Jack Thursday – Your Land Investing Niche Chooses You Not the Other Way Around (LA 1646)
Jack Thursday – Your Land Investing Niche Chooses You Not the Other Way Around (LA 1646)
Transcript:
Steven Jack Butala:
… Steve and Jill here.
Jill DeWit:
Hi.
Steven Jack 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 the Valley of the Sun.
Steven Jack Butala:
Today is Jack Thursday, and I’m going to talk about your land investing niche that actually chooses you, not the other way around. This is not the first time we’ve discussed this on the show, I guess as is with most things, since we’re on episode 1,646.
Jill DeWit:
There might be some duplicates in here.
Steven Jack Butala:
There’s some overlap.
Jill DeWit:
But you know what, though? I would argue there’s a reason they come up, because we’ve figure out something new. I’m sure on show 646 we had different things to say about niche than we do 1,646, and know that’s not a typo.
Steven Jack Butala:
This is a very common theme that you hear in business all the time, about how the business that you ultimately are involved in, or choose… You think we make all these choices, and honestly, there’s a lot of things that just chooses us-
Jill DeWit:
Like women?
Steven Jack Butala:
Like Jill chose me.
Jill DeWit:
Exactly. I was just going to say that. Let’s see, let’s think about, what are a few things that you don’t get to choose? You don’t get to choose your children.
Steven Jack Butala:
Boy, that’s for sure.
Jill DeWit:
And you don’t get to choose your parents. And you don’t get to choose your siblings, I wish I did.
Steven Jack Butala:
But you can choose your friends, which is why you spend the most time with them.
Jill DeWit:
Yeah. You can choose where you live. What you drive. You can choose how you look. You can choose your hair color. Wait, what do you have?
Steven Jack Butala:
I don’t know, we’ll figure it out as we go here.
Jill DeWit:
Oh, good. That’s [inaudible 00:01:54].
Steven Jack Butala:
Before we get into it, let’s take a question post about 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 comments on the shows you liked.
Jill DeWit:
Anthony wrote, one topic I would like to hear about is what people get… Oh, please. We’re having a little, what’s the word I’m talking about?
Steven Jack Butala:
[inaudible 00:02:20].
Jill DeWit:
Technical error. Okay. One topic I’d like to hear about is how people get wrecked in the land business. Oh, this is hilarious. Especially if you could add a cautionary tale. My take is that staying away from too much leverage is probably the key to not getting wrecked. I like the term wrecked.
Steven Jack Butala:
[inaudible 00:02:41].
Jill DeWit:
I never use that. It’s tempting to finance a purchase or two with credit when your acquisition budget is maxed out. Property values go up and down, most of the time they go up, but if you are over leveraged during a downturn, that debt could be working against you on a leveraged basis. Not saying that we will see a downturn soon, in fact, I see the opposite, with inflation as a dominant narrative ATM, but it’s prudent to know where the risks lie.
Steven Jack Butala:
So I’ve been communicating with Anthony about this, and other things in Discord.
Jill DeWit:
Wrecked?
Steven Jack Butala:
I have a lot to say about this.
Jill DeWit:
This is good, go ahead.
Steven Jack Butala:
Because Jill and I were just about flat broke in 2009-ish.
Jill DeWit:
Yeah.
Steven Jack Butala:
Which is about the time we met-ish. Prior to that, I had a yacht, and so we really, really, got wrecked by that downturn, and the only reason that we made it out of it, and I say this in every time we do a live event, multiple friends who were in the same business, not necessarily land, but somehow in real estate, in Phoenix at the time, either ended up dead, or filing bankruptcy, or both. And so, we didn’t have to do that. And it was for one reason, we just didn’t have any debt.
Jill DeWit:
Right. It saved us.
Steven Jack Butala:
So what we did was-
Jill DeWit:
And property, we sold those assets.
Steven Jack Butala:
And we had tons of property. We had a good amount of cash saved up individually, and we had all kinds of fallback plans, and everything else. So what saved us is we took that cash, we sold a lot of the properties for cash, and we lost money on it, but we were able to just liquidate it all, and go and buy a bunch of houses and turn that all around ourselves. So it’s not what I want to do, it’s certainly not what we do now, but we got out of that recession around 2011 or ’12, because we made some really acquisition choices, both the houses and the land, and that would never have been possible if we leveraged stuff. So please take this seriously if you’re young, or young in the business, use equity to finance deals, not debt, I cannot express this enough. “Oh, Jack, but it’s so expensive. If I go get a credit card debt, or tertiary debt, or you do a second mortgage on my house, it costs nothing, it costs 3%, are you nuts?”
Jill DeWit:
Yeah, “And not to split the profits of anybody.”
Steven Jack Butala:
“Are you nuts?” Yeah.
Jill DeWit:
“Yeah, well, I’ll make more money doing it that way. Yeah, this is better.”
Steven Jack Butala:
So follow me on this. Great, now you’ve got an acquisition, that’s 10 properties, or you have 10 acquisition candidates that make sense to you-
Jill DeWit:
Right.
Steven Jack Butala:
You have two choices, you can find somebody, deal funding partners within the Land Academy community, or you can do what I just said, and split the profit with something, the numbers, let’s say, if you can make $100,000 on these 10 deals, you make 50, the other person makes 50, now you’ve got $50,000 instead of zero. Or you could go borrow all kinds of money to do the deal, and make the entire $100,000 profit, which is very tempting, and most finance instructors at the college level are going to say, “Yeah, you should use debt as leverage, not equity.” I disagree with that. Because if something goes south, and it always does, always, you can go back to that equity partner and say, “Yeah, we kind of knew this was possible, but we’re in this together, so let’s figure it out together.” And now you don’t have creditors calling you, and banks repossessing things, and all kinds of terrible stuff that can happen that I’ve through. Not since I’ve known Jill, but I’ve been through that stuff in my life. And again-
Jill DeWit:
And I have too, separately.
Steven Jack Butala:
You’re here to learn-
Jill DeWit:
Yeah.
Steven Jack Butala:
From us.
Jill DeWit:
[crosstalk 00:06:47].
Steven Jack Butala:
I’m just really glad that Anthony asked this question, because a lot of times it’s all peaches and cream on the show, and that’s all, this is great, and we’ve got expensive cars, who cares? The fact is, we’ve been down and out, and we’ve been down and out together, and that’s one of the reasons… We built an empire that crumbled, and when I met Jill, we built it back up together. And it’s one of the reasons that we work great as partners, both socially and professionally, is because we’ve been through a lot together-
Jill DeWit:
It’s true.
Steven Jack Butala:
Wouldn’t you want to do that with a partner? Or do you want to do it with Bank of America?
Jill DeWit:
Yeah. You know what’s it’s interesting too? I was thinking about affordable housing. We moved into what we could afford.
Steven Jack Butala:
Yeah.
Jill DeWit:
And it was what? Maybe 1,000 square feet, I can’t even remember, with kids too-
Steven Jack Butala:
Yeah.
Jill DeWit:
By the way. That was…
Steven Jack Butala:
We did it.
Jill DeWit:
Bunk beds, but that was okay.
Steven Jack Butala:
Please just don’t leverage anything with debt.
Jill DeWit:
Yeah.
Steven Jack Butala:
You eventually will get stung pretty hard.
Jill DeWit:
Yeah.
Steven Jack Butala:
And it’s very, very hard to undo.
Jill DeWit:
Yeah.
Steven Jack Butala:
If a deal goes south, all you’ve got to do is pick up your phone with your deal funder and say, “This thing went south.” We have a couple, and we’ve phoned them.
Jill DeWit:
I took them back. Yeah, I’ve phoned them, I’m like, “Okay, great, and that’s fine.” So it happens. Actually, one’s about to close.
Steven Jack Butala:
In a good way.
Jill DeWit:
Yeah.
Steven Jack Butala:
Today’s Jack Thursday, your land investing. And I’m going to talk about your land investing niche chooses you, not the other way around, this is why you’re listening. I’ll start with you at another story. Very recently, I went into a market, Jill and I do separate land deals sometimes, and I’m going to just tell you my story, she’s probably got it a couple too. And bought a property that I found out, during the acquisition process, it was conducive to putting a mobile home on it. And that the municipal environment was very pro-mobile homes, I didn’t know this. I bought the property anyway, I think we paid 12 or $14,000 for it, I was going to sell it for 45 or 50, very successfully, and very quickly.
Steven Jack Butala:
And that’s what happened. We did. I rolled it all into Jill’s stuff, she sold it. It was a very fast deal. She sold it based on a sign we had a photographer put up, and we all high-fived each other like we usually do, and “Wow, that’s great. We made a lot of money.” What I found out later is that if we put a mobile home on it, it would’ve been 300,000. Granted that’s a different animal, there’s well drilling, and there’s a bunch of stuff involved, but you can really hire that out very effectively with layers of people, and still make way more than what we made. So this mobile home niche, which everybody loves now-
Jill DeWit:
Yeah.
Steven Jack Butala:
Probably because we talk about it on the show a lot, and on the Thursday calls, and by the way, will be the topic of the next Career Path, which starts in January, is a niche that found me. I didn’t go out there and say, “I want to buy mobile homes with their own land.” I didn’t do that at all. And so there’s all kinds of niches. There’s something going on in Discord with recreation land right now, it’s specifically in the south-eastern parts of the country, is because they’re going into this realizing that it cannot be built on, it’s only for fun, and there’s a niche for that. These people have been Land Academy members for a while, actually Career Path members, both of them. And they’re realizing how much land is this shit, can’t be built on it because it’s wet. But-
Jill DeWit:
But there’s a use for it.
Steven Jack Butala:
There’s massive use.
Jill DeWit:
There’s stuff you can do with it. You know one of my niches is that I love? One of my niches is building a whole little side thing around a broker that I love.
Steven Jack Butala:
Yeah.
Jill DeWit:
And now-
Steven Jack Butala:
Oh, that’s a great example.
Jill DeWit:
Uh-huh (affirmative). And when I found this guy… I was hearing things about this part of the country, I’m like, “I’m going to test this, and find some deals, and I’m going to make some calls, and see who I connect with.” And I connected with this guy, and now he’s like, “We need to get these zip codes, and this price for acre. I can sell it all day long.” And that’s a beautiful niche. But there’s lots of different variations of this.
Steven Jack Butala:
Too many to list. That’s one I didn’t even think of, what Jill just said. So it’s not necessarily a land type niche like mobile homes, or recreation land, now she’s building an entire operation around one good real estate agent.
Jill DeWit:
And you could have three of them, you could have five of them by the way. Have one in every state, or one in the states that you love.
Steven Jack Butala:
Yeah.
Jill DeWit:
And that’s what’s so great too. This could be your whole business model. All you do is send out mail, you don’t fund a thing, you use people in our community for that, and you don’t sell a thing because you use brokers. How great is that?
Steven Jack Butala:
There’s a lot to be said for how well you get along or communicate with a vendor.
Jill DeWit:
Right.
Steven Jack Butala:
I’ll tell you, Jill and I just renovated this house, no, we didn’t renovate it, we heavily redecorated it, and there were probably seven or eight vendors involved. One guy was a personal recommendation from a buddy of mine who lives in the same neighborhood-
Jill DeWit:
Yeah.
Steven Jack Butala:
And he’s an electrician/audio systems installer/wifi installer, all of that, televisions, just that part. And he and I just hit it off, the first time I met him we just got along, so now we’re doing all this other stuff. And then the other vendors, it was the exact opposite.
Jill DeWit:
Yeah.
Steven Jack Butala:
If they showed up, it was like we’re lucky that they showed up-
Jill DeWit:
Exactly.
Steven Jack Butala:
And they let us know that.
Jill DeWit:
They made you feel that way.
Steven Jack Butala:
And that’s the way most of life is.
Jill DeWit:
Yeah.
Steven Jack Butala:
If you’re going to date for five women, one of them is going to be better, for you.
Jill DeWit:
Yeah. You’re lucky I showed up on wedding day. Could you imagine? Oh my gosh, oh boy, that’s a whole scary thought. I’m trying to think of other… And there’s niches that are around… You covered property type, I covered this broker thing, there’s niches around parts of the country, there’s niches around the type of deal, there’s niches around, “I do smaller deals. I only do things under $5,000.” Or it could be niches like, “I only do things above $50,000, above $100,000.” There could be things like, “I only do deals where there’s title issues, because no one wants to touch those, and I figured out how to solve them in whatever state.”
Steven Jack Butala:
I mean, we haven’t even talked about zoning.
Jill DeWit:
Right. Oh, zoning niches.
Steven Jack Butala:
There’s several-
Jill DeWit:
Yeah.
Steven Jack Butala:
Classes of commercial zoning in tertiary markets around every city that it’s shocking what you can use them for. The commercial, like C3, and the market that we’re in, is anything from a restaurant to an auto dealership, to, one of my personal favorites, self storage, and then RV storage. If you do the math on those types of business, they’re very, very profitable. They’re expensive to get into, but really, once it’s all set up, very, very cash flow rich, and low maintenance.
Jill DeWit:
There’s people in our community right now that are [inaudible 00:14:08] pros, that’s their niche, with all the building going on. They found a pocket, and they found a builder, and they’re just going bananas. So there’s just so much-
Steven Jack Butala:
Yep.
Jill DeWit:
I love it. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow is Jill Friday, she’s going to talk about doing deals during the holidays. You are not alone in your real estate ambition. I should you do a deal during the holiday?
Jill DeWit:
I was just imagining a Christmas tree with deeds hung all over it. You think I’m kidding?
Steven Jack Butala:
No, I don’t.
Jill DeWit:
I think that would be the coolest thing, maybe I should do that. That’d be kind of fun.
Steven Jack Butala:
Actually, you know what you could do? Is make a… You know how when you do a large economic transaction as an investment banker you get a plaque, or it’s called a tombstone-
Jill DeWit:
Yeah, no, I don’t know that it was never an investment banker.
Steven Jack Butala:
It’s okay. A document-
Jill DeWit:
Okay.
Steven Jack Butala:
Make it really small, and then case it in [inaudible 00:15:00].
Jill DeWit:
Oh, okay. And hang that on the tree?
Steven Jack Butala:
So it’s like the size of a man’s wallet. Yeah.
Jill DeWit:
Oh, there you go, that would be nice. Maybe we’ll do a deed tree. I would need several trees for all the deeds that go through this-
Steven Jack Butala:
Yeah.
Jill DeWit:
Business.
Steven Jack Butala:
God, I can just see our kids rolling their eyes, like, “What are they doing now?”
Jill DeWit:
Oh God.
Steven Jack Butala:
“Now we have a deed tree?”
Jill DeWit:
“This is stupid.”
Steven Jack Butala:
Yeah. “I got up early for this?”
Jill DeWit:
Right. And guess what I got you sweetie? A property.
Steven Jack Butala:
Every child wants a vacant piece of land.
Jill DeWit:
[inaudible 00:15:38], I love you, so I will pay the taxes until you graduate.
Steven Jack Butala:
Until you’re 18.
Jill DeWit:
Yeah, exactly.
Steven Jack Butala:
Now you have to pay for something you don’t want.
Jill DeWit:
Exactly. Thank you for tuning in. We hope you find our content valuable, and we really appreciate your support. If you haven’t already, please check out our YouTube channel, and hit the subscribe button.
Steven Jack Butala:
We are Steve and Jill.
Jill DeWit:
We are Steve and Jill.
Steven Jack Butala:
Information.
Jill DeWit:
And inspiration.
Steven Jack Butala:
By undervalued property.
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