Why Real Estate is the Most Popular Way to Create Wealth (CFFL 0150)
Why Real Estate is the Most Popular Way to Create Wealth
Jack Butala: Why Real Estate is the Most Popular Way to Create Wealth. 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 from Land Academy. Welcome to our Cash Flow from Land Show. We show you how to buy property for half of what it’s worth, and we resell it the next day. Free information from Jack, that’s me-
Jill DeWit:
And inspiration from Jill, that’s me.
Jack Butala:
In this episode Jill and I talk about why real estate is the most popular way to create wealth. It’s true. More millionaires have been created from real estate than anything else. Great show today Jill. It’s a little bit different. It’s fun actually.
Before we start, let’s take a question posted by one of our members on successplan.com, our free online community.
Jill DeWit:
Okay. Scott from Sacramento asks, “Super excited and ready to purchase my first investment property. What are your best tips or advice for me? I’m looking for guidance as I embark on my future as a real estate investor.”
Jack Butala:
Congratulations Scott from Sacramento. That’s awesome. You’re definitely pointed in the right direction. You’ve got the right idea. Here’s my advice, forget about this property, and here’s why, what I want you to do first, especially if you’re young and it sounds like you are, learn how to source super cheap properties. That talent, and it’s what we teach here, that talent will serve you fro the rest of your life. I see many, many, many investors buy a property the incorrect way the first time out of the gate, and it destroys your appetite or that quest that you have and the interest in being a real estate investor.
You want to start with education. You want to learn how to buy super undervalued property, which is what Jill and I specialize in and teach many of our members. Please consider forgetting about that first property and spend the next six months to a year learning, hopefully from us, but any resource that you can find about how to buy super cheap property.
Jill DeWit:
Love it. Just to recap Jack aka Steven.
Jack Butala:
Jack in my middle name.
Jill DeWit:
I know, but we don’t use it very often. Now it just kind of fits. I still catch myself too.
Jack Butala:
People are starting to call us Jack and Jill and remembering it.
Jill DeWit:
I know.
Jack Butala:
It makes sense.
Jill DeWit:
It’s true. Think about the numbers, don’t get … We joke about this, but it’s all true. You’re either going to win emotionally or you’re going to win financially. Which would you like? Don’t think emotionally, think financially. Think about the numbers.
Jack Butala:
This is a topic of a whole different episode, but one of the least significant things to look at in a real estate deal, the way we do it, is the real estate itself. The transaction’s what matters. The numbers, who’s going to buy it, how fast they’re going to buy it, how they’re going to buy it. The whole thing. The house itself, unless it’s falling down, it’s either turnkey or it’s not, and if it’s not you wholesale it to somebody who can make it turnkey. The real estate doesn’t matter, and it’s sad to see people who are out front, Jill, get really hung up on it.
Jill DeWit:
It’s true.
Jack Butala:
All right. Why the heck is real estate the most popular way to create wealth? Here’s the thing, and Jill, pipe in anytime here.
Real estate has what I call the two major components of any type of investment that you really want. It immediately produces cash flow, but it’s also, the value of it is increasing over time because inflation pushes it up.
Theoretically, when you go buy some stock in the stock market, it’s the same thing. It should pay out a little bit of dividends every year and increase in value 10 or 11% a year, but it never does. Stock will increase, for sure if you buy it right and get the right person involved and stuff, but there’s fees and all kinds of things.
Real estate, unless you really do it all wrong, it’s the safest way to do that. It’s timeless. The more population grows, the more people need a place to live. A huge difference in my opinion is that it can be a totally passive investment. You can buy 15 rental houses and have a manager and never even know where they are. That’s really why I think it’s such a popular way to make a ton of money.
That, and I think the numbers are pretty staggering. If you put $20,000 down on a house, and you pay off a 30 year mortgage fixed, and everything holds true, the market goes up 11% a year. It has done that since they kept track of it since the early 1900s, you’re going to make 2 million bucks by that time.
Jill DeWit:
Right.
Jack Butala:
That’s just because you’re living there. That’s all you’ve got to do. If you own a company, let’s say a dry cleaner … Let’s look at this. Let’s look at selling 100 properties on terms versus owning a dry cleaner. You buy and sell as you go along 100 properties, and you sell them on terms for $200 each a month for 15 years or 18 years, that’s a typical 40 acre deal for us. We buy it for 2 or 3,000 bucks, and we sell it for 20 for $200 down and $200 a month. You get 100 of those, you’re making 20 grand a month for 17 or 18 years. The vast majority of those are never going to get paid off, so you resell them. It’s basically like renting a property.
How much time Jill, would it take you a day to manage 100 vacant pieces of property and the payments?
Jill DeWit:
Um-
Jack Butala:
20 seconds?
Jill DeWit:
Exactly.
Jack Butala:
A teaspoon full of effort.
Jill DeWit:
It’s true.
Jack Butala:
How much time does it take to run a dry cleaner? All day. 12 hours a day.
Jill DeWit:
Oh my goodness. There’s work involved. There’s a lot involved.
Jack Butala:
That’s why it’s such a popular method. You don’t have to get up in the morning, you’re literally making money in your sleep, literally.
Let’s take a real brief look at another example, an apartment building versus a printing company, a big commercial printing company. You buy the apartment building, you put a manager in place, you raise the capital of the whole thing, you get the thing done. Buy the building right by the way. You don’t buy one that’s falling down, and you renovate it. You keep the thing rented with your good property manager in place, you pay the manager well, you don’t even really need to know where the building is. You could have a full-time job, and own an apartment building and buy another one on a weekend.
It’s so easy to accumulate wealth in real estate if you get the right training. That’s the whole key. You know what you’re doing. Real estate almost always wins Jill. I’d love to hear a better business model.
The only one that I’ve ever heard of that’s even close is insurance, but here’s the thing with insurance, if you’re the greatest insurance person in the world, and you sell a million policies a day, there’s still no equity component. When they stop paying the policies, you have nothing left. There’s no balance sheet component to it in accounting speak. I’ll leave it at that. I hope that’s obvious Jill.
Jill DeWit:
You said equity?
Jack Butala:
Yeah. Equity.
Jill DeWit:
That’s the thing.
Jack Butala:
Real estate has both.
Jill DeWit:
I know. We joke about that … I sleep really well at night because everything’s paid for around here. Equity.
Jack Butala:
Yeah, equity.
Jill DeWit:
It’s bringing in money, and here’s the thing I love about … If something happened, if a tenant moves out or whatever you’re doing, you put another one in, it’s paid for. It’s easy.
Jack Butala:
This can’t be a three hour show because I can fill a three hour show with the reasons that real estate’s better than everything else. We haven’t even talked about the fact that our kids are going to get all of this.
Jill DeWit:
That’s true too.
Jack Butala:
If you have an apartment building … I’ve got a buddy who owns 3 or 400 single family houses that are paid off.
Jill DeWit:
Right.
Jack Butala:
His kids are going to get that stuff. They’re all rented. Their kids and their kids if that’s what they want.
Jill DeWit:
Exactly.
Jack Butala:
With a good manager in place you don’t even need … I’m sure he doesn’t even know where half of them are. He’s never seen them.
This is the if, then segment of the show. If you do x, then y will happen. If you buy a $1,000 property for half of what it’s actually worth every single month and you sell it for $2,000, you double your money, which is what we do around here every single day and week, then how long does it take to turn that $1,000 into a million. If you buy $1,000 property and double your money every single month, that same $1,000 investment, how long does it take to have a million dollars in the bank? 11 months. What? Then why the hell isn’t everybody doing that?
A lot of people are, and you can hear them talking about it at successplan.com. They’re our members. Here’s the thing, in month one, you sell one property. You buy and sell one property in month two, it’s two. In month three it’s 4, 8, 16, 32, in those later months, especially in 9, 10, and 11 you’re selling 250 properties a month and then 500 and a thousand. Is that unrealistic? Yes, but is it realistic to do it in 2 years? Yeah. You just have to get a good machine in place like Jill and I have. A good sales machine in place, a good engineering department so we can review a lot of properties quickly, and that’s the whole thing about it.
We do this all the time. We generate millions of dollars. I haven’t put money in company since 1999.
Jill DeWit:
This comes up a lot. It’s interesting, but when you sit down and think about it, it’s like people go, “Oh, yeah. No. I don’t see how that can work,” but when you sit down and write it down they go, “Oh okay. I guess that’s right.” I talked to someone just recently when we were going over some numbers. I said, “Look at it this way. You start with $500, you make it $1,000.” Even if you’re just building up your acquisition funds, which is what we were talking about. “You put in $500, you double your money, now you have 1,000. Double your money now you have 2,000. Double your money, you’re at 4,000, 8,000-
Jack Butala:
16-
Jill DeWit:
16,000
Jack Butala:
32-
Jill DeWit:
32, when you look at it like that you’re like, “Huh.”
Jack Butala:
Just do one deal at a time.
Jill DeWit:
I’m like, “Yeah.” You don’t have to be looking … Here’s what will happen, let’s be realistic, it’s not one property. I’m not finding one property for 32,000 and making 64. Maybe I have, however, make it easy. I’m doing four now with my same numbers, or like you just said five with my same numbers.
Jack Butala:
Yup.
Jill DeWit:
That’s it. When you really … I love that you have a spreadsheet that I know that you shared in our Cash Flow from Land Program that does that exact math.
Jack Butala:
I think it’s in the free e-book actually. I know it is.
Jill DeWit:
I don’t know. I don’t know if it’s-
Jack Butala:
It’s in both.
Jill DeWit:
Okay, but you share a spreadsheet that does exactly that. It’s kind of like, “Huh.” It sounds … Oh it’s just these big goals, but when you write it down on a paper you kind of go, “Oh, all right. No, I really do get it. I see where you’re coming from.” Yeah.
Jack Butala:
Here’s the key. This is extremely accomplishable if you have the systems in place. What I see, and I talk about this in our program several times, I talk about it on the show all the time, what’s going to trip you up is if you don’t listen to the step-by-step instructions.
The first thing you want to do when you start a company like this is get your website up. Forget about the property, we’re not even going to get to that yet. We want to get your website up, get your social media … I call it getting the social media ball rolling because once you start sending these letters out, and you’re going to get tripped up by doing deals, all the stuff that you were supposed to do in the beginning is undone, and now you’re missing out on deals and you’ve got the cart before the horse.
The trick is not to find a property, anybody can do that. We show you exactly how to do that in our program through direct mail. Do the deals? Anybody can do that. Not anybody, you’ve got to be organized. The key is to stay all organized with the sales process and get a big list of buyers, and I show you and tell you exactly how to do that.
Jill DeWit:
I’ve got to say something, I had someone … Someone asked me the other day, “How long,” asking me personally about flipping properties, a timeline, and I said it varies from hours to weeks, and they went, “What?”
Jack Butala:
That’s hilarious. That’s true though.
Jill DeWit:
It’s totally true, and I said, “and sometimes it sold before I bought it.” They’re like, “What?” I’m like, “Seriously, and anybody could do this.”
You and I talk about it all the time about getting a buyer’s list. I have a good buyer’s list that I’ve developed over the years. I know that before I buy this property, I’m talking to this guys with right now, I already know three buyers that want it.
Jack Butala:
I always say that to myself too, “This property’s perfect for x,” right when we’re looking to buy it.
Jill DeWit:
That’s when the guy goes, “Oh.” I’m like, “Yeah.” For example a car dealership, we have a friend who does car sales. We put in an order, and he goes and gets it. It’s kind of like that. You know what your people want. That’s not crazy. I see that happening within Success Plan all the time.
Jack Butala:
Yeah, me too.
Jill DeWit:
A lot of our members are like, “Oh my gosh, this county is fantastic.” I see them talking with each other. “I’ve got a guy, I just sold him every five acre property that I had in this county. He wants more. Does anybody else have any?” Everybody’s scrambling to get some more in that … I’m like, “This is great.” There already sold.
Jack Butala:
Right.
Jill DeWit:
That’s it.
Jack Butala:
It’s awesome.
Jill DeWit:
Mm-hmm (affirmative).
Jack Butala:
It takes 11 months or 12 months if you’ve got all the ducks in a row, and the planets are aligned, and you’re organized and efficient it should take you about 11 months. Then you take that million bucks, and you buy a bunch of property, sell it on terms, and you’re done.
Jill DeWit:
Yup.
Jack Butala:
24 months, you could be done with the whole thing. If you have a question or you want to be on the show call 800-725-8816. Jill, do you have some kind of inspirational theory for us today?
Jill DeWit:
I do. Today I thought it would be good to think about what is your end goal? Dream it up. It kind of ties into this. Let’s … Two years from now, where would you like to be?
Jack Butala:
I love that. I think that you could even take it a step … I’d take it a step further, and try to visualize it. What does your office look like? What does your house look like? What kind of car’s in the driveway? That really helps me for some reason.
Jill DeWit:
Yes, but then it’s not Jill’s inspiration for the day. That’s Steven’s inspiration for the day.
Jack Butala:
No, that’s just my comment on Jill’s inspiration.
Jill DeWit:
I’m just teasing you. Look I have one segment, it may be small, but it’s mine. I’m just kidding.
Jack Butala:
I would love for you to have nine segments, and I have one.
Jill DeWit:
I’m just kidding.
Jack Butala:
That’d be great. We could change seats anytime.
Jill DeWit:
Totally kidding. No, I’m good. I’m good. I’m happy over here. I like my view.
Jack Butala:
Do you want to sit in another episode where Jack and Jill discuss how to use information, that’s me-
Jill DeWit:
And inspiration, that’s me-
Jack Butala:
To get just about anything you want? We use it everyday to buy land for half of what it’s worth and sell it immediately.
I like this new format Jill.
Jill DeWit:
Mm-hmm (affirmative). Me too.
Jack Butala:
I’ll give you four more segments if you’d like.
Jill DeWit:
I was totally kidding.
Jack Butala:
Okay good.
Jill DeWit:
That was funny. That was a good show. I think … Everybody knows that … We all grew up knowing that you can make money in real estate, but a lot of people don’t … When you have to sit down and talk about how does this work … How did Trump become Trump? There you go.
Jack Butala:
Yeah. The large commercial guys like Donald Trump … Donald Trump, he is very successful because he’s branded his last name. When there’s people in America that are looking for a personal condo in a huge city like Manhattan or anywhere, they look at nine buildings or three buildings, and they’re all Class A, and they pick the Trump building because it’s so recognizable. That’s the reason he’s so successful. Those large commercial guys, they take the equity thing really seriously. They’ll buy a half full, 50% occupied, extremely high end apartment building, fill it up, and in the same year sell it for three times as much. They’re creating equity by that income stream, and that’s what Donald Trump does.
Even better yet, you build it, fill it up, and sell it. You can make tons, literally billions of dollars in equity really quickly, but if you know how to occupy big buildings.
Jill DeWit:
Yup.
Jack Butala:
That’s not my talent. In fact, it’s funny because the title of the next show is “Be Great at One Thing.” What are we great at? Buying property for half of what it’s worth. That was intentional. I’m not the greatest sales person there ever was. I’m not even that good. In fact, Jill, you know I’m not a very good negotiator, but I know how to buy property for cheap, and it’s paying out great, right?
Jill DeWit:
Yes. I thought you were closing on that.
Jack Butala:
Let’s go buy something for half today and sell it for twice what you paid. Jack and Jill information and inspiration.
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