Let’s Not Jump the Gun on Your REI Career (CFFL 0268)
Let’s Not Jump the Gun on Your REI Career
Jack Butala: Let’s Not Jump the Gun on Your REI Career. 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 today. In this episode Jill and I talk about, let’s not jump the gun on your real estate investment career. Great show today, Jill. Before we get into it, let’s take a question posted by one of our members on SuccessPlant.com, our free online community.
Jill DeWit: Okay. John asked, “Hi everyone. I’m looking for some reassurance or home truths. I seem to be getting a few calls of interest but it’s as if people aren’t reading my letter. Two people have called with real interest when they ask what I want to offer I tell them it’s 500 as it says on the purchase agreement and they abruptly try to end the call saying the offer’s a joke, and in one case that she knew the land was worth at least 25 thousand dollars. I’ve looked at the assessed value of that particular land and it is only 35 hundred dollars. The other call went pretty much the same way with them saying 15 thousand dollars and the assessed value being 2 thousand dollars. I know that assessed value is really only there for tax purposes. Am I missing something or is this just disgruntled land owners think their land is worth far more than it actually is? Thanks.
Jack Butala: Jill, you want to answer this?
Jill DeWit: It’s probably, maybe both. Are you missing something? I’m not so sure. Make sure you are looking at the right comps and you are looking at, not really the assessed value so much, because, yes, that is for tax purposes, but you want to look for the real comparable properties that are available and being offered for sale in that area because there’s very often, the assessed value and what they’re selling for is drastically, drastically different. Then sometimes I have had those people that they really think that their asset is priceless and I understand that. When they bought it, X was going to happen and this was going to grow and this was going to happen and they may not even be there and they think it’s a beautiful, gorgeous thing and it didn’t really pan out and they don’t know. Sometimes there is some of that going on.
Jack Butala: John, thank you for the question and kudos to you man. You got some stuff in the mail. You got some offers in the mail and you’re a lot further than a lot of people are, so great work. Pricing properties is a big topic lately.
Jill DeWit: Mm-hmm (affirmative), it is.
Jack Butala: We talk about it on the weekly call all the time, so in our program, in the Cash Flow From Land program, I talk about how to price property in great detail, but here’s the summary: If you’re going to buy property in any given area, even out west here where we try to buy it for about a hundred dollars an acre and sell it for 2 or 3 or 400, actually, we don’t try, we do it every day. We buy property at about 25 percent of the cheapest posted for sale property, so if lots of properties are posted for 4 grand, you want to try to buy that property for 25 percent of that, 1 thousand. First of all, you only got 2 responses that you’ve described here, that’s actually pretty good. I hope that your mailer was large enough. We don’t recommend sending out a mailer that’s smaller than 15 hundred units. You don’t want to … A lot of people, their first response is when they send a mailer out is, let’s just test it. We’ll send a couple hundred letters out and see what happens.
Jill DeWit: That’s not a good test. You need more than … More than 2 people call back by the way when you’re doing it.
Jack Butala: Two hundred will.
Jill DeWit: Exactly. It’s coming.
Jack Butala: Some of them have an unrealistic idea of what their property’s worth and some of them are downright angry. There’s no bones about it, but some of them sign it and send it back and that’s what we’re looking for.
Jill DeWit: Exactly.
Jack Butala: You’ll be fine.
Jill DeWit: For every story like this, John, we have other stories like, “I’m holding out for 10 thousand dollars,” and they call me back a month later and now 500 dollars is acceptable. We just had a member call the other day, I’m not going to give any details other than they picked up eleven properties for 200 dollars, total. There’s all kinds of crazy variances so don’t get discouraged and hang in there.
Jack Butala: It’s really hard to digest this concept but it’s really not about the property at all. It’s about the circumstance that the seller’s in. There’s lots of triggers that trigger people to sell real estate. This is true for houses, apartment buildings, and all kinds of stuff. If you have a family illness, if somebody passes away and they’re handling their mom or dad’s estate, and on and on and on, they just plain need money. They’re going to sell the property to you and price is really not going to matter. This particular call Jill was talking about, the caller, that was what I started to say. All through the program I talk about offering a hundred dollars an acre. A hundred dollars an acre is not going to work in Manhattan, New York, it’s just not. You’re not going to buy a skyscraper for a hundred dollars an acre.
Jill DeWit: Or Manhattan Beach. Pick any Manhattan.
Jack Butala: What will work, generally, for land, is offering 25 percent of the lowest priced property. The more rural it is the better deal you’re going to have. I’m oversimplifying it, just to answer this question, but here’s the takeaway: All the answers, we have all the answers. I’ve been doing it for 15 or 20 years. This is a great question and it’s impossible to actually address it without knowing a little bit more but I think that’s the gist of it. Is that pretty clear, Jill?
Jill DeWit: Mm-hmm (affirmative). The other thing to point out is the assessed value. When we talk about pulling your data and you’re getting your group together, the assessed value is just one way so you know you don’t accidentally hit the wrong group like Jack just said. You want to make sure you cap the assessed value so you aren’t accidentally sending crazy offers to property that really is worth a whole lot of money, but do you price it based on assessed value in your offer? Nuh-uh (negative).
Jack Butala: There’s 3 or 4, maybe 5 components to looking at the universe of data in a given county like we do with Data To Doorstep, and then utilizing those 3 to 4 steps. If I described them right now Jill would fall asleep. This is not a lecture. It’s not a PhD lecture.
Jill DeWit: Not just me. We’d lose half of our listeners. Just kidding.
Jack Butala: It actually gets pretty scientific when you get into it in the program, on the calls and stuff, we cover that, but this podcast show is supposed to be half entertainment and half information. What did you call it? Infotainment.
Jill DeWit: Infotainment.
Jack Butala: Jill came up with a phrase.
Jill DeWit: It’s infotainment, that’s right. What was my other thing? Everyone was teasing me the other day, they were going to “Jill” it-
Jack Butala: Jillify it.
Jill DeWit: Jillify it.
Jack Butala: That’s what everybody around the office says. “Just give it to her, she’ll Jillify it.”
Jill DeWit: That’s right. It spread. Our members are talking about it, “All right, we’re going to Jillify it now.”
Jack Butala: That just means take a regular topic and make it all happy and nice.
Jill DeWit: John, you can Jillify these calls when they call back and they say 25 thousand dollars, you can go, I must’ve forgot a couple zeros.
Jack Butala: Yep. Where would you like me to send the check? That’s what I say. What? You’re going to send me 25 thousand?
Jill DeWit: Could you imagine? That would be hilarious. I kind of want to do that now.
Jack Butala: I’ve done it several times.
Jill DeWit: Someone’s going to call and go, “You know what? This is absolutely crazy. I think this thing is worth 50 thousand dollars.” Okay. Done. They’ll be like, “What?” Just kidding.
Jack Butala: All kidding aside, you’ve got to loosen these people up when they call back. They’ll sell you their property. They’re angry one minute, then they’re selling you their stuff for 500 bucks the next.
Jill DeWit: That’s the truth. They picked up the phone and called you instead of the real people that go, “Yeah, this is so not in the ballpark,” those are the ones that just throw it away and they’re not interested, but this person took time out of their day to call you for a reason. That’s a little trigger that they do want to sell. They’re not so happy about your offer. It doesn’t mean they’re not going to be happy about your offer in 2 weeks, they’re just not happy about it today. Let’s just see. Don’t throw those out yet.
Jack Butala: Exactly, well said. Today’s topic: Let’s not jump the gun in your real estate career. What the heck does that mean? This is the meat of the show. We have tons of members. We are very fortunate to see how different people react in the beginning of their REI career. What we love to see is people who follow directions through our programs, they do what we say, with a little bit of interpretation and artistic license. They ask a bunch of questions, they get some offers out and they start buying property, then we don’t hear from them anymore because they go off and they learn on their own and they go silent as Jill and I call it. It’s like sending your kid to college and then you don’t hear from them. You get their report card back and they’re getting all As so everything’s fine. That’s the vast majority of the experience that we’ve had, but sometimes we get a few rogue members who want to do it all at once. They want to send multiple counties mailers, they’ve never done a mailer before but they want to send 10 thousand letters out, they don’t have a website up yet. Ten thousand letters out with their cell phone number on it. Oh no, no. There’s an A to B to C here.
What I mean is, let’s not jump the gun on this thing, on your whole career. We don’t want to quit our job. We want to slowly and methodically buy a few pieces of property and get that first deal done. Get all the jitters out and the kinks out and the whole thing and take it step by step by step and pretty soon your bank balance is going to be pretty big. That’s exactly what we experience with most of our members.
Jill DeWit: I have 3 points that I wanted to make about the not jumping the gun that I experience a lot. One is, just like you, isolated Jack, they go in the wrong order. They’re doing this before that and they’re not being slow and methodical. The second thing I see is by jumping the gun and kind of goofing it all up, they start with an apartment building. What the heck? They think that, “I got all the steps now, I can do this. I’m going to start with an apartment building.” Let’s hold on. If you’ve never done real estate, you’ve never done investing, you’ve never sent out a mailer, this is a whole new thing for you … If you start with an apartment building it’s probably not going to go great and you might not have a good experience here and then dump the whole thing and I don’t wan that to happen.
Jack Butala: Then you wonder why.
Jill DeWit: Exactly.
Jack Butala: I want to buy an apartment building.
Jill DeWit: Then the other three is, the third thing is, I see people shopping for a home run only. That is where I see jumping the gun. Like, “I heard so and so did this and I read so and so did that, so I’m just going to hand out and watch for those deals. Hold on everyone. If you’re sitting here spending 6 months looking for that one home run, when in that 6 months you could’ve had 100 singles like Jack says, you would’ve been ahead.
Jack Butala: You would’ve made more.
Jill DeWit: You would’ve made more and you know more, you have the experience now …
Jack Butala: You’ve got a machine in place too.
Jill DeWit: You know what? The home runs will come. When you’re doing all those hundred little in the 6 months, whatever your schedule is, Jack’s really good about that. I love that in our program.
Jack Butala: What am I good about?
Jill DeWit: You talk about … [crosstalk 00:11:36] We both say working it backwards.
Jack Butala: A lot of times I hear what I’m not good at. I like to hear, what am I good about?
Jill DeWit: One of the things that you’re really good at, you’re good at lot of things, Jack, silly. One of the things that you’re really good at is sitting down with a spreadsheet and planning it out. I’m going to have X amount of money coming in or X amount of properties or whatever it is by then end of 12 months. Okay, let’s work it backwards. Then when you do that you go, okay, that’s a deal a week or a deal a month. You go, “Oh, I can do that.”
Jack Butala: Just deconstruct it.
Jill DeWit: Yeah. By doing that and having that schedule, not jumping the gun and being so methodical, if you do everything right and do little things like my little thing, ask them what else they have when they’re calling you back, you’re going to find those little home runs in there. It’s just going to happen.
Jack Butala: People come to us, they join us from all different walks of life. Some people, they’re sick and tired of flipping houses. It’s complicated, it’s expensive, and there’s a lot of unknowns. Some people, they start their whole career off of us. They start their whole REI career with us and this is a stepping stone for them and they move on to other stuff, or they’re like us, they get the machine in place and the land thing runs in the background, it pays everybody’s salary and things are really well and you go off and bite off bigger and better things as we go, as we learn. Whatever it is for you, wherever you are, there’s a place for you.
We have a couple of members who are acquisition specialists in Chicago for a commercial real estate company and they had no idea you could send out direct mail offers, unsolicited offers for commercial property and get some back. Those guys are killing it. Jill and I do that too. We don’t talk about it too often but we do.
Don’t jump the gun. Just take it step A to B to C and you’re going to do just great. If you’re a crazy type A personality like me it’s going to feel like it takes 5 years but it’s really only a month and a half.
Jill DeWit: It’s 5 weeks, exactly.
Jack Butala: This is the Technical 2, 2 minutes of property investment advice from our 15 year, 15 thousand transaction experience. Get past that first deal first. Period. Let’s not think about what Jill said, buying apartment buildings and stuff. Let’s slowly, methodically, mechanically go through that first transaction. Get a deed done by yourself, use the resources that we have like DeedPerfect.com. Go through the whole transaction and ask a ton of questions on SuccessPlant.com, it’s free, that’s why it’s there. Everybody on SuccessPlant’s going through the same thing you are. Go on there and ask away. They’re doing the same thing right alongside of you. They’ll answer your questions. They’ll say, “I did that 2 weeks and I made a mistake.” Get that first deal done first and then get that second deal done and the third one, not all 20. We talk about a lot of pie in the sky stuff on this show, but when it comes to it, you’ve just got to get that first deal done. We talk about that first deal a lot too I guess.
Hey, if you have any questions or you want to be on the show call 800-725-8816.
It’s the inspiration portion of the show, my favorite part.
Jill DeWit: I have a sound effect today too. Not to scare anybody. What’s this going to be? My inspiration for today is to do this, ready?
Jack Butala: Is that your paycheck?
Jill DeWit: Tear up your to do list. It’s not tear up your paycheck. No, okay, most of my inspiration comes from what’s going on with me right now today, and today my to do list is running my life and I’m tired of it. I’m not kidding.
Jack Butala: You’re tired of running your life?
Jill DeWit: I’m just tired of my to do list running my life. Jack, you know that, right?
Jack Butala: This is awesome.
Jill DeWit: Jack and I just got back from a nice meal and catching up and I’m looking at my to do list and jack’s looking at me like, “What’s going on?” I’m like, “I just can’t take this anymore.” My to do list is running my life. It’s okay, like I am today, I’m just going to tear the whole thing up.
Jack Butala: That’s great, Jill.
Jill DeWit: Because it’s messing me up.
Jack Butala: I think we should do that more often.
Jill DeWit: Thank you. It’s messing me up, it’s messing up my day, it’s messing up how I feel, it’s messing up my mood.
Jack Butala: It’s messing me up, it’s messing you up, it’s messing-
Jill DeWit: Then it spills into everything else, it spills into my meetings, it spills into my everything and it’s silly. It is silly, so I’m officially giving everyone permission to tear up …
Jack Butala: Jill, oh my gosh, you’ll get 500 emails on this.
Jill DeWit: No, it’s going to be from everybody’s bosses. They’re going to go, “You told my employee to rip up the to do list and then they left.”
Jack Butala: Yeah, that’s what’s going to happen.
Jill DeWit: They all went to a baseball game or they went and watched something, something …
Jack Butala: It doesn’t mean burn your life down, it just means take a break I think.
Jill DeWit: Yes, it does.
Jack Butala: Or maybe it does? No, do not burn your life down please.
Jill DeWit: No, it means tear up your to do list now and then. Not everyday. It’s not everyday, this is like once in a while give yourself that little pass and tear it up.
Jack Butala: Are you like a compulsive list maker? Do you make lists and stuff?
Jill DeWit: Totally. Do you know why?
Jack Butala: I didn’t know that.
Jill DeWit: I have papers with me everywhere. It’s silly, you know, because I have sense of accomplishment to cross things off. It’s a little thing for me. That’s a whole other inspiration, but anyway, tear up your to do list, give yourself a break.
Jack Butala: Okay, awesome. 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 or maybe 25 percent, just kidding, of what it’s worth and sell it immediately.
Jack Butala: You are not alone in your real estate ambition. I don’t know why I never thought of doing sound effects on this show?
Jill DeWit: Thank you.
Jack Butala: That’s awesome.
Jill DeWit: That one I said it like, it could be I don’t know what.
Jack Butala: Now I’m going to go on Amazon and try to get a sound effects machine or something.
Jill DeWit: Oh no, no, no, no. We don’t need like a boing in the background or …
Jack Butala: Not silly stuff but noises that real estate investors make. Not themselves, but stuff that happens in your real estate career.
Jill DeWit: What would that be?
Jack Butala: I don’t know. I have to think about it but I think once in awhile it’s kind of funny. Or office noises. I don’t know.
Jill DeWit: I don’t know what that would be. Like a phone ringing? We’ve had that in our thing.
Jack Butala: Yeah, we don’t have control of that.
Jill DeWit: We’ve had Jack’s cell phone go off so that’s already in there.
Jack Butala: It happened this show I think. I concealed it pretty well.
Jill DeWit: Thank you. I’m glad you liked that.
Jack Butala: Tear up your list.
Jill DeWit: Yeah, I need a break sometimes. I need a break.
Jack Butala: You probably need a break from me.
Jill DeWit: No. You’re good.
Jack Butala: Information and inspiration to buy undervalued property.
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