Value is in the Land Not the House (LA 842)

Value is in the Land Not the House (LA 842)

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:                            And I’m Jill DeWit, broadcasting from sunny southern California.

Steven Butala:                   Today, Jill and I talk about the values in the land, not in the house.

Jill DeWit:                            Boy, are we qualified to talk about this.

Steven Butala:                   We really are.

Jill DeWit:                            Thank you.

Steven Butala:                   All this week, is cliches that are true in real estate week. And, you know, everybody’s, if they really, truly answered this question. You’re staring at a real estate agent, wondering why this piece of property is twice as much as all the other pieces of property around it.

Jill DeWit:                            Right.

Steven Butala:                   And they have these cute little sayings. Most of ’em are malarkey, but this week we’re talking about five of them that I think actually have some merit. So, you’re standing there looking at a house, it’s pretty much falling down, it’s twice as much as all the rest of the houses around there, and you say, “What the heck.” Oh, he says, “The value’s in the land, not in the house.”

Jill DeWit:                            Yep.

Steven Butala:                   And that actually is true. And we’ll talk about it, all the details why in a few minutes here. Before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free, and as you’re listening to us please drop your questions in the comment section below.

Jill DeWit:                            Andy asks, “I just signed up for a free trial of Data Tree. The salesman ran through a demo and I like what I see. I think Steven has mentioned it will be included with House Academy. Just wondering if it will be included in Land Academy 2.0? If not, will there be a way to subscribe with a group discount? Thanks.”

Steven Butala:                   That’s a question for Jill.

Jill DeWit:                            I’m still working out the details, thanks.

Steven Butala:                   The answer’s yes to both.

Jill DeWit:                            Hold, not so fast. Can I, House point O yes, but 2.0?

Steven Butala:                   House point 0?

Jill DeWit:                            House point 0?

Steven Butala:                   Like [inaudible 00:01:50] point 0.

Jill DeWit:                            House Academy yes, 2.0 automatically no. Am I working out something? Yes. So, is it coming right now? No. Is it valuable? Yes. Is it cheap? No. You like this?

Steven Butala:                   Yeah, I do actually.

Jill DeWit:                            So, are we licensed providers? Yes. So …

Steven Butala:                   Do we love Data Tree heck yes.

Jill DeWit:                            Yes. Does it change what you’re doing right now for land? No.

Steven Butala:                   Yeah, that’s the real value is for houses.

Jill DeWit:                            You still have what you need to do what you’re doing. So, but would you like to just have all everything possible? Heck yeah and it’s why I’m working on that. So, give me a little bit of time. Like I said we are licensed providers so a version of it is coming. I just don’t, I haven’t, iced it all out yet.

Steven Butala:                   January 1st all of this will be …

Jill DeWit:                            Explained.

Steven Butala:                   We’re still working out … Well, it will all be purchasable let’s just say that and in true form to Land Academy it’s going to make sense for everybody.

Jill DeWit:                            Right.

Steven Butala:                   Here’s what the hold up is. It’s not so much the data itself, it’s rolling into certain discounts for 0 to 0 and what we’re going to charge for the data.

Jill DeWit:                            Right.

Steven Butala:                   So, for the subscription whatever that ends up being, the subscription that you pay … The reason Land Academy is so successful and makes sense for so many members is what is included. If you add it up, all the stuff off the street, forget the education, forget about that, I mean just the subscriptions.

Jill DeWit:                            That’s the value.

Steven Butala:                   I know. Forget about the actual education that you get. If you look at the subscriptions, say you get the data and the 0 to 0 pricing, if you signed up more than a thousand letters a month you’re saving so much money it’s silly.

Jill DeWit:                            That’s true.

Steven Butala:                   So, people all sit there and say, “Why do I need Land Academy?” And, I just shake my head and say, “You obviously can’t do any math. You just don’t get it.” I don’t even explain it anymore.

Jill DeWit:                            Isn’t that funny? I remember right when we announced it, it was data to doorstep back then too. But when we first started doing the subscriptions and providing the tools and everything everybody wants. I guess it was cheaper for us all. I remember people doing case studies and saying, “Look oh my gosh you guys just saved me $500 a month in mail so 250’s nothing. This is great, for 250 I get World Quest Pro, and I get Title Pro, and I get the cheap mail, and it was a no brainer.” So, that’s it.

Steven Butala:                   So, imagine that with houses now and every house that you buy and sell you make 20 to 40 thousand dollars on each unit, imagine being able to get financed to do that with a group of people like us. And then, on top of that get, we charge 55 cents to send a letter out now, what if we charged 35 cents or 45 cents? I mean how much more mail could you possibly send out? We charge 10 cents for a line of data right now, what if we charged five?

Jill DeWit:                            Right.

Steven Butala:                   And so, a lot of that takes us going back to the people that are suppliers and negotiating with them based on our current rates because we’re, as a group we’re sending out more mail and we’re buying more data.

Jill DeWit:                            It keeps going up.

Steven Butala:                   So, our leverage to negotiate better prices with these providers goes up too. So, it’s not just that we’re lazy and we’re not releasing these products although that does have part to do with it.

Jill DeWit:                            I don’t think so. You don’t know what lazy is.

Steven Butala:                   I know.

Jill DeWit:                            Neither of us do. We are not Lazy.

Steven Butala:                   It’s because Jill and I want it, when we do release it we want it to have the same success and impact.

Jill DeWit:                            Right and value.

Steven Butala:                   And value that the original Land Academy 1.0 did.

Jill DeWit:                            Exactly.

Steven Butala:                   How’s that for a description?

Jill DeWit:                            Awesome.

Steven Butala:                   Today’s topic, is that where we are?

Jill DeWit:                            Yup.

Steven Butala:                   Today’s topic, the values in the land not in the house. This is the meat of the show. You have good story about this don’t you?

Jill DeWit:                            Oh. So, a couple of weeks ago, it was for Oktoberfest. We were up in Lake Arrowhead, California and we took, Sue and I took our number three and his best pal. And, it was so funny ’cause we just love it there. So we’re driving around looking at property and you …

Steven Butala:                   Looking at real estate on vacation.

Jill DeWit:                            Find this, what we think is a gem, right? So, we’re like this is the best location, it’s got to be awesome, it looks like access. So, we go to take a look at it. We roll up, roll down the window …

Steven Butala:                   This is the greatest piece of dirt by the way. I mean it’s …

Jill DeWit:                            Oh, it’s got this view and where it’s tucked in in trees.

Steven Butala:                   It’s got a dated boat dock.

Jill DeWit:                            It’s on a hill and as for the back you can have access and then you can walk up these what should be dreamy steps in the front. So, we roll up …

Steven Butala:                   It’s got murder tape on it.

Jill DeWit:                            Wait a minute.

Steven Butala:                   Caution tape.

Jill DeWit:                            Yeah, we roll up, yeah there’s caution tape all around the whole structure and we all roll down the windows, and we all take a look, and the kids almost in unison said, “This is meth murder cabin”. That’s what they called it. I’m like oh my gosh they’re right. What went on there? I was afraid. We certainly couldn’t go in. You couldn’t even in the windows. You couldn’t even get close enough to try to see in the windows. Holes in the roof and it really did look like something bad went down there. I don’t think it did but it looked like something bad went down. So …

Steven Butala:                   It was out of a horror movie for sure. I was afraid to go in there in the middle of the day.

Jill DeWit:                            It was hilarious yeah. I was, that would have been kind of funny. You know what we should have done? That’s the only thing we didn’t do. We should have called the agent and said, “Can we see it?” Just to hear what he has … I want to do that because I would love to hear him going, “Um, well um”. And, the best part was in the description it had listed in there, “Hey great fixer, bring your hammer.”

Steven Butala:                   No, “Bring your toolbox”.

Jill DeWit:                            It needed way more.

Steven Butala:                   “Bring your toolbox.”

Jill DeWit:                            “Bring your toolbox.”

Steven Butala:                   “Bring your bulldozer.”

Jill DeWit:                            That’s what it needed.

Steven Butala:                   Bring your toolbox, this is a classic little … This is a classic real estate agent move.

Jill DeWit:                            So great.

Steven Butala:                   Deeded access.

Jill DeWit:                            Cozy.

Steven Butala:                   Cozy. Oh man.

Jill DeWit:                            Oh yeah, it was good.

Steven Butala:                   Bring your bulldozer.

Jill DeWit:                            That was funny.

Steven Butala:                   So, we’ve all looked at real estate like this, all kidding aside. It’s priced like a house but it’s really a piece of dirt.

Jill DeWit:                            That’s it, that’s all it was.

Steven Butala:                   So, this was listed for like 200 thousand dollars and I’m looking at all the land. I mean there’s 100’s, 100’s, and 100’s of info lots all over the place that look to me buildable because of how the utilities are set up in the area. Without going into detail a great place to send mail. Would I spend 200 grand on a tear down house? You have to tear it down and get permits and do the whole thing or buy a piece of dirt for probably 15 or 30 thousand dollars is how I would send mail out in that area.

Jill DeWit:                            Yeah.

Steven Butala:                   The values in the land not in the house, that’s my point.

Jill DeWit:                            Mm-hmm (affirmative)-

Steven Butala:                   We can begin another show.

Jill DeWit:                            Yeah, I guess we can. Think about here. Think about where we live too. Think about, what’s interesting is when you, that one you can equate to it because, well it’s kind of the same thing. It wasn’t a big lot. It’s kind of like where we are here. Where we live we live in postage stamp sized properties and the value is in the land. It’s exactly the same thing. And, we get it, we walk around here in south bay, south of Los Angeles. If you go up and down the coast in southern California just look at it. I hope that you see it and get it, the value is in the land. It doesn’t really matter what’s on it. You can put all kinds of things on it.

Steven Butala:                   Yeah, honestly it all starts, that’s what Land Academy 2.0 is all about. It’s about taking an info lot and taking existing home sales prices, and backing into it from a mathematical perspective, and looking at it the way a builder does, and setting a price in that way.

Jill DeWit:                            Right.

Steven Butala:                   Land Acadmey 1.0 is not like that at all, it’s more of a, there’s more of a art and a more of a feeling inside perspective on pricing and things like that. Land Academy 2.0 which warms you up for House Academy is filling in the blanks. It all starts with existing home prices so the value’s in the land it’s not in the house. And, the consumer, the end user, does not and will never know what this sentence means. In fact, I would take it a step further. The value’s not even in the house for them it’s in the finishes.

Jill DeWit:                            That’s true. Good point.

Steven Butala:                   The value is in the refrigerator, the countertops, and the bathrooms.

Jill DeWit:                            Right.

Steven Butala:                   And the crown molding all of which cost as a whole cost of the whole project a very very small part of it.

Jill DeWit:                            Isn’t that true? That’s what they see when they walk in. That’s odd.

Steven Butala:                   So, you listening to this, you’re smart enough to listen to this show or be involved in this group anyway, understand the back end of this whole thing which makes you a real estate professional. Your mom and your dad were probably not real estate professionals just because they made a 150 thousand bucks on their house that you grew up in. Everybody thinks they’re a real estate professional, they’re not.

Jill DeWit:                            Thank you.

Steven Butala:                   The value’s in the land not in the house. Sorry go ahead.

Jill DeWit:                            No, it’s okay. I lost it again. I’m so sorry.

Steven Butala:                   You do it on purpose.

Jill DeWit:                            I know.

Steven Butala:                   You just catch me right at the end of making my point.

Jill DeWit:                            I know I did and I’m like ..

Steven Butala:                   You know, that happened yesterday too.

Jill DeWit:                            Shucks, back up.

Steven Butala:                   Refrigerators and counter tops was what we were talking about.

Jill DeWit:                            Oh, what’s interesting is this is the point of what we do like Sue was just saying. The value is in the land. People don’t realize that I can make money on land, we are all making money on land and have for many many years without putting anything on it, without improving it. So, the value is truly in the land and we know how to buy it, and that’s this whole point here is what you should be doing is buying it for less than what it’s worth, selling it for less than what it’s worth quickly.

Steven Butala:                   Yeah, that’s it. You know there’s a reason there’s no shows on HGTV about buying land and selling it for more.

Jill DeWit:                            People don’t get it. You know what there should be. You know what, that should be a show.

Steven Butala:                   No one’s going to watch it.

Jill DeWit:                            I know.

Steven Butala:                   It’s boring.

Jill DeWit:                            Isn’t that true.

Steven Butala:                   There’s nothing to film.

Jill DeWit:                            Wouldn’t it be funny. Here we are standing on it before. Here we are standing on it after. Could you imagine?

Steven Butala:                   Here’s our bank account before. Here’s our bank account after.

Jill DeWit:                            That’s the show.

Steven Butala:                   That’s it. It’s a two minute show.

Jill DeWit:                            Exactly.

Steven Butala:                   We could put it on Amazon.

Jill DeWit:                            That would be really funny. That would be so great. Like our version of, it’s property flipping, it’s you know the kind of thing.

Steven Butala:                   Yeah.

Jill DeWit:                            Here we are. Isn’t it gorgeous? Great, now I mowed it and now I sold it.

Steven Butala:                   Actually mowing it would probably hurt your …

Jill DeWit:                            It might, don’t mess with the trees, don’t mess with that. That’s so darn funny. I think you covered it.

Steven Butala:                   Well, you’ve done it again, you’ve spent another in this case 12 minutes or so listening to the Land Academy Show. Join us next time where we discuss days on market, the great equalizer.

Jill DeWit:                            And, answer your questions posted on our online community LandInvestors.com it’s free.

Steven Butala:                   You are not alone in your real estate ambition. I have to admit the first four cliches this month or this week weren’t real cliches. This last one I made it up.

Jill DeWit:                            It’s your cliché?

Steven Butala:                   It’s, I’m trying to start it to be a cliché ’cause it’s so damn true.

Jill DeWit:                            I love it.

Steven Butala:                   And, every single person in this community needs to understand, we’ll talk about it tomorrow, how important days on market is.

Jill DeWit:                            I think that’s awesome. We’re going to start something new. Please be sure and hit the subscribe button to stay up to date on our podcasts. Like us and comment on what you would like to see in future shows. And, if you’re listening on iTunes please rate us there. We are Steve and Jill.

Steven Butala:                   We are Steve and Jill. Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy under valued property.

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