How to Decide to Buy a Property or Not
Jack Butala: How to Decide to Buy a Property or Not. 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 with Jill DeWit.
Jill DeWit: Hi.
Jack Butala: Welcome to our show. In this episode, Jill and I talk about how to decide to buy a property or not. What’s the decision making process? Great show today, Jill. Let’s take a question posted by one of our members on Success Plant dot com, our free online community.
Jill DeWit: Cool, all right. Bay asked “how do you explain to a potential buyer that it is only an option deal for you? Should you tell the buyer the truth or just say this is your parcel?” Good question.
Jack Butala: Excellent.
Jill DeWit: I put a note in Success Plant by the way telling her to listen to the show.
Jack Butala: Awesome, well good.
Jill DeWit: So she can get most of it. I answered the question. By the way yeah, it is our free online community so we go in there and answer stuff. I did answer the question for Bay and I also said “hey listen to the show because you’ll get more detail.
Jack Butala: Jill and I were lucky enough to meet Bay in person. One of the few people, actually the members that we have do far anyways. She’s just an incredibly bright, motivated person. I’m sure she’s going to do great.
Jill DeWit: Oh yeah, smart, very smart.
Jack Butala: 30 seconds of background. Sometimes we encourage members, and we do it ourselves all the time, to do an option versus an outright purchase. The difference is this. Instead of actually funding the deal, let’s say you got a 40 acre property you’re going to buy it for 4 grand, but you’re just not comfortable with that price. Maybe the seller wants 6 grand instead of 4 and it’s a little out of your comfort zone, but you’re pretty sure you can sell it probably at least double your money. We encourage people to do an option, and to answer Bay’s question, to be incredibly up front about it and honest and say “hey seller if you’re not in a hurry, you want to get this thing done within 6 months or 4 months I can get you your 6 grand but I’d like to option it. I have a marketing machine and I belong to Land Academy, 100’s of thousands of yada yada yada. If you would like to sign this simple agreement that says you will not sell it for a certain amount of time, let’s say 6 months, I will fund it then.”
To answer your question, fund it then after you find a buyer and it’s pretty easy usually if the deal’s put together properly. Pretty easy to find a buyer pretty quickly, way earlier than 6 months. Always, always, always be completely up front and honest with everybody in general, but specifically with her question with the seller, about whether or not you’re optioning the property. That’s how you earn people’s trust.
Jill DeWit: You know, I went in too and said “I personally, if they ask, I’m always, always honest, but am I going to sit and tell them the whole deal structure and the thing like that if they don’t even ask? No, because often time they don’t. They’re disinterested in the parcel, seriously.
Jack Butala: I know, Jill. I’m not laughing at you. I agree.
Jill DeWit: They’re interested … Yeah, no, when I have a buyer they don’t even know to ask, kind of thing. They’re interested in the parcel and the prize and what they’re going to do with it and I answer all their questions. That’s what I answer. I said you know Bay, I wouldn’t volunteer any stuff. You don’t need to bore them with that. It’s an issue, but should they ask anything, absolutely. No one’s going to say “do you own it?” Kind of thing, or “what’s the deal” and if somebody says yeah, well you could say it’s under contract and yeah, this is the price and I’ll make it happen in X days and we’re all good.
Jack Butala: There’s no fibbing in this. Jill’s just an expert at this. No matter how bad the news is or you think the bad news is bad, if you explain it slowly and with some heart felt emotion, so your buyer or your seller or anybody you’re doing business with in any part of this, in any real estate transaction, they’re going to understand. People know that mistakes happen. This isn’t perfect. We’ve done what? Almost 16,000 deals this stuff is by no means perfect. If you explain it … If they freak out and say “oh my gosh” then they’re not the right buyer anyways.
Jill DeWit: My big thing is don’t bore them with this stuff they don’t really care about, you know what I mean. You even met somebody … Hey Jack, I’m going to bring this in for you. Say you’re dating somebody brand new. This is the way Jack dates, okay?
Jack Butala: Okay this is great.
Jill DeWit: Here’s my thing. You’re dating somebody brand new. Do you really want on the first date for them to start talking about their failed marriage, why the divorced happened.
Jack Butala: Yeah that’s what I want.
Jill DeWit: The whole big thing, yeah you really want to have the whole conversation about all the stuff. No you really don’t care at this moment. It’s not important to you.
Jack Butala: Buyers excited about buying a property for so cheap.
Jill DeWit: Exactly, like you’re excited about that first date. Let that first date happen. See if there’s even any chemistry because if there’s not any chemistry you don’t need to go any further anyway. How’s that?
Jack Butala: There’s a woman’s perspective, because you know what I love, Jill, is whenever you bring these examples up it’s all non gender specific. It’s perfect. I’m always woman this, men that. I get in trouble for it actually.
Jill DeWit: Yeah you do.
Jack Butala: You’re were completely non gender specific in that whole description, it’s outstanding.
Jill DeWit: Thank you. I’m gender politically correct. What’s the term for that?
Jack Butala: I think you nailed it. Gender correct.
Jill DeWit: GEC. Gender correct.
Jack Butala: Wow there’s like an acronym for everything now with all this stuff.
Jill DeWit: That’s true. Sometimes it’s like I don’t know what I call myself. I’ve been out somewhere, I’m like how do I even refer to myself? What’s a politically correct way to say I’m a straight, right?
Jack Butala: Let’s look one up.
Jill DeWit: I don’t know what to call myself, you know?
Jack Butala: So much derogatory stuff just went through my head.
Jill DeWit: Thank you. I think we answered that. That’s good.
Jack Butala: So do I. Hey if you have a question or you want to be on the show, call 800-725-8816. Today’s topic how to decide to buy a property or not. Right at the end of doing all your due diligence there’s that one moment where if you’re on the fence and you sit there and you look at yourself and say “man, am I going to do this deal or not?” I chose this topic today because I’ve been having a lot of … We have this thing called deal review where members can contact me via Skype when they’re at that point and they’re just on the fence. They want my opinion. I decided to do a show and really describe the thought process that I go through and it’s not very complicated at all. With this day and age with the internet tools that are available, it’s incredibly simple.
Step one is when you send a bunch of mail out and offers, some of them come back. When you’re opening the mail or answering the phone, people call back and they say “I would love to sell you my property for $500 or $900 or if it’s a house of 40% less than ARV.” What’s the first thing you do? You take down their information and you get on your computer and you go straight to Google Earth. That is the decider for me. I’ll tell you, it’s in that moment that I make the decision. I think newer people, that’s the key to this. If there is a take away from this show it’s that key moment where you find the parcel, you locate it on Google Earth, you fly into it and you take a look. The first thing I look for is access. Well I look for the 4 A’s. Attributes, is it close to the Grand Canyon, mountain views, anything cool about it.
Jill DeWit: Trees maybe? I look a that too.
Jack Butala: Yeah, tall pine trees.
Jill DeWit: I look the actual parcel sometimes and just see what’s around there.
Jack Butala: The 4 A’s are access, can you get to it at all? Attribute, like we just described, Jill described. Affordability, is it cheap enough? Yeah of course it is because you send the offers out on it. Then acreage, larger acreage in general is almost always better unless the attribute’s amazing like on the ocean or something like that. I ask myself, really quickly, the 4 A’s. The vast majority of what I’m looking for is access, if you can get to it. Then I look at the price. 4 A’s and the price. Well, we already know that the price is what it needs to be because we send that in the offer. You can decide right then, not after you talk to the seller and you go through … There’s a lot of misconception about old school real estate deal making where you got to go back and forth and say all talk and that. You don’t have to do any of that.
Jill DeWit: You just brought up a good point that I think is interesting that it’s good to share. You and I don’t even look at it until we know it’s in our ball park. Let’s imagine I sent out an offer for, I don’t know, 5 acre properties, you know, I’m offering $800 or whatever I’m working on, and the guy calls me back and say “you know what? I won’t go below $3,000.” Right then and there it’s almost like I’m not even going to look at it. I kind of, you know, I know what my range is. Unless they say. What do you think, Jack?
Jack Butala: This whole system is … Jill and I differ on this. This whole system is set up to remove negotiation and discussion from the buyer between you and the buyer. If you send a letter out, if you send 10,000 offers out and the certain percentage come back, listen to our other stuff to find out what the percentages are because they’re pretty amazing. The thing comes back in the signed, there’s no writing on it or anything. What are you going to do? You’re going to say “heck yes I’m going to buy this thing.” Without even looking at it because you wrote the offer and you know how to crunch data and you have the cash flow from land program and you know all about how to ultimately get that offer in the mail. Well you’re ready to do the deal anyway or you wouldn’t have sent it. You wouldn’t have sent the 45 cents or 40 cents on it to get it in the mail. If it comes back I’m just checking for stuff. I’m checking for access, in general, make sure the owner owns it, there’s no title issues and stuff. We go through all the details of that. Then I buy it.
Jill on the other hand, does it a little bit differently. It’s a whole …
Jill DeWit: No I do that too.
Jack Butala: If it’s an old offer … We get a lot, we’ve been doing this for a lot of years. If they come in from 2004 or 6 or something, and rightfully so, Jill will, because the offers we sent out were larger than they are the dollar amount was higher, we negotiate the deal and make friends with the seller. Both of our ways are right for us individually. Jill’s way, I will say, Jill’s way tends to yield more deals and better deals because just innately she’s a negotiator. Ultimately these people have other properties. She befriends them and starts to buy their portfolios instead of just the 1 property that they own. There’s a huge benefit to making friends with the seller and talking. It’s just not my thing. I’m lucky to have you.
Jill DeWit: Thank you. The nice thing is once you get into this, too, you learn what areas, what your price range is, and you can shut it down right then and there. I’ve had some they have called back, I mean they do, this is a fact. They will call you back sometimes and say “I got your offer for $500. I’m thinking 5,000.” They will do that. At that point you just say yes or no.
Jack Butala: Exactly.
Jill DeWit: Most of the time I’m like yeah, no.
Jack Butala: If there’s too much talking this is the truth, if there’s too much talking I kill the deal. I’ve got a bunch of mail to go through where no one’s going to say word. They’re just going to sign it and you know, constantly. It’s not just us, it’s our members too. Our members that take this seriously, there’s a lot of them now. They do the same thing. Most of our members, in fact probably the vast majority probably 98%, have regular jobs. They don’t have time to do this stuff. We’ll sit around, Jill and I do, with the whole staff and do this all day long. We have that luxury, but a lot of members just they get in back in the mail, they check to make sure there’s access and they do the deal.
Jill DeWit: You know, you’re right. That’s a good point. It’s funny because a lot of our members when they’re new and they’re starting out they are really careful about every single individual one. Now they’re in 20 in and they’re couple weeks in they’re like okay I just don’t have time. I get it. You have to prioritize.
Jack Butala: It’s like when you had your first kid, you were following them around worried that they’re going to trip. By the third one you just let them juggle knives.
Jill DeWit: Whatever, you know your way home.
Jack Butala: The third one’s always the strongest too.
Jill DeWit: That’s really funny. That’s true.
Jack Butala: Hey, if you have any questions or you want to be on the show call 800-725-8816. This is the technical 2. 2 minutes of property investment advice from our 15 year 15,00 plus transaction experience. Take a screen shot of the research that you’re doing when you buy the property because you’re going to need it when you sell it. What the hell does he mean by that? Get a program, if you have a Mac you already know how to take screenshots. If you have a PC like us or like me I should say. Jill has a Mac. I use a program called Snag It. I love Snag It. It makes it just incredibly easy to take a screen shot of what you’re looking at in Google Earth or whatever research that you’re doing. Just make a little subdirectoy with the APN. All through your due diligence process just get in the habit of it because when you buy the property you don’t want to have to restart the whole process. Go back and look up county maps. Take a screenshot while you’re deciding whether or not you’re going to buy the property. Whether you’re going to buy it or not it takes maybe 30 more seconds the whole due diligence process. I wish somebody would have told me this a long time ago, Jill, you know? That would have saved so much time.
Now when you go back to do, when you actually buy the property and go back to do all the engineering to get it ready for sale, you got all the stuff there. It saves so much time.
Jill DeWit: So true.
Jack Butala: I wish I had [crosstalk 00:13:36].
Jill DeWit: I know. We say that all the time. It’s the funniest thing. I swear the whole time we were putting that program together I felt like everyday I was saying man I wish I had a version of me when we were doing this.
Jack Butala: A version of me?
Jill DeWit: Seriously, a version of me.
Jack Butala: I wish I had a version of you, too. Can you imagine?
Jill DeWit: Thank you. Just teaching me what to and saving me the learning curve, saving me all the mistakes. How many times … Do you remember how funny it was in the beginning? This is good for people to hear. I would constantly call the wrong person. I’d call the assessor when I meant to call the recorder. Then I’d call the treasurer when I meant to call the assessor. I’m like I’m so sorry. It’s the funniest thing, but we all make those mistakes. I’m getting them all confused.
Jack Butala: I still do that.
Jill DeWit: I’m like oh yeah, the treasurer does that. Okay, the assessor does that and the recorder does that. Okay got it.
Jack Butala: I’m subdividing some property with one of our members and he’s pretty new. He’s really going through the correct motions and dotting his I’s and crossing his T’s and everything. He asked me the other day “who do I call to check to see if I an subdivide this?” I said “you know, honestly it could be a lot of people but I start with the planning and zoning because they will, planning and zoning tend to tell you the truth really quickly.”
Jill DeWit: I like them.
Jack Butala: I do too.
Jill DeWit: It seems like it’s always men and they’re really cool.
Jack Butala: They’re like not … They don’t deal with questions like the recorder has to deal with some awful questions in my opinion. How much does it cost to record a dead? That kind of thing. On and on and on there’s a bunch of questions that can happen like that. I don’t know. Start with planning and zoning on a lot of … My point is this. We still do it wrong. Not wrong. We still have to feel it out and call people and ask to see if it’s the right department.
Jill DeWit: Exactly, it’s so funny.
Jack Butala: Jill it’s that time. It’s the time to inspire us.
Jill DeWit: I was thinking of the number of folks that I talk to who are starting out in not just what we do, but any time you’re starting off on a new side business or a new project or a new something it’s so easy to get overwhelmed. I thought I’d just take a minute and just talk about what I do and a great way to help you if you just think oh my gosh there’s just no way I can do this. I’m quickly overwhelmed, all these tasks, you know. Even with our people, they went from 2 offers one week to 50 the next. We have people that have sent out 6,000 mailers in a round. We’re like woo-hoo go, get ready. Buckle your seat belt here it comes.
Jack Butala: Isn’t that funny?
Jill DeWit: It’s hilarious? Someones said yeah I’m just going to initiation by fire, like all right go for it. We’re here.
Jack Butala: What’s funny then, here’s the pattern. People start with us they’re all worried, they’re concerned. What is this for real? What am I going to do wrong? Then they get their mailer out and then we don’t hear from them for 2 months. then all of a sudden they resurface and say “yup I bought 14 properties. Now what I do to sell them?” I’m like oh you didn’t listen because I told you. You got to set all this sell side stuff up first because you’re going to get too busy. Oh yeah I didn’t do that.
Jill DeWit: Yeah that’s right, exactly. Hello? It’s so funny.
Jack Butala: Who should I call and start a website? That’s the first question I get.
Jill DeWit: Oh my gosh [inaudible 00:16:49]. Oh boy. You know what’s funny? That’s nice. We can save them with that, we’ll get to that later. My tips and you’re in that situation and oh my gosh now I’m overwhelmed and now I’m feeling like I can’t breath. I’m up ’till 2AM buying property. What the heck. I still do this to this day. I stop myself. I take some time off and I write it all down. Now if you want to write it on a note pad, go for it. You want to write down, and I mean write down every little thing that’s on your mind, all your little tasks. I do it on a computer and I keep track of them. I write them all down. My thing is slow down, write it down, give yourself dates. Give yourself some cushion dates too. Let’s be realistic. Oh I’m going to do it all tomorrow. No you’re not. Let’s be realistic. Give yourself some cushion dates because you don’t want to fail. You want to get yourself back on track. Then check them off. For me, maybe it’s me, maybe it’s silly, but I have such satisfaction … Look it. I can show Jack right now. I have a little sheet I’m holding up.
Jack Butala: During the show you do this?
Jill DeWit: I do that. Well, this was my getting ready for the show and adding in questions and things.
Jack Butala: Oh okay. God, I don’t do anything like that.
Jill DeWit: Right? A lot of it’s on the computer but sometimes I’m like old school on a piece of paper.
Jack Butala: I think it’s great. I got to get organized like you.
Jill DeWit: Seriously I have a piece paper with little check marks for the shows and getting ready for the shows and where I am in the process. I have been known to, I know Jack, you’ve seen me do this and I know my people make fun of me about this. They’re like did you just write that down and immediately cross it off? I’m like yes I did. Even though I just completed it and it doesn’t really need to be there, it makes me feel good. It’s a little bit of satisfaction that I did it and I can cross it off.
Jack Butala: Isn’t I funny how there’s a line between being too organized where it paralyzes you or being just organized enough so everything’s not a mess.
Jill DeWit: Sometimes it’s hard.
Jack Butala: I know it’s a hard place to find.
Jill DeWit: It’s easy to get paralyzed.
Jack Butala: It’s different for everybody.
Jill DeWit: It’s really, especially with what we’re doing here, I think so many people that we’re talking to they’re new investors. This is a side gig. They have a day job. They want to do this, but … There’s going to be some times here that it’s nutty and you’re not sure if you’re doing the right thing and you want to just give up because you’re just overwhelmed. That’s my thing. Slow down, write it out, give yourself good deadlines, and check them off.
Jack Butala: Exactly, good advice.
Jill DeWit: Thanks Jack.
Jack Butala: That was a technical inspiration.
Jill DeWit: Thank you.
Jack Butala: I like it.
Jill DeWit: Thank you. You inspired me.
Jack Butala: Oh no. Don’t let that happen. Hey, listener, do not let me inspire you. Let Jill inspire you. Then if you have to do some math or something let me know. Ill help you with that.
Jill DeWit: Dude, you are rubbing off on me. What did I just do in this? I did a technical but inspirational thing and I talked about dating.
Jack Butala: Oh my gosh, you’re right.
Jill DeWit: You are so rubbing off on me.
Jack Butala: You’re like one baseball analogy away from the whole thing.
Jill DeWit: Oh wait. I just need to bring up a yogi bear quote. There we go.
Jack Butala: You want to hear a good yogi bear quote?
Jill DeWit: Yes.
Jack Butala: Nobody goes there anymore. It’s too crowded.
Jill DeWit: I love it. Oh my gosh. I got to look those up. That’s good.
Jack Butala: That’s actually my tip top favorite one.
Jill DeWit: I love it.
Jack Butala: Hey 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 everyday to buy property for half of what it’s worth and sell it in a system immediately.
Jack Butala: You are not alone in your real estate ambition. Jill, you’re cracking me up.
Jill DeWit: Thank you.
Jack Butala: I got to bring this up.
Jill DeWit: I am starting to sound like you. That’s …
Jack Butala: This show airs at a much different day than we … It records weeks earlier before it airs but today is Jill’s birthday.
Jill DeWit: Yes it is.
Jack Butala: Happy Birthday.
Jill DeWit: Thank you very much.
Jack Butala: How’s it going so far? It’s like noonish.
Jill DeWit: I know. I’m about ready to split.
Jack Butala: I think you should. I told you you should just get up and leave.
Jill DeWit: I know.
Jack Butala: Go do whatever you want the whole day.
Jill DeWit: Yeah I’m doing it now. I’m ready.
Jack Butala: No, happy birthday. How’s it feel?
Jill DeWit: Thank you.
Jack Butala: Is anything missing in your life?
Jill DeWit: I got nothing.
Jack Butala: There’s got to be something.
Jill DeWit: No I really got nothing.
Jack Butala: Is your car big enough, fast enough? The top goes down. The kids are good.
Jill DeWit: My car is great. Yeah everybody’s happy. They’re all going to be coming into town here at the beach and hang out with us in a couple weeks. That’s going to be a blast.
Jack Butala: Jill’s birthday is July 5th so every 4th of July is a big deal. It’s a big deal holiday in our household. There’s a lot of celebration with fireworks and it’s … We had some hoopla last night.
Jill DeWit: Yes we did. It’s really nice of the whole beach community to rally on the eve of my birthday. I really like that. See how many people on the beach for eve of my birthday? Wasn’t that nice?
Jack Butala: Jill was told as very young child that those fireworks, because it’s her birthday tomorrow, they’re for her. They’re special for her and she still believes it.
Jill DeWit: It took me along time to figure that out that it wasn’t just for me.
Jack Butala: I still think they’re for you.
Jill DeWit: I still love sparklers.
Jack Butala: Information and inspiration to buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steve@LandAcademy.com.
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.