Real Estate Investment 505 Your End Game (LA 770)
Real Estate Investment 505 Your End Game (LA 770)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: I’m Jill DeWit, broadcasting from sunny southern California.
Steven Butala: Today Jill and I talk about Real Estate Investment 505: Your Endgame. All this week it’s been 101, 202, all the way through to 505. This is it. You’re long past quitting your job.
Jill DeWit: This is the fun part.
Steven Butala: Yeah. This is where you’re planning … You’re standing in front of spreadsheets saying, “I got a bunch of dough in the bank. Everything’s going great. I got the right people in place. How am I going to just … What’s my true exit on this? Do I want to hand this down to my kids? Do I want to sell part of it? What’s really the deal here?”
Jill DeWit: “Am I really going to ever retire?”
Steven Butala: “We’re cranking seven or eight digits a month or a year in real estate,” like we are. “What do I want to do? Do I want to do a podcast and share it with everybody?” No, you don’t want to do that. Trust me. “Do I want to give back?” We’ll talk about it in a minute.
Before we get into that, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.
Jill DeWit: Okay. M asks, “The title companies are driving me crazy with their long close.” Yes, that can happen. “A few properties I’m buying through a couple of title companies are now in one month wait and counting and still nothing is happening. When you contact them, they’re polite and they say, ‘We’re still waiting for title report.'”
Steven Butala: Lie.
Jill DeWit: “My question for you guys is what is your strategy to make sure the seller doesn’t change his mind in this never-ending wait?”
Steven Butala: Time kills deals.
Jill DeWit: Yeah. “I know, I know. They signed the purchase agreement, but believe me … But, I believe they can back off from the deal any time if they want to.” That’s true. “I am thinking about sending this seller a check for $300 or so to keep him committed. What do you guys do?”
Steven Butala: Well, I think that we have never had a problem … or, in very recent years, I should say … have a problem where a seller backs out.
Jill DeWit: Right.
Steven Butala: If they back out and we got to pay him to just keep him in the deal or anything like that. I think there’s different … Jill, you know what? You’re very qualified. What would you do on that?
Jill DeWit: Okay. Here’s my experience. My experience is the seller doesn’t usually back out, the buyer backs out. When I say buyer, sometimes it’s me.
Steven Butala: Yeah. I mean us.
Jill DeWit: Exactly. That’s what we’re saying. I’ve had those, where it was just like, “You know what? You guys don’t have your ducks in a row, and I have this money …” Basically, when we allocate funds for acquisitions, it’s kind of burning a hole in my pocket. If it’s taking you too long, and this is often what happens, I’m working on one deal and three more easier ones come along over here.
Steven Butala: Better ones.
Jill DeWit: Well, guess what? You’re out.
Steven Butala: Better deals.
Jill DeWit: I’m doing these three. That’s what usually happens in our world. I’m never a fan of giving them money just to have them sit there. I think that’s ridiculous. Now, I do believe in a non-refundable deposit that goes through escrow. I’m good with that. But, just sending them a check or something like that? Mm-mm (negative). Because that’s too easy for them just to go, “Great, thanks,” and still run.
You’re right. The seller and the buyer can really back out at any time. Anybody can change their mind. No one’s going to go after the other person, it’s just not a thing. Do you really want to spend that time and the money, and whatever? Are you even going to win that? Probably not. That’s the whole point. Even though they signed a purchase agreement.
Steven Butala: This is a great question, and it’s a real problem.
Jill DeWit: Yeah. One other thing that I do, though, at this point is … and, we’re doing it right now, literally today, with some of our House Academy acquisitions … We are all in daily, multiple times a day, in contact with the title agency and actually doing their work. It’s kind of a pain in the rear, but it’s true.
Steven Butala: Yeah, that’s great advice, Jill. Great advice.
Jill DeWit: We just got back, basically, like the HUD-1 and all the different things that need to be … all the conditions we need to have copies of this, copies of that. What we’re doing is working with … We’re the buyer … for the seller. We are getting all these things read for her. “Hey, do you need help writing this affidavit? We’ll do it for you.” Making sure that the title rep … because, even though you talk to the title person, they said, “I’m calling them today,” and you hang up. They don’t always call them today. You need to follow up and make sure you did call them today and really … I hate to say it … push them along. Don’t just sit back and wait. We’ve had some, too, that, “Do we have an escrow number? Do we have an escrow number?” And I’m, “We’re going to blow up their phone.”
Steven Butala: We’re going through that on two deals right now with the same title agent, and she’s been our title agent for a lot of years.
Jill DeWit: Yeah, and I really like her. They get busy. I understand there’s other deals. That’s part of it, too, is I hate to do their work, but sometimes we are kind of doing their work a little bit, but that’s what gets it done.
Steven Butala: I have a bunch of points to make.
Jill DeWit: Sure.
Steven Butala: Title agents … like we have one that’s been doing great work for us for years … but, they’re still responsible for bringing in new clients, unfortunately. So, when they get new customers and new clients that are investors like us, they want to treat them really well. Our stuff tends to get pushed down to the bottom. So, there’s lots of ways to deal with that, and Jill’s great at it. But I will tell you, these types of deals where there’s no debt and there’s no real estate agents are the easiest that a title agent can possibly complete.
Jill DeWit: Exactly.
Steven Butala: Real problems happen for escrow agents. Real estate agents are a pain in the butt. Lenders are a pain in the butt. Those aren’t even in any of these deals.
Jill DeWit: Exactly.
Steven Butala: You’re dealing with a buyer and a seller directly. We have a subdirectory, all of us, with all the LLC documents and anything that they could ever want. It goes right to that … As soon as we send them the purchase agreement on these larger deals, we send them all those documents. In our case, we don’t do it anymore, because they have their own subdirectory with all that. What Jill’s saying is make it as easy as you possibly can, and smile the whole time, and send them flowers or whatever it takes, and they’ll get your stuff done.
Jill DeWit: That’s very true. Exactly.
Steven Butala: If they don’t, like mid-deal, in this situation if it’s taken what? How many months did he say?
Jill DeWit: I don’t know. One month wait. One month.
Steven Butala: Yeah. I’d get a new agent.
Jill DeWit: Yeah, it should have been done.
Steven Butala: I would get a new agent.
Jill DeWit: It should have been done two weeks ago.
Steven Butala: If they’re backed up at title, do the title work for them. They’re not going to be able to write a policy based on that, but what you’re going to do it say, “I did the title work for you. Here it is.” If you are a subscriber with us, you have access to TitlePro247, which is literally, literally the same database that title agents use.
Jill DeWit: Pulling the lien reports.
Steven Butala: They’re not going to issue it, but what you’re telling the escrow agent is, “Hey, nothing’s going to come up. Please just order it and get it done.”
Jill DeWit: Exactly.
Steven Butala: If I sound animated and angry about this, it’s because I am.
Jill DeWit: I understand.
Steven Butala: Time kills deals. The seller’s not going to sit around.
Jill DeWit: Oh, my gosh. That’s what’s the funniest thing. When we say that, I’ve had that happen to sellers with us. You know what? I feel like saying, “Too bad for you, but this all took too long. You lost it with us. We’re out. You just killed your own deal.” And, it’s true.
Steven Butala: I’ll tell you another thing that personally … and it’s probably my personal problem that I have that kills deals for us … is when the seller calls every day.
Jill DeWit: Yeah.
Steven Butala: “Is it done yet? Hey, how you guys doing? I’m just checking to see if you really wanted to close the deal. Why isn’t this done yet?” It’s all into escrow, and we’ve long decided-
Jill DeWit: We’re all just waiting.
Steven Butala: We’ve all mentally moved on to deal number six after that.
Jill DeWit: Exactly.
Steven Butala: “Hi. How are you, Jill? Are you really going to close this? Because I need the money.”
Jill DeWit: I know.
Steven Butala: That makes me want to say, “You know what? We’re done now.”
Jill DeWit: Exactly. And, that’s okay.
Steven Butala: Which is silly on my part, because it’s such a long road to get somebody to where they want to sell like that.
Jill DeWit: It’s a bummer, but it happens. What?
Steven Butala: You have nothing to say, because you know it’s true.
Jill DeWit: I do.
Steven Butala: She gets so disgusted with my attitude when it comes to this stuff.
Jill DeWit: It’s true. I have nothing. I really have nothing to add.
Steven Butala: Let’s transition here.
Jill DeWit: Okay, good.
Steven Butala: Today’s topic, Real Estate Investment 505: Your Endgame.
Jill DeWit: This is the fun part.
Steven Butala: This is the meat of the show.
Jill DeWit: Awesome.
Steven Butala: What does it mean to you, the endgame?
Jill DeWit: Oh, my gosh.
Steven Butala: Now it’s like liquid fun.
Jill DeWit: Okay, here’s how I see it. The endgame is no matter what path I go, I can’t lose. I’ve already got this existing company up and running smoothly. I have the right people in place, bills are getting paid. It’s steadily growing every month. Now I can really kind of experiment, going, “You know what? I’ve always wanted to own a bed and breakfast.” I don’t know, whatever it is. Dream it up.
Steven Butala: “I’ve always wanted to start a podcast.”
Jill DeWit: Maybe that. Wait, I have another one. I have a good one. Maybe you’re in our community and now you’re buying and flipping classic cars. How about that one? Maybe you’re having more babies while flipping classic cars, Justin.
Steven Butala: These are all members that have that are going through this.
Jill DeWit: Talk about crazy, he’s expanding his family and his portfolio. Anyway. Now at that point, you can do that kind of stuff.
Steven Butala: Yeah.
Jill DeWit: Because, you know you can’t lose. That’s what’s so great for me. Because when you know you can’t lose, you can really experiment and try some things like … I’m going to share what we talked about. We’ve been talking about everything from reinventing a company that we used to have, which was a mint.
Steven Butala: We used to own a mint.
Jill DeWit: We did.
Steven Butala: We coined our own silver and gold coins.
Jill DeWit: Yep. Where we’d … Looking at that.
Steven Butala: We sold it. We sold the whole company, and we’re long out of the non-compete print, so we’re looking at that again.
Jill DeWit: Thinking about that.
Steven Butala: It’s a 3% margin business, but you can’t lose.
Jill DeWit: Exactly. We’re also looking at maybe even opening some kind of a restaurant or bar, or …
Steven Butala: I’ll veto that, but okay.
Jill DeWit: Oh, we’re not going to do that after all?
Steven Butala: No.
Jill DeWit: Have you changed your mind?
Steven Butala: No, but I don’t care. Even if it’s profitable, I don’t want to … There’s just … No.
Jill DeWit: I guess my point is-
Steven Butala: We will open a restaurant in the light of franchising it.
Jill DeWit: Okay.
Steven Butala: A franchise-type restaurant.
Jill DeWit: Okay. Whatever form that that takes.
Steven Butala: No, let’s have a little marital disagreement right now about this.
Jill DeWit: No, I’m okay. No, my point is we’re actually thinking of things that are so different from our daily real estate based core investment business, that at the 500 level, you can think about this stuff.
Steven Butala: You’re no longer working in your own company. You have other people … We have multiple people who work there. We don’t.
Jill DeWit: It’s good. Exactly.
Steven Butala: We get pulled in if there’s a real big problem, or we get pulled in if there’s a real huge success. Well, we know about that before they do. That’s what I have always strived for over the years. It’s been a while since we’ve had that. There’s no better way for … Jill has lots of fun on the show. In all seriousness, there is no better way to generate wealth for yourself than acquisitions. Acquisitions of companies. Generally acquiring things, you can buy your way into success, believe it or not. Startups, you can knock one out of the park, like let’s say an Uber. There’s IT startups, and we always hear about those, but we never hear about the ones that fail.
Jill DeWit: Right.
Steven Butala: Startups are tough. You, if you listen to this, you have a startup or you succeeded at a startup.
Jill DeWit: Exactly.
Steven Butala: Not only are you a very …
Jill DeWit: Seasoned.
Steven Butala: … seasoned and successful entrepreneur, you went through your own startup. You’re at the top of the heap. There’s a lot of people who are like CEOs of bit companies, they couldn’t start their own car.
Jill DeWit: It’s true.
Steven Butala: They’re not startup people. You’re a true entrepreneur if you took a piece of property, bought it for four grand at the 101 stage, and parleyed that into millions on millions of dollars every year, which is what we’ve done. Pat yourself on the back, because that’s how it ends.
Jill DeWit: Exactly.
Steven Butala: Everybody talks about exit strategy. I will admittedly say this is not the best business to set up, to build, and then sell. I’ll tell you, in this stage, we have tons of capital. And, we know a ton of people with way more money than us to do that if we wanted to. So, you won. We won. Congratulations.
Jill DeWit: Thank you. Here was my point five minutes ago. Just kidding. I’m just kidding. No, what I was going to say was you know you’re at this level when you take a couple weeks off and not only do the wheels stay on the bus, but actually kind of made more money, because you weren’t there messing with it.
Steven Butala: Yeah. When you don’t go to work and you make more money, that’s this stage.
Jill DeWit: That’s the best thing in the world.
Steven Butala: You look all this stuff up … You come out of the week-and-a-half haze of vacation, and you look at all the stuff, and it’s like, “Wow.”
Jill DeWit: “I have the right team.”
Steven Butala: “Maybe I shouldn’t go back there at like.”
Jill DeWit: “They don’t need me. They don’t want me.”
Steven Butala: Yeah, they do it better when you’re not around.
Jill DeWit: Exactly. They have some freedom. It’s good. I love that. Try to think … Okay. What about paying it forward. What do you think people should be doing?
Steven Butala: I know where my comfort level is on that, and we decided to do Land Academy and share it and collaborate.
Jill DeWit: Thank you.
Steven Butala: Through that, we have multiple people who we do transactions with where they just put the money in, and we partnership, and everybody gets paid out at the end. That’s been great for us and them. I can’t … We have a file of all the thank you notes. We constantly get-
Jill DeWit: I know. I love that. I got one just now.
Steven Butala: We get thank you baskets.
Jill DeWit: Shucks, I got one just a little while ago. I should read that next time.
Steven Butala: Is it on your phone?
Jill DeWit: It is.
Steven Butala: Put the headset down. I’ll cover for you.
Jill DeWit: Are you serious? You want me to read it real quick here?
Steven Butala: Yeah. Sure. It’s good. We get this stuff every single week. Can’t make this stuff up. Land Academy itself was our way of actually giving back to this whole thing, and truthfully, didn’t think it was going to be anything … I did not think it was going to end up being popular. I figured there’d be 20 or 30 people that understood that buying rural vacant land or urban land, infill lots, was their cup of tea and made it profitable [inaudible 00:14:16] and it’s just exploded. From day one, it exploded. We had … this is in 2015, and 25 people signed up the first day, and it just hasn’t stopped since then. It gets slow around the holidays, and that’s it.
I’ve always envisioned … The whole time I was getting to the 505 point, I always knew in the back of my head that this just can’t be all about me and money. It has to be about paying it forward somehow. We just got lucky. It went, actually, pretty well.
Jill DeWit: Okay, are you ready?
Steven Butala: Yeah.
Jill DeWit: Okay. This is the perfect way to end this week and end this show, okay? This just came in literally two hours ago. This person, obviously, knows who he is. I’ll just say the first initial is J. “Jill and Steve, good morning. Steve told me, ‘Well, we’ll probably never hear from you again,’ so I committed to him at that time, that I would get back to y’all and let you know my progress.”
Steven Butala: Hold on. I always say that to … There’s certain people that we speak to that join our group right in the beginning where I just know, based on their-
Jill DeWit: They’re going to kill it.
Steven Butala: Based on their long before they got to us what they were doing for a living, and maybe they owned a company. You can just tell that they’re coming into this thing with the right attitude. So, I always say to those people, “Let’s enjoy this moment together, because a few months from now, you’re going to do six or seven deals, and then we’re just never going to hear from you again.”
Jill DeWit: “You’re going to be too busy.”
Steven Butala: “You’re going to enjoy your data subscription with us and the access to the bulk mail company, and you’re going to off and probably make more money than we do.”
Jill DeWit: Exactly.
Steven Butala: This is clearly one of those people.
Jill DeWit: Right. By the way, here I am literally reading this from my phone. “It’s been a while only because I wanted to have tangible results to report. For context …” Oh! “I am the guy that sent you the Captain Obvious T-shirts about a year ago.”
Steven Butala: We have Captain Obvious T-shirts.
Jill DeWit: Yeah, we do. Oh, thank you.
Steven Butala: I am Captain Obvious.
Jill DeWit: You are Captain Obvious. Okay. “So, here is a quick update.”
Steven Butala: It’s not a compliment.
Jill DeWit: Oh, yes it is.
Steven Butala: Thanks for saying obvious stuff.
Jill DeWit: I love it. I love it. “I signed up in January 2017. I am the guy the system did not work for. I failed miserably. In 2017, I sent several thousand letters and even did several consulting calls with Steve to make sure I was pricing it correctly. On most mailer campaigns, I got zero offers signed back. After expenses, I did a total of two deals, both profitable, and yet still lost about $10,000. But … I kept at it.” This is going to make me cry. Okay, here we go. “I kept at it, because I felt like there was something to this, and I just needed to figure it out. I sent just one more mailer in the fall of 2017. That resulted in some decent response, and I bought and sold, in December 2017, my second property. This was a breakthrough. I now have finally completed my first 10 deals.”
Steven Butala: Oh, my gosh.
Jill DeWit: “This is slow for 18 months, but I’m breaking a lot of rules. I’m also doing larger deals, so they’re not going to turn as fast. I completely skipped the $500 in the desert phase.” Good for you. Okay, you ready on this one?
Steven Butala: Yeah.
Jill DeWit: “First 10 deals, $375,000 in sales. $187,000 in gross profit.”
Steven Butala: That’s it. That’s our numbers.
Jill DeWit: “Current balance sheet is about $250,000. $110,000 in cash, and $140,000 in two properties that are currently for sale. I also have a pipeline of acquisitions signed up ready to go.”
Steven Butala: Wow.
Jill DeWit: Wow. “My goal is to quit my job, which pays very well.” Wow, he has a date. Okay, we’re going to-
Steven Butala: See how organized he is?
Jill DeWit: Holy cow. You’re going to do this. J, you’re going to … JB.
Steven Butala: He’s at the 303 level.
Jill DeWit: Wow. He’s … Oh, my gosh. Sliding into home plate here.
Steven Butala: Yeah.
Jill DeWit: “My goal is to quit my job, which pays very well, on …” He has an actual date. “… September 5, 2018. At that time, I plan …” This is going to make me cry. I’m going to call him on that. I’m telling you right now, we’re going to have a call on that day, okay?
Steven Butala: Oh, that’s a good idea.
Jill DeWit: Well, I want to talk. “At that time, the plan is to have a balance sheet that includes $1 million in inventory, $100,000 in cash in my personal checking account to live on, and most importantly, number three, the knowledge, skill, and confidence that if everything were taken away from me tomorrow and I had to start all over …” I am going to cry.
Steven Butala: Oh, my God. You are crying.
Jill DeWit: “I could back it up and know that I could be still independently and financially very successful. All of these are realistic and doable. All of these are directly contributed to the two of you. For that, I’m sincerely grateful forever. If there’s anything I can do for the two of you, please do not hesitate to ask. If you’re curious about all the mistakes I made and how I got here-”
Steven Butala: I am.
Jill DeWit: “… I’m happy to share. Thanks very much for all you do.” All right, you … We’re going to talk on that day, and we’re going to talk after this.
Steven Butala: We should interview him on this show.
Jill DeWit: Oh, my gosh. Wouldn’t that be awesome? Yeah, I’m going to ask him if we could have him on the show that day. Wouldn’t that be fun?
Steven Butala: Yeah.
Jill DeWit: After I clear up my tears. That’s just awesome, and that’s this.
Steven Butala: Well, you’ve done it again. Spent another 20 minutes or so listening to the Land Academy, some of which Jill cried [inaudible 00:19:43]
Jill DeWit: Exactly.
Steven Butala: Join us next time where we discuss Choosing A Property Investment Niche.
Jill DeWit: And, we answer your questions posted on our free online community … I lost my thoughts here. Go to LandInvestors.com. You can post your questions there.
Steven Butala: You are not alone in your real estate ambition. Are you okay?
Jill DeWit: Yeah.
Steven Butala: It’s okay to cry.
Jill DeWit: Oh, thank you.
Steven Butala: At least I didn’t make you cry this time.
Jill DeWit: You don’t. You’re silly. You never make me cry. You don’t. You make me … aggravate me, but you never make me cry.
Steven Butala: That’s great. Well, it didn’t take long to get out of that misty state, did it?
Jill DeWit: No.
Steven Butala: “You aggravate me.”
Jill DeWit: I say that with love, come on. That’s just the facts. Share the fun by subscribing on iTunes or wherever you are listening. While you’re at it, please rate us there. We are Steve and Jill …
Steven Butala: We are Steve and Jill. Information and …
Jill DeWit: … and inspiration.
Steven Butala: … to buy undervalued property.
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