Mistakes We Have Made in Land Investing (LA 1459)
| Mistakes We Have Made in Land Investing (LA 1459) |
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hello.
Steven Butala:
Welcome to the LandAcademy show, entertaining land, investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill DeWit broadcasting from sweet Scottsdale Arizona.
Steven Butala:
Today Jill and I talk about the mistakes we’ve made in land investing. And man, I have made some great-
Jill DeWit:
This ought to be funny.
Steven Butala:
Biblical mistakes. You know what? I bet my mistakes are way bigger than yours.
Jill DeWit:
You know, it’s funny, I have one catastrophic mistake that we make all the time, seriously. And then I have mistakes that I’ve just talked to people recently about, and I will share those too.
Steven Butala:
Excellent. Before we get into it though, let’s take a question posted by one of our members on the landinvestors.com forum. If you’re already a LandAcademy member, please make sure you check us out on Discord, one of my favorite tools actually.
Jill DeWit:
Cool. Yeah. There’s two places. So you can go on landinvestors.com and chat with everybody. That’s free, you don’t have to be a member. Or the Discord thing he’s talking about, is for members, and that’s super special and fun and fast.
Steven Butala:
It’s my new favorite tool.
Jill DeWit:
It’s hilarious. Okay. Levi wrote, “Hi everyone. They’re still in escrow now, so I don’t want to count my chickens too soon, but I just snagged my first two big time deals. They’ll both end up being about $15,000 to acquire, and I think they’re worth about $100,000 each, retail.”
Steven Butala:
That’s why we’re here.
Jill DeWit:
Holy moly. “I will probably list them at 65 ish.”
Steven Butala:
No.
Jill DeWit:
No, no. Let Levi go. Let him go. I’m going to share, it ties in today. “And move them quickly. They’re both partner funded and it’s also my first time doing that as well, working with an old childhood friend.”
Steven Butala:
Excellent.
Jill DeWit:
“Cross your fingers for me because if the spread works out the way I think, that’ll be the most money I’ve ever seen in one place in my life.” Aww.
Steven Butala:
That’s a great story.
Jill DeWit:
That ties into the show too.
Steven Butala:
And you’re never going to get rid of that childhood friend when they get a check, they’re going to be standing at your door.
Jill DeWit:
Yep. So here’s one of the mistakes I’ll give it. It’s a prelude and it ties into what Levi just said, and it’s a prelude to the show today. People often go in and retail price, and then they sit there and wonder why it doesn’t sell. Well, congratulations, because you’re retail price, you’re one of however many there are in there. You got to stand out somehow, and it’s usually price. It’s price and reach, that’s the whole point here.
Steven Butala:
It does tap right into the show.
Jill DeWit:
And you’re going to totally, Levi’s going to way double his money. If he wanted to move them for 35… What’s funny is Levi’s getting into the territory where if you price things too cheap, that you just try to really double your money and move on. Now it’s priced too cheap and people think there’s something wrong with it, and that’s the funniest thing.
Steven Butala:
Yeah, the good news is that there’s two. So I think you have the opportunity when you have two APNs like this, or more, to sell the first one at 40,000 and sell the second one at 100. So you recoup all your money, you get another mailer out, and you let the better of the two properties just mark it up. And if it’s really, truly worth 100, sell it for 90.
Jill DeWit:
Not what I do, but that’s okay. I like Levi’s read too, both at 65 because they’re worth 100 each and then let them go.
Steven Butala:
Today’s topic, mistakes we’ve made in land investing. This is the meat of the show.
Jill DeWit:
We obviously see differently about these things, and there’s nothing wrong-
Steven Butala:
No, I was just moving if forward because we’re really talking about the topic.
Jill DeWit:
Yeah. It’s really cool.
Steven Butala:
So obviously one of Jill’s steaks that she’s going to talk about, is marking property up too high-
Jill DeWit:
And wondering why it doesn’t sell.
Steven Butala:
Yeah.
Jill DeWit:
Because that happens all the time.
Steven Butala:
We are real wholesalers, not in the bad sense of the real estate wholesaling, dual escrow weirdo thing that-
Jill DeWit:
Right.
Steven Butala:
Gives some people a bad name. We are true, truly buy it so cheap that we can actually wholesale it, like wholesaling-
Jill DeWit:
Costco.
Steven Butala:
Yeah, like Costco.
Jill DeWit:
Think of some things like that, that you buy wholesale, think of Shark Tank. My wholesale price is this, my retail price is this.
Steven Butala:
Yup.
Jill DeWit:
Just like that.
Steven Butala:
Excellent.
Jill DeWit:
That’s how we do it.
Steven Butala:
Excellent way to explain it.
Jill DeWit:
Yeah. And you know what, and that’s how that’s how Levi could explain it. Look, why is this 65,000? Because I’m wholesale pricing and I’m not retail pricing it, you win. Oh yeah, that’s true. I think buyers are understanding that now, too.
Steven Butala:
I used to be the biggest advocate of this ever, especially when we were doing online auctions for land, just let the price be what it is, let the market decide what the price is going to be. But recently, probably in the last 24 months, the checks that we’re getting on the South side, on some of these properties and because the market is so hot, there’s nothing wrong with retailing a few pieces of property out a year.
Jill DeWit:
Okay. You know what? There’s no wrong-
Steven Butala:
And we flipped on this.
Jill DeWit:
Because really, it really depends… Isn’t that funny?
Steven Butala:
Jill and I completely flipped on this because I used to be-
Jill DeWit:
I don’t care.
Steven Butala:
All wholesale and she used to be, what are you crazy? But after a few years of seeing what comes back in the mail, she’s like, let’s just burn through it.
Jill DeWit:
No, because here’s the advantages to doing it the way, just what Levi’s talking about. His buyer is going to be running to the bank to pay Levi.
Steven Butala:
Yeah.
Jill DeWit:
Knowing that I’m buying something for 65 or 60, whatever Levi’s going to take, that’s worth this much. And Levi will never hear from the guy again. The only thing Levi might hear from this buyer, if you do it the way we do it, is do you have any more? I can’t believe that you’re letting this go for this price. And Levi’s like, yay. It all worked out perfect. So one of the things I was going to say too, is that… Want to hear what our fatal-
Steven Butala:
Yeah.
Jill DeWit:
Here’s our fatal, fatal, fatal mistake-
Steven Butala:
You go first.
Jill DeWit:
That we have made and we continue to make to this day, we are really awesome acquisition machines. We buy it, you send out the mail, we know how to buy it, we get these deals just like Levi. And then we forget about them and we don’t post them for sale.
Steven Butala:
Yeah. I mean-
Jill DeWit:
I forget.
Steven Butala:
You and I are right on the same page about this.
Jill DeWit:
Yeah.
Steven Butala:
Every single mistake I’ve ever made, real mistakes, not just once in a while you pay too much for a property. Very, very rarely does that happen. But every single mistake is on the sales side of this business because I don’t like it.
Jill DeWit:
Yeah.
Steven Butala:
I don’t like to sell, I don’t treat it with the respect that it deserves. And we’re in the process of hiring a full-time person to sell property for us, that’s how much we’re not-
Jill DeWit:
Well, here’s part of the problem. I’m going to to share some personal, I’ve had some soul searching while I’ve been away… We’re back in the same city, by the way. So I had 10 days of Jill time, and I did some soul searching, and I realized-
Steven Butala:
I can’t wait to hear this.
Jill DeWit:
Here’s one of my problems, I have a hard time posting when it’s not perfect. So it doesn’t get-
Steven Butala:
Really?
Jill DeWit:
Posted at all. No. Yeah, yeah. Totally.
Steven Butala:
Oh my gosh. Man, I don’t have a problem with not-
Jill DeWit:
I know you don’t.
Steven Butala:
Not perfect at all.
Jill DeWit:
I’m reading this book right now about personalities and trust me, I’ve identified your personality and it’s very different than mine.
Steven Butala:
You know what’s great? We can have a little family meeting right here with the camera on, and we can’t bicker with each other, we can’t yell at each other.
Jill DeWit:
Do you want to hear what it is?
Steven Butala:
Yeah.
Jill DeWit:
All right. If anyone knows, if I don’t say it right, the Enneagrams, if I said that. And the book is called, The Road Back to You. My girlfriend says, “You’ve got to read this book.” I’m like, “Okay, fine.” Now I haven’t taken the actual test, I’ll tell you, but I read the book and I pretty much identified myself as a one. And I’m a pretty good one, which is, I’m a perfectionist.
Steven Butala:
Wow.
Jill DeWit:
And to the point where if I can’t do it right, sometimes I don’t even start the project. I’m so-
Steven Butala:
That’s not good.
Jill DeWit:
I know. Well, wait a minute, your turn’s coming. We all, that’s not good.
Steven Butala:
This is fascinating.
Jill DeWit:
Well wait a minute, but here’s the thing, there’s always good things and bad things about it. Here’s the good news about being with a one, here’s why, I do the work of two people and you know that.
Steven Butala:
Yeah, you do.
Jill DeWit:
I am classically-
Steven Butala:
Really like six people, actually.
Jill DeWit:
Right? I can’t go into something unless it’s going to be done and done right, and done well. And I will work too hard sometimes. Sometimes I have a hard time. This is why I identified this too. I had a hard time relaxing sometimes this last week. I sit on the couch trying to relax, reading this book, feeling like I should have my laptop open and be working. I really have trouble with that.
Steven Butala:
Working on what though?
Jill DeWit:
Just something. Well, maybe posting property, seriously.
Steven Butala:
Oh Jill.
Jill DeWit:
I know.
Steven Butala:
We’ll talk.
Jill DeWit:
I know, I know.
Steven Butala:
I’m going to take you to lunch today maybe.
Jill DeWit:
Aww, thank you.
Steven Butala:
We’re going to figure this out.
Jill DeWit:
Thank you.
Steven Butala:
Because there’s no reason that you should feel bad about anything.
Jill DeWit:
Well, here’s a funny thing about your personality, which I think I know what you are, you got to take the test with me. Will you take it?
Steven Butala:
Absolutely.
Jill DeWit:
Okay. I think you’re, I can’t remember what number it is, but I think you’re the performer, which I think is a three. And one of the things about the performers are, they like to blow through things-
Steven Butala:
Well, yeah.
Jill DeWit:
And really fast. And it’s very hard for me, the perfectionist, to watch you blow through something and say, “That’s good enough.”
Steven Butala:
Oh man.
Jill DeWit:
So here’s how-
Steven Butala:
We got to talk.
Jill DeWit:
It describes me, this is so funny, this is totally off the topic, but you get it. So I was describing this to one of my girlfriends, we were having brunch yesterday. I said, “Here’s how we are. If Steven and I are left to do an Ikea project together-”
Steven Butala:
Oh man.
Jill DeWit:
“And we’re missing a part, first of all, I will make sure, I will look at the instructions and make sure we have all the parts. I will stop right there,, I will contact Ikea and I will wait for the part. This one will go out and find duct tape, or maybe chewing gum.”
Steven Butala:
That’s it. I’ll make a part.
Jill DeWit:
That what I was saying.
Steven Butala:
I’ll go in the garage and machine a part or something.
Jill DeWit:
It might be chewing gum that’s going to hold it together.
Steven Butala:
I’ll get that done.
Jill DeWit:
And I’m like-
Steven Butala:
It needs to be down.
Jill DeWit:
And I’m like, “Nope, we’re waiting on Ikea to mail us the right part.”
Steven Butala:
I would sit on top of it when it’s done and have a beer. In the time that you can load the internet to order that part, the whole thing will be done.
Jill DeWit:
Oh I know, but it won’t be done the right way as far as I’m concerned. So that’s why I have trouble with it.
Steven Butala:
Okay. This is just fascinating for me. So what do we do?
Jill DeWit:
We have to accept each other. We have to-
Steven Butala:
I accept you completely.
Jill DeWit:
I know, but you know what I mean? It’s like-
Steven Butala:
Okay. So here’s this perfection… This is going to be a long show. This perfectionist thing.
Jill DeWit:
I know.
Steven Butala:
How do you explain-
Jill DeWit:
It’s my dad.
Steven Butala:
Not really being on time then?
Jill DeWit:
You know, what’s funny about that… Oh, you know, I don’t know about that one. That one’s kind of weird.
Steven Butala:
Yeah, maybe that’s in the back of the book.
Jill DeWit:
Or maybe I have to perfect myself to be at that event, more than I need to be there on time. Maybe I need to make sure that I show up and I’m ready to do it the right way, not necessarily… It doesn’t talk about punctuality at all as far as the perfectionist. That’s probably it, the perfectionist doesn’t talk about punctuality, it talks about… One, in the book, the guy gives an example. Like he was taking a flight somewhere and he was really worried about this because it was a long flight, whatever reason. It’s like, it was the biggest plane on the planet at the time. And he’s like, it felt uncomfortable and-
Steven Butala:
What’s uncomfortable, the big plane is uncomfortable?
Jill DeWit:
Yeah. He’s like how, he had a little mental thing, like, “It’s amazing to me, this thing can get off the ground.” Right? So as he’s sitting there in his seat waiting, one of the pilots walks by and they had a little quick conversation. And maybe he was reading the book or something, I think he was reading the book or writing them. I don’t know. Anyway, the pilot said something about, “I’ve heard about this stuff. My wife’s into it, she says I’m a one. I don’t know what that means.” And the guy said, “That means I have nothing to worry about. Thank you very much. Because you, as a pilot, as a one, are so checklists and calm in these situations, you do everything perfectly.” I’m like, Oh.
Steven Butala:
Or maybe it never gets off the ground at all because-
Jill DeWit:
What if it’s not right, we’re not going.
Steven Butala:
The buttons are dusty.
Jill DeWit:
That’s me. If it’s not right and not perfect, that’s how I fly a plane too. If it’s not right, we’re not going, I’m not messing around.
Steven Butala:
Yeah. We’re going to talk at lunch today.
Jill DeWit:
So back to the mistakes we made in land investing.
Steven Butala:
So is it possible though, that the fact that we have different personalities as a unit-
Jill DeWit:
Of course.
Steven Butala:
We’re better?
Jill DeWit:
Of course.
Steven Butala:
We’re a good influence on each other.
Jill DeWit:
Of course.
Steven Butala:
Because if we were both ones, nothing would ever get done.
Jill DeWit:
Could you imagine? Or we’re both threes. Holy moly for both.
Steven Butala:
Yeah, that’s not good either.
Jill DeWit:
Yeah, that’s the whole point. I mean, but maybe one of the mistakes in land investing is people don’t get partners.
Steven Butala:
That’s actually on my list.
Jill DeWit:
Finding someone that you have a fit, like us.
Steven Butala:
That’s on my mistake list.
Jill DeWit:
Yeah. Don’t find two of you, find someone who compliments you and gets stuff done.
Steven Butala:
Do you have a list? A real list list? Because I do.
Jill DeWit:
Just in my head list.
Steven Butala:
Okay.
Jill DeWit:
Go ahead.
Steven Butala:
No, you go first, this is interesting.
Jill DeWit:
So one of them was, well overpaying for property. I do talk to people about that often. And it ties into this with the retail thing. You think you got to sell it for that because that’s what everything else is selling for. Do ya? You just got to move the property because you’re going to buy a bunch more. That’s where people, that this is their one time investment, and they’ve got the realtor, and they’re hoping to cash out, and they’re going to sit there for a year and wait. And by the way, you don’t want to be that guy, because by the time you sit there for a year, you could have done 10. It’s so-
Steven Butala:
That’s right.
Jill DeWit:
It’s so silly.
Steven Butala:
That’s the three in me.
Jill DeWit:
Just move on, don’t be that hung up. I’m trying to think of what other mistakes people have made. They miss things.
Steven Butala:
This is the thing with this show, it’s called mistakes we’ve made.
Jill DeWit:
Oh. All right, well I talked about mine.
Steven Butala:
What I want to hear… Oh that’s it?
Jill DeWit:
Mistakes we’ve mad.
Steven Butala:
Because I have a long list of stuff that I’ve done.
Jill DeWit:
My biggest mistake is, well one of them is, we learned from the beginning that you can’t have two people working on a deal.
Steven Butala:
That’s for sure.
Jill DeWit:
You have to-
Steven Butala:
That’s you though.
Jill DeWit:
Decide who does what and-
Steven Butala:
That’s actually a universal acquisition role.
Jill DeWit:
And stay out of the other person’s away, whether… And this was harder for Steven than it is for me. I’ve had to convince you, it’s truth time, a couple of times that I got this. And then you finally, after the 10th time you go, “Okay, I guess you got this.”
Steven Butala:
That hasn’t happened recently at all.
Jill DeWit:
I know it hasn’t but-
Steven Butala:
That’s years ago.
Jill DeWit:
It was. But in the beginning, that was… What a-
Steven Butala:
The single biggest mistake I’ve ever made, and I’ve said this on the show before, and please don’t do this, is have a single point of failure in anything. And so specifically I had a single point of failure around 2009, 2010, right when Jill and I joined forces, and she solved it, she fixed it. I had a single point of sales channel failure, which was Ebay and Ebay, it stopped, people stopped bidding, the economy didn’t work. The economy, we went into the great recession and it brought us to our knees. And we had a bunch of inventory, and Jill figured out, she’s like, “Well, who are the other people in the business?” And so we sat down one day, I remember it like it was yesterday, and I wrote down or spreadsheeted out, I think probably 10 or 15 people that I know that are in the business. And I have a, from the auction circuit, and I had, here’s their phone numbers.
Steven Butala:
So she started calling everybody and she sold a ton of property, hundreds and hundreds of thousands of dollars of property, in a week or two. And got us out of that recession. And it’s not just sales, it’s a single point of failure. And it taps right into partnership because I’m not a salesperson. I can do it, but I don’t want to. I’m a technical, accounting, spreadsheet, data person.
Jill DeWit:
Yeah.
Steven Butala:
And so you don’t want to be trying to do everything yourself for long. You know? I think for a couple, the first two years, maybe you can get your kids to help you, maybe you can get your spouse to help you.
Jill DeWit:
Or months.
Steven Butala:
At some point, and Jill and I just had this conversation a couple of days ago, we’re at a point in our career where anybody we hire, whether they come on our staff or we use them to improve property somehow, my rule right now, hard and fast rule, is they are a thousand times smarter than I am at it. And they had at least 20 years of experience in whatever it is that we’re hiring them to do. Whether its technical websites, data, I don’t care, property improvement, real estate sales. If you hire somebody, at least 20 years of land sales experience in that area. That’s it.
Jill DeWit:
That’s a good… What, I’m letting you go, you had a long list.
Steven Butala:
Oh man, geez. Recently-
Jill DeWit:
I’m trying to think.
Steven Butala:
I’ll tell you what, I tend to send out 25,000 unit mailers all at once, and that’s probably not the best thing to do. It’s hard on the staff, it’s hard on Jill’s staff and-
Jill DeWit:
It’s true.
Steven Butala:
I should probably be more-
Jill DeWit:
It’s funny, it’s comical.
Steven Butala:
I should probably calm down a little bit, maybe do a 20,000 unit mailer, just send it out in 2000 unit chunks.
Jill DeWit:
This is what happened, this is the truth time too, this is part of your personality where you want to hurry up and get it all done. You’re like, we’ll just figure it out. Hold on a moment. It’s a fire hose. Jeez.
Steven Butala:
There’s several states in the country that I know of, that you can do minor splits. You can take a piece of property and go through an application process with a survey, and turn one property into five. Four or five, depending on where it is in the country. And so we’re going through that-
Jill DeWit:
Right.
Steven Butala:
And I’ve put a budget together, and we’re hitting the budget, both on the buy side and the sell side, and we’re making a ton of money. We’re doing a lot fewer deals now, and making a lot more money. And I’ve really, at my age, I started, for the first time ever, I’m happy to report-
Jill DeWit:
Okay.
Steven Butala:
We only need to do a couple of deals like this every year to make a million bucks. And we’ve got our life situated financially, where that’s way more money than we need at all. It’s now going into a trust for children and stuff, and I’m okay with that. A couple of years ago, I’d be like, what? We’re going to do 90 of these a year.
Jill DeWit:
Yep. I understand. That was good. I’m sure we’ve got more, but I think we-
Steven Butala:
I’ve been, all throughout my career, except for right now, I’ve waited to fire bad employees, way too long. Our lives, the biggest source of issues between Jill and I as a life partner and business partner in the same house, on the same desk, the biggest source of problems between us are bad employees.
Jill DeWit:
True.
Steven Butala:
And we don’t have a single bad employee right now that, I think.
Jill DeWit:
Exactly. It makes a difference. Yeah. Hire correctly. That’s a mistake.
Steven Butala:
Yep.
Jill DeWit:
Yeah. And you know what, here’s a mistake, here’s my last one then, because you’re on this topic, which is I didn’t fire fast enough.
Steven Butala:
Yeah, exactly.
Jill DeWit:
That was a mistake.
Steven Butala:
And on the flip side, we didn’t hire fast enough too. It’s like when Jill can’t relax, I don’t know why, we’ll talk about that later.
Jill DeWit:
It’s just me. It’s okay.
Steven Butala:
I think we should just-
Jill DeWit:
You’re sweet.
Steven Butala:
We should hire somebody.
Jill DeWit:
I know, you’re sweet.
Steven Butala:
And she’s got a-
Jill DeWit:
That’s the man-
Steven Butala:
For the first time ever, Jill’s got-
Jill DeWit:
Solving my-
Steven Butala:
A personal assistant.
Jill DeWit:
Yeah.
Steven Butala:
So 40 hours a week, personal assistant. So there’s no reason you shouldn’t-
Jill DeWit:
I know. We’re good.
Steven Butala:
Have to do anything.
Jill DeWit:
Thanks. Happy you could join us today. Five days a week you can find us right here on the LandAcademy Show.
Steven Butala:
Tomorrow the episode on the LandAcademy Show is called, what makes a good land internet posting? You are not alone in your real estate ambition.
Jill DeWit:
Cool.
Steven Butala:
The staff asked me to do this because they’re tired of answering it.
Jill DeWit:
Oh, god.
Steven Butala:
We’re going to ask Jill this, she’s going to answer this tomorrow for us because this is one of her mistakes.
Jill DeWit:
Oh.
Steven Butala:
Having to have, you have to have a perfect internet posting.
Jill DeWit:
Oh.
Steven Butala:
Here’s the good news about internet posting, and we’ll open with this tomorrow, there’s a lot of examples all over the place, all you got to do is just copy that.
Jill DeWit:
Totally. Hey, if you need access to any sort of ownership or property details, including owner phone numbers and FEMA flood map overlays, check out neighborscoop.com created by investors assets for investors like you. We are Steve and Jill-
Steven Butala:
We are Steve and Jill, information-
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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