Diversifying Your Real Estate Investment Company (LA 748)

Diversifying Your Real Estate Investment Company (LA 748)


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 am Jill DeWit, broadcasting from sunny Southern California.

Steven Butala:                   Today, Jill and I talk about diversifying your real estate investment company; why it’s so important to keep growing, but then branching out into doing your things. And the real reason is, as much as you really think it, that things are going to change, there’s always somebody who figures something out that’s younger, and more aggressive, and willing to replace you, or attempt to replace you. It’s just the way human nature is. So, if you have six, or seven, or 10, or 12 lines of income coming in in all different markets around the country, it’s just that your chances of-

Jill DeWit:                            Safe.

Steven Butala:                   … success are so much higher.

Jill DeWit:                            Exactly. And if one thing goes sideways, or one area, who knows? You have 11 others to carry.

Steven Butala:                   And here’s the good news. I mean, like we said yesterday, if you can buy rural vacant land inexpensively and resell it, I mean, the world’s your oyster. You can do it with houses, then. You can do it with info-lots. You can do it with apartment buildings, or lots.

Jill DeWit:                            Big ranches.

Steven Butala:                   Or ranches! Yeah. So, that’s the good news. You’ve figured the first one’s the hardest.

Jill DeWit:                            Yep.

Steven Butala:                   Before we get into it, though, let’s take a question posted by one of our members on thelandacademy.com online community. It’s free; and, before Jill reads the question, I’m going to share a sentence that Jill said to me right before we started recording. “Can you tone down the negative relationship stuff? It’s not as funny as you think.”

                                                You know what that makes me want to do?

Jill DeWit:                            Tune it up-

Steven Butala:                   … Kick it up three notches, yeah.

Jill DeWit:                            Oh, that’s not good. That’s really not good to relate … Let me give you some relationship advice. Don’t do that.

Steven Butala:                   Because I love you, I will not talk about the negative aspects of a relationship this entire episode.

Jill DeWit:                            Save it for the Steve Bashes show.

Steven Butala:                   Oh, we need a Steve Bash show!

Jill DeWit:                            Yeah. Then you can save it for that. That would be fine.

Steven Butala:                   All right. That’s great.

Jill DeWit:                            I’m okay. You can do that anytime you want, and I won’t be here.

                                                Okay. Brandon asks, “Hey! Haven’t been on in a while,” meaning in our online community. “Super busy with that last mailer hitting. I sent out 1,600 mailer-slash-units, and I got six hate voicemails, four counter-offers that might be reasonable, four-“

Steven Butala:                   Jeez!

Jill DeWit:                            “… signed agreements that died during due diligence, and eight accepted purchase agreements. I have picked the two I liked best, and I am closing soon. Hope to make 300% ROI on terms with them. So far, so good. The rest, I can’t buy. I don’t have any more cash! Thought I would offer up the contracts. I want $500 each. I have looked at each, and estimated what I think they are worth, but take that with a grain of salt. I’m still new. If I’m way off, please help me know, and help me get on-track. Thanks everyone for all the info you just posted on here.” Aw!

Steven Butala:                   Send him!

Jill DeWit:                            That’s our Deal Board.

Steven Butala:                   I’ll buy all that stuff for … If there’s good money in it, I’m happy to pay you $500 to transfer all of it.

Jill DeWit:                            So, this is what goes on all the time in our community.

Steven Butala:                   On Deal Board.

Jill DeWit:                            Right. In the current state, you can do something like that, reach out to the community as a whole, and our online community, and … And just for listeners, there’s a public area, and there’s a private area. So, some of these conversations like this go on in the private area, where you can’t see it. It’s just for members, because they really are sharing information that should not be public about the deals. APNs, and all that good stuff-

Steven Butala:                   Partnership stuff.

Jill DeWit:                            And then, we have a … and, in that private, closed community, we have a thing called our Deal Board, and that’s where our members are posting these things, and getting … partnering up, and making deals.

                                                Now, what we haven’t shared very much is what you have working on that there’s going to be a bigger way … We created the Deal Board for us to personally post all the deals that we pass on. That was the original intention. It grew to have a life of its own, where everybody else is doing it, and it’s awesome! Now, we’re starting to have no only land deals that we’re passing on. We have house deals, we have info-lot deals, mobile deals, all kinds of things that, for whatever reason, doesn’t meet our buying criteria; but it’s a deal that should not go to waste.

Steven Butala:                   Yeah. I mean, he, right in the … This is a perfect prelude. The tools Jill was talking about are landcrowdfund.com and flipleader.com, which are both in development right now. Brandon, here, gave us the numbers. He’s passing on very viable transactions. They’re just not up his alley; and so, it turns out … Here’s a real number. We have 11,000 deals that we have passed on over the years; usually not because of the real estate, itself, but because maybe there’s people that have passed away, and we just don’t want to work that hard. We don’t need to.

                                                But there are some people who specialize in that. Jill and I never buy houses that are on a major street, either, but some people specialize in that. So, it turns out, we need a real efficient way. This group now is so big, we need an efficient way to not let those deals go to waste, just because we, personally, don’t want to do them.

Jill DeWit:                            Exactly.

Steven Butala:                   And I think $500 is kind of the number that I was actually thinking. Just-

Jill DeWit:                            That’s very fair-

Steven Butala:                   I’m happy to transfer a very viable deal if it’s up your alley, over two for 500 bucks.

Jill DeWit:                            Right.

Steven Butala:                   And that’s what’s land crowd fund is. Really, he’s set up for land crowd fund here, because he’s running out of acquisition money, which happens to all of us. Believe it or not, it happens to us, even. So, pull in partner.

Jill DeWit:                            Yep.

Steven Butala:                   Somebody who’s got too much … There are a lot of people in this group who have way too much money.

Jill DeWit:                            Yep.

Steven Butala:                   Today’s topic: diversifying your real estate investment company. This is the meat of the show.

                                                Like I said earlier, you figure this out, and one … probably with rural vacant land, if you followed the directions of the program, why not do it with info-lots? A couple of days ago, we had somebody … Matt was having tons of success with info-lots in Tennessee. Why not …

Jill DeWit:                            I say a lot-

Steven Butala:                   Assisted living facilities. I mean, if you have a medical or healthcare background, and that just seems logical to you? Expand.

Jill DeWit:                            I see a lot of our members doing it, just because it’s fun; and, sometimes, they’re like, “Yeah, I kind of nailed that one. I’ve got this all figured out. I know how to buy 20 acres. I know how to buy 2,000 acres. You know, I’m kind of bored. I want to look at something else while that is running in the background.” And that’s … You know, we say, “You don’t want to leave your day job until it’s too late; until it’s way past that,” kind of thing. So, it’s a sale of land. It’s such a good run in the background kind of thing. It can really pay all your bills forever, honestly, while you start doing some other things to houses, and do these things, and … So, a lot of our members just naturally go into that.

Steven Butala:                   Mobile homes, mobile home parks. It’s endless.

Jill DeWit:                            Exactly.

Steven Butala:                   Diversifying your real estate company, it should not be optional. It shouldn’t be something that you’re deciding to do or not. You have to do it. I’m a firm believer of growth. You have to grow, or you’re going to die.

Jill DeWit:                            Right.

Steven Butala:                   You can’t just … I mean, that said, there’s a lot of people in our group … One specific guy, I remember, in the beginning, said, “I just want to make enough to pay my mortgage.”

Jill DeWit:                            Exactly.

Steven Butala:                   I don’t know what … I think it was 1,200 bucks, just so I can get that bill out of my life; and now, he makes half a million dollars a month.

Jill DeWit:                            It’s hard. You know, once you get going, you go, “Well, that wasn’t hard. I can do a little bit more.”

Steven Butala:                   So, we’ll use Brandon’s example here in his question. He sent out 1,600 mailers, and he’s buying a bunch of deals, so much that he ran out of money. So, what if he sent out 3,200? What if he sent out 40,000 mailers? How many properties would he buy then? He’d be done! So, you know … and then 80,000. Some for mobile homes, some for info-lots, some for rural vacant land, some for ranches, and on, and on, and on, and on. So, this is a very positive … You’re in a great position. You’re putting yourself in a position to win.

Jill DeWit:                            You brought up a good point. Also, earlier, Steven, about diversifying, and how it lessens the risk. If there’s any kind of weird hiccup in any market, the more diversified your products are, the more you have in different parts of the country-

Steven Butala:                   Parts of the country.

Jill DeWit:                            … you know, all of that stuff, it’s just going to … You’re going to sleep even better at night. Well, here’s an example. This happens. You know, we’ve had people right before the San Juan, Puerto Rico storm in the last year, we had someone in our group that had just sent a mailer there, and they’re like-

Steven Butala:                   In Puerto Rico?

Jill DeWit:                            Yes!

Steven Butala:                   That’s great!

Jill DeWit:                            Yes!

Steven Butala:                   I don’t even know we had data for that!

Jill DeWit:                            Yes, we do! We tested it! We do! We have Alaska, we have Hawaii. So, anyway, they had sent some offers out there. They’re like, “Oh, no! The storm hit, and hit them hard! I don’t want them to get my offers and think that I’m the scum of the earth, trying to kick them when they’re down! That wasn’t my intention!” So-

Steven Butala:                   Oh, I remember this.

Jill DeWit:                            Remember this? And so, we said, “Don’t worry. Well, if they can get the mail,” the sad reality-

Steven Butala:                   Oh.

Jill DeWit:                            “… but they might not be thrilled with your offer, and it’s too easy to apologize and say, ‘I am so sorry. That was not my intention. I wish you all well, and please just throw it away,’ kind of thing.” But imagine, if you were all in, and you were the king of San Juan, and that’s where all your properties were, and all of that, stuff does happen. So, that’s another reason why, even if you’re doing land, diversifying, and having stuff all over the country, in all different sizes, is such a safe, great way to run your business.

Steven Butala:                   We are in such a good situation here. You know, how many people, listener, do you know that just … they have money woes? Probably more than half the people you know, no matter who you are. You don’t have that problem.

Jill DeWit:                            I know.

Steven Butala:                   I mean, we’re in such a good situation; and, if you wanted, you have complete … I was explaining this to somebody a couple years ago. If I want to double our income, Jill, I can do that next week.

Jill DeWit:                            I know.

Steven Butala:                   I mean, that’s crazy, when you think about it.

Jill DeWit:                            I know. You know, here’s another point. I think of a few things that I would not do, as far as diversifying. Say you’re cruising along. It’s an awesome investor, and you want to get into houses, and the thought pops in your head, because it often does, “Well, then, I should go get my real estate license.” I would not diversify into that. Seriously!

Steven Butala:                   Yeah, what wouldn’t you diversify into?

Jill DeWit:                            Yeah, that would be one I wouldn’t do.

Steven Butala:                   Gosh, I wouldn’t do that, either.

Jill DeWit:                            Right? I highly recommend … if you’re really bored, though, and you have a lot of free time, I do highly recommend sitting through the classes, and getting that information. You know, even if you just sit there to get … you will get something out of it, for one-

Steven Butala:                   More education is always better, always.

Jill DeWit:                            Oh, yeah! Well, and number two, what I got out of it, Steven, was the mindset of these agents. I actually sat there to go, “Oh, that’s why they think that, because they’re all taught that,” you know? So, it really helps you understand that community, if you will; because, in a perfect world, you want to have a bunch of brokers, and a bunch of agents, in your back pocket, because all they’re going to do is feed you information-

Steven Butala:                   Sure.

Jill DeWit:                            … should you need it, and you can help them out with information; and then, all the dumb deals that come their way that … even a $50,000 deal, these agents do not want to do that. They don’t want commission on $50,000. They want commission on $500,000.

Steven Butala:                   Yeah.

Jill DeWit:                            They’re not going to do them.

Steven Butala:                   That’s right.

Jill DeWit:                            And they’re just going to hand them all to you, so that’s … There’s so many things. When we say diversify … I guess I look at it as, now you can come up for air, kind of look around, and say, “What else can I do to make my business better, and bring in some other potential areas of revenue,” you know?

Steven Butala:                   Exactly. So, I mean, Jill and I are in the data business, we’re in the website driving traffic business …

Jill DeWit:                            Mailer business.

Steven Butala:                   We’re in the bulk mail printing business; and so, there’s a lot of things that we have diversified into, and I’ll tell you, once you start making money in real estate, you really should start looking at different types of companies to buy.

Jill DeWit:                            That’s true-

Steven Butala:                   There’s a company we failed at, all truth be told here. We failed at operating an escrow company, and it’s not because we didn’t know how to do it, because gosh knows we do our own deals. A lot of them. We couldn’t stand the constant contact that’s involved with an escrow company. It was basically a call center.

Jill DeWit:                            Yeah.

Steven Butala:                   There’s a lot of things that can go wrong in a real estate deal; and, up in our regular business, if something goes wrong in our deal, we walk away. And so, you can’t walk away with you’re serving a customer the way that they deserve to be served, and we weren’t willing to do that.

Jill DeWit:                            Right. So, let’s be honest, when do you call an escrow company? When the deal’s too big, got it, or there’s some problem, and you don’t know how to undo it, you don’t want to undo it, it’s too tricky, you’d rather pay somebody else to track down that person that … get the death certificate, do all whatever that’s involved, all the junk-

Steven Butala:                   Here’s why-

Jill DeWit:                            … and that’s what we caught, was all the junk, which I wasn’t totally prepared for!

Steven Butala:                   Because, and yesterday, the title was … or two days ago, I think, “You should be only working on acquisitions;” and, when I mean that, I just mean buying property.

Jill DeWit:                            Right.

Steven Butala:                   Shoving this stuff off as the properties come in, and then working on the next deal; shoving it down the pipeline.

Jill DeWit:                            Yep. So, maybe we could end on this. This is a good thing to say. So, as you diversify, if it doesn’t feel right, and you find yourself going, “This is not what I wanted,” then get out! Try something else.

Steven Butala:                   Yep.

Jill DeWit:                            You don’t have to follow through, just because you started it. No, just because … This is what I learned a long time ago. I didn’t know this forever when I was a kid. I thought, when you started a book, if it sucked, it doesn’t matter. You had to finish the book.

Steven Butala:                   Oh, my gosh, Jill, so did I!

Jill DeWit:                            Isn’t that funny? And I never knew-

Steven Butala:                   Why did they tell us that?

Jill DeWit:                            … I don’t know why, who told me that. It was just kind of, “Get through it, get to the end. It’d be worth it.” No, no! You don’t have to do that! You can start a book. If you don’t like it, give it away, put it down, whatever. Don’t finish it; move on. So, you can actually … We are here to tell you-

Steven Butala:                   Why is that?

Jill DeWit:                            … you can start a business; and, if you don’t like it, get out! It’s okay! Find something else.

Steven Butala:                   There’s only a few things you can’t bail on in life. Everything else, you should just get out of there if one is [inaudible 00:15:02] sideways.

Jill DeWit:                            Oh, I can only think of one you can’t bail on.

Steven Butala:                   Children.

Jill DeWit:                            That’s the one. Parenting. You cannot bail on parenting-

Steven Butala:                   How can I not talk about marriage right now?

Jill DeWit:                            Because you can bail on that!

Steven Butala:                   I know! I want to talk about it-

Jill DeWit:                            Oh, no-

Steven Butala:                   … and you will not let … [inaudible 00:15:19], I promised you-

Jill DeWit:                            … Okay, no, you know what-

Steven Butala:                   … that I would not talk about it in this-

Jill DeWit:                            … I just would like the positives.

Steven Butala:                   This is you, okay. Oh, my gosh, Jill.

Jill DeWit:                            Do you know what’s so funny? I think, you know what, Steven? I think you have a pretty darn good life. I mean, I’m not going to pat myself on the back, but I kind of am. I think you have a pretty darn good relationship here. I think your life is pretty darn sweet. So, what do you have to complain about?

Steven Butala:                   I’m not complaining!

Jill DeWit:                            Okay.

Steven Butala:                   I think it’s fun on rack on marriage, because most people are just miserable, and I’m not miserable! I’m happy as heck!

Jill DeWit:                            I know.

Steven Butala:                   It took a few tries, but I’m happy now!

Jill DeWit:                            Yeah! I’m not the first, but I’m the last!

Steven Butala:                   That’s what I like to tell her.

Jill DeWit:                            Thank you. Can we end-

Steven Butala:                   If all goes well, this will be the last company, and you’ll be the last girl.

Jill DeWit:                            Deal.

Steven Butala:                   Well, you’ve done it again. Truly wasted some time with us. I guess it’s almost 20 minutes listening to the Land Academy Show. Join us tomorrow for another interesting episode, where we discuss choosing the right business partner. Man, that’s important.

Jill DeWit:                            Thank you; and we answer your questions posted on our free online community. You can find it off of landacademy.com, or just go straight to landinvestors.com. It’s free.

Steven Butala:                   You are not alone in your real estate ambition.

                                                All right. I think … Well, we started talking about marriage, and I thought I accomplished it. I thought I really just went the whole show without talking about relationships-

Jill DeWit:                            You can’t do it, can you?

Steven Butala:                   I know.

Jill DeWit:                            You can’t do it. You had to-

Steven Butala:                   … especially when you just open the-

Jill DeWit:                            … pick up the cigarette.

Steven Butala:                   Especially when you just open the door wide-open like that. That’s the problem. It’s not me. It’s you, Jill.

Jill DeWit:                            I did not! Oh, my goodness. Oh, boy.

                                                Hey, I have something to share with us, since it’s the after-show, because I want to make this point. I think a lot of our listeners are sending mail. I hope a lot of our listeners are sending mail. I got wind, about a week and a half ago, of a large investor group thinking they were doing great, spending 80 cents a mailer, and I’m here to-

Steven Butala:                   80 cents a unit?

Jill DeWit:                            80 cents.

Steven Butala:                   That’s kooks.

Jill DeWit:                            Because you know what? In a lot of areas, that is good. Over a dollar, there are places you can spend over a dollar, and these guys thought they negotiated something down to 80 cents, and they think that’s good.

Steven Butala:                   That’s crazy!

Jill DeWit:                            And I know a lot of the people in this group were even hand-writing things for a while, and they’ve … So, they’ve come a long way, and I’m really happy about that, but please don’t spend-

Steven Butala:                   You mean the land gate group?

Jill DeWit:                            Yeah-

Steven Butala:                   Let’s just say it. We can say it.

Jill DeWit:                            It is. Please don’t spend 80 cents.

Steven Butala:                   No.

Jill DeWit:                            Yeah, I got people that just came there and said, “We’re spending 80 cents. At least we’re not handwriting them anymore. We’re not doing 10 a night, or whatever it was. Now, at least we’re spending for it,” but I’m like, 80 cents is too much! Go to Offers 2 Owners. You don’t have to be a member. I don’t care. You can get it for 58, 59 cents. I can’t remember what it is-

Steven Butala:                   Don’t even join us if you don’t want to. That’s fine.

Jill DeWit:                            No. Just don’t spend 80 cents!

Steven Butala:                   Yeah, exactly.

Jill DeWit:                            Save the extra 20 cents on every unit, because that’s your money, and that should be acquisition funds.

Steven Butala:                   I just … Don’t waste money. I can’t stand that, and don’t … Just please keep your mind open of that there are other ways to buy property inexpensively. Not just driving for dollars, not just back tax property, not just dead people. There’s lots of positive ways. Just keep your open mind. Don’t join our group? That’s fine.

Jill DeWit:                            I don’t care. Just use the mail, because it’s cheaper, and you’re going to … That’s all you need to know.

Steven Butala:                   We just want you to succeed, no matter where you do it.

Jill DeWit:                            Thank you.

Steven Butala:                   We are Steve and Jill, information-

Jill DeWit:                            And inspiration-

Steven Butala:                   … to buy undervalued property.

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