Jack Thursday – What Jack Looks at When Doing Deals (LA 1522)
Jack Thursday – What Jack Looks at When Doing Deals (LA 1522)
Transcript:
Jack Butala:
Steve and Jill here.
Jill DeWit:
Hey.
Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk, we hope. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill DeWit, broadcasting from perfect Paradise Valley, Arizona.
Jack Butala:
Today is Jack Thursday and it’s called What Jack Looks At When Doing Deals. I will tell you what I look at, what I look like while I’m looking at deals.
Jill DeWit:
I’ll tell you what you look like.
Jack Butala:
How I feel about it.
Jill DeWit:
Oh yeah.
Jack Butala:
What makes me livid.
Jill DeWit:
Oh yeah.
Jack Butala:
What makes me happy.
Jill DeWit:
What gets to me.
Jack Butala:
What makes me jump up and down.
Jill DeWit:
Yeah.
Jack Butala:
I’ll tell it all.
Jill DeWit:
I love it.
Jack Butala:
For better or for worse.
Jill DeWit:
Uh-oh.
Jack Butala:
You decide if you want to listen to the rest of the show.
Jill DeWit:
That’s right. For those of you who love a Jack Rand, this is for you.
Jack Butala:
Oh yeah. 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 a Land Academy member, join us on Discord.
Jill DeWit:
Aaron wrote, “In the meeting, I was asked to share some results. This is not a done deal by any means, but here’s what I have to share. My second mailer is starting to hit out of state owners first. First response via email, I offered $4,000. The owner wants to get at least what they paid for it in the 1980s, which is $12,000. Both brokers I talked to today said the market has gone mad and they think they’ll sell it in 30 days for $30,000 to $40,000. I have to dig into comps tonight and decide if I believe them.” Love that. “I would love to hear how others are doing $4,000 and would have been about right on a lot with no trees in this area?” That was a little confusing there.
Jack Butala:
A little encrypted.
Jill DeWit:
But big picture is-
Jack Butala:
He’s buying for 12, selling for 35.
Jill DeWit:
Well, right now he’s offering four. The guy said he wants 12. So I have two things that I’d like to say first, please. Number one is, sometimes they’re right. In this situation, if the guy just wants to go to his 12 out and you can confirm you’re going to get $30,000 to $40,000 out of it, and then we’d have to discuss it and you’re comfortable with that, I would do it.
Jack Butala:
So would I.
Jill DeWit:
My second comment is sometimes it’s not right. I have had people that paid 12,000 for property years ago in the ’80s, because of this mall or this airport or this freeway was going to come in and it was going to be, yay, the greatest thing, and then didn’t pan out. So they have paid 12,000 for it and now it’s worth two. I’ve had that. And they know that and I’ve had to remind them. They’re like, “Yeah, I knew when I bought it that it was because of X, and that military base never happened.” So there we go. I know. And so you have to explain that to them. So sometimes I just want you to know that just because they pay 12 in the ’80s doesn’t mean it’s always worth money today. Go ahead.
Jack Butala:
I couldn’t have said it better. I mean, I would’ve said-
Jill DeWit:
Oh, you would have said it better.
Jack Butala:
No, I mean, this is a great topic. Tomorrow’s topic, by the way, is how Jill looks at deals. It’s Jack Thursday, it’s about me, not about Jill.
Jill DeWit:
Oh my gosh.
Jack Butala:
And believe me, this doesn’t happen often
Jill DeWit:
We should do this. We’re going to make Thursday all about Jack all day long.
Jack Butala:
I sit next to Jill. That’s what Land Academy should be.
Jill DeWit:
The guy next to Jill.
Jack Butala:
John F. Kennedy used to say, “I am Jackie Kennedy’s husband.”
Jill DeWit:
There we go. Thank you, babe. That’s awesome. So what are your comments?
Jack Butala:
Today’s topic?
Jill DeWit:
You have no other comments?
Jack Butala:
Oh, about this? No, I would shorten the hell out of that. I would just say, I mean, he wants 12, I offered four, he wants 12. I’d probably say, “I’ll give you 10.” We’ll get it done really fast, and I’d get the guys brokers on it even before I closed on the acquisition side. But I would also, Aaron’s very bright in making sure that brokers are correct about the market.
Jill DeWit:
Mm-hmm (affirmative). I liked that he talked to two brokers too. Not just one.
Jack Butala:
Yeah. I don’t try to squeeze every dime out of every deal.
Jill DeWit:
true.
Jack Butala:
And we teach this, both of us.
Jill DeWit:
True.
Jack Butala:
Jill leans towards squeezing. Here’s where Jill got tripped up on this, and she does even in our deals. The guy. in 1980, he paid 12,000 bucks. He wants his 12,000 out. That is a trigger for Jill to get it for less than 12, because she doesn’t think that’s a good enough reason.
Jill DeWit:
I just said pay him his 12.
Jack Butala:
You did?
Jill DeWit:
I did.
Jack Butala:
I was thinking about something else.
Jill DeWit:
You weren’t listening, once again. I guess it’s all about Jack today.
Jack Butala:
It’s my day, yeah. This is why you’re listening.
Jill DeWit:
This is why I’m tuning out.
Jack Butala:
I go into these deals, this is truth time, with an incredible amount of confidence. When a purchase agreement comes back and somebody says, “I got your offer and the price is okay, and I would like to sell it,” that’s 95% of it, because I put a tremendous amount of brainpower and time into pricing them offers correctly anyway. And so I have a lot of confidence when these offers come back or even these little counter offers come back just like in that question today, that I’m good. So how do I look at the deal? The first thing I do, I pull it up on Neighbor Scoop and I check four things. Number one, is a property any good? Can you get to it? Do the numbers work? This is all inside of maybe three to five minutes. It’s the same thing on our Thursday calls, exact same thing we do. Is it in a flood zone?
Jack Butala:
Those top tier things. Does a property make sense? Do I test it for a reason? And then after that 30 seconds is done, I go to see who bought property in the area that’s very similar and for how much and what they’re doing with it. And so if there’s 25 properties in the immediate area that people bought for, let’s say I bought a property for, this is a real example, I bought a piece of property for $10,000 in an area that I really believe in that I believe is worth between 40,000 and 50,000. So I sent a mailer out based on that thought. Did all the red, green, yellow tests. I did all this stuff, I have all this confidence, and two properties come back an eighth of a mile from each other with signed purchase agreements. In one situation, I’m jumping up and down elated because I know that it’s going to work and why, because I can see in the immediate area what’s been going on for the last 36 months or whatever and there’s going to be a pretty high demand for it.
Jack Butala:
There’s some for sale property where the numbers work and some sold properties where the numbers work. And so I’ll get that under contract that day, and I’ll make sure that it’s buildable or whatever later. In another case, this is a real recent example, less than an eighth of a mile away, same situation. I don’t want to buy it for anything, because of access or because of exactly what’s going on in that immediate area. Every Thursday on these calls, when we get, “Would you do this deal?” the first thing I look at is, what’s going on in the area? And sometimes we get calls in where there’s just nothing happening in the area. We used to do those deals all the time. They’re real cheap. We don’t do that anymore. We do more specific use type deals for the end user and how they’re going to use it. So great, that’s all fine and good for the property that I signed off on. What do you do with that other property where you say, “No”?
Jack Butala:
Well, I’ll tell you, I call Jill because she’s the person talking to the owners and I said, “I don’t want it.” And she says, “Okay.” And then she calls the seller. I was actually out in the field, looking at these properties. She calls the seller and says, “We don’t want it. Thanks.”
Jill DeWit:
Yeah.
Jack Butala:
Half hour goes by, they call back and say, “We want to sell it to you. Just give us a price.”
Jill DeWit:
“Yeah, we’re done with it.”
Jack Butala:
Went from 10 to two. So I just throw a price out to Jill, because at that point I didn’t care about the deal at all. By the way, we’re developing a process for the advanced group where these deals that people were passing on they might be gold to somebody else in our group. And so we’re putting that into a process where they can do those deals if they want. And vice versa. They’re passing on deals that we might see some value in. So yeah, she just went back and said 5,000 or whatever it was, $1000 for the whole thing. And they said okay. And so we’re closing both deals. That’s how I look at these deals, very matter of factly. It’s all numbers for me. I have the luxury of having a business partner, and believe me, I did this for 20 years before Jill and I joined forces. I have the luxury now of having a business partner where I can bounce it off of her and say, “Yeah, please call him back and say X,” or whatever.
Jill DeWit:
Mm-hmm (affirmative).
Jack Butala:
Jill’s going to talk about how she does these deals tomorrow. But that’s how I do the deal. I’ll tell you where I get real hung up is in the closing process and the paperwork. We have people that work for us who are good at that and we have people who work for us who are not.
Jill DeWit:
That happens.
Jack Butala:
It happens.
Jill DeWit:
In every business.
Jack Butala:
In the beginning, you’re going to do it all and you’re going to learn what you like and what you don’t like and what part of this you’re really good at. And that’s all part of it.
Jill DeWit:
Mm-hmm (affirmative). I concur. Thank you.
Jack Butala:
I love looking at deals.
Jill DeWit:
Tell us, have you thrown anything across the room recently over anything?
Jack Butala:
I only get livid, and I do get livid, when I believe that the people that are involved in actually the closing process and the paperwork process are not managing. Jill and I spend a ton of time and energy and, honestly, brain power and expertise, decades of expertise, I know what I’m doing, getting these deals to the point where they reached Jill and her staff.
Jill DeWit:
Right.
Jack Butala:
All right. So now Jill’s got 20 deals to look at that are so incredibly pre-qualified. They just work.
Jill DeWit:
Right.
Jack Butala:
And so her staff and her job is to now take the ball from the 50 yard line back into our own zone, and take it down to the 25 or the 10 even to get it close, and then that last part is just getting it all signed and all that stuff. So there’s problems, I get livid when the relationship and all the work, the expertise that she has and the data expertise that I have, gets screwed up because of an escrow agent or maybe if there’s a real estate agent involved are in it for themselves and are overzealous in how they treat the people, the sellers or the buyers. They just don’t have the right attitude or respect and they don’t understand what goes into all that. So yeah, it’s a big pain point for me right now.
Jill DeWit:
That’s true.
Jack Butala:
And we’ll get over it.
Jill DeWit:
Of course. Exactly. Happy could join us today. Five days a week, you can find us right here on the Land Academy Show.
Jack Butala:
Tomorrow the episode is called, well, you already know, it’s Jill Friday, what Jill looks at when doing deals. You are not alone in your real estate ambition. You know what? I left one thing out that I do, and I don’t know why I do this. I’ve been doing it since I was brokering longterm care facilities in the very early ’90s. I take a look at the deal that we’re doing and how much money we’re going to make on it, so if you’re going to buy for 10 and, let’s say, 40, I know I’m going to make 30 grand on it. In the back of my head, I say, “How many deals a month can I do realistically, very realistically? Now, I’m making 30,000 this month. Can I do two deals? Yeah, you is very reasonable.” That’s $60,000 I’m going to net in a month, and then I multiply by 12. And so now I’m talking about $750,000 a year just in this one little area.
Jill DeWit:
Doing two deals a month.
Jack Butala:
Doing two deals a month.
Jill DeWit:
Yeah.
Jack Butala:
Does it fit into my life scheme? And the answer is hell yes.
Jill DeWit:
That’s big picture. That’s cool. That’s so cool.
Jack Butala:
I don’t know why, I do it with everything.
Jill DeWit:
I love it. I wasn’t trying to stop you. I was just moving it so I can read.
Jack Butala:
No, it’s okay. It’s good.
Jill DeWit:
All right. Do you need to send out a few 1000 offers to property owners like us? Check out offers2owners.com. It’s offers, the number two, owners.com. No setup fees, free mail merge, and exceptional service, including brand new concierge pricing. Check it out. Give offers2owners a call today. We’re Steve and Jill.
Jack Butala:
We’re Steven and Jill, information …
Jill DeWit:
And inspiration.
Jack Butala:
… to buy undervalued property.
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