Jack Thursday and What Your Father Never Told You about Land Investing (LA 1467)
| Jack Thursday and What Your Father Never Told You about Land Investing (LA 1467) |
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hello.
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 sexy Scottsdale Arizona.
Steven Butala:
Wow. How long have you been holding that in?
Jill DeWit:
I just came to me actually, just S word, S word, sexy done.
Steven Butala:
Today, when Jill’s not horsing around, today, Jill and I talk about what your father never told you about land investing. this title I wrote, if you can’t tell. 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. And if you’re already a member, join us on Discord.
Jill DeWit:
Jeff wrote, “Hey all. I’m sure this has been answered before, but if you have two comparable info lots across the street from one another, with the only obvious difference being that one is cleared and the other is wooded, is there typically a difference in value? In this case the cleared lot last year sold for $65,000. Just wondering if it’s an apples to apples comparison.”
Steven Butala:
This is a fantastic question. Reality-based question and an academic question. So if you asked an economist this, if you’re not an economist and you’re not an accountant, you would never know that economists hate accountants and accountants hate economists. Accountants say to economists, get in reality. Yeah. Great. You sit in your office all day and come up with these concepts. But in reality, I’m an accountant. I’m in there in the field and we’re looking at stuff and how to make or lose money. This is an academic question. an accountant would say this, the price different, I’m sorry, an economist would say this, “At the price difference is how much it costs to clear the lot. That’s the difference.” An accountant would say, “No, you’re an idiot. It’s whatever the market demands. There could be some real value in a wooded lot, because you’re just going to create clear a little part of it to build a house.” So there’s your academic answer and there’s a reality answer. I personally probably price them the same. Would you?
Jill DeWit:
It’s the funniest thing too. I’m like, I have to say too. It depends Jeff. So when you say infill lot, now I’m thinking house lots are not that big. If we were talking 20 or so acres, I’d want the wooded one. I think the wooded one would be more valuable than the barren one kind of thing. It’s usually, that’s how that goes, because you have a lot of options at that point. I totally agree with you. So in this situation, yeah, I would just be pricing it based on per acre average in the area. But my gut tells me that for a buyer coming in, having a cleared lot, if it’s, again, I’m going to put a house there. It’s somebody did the work. It’s like someone poured a pad. Even if it’s not exactly what you want to build your house, somebody started to construction and then they walked away. But they put in some of the infrastructure and poured a pad. That’s worth something.
Steven Butala:
All true. It’s interesting you ask this now because the properties that Jill and I are buying, we really look at this. Because we’re improving the property to resell it and we look at the cost of how much it’s going to get that property graded correctly and all of that. And that stuff’s not insignificant. It can be expensive. But I’ll tell you if two people drive their car up to a property and they see a barren lot or if they see with one with beautiful trees on it, guess which one they’re going to choose.
Jill DeWit:
Then you have that.
Steven Butala:
Beautiful trees.
Jill DeWit:
There you go. Exactly. And they can decide where they want to put the house and position it and what trees they want to keep. So there’s value there.
Steven Butala:
Today’s topic, what your father never told you about land investing. This is why you’re listening. Maybe it’s why you’re listening, maybe you just want to listen to Jill like I do.
Jill DeWit:
Please tell us. Please, dad.
Steven Butala:
When I was a little kid.
Jill DeWit:
I’m like, I’m sitting here, ready to go. If I should have hot cocoa or something.
Steven Butala:
When I was very, very, very young, probably before school age, my dad bought a farm in rural, in our suburb of Detroit. And we lived in an urban area in urban Detroit, and we went and looked at the farm and my sister and I, my sister’s really young and he’s explained the whole thing to us. I remember it like it was yesterday. I have no idea why. I don’t know why I remember this more than other stuff. Who knows why that happens. He bought it for about $28,000 and sold it, I think for 78 or so, I think 79,000. So he made 50 grand and he sat us down and said, it takes me like two or three years in my accounting, my dad was a tax accountant, two or three years in my job to make this amount of money. And I guess that’s just where this started for me.
Steven Butala:
So I was real lucky to have some type of working example. And I remember thinking, well, why don’t we buy all the land? There’s a farm over there, there’s a farm over there, let’s buy all this and then you don’t have to work at all. And I remember my dad really laughing about that. He’s like, okay, let’s go buy it all. And I don’t remember what happened after that. Some version of it, I don’t know, but you need a working example. That’s what Land Academy is. We are a working example of what’s possible.
Steven Butala:
If we’re doing our job correctly, that’s how we’re teaching by example. We’re not just saying calculate all this data and we’re showing you how to do it step by step by step. We’re not saying there’s this data out there and it’s a mystery and go figure it out, like it’s some Harvard law class. This is like, this is how you do it and this is why and we’ve done it 16,000 times before. Here’s how to do it correctly and here’s how not to do it. And here’s how to take the risk out of it, for the most part. That’s what your father never told you, probably. And my dad never went into the details of any of this stuff either. He’s probably shocked, just as shocked as we all were, that he made that kind of money.
Steven Butala:
Here’s what else my dad never told me. Don’t get married when you’re young, they’re going to screw up your land investing career. Don’t have children when you’re too young, that’ll screw it up too. All this stuff, they are time sucks.
Jill DeWit:
I never had these discussions. I wish.
Steven Butala:
Well, I didn’t. Yeah, my dad never talked about this stuff ever. So it’s not so much about land investing, this topic, it is about wrecking your life and otherwise so that you can’t go have the time or the money to go land invest. We all know the land investing works. If you don’t know that land investing the way that we do it works, you need to find another podcast. I’m really serious. We’re not here, I’m not here to sell you anything. And neither is Jill. We’re here to talk and celebrate and talk about success and how to do it. Not whether or not it’s true. There’s a lot of places on the internet you can go watch idiots with Ferrari’s and they’ll tell you all about how to get rich by the time you’re 21, that’s not what this is.
Jill DeWit:
What’s with that stupid money machine? Have you seen that machine? I think that’s the dumbest thing. When I see that I tune out, by the way.
Steven Butala:
Yeah, me too.
Jill DeWit:
It’s like when I see someone on the hood of a car with that money machine, like, nope, and we’re done. You are not my people. But if I see you with a cool camper out somewhere enjoying your land, okay, now you’re my people.
Steven Butala:
I agree. Or if I see you sitting in front of a pretty cool computer with Excel and music in the background, I’m going to listen to that, watch that too.
Jill DeWit:
I appreciate that too.
Steven Butala:
What did you and your dad talk about?
Jill DeWit:
It’s interesting. The only discussion that was anything like this was my dad saying, just telling me to think about how hard I wanted to work in life and really think about how much money they wanted to make. Did I do that? No.
Steven Butala:
Well you’re here now.
Jill DeWit:
I am here now. At the time, like, oh, whatever. So all I could think about at the time was what was the most fun job? That’s where my head was at the time. And what’s funny is I’ve landed into a career now that I do find this fun. I was talking to my girlfriends last night and they’re like, “Do you have to work tomorrow?” I’m like, “You know what? I don’t have to work any day if I don’t want to. I really don’t.”
Steven Butala:
Is this work for you right now?
Jill DeWit:
For me, no.
Steven Butala:
Me too. This isn’t work for me.
Jill DeWit:
No, no, it’s not, no. I’m choosing. Every day I wake up choosing to do what I want because I love this stupid thing. And I was explaining to my friends, I was like, “Look, here’s the deal. I don’t have to work tomorrow. I’ll have to call anybody if I don’t want to, I got people that can do this. I love to do this. I’m a deal junkie.” And my friends like, “I get it. It’s like a high for you.” I’m like, “It’s totally a high for me.” There’s lots of things about this business, I’m like, eh, that other people run, but the deal part of it, the real core, dealing with the sellers and dealing with the buyers, that’s the part I love. And I get to talk about tomorrow on the show.
Jill DeWit:
But my dad, that was kind of it. And the only thing I remember my dad trying to empower me was, and both my brother and I, he sat us down and said, “Think about what you want because I’m here to tell you anything’s possible.” Who would have thought this guy from Grand Rapids, Michigan could grow up to be my dream job, which his dream job was a pilot and do fantastic in that career, retire off at MD 11 and then go on to NetJets and have a great time and fly around all the movie stars that he always, when he met Ron Howard, I can’t even imagine what that was like for him, flying him around. And I’m like, this is the greatest thing. That was his dream. And his other thing was, I also wanted a job that it was his hobby. His hobby was his career. And he said I wanting to have something where I could work very few hours and make a lot of money. And he got that too. So that was our only thing.
Steven Butala:
There’s an underlying theme in my entire childhood, throughout my whole extended family, immediate to extended family, that suffering is appropriate. And you need to suffer to get what you want. And I’m here to tell you that’s ridiculous. It is a Midwest myth that spreads like, I don’t know what.
Jill DeWit:
We were never taught that, thank goodness.
Steven Butala:
And we don’t teach our kids that either, we teach our kids to have fun, work hard, but have some fun.
Jill DeWit:
Yeah.
Steven Butala:
My dad had a duplex, he got it. My dad had a tax practice. So very often his clients, especially his business clients, couldn’t pay him. They didn’t have the cash to pay him for doing taxes and their books and the whole thing. So my dad would show up with the weirdest stuff. We got a pinball machine one time. So he ended up in a partnership.
Jill DeWit:
I think that’s cool. That’s awesome.
Steven Butala:
He ended up in a partnership with this little duplex in a pretty bad part of town. And whoever his partners were, they didn’t do anything. They didn’t collect the rent. And so I remember he got a phone call one day on the weekend. And if you know what wet plaster is, it’s the opposite of drywall. So back in the day, there’s this wood slats behind the wall and somebody would go in instead of, before drywall was a thing, would wet plaster it. So the effect is the same, the wall looks the same, but it’s wet plaster. So my dad got a phone call that the ceiling of one of the sides of the duplex, the wet plaster just fell down in the entire place on their heads, on a tenant’s heads. That was the day my dad said, “I will never be landlord again.” And he’s sold his, I don’t know how he got out of it, but he got out of it. And that stuck with me because Jill and I are terrible landlords. Every time we get a rental property or sell property-
Jill DeWit:
We’re great landlords.
Steven Butala:
We’re good landlords, but we hate it.
Jill DeWit:
Because we charge too little.
Steven Butala:
I just don’t like, I don’t want to get $500 a month when I know I can sell the thing and make 500 or 50 or 80. You really do the math on renting, it’s silly, especially when you have new deals coming in every day like this.
Jill DeWit:
Renting to make a little bit of money every month. Yeah.
Steven Butala:
The math doesn’t work for me. If you’re going to buy a class A apartment building, raise the rent and sell it for $12 million more. I get that.
Jill DeWit:
That’s who we are.
Steven Butala:
Yeah, renting is a necessary step to get to exit. Then I get it. But just renting to collect the money every month. But this is stuff your father never told you.
Jill DeWit:
Well you know what I think it is?
Steven Butala:
Renting a house out, buying a house and renting it out is maybe the dumbest real estate investment you could possibly make.
Jill DeWit:
This is coming from the man who said, who wrote this beautiful blog, how many years ago, which is true, about these rental homes that could feed a family.
Steven Butala:
Yeah.
Jill DeWit:
You know what it is? I think we’ve become more instant gratification people.
Steven Butala:
You and I?
Jill DeWit:
Yeah.
Steven Butala:
With age?
Jill DeWit:
I’m going to be devil’s advocate here, I don’t think there’s anything wrong with the long haul should you choose to go that path. That’s slow methodical. I’m making more money or paying down the asset, whatever it is. So I’ve already paid for the asset, I’m just going to sit back and collect it. Some people like that.
Steven Butala:
I don’t think renting stuff out and making money is necessarily bad. I think renting out a free standing house is silly. Getting an apartment building, get a trailer park.
Jill DeWit:
Oh, like having one? What if you have 20 though?
Steven Butala:
It’s still a freestanding structure with the ton of stuff that can go wrong versus a 20 unit apartment building where there’s one roof and it’s in a maintenance schedule and there’s always a-
Jill DeWit:
Well I understand that.
Steven Butala:
Unless you’re in California, that’s a very liquid asset.
Jill DeWit:
Right. I get it.
Steven Butala:
And even then, wouldn’t you rather have a 20 units trailer park where you’re just collecting pad rent?
Jill DeWit:
Oh, so it’s not just much being rent and a landlord.
Steven Butala:
Yeah, it’s houses.
Jill DeWit:
It’s the product type.
Steven Butala:
Houses suck period.
Jill DeWit:
Okay. Now I know where you’re going.
Steven Butala:
If you’re going to make money on a house, this is how you do it. And this is what House Academy is. You buy a house really cheap, way cheaper than it’s worth and then you stick a sign in front of it and sell it. You never go in.
Jill DeWit:
And let the next guy come along and clean it up.
Steven Butala:
HGTV it.
Jill DeWit:
And deal with the ceiling and deal with whatever problems in the cracks or whatever they find. And they love it. They’re still happy. Because they bought it right too.
Steven Butala:
Yeah.
Jill DeWit:
I get it. 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 Jill Friday and her take on relationships. You are not alone in your real estate ambition.
Jill DeWit:
Let me just stop you right there. It’s not a dating thing. It sounds like-
Steven Butala:
I think it should be.
Jill DeWit:
Oh, you want to talk about that?
Steven Butala:
There’s social relationships and there’s partnership relationships and there’s relationships with your children. There’s all kinds of relationships.
Jill DeWit:
That’s not where I was going with that.
Steven Butala:
Jill’s a relationship expert. I’m here to tell you. I mean it, you are. That’s a compliment.
Jill DeWit:
Thank you. Thank you very much. Well, I’ll all talk about some stuff and then you can ask me some questions or take it however you want it to go.
Jill DeWit:
Do you need to send out a few thousand offers to property owners like we do? Check out offers2owners.com. It’s offers and the number two owners.com. No setup fees, free mail merge, and exceptional service.
Steven Butala:
That’s for sure.
Jill DeWit:
We should know because it’s our company. Give offers to owners a call today.
Jill DeWit:
We’re Steve and Jill.
Steven Butala:
We’re Steve and Jill. Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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