Lenders Kill Closing Time Frames (JJ 663)

Lenders Kill Closing Time Frames

Transcript:  

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 how lenders can kill closing time frames. Now, and you’re “I want to buy a quick SFR deal.”

Jill DeWit:                            Oh, hey.

Jack Butala:                         Not all lenders are evil. We’re not here to bash lenders. We bashed real estate agents a couple of shows ago.

Jill DeWit:                            Could you imagine? Wonder what the fast is? I’m really curious. I’d love to take a poll. Like, I should do this on Facebook. I’m gonna make a little, do a little Facebook poll and just see what’s the fastest closing that people have done with a lender, and I bet it’s like shocking. Shockingly slow.

Jack Butala:                         Yeah.

Jill DeWit:                            You know?

Jack Butala:                         Like an old school lender, like a big bank.

Jill DeWit:                            Yeah, let’s, well you-

Jack Butala:                         I bet it’s 30 days.

Jill DeWit:                            I like, yeah, and they probably feel good about it. Yeah.

Jack Butala:                         And I bet that with the private lenders it’s still 10 days. You still have to look at some stuff.

Jill DeWit:                            Yeah.

Jack Butala:                         But that’s what we’re here to talk about.

Jill DeWit:                            Totally. Love it.

Jack Butala:                         It’s gotten a lot better. Man, it used to take six months to buy a house.

Jill DeWit:                            Oh my god. Really?

Jack Butala:                         I’m not that old, you know, I’m old enough to remember. Yeah.

Jill DeWit:                            Yeah, you know what? Oh, yeah, remember the whole short sale thing, back when that was, I mean …

Jack Butala:                         I mean, I mean in the ’90s.

Jill DeWit:                            … a big deal.

Jack Butala:                         In the ’80s and ’90s it took …

Jill DeWit:                            Well you know, I do remember my parents bought a house in Laguna Hills in the ’80s, late ’80s, and that took forever, you know. I know what you’re … I remember, and it was buying it from a bank, and it was a whole [inaudible 00:01:30] thing, and …

Jack Butala:                         Bank’s gotta send a person out there.

Jill DeWit:                            Man, it was just ridiculous. Exactly. Good stuff.

Jack Butala:                         But that’s past now. Thank you.

Jill DeWit:                            That’s behind us.

Jack Butala:                         This is a great time in history to be a real estate investor.

Jill DeWit:                            Exactly.

Jack Butala:                         We have so much data that’s available, most of it’s free, and we just have to realize how to use it. Yet I see many, many, many people just kicking it old school.

Jill DeWit:                            Could I ask you a political question? And if you think this is a bad one, you want to just skip it we can. But, because our current President has a real estate background, are we in for some good changes?

Jack Butala:                         No.

Jill DeWit:                            Oh. Well, never mind.

Jack Butala:                         I mean with all … I do not care one way about, you know, left to right or any of that, but the person that we have in office is …

Jill DeWit:                            I’d like to see some easier things.

Jack Butala:                         … he’s a contractor, let’s just call it a … that’s what this whole build a wall thing is, and do the company a … This whole country infrastructure thing is all about improv- … he’s a contractor in his soul.

Jill DeWit:                            All right.

Jack Butala:                         But the two guys before him they were oil people and guess where all the wars are in the world right now? Still left over from there, from digging oil, so …

Jill DeWit:                            Yeah. So who, so what kind of person do we want-

Jack Butala:                         I don’t care how impartial you think you are about stuff, I just think you bring certain things to what you do.

Jill DeWit:                            I like where you’re going with this. So, do we want an educator someday next? Would that be a great thing just to help all our … bring college … I, personally, think that wouldn’t be a bad thing. It just came to me.

Jack Butala:                         An educator?

Jill DeWit:                            Yeah, what if our next President was an educator, like a Professor, and said, “We need to change the way we pay our teachers, professors, all that good stuff. We’re gonna make colleges cheaper and more accessible, and we need to come up with some good alternatives, like some great programs, and trade schools, and things for people, to help educate more people who don’t want, or need, the whole four year thing. I like that. Can we do that?

Jack Butala:                         Yeah, sure. I mean, I think …

Jill DeWit:                            That’s what I want.

Jack Butala:                         Really the biggest clear question is what’s a proper, or correct, or appropriate background for a politician? And I have always said …

Jill DeWit:                            What do you think it is?

Jack Butala:                         … forget about right or left, it’s number one somebody who brings people together.

Jill DeWit:                            All right.

Jack Butala:                         You know, like a sales person. I’m not saying a sales person is a good background.

Jill DeWit:                            I’m not running.

Jack Butala:                         So somebody who’s used to like solving problems between people, two people, like a sales person. I also think that being a career politician is a really bad idea.

Jill DeWit:                            Oh, I agree.

Jack Butala:                         I think the more business background and solving problems in the real world.

Jill DeWit:                            Running a business, owning a business.

Jack Butala:                         Yeah.

Jill DeWit:                            I think that’s very true, right.

Jack Butala:                         Yeah. I’m not advocating the guy that’s in office right now, he’s a … he’s taken that to a level. There’s a saying in business that you should never hire a CEO, a former CEO, if you want to get anything done, ’cause all they do is delegate. They don’t know how to do anything themselves.

Jill DeWit:                            Oh. What does that say about you, Jack?

Jack Butala:                         I have that saying.

Jill DeWit:                            You’re …

Jack Butala:                         That’s how I know the saying’s true.

Jill DeWit:                            … a walking example. Thank you, Jack. Love it.

Jack Butala:                         Before we get into it, let’s take a question posted by one of our members on the JackJill.com online communities, free.

Jill DeWit:                            Oh boy. All right. So, this is so cool. Joe S, welcome to our community. Jack was just sharing with me, and some of our staff, how vocal you are in our online community, and that you are bringing some really good quality questions to the table.

Jack Butala:                         And articulate, and participating, participatory.

Jill DeWit:                            Yes.

Jack Butala:                         Thank you Joe S.

Jill DeWit:                            We are glad you are here. Okay, so here’s Joe’s question. “As a new line investor, here are a few thoughts that I struggle with.” And it’s kind of a checklist, so I’m just gonna read them all off. “Defining my acquisition criteria. Selecting a county given my acquisition criteria. Pricing a mailer for a county. Selecting the correct number of properties to mail using RealQuest. Understanding price differences within sub divisions within a county. Comparing received offers. Buying property from dead people. Researching title. Where to market the property, sites, and target buyers. Building a buyers list. Selling on terms. Making purchases easy. Planning for taxes. Hope this helps. Looking forward to the videos.”

Jack Butala:                         You about covered it, Joe.

Jill DeWit:                            Yep.

Jack Butala:                         If all the questions were answered, I’m gonna give you like a one or two sentence answer on a lot of these, if not all of them, you know then we wouldn’t have anything left to talk about. We’d just talk about fun stuff like Jill wants to talk about all the time.

Jill DeWit:                            I know. I’ve a funny thing to say about this when you’re done.

Jack Butala:                         Fluffy bunnies and stuff.

Jill DeWit:                            So, …

Jack Butala:                         Go ahead.

Jill DeWit:                            So, heres what I was going to say. Like for the first one, I could go down this list and go, “Chapter 2, Chapter 1, Chapter 1, Chapter 4, I think. No that’s Chapter 5. Chapter 5. Chapter 7. Chapter …”

Jack Butala:                         You’re right. Oh my gosh, you’re right, Jill.

Jill DeWit:                            … 9 or 10. And then Chapter, gosh, 13 on that last one.” You know. So the good … so this is who we are, by the way, and Joe, this is so good. So people, if you’re listening to us and you don’t know why we’re here, other to kill time and not work … just kidding.

This whole podcast stemmed from our Land Academy in way to reach more people and share what we do, and share our business model. Land Academy is the thing that Jack and I put together, gosh, going on three years ago, sharing our whole business model, start to finish, and what we’ve been doing for so many years. So, this person in our online community found us, is now in our community, in our program and everything. So all these things, if you’re thinking about doing this and you have questions on these things, this is what we share.

Jack Butala:                         Land Academy is a direct result of us not wanting to answer questions like this anymore.

Jill DeWit:                            What, 80 times [inaudible 00:07:32].

Jack Butala:                         And it’s not that they’re bad questions, it’s just like after a while it’s like, you know what? Let’s just put a video together that explains it all so we don’t have to answer the questions anymore.

Jill DeWit:                            Well it got to, it’s not that we didn’t want to, it’s like there was-

Jack Butala:                         They’re great questions.

Jill DeWit:                            We were too many of us, and there’s not enough of us to go around. I was like, “I want to help more people. I’m only helping one at a time.” And it was really because it was our buyers who were buying from us, people were buying from us, marking them up, and then selling them. They were like, okay, wait a minute. They finally did the math, figured it out, going, “Wait a minute. You’re my well, so I just keep coming back to you to buy more property to mark it up and sell it. I’m a wholesaler too,” you know, kinda thing. And so they’re going, “So what the heck are you guys doing?” And that’s how it all started. We’re like, all right. We started helping a few people here and there, ’cause there’s enough property to go around. We’ve all covered that a thousand times. And so we put together this program which, who knew we’d be here. But this was our … We spent, what? It was six, eight months, by the time we wrote, and filmed, and produced, and launched Land Academy and put it out there, and then Jack and I just sat back going, “All right. Maybe five people. We’ll see who was really interested.” Holy cow.

Jack Butala:                         Oh, geez.

Jill DeWit:                            A lot of people.

Jack Butala:                         I’m still surprised about that.

Jill DeWit:                            And they’re getting it. So that’s what’s going on, and now we’re doing it with houses. That’s the exciting thing. Now we’ve got three years in of Land Academy and we have, you know, going on three years of successful members, people doing it. We can prove that we built it, we taught it. We helped other people build their own businesses, they’re doing it, and they’re even branching out and helping other people too, by the way. Let’s be honest. This, our members are helping other people, you know, and it’s awesome. So now we’re doing it with houses.

Jack Butala:                         Exactly.

Jill DeWit:                            Thank you.

Jack Butala:                         So, I mean, Joe’s first question here is defining my acquisition criteria. My answer is you want to buy real estate for half of what it’s worth. Well great, Jack. That’s fantastic.

Jill DeWit:                            All right. Well, when those people call …

Jack Butala:                         Did you ever sit in a class, like in school, and the teachers are up there and they say stuff like that.

Jill DeWit:                            Right.

Jack Butala:                         You want to buy assets that are less than what they’re worth. Really?

Jill DeWit:                            You want to always get 100. Really?

Jack Butala:                         Really? Thanks. That’s so helpful. You mean I want to buy it for less, not more.

Jill DeWit:                            Yeah. You want to work out your taxes so this is the outcome. Really? Dah.

Jack Butala:                         So given my disgust for that type of answer-

Jill DeWit:                            Dah.

Jack Butala:                         These programs, and this education that Jill and I kick out, really it addresses it way further than that. Like, yes, we really do want to buy cheap real estate, and this is how you do it, like down to the letter.

Jill DeWit:                            Here’s what you do.

Jack Butala:                         So yeah. Your acquisition criteria is cheap property. Selecting a county?

Jill DeWit:                            You want to select the right ones.

Jack Butala:                         We go into that in great detail, for rural …

Jill DeWit:                            I want to give all the dah answers.

Jack Butala:                         Pricing a mailer? That is the single most discussed topic, and it’s one that I continue, even at this level … I mean, we sent millions, and tens of millions of letters out. Every single time I send a mailer out I price it slightly different ’cause I’m always learning something new. That is, there’s no, that’s not a black and white topic.

Jill DeWit:                            Exactly. And for anyone that was just listening and heard a little bump there, ’cause I went “What?” it was discussed as in d-i-s-c-u-s-s-e-d, not in d-i-g, disgust. Sometimes when you spend a lot of time like Jack does pricing a mailer it can be disgusting, this is true. But you have to do that, and do it right. I’m just having fun with you guys.

Jack Butala:                         Pricing is … I know … Pricing is, it’s an art form.

Jill DeWit:                            A big deal. That’s the art, that’s the key right there, isn’t it, Jack? Let’s pause for a second. Isn’t that the biggest part?

Jack Butala:                         Yeah.

Jill DeWit:                            Thank you.

Jack Butala:                         And there’s no … everybody’s different, and even the real high level members that we have now, after a few years doing this they price their mailers way different than I do.

Jill DeWit:                            Right.

Jack Butala:                         And they’ve taken a kind of creative license, and it works for them.

Jill DeWit:                            Yep.

Jack Butala:                         That’s why we have a group, so you can ask those guys how they do it too. That’s what LandInvestors.com is all about.

Jill DeWit:                            Exactly.

Jack Butala:                         That’s what this question is for, for everybody in the community. Selecting the correct number of properties to mail using RealQuest. For real vacant land it is 1500 for us, and for houses it’s 2500, per mailer. That’s great, Jack. Why would you pick those numbers?

Jill DeWit:                            I love it when you do that. Oh, I want to do the next one.

Jack Butala:                         Go ahead.

Jill DeWit:                            No, no, go ahead. I want to do the next, “That’s great, Jack.”

Jack Butala:                         We’re gonna run out of time if I answer them in detail.

Jill DeWit:                            I know. Why are we doing this?

Jack Butala:                         Understand the pricing differences between sub divisions. Exactly. That’s not something that, the market sets that and you need to take that into consideration when you’re pricing.

Comparing received offers. Pretty self explanatory, in my opinion.

Buying property from dead- Well, by the way, if you’re gonna offer back, that’s for sign and received …

Jill DeWit:                            And the person’s dead, I might check that out. I might not believe that signature.

Jack Butala:                         Here’s the beauty. Here’s the beauty in how we do this. If you get a signed offer back you know it’s priced right.

Jill DeWit:                            Right.

Jack Butala:                         You just need to check to see if you can get to it, and some other things. So, it’s not like you have to do a lot of work after it comes back. The mail does the work for you.

Buying property from dead people is a whole PhD level concept that Jill’s an expert in by now. Same thing with researching title.

Where to buy market property? I don’t know what that means. What sites.

Jill DeWit:                            And target buyers.

Jack Butala:                         Probably Land Flash and stuff.

Jill DeWit:                            Yeah.

Jack Butala:                         Building a buyers list. That’s a marketing concept on the internet that goes way beyond this venue.

Selling on terms. Again, PhD level stuff. We address it all.

Making purchases easy. That’s my middle name.

Jill DeWit:                            Me too.

Jack Butala:                         And planning for taxes. That’s something you should not even actually do yourself at all. You should just get a good accountant.

Jill DeWit:                            Sure.

Jack Butala:                         And speaking as a former accountant, don’t do your own taxes.

Jill DeWit:                            Yep.

Jack Butala:                         So, yeah, we blew through those just like regular school. But, we do have all the answers, it’s just not, we can’t do it in a half hour here.

Jill DeWit:                            No. It’s good.

Jack Butala:                         Today’s topic, lenders kill closing time frames. What the heck is he talking about now? Lenders kill time frames. What I mean is this. We send mail out exclusively to people who own assets that are mortgage free. Well, Jack, why wouldn’t you send it out to somebody who’s got an asset?

Jill DeWit:                            You make me laugh when you do that.

Jack Butala:                         Who’s got only $10,000 $20,000 on a $2 million house? And a $200,000 house? $10,000 is fine. That doesn’t affect how they make the decision. You know what it affects? And that’s the route of the show here. It affects the fact that now there’s another person, and another institution involved in closing this deal.

Jill DeWit:                            Right.

Jack Butala:                         Our whole premise is to buy an asset from somebody. We’re the buyer. Buy an asset from somebody, from the seller, there’s just two people staring at each other and saying, “I want to buy it for $1,000.” “Oh, good. I want to sell it for $1,000.” “Can you do the paperwork?” “Sure.” And then the deal gets done.

Jill DeWit:                            Exactly.

Jack Butala:                         Not, “Hey, Dad. Lender. Do you mind if I do this deal?”

Jill DeWit:                            Right.

Jack Butala:                         And that’s what lenders do, and that’s just the nature of how it is. They have to do that. I’m not dogging lenders at all here.

Jill DeWit:                            Right.

Jack Butala:                         That’s for a different time. Right, you know.

Jill DeWit:                            What show is that?

Jack Butala:                         We’re adults. We don’t want to have to go ask our parents if we can do this deal. And that’s really, when there’s a lender involved, even for $100, if there’s two payments left on a mortgage it’s still the same process to get it closed out in a real estate deal as if there were, if it was a brand new mortgage.

Jill DeWit:                            You know, and most lenders, whether it’s $10,000 or $100,000, it’s the same checklist. They’re not gonna go, “Oh, we’re not gonna do this. We’re not gonna do that. We’re not gonna require these documents because we’re down at the end of the loan. We don’t really care. Whatever.” Oh no. You get to go through the whole dumb checklist, because they don’t know how to do it any other way.

Jack Butala:                         It’s not their fault.

Jill DeWit:                            No, that’s true. It’s-

Jack Butala:                         They’re in the business of loaning money and they’re trying to protect their investment in the whole thing.

Jill DeWit:                            Well I think it’s-

Jack Butala:                         I prefer to just not deal with it.

Jill DeWit:                            I hate to say it, it’s just like, I feel bad but it’s still old school. I think of some ESCROW agents. Some of these things are so old school it’s like, it’s frustrating to me the time that … I don’t see it so much with banks, I do with ESCROW, but there’s times that I’ve had … although I’ve seen it with commercial brokers, but some people have been in this business a little too long that they are still afraid of this whole nice thing that we call the internet. And they don’t know how to pull things up for themselves. I’m like, “Really? Am I really screen shotting this and sending it to you because you don’t know how to look at it yourself?” But, you know, anyway, so this is just lenders, it seems old school and a lot of it is. It’s really weird and it’s not gonna change anytime fast, by the way. They do have a lot of extra steps, unnecessary requirements, I think, and crazy conditions, and there’s no way around them. So, like Jack said, that’s why we just choose not to deal with them.

Jack Butala:                         Yeah, I mean, and that’s just what works for us. We tend to pull a low hang through a lot of that real estate environment. But we have-

Jill DeWit:                            There’s a lot of people out there that own their homes outright that don’t have mortgages.

Jack Butala:                         55%.

Jill DeWit:                            Thank you. People don’t … You know what’s so funny? I talk to people all the time that go, “Oh, really? Is it that many?” And I say, “Tell me about your parents.” “Well they own their house. Oh, they own their house.” I’m like “Duh. Hello, you just … I just asked you and you said yeah, five people.” Think. “Oh, yeah, I guess you’re right.”

Jack Butala:                         Yeah.

Jill DeWit:                            When you think about it like that.

Jack Butala:                         Here’s the thing, the net effect that it was an unintended consequence when we started doing this. The way people make decisions when there’s no lender, and how confident they are, and how they behave, is really different than people who just have 5 years they’ve paid off. They’re paying down their mortgage and they’re just five years into it. They really have the sense of power, and sense of, “Oh, I am gonna get a quarter of a million dollar check at the end of the week.” I mean, it’s a whole different situation versus, yeah, and you don’t have to go check with dad.

Jill DeWit:                            Exactly.

Jack Butala:                         So they will make a decision. That’s been my experience. So, we do have a member, his name’s Justin, who loves that middle market that we avoid, that market where a mortgage was originated in, let’s say 2005, or earlier, and so he loves buying quarter of a million dollar houses, or $150,000 houses with $10,000 or $20,000 mortgages on them. For some reason that just works for him, and I think that’s great.

Jill DeWit:                            Is there a … I’m sure this is a thing. What’s a … this may be a topic for another time, I wonder what the percentage ratio is where the, as long as the lender’s loan is covered I’m assuming they don’t really care?

Jack Butala:                         They don’t care at all.

Jill DeWit:                            Thank you.

Jack Butala:                         They have nothing to say. They just want their money back.

Jill DeWit:                            Gotcha.

Jack Butala:                         They don’t care about the purchase price.

Jill DeWit:                            As long as you’re selling it for more than the twenty thousand that you owe me, have at it.

Jack Butala:                         They don’t even look at that.

Jill DeWit:                            Seriously?

Jack Butala:                         Yeah.

Jill DeWit:                            So, at what point do they not get … do they ever get involved in the purchase price as …?

Jack Butala:                         Never. Unless it’s a short sale.

Jill DeWit:                            Or it’s upside down.

Jack Butala:                         Or it’s upside down. Exactly.

Jill DeWit:                            Okay. Thank you, Jack. I appreciate that. So, I’m trying to think of other questions that I have, and that people might have about lenders. So they kill the time frames, they have a lot of conditions, slow. I mean, talking about the timing, I mean, what is the fastest you think you could do it if there’s a loan involved?

Jack Butala:                         Well there’s so many, there’s three different basic types of loans. There’s a commercial loan, like, say, from a Bank of America, or a real large bank, or even like a credit union. There’s a private money loan which is, you know, “My rich Uncle Skelton gave me $150,000 and I agreed, we wrote it on a napkin and I’m gonna pay him $150 a month until it’s paid off with 1% interest. Private loan. And then there’s hard money loans which are usually backed by private, like bunch of rich Uncle Skeltons, but it’s charged …

Jill DeWit:                            You don’t know them.

Jack Butala:                         … And this group of private investors are charging, the hard money lender, let’s say 10% a year to use their money, but the hard money lender’s marking that way up. They’re charging, you know, 10% a deal for 90 days, so they’re very motivated to place that money at really high rates. So, to do that, it’s a natural way the economy works, or the way the supply and demand works, free market, to do that they have to offer some crazy stuff. Like they don’t look at you, they look at the asset.

Jill DeWit:                            Oh.

Jack Butala:                         They don’t look at you at all. They say the … And then you want to talk about pricing like you just said? Does a lender ever look at …? That’s all they look at.

Jill DeWit:                            Okay.

Jack Butala:                         That’s what the hard money lender looks at. They’re, theoretically, meant to be experts, or very good at pricing an asset to be able to loan that. So, I mean, we’re getting a little bit off topic here but, in general, for the purposes of this, for what we do, almost everyone has a commercial loan, like a Bank of America type loan.

Jill DeWit:                            Right.

Jack Butala:                         Right, done it again. You’ve  spent another 20 minutes listening to the Jack and Jill Show. Join us tomorrow where we discuss real estate agents’ egos. We’re gonna lighten it up a little tomorrow.

Jill DeWit:                            Is this like real estate agents week? I feel a little bad. Like, gee, we’re gonna get a lot of hate mail here. And we answer your questions. So do you have one? Post it on our online community. Find it at JackJill.com. Go there, it’s free.

Jack Butala:                         You are not alone in your real estate ambition.

Jill DeWit:                            Totally seriously. So when you were coming up with these topics for this week, what crawled up somewhere and just gave you a hard time?

Jack Butala:                         No, so …

Jill DeWit:                            I don’t know how to say that.

Jack Butala:                         So, for a while we were talking about, we were really taking a lot of creative license, and so and getting a lot of mail from people saying, “You know, could you cover this? Could you cover this? Could you cover this?” People listen to this show for real estate investment advice, which is really what this show is all about.

Jill DeWit:                            Kinda true.

Jack Butala:                         It’s not about Jack and Jill talking about their-

Jill DeWit:                            Hair color.

Jack Butala:                         … sort of marriage.

Jill DeWit:                            Exactly. I love it. All right. This place is funny. It’s real estate agent week, unfortunately. Or fortunately.

Jack Butala:                         [inaudible 00:22:14]. Everybody wins.

Jill DeWit:                            There we go. Well, duh Jack. Just kidding. I like doing that. Hey, share the fun by subscribing at iTunes, or wherever you’re listening, and while you’re at it please rate us there.

Jack Butala:                         We are …

Both:                                     … Jack and Jill.

Jack Butala:                         Information …

Jill DeWit:                            … and inspiration …

Jack Butala:                         … to buy undervalued property.

 

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