Are You a Recovering Landlord? (LA 1479)
| Are You a Recovering Landlord? (LA 1479) |
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWitt:
Hello.
Steven Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWitt:
And I’m Jill DeWitt, broadcasting from sunny Scottsdale, Arizona.
Steven Butala:
Today, Jill and I are talking about are you a recovering landlord?].
Jill DeWitt:
That’s funny, because we have a few.
Steven Butala:
Since the COVID, it seems like it’s optional to pay your rent now. Do you feel like paying your rent? Go ahead. If you don’t, don’t. If you feel like wearing a mask, go ahead. If you don’t …
Jill DeWitt:
Well, wait a minute. And if you don’t want to fill out the paperwork to get rent aid, I’ll do it for you.
Steven Butala:
That’s what’s so bad.
Jill DeWitt:
I feel bad for these poor … No, it’s true. The landlords are allowed to do it.
Steven Butala:
Oh, man.
Jill DeWitt:
It’s like what’s funny, with the person’s permission. It’s like, “Yeah, I’m too busy sitting on my couch. Will you do that for me?”
Steven Butala:
Never. And on top of that, institutional real estate companies, specifically class A apartment building REITs and stuff are reporting the best earnings ever, like record earnings. So I think some of the smaller landlords, some of these smaller apartment buildings in really specific states, California is one of them. California, New York and Michigan are having huge, huge problems with people not paying their rent. And every politician on the television is saying it’s okay.
Jill DeWitt:
And it’s extended again and again and again.
Steven Butala:
Yeah.
Jill DeWitt:
Yeah. I’m glad we’re not in that business.
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. And if you are already a Land Academy member, join us on Discord. It’s a party every minute.
Jill DeWitt:
So silly. Steven’s Discord is my Clubhouse.
Steven Butala:
I love Discord.
Jill DeWitt:
I know you do. Ann Marie wrote, “I’m working my way through the course and also listening to the podcast while driving. I have a mailer question. I think I’ve understood to send a tri county area a 1500 unit volume of mailers with 500 to each of the three.” Got it. “Then today the podcast was about getting really knowledgeable with one county and how to price it. Should I interpret this, that me, that I should send on my first batch to only one county with 1500 units going to the one county and drill down on two or three nearby counties and then go 500 each to those? Thank you.”
Steven Butala:
This is all you.
Jill DeWitt:
Me, why? Why? You’re the mail guy.
Steven Butala:
Because Jill and I-
Jill DeWitt:
Differ.
Steven Butala:
… Jill and I are enjoying instructing our first career path class, Land Academy Career Path.
Jill DeWitt:
True.
Steven Butala:
And we divided the whole entire group, it’s a group of 15 people, between brand new people and not brand new people. And the not brand new people could be, I’ve done anywhere between 10 or 20 transactions and I get it and I want it to be my career now, all the way up to I’ve done thousands and thousands of deals but I want to grow my business from 500,000 a month to a million a month. And she got the new people and I got the not new people. So, Ann Marie’s a new person.
Jill DeWitt:
You’re so funny. We might have different answers. This is going to be funny.
Steven Butala:
We do have different answers, and yours is the right one.
Jill DeWitt:
Here are my thoughts. Ann Marie, if you want to make your life easy, I really want you to send more mail to one concentrated area, so the offers you’re getting returned are like kind. You’re comparing apples to apples, not getting to know a new area based on what comes back. Are you sighing because you don’t like that?
Steven Butala:
No, I’m not sighing.
Jill DeWitt:
You’re breathing heavy like, huh.
Steven Butala:
Well, my answer is you can’t do this wrong. Whichever ones-
Jill DeWitt:
Okay. Well, let me finish my one. So here’s my thinking, Ann Marie. I want you to start with five areas, tool it down to three, and then you’re doing your red, yellow, green test. And one just really jumps out at you, like, wow this is great. Even better. These other two are also good, but boy, this one really looks hot. So that one area is where I’d like you to concentrate first because the reasoning is all the offers that are going to come back are going to be neighbors of the parcels in the one area in the same maybe zip or two zips really close to the target that you’re going for, the size and the acreage and the price. There’s obviously the zoning. You probably picked all that stuff specifically because you did what you were told. So you’re going for all that stuff. And it’s just so much easier.
Jill DeWitt:
So now when the offers come back, all you really care about is am I dealing with the right guys? Are we alive? Is there access? The numbers work because I already ran them, but I’ll check and make sure again. I know the size works because that’s all I mailed are those size, so that’s easy. And then the last thing is maybe an attribute. Oh, wow, this one’s really good because of X. And you can then line them all up really easily and buy the best ones, versus if I got 500 over here and 500 over there and 500 here, I got two over here, one over here and one over here. Okay, now I’ve got to really dig in and get to know these areas a little bit. I kind of do, but I didn’t really spend all my time on it. So is this one better than this one? I’m not sure. Now I’ve got to reach out to a realtor in this area. And you get where I’m going with that. And then you can expand. That’s my plan.
Steven Butala:
If you send 1500 mailers out that are priced correctly, whether it’s a single county or three counties, you’re going to do fine. That’s what I think. If it’s priced right.
Jill DeWitt:
Exactly the opposite.
Steven Butala:
I mean, I would actually send out 3000.
Jill DeWitt:
Well, there is that. Do 1000 in each one.
Steven Butala:
Yeah.
Jill DeWitt:
The more you do in each area, the more success you’re going to have. If you whittle it down to three that you really, really love, why wouldn’t you just send more mail and get the offers out there? I agree. Even if you have to stagger the mail. Maybe you can’t handle all the calls at one time. All right, fine. I got 3,500 units and I love all three of them. First batch is going to be this area. Second batch, it’s going to be this one. Third one’s going to be this one. There you go. I’m happy with that. And you’ve got a month’s worth of work there.
Steven Butala:
Today’s topic … And by the way, you should probably buy, if you can send out 1500, if they’re priced right, not too low, not too high, you should buy one or two properties and do pretty well.
Jill DeWitt:
I concur.
Steven Butala:
If you send out 3000, it’s just more insurance.
Jill DeWitt:
True.
Steven Butala:
You’re insuring that you’re going to get one-
Jill DeWitt:
A couple good ones.
Steven Butala:
… beautiful picture perfect deal hopefully, if it’s priced right.
Jill DeWitt:
Exactly.
Steven Butala:
Today’s topic, are you a recovering landlord? This is the meat of the show.
Jill DeWitt:
Can I ask a question?
Steven Butala:
Sure.
Jill DeWitt:
What made you think of this today?
Steven Butala:
It’s a topic, pretty hot. So Jill and I are teaching career path for the first time. It’s an advanced Land Academy taught by us live kind of thing over the camera.
Jill DeWitt:
It’s a custom program, 10 weeks long, that we do have recorder to take anyone from point A to point Z hopefully, or at least on the path, maybe to T so you know how to get to Z.
Steven Butala:
Later this week we’ll record a podcast all about it. But there’s a profile. I mean, I couldn’t help but notice the consistencies with the shifting people, and at least half of them are recovering landlords. They love real estate, the members. I love real estate, hate being a landlord. I hate it. It’s two different things completely. I love land.
Jill DeWitt:
You’re talking to landlords with tenants, not just owner financed properties.
Steven Butala:
Yep. And for some reason, people think, and I think it’s because of our parents, that buying a house, a single family, freestanding residence, and renting it out to somebody, that’s like be getting into the real estate business. And I feel bad because I don’t know how that got to be so prevalent. It is such the absolute wrong way to make tons and tons of money in real estate.
Jill DeWitt:
You know what I think? It’s not necessarily bad-
Steven Butala:
It’s bad.
Jill DeWitt:
… if you have the stomach for it. Well, let me back up here, because I don’t think this is bad. What if I’m a new kid in college? I’m a college kid. Instead of paying rent to somebody else, I scrape together enough to get a down payment, buy a house, and I rent out three rooms and I pay no money and they’re paying my mortgage.
Steven Butala:
Worst idea ever.
Jill DeWitt:
Why?
Steven Butala:
Because why wouldn’t you … Okay, so I scrape … What can go wrong? Everything can go wrong in a situation like Jill just described.
Jill DeWitt:
But I live there.
Steven Butala:
Why wouldn’t you, as a kid in college, get educated on how to buy and sell rural vacant land, buy a piece of property every month for 5,000 bucks and sell it for 15,000? You tell me those three people, if you do that every … Let’s just do the math. If you do that, you make 10 grand a month now by doing one deal, especially if you’re in college, because you have tons of time, because nobody goes to school in college.
Jill DeWitt:
Especially not now.
Steven Butala:
Now you made $120,000 a year and you’re a college kid. And with no risk. There’s no financing. You didn’t scrape together a down payment. You’re not chasing people or trying-
Jill DeWitt:
Your parents aren’t cosigning.
Steven Butala:
… yeah, looking for money in the couch to pay the rent.
Jill DeWitt:
That’s true. And then one person skips out of town.
Steven Butala:
All your friends hate you.
Jill DeWitt:
Oh, that’s true.
Steven Butala:
Stuff doesn’t work in the house. All your friends hate you because you own it.
Jill DeWitt:
Because you’re that guy.
Steven Butala:
And so this other way, nobody even knows it, and you’re buying a Porsche, because you’re making a … And when you’re a kid in college, that matters, the car you drive matters. So no, I think almost always owning a freestanding SFR and renting it out is ridiculous.
Jill DeWitt:
You know what’s funny about that? I was at Starbucks today.
Steven Butala:
Wow. There’s a sentence I never thought I’d hear you say.
Jill DeWitt:
I was at Starbucks this morning at eight o’clock because I had a dentist appointment at seven o’clock. Anyway, and this kid rolls up, I’m not kidding, in a bright orange McLaren.
Steven Butala:
Oh, man.
Jill DeWitt:
In his 20s. And his girlfriend gets out. She’s got her hair in a ponytail up on the top of her head. And it’s just like skipping into Starbucks.
Steven Butala:
Why do women do that?
Jill DeWitt:
I don’t know.
Steven Butala:
What is with that?
Jill DeWitt:
I don’t know. She had cute shirts on and ponytail up high, and she’s skipping. And I’m looking at this kid and I’m like, I just don’t get it. I mean, I’m glad … I don’t know. That’s not what you should be doing with your money.
Steven Butala:
I agree.
Jill DeWitt:
You should be doing other … especially at that age. You should be-
Steven Butala:
What part of town was it in? Because it might’ve been dad’s car.
Jill DeWitt:
Arcadia.
Steven Butala:
Yeah, it was dad’s car.
Jill DeWitt:
There you go. That could be. I hope it was dad’s car. You know what, I hope it was dad’s car. I’m not sure. It’s kind of funny. Anyway, you just brought out the car thing, so I had to bring that up.
Steven Butala:
So let’s say that’s not an SFR. Okay, Jack, cynical Jack.
Jill DeWitt:
What’s smarter then?
Steven Butala:
How about a duplex? Nope. How about a quad, four properties and you rent it out under one roof so there’s only one HVA system and all that? Nope.
Jill DeWitt:
What about an apartment building where you have a property manager.
Steven Butala:
Absolutely. If you want to buy a class A, a class B, class C apartment building that’s 20, 30 units and you get it for an amazing price in the right state … As we go on in life from a political environment standpoint, this gets harder and harder and harder. You can’t do this in California, what I’m describing. You can’t because people just don’t pay.
Jill DeWitt:
Or New York maybe.
Steven Butala:
No, New York’s worse.
Jill DeWitt:
I was thinking about the articles I was reading today about that and the tax situation and who might be leaving.
Steven Butala:
You want to buy a 25, 28 unit property in Dallas, I’m all for it. And it’s got to be an amazing price. I just read a study that the federal government put out about less than a year ago that said apartment buildings make 50%. So if you’re collecting $100,000 in rent a month and you have no debt, you’re going to put in your pocket 50,000 bucks. If you add debt to that, you’re going to put about $5,000 to $10,000 in your pocket after maintenance and everything.
Jill DeWitt:
I understand.
Steven Butala:
Why would you do that? Why would you do that to yourself?
Jill DeWitt:
I can see why people, they think it’s good because it’s enough you can live on. You’re like, “I’m living off it. How great is this?” Slash however you could be making more money and building up your nest egg or whatever you want to call it, your portfolio faster.
Steven Butala:
A single person sitting at the kitchen office that they set up, one person very easily buy and sell wholesale now. If you love the houses, I get it. You could buy a single house and resell it every month after you get the hang of everything. It can maybe take you … Can you even spend eight hours a week on one deal like that, eight hours a months, I mean?
Jill DeWitt:
Eight hours a month, that’s pretty good. Two hours a week.
Steven Butala:
Yeah, that’s about right.
Jill DeWitt:
Yeah. That’s good.
Steven Butala:
Buy a single house, mark it up, $25,000 net. This is extremely realistic. So now you’re making 250 to $300,000 a year working four to eight hours a month. Why would you ever, ever rent stuff out? I just don’t get it. The only way that works is when you are building an institutional company that owns 150 apartment buildings somewhere or mobile home parks or something like that. Then I understand that.
Jill DeWitt:
I get it.
Steven Butala:
It takes just as long to buy a mobile home park as it does a house.
Jill DeWitt:
Happy you cleared that up.
Steven Butala:
So, career path is packed full of recovering landlords, to answer your question.
Jill DeWitt:
That’s where this all came from. Happy you could join us today and happy you could join Jack’s rant, brought to you by-
Steven Butala:
That’s the feeling.
Jill DeWitt:
… Anger Anonymous. It’s the new 10 step program to make you happy. Join Anger Anonymous today.
Steven Butala:
Is that our sponsor?
Jill DeWitt:
Yeah, that’s our sponsor.
Steven Butala:
It’s free.
Jill DeWitt:
Heck yeah, it is free. Oh God, yes. I have so many people throwing money at this nonprofit. Please take my husband into Anger Anonymous.
Steven Butala:
Turn the TV off.
Jill DeWitt:
He’s a recovering anger management whatever.
Steven Butala:
Turn the TV off and come with me.
Jill DeWitt:
That’s right. Yeah. This is the whole campaign. Does your TV have a football in it?
Steven Butala:
Put the Jack Daniels down.
Jill DeWitt:
Exactly.
Steven Butala:
Turn the TV off.
Jill DeWitt:
Exactly.
Steven Butala:
Put those guns away.
Jill DeWitt:
Exactly.
Steven Butala:
Come with me.
Jill DeWitt:
That’s right. Stop scaring the children. Go to AA, Anger’s Anonymous.
Steven Butala:
10 step program, that’s funny, because I think it’s 12 steps, Jill.
Jill DeWitt:
Well, this one’s only 10. This one’s easier. We take all the religion out.
Steven Butala:
Oh my God, stop.
Jill DeWitt:
Okay. Now that we’ve got that covered, hey, by the way, five days a week, you can find us right here on the Land Academy Show.
Steven Butala:
We are Steve and Jill. Information.
Jill DeWitt:
Oh, join us tomorrow. Tomorrow the episode on the Land Academy Show is Land Academy Career Path is not just for pros.
Steven Butala:
You are not alone in your real estate ambition.
Jill DeWitt:
I still do have a sponsor.
Steven Butala:
Oh man.
Jill DeWitt:
That was good.
Steven Butala:
You’re something else, Jill.
Jill DeWitt:
That was great. Hey, by the way, here is the real sponsor. 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, that’s us, for investors like you. We are Steve and Jill.
Steven Butala:
We are Steve and Jill. Information.
Jill DeWitt:
And inspiration.
Steven Butala:
To buy undervalued property.
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