3 Step Process to Buying Property for Immediate Resale (LA 706)

3 Step Process to Buying Property for Immediate Resale (LA 706) 

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hi.

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

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

Steven Butala:                   Today Jill and I talk about the three step process to buying property for immediate resale. I know it seems like a Captain Obvious moment.

Jill DeWit:                            The whole thing’s gonna be Captain Obvious.

Steven Butala:                   What do you mean, Steve? You want to resell the property immediately?

Jill DeWit:                            Who doesn’t want to sell it immediately?

Steven Butala:                   You wanna, so that’s what we should talk about, because I don’t understand when people come to us all the time and say, “No, I just bought that house for $35,000”.

Jill DeWit:                            You want to say “I just sold that house and made $35,000”

Steven Butala:                   I’m quoting my little sister because she seems to accumulate $35,000 houses and then rents them to dead beats and then she wonders why “what? What, what am I doing wrong?”

Jill DeWit:                            Isn’t that a funny, you know it’s so, I was just thinking about that too. In our market and those markets are so weird, so different, where we are in southern California and I, I’m often on my phone and you and I are both on every single person’s buyers list. And I look at these and, like, right now there’s one in Tennessee. It’s a three bedroom, one bath and its $28,000 or best offer, right?

Steven Butala:                   And there nothing wrong with that.

Jill DeWit:                            No, I just forgot. Sometimes you forget. Oh yeah, get out of your, snap back. Get in to the Tennessee mode. You can really buy homes that cheap.

Steven Butala:                   Yeah I just talked to a guy actually, on a consultant call. That’s his whole business model. In the center of the country, he buys properties for 70 or 80 thousand bucks. Cleans them up, marks them up 20 grand and sells them.

Jill DeWit:                            Yup.

Steven Butala:                   And that what we’re gonna talk about, immediate resale.

Jill DeWit:                            Exactly

Steven Butala:                   Before we get into the meat of the show, let’s take a question posted by one of our members on LandAcademy.com online community, it’s free.

Jill DeWit:                            Paul asks, “Hey L.A. community, I’m working on getting my first property sold and all of the interest I have had thus far seems to be wanting to do terms. I know it’s not quite as straight forward in Colorado as it is in some states, but from some searches, it seems like more members are having some success there. Most of the posts, however, are older. Does anyone have any information on pitfalls to avoid when I’m doing terms deal in Colorado? I found a website that has some helpful articles. Non-advertisement, I haven’t used them. And I have no connection with them. But I wanted to see if anyone else had some realworld experience to share”.

Steven Butala:                   Yeah, so what the poster, what Paul’s talking about is selling property is [inaudible 00:02:41] the opposite of what this show’s about.

Jill DeWit:                            Right.

Steven Butala:                   He’s asking about buying piece of property for ten grand, let’s say, and selling it on terms. Collecting payments for quite some time until the thing’s paid off.

Jill DeWit:                            It might be like 25 thousand dollars in the end, kind of thing.

Steven Butala:                   Right, and it’s definitely the way to maximize your return on an asset. There’s no debating that. It’s a great way to make ton of money. But you have to go through a bunch of stuff, and what he’s asking here is, “what’s the deal with Colorado specifically, selling property on terms”. And Colorado is a very regulated state on this topic.

                                                So I encourage you to investigate this website that you’re referring to and also find out what the rules and the laws are in colorado specifically about selling property on terms. Jill and I don’t do it in that state, I’ll tell you that. And there’s a darn good reason for it. It’s just too regulated.

Jill DeWit:                            Right.

Steven Butala:                   And we’re on the airways every day and we’re, I’m not, Jill and I are not a huge fan of breaking the rules.

Jill DeWit:                            Yeah.

Steven Butala:                   Most of the time. Unless it’s with each other.

Jill DeWit:                            Hello. Thanks. Thanks Steven.

Steven Butala:                   What do you think? On the topic.

Jill DeWit:                            I think that’s great. No, you’re right. There are a number of states, and that could be your business model, Paul. Don’t, if you really want to do it and you’re gonna get in there and you’re gonna be great. I wanna be the only one selling [inaudible 00:04:02] cause you guys are all chickens. And I got this down. That’s fine

Steven Butala:                   Chickens…

Jill DeWit:                            You know what I mean. That could be your business model. But, we, for two reasons too, we’ve become more cash people. I mean that’s a fact.

Steven Butala:                   Here’s a question you have to ask yourself economically. Congratulations, you sent mailer out. You’ve got a pice of property, boughT it for ten grand, it’s worth a lot more. Let’s say it just worth, it’s probably worth 40, 50, 60. You bought it for ten, you did everything right. Would you rather take a quick 20 thousand bucks and pocket the ten grand, or sell it on terms for 50 or 60 thousand dollars and collect 500 dollars a month for a along time?

Jill DeWit:                            And it depends. Some people love that though.

Steven Butala:                   And I think its great.

Jill DeWit:                            Yeah. There are a lot of people that are still here with us in our community that are trying to replace their paycheck, if you will. And that, that sings to them. That’s how they’re doing it. They’re getting 500 dollars a month on this one, 200 dollars a month on that one, and before you know it, now you’ve got five grand. Great now it’s covering my mortgage and this and that’s perfect.

Steven Butala:                   And if you’re new, like I think it sounds like Paul is, I would heavily encourage you to try both because its not that you’re gonna seek one out, it gonna seek you out. We, I did a ton of term sales, along, in the early part of my career. And it just didn’t, it was not my thing. Because my forte is data and sending out mail and purchasing a lot of property really cheap just has always come easy to me. So, with the help of Jill, we can buy it and sell it for cash a lot faster than we can put together terms deals.

                                                So that’s just what works for us.

Jill DeWit:                            Awesome.

Steven Butala:                   Today’s topic; the three step process to buying property for immediate resale. This is the meat of the show and I know it sounds like were having a Captain Obvious moment here.

Jill DeWit:                            Three steps? It sounds like there could be thirty. How do you narrow it down to three? Seriously?

Steven Butala:                   I’ll jump right into it. Number one : identify a market and a property type. “Well, Steve, I’m standing in my market and I want to buy land that I can sell for more”. Okay well, that’s why I bring this up, because, you need to narrow it down a little bit more than that or you’re never going to get out of the starting blocks here.

Jill DeWit:                            I’m gonna pick.. Dallas county. There we go. Is that good?

Steven Butala:                   I think what ends up happening, and I’m not busting on anybody, I’m just saying, what ends up happening, and I know it because it happened to me “well, I just want to get into the real estate business and make some money”. Well, if you do that, you’re just gonna spin your wheels forever. You want to identify a market, let’s say Dallas county. Let’s use Jill’s example. Probably because you are in Dallas county or close to it. And you kind of look at a map and you can say “oh yeah, I can visualize that corner, or that street corner”. So you know the market a little bit.

                                                And then more importantly, pic a property type. And when I mean property type, I mean infill lots that are buildable with utilities at the lot line, that are, I’m gonna purchase for more than, for less than 20 thousand dollars, and sell them for 40 to 60 on a bought, for a buyer who I’ve already identified who pays cash for these things.

                                                Oh, now we’re getting somewhere. We’ve identified a market and a property type and were gonna stick with it and we’re gonna get mail. We’re gonna get offers in the mail to these owners. And follow through with a full-blown cyclical mechanical acquisition of sale.

Jill DeWit:                            Awesome.

Steven Butala:                   So step one is to identify a market and a property type.

                                                Step two: get the offers to the owners that you’ve identified and get the offers in the mail.

Jill DeWit:                            Wait, wait, wait. Not just a postcard?

Steven Butala:                   Nope.

Jill DeWit:                            Can I just put a sign in the grass?

Steven Butala:                   Nope.

Jill DeWit:                            What?

Steven Butala:                   It’s like –

Jill DeWit:                            Come on. The guys walking around delivering pizza flyers anyway, I was just gonna hand him my flyers and some extra money. Can’t I just do that?

Steven Butala:                   You’re welcome to do that. Jill and I just went to a live event. Sat in the back, just to learn, to see what other people are doing out there and he, this guys was saying, “all the things you can dream up to contact an owner, you should do that”. And we kinda just high-fived each other under the table.

Jill DeWit:                            And said that’s a lot of wasted time.

Steven Butala:                   Yup, it’s gonna take you a year to figure out which one works for you and then its probably not gonna work the next three months after that then you’re gonna have to change gears and go over – I know this because that’s what happened to me.

Jill DeWit:                            Don’t forget, a full time staff to answer the phone because you’re doing that wrong.

Steven Butala:                   I built the whole company, this whole land company, years and years ago. This is before the internet, on going to tax auctions. And then after a while it just didn’t work. I’ll tell you what’s never gone out of style, ending offers to owners in the mail.

                                                So, step two is: you need to get a data set that is assesser-based.

                                                All the switches on the radio turned off just now.

                                                It’s really a lot easier than it sounds. Every assesser has a, every county assesser has a tax role where every person who pays property taxes is on there and it, by law, they have to make it public. They don’t have to make it easy for you to get by law, and they don’t, they make it incredibly hard.

Jill DeWit:                            That’s awesome.

Steven Butala:                   But it does have to be public. Turns out, lucky for us, there’s aggregators, I call em, that, it’s there mission in life to take all these messy data sets, all 3144 of them, and make them, to put them in one format, and make it easy for you to digest and utilize however you do it.

                                                As property investors were a small little group for these aggregators. Their real customers are –

Jill DeWit:                            We’re small but mighty. Insurance companies,

Steven Butala:                   Insurance companies, oil companies. A lot of people have a vested interest in understanding who owns real estates.

Jill DeWit:                            Mortgage companies..

Steven Butala:                   So Jill and I are licensed providers for the largest three companies. The Real Quest Pro, Coralogic, that’s the name of the company. Black Knights-

Jill DeWit:                            Financial services.

Steven Butala:                   24, what is it?

Jill DeWit:                            Data Pro 24/7. I always tell people, most people know if you’re in real estate, you’ve probably heard of Agent Pro 24/7, so the easiest way I describe it is, Data Pro 24/7 is Agent Pro on steroids.

Steven Butala:                   Yeah, it’s the-

Jill DeWit:                            Mack Daddy.

Steven Butala:                   – complete package, yeah. And Data Tree which is First American Title’s data company which we will be, we’re licensed providers of all three. And our members enjoy two of those because we’re getting ready to release the third one a few months from now, Data Tree.

                                                So, you get that list. You manipulate it like we talk about in our program and you get an offer out to these people for half of what their properties worth in the case of land. And a very very predictable are gonna sign the offer and send it back to you. That’s step two.

Jill DeWit:                            And you’re strategic about it. Can I just back up and say, it’s not just you get, you’re not just getting a really good, so you know you’ve got a great data source, you’re actually manipulating it, stripping it down to the real specific just what you want, even. I like people that know up front. It’s not gonna be a five minute job. It’s gonna be a couple days that you spend on this because you can’t to do it right.

Steven Butala:                   That’s a great point. This doesn’t happen in a weekend. We make it, somebody, I just talked to someone on a consulting call and they said “you guys make this sound really easy”.

Jill DeWit:                            It’s true.

Steven Butala:                   You know what? That’s kind of the point up front, to get everybody motivated and interested. I mean if we sat here and like Ferris Bueller’s history teacher, and told you the reality, all the tiny little things that go on every day, you’d never get out of the starting blocks, ever.

Jill DeWit:                            But that’s with every business.

Steven Butala:                   I know. Even a laundromat, it’s gonna happen.

Jill DeWit:                            Oh my gosh it’s probably, it’s worse, I’m sure.

Steven Butala:                   But yeah, you bring up a great point, you have to do this right, I think it goes without saying, this three step process, you have to execute it correctly and be prepared for what’s gonna happen.

                                                The good news is that we have a huge community of people that do this every day. Jill and I have created. Just go ask them.

Jill DeWit:                            Ask for help. We’ll help.

Steven Butala:                   Go right on to the land academy community. It’s all free. Click on there, and ask them.

Jill DeWit:                            Right

Steven Butala:                   And say, I would ask them, if I were listening to this “well, what’s the mailer look like that you guys send out because I’ve never done this before?” And they’ll point you to the right direction.

Jill DeWit:                            Yeah.

Steven Butala:                   Jill will.

Jill DeWit:                            Sure. It’s there. It’s free. You can find it.

Steven Butala:                   It’s in our network of family of companies, and it’s really, free to download.

                                                That brings us to step three. And this is incredibly important, this is, what, the takeaway. If you have been doing this and you’re like “get on with it, Steve. Please just tell us something we don’t know”. Well, here’s something you probably don’t know, step three is: execute the sale of the property, or plan to execute the sale of the property, before step one.

Jill DeWit:                            Whoa. Wait a minute.

Steven Butala:                   That’s where everybody gets hung up.

Jill DeWit:                            Is that legal?

Steven Butala:                   Nothing here is illegal.

Jill DeWit:                            Wait, I thought you just said that we’re not rule-breakers.

Steven Butala:                   Just don’t break the rules.

Jill DeWit:                            What are you talking about? I’m just being the devil’s advocate. I have to do that.

Steven Butala:                   You have to start planning to sell the property that you’re gonna buy long before you even plan to buy it. So that, all through this process, the number, one of the top questions I get are; “how do you know, how should I know that I should buy this property? Should I buy this property?” Well the answer to that question is long before you ever even started to choose a market.

                                                You have to choose, execute number one and two based on the fact that you are going to immediately resell the property. And the only way that I know of to do that, is to know who you’re gonna sell it to. Or know that the price is so good, it is so grossly undervalued based on sales comparable and act of for-sale property and days on market and a bunch of other statistics that we look at. That’s how you know you’re gonna sell it. Or better yet, you just know who you’re gonna sell it to immediately.

                                                So number three is key: execute the sale of the property, before, and plan for the execution of the sale of the property, long before step one.

Jill DeWit:                            You know, you’re right. I mean, when you think about it, people don’t, it seems like, it does seem like a Captain Obvious moment, I have to say it out loud, but it’s like imagine if you knew who wanted, someone says “boy, I would pay anything to have a property like this. If I could have ten acres in this area, with access and any view, I don’t care whatever it is. I’ll pay 50 thousand dollars for it”. Ding! Go get it. It’s that kind of a thing. It sounds like a no-brainer.

Steven Butala:                   Send a bunch of offers out.

Jill DeWit:                            So, alright. And then I’m not saying you need to go find those people. You don’t need to have ten of those in your back pocket. It sure helps, though. But that’s what you’re kind of looking for. You can kind of tell what people want. You know what people want. You should be, you even, you know when you’re looking at for-sale property all over the internet.

                                                You’ll know right away when you go “oh, look at this area. Why are there so few and they go so fast? Maybe that’s something I should be looking at”. You know what I mean? You can watch them. And that’s just spending a little time and watching the market.

Steven Butala:                   Getting to know the market, right?

Jill DeWit:                            Yeah.

Steven Butala:                   That’s step one. Identify and research your market that you should be doing this in. That’s sad I think that, I have yet to see a market where this doesn’t work. The variable is pricing. So, like, the Tennessee reference that, for houses in Tennessee, you’re gonna send out, probably offers out between five and ten grand. Maybe twenty or thirty. For apartment buildings in lower Manhattan, it’s gonna be closer to 2000 bucks a square foot because you know you can sell it for 4000.

                                                So this concept works with everything and the data sets that we are licensed to provide, provide all the data. 100% coverage, or so I’m told, from our providers, of all property types in the country. Nothing’s 100%, let’s just say it’s 98 plus.

Jill DeWit:                            Right.

Steven Butala:                   Well you’ve done it again, you spent another 15 minutes listening to the land academy show. Join us tomorrow for another interesting episode where we talk about when to use the MLS, the multiple listing service, for immediate resale of the property we just talked about buying.

Jill DeWit:                            Ooooh, I’m intrigued. And we answer your questions, should you have one, post it on our online community. If you go to landacademy.com, you will find it. It’s free.

Steven Butala:                   You are not alone in your real estate ambition. It’s fun to talk about the basic stuff.

Jill DeWit:                            I know. I was telling you a little while ago, some of the books I’m reading, I’m sure I’m not alone in my book reading endevours. I read a lot, man. So, I’m always –

Steven Butala:                   Yeah, what are you reading right now?

Jill DeWit:                            So, right now I am reading a book about scrum, and being a scrum master, which is not, does not mean I’m learning to play rugby. But it’s about scrum and managing a team, an IT team, and then how it applies to things other than IT. Cause that’s why I’m reading it. Well I started it for IT because I’m managing an IT team, but I’m looking at this to do other things.

Steven Butala:                   Like a general contractor has sub-contractors.

Jill DeWit:                            Right. Exactly

Steven Butala:                   And a general contractor’s hoarse from yelling.

Jill DeWit:                            Right?

Steven Butala:                   Has to wash his mouth out with soap every ten minutes

Jill DeWit:                            And, as I’m reading this book, a lot of it is, it’s like, “duh”. But you know what? Apparently we all need to be reminded. You might want to check in half way through the project or very early on in the project to make sure you’re going down the right path.

Steven Butala:                   So much of this is Captain Obvious stuff. It just, it all comes down to executing a viable plan and sticking to it.

Jill DeWit:                            Mm-hmm. Like, my team, we have a regular Wednesday check-in. That’s like, that’s the big picture stuff. Every single Wednesday, everybody that reports to me, we have a 30 to 45 minute call where it’s door-closed kind of thing where we’re going over a list of projects. “Where do you stand? How’re you doing on your goals? What do you need from me”, timeline, and it seems like a no-brainer but you gotta check in. And then there’s constant, sometimes daily, check-ins and it’s a lot of work but you gotta do it.

Steven Butala:                   Yeah, if you chose that role in life, there’s certain personalty types that really shine. Like a general contractor.

Jill DeWit:                            Yeah its true.

Steven Butala:                   They love it.

Jill DeWit:                            It is a lot of work. So yup. Thank you Jack.

Steven Butala:                   Oh my gosh [crosstalk 00:18:33]

Jill DeWit:                            I’m still reading all about scrum.

Steven Butala:                   So that’s like a, what? A general contrac-? [crosstalk 00:18:38] An IT-specific term for a general contractor?

Jill DeWit:                            Yeah.

Steven Butala:                   Does it apply to anything else? Like an office manager?

Jill DeWit:                            Yeah. It could apply to everything. So it started-

Steven Butala:                   So is that the rule for the rugby position too? Kind of like a linebacker?

Jill DeWit:                            A scrum is like, I think, the huddle in rugby. Don’t quote me on that.

Steven Butala:                   I just kind of put you on the spot, sorry.

Jill DeWit:                            I know more about the IT version, not the rugby version but now I’ll look it up, thanks Jack.

Steven Butala:                   Someone will tell us

Jill DeWit:                            Thanks Jack. Thanks Steven. What’s your name again?

Steven Butala:                   My name is Steven Jack Butala.

Jill DeWit:                            Thank you. Oh my goodness. If you’re loving this, share the fun by subscribing on iTunes, or wherever you’re listening, while you’re at it, please rate us there.

TOGETHER:                         We are Steve and Jill.

Steven Butala:                   Information,

Jill DeWit:                            And inspiration,

Steven Butala:                   To buy undervalued property.

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