This Amazing American Real Estate Market 2020 (LA 1371)
This Amazing American Real Estate Market 2020 (LA 1371)
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 this amazing American real estate investment market in 2020. Who would have thought? I never would have thought.
Jill DeWit:
I know.
Steven Butala:
It all comes down to one thing, one word, migration. I’ve been studying this now since March.
Jill DeWit:
Yep. I just talked to a guy the other day, as a matter of fact, who’s in Texas. And I said … We were talking about next places to mail. We were talking about this is what you do and what’s great about you. I said, “Just do it like Steven. You need to spend a weekend, go into a dark room and figure out what’s happening. Look at where people are going. Look at what people are doing. Look at what people are buying.” We all know they’re leaving New York. We all know they’re leaving Chicago. We all know they’re leaving LA. It’s obvious. So where are they going? And that’s, you just need to be ahead of.
Steven Butala:
Here’s some staggering statistics on this. In a regular year, just in a normal … This is not normal, obviously, but in a normal … This shocked me when I first read it a few years ago. 20% of the people in this country move every year. Well, that’s double and they’re expecting maybe triple now. So what does that do to the real estate market? Everybody’s just, you might as well throw a ticker tape parade because especially if you’re a real estate agent, all the fees that are associated with moving. I read somewhere that U-Haul, the company where you rent the trucks to move, I think you were telling me, it’s like, if you want to know where to send mail and where people are moving, find out what U-Haul rates are. Because if you’re moving from someplace to California, that U-Haul costs $3,000 to rent, but if you’re moving out of Los Angeles to somewhere else, it costs $200.
The numbers are staggering when it comes to, when you really think about 40% of the population in this country is going to move this year and next year. I mean, that’s like 115 million-
Jill DeWit:
More than … Oh, yeah. There was that-
Steven Butala:
What are there? 300, 400 million people in the country?
Jill DeWit:
It was all the remote workers. That was that article that I had the other day, I sent you.
Steven Butala:
Do you have the numbers on that?
Jill DeWit:
No, I don’t, but it was staggering, the billion people.
Steven Butala:
There’s like 200 million people in this country are working remotely.
Jill DeWit:
Yeah, and they’re moving.
Steven Butala:
And they’re tired of the smaller houses.
Jill DeWit:
Yeah. And they don’t have to anymore.
Steven Butala:
There’s a run on refrigerators and large appliances right now because people are staying home. Probably many of them, maybe us included, permanently. So everybody’s rushing. And it’s not affecting their paycheck. If they do anything online, it’s not affecting anything.
Jill DeWit:
Yeah.
Steven Butala:
So it’s really affecting people that, like restaurant. Stuff that, where your revenue stream’s in the public. So all of that adds up to positive stuff for people like us from a real estate investment standpoint. Before we get into it, though, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit:
Is that Walder?
Steven Butala:
Yeah, Walder.
Jill DeWit:
Okay. Walder wrote, “Hi. So a few months ago around April, I was thinking to stay away from infill lots due to COVID and builders won’t be building. But fast forward to today. Is it safe to say infill lots are good to market to again, since the housing market is hot? And if not, which land type would you recommend going to 2021?” Great question.
Steven Butala:
Yeah, great question. And it’s perfect for today on this topic. Yeah. Like I said earlier, I was really wrong about this in March and April and May. I was like, “Hey, put your helmet on because this market’s going to crash and it’s going to be terrible.” And boy, I couldn’t have been more wrong. At which time I said, “Chill out on the infill lots and get the rural vacant land marketing back up because people are getting away from the cities.” Well, I was half right. The rural vacant land couldn’t be hotter. It’s the hottest market I’ve experienced ever, since the early ’90s. Infill lots, yeah, go for it.
Jill DeWit:
Yeah.
Steven Butala:
Here’s what I want you to be-
Jill DeWit:
Houses, go for it.
Steven Butala:
I want you to be careful with infill lots. I’m going to give you a couple of reasons why. I’ll never understand this and economists will never understand this, but there’s a massive shortage for construction workers all over the country. But the unemployment rate’s like 18%. So you would think that people who don’t, the restaurant jobs that they used to have, you could think they could convert some of their skills to being, let’s say a carpenter or some type of construction. And for whatever reason, that doesn’t translate into the national numbers that we all look at. So all I’m saying is that in your quest for infill lots, do some research before you send the mail out, long before you send the mail out. Do some research on five to 10 markets for infill lots and find out if properties, if home builders are actually building houses there, because I’ll tell you, like specifically in northern Michigan, I only know this because my sister lives there. They cannot find a crew to renovate a house, let alone build a new one. And there’s a huge demand.
I don’t care where you slice it. There’s a massive demand. Especially in these Zoom cities. A massive, massive demand for new construction. Nobody can build the houses. So it’s not everywhere. There’s construction that’s happening in a lot of places, but …
Jill DeWit:
Yeah, it’s very interesting. I’m just thinking of her little sleepy community too. It’s probably because if they brought people in, they don’t have places to put them.
Steven Butala:
They don’t. That’s correct.
Jill DeWit:
Because of how it is. It’s like a silly little backwards system right now. They need to build more houses so they could house more people so they can build more houses. Seriously.
Steven Butala:
Well, Jill just nailed it earlier. You can’t go wrong with buying rural vacant land and you can’t go wrong with buying houses right now.
Jill DeWit:
Exactly.
Steven Butala:
You just need to make sure that there are … There’s massive migration going on in this country. And you guessed it, people are moving to warmer climates and places that are less expensive than what they’re used to dealing with.
Jill DeWit:
And where they can have more room.
Steven Butala:
Yeah, exactly. So, the transition from New York to Florida has never been more hot. And I mean like more attractive for people like us to buy property. They’re moving from a colder climate to a warmer one and a more expensive situation to a cheaper one. And that’s happening all through the west and the southern part of the country.
Jill DeWit:
It’s awesome.
Steven Butala:
I’m not sure that I would be buying and selling houses in like Minnesota right now.
Jill DeWit:
Okay.
Steven Butala:
Today’s topic, this amazing American real estate market in 2020. This is the meat of the show.
Migration is what’s caused this, but that’s no reason to just say, “Oh, migration caused it. Florida’s awesome. I’m sending mail there.” You have to do a lot more research than that. Figure out who’s moving there and why. Figure out which zip codes. And fortunately, we have all the data to do this. This is the stuff that you learn at Land Academy. Which zip codes are doing really well? Which the codes aren’t? And taking a look at all the things that Jill and I teach about the last 60 days versus the last 10 years versus all of that. But I’ll tell you this, once you figure out the migratory patterns, and it shouldn’t take you more than a few hours on the internet, we are having huge success in our group.
Jill DeWit:
Yes. I’m like, this again ties into this consulting call the other day. I just said, “Spend some time on this. This is your job.” If you’re like us and you’re an investor and you own your own company, you own your own business, this is what you should be doing right now, spending your time getting ahead of it. Researching where people are going, why, when, how much they’re going to spend. And it’s all right at your fingertips. I was referring to, this is stuff that we do every Thursday before our weekly member calls with Land and House Academy, is we spend time looking at data and showing where to get the data and looking at days on market and how to pit zip codes and how to pit areas against each other, because when you know how to do that, it takes all the guesswork out of it. There is no guessing, and there shouldn’t be any guessing.
You should be able to go, “Okay.” After spending four hours, let’s just say. You went in Saturday morning and came out at lunchtime. And you’re like, “I think I’ve got a good idea of where people are going. I watch the Chicago market. Everybody’s kind of over here. Now I’m going to prove the concept and I’m going to isolate the exact zip codes.” And then when you know how to do it, like you have taught to us, there’s always going to be three or four zip codes that just jump to the top and you can be like, “Well, this is a no brainer.”
Steven Butala:
That’s right.
Jill DeWit:
I know exactly what to do. I know what size of property to go for. It’s so great and it just keeps getting … ties into this amazing real estate market in 2020. Every single time I turn around, there’s better and better tools to analyze markets and do my job. The tools I don’t like are easy buttons. There are so many people that think they’re experts and think that they can create a one-size-fits-all easy button where you could go from I want to be an investor, push this button, and here you go, here’s everybody should mail and it’s already priced for you. That’s not going to happen. Please don’t fall for that. And it’s not like you’re falling for it. It’s like they think they know, but there’s just so many nuances to it. It’s like, if this was possible, if robots could do this stuff, there would be no doctors. Every doctor would be a robot. There’s always going to be a nuance, and you can’t account for that. You have to have a human being there watching and adjusting and understanding each market.
Steven Butala:
It takes a lot of research. So my point in writing this topic is that, yeah, I mean, there’s only so many times that we can get on a Thursday call for example, and say, “Hey, by the way, there’s an amazing American real estate market right now.” There’s only so many times you can say that. There’s only so many times we can say it during this episode. The fact is, what are you going to do about it? Which zip codes are the best and why, and which ones work for you? Which product type works for you? What’s your source of funding? What is your funding source like? Do they like you? Do they like the dirt? So it’s getting into the caveats and the little nuances of this to make it your own, to make it work for you.
But the great news is this. It’s an amazing market out there, so it’s making it harder to fail. But I’ll tell you, I’m not so sure, like let’s say farmland is any more expensive than it was let’s say pre COVID. In fact, it’s not. I checked. What’s cheaper is the cost of capital, which makes farmland a little bit more attractive because it’s cheaper to purchase, but that affects the price anyway. So, you see my point. You’ve got to do your homework and there’s no real shortcuts.
Jill DeWit:
No.
Steven Butala:
Or are there? That’s what keeps us getting up in the morning.
Jill DeWit:
You think there are?
Steven Butala:
Yeah, yeah.
Jill DeWit:
Okay. You want to give us a couple?
Steven Butala:
Yeah, sure. I mean, I think in 1994, I was sending faxes out to people who owned long-term care facilities.
Jill DeWit:
That’s true.
Steven Butala:
Because I didn’t have the data set to send them mail. Now I have the data set. So that was a shortcut I developed. So yeah, there’s dashboard shortcuts from a data perspective. I’m working on one right now that’s going to tell us where to send mail, unequivocally, nationally, which zip codes rise right to the top. Is that a shortcut? Yeah, but it’s going to take a year for me to develop it, but once it’s developed, I mean, it will be correct. Will I test it for a reason after that? Of course. That’s the real problem with a lot of these, is they don’t get tested for reason at the end. But now’s a great time to get into this.
Jill DeWit:
That’s a really good example. One of my shortcuts, I usually say now is all the tools that we have to do our due diligence. And it just keeps getting better too.
Steven Butala:
Yeah, that’s a great point, Jill.
Jill DeWit:
So many good mapping things now.
Steven Butala:
Yeah, like Google Earth. That’s a shortcut.
Jill DeWit:
Isn’t that amazing? I mean, the documents I can get my hands on, mortgage documents I can get my hands on, lien reports I can get my hands on, all kinds of stuff I can do. I’m questioning, we’ve always questioned this, what’s the point of a title agent? Don’t get me started. But I’m getting-
Steven Butala:
We are rapidly getting to the point where we don’t need that.
Jill DeWit:
Exactly. It’s going to, I really think. The only thing I’m waiting for right now, it’s driving me a little bit batty and I thought this was going to happen sooner in COVID times, which is online recording. I can’t believe how many counties are still behind the times with this, online recording and online notaries, but it’s coming, I think.
Steven Butala:
Yeah. And signing.
Jill DeWit:
It’s coming. It needs to happen. Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show.
Steven Butala:
Tomorrow, the episode on the Land Academy Show is called an interview with Land Academy member, Johnny Newsome. You are not alone in your real estate ambition.
Jill and I already recorded that show, and I can safely tell you that this guy went from going into the free section of Craigslist, buying furniture. I mean, just going to pick up people’s old furniture, cleaning it up and reselling it. He said he was making $2000 or $3,000 a month.
Jill DeWit:
Feeding his family.
Steven Butala:
Yeah. On a rural part of, I can’t remember. Somewhere in the center of the country. I think it was Kentucky or Tennessee.
Jill DeWit:
Right. I want to say outside Nashville.
Steven Butala:
Yes. I think I want to say Nashville too.
Jill DeWit:
I think it was Nashville, yeah.
Steven Butala:
Learned about Land Academy, started buying and selling land. He’s obviously now doing the exact same thing, buying super inexpensive dirt and reselling it for more, which is what we all do for a living. And he’s times 10’ed his income.
Jill DeWit:
And he doesn’t need a moving truck or a warehouse.
Steven Butala:
Exactly. Now all his family members are involved, his parents and all kinds of stuff.
Jill DeWit:
It’s really good.
Steven Butala:
It’s a good story. There’s a lot of times we interview some people and they say some like … Like we interviewed Lori Phillips. She’s like, “Yeah, I used to work for this massive company. Trillions of dollars or billions of dollars.” And it’s not that far of a stretch to see somebody who’s that bright do well in that … I don’t mean bright. I mean, at that level of, as an executive, and I don’t use that term in a positive way. But when you get somebody like Johnny Newsome who’s grassroots, gets buy for this, sell for this, clean the product up just a little bit in between, and then rinse and repeat. That just, in my soul, it just makes me happy for some reason, where it’s not all this complicated math and financing and ivory tower stuff. I just love it. It’s such a treat to talk to people like that who have done well grassroots wise.
Jill DeWit:
Awesome. Thank you for tuning in. We hope you find our content valuable and we appreciate your support. If you haven’t already, please get on over to our YouTube channel, hit the subscribe button.
Steven Butala:
And your comments and suggestions help us to create the type of content you’re here for. Hitting the like button on your favorite episodes helps to support our channel’s algorithm and engage your interest for future shows.
Jill DeWit:
We are Steve and Jill.
Steven Butala:
I missed it.
Jill DeWit:
You did.
Steven Butala:
Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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