Real Estate Investment 404 Accumulating Wealth (LA 769)

Real Estate Investment 404 Accumulating Wealth (LA 769)


Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hi.

Steven Butala:                   Welcome to the Land Academy Show. Entertaining land investment talk, we hope. I’m Steven Jack Butala.

Jill DeWit:                            And I’m Jill Dewit, broadcasting from beautiful Southern California.

Steven Butala:                   Today, Jill and I talk about Real Estate Investment 404: Accumulating Wealth. This is my favorite stage. Tomorrow, we’re going to talk about the End Game, that’s what it’s called. 505 The End Game.

Jill DeWit:                            Love it. [crosstalk 00:00:25]

Steven Butala:                   But this is where it’s all about the money, and you’ve realized that you’ve found it.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   As an investor, or just basically an adult, we’re all trying to find this thing that’s going to set us up to be done or on our way to being done.

Jill DeWit:                            Yes.

Steven Butala:                   It’s like we’re not saying any longer, “What is this for? What am I getting up in the morning for?”

Jill DeWit:                            Right.

Steven Butala:                   That’s it. You’ve found it now. You know the equity that you’re going to create and the wealth that you’re going to create for yourself is possible. So you know how to do it. It’s just about getting organized and really putting the right people in place to make you some dough. So this is my favorite, it’s not even the end. This is more fun.

Jill DeWit:                            Are we going to talk about goals and all that?

Steven Butala:                   Sure.

Jill DeWit:                            Okay good.

Steven Butala:                   We can talk about anything you want. [crosstalk 00:01:10]

Jill DeWit:                            Because I have some questions about that.

Steven Butala:                   We can follow the script too, but that’s up to you.

Jill DeWit:                            It doesn’t matter. It doesn’t really matter.

Steven Butala:                   Before we get into it, let’s take a question posted by one of our members. On online community. It’s free.

Jill DeWit:                            Okay.

Steven Butala:                   Let’s take a look at the question.

Jill DeWit:                            Milan asks:

I am in escrow for an amazing property I am buying in Nevada. I visited this place with a couple of my buddies over the weekend and it was an epic road trip. I still have a massive headache. Oh we know those kind of trips.

Steven Butala:                   Guess what’s happening there.

Jill DeWit:                            Very, very good. All right. This land is everything and anything. It’s in a ghost town, it has electricity, water, gas connection, half burned house, old scary other house, old vintage Russian cars, piled up tires, mining equipment. My goodness. It’s a mess, or you would say hot mess.

Steven Butala:                   No I wouldn’t. I said that once.

Jill DeWit:                            Right.

Steven Butala:                   She liked when I said it.

Jill DeWit:                            I do like hot mess. It’s kind of fun. But it’s kind of a beautiful old Western American mess. And all of it is on 40 acres with mountains all around and walking distance to a restaurant. So the area is not completely dead. I’m really liking this property. Maybe this is kind of a stupid idea and wishful thinking, but can land like this be rented to Hollywood? I saw a few websites where owners can list their properties for film production rental. What do you guys think? I already know Steve’s answer.

Steven Butala:                   What is my answer?

Jill DeWit:                            Milan wrote, fill up for double and move on. You’re not in the rental land business. I agree, ha ha ha. But it’s nice to dream a little. You know that guy that we know? It makes me think of this guy that we know that has, he owns awesome property, it was industrial property. It was a manufacture of some sort. [crosstalk 00:02:55]

Steven Butala:                   A closed manufacturing facility in Long Beach.

Jill DeWit:                            Yes. And he retired basically from that business, but he had this awesome, awesome building. So what did he do? Start renting it out to Hollywood for-

Steven Butala:                   Yeah, for horror films.

Jill DeWit:                            Yeah, and there’s one whole area that’s a medical wing. So a lot of soap operas and TV shows will use it when they need a hospital room, for different scenes and stuff like that. He’s got it all set up.

Steven Butala:                   Yeah.

Jill DeWit:                            Ready to go already. And he does this. So, I don’t know how he got from-

Steven Butala:                   He’s not going to retire on that. [crosstalk 00:03:24]

Jill DeWit:                            His business right, it’s more like more of a hobby I think.

Steven Butala:                   Yeah.

Jill DeWit:                            And it’s just kind of fun. Because remember we were talking to him, you know it was funny because George Clooney-

Steven Butala:                   Yeah.

Jill DeWit:                            He was telling us was showing up there. And he was like, “Yeah, I got to get up early, George Clooney is coming to be on the set today.” And all this stuff, I’m like, “What kind of?” I was waiting for an invite, which didn’t happen. But anyway.

Steven Butala:                   We could actually-

Jill DeWit:                            I’m like-

Steven Butala:                   We could invite ourselves. [crosstalk 00:03:43]

Jill DeWit:                            I kind of want to crash that. I’d like to be there and see this thing. This was like two years ago I feel like.

Steven Butala:                   He wasn’t interested in getting up and meeting these movie stars at all.

Jill DeWit:                            No, it was like a pain in the- [crosstalk 00:03:53]

Steven Butala:                   He was more interested in finding somebody to hire to do it.

Jill DeWit:                            Well you know what was funny, all his stories were around what a mess catering is.

Steven Butala:                   Yeah, what a mess. What a mess.

Jill DeWit:                            Oh, the stuff I got to do for this.

Steven Butala:                   Yeah.

Jill DeWit:                            And they want to have this available and that available. Because that’s all part of what he provides. So anyway. So yeah, careful what you wish for Milan, because if you do go to this, there are of course a lot of headaches and things that they want. So that’s probably going to be your answer. So what’s yours?

Steven Butala:                   Now I’m going to give you the sad truth, Milan.

Jill DeWit:                            Okay.

Steven Butala:                   I would never buy a property, ever, where there used to be a mine. And here’s why.

Jill DeWit:                            Oh.

Steven Butala:                   There’s EPA issues, of all the things with land that you need to be concerned about, it’s the environment. The EPA, if you buy a piece of property and an LLC, and you find out there was an oil spill there, or there was an old mining, mining is the perfect example. Or even worse, it has a gas station with a tank that’s left underground. And somebody calls the EPA, you’re going to get shut down. And here’s even worse news, it follows you around personally. So if you own an LLC, you can’t get out of it, with the way an LLC was designed to protect you from law suits. It trickles up to you personally. It pierces the corporate veil, that’s the term. So I honestly wouldn’t buy this property for that reason. Unless it was a studio before, and nobody actually did any real mining, it’s just equipment.

Jill DeWit:                            Yeah, he did say mining equipment. So I don’t know though.

Steven Butala:                   I personally have purchased properties, and I don’t know if Jill was involved in these or not. I don’t remember. Where there was an old refrigerator on there, you don’t want that.

Jill DeWit:                            Oh yeah.

Steven Butala:                   With Freon. EPA, I’m not going to tell you about what I really think about the whole EPA situation. And most of our listeners, if you have any experience with this at all, agree. So I think it’s great. I sold a piece of property, it’s the guy who produced in Montana, produced the original Baywatch with the Knight Rider guy. Not the stuff now. But whatever his name is.

Jill DeWit:                            No, David Hasselhoff.

Steven Butala:                   David Hasselhoff. The original one. So this guy was loaded, and he bought a 40 acre property from me in Montana, and I talked to him about it. I don’t remember his name. And he was elated because he said, what he gets charged to produce a film or TV series from-

Jill DeWit:                            Oh yeah.

Steven Butala:                   From that location, is insane. So he’s like, “It would be cheaper for me to fly everybody up there.” And he used this 40 acre property to film a Western. It’ll be infinitely cheaper than renting someone else’s area. So you’re on to something here. Just be careful about the environmental issues.

Jill DeWit:                            Thank you.

Steven Butala:                   And land leases are great. Here’s another, leasing land is like, what’s better than that? I bought a ranch in Demi, New Mexico. All caught up. I paid $230,000 cash, almost at the time, this was a lot of years ago, depleted all my cash. I was concerned about it, because we got payroll and the whole thing. And I sold half of it, made a ton of money, and then leased the other half to an adjacent cattle ranch, and we did great.

Jill DeWit:                            Mm-hmm (affirmative).

Steven Butala:                   So land leasing, you know. Remember that girl we ran into here in LA that buys houses and rezones it for parking lots?

Jill DeWit:                            Yeah, yeah. I do.

Steven Butala:                   Leases it out. She was probably-

Jill DeWit:                            Exactly. [crosstalk 00:07:01]

Steven Butala:                   23 years old. I looked at her like my daughter, I couldn’t be more proud of you.

Jill DeWit:                            Exactly. That’s true.

Steven Butala:                   Today’s topic: Real Estate Investment 404: Accumulating Wealth. This is the meat of the show. Jill, what does this like mean to you?

Jill DeWit:                            This is the fun part. Now you’re watching your bank account grow. Now you’re really setting big long term goals for you and your family. That’s how I see it. And if you don’t do this, you should be doing this. Thinking about spreading your wealth out a little bit. How much do we all need? You know? I hope you’re giving back in some way. Maybe you’re making some big donations, you know. Some kind of, I don’t know if you need to be a quote unquote philanthropist, but you’re thinking about things like that.

Steven Butala:                   You’re planning for the future.

Jill DeWit:                            Exactly.

Steven Butala:                   There’s still a future. At the End Game, which is tomorrow, your futures. Jill and I just saw a movie. If you haven’t seen it, it’s a great movie. It’s a good movie to watch with your spouse, called Spanglish. I think it was called? And so this guy, long story short, one of the characters-

Jill DeWit:                            Adam Sandler. [crosstalk 00:08:05]

Steven Butala:                   Yeah. He was a chef, like a top rated chef.

Jill DeWit:                            Yeah.

Steven Butala:                   He was running a three star restaurant, and a critic came in to see if they were going to make four stars.

Jill DeWit:                            Yeah.

Steven Butala:                   And he got all upset.

Jill DeWit:                            Yes he did.

Steven Butala:                   He said, I’ve had a four star restaurant before, and everybody gets mad at each other.

Jill DeWit:                            That’s what happens. [crosstalk 00:08:23]

Steven Butala:                   He said at three stars, we’re all still striving for something, and we’re still on our way somewhere.

Jill DeWit:                            That’s true.

Steven Butala:                   That’s what this whole 404 thing is. You’re still on your way to getting to the top.

Jill DeWit:                            You’re not quite retired.

Steven Butala:                   He was mad in an Adam Sandler comedic way. Like, we’re all going to yell at each other.

Jill DeWit:                            It’s going to change the restaurant, no one is going to be able to get in anymore, all of the tables are going to be full he said. He was so upset. [crosstalk 00:08:44]

Steven Butala:                   Staff’s going to be yelling at each other.

Jill DeWit:                            He said, everybody’s going to want a raise. I’m not going to be able to do these things that I wanted to do, and yeah, he was upset about that.

Steven Butala:                   So what happens? Spoiler alert, I’m going to tell you what happens here. They get the four stars, and all that stuff that he said happens. He’s got to make people partner in the kitchen.

Jill DeWit:                            Exactly. To keep them in.

Steven Butala:                   Spanglish.

Jill DeWit:                            Yeah, that was a good movie.

Steven Butala:                   The main character, it was all about the maid. It’s a really good movie. It’s worth seeing.

Jill DeWit:                            Yeah.

Steven Butala:                   And it’s free I think. On Amazon? Or Netflix?

Jill DeWit:                            I don’t know.

Steven Butala:                   Doesn’t matter.

Jill DeWit:                            Are we promoting them?

Steven Butala:                   No.

Jill DeWit:                            Okay.

Steven Butala:                   So at the 404 level, which is what? Senior year?

Jill DeWit:                            Yeah. You’re a senior, man.

Steven Butala:                   At 404, you’ve actually done a few deals where you’re rolling your own eyes saying, “Wow, I’m not sure I can top that.”

Jill DeWit:                            Right.

Steven Butala:                   I’m not sure I can do a deal, this mail campaign thing that actually turns out it works. Can I parlay that into making every deal a million bucks?

Jill DeWit:                            Right.

Steven Butala:                   Or every deal 2.6 million.

Jill DeWit:                            Exactly.

Steven Butala:                   Absolutely you can. Jill and I do it all the time.

Jill DeWit:                            Yep. Totally.

Steven Butala:                   We’ll talk about that tomorrow, but right now, you need to make sure you have a great personal assistant, make sure you have a fantastic set. At this point, you’re not doing your own deals any longer. You’re not even thinking about doing your own deeds. We spent too much time on this show talking about doing your own deeds. It’s so not involved at this stage at all. All you’re thinking about is becoming an expert at analyzing data, and offer pricing. Answering the phone, qualifying the leads that you’re generating is all a machine now. Get all the stuff out of your life that you don’t want to do. For me, I just do all the data, and Jill runs everything else. Go ahead, Jill. I’m excited, I miss this stage.

Jill DeWit:                            [crosstalk 00:10:42] No, I know. I love this. Do you know what’s so funny? It’s cool now that we’re doing this on video, because on just the audio portion, they can’t see me raising my hand, and I really do raise my hand. Like, I want to say one thing. But like you said, at this level, you could stop doing the stuff that you didn’t like, like you were saying. You have the staff. You should have removed these things from your life. You know what you’re good at, you know what you’re not good at. And you may have an office, I don’t know. That’s where we are, or what we do obviously.

Steven Butala:                   Should have maybe two offices. [crosstalk 00:11:22]

Jill DeWit:                            Okay, thank you. And you probably left your job a while back. Because you at this point, you’re however many years in, to get to this level. You know? You’ve already had a full year of-

Steven Butala:                   Yeah. That’s a good point. [crosstalk 00:11:39]

Jill DeWit:                            You had a full year of, like we say, don’t quit your day job too soon. We want you to overkill it. We want you to have so much money saved up, and now you’re really going, “Okay, it’s stupid. I’m losing money. I’ve got all this saved up, I know what I’m doing. This day job’s gotta go.”

Steven Butala:                   And then two months into it, you look at it and say, “I should have done that two years ago. Or a year ago.”

Jill DeWit:                            Exactly. That’s what you’re saying to yourself right now as a senior at the 404 level.

Steven Butala:                   You also have a couple of lines of revenue now. One might be houses, one might be urban land splits, one might be rural vacant land. Although you’re probably thinking rural vacant land was a good place to start, but it’s really ticking up a lot. These are the conversations that Jill and I have had in the past. Rural vacant land is profitable and if you look at it from like a percentage profit, it throws off 60-70% of the profit, but it’s a lot of work.

Jill DeWit:                            Right.

Steven Butala:                   You got to do your own deeds, you’ve got to deal with consumers. So you know, you have now two or three lines of business, and you’re thinking about another one that could be even bigger.

Jill DeWit:                            Exactly.

Steven Butala:                   That’s 404 stuff.

Jill DeWit:                            Yep, I love that. Maybe it’s houses-

Steven Butala:                   Plus, your spouse is off your back now. He or she is saying, “Well, I’m sorry.” In a perfect world, this never happens. This is a dream I have. I’m just going to dream for a minute.

Jill DeWit:                            Oh no, here we go.

Steven Butala:                   I’m so sorry sweetheart, you were really right. And two years ago, when you started this cockamamie scheme, I just thought it was another one of those things that you never finish. Like the puzzle in the den, or the car in the garage, or all of your education. So thank you for finishing this. This is my dream.

Jill DeWit:                            Okay.

Steven Butala:                   So thank you for finishing this one thing, and taking care of your family, and I love you very much.

Jill DeWit:                            I’m sure-

Steven Butala:                   That never happens ever.

Jill DeWit:                            I’m sure you’ve all had that speech. Sweetheart, I’m eating my words right now. You were right.

Steven Butala:                   And the kids come up to you and they say- [crosstalk 00:13:41]

Jill DeWit:                            Thanks, Dad.

Steven Butala:                   Dad, I keep confusing you with Superman and Batman.

Jill DeWit:                            Thanks, Dad. That was the best party ever. Thanks, Dad.

Steven Butala:                   What would I do without parents like you? What would I do? All my friends’ parents are idiots.

Jill DeWit:                            Dad, I want to take you out for dinner.

Steven Butala:                   This is funny, this stuff. Never happen. How do you get kids like that?

Jill DeWit:                            What else do we wish we had that we don’t have? Just kidding.

Steven Butala:                   Dad, can we go in your rock-a-car, dad? I heard it flies.

Jill DeWit:                            No, dad. I want to listen to your music.

Steven Butala:                   I listened to your show again today, dad. You guys are great.

Jill DeWit:                            Dad, I’ve been listening to your podcast for six months straight. It’s great.

Steven Butala:                   All my friends’ parents are really embarrassing, but you guys are fun to be around.

Jill DeWit:                            You are the coolest.

Steven Butala:                   We need to stop this right now.

Jill DeWit:                            So that’s what should be happening in your life right now, at the 400 level. That’s so good.

Steven Butala:                   Join us next time, where we discuss Real Estate Investment 505: The End Game.

Jill DeWit:                            Oh yay. And we answer your questions posted on our online community. It’s free. Go check it out,

Steven Butala:                   You are not alone in your real estate ambition. I broke a sweat on that. Did we finish the topic, or did we just horse around at the end?

Jill DeWit:                            I think we wrapped it up. I think we brought it back. I tried to. I don’t know if I did but, I think we did. That’s fun.

Steven Butala:                   Yeah. I don’t think you ever stop.

Jill DeWit:                            No.

Steven Butala:                   We’re long past 404. [crosstalk 00:15:14]

Jill DeWit:                            I know.

Steven Butala:                   And we’re just never going to stop.

Jill DeWit:                            I know.

Steven Butala:                   What I am going to talk about tomorrow though, are distractions.

Jill DeWit:                            Oh, that’s good.

Steven Butala:                   Because if we have any issue in our whole career right now, it’s getting distracted with things like, “Hey, let’s do a podcast.”

Jill DeWit:                            Yeah, let’s start something new.

Steven Butala:                   Yeah.

Jill DeWit:                            That’s great. When you said distraction, I was thinking of something else, and it makes me want to reach over and kiss you right now, but I won’t distract you.

Steven Butala:                   We couldn’t do that with these mics on and stuff.

Jill DeWit:                            I know, now we can. Share the fun by subscribing on iTunes or wherever you’re listening, and while you’re at it, rate us there.

In Unison:                           We are Steve and Jill.

Steven Butala:                   Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

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