Common Misconceptions about Property Flipping (CFFL 0119)
Common Misconceptions about Property Flipping
Jack Butala: Common Misconceptions about Property Flipping. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack Butala:
Jack Butala here for Land Academy. Welcome to our cash flow from land show. In this episode, Jill and I talk about the questions we’ve received as speakers at a local REI event.
Jill, this is so much fun giving talks like this with you. It’s so fun to face to face get everybody’s… We’ll explain what an REI event is in a second here. It’s a lot of fun.
Jill DeWit:
It is a lot of fun.
Jack Butala:
Let’s share the whole deal with our listeners. Before we do, we’ll take a question from a caller.
Jill DeWit:
Carol from St. Louis called in and asked, “I work full time, and I’m trying to do this on the side. What is the best way to handle calls that come in when I’m at my day job? Hoping to leave that in a year.”
Jack Butala:
Wow, that’s a good question.
Jill DeWit:
It is.
Jack Butala:
Do you want to answer it?
Jill DeWit:
You start, please.
Jack Butala:
This is actually incredibly important. I made this mistake when I started out. You really don’t want to use your cell phone. It’s going to catch up with you pretty quickly. If you’re sending out mailers and offers… If you’re doing it properly, these are documents that recipients are going to stick in the physical file folder forever. You want to have a phone number on there that’s going to last forever. This is good, free advice. Don’t use your cell phone. Cell phone numbers change, people move, stuff happens.
You need to find a place maybe online like ringcentral.com … we have no affiliation with these people… You need to find a place where you’re going to get a phone number that you’re going to have for an extremely long time. I know it costs money. Nobody likes to pay monthly fees for all this stuff. We get calls on mailers that we’ve sent out from the early 2000s because of that. If we ever changed our phone number, it would be lost.
To answer your question, Carol from St. Louis, you need to hire a service that’s going to answer your calls, a live service. You’re going to dramatically increase the number of deals that you do. If someone live answers the phone, and they’re nice, and they say, “Carol is not here right now, but she usually returns her calls at XYZ. Thanks for calling.” That makes a world of difference in my opinion. Some people will say no and maybe just a cell phone message.
Jill DeWit:
In success plant, I see a couple different people doing different things, trying different things, and even having different scripts on their … they have recordings and scripts. I don’t know what all the percentages are, but I’ve been watching people try different things. There are a lot of folks in the same situation. This is not their number one thing. They’re hoping it’s going to be their number one thing. They just can’t take the call at that time.
Another interesting point is: A lot of times I have sellers calling on weekends too, because they have jobs. So sometimes it works itself out. Be available if and when you can.
Jack Butala:
Here’s how Jill and I do it. A long time ago, probably 2001 or 2000 I moved my office from my house to an office share situation. Different parts of the country call it different things. Out here we call it office share or executive offices. It’s certainly not the cheapest way to go but it’s the most convenient. You’re in an office building with a bunch of other people like attorneys and whatever who have different practices or do different things for a living. We have a common receptionist/admin help, which we never use. What came with it was a bank of phone numbers because the guy who owns this office share thing we now have a personal relationship with and have had since that time. We picked the right place. It came with a permanent phone number. If you’re lucky enough to look around and ready to move out of your house, that’s a great way to do it.
VOIP is a permanent number, voice over internet.
Jill DeWit:
Those are permanent? That’s good to know.
Jack Butala:
You could get a Google voice number. That’s permanent and free.
Jill DeWit:
I know people who have done that.
Jack Butala:
You can also get, as crazy as it sounds, get a phone number from the phone company. If you have a home phone number from the phone company, that’s yours forever if you want to keep it. You have to pay. I sound like I’m 80.
Jill DeWit:
Five bucks or 8 bucks a month.
Jack Butala:
You can forward that anywhere. You can forward it to your cell phone, you can forward it to your new office, you can forward that to a new city.
Jill DeWit:
If you’re lucky, maybe it comes with an answering machine, Steven.
Jack Butala:
No, I’m not joking. I’m serious, Jill.
Jill DeWit:
I know you are.
Jack Butala:
When I first started we used our home phone and it worked out great. It’s not our number now.
Jill DeWit:
Someday, someone is going to say, “What is a home phone? Why would I do that?
Jack Butala:
One of our kids a couple of months ago picked up an office phone here, the youngest one. He picked it up and he put the thing to his ear. He dialed the number and said, “Where is the send button?”
Jill DeWit:
Let’s talk about the experience. I think we answered that okay for Carol.
Let’s talk about our event, our experience the other night.
Jack Butala:
What I got out of that… Jill, I would love to hear your thoughts on this. We haven’t really talked about it in detail. What I got out of that was a lot of… Right at the beginning I asked everybody to raise their hand if they never done a deal. Probably 80 percent of the people did. It was a great way for me to get information about the basic 101 questions that people have.
Jill DeWit:
You mean 80 percent of them had not done a deal.
Jack Butala:
Please tell us what an REI event is in general before we even get into this, where people can find them, and all that.
Jill DeWit:
Ours is AZREI. It’s real estate investor. That’s what it is. They get together to collaborate, and learn, and network. Sometimes they specialize in different things, and they can work together. Maybe you’re a flipper. You might go to something like this because you need a contractor. Someone might have a good contractor. They can do some networking and things like that.
I just found it. That’s what the event is. This group is the only group I’ve ever been involved in and gone to, me personally. I know you’ve done other ones. I know that this one is a paid membership. I have no idea even how much it is.
Jack Butala:
I didn’t even know that.
Jill DeWit:
Yes, it’s a paid membership.
Jack Butala:
Those people paid to be there?
Jill DeWit:
That even last night was not free. It was for members only.
Jack Butala:
They should pay us to speak then.
Jill DeWit:
Maybe we will work on that. I was just happy to be there and check out this group. It was a new group. They meet once a month. The people come and go. It varies.
How do you find it? Google it or biggerpockets.com. That community talks about events. They might even share meeting times in there with different cities and things. I’ve seen that, and they’re talking about it. I’ve even seen people saying, “Hey, I’m in X city and I can’t find one because there are so many investors in that community. Should we start one?” I’ve seen people talking about that. I don’t know what’s all involved.
Jack Butala:
Maybe we should start one, Jill.
Jill DeWit:
That’s a good idea because I don’t have enough going on right now.
Jack Butala:
That was a trap.
Jill DeWit:
Did you see the look on my face?
Jack Butala:
I know, but honestly was a trap.
Jill DeWit:
I was like, “What do I say to that?” It took my breath away.
Jack Butala:
I come up with these cockamamie ideas all the time.
Jill DeWit:
I hope that answers where to find it and I hope it answers what it is. So many of those people were new and had not done a deal before. It’s a great place for people starting out to meet people like us who are not new, who have 15,000 almost 16,000 deals under our belts and ask us questions. That’s really what I think it’s for. That’s the beauty of it. You have experienced people there face to face who can answer all your questions.
Jack Butala:
I swear I get more out of it than they do. You get involved with something like this and do it for a lot of years, you completely forget about the grassroots mistakes that you made a lot of years ago. There ended up being a Q and A at the end about… One person asked, “Can you list the serious mistakes that you made so we can avoid them?” So we did.
Jill DeWit:
I love that.
Jack Butala:
I loved it too. I really had to dig deep. I had to think for a while.
Jill DeWit:
I know what I said in my first one.
Jack Butala:
Go ahead.
Jill DeWit:
Don’t get hung up on a deal. It’s easy to say, “This sounds so great. I’m going to make it happen. There are all these things that are wrong with it. Maybe it’s priced not right.”
Jack Butala:
Let me address that right now. This is really helpful. Sit down with yourself and a blank piece of paper after you’ve listened to a bunch of these podcasts or whatever source of education you’re getting as an investor. Sit down with yourself with a blank piece of paper. At the top of it put acquisition criteria. A lot of people at the end of this program last night brought up these crazy, pie-in-the-sky schemes that they’re all wrapped up in. They’re never going to make a dollar on them.
Let me give you a couple of examples. You want to stick to your acquisition criteria. Maybe it’s a 40-acre property that you’re going to buy for $3,000 and sell them for $6,000, and you don’t want to look at anything else. Some of the things that were being described last night were this, “I know my Aunt Sally had this boyfriend who had a farm and it had six subdivided parcels in the back. There was no debt on it.” It was a crazy personal story.
The person who was describing this, when she was done … I was as polite as possible. I said, “You should never know this. Whatever your acquisition criteria is, you should never know about this deal. I don’t care if you’re sure you can make a billion dollars, pass on it because you need to move forward on your acquisition criteria and get the machine rolling.” Consistency, consistency, consistency.
Jill DeWit:
She got that.
Jack Butala:
Consistent mailers, consistent product type, consistent relationships at the county. Travel along the path of A, to B, to C. When you’re rich and famous, and you want to do some cockamamie, crazy real estate deals out there like the one she was describing, have at it. Even to this day, I know there are a bunch of deals you and I could do, Jill. I know it would take a year, and I know we would make a ton of money, and I don’t want to do it.
Jill DeWit:
You know what I come back to? I said, “Let’s talk about this.” What I point out here … This deal sounds great right now, and all of things perfect. What do you think you’re going to make? Let’s just say you spend four months on it, and you make $20,000. I’m like, “Do you know what I could have done in four months? Let’s think about this.”
Jack Butala:
If you stuck to the program.
Jill DeWit:
She’s like, “You’re right.” I’m like, “Yeah. Let’s think about that. Move on.”
Jack Butala:
You’re right.
Jill DeWit:
Don’t get hung up on that stuff like you just said. Have that criteria and stick to it.
Jack Butala:
I told the story last night. I’ll tell it again. I sold a property, an 80-acre property in Southern California to a guy a lot of years ago, and I never remembered the deal. I don’t remember these deals. We’ve done 15,000. We have people under us who would actually do the deals once we real on them. A guy in a scary kind of way hired a private investigator, got my cellphone number, and I get this random phone call one day, and I answer it. The guy says, “You don’t know me at all.” He tells me the story. He sold me this 80-acre property in Southern California. I bought it for X. I sold it for Y.
I looked back. The numbers are these. I bought it for about eight grand, and I think I sold it to him for maybe $22,000 or $30,000. I don’t remember the exact numbers. It was something like that. He told me, “Do you have any other properties like this?” I said, “Probably, but that’s just not how this works. There’s a whole list of them on XYZ.com. Go take a look.” This is a lot of years ago. Our dot coms are real different back then. He said, “I’ll tell you, that property is a municipal airport now.” I sold it for 1.2 or 1.4 million bucks to the county …
Jill DeWit:
Isn’t that awesome?
Jack Butala:
… or whatever. I said, “Congratulations, man. That’s awesome.” I expected myself to feel bad about it like I could have done that. Then I started thinking between then and now, how many deals have I done. More than $1.2 million net worth. I’m making your point, and I’m . Have an acquisition criteria and work it, work it, work it, and you are going to do great. Forget about these one off pie-in-the-sky. You don’t ask the class that we teach, “What’s an entrepreneur?” You know what they all said? It’s Mark Zuckerberg. That’s not an entrepreneur.
Jill DeWit:
Right.
Jack Butala:
What we do is an entrepreneur.
Jill DeWit:
Right.
Jack Butala:
That’s a pie-in-the sky one off crazy … I mean, congratulations, Mark. You nailed it.
Jill DeWit:
Right.
Jack Butala:
What happened is you got lucky.
Jill DeWit:
Exactly.
Jack Butala:
I’m not saying he’s talent-less. I’m just saying he’s at the right place, right time. He nailed it. I’m not going for that, and you shouldn’t either. As a real-estate investor, you should get a system in place, so you can have a ton of money coming in and it’s easy.
Jill DeWit:
One of the things that you said last night that I really loved, and I wanted to share with our listeners is something is going to pick you. You usually don’t pick it in this world. The investors there, by the way, they might be single family residents. They might be multi-unit. They might be apartment buildings. They might be commercial. That’s one of the cool things, too, about these events. You get everybody there that does all kinds of properties taking about stuff, because some of the strategies in how we do stuff is universal. Like, our whole program really is universal.
Jack Butala:
Most of the people there were single family residential flippers, or at least they thought they were going to be.
Jill DeWit:
Right.
Jack Butala:
I did a whole thing on this on. I mean, start with land. You can start with houses. Jill and I still have wholesale houses out, but I don’t like doing it.
Jill DeWit:
Right.
Jack Butala:
I’ll tell you, there’s a catch to every deal.
Jill DeWit:
Yeah.
Jack Butala:
There’s something you got to … There’s all, “Wait a minute. We got to do this.”
Jill DeWit:
It’s usually because people come to us and they need the money, and we’re happy to back them, because it’s good of a deal. It’s how we get roped into these things. I’m not out there looking for them. They’ll find you.
Jack Butala:
Let me send a ton of mails responses. They will still come back, right?
Jill DeWit:
Yeah.
Jack Butala:
Exactly. You’re right, Jill. You find your specialization. The thing that you think your specialization is going to be in the beginning, it doesn’t end up being that. My specialization right in the beginning was long-term care facilities, assisted living facilities and nursing facilities. I got out of that. I mean, it’s extremely profitable. I mean, crazy profitable, but I got out of that as fast as I could. You want to talk about it or … I talk about this in the free ebook. You want to talk about a complicated a transaction. It doesn’t come more complicated than that. Then I went from that to the easiest transaction on the planet. There’s no one involved, except you didn’t sell it.
Jill DeWit:
You’re the 180. It’s like you’re running, screaming from that.
Jack Butala:
It’s like I touched the stove.
Jill DeWit:
It’s so funny. I am not doing that again. Any last misconceptions about property flipping or … I don’t know. That’s …
Jack Butala:
I think there’s a huge misconception that it’s hard.
Jill DeWit:
That’s true.
Jack Butala:
It’s ridiculously easy, I think.
Jill DeWit:
That’s true. That’s really true.
Jack Butala:
I think, I have to come back to what you say all the time, Jill. If it’s super-hard, and you are really struggling with it, anything in life is not for you. If you are banging your head against the wall at math class and math … Gosh. I didn’t say this. I’m going to say it, anyway. If you are banging your head against the wall about math — a lot of people do — math is not for you. You’re probably not going to learn it. I think there are some things you have to just put the goggles on and do it, and that’s it. If it’s really hard, and you’re just not up, it’s not for you.
Jill DeWit:
Thank you.
Jack Butala:
Jill, just fell asleep again.
Jill DeWit:
I did not. Do you know what’s funny?
Jack Butala:
That’s how I know I’m talking too much.
Jill DeWit:
I got to bring this up right now. I have to bring it up. You are so Michigan and I am so California. You and I say the exact same things 100% different. The way I say it, you say it if this is wrong, don’t do it. I say, if this is right, do it. That’s what’s so funny. I was a little bit confused at the way you’re wording things, because I’m like …
Jack Butala:
That’s just helpful.
Jill DeWit:
That’s exactly … That’s just not how I say it, but it’s the same … We’re going to do the same ending, but I just word it so differently. I wasn’t looking at you going, I can’t believe how my words when they hit your brain, it’s translated.
Jack Butala:
Every time I starts something new, I say to myself, this is probably never going to work. It’s going to end in a fiery ball of disaster. Then when it works, I’m like, “Man, this work great. I’m surprise and happy.”
Jill DeWit:
It took me many years it took me to get over that. Like, why does he walk around saying that? For you, you know what, Steven? For you and your personality, and I’m not digging on Michigan people, or Detroit, or anything. I think you need to be prepared for the worst just in case, and you’re pleasantly surprise. I go at things so differently always. I’m always like, “This is going to work. You know what? I’m going to make it work. I’m going to force this until it works.” I have to give up like I really was wrong. Like, I’m not going to be a supermodel or I don’t know whatever it is, a race car driver or dream it up. I did my best, and eventually have to give it up.
Jack Butala:
Race car driver?
Jill DeWit:
I don’t know.
Jack Butala:
Supermodel.
Jill DeWit:
I don’t know.
Jack Butala:
What the heck?
Jill DeWit:
I don’t know. I didn’t really want to be those things, anyway. That’s funny. We got at things a littler bit differently.
Jack Butala:
That’s why maybe we’re good at this.
Jill DeWit:
Maybe it is. Thank you.
Jack Butala:
Hey. Join us in another episode where Jill and I discuss your all important success and property investment, and in life. You’re right. I don’t think it’s bad.
Jill DeWit:
I don’t know. I just felt bad. I was looking at you.
Jack Butala:
[Crosstalk 00:19:44] like you.
Jill DeWit:
I was totally …
Jack Butala:
[Crosstalk 00:19:46] like me. We’re a mess.
Jill DeWit:
Wow. Listen to how I was really taking this step back and listening to how you describe my concept and I’m like, that is not how I describe it at all, but it really means the same thing. It’s just so interesting.
Jack Butala:
I think if we were both the same, it would be tragic. If we were both like you …
Jill DeWit:
Oh my gosh.
Jack Butala:
… we would just walk around with a happy high all the time and nothing get done. If we were both like me, it would be walking around like Eeyore going …
Jill DeWit:
But everything would be organized.
Jack Butala:
This is never going to work.
Jill DeWit:
Perfect.
Jack Butala:
It will be all organized, but no revenue at all.
Jill DeWit:
(Laughs)
Jack Butala:
This is a big wall of depressing red numbers on a sheet of paper.
Jill DeWit:
Why isn’t the phone ringing? Everything looks great. The website’s perfect. My office is perfect. There’s nothing out of place, but the phone does ring.
Jack Butala:
Wow. This should event called “roast Steve.” That’s the name of this episode.
Jill DeWit:
No. I didn’t mean it as a negative thing.
Jack Butala:
Have you ever heard a woman complain about a man being too clean and too organized? I want to hear somebody call in and say, “You know, my wife said that,” but I’ll be … No, Jill.
Jill DeWit:
No. It’s okay. You know what I think can be funny? I think it would be funny to take pictures of both of our offices and put them on our website side-by-side. This is how Steve rolls. This is how Jill rolls.
Jack Butala:
There’s nothing in my office. I don’t have any papers.
Jill DeWit:
You don’t have a trashcan.
Jack Butala:
I know. That’s the way it should be. I hear a funny story. A lot of years ago, I got mad at the staff, because it was just a mess. Some people, that’s just the way I guess they work. I work almost completely paperless, except for deeds and stuff. We’re generally about 90% paperless, because we need to see everything for functionality. Well, they weren’t getting it. Have I ever told you the story?
Jill DeWit:
You have. Share it, please.
[00:21:49]
Jack Butala:
I took away everybody’s filing cabinets. I remember them in like a semi . That’s not really rage. We’re all laughing about it at that time while it was happening. I was serious. All took all the waste baskets out. I took all the filing cabinets out. I put a shredder right in the middle of the office, and I said that we’re done now. Like I ripped off the band aid, and it worked.
Jill DeWit:
It’s good.
Jack Butala:
Everybody took it seriously after that.
Jill DeWit:
That’s good.
Jack Butala:
I don’t know why I share it. That doesn’t matter.
Jill DeWit:
Come to Jill’s office. There’s a trash can. It’s pretty.
Jack Butala:
It’s flawless.
Jill DeWit:
There’s even magazines in there.
Jack Butala:
There’s talk of a couch and stuff.
Jill DeWit:
It’s talk of a couch.
Jack Butala:
It’s a cool office.
Jill DeWit:
Talk of a sitting area.
Jack Butala:
We all just got new offices.
Jill DeWit:
Right. I have a little sitting there off the side, and I’m going to do something with it. I haven’t decided yet. I would love to have a table and like some chairs. I could sit there and like if anybody comes in, we can just say, “Let’s sit over here and have some tea.” That’s what’s coming. Do you think I’m kidding?
Jack Butala:
Tea?
Jill DeWit:
Yes. I think that would be nice. It’s coming. Just wait.
Jack Butala:
There’s a bottle of whiskey in my office, not tea. That’s the difference between California and Detroit right there.
Jill DeWit:
There you go.
Jack Butala:
Let’s go buy some property.
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