How to Use Real Estate Inside Information (JJ 619)

How to Use Real Estate Inside Information


Jack Butala:                         Jack, Jill here.

Jill DeWit:                            Hi, everyone.

Jack Butala:                         Welcome to the Jack Jill Show, it’s here that we provide entertaining real estate investment advice on a good day anyway. I’m Jack Butala.

Jill DeWit:                            And I’m Jill DeWit broadcasting from sunny southern California.

Jack Butala:                         Today, Jill and I talk about how to use real estate, air quotes, inside information.

Jill DeWit:                            Who uses the air quotes thing?

Jack Butala:                         I guess I just did on the radio.

Jill DeWit:                            Is that really a thing because I’m missing it. Are you on the inside track and I’m not? Like this show? Just kidding.

Jack Butala:                         No, I think that I … If anybody’s missing it, it’s me.

Jill DeWit:                            Oh, meaning that was a year ago and something? I don’t know.

Jack Butala:                         You know how … Yeah, it was a year ago.

Jill DeWit:                            Oh, okay. I got it.

Jack Butala:                         Or maybe a decade or two ago. Probably that.

Jill DeWit:                            He read it somewhere. Let me guess. Let me guess, Warren Buffett’s using it?

Jack Butala:                         Oh right! Well, if Warren Buffett’s using it, I would use it no matter how silly it looks.

Jill DeWit:                            So it’s got to be. Right. How old it looks or how weird it looks? I got you.

Jack Butala:                         He’s too smart to do something silly like that.

Jill DeWit:                            I know, I think he’s really cool. That’s somebody I’d like to meet. If I … You know what? There’s a few people that you’re like, “I’d pay to go to that dinner,” or whatever it is and I don’t have very many people that I really would, but if Warren Buffett were there I’m like, “You know what? I’d show up to that event. I would like to meet him and shake his hand.”

Jack Butala:                         I don’t think that’s unrealistic. I think he gives talks all the time.

Jill DeWit:                            Seriously?

Jack Butala:                         Yeah, they’re usually political fundraisers and stuff, but yeah.

Jill DeWit:                            Oh, I did not know that. That’s cool. Thank you for that information. Air quote. “Thank you, air quote.”

Jack Butala:                         Puts a visual down, doesn’t it?

Jill DeWit:                            Yes, it does.

Jack Butala:                         For better, for worse.

Jill DeWit:                            Yes.

Jack Butala:                         Before we get into our actual topic, let’s take a question posted by one of our members on the online community. It’s free.

Jill DeWit:                            Okay, Eric M. writes, “Hello, all. I came across some great market slash area info recently that is available in a spreadsheet.” Oh! “I hope this helps others. Thanks to all for their help and contributions. It’s data inventory research.”

Jack Butala:                         I think that … I put this in here. I had the producer put it in here for two reasons. Number one, this is how helpful the JackJill online community is. This guy, Eric could have kept this stuff for himself and doesn’t need to. My second point is, I use this all the time. There’s two places that get fantastic free data driven information that’s almost in real time. It’s maybe 15 to 30 days off, but it’s still unbelievable data based on the MLS., if you Google, data inventory, or just data … Real estate, data or data, the amount of informations you can get on what is sold, and what’s happening by … Down to the zip code, is truly spectacular and that’s my whole point here. Thank you, Eric.

Jill DeWit:                            I think 30 days is pretty darn current. If it was October’s numbers, it’s still is going to help me out because I know people that are trying to wing it with last year’s numbers. That does not impress me.

Jack Butala:                         I mean, I’m obviously a data person and every time I sit down, I can’t just do this for half hour. I have to get in there and take … I look at the clock and stare time.

Jill DeWit:                            Exactly.

Jack Butala:                         It’s truly a amazing set up.

Jill DeWit:                            And the family appreciates it.

Jack Butala:                         Notice she just didn’t say, “you.”

Jill DeWit:                            Yeah, yeah.

Jack Butala:                         Everybody’s happy when I do that.

Jill DeWit:                            The office appreciates that too. First, Jack, I don’t know. Don’t interrupt him. Do not bother him. He’s actually quiet right now. Shh!

Jack Butala:                         Dan said that!

Jill DeWit:                            Stop! He’s going to give us something to do. Don’t bother him!

Jack Butala:                         I couldn’t … I have to do this and I …

Jill DeWit:                            That’s it. Let it go. Let it go!

Jack Butala:                         Jill says, “And that’s what you get for talking to that!”

Jill DeWit:                            That’s right. I know it’s dark out, let him go.

Jack Butala:                         If you talk to your father, you’re going to have to expect stuff like this.

Jill DeWit:                            That’s your problem. No.

Jack Butala:                         Today’s topic, how to use real estate inside, real estate data, or just real estate … Plain on real estate inside information. What the heck is inside information anyway? An inside information on Wall Street … You’re having a cup of coffee with somebody and you say something like this, “You know my company that’s public? We’re about to make some pretty serious changes with this little sub-company. I know you own a ton of stock, I would suggest that you really get rid of it right now. Hey, have a good day.”

That’s how you go to prison. I mean … I’m not exaggerating here.

Jill DeWit:                            By they way, do they both go to prison or just the idiot who said it?

Jack Butala:                         Well, if the person acted on the stock tip then they’re in serious trouble, yeah.

Jill DeWit:                            Okay, if I didn’t … If you said it to me … I’m actually curious. If you said it to me and I said, “What an idiot,” and I didn’t act on it then-

Jack Butala:                         Then call the …

Jill DeWit:                            Authorities?

Jack Butala:                         FCC?

Jill DeWit:                            Yeah.

Jack Butala:                         Er, FTC? Yeah, I think that you would be fine. I think the person, especially-

Jill DeWit:                            After a long investigation.

Jack Butala:                         Especially if you’re an officer of the company. I mean, that puts you in a whole different liability category. That’s serious, serious issues. Prison time, you’re going to get prison time. My point is, inside information on Wall Street about stock trading is illegal. Movies have been made about it. In the ’80’s, Wall Street was all about that, the movie Wall Street.

In real estate, it’s celebrated and encouraged. Here’s a couple of examples. This show is about how you can take advantage of it.

Jill DeWit:                            That’s true.

Jack Butala:                         How you can take advantage of it and make it work for you. Jill and I were talking before the show. We’ve all heard the old story of land banking. Air quotes. No, I’m just joking.

Jill DeWit:                            Awesome.

Jack Butala:                         Land banking is buying property and waiting until the whole rest of the world catches up from it from a geography standpoint so then you can sell it for more. A lot of the … In the olden days, anyway, a lot of reasons that you would buy property and land bank it is because of freeways going through there or a railroad is going through there.

Jill DeWit:                            I think people still try to do this too.

Jack Butala:                         I do too. Actually, I talk to people all the time.

Jill DeWit:                            The think it’s coming.

Jack Butala:                         We get questions on Thursday, yeah. I don’t advocate this because I want a return on my investment in 25 minutes, I don’t want it in 25 years. That’s one way to use it, real estate inside information. Not everybody knows where a freeway’s going to like public officials do.

Jill DeWit:                            Or a mall.

Jack Butala:                         Or maybe the contractor who’s bidding on it might even know. A mall’s a better example or even … The best example that I’ve used in the past, in the distant past, is I know that this commercial central business district is expanding so if we buy infill lots that are two blocks away … Especially, in lower census tract, census data area, like a de-census tract … Detroit’s a good example. Central business district, the real estate there is incredibly expensive and then you go two blocks out, and it’s just a mess. You can buy property for nothing, almost nothing, like $500 I’m talking about.

Las Vegas is like this. Joel’s favorites … New Orleans is like this. The property that’s down in the French Quarter, you go a couple blocks … You don’t even walk a couple blocks away.

Jill DeWit:                            Oh, no. You know you don’t go north of … I can’t remember the name of the street, but there’s certain streets you don’t go north of.

Jack Butala:                         That property, literally, you can buy houses and lots for $500. If you knew that the French Quarter was expanding north, like just Jill said, for whatever reason … You heard it in a coffee shop or you work in a county and you got a brother-in-law who’s in Alaska, that kind of stuff is not illegal, to my knowledge. Maybe I’ll get a million emails on this.

Jill DeWit:                            Well, here’s another one that I think that people miss. Data is not cheating. People think-

Jack Butala:                         You know what? That’s a great point!

Jill DeWit:                            Thank you. People think that going and downloading every owner’s name and address, and what they paid for it, and when they bought it, and the type of deed, and who they bought it from, and what their mortgage is, and the bank, and all that … People go, “What?!” They look at me like I’m doing something illegal when I say, “Dude, I have it. It’s in title mind. I … Er, Title pro, 24/7. This is one of the things we supply everybody too, by the way. You can have it too.”

Jack Butala:                         One of the top response-

Jill DeWit:                            “What?!”

Jack Butala:                         One of the top responses we get when we send out offers to owners, both positively and negatively back from people … The actual owners, is “How the hell do you know all this stuff about my property that I own?”

Jill DeWit:                            Isn’t that funny?

Jack Butala:                         We say right now … Years, it’s been years since I added this sentence to our mailer that … This is a matter of public record by law. You could actually quote … I think it’s statutory that you … The data has to be-

Jill DeWit:                            Available?

Jack Butala:                         Yeah, it’s public. It’s a matter of who owns property. The associated data has to be a matter of public record and here’s why, because that’s a bad data that the tax rates could set on. It needs to be accessible or let’s say, call it, open source. It needs to be available to people so that the taxing authorities are not unfairly taxing someone.

Jill DeWit:                            Right, and I understand people’s confusion because it’s easier … It’s funny because if you … Say someone cut you off on the freeway and you write down their license plate number, and you want to do something about it. You cannot find out who owns that car with the license plate. It’s not-

Jack Butala:                         Isn’t that [crosstalk 00:09:15]?

Jill DeWit:                            It’s weird-

Jack Butala:                         I agree.

Jill DeWit:                            … But it’s not readily available. Even through an insurance and through other people, it’s like-

Jack Butala:                         Do you have personal experience with this?

Jill DeWit:                            I do have personal experience with this. Not that anybody cut me off, but hmm, maybe there was an accident and a car that we recently sold, and I tried to make sure that the car had been … Title had been transferred, I’m here to tell you. I went through 18 … Even with my insurance people, we just can’t do it. You just can’t get that. You have to go through this whole process, and almost get an attorney involved that there’s a claim and all this good stuff. My point in saying this is, I understand why people think that, “Oh, you can’t possibly have that for our property then. If I can’t get it for a car, how can I get it for a house?” But I’m here to tell you, you can. It’s a whole different ball game.

Jack Butala:                         If you’ve ever gone to the RealQuest or, or [inaudible 00:10:06] for that matter, they do not make it easy to buy their product. It’s not where they have a pricing and all that. I mean, I remember … The reason I bring this up is that I remember the day like it was yesterday and it was not yesterday. It was a lot of years ago, decades ago that I first learned about RealQuest Pro. You know me, I’m like, “There’s no way that there’s a database out there that has all this data in one place,” because I was the person who was pulling data from the county, ordering the CDs, and spending a month of my life trying to get it in. I didn’t think that it could possibly be real.

Jill DeWit:                            And this easy.

Jack Butala:                         The first time I downloaded that data, I’m like, “You know what? The world is my oyster.” That taps into, really quickly, that feeling that I’m just … I just got it. It clicked. There’s some people in our group where they do that, it clicks, and then two months later they’re buying 22 properties and quitting their job. Then there’s some people on the opposite end of the spectrum who just look at it and say, “This is going to be a mess for me to learn this and I don’t understand the point anyway.”

Jill DeWit:                            It’s overwhelming.

Jack Butala:                         It’s overwhelming.

Jill DeWit:                            They don’t get … They don’t see it like that.

Jack Butala:                         And that’s okay.

Jill DeWit:                            It’s like that movie The Accountant. How he just saw this as … For him, this data and stuff, it was like … Remember he was writing all over the walls and everything? For him, I think it was like art and it came so naturally, but for other people they walk in and see this, and go, “Whoa!” They can’t, they just shut down.

Jack Butala:                         Yeah. I mean since we’re talking about movies, it’s like Good Will Hunting where he used the example, or the analogy of piano player where he looks at a … This guy is a mathematical genius and he was born that way with no formal education, but … He said, “When I look at piano I just see a box of wood with keys.” Some people sit down at a piano … I’ve known people like this. They sit down at a piano-

Jill DeWit:                            Are you not like this?

Jack Butala:                         I’m not like this. Where you sit down at a piano and it’s just make sense, and you start playing. Then you learn how to read music and the whole thing, but I’m not one of those people.

Jill DeWit:                            Well, I like to think I’m never going to beat you. I know I’m not you. When it comes to data and sitting down at a computer, but, man, I’ve come a long way, baby. I’m here to stay.

Jack Butala:                         No, Jill you have massive … You have talent where I do not and I think vice versa at work.

Jill DeWit:                            Oh, totally. Thank you.

Jack Butala:                         Somebody asked me recently … Kick me under the table for this.

Jill DeWit:                            Uh oh.

Jack Butala:                         Somebody asked me recently what the biggest challenge is.

Jill DeWit:                            Working with me? No!

Jack Butala:                         In this whole career. He said, “What is your biggest challenge? What was the thing that you had to overcome?” It was a person in our group who has analysis paralysis, they just can’t stop looking at the numbers and they got to get in the mail. They asked me. He asked me and I said my … The single biggest challenge that I have and continue to have is working with my spouse. It’s such a bittersweet thing because-

Jill DeWit:                            Good thing we’re not married.

Jack Butala:                         We are so … Well-

Jill DeWit:                            Who … Just kidding.

Jack Butala:                         It was so productive in our output. From a money standpoint and an acquisitions and sales standpoint, or all of it, it’s so incredible when you really look at it. The fact that you bring stuff to the table that I don’t and vice versa, is so positive, but there … We need to write a book about how to survive working with your spouse.

Jill DeWit:                            That’s true.

Jack Butala:                         I mean, I don’t … It’s not that bad I don’t think, but it’s just … Those two things don’t go. Don’t go together.

Jill DeWit:                            Yeah, it’s hard.

Jack Butala:                         We both want to go to the same place. We just have a different way to do it.

Jill DeWit:                            Oh, that’s true.

Jack Butala:                         When you live with the person that is your business partner … This all went down on Facebook a couple days ago. This young kid was asking, “I have plans to be … To make it in a world and it’s starting to happen,” he’s … I’m assuming he’s in his 20’s. He looked like it from his picture. He said, “Is your … Can somebody please tell me what the advantages are of getting married?” He wasn’t joking about it. He wasn’t saying … You can imagine the response of some folks, but … I almost never respond on Facebook to anything, but-

Jill DeWit:                            Did you pipe in on this?

Jack Butala:                         Yeah!

Jill DeWit:                            This is hilarious. I wish I would have seen this. What was your reply?

Jack Butala:                         He was very professional about it. He said, “Look, this is not a love thing, or a religion thing, or anything like that. It’s just a pure financial, legal … Can you please tell me,” and then there’s all the people with the pre-nuptial agreements and all that. My response was really simple, like, “Look.”

Jill DeWit:                            That’s funny.

Jack Butala:                         “I say this out of a decade of experience. There is no financial and or legal benefit to being married, but there are massive benefits,” and I went in. I went off and said, “Massive benefits to being a business partner with your life partner.” That’s just the way it is.

Jill DeWit:                            That’s cool.

Jack Butala:                         Yeah.

Jill DeWit:                            Was that in a real estate forum or where was that?

Jack Butala:                         I don’t know. On Facebook. I’m not … I don’t use Facebook as a personal … My high school friends are not in there. It’s all business so I can’t … Stuff just pops up. We’re all real estate people on there.

Jill DeWit:                            Exactly. Okay, cool.

Jack Butala:                         What do you think on that? I mean, what do you think the biggest challenge is, Jill?

Jill DeWit:                            Of the business that we’re doing?

Jack Butala:                         I know that we’re supposed to be talking about something else today.

Jill DeWit:                            Is that what we’re talking … That’s where I’m a little confused. What do I think is the biggest obstacle?

Jack Butala:                         Or just challenge.

Jill DeWit:                            The biggest challenge? Staying on task. I see people get sidetracked on something and the next thing you know, they’re down the rabbit hole-

Jack Butala:                         No, but for you.

Jill DeWit:                            Working on their … Oh, for me, personally? Oh.

Jack Butala:                         We’re buying a ton of houses right now. Do you see that there’s anything in our way?

Jill DeWit:                            I’m trying … I’m so far in. I mean, we’re really good at tacking … Here’s the advantage of having you. If I get hung up on something, I have you.

Jack Butala:                         That’s been … Me too.

Jill DeWit:                            Thank you, so I’m not at a loss. You know what else? Here’s my thing, I have no fear so I will-

Jack Butala:                         I thought I was fearless.

Jill DeWit:                            I will barrel ahead, maybe doing something I have no business getting involved in or … I don’t know. I’ll pick up the phone and call the CEO of anything.

Jack Butala:                         I know you will.

Jill DeWit:                            I’ll get to the top if I have to. I don’t have a fear so my only thing is … My personal thing is sometimes I … Staying organized. I mean, for me, I do sometimes. I have so many balls in the air that sometimes I get … I, personally, get sidetracked on different things and I have to stop it, and reel myself back in.

Jack Butala:                         This Facebook thing really got me thinking and I started to write a lot down. One of the things that I’ve never had … I’ve never had an issue with, “I really wonder if this deal’s any good. Should I do this? Should I do this deal?” I’m staring at it, it looks like a good deal. What could go wrong that … I’ve never had that, not since … I don’t think you have.

Jill DeWit:                            No. Well, because the money … You know why? For me, personally, because we’re paying cash for things, I don’t worry about it. I know that whatever asset we’re buying, I can cover it so I’m not worried. If I were taking out mortgages left and right, and had a lot of debt, then I might make different decisions, and I might feel differently.

Jack Butala:                         More specifically-

Jill DeWit:                            Takes me longer to sell, I don’t care.

Jack Butala:                         More specifically, I think that what … I get a lot of questions like this, like, “Should I do this deal?” I look at it, and it’s … I got this yesterday. There’s a guy in our group who’s doing a lot of … Buying a lot of properties and his acquisition price per property is two grand. These are hundreds of properties in northern California.

Jill DeWit:                            That’s great.

Jack Butala:                         They’re all in the lots, utilities are there. They’re not all next to each other. They’re really-

Jill DeWit:                            This is great.

Jack Butala:                         They’re the perfect property and they’re over an acre. They’re the perfect property for somebody and there’s trees. For somebody who has a little bit of money, not a ton, maybe five grand. Buy a property, build a house on it, put an RV on it, the whole thing. They’re great. They’re drive-right-up-to-it properties so there’s nothing bad that I can find. I didn’t look into the deal, like does the guy actually own them? I looked at them just from a usability, the 4A’s perspective.

Jill DeWit:                            Exactly.

Jack Butala:                         He said, “Is this … Should we? What do you think?” Very professional, this guy by the way. I said, “I don’t think you can miss.” If you’re buying two properties for two grand and selling them for five and hundreds of them, you’re going to do great. They’re all broken up and the way that he structured the deal with the seller is, “I’ll buy them from you as I sell them.”

Jill DeWit:                            There you go.

Jack Butala:                         I mean he did exactly what our whole program’s all about.

Jill DeWit:                            “I sell two, I buy two more. I sell 10, I buy 10 more.” Perfect.

Jack Butala:                         Now that I’m thinking about it, I hope he was just letting me to know to brag. Like, “Hey, look at this deal,” instead of just asking me.

Jill DeWit:                            Exactly. That’s funny.

Jack Butala:                         Anyway, inside information in real estate can be incredibly beneficial. We have inside information with data, Jill nailed it. If you know … You know that if every single other property in a little, tiny market that you’re buying is selling for $200,000 and you have data that’s less than 30 years … 30 days old saying that and a property that you’re going to buy, somebody just signed a contract for 150? Congratulations! You have a crystal ball. Baring some crazy, crazy stuff, which I mean, I can honestly say almost never happens. It doesn’t even … It’s not even worth mentioning. You’re going to make 50 grand, or maybe 40, or 30.

Inside information is what you should be shooting for, not avoiding. I see a lot of new people trying to really bug that.

Jill DeWit:                            I agree. Thank you, Jack. Join us tomorrow where we discuss real estate investment to live by. Oh, and we answer your questions. Should you have one, post it on the online community.

Jack Butala:                         You are not alone in your real estate ambition. Good stuff, Jill.

Jill DeWit:                            That is good. Isn’t that funny about the whole stupid car thing? I’m sorry I had to bring that up, but it was just … When I went down that path try to figure out, I’m like,  “Okay, come on. Let’s see what name the car’s in. Just make sure it’s transferred out of our name into this new person’s name.” I came up against a wall. I’m like, “What do you mean I can’t have that information?”

I’m calling all over and they’re like, “No,” and then they’re saying, “You have come in, in person.”

I’m like, “You’ve got to be kidding me. This is ridiculous.” There should be a database.

Jack Butala:                         Jill and I broke our own rules. We sold a car through a personal friend who needed it, at a dramatically reduced price. What happened is this before it got recorded, before it got titled to that person that got in an accident.

Jill DeWit:                            What the heck?

Jack Butala:                         No good deed goes unpunished.

Jill DeWit:                            I tell you. So I know.

Jack Butala:                         We got it all straightened out because the guy that we sold it to finally was a stand up guy.

Jill DeWit:                            Yeah, he’s doing the right thing. That was a pain in the rear and many phone calls-

Jack Butala:                         We could have bought 16 houses-

Jill DeWit:                            In that time.

Jack Butala:                         Between that … In the time that we spent on that.

Jill DeWit:                            On the phone. Exactly. Well, we won’t do that again. This is one of the things that I … We just had this with our staff recently. That day we made a mistake. Not made a … What we did is we accidentally … We undercharged for some stuff and that … We’re just eating it kind of thing. I’m like, “Hey, I told my whole staff. This is what we tell all our members too. Be ready for it. You are going to make mistakes. That’s a learning process. It’s okay. Fix it, move on.”

Jack Butala:                         That’s just … That’s part of a startup and that just part of stuff that happens, I think.

Jill DeWit:                            Yeah, it really does.

Jack Butala:                         That doesn’t break my heart at all. Does it break your heart?

Jill DeWit:                            A little bit.

Jack Butala:                         I think it does, doesn’t it?

Jill DeWit:                            A little bit.

Jack Butala:                         Tell me why.

Jill DeWit:                            It’s the perfectionist in me that comes out. That’s why.

Jack Butala:                         I don’t have that.

Jill DeWit:                            That’s right.

Jack Butala:                         I expect stuff to go really wrong and it does, then you’re past it, and then it’s time to do it right.

Jill DeWit:                            Well, I’m … That’s happy for you. Share the fun with all of this by subscribing on iTunes or where ever you’re listening, and while you’re at it, please rate us there. We are Jack and Jill.

Jack Butala:                         We are Jack and Jill. Information-

Jill DeWit:                            And inspiration.

Jack Butala:                         To buy undervalued property.

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