Path of Professional Real Estate Acquisitions (LA 729)

Path of Professional Real Estate Acquisitions (LA 729)


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 path of the professional real estate acquisitions.

Jill DeWit:                            Is that a person?

Steven Butala:                   Yeah.

Jill DeWit:                            Cool.

Steven Butala:                   Every real estate company.

Jill DeWit:                            Path of a professional real estate acquisition pro. I feel like pro is in there twice, but there you go.

Steven Butala:                   Path of a professional real estate acquisitions executive.

Jill DeWit:                            There we go.

Steven Butala:                   Every real estate investment trust, every wall street fund, every institutional investor, they have a guy sitting in a corner, I used to be this guy. He’s called the Vice President of Acquisitions. And his job is, that’s what this show is all about.

Jill DeWit:                            There you go.

Steven Butala:                   His job is to find property that nobody knows about, off market property, and provide a clear running stream, a flow, a pipeline of deals to the guys that make decisions at the top.

Jill DeWit:                            I have something funny to add. Why the heck does this not make sense? And because I’ve been spending a lot of time in Bigger Pockets too lately. Every single person in Bigger Pockets says we want off market deals. And you ask them, where do you go looking for deals? MLS.

Steven Butala:                   MLS.

Jill DeWit:                            (Laughs).

Steven Butala:                   (Laughs).

Jill DeWit:                            We did not rehearse that. That was so funny. Like what the heck? You can’t expect it to work if you’re not looking in the right place.

Steven Butala:                   Everybody wants to kiss a pretty girl. How many pretty girls-

Jill DeWit:                            How many have you dated?

Steven Butala:                   Have you walked up to lately? Oh, none. (Laughs).

Jill DeWit:                            Zero. (Laughs). Oh, my gosh. That’s so good.

Steven Butala:                   So this show is a story of if you want the …I don’t know why you would want that position. You know here it is in a nutshell. Land Academy itself is me, sharing my experience as a professional real estate acquisitions executive for years and years and years. And taking all that high level, go pro type methodology and the tools and stuff, and making it available to everybody. Making it available to a kid who wants to buy, in the beginning, a five hundred dollar piece of property and sell it for a thousand, and then parlay that into skyscrapers or whatever.

                                                Yesterday we talked, the question was, why the heck is everybody kind of branching out into other stuff after they get the hang of it with land? Because that’s what it’s intended for.

Jill DeWit:                            Because they can.

Steven Butala:                   That’s the intention.

Jill DeWit:                            Yeah.

Steven Butala:                   The intention is to learn with land.

Jill DeWit:                            It’s true.

Steven Butala:                   Learn with with your own money. Learn how to use data and then go do what makes sense to you.

Jill DeWit:                            Yeah, your whole goal should not be to do, I’m doing a thousand now, five hundred dollar transactions I sell for fifteen hundred dollars a month deals.

Steven Butala:                   Or if you’re Luke Smith, that is your dream and so you could stay right there.

Jill DeWit:                            C’mon, even Luke’s doing some big, big, big stuff.

Steven Butala:                   Yeah.

Jill DeWit:                            He just added, added more and more and more and mora.

Steven Butala:                   Yeah.

Jill DeWit:                            But the end goal is, if I’m going to do the work on a five thousand dollar … if the same amount of work goes into a five hundred dollar property as a fifty thousand dollar property, well, I’m going to do the fifty thousand dollar property, I got more profit there.

Steven Butala:                   Exactly.

Jill DeWit:                            Thank you.

Steven Butala:                   Did you ever notice how, let’s say Pepsi or Coke, they had one product for a while and then now they have Diet Coke, now they have Coke Zero.

Jill DeWit:                            Oh, my gosh. Coke Life.

Steven Butala:                   All that, so.

Jill DeWit:                            All this stuff.

Steven Butala:                   It’s the same thing here. If you just have one product, your customers don’t want just one product.

Jill DeWit:                            It’s true.

Steven Butala:                   If you’ve learned how to make Coca Cola and distributed it around the world, why not add a product?

Jill DeWit:                            Put someone’s name on the bottle.

Steven Butala:                   Same situation here. Same exact situation. If you learn how to deal with land, move on. Before we get into it, let’s take a question posted by one of our members on the online community. It’s free.

Jill DeWit:                            Okay. So Joe asks: I have some higher value properties that I’m about to list, and was wondering how others treat agent commissions for potential buyers? Do you state that the buyer is to pay all commissions? Or do you offer a percentage? I plan on listing these on the MLS and my concern is that agents won’t send their clients the listing if a commission isn’t stated in the listing or if it’s too low. Any insight would be appreciated.

Steven Butala:                   May I?

Jill DeWit:                            Sure.

Steven Butala:                   Jill and I are famous for bashing real estate agents, and for good reasons. But I will tell you, as time goes on, and the way the internet is growing and the internet is the great equalizer. We increasingly have access to information that even weeks ago we didn’t have access to.

                                                Well, the same thing is happening with the MLS. There’s all these flat fee companies out there that are allowing us to pay two or three hundred dollars, in some cases less, to list a property on the MLS without all the malarkey. Without all the commissions, and the real expensive stuff. You don’t need somebody to show your land for you.

                                                So this is what we do, and we do sell land on the MLS, and houses. Every single house we buy, we list on the MLS for two or three hundred dollars and we quite simply say, “Buyer to cover all agent commissions.” But here’s the good news. There’s no listing commissions. And that’s going to make them real happy.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   So in a more sophisticated way, usually in the email that we send to people who are potential buyers of our property we say, “Buyer to calculate all commissions above and beyond this purchase price: $300,000.” And that, to a real investor, which is timely because that’s actually what we’re talking about today, makes a lot of sense.

Jill DeWit:                            You know and depending who you’re trying to sell to, who your market is, our market is other investors. That’s been our thing and it’s easy to find those whatever property type you’re doing, so most real investors either don’t work with agents or they have one in their staff anyway. It’s not a big deal. They’ve got this all figured out. It’s not the end user –

Steven Butala:                   Exactly, Jill.

Jill DeWit:                            Who’s running around with Bonnie from Sky View Realty looking for this.

Steven Butala:                   Yeah. Right. And it’s all end user driven.

Jill DeWit:                            Right, so if it’s priced that way, and we put things in our things like, “Investor special” you know what I mean? We try to pull them out because that’s really who are market is. And for them, it’s a no brainer, they want it this way too.

Steven Butala:                   And without exception, this is what’s going to happen. It happens every single time we list it on the MLS. We get some calls from agents and they say, “Who is representing you?” And we tell them it’s a flat rate listing situation. We don’t pay commissions. And then they’ll keep you on the phone, because they’re sales people, and sell you on the fact that you need an agent. Or they’ll say, “What’s the concept behind that because you know how you’re …” and my answer is this, “Please go away.”

Jill DeWit:                            It’s hilarious.

Steven Butala:                   The property sells itself. That’s why it’s so cheap.

Jill DeWit:                            Exactly.

Steven Butala:                   In fact, while I’m talking to you right now, it’s probably sold.

Jill DeWit:                            Yeah, I mean here’s the bottom line. I could mark it up six thousand dollars or whatever it is and to cover your costs. And I tell them, it’s very easy to talk to people about that. What do you mean you don’t have an agent? No, because you’re going to make that money, not them. We’re keeping that money ourselves.

Steven Butala:                   Right.

Jill DeWit:                            That’s the reality. Everybody understands that.

Steven Butala:                   I had this agent say to me last week. This sentence. They were talking about not our deals, but some large deal that was happening in their area in Texas, a large land deal, and she said this sentence: Boy I wish I could get a piece of that.

Jill DeWit:                            Which is…meaning what?

Steven Butala:                   She just wanted to get into somebody’s deal.

Jill DeWit:                            Oh.

Steven Butala:                   Not really provide anything. That’s how they look at it.

Jill DeWit:                            Oh.

Steven Butala:                   Boy I wish I could get a piece of that deal.

Jill DeWit:                            You know what I find is funny too?

Steven Butala:                   That makes my blood boil, by the way. Go ahead.

Jill DeWit:                            I have yet to meet an agent that doesn’t admit that the real money is not in being an agent, it’s being an investor.

Steven Butala:                   Which is what we do.

Jill DeWit:                            Thank you. I hope we answered that question. (Laughs).

Steven Butala:                   (Laughs). It almost became a rant.

Jill DeWit:                            It kind of did.

Steven Butala:                   Darn. It was so close. I love the rant.

Jill DeWit:                            Okay. Okay.

Steven Butala:                   Today’s topic, the path of becoming a professional real estate acquisition vice president. The path of learning how to write a title. This is the meat of the  shell.

Jill DeWit:                            The path to learning how to write a title. Because when we wrote this title, we were obviously struggling. So what should your…that’s a whole nother thing. It’s kind of funny you bring this up, Jack or Steven, sorry because our titles keep changing. Our own personal titles. It happened even this week.

Steven Butala:                   Oh, I don’t know.

Jill DeWit:                            Our job titles.

Steven Butala:                   My job title’s always been the same.

Jill DeWit:                            Has it really?

Steven Butala:                   Principal. Not like the one in the school, with an A.

Jill DeWit:                            Well, you know what I mean? How about this. Okay, never mind. Okay, sorry.

Steven Butala:                   So, what is your title?

Jill DeWit:                            It’s changing.

Steven Butala:                   Oh. (Laughs).

Jill DeWit:                            Well, you know what’s funny? How about this.

Steven Butala:                   Because people are getting promoted under you.

Jill DeWit:                            Let me word this better. My job title’s not changing and it’s not going to change but my roles change and what I work on changes.

Steven Butala:                   Right.

Jill DeWit:                            That’s it. My focus changes and it’s all better. I’m still going to be overseeing all the operations and the sales but I get to do it a different way.

Steven Butala:                   Cool.

Jill DeWit:                            Thank you.

Steven Butala:                   That’s like a dream job.

Jill DeWit:                            It is.

Steven Butala:                   So today’s topic is all about, what the heck is the difference, and I didn’t convey this in the title, admittedly. What’s the difference between the ice resident of acquisitions for a real estate investment trust, a professional real estate acquisitions person. What’s the difference between what they do and how they find deals and us?

                                                And the answer is very, very, very little because that’s what I developed a lot of these programs back all through the ’90s. I was a professional real estate acquisitions executive for lots of different places. KPMG. We took a company public with long-term care facilities and it was all predicated on me finding off market deals.

                                                That was all commercial real estate. There’s no place to go like the MLS for commercial real estate. It’s all about picking up the phone and talking to owners. Or in my case, I wrote some software that sent overnight faxes overnight, before email, before email was as prevalent as it is now, to see if they wanted to sell. And I didn’t know it at the time, but I was developing Land Academy. I was developing how Jill and I can buy off market properties and land and houses and now mobile homes, but that’s for the distant future.

                                                So what these people do is they get a budget, and they’re in an office, usually wearing a suit. They’re bosses, the people above them, expect them to produce X amount of acquisition opportunities, “acquisition opportunities” according to their “acquisition criteria” consistently. So every week they need to review 22 deals or they set the numbers like that. So the pressure’s really on for professional acquisition, vice president of acquisitions or however we want to phrase it, to come up with these deals.

                                                And so anybody who’s ever been in a position like this, including sales, Jill is the greatest example, at some point you realize 40 phone calls is just not going to work. You got to come up with something better. So that was me and I designed this faxing overnight system and eventually it became direct mail.

                                                And it all starts with a data set, so that’s the good news. When I started they slapped the phone book down and said figure it out, which lead me almost immediately to back then, libraries and hospitals. Hospitals used to have libraries and they would have a list of all the hospitals in the country and all the connected long-term care facilities and on and on.

                                                So that was my data set and I literally typed in this phone book sized book into and created a data base because it had the fax numbers and sent it all out. Well, it’s the same thing.

Jill DeWit:                            I have to ask a question here because I like to think I know you fairly well.

Steven Butala:                   Yeah, oh, no. She’s got that look.

Jill DeWit:                            I don’t see this as, how do I say it? I think that your natural…part of why you’re so successful is your natural ability to want to do less work.

Steven Butala:                   That’s exactly right. And talk to less people.

Jill DeWit:                            And so you created this system, not even, probably trying to get out of doing it a different way work wise. You have this phone book, let’s just say, and I can see you sitting there going, I am not cold calling all those people.

Steven Butala:                   Yup.

Jill DeWit:                            I’m just going to blast them all and if they’re interested, they’ll call me back. You know what, which was your little light bulb and who knew that was brilliant and that’s the whole underlying theme of the whole thing.

                                                You’re trying to get out of work and only want to talk to motivated sellers is the catalyst, if that’s the right term, for this whole thing. So thank you, Steven. And I love your lack of work ethic. (laughs). Just kidding.

Steven Butala:                   The light bulb really went off when this happened. You’re in sales so you know you’ve got to catch people on the right day. So if you call them and it’s Friday and they’re ready for the weekend and they’re having fun, they’ll talk to you.

Jill DeWit:                            One foot out the door.

Steven Butala:                   They’ll talk to you for a while. Or if they’re having a bad day with their spouse, they’re not going to talk to you at all. But when you send them something, when you send them a fax or a letter, you know, they’re going to stuff it in a file and they’re going to have a mental thought. They’re going to have a thought. Well, this person wants to buy my property, my commercial piece of real estate for three million bucks. Nah, that’s ridiculous, I’m not going to sell it. And they put it in a file. And then some stuff happens three weeks later, like the rent goes up or they can’t handle-

Jill DeWit:                            Tenant problems.

Steven Butala:                   All kinds of stuff. You know how it is.

Jill DeWit:                            Taxes.

Steven Butala:                   Yeah. Anything. Any trigger. And they start rummaging around finding that thing and saying, oh, selling this property for three million bucks doesn’t suck right now. In fact, it sounds pretty good. Maybe I’m going to call this guy.

Jill DeWit:                            Yup.

Steven Butala:                   So that, with the phone thing, never cut it for me. When you call them and they, “No, I don’t want to sell my facility.” Boom. Slam the phone down.

Jill DeWit:                            Well, they’re not going to remember you too. They don’t remember you. They have nothing to …they’re not going to back through their auto dial from days ago to see what was that guy’s number? No, that’s not it, that’s not it. They’ll never remember you.

Steven Butala:                   That’s exactly right.

Jill DeWit:                            It’s a good point.

Steven Butala:                   So my point is, you’ve got to have it on paper.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   So people have asked me over the years, what tool, I think people assume this, that these office buildings full of people that own massive real estate empires, used to be able we could say the Donald Trumps of the world, you know, but he wrecked that for us. He had to become a politician and I can’t use him as an example.

Jill DeWit:                            No.

Steven Butala:                   Every time I say the word Donald Trump I get five hundred emails from people.

Jill DeWit:                            Yeah.

Steven Butala:                   Some of them supporting it, some of them you can’t imagine.

Jill DeWit:                            Yeah, I’ve sent three myself. (laughs).

Steven Butala:                   I’m going to use Sam Zell from now on. (Laughs). Sam Zell is one of my heroes. He’s the Chicago version of Donald Trump and he’s much cooler.

Jill DeWit:                            Okay. How old is he? Is he alive?

Steven Butala:                   He might be dead.

Jill DeWit:                            You might want to have a newer reference.

Steven Butala:                   Yeah. I don’t know. Is there anybody now?

Jill DeWit:                            My old reference was an Orange County reference, it was Don Cole.

Steven Butala:                   Yeah, it’s all local.

Jill DeWit:                            Okay, sorry. Yeah.

Steven Butala:                   Well, if you see Zell Real Estate you’ll see that everywhere if you look on commercial signs.

Jill DeWit:                            Yup.

Steven Butala:                   He wasn’t just in Chicago, he just started in Chicago.

Jill DeWit:                            Yeah, it’s the same thing.

Steven Butala:                   In the back of everybody’s head, and it used to be me included, you would think that the guys that are involved in commercial real estate have access to different tools. They have secrets. They have better people, better information, and there’s this kind of-

Jill DeWit:                            More money.

Steven Butala:                   Or more money or whatever. And I am absolutely here to tell you, they do not. Jill and I have given away, and I don’t even want to say it that way. We provide all the tools, the secrets, however you want to label it, that a real estate pro has.

Jill DeWit:                            Yup.

Steven Butala:                   The VP of acquisitions for a commercial real estate company probably has access to less tools than what we provide.

Jill DeWit:                            Well, let me share this, too. That’s why we have a few Wall Street guys and some Michigan Avenue guys and things in our group. They won’t brag about it. They’re not going to tell you that, but we have people in our group using our data, thank you very much, because it’s better than what they have.

Steven Butala:                   Exactly, to do that job specifically, which is how I came up with this poorly written title.

Jill DeWit:                            (Laughs). You did great, sweetheart, it’s some of your best work.

Steven Butala:                   (Laughs). Here’s the title: Path of Professional Real Estate Acquisitions. That means nothing.

Jill DeWit:                            What? Oh, my gosh. Might as well be Knitting Your Way to a Beautiful Sweater. (laughs). What?

Steven Butala:                   (Laughs). So I think I made my point. Like do you ever sit around and think what special stuff do those guys have that they can go buy a building?

Jill DeWit:                            No, I don’t because I know.

Steven Butala:                   The fact is-

Jill DeWit:                            We all know, I mean I feel bad talking to some of those guys. I leave some of these conversations. You and I go to these events sometimes, or even at a cocktail party or something. I don’t know. Fourth of July, for example, we were at a Fourth of July barbecue. We were with some friends and they wanted to introduce you to this guy, and I walked away going, that guy’s not that smart. My goodness.

Steven Butala:                   Right. Oh, my gosh.

Jill DeWit:                            They were all excited you were … impress us right? And introduce us to this guy because he runs XYZ and doing great.

Steven Butala:                   Yeah, I remember that.

Jill DeWit:                            Remember that? I’m like that guy’s not smart. He’s either drunk or drunk all the time or just not that smart, I’m not sure. But anyway. It was funny. Yup.

Steven Butala:                   Yeah. And you know, then another thing that comes with this job, with that job, is that you have to buy a certain amount of property. You have to. So you start to get stuck in a situation where you’re buying property you know you shouldn’t be buying, that you’re paying too much.

Jill DeWit:                            You have to, to have a transaction.

Steven Butala:                   Yeah, because you have to make announcements, especially with publicly traded companies.

Jill DeWit:                            Yeah.

Steven Butala:                   It becomes a mess.

Jill DeWit:                            Yeah.

Steven Butala:                   So my point in saying that is that we in this group, and I include us, we have it made.

Jill DeWit:                            Yup.

Steven Butala:                   We have access to great tools. We have exactly the education, and Jill and I are watchdogs, so to speak, for new data sets. In between recording these two shows, we just talked about rolling out a new data set because the one that we’re using is starting to look a little stale. How powerful is that?

Jill DeWit:                            I know.

Steven Butala:                   You can just kind of trust us, that we’re going to give you the most fresh stuff.

Jill DeWit:                            We will figure it out. But you know why, because we’re using it. That’s the bottom line.

Steven Butala:                   Right. Right. That’s what I mean. Like it’s not working for us like it used to.

Jill DeWit:                            It’s not like I’m just saying, huh, it’s not like, it’s so funny too. It’s not like we have a bunch of customers that come to us and say, you know what? You need to dah, dah. No, we are using it. We’re on the forefront here too guys.

Steven Butala:                   Right.

Jill DeWit:                            So we need it, also. Like Parcel Fact was kind of more for us.

Steven Butala:                   Yeah, well it was.

Jill DeWit:                            We needed it too, so.

Steven Butala:                   So my whole point is, you have access to the tools that these guys have without the pressure, without the you have to buy pressure, time pressure. Which is a good thing for most people.

                                                Well, you’ve done it again. You’ve spent another 20 minutes actually with us listening to the Land Academy Show. Join us tomorrow for another interesting episode where we discuss, regret or reward. Which one are you going to have a few years from now?

Jill DeWit:                            I like that. Let me your question. Post it on our free online community found off of

Steven Butala:                   You are not alone in your real estate ambition. I stole that from a movie.

Jill DeWit:                            Oh, what movie was it?

Steven Butala:                   Kill Bill.

Jill DeWit:                            Really?

Steven Butala:                   Yeah.

Jill DeWit:                            Did somebody use that line in there? Totally missed that.

Steven Butala:                   Tarantino.

Jill DeWit:                            Really. Was it the beginning, when did he use it?

Steven Butala:                   It was in the trailer, with the snake, the mamba snake.

Jill DeWit:                            I don’t remember, well.

Steven Butala:                   And she said, you know, people either have at the end of whatever they’ve ended, whether it’s a relationship or a career or retirement or the end of something substantial. You either have regret, you either feel regret, like man, I should have done something differently. Or reward, like wow, that worked out. You know. That worked out. I’m going to try a different version of that right now, again.

Jill DeWit:                            I know the concept, I just didn’t remember the reference. And we have just watched Kill Bill in the last like 90 days so I guess, I just set myself up to go watch it again. It’s a good movie.

Steven Butala:                   I should give you a trophy for watching Kill Bill.

Jill DeWit:                            Oh, I like Kill Bill because it’s all about the girl kicking ass and winning in the end.

Steven Butala:                   Isn’t it? Isn’t that great?

Jill DeWit:                            Woo, whoa, hey, any woman who hasn’t seen Kill Bill you should see Kill Bill. Hey, and share the fun by subscribing on iTunes or wherever you’re listening. And while you’re at it, please rate us there.

Steven Butala:                   We are Steve and Jill.

Jill DeWit:                            We are Steve and Jill.

Steven Butala:                   Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

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