3 Rules of Real Estate Age Old Truth (CFFL 0214)
3 Rules of Real Estate Age Old Truth
Jack Butala: 3 Rules of Real Estate Age Old Truth. 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 for Land Academy. Welcome to our Cash Flow from Land Show. In this episode Jill and I talk about the three rules of real estate. The age old truth. It’s as old as dirt. Great show today Jill. Let’s take a question first, though, posted by one of our members on successplant.com, our free online community.
Jill DeWit:
Okay. Brandon wrote, “I’m just about done with my first deal. I was really nervous it wouldn’t sell. It was 4.64 acres, fifteen hundred in after back taxes. I didn’t have great access, so I just doubled my money and posted it on Craigslist and Postlets, so that puts it all over. The buyer wanted title insurance, so I had been not so patiently waiting for it to close for a few weeks now. In the last few weeks I updated my price on Zillow and Craigslist just to see (wink wink). My phone has been blowing up. I could have easily made probably three times as much if I hadn’t been so worried about not selling. Already working on my new list in the area to get properties that I skipped over. I’ve got a ton of buyers now. Like I said, you can’t be greedy.” That was his title. “Followed Jack’s advice, doubled my money.” Isn’t that funny? I love that.
Jack Butala:
That’s just a picture perfect beautiful story. What do you usually do, Jill? We double it, and then that’s it, and then collect buyers. Really, what the take away from this, I think, is leave it up there until the deal is closed. That’s not hurting anything. It’s technically “under contract”, so I don’t think there’s anything wrong with leaving it up there for as long as you possibly can. Every real estate agent on the planet keeps the real estate sign in the ground as long as they can, even after the deal’s done.
Jill DeWit:
I think Brandon pointed out another good point, also, which is don’t be greedy. I doubled my money, get out. It’s easy to say, “I should have hung out for more. I did that wrong.” We’ve laughed about that in some of our weekly member calls. One guy said, “I did it all wrong,” and then we all did the math together and he made 90% profit. We’re like, “Oh, really? That’s doing it all wrong.”
Jack Butala:
I remember that. That’s recent.
Jill DeWit:
We all had to reel him back in and go, “Think about this now,” and he’s like, “Yeah, you’re right.” Get in, get out, you’re doing great. I think you did everything right.
Jack Butala:
I do too. That’s what Success Plant’s for. Half of it’s motivation and half of it’s getting stuff answered. He didn’t even really have a question in that, but he just said, hey, keep it posted. He did the textbook thing that we say. If you’re collecting buyers in one area, work one area, and just keep nailing it. Keep doing deal, after deal, after deal and then start up another one. Start up another area, I mean.
Jill DeWit:
I love it.
Jack Butala:
If you have a question or you want to be on the show call 800-725-8816. Today’s topic, one of my favorites, actually, the three rules of real estate; the age old truth. When I was very young I had a boss/mentor, and he said, I think everyone’s heard this phrase for their first time in their lives, what are the three rules of real estate? It’s location, location, location. We talked about this yesterday a little bit, but the topic for today is very different. It’s very, very important, like we talked about yesterday, to stay on track, to keep the acquisition machine flowing. Even if somebody says, “I got this great hotel over here. You should take a look at it, I know you’re a real estate investor.” As tempting as it is, you just have to stay on track to buy and sell land, and learn, and push through it. If you want to expand it into something else that’s fine, but make sure the other stuff’s getting done, paying the bills and the whole deal.
Here’s the real point to this whole show, this episode: Location, location, location. What does that really mean? It means it’s incredibly important to do deals in the right location. Let’s say you want to buy an infill lot in a place like Manhattan Beach, California, we’ll just use it again.
Jill DeWit:
It keeps coming up.
Jack Butala:
It’s a cool little town. It’s a suburb of Los Angeles. It’s a great little place. It’s very, very, very expensive. I bring it up because it’s so diametrically different than what we do. A 0.02 acre infill lot where you would put a two, three story house is expensive, it’s over a million dollars, and it’s very, very different than what we do. Let’s say that’s the kind of real estate you want. You want to start a machine that buys beach community infill lots. What do you do?
You get Data to Doorstep, you look at the data the way that we teach in our programs, and you start sending letters. Do you send letters for five hundred dollars? No, you send letters, if the properties are worth about a million bucks, each infill lot, you send as many letters as you can based on the data that you pulled. We show you exactly how to do it, for seven hundred grand. Then, you either build your dream house on it, some people use the data that way, or you find somebody long before you even send the mailers out, or price it, or get the data, or anything, you find somebody who’s in the business of building houses, or whatever it is, on these types of lots and then you become that guy’s acquisition person.
You buy it for seven hundred grand. I’ll juts throw some numbers out. You know it’s worth a million bucks. This guy’s probably very willing to pay nine hundred, eight hundred, let’s say. Eight hundred grand. Send a few mailers out for seven hundred thousand. Mark it up twenty, thirty, forty, fifty grand, and now the guy’s got a smoking deal, he’s going to beg you for the rest of his life to keep doing it.
Location, location, location. You can do this in Manhattan, New York, for skyscrapers it works. I used to do it for long-term care facilities a long, long time ago, as a broker. Make offers all the time. It just gets the conversation started on those huge assets like that.
This whole show, Jill, the idea for me to do this show came from the fact that my whole career, and I’m sure it’s happened to a lot of members, people who are unfamiliar with the fact that there’s a lot of rural land out there. You can hear it now. They say, “What the heck are you going to buy that for, out there? It’s not worth anything.” Yes, it is, it’s worth more than you pay, I tell you that, or you don’t buy it. My point to you is, whoever says that, great, then go do it where you think it’s going to be worth it. Everybody’s got an opinion about that.
Jill DeWit:
That’s cool. What if you wanted to do a cabin property, or a lake property, or whatever it is. Whatever sings to you.
Jack Butala:
Maybe you want to buy your next house.
Jill DeWit:
Maybe it’s a condo, I don’t know. It all works. It’s all the same strategies, and data, and everything. It’s just pick it and do it.
Jack Butala:
Jill and I have a close friend, she’s a teacher and she does a primary residence real estate deal about once every four years, I’m guessing. Four or five years. She’ll buy the house, she and her husband clean it all up while they’re living in it and going about their regular lives, and then they put it up for sale and they price it so they fully expect it’s going to take a year to sell. It does, it takes a year, but they get their price, they make a ton of money, and they do the next one. That’s their savings account. That’s their way to save for retirement. Except for the money that it takes to get into the next one, they keep all the rest. I think it’s a great plan.
Jill DeWit:
Mm-hmm (affirmative), I love it. That’s the thing I love about this business, there’s so many things that you can do. It’s really never ending. I know that there’s people that have found us because of the land thing and then they’ve gone off and used it for all different other types of real estate. I never get bored, there’s just so much going on.
Jack Butala:
Exactly. This is the Technical Two. Two minutes of property investment advice from our fifteen year, fifteen thousand transaction experience. Data to doorstep, our product, which is a fancy way for saying send a lot of offers in the mail to people who own real estate, works for every single property type. Every single one. Can you think of any property type, Jill, that this doesn’t work? I can’t.
Jill DeWit:
Nothing.
Jack Butala:
We’ve been talking about it all show. It works for office buildings, it works for apartment buildings, it works for assisted living facilities, it works for your next primary residence, vacation property …
Jill DeWit:
Hotels.
Jack Butala:
Hotels, great. It’s the concept that needs to be grasped, I think. If you get a database, manipulate the data, and get it int he mail properly and respectfully with offers, not postcards and all this silly stuff you hear, offers. Respectful, business letter offers. We show you exactly how to do it. You’re going to win.
Jill DeWit:
That’s it, you’re strategic about it, and that’s what I love. It’s not just putting a flyer in the grocery store or something silly, or driving around with a banner on your car. People do that? What’s that thing called that they put them in the ground?
Jack Butala:
Bandit sign.
Jill DeWit:
That’s it. Oh, my gosh. I can’t think of a better time waster than answering the phone from a bandit sign, because every person is going to call you and want to talk about it, and they have no idea what you’re willing to pay, what it’s worth.
Jack Butala:
You don’t even know.
Jill DeWit:
Exactly. They think this is going to … Yeah, no. It’s going to waste so much time. That’s the whole thing of Data to Doorstep. Let’s do this smart everybody. Get the right data, Jack shows us how. Scrub it down, get the right offers to the right people and let those five, ten, whatever percent that are thinking about it call you. They know where you are.
Jack Butala:
Or, sign it an mail it back to you.
Jill DeWit:
Yeah, they might even just say, “I’m in.” They at least know your range and they’re going to call you back and say, “All right, tell me more. Who are you? What’s going on?” There you go.
Jack Butala:
I love what we do for a living.
Jill DeWit:
Me too, it’s really awesome.
Jack Butala:
If you want to be on our show or you want us to answer your questions, call 800-725-8816. Please be not boring.
Jill DeWit:
Not Eeyore.
Jack Butala:
Jill, inspire us.
Jill DeWit:
To keep with this topic, because I thought it was funny when you said, “The age old real estate truth,” I’m thinking of some age old real estate stuff, and you know what I want to say? Let’s get with the times, folks. It is not 1970. Should we really be going door to door in the neighborhood where we want to buy a house? Is that a good use of our time?
Jack Butala:
Did somebody do that?
Jill DeWit:
Oh, my gosh, yes. They still do.
Jack Butala:
That’s what this driving for dollars business is.
Jill DeWit:
Yes, they do.
Jack Butala:
We haven’t disrespected driving for dollars in quite some time.
Jill DeWit:
No, it’s been quite a while.
Jack Butala:
Do you want to take a shot at it right now?
Jill DeWit:
No it’s okay. I’m just saying it’s not nineteen seventy.
Jack Butala:
I love your disdain for driving for dollars. I love it.
Jill DeWit:
Because it’s such a waste of time. Not to mention, if there’s a property that’s sitting there in an awesome neighborhood that, hmmm, has been boarded up and sitting vacant for two years, do you really think that you’re the first person that’s rolled up on that and said, “I see a gold mine”? No, there’s some problem going on there, everybody. You should run from that property. There’s obviously a reason why, because the neighbors would have bought it if it was something good.
Jack Butala:
You’ve already thought about it too much, just from what you said right there. Not you, but if you’ve already had the thought, “That property down the street, the porch is falling off,” you’ve spent too much time on it. You should put all your energy into scrubbing data, getting offers out, then letting them decide. Let the seller decide whether they want to sell it, not you.
Jill DeWit:
There’s a 2016 way of finding people, and it is using your resources, i.e. good data, not spending a whole lot of time on this. Do a mail merge, get a good letter and have a printer pop it in the mail for you, not you. Don’t have your family sitting around the table licking stamps. That’s an old one, too. Let’s all do this right.
Jack Butala:
It’s going to cost you way more money. I’ve done all the math a million times. If anybody’s licking stamps or buying envelopes, you’re doing it wrong. If you use economies of scale you can do it for the price of a stamp or lower than the price of a stamp. Using a commercial printer, and the correct commercial printer, not one that prints catalogs.
Jill DeWit:
I’ve said this to people, I’ve said, “I hear you. You’re hand-writing these letters, this is great.” I’m like, this sounds to me like a hobby, it doesn’t sound like a business, because if you think you’re going to hand-write ten thousand letters next week, I’ve got another thing coming. It’s not going to work. So then it’s a hobby! Congratulations, you have a hobby.
Jack Butala:
That’s a great point. That’s fine, you only want a couple deals a year, like our friend that we just described. One deal every four years, that’s fine. You’re going to get serious about it.
Jill DeWit:
I can think of better thing to do than hand-writing forty letters a week.
Jack Butala:
For some people that’s fine, but I just don’t know how that gets disconnected. Why wouldn’t you just take some advice from somebody like us? It doesn’t have to be us, but somebody like us who’s got it all figured out. You want to be a deal maker, that’s what I keep saying. You want to be on the phone making deals, and putting stuff together, and directing people, you don’t want to be a secretary.
Jill DeWit:
You’re not going to get a deal … The hand-writing letter thing, that’s a whole other thing, now, that I don’t like. Jill doesn’t like driving for dollars, Jill doesn’t like hand-writing letters. This is a business, folks. Let’s do this.
Jack Butala:
There you go, Jill. It’s a business, take it seriously.
Jill DeWit:
And it’s 2016.
Jack Butala:
Bandit signs and all that stuff, postcards, it just seems like such an afterthought. It just seems like it’s all slapped together, usually they’re hand written. It’s hard to take it seriously.
Join us 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.
Jill DeWit:
We use it every day to buy property for half of what it’s worth, not by hand-writing a letter, and sell it immediately.
Jack Butala:
Send a bunch of offers out and get there first. Good show, Jill. Good inspirational stuff, 1970, I love it.
Jill DeWit:
Maybe that’s the source of all my frustration. I feel like the driving for dollars is so old, this is so old, I don’t understand why people can’t, you know … You and I have sat through real estate classes so we know all that stuff. I remember sitting there going, “What are they talking about?”
Jack Butala:
Jill and I, at separate points in our lives, we both went to real estate school. We never got licensed. I highly recommend that anybody go to real estate school. It’s between three hundred and five hundred bucks. Even if you don’t want to take the test and you don’t want to be an agent, because man, you learn a lot of stuff. For how much education costs for a college degree, and things like that, for three to five hundred dollars for, what is it? Eighty hours, maybe?
Jill DeWit:
I think it’s ninety here in Arizona.
Jack Butala:
I’m not plugging it, and we have no affiliation with any of this, but usually it’s taught by people who are in the business every day. They see these deals, they’re talking about what’s going on on this side of town and that side of town. It’s a lot of fun. Some of it’s silly, like everything. Everything’s like that.
Jill DeWit:
It’s interesting. I sit there, though, and I look at how much time they spend on some of this stuff, I’m like, “Wow, how much money you guys could be making.” It’s really interesting. Thank you
Jack Butala:
Jack and Jill, information and inspiration. Now that we’ve talked about that, let’s go buy some property.
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