s involved in that. That’s really what this blog is about.
I, in detail, describe why it fails and then after that I describe how to do it so that it can really work for you. You really only need 5 or 6 of them or 3 of them depending on your situation to not really ever have to go to work anymore.
Jill DeWit: Are you not going to tell us or are we going to have to read the blog? Is that kind of what you’re saying?
Jack Butala: I have it up on my screen right now. I can read it to you if you’d like.
Jill DeWit: Okay. No, that’s good. All right … all right … We’ll just dance around …
Jack Butala: … all right so …
Jill DeWit: … dance around the top here …
Jack Butala: Here’s the answer to that question. Why does this fail? Why do rental houses as an investment fail for so many people? … because there’s a real estate agent involved … There’s a lender involved. There’s a home inspector involved. There’s mortgage insurance involved … and on … property managers and on and on and on … so you got …
I read a blog one time recently on bigger pockets about how you have to get your team in place. You’re the investor and you get your team. You get your manager in place and your contractor. That’s the worst advice I’ve ever heard. Do the stuff yourself.
Jill DeWit: Right.
Jack Butala: If you’re trying to quit your job or trying to be a passive investor in real estate which is what we are … what Jill and I are …
Jill DeWit: Right.
Jack Butala: … You don’t want to work for somebody else the rest of your life. Learn how to do this stuff.
Jill DeWit: Exactly.
Jack Butala: Don’t hire an agent.
Jill DeWit: You’ll never know what’s going on. By the way, you won’t know where your money is going to sometimes.
Jack Butala: That’s really what the first part of the blog is all about. This is why it fails because you’re paying all these people to do all this stuff …
Jill DeWit: Correct … that you could do …
Jack Butala: Real estate agents are famous for saying, “Oh, no, no…” The seller pays the fee. The seller pays my fee. You don’t pay my fee which cracks me up every time I hear it because …
Jill DeWit: It’s coming out somewhere.
Jack Butala: Pay it.
Jill DeWit: …somewhere …
Jack Butala: … and the mortgage broker … same thing. You don’t pay anything. The bank pays it.
Jill DeWit: You’re paying more for the house because …
Jack Butala: My money pays it.
Jill DeWit: … [inaudible 08:14] out the fees …
Jack Butala: You pay it all.
Jill DeWit: … whatever it is … It’s true.
Jack Butala: You pay everything. You pay for everything. Without you, the buyer, or the investor, the deal is not going to happen.
Jill DeWit: Okay. I got the gist of what’s going on now. Can anyone do this?
Jack Butala: Can anyone … Anybody can do this. Anybody who has the ambition can absolutely do this. Yes …
Jill DeWit: Do I have to be really really smart to be able to figure … You just said I don’t need a team. I need to do it all.
Jack Butala: Yes.
Jill DeWit: Oh my gosh. That means I have to act as my investor. I have to be the real estate person. I’ve got to be the acquisitions person. I’ve got to be in charge of finding a tenant and all of that. Can I do all of this by myself?
Jack Butala: Yes.
Jill DeWit: Cool …
Jack Butala: Jill you and I are famous in other circles for saying everybody just wants the truth, right? That’s how I right these blogs and I know you do too.
Jill DeWit: Mmmhmm.
Jack Butala: You talk to a lot more people on the phone …
Jill DeWit: It’s true.
Jack Butala: … per day than I do. They just want the truth.
Jill DeWit: It’s true.
Jack Butala: Here is the truth. Learn how to buy undervalued real estate by sending out direct mail. That’s what this blog is about. Learn how to do that. It’s going to take months. It’s not going to take thirty seconds. Once you’ve mastered that you got a good data source and we have all the answers in our programs for all this stuff. We’ve done it 15,000 times.
Once you know how to buy undervalued real estate … Let’s say you don’t have a dollar and you send out a bunch of mailers and you get all these people calling you back who own the houses … and they’re calling you back and you know they want to sell their house really quickly for 20 or 40,000 dollars below it’s value … Then find some people … and there’s tons of them in your neighborhood … That’s what this blog is about … who are dying to buy houses that are undervalued like you can provide …
Now you’re learning how to buy … to source undervalued real estate … Then complete the transaction with the investors that you’ve found. Collect 10, 15, 20 grand per unit … Accumulate enough cash then go buy your own rental house for cash.
Jill DeWit: Mmmhmm.
Jack Butala: Now you don’t have a lender or property manager or real estate agent or any of that stuff and you have a lifelong skill.
Jill DeWit: Mmmhmm.
Jack Butala: That’s why this blog is so …
Jill DeWit: Mmmhmm.
Jack Butala: … popular because it provides all the answers and it’s the truth.
Jill DeWit: Do you know what? You’re so right. I didn’t know that. It’s funny you say that because years ago my brother was starting his at [inaudible 10:23] and sold a day trading company. I was scratching my head going, “How did you come up with all this money?” He’s like, “Jill, it’s super easy. The money is out there. If you’ve got a really good business model and a good business plan and everything, finding the investors and the money is the easiest part of it.”
Jack Butala: He’s right.
Jill DeWit: I didn’t get it back then.
Jack Butala: Yeah.
Jill DeWit: I get it now and it’s true . You and I are those people too.
Jack Butala: Yeah. Right.
Jill DeWit: Now people can come to us and go, “All right … Here’s this deal. I mean we’re all crazy not to complete this. We’re all running to the bank because we want to complete it.” You’re right.
Jack Butala: Yeah … so at the end of the blog … Here is the gist of it. Learn how to buy undervalued real estate using direct mail and save a bunch of money while you’re … You don’t have to start with any money. Save a bunch of money. While you’re doing this … while you’re shoving these deals over to the investors or … they’re usually like land-flip guys.
If you go on Craigslist and you type in stuff like we buy houses or the ugly houses model … all of that … You want an arsenal of those guys in your back pocket … not an arsenal … like 5 … You want five guys in your back pocket where once you find an undervalued piece of real estate they can step in, close the deal, and pay you.
Jill DeWit: Mmmhmm.
Jack Butala: …or you can source it together … There’s lots of different ways to cut in to but the blog covers all that stuff in great detail … but all you have to do is maybe 10 of those deals …
Jill DeWit: Mmmhmm.
Jack Butala: …less than one a month …
Jill DeWit: Yeah.
Jack Butala: … less than one a month so in a year … Now you’re paying cash for a house.
Jill DeWit: Exactly.
Jack Butala: If you make 10,000 bucks on each one of those … which is actually a pretty low fee … You can go to 100 grand so you go pay cash for a house [heading 11:57] out. Here’s another thing that I really think that this is one of the reasons that this blog is so successful. When you pay cash for an asset which is all we do in our land business …
Jill DeWit: Right.
Jack Butala: … but when you pay cash for a house all kinds of stuff can happen even when you’re learning … You got a bad tenant. Mandy lost her job. When you don’t have to make that mortgage payment …
Jill DeWit: Right.
Jack Butala: … and there’s no real monthly expenses associated with the house … It can stay vacant for a while and you can afford it.
Jill DeWit: Right.
Jack Butala: …or you can sell it really quickly if you have to without checking with the bank first … You’re in so much more control.
Jill DeWit: … very true …
Jack Butala: I think most new investors don’t know this kind of stuff …
Jill DeWit: I think you’re right.
Jack Butala: … you know?
Jill DeWit: They can’t wrap their head around it for some reason. They just don’t think it’s possible and it’s very possible.
Jack Butala: Are you text messaging?
Jill DeWit: I am not. I am not. I am totally paying attention. I am serious.
Jack Butala: One of the reasons Jill and do well together …
Jill DeWit: I’m interviewing you.
Jack Butala: … because I’m too wordy and brainy …
Jill DeWit: Oh, yeah.
Jack Butala: I know I am. Jill is too skip along the top …
Jill DeWit: Can I go now? Can I go now?
Jack Butala: … twisting an umbrella, skipping along the top like she’s in a 1940’s musical … That’s Jill’s whole life and mine is like … I’m like a mechanical engineer with a slide role all upset and we just meet somewhere in the middle and I guess it works for some reason. I don’t know.
Jill DeWit: It does work. [crosstalk 13:19] We complement each other.
Jack Butala: I think you just closed your eyes a little bit.
Jill DeWit: I think I did.
Jack Butala: Am I all monotone?
Jill DeWit: I think I did.
Jack Butala: Is it all like, monotone [crosstalk 13:26] …
Jill DeWit: Do you know what I zeroed in on? I’m looking at my notes on the computer here and I’m like, “You know what? You kind of spelled my last name wrong.” It’s okay.
Jack Butala: Did I really?
Jill DeWit: There’s a capital “w” but that’s okay.
Jack Butala: Oh …
Jill DeWit: It’s a minor thing. That’s just what I was focusing on because you were deep in discussion there with yourself so I kind of let you go.
Jack Butala: … deep in discussion with yourself … Boy, if you had a guest that would be the whole … You know how we name … we title …
Jill DeWit: … name the show … tell the show [crosstalk 13:58] …
Jack Butala: When we have guests we …
Jill DeWit: Five Good Rentals … Steve’s discussion with himself about …
Jack Butala: Steve’s having a discussion with himself.
Jill DeWit: … Five Good Rental Houses That Will Feed Your Family For Generations …
Jack Butala: I’m going to go make lunch. You keep talking. I’ll come back later. Great show Steve.
Jill DeWit: Okay … all right, all right, all right … Okay … I have another question though. We kind of led in to this and so I know a lot of this show is going to recap but tell me again why isn’t everyone doing this? It just doesn’t make sense that they’re not. It’s a no-brainer to me.
Jack Butala: Yeah … a couple reasons … I think everybody gets real jacked up about it and excited in the beginning and then they find out it’s a little bit of work.
Jill DeWit: … but it’s … teaspoon full of work like Seth Williams said …
Jack Butala: … a teaspoon … yeah …
Jill DeWit: See Seth Williams … a teaspoon full of work …
Jack Butala: … a teaspoon full of work in reality …
Jill DeWit: He … boy … First it’s getting up and all the commuting that you do and the driving and the this and the that … Lets all think about this everyone.
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