Now Other Industry Leaders See the Value in Land (LA 1233)
Now Other Industry Leaders See the Value in Land (LA 1233)
Transcript:
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 Jill DeWit, broadcasting from sunny Southern California.
Steven Butala:
Today, Jill and I talk about how other industry leaders see the value in buying land now.
Jill DeWit:
It’s funny how its now, now. Why is it now?
Steven Butala:
This is a very slippery slope, dangerous. I know that this is true, and I saw it happen through the last recession. And I think that buying a strip mall and making some money on it seems easy. It certainly seems easy to the tenants. So people in other industries think that buying and selling real estate is pretty simple. Those of us in it, I think, know how difficult it is to actually buy it and sell it. And buying land, the people that think that this is easy don’t take into consideration, it’s real easy to be a tenant in a building, maybe a 10-unit building, let’s say a strip mall, and pay all this rent and sit and have this thought, every time anybody writes a rent check they say, what if I didn’t have to write this rent check?
Steven Butala:
All these people are making all this money that own this building. They’re not doing anything. They don’t have to get up in the morning and I have to get up every morning and do all this stuff. If I didn’t have this rent check or if I was them, I would be doing great. That’s just not how it works.
Jill DeWit:
Isn’t that funny.
Steven Butala:
People that own these buildings probably own it for 35, 40 years. So there’s a lot of stuff involved. So I can’t wait to hear what you say about this but because I know you did some research on this, other industry leaders just saying now’s a good time to buy a hotel. It just cracks me up.
Jill DeWit:
Or just land, its interest. So that’s where I’m going and we’ll talk about it. It’s good.
Steven Butala:
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:
Lauren says, hello. I’ve been buying and selling all kinds of products online for a few years and it’s never done well enough to pay all my bills. I need to continue to have a job. I’ve researched land for a long time and this seems like it really can work. What advice for you do you have for someone like me? Thanks a lot.
Jill DeWit:
Yes it can work. And everyone that you’re writing to in this community, I’m sure there’s a lot I didn’t look to where they’re like a lot of comments. Okay, good. So actually can. And one of the main reasons is, what you’re, it’s not like buying something that you sell for markup for $1 or $2. We’re buying things we sell up for markup for hundreds and thousands of dollars. So it’s a whole, it can pay your rent and it can replace your job. But what should you be doing that’s, I love that you’re excited about it, looking at it like as an opportunity.
Jill DeWit:
I want you to really spend some time researching it cause it isn’t for everyone. And like Steve was just saying too, there are a lot of moving parts and it sounds like, God, this guy who owns this building owns this land, just puts, it sounds like you buy a piece of dirt, you write a check, big deal. You’d make one deed, you send it to somebody, they put a stamp on it and now you take a picture of five, I don’t know, and put it on Craigslist and walk away. There’s more to it than that. So I want you to do a lot of research. It might be weeks for you and months for somebody else and then even before you pull the trigger, I might say test the water a little bit. You know buy a piece of property and copy somebody and sell it and see how it goes. What do you want to add?
Steven Butala:
Well, I think buying and selling stuff on online, I’ve done that in the past too, with the limited success, you can do it really efficiently. You just have to really cost control your operation and get used to smaller margins if you are drop shipping stuff. The other way is to brand yourself and Joe and I have done a little bit of that although it doesn’t really apply to our success in real estate. I don’t think. If you can brand yourself and then whatever you’re buying and selling, make yourself an expert about it and become an expert so that you’re not, you don’t have to fib when you’re telling the truth about why you’re an expert at buying, selling land it’s easy for us. And we branded ourselves that way or it’s inadvertently happened for whatever reason maybe cause we have 1,233 shows.
Steven Butala:
That’s number two and then number three I think is you’re going to see incredible profit margins when you buy and sell land. Just when you average everything out and by incredible, I mean Mark it up 100% pretty regularly if you know double your money, if not more. But it’s a lot more work and there’s a lot more people involved and things go wrong all the time. Not all of the time things go wrong sometimes you have to recover from it. But if you’re buying again at 30 cent flashlight from China and reselling it for a $1.50 and you’re the expert in flashlights, it’s not such a bad gig.
Jill DeWit:
That’s true.
Steven Butala:
Today’s topic now, other industry leaders or sorry, how other industry leaders see the value in land? This is the meat of the show.
Jill DeWit:
You were right the first time. It’s now other industry leaders are seeing the value in land. Okay. This is sparked from an article that I read the other day and I pulled it up here cause I thought it was very interesting. So the article is about the Starwood CEO, Barry Sternlicht and what we’re buying now and he’s on the offense. I’m like, Hey, so are we, so was our whole community. And why is it taken now to figure this stuff out? And one of the things that just hit me first, he goes in and talks in great detail about, it’s a really good article. It’s dated April 22nd if you have time to check it out. And I’m trying to figure out was it was written on Biz Now, is the site where I get these updates. Well, I thought it was so interesting is, he’s talking about his company and how they’re really busy right now and when you think everybody’s panicking and holding back, he’s like, no, now’s the time to scoop up some good deals.
Jill DeWit:
But they’re looking at our hotels, which primarily, cause that’s what they do. That’s what they know. And he told the story about, he just recently traveled somewhere to buy a hotel and he was all set to pull the trigger because he’s not going to shrink away. He’s going, this is his business and it’s going to work. They’re making some changes. He also talked about changes they’re going to make to their industry to make it work and cut costs. But it was funny, he looked at this hotel and he said, I was about ready to buy it, but the people had just got their payment protection plan. And because they got in that infusion of money, they decided not to sell and his response is okay, moving on and just went and looked at something else.
Jill DeWit:
So the part that of the articles, I kept reading the article that was already interesting to me, but then he said this, historically, the nation has come out of these great falls. My view is when you’re buying real estate assets, well below the cost of replacement in a country like the United States, that’s kind of what we do. He goes on to say with land in some cases at no value I don’t know where he got that, then you’re going to make money because this nation is going to grow. So I don’t agree with the land and no value part. But what I liked was he’s now another person like us and another industry leader that I don’t think he really considered land for real. You know this seriously and now it’s tripping his radar, has been really doing this since you ’90s and me with you for 11 years.
Steven Butala:
I mean and the whole point of the article and there’s many, many like that is that now its time to buy undervalued assets. Wherever you see the value and wherever your expertise is. For us it happens to be buying and reselling. For him it happens to be taking value that in an asset that not a lot of people see value in. Maybe they see zero in it and maybe stock buying a bunch of dirt real cheap to buy, to put hotels on or to sell it to people who see the value like it is in this industry. When you have a special use property type like hotels, it’s not hard to do that by doing zoning. But by looking at specifically zoned properties and selling on an offer campaign.
Jill DeWit:
It’s interesting, the article didn’t say if he’s looking at buying the land to put a hotel on or just buying land to resell the land. I took it as buying the land to resell the land, but so I’m not sure what he’s looking at.
Steven Butala:
Well, he’s a Starwood executive. I’m sure his soul is hotels first.
Jill DeWit:
Right.
Steven Butala:
And if you don’t have to make a payment on the physical, Stuart was dramatically a manager of hotels, as I understand it, or math or leasing the assets, they don’t own the assets primarily. So now he’s looking at the same thing I said earlier, wow, what if I didn’t have to make this lease payment? The point is he’s looking at it as an opportunity.
Jill DeWit:
You know its funny to share some personal stuff here. I see this as diversifying because he made a comment too in the article that he’s also looking at stocks in some major companies because the prices now he’s like, he thinks we’ll never see that again. You know like some major brand name companies that aren’t going to go anywhere. And I know you talk about this a lot just with your friends. I’ve heard you guys have these discussions about things like that. And so what I was going to share is, we are personally doing this. We all know and we’re very vocal that we’ve had other companies along the way. And even before we even did Land Academy but our constant was land. No matter what we were doing, we were always buying and selling land alongside other things cause it always kept food on the table and it’s always been a great business but it’s good to diversify and have other things.
Steven Butala:
Industry leaders see huge opportunity in their lines of business and all comes back to land. Everything does in these types of times.
Jill DeWit:
I agree. Happy you could join us today. Every Monday, Wednesday, and Friday. You can find this right here on the Land Academy Show. Tuesdays and Thursdays, we are on the House Academy Show.
Steven Butala:
Next week, join us for another interesting episode on the Land Academy Show. You are not alone in your real estate ambition.
Jill DeWit:
That article, it just sometimes I feel like the light bulb goes off and I’m like, why does it take this for the light bulb to go off to some people or maybe it didn’t go off, but maybe for the person writing the article for them there. I don’t know. It got them excited. It’s what we’ve all known this forever. The Land Academy Show remains commercial free for you, our low listener, so wherever you’re watching or wherever you’re listening, please subscribe and rate us there. We are Steve & Jill.
Steven Butala:
Information.
Jill DeWit:
And inspiration
Steven Butala:
To buy undervalued property.
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