Don’t Make Your Primary Residence Your Worst Real Estate Deal (CFFL 0228)

Don’t Make Your Primary Residence Your Worst Real Estate Deal

Jack Butala: Don’t Make Your Primary Residence Your Worst Real Estate Deal. 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:
Jack Butala and Jill DeWit.

Jill:
Hello.

Jack:
Welcome to the show. In this episode, Jill and I talk about not making your primary residence your worst real estate deal ever. Hey, it happened to me, I’ll tell you the story in a second. Great show today Jill, let’s take a question posted by one of our members on successplant.com, our free online community.

Jill:
Yes. Courtney L wrote and asked, “I paid too much for some properties, what do I do now?”

Jack:
Oh, this is very timely. This is perfect for the show. You just sell them, even at a loss. You just got to get past them. Get the cash, as much cash as you can. We pay cash for everything, get as much cash back. When I see happening is people well on it and say, “Well it’s over. I can’t do it anymore.” It’s just a little tiny bump. People do it. It happens to us, not so much anymore, but because we are a couple of decades into this thing. If you have a group of property, a lot of new members come to us and say, “I paid too much. I don’t know what to do. I can’t sell these properties.” I tell them, every single one of them the same thing, “Hey, reduce the price to the point where you can sell them, or sell them on terms or something where you collect payments forever, but you got to get past it.”

Jill:
Move on.

Jack:
Yeah. Move on.

Jill:
You know, you learn that sometimes that happens. You can’t dress them up and sell them. If it’s not worth it, it’s just not worth it because you did accidentally overpay.

Jack:
What I see is people sending, they can’t believe how inexpensive they are sending these offers out, so they stare at an offer before it goes out and they say, “There’s no way that I can buy 5 acres for 500 bucks. I feel like a jerk, or an idiot by sending this.” So they market of 1500, 2000, even 4000 bucks, and they send them all out, and then they get a lot of them signed and returned, and they buy the property. This is usually before they learn about Land Academy. They say, “Geez, I didn’t realize.” Or they made an honest mistake and maybe even priced it wrong. It’s not so much that they are embarrassed to send it out, they just didn’t price it right. Just get past it. Like anything in life where you made a mistake, you just chalk it up to experience, get back on the horse, and make it right on the next miller. Sounds like advice you would give Jill.

Jill:
Totally. Just have to move on. We can sit and fret over it and let it bring us down and kind of beat ourselves up about it, but don’t worry about it, move on. You know what my thing’s to hurry up, unload them, and do it right, and then down the road when you recover from this, you can look back and go, “Oh boy, I made a mistake there, but I learned and now I have this much money in the bank.” That’s okay.

Jack:
Right.

Jill:
You’ll catch up, don’t let that sink the ship.

Jack:
Yeah, this concept works with wives too. If you have a question or you want to be on the show, call 800-725-8816.

Jill:
Back up the truck.

Jack:
Back up the truck?

Jill:
I don’t know what else to say.

Jack:
Back up the truck. I love that. Let me use that. Back the truck up. It sounds, “Shut the hmm up.”

Jill:
You know Jack, you are famous for slighting things in there hoping I’m not going to catch them and I caught that one. This works for wives.

Jack:
Back the truck up.

Jill:
Gee whiz.

Jack:
That’s my new favorite saying.

Jill:
Oh my gosh. What, you overpaid for a wife?

Jack:
Shut the front door.

Jill:
Did you overpay for a wife? What do you mean this works for wives? Recover, move on? I guess divorce, recover, move on?

Jack:
My personal experience is not up for discussion here.

Jill:
Oh boy.

Jack:
I’m just saying in theory …

Jill:
In theory. You’ve heard.

Jack:
Moving on could also work in a marriage. That’s all I’m saying.

Jill:
Oh my gosh, you’re crazy. Oh gosh.

Jack:
You know why we are laughing so much? Today is the last show we’re recording.

Jill:
Do you know why? Here’s something really good, I’ve got to share this one. Our staff asked me the other day, they are re-dealing our Facebook and social media stuff, and there’s an area in Facebook that asks if you have any awards. The employee reached out to me and said, “Do you have any awards?” I wrote back, “Really,” with the?. I’m thinking, you know what Jack, I kind of deserve an award. I should have said, “Yes. I can handle Jack on a day-to-day basis.” Do I get an award for that? Just kidding.

Jack:
You know what we should do?

Jill:
Have our own award.

Jack:
We should have like an award show. You know, like some people have live events, we could have an award show like most deals done …

Jill:
We could do that with our party.

Jack:
Like it’s the Oscars, you know?

Jill:
We can roll that in with our party that we are talking about.

Jack:
Oh my gosh, that’s a brilliant idea. We’ll have little statues. Most deals done, most …

Jill:
Helpful.

Jack:
Most improved, like a coach.

Jill:
Yeah.

Jack:
Like in coaching. Most improved. Mail sent out, numbers of letters, offers made.

Jill:
That’s a good one.

Jack:
Number of data downloaded.

Jill:
I like that. That would be really cool.

Jack:
We could get little Oscar things, maybe make them silver or platinum or something instead of gold.

Jill:
Exactly. That’s nice. You get one, like an attendance one for showing up on our calls.

Jack:
Yeah. Attendance.

Jill:
Most participation. I like that.

Jack:
They could come up and, yeah like most SuccessPlant participation.

Jill:
How about helping other people? I like that one. Most helpful in SuccessPlant, or something I don’t know, too. That might be kind of out there. You’re thinking, I love it.

Jack:
I just like it a lot. Everybody wants to get on stage and say, “Yeah, I’d like to thank my mom,” or whatever. Anyway …

Jill:
I know what everybody would say, “I’d like to thank my wife for not killing me when I came home with this idea, and now I have so much money in the bank, now she sees it, and we’re all good.”

Jack:
Yeah, like the best supporting spouse award.

Jill:
Yeah. That would be good.

Jack:
Then you can’t just submit it, you know? Everybody wins there.

Jill:
Yeah, nominate your significant other.

Jack:
You know how it’s awful when they give the kids participation awards?

Jill:
Right.

Jack:
I think everyone gets an award for being a supporting spouse.

Jill:
Well it’s a party. Yes.

Jack:
If you have any questions, or you want to be on the show call 800-725-8816. Today’s topic is, and I love this topic, don’t make your primary residence, like me, your worst real estate deal. Why, Jill, would your primary residence ever be the worst deal you’ve ever done in a word or less?

Jill:
Emotional.

Jack:
I knew it. I knew you had the answer.

Jill:
It was 100% …

Jack:
Yep.

Jill:
If it’s 100% an emotional decision, you are probably not going to win financially.

Jack:
Companies have whole office buildings filled with people that do marketing so that, to make sure that you as a consumer make an emotional decision about anything you buy. Hairspray, automobiles, clothes, socks, everything.

Jill:
Lexus, Lexus headlights.

Jack:
I’m not going to live that down.

Jill:
No.

Jack:
I changed the light bulb on a Lexus one time and it was a two day project.

Jill:
Right.

Jack:
I’ll never do it again.

Jill:
Bacon.

Jack:
There’s springs and clips and you can’t touch anything because oil on your … Never mind.

Jill:
Yeah. Computers, Apple, anything.

Jack:
Yeah.

Jill:
Apple’s a good one. That’s a good emotional one. They prey on you that you’re going to want to be the coolest person on the block and have the latest and greatest toy.

Jack:
I had a buddy who, a long time ago, he loved electronics and when he got something in the mail, or when he bought something, he would go through this almost compulsive process of opening it. You could just see him licking his lips like he’s ready to eat a pizza or something that he just couldn’t wait to sink his teeth in and enjoy. It was really kind of disturbing. He just went through this, I could see him like salivating.

Jill:
That’s funny.

Jack:
It’s a very emotional purchase.

Jill:
Got it.

Jack:
Just packaging.

Jill:
Exactly.

Jack:
Yeah, primary residences. I bought a property in the market, it was very inexpensive, because that’s what I do, I buy cheap property. I figured, “I’m going to do with my house,” and it worked, I did it. The house needed a lot of repairs so I blew that by making a ton of repairs that I went way overboard for the neighborhood, and ultimately lost a lot of money on the deal. It was all based on emotion. The renovations were based on emotion, and the whole thing. I see a lot of people using their primary residence as an example of the real estate business and my opinion is that the two have nothing to do with each other. When we wholesale houses, we make a ton of money, while we make 10,000 bucks a unit, intentionally, or we don’t do the deal.

Jill:
Just look at it like a number. What’s interesting is why is it that your primary residence have to be such a reflection of you?

Jack:
I think there’s two reasons. Can I answer?

Jill:
Yeah.

Jack:
First of all, when you buy a primary residence, most of us, you’re making a decision with someone else. When two people make a decision together, it’s usually a mess. Someone has got to be in charge.

Jill:
Correct. I got a lot to say about this one, go ahead. No, not about that part. I just thought of something … That vision is so good. No, do keep going.

Jack:
Second of all, even if you are doing it, you just start to look at wallpaper and stuff. Not wallpaper, but paint colors, “Boy what if we put a deck on the back and do this whole thing. 19 car garage, and I can buy some cars.” It’s a mess. I don’t know, to answer your question Jill. I don’t have that answer. It’s not. The answer is not for you, I know that, it’s not for me. We’ve said this before the show, for us, it’s all about location, location, location. I’ll live in a rat pit in a great location.

Jill:
Here’s my two cents on this. We’ve done it wrong, and then we’ve done it right. Our current residence in Arizona was 100% financial, it was actually meant to be a flip that we decided, this is such a good deal, we are just going to make ours. We really when at that the right way and I love it.

Jack:
That’s the best location on the planet.

Jill:
Yeah, we were thinking anything at all and then, this is going to be a great flip.

Jack:
Remember we stayed there? We got done with renovating it and we stayed there because it was such a good location, and we’re like, “Why don’t we just live here?”

Jill:
I would sell this? This is crazy. Totally.

Jack:
There’s no mortgage on it.

Jill:
Yeah, it was hilarious. I was going to say we turned around and did it again in California. We are so, to us it’s normal, everybody else thinks we are nuts …

Jack:
Everyone.

Jill:
But our residence in California, the first time we saw it was when we were moving in.

Jack:
Yeah, we did the whole thing online. We did the deal online.

Jill:
It was all location and numbers.

Jack:
You know what, we are experts at real estate because I never thought of that Jill. We bought online.

Jill:
Talking to people, we knew the area, we do the math, we did our numbers, we ran comms …

Jack:
Just like we buy land, we don’t go look at that either and we do great.

Jill:
Yeah.

Jack:
I never put that all together.

Jill:
Yeah, we did not look at it. It was zero emotional, it was all about numbers and location, for us, it was location and that’s it.

Jack:
Yeah. That’s a great example.

Jill:
I think what’s interesting is some people are stuck. You’re buying a primary residence, there’s two of you, so even if you are on that one page, your other person very well might not be on the same page, that’s how it’s going to go. If you can get them on the same page somehow, or you can at least reel them in and say, “How about this? Can we at least, what are your top three things and I work them into,” you and I do this often, “What are your top three things and I’ll come back with some options for you?” Maybe you can at least do that, maybe your significant other says, “I have to live in this area, in the school district, and this.” Okay, I get that, all right now let’s work with the numbers that work within the school district and that ZIP Code because you love it.

Jack:
Let’s rent a place for a year and really, really spend some time looking around and make a good decision, because we are going to be there for years and years and years together theoretically.

Jill:
How many people do that? I see people all the time …

Jack:
No one.

Jill:
Well they don’t, you are right.

Jack:
Nobody does.

Jill:
It’s crazy to me the number of people that go out and buy a home and have it already lined up, ready to go …

Jack:
On a weekend.

Jill:
Then they come home and they go, “Okay, now we got to pack up and sell.” What the heck?

Jack:
Yeah.

Jill:
The clock is ticking man.

Jack:
It’s a personality thing.

Jill:
You got probably 30, 45 days, you got to sell this place, because new place is contingent sometimes on this place. You are not making the decisions at that point.

Jack:
I wrote a technical paper years ago about how you don’t make any money on your primary residence. When you hear anybody say, “I made $300,000 on the house,” it happens California here a lot. It turns out they didn’t make anything because the interest that they paid over the years and the improvement that they made, what they are saying is I bought it for 300 and sold for 600. That has nothing to do with how much you made. In fact, the whole technical paper got right into the math, seriously into the math. Nine times out of ten, unless you are in an extremely spiraling upward market, you lose money. The pros flip houses and they make money because they know what they are doing, they have it all worked out, they don’t buy stuff at Home Depot, they go deeper into buying cheaper material, and they have a contract lined up that’s done 90 houses for them already. I see it all the time. People say, “My parents bought a house, they made $1 million. They are millionaires when they retire because they bought into …” Okay.

Jill:
That’s kind of the, let’s back up.

Jack:
That’s not a gauge, this is a completely different product.

Jill:
Exactly.

Jack:
This is the technical two. Two minutes of property investment advice from our 15 year, 15,000 transaction experience, don’t dwell on a bad deal. Sell it at a loss if you need to. Just keep moving forward. If your house is going to sell for less … If you are going to lose a bunch of money on your house, then lose it, or stay there forever and try to make it up that way, but I’m telling you, that mortgage payment every month, just get out of it. Whatever it takes, just get out of it. I would love for us somebody who gives financial advice to disagree with me and reach out to me and tell me why. What we’ve all heard in our childhoods for some reason, and I think the millennials have not heard this is much, but in our generation and the baby boomers generation is that, you have to buy a house, you have to live in house. Honestly Jill, before I met you, that’s kind of what I thought …

Jill:
Everybody thinks you have to have a mortgage and a car payment.

Jack:
I fought you on that. Live in a house if you want to, just make sure it’s paid off or that you put 50% down. Do the math on it, it’s silly. If you read your mortgage, right on the first page, I think they have to do this, it will tell you what the principle and interest amounts that you will pay on a mortgage throughout the duration of the mortgage and it’s a staggering number. It’s in the millions of dollars.

Jill:
Do people read that and think, “Oh, I’m going to pay it off sooner, that’s not going to happen to me.” Do they just gloss over that? Think, “That’s just the way it is.”

Jack:
Probably.

Jill:
“That’s just the way it is.”

Jack:
When’s the last time anybody’s read a contract for anything? Including me.

Jill:
I know, because you have me. That’s funny. I get it though. I go through it with a fine tooth comb.

Jack:
You have a question or you want to be on the show? Call 800-725-8816. This whole show is inspirational, Jill’s got the icing on the cake I bet.

Jill:
Be real and follow-up with actions. Don’t put something out there that’s not truthful. Be sincere. Be transparent. Say what’s really going on. Be upfront and honest all the time even if it costs more and follow up with your actions. You will get a lot further in anything.

Jack:
Awesome advice. Do the right thing, right?

Jill:
I’m just talking about, be real. Some of you are making up stuff, and saying staff, and promising things that they really can’t follow through with. It’s just not truthful and I don’t understand. It’s not nice.

Jack:
It concerns me how you came up with this today.

Jill:
Tricking people …

Jack:
Did somebody trick you?

Jill:
I am actually not going to share it.

Jack:
Somebody trick you.

Jill:
No. It was something that I read in social media. It was something that I read about someone, actually here’s what I will share. It was someone in our world in social media, someone in the real estate world and stuff that has … I don’t want to throw anybody under the bus.

Jack:
Why not?

Jill:
Anyway, they sell …

Jack:
Whisper in my ear, I’ll throw them under.

Jill:
No. They sell in education and they are now recovering, apparently, and saying, “Oh, maybe we were doing this wrong. We really do want to help you, we are not going to charge for something.” Yeah. Yeah. Yeah.

Jack:
I bet I know their name. Well, the first thing I’m going to do after the show is find out on this. Is it a direct competitor of ours?

Jill:
We don’t have any competitors.

Jack:
I know you say that, but is it somebody that buys and sells land?

Jill:
Somebody who buys and sells land, yes.

Jack:
Alright so it’s one of two people.

Jill:
It’s like we’re going to play 20 questions here.

Jack:
It’s one of two people though and now we can find out.

Jill:
Yeah, it’s really kind of interesting. You know why? Here’s my thoughts. I’m like, “Hey good for you. You are now catching on in doing the right thing, A. But B, shouldn’t you kind of been doing the right thing all along?” That’s my point. Part of me is like, “well, what else are you hiding?” I don’t know if hiding is the right word, but you know. My whole thing is come on, just be real. If you are really saying you are trying to help somebody, then really try to help somebody, don’t charge them for it and whatever, have an ulterior motive. Be real and follow up with what you say you are going to do.

Jack:
Yeah, that’s too bad.

Jill:
It is. That’s why we are different and that’s why we have so many people in our world. We had a lot of good people in our world. They know that we are really here … The only thing that you and I get in a pickle about is we try to help everybody and there’s just not enough of us to go around. Sometimes I’m spread too thin, it’s not that I don’t want to talk, I would love to talk to every single person who has a question for me. I would love to spend a half-hour personally on the phone, I would do that all day every day, I just can’t.

Jack:
I’m here to tell you, Jill’s exactly right. Even as far as we are in this business in the number of deals we do, there is still so much more stuff that I want to provide into, and you really have to reel yourself in. I used to think there was some magic line that you cross and then it’s like, “Oh, that’s it. I’m going to put my feet up, sit in the back of the boat, and it’s over.” That’s just not how it is. If you are serious about whatever you do for a living, I don’t care what it is, it just never ends. I heard this about artists a long time ago, let’s just use a painter as an example, they are just never done. They’re still staring at the painting and that’s what a true artist is. It’s like, you know this painting is not done yet, or a novelist. I watched an interview with an animator that works for Pixar, they do the video, the computer animated films …

Jill:
Like Nemo and stuff …

Jack:
He said “The only reason that this got released this way is because I ran out of time. They gave me 10 more years to do this, I would still be working on it.” You have to have a schedule. That’s true with a lot of stuff. I stop myself when I think stuff is less-than-perfect just to move on all the time.

Jill:
Because then you would never be done. You are right. You just have to.

Jack:
That should be a formal class or something. Probably is. How to control your workflow. I know that movies are made in 45 days now, 35 to 45 days.

Jill:
That’s crazy. I don’t know how they do that.

Jack:
They are pushing all the data back to somebody who is producing it while they are shooting it and everything.

Jill:
Right.

Jack:
I think that’s cool. I mean, it used to take two years.

Jill:
That’s true. They wait and send it.

Jack:
Hey, join us and another set where Jack and Jill discuss how to use information, that’s me.

Jill:
And inspiration, that’s me.

Jack:
To get just about anything you want.

Jill:
We use it every day to buy property for half of what it’s worth and sell it immediately.

Jack:
You are not alone in your real estate ambition. Are they apologizing on social media, for what? Are they giving refunds?

Jill:
No, oh boy, I hadn’t even thought about that one. I wonder if that’s going to come up. Yeah it’s …

Jack:
Are you reading?

Jill:
I’m reading.

Jack:
We are not going to name names, you’re right, but geez, that’s amazing.

Jill:
Exactly.

Jack:
Sales tactics I guess.

Jill:
Here, it wasn’t really an apology. It was, “Over the years, here’s what I did, and you know what? I didn’t enjoy it. Someone told me that if you want people to respect you you can’t get too close to them.” Not really getting out advice and really helping, so it’s very …

Jack:
Someone was wrong.

Jill:
Someone was wrong. It’s interesting.

Jack:
What does that mean really Jill? You’re the inspirational one. What does that mean, not get close to me? Not untouchable, but unreachable?

Jill:
You can’t have access, you can’t have access to them.

Jack:
Like a celebrity?

Jill:
Mm-hmm (affirmative).

Jack:
Wow.

Jill:
It’s like putting yourself in that position on purpose.

Jack:
That’s really sad.

Jill:
I know.

Jack:
All right, enough sadness on the show.

Jill:
Okay, thank you.

Jack:
Information … I’m sorry, go ahead.

Jill:
The point is they’re recovering, and good for them.

Jack:
Information and Inspiration to buy undervalue property.

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