Better ROI with Land or Houses (LA 723)

Better ROI with Land or Houses (LA 723)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Good day.

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, do you get a better ROI with land or with houses? Or with mobile homes or with skyscrapers. Or apartment buildings.

Jill DeWit:                            Or apartment buildings

Steven Butala:                   Yeah. You got it.

Jill DeWit:                            Or gas stations, or industrial.

Steven Butala:                   Why do you guys just, did you guys choose the land over apartments because you get a worse ROI? I don’t think so.

Jill DeWit:                            Good point.

Steven Butala:                   Is this all happen on accident for you, Steve and Jill?

Jill DeWit:                            Right.

Steven Butala:                   Were you just sitting around and kinda fell backwards into buying and selling land?

Jill DeWit:                            Yes, I just kinda …

Steven Butala:                   Just hope for the best.

Jill DeWit:                            Yeah, I just … what’s it, swing hard?

Steven Butala:                   Swing hard and hope for the best.

Jill DeWit:                            Yeah.

Steven Butala:                   It’s how I play golf.

Jill DeWit:                            Yeah, you know, it was either this or, you know, that cleaning service that we talked about. I don’t know. Could you imagine?

Steven Butala:                   I owned a dry cleaner one time. I’ll tell you about that in a minute.

                                                Before we get into this, let’s take a question posted by one of our members on LandAcademy.com online community. It’s free.

Jill DeWit:                            I do remember you saying something about that, by the way, and every time we were anywhere near a laundromat you’d look at those coin machines like, oh, like your eyes light up. Like people put money in for this.

Steven Butala:                   So, I owned two laundromats. I was very young in my early 20s. And one with a dry cleaning service and then later in life I owned a dry cleaning drop off. Talk about printing money.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   But like the houses, every time we buy a rental house, we own it for about five months, do the math and say, “If I keep this rental house, I can sell it right now for three times what I paid.”

Jill DeWit:                            Right.

Steven Butala:                   “Or whatever the numbers are. Or I can just rent it out forever and just collect the money. I think I’d rather sell it. It’s gonna take me like, I’ll be dead before I actually make my money back.”

Jill DeWit:                            Right.

Steven Butala:                   So we would just sell it. That’s what happened with all those laundromats and everything.

Jill DeWit:                            I understand. All right, so here’s David’s question.

                                                Hi everyone. I’m getting ready to send out my first mail campaign.

Steven Butala:                   Yeah.

Jill DeWit:                            I live in L.A. I know I don’t need to market close to home, but if at all possible, I’d prefer it. I want to be fairly close to a big city and I also want a place where the land is relatively inexpensive so I can afford to get into the game, buying up multiple properties in a short period of time. What criteria do you all typically use when researching and choosing an area. Population?

Steven Butala:                   Yep.

Jill DeWit:                            I know this is important. Seth from [REtipster 00:02:22] suggests marketing to areas with a population of less than a hundred people per square mile.

Steven Butala:                   He’s right.

Jill DeWit:                            Is that advisable?

Steven Butala:                   Yeah, so you can tell, David, and congratulations. I’m glad you’re … get that thing in the mail. Jill and I are planning a live event called … We’re going to get this thing in the mail. We’re going to look over your shoulder like you math teacher in grade school. And we’re going to get this thing in the mail together. So, congratulations.

                                                I’m not sure based on the content of your question that you’ve seen the program. The cash flow from land program. Because I cover it in a huge way.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   I spent a couple hours on how to choose a county.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   I’ll synopsize it for you right now. You wanna get the population density maps. This is such a popular question among our group of people that I set up a website called, it’s all 100 percent free. Called [Countywise 00:03:16]. WISE.com. Click on the state and then drill down to the county, and you’re gonna see a tremendous amount of census data. Census maps. A ton of data about every county in the country.

                                                Census track data. Yeah. Yeah. [crosstalk 00:03:33]

Jill DeWit:                            Like back tax? How many back tax properties there are, ’cause … not that you need to hit that or not. You’re not doing it to hit them. But it’s information that you need when you’re putting your mailer together.

Steven Butala:                   It’s a website we set up that’s free. And it’s truly … not enough people know about it. It’s a collection.

Jill DeWit:                            Yeah.

Steven Butala:                   You just literally click down through all the counties and get all the information that you need. Including all the links to the county themself and all that.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   So, Seth is right. Seth is almost right about everything. Except his little postcard problem. But whatever.

                                                Seth loves postcards. Or maybe he doesn’t anymore. I’m not sure.

Jill DeWit:                            I don’t know.

Steven Butala:                   We send out actual offers.

Jill DeWit:                            He’s in our group.

Steven Butala:                   Anyway. You wanna find … you’re like 90 percent right here, David. You wanna find a community or a county or an area. Census track, maybe. Census block. Or however you look at it. Where it’s about four to eight hour drive out of a major city. Now we send it everywhere, but … On your first mailer, so you wanna … So for you, if you’re Los Angeles, [inaudible 00:04:38] county, San Bernardino County. Eastern Los Angeles County, gets really rural. Jill and I are buying three properties there right now.

Jill DeWit:                            Mm-hmm (affirmative)

Steven Butala:                   Three five acre properties in Eastern LA, for five grand each.

Jill DeWit:                            Palm Springs, like Indio. I think it’s Indio County, out there. That’s not bad.

Steven Butala:                   Yeah. Parts of Santa Bar-

Jill DeWit:                            San Diego County.

Steven Butala:                   Eastern San Diego works.

Jill DeWit:                            Yeah.

Steven Butala:                   Eastern Santa Barbera. The further you get away from the ocean, the least expensive it gets.

Jill DeWit:                            Right.

Steven Butala:                   So if you price it right though. Here’s the truth of it. We but property now in that county all the time. But we don’t but it for $150 an acre. We buy it for a lot.

Jill DeWit:                            Mm-hmm (affirmative)

Steven Butala:                   You know. And we sell it for a lot.

Jill DeWit:                            Mm-hmm (affirmative)

Steven Butala:                   So, if you’re trying to get 40 acre properties for four or five thousand bucks, you’re gonna have to go pretty far out.

                                                What’s this phrase you have, drive ’till you qualify?

Jill DeWit:                            Yep. That’s exactly it.

Steven Butala:                   Let’s take a look at. If you haven’t run through our program, the [inaudible 00:05:31] program. Take a look at that. About how you pick a county. The secret county is this, you’re sitting in it. It’s all about pricing.

Jill DeWit:                            I love that. Cracks me up.

Steven Butala:                   We have a competitor who talks about …

Jill DeWit:                            180 now his list is …

Steven Butala:                   If you sign up with us. I will give you a list of secret counties.

Jill DeWit:                            Oh yeah. It went from 4 to 180. It’s hilarious. Like where he just makes up these random, I don’t understand. There is no secret county. It works everywhere.

Steven Butala:                   Exactly.

Jill DeWit:                            It’s so good.

Steven Butala:                   In fact, we’re gonna talk about what works and what doesn’t.

Jill DeWit:                            Cool.

Steven Butala:                   Landing houses. Today’s topic, do you get a better ROI with land? Or with houses? This is the meat of the show. What do you think Jill?

Jill DeWit:                            What do I think?

Steven Butala:                   Do you make more money, when you land and sell it? Or houses?

Jill DeWit:                            Per transaction, land all day.

Steven Butala:                   Keep going.

Jill DeWit:                            Alright.

Steven Butala:                   I’m sure you’re right about … Well you live it.

Jill DeWit:                            I do live it. I mean that’s, I’m done. I don’t have anything else, I’m sorry. Can I go now?

Steven Butala:                   Yes, you’re welcome to go. Here’s the deal. It’s a pure example of risk reward. You get a much better ROI with land. Period. You also have a much better chance of hitting a home run with land. You know, we usually double our money with land. Almost always.

Jill DeWit:                            True.

Steven Butala:                   But there’s a few times where, we strike it rich, man. You hit that vein of gold.

Jill DeWit:                            It’s true.

Steven Butala:                   Where you buy a piece of property … It usually happens when I make a mistake in the mailing.

Jill DeWit:                            Right.

Steven Butala:                   Send out … In a county I’ll look at all the 40 acre properties and I’ll send everybody an offer for 46 thousand bucks. And somebody sends it back and signs it. We buy a piece of property in the middle of town. 40 acres in the middle of town for five or six grand. It’s happened several times.

Jill DeWit:                            It does. And we didn’t even know what it’s worth. We’re like, what just happened?

Steven Butala:                   We end up selling it for a quarter mil. And the person who buys it is worth millions, so.

Jill DeWit:                            That’s what we call a run to the bank situation.

Steven Butala:                   Yeah.

Jill DeWit:                            I love those. So what happens is, so like Steven just said. The mail goes out, these offers come back. That’s when we review them. You don’t review them before you send out the mail.

Steven Butala:                   Right.

Jill DeWit:                            You review it when the people come back. Now you sit down and go, alright let me make sure it’s legit. Let me make sure I want it. Let me see where it is. Let me make sure the person I’m talking to is the seller, and they can sell. And all of that stuff. Well, in that process we’re looking [inaudible 00:07:53]. Let’s see where this is, and now and then we go, holy cow.

Steven Butala:                   That’s my favorite part.

Jill DeWit:                            Oh my goodness. Look at this.

Steven Butala:                   Reviewing the seals.

Jill DeWit:                            It’s next to a Starbucks.

Steven Butala:                   Yeah.

Jill DeWit:                            And it’s between Starbucks and Mcdonalds on a paved road.

Steven Butala:                   Yeah

Jill DeWit:                            And it’s literally run to the bank. It’s like we drop everything. Let’s get that cashiers check in the mail. We are closing this today. You know, kind of thing.

Steven Butala:                   So you talk to these people. What do they say?

Jill DeWit:                            They have no idea, and they don’t care.

Steven Butala:                   They don’t have any idea?

Jill DeWit:                            No, and they don’t care. They’re like, ah thank you. I’m so sick of this property. The taxes keep going up on it. I don’t know why.

Steven Butala:                   Jeez.

Jill DeWit:                            They don’t care. You know and often-

Steven Butala:                   Even, you know, in all my experience, that still amazes me.

Jill DeWit:                            Well, wait a minute. I just had a conversation with somebody, literally yesterday. That I said, “And the kids don’t want it?” I was really kind of, you know I’m kind of making sure. ‘Cause sometimes what will happen is, in the process. Not often, but now and then. In the transaction mom and dad will start telling the kids, “Hey we’re selling this property for six thousand dollars. Any bidders, any higher bidders.” And the kids will go, “Well shoot if it’s only six thousand dollars dad, I want it.” You know, kind of thing.

Steven Butala:                   Yeah.

Jill DeWit:                            So sometimes I’ll ask that. I had this sweetest little old lady. Anyway, and I’m like, “The kids don’t want it?” She’s like, “Nope. They don’t care.” I’m like, “Alright. Let me get back to you on this one.”

Steven Butala:                   Amazing.

Jill DeWit:                            Yeah. It’s true. And, she really doesn’t care.

Steven Butala:                   Amazing to me.

Jill DeWit:                            Mm-hmm (affirmative) So that’s why I was saying, you know I love those. It’s a, gosh a run to the bank. So, talking about, that’s gonna happen with land.

Steven Butala:                   Yeah.

Jill DeWit:                            And like you said, it’s not gonna really happen with a house. We’re all realistic. The chance of somebody owning a home that they bought for 30 thousand dollars in 1959. The chance of them going, you mean it’s worth more than 60 thousand dollars now? Oh my god I just wanted 60 thousand.

Steven Butala:                   Right.

Jill DeWit:                            That’s not gonna really happen.

Steven Butala:                   Okay, so. The name of the show is, better ROI with land, or houses? Well then, you guys talking buy and sell houses all the time. Why don’t you just stick with land? Here’s why. You can look into a crystal ball. When you write offers for houses. There is so much data available. Write down a census block census data, about so … When you buy a house, when I send offers out for houses. I make sure they’re 40 thousand dollars less than whole sale. No matter if it’s a million dollar house, I make sure it’s 40 thousand dollars less. If it’s a 150 thousand dollar house, 40 thousand dollars. Because I know, based on all the data we collect through Realtor.com and Refin.com and the whole … This is what house academy, the programs, all about how to collect this data and manipulate it.

Jill DeWit:                            Mm-hmm (affirmative)

Steven Butala:                   So you don’t loose. I also know exactly. Almost to the day, how fast that house is gonna sell. And, who’s gonna buy it. All the risk is taken out, when you buy houses. That is why you don’t hit a home run. There’s a lot less risk. And a lot less reward.

Jill DeWit:                            Slash however, Steven, not everyone knows this, and knows how to do this.

Steven Butala:                   That cracks me up.

Jill DeWit:                            This is what’s special about you. Like you just said-

Steven Butala:                   Short fast special.

Jill DeWit:                            I feel like it’s cheating. But it’s not.

Steven Butala:                   It’s like printing money.

Jill DeWit:                            You have the cheat sheet here.

Steven Butala:                   I know.

Jill DeWit:                            And you’re happy to share it. And that’s gonna be House Academy, the cheat sheet.

Steven Butala:                   Right.

Jill DeWit:                            But, if you really wanted to. People could sit down and figure this out.

Steven Butala:                   So, you have to ask yourself. I have a choice. I can buy and sell whole sale houses. And I know exactly how much I’m gonna make, and how long it’s gonna take. I can constantly hit base hits, right over the shortstops head. And hit a single. Over and over, and over again. My batting average is 900.

Jill DeWit:                            Love that.

Steven Butala:                   Or, I can Sammy Sosa the thing. I know don’t who’s a great hitter right now.

Jill DeWit:                            I don’t either.

Steven Butala:                   That shows my age right there. At least I didn’t say Hank Aaron.

Jill DeWit:                            Thank you.

Steven Butala:                   Or worse yet like, god who’s the guy who’s frozen head’s in Arizona? I’ll think of it in a minute.

Jill DeWit:                            Okay.

Steven Butala:                   He was a fighter pilot, with first George Bush.

Jill DeWit:                            I don’t know.

Steven Butala:                   He batted 500, regular season 500.

Jill DeWit:                            That’s awesome.

Steven Butala:                   Ted Williams.

Jill DeWit:                            Oh okay.

Steven Butala:                   His head’s literally frozen in cryogenics. Anyway, wow that digressed fast. Do you wanna hit a single over the shortstops head, almost every single time you’re up to bat? Or do you want that chance that you can hit a home run every 7th or 8th or 10th time at bat? But, you know, bat 3-4 hundred. Which one do you want?

Jill DeWit:                            You know what’s funny about that? You just brought up-

Steven Butala:                   I went with the singles.

Jill DeWit:                            I know. You just brought up a good point. You want the house singles.

Steven Butala:                   I want the singles.

Jill DeWit:                            Okay well, here’s the funny thing though. It cracks me up how people think, oh land’s not sexy it’s not fun. You know what? You have one home run. And you’re like, holy cow, what did I just find, buy and sell?

Steven Butala:                   Yeah. That’s why we do both.

Jill DeWit:                            Now it’s pretty darn exciting and it just got sexy. I’ve had that conversation with people. It was so funny I’ll never forget like. You know a bank balance is pretty sexy.

Steven Butala:                   Yeah.

Jill DeWit:                            Yeah I guess it is. Thank you.

Steven Butala:                   Half a million bucks is, that’s not-

Jill DeWit:                            I think that’s sexy.

Steven Butala:                   Yeah.

Jill DeWit:                            But I guess we have different definitions of sexy.

Steven Butala:                   Half a million bucks in your checking account for a side gig.

Jill DeWit:                            Yeah.

Steven Butala:                   Is sexy.

Jill DeWit:                            I think so too. Very little work. I love land.

Steven Butala:                   I love land too. But I also love hitting singles constantly. And predicting the future and manipulating data. It makes me feel like I’m getting away with something.

Jill DeWit:                            I know that you love that. Where did that come from?

Steven Butala:                   I don’t know.

Jill DeWit:                            That’s one of the reasons it’s funny that I’ll have to share real quick. One of the reasons that’s why we’re together. And I know that early one we figured this out. But, it was like, like I found another rule breaker.

Steven Butala:                   I know Jill, ’cause I had never met a woman like you. I got in trouble. Every female in my life, starting with my mother. Was like, why are you constantly trying to get away with something?

Jill DeWit:                            Aw, no. And I told this-

Steven Butala:                   You were born that, you’re wired like that.

Jill DeWit:                            Thank you. We had an interview yesterday honestly. And I shared this. This girl was interviewing, she didn’t make the cut. But I appreciate her attitude about this. She’s like, “Look, I’m a woman. If I don’t use that to some advantage. You know, come on.” And I’m like, you know what? You’re right.

Steven Butala:                   Absolutely.

Jill DeWit:                            If you don’t use all, and I don’t mean just your woman stuff. But just to say, you know, the information that we have. I was look at it that way too. If you don’t use the fact that you know what’s coming up in this area. Or you just uncovered a pocket of properties that you’re killing it over here. If you don’t just ride that wave, and use all the tools you’ve got. You’re an idiot.

Steven Butala:                   Every time this topic comes up I use taxes as an example. There is ways that you can pay little to no tax without breaking the law at all. Now, is it ethical? Hell yeah it’s ethical. Am I gonna sit around and say, “Oh no, no. I should really pay my taxes.” There are people like that.

Jill DeWit:                            Yeah. I made, no, no, you should add a zero here, I can afford it. Could you imagine?

Steven Butala:                   We’re gonna loose listeners over that.

Jill DeWit:                            No, I know I’m so sorry.

Steven Butala:                   No because I do believe that you have to pay. Like, especially here in California. We pay taxes, okay?

Jill DeWit:                            Right.

Steven Butala:                   And we get a lot for it.

Jill DeWit:                            You know what I get more kick out of giving what I wanna give. And donating to where I wanna donate. We still give, and help.

Steven Butala:                   However, you know, our tax rate’s certainly not zero.

Jill DeWit:                            No.

Steven Butala:                   But it’s not 50%.

Jill DeWit:                            No.

Steven Butala:                   50% tax rate, is for people who have a W2 job. And no other stuff on the side. You’re gonna be taxed at almost 50%. Especially if you make, you know a lot. If you make a half a quarter of a million dollar salary, you’re gonna give half of it away.

Jill DeWit:                            Right.

Steven Butala:                   There’s another reason to start buying and selling real estate. Is you need the tax situation.

Jill DeWit:                            Oh, good point.

Steven Butala:                   We don’t talk about that ever.

Jill DeWit:                            I didn’t think about that too. That’s true. What a benefit this is.

Steven Butala:                   We still write checks, believe me. We write checks in April.

Jill DeWit:                            Yeah.

Steven Butala:                   But, you know, nowhere near 50% tax rate. If we wrote 50% on what we make, it wouldn’t be worth it.

Jill DeWit:                            Exactly. I’d be flipping burgers right next to you.

Steven Butala:                   We’d flip burgers together.

Jill DeWit:                            How sweet.

Steven Butala:                   Well you’ve done it again, you’ve spent another 15 minutes or so listening to the Land Academy Show. Join us tomorrow.

                                                Hey it’s velocity of money week. The velocity of money, your money, faster and faster and faster. Join us tomorrow for another interesting episode where we discuss, the real expense to your business overhead. What are you really gonna spend money on? What are you really, have to spend money on? Fix cost overhead, in this business.

Jill DeWit:                            And we answer your questions. Posted on our free online community found off of LandAcademy.com.

Steven Butala:                   You are not alone in your real estate ambition. I wonder how many times I’ve said that.

Jill DeWit:                            Which one?

Steven Butala:                   You are not alone, in your real estate ambition. Thousands and thousands of times.

Jill DeWit:                            The kids, when we first did Land Academy. And you had this one video that was really-

Steven Butala:                   Welcome to Land Academy.

Jill DeWit:                            Yeah, that’s the one.

Steven Butala:                   You know I just took that off?

Jill DeWit:                            Oh.

Steven Butala:                   It’s over.

Jill DeWit:                            The kids loved that. That thought that was the funniest thing.

Steven Butala:                   It’s got 2012 on it or something.

Jill DeWit:                            They would walk around and imitate you. Welcome to Land Academy.

Steven Butala:                   Back then I had this like-

Jill DeWit:                            And the music would jump in.

Steven Butala:                   The Stick Clark radio voice. I was practicing and practicing, and I realize now nobody liked it accept me.

Jill DeWit:                            Shucks. I’m sure the kids saved and downloaded copies of that. ‘Cause that’s good, that’s gonna come back.

Steven Butala:                   If you go back to those original episodes, it’s pretty funny. Like the number one through twenty. It’s some funny stuff.

Jill DeWit:                            Hilarious.

Steven Butala:                   Every once in a while I listen to it. I’m like, “Oh my god. That’s awful.”

Jill DeWit:                            You know what’s funny. I was thinking of a reason where the kids would share it. Well we’re not married so we’re not gonna have an anniversary party that the kids would throw us. But, if we did have an anniversary party that the kids through us, that I would whip that out like. I would bring up the, welcome to Land Academy.

Steven Butala:                   Welcome to Land Academy. That’s what it was like.

Jill DeWit:                            It was so awful. Oh my gosh, share the fun.

Steven Butala:                   What if your parents had a talk show. And then after like your dad passed away. You had, I always think about this.

Jill DeWit:                            I wish I had it, I’d go back and listen.

Steven Butala:                   I would too.

Jill DeWit:                            That would be so cool.

Steven Butala:                   I wish my parents had a talk show.

Jill DeWit:                            I know.

Steven Butala:                   Either that or I’d probably throw up about it.

Jill DeWit:                            I would love it.

Steven Butala:                   I’m sorry go ahead.

Jill DeWit:                            It’s all good. I’m trying to end this here. Trying to end the pain. Share the fun. And pain, my subscribing on Itunes or wherever you are listening. And while you’re at it please rate us there. We are Steve and Jill.

Steven Butala:                   We are Steve and Jill. Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.

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