Real Difference Between a Land and House Flip (LA 1695)
Real Difference Between a Land and House Flip (LA 1695)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Hi.
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 the real difference between a house and a land flip. Basic structure, basic mechanical, send out blind offers, receive them, choose the ones you want, close the deal. There’s a lot of stuff in the middle.
Jill K DeWit:
It’s different. We’re going to share this with you. It’s different.
Steven Jack Butala:
There’s a lot of stuff in the middle.
Jill K DeWit:
And I’m sure you can tell by my sigh which side I’m on. So there’s Beth Dutton in me that just loves land.
Steven Jack Butala:
Once a week, a new Land Academy member reaches out to me. I’ll put it in terms you can understand, and then we’ll get into the details. Once a week, maybe once every other week, a Land Academy member reaches out to me and says, “That’s it? I just got done with this land deal. We bought it for 10, sold it for 25. The whole thing took 35 days. And I think I talked to somebody three times. That’s all you do?” And I can tell before they even say anything, that they’re former house flippers.
Jill K DeWit:
Oh, gosh.
Steven Jack Butala:
That’s why?
Jill K DeWit:
That’s true. Oh, that’s funny. Okay. Now I get it.
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. Don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like.
Jill K DeWit:
Corley wrote, “I was wondering if anyone has any advice for building credibility, other than social media presence. I just got off the phone with a seller and they wanted to know where they could learn more about my company other than my website and social media. I haven’t done any deals, so I really don’t know what direction to point them in. I haven’t set up a LLC yet, but I’m waiting to get a few deals under my belt.” I think what you’ve got is perfect. What are you going to do, say, “Call the Better Business Bureau. I have an A plus”? I don’t do that anymore. Uh, oh, you have something to say.
Steven Jack Butala:
Watch this. Watch this. Listen or watcher, watch this. Jill, why should I sell my land to you?
Jill K DeWit:
Oh my. Okay. I wasn’t ready for that. That’s good. What are your concerns?
Steven Jack Butala:
I just want to know it’s real. I actually do want to sell my land and I’m pretty sure the price works out, if it works out for you. I want to know that the deal’s going to go okay and you have some kind of credibility. Is this a scan?
Jill K DeWit:
No, that’s why we’re going to do through escrow too. I’m going to make sure it all goes smooth. We’re going to have an escrow agent closing the deal, if that’s the case, whatever it is. Yeah. Then otherwise I just do refer them back to me. Look me up. Google me. Please Google me if you’re not sure. Actually I do that now all the time for all kinds of things. We might be doing an Airbnb and I’ll say, “Google me,” and they go, “Okay, I see who you are. I see that you’re real.” And it’s totally fine.
Steven Jack Butala:
If you’re going to own your own business, you are, like it or not, in the business of selling yourself for now and forever. If you own a convenience store and you run it, and you’re standing behind the counter and running it, you better get to know everybody in the neighborhood, so they subconsciously start to choose you for light grocery shopping. That’s it. So know, this business model and Land Academy itself attracts a disproportionate number of Jacks, not Jills. There’s a technical solution for everything. Well, if I just price it perfectly, like we talked about yesterday, if I price this mailer perfectly, people are going to flock to me and I’m going to email them back and say, “I might do the deal. I might not. Here’s the name of the escrow agent, and go ahead and submit it, and we’ll get the deal done for you.” That’s just not how this is. That’s what this show is really about today.
Jill K DeWit:
Oh, okay.
Steven Jack Butala:
We are in the people business. There’s technical stuff that you need to know about.
Jill K DeWit:
Right. That’s true.
Steven Jack Butala:
And this business model attracts technical, smart people, but there’s a huge people component to this and a sales component to it.
Jill K DeWit:
Yeah. You’re just going to have to practice, Corley, and you’ll get good at it, about selling yourself, but don’t overdo it. If you throw up on them about how great you are and your high school experience and how you played college football, that’s a little too much, but, “Hey, check out my website. What concerns do you have? I am new to the business, but I’m actually related to this Land Academy group. Look them up, if you really want to know what’s going on here. I’ve got a huge community of people here that are really smart about buying and selling land and we know what we’re doing.”
Steven Jack Butala:
Yeah. And if we get into any kind of sideways situation, I’ve got all kinds of resources to solve it. We’ll get it done for you.
Jill K DeWit:
Totally. Yeah.
Steven Jack Butala:
Today’s topic, the real difference between a land and a house flip. This is the meat of the show.
Jill K DeWit:
You know what’s interesting? I just had a thought of another thing. I had somebody ask the other day, can we do that? Can I reference you guys? I’m like, “You should.”
Steven Jack Butala:
You should reference us all the time, sure.
Jill K DeWit:
Please do. Yeah, that’s great. It does calm people down. So, the only other thing, Corley, I would say is reference us and let them know you’re part of our community and our world, and that will calm people down, and they’ll trust you. So back to the show, the difference … So do you want to go first?
Steven Jack Butala:
No. I’d love for you to.
Jill K DeWit:
Oh. Why are you doing that? Just to-
Steven Jack Butala:
I’ll do it, if you want.
Jill K DeWit:
You’re like, I don’t care.
Steven Jack Butala:
I don’t care.
Jill K DeWit:
This is so funny-
Steven Jack Butala:
You know why? Here’s why. Because, this is what, the third show this week that we’re … We record these all at once and I’ve been talking and talking and talking and talking.
Jill K DeWit:
Oh, yes you have. Yes, you have. That’s why I thought you might have a lot to say. This is kind of your day, you’re weak. I love of it. So, no, it’s funny though, we’ve been doing this long enough now, also I’m okay with being in the hot seat. I’m like, all right, bring it. I got nothing. I’m like, I’m not afraid of anything. Put me in any situation, put me in coach. I’ll do it. So the main difference, we were talking about this as we were making tea and talking about this show. I said, “I just really have one big one and then a bunch of little stuff.” And he goes, “Yeah, that’s it. It’s kind of the same for me.” So my big difference is you need BOG. You’ve got to have boots on the ground. If you think you’re going to do a house deal the way we do a land deal, you got another thing coming.
Jill K DeWit:
Having that phone conversation with them is only the beginning. The house people need more attention. There’s just more involved. And by the way, you’re going to need to go see the asset. You can’t look at a Google Earth shot and all the photos from when they bought it in 1982 and say, “Yeah, well that’s good enough for me.” No, you really need to get somebody in there. They need to walk it and see what’s going on and see what condition it’s in. Not that you’re going to necessarily make a lot of huge changes, but you need that assurance going forward to make a decision about the deal. And also these sellers, they need help. Go ahead, babe.
Steven Jack Butala:
It’s a totally different seller. That’s really my big point here. There’s a reason that they’re not … They might be really in a hurry to get some money out of the thing and get out of there for whatever personal reason. There’s a reason they’re not listing the house, and they’ll tell you very quickly. There’s so much stuff in the basement, I can’t deal with it. I can’t even go down there.
Jill K DeWit:
Right. I had someone look at it once and they told me that I had to remodel the kitchen or it’s never going to work.
Steven Jack Butala:
Yes. And it’s social. It’s never, “I don’t like your price.” They never say that. They’ll say I have, “I have six kids and my husband just got transferred and there’s no possible way I can show this house to a real estate agent.”
Jill K DeWit:
Yeah, I can’t keep it in an open house mode.
Steven Jack Butala:
I can’t, yeah.
Jill K DeWit:
And pack up my kids and be ready with a 20 minute notice every Saturday morning. No way.
Steven Jack Butala:
So, your business is no longer moving paper around to buy and sell property, like we do with land. Your business is in, you start to get into the people catering business. Okay. We’re going to sell this for you. Or maybe they need to stay in their house for six more months so they can find … There’s always some social thing that … And for the right personality-
Jill K DeWit:
Kids getting out of school. It’s a lot of kids stuff.
Steven Jack Butala:
For the right person, and I’m not the right person, and honestly, I don’t think Jill is. I know she’s not. We had a set of boots on the ground in the past and we still do deals with them once in a while, that they’re all set up for it. He loves looking through houses and-
Jill K DeWit:
He’s good at it.
Steven Jack Butala:
… and say, “Oh no, there’s mold over here, or this over here.” He was always there for the inspections. The guy was explaining everything. He translated it to me. The BOG was. And his wife was just great with these sellers. “Oh, sure. We can do this, this and this.” So it’s a different kind of deal, and I don’t prefer it. Then when you’re done and you own it, then you’re staring at an asset that’s like, wow. It’s got all these flaws.
Jill K DeWit:
Well, let me back up on this.
Steven Jack Butala:
Yeah, go ahead.
Jill K DeWit:
So now it’s done and you … Let me back up. I’m not trying to poo-poo one or the other. And I’m sorry. I’m sure that comes across that way. It’s just, it’s a different mindset and a different kind of person that loves doing that stuff. Because those people that love doing these house deals, they’re not the land people. They’re like, “Yeah, that’s too boring. I don’t get to do any of the fun stuff. I want to go through and I want to talk to people about it and get to know them, really get to know them.”
Jill K DeWit:
But then what I was going to say, my point is, now once you own it, there’s a whole list of other things you need to think about with these houses. You need to get insurance. On my land, I don’t need to get special insurance the day I own it. If there’s a fire, great, now the brush is cleared. It’s that kind of a thing. On a house, if there’s a fire, oh, there’s a problem.
Steven Jack Butala:
You’re done.
Jill K DeWit:
Exactly. There went my asset. You have to have insurance. You’ve got to have utilities. You’ve got to transfer things over. There’s way more moving parts, like you just said, in a house transaction. Back to you.
Steven Jack Butala:
So the good news though, is that houses, if you price them right, they sell that day. On the buy side, it’s really easy. On the sell side, it’s really easy. Everybody understands what a house is. Everybody understands what a fallen down, dilapidated house is in a great neighborhood. So, Jill and I have done very well and still do well buying and selling houses. We just do it very, very differently. And my final point is here, Jill, that there’s a reason that there’s about 20 shows on HGTV about buying and selling houses and there’s exactly zero about buying and selling land, because it’s not glamorous. There’s no glamor in what we do. It’s all money.
Jill K DeWit:
It’s true. But like you said, when you really dig in and you look at the data, there’s, what, 100 times more data that you could get right now today on houses in your neighborhood than land. So ours is more work, but we love it. It’s clearly who we are.
Steven Jack Butala:
From a data perspective, they’re pretty similar. From a-
Jill K DeWit:
But I mean, you have more to go with.
Steven Jack Butala:
I know. You do, but I’m just-
Jill K DeWit:
I can look at house days on markets and be very confident. I can be very confident at the house I’m looking at right now across the street, exactly how it’s going to go.
Steven Jack Butala:
I agree. But the data’s relatively similar. There is more data available. For our purposes, they’re similar. The transaction itself is almost identical. There’s a few things that are a little bit different. Escrow and all of that, the part in the middle is so intense. It’s just people intensive.
Jill K DeWit:
Right. I never have to go anywhere and do … Somebody has to be there too.
Steven Jack Butala:
We buy property every week out of state. And I don’t lose a minute of sleep over, well, I didn’t look at it. What if there’s mold, or what if there’s just … I don’t ever think about it.
Jill K DeWit:
I will say this. If this is you and you are the house flipper kind of thing. And when I say flipper, I mean, you buy it and sell it. You don’t do anything to it. Those are rehab people.
Steven Jack Butala:
And you actually buy it. You put your money down on it.
Jill K DeWit:
Exactly. You’re not a wholesaler, where you’re just getting it under contract and then cashing out. You do what we do, where I find the asset, we put down the $233,000 or whatever it is, we buy it, we own it, and we sell it really fast. And if you do it right, you’re cash in, cash out in 30 days or less. The longest piece is escrow. That’s it. But if that’s you, you could do this really well with the right BOG.
Jill K DeWit:
Because I was just saying, we have House Academy. So, when we were recording House Academy, I got on an airplane. We were living in California at the time. I got on an airplane with my cameraman, flew to the location where he had done the majority of the houses with a wonderful BOG team, boots on the ground. I did a tour and talked about them and the numbers and shared it for House Academy. What was funny was, that was the first time I’d ever seen those houses. Ever.
Steven Jack Butala:
That’s great.
Jill K DeWit:
So, I just want to make sure you know, you can do it. There’s more to it. I don’t want to poo-poo this, but you need-
Steven Jack Butala:
Would it have changed your decision?
Jill K DeWit:
No, no, not at all.
Steven Jack Butala:
Were you like, “Wow, these houses are worth it”?
Jill K DeWit:
Yeah.
Steven Jack Butala:
Okay, good.
Jill K DeWit:
Yeah, totally. So, that’s it. It’s just kind of apples and oranges, whatever you’re into. We want you to know all the information, so you go into this knowing what’s involved. That’s what this show is for me.
Steven Jack Butala:
That’s it. Yep.
Jill K DeWit:
Thank you. Happy you could join us today. Five days a week, you can find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow’s Jack Thursday, and I’m going to talk about the honest truth about business ownership. You are not alone in your real estate ambition.
Jill K DeWit:
Do you know what was so funny about that? The cameraman I took with me, I said, “Here’s the deal. Don’t tell the staff were sitting in first.” He’s like, “Oh.”
Steven Jack Butala:
I didn’t even know that.
Jill K DeWit:
Yeah, yeah. So I said, “Look, lucky you, you’re going with me. It’s only you and me going on this trip.” And it was one day. We didn’t even spend the night. We just flew in the morning. We picked up a car. It was a red Camaro too. This guy’s like, “This is awesome.”
Steven Jack Butala:
That’s great.
Jill K DeWit:
We flew first class. I said, “All you’ve got to do is follow me around with a camera and capture all this stuff, all this content.” It was really funny. We had a good time. Hey, thanks for tuning in. We would love to connect with you on Thursday on Clubhouse. So it’s not every Thursday. It’s usually the first and the third Thursdays of the month. But to be sure, just go onto Clubhouse, find the land investing club, and check the schedule there. We’d love to connect 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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