Our Most Recent House Flips Net Us 100K (LA 985)

Our Most Recent House Flips Net Us 100K (LA 985)

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 how our most recent house flips net us about a hundred thousand bucks. Jill’s like right before the show, “What do you mean it net us $100000?”

Jill DeWit:                            I don’t even look anymore. I’m like and did it what? What are you talking about?

Steven Butala:                   We made $98000. These three properties generated.

Jill DeWit:                            I get so-

Steven Butala:                   $98000. When you think about that, it’s actually pretty amazing.

Jill DeWit:                            It is.

Steven Butala:                   And you think about doing one a month. It gets to millions pretty fast.

Jill DeWit:                            Yeah. Do one a week.

Steven Butala:                   Yeah. I need it. Yeah.

Jill DeWit:                            That’s really what you’d like.

Steven Butala:                   If we didn’t have a show and we didn’t have Land Academy and House Academy. If we were you, listener.

Jill DeWit:                            We’re going to get back to one a week. All good.

Steven Butala:                   We’re putting food on the table. 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.

Jill DeWit:                            Kevin says, “Hi everybody. Yesterday, I received a call from a property that we just put on the market”. And the caller asked, “Why is it so cheap?” I love this. Isn’t this funny how this happens? It’s so darn funny. Half the time I feel like I’m going to mark it up just because they don’t believe it. “That is my second favorite question when talking to buyers. One, it tells me that I got the comps right. That is important feedback when there are very few comps. In this case I really had to dig to look for listings and recent sales to get a number. Two, if the buyer is serious, he isn’t going to haggle much. He already knows that the price is great. Three, the buyer won’t drag his feet on a deal because he knows that other buyers will be attracted to this price. In this case, I have two buyers out looking at the property after being on the market for two days. And number four, I have the opportunity to explain my business to the buyer, so he knows how we purchase properties and why the price is so low.”

Jill DeWit:                            “I also explained that there are no liens or back taxes. That way you can stop worrying about the property being a toxic dumping ground and get on with making a good purchase decision. Oh yeah. My favorite question is how can I buy it? If you want to hear people asking you these questions? Send more mail.”

Jill DeWit:                            And I agree. That was good.

Steven Butala:                   That’s a Luke Smith call.

Jill DeWit:                            I like that.

Steven Butala:                   Stop asking all these questions. Just send more mail.

Jill DeWit:                            Isn’t that funny? And it’s so true. That happens all the time because our whole motto is buy a right, mark it up, this is, we’re talking land of course, mark it up so you double your money, but you’re still way below everything else out there. And then it’s going to sell really fast. And you are going to get these calls and these people going, “What’s wrong with this?” And the question is nothing and you better hurry up because I got, there’s other people looking at it, kind of thing. It’s great. What do you want to add?

Steven Butala:                   Nothing. Because Kevin’s actually a moderator on Land Investors.

Jill DeWit:                            One of ours, yeah?

Steven Butala:                   Oh, he’s just… Are there more than one moderators?

Jill DeWit:                            Yeah.

Steven Butala:                   Oh, I didn’t know that.

Jill DeWit:                            We’re moderators.

Steven Butala:                   If I’m a moderator on Land Investors, I think I’m failing at my job.

Jill DeWit:                            Yeah, you might be. That’s why we have Kevin.

Steven Butala:                   Kevin’s been with us for a long time. He’s super successful and he got the distinction of moderator because he’s just has a very unique way of looking at things and a very positive way.

Jill DeWit:                            And good at explaining things to people too. So it’s really, really good.

Steven Butala:                   Good writer.

Steven Butala:                   Anyway, I love answering questions like that for sellers. Like why is this so cheap? And what the heck? That’s why we started Land Academy because of questions like that.

Jill DeWit:                            Exactly.

Steven Butala:                   What do you mean you send out mail? And then we have to explain it. Instead we just have a show about it and sell it to everybody once at the same time every day.

Jill DeWit:                            Right. Hopefully.

Steven Butala:                   Today’s topic. Our most recent house flips net us about 100000 bucks. This is the meat of the show.

Steven Butala:                   What I love about houses is that every single transaction almost without exception, is a single. Speaking in baseball. You almost never, in fact, I’ve never personally hit a triple wholesaling houses. When you buy a house, it’s usually 75% ish of its value. Or you can look at it like I’m going to mark it up 30000 to 40000 bucks. In this case, that’s what it was, about $30000 for each of the three houses.

Steven Butala:                   And you can very, varies with great, with a high degree of accuracy. Expect when you’re going to sell it and for how much? It’s very consistent. And to make it even more consistent, this is like the accountant in me coming out, to make it even more predictable, all you got to do is send out x amount in letters and you know you’re going to buy a house. That number for us is about 3000 to 3500, it’s actually closer to 2500, but Jill is very, very selective these days about which houses we actually purchase. So when we send, this last mailer went out in a subdivision or it’s a city in Metropolitan Phoenix. I bet we bought half of the properties we could have bought.

Jill DeWit:                            Oh my gosh.

Steven Butala:                   Because you were so like, you know?

Jill DeWit:                            I’m not messing around. I’m just picking the, I want the good ones that are going to go fast. And you tapped into it. My favorite word here is consistency. And that’s one of the things that I really love about houses. From day one when you’re looking at the data and figuring out the pricing going out, you have so much quality data look at, it takes the guesswork out of it. It’s awesome. But then so you know, we know going into it pretty much by the time it gets to me there’s nothing to talk about with the offer price. It’s done, it’s set, we know it’s good. They’re either in or they’re out.

Jill DeWit:                            And then when it gets to me, and this is good because this is what I’m working on with wrapping up House Academy, I just recently finished was the due diligence part. Now I’m only looking at are there any fatal flaws that we couldn’t find in the data? Did somebody do an add on and the roof’s about to collapse? That kind of stuff. We’re going to smoke that out. Or is there something weird about it that we didn’t account for and we might not want to do it? So that’s really all I’m doing. But for the most part they’re great and they’re consistent. And I love that.

Steven Butala:                   I use the word consistency in the House Academy program probably a thousand times.

Jill DeWit:                            It’s good.

Steven Butala:                   When you’re looking for a market, you’re looking for consistency. When you’re looking at pricing, you’re looking at consistency. When you actually probably, I just filmed this chapter. When you’re looking for pricing because, House Academy itself is all about pitting these situations against each other to help you make a good decision about where to send mail, which zip codes are better? And then we get into the actual pricing itself in the spreadsheet before you send it to go out in the mail. You pitted against each other from a cash perspective and from a price per square foot perspective. And you mess with those numbers until you get really close and then you know. So it’s so predictable. That’s what I love about it.

Jill DeWit:                            Exactly. I know it’s funny, I was just thinking, I wrote that down because that’s a good little quote. I remember in the cashflow from land program, the big word that we hit over and over and over again was reach. Reach, reach, reach, reach, reach. And this one, the keyword is consistency. Like how cool is this? I love that.

Steven Butala:                   I just got done writing and filming a chapter, I don’t know, what a couple of days ago, about scaling your business. And because it’s so consistent, land is not as consistent. There’s always what, both are great, but land provides you the possibility of hitting a out of the park, home run. You can, we have people in our group that’ll regularly report marking up hot properties for 100, 250000 bucks, sell it in the same day. So while that’s a lot less likely with houses, you can outsource every single thing. Every single thing about, except for the decision, should we do this deal? And I would argue even then you could.

Jill DeWit:                            You know I have something interesting. I want to hear your take on this. I feel like when you’re doing houses, one of the things that, I think the buyers pool that you need to have lined up is smaller, as long as it’s a good buyers pool. I think it’s easier. Is that what you think?

Steven Butala:                   I think because houses are in an urban market and the quality of the data is way higher. And what you just said, the sales process is really to a very closed end group of people. It’s not open.

Jill DeWit:                            That’s the point.

Steven Butala:                   I mean I would argue that buying and selling houses is way easier for somebody who’s experienced then land. And faster and more consistent and predictable and all of it. It’s also more expensive. So there’s pros and cons.

Jill DeWit:                            I’m also writing down one of the things I love about, with House Academy. This is a good column so [inaudible 00:09:25] Are here because it’s in the program. Driving for dumpsters. I think that’s great. You’ve heard me rant about driving for dollars. Driving for dollars is not good. Driving for dumpsters. That is good. Those are your buyers. Makes it easier.

Steven Butala:                   It’s very, what Jill’s saying is it’s very simple to find out who’s going to buy a potential house renovation project from you because you’re the wholesaler.

Jill DeWit:                            Exactly.

Steven Butala:                   All you got to do is drive around the neighborhood, see who’s got dumpsters in their driveway because they’re already renovating houses in the neighborhood. They’d be happy to, they’ve already figured out how to finance it, how to price it, how to, and renovate it. Adding your property two blocks over because you marked it up for 20000 bucks is easy.

Jill DeWit:                            I love it. That’s a dream for them to have three in the same neighborhood at the same time is the greatest thing. They send the same guy, now when he’s done with the wiring here, he goes over there, he goes over there. It’s perfect.

Steven Butala:                   So it’s a, House Academy, that program, we’re just about done with it. I think my [inaudible 00:10:25] It’s all in editing now. I’m proud of it. And whenever we start these projects, I’m like this is an insurmountable amount of work and then when we’re done with it, I’m like, you know that wasn’t that bad. It came out pretty well.

Jill DeWit:                            We’re writing books by the way. We’ve actually, it’s like they really are novels that we’ve done. It’s really good.

Steven Butala:                   Anyway 30000 bucks, SFR flip, a house flip is pretty close to what happens on average. Some of them make 15 some of them make 40, but about 30, 30 to 33. And it’s easy.

Jill DeWit:                            It’s not hard. You’re right.

Steven Butala:                   Especially when there’s no real estate agents involved, then it’s really easy.

Jill DeWit:                            Ding, Ding.

Steven Butala:                   Well you’ve generally [inaudible 00:11:13] Spent another 15 minutes or so listening to the Land Academy Show. Join us next time for the episode called Member Matt Rogers Shares His Land Academy Success Stories.

Jill DeWit:                            And we answer your questions posted on our online community landinvestors.com. It is free.

Steven Butala:                   You are not alone in your real estate ambition. What I really meant to say is both are good.

Jill DeWit:                            Which are good?

Steven Butala:                   Houses and land and influence and all of it. It’s all systematization.

Jill DeWit:                            I love the diversity of what we have going on. I really, really do. I know the land is so easy. That’s flowing nicely. You don’t have to think about it. Houses in there, info lots. It just, you can’t go wrong when you diversify like that. Love it. Wherever you are watching, wherever you are listening, please subscribe and rate us there. We are Steve and Jill.

Steven Butala:                   Information.

Jill DeWit:                            And inspiration.

Steven Butala:                   To buy undervalued property.

 

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