How Much Wealth is Possible Buying Undervalued Land (LA 709)
How Much Wealth is Possible Buying Undervalued Land (LA 709)
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 DeWit, broadcasting from sunny Southern California.
Steven Butala: Today Jill and I talk about how much wealth is really possible by undervalued land.
Jill DeWit: Do we just put a picture of where we live on there? Just kidding.
Steven Butala: That’s a good point. Well, we’re not here to talk about Jill and I. It’s going to seep in-
Jill DeWit: I’ll put a picture of some of our community members, where they live, on there.
Steven Butala: Yeah, even better.
Jill DeWit: I will put a picture … Actually, one of our members posted a photo on social media of the brand new pickup truck that he bought himself-
Steven Butala: Good.
Jill DeWit: To drive around and look at the property in the Dallas area. You know who you are, as I’m talking about you. I thought that was really darn cool. He’s really been very vocal about sharing that. Yeah, and he did it … He’s a dad with young kids, and did it methodically-
Steven Butala: I know who you’re talking about.
Jill DeWit: Mm-hmm (affirmative) … Methodically and carefully. He’s not running a Ferrari.
Steven Butala: He’s Justin.
Jill DeWit: Yes, and doing it the right way. Anyway, that’s the thing … Yeah, we say this all the time, don’t listen to us, go talk to our people that are really doing this. There’re hundreds of them that you can talk to on our online community. They’ll you.
Steven Butala: Any questions. If you’re a listener, and you have any questions about whether this is true or not, go onto the LandAcademy.com online community. I built the site myself because I was so tired of answering these questions.
Jill DeWit: Yeah.
Steven Butala: What did you guys smoke today that you can there on the show like this and talk about how easy it is. Don’t believe me.
Jill DeWit: Right.
Steven Butala: Go to LandAcademy.com and on the online community there, in the resources, and ask that question. Is this a pile of larkey or not?
Jill DeWit: Malarkey.
Steven Butala: Is it easy? Is it hard? How long does it take? Actually, that’s kind of what the show’s about.
Jill DeWit: Yeah.
Steven Butala: What’s really possible.
Jill DeWit: Well good, let’s get to that. You just covered it, Steven, so there’s where you can go do a question right now, and it’s free, by the way. Right now, I’m going to answer one that Merritt put in there. Merritt asks: “Undoubtedly this question has been raised somewhere on the farms, but I’m having trouble finding specific answers.”
Steven Butala: Oh, this is good.
Jill DeWit: “Has anyone had experience with terms deals defaults in California? I’ve seen it talked about in some threads, and that land lease options were the way to go versus land contracts, as depending on the state, utilizing land contracts for terms deals may necessitate going through an expensive, lengthy and formal foreclosure process in the advent of a default. Obviously, one would want to reclaim the land for resales quickly, and as inexpensively as possible, in the event the buyer stops paying. Any advice here, aside from running through a California attorney? Thanks for your thoughts. Merritt.”
Steven Butala: So this is the age-old question of if I sell a property on terms, should I use a land contract, which is a back of a bar napkin agreement, which is what we do. Or, should I do a deed of trust? Depending on the state that you’re in, there’re laws that govern both of these very strictly. There’re some states, New Mexico, and other states that, to my knowledge, have no rules whatsoever. Although in the foreclosure, the deed of trust situation is very consistent, in my experience, through lots of states.
To directly answer your question, Merritt, you need to look up the statutes of California, because they change all the time, which is why I’m not directly answering your question because my information is more than two years old about California … And find out which way to do this. But I will tell you this, and here’s the value that Jill and I are bringing to this question, plan for a default.
Jill DeWit: Mm-hmm (affirmative), because it’s going to happen.
Steven Butala: Yeah, that’s my point. That was my roundabout way of saying that it’s going to happen.
Jill DeWit: I’ll help you.
Steven Butala: In fact, most of the time … In fact, probably nine times out of 10, when we have … This is one of the reasons we sell property for cash-
Jill DeWit: I have something to say about this.
Steven Butala: We buy it for cash, and sell for cash. Nine times out of 10, when a buyer says, “You know what? I’m done paying. Have a nice life.” Jill says, “You know what? I’m going to deed you the property. You paid for it, doubled our money on a down payment, even if paying us for three years, I know the contract says you gotta pay it for seven. You know, I’m going to deed you the property. Thank you.”
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: We’ve all done well here.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: That’s how these terms deals end for us. They don’t end in someone paying it off for 22 years, or whatever. It’s not a mortgage situation. So, set yourself up for that.
Jill DeWit: I just had this conversation with one of our staff members. I’m like, “All right, who do we even have that’s still paying?” Kind of thing. It’s funny how few there are. We’re like … There’s one that was in there for quite a few years, really consistently, great property, and-
Steven Butala: I know what you’re talking about.
Jill DeWit: And they’re gone.
Steven Butala: Yeah.
Jill DeWit: They’re like, “Yeah, that guy,” so then we were having a discussion … We have a meeting planned for that later this week, Ryan said. “All right, let’s sit down and talk about it and look at it.” I said, “He might have paid enough. I’m just going to send him the deed.” You know, I’m like he paid enough. It’s good. It’s covered. I don’t need to … I don’t really … It’s all good.
Steven Butala: I bought a couple hundred properties really early in my career, when I was still working at a full-time job as an investment banker, doing this on the side. I sold a set of six. Those properties in Arizona, to somebody. We did it … I was so new, I didn’t know any better, I did it as a deed in lieu of foreclosure. A deed of trust through First American Title.
About three months ago, I got the letter that said, “This person just paid this off.” This is 20 years ago.
Jill DeWit: Right.
Steven Butala: So that will tell you, and that’s the only one that’s ever-
Jill DeWit: Only one that’s followed through all the way.
Steven Butala: Yeah.
Jill DeWit: It’s hilarious.
Steven Butala: It’s the only one that’s ever, not according to terms … I mean, I didn’t even calculate what I made on that. I probably made, I don’t know, $45,000.00-$55,000.00 at $200.00 payments.
Jill DeWit: Well on the flip side, I’m sure you were going to probably cover this. This is some people’s business model. They count on it making a year or two of payments. It’s been paid off for a good year or so. A lot of people in our community, they find themselves a down payment is paying for the property, and then the terms payments are gravy. That’s their whole thing. They know that the person’s going to default, and all they do is try and sell it again. That’s their thing. I’m just like one of these properties are like, “I’m just going to keep it in my system, and keep reselling it.” Like, “Okay.”
Steven Butala: Take a look in your garage, or your basement, or your closet. If there’s just stuff everywhere and it’s a disaster and it’s a mess, and you can’t park in there, and you can’t fit anymore clothes in your closet, or your basement’s just … You have to wade through it, you’re a terms person. You collect property, you never want to let it go. It kills you to let it go.
Jill DeWit: I never thought of that. That’s hilarious.
Steven Butala: Or the backseat of your car, too.
Jill DeWit: Hmm.
Steven Butala: I can speak for both of us, we don’t have a basement, there’s nothing in our garage except two cars and two surf boards.
Jill DeWit: Yeah.
Steven Butala: Jill’s closet, you could actually eat off the floor in there. In fact, part of it’s not even a closet. It’s so perfect.
Jill DeWit: Thank you.
Steven Butala: We’re cash people.
Jill DeWit: We are. You’re right. That’s funny. You’re right. That was a really good perception that you had. I’m impressed.
Steven Butala: My little sister, bless her heart, can’t get in her basement, or her garage. She accumulates property and she’s a landlord. She wants it.
Jill DeWit: She doesn’t want to move?
Steven Butala: She loves it, yes.
Jill DeWit: Got it. Point made.
Steven Butala: Thinking about my sister’s basement, I lost my way.
Jill DeWit: I got it.
Steven Butala: Today’s topic, how much wealth is actually possible to accumulate buying undervalued land? This is the meat of the show.
Jill DeWit: Is there any such thing as too much wealth?
Steven Butala: My mom used to say, “Is there any such thing as being too skinny or heavy, too much money.”
Jill DeWit: No. Well, maybe too skinny.
Steven Butala: I know, when you think about it, it’s like, when you start … Your initial thought on that is like, “No, I want 22 billion dollars, and I want to be stick thin.”
Jill DeWit: Yeah.
Steven Butala: But then you think about it. It’s like, “Eh. 22 billion dollars is too much.” Your age and your logic kicks in.
Jill DeWit: Yeah.
Steven Butala: But let’s talk about how much wealth it can actually accumulate. Let’s do some math.
Jill DeWit: Oh, good. My favorite.
Steven Butala: I teach a class, Jill and I teach a class once in a while, to college students. It’s the last class that they take before they graduate, becoming an MB. So, they’re like mentally checked out, which is perfect for us, because then we could talk about silly stuff. I use the Arizona, or the Southwest 40 acre example of wealth accumulation. Here it is. Jill and I, for years, and we still do, buy 40 acre properties for $4,000.00. All over the Southwest. We sell them for $8,000.00, sometimes more now. $8,000.00-$12,000.00. But let’s just use $8,000.00.
Let’s say you take $4,000.00, you buy one of these properties, you double your money, and now you’ve got $8,000.00. You doubled your money again, now you got $16,000.00. $32,000.00, $64,000.00, and on and on and on. I’ll tell you, if you do that once a month, because you got the marketing machine going, and the same thing that we do, because you listened to what we said in the Land Academy program, it doesn’t take long to accumulate enough wealth so you can pay all your bills off. That’s stage one.
These are my stages of wealth, here. Get debt free. Stage two, have something going on the side, a real estate business on the side, while you have your regular job, to pay your regular bills. At some point, you’re going to look at yourself in the mirror and say, “My regular job is costing me money.” Stage three is, you’re rolling along in that side business full-time now, and then piling equity on top of equity on top of equity, until you hit your financial goal, if that actually ever happens.
Jill DeWit: I remember step two, by the way. I was going to talk about that, because it’s a good … That’s one of the greatest feelings on the planet is when you realize you’ve crossed over that threshold where you’re making so much money now, that being busy at your day job is costing you money.
Steven Butala: Yeah.
Jill DeWit: It’s the best thing on the planet. That’s one of the things … We haven’t talked about that in a while, is that we talk to our new members, too. Don’t do that too soon. You really want to wait. You want it to be so darn ridiculous, staring you in the face, that you go, “I should have done this a year ago.” Then you know it’s the right time. You don’t wan to jump ship. You don’t want to say … This is the thing that I’ve heard people do, and it scares the heck out of me. “All right, I’m in between jobs. Now’s the time I’m going to do this.” No you’re not. That’s not the right thing to do.
Steven Butala: If you have to do that, if some kind of weird life circumstance … You get laid off, and after you really dramatically cut your expenses down as low as it will go-
Jill DeWit: And you live in your mom’s basement-
Steven Butala: [crosstalk 00:11:25] Dave Ramsey, now. Once you’ve cut everything out of your life, I mean, that’s absolutely not necessary, and you’re eating Ramen Noodles and stuff, you can do this.
Jill DeWit: It’s still better-
Steven Butala: If you have the right kind of personality for it. If you want to do it the right way, I’ll tell you how I did it. I had a fantastic mid-six digit job as an investment banker. I had this real estate thing on the side. I have $560,000.00 in my checking account, and I just went to a tax auction and bought enough property to make $700,000.00.
Jill DeWit: Right.
Steven Butala: That’s when I walked in and sat down with the guy that owned the company and said, “What would you do if you were me?” I gave him all the numbers. He’s like, “Oh, yeah. You gotta get out of here.”
Jill DeWit: Totally.
Steven Butala: It was pretty easy. It was a decision made … That decision was made for me.
Jill DeWit: Oh yeah.
Steven Butala: I didn’t have to do it.
Jill DeWit: Exactly.
Steven Butala: But I’ll tell you this, that wasn’t, for me personally, half as exciting as crossing over step one.
Jill DeWit: Really?
Steven Butala: Debt-free.
Jill DeWit: Yeah.
Steven Butala: When you get debt-free man, your life is … And I’m talking about mortgage debt-free. I’m talking about debt-free, debt-free.
Jill DeWit: I know.
Steven Butala: You’re paying utility bills and insurance.
Jill DeWit: Food, yeah. You know what’s sad is how many people really walk around this planet that never get there.
Steven Butala: Yeah, that’s too bad, I-
Jill DeWit: I bet the number is-
Steven Butala: What do you think the reason for that is? This is not on the topic here, but this is helpful.
Jill DeWit: I think it’s sometimes keeping up with the Joneses, that people think that they should be walking around like that, you know?
Steven Butala: I think it’s kids.
Jill DeWit: Kids are expensive, that’s true. I know some people, too, that if they have the money, though, they’re in the mindset that … Then there’s some weird quirkinesses. There’s a small portion that go, “Why would I pay cash for the house, then I can’t write off the mortgage interest. I should keep that money in the bank, and apply it towards other things.”
Steven Butala: If you’re smart enough to have that thought, then you’re smart enough to get crazy wealthy.
Jill DeWit: That’s true.
Steven Butala: If you’re thinking about tax write offs and tax manipulation … Not manipulation, but-
Jill DeWit: [inaudible 00:13:23] manipulation.
Steven Butala: Using the tax rules to your benefit, let’s put it that way.
Jill DeWit: Yeah.
Steven Butala: You’re an upright person.
Jill DeWit: Right. Exactly.
Steven Butala: We’ve covered stage one and two. Let’s talk about stage three.
Jill DeWit: Okay, ready.
Steven Butala: How much wealth is actually possible buying property? This is the meat of the show. It’s limitless, that’s the answer.
Jill DeWit: Were you doing the numbers?
Steven Butala: Oh, I was doing numbers. Yeah, we’ve got … Yes, I am doing the numbers. When you use the 40 acre example, and you’re doubling your money as you go, and your bills are getting paid with your regular job, you’re going to, like I said in my example, it’s not going to be long before you’re going to have $700,000.00 in the bank. Yeah, we’re skipping along the top here, and giving you a 35,000 foot view, but that’s what the show’s about. It’s not about the nitty-gritty details.
You want the nitty-gritty details on how to do this, go to LandAcademy.com, and ask the people that have just done it. They are four, five, six or seven months ahead of you, and they’ll tell you the truth. They’ll say, “Oh yeah, we listen to the show, too. We signed up and we did five or six deals. We made a bunch of money. But what they don’t tell you is,” and then fill in the blank, because it’s different for everybody.
You need to do your own deeds, some people can’t handle that.
Jill DeWit: You gotta answer [inaudible 00:14:41].
Steven Butala: People love that.
Jill DeWit: Right.
Steven Butala: You have to answer your phone. Some people hate that, some people love it.
Jill DeWit: You gotta keep track of your properties. You gotta learn how to post property. You gotta get the pictures.
Steven Butala: If you’re that very special kind of person is not bothered by doing the details to get where you want to go, then you really should actually go do that.
Jill DeWit: Exactly.
Steven Butala: That’s how we are.
Jill DeWit: Exactly. For some reason, it’s hard for people to think about … Here’s what I run into. When we’re talking big numbers, people’s eyes gloss over. When we’re talking realistic small numbers-
Steven Butala: Like what? This is good.
Jill DeWit: This is a conversation that I often have. People, when we talk to them, one of their concerns is, “I don’t have any money to be doing this. I have $5,000.00. I can afford the education. I can afford doing some data, getting some mailers out. I’m going to have a couple thousand dollars of investment properties. Should I put it all into one?” I’m like, number one, no. Do a couple. We don’t want to put all our money in one basket there, so say you have $3,000.00 to spend on a property. Buy six properties at $500.00 a piece, that way. Double it … So this is real conversations that I have.
Six properties, you spent $500.00. You sell them for $1,500.00. We’re not crazy. This is easy. These are small numbers, people can put all that on a credit card. Now, your $3,000.00 is $9,000.00. Look at that. Let’s do that again. Now we’re at $18,000.00. Oh, okay. We just did that much more money and spread it out. Pretty soon, now we’re at $36,000.00. We’re maybe months into this.
Steven Butala: Six months, let’s say, realistically.
Jill DeWit: Okay. Six months. You’re doing it slowly and methodically. I love it. Now, we’ve got $37,000.00 and they’re like, “Huh, now I can make some different decisions. Maybe I’m going to buy properties in the $10,000.00 range-“
Steven Butala: [inaudible 00:16:31] lots.
Jill DeWit: Right, three of them-
Steven Butala: Is what I would say there.
Jill DeWit: Yeah, “I’m going to buy three properties-“
Steven Butala: Three [inaudible 00:16:35] lots, at $10,000.00 each-
Jill DeWit: At $10,000.00 each-
Steven Butala: Sell them for $20,000.00 each.
Jill DeWit: Exactly. Now, my 30 is 60.
Steven Butala: This is a good story.
Jill DeWit: “We only own three properties, by the way.” That’s three transactions. That’s not crazy. Then you go, “All right,” and I said, “Do it again,” and now you’re at $100,000.00. Okay.
Steven Butala: Now the wheels are turning.
Jill DeWit: Right?
Steven Butala: So the real value of the story … I’m sorry, are you done?
Jill DeWit: I guess I am.
Steven Butala: No, go ahead.
Jill DeWit: I’m just kidding.
Steven Butala: The real value in Jill’s eloquent story … She picked up where I left off, and finished it, which is good for me. The real value in the story is that this person realized that it’s possible, it works, they tested it, they spent a year, let’s say, accumulating $100,000.00 in equity from $2,000.00, $3,000.00, $4,000.00, $5,000.00 of their own money, and they’ve learned the business. They’ve learned how to buy and sell property.
Now, you shift it into second or third gear.
Jill DeWit: Right.
Steven Butala: You take $100,000.00, or $50,000.00 and as you buy property that’s higher in value and you sell it for more. That’s where the title of the show comes in. How much can you really possibly … What’s really possible? What you learned is how to buy undervalued real estate. Forget about the money piece. Now, you’re sending mailers out to, I don’t know, ranches in Oklahoma.
We have a member who purchased a ranch in Oklahoma without any of his own money, and made $400,000.00-$500,000.00.
Jill DeWit: Because he knew how to buy it.
Steven Butala: Because he knew how to buy it.
Jill DeWit: That’s it.
Steven Butala: Because he learned how to do it on these $400.00, $500.00, and $800.00 deals, and they pulled the right people in. This guy is older, and he happened to know some people with a lot of dough-
Jill DeWit: And it’s not hard. You have a track record now.
Steven Butala: The concept’s the same.
Jill DeWit: Yeah. You can tell people-
Steven Butala: You do that five or six times a year, and now you’re talking about making five or six million bucks a year for not a lot of work.
Jill DeWit: And the deal speaks for itself, actually. Say you find this asset. It’s a no-brainer. Everybody can look up with you, and you could say, “Look, I’ve got this under contract for this. I need this much money to close it, and we’re going to sell it for this. Who’s in?” Every single person is going to raise their hand.
Steven Butala: Right. I’ve done some huge deals, huge land deals, where we made a ton of money. I don’t prefer those kinds of deals. I’ve done commercial real estate … Hospital deals. Hundreds of millions of dollars. There’s a lot of people involved, and a lot of stuff going on. My favorite deal on the planet is to buy a piece of property and make $20,000.00, $30,000.00, $40,000.00 on a cash, and to do multiple deals like that a week.
Jill DeWit: Right.
Steven Butala: That really, really adds up. Houses in … Single family residences and land, and fill lots.
Jill DeWit: Right. Exactly.
Steven Butala: It just runs like clockwork, you’re flying under everybody’s radar. I’m a little bit older so that the big pounding your chest element of doing a big real estate deal, it’s all out of my system. What’s so funny?
Jill DeWit: It’s not out of your system.
Steven Butala: It’s out of my system.
Jill DeWit: What’s not out of your system, that’s what I want to know. What’s still left on your Bucket List, your professional Bucket List, Jack … Steven?
Steven Butala: Not a lot. Really, there’s not much.
Jill DeWit: Seriously, I’m curious. Do you have nothing left on your professional Bucket List?
Steven Butala: I mean, we have enough money. It’s not that. I don’t know. You know really what’s on my list is to help other people do this. Honestly. What’s on yours?
Jill DeWit: Publishing.
Steven Butala: Yeah. There’s not any more real estate deals-
Jill DeWit: Nothing’s money related.
Steven Butala: It’s not real estate driven.
Jill DeWit: That’s it. This is what happens … What happens is you get to the end, you got what you needed. Sometimes it’s less than you think that you need, which I thought was very interesting. Then … Because it’s so true, everybody says this, and I’m like, “Yeah, whatever.” You pass a certain threshold financially, where it doesn’t-
Steven Butala: It’s just numbers on a computer screen.
Jill DeWit: It doesn’t matter. Adding another zero, you think it’s going to change your life, and it doesn’t. You’re like, “I don’t really care at this point,” and then-
Steven Butala: I don’t care one bit.
Jill DeWit: It’s like, “Now, what do I want to do?” Which is really good. Now, I do, I have some other personal professional goals, but they’re not money related.
Steven Butala: Yeah, I mean, I have those same goals, Jill. I have written three books, and those will-
Jill DeWit: I’m with you there.
Steven Butala: Those will all get done.
Jill DeWit: Exactly.
Steven Butala: I want to do that.
Jill DeWit: I do, too.
Steven Butala: I love teaching. I love what we’re doing here with Land Academy, House Academy, and [crosstalk 00:21:04].
Jill DeWit: You know, that’s the thing for us, that our charity stuff is kind of … I don’t broadcast it, if you will. That goes on, but it’s more about what do helping people get their selves out of debt, and making money, and sleeping well at night, doing this stuff.
Steven Butala: Yeah.
Jill DeWit: That’s even better. That’s cool.
Steven Butala: You know what? It comes down to this, when I really learned how to do this at the end, I’m like, “You know what? I’m so tired of talking to people who just don’t understand how easy this can be.”
Jill DeWit: I know.
Steven Butala: Finally, you and I decided we were going to do something about it.
Jill DeWit: Yeah.
Steven Butala: So we created Land Academy, and now it turned into House Academy, which is eventually going to turn into two other programs that we’re doing.
Jill DeWit: It’s awesome.
Steven Butala: Yeah.
Jill DeWit: We have it.
Steven Butala: Well, you’ve done it again. You spent another 22 minutes with us, listening to the Land Academy Show. Join us tomorrow for another episode of the show called The Three Biggest Roadblocks in Creating Real Estate Wealth, that I actually see all the time.
Jill DeWit: And we will answer your questions. Should you have one, post it on our free online community found at LandAcademy.com.
Steven Butala: You are not alone in your real estate ambition. This has to be helping somebody.
Jill DeWit: I’m sure it is. It’s hard to imagine sometimes-
Steven Butala: A lot of people are listening to the show. I wonder how many people … I mean, our numbers are actually pretty staggering for this show. I wonder whose really sitting there going, “Man, I’m going to do this.” I mean, this is not a commercial. I can just see … If I were a lot younger listening to this, I’d be like, “Man, these people are not poking around.”
Jill DeWit: You paint the picture like you’re 80. You’re not 80.
Steven Butala: No, I know.
Jill DeWit: Why do you do that?
Steven Butala: No, I just mean … Because young men are very, very, very impressionable at a certain age. If I would have-
Jill DeWit: Okay. Like, under 30.
Steven Butala: Yes.
Jill DeWit: Okay, thank you.
Steven Butala: Under 25.
Jill DeWit: Okay, thank you.
Steven Butala: Older men, who have maybe been forced to take careers paths that they didn’t really necessarily want to take, my message to both of those groups of people are, you just gotta do it, then. It truly is not hard. You just gotta get the crap in the mail.
Jill DeWit: Right. Thank you, I appreciate that. Hey, share the fun by subscribing on iTunes, or wherever you’re listening. While you’re at it, rate us there.
Steve & Jill: We are Steve and Jill.
Steven Butala: Information.
Jill DeWit: And Inspiration.
Steven Butala: To buy undervalued property.
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