Lipstick Flip (LI 696)

Lipstick Flip (LI 696)

Transcript:

Steve Butala:                      Steve and Jill here.

Jill Dewit:                             Hello.

Steve Butala:                      Welcome to the Land Investors Show. Entertaining land investment talk. I’m Steven Jack Butala.

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

Steve Butala:                      Today, Jill and I talk about a lipstick flip. I learned a new phrase the other day and I feel compelled to share with everyone.

Jill Dewit:                             Sounds like-

Steve Butala:                      It’s as funny as what it sounds like.

Jill Dewit:                             Are we talking about property or are we talking about women? Are we talking about …

Steve Butala:                      Oh, we’re going to cover all of that.

Jill Dewit:                             … getting ready for a date. What are we going to talk about? I’m really intrigued here, Jack, this is awesome.

Steve Butala:                      Before we get into it, let’s take a question posted by one of our members on thelandinvestors.com online community. It’s free.

Jill Dewit:                             Steven asks, “I know this is not supposed to be a big deal, or a deal-stopping issue, but I have to admit to being flummoxed by the many ways grantor and grantee wording can be affected. Does residence and venue of the parties come into play, or does the location of the land, just the land matter?”

Steve Butala:                      Oh my gosh, this is PhD level stuff.

Jill Dewit:                             “It would be nice that there was a go to source for this, but I guess I could just use the pros til I have a better feel for it.” I would definitely use the pros, so you’re in the right areas.

Steve Butala:                      Oh, we’re the pros?

Jill Dewit:                             Yeah, right.

Steve Butala:                      Okay. You know what he’s asking, right?

Jill Dewit:                             Yeah, I guess the address of where the person lives. Oh, you know what? I think I know what he’s asking. Let me guess.

Steve Butala:                      John Smith, grantor, a resident of Elko, Nevada.

Jill Dewit:                             Maine … Okay, Elko, Nevada, buying a property in Texas.

Steve Butala:                      Right.

Jill Dewit:                             What kind of deed do you use? Do you use a Nevada grant deed or do you use a Texas special warranty deed?

Steve Butala:                      Well, we can start with that.

Jill Dewit:                             I know.

Steve Butala:                      Well, I think the question is, do you mention the geographic location in the deed of the resident of where the person’s residing …

Jill Dewit:                             Nope.

Steve Butala:                      … or where the actual property is? Here’s the answer. It’s with the answer is both. Number one, the legal description smokes that out.

Jill Dewit:                             Right.

Steve Butala:                      The legal description’s going to say Elko, Nevada. It’s the northeast corner or the southeast corner of whatever.

Jill Dewit:                             Where the property is, ’cause if the person happens to be in Elko.

Steve Butala:                      Right. That, you get, as Jill so famously loves to say, from the vesting deed. You copy and paste that. In a lot of cases, in most cases, even if it’s wrong, you just copy and paste it.

Jill Dewit:                             Yeah.

Steve Butala:                      The vesting deed is the immediate deed before you.

Jill Dewit:                             That’s a good tip, by the way. I hope you don’t mind me throwing this in here, Steven, I’ve told people this too. Even if the person’s name was spelled wrong on the deed before you, I copy that, ’cause then there’s no red flags, it doesn’t set anything off. You know what? It was recorded this way, we’re just going to roll with it. You now have Smith with an E. You know?

Steve Butala:                      Yes.

Jill Dewit:                             That’s okay.

Steve Butala:                      Yes. That’s the deal with, the legal description smokes out exactly how you should stipulate the geography in the deed. I don’t want to get too technical here, but the bigger questions is, and this is the PhD level stuff. Can John Smith, which is obviously a super popular, intentionally chosen, super popular name. John Smith of Oregon, or an individual from Oregon, or an individual from Eugene, Oregon, how would you do it? I think everybody does it differently, I know how I do it. John Smith …

Jill Dewit:                             An individual.

Steve Butala:                      An individual.

Jill Dewit:                             I’d just leave it at that.

Steve Butala:                      Grants X, Y, Z property in Elko, Nevada to Sally Jones.

Jill Dewit:                             Exactly.

Steve Butala:                      That’s how you do it.

Jill Dewit:                             Yeah. Then on the …

Steve Butala:                      I’m glad we’re having this talk. That’s not how I do it.

Jill Dewit:                             Yeah, that’s exactly what I do. Then on the upper … you know what’s so funny, we used to put an individual man, an individual woman. What if they have a sex change? That’s a whole another thing.

Steve Butala:                      Oh my gosh.

Jill Dewit:                             Anyway.

Steve Butala:                      What if they lipstick flip?

Jill Dewit:                             That could happen, by the way. Come on. Could you imagine? That has not come up yet in our online community. That’s going to be funny. The person was a man when he bought the property, and now he’s a woman. What do we do? That will happen.

Steve Butala:                      I have long respected, silently and quietly, the whole process of though getting married for female name change. I think it’s a pile of malarkey right out of the dark ages.

Jill Dewit:                             What does that mean?

Steve Butala:                      You and I have the same, or different last names.

Jill Dewit:                             Oh. I see what you’re saying.

Steve Butala:                      But, I’ve watched women go through what it really is required to change their last name.

Jill Dewit:                             Oh, it’s not fun.

Steve Butala:                      It’s outrageous.

Jill Dewit:                             I’ve done it. Oh, it’s so exciting and fun the first time, and then when you’re undoing it, you’re like, “What was I thinking?”

Steve Butala:                      Oh, it’s exciting?

Jill Dewit:                             Oh, sure it is. Oh my gosh, girls practice writing their married name.

Steve Butala:                      Oh, shut up.

Jill Dewit:                             Not kidding.

Steve Butala:                      Are you serious?

Jill Dewit:                             Yes, they do. Yes, they do.

Steve Butala:                      Oh, Jill. That’s a topic for …

Jill Dewit:                             It’s probably like men walk around imagining how great that woman’s going to look on their arm. Just kidding.

Steve Butala:                      They can’t do that.

Jill Dewit:                             They don’t. All right, anyway, back to the topic. But what you do have to put somewhere on there, and it’s for tax purposes, they need to know where to send the tax bill. There is that, traditionally, on a deed. Traditionally, on the upper left hand corner, and traditionally, it says, “For tax records, send to …”

Steve Butala:                      Yeah.

Jill Dewit:                             “John Smith at …” whatever.

Steve Butala:                      That’s a different … I mean, so yeah, that’s totally separate.

Jill Dewit:                             Well, I’m covering the whole thing, like where would you even mention like where the guy lives? That’s where you would mention it.

Steve Butala:                      I honestly can’t remember the last time I’ve done a deed, but this is how I used to do it.

Jill Dewit:                             I know.

Steve Butala:                      John Smith, an individual, from Eugene, Oregon.

Jill Dewit:                             You used to do that?

Steve Butala:                      Grants to Sally Johns, an individual, in Chicago, Illinois. Yeah.

Jill Dewit:                             Never did that.

Steve Butala:                      Yet, we still …

Jill Dewit:                             Never did that.

Steve Butala:                      Here’s a big picture point, and yet, we still have done all these deals and the vast, vast majority of the time …

Jill Dewit:                             Because it doesn’t matter.

Steve Butala:                      … 99.9% of the deeds that we send in, work.

Jill Dewit:                             It doesn’t matter. Well, here’s my other thing.

Steve Butala:                      If you’re afraid, if you’re sitting there worried about deeding and making mistakes, because my big hang-up in the beginning, don’t worry about it. It’s going to be fine.

Jill Dewit:                             We usually just copy the one before. The ones I’ve copied, didn’t have that in there. I could care less. The one time I do put where it is, if it’s an LLC because you need to put in there, XYZ Company, an Arizona Limited Liability Company. That, you need to put in there.

Steve Butala:                      All the houses that we buy, Jill and I just have a LLC that we use, called [Mohalan 00:06:13] Service, LLC, an Arizona Limited Liability Company.

Jill Dewit:                             That you even need to state otherwise.

Steve Butala:                      I guess we are the pros. Today’s topic, lipstick flip. What is it? Is it good, is it bad, is the meat of the show? Jill, tell us what you think a lipstick flip is.

Jill Dewit:                             Paint and carpet.

Steve Butala:                      That’s what I think it is.

Jill Dewit:                             Maybe landscaping, maybe a little … I think a lipstick flip is … Here’s I define it. What I can do in a weekend, one weekend-

Steve Butala:                      Wow! Is that even possible?

Jill Dewit:                             … that will add value. Sure, you can have the carpet come in on Saturday. You do the painting on Saturday and the carpet on Sunday.

Steve Butala:                      You’re not changing any fixtures, nothing.

Jill Dewit:                             No. Monday morning, I freshen up the flowers by the front door. I mean, because there’s some out there that are that easy.

Steve Butala:                      Here’s what I think a lipstick flip is and it’s some version of what Jill just said, the absolute bare minimum, but I think you could take it just a little bit further. A couple more days and really add some value. Paint the outside of the house, if it’s needed, if it’s conducive for that. Maybe clean up the landscaping a little.

Jill Dewit:                             That’s what I was saying. Pretty flowers. Curb appeal.

Steve Butala:                      It’s amazing what a power wash too like the garage-

Jill Dewit:                             Driveway.

Steve Butala:                      … and driveway will do and then maybe change out some fixtures, some key fixtures, even if it’s just as simple as like the hardware in the kitchen.

Jill Dewit:                             New shower head.

Steve Butala:                      All that, yeah. New shower doors.

Jill Dewit:                             This is stuff you could do in a weekend, so you’re still-

Steve Butala:                      I also think, you’re not spending … In regular markets, not crazy markets, probably $10,000 to $15,000 if that?

Jill Dewit:                             I was going to say $5,000.

Steve Butala:                      I don’t think you can do a $5,000 renovation. I don’t know.

Jill Dewit:                             For, this kind of thing, maybe.

Steve Butala:                      Here’s our whole point. There’s a reason we don’t know about this and if you want to decorate a house, this is not the podcast for you. What’s beautiful as wholesalers, both land and houses, is that we don’t care about this stuff.

                                                If you buy a house, 20 to 40% below what you can immediately sell it for to an investor, that’s their problem. I call it a problem. They call it- That’s their euphoria.

Jill Dewit:                             That’s their bread-and-butter. Yeah, they love it.

Steve Butala:                      Go ahead.

Jill Dewit:                             I’ve no trouble right now because we’re building up House Academy. It’s very easy for me to talk to these guys and for me to say, “Look, I’ve been there, done that,” and I’ve quoted you on this Steven, we don’t have the stomach for it. Have fun. They’re like, “Great.” It’s a perfect relationship and they understand-

Steve Butala:                      They love it.

Jill Dewit:                             … it too.

Steve Butala:                      All the time, I see wholesalers like us, all over the internet trying to profess what the ARV is to a renovator.

Jill Dewit:                             All my gosh! I hear that term-

Steve Butala:                      [crosstalk 00:08:58].

Jill Dewit:                             … one, after renovated …

Steve Butala:                      After repair value.

Jill Dewit:                             Yeah.

Steve Butala:                      Who am I that I think I know what this professional flipper’s ARV is going to be?

Jill Dewit:                             Isn’t that hilarious?

Steve Butala:                      I don’t even pretend. All I know is that I just purchased a property … I usually buy it for 40% less. In land case, we buy it for probably 80% less of the value that I can immediately sell it for in the condition that it’s in. That’s what I focus on.

                                                Remember when your parents said, “Just keep your head down. Keep your nose clean and get the good grades and don’t make a big fuss. Get out of there.” That’s what we do. In with the crowd, out with the crowd.

Jill Dewit:                             What the heck! We had very different childhoods.

Steve Butala:                      I know. In with the crowd, out with the crowd. That sentence evokes like one of two reactions I’ve noticed in people over the years. You are the lamest.

Jill Dewit:                             I don’t want to be a sheep.

Steve Butala:                      I know. That’s one reaction and sometimes with a different type of personality, they’re like, “Oh, you’re the guy for me.”

Jill Dewit:                             That’s not what-

Steve Butala:                      We’re going to have a happy little life together. I know, I’m not …

Jill Dewit:                             I’m all for being under the radar, but I’m certainly not one for following the crowd and you know that about me.

Steve Butala:                      Yeah. We’ll talk about that on a different show.

Jill Dewit:                             Okay.

Steve Butala:                      Because you and I agree.

Jill Dewit:                             Okay, thank you.

Steve Butala:                      But, on this specific topic, I really don’t think that you need … Because, here’s why. As a wholesaler, if you say, “Oh, the ARV is $500,000.” All you’re going to do is upset …

                                                If you put that number on a particular house or an asset in front of 10 different people who renovate and resell property, they’re going to say, “You’re off your rocker.” Every single one of them are going to have a way different opinion.

Jill Dewit:                             Isn’t that funny?

Steve Butala:                      Why not just say, “Hey, investor special. $300,000.”

Jill Dewit:                             I’m so sick of hearing about the ARV. I could make up any number and make it ARV.

Steve Butala:                      That’s what they do.

Jill Dewit:                             I know, in my gut and soul, we can get a million out of this.

Steve Butala:                      Exactly.

Jill Dewit:                             I know it’s going to be the highest one. We’re going to have the highest comps.

Steve Butala:                      We’re going to reset the comps in the area.

Jill Dewit:                             Yes, we are. I know it and that’s why my ARV is this high. That’s ridiculous.

Steve Butala:                      Any bragging rights to resetting the high mark for a given market, price per square foot. I think you should be ashamed of yourself. Are you building? What you’re saying is, “I overbuilt for the neighborhood and I …”

Jill Dewit:                             Conned somebody.

Steve Butala:                      Yep. I found a bigger loser.

Jill Dewit:                             I found an out-of-state guy that thought this was good and I took the money and ran.

Steve Butala:                      With cash. I found a Canadian with cash. In Arizona, that’s what they love.

Jill Dewit:                             Canadian with cash.

Steve Butala:                      Then, they pat themselves on the back with a little smirk and take a sip of their beer.

Jill Dewit:                             Right.

Steve Butala:                      That’s not how we operate.

Jill Dewit:                             I know.

Steve Butala:                      Pass it on, man.

Jill Dewit:                             Exactly.

Steve Butala:                      What you should be saying is, “I bought this property so cheap and put in what I needed to put in to make it look like it really is a valuable asset and I passed the savings on to everybody.”

Jill Dewit:                             Exactly.

Steve Butala:                      Every single person won, including the seller.

Jill Dewit:                             Exactly.

Steve Butala:                      Because they just wanted to get out of it or they didn’t want to clean up their house or whatever.

Jill Dewit:                             I’m just thinking what kind of life that person has that they … I mean, do you really walk around saying, “I don’t know.” You’re right. You can’t do that for too long. If you’re known as the top dollar person, nobody’s going to want to do business with you.

Steve Butala:                      I guess there’s some people, Jill, all kidding aside, now, that really, really pride themselves on like craftsmanship and how the cupboards fit and like … I don’t know. I’m not one of those people at all.

                                                I guess there’s some value in that, but, geez, marking up an asset in southern California’s case, $500,000, because it’s all perfect inside with Italian marble and whatnot, that’s just not me.

Jill Dewit:                             I think there’s a happy medium. You can have quality stuff, but you don’t have to gouge people.

Steve Butala:                      Right.

Jill Dewit:                             That’s what I think.

Steve Butala:                      No gouging.

Jill Dewit:                             Exactly.

Steve Butala:                      I love the idea of a lipstick flip and I think the phrase is really funny.

Jill Dewit:                             I think it’s awesome.

Steve Butala:                      Well, you’ve done it again. You’ve spent another 15 minutes or so listening to the Land Investors show. Join us tomorrow for another episode called when to put a mobile home on your land to increase its value.

Jill Dewit:                             That’s going to be on and we’ll answer your question, should you have one. Post it on landinvestors.com. Go there, it’s free.

Steve Butala:                      You are not alone in your real estate ambition. I think that new format went well.

Jill Dewit:                             I do too. Do you know what your name is?

Steve Butala:                      I do. My name is and always has been, Steve.

Jill Dewit:                             You know what’s funny?

Steve Butala:                      My middle name has always been Jack, so we became Jack and Jill.

Jill Dewit:                             I’m even confused now. Actually, it’s perfect. Half the time I call you Jack, half the time I call you Steven, so. It works.

Steve Butala:                      I introduce myself as Steve and it’s just we’re two people. This is the truth. We’re two people who make a bunch of money in real estate without a lot of hoopla. Jack and Jill, there’s a little bit of a hoopla to it. So, I’m just Steve. That’s what I think.

Jill Dewit:                             Okay.

Steve Butala:                      I’m Steve and Jack.

Jill Dewit:                             Okay.

Steve Butala:                      You’re Jill.

Jill Dewit:                             Thank you. We can do that.

Steve Butala:                      The constant is Jill. Let’s call it that.

Jill Dewit:                             That’s right. At the end of the day, there’s still Jill. Just Jill. Hey, share the fun by subscribing on iTunes or wherever you are listening and while you’re at it, please rate us there.

Steve & Jill:                         We are Steve and Jill.

Steve Butala:                      Information.

Jill Dewit:                             And inspiration.

Steve Butala:                      To buy undervalued property.

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