Choose Real Estate Specialization (CFFL 541)

Choose Real Estate Specialization (CFFL 541)

Transcript:

Jack Butala:                         Jack Butala with Jill DeWit.

Jill DeWit:                            Hey there.

Jack Butala:                         Welcome to our show today. In this episode, Jill and I talk about choosing a real estate specialization. Seems kind of basic, but man, it’s important. Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.

Jill DeWit:                            Okay. Joshua asks, “In the education program, Jack recommends including agricultural land data in our search criteria. I had decided on a county to send my first mailer to, but I’ve noticed that the majority of the parcels listed had the land use description of Agricultural NEC. Would this be a red flag for targeting this county, or could I be looking at this differently. In theory, I thought having the major percentage of my list focused on residential or recreational would be best. Thanks for any insight.”

Jack Butala:                         NEC, as I understand it, and I don’t know the exact N-acronym, I’ll look it up during the show and try to find out exactly what it stands for, but what it generally means is not categorized. Not is the N, and C is categorized, I think, and I’ll make absolutely sure. I just found it, No Existing Category, so it means that the assessor thinks it’s agricultural, but it’s NEC, or they think it’s industrial, but it’s NEC. That’s your assessor at work, by the way. That’s your taxes.

Jill DeWit:                            Would this be a red flag? Oh gosh.

Jack Butala:                         No. You know what? To directly answer your question, I love NEC property because hey, if the assessor doesn’t really know, I’ll figure it out. We’re going to let the guy who owns it and me, the buyer, we’re going to put a price on it real quick, so keep that in, absolutely.

Jill DeWit:                            Totally.

Jack Butala:                         To directly answer your question again, the only reason I would remove agriculture is if you’re working on a very farming intensive county. Farmland is a commodity that’s usually priced per acre. If you walk into a bar or a coffee shop somewhere in Kansas and you say, “Hey, what’s the price of an acre go for these days,” everybody will jump right up and say, and they’ll be pretty close about it, but their answer’s going to be very consistent, “Oh, it goes for about $8,000 an acre or $3,000 an acre or $3,250.” If you’re working those areas, you want to price your mailer the way that we price houses. You want to come in under that number. Decide what it is and come in 60-70% under that number.

Jill DeWit:                            Traditionally, what you’re saying too is farmland is much higher than just out there rural residential vacant land.

Jack Butala:                         Desert land, yeah.

Jill DeWit:                            That’s the whole point here.

Jack Butala:                         It’s priced much lower, much, much lower than property that’s about to be developed like a developer property for subdivisions.

Jill DeWit:                            Exactly.

Jack Butala:                         That variance, by the way, this is a topic for a whole show. All of us have driven down a street and then two months later, you drive down it and you’re like, “There used to be a farm there, and now they’re putting roads in.”

Jill DeWit:                            It’s a strip mall or something, exactly.

Jack Butala:                         That’s why we’re here, by the way. That person, whoever is doing that development, they’re creating equity. That’s the takeaway from this question, but whatever you do, you want to create equity. You don’t want to just make property move around, if you know what I mean.

Jill DeWit:                            Right.

Jack Butala:                         If you have a question or you want to be on the show, reach out to either one of us on landinvestors.com. Today’s topic, choosing a real estate specialization. This is the meat of the show. What are your thoughts, Jill?

Jill DeWit:                            You know what? For me, there’s two ways to go with this. One is, is there something that you already know a lot about? Let me go back. Let me go back from it. A real estate specialization, of course, is what do I want to be? Do I want to focus on farmland? Do I want to focus on vacation properties? Do I want to focus on commercial properties? Do I want to do apartment buildings? What’s going to be my specialization?

I have a lot of people that come to us, and they’re wide eyed. They’re like, “I don’t know where to start.” One thing that I suggest is, well, is there something that you already know something about? Do you have the inside track to something? We have many people in our group that come to us from some real estate niche or something they’ve known about, or maybe they’ve even worked for a county.

Jack Butala:                         Jill, this is brilliant.

Jill DeWit:                            Thank you.

Jack Butala:                         I have to tell you, because this is not what I was going to talk about at all, and I’m learning stuff here.

Jill DeWit:                            Thank you.

Jack Butala:                         This is a brilliant insight on this.

Jill DeWit:                            Thank you. Yeah, we have a lot of people that already have a lot of information at their fingertips that not everyone does, and they have experience in these areas that they didn’t even realize it would be useful now. There’s people in our group that have worked at the counties and dealt with subdividing property, and they don’t even realize, oh my goodness, I have all this knowledge at my fingertips now. I know how to do this better than anybody and faster and who to call to get this done for myself. Ta-da, that’s probably what I should do, and bingo, the answer is yes. That’s one way to really think about and choose a specialization.

Another way is start easy. I tell people, “Let’s just start with the basics. Let’s start with just flipping some land. Let’s start with rural vacant, vacation or residential or something property and be really open and let your specialization find you,” because that happens. We have some gentlemen in our group that their specialization became they were the only ones that could figure out how to do certain deeds in certain situations where people passed on. They became the experts in X, Y, Z county of how to do these transactions.

Jack Butala:                         Yeah. The technical term’s called adverse possession.

Jill DeWit:                            Right.

Jack Butala:                         What you’re doing is really solving someone’s problem.

Jill DeWit:                            Right. They picked up on all these properties that no one else would touch, valuable properties, because no one could figure it out, and everybody would just move on. It wasn’t even their property specialization, it was more of a transaction specialization, and it just came to them. They were happily off and running, and that’s their thing. Those are my two ways that I suggest. What else do you have, Jack?

Jack Butala:                         Well, let’s look at us. I’m in this specialization now because I was just sick and tired and half dead doing large commercial real estate deals that are rooted in healthcare. I had to get approval from the federal government, the state government. It took a year. It took a year to do a deal. The payout was pretty good. It was a six-digit payout, but that’s just not for me. I’d rather just turn and burn and turn and burn properties and do it in a way that is a data-driven way.

We’re all about data here. All the companies that Jill and I have and all the group of people that we have have one thing in common, we all love data and we all love manipulating data. Every once in a while, there’s people that come to our group who don’t start with data. They start with, I don’t know, maybe they’re interior decorators or something. That’s not what this is about. I don’t care about any of that at all. In fact, the only one who’s close to that maybe is Jill, and thank God, by the way.

Jill DeWit:                            I like that stuff.

Jack Butala:                         We’re not about renovating houses like on HGTV.

Jill DeWit:                            No.

Jack Butala:                         We’re about hardcore-

Jill DeWit:                            I would if it would’ve made a lot of money, but it seriously doesn’t.

Jack Butala:                         So would I, so would I. We are about hardcore data manipulation, getting offers in the mail and buying undervalued property/real estate of all types and then wholesaling out to somebody who already said, “Yeah, if you can find a property for $110 a square foot in that zip code, I will buy as many as you can get.” That’s what we’re all about here. That’s our specialization. Quite frankly, it’s like we’re printing money.

Jill DeWit:                            Do you want to know what my personal specialization is? Here, I want to tell you.

Jack Butala:                         Yeah, I do.

Jill DeWit:                            Here’s my personal specialization and why I’m involved in all of this, I personally want to make a lot of money on property I don’t have to visit.

Jack Butala:                         Yeah! You mean, you just want to sit at your desk?

Jill DeWit:                            Totally.

Jack Butala:                         That’s what I want.

Jill DeWit:                            I don’t know, it could be in another country. It could be on a boat. It could be on the beach. It doesn’t really matter. I can be anywhere I want, review a property, not have to do anything, call anybody and buy it and sell it.

Jack Butala:                         All right, good. I’m glad this went in this direction. We can rename this show right now, “Real estate, what motivates you to be a real estate investor?”

Jill DeWit:                            Really?

Jack Butala:                         Because it’s the same thing. Because if you can answer that question, that’s your real estate specialization.

Jill DeWit:                            Oh, brilliant.

Jack Butala:                         Jill just reverse answered it perfectly. She doesn’t want to go visit the property. She doesn’t want to drive for dollars.

Jill DeWit:                            Yup, bingo.

Jack Butala:                         She wants to flip a piece of dirt by talking on the phone because she’s super good at it, make a good living at it and then be on her way.

Jill DeWit:                            Yeah.

Jack Butala:                         I want some version. That’s the end result that I would like, although I’ll leave the talking on the phone part to Jill. I want to really take a week and manipulate data, beautifully selected data, and sit in a dark room in front of the computer and make sure that the data’s perfect, the letters go out and then predict.

Here’s what it is for me, I want to remove all the risk so that if I know when someone calls us back on 4-5,000 letters that we send out, if 10 or 15 people call us back and two or three properties get purchased or more, usually it’s more for us at this point because we do spend so much time sending out perfect offer campaigns, that we’re going to make some money. That’s what this is about. That’s what motivates me.

Jill DeWit:                            Yup. I love it.

Jack Butala:                         Talking to people doesn’t motivate me. Choosing wallpaper, oh my god, no. If I have to go look at it, I’m not opposed to that. Quite frankly, I love going to look at real estate. We don’t do it as much anymore because we don’t need to, but it’s the data piece. I’ll tell you what I don’t want. You know what? Let’s do that.

Jill DeWit:                            Okay. I’m ready, go.

Jack Butala:                         You go first.

Jill DeWit:                            What I don’t-

Jack Butala:                         What don’t you want? We already have the go visit it thing.

Jill DeWit:                            I’m thinking. I was thinking about I don’t want to pick something or I don’t want someone to pick something because they think it’s the coolest. I mean, come on, like doing a big mansion flip just to say that I did it.

Jack Butala:                         Oh, because it’s sexy. I can’t stand that.

Jill DeWit:                            Yeah. I don’t want to say, “Hey, that $5 million property over there, hey, bought it for 5, sold it for 4. That was me.” You know what I mean?

Jack Butala:                         God, I look good losing a million dollars.

Jill DeWit:                            Isn’t that awesome? Yeah, like I’m going to brag because I could just throw that much money around. That’s not what I want to do, seriously.

Jack Butala:                         I agree.

Jill DeWit:                            People are out there doing it. They’re bragging, “Ah, well, you lose a million here. You make two there, whatever.” I’m like, that’s not what I want to do.

Jack Butala:                         No.

Jill DeWit:                            What do you not want to do?

Jack Butala:                         What I don’t want to do is I want all the stuff on HGTV, I don’t want any part of that. Here’s a list of stuff that I refuse to do in a real estate transaction, because we can at this point, we can easily afford to. This happens all the time. If I need the approval of anyone to do a real estate deal, and here’s an example, a lender, a business partner, a real estate agent, if anyone is going to say yes or no to a real estate deal, I’m out. I’m past it. I got stung too many times a lot of years ago in healthcare just waiting for people to make a decision.

Here’s what else I’m not going to do under any circumstance, represent somebody else in their real estate deal, and that’s exactly what a real estate agent does. That’s what they do for a living. That’s the definition of what they do. They represent a buyer or they represent a seller and in buying and selling a house or an office building. You want to talk about a mess.

Jill DeWit:                            Well, doesn’t that tie back into you just having control?

Jack Butala:                         Yeah.

Jill DeWit:                            Is that really it? You don’t want to answer to anybody else?

Jack Butala:                         Exactly.

Jill DeWit:                            Which is really how you roll in life, but that’s a whole nother show. I’ve heard the way you drive, point, I am not going to answer to anybody else in this intersection.

Jack Butala:                         It’s not that bad. I’ll tell you, Jill, between the two of us, I know who’s a crazier driver than me.

Jill DeWit:                            Actually, I did that the other day. I was with kid number three, and he said something, he’s like, “What, no U-turn.” I said, “Number one, read the times.” It was like 7:00 to 9:00 a.m. We were clearly out of it, and I said, “And B, we’re exempt.” He’s like, “What?” It was funny, so yeah, you’re right.

Jack Butala:                         If you ask a real estate agent, what a lot of real estate agents when they try to justify what they do, they say something like this, “If I wasn’t involved in this transaction, those two people, the buyer and seller, they would’ve never gotten this deal done.”

You know what my answer is? Then it shouldn’t have gotten done. If the buyer and seller are all angry with each other about anything or if their water heater’s the problem or there’s some, then that’s not the right deal for them. There’s no way to justify. If I sound angry about this, it’s because I am.

Jill DeWit:                            Have you heard realtors say that?

Jack Butala:                         Oh my god, yes.

Jill DeWit:                            I say, I don’t. Do we think it’s true or think it’s not true? If I had a realtor come to me and say that and say, “You know what, this deal would not have got done if it weren’t for me,” I’d be like, “Really?” Maybe I feel bad, but I don’t know a lot that push transactions through.

Jack Butala:                         I feel exactly the opposite of bad.

Jill DeWit:                            Really?

Jack Butala:                         I feel great about all of this because no, it’s silly.

Jill DeWit:                            I know. I don’t want to bash on them, but I’m just saying.

Jack Butala:                         I do.

Jill DeWit:                            Okay. I know. All right, so I got it. You pick the property. Your specialization is having control because you just went with … Well, you know what? Okay, so I want to ask this question please, Jack.

Jack Butala:                         Sure.

Jill DeWit:                            When you set out, because you came from, your background, doing the toughest type of transactions, did you specifically seek out the easiest-

Jack Butala:                         Yes.

Jill DeWit:                            … number one, okay, and then what made you not veer from that?

Jack Butala:                         Well, I was grossly, ridiculously successful from transaction one. Then it just became one thing after another in a positive way where I was buying property on the internet. This is the first inning of the ballgame back then about buying and selling real estate on the internet. The light bulb went off over my head multiple times until we landed on doing mailers, which we’ve done now for decades.

The ease of a transaction, the fact that you can buy a piece of real estate on the internet the same way that you can buy a vacuum cleaner, just there’s like 19 things that just sing to me and all through the years have sung to me, but the most important of which is the availability of data and then manipulating it, which is just that was icing on the cake for me. That’s when we really started doing thousands and thousands of deals. Finding a buyer, finding a seller, all that stuff’s really easy.

Jill DeWit:                            Exactly. That stuff’s not a big deal. It’s really, you’re right, having the data and knowing what to do with. Your whole concept, I know you’re right, I want to back up and just give a little background real quick here for people who don’t know. Jack perfected his way of buying nursing homes by sending out faxes back then, thousands of faxes to, was it, brokers and realtors?

Jack Butala:                         It was actually the fax number to the facility, and it was a closed market so there are, I don’t know, 12-15,000 licensed nursing homes in the country, not assisted living buildings, these are nursing homes, post-acute care. They’re called different stuff throughout the country. It was a finite database, and I literally input, this is way back in the day, created a database, and then they got a fax from me every month or so.

Jill DeWit:                            And it worked.

Jack Butala:                         Oh my gosh, it worked.

Jill DeWit:                            Then it transferred into this, and here we are today.

Jack Butala:                         Bunch of stuff happened in between. Some of it’s great, some of it’s not, but in the end what it became, Jill, and thank you for clarifying all that, is there’s a finite database of 150 million properties in this country. While it sounds like a daunting task, it’s not. 15,000 nursing homes to 150 million pieces of property, 150 million APNs, Assessor Parcel Numbers, it’s not that many. A lot of them fall right off. A tremendous number fall right out based on certain criteria, and they should all get letters, and they all will eventually over and over.

Jill DeWit:                            I love it.

Jack Butala:                         I’m glad you asked that.

Jill DeWit:                            Thank you.

Jack Butala:                         What really sings to you about this whole thing? You told us about …

Jill DeWit:                            Why I chose to do-

Jack Butala:                         … not being inconvenienced by going to look at real estate, which I completely agree with. It’s totally inefficient.

Jill DeWit:                            You want me to do what? I have to be where when? Oh, no, no, no, no, no, that’s not how I roll. No, just kidding. You know, it’s kind of funny. I got to be honest because so much of my life is not about money, seriously. I’m not about-

Jack Butala:                         That’s why you have me.

Jill DeWit:                            That’s true. I’m not about maximizing revenue here or that flash. However, I have found our product type seems to have the highest return on investment, so that’s why I am sitting here right now. Least amount of output, highest amount of money back. That’s it. I don’t care that it’s not cool. I don’t care that there’s not any or probably ever will be an HGTV Flipping that Dirt. I don’t see that. I don’t see a …

Jack Butala:                         Can you imagine?

Jill DeWit:                            … flip or flop your farm property. I don’t see that like, “Oh, they put in new sprinklers. Aren’t they pretty, babe? Oh my gosh, we’ve got to get this.”

Jack Butala:                         How would you do a show?

Jill DeWit:                            You can’t.

Jack Butala:                         You’re right. How would you do an HGTV show on that?

Jill DeWit:                            Wouldn’t that be hilarious? “Oh, babe, look at this. We took different pictures with different lighting, and doesn’t it look great now?” No, we’re not going to do that. I’m not going to go plant things and put a fence up and then say, “That’s my renovation.”

Jack Butala:                         Here’s the whole show. Here’s the HGTV land flipping show. It’s called the Jack and Jill Land Flipping show, and this is what would happen.

Jill DeWit:                            Okay.

Jack Butala:                         It would be a shot of you and me standing next to each other like in that pitchfork picture.

Jill DeWit:                            Yes, exactly.

Jack Butala:                         Then they would cut to a picture of a piece of dirt that says, “Purchased for $32,000 and sold for 61.” The show would be over.

Jill DeWit:                            That would be it. That’s it.

Jack Butala:                         It would be both of us high-fiving each other.

Jill DeWit:                            That’s right.

Jack Butala:                         Cut to the next scene. Purchased for $22,000, sold for 38.

Jill DeWit:                            We high five.

Jack Butala:                         High five. Cut to the next scene and then it would get canceled.

Jill DeWit:                            That’s right. It’d be boring really fast.

Jack Butala:                         Right at the end of the episode it would be, “We made $142,000 this month flipping land.”

Jill DeWit:                            Wait, wait, wait. I have a way to make it more exciting.

Jack Butala:                         Okay, go ahead.

Jill DeWit:                            Imagine this, we preface cutting to seeing you in your office for two days manipulating data. That’s it, because that’s how we got there.

Jack Butala:                         The guy called, god, the guy needs to shave.

Jill DeWit:                            Oh my gosh. Babe, you got to see this. He’s still sitting here. It’s a time-lapse camera. He’s still sitting there with that.

Jack Butala:                         Right. It’s a good thing you can’t smell his office.

Jill DeWit:                            Oh my gosh. Someone just brought him food, and then they left, and he’s still sitting there. Then I don’t know what happened, but the offers went out, and now people are sending back stuff. I don’t get it.

Jack Butala:                         There could be a phone bank on a public radio station where all the people are calling. Some of them are yelling. Some of them are happy.

Jill DeWit:                            Yeah, like this is stupid.

Jack Butala:                         This is stupid. That’s a show.

Jill DeWit:                            This is stupid, how to make millions on land.

Jack Butala:                         The stupid way.

Jill DeWit:                            That’s right.

Jack Butala:                         If you have a question or you want to … I’m sorry. Join us, yeah. Join us on another episode where we discuss how to buy your next house for half price.

Jill DeWit:                            Then we answer Shammgod’s question about extremely low assessed value. This ought to be good.

Jack Butala:                         You are not alone in your real estate ambition. You know, Jill …

Jill DeWit:                            Tell me.

Jack Butala:                         It’s no wonder that we made a successful podcast out of such a boring topic.

Jill DeWit:                            Good point.

Jack Butala:                         I’m patting myself on the back right now.

Jill DeWit:                            You know what? You’re right. We might be able to carry a show for at least 5 or 10 minutes.

Jack Butala:                         Maybe just a pilot.

Jill DeWit:                            This is true.

Jack Butala:                         Maybe we could just do a documentary.

Jill DeWit:                            That might work.

Jack Butala:                         A one-hour documentary about how to flip land in the 21st century.

Jill DeWit:                            What would we put interesting in there?

Jack Butala:                         I don’t know, that’s the thing. Because you don’t want to do a whole series on it, because it’s just not … Once you get past the fact that you can make a bunch of money on it, which our members already know …

Jill DeWit:                            They move on.

Jack Butala:                         Yeah. Then they just repeat it and hire somebody to do it.

Jill DeWit:                            Exactly. Hey, like our show? Please subscribe and rate us on iTunes or wherever you are listening.

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