Already Flip Houses Successfully – Buy Cheaper Houses to Flip (CFFL 0239)
Buy Cheaper Houses to Flip
Jack Butala: Buy Cheaper Houses to Flip. 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: Hello.
Jack Butala: Welcome to our show. In this episode Jill and I talk about, hey, you already flip houses successfully. Why not buy them cheaper and then flip them?
A great show today. I love this topic. It’s something that Jill and I have done in the past, and we do now all the time. We don’t talk about it too much because this is a Cash Flow from Land show. Flip houses is not in that title, but we’re going to talk about it a little bit today.
Before we do that let’s take a question posted by one of our members on successplant.com, our free online community.
Jill DeWit: Luke wrote and asked, “I have five five acre lots inside a nice national forest today. I did not pay yet. The seller sent me a letter replying to my offer and said I have to buy all five of them. Trees, park, no neighbor, no road. It would be a hike to access. I think that would be fun to sell. What do you guys think, am I going crazy? The cheapest five acres in the county is $40 000, so I think there’s some room for error.” I put this in here, Jack, on purpose because I wanted everybody to hear your thoughts on this.
Jack Butala: Lucas is, if not our star member, one of our star members, probably star performer. Let me translate, I’ll translate Luke’s language. He sends out a bajillion letters, and he obviously reeled in five five acre properties that are inside a national forest. A lot of times this happens with Native American reservations, also.
If you look at a use map, you ever see those checkerboard maps? If you’re my age you remember those atlases that your parents had in the back of the car, and it’s all checker boarded out and it’s color coded. The white ones, it used to be, anyway, are privately held land. There’s different type. I’ll go over it really quickly here. Even now, just look up on the internet land use maps. White is private ownership, and then there’s lots of different color codes for federally owned and, like Bureau of Land Management, state owned land, and then all different types of municipalities, and on, and on, and on.
What ends up happening is if you look at what Luke has here is some property that’s privately owned land all surrounded by what I guess he’s calling national forests, which is cool. This is my opinion, my fifteen year opinion. These lots are incredibly valuable. Incredibly valuable because they’re so finite and unique. Do you have to cross federal land to get to it? Yeah, but guess what? We all do. We don’t know that we’re doing it but we cross over all kind of land use stuff on the way to work, on the way home, and all of it.
My message is this: hell yes, but these Luke. That’s the answer to the question. The more unique that your property is, the more that you can set it apart from looking just like regular old vacant land, like the 9 000 other properties that may or may not be for sale in that area, the faster you’re going to sell it for and the more you’re going to get for it. I love unique property like this. I had tons of lots a long time ago one mile from the Grand Canyon, just inside of a Native American reservation, and boy did I get it from a lot of people that were doing the research on whether or not to buy these properties from me. I was getting hate mail, like, “Why are you selling Indian reservation?” I really wasn’t, it was just really, really close to it.
This is a great question. This is a master’s degree level question on land. Not quite PhD, but I love it and heck yes!
Jill DeWit: I think what a better attribute? I’m like, how cool is that? There’s somebody somewhere who wants to hike to their place and pitch a tent, and know that it’s there’s. It’s obviously in a pretty part of the country. I think it’s awesome.
Jack Butala: Jill and I had a cabin for several years in a North Western part of Arizona in a heavily treed, high elevation area. It was just like Luke’s saying. Our cabin happened to be on private land but we probably crossed ten use types on the way to get there.
Next to us about a mile away there was a whole slew of what they called summer homes. Get this, they sub divided a bunch of property. It was literally a land lease, and still is, from the Federal Government. The properties are there, you can buy properties and you can buy cabins that have been built on them. They’re really cheap, 40, 50 000 bucks, and you sign a land lease with the Federal Government for 100 years. It’s like $200 a year, it’s really, really inexpensive and it’s locked in. It’s all guaranteed and locked in. It’s as good as if you own it.
There’s lots of different things that go on that I don’t think get discussed too much. This is the interesting stuff for me. This isn’t like, send some letters out and you’re going to get some back, and you can buy properties cheap. After a while it’s like, yep, I’ve got to figure out a different way to say that. I might throw up on myself.
Jill DeWit: No, that was good.
Jack Butala: If you have a question or you want to be on the show, call 800-725-8816. Jill just got a chance to paint her nails, I was so long winded on that.
Today’s topic, so you already flip houses successfully, why not buy cheaper houses in the beginning and then flip them the same way you’re already doing it? That’s the meat of the show. Can you believe it? We’re getting multiple members now that are using our data to doorstep program, and the stuff that we provide to buy houses successfully. Multiple members. The word’s out.
My question is, if you’re flipping houses and listening to this, are you sending mailers out to buy these houses? How are you sourcing your houses that you actually flip successfully? Can you image if you were buying the properties 20% cheaper on the front end? You would have a lot more choices. you could say, “I don’t have to renovate this thing as heavily because I’m into it for 20% cheaper,” or, “I can renovate it the way I always have been and make a 20% better margin than I usually do.”
I constantly talk to house flipping people. Jill and I go to a lot of events. For whatever reason, flipping houses is very popular right now. I think a lot of it’s HGTV, and residential houses in general seems to be the product choice of new people who get into real estate investing, which I do not understand, but that’s fine.
Jill DeWit: Couldn’t be one of the more harder ones, my goodness.
Jack Butala: It is the single hardest way to make a living in real estate, flipping a house.
Jill DeWit: I think it’s insane because the things that could go wrong. Feel so bad at the number of people who jump into that, and then they get a bad taste of it and they think all of this is bad, just because they started with the hardest product type of all. It’s so interesting.
What I think is interesting too, Jack, is the number of people that are still doing it the old way. I still hear people talking about bandit signs. Are they also wrapping their cars? “I search the MLS for new things every day.” I’m like, oh my God, all these things that when it was the only way, maybe, but there’s a much better way now.
Jack Butala: We know a lot of people, specifically in Phoenix because it’s such a good market to do this, who buy properties. Every time I see them I ask them, “How do you search for deals?” “Oh, I have this guy and he calls about twice a week and asks me if I want to do this deal.” Is it a real estate agent? No, it’s just this guy. Being who I am i dig deeper into this and find out that that’s what these people do. They send out letters like us and they secure properties, and they mark it up ten …
Jill and I do this. Jill and I have one guy that we do this for in Phoenix, and we sell a ton of houses this way. We buy houses super cheap, mark it up ten grand. I don’t care if it’s a 1.2 million dollar house or a hundred and thirty thousand dollar house, we mark it up exactly ten thousand dollars. This guy knows that and he trusts us. He know it’s consistent and he constantly buys houses from us. Why not, if you’re a flipper, do that yourself? Take a weekend, get the program, learn how to manipulate data, access the assessors database through our products, get some mail out there. While you’re swinging a hammer or yelling at your sub-contractor, you can open the mail and buy cheaper houses.
Jill DeWit: I know people that I’ve talked to, they don’t realize how specific our data is. They don’t realize I can put in a three bedroom, two bath, this neighborhood, this zip code, dream it up. I want square footage.
Jack Butala: You can use the map.
Jill DeWit: Exactly.
Jack Butala: Draw a map around the houses you want to send letters to.
Jill DeWit: I can specify the mortgage if there is one. You could even get into the lending specifics, it’s so interesting.
Jack Butala: Whether or not it’s got a pool.
Jill DeWit: Right, if it faces north, south, east, or west. I about fell over when I saw that. How funny is that? If you really are serious about this, you can really say this is our number one property type, we’ve done twenty of them in the last three years. Great, put in that exact property type that you guys know, that you’ve worked with and flipped successfully, and you’ll find them. Use the data.
Jack Butala: Here’s a sentence that I like to hear because I can solve this problem. Have you ever hears somebody day something like this: “Boy, if I had fourteen of those I’d be in a different situation.” That’s what you want, because you can get fourteen of those. It usually comes out of the mouth of somebody who just turned a deal and did really well on it, and they’ve got everybody lined up, all the buyers lined up, the whole thing. That’s what we go out and do, and say, “All right, great. I’m going to go out and get you fourteen more in the same area, same product type.” We might have to send five bajillion letters, but the math is staggering. It’s very profitable. I think we made our point.
This is a Technical Two, two minutes of property investment advice from our fifteen year, fifteen thousand deal experience. If you are in the business of buying and selling anything that is associated with a database, here’s a short, fast, rapid fire list: cars, boats, houses, land, office buildings, any type of real estate, anything where there’s a database like the DMV, or an assessor’s county database where it keeps track of all the data, if you send them offers, owners offers, you will smoke out a tremendous number of people who just want to get rid of whatever that asset is.
Money is not their priority, convenience is, and timing. “Boy, I really just want to get rid of this car. I would take $10 000, $15 000 less, I just want to get out of it.” “What’s the loan on it?” “It’s zero, I just want to get out of it. I’ve got to go do this thing this weekend.” It’s amazing what you’ll find. Database driven acquisitions. Accessing a database, not buying a list that somebody sends you, accessing an actual database to get good information to send meaningful, individual offers. You will do incredibly well. That’s exactly what we teach.
Jill DeWit: Touche. That’s all I have.
Jack Butala: You’ve got a question or you want to be on the show, call 800-725-8816. Now it’s Jill’s turn. Jill, inspire us.
Jill DeWit: Don’t let money make decisions for you, you make the decisions. 1.2 is don’t take the cheaper way. Sometimes we take the cheaper wrong way. Don’t do that. Do the right thing, we talk about that, even if it costs more. As you’re making some decisions going forward, and whatever you’re investing in, or whatever you’re doing, or life’s taking you, don’t look at things just based on money.
Jack Butala: Well said, my friend.
Jill DeWit: Thank you. People do that a lot. It’s very interesting. “Why did you do that?” “That’s all I cold afford.” Hold on a moment. Let’s talk about that. That’s a whole other topic, what you think you can afford and what you can afford are two different things.
Jack Butala: This applies to a lot of stuff in life, doesn’t it? “I don’t have the time to do that.” You hear it a lot. The money thing, specifically, I just wrote a bunch of stuff down. I make a lot of decisions based on money. A lot of little decisions I probably should not even be involved in at all. You’ve heard that phrase a thousand times, penny wise and pound foolish, that’s me times eighty.
I spend too much time on little decision making stuff, like standing in the hardware store buying screws and trying to get the cheapest one, and then over spending a million dollars on a yacht. Not that I have any personal experience on that.
Jill DeWit: I don’t want to call you out on that, but that is so true. Thank you Jack, I really appreciate that. Jack, you are wonderful and it is so funny how you roll. That’s a thing. It’s very important for you to be in a hardware store, even a grocery store, pricing meat. It’s very important.
Jack Butala: It’s stupid. I catch myself doing it and I can’t stop it.
Jill DeWit: This is good. I don’t mean to throw you under the bus.
Jack Butala: No, it’s fine. I brought it up.
Jill DeWit: You’re in a grocery store and you’re pricing meat, however, we’re going to go out to that restaurant and we don’t care what it costs. What just happened?
Jack Butala: I don’t even look at the prices on a menu, but I will spend an extra hour in the grocery store. It’s so silly.
Jill DeWit: It’s just your thing and it’s okay. We love you for it.
Jack Butala: Now would be a great time to end this show.
Jill DeWit: Totally.
Jack Butala: Join us in another episode where I self-diagnose my problems and Jill discusses how to use that information. That’s me.
Jill DeWit: That’s me.
Jack Butala: About anything you want.
Jill DeWit: We use it every day to buy property, and other things in the grocery store, for half of what they’re worth and sell them immediately.
Jack Butala: That’s thievery. You’re not alone in your real estate ambition. You’re cracking me up man. That was like a therapy session.
Jill DeWit: I would have not gone there if you had not said that first.
Jack Butala: I don’t know what it is, it’s just ingrained in me. We have members like this. We sit around and talk about this stuff like it’s an addiction meeting. Everybody brags about it, we start bragging about it and I catch everybody, I say, “Wait a second.” It’s healthy to buy property for half, but you don’t want to get secondhand deodorant and stuff. You just don’t want to do that.
Jill DeWit: Can you imagine, like to your kids, “No sweetheart, you don’t get that, you get this.” They get the two dollar one. What if you’re making college decisions for your kids or something? Don’t do that.
Jack Butala: I brought this up on the show in the past, and I just think it’s funny as heck. If you talk to a commercial contractor, we have a lot of friends who are contractors, I don’t know why, it’s just the way it worked out. If you talk to a commercial contractor about spending less money on something they all just stop what they’re doing and really give you a long lecture about you get what you pay for.
I personally think they’re wrong. I argue with them. One guy specifically, I argue about this with him all the time. It’s not about buying a cheaper shelf, or a cheaper wall, it’s about finding somebody who doesn’t want the damn wall, who doesn’t want a super high quality wall, so you get it for cheaper. He just doesn’t get it.
Jill DeWit: I don’t understand their side of the thing. What are they saying?
Jack Butala: You get what you pay for.
Jill DeWit: We buy the most expensive products?
Jack Butala: Yes. It has to be brand new, it has to be top rated, and you’re going to pay for it. The guy who I’m building the building for is going to pay for it, and I’m going to mark it up. It’s like, what if you got something cheaper?
Jill DeWit: That’s just as good?
Jack Butala: Just as good, but you’ve got to work around this. Nope.
Jill DeWit: Do they not buy Kirkland products? I have a question.
Jack Butala: Costco comes to mind in this conversation, it comes up a lot, too.
Jill DeWit: Are you saying that’s not going to be just as good? I beg to differ.
Jack Butala: A agree with you, Jill. That’s why we’re in the business together. It’s not a rant, I’m just saying, there are lots of people, many, many people where I communicate our business model and they think it’s sub-standard product.
Jill DeWit: That’s interesting.
Jack Butala: You take ten pieces of property in one area. You take ten different owners. Line up ten diametrically people, put them in your head, visualize it. They’re standing there against a wall. You can’t predict which one is going to sell the property or which one’s not at all. You just make them an offer.
The guy on the end, maybe his grandmother just passed away and he’s got a bunch of stuff to do, and he doesn’t want to deal with it. The guy on the other end got a new job. The guy in the middle just wants to get rid of it. He’s the third owner in his family to have it, generation to generation. The people in between are extremely upset at the thought of even selling their property at the price that you offered them. So what? It’s all the same product.
Jill DeWit: It’s funny, when you just brought up the contractor thing. They expect that if I pay more it is worth more, kind of thing. That’s the buyer I want. Here’s the deal. I’m going to go over here, quietly buy it, they’re not going to know what I spent. I’m going to turn around and mark it up four times and sell it to them, and they’re going to be all over it. That’s true.
Jack Butala: That happens every day here. You know what? Your four times markup is probably about what the property’s worth. We are not in the business, by the way, of marking property up over what it’s worth.
Jill DeWit: Correct. That’s a good point.
Jack Butala: The whole real estate industry is chock full of people who are trying to get top dollar, which I think is a huge mistake. It’s a time waster and the whole thing. Why not buy it super cheap and then sell it super cheap, and then everybody wins?
Jill DeWit: That’s a point we don’t talk about enough. That’s one thing that we teach. We don’t teach everybody once you buy it, mark it up so you’re right in with the competition. Uh-uh. You buy it so well that you mark it up enough that you’re still under all the competition, and that’s why it sells so fast and you do so well, and you move on.
Jack Butala: I was talking to our customer service manager earlier today in great detail because we have so many members now she’s getting extremely detailed, really intelligent written questions via email in the middle of the night. They have regular jobs. God bless them, it’s awesome. The smarter, the better, I say. She came to me and said, “These questions are possibly over my head, I need some help.” There are all these detailed, crazy questions.
We finally, together, go to the bottom of it. People are so excited when they order this stuff that they’re putting data to doorstep before the education. Data to doorstep, by definition, is a set of tools that props use, like us, to buy properties super cheap, but like any tool in a toolbox that you have under your sink or in your garage, it comes with a set of instructions. Maybe you’ve used a wrench so many times you don’t need to read the instructions anymore. If you’ve never bought any real estate, you need to read the instructions. That’s what our education programs are about. You’ve got to have that first.
We came up with a little template thing, she and I. I’m like, “You need to send this to this guy, and then everybody else that comes up.” The whole toolbox analogy, we wrote that all out. Does that convey …?
Jill DeWit: It does, and I’ve had that too. Before we had her and it was just me back then doing a lot of this work, I would have to say, “Sit tight, hang on, it’s coming. Go to chapter five, you’re on chapter one right now. Let’s hang in there.” Then they go, “Oh, got it.” I have to admit, I’m like that too, sometimes. I don’t want to read the instructions, I want to figure it out. I just dive right in and I know nothing what I’m doing. That was a waste.
Jack Butala: I’m a huge fan of the immediate gratification.
Jill DeWit: You? No!
Jack Butala: With intent I throw directions away. It comes with being a male.
Jill DeWit: It comes with testosterone, and you have a lot of it.
Jack Butala: I do?
Jill DeWit: Yeah. It’s the after show. Yes, you do.
Jack Butala: I’ll save that story for later.
Jill DeWit: Thanks.
Jack Butala: Information and inspiration to buy undervalued property.
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