Fictional Real Estate Passive Income (LA 1008)
Steven Butala: Steve and Jill here.
Jill DeWit: Happy Friday!
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 fictional real estate passive income. “What the hell is that, Steve?”
Jill DeWit: I know, I’m kind of curious myself.
Steven Butala: When’s anything in your life ever worked out the way you wanted it to with you being passive about it?
Jill DeWit: That’s what you’re talking about.
Steven Butala: I’ll tell you what’s going to happen if your real passive in your marriage …
Jill DeWit: Passive …
Steven Butala: How about raising kids? No, no, I just … Well …
Jill DeWit: We know those people.
Steven Butala: Well, those kids will figure it out on their own.
Jill DeWit: We know those people!
Steven Butala: I know.
Jill DeWit: I want to be those people, man. I’d like to be a passive parent.
Steven Butala: How about school?
Jill DeWit: I want to be the passive parent of the year. I want to get a shirt that says that …
Steven Butala: How about school? You just sit in the back, chill out, handing in your homework once in a while …
Jill DeWit: Yeah.
Steven Butala: No … You can’t just do that.
Jill DeWit: It sure sounds good, though. A lot less work.
Steven Butala: This word passive … This word passive is very … Well, there’s probably some places on the planet that it’s appropriate to be passive, like if you’re a monk, let’s say. But outside of that-
Jill DeWit: You can’t be a passive monk. Well how can you be a passive monk like, “I’m only going to talk when I feel like it?”
Steven Butala: Yeah you’re right.
Jill DeWit: You can’t be a passive monk even.
Steven Butala: You’re right. [crosstalk 00:01:24].
Jill DeWit: You’ve still got to commit to that.
Steven Butala: So, it’s official, there’s no reason to be passive about anything.
Jill DeWit: Yeah.
Steven Butala: Before we get into the show, even further than that, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.
Jill DeWit: Brandon asks, “Has anyone sent a bunch of micro-mailers in one mailer? How do you go through the data? I’m finding a bunch of small subdivisions that need to be priced differently than the next subdivision over. Each little subdivision in our area has about 400 mailers. So not enough to send on it’s own. And it would take way too much time to do one for each area.”
Steven Butala: Ding ding.
Jill DeWit: “Is there an easy way to do this? Do I just need to pull the data for each little area and put it into a spreadsheet and then keep adding an area to the list, and then price it all accordingly, and then send out one big mailer? It’s the consistency that’s killing me. In some areas, one acre is selling for $10,000. And then one hill over, one acre is selling for $50,000. So I don’t want to price them all the same.”
Steven Butala: This is a PhD, or possibly a Master’s Degree level question about offer campaigns and manipulating data so as to send offers to owners. It’s my favorite kind of question. And if I had to teach a class every Wednesday or something like that, I would love to have you in my class, because this kind of stuff is what I personally go through at this level in my career. Just bout every mailer, if not every single mailer that I send out, is what you’re calling a “micro-mailer”, which is funny because that’s what I call it. It’s a collection of micro-mailers. So here’s what I do.
Steven Butala: I take these nine or ten or so areas that I have identified as working, and it usually comes from the Red Green Yellow Test in the House Academy, or in Land Academy 2.0. And I start a master spreadsheet, and I’ll put all the raw data for each of the ten, in one big spreadsheet, and I’ll label them as such … So I’ll label them as some unique identifier. For the sake of argument for this, I’ll say, Section One is number one, Section Two is number two, and on, and on, and on, in a control column. Control number. And hard quote it.
Steven Butala: Then I go through all the motions that I would as if the whole thing was one single mailer. So you don’t have to do it ten times, you only have to do it once, until I get to pricing. And then I separate them back out, I look at Section One, price it the way I should. Section Two, price it how I usually price it. And on, and on, and on. And it’ll save you 80 to 90 percent of the time that it would to do ten micro-mailers.
Steven Butala: Here’s the benefit of doing a separated mailer like this, or a micro-mailer. You’re diversifying the risks, because when you send all of it to one place, you could’ve missed something. You could’ve missed the pricing, you could’ve missed the fact that the place just burned down two months ago … There’s a lot of stuff … It’s just a common sense diversification concept. Just to keep it diversified, so … I’ve never had a bad experience doing micro-mailers like this. We do them upwards to 50,000 units at a time now, and separate them out like that. So I’ve just recently started doing this probably two years ago, so I don’t know where this comes from, if it was just your idea, or if it was like through osmosis from these shows or our live events, or … I’m not sure where this all comes from, but it’s approaching brilliance.
Jill DeWit: Ditto …
Steven Butala: … Sometimes I go off like that and I look at the timer, and I’m like, “Wow, that was twenty minutes.” And this time it was only five, so that’s not that bad.
Jill DeWit: I was trying not to yawn, I’m sorry.
Steven Butala: Oh really?
Jill DeWit: I think I held one back.
Steven Butala: Oh man, sorry.
Jill DeWit: Sorry babe.
Steven Butala: Sorry Jill.
Jill DeWit: No, no, it was perfect. It was just perfect.
Steven Butala: Next topic. Fictional real estate passive income. This is the meat of the show.
Jill DeWit: I like your rant earlier, that was pretty funny. On what planet, or what occupation can you be passive about anything and have it really work out? Even the passive income thing. You’ve still got to do stuff.
Steven Butala: Why do you want passive income anyway? [crosstalk 00:05:42] Here’s an example of passive income … We have a colleague, an internet colleague, he’s not in our group, who tested these places where you can put $1,000 bucks into a real estate investment thing and then showed us a screen a year later and he made 8%. And everybody else piped in and said 6%, 6%, 5%, 9%, 8%. And so that’s passive income.
Jill DeWit: Right.
Steven Butala: Is that what you want?
Jill DeWit: He made 8%.
Steven Butala: He made $80. He put $1000 in and made $80.
Jill DeWit: Right.
Steven Butala: I don’t want that.
Jill DeWit: I don’t want that.
Steven Butala: I want to put $1000 in and the next day make $2000. And then now there’s $2000 and then the next week make $8000.
Jill DeWit: That’s true.
Steven Butala: And I’m happy to work for it. I don’t want to sit around, twiddle my thumbs, and I don’t know, what would I do? Have a regular job then?
Jill DeWit: That’s a good point. It’s a very good point.
Steven Butala: So … This whole notion of buying a piece of property and reselling it in a passive manner, even if you sell it on terms, like we teach in the Cash Flow From Land program. There’s nothing passive about that. Ask her.
Jill DeWit: No. There’s work involved.
Steven Butala: Those people need maintenance. They have questions …
Jill DeWit: They do. Every month there’s something.
Steven Butala: Yeah.
Jill DeWit: Payments get missed, you can’t find them, something got goofed up. It’s true.
Steven Butala: So, in the House Academy show this week, we talk about why the landlord model fails. And what we’re talking about, this is the land version of that.
Jill DeWit: Right.
Steven Butala: If you go into anything with any concept of passive, in the end it’s not going to work. You need to go into everything that you want to do and take it seriously. With this sentence in your head … “Whatever it takes, I’m going to do it to get this done.”
Jill DeWit: Ding ding. Beautiful. It’s true.
Steven Butala: My dad used to say this, of all the crazy stuff my dad used to say, he was right about this one thing. “If it’s worth doing, then do it.” What he meant is, “If it’s not worth doing, don’t do it.” [crosstalk 00:07:41] But if you’re going to do it, do it.
Jill DeWit: Isn’t it, “If it’s worth doing, it’s worth doing well?”
Steven Butala: No, I don’t know. That was his version.
Jill DeWit: That’s what I heard. Oh.
Steven Butala: That’s your twist on it.
Jill DeWit: Oh, okay.
Steven Butala: If it’s worth doing, do it. And I like it that way better, actually.
Jill DeWit: I, well okay. I like doing it well. Show up.
Steven Butala: Yeah.
Jill DeWit: Show up.
Steven Butala: Yeah, if you’re going to do it, really do it.
Jill DeWit: Well you know what bums me, as I’m thinking about this topic and this title … When I think of fictional real estate passive income, it’s just, people walk around thinking you can be an investor, you can do everything, and just kick back. You just, “Hey, do three easy steps and then just sit back and let the money roll in …” [inaudible 00:08:21] I can’t help it. I’m like, “Do you really think that? And why are you telling people that?” Because that’s not true. That’s the whole thing, it is fictional. Good topic, now that I really get to dive into this. There’s nothing passive about anything.
Steven Butala: Ten minutes later, she’s like … Because this is how it starts before the show, when all the cameras are off and stuff. “It’s not a good topic.” That’s not what she says …
Jill DeWit: I did not say that! I said nothing, I said nothing, but I will say this … I went into this show with zero notes. I drew a, as you can see I drew an arrow …
Steven Butala: Yeah.
Jill DeWit: I drew an arrow on my piece of paper. And then below where my arrow is, right here. Right there, I got nothing. There is nothing, I have nothing to add. I don’t know what to say … So, that’s so darn funny.
Steven Butala: I didn’t think of it until we started the show either, that there’s nothing that I do in a passive manner.
Jill DeWit: Oh my gosh, you’re the opposite of passive.
Steven Butala: Yeah.
Jill DeWit: That’s what’s so funny. So fictional real estate passive income, so get that out of your head, that’s not possible. But you should be thinking of is, “All right, now I got 10 down, how can I do 20, and do them better and faster?” That’s the mentality you should have. Not, “Hey, how can I get somebody else doing my job for me and I do nothing?” No, you should be really upping your game.
Steven Butala: Actually, I was going to end on that.
Jill DeWit: Oh, sorry.
Steven Butala: Here’s the way that I think just from operating a company. If you can picture a hub with a spoke, like an old, I don’t know, wooden wagon. And you’re the hub, and all these spokes are going out. And at the end of the spoke, there’s a person that’s running everything. So each one of those spokes is, let’s say, a real estate deal, or a real estate line of business, or a company, or like a manufacturing company. And if you’ve got somebody who is truly taking full responsibility, in fact maybe they’re a partner on it, a partner on the deal, a partner in the company, or the partner in a line of business. Let’s say in our world it might be … This is real for us …
Steven Butala: We’re the hub, we have lots of real vacant land, people that we do deals with, we have lots of people that we do … Well, one person in particular that we do mobile home transactions with. We have one person that is now … We’re opening a new line of businesses for adverse possession. And that person takes full responsibility and they come to us and say, because we’re funding it and we locate the deals, and we really truly provide a tremendous amount of value. That’s as close as passive that I can think of. And it’s still not passive. There’s still issues that come up. There’s always, in a line of business like that, there’s always one deal or one vendor that requires your involvement.
Steven Butala: And that’s kind of in our heads. If we just said, “Hey, the buck stops with you, figure it out,” we could do that. In fact, there are some managers who do that. So that’s as passive as it gets. But I’ll tell you, it doesn’t start from day one like that.
Jill DeWit: Nope.
Steven Butala: And I wouldn’t even call it passive, I would call it a partnership. Maybe a silent partnership. Silent works better than passive. Passive … There’s this whole cult-like thing on the internet about the word passive. Passive income.
Jill DeWit: I know.
Steven Butala: If you type in passive income, there’s these gurus-
Jill DeWit: It’s crazy. They come up.
Steven Butala: … on the internet that are teaching this … And it all starts with a Ferrari, and all this other stupid stuff, just like Jill said. And it’s just all fiction.
Jill DeWit: Yeah. They’re really working at it. And you need to, also. Seriously.
Steven Butala: Join us next time for another interesting episode … Oh, I missed it.
Jill DeWit: That’s okay.
Steven Butala: Thanks for spending some time with us today.
Jill DeWit: And, by the way, next time with our interesting episode, we will also answer your questions that are posted on our online community at LandInvestors.com. It is free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: I should say that more often. Just so you know, if you’re listening to this show, and you have a question you want to ask us, throw it in there, and even just say, “Hey, guys, I listen to your podcast, I’m not in your group, but you always answer a question. Hey, will you pick mine? Or I really want to know … ”
Steven Butala: That’s great. I would love that actually.
Jill DeWit: Let us know where you found us, and you want us to address something, and man, we will.
Steven Butala: Hashtag podcast. Go look for it.
Jill DeWit: That would be cool. Thank you. And then also, don’t forget we have a special going on right now with Land Academy, so check it out at LandAcademy.com. I was going to say, it is free … It is not free. Just kidding. But it’s awesome. Wherever you’re watching or wherever you’re listening, please subscribe and rate us there. We’re Steve and Jill. An inspiration.
Steven Butala: We’re Steve and Jill. Information to buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
The BuWit Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.