Grown up Office Space
Jack Butala: Jack and Jill here.
Jill DeWit: Hi.
Jack Butala: Welcome to the Jack Jill Show. Entertaining real estate investment talk. I’m Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting from sunny southern California.
Jack Butala: Today, Jill and I talk about grown-up office space. Is there such a thing? We’ll find out.
Jill DeWit: How we got here is ridiculous. That is the only thing …
Jack Butala: We got here is ridiculous?
Jill DeWit: No, no. Not how we got here, physically, or at this, but I’m just saying how we got to our most recent version of grown-up office space is ridiculous, and I’m going to leave it at that. I have an even voice. I don’t rant like this, but man, I even put it on social media. I was ticked off. I don’t usually do that.
Jack Butala: I love it when you get upset.
Jill DeWit: I’ve got that out of my system now, so now we can have the show. Thank you, Jack.
Jack Butala: Before we get into Jill’s rant, Jill’s controlled rants …
Jill DeWit: I’m good now.
Jack Butala: I will make it a funny rant. I always do.
Jill DeWit: Thank you.
Jack Butala: Comedic relief. Let’s take a question, posted by one of our members on the JackJill.com online community. It’s free.
Jill DeWit: Angela asks, “I’m looking at a mailer in Arizona. Still on the practice phase of buying cheap desert land. Trying to go into more detail about pricing lands that look like they have more potential near attractive features. How would I go about evaluating a piece of land that is near other houses? What about near a mobile home lot with no trailer on it? I know a person would get more for this land closer to all the utilities. Also, if I go up in elevation, would people pay more? Closer to a main road or an interesting tourist attraction, for instance, close to a national forest? Do I look for similar properties on LandWatch and use our basic formula to decide what to offer? I’m afraid if I just blast a set number we’ll get nothing back because my new area I’m sending mail looks to be a bit more diverse. Any ideas? In advance, thanks. Angela.”
Jack Butala: Excellent question, Angela. That’s the reason that I chose to include it. You’re overthinking this. With houses, you need to spend a week pricing a mailer, exactly how you’re doing it and thinking it. If you were asking about houses anywhere, really, you would not be overthinking this, but with rural vacant land, no one lives on it, it’s a long-gone thought in their head. In fact, it’s just more of a pain in the butt. All they need is an offer from you for 500, 1,000, 1,200, some number.
Am I saying you can offer $10 and get a response? Not at all, and I am a little bit oversimplifying, but the difference between a tiny little property next to two mobile homes in northern Arizona and a 40-acre property in the mind of its owner who lives in Massachusetts and really it was the deceased mom’s and now the daughter has it, there is no difference and the price doesn’t matter. I say shotgun approach with the specific product type. I’m not guessing. I’ve done it both ways and you do not want to criss-cross pricing on desert property like this.
Jill DeWit: It seems like part of it is that it means she’s going to go … Taken a step backwards and going a little bit the wrong direction. If you’re looking for property, like a specific property instead of like what you just said, Jack, just go for it. Now, once you have these …
Here’s how I see it. You need to think of these all as a line item, and I only know this because you taught me this, Jack, and that’s your term. Think of them all as a spreadsheet and a line item.
Jack Butala: That’s it.
Jill DeWit: You just have to see them like that. Until the moment that you’re posting them, and then you want to make them look unique and stand out. When you’re posting these properties for sale and you’re writing a description, hey, bring it out. That’s where you want to go, “Look at this, gosh, at this elevation the air’s so clear.” Who knows? You can add little things like that.
Jack Butala: You’re right.
Jill DeWit: That’s perfect.
Jack Butala: You nailed it.
Jill DeWit: Thank you. I get one or two now and then.
Jack Butala: The reason that these people who own these properties that you’re referring to, specifically referring to, that they own the properties, is not because they generally sought out to buy them. They ended up with them somehow and they just want to get rid of them, or they just want to keep them, but it’s really nothing, generally, in between. They’re not going to sit around and say, “Well, this property …” Some of them might. “This property is right next to this mobile home park and it’s worth X,” or “It’s right down the street from this truck stop,” or “It’s over here.”
Jill DeWit: It’s true.
Jack Butala: The ones who sign the offers and call back and say, “Yeah, I really want to do the deal,” they’re going to say some version of, “Where have you been my whole life? I’m really interested in getting rid of this and whatever the price is …” Jill and I literally, at any given time, are doing 10 to 15 properties where the people just said, “Whatever it takes, just let me know and I’ll sign it. I do not want to own this property any longer. I’m really not interested in getting another tax bill. My husband bought it 42 years ago and we just don’t care anymore. And thanks, by the way.”
Jill DeWit: I have a question, Jack. What, in your life … Look around the studio. Think about the garage. Think about our home. What is it that you would just love someone to walk up and make an offer on? We always have something.
Jack Butala: Yeah. We have a …
Jill DeWit: Besides me.
Jack Butala: Oh, gosh.
Jill DeWit: I’m just kidding.
Jack Butala: Oh, love.
Jill DeWit: Thank you. Or a child.
Jack Butala: Yeah, that’s one.
Jill DeWit: There we go.
Jack Butala: We have a storage unit full of crap that I would just give away right now.
Jill DeWit: There you go.
Jack Butala: There’s a bunch of fishing equipment that I would give away, and it’s actually only because I want different, better stuff.
Jill DeWit: Isn’t that interesting? There’s always something that you just want someone to make an offer on.
Jack Butala: There’s some sports equipment. Yeah, so if somebody sent me a letter and said, “For 100 bucks I’ll buy all the fishing equipment you want to get rid of …”
Jill DeWit: You would hand it to them, wouldn’t you?
Jack Butala: I would sign it and send it back.
Jill DeWit: Right. Thank you.
Jack Butala: There’s a bunch of real estate that I own that I would do that, as a seller, because it just doesn’t sell the way I think it should and it’s not worth posting anymore.
Jill DeWit: Dude, you know we should do that. I got to say this real quick. We get all kinds of offers from our own members for property that we own, and I love it when I see these offers come in. You know what? I’m going to start looking at them.
Jack Butala: Start signing them.
Jill DeWit: Yeah, I’m going to start signing them, sending them back, and going, “You know what? I really will sell this to you for your price. You get an A for effort, but I’m not closing the deal.”
Jack Butala: Yeah, you got to do the whole thing.
Jill DeWit: I’m going to say, “You close the deal. I will sell it to you at this price.” I’m going to start doing that. That would be hilarious. They don’t know it’s us, because we have so many different LLCs out there rolling around through different names.
Jack Butala: Oh sure, that’s right.
Jill DeWit: If they looked at the address, they’d figure it out. It’s funny.
Jack Butala: Yesterday we talked about smart people and technical people who get it. Angela, I’m telling you, you are one of those people. Your level of pricing analysis, you should move straight to House Academy, because there are a lot of people …
Here’s exactly what you do not want to do when you buy houses. You do not want to do what I just described. “Oh, just send them a letter. They don’t care.” People care about their houses. They don’t care about their land at all. Now, they know they have something of value if they own a house, but they do take into consideration in a big, huge way, convenience.
Jill and I are buying multiple houses right now from people who have accepted the fact that our prices are probably 40 to $50,000 less than the actual retail value, but they like Jill, they like the people that are involved in our organization, and they do not want to go through listing it with an agent and the whole thing. There’s a convenience factor, and those properties need to be priced correctly, because … They need to be Angela priced correctly here.
Jill DeWit: Right.
Jack Butala: You can’t send an offer for a $400,000 retail value house for $300,000.
Jill DeWit: Bingo.
Jack Butala: You’re going to waste money and time. But you sure can send it for 360, 370, 380, or whatever it ends up being in that neighborhood after you go through the whole analysis. You get pricing … The reason I’m spending so much time on this, probably to the point of nausea for some people … Pricing is everything, and it’s impossible if you’re brand-new, to know which is which, so I’m trying to help in my boring, weird way.
Jill DeWit: Thank you, Jack.
Jack Butala: Today’s topic? Grown-up office space. This is the meat of the show, and it’s Jill’s chance to rant.
Jill DeWit: No, I don’t have a rant anymore. I got it out. It’s out of my system now. It’s done. It’s over. I have moved on. Seriously, we are about to move in. Everything’s good. It’s just comical.
Jack Butala: Here’s my theory, very quickly, and then Jill’s going to get into it. Everybody has this thing in the back of their head that signifies some version of success. For young men, it’s usually a Ferrari or some car. For people like me, it’s a house on the ocean or there’s some version of that. Or maybe it’s a spouse that looks a certain way, like she’s out of a magazine or he’s out of a magazine.
Jill DeWit: Trophy wife.
Jack Butala: I’m here to tell you, that half obsession that you have about defining success that way, for some people named Jill, it’s grown-up office space. Can’t sink the ship. That is my point here. I say this from experience.
Jill DeWit: It sounds like you’re throwing me under the bus.
Jack Butala: Absolutely not, because I have way more hangups about this kind of stuff than you do.
Jill DeWit: Oh, well, I appreciate that.
Jack Butala: Correct me if I’m wrong. I’m not criticizing you, not even 1%, Jill. I think that you had a version of what office space should look like in your head, probably built up with television shows and stuff your whole life …
Jill DeWit: You know, I have to say something. In my defense, though, I don’t need a … What’s it called? Class A space where it’s all gorgeous and new and environmentally sound, and instead of trash it’s compost in the coffee room, you know what I mean? I don’t have that, but I also have some standards …
Jack Butala: That’s pointed at me.
Jill DeWit: … Of what it should look like. You know, it’s so interesting, Jack, because you’re right. There’s things that you … That’s where we’re different, isn’t that funny? You’re like, “Yeah, whatever. Does it work? Does it run? Sure, fine. It’s totally good.” I’m like, “Okay, that’s disgusting. I will not sit there, and I will not touch that.”
Again, my standards are not that high. They’re not super high. I’m not like Howard Hughes walking around with sanitizer, crazy. I’m not going to get sick. I don’t want to get hepatitis.
Jack Butala: Office hepatitis.
Jill DeWit: Office hepatitis.
Jack Butala: It’s hepatitis O.
Jill DeWit: Sitting at a table in a conference room that hasn’t been cleaned in four years. I will not do that. Just have to defend myself a tad here. Anyway, back to grown-up office space. You know, that is something that is a little bit important to me, and I am one of those people that, even though in my current staff and my current office we don’t see customers at all, none, there’s no …
Jack Butala: There’s no signage.
Jill DeWit: There’s no signage, there’s nothing.
Jack Butala: Full-blown back office situation.
Jill DeWit: But I do require a dress code. I do still believe, because I can feel it in myself. I know that when I wear certain things, I dress up a certain way, I carry myself differently. I act differently, I feel differently, so I do require my staff to do that. We could wear shorts and flip-flops all day long every day, but I don’t let people do that. I do that at home, in my home office, but that’s my whatever, but still. In my office, I still feel like if you have a professional environment it’s going to make you react differently.
Jack Butala: Here’s what’s happened, cutting to the chase. Here’s what happened. Jill and I outgrew our office space. Up till now, both in Arizona and in California, we’ve had an office share situation, with few exceptions. It’s like Regis but not Regis. It’s somebody bought or leasing a master lease, 20, 30,000 square feet.
They put a bunch of offices in there and they sublease it. You don’t really sign a lease, you just sign an agreement. You pay every month, and it’s expensive, but the furniture’s already there and the wifi’s free or included, and electricity. It’s really open up your laptop and get to work. As you expand or contract with people, that’s what happens.
This has been working great for me for a lot of years. Am I saving any money? No, and a lot of people would argue, “Buy an office building,” which I did, which was a total and complete disaster, and I’ll get to that in a minute, a long time ago.
The culmination of all these experiences has led me to I just have a disdain for office space. The cheaper the better. I just want to make a truck-ton of money, and if I have to do it in a closet and work in a closet, then that’s fine with me. Well, my business partner, who’s also the person that I’m sleeping with, had a different idea.
Jill DeWit: I don’t want to get hepatitis in the office.
Jack Butala: I didn’t know this. I didn’t know about this till recently, so we had a little adventure. Here’s what happened. Jill found perfect office space for us, I will say. My hat’s off to you. At the right price, in the right building, and in the right location. I said, “Oh my gosh, I’ve been wrong all these years. I do want to do this deal.” Then the tragedy happened. Go ahead, Jill, take it from here.
Jill DeWit: The tragedy that’s called … It starts with a B and ends with an R.
Jack Butala: Broker?
Jill DeWit: Yes. Well, and I have to say that too. It was a sublease situation and the person that was subleasing it knows nothing about real estate, nor am I really confident they know a lot about business, because …
Jack Butala: Before you get into this, I want to set it up like this.
Jill DeWit: Okay, go ahead.
Jack Butala: We’re the perfect tenant. We have truck-tons of money. We look perfect on paper.
Jill DeWit: Correct.
Jack Butala: And we’re ready to move in today.
Jill DeWit: And we’re easy. I’m not going to say cleanness …
Jack Butala: Hold on. The subtenant, horrific tenant. Back on rent, the building owner couldn’t wait to have us move in. You’re asking yourself, “What could go wrong?” Here’s what went wrong. An egotistical, crazy broker. I refuse to do dual agency. I refuse to check that box. I refuse to be represented by a real estate agent, ever. I refuse … What else? There were a couple things where we just said, “You know what? It’s not really any material issue.”
Jill DeWit: Personal guarantee.
Jack Butala: Yeah, so we’re not going to do personal guarantee. These companies are total credible companies with huge bank balances. They got past that, but they couldn’t get past that dual agency.
Jill DeWit: That was the one thing that held up the whole thing, and he killed the deal because of it.
Jack Butala: That guy, like a teenage girl …
Jill DeWit: Wouldn’t do it.
Jack Butala: … Was offended by that sentence.
Jill DeWit: Exactly.
Jack Butala: So he killed the deal.
Jill DeWit: He did.
Jack Butala: This has been my experience, my whole life, with office space. The people that are in that business, for whatever reason … And don’t take my word for it, just talk to anybody in real estate anywhere … Have some type of egotistical problem.
Jill DeWit: It’s really weird.
Jack Butala: And ego, it doesn’t stop there. It gets way worse. So, unfortunately, my life partner and best friend had to experience what I kind of knew … It’s like watching your kids get hurt. You know it’s got to happen. It’s awful to watch.
Jill DeWit: It is.
Jack Butala: And I’m sorry you’re disappointed, but …
Jill DeWit: Thank you. Maybe the title of the show should have been “Office Space Tears.”
Jack Butala: Forget about Jill’s experience with the office space. It happens with … Some people have this thing in their mind about when they’ve arrived. For me it’s been all kinds of stuff, and it almost always ends in disaster, because you build it up to be something it’s really not.
Jill DeWit: It’s true.
Jack Butala: Really what matters is a bunch of dough in the bank, and a great person next to you. That’s about it. Those two things.
Jill DeWit: I want to piggy-back on what you said about you build it up in your head. It’s so true, because every time when I’m looking … We went to the auto show a couple months ago, and I’m like, “Wow, look at this car, look at that car.” Every one I’m like, “Maybe I should get one of those.” All you kept saying was, “Why don’t you rent one for a weekend and see.” I’m like, “You know, you’re right.” I got into … I can’t remember what it was. Some of these that look the coolest, these really cool sports cars, when you really get into them, they are race cars.
Jack Butala: It’s awful.
Jill DeWit: They are not designed for comfort.
Jack Butala: Right.
Jill DeWit: They are so uncomfortable it’s stupid. You really are sitting on the ground, virtually, and climbing in and out of them is hilarious. Jack is right. If I really had … Yeah, it looks great and it turns heads, but rent one of those race cars for a weekend and you’re going to decide that you probably don’t want one.
For my commute … I was thinking about that too. One of the cars I always thought was so cool was a McLaren. It would never … Where we live and my commute, I would never, ever be able to drive it over 40.
Jack Butala: First gear.
Jill DeWit: Exactly.
Jack Butala: Just keep the car in first gear, wherever you go.
Jill DeWit: What’s the point? Even if I get on the freeway, that doesn’t make a difference either.
Jack Butala: Second gear.
Jill DeWit: Exactly. I will be cursing at how horrible it is to drive. It’s just not realistic. If I lived in Germany near the autobahn, now that would be fun, but we don’t.
Jack Butala: Some people define their success with the hotness of their spouse.
Jill DeWit: Wow.
Jack Butala: I’d love one example of when that actually worked out for anybody.
Jill DeWit: Oh my goodness, yeah. I’ve often scratched my head going, “How much fun is that?” You and I, one of the reasons we have so much fun is we have a lot to talk about. Sometimes too much to talk about, but I mean, a lot of similar things with our upbringing and movies and music and things like that.
Jack Butala: We’re close to the same age.
Jill DeWit: If I was with somebody 20 years older than me, and they were saying, “Hey, do you remember when …”
Jack Butala: It’s funny, because I was thinking 20 years younger than me.
Jill DeWit: “… When John Wayne was in X movie?” I’d be like, “Really?” I actually know a little bit about John Wayne because of my parents and where we lived, but most people would be like … A lot of people would go, “Who is that?”
Jack Butala: Or if they’re 20 years younger and they know all the names of the Smurfs.
Jill DeWit: Right. That would be horrible. That would be horrible.
Jack Butala: Yeah, it would be awful.
Jill DeWit: That’s very interesting. I don’t know how we got here on office space.
Jack Butala: Whatever it is in your head that you think that you’ve arrived, keep it there. Keep it in your head. Keep it as a goal, but when it comes time to pull the trigger, don’t expect.
Jill DeWit: Don’t say it out loud.
Jack Butala: Don’t expect that much. Is that depressing?
Jill DeWit: No.
Jack Butala: I think it’s really realistic.
Jill DeWit: I think it is realistic. [crosstalk 00:19:59]
Jack Butala: All you really want in the end is a bunch of dough and someone to share it with.
Jill DeWit: Exactly.
Jack Butala: I think.
Jill DeWit: Don’t get caught up. You what I think for me too? For me, it was a … Can I just back up and finish with this? Where we ended up checked all the boxes. Our new office space is nice, not fancy …
Jack Butala: Yeah, we did end up with space.
Jill DeWit: … Is clean.
Jack Butala: Great space, actually.
Jill DeWit: It’s clean. Not perfect. It’s got great walkability. We can still ride our bikes there. There’s a lot of things. Our staff is happy because there’s so much around there restaurant-wise and shopping. Take a little break and go get a coffee. There’s three choices really quick to get coffee and lots of good stuff.
Jack Butala: Here’s the kicker. The building owner’s the same.
Jill DeWit: That’s what’s right. You’re right.
Jack Butala: This guy had no idea what’s going on. The building owner, yeah.
Jill DeWit: Yeah, it’s the same. It just happens to be the same owner.
Jack Butala: It’s a different agent.
Jill DeWit: It’s a different agent, and I had a discussion with him. Let me save everybody else some time. Here’s what I did, because Jack let me go through the tears and pain and suffering to get to this point. When I saw this last space and I met with the broker and walked around, I said, “Look, okay, here’s the deal. Before we even waste anyone’s time, I will not sign dual agency, I will not do a personal guarantee. I will provide everything else that you want. I’ll give you this, this, and this, check all the boxes, but those are just my things. If it doesn’t work for you, I get it. We’ll just go our separate ways.” You know what? He said, “That’s fine, I get it,” and he followed through.
Jack Butala: That’s why the title of the show’s called “Grown-up Office Space,” because you made a tremendous, grown-up decision.
Jill DeWit: Thank you.
Jack Butala: You put your little fantasy aside and just looked at functionality and everything else, and you’re allowing your bank balance to be your fantasy.
Jill DeWit: Thank you, Jack.
Jack Butala: I’m real proud of you.
Jill DeWit: Thank you. I appreciate that.
Jack Butala: We all have stuff, you know.
Jill DeWit: You know what? You have to even see office space as a little bit like a line item. That’s part of it, too.
Jack Butala: That’s what it is. You got emotional about it.
Jill DeWit: You can’t. I got emotional about that other space. That was true. I did. I was almost in tears when they pulled the rug out from under me, and it was the broker being a jerk. I’m like, “What the heck?” Anyway, it worked out fine. I’m very happy now.
Jack Butala: I agree with you on that hepatitis thing though. You don’t want that.
Jill DeWit: No, I don’t want that.
Jack Butala: In the office.
Jill DeWit: Thank you very much.
Jack Butala: You’ve done it again. You’ve spent another 25 minutes listening to the Jack & Jill Show. Join us tomorrow, where we discuss work ethic disappointment.
Jill DeWit: This is going to be good, and we answer your question, should you have one posted on JackJill.com.
Jack Butala: You are not alone in your real estate ambition.
Jill DeWit: I didn’t mean to rant again about that space, but I’m just …
Jack Butala: I think it’s good.
Jill DeWit: But I like how you brought in that it’s … Are you looking at it for the right reasons, is what I heard you say. It’s like, “Do you really need that car, or are you just trying to show off?” Come on, everybody.
Jack Butala: Yeah, right.
Jill DeWit: What you shared with us, too, your past experience where you didn’t get into too much detail but I know and I’ll share that. You bought an office building and it did almost sink the ship.
Jack Butala: It was tenants and stuff.
Jill DeWit: Yeah, and what a … I can see where you’re going with that.
Jack Butala: Millions and millions of dollars wasted.
Jill DeWit: Because trust me, Jack, I’ve been thinking about this too, as I’ve been going through the pain of trying to find a decent office space and deal with the right people. My answer was, “Well, forget it then. I’m going to buy my own flipping building and I’m going to be the boss and I’m going to do it the right way.” I totally …
Jack Butala: That’s what I did.
Jill DeWit: … Understand how you got there, right.
Jack Butala: Awful.
Jill DeWit: You don’t want to be in that situation, too, because it’s just not fun.
Jack Butala: We’re in a near-perfect situation right now, Jill, with the office space we have and where we live and how we can get there, and more importantly, the people who work with us or work for us, I mean, they can walk wherever they want to get lunch. It’s just a really usable office space. Office spaces.
Jill DeWit: You know what? Even the very, very, very, very, very, very best possible situation still takes time. It’s killing me. It should have been a one-day event but it was a week event, but I’m still happy with that.
Jack Butala: We’ll add that to the list of things that I love about you.
Jill DeWit: Thank you, Jack.
Jack Butala: Everything takes too long. I love that.
Jill DeWit: Hey, share the fun by subscribing at iTunes or wherever you’re listening. While you’re at it, please rate us there. We are Jack and Jill.
Jack Butala: Jack and Jill. Information …
Jill DeWit: … And inspiration …
Jack Butala: … To buy undervalued property.
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