Bending Acquisition Criteria (JJ 636)
Bending Acquisition Criteria (JJ 636)
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hello.
Jack Butala: Welcome to the Jack Jill Show. Entertaining real estate investment advice. I’m Jack Butala.
Jill DeWit: And I’m Jill DeWit broadcasting from sunny Southern California.
Jack Butala: Today, Jill and I talk about bending your acquisition criteria. Is it okay or not?
Jill DeWit: You know, Jack, I have to … I’m sorry. I have to interject here because … how long have we known each other?
Jack Butala: It’s been awhile.
Jill DeWit: How do you think I feel about rules and bending rules?
Jack Butala: This is what happens before every single show. Jill says, “No, bending acquisition criteria. What the hell is that?”
Jill DeWit: That’s exactly what I said and then you gave me your definition and I go, “That’s not what I thought.”
Jack Butala: Exactly. Every … before every show, the exact same thing happens.
Jill DeWit: Yep.
Jack Butala: I don’t know if you should not know at all and we should just laugh about it-
Jill DeWit: I know.
Jack Butala: Throughout the whole show-
Jill DeWit: That’s right.
Jack Butala: Or if we should just talk about it intensely and provide real advice. Not that.
Jill DeWit: Heaven forbid, rehearse. I don’t know what that means.
Jack Butala: Rules are meant to be bent.
Jill DeWit: That’s how … by Jill. If anyone got a doctorate in anything like that, it’s me.
Jack Butala: We’re going to get into why I think bending your acquisition criteria’s actually pretty healthy. It’s ironic, but I think it really is-
Jill DeWit: It is ironic.
Jack Butala: But, before we do that, let’s take a question posted by one of our members on the jackjill.com online community. It’s free.
Jill DeWit: Okay. Jordan M. asks, “Greetings. My name is Jordan and I am in Texas. I want to learn more about wholesaling and land as an additional revenue stream to fund our other real estate ventures. Currently, I build residential and multi-family properties, own a single family …. own single family duplexes, multi-family and commercial buildings. I also have experience syndicating real estate partnerships. What … I think this could be a good resource for more money. What should I read to get started? Glad to be here.”
Jack Butala: The reason I chose this of all the … again the questions that are put in front of me every week is because Jordan, you are the exact candidate for the Land Academy House Academy Group.
You’ve started in real estate. It sounds like it’s either your career … full-time career or you’re seriously dabbling in it. Whichever one and you’re serious about it. We have more people come to us and say, “I’ve been buying and selling real estate or invest … real estate investor in some capacity for 25 years and I didn’t realize how easy it is to buy cheap property until I met you guys.”
Jill DeWit: Exactly.
Jack Butala: That’s what it sounds like is happen here and, welcome.
Jill DeWit: What should I read to get started? Every thread you can get your hands on in this forum that you’re reading in this environment. You came to a self course in our online environment, so landinvestors.com or jackjill.com and I’d say, “Read away.”
Jack Butala: Don’t just stick with us. I mean-
Jill DeWit: True.
Jack Butala: You should definitely read the ebook. The House Academy e-book’s coming out really soon here and the Land Academy one’s long been out and people love it. I would go onto YouTube. Understand what a mail merge is. A lot of stuff you don’t need to learn from us at all. There’s better people out there to learn things like mail merge. That’s very technical computer related stuff, but for real estate and buying cheap property, I have to pat myself on the back. I think Jill and I have it figure it out.
Jill DeWit: And confident.
Jack Butala: Really the answer is, read as much as you can. Avoid anything that has to do with … I explained this to … I just hired a new acquisition person and I had to explain this to her. If you leave your desk, that’s just … you’re starting down the wrong path. It’s so inefficient to leave your desk and the nature of real estate is that you leave your desk, you’re in your car.
Jill DeWit: Isn’t that funny.
Jack Butala: I just think there’s so much time gets wasted when you leave your desk.
Jill DeWit: I completely agree. You should have … we’re doing boots on the ground. Get other people to do it for you.
Jack Butala: That’s right.
Jill DeWit: You have six folks in six different towns, huh, look at that. Imagine you running around trying to do it yourself.
Jack Butala: Exactly.
Jill DeWit: Impossible.
Jack Butala: Exactly.
Jill DeWit: Thank you, Jack.
Jack Butala: Hey, today’s topic, bending your acquisition criteria. This is the meat of the show. What we say in the capsule from the Land Program is, “Set a perimeter based on the comparison values of the county where you’re working when you buy land.”
If you’re in the desert type of property that we’ve cut our teeth on from a land perspective , it’s a $100 to $200 to $300 staker and no more than five acres or no more than 20 acres or whatever it ends up being that you’re sending mail out for during that scenario or it’s infill lots, you won’t pay more than $12,000 in a certain MSA or a certain zip code or whatever your criteria is, but this show is about when is it okay to bend your acquisition criteria?
Here’s a typical example. Property comes in … you send a mailer out for $12,000 for infill lots. Let’s say all over Austin, Texas. I’m just using … throwing it out as an example and a much of people call back and say, “You know, $12,000’s too thin or $10,000’s too thin, I’ve got a bunch of properties at $18,000, you can have ’em all.” What do you do, Jill?
Jill DeWit: They might be worth it too?
Jack Butala: Right, that’s really my point of this whole thing.
Jill DeWit: Exactly.
Jack Butala: So, what do you do?
Jill DeWit: Well-
Jack Butala: Besides sit here and listen to me and look at me like, what the heck are you talking about?
Jill DeWit: It’s kinda funny. It’s awesome.
Personally, I mean, at the rate we’re at … I mean, I try to pay attention, if not, I make not of everyone of them, so I don’t say, “Oh, nevermind, have a nice day.”
Jack Butala: Right.
Jill DeWit: My team takes every inbound call and every inbound email or contact form filled out for something for sale. It gets logged and cataloged because even though it’s not what I’m looking for right now, it might be some day and those properties are often still there when we circle back around.
Jack Butala: Right.
Jill DeWit: I do that. It depends on … honestly, it depends on how great the deal is, how much time I have and how far it is from my acquisition criteria. For example, say I’m dealing with only residential. I’m brand new. I’m just learning this thing and someone dumps a commercial thing on me. I do not want or industrials, heaven forbid. Last thing … or even agriculture. I don’t really want to spend a week learning the rules just so I can properly evaluate and assess this property. That’s a little too far from-
Jack Butala: That’s what I would call breaking your acquisition.
Jill DeWit: Yes.
Jack Butala: You don’t want to do that.
Jill DeWit: Exactly. That’s … I don’t want to go down that path, but-
Jack Butala: It’s worth spending 10 minutes on. That’s my answer.
Jill DeWit: Yeah.
Jack Butala: If you send mail out for infill lots in Austin and the price is the only thing that you’re bending, that is your product type, you’ve got buyers set up for all that-
Jill DeWit: Size.
Jack Butala: If it’s three or four thousand dollars more, it’s worth spending 10 minutes on to look and see if you can justify it. Maybe even making a couple of phone calls to your favorite buyers, but anymore than … and then you’re going to make a decision right there, but letting it linger, I’m guilty of this sometimes.
Letting it sit there and linger in your database forever because you just never really made a decision on it.
Jill DeWit: Exactly.
Jack Butala: It’s a really bad idea.
Jill DeWit: It’s true.
Jack Butala: It’s unfinished.
Jill DeWit: It is.
Jack Butala: I think it’s okay to bend your acquisition criteria a little bit.
Jill DeWit: You don’t want to get distracted.
Jack Butala: Look into it. Yeah.
Jill DeWit: Okay, so here’s my thing, though. When you read this, I thought you were going to say it’s bad because sometimes people are all in their path and then it’s like, “Oh, something shiny. A guy just called with a mobile home park and I’m doing this.” Like, hold on a moment. On what planet does that fit your criteria and what you’re doing right now and by the way, you’ve only done two transactions.
Jack Butala: Yeah.
Jill DeWit: Let’s all be smart here. Don’t get distracted and that’s where I thought you were going with this. Don’t bend your criteria. Bend it, I guess you’re right, but don’t break it, like you said. Try to stay true, especially when you’re starting out. Get to know a property. I mean, I know … I have a lot of our members that have been so successful ’cause they got to know an area even. They’re the experts of this neck of the woods, if you will and then they move onto another one and another one and another one and those … they did it methodically and carefully and they’re killing it. Then they know the area what to ask, what to look for, all that good stuff.
Jack Butala: If you know anything about modern IT and computers, or if you’ve worked with tech people, you know that they each have a severe specialization and so, Jill and I grew up in a time where … We grow up in a time were companies didn’t even have a tech department and then all of a sudden overnight there seemed to be a guy … an IT guy that’s walking around making sure everybody’s computer works and he’s the guy you would call if your mouse didn’t work, literally. It was only one guy. The mouse didn’t work, the software wasn’t right, anything-
Jill DeWit: Isn’t that funny. You’re right.
Jack Butala: Anything computers, you would call him. If you did that with a modern IT person, right now, they’ll tell you go jump in a lake.
Jill DeWit: Exactly.
Jack Butala: If you tell them your mouse doesn’t work, they’re going to laugh. I mean, they were trained to be database people.
Jill DeWit: Right.
Jack Butala: Most of them have never built a computer. They’ve never been inside of a computer. They know nothing about hardware, unless that’s their specialization and to ask them to fix your email, forget it.
Jill DeWit: They’re there for the network.
Jack Butala: But, they’re geniuses about whatever one little thing they work on. For us, we have a bunch of database people in and web designers, but I’ll tell you what, God help us if you ask them to fix our email.
Jill DeWit: Oh my gosh.
Jack Butala: That ends up on my desk.
Jill DeWit: It does.
Jack Butala: I have to deal with it. I have to call somebody. It’s the same thing with acquisitions.
Jill DeWit: So funny.
Jack Butala: Be an expert at whatever you are and leave the … like Jill said, the industrial property or whatever else is not your expertise, just leave it alone.
Jill DeWit: You know, to take it a step further. Thank you, Jack. That was beautiful.
Jack Butala: That means it’s my turn. If you’ve ever had a wife, you know … thanks, that was beautiful, now you’re done.
Jill DeWit: Definitely.
No. Oh my gosh. Or a mother. A mother would do that too, maybe.
Jack Butala: Let’s just say a woman.
Jill DeWit: Oh, thank you.
Jack Butala: I’m going to get into so much trouble for this.
Jill DeWit: Thanks a lot. Oh man. If I could reach you right now, I might kick you under the table.
No. So funny. What … now I totally lost that, Jack. Shoot. Okay.
Jack Butala: Mission accomplished.
Jill DeWit: You are a stinker. Anyway, it’s just important to set this criteria and stick to it and grow and build and we were talking earlier too about, again like you said, the leaving the desk. I’m just thinking about that right now. There’s more than just your acquisition criteria you shouldn’t bend. Oh and I just thought about this, so here’s a good thing too-
Jack Butala: Good recover.
Jill DeWit: Ah, thank you.
Jack Butala: Wow, we just talked about nothing for like three minutes.
Jill DeWit: I did.
Jack Butala: And totally pulled it off.
Jill DeWit: And it helped me … helped me recall what it was-
Jack Butala: You are like a radio talk show host dream.
Jill DeWit: Just-
Jack Butala: This is filler.
Jill DeWit: Fleeting out of my head and now I got it back.
Jack Butala: Did I distract it or lose it again?
Jill DeWit: Nope.
Jack Butala: Okay, good.
Jill DeWit: I’m not going to let you do that. No, it’s funny about … Well, even thinking about acquisition criteria stuff. You know, look at this show right now that we do. We talk so much about your expertise, which is acquisitions. We don’t talk so much about sales, which is mine, so I think part of your acquisition criteria is not dealing with anything but acquisitions.
Jack Butala: That’s true.
Jill DeWit: And being smart and recognizing what you’re good at.
Jack Butala: Yeah.
Jill DeWit: So … isn’t that funny and you use acquisitions … let me take this a step further. So interesting. You use acquisitions and better acquisitions to solve every other problem.
Jack Butala: I really do.
Jill DeWit: Isn’t that interesting?
Jack Butala: I could buy your way out of issues. Think about that for a second. I wrote a whole blog on this. You can buy your way out of negative cash flow, if you know what you’re doing, by acquisitions.
Jill DeWit: Yeah. You can.
Jack Butala: I mean, that’s just truly amazing when you think about it.
Jill DeWit: It really is. I was talking to somebody about this the other day. Again, on what planet can you start a company for this and really like you just said, we’ve seen people come from behind, man and killing it now and now the kid’s colleges are taken care of and now the wife can quit the job and all those things. I can’t, but … just kidding.
Jack Butala: Of all the people who should be quitting their jobs, we should be the number one and number two.
Jill DeWit: We’re the ones that are like, “I don’t wanna.”
Jack Butala: We’re not. I don’t know why.
Jill DeWit: It’s too much fun.
Jack Butala: Well, yeah. Most of the time.
Jill DeWit: Most of the time.
Jack Butala: Until I have to fix someone’s email, it’s a lot of fun.
Jill DeWit: Oh my goodness. Don’t ask Jack. Don’t … that’s the thing, if you are silly enough to CC Jack on something, or go by his office and let it be known that you’re having an issue with anything, it’s on you.
Jack Butala: It’s taken 10 years-
Jill DeWit: Can’t save ya.
Jack Butala: 10 years for some of the people who work here to figure that out.
Jill DeWit: Yeah.
Jack Butala: And thank you for saying it right on the air to everyone.
Jill DeWit: Oh, sorry.
Jack Butala: No, I mean, I’m not … not sorry. I mean it. There’s just … just don’t-
Jill DeWit: Our employees don’t listen to this show. It doesn’t matter.
Jack Butala: This is good advice for anyone. Just fix your own stuff. You don’t need to tell your parents. You don’t need to tell your boss. Just fix it.
Jill DeWit: Yeah.
Jack Butala: Hit your numbers, fix it, and have fun.
Jill DeWit: Isn’t that true? I love you, but please don’t brag about it. That’s nice. It’s like, if you come to me and you want to brag about something that you just did. “Hey, look what happened to me, I just did this.” It’s almost like you’ve said this many times, why are you even letting me know about it?
Jack Butala: Yeah.
Jill DeWit: I shouldn’t know about it and now it’s your fault.
Jack Butala: Well, you’ve done it again. You’ve wasted another 15 minutes listening to the Jack & Jill Show. Join us tomorrow, where Jill and I discuss how to talk to house sellers. It’s kind of different then land sellers, actually.
Jill DeWit: Always, it is and we answer your questions. Should you have one, post it on jackjill.com, our online community.
Jack Butala: You are not alone in your real estate ambition. Good show, Jill.
Jill DeWit: Yeah, that was … we didn’t … I’m the rule breaker. We didn’t talk too much about that. Thank you for not throwing me under the bus and ask me how I was such a rule breaker because I still am.
Jack Butala: Well, yeah. Let’s talk about it.
Jill DeWit: It’s nature.
Jack Butala: You are not a rule breaker.
Jill DeWit: I swear it’s not nurture, it’s nature ’cause no parent would raise their child to be like that.
Jack Butala: Just going to say one thing and do something else.
Jill DeWit: Yeah.
Jack Butala: That’s really what goes on with you. Fortunately, you don’t pull that crap with me, which I really appreciate.
Jill DeWit: It’s just like in … In my head, it’s the right thing to do. It always is. I’m not hurting anybody. Everybody’s going to benefit when I’m done. It’s just I need to talk … I need to run with this and I need to do it my way and if it didn’t work out the majority of the time, I’d stop it, but it does work out.
Jack Butala: I know, that’s the problem. You get encouraged.
Jill DeWit: Yeah, like, “Oh look, that did work. I told you all.”
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