Give Them What They Want Now Tell Them What They Want Later (CFFL 0271)
Give Them What They Want Now Tell Them What They Want Later
Jack Butala: Give Them What They Want Now Tell Them What They Want Later. 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 today. In this episode, Jill and I talk about give them what they want now, so you can tell them what they want later. The people who buy our land that is, specifically the institutional people. Good show today, Jill. Let’s take a question before we get into it, that’s posted by one of our members on successplant.com, our free online community.
Jill DeWit: Actually this is even better. This is from, I got a note in Facebook. So this is really cool. Tom sent in this note to me in Facebook, it says, “Hey Land Academy team, I’ve been listening to your podcast recently and I have been interested in buying and selling land. I’m 28 and debt-free with good credit, but I still rent an apartment and I do not have a home of my own yet. Just thought I would see your thoughts of buying property before I buy a house of my own.”
Jack Butala: Oh my gosh, this was designed for me.
Jill DeWit: “I have a few friends that are loan officers, and they say house first. But some spare income for a larger down payment sounds pretty good.” Well, first of all, why are we asking loan officers about borrowing money? Because I’ve got to say, I think I know what their answer is going to be. Versus you ask your dad, your dad’s going to give you a different response, and your brother is going to give you a different response. Okay, Jack go ahead.
Jack Butala: Boy, your friends are wrong, your loan officer’s wrong, and who else is wrong on this? Everyone’s wrong. I wrote a technical paper a lot of years ago about why it does not make sense to buy a house, almost ever. Unless you pay cash, or at least 50% down. And especially at your age, you want to build an empire. If you have no responsibility at this age, for people our age it looks like to me you have no responsibility and you actually probably do. You want to build a little micro=empire and then worry about a house later.
Jill DeWit: I love it.
Jack Butala: A house, unless it’s in California or some high growth area, and even then you’ve got to really be careful, you don’t make money. You don’t make the money that you think. Your house is basically a savings account, you pour some money into it, you fix the roof when it needs it, but in the end your just putting money into a savings account, you’re not making any money. The national average for years and years and years has been between 8 and 11% increase in value.
Jill DeWit: That’s what I was just going to ask you, I wanted to ask you Jack, just give us, for Tom, a few little tips about that article, because it was so good. And you had good numbers in there, and you even had like a … You did the math, so people can kind of see, you’re like, “Oh gosh, I paid 200,000 and then I sold it for 205,” let’s just say somewhere in Arizona, let’s say Phoenix area, I lived there for ten years, gosh I made payments that whole time on a mortgage, did I really make money? When you add it all up …
Jack Butala: Jill’s exactly right, and that’s what the article was about. What you hear your friends and your parents say is, “I paid $120,000 for that house, and I sold it for $210,000, I made $100,000 in that.” No you didn’t. If you add up all the interest and the maintenance and the taxes that you paid, and all that stuff, like you would in a business. In a business you have revenue and expenses. Well if you did that with your house, revenue and expense, you would find out, and I’m not pulling this out of my hat, you would find out that the vast majority of the time you do not make any money at all. The difference between renting an apartment and owning a house is that you get that variance back, so do you … there’s study after study after study, people have written dissertations on this, about whether or not it makes sense to rent an apartment versus a house. Do you make more or less money? And do you know what it comes down to? Not the asset or any of that, your life. Like if you’re a nurse, or if you’re there a lot, if you’re an investment banker it comes down to your situation, not so much the asset itself. So stay the hell away from a primary residence, especially if you’re leveraging the heck out of it.
Jill and I, that being said, own our own home. And we paid cash for it, and it goes up in value, now we’re going to make some money. So, in the technical paper, the example is I take two college graduates who make $60,000 each, and I look at them going to buy a house, I think it’s a $200,000 house, and leveraging it at 90%, and then in the second situation they live in an apartment that they can afford, for 5 or 8 years, and then save the money that they would have spent on a mortgage, principle and interest, put 50% down, 5 or 6 years later, and now they win. So, I’ll say it again, stay the hell away from that primary residence.
Jill DeWit: Not yet, until you can pay for it.
Jack Butala: In fact, I would take it even a step further. You’re 28 years old, go find a house with like 10 guys, or 10 people.
Jill DeWit: Really save some money, now you’re talking.
Jack Butala: Pay $2-$300 a month total with everything, utilities, split all the costs, have a blast, and start your REI career with us, or anybody really, get some huge money coming in pretty quickly, and then go buy a Ferrari and stuff. You’re young, have a blast.
Jill DeWit: Well Tom didn’t say whether he’s single or not, we’re going to assume he is.
Jack Butala: I am assuming that, just the way this was written. He seemed happy, so maybe he’s single.
Jill DeWit: You know what, and he has good credit, got to be single. Not a woman in his life yet.
Jack Butala: Maybe Tom’s a girl, and the man’s not screwing it all up for her yet.
Jill DeWit: That could be too, because that does happen also. Oh my husband decided this was a good investment, what?
Jack Butala: Maybe Tom’s a guy and he’s got a boyfriend, and the boyfriend is about to screw everything up for him.
Jill DeWit: Maybe, I don’t know.
Jack Butala: We’re not gender specific here.
Jill DeWit: This is very true.
Jack Butala: Spouses, no matter the location, can screw up your life. That’s the name of this show,
Jill DeWit: Oh my gosh. Oh no. Love it.
Jack Butala: I think we answered the question pretty strongly.
Jill DeWit: I think so. Tom, if you have any follow up, hit me up on Facebook, I’d love to hear.
Jack Butala: Today’s topic, give them what they want now, so you can tell them what they want later. What the heck does this mean? Jill’s going to tell us in a second. This is the meat of the show. What do you think Jill? You do it all the time, I don’t even know if you really think about it.
Jill DeWit: I do, I do.
Jack Butala: As the head salesperson of all these crazy companies we have.
Jill DeWit: Yeah, this is really a Landstay discussion, our land business, discussion.
Jack Butala: Houses too.
Jill DeWit: Well and houses too.
Jack Butala: I wrote this over houses, because we do it with houses all the time.
Jill DeWit: That’s true. And our people that buy from us, so this is really about making them happy, giving them something that they want, “Oh my gosh I can’t believe I just bought that property from you. As a wholesaler, I turned around, cleaned it up, dress it up, took pretty pictures, whatever you want to do to it, and I just made that much more. Oh my gosh, Jill what else do you have for me?”
Jack Butala: Bingo.
Jill DeWit: Thank you.
Jack Butala: You gave them what they want. Especially on the first deal.
Jill DeWit: Yep, I guess this is done.
Jack Butala: Because then three deals from that, you’re going to call them or they’re going to call you and say, “I really want this property, but it makes sense, I know you want 10 grand for it, but it makes sense to me at 8.” And then you can say, “Hey, remember those two deals, how much money did you make on those? You might not make as much money on this one, but this is the price.” So you gave them what you wanted in the beginning, and now you’re telling them what you want later. How many times do you go to a restaurant, you check it out, the first couple of times you sit there, and then it grossly exceeds your expectations. Service was great, and the food’s great. We had an experience like that last night actually.
Jill DeWit: We did.
Jack Butala: And then you just keep going, you go back forever, you stop looking at the prices on the menu, you know that it’s going to be great.
Jill DeWit: You don’t care.
Jack Butala: And then you say, I even say, “Hey, just put something in front of me, I love this place.” I’m not even going to look, I’ll eat it. So that’s the whole model there. We do it with houses, Jill and I wholesale houses to a very small group of rehabbers, flippers. And we make a big show out of the fact that we only mark them up 10 grand. Every deal. They don’t even ask anymore. They know that if it’s coming from us, it’s a good deal, we marked it up 10 grand, and they love us. Call us for more all the time.
Jill DeWit: Yeah, it’s consistent in its value, and it’s doing the right thing, and all of that. It’s funny because I remember new employees in the past years, they would follow some of our transactions, and I’m talking about they would see us buy it for X, sell it for Y, and then they’d watch what that person did with it. And they’d come back and go, “Did you know we could have done this and that? And we could have made this much money?” Yeah good for them. I don’t really care, I don’t care.
Jack Butala: That’s not our model.
Jill DeWit: That’s not my business model.
Jack Butala: This is a wholesale model.
Jill DeWit: That’s not what I’m doing, I’m going to flip it, and then I go yay. I get even more excited like I said Jack, because I’m glad that they just made that much more, because now I officially have a customer for life.
Jack Butala: There’s no where else they can go to consistently get inventory. Think of it like widgets, or anything that you would buy that you wholesale and then retail.
Jill DeWit: It’s a quality product, imagine you … dream it up, whatever your product is, you consistently provide quality stuff to your people, like CostCo or whatever, and your person buys it, and they do X with it, and they’re just thrilled, and you’re thrilled too because you have 100 of those people or 200 or 2000 of those people coming back to you consistently and they don’t even question anything, like Jack said. Just put it in front of me, I know it’s going to be good. That’s it, it’s great.
Jack Butala: I love it.
Jill DeWit: It really works. You just can’t get greedy and be consistent and be fair, and don’t look back.
Jack Butala: That’s it. This is the technical two, two minutes of property investment advice from your 15 year, 15,000 deal experience. Forget about your primary residence, people. Forget it. I see this mistake, I see it specifically in bigger pockets. People are constantly asking the question that Tom asked, well forget it. Forget about your primary residence. It’s a money hole. The only way it works is if you find a smoking deal, buy it for 35 seconds, maybe not even see the asset, and then flip it. As a primary residence, to move in and put your little garden in and all that, it’s a big huge distraction in my opinion.
Jill DeWit: I agree. I don’t know what else to say about that because I feel so … [crosstalk 00:11:16]
Jack Butala: We’re so lucky Jill, you and I, honestly just take a minute and say this. Because it’s so hard, like this guy Tom. I know this isn’t even the topic of the show, but I’m so adamant about what he said, I just see so money people get sidetracked and distracted by a house.
Jill DeWit: Well you know what it is, with you and I we’ve been there done that. Tom hasn’t, and I hope that he really listens and pays attention.
Jack Butala: I’m one of those people who got distracted.
Jill DeWit: Oh I did too. It’s easy to get caught up in the whole this is what I’m supposed to do now, everybody tells you that, and you think that’s what I’m supposed to do now, and it’s not what you’re supposed to do now. You don’t have to do what everybody says. Do what’s right for you.
Jack Butala: So glad he asked that question.
Jill DeWit: Do your own homework, and that’s a thing too, I tell people this all the time: don’t trust me, sit down and do your own homework. You can figure this out, you can look at some numbers, you can figure out what people bought for and sold for and what their mortgage was and do the math just like everybody else, and you will reach the same conclusion and go, “Oh. Yeah you’re right.”
Jack Butala: If you read your mortgage, the first page of it, it says on a $120,000 house for example, you have to by law disclose the full value of the payments, the full amount of payment, like principle and interest. On a $120,000 house, right on the first page, it’ll say you are signing up to pay XYZ a month until you pay off …
Jill DeWit: 300 [crosstalk 00:12:34]
Jack Butala: $420,000
Jill DeWit: Yeah why do we all not run from that?
Jack Butala: Right. If you actually sit there, and actually do that, so you live there for 30 years, 30 year fixed mortgage.
Jill DeWit: You really paid 400 for it.
Jack Butala: Yeah, and so is your house going to be worth $400,000 30 years from now?
Jill DeWit: No.
Jack Butala: I doubt it.
Jill DeWit: Isn’t that silly? And we never mentally think that, we mentally think, I bought it for 120. No you didn’t. You bought it for 400, and now you’re selling it for 450?
Jack Butala: You’re right, Jill that’s a good way to look at it.
Jill DeWit: So you really didn’t make any money. It’s a little bit of a mental thing, that’s how everyone who does a mortgage should go into it, they should really go and look at that first page, look at that N number, with all the interest and everything calculated over whatever the term is, 15 or 30 years, and say, that really is the sales price, do you want to do that?
Jack Butala: Then you start refi-ing and all that, you start the clock over again. Trust me, it’s a bag of tricks.
Jill DeWit: It is.
Jack Butala: 50% loaned or valued, don’t refi unless it’s just an interest refi only, never give back any equity, and 50% loaned or valued.
Jill DeWit: Or all cash. Buy a nice condo Tom. Save up and buy something for 115.
Jack Butala: Buy a condo that you don’t have to take care of, you don’t have to pour any money into it.
Jill DeWit: You’ll always have it.
Jack Butala: Get a reasonable HOA, try to get it from a bank so it’s ultra-cheap. Stuff like that.
Jill DeWit: I love it. Then if you ever move around, you rent it out and have a little income. Isn’t that nice? Let’s think about that.
Jack Butala: That sounds a little familiar actually.
Jill DeWit: Yeah it does.
Jack Butala: If you have a question or you want to be on the show, call 800-725-8816, Jill inspire us.
Jill DeWit: Don’t look back. Stop analyzing last year.
Jack Butala: Listen to you. I like your forceful inspiration.
Jill DeWit: Thank you.
Jack Butala: I don’t like hang in there baby, I’m a little kitten. I like, hey. Don’t look back, look forward. I don’t care what you screwed up yesterday, today’s today.
Jill DeWit: It does not matter. I see a lot of people spending a lot of people spending a lot of time really analyzing the decisions they made last week, last year, that got them into whatever hole they’re in, or pickle, or whatever. It doesn’t matter, it really doesn’t. It’s wasted effort. Just pull yourself up, and just go forward, and just make a different decision right now and today.
Jack Butala: Pull yourself up by your bootstraps.
Jill DeWit: I know there’s my cliché, you know what I mean. Just don’t look back. It sounds oh yeah, well duh. But we do it all the time, it’s easy to fall into that trap. Why did I marry … why did I take this job? I didn’t want to say marry some other person, whoops.
Jack Butala: You started down that path, what’s the end of that?
Jill DeWit: Sorry. Not what I meant.
Jack Butala: Okay Freud.
Jill DeWit: Sorry, was that my outside voice?
Jack Butala: That was a Freudian slip.
Jill DeWit: Oops.
Jack Butala: Why did I … Steve. Jack, oh. There’s a sound effect.
Jill DeWit: What’s that Simpsons, “D’oh.” No, no.
Jack Butala: Whatever his name is, why did I marry him? Oh well never mind.
Jill DeWit: Why did I take that job? Why did I …
Jack Butala: Why did I screw that deal up? Why did I think I could flip that house for 200 when now I’m $280,000 into this thing, I’ve been there.
Jill DeWit: Why did I get talked into X? There’s all kinds of things, so whatever it is, we’ve all been there. We’ve done it, and hopefully you’ll get to the point like we are, where we can all laugh about it now. And it’s okay, I tease myself now about, what was I thinking? But that’s okay, at the time, here’s what I tell myself. At the time, given all the information that I had, I really thought I was making a good decision, and that’s okay, now I’m doing …
Jack Butala: Or at the time, I was really really drunk, and I made a huge mistake.
Jill DeWit: Oh my gosh, in Vegas. In a chapel.
Jack Butala: In a Cadillac. How’s that for an image?
Jill DeWit: At a drive-through.
Jack Butala: Without a condom.
Jill DeWit: Oh boy, Jill’s inspiration just went “whoo” sound. So anyway, you should analyze … we just described someone’s insulation …
Jack Butala: Insulation? Freudian slip number two.
Jill DeWit: Someone’s situation. You do need to analyze that one.
Jack Butala: Yeah you need to seek some help with that. If you just bought a house …
Jill DeWit: But for everybody else.
Jack Butala: So it makes buyer paying too much for a house just seems fine now, doesn’t it?
Jill DeWit: It really does, nobody got pregnant. Any way …
Jack Butala: I knew, if I led you down that path, you would close. Because you’re a closer, you’re a sales closer.
Jill DeWit: Yeah, and we’re out. No just kidding. Thank you.
Jack Butala: Join us in another episode where Jack and Jill talk about pregnancy, in a derogatory manner. That’s me.
Jill DeWit: Oh my gosh. And inspiration in how to recover, that’s me.
Jack Butala: Just about anything you want.
Jill DeWit: We use it every day to buy lots of things for half of what they’re worth, and hopefully pay cash and sell immediately.
Jack Butala: You are not alone in your real estate ambition. Jill you’re a crack up man. How did that start?
Jill DeWit: I don’t know. You do lead me down these paths, you’re tricky doggone it. You know exactly what to say, and you know I’m not going to think first, quick second, and then I’m going to blurt out something and it’s like whoops.
Jack Butala: It’s really funny. You know what’s worse, I see people do, all kidding aside, they just get down on themselves. Like oh I’m so stupid, there’s a huge difference between being stupid and doing something stupid. I do stupid stuff all the time.
Jill DeWit: I used to do that, because it’s a learned behavior, I learned it from a family member who would beat themselves up, so I would beat myself up, like God I’m an idiot. And then I realized, then I watch them doing and I’m like, “That’s not right.” So then I had to teach myself don’t do that.
Jack Butala: You know what’s really bad is malicious intents. Like if you do something and you’re pre-meditatively messing with somebody, that’s not good. But if you make an honest mistake and step on someone’s foot, I’m sorry man. If you do it on purpose with intent, that’s a whole different story.
Jill DeWit: Maybe they deserved it.
Jack Butala: Yes, maybe they did. Maybe. Or maybe you just need to walk away.
Jill DeWit: Right, oh gosh here comes the road rage conversation, let’s get this out of here.
Jack Butala: Let’s close while we’re ahead. Like in real estate, let’s close while we’re ahead. Information and inspiration to buy under-valued property.
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