House Deals Made as Easy as Land Deals (LA 1680)
House Deals Made as Easy as Land Deals (LA 1680)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Hello.
Steven Jack Butala:
Welcome to the House Academy Show. Entertaining real estate investment talk. I’m Steven Jack Butala.
Jill K DeWit:
And I’m Jill DeWit, broadcasting from the valley of the sun.
Steven Jack Butala:
Today, jill and I talk about house deals, made as easy as land deals. Is there really, such a thing?
Jill K DeWit:
Yep. You know what’s funny? I’ll share one story with you now. And then I have another story for in a minute. Well, first of all, happy Career Path Day, for those of you who are with us and joining us in Career Path, today is day one day. One of the rest of your life.
Steven Jack Butala:
Jeez, that’s cheesy.
Jill K DeWit:
I know, isn’t it.
Steven Jack Butala:
Something’s probably cheesy.
Jill K DeWit:
It’s stupid. I know.
Steven Jack Butala:
Who else walked up to me and said, you are cheesy. Some people have said a lot of stuff to me.
Jill K DeWit:
I’ll do it.
Steven Jack Butala:
A lot of crazy stuff to me, but not you’re cheesy and fake and this doesn’t work.
Jill K DeWit:
Well, I never say you’re fake, but sometimes I say goofy. I do. I did call Aaron a goofball the other day. So anyway, it was funny, because this whole show is, house deals made as easy as land deals. So last week, and I was talking to one of the attendees who’s in Career Path with us, starting today. He was talking about how, two or three years ago, I think that they were three years in now. He’s adding land to his portfolio, but they were doing all houses. Started year one doing one house, year two was six houses. And then year three was 145 houses. Well, here’s what the difference was. And the money was so much better. But year one, they were doing it all wrong. They were doing the renovations themselves.
Steven Jack Butala:
Yeah.
Jill K DeWit:
And they got one done. Year two, he and his partner got six done, because again, they’re doing renovations. And then they realized, why are we doing this. Year three, they transitioned to what we’re about to talk about today. And they’re like, “I’m not doing any renovations. I’m buying it, selling it quickly, and moving on”, kind of thing. And that’s how they went from six to 145. He’s like, “And this year we want to do 250 or something like that.” And it’s a small crew, but they’ve got it.
Steven Jack Butala:
Yep.
Jill K DeWit:
It’s good.
Steven Jack 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 don’t forget to subscribe, seriously. Subscribe on the Land Academy, YouTube channel and comment on the shows you like.
Jill K DeWit:
Luke wrote, “If I have a signed purchase agreement and the owner gets a better offer in the mail for other land buyer. Do I have any recourse?” I think we covered this question last week.
Steven Jack Butala:
I think we did too.
Jill K DeWit:
So I’m just wondering, this is funny. So let me think of a different question that I can sub in here-
Steven Jack Butala:
About houses.
Jill K DeWit:
Real quick, that can solve our little typo.
Steven Jack Butala:
God, whoever produces this podcast really needs to-
Jill K DeWit:
Get their act together.
Steven Jack Butala:
Yeah. Geez.
Jill K DeWit:
Wonder who that is.
Steven Jack Butala:
Come on, podcast producer.
Jill K DeWit:
All right. Here’s a house question for you. I’m going to say, Jill asks, “What would be a fair dollar amount that I should expect to get on a house flip. I understand the way you guys do it. You buy houses, you mark it up. You sell it to another investor. What dollar amount makes sense to you?
Steven Jack Butala:
Between 50 and $100,000, if you’re funding it yourself. Here’s an example. Buy in a market that, where, it all done, it’s $600,000 let’s say, five to $600,000. You’re buying a house for 200, because it needs a lot of work. You buy it for 200, 250, sell it for 300, 350. There’s some realtor fees and things like that. But you’re pulling a good, solid 70, $80,000 out of it, out. And then you’re selling it to the person who’s going to renovate it, for more than that. Well, you sold it to them for 350, 400. So they’re going to collect. Hopefully when they all put $100,000 into it and make $100,000.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
I make 50 to 80 as a, I’m not going to use the w word. And then the renovator should make, because there’s a lot more involved, because that keeps them coming back for more. So it’s not a percentage thing. Here’s the deal, though. And we’re getting into the show, which is fine. You have to front that money. You’re going to come up with a half a million bucks. And so for us to make 50, to $100,000 on a land deal, we’re fronting 30 to $80,000. Not half a million. So I can do five land deals for every one house deal.
Jill K DeWit:
Right. So I’m going to clarify for… I’m going to tell you in plain anguish. What are you saying?
Steven Jack Butala:
Today’s topics. House deals made easy. Made as easy as land deals. This is the meat of the show. Go plain English.
Jill K DeWit:
Let’s start with plain English. What the heck is he talking about? Oh my gosh.
Steven Jack Butala:
Is it really confusing?
Jill K DeWit:
A little bit. Some of the terminology might not… Everybody might not be there, and I get it. You’re up here baby, and that’s great. You stay right up here and I’m going to-
Steven Jack Butala:
what the hell? I don’t want to be up there.
Jill K DeWit:
I know. Wow.
Jill K DeWit:
I want to be down here with you.
Steven Jack Butala:
Well, I know this is more fun down here, but that’s okay. You up there, you brainy guys up there can just have your own little fun and your own little conversations. So I’m okay. So let me describe what happened. This is the funniest thing. We haven’t told this story in a while. Remember Roberto?
Jill K DeWit:
Yes. I do remember him.
Steven Jack Butala:
Roberto was on the first floor in our office building and we were on the third floor. And Roberto, if you’re here, you got to send us a hello, because you used to check in now and then. I dying to know-
Jill K DeWit:
He’s in Tennessee or something.
Steven Jack Butala:
He was, but I think he went back. I don’t know. So anyway, please give us a shout out and say hi, because I want to know what you’re up to now. Anyway, dear Roberto worked for a real estate company. He was a broker agent, and the guy that owns the brokerage, because the guy was kind of nosy. It was the funniest thing. He wanted to walk the building and whenever there was somebody new that came in and just shake their hands and find out what they did. So I’ll try to speed up this story. Anyway, so Roberto and the owner came in, shook our hand. And again, he’s just another tenant. He doesn’t own the building or anything. It was funny.
Steven Jack Butala:
Because he is a real estate agent, he thinks he has any talent at all, including personality and salesmanship-
Jill K DeWit:
It was weird.
Steven Jack Butala:
But he doesn’t, like almost all real estate agents.
Jill K DeWit:
It’s okay. So the point is, dear Roberto’s like… We’re talking, the guy asked what we do and I described it and Roberto’s light bulb went off and he’s like, “What the heck are you guys talking about?” And then a week later he’s knocking on the office, like, “Is Jill here? Can I talk to her?”
Steven Jack Butala:
Roberto’s awesome, by the way.
Jill K DeWit:
He’s so nice.
Steven Jack Butala:
He’s the nicest guy there ever was. And he is really young and totally ambitious and just got a great attitude. Work 20 hours straight, kind of guy.
Jill K DeWit:
Yep. So for about four weeks in a row, on a Wednesday, he’d come in and I’d say, “Look, I got about 15 minutes.” And I’d tell him a little bit more and I’d give him a little bit more and a little bit more. And then a month goes by and he comes back to me and goes, “Oh my gosh, I just did exactly what you said. I made $100,000. I don’t know what just happened.” On one deal. And it was a house deal. So I was describing him, “All right, here’s what you got to do. You got to get your hands on this kind of a data you got to…” At the time, our favorite was RealQuest Pro. “If you could get Car Logic or something.” I was just kind of skipping along the top, telling him what we do, and then feeding little things, and you got to buy it.
Jill K DeWit:
You got to find this asset. Make sure it’s a good one. You got to buy it. And then you turn around real quick, find a buyer. And he did exactly that. He uses dad’s access of data, because his dad was some kind of a estimator or something. So he’s in the industry, and he got his dad got in trouble a little bit, because Roberto’s overusing his company account and everybody’s wondering what’s going on. Anyways, so with his dad’s help, they found this great place in Torrance, and they bought it for, I don’t know, eight or $900,000. That’s what the market was going for at the time. Mark up $100,000, sold it to some investors and then walked away with $100,000 cash. He’s like, “What did I just do?” And I’m like, “You did exactly what you’re supposed to do.”
Jill K DeWit:
And I’m like, “Now go do it again and do ten.”
Steven Jack Butala:
Three a month.
Jill K DeWit:
And then do more. And so that started his whole thing and it was just amazing. So we still keep in touch with him. So, that’s just an example. I guess my point is, you were talking about, how you acquire the asset. We don’t assign these things too. And I want to make sure people understand how we-
Steven Jack Butala:
I wouldn’t even bring that up.
Jill K DeWit:
No, I want you to know this because there’s a lot of people out there thinking that we do that and we don’t. And that’s why we’re different. And I control it. We buy it, even if it’s… So he’s talking about the example in the beginning, you’re putting down $250,000 or somebody is. We’re not just locking it up in escrow and running around, trying to find someone and hoping it goes smoothly and losing sleepover in case they talk. No, we’re actually buying it. I will find it. We find it, we buy it, we pay for it. I own it. And then I try to sell it as fast as I can. So my name is on the deed, we’re on there and that’s a little bit of a difference that we do. And I want to make sure everybody knows and understands what you are trying to say.
Steven Jack Butala:
So why is it as easy as buying land? In one word, we do not renovate it. We don’t do anything. I sold my tools a long time ago. We do not-
Jill K DeWit:
Meaning a hammer.
Steven Jack Butala:
We don’t have… Yeah. And you should never do that, as much as you might want to replace the carpet and paint it, don’t do it. You’re going to op open up a can of worms by doing this, leave it to the people that have all that set up. We’re just data people, we’re deal makers. So you send a mailer out. By the way, it’s crazy easy to raise capital or borrow money against a house.
Jill K DeWit:
Yeah.
Steven Jack Butala:
It’s crazy, not easy to do that with land, unless you’re in the Land Academy Group, which is packed of people who get it, get land and are happy to partnership stuff with you. So finding the deal, finding a house that’s priced directly, the way that we price it and ready for wholesaling out to the person who’s going to renovate it, as long as you close on it, is not hard. It takes a lot of mail. It takes the same kind of stuff that happens with Land Academy, answering your phone, making friends with them, which is what Jill does and meeting whatever need they need.
Jill K DeWit:
And picking a hot market, by the way, it’s easier right now, too. [crosstalk 00:10:45]
Steven Jack Butala:
House owners need something different than land owners. Land owners don’t live on their land. House owners typically live in the house and they have some pressure point like, “Yeah, but I really need to clean the basement out.” And so, you need to be prepared to, to manage some of those things and outsource that stuff quickly and think on your feet. Or you need to be like Jill does, say, “Just leave it all down there. We’ll take care of it.”
Jill K DeWit:
Whatever it is, exactly.
Steven Jack Butala:
But what you don’t want to do is, renovate the house. Get this owner out of there and have the house sold to somebody that you know who’s a renovator in that area. And it’s not hard, just driver around that neighborhood and see where the dumpsters are. Find out who’s renovating the house and get their cell phone number, and they’ll buy the one down the street for sure.
Jill K DeWit:
Well, think it was yesterday. We talked about, we had a question about the flat rate MLS. Here’s a little tip, my last tip for me if you want to do this, like we do. This is a perfect example of when I would use a flat rate listing service. I’d buy the acquisition, say I find this rundown, ugly house. And you know it’s going to be some investor’s dream. You know area’s hot, there are 10 dumpsters around the area. So you want to put it in the MLS and put in their investor special. I do that. I even put a little sign in the ground, have one quick open house, watch them flock, because they are driving the area right now. They’re already doing the renovations. So they will drive by and see your sign on the lawn and call you because they’re doing three down the road.
Steven Jack Butala:
This is all true, Jill. And this is a topic for another show. It is as easy… You don’t need to see these houses.
Jill K DeWit:
True.
Steven Jack Butala:
You need to get somebody who’s local to the house. Maybe it’s you. Maybe it’s not. To go in there and say, “This is not recoverable.” Or “Yeah, this is a good deal.”
Jill K DeWit:
Boots on ground.
Steven Jack Butala:
Yeah. Boots on the ground.
Jill K DeWit:
Yeah.
Steven Jack Butala:
But we’ve done the open house scenario and we did great with it. And we developed and we still get calls from those people. Buying and selling houses is not in my soul, the way land is. So we don’t do a lot of deals, but for some people, it is. For most people, it is, and it works. Just don’t renovate them.
Jill K DeWit:
Exactly. Thank you. Happy you could join us today. Five days a week, you can find us here on the House and really Land Academy Show.
Steven Jack Butala:
Tomorrow’s Jack Thursday. And I’m going to talk about tranching your land deals. You are not alone in your real estate ambition.
Jill K DeWit:
And there it goes. I told you, you’re up here, we’re down here. Let’s talk about tranch and all kinds of things. There we go.
Steven Jack Butala:
Trenching is a fancy French word for-
Jill K DeWit:
Bundle.
Steven Jack Butala:
Breaking up and re bundling. Yeah.
Jill K DeWit:
Yeah. Thank you. I love it. And thank you for tuning in. By the way, we’d love to connect with you on Clubhouse. So check it out on the first and third Thursdays, you can find me, and usually Steven too. And just go to Clubhouse, check out the Land Investing Club, join it, follow it, follow us. And you’ll get notified when we go live and you’ll see our schedule there. We love to talk with you. We are Steve and Jill.
Steven Jack Butala:
We are Steve and Jill. Information-
Jill K DeWit:
And inspiration-
Steven Jack Butala:
To buy undervalued property.
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