Real Estate Investing 2021 (LA 1501)
Real Estate Investing 2021 (LA 1501)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hey.
Steven Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill DeWit coming to you from scorching Scottsdale, Arizona.
Steven Butala:
Not yet, but coming.
Jill DeWit:
Yeah.
Steven Butala:
We’ll be in a different state.
Jill DeWit:
It’s probably 100 today.
Steven Butala:
We’ll be in a different state for sure, when it gets real hot. Today, Jill and I talk about real estate investing in the year 2021, what’s different about the past and what’s probably coming in the future.
Jill DeWit:
You know what this is like, I remember when I was dating, newly dating, late teens, early twenties, and you’re a girl, I’m a girl all hung up on a guy and my mom sat me down and said, “Look, don’t get all hung up. You think this is it, this is the guy, this is what I’m going to do, whatever.”
Steven Butala:
He loves me. But he loves me. You don’t understand.
Jill DeWit:
It wasn’t even that. I was too into him. But my mom’s like, look, let me just share with us with you. The guy that you bring home at 18, 19, 20 is pretty different from the guy that you’re serious about in 30, 31, at an age that you should be really getting serious.
Steven Butala:
Do tell. What are the differences? Because this is going to be the show now.
Jill DeWit:
All right. Want some truth time?
Steven Butala:
Yep.
Jill DeWit:
I may or may not have been in a punk rock phase at that age. I once had my hair done, came home and my mom cried. So I may or may not have dated a guy that wore more eyeliner than I did. And as you can see Steven wears zero eyeliner. So there’s a little difference there.
Steven Butala:
I’m the guy she settled for.
Jill DeWit:
Where is eyeliner guy now, I don’t know.
Steven Butala:
He probably looks like me, just a lot less money.
Jill DeWit:
That’s true. So anyway, that’s one really good example of what was then and is now, what you thought was important then and how it’s the end all be all and what’s really important now are different. And what’s really going on in 2021 now with real estate and investing and everything, it’s pretty darn awesome. And I’m glad that you’re older and can handle it and you’re ready for it.
Steven Butala:
I don’t understand this. So is 2021 the punk rock guy or the old guy like me?
Jill DeWit:
2021 is you.
Steven Butala:
Okay.
Jill DeWit:
Yeah, yeah, no, no. That was a year that I’m not going to call out, but it was way before 2021. When I was 20.
Steven Butala:
Okay, you’re actually assigning a real year. I understand.
Jill DeWit:
Yeah. Yeah.
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. If you’re already in our group, join us on Discord.
Jill DeWit:
It was in the eighties. I will be truth. So, okay. Austin wrote, “Hello. I’m writing this in response to podcast number 1479.” Do you remember that one? I do.
Steven Butala:
Oh yeah. I remember every single word.
Jill DeWit:
Me too.
Steven Butala:
I remember episode 10.
Jill DeWit:
I love it. “About recovering landlords.” I do remember that. “I’ve owned a duplex for about 10 years.” This is going to be funny. “It cashflows about $600 a month, depending on expenses. If I was to sell it right now, I could gross approximately $220,000 after paying off the underlying mortgage.”
Steven Butala:
I’m going to stop you there for a second.
Jill DeWit:
Yay.
Steven Butala:
You would net 220, not gross. This is, oh my God, Jack, really, do you have to call us out on every little nitpicky thing, gross, net, please.
Jill DeWit:
He does. He does.
Steven Butala:
Well for the same reason that your mother stopped you from saying, ain’t your whole life. Like I ain’t going to eat my broccoli.
Jill DeWit:
Okay. You’re picking on us, got it.
Steven Butala:
It’s net, it’s net. You’re going to net 220. Look, we’re all real estate investors here. We should learn to speak the language. It’s not a criticism. I’m just helping.
Jill DeWit:
It’s a helpful reminder from Jack. Okay. “The real estate fees and other taxes would still need to be subtracted. I’m not sure what this looks like tax wise until I have a chat with my accountant. Would you guys hang on to this asset and let rents and equity go up or sell it and apply to property acquisitions?” I know what I’d do. And we’re going to answer at the same time. Hold please. “I could also do a cash out refinance as well. Thoughts on this?” Okay. So here are your choices and we’re going to do one, two, three.
Steven Butala:
We have three choices.
Jill DeWit:
One is hold. Two is sell for cash. Three is refi.
Steven Butala:
Refi.
Jill DeWit:
Refi. So hold, cash, refi.
Steven Butala:
Hold, sell.
Jill DeWit:
Or hold, sell, refi. Okay. Three, two, one. Sell.
Steven Butala:
Sell. That’s why we’re together.
Jill DeWit:
Thanks for playing Austin, your prize today is a free trip to see Land Academy Deal Funding in-person. It’s a thing.
Steven Butala:
Here’s why, Austin, I’m not picking on you. I want you to have great real estate career, that’s all it is. Let’s think about this like it was an investment, not a piece of property, but I don’t know, any investment that you would make, shares of stock or convenience store. Anything that you could make. You paid, if you have equity of $220,000 in this thing, you paid more than that. You probably paid over 300, or let’s just say you paid 300, 280, some number, 250, I don’t know. You put at least $20,000, 20 or $30,000 into this thing, unless you have some weird 2% down mortgage. So even if that’s the case, that’s not good because … it doesn’t matter. You probably paid more than that. It’s cashflowing at $600 a month, so you make what, $7,000, $7,200 a year on something that you put, it’s going to take you, how many years is it going to take to recoup your costs and how much risk are you taking?
Jill DeWit:
I have a comment to make. I just did the math.
Steven Butala:
And if you do, give me one second, Jill, if you cash out refinance this, you’re just leveraging it more. So it becomes a less worth, the asset becomes less valuable to when you go sell it. So that’s the reason we did the episode 1479 is to really inform people about these tiny little houses or duplexes or quads that I don’t think almost ever make sense financially, unless you’re buying it in California where you know it’s going to double in value in five to 10 years. But even now, California is making it impossible, very impossible, in my opinion, very hard for landlords to collect rent. And that’s not going to be a new thing. It’s going to be, this is the part of the show today, so get the hell out of that thing.
Jill DeWit:
I think you did great up until this point and let’s talk. Here’s my math, $600 a month times 12 months is you make $7,200 a year, times 10 years, that’s $72,000.
Steven Butala:
I love, you’re still the girl for me.
Jill DeWit:
Why would I want to pass up $220,000 now to hold onto this for another 10 years and still not make that much money? That’d be 20 years, 20 years of your life and headaches and tenants and moving in and moving out and carpet cleaning and carpet replacement and new roofs and all of that for less money? I take the money, what I could do and what you could do Austin, because you’re in Land Academy now, we got ya, with $220,000 in six months.
Steven Butala:
Could turn that into a million dollars.
Jill DeWit:
Easily, easily, easily. So what’s the thing? To me just no question. I think you did great.
Steven Butala:
Me too.
Jill DeWit:
You did awesome up to this point. Now you need to cash out and make some different decisions.
Steven Butala:
This is not some scheme to get you to join Land Academy, it’s not at all. You’re already in there in the club. It’s not some way to day to do something you’re not comfortable with. It’s just pure math. If you were a grandfather and you’re 82 years old and you just didn’t have the energy or care about buying and selling land, then a duplex where you collect six or $700 a month or $7,000 a year and it compliments your social security and you’re playing with the grandchildren all the time, that’s a great investment, but-
Jill DeWit:
That you give to the kids. That you give to you, Austin.
Steven Butala:
Yeah. You obviously have the energy and the interest to do other things in real estate, that’s why you’re here. And I just think your quarter mil is going to be put to great use by turning land deals.
Jill DeWit:
Exactly. That’s good.
Steven Butala:
In fact, if you were going to say, I’m going to sell my duplex and buy and sell houses right now, I would say keep the duplex. So land is the way to go. Today’s topic real estate investing in 2021. This is the meat of the show. I hope I wasn’t too hard on him. I don’t mean to be hard.
Jill DeWit:
We’ll find out. I’m sure we’ll hear about it.
Steven Butala:
There’s some people, Austin, I’m not picking on you. I get in a lot of trouble sometimes by answering these questions, if I was smart I wouldn’t use the same name.
Jill DeWit:
Austin knows. I think we’ve got to know you by now. Good, bad or otherwise, you are very transparent and truthful and speak your mind.
Steven Butala:
I want everyone to succeed.
Jill DeWit:
Sometimes I wish you wouldn’t speak your mind.
Steven Butala:
Do you have some questions for me on this topic?
Jill DeWit:
Yeah, my favorite thing is when I walk out and you go, “Not your best look.”
Steven Butala:
I don’t do that unsolicited ever. She’s paraphrasing. She pesters, all men know this. Does this make me look fat? No sweetheart, you look awesome.
Jill DeWit:
I don’t do that.
Steven Butala:
You look great today. Is that new?
Jill DeWit:
I don’t say that. I’m like, hey what do you think? I felt good about it. And you’re like-
Steven Butala:
Oh no, no, you look fantastic. I would absolutely-
Jill DeWit:
Not your best look.
Steven Butala:
No, that’s my final to end it after 10 comments that didn’t get received well.
Jill DeWit:
I have a lot of Goodwill piles.
Steven Butala:
You look great today.
Jill DeWit:
Thank you. Anyway.
Steven Butala:
Are you sure? Yeah. I’m telling you, you look great. I think that’s new, isn’t it? No, no. I got that two years ago.
Jill DeWit:
All right.
Steven Butala:
I’m not sure if it’s fits right. Does it fit me right?
Jill DeWit:
I opened a can of worms. I don’t even say that.
Steven Butala:
Jill, sometimes you do.
Jill DeWit:
I don’t. But thank you. Thanks for throwing me under the bus. The imaginary bus that I didn’t even bring to the table.
Steven Butala:
You kind of did. You brought this all up yourself.
Jill DeWit:
All right, back to the topic. So I was going to ask you, okay, now it’s 2021. I have five things I want to ask you about. I’m going to ask you from then, because there’s … then to now. I want you to give me your old best resource and your latest one. So let me give you like number one is data. Think back when you first started this, how did you get data? And tell me what you do now and what’s your number one tool.
Steven Butala:
So there’s no data that was available in any way like this. What I did was I would take any type of dataset that where I could get a fax number, let’s say it was back in my way back day, it was anybody who owned a nursing home or an assisted living facility had to register with the national, wherever they got money. And so they had to disclose their phone number and who the administrator was. It was pretty good database actually. And it was in a book like a phone book. And so I one time for like two weekends straight input that, all of it and got a very solid list of fax numbers and a person to send that fax to. So that was the only data sets that we had. The only way you could get data to, and I wasn’t in the business yet, for landowners was to go to the county and ask them for the data. And they would hand you and they by law have, the reason we’re the reason we’re all in business is-
Jill DeWit:
Public.
Steven Butala:
It’s public information so they would hand you a green bar sheet, IBM printed out green bar sheet, and you’d have to input it that way too.
Jill DeWit:
What’s your 2021 favorite tool for that now?
Steven Butala:
DataTree. You can get a dataset in any county. They have a hundred percent coverage in the country for any county and download it in seconds. What used to take me two weeks to get it into the correct format.
Jill DeWit:
Love it. Okay. Number two, mail, then and now. How would you effectively send out offers then to now?
Steven Butala:
There was no bulk mail scenario, no such thing as a mail merge in the early nineties, Microsoft Excel and Microsoft Word were in their infant stages and they didn’t connect through a mail merge. In fact, most people, including me, were using Lotus instead of Excel. So there wasn’t a way to send mail to landowners other than taking that green bar sheet and typing it out one by one, which I didn’t do. I opted for this fax thing for commercial real estate.
Jill DeWit:
Love it. What’s your number one mail source now?
Steven Butala:
It’s this a trick question?
Jill DeWit:
Kind of.
Steven Butala:
Jill and I were so unsatisfied with our bulk mail client in 2000 and what, 2004? No, no, 2010, we went through a ton of them and they all sucked. So we created our own. So now we use offerstoowners.com.
Jill DeWit:
How’d you do due diligence then and then now?
Steven Butala:
This is hilarious.
Jill DeWit:
Uh-huh (affirmative). I like this.
Steven Butala:
We would take a plat, due diligence is when somebody signs an offer and they send it back, so you look up the property. It would start with a plat map. So we’d have to get the plat map from the county.
Jill DeWit:
How long would that take?
Steven Butala:
Well, it would take a week, at least, because you have to send a check to the county, they would go back and Xerox it on a photocopier and send it back to you in the mail. If you’re real lucky, they would email it to you and this is around when email started, which is not when it started, when it became prevalent in like, ’04, but they didn’t, they still didn’t, there’s some counties you still have to send a check. There’s counties in Arkansas that still are not computerized.
Jill DeWit:
What’s your due diligence number one tool now?
Steven Butala:
I mean you can pull up offers, I mean, neighbor scoop. Again, we created the tool because we were so dissatisfied.
Jill DeWit:
Kind of how I’m going with this too. I didn’t even realize, as we’re talking this through, how many tools that we had to create to make them even better.
Steven Butala:
We created neighborscoop.com to do this. You can do it on the phone with the seller now. You can pull up their property and say, yep, I’m going to buy it.
Jill DeWit:
And you have their phone number. It’s amazing. And FEMA, flood map stuff, it’s awesome.
Steven Butala:
It’s easy to pull up real estate that if it has a post office address 123 Main Street, but there’s 150 million properties in the country, 85% of them don’t have a post office address. And there’s very, very few of tools. One of them is Neighbor Scoop that allows you to just put in a state, county APN.
Jill DeWit:
And there it is.
Steven Butala:
And it pops right up.
Jill DeWit:
Yep. All right. Talk to me about property management, like your CRM. How did you manage the deal flow back then?
Steven Butala:
We very poorly managed it in Excel.
Jill DeWit:
How many times did you like lose it and have to get that recreated?
Steven Butala:
I don’t know. I don’t know how many deals we lost. I suspect it’s a lot.
Jill DeWit:
When I first started that was one of the things that it was like every year we get the tax bills, right, and we’re like, oh well, we forgot about, we still own that. Where did that go? Oh my gosh.
Steven Butala:
We still get tax bills for properties that I’m like, oh, geez, I didn’t.
Jill DeWit:
Do we still own that?
Steven Butala:
Yeah.
Jill DeWit:
Yeah. I had one just the other day, I’m like, whoa, I forgot about, I actually paid it current because they were about to take it back. I’m like, you know what, I still want this one. So I got it all current. That’s so funny. All right. And so what’s your property management system now?
Steven Butala:
You mean like a CRM, not a property manager?
Jill DeWit:
Mm-hmm (affirmative). Yeah. Not the person.
Steven Butala:
Airtable. We use Airtable very successfully. We just talked about it on Career Path and everybody was like, wow, this actually works. It’s pretty simple. We don’t get any money for talking about this and don’t want any money. The important thing about these CRMs, including Airtable is if you’re new, you don’t need, if you’re doing 30 or 40 deals a year, you don’t need a CRM. You can just manage that in Excel, on Google drive and get VA’s involved if you need to. But it’s when you’re doing two, three, four, 500 deals a year or a month, in some cases, it gets to be a mess.
Jill DeWit:
Okay. You’re almost at a hundred percent. I have one last question for you. Back then and again, up to now versus now, what was your number one go-to resource for help or guidance or something like that? Mentoring?
Steven Butala:
There isn’t any.
Jill DeWit:
Yeah. How about now?
Steven Butala:
There’s no place to get any questions answered. In fact, you know what, land has been the bastard stepchild of all real estate and continues to be misunderstood and completely overlooked by the mass majority of real estate people. I don’t care if they’re real estate agents or real estate investment trusts. That’s just not what for whatever reason people want to be in, until you talk to a single family residential home builder. And then they’ll say, land is the bane of my existence. I can’t ever find any, when I do find it it’s too expensive. So it just becomes this thing where everybody doesn’t like it. Go to any, well now it’s because of COVID you can’t, go onto any webinar and ask, well, I’m going to thinking about buying some land. You’ll just get screamed at and scoffed at.
Jill DeWit:
What’s your number one resource for help and guidance and everything now?
Steven Butala:
Jill DeWit.
Jill DeWit:
Oh, darn, you were almost at a hundred percent.
Steven Butala:
No, it’s sounding like commercial now.
Jill DeWit:
No, no.
Steven Butala:
Land Academy.
Jill DeWit:
No, honestly, when I wrote this stuff down-
Steven Butala:
Oh Discord is mine.
Jill DeWit:
That’s what I thought you were going to say too, yeah. Yeah.
Steven Butala:
Discord is, if I have any questions about anything or I need a business partner or-
Jill DeWit:
You have a community now.
Steven Butala:
I just go to Discord.
Jill DeWit:
Well, I was thinking about how it changed from then to now and then it went to, oh my gosh, we’ve helped make these changes that I didn’t even realize until we’re talking about it.
Steven Butala:
I didn’t know this show was going to go this way, but here’s my final comments. Is never been a better time, never, to buy and sell land. There’s never been more tools, more help, more data.
Jill DeWit:
Money.
Steven Butala:
And more money available and more instruction and more willing sellers, warmed up, willing sellers because it’s crazy out there right now. And it’s going to plane off, this whole market is going to plane off. It’s not going to crash, it’s going to plane off for awhile. And then that’s going to even be a better time. Inventories will rise. I’ve never had, in the worst of times and in the best of times, I’ve always had a jam packed pipeline full of acquisition candidates. That’s the truth.
Jill DeWit:
Yep. Thank you, babe. 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, well it’s Jack Thursday, five things you must know before you start real estate investing. You are not alone in your real estate ambition.
Jill DeWit:
That was awesome.
Steven Butala:
Was it?
Jill DeWit:
Yeah, I think that was one of my favorite shows.
Steven Butala:
You know what, every time I turn the camera on, on this show, on these episodes, I really try to not sound preachy and I think I sound preachy there.
Jill DeWit:
No, it was good. I really want you to share then to now. You did a great job.
Steven Butala:
It was a pain in the butt-
Jill DeWit:
Of explaining it.
Steven Butala:
To get deals done back then. But on the flip side, there was absolutely nobody buying and selling land. No one, so, I don’t look back on those times, like a gray haired guy and say, those were the good old days. These are better. This is better now.
Jill DeWit:
Yeah, this is true. No, totally agree. Even the deals we are doing.
Steven Butala:
The deals are better.
Jill DeWit:
Are bigger and better and easier.
Steven Butala:
The data’s better.
Jill DeWit:
I have help now. It’s awesome. If you need 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.
Steven Butala:
We are Steve and Jill.
Jill DeWit:
We are Steve and Jill.
Steven Butala:
Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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