Your September Financial Review (LA 1600)
Your September Financial Review (LA 1600)
Transcript:
Steven J Butala:
Steven Jill here.
Jill K DeWit:
Hello.
Steven J Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I am Jill D… or Jill dimwit, apparently.
Steven J Butala:
Oh my gosh. That’s awful.
Jill K DeWit:
I know. I got all kinds of good… It’s funny. Who cares? I say this because I want people to know it’s, who cares?
Steven J Butala:
Yeah.
Jill K DeWit:
Some people get these letters back and they’re like, “Oh no.” Like, so what? Throw it away.
Steven J Butala:
It’s part of it.
Jill K DeWit:
And the person who wrote the letter, they’ve already forgotten about it too, so it doesn’t really matter. Anyway, I am Jill DeWit and I am broadcasting from the Valley of the Sun.
Steven J Butala:
Today, Jill and I talk about your September financial review. I’ll tell you, it’s based off of my September financial review. 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 don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows that you like.
Jill K DeWit:
Tony wrote, “I have a property that is an escrow for an attorney close. They are doing the title insurance and handling all the closing details. Can I assume it’s safe to say I could officially, and legally begin marketing this property for sale?” Hold on Tony. You don’t own it yet. I want you to get all ready to do this. You may or may not agree with me. We’ll see what you say.
Steven J Butala:
I’m not going to agree.
Jill K DeWit:
Oh.
Steven J Butala:
I’m not just being difficult. I’m not going to agree, but go ahead. I’ll tell you why, because there are probably six people that piped in on this real hard.
Jill K DeWit:
Some do.
Steven J Butala:
And they said, “No, no, absolutely not. Don’t do it. Don’t do it. And don’t do it.”
Jill K DeWit:
And you say, “Yes.”
Steven J Butala:
And I say, “Yes.”
Jill K DeWit:
Okay. What’s the… I mean, you could cover your butt and ask for permission.
Steven J Butala:
Ask who?
Jill K DeWit:
The seller. And then no one will ever get mad if the seller’s on board with it.
Steven J Butala:
When you have a property that is in escrow, lawyers closing it, and lawyer’s telling you… Usually lawyer closes are way faster than title insurance.
Jill K DeWit:
This is true.
Steven J Butala:
So you’re going to be, let’s say, it’s safe to say, inside of two weeks. It’s going to take you several days to get the property prepped anyway, pictures of it.
Jill K DeWit:
So you are agreeing with me.
Steven J Butala:
Start with all that. And I would start. I’d put it on Craigslist, Zillow, everywhere. I would not execute a listing agreement with a… If you’re going that route, with a real estate agent until you have a book and page number, it’s stamped on the deed.
Jill K DeWit:
So we are kind of on the same page.
Steven J Butala:
But I would ease into it. I wouldn’t just not do it.
Jill K DeWit:
Right. So my thing, have it all ready, ready to push the button. I mean, you could start making some calls to neighbors and things like that.
Steven J Butala:
I would do all that.
Jill K DeWit:
Yeah. See, we’re on the same page more than you think.
Steven J Butala:
I just wouldn’t list it. That’s all.
Jill K DeWit:
There you go. I had one too where they were like ahead of the game, like, “I can’t sign this yet you guys.”
Steven J Butala:
Yeah. I’ve had that too.
Jill K DeWit:
Yeah. I’m like, “I love that you’re that ready.” But I’m like, “I can’t sign the listing-” [crosstalk 00:03:12]
Steven J Butala:
You guys don’t own it yet.
Jill K DeWit:
Yeah. I can’t…
Steven J Butala:
I’ve had that happen multiple times.
Jill K DeWit:
Yeah, I don’t want to get anybody in trouble. I don’t want to get the agent in trouble, because then they’re going to get pissed at me.
Steven J Butala:
Zillow doesn’t care. That’s all for sale by owner. Anywhere that’s not the MLS. Craigslist, eBay…
Jill K DeWit:
Social media.
Steven J Butala:
Yeah. Any social media, I would knock yourself out. Neighbor letters, especially.
Jill K DeWit:
Mm-hmm (affirmative) You just want to be careful too, that it’s… I’m okay with getting the ball going a little bit early, kind of like under the radar. But when you start collecting money for something that you don’t own-
Steven J Butala:
That’s really bad.
Jill K DeWit:
Then you get in a pickle. Exactly. Thank you. Then we are on the same page. You’d be surprised. You know what this is? He’s already thinking about the topic today, and he’s like all ready for me to be not on the same page. So knock it off. I am on the same page more than you realize. So, go ahead.
Steven J Butala:
Today’s topic, your September financial review. This is why you’re listening. So every year around early to mid-September, I have it on my calendar, every single year. It’s a reoccurring event, to just finance… It’s called financial review. And what that means for me is this. I go into our bank accounts, our commercial business bank accounts. I download all the data from January 1st, in this case 2021, up to August 31st, same year. And I pull it for all the bank accounts, operational bank accounts that we have. And I look at, and I see how we’re doing. Did we make any money? Did we lose any money? In a lot of cases, Jill spends way more money on real estate from a cash flow standpoint than we brought in.
Jill K DeWit:
Not necessarily. Oh, it hasn’t closed yet. That’s true.
Steven J Butala:
So we spot more than we actually sold, dollar wise.
Jill K DeWit:
True.
Steven J Butala:
And then there’s, for us, there’s other companies. We have companies that are like Land Academy, that doesn’t make any money, but at offers, the owners makes a little bit of money. So there are all these… For hopefully in your case, because… I say this because a lot of people in the career path scenario come to us with other businesses or other money sources, whether it’s pensions, or retirement, whatever, just other money. So in September, you really got to take a look at that stuff, because I’ll tell you, there’s been years, and last year was one of them, not this year, where we just made too much money. And it was fortunate that I ran through this review because I made a lot of decisions in October and November, and a little bit of some decisions in December to minimize, or effectively, ethically, and legally manage our tax situation for that tax year.
Steven J Butala:
So we bought a lot of property. We did a bunch of things that are within my risk threshold and Jills to manage it. My point is this, you got to do it. You have to look at it. And if you hate it, like the vast majority of people I know, Jill included, you have to hire somebody to do this. Give the, hopefully an accountant that you trust so that they can come back and say, “You got three months to sell all these properties, buy some new properties, buy a company.” In some cases in the past, Jill and I have purchased companies, small businesses and stuff to manage the flow of cash and how much money we make that year. So, please. This is a short episode. I seriously encourage you to look at this. And if you can’t stand this kind of stuff, get somebody else to do it. And my final point is this. If you’re new, brand new, don’t worry about it. If this is your first year, you’re a couple months into it, you don’t have to get all this stuff.
Jill K DeWit:
Don’t stress.
Steven J Butala:
Yeah. Don’t stress about this at all. Chances are, just pay the taxes on the raw money that you’re making. It’s going to be fine, even if you’ve made a lot of money the first, or second year. But if this is your second or third year and you’re not set up with an LLC, you don’t have an accountant, now is the time, September, to get those things done.
Jill K DeWit:
This is a good test. We’ve been talking about this a lot, because we have a lot of people, I think coming out of career path. And then they… When you go through a career path, you get promoted automatically into the advance group. So in the advanced group, a lot of our discussions right now at the end of the year is like, “Okay, what am I going to do with all this money I’m making? People are making so much money.” They’re going, “What do I do, and what’s the right way?” So this ties into that.
Jill K DeWit:
And one of the things we talked about is you’ve got to interview several accountants. You can’t go with the first one or just one that somebody recommends to you. Not every accountant’s going to see things the same way too. It’s like an attorney. One attorney will tell you this and one attorney will tell you that. So I see this as a good test too, by the way, to see what attorney makes sense to you. You could give this a couple guys. So after you whittle down your list and you’ve got two or three guys, let them run your numbers and see what they would do with your financials at the end of the year, and what advice they give you. That would really help you make a decision. A, which accountant you’re going to go with. I think you’re going to tell me I’m…
Steven J Butala:
No. [crosstalk 00:08:19] I absolutely agree with everything you’re saying.
Jill K DeWit:
Which accountant, B. And hopefully two of the three have the same thing. You’re like, “Okay. This is what I need to do.”
Steven J Butala:
Like if they’re licensed financial planners too, which by the way, ours is not. But if they’re licensed financial planners, they’re going to have some suggestions, hopefully that say, “You need to open a brokerage account and spread some of this out for long term gain.” Just buy and hold kind of thing. So there’s all kinds of things you can do. But here’s my point. Here, I’m going to leave you with this. You have to do it. You can’t just let this happen to you. And we are all hardwired, me included and Jill included, to let this happen to us. That’s the way it’s set up.
Jill K DeWit:
It’s true.
Steven J Butala:
The federal government… Because we’ve all had jobs. We’ve all had W2 jobs. People who have W2 jobs can’t have no control over this whatsoever.
Jill K DeWit:
Don’t have a choice.
Steven J Butala:
They have no choice.
Steven J Butala:
They get money taken out of their paycheck every two weeks. And then if they’re lucky and they do everything right, the federal government’s nice enough to give it back to them. And if you’re in California, they give it back to you, theoretically. So we are in a great position as a small business owner, specifically in real estate like this, where we buy these assets and resell them. Sometimes not in the same year or the same accounting period. So we are in the single best tax management situation you can possibly be in, but you have to do it. So now, do I sound like your dad? I’m sure.
Jill K DeWit:
I’m so holding back.
Steven J Butala:
No, go ahead.
Jill K DeWit:
There’s so many… No. Oh gosh, no. No, this is a G-rated so I can’t. The comment I was going to make was-
Steven J Butala:
Make it PG.
Jill K DeWit:
Not G-rated. No, no, no. Just saying that, everybody knows what I’m talking about.
Jill K DeWit:
Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show.
Steven J Butala:
Tomorrow, the episode of the Land Academy Show is called, we’re going to talk about occupations that are probably going to go away. You are not alone in your real estate ambition.
Jill K DeWit:
I just read a couple articles today from Bisnow Los Angeles, really talking about things that are just not going to come back. Nice, I have a lot to share. It was really interesting.
Steven J Butala:
Can you do it from memory, or do we have to do work and pull it up and all that?
Jill K DeWit:
No, I could do it from memory.
Steven J Butala:
Oh, that’s such-
Jill K DeWit:
Oh my goodness,
Steven J Butala:
Jill, you’re awesome.
Jill K DeWit:
Sheesh.
Jill K DeWit:
Thank you for tuning in. And if you are a Land Academy Member, make sure that you are joining us on discord. We’re Steven Jill. [crosstalk 00:10:49]
Steven J Butala:
We’re Steven Jill. Information…
Jill K DeWit:
Inspiration.
Steven J Butala:
To buy undervalued property.
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