Real Estate Investment 101 for Beginners (LA 766)
Real Estate Investment 101 for Beginners (LA 766)
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 real estate investment 101 for beginners.
Jill DeWit: This will be good. So, here’s what I’m thinking. This whole week, it’s 101, 202, 303, if I’m not stealing your thunder-
Steven Butala: Yeah it is.
Jill DeWit: So, 101 is, think like a freshman, and we’re gonna go … So, this week is freshman, sophomore, junior, senior, and master’s, right? Because we’ll do-
Steven Butala: I call it real estate education week.
Jill DeWit: Because we’re gonna do 500 level, so you’re in your master’s program at that point.
Steven Butala: So, if you’re already buying apartment buildings but you’re not enough, then maybe you can skip to 303. 404. Or you can listen to the beginning.
Jill DeWit: Yeah. There’s always gonna be something.
Steven Butala: We’ll all about sending offers to owners here.
Jill DeWit: Yeah. There’s always gonna be something that you pick up, even if you went back and picked up, we all know that. Every time you start something new, you’re like, oh, I know it all.
Steven Butala: Yeah.
Jill DeWit: Right? I have so many members, too, that have started with us, they’re like, oh, I knows this all. I’ve been here, I’ve been there, I’m doing all this stuff. Then, oh my gosh, I totally missed that.
Steven Butala: Yeah.
Jill DeWit: So, it’s huge.
Steven Butala: Including me.
Jill DeWit: Yeah, including me.
Steven Butala: We’re doing a deal right now where I’m learning tons of stuff on it. I didn’t know we could subdivide it like we can.
Jill DeWit: Exactly.
Steven Butala: Before we get into it, let’s take a question posted by one of our members on the land investors online community. It’s free.
Jill DeWit: Okay. So, Brian asks, “I’m looking at picking up a five acre parcel in Kern County, California. Pretty much barren wasteland right next to a solar plant, 45 minutes outside the nearest city. I’ve done my own title search and I’m confused by finding one original party in 1969 selling to another, and this parcel has deeds exchanging ownership a number of times. But it looks like the one party,” I’m not gonna say the name-
Steven Butala: Yeah.
Jill DeWit: “Mr. Blank sells it in 1970, buys it again three years later, sells it it a few years later”-
Steven Butala: Welcome to our world.
Jill DeWit: I’m questioning it’s probably the, gives it to the family member-
Steven Butala: Yeah.
Jill DeWit: Then he got it back-
Steven Butala: Kid, a family drops out of college-
Jill DeWit: Then, yeah, dad takes it back.
Steven Butala: Gets in an argument with his wife, takes the property back.
Jill DeWit: I like, you’re out of the will, we’ve all heard that.
Steven Butala: You’re out of the will. You’re out of the herd.
Jill DeWit: You’re out of this, dad takes it back, buys it again three years later, sells it a few years later, and then sells it again in 1991 to the current owners. Dad finally, finally got rid of this. He’s like, I’m out, man.
“It looks clear. I’m not worried about that, but what is a pattern like this say about the property?”
Steven Butala: Nothing.
Jill DeWit: Well, I think we discovered it.
Steven Butala: Yeah.
Jill DeWit: “I’m just worried that this is something that should cause me caution.”
Steven Butala: Okay. Well, go ahead.
Jill DeWit: I was gonna say, Brian, have you ever had a family squabble?
Steven Butala: We can have one on camera right here.
Jill DeWit: Have you ever, dad has ever said, my dad’s never said. My dad never would, and he’s not here, but my mom has dropped that one of my.
Steven Butala: You’re out of the will?
Jill DeWit: Yeah. You’re out of the will. You do X or you’re out of the will. I’m like, come on. We all know that’s not true, but apparently for this guy, it was. What was your point?
Steven Butala: Tell your dad, what’s that, I love your dad’s Cheerios thing. Share that with everyone, please.
Jill DeWit: Oh. You’re not sick. You know what, by the way? This was my dad’s cure. You might have appendicitis, and you come to my dad, and he’s like, “No, no, no, no. All you need is a bowl of Cheerios and a walk around the block.” That’s really my dad’s cure for everything. Not even, and he was so adamant about that. If we, two times in my life I saw him take aspirin, and that means it was bad. It was really bad, so.
Steven Butala: Brian, don’t worry about this at all.
Jill DeWit: Yeah.
Steven Butala: That’s my advice. What would you say? People change properties all the time. I don’t think it’s an indication of anything that’s actually going on with this property. I think it’s an indication of what’s going on with the owners-
Jill DeWit: Right.
Steven Butala: And yeah, five acres in Kern, I will tell you this. I hope that you’re not paying a lot for it. I hope you’re really, really underpaying. If it’s next to or adjacent to, it says right next to a solar plant-
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: Power plant, that might be your buyer. Whoever owns that property where all those solar panels are have a vested interest in it. Vested interest in potentially owning your property and it’s only making your property more valuable, so check to see if they’ll buy the property, first.
Jill DeWit: Can I say one more thing about this?
Steven Butala: Yeah.
Jill DeWit: So-
Steven Butala: Of course.
Jill DeWit: Thank you.
Steven Butala: You own half the company, Jill. You can say anything you want.
Jill DeWit: Thank you, thank you very … Well, careful. Thank you.
So, another thing that I wanted to point out is I don’t worry because no matter what, Mr. Blank was in control of it during this whole weird transition. That makes me feel good.
The other thing I want to point out is he sold it in 1991, and the same people have had it since 1991. So, I like to thing between 1991 and 2018, if somebody back in that little weird period had any kind of issues, it would’ve come up in the last 17 years. So, I’m feeling good about that, too.
Steven Butala: So, Jill makes a great point.
Jill DeWit: Yeah.
Steven Butala: What title insurance companies do is try to remove as much risk as they possibly can, and when they see ownership, the last change of ownership was that far back-
Jill DeWit: Right.
Steven Butala: In ’91, that’s gonna pass a vast majority of their tests.
Jill DeWit: A lot of their tests. Exactly.
Steven Butala: Some of them don’t even, some of them only go back, what? 18 years? They don’t ever look past-
Jill DeWit: They don’t go back. Isn’t it tradition? I always like to think, I don’t know if I’m right or wrong here, I always thought the tradition was 30, 35 years or so.
Steven Butala: Maybe for a house.
Jill DeWit: Maybe for a house. That’s probably why. Yeah, that’s probably why. So, thank you.
Steven Butala: Today’s topic, real estate investment 101 for beginners. This is the meat of the show.
You gotta start somewhere, right? You have to get that first deal done. So, for me, real estate 101 is all about one single thing: getting that first deal done. Right? When you step up to the bat in T-ball when you’re playing T-ball when you’re a kid, it’s all about just hitting that ball, and that’s all you’re focused on. You’re not focused on how you look, what you’re wearing, well, maybe Jill would be, but not, anything else, not how you look in front of your parents, or anything else. You’re just trying to hit that ball, and there’s no difference here.
Real estate investment 101 is all about that first deal, and people get really hung up.
Jill DeWit: They do.
Steven Butala: Here’s a short list of things that people get hung up on long before they’re even doing a first deal. Where should I form my LLC? When can I quit my job? What’s my wife gonna think?
Jill DeWit: How much money should I spend on my website? How many websites should I have?
Steven Butala: Forget about that. Buy and sell a piece of property like it’s 1971. Put it in Craigslist, and make 100 bucks.
Jill DeWit: Transfer in your name, put it in your name.
Steven Butala: Put it in your name, go through the motions.
Jill DeWit: Right.
Steven Butala: Make 100 bucks, maybe 500 bucks on it, who knows. But just get that first deal done, because you’re gonna find out if you like this or not.
Jill DeWit: Exactly.
Steven Butala: The vast majority of people that get to us at this point, if you’re listening to this or watching this, you probably liked it. But there’s some people that just, it’s not for them.
Jill DeWit: That’s true.
Steven Butala: They would rather work a corporate job and it’s totally fine.
Jill DeWit: Yeah, and they panic. The little things make them panic, I always think is kind of interesting too, that they get hung up on. So, I look at it like this, too. This is like your freshman year, and you’re trying to decide if the degree you picked is the one you want to finish with. So, a lot of your freshman year, hold on a moment-
Steven Butala: No, I like it.
Jill DeWit: Follow me here. So, the freshman year is getting some of the basics out of the way. Let’s learn the ground rules. We still gotta do just a little bit of an extension of high school, we all know that. There’s a little bit of the English, some of the majors, but they sprinkle in some of your major, right? So, you can kind of get your feet wet and decide if this is what you want to do. Maybe your major was medicine, right? So, you’ve got some biology classes, some science classes, because they want to make sure if you can’t stomach that, you’re not gonna make it in medicine.
Steven Butala: Yeah. That’s good.
Jill DeWit: So, I kind of look at it, so right now you’re getting a lot of the, so you need to spend more time on some of the basic foundation, too, for a real estate 101. Sit in these REI meetings, as boring as they might be, hear what deals people are doing. I don’t think that’s crazy. Listen to us. Listen to every show, read everything you can get your hands on, good, bad or otherwise, and something’s gonna sing to you. If you can’t fathom the idea of doing your own properties, being your own boss, doing your own deeds, all the things you need to do to make money here, right? And to do this right, then you’re gonna know.
Steven Butala: Yeah, Jill makes all good points, but I’m gonna add one.
Jill DeWit: But.
Steven Butala: People don’t fail at this.
Jill DeWit: Yeah.
Steven Butala: Let me rephrase it. People succeed at this not for real estate reasons. They succeed at it because number one, they understand how much profit can be made.
Jill DeWit: Right.
Steven Butala: How successful you can be and very quickly, actually.
Jill DeWit: Right.
Steven Butala: But they have an adapt and overcome Marine Corps attitude. I see so many people that get into this business, especially with one of our other companies called House Academy, that really are interior designers.
Jill DeWit: Right.
Steven Butala: They’re not deal makers, they’re not looking at the math, constantly obsessing on the math.
Jill DeWit: Right.
Steven Butala: That’s what I do. They can’t really effectively talk to people, they just want to decorate a house.
Jill DeWit: Right.
Steven Butala: In fact, what we teach with houses is has nothing to do with, we don’t even go to the house.
Jill DeWit: Exactly.
Steven Butala: We just buy for 100 grand and sell it for 120 on the MLS. But that’s a different topic.
But all along the way, there’s always issues to deal with.
Jill DeWit: Yeah.
Steven Butala: There’s constant issues, especially in the beginning, that you have to overcome. The one that I have to overcome, even now, is IT, and just dealing with websites exploding or, we just got hacked. One of our servers got hacked last week. Fortunately we have a really good crew right now address it during the weekend, over the weekend.
Jill DeWit: Exactly.
Steven Butala: So, that’s the kind of stuff. Look, we’ve been doing this since the ’90s.
Jill DeWit: Yeah.
Steven Butala: I still have to wake up on Saturday morning and find out our stuff got hacked.
Jill DeWit: I know. If you don’t have the stomach for that-
Steven Butala: It never ends. Doing the real estate is easy.
Jill DeWit: I know.
Steven Butala: It’s all the other stuff that’s hard.
Jill DeWit: Exactly. Can I add something?
Steven Butala: Yeah, you don’t have to ask.
Jill DeWit: I keep doing that. I’m being so polite today. By the end of the show, or by the end of the day, it’s all different, but we’re fresh right now. Just kidding.
No, I wish there was an entrepreneurship school. You know what’s funny? Because you and I have been guest, you first and then I got to join you, and be a guest professor, if you will, it’s been a couple years now, for an entrepreneurship program at a college.
Steven Butala: In a college.
Jill DeWit: Yeah, a friend of ours is a professor and when he was traveling, he would call Steve and then eventually it would me, too, I get to show up and help do this class in his absence. It was really fun.
What’s so funny is what you and I would walk in and convey to these people, with nothing that they were getting.
Steven Butala: They were shocked. Shocked out of their minds.
Jill DeWit: They’re like, but this is the truth. Please give us more. We’re like, gosh, I wish we could be with you the whole time. So, I wish there was a true entrepreneurship course that really, really told you the truth, number one. Number two, I wish there was a real entrepreneurship degree-
Steven Butala: There is now.
Jill DeWit: For what?
Steven Butala: Some colleges now.
Jill DeWit: But I question it’s gonna smoke out stuff like, the entrepreneurship degree should be if you can’t handle tech issues, you don’t graduate.
Steven Butala: Yeah, that’s-
Jill DeWit: You know what I mean?
Steven Butala: That’s the stuff your parents should really be telling you, too.
Jill DeWit: That’s-
Steven Butala: It’s not about the real estate.
Jill DeWit: That’s it. So-
Steven Butala: It’s about not killing your partner on some days.
Jill DeWit: Yeah.
Steven Butala: It’s about dealing with people who don’t show up.
Jill DeWit: Yeah.
Steven Butala: All your employees who thought you were the best employees on the planet, who stop showing up.
Jill DeWit: Getting deeds returned from the county. You can’t fall apart. You just fix it and send it back.
Steven Butala: Can’t have any emotion about it.
Jill DeWit: And you have to plan for mistakes. That’s my biggest one, is the people that think it’s gonna go perfect, they put in so much on the front end that hey, over analyzing to the point now, and then something goes wrong, they’re shocked-
Steven Butala: Yeah.
Jill DeWit: And upset. You can’t. Mistakes are gonna happen, and that’s okay. That’s part of this.
Steven Butala: I have to tell you-
Jill DeWit: Make them fast. What’s your thing? You have some good sayings about make it good, man. Make it count. Fall hard.
Steven Butala: Oh, yeah. Oh, yeah, yeah.
Jill DeWit: And that’s-
Steven Butala: Make your mistakes at 100 miles an hour.
Jill DeWit: Yeah, that’s it. I love that.
Steven Butala: It should be a hot mess that first real estate deal. In fact, you should fail at it.
Jill DeWit: That’s awesome.
Steven Butala: You might even lose money, and if you’re gonna-
Jill DeWit: Some people-
Steven Butala: Get back on the horse after that, this could work for you.
I gotta tell you. There’s five, we’re gonna record five shows.
Jill DeWit: Yeah.
Steven Butala: 101, 202, 303, and on. Jill explained it in the beginning. This is my least favorite.
Jill DeWit: Right.
Steven Butala: This very beginning. It’s like when you have a baby. That’s the least fun time.
Jill DeWit: I liked it.
Steven Butala: When it starts to talk, and it starts to look at you and say, “I’m hungry, I like chicken, not whatever”-
Jill DeWit: Oh.
Steven Butala: That’s when it starts to get fun, and then when they get older 10, 12, 15, 20 years old, it just gets better and better and better, I think.
Jill DeWit: I have-
Steven Butala: Real estate’s like that.
Jill DeWit: I have a confession along those lines. Kid number three just got back from two and a half weeks with his grandparents, and I like him again. Before he left, I wanted to kill him. So, I gotta tell you-
Steven Butala: He probably feels the same way.
Jill DeWit: What’s that?
Steven Butala: He probably feels the same way about us.
Jill DeWit: Yeah, that’s true. I was like, I was ready to throttle him. Now I’m like, hey, now he’s kind of fun. Now he’s going into high school, he’s making some changes, he had to kind of be a little mini adult for a while there, and now it’s good now. At the end of the school year I might, ready to kill him and send him away again. So, we’ll see, but.
Steven Butala: My point is just because-
Jill DeWit: Yeah.
Steven Butala: You don’t like the start up portion doesn’t mean that you can’t just get through it and get to 202 and then 303 and on.
Jill DeWit: Yeah.
Steven Butala: We all started there.
Jill DeWit: It’s true.
Steven Butala: Most of us.
Jill DeWit: Yup.
Steven Butala: Some people inherit a whole fortune and then they start there, but that’s not us. It wasn’t me.
Jill DeWit: No. Wasn’t me.
Steven Butala: Well, you did it again. You spent another 15 minutes or so listening to the Land Academy show. Join us next time where we discuss real estate investment 202.
Jill DeWit: We answer your questions posted on our free online community, landinvestors.com.
Steven Butala: You are not alone in your real estate ambition. I think this video thing’s going okay.
Jill DeWit: I have to tell you something funny. You used a term that I haven’t heard you use outside of a dating scenarios, which I think is funny because one of the ways when we’re out somewhere and we see clearly high maintenance people, you use the term hot mess-
Steven Butala: Yeah.
Jill DeWit: So I love that you’re-
Steven Butala: Did I say that?
Jill DeWit: You did say hot mess. When you said hot mess, all I could think of is, it’s not dating, what is he talking about? But, yeah. You might all know who those girls are that are a hot mess.
Steven Butala: I got a job one time, a really, really good job as a VP of acquisitions for a healthcare company, and after about, I shared the office with the CEO because the acquisitions in the beginning of the company were so important-
Jill DeWit: Right.
Steven Butala: And the guy came to me after sharing an office for, I don’t know, three or four weeks, he said, “You know, you really can get these deals done, but you truly don’t care what you look like while it’s happening.” Because he was a former CEO of a healthcare system-
Jill DeWit: Oh, were you sleeping under your desk and not showering?
Steven Butala: Oh, it wasn’t how I physically looked.
Jill DeWit: Oh, okay.
Steven Butala: It was how I was speaking and yelling at people and-
Jill DeWit: Oh.
Steven Butala: Because that’s what it takes. That’s just my style. If anybody listens to the show, you know that that’s, I’m-
Jill DeWit: That is your style.
Steven Butala: Not here to look good. You know?
Jill DeWit: No, no, you’re not. Just kidding.
Steven Butala: And I don’t. I’m here to get the deal done.
Jill DeWit: I, on the other hand-
Steven Butala: Exactly.
Jill DeWit: It’s so funny, this reminds, okay. This is the last thing for me. My girlfriend Heather drives like a crazy person, and this is how I feel like with you. I’m not trying to throw you under the bus-
Steven Butala: Yeah.
Jill DeWit: For not being nice, but it’s actually funny story. The way the woman drives, and I remember I was following her one time on the freeway. We were going, it was a two hour trek somewhere, she’s in front of me, I’m behind, and she’s the kind of person that gets in that left lane and guns it, and she flashes her lights to people to move out of the way.
Steven Butala: Wow, really? I know her. She doesn’t’ seem like-
Jill DeWit: Yup.
Steven Butala: That kind of person.
Jill DeWit: Oh, she’s a crazy driver. That’s her. She’s parking in that lane and making it, so and here I am, following behind her in her wake, and the whole way, all I’m doing is sorry, sorry, sorry, I’m apologizing for her, every car that she pissed off because they’re still flipping her off-
Steven Butala: Wow.
Jill DeWit: As we’re rolling past, and here we come, I’m like, sorry. It was so darn funny.
Steven Butala: I gotta go with Heather on this.
Jill DeWit: Yeah, I know. It’s really good. We got there really fast, is the good news. Anytime I was behind her, it was pretty fun.
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Jill DeWit: And inspiration-
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