3 Circumstances That Tell Us it’s Okay to Flip a House (LA 1725)
3 Circumstances That Tell Us it’s Okay to Flip a House (LA 1725)
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 in 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 three circumstances that tell us it’s okay to flip a house.
Jill K DeWit:
There’s probably 30, but we broke it down to three.
Steven Jack Butala:
What are you guys talking about? What are you talking about? Why are you talking about houses, Jack? I thought you buy and sell land. We don’t advertise it, but Jill and I also have a company called House Academy. You can check it out on houseacademy.com. It’s got regular members who buy and sell houses, usually alongside their land operation.
Steven Jack Butala:
And it’s not something that we’re really, really focused on right now. Actually that’s the content of this episode, because there’s a lot of competition. The market’s super, super hot. And we would rather be over here, making tons of money buying and selling land right now. But that doesn’t mean you can’t do it, it’s not profitable.
Jill K DeWit:
House’s Academy is alive and well. We just had to check out the other day.
Steven Jack Butala:
Yeah, just saw that.
Jill K DeWit:
We saw people joining us.
Steven Jack Butala:
Right.
Jill K DeWit:
I don’t want you to think that this is a bad thing that we’re not invested in it, we’re not doing it, because we are.
Steven Jack Butala:
Exactly.
Jill K DeWit:
And we’re going to tell you, so for people who are thinking about House Academy and doing … And we’ll explain here in a few minutes who is a candidate for House Academy and why people come to us.
Jill K DeWit:
And then we’ll talk about what we’re doing now in this environment, because it was really important. And I want you guys to know that you are important to us and we are doing it with you, but we’re being strategic. And that’s what today’s shows about.
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 last year a ton of land academy members came to Jill and I, needing extra help to get their blind offer campaigns into the mail and off the ground.
Steven Jack Butala:
I took a look at how we personally are sending out mail with our key employees, and ultimately made those exact same people available to Land Academy members to get the mail out. And we gave it a name, it’s called Concierge Data.
Steven Jack Butala:
So it’s a year later, and hundreds of our members are outsourcing their entire mail process with this product. Some of those members are people that have been doing mail themselves for years and they’re tired of it. They’re outsourcing it. And some of those members are brand new and are not fully … It’s stopping them from getting into the business. And they’re in both cases and everything in between, using Concierge Data to get the mail out. Check us out at offers, the number two, owners.com and give them a call.
Jill K DeWit:
Aaron wrote, “Hi, I’m brand new to this course. I just bought it today. I was wondering, number one, should I set up an LLC in my home state? Number two, should I get an email forwarding service, slash virtual business address? Number three, should I get a local number or an 800 type number?” Well, good news is, that thing you just got today, watch it.
Steven Jack Butala:
What’s that?
Jill K DeWit:
Because it’s in there.
Steven Jack Butala:
What’s that thing that he got today?
Jill K DeWit:
He just said, “I just joined Land Academy. I just got the education today.” I’m like, “Congratulations. Watch it.” Because all three questions are answered. They’re in there.
Steven Jack Butala:
Yes, Jill’s exactly right.
Jill K DeWit:
No, it’s really good, I’m trying to say. So this is a perfect question, it’s not a silly question. And you don’t know until you dive in.
Steven Jack Butala:
Yeah.
Jill K DeWit:
You think that it’s just about this part of the business, but it’s about the whole business. We help you getting started, like, “Do I need to go get an address? Do I need to do this? Do I need to go buy a desk? Do I need business cards?” Whatever. We talk about all those little details in the program so you know where to spend your money, where to spend your time.
Jill K DeWit:
Because I know that question number four is probably going to be, “Do I need a catchy name and a website?” Question number five, “Do I need to do Facebook, YouTube and all that?” Question number six … I can dream them up because we know because we’ve been there and that’s why we cover it in Land Academy.
Steven Jack Butala:
It’s in chapter two.
Jill K DeWit:
Yeah.
Steven Jack Butala:
I would estimate this, probably 85 to 90% of what you need to go … Maybe 95% of what you need to know to make a ton of money in this business, is in Land Academy 3.0, which is the product Jill’s referring to.
Jill K DeWit:
And the rest is experience.
Steven Jack Butala:
And the rest is filling in any gaps in questions that you might have. Or honestly, they’re not usually core questions on how to do it. They’re questions that are rooted in this concept. “I feel, I don’t know if I’m doing this right. I don’t have a good feeling yet. I want to ask a bunch of questions.” Or just fence, and that’s what Discord’s for, to ask other members, “Hey, if you’re six months into this and you’ve done a couple of mailers, am I nuts to think,” fill in the blank.
Jill K DeWit:
Yeah.
Steven Jack Butala:
And it’s all in there.
Jill K DeWit:
Exactly.
Steven Jack Butala:
Today’s topic, three circumstances that tell us it’s okay to flip a house. This is the meat of the show. Jill, you had notes. I would love to hear your opinion on this.
Jill K DeWit:
All right. I do. Well, first of all I want to say, who’s a likely candidate for this House Academy and house flipping? I’ll tell you, it’s any person who is buying a house for, fill in the blank reason, and they need to buy it better, cheaper, faster. That’s who it’s for. We have people that come to us and join House Academy to buy their dream house, buy their retirement cabin. Or their flippers, and they’re tired of waking up every morning, scouring the MLS trying to find a deal. Or driving for dollars, heaven forbid. Okay, that’s what this is for.
Jill K DeWit:
Now the topic today is though, all right, well, what circumstances tell us it’s okay to flip a house? And the way we flip a house is different than what you might think on … Because property flipping on HGTV is not what we do. So let me explain that one too. We have done both. Have we bought houses and gone in and moved walls and redecorated? I mean, I’m talking down to below the cement. Put bathrooms in where they was a closet and all of that. All levels of flipping we have done.
Jill K DeWit:
Guess what’s the best? The way we do it now. And the way we do it now is I am buying it right, we are buying it right, marking it up whatever our dollar amount is that we have to make a minimum of. Whether it’s $50,000, $70,000, $100,000, whatever our minimum is in that area, that we are not doing anything if we can’t make that. And then we’re selling it to either, most likely, it’s another investor who is going to go in and do all the work that I don’t care to do, but they have the team in place. Or it might be the end user, it depends on the property.
Jill K DeWit:
That’s the point here. We don’t wholesale, we don’t assign. We buy it, our names go on the deed, and I sell it as fast as I can. And it’s usually not hard because it’s priced right. So now that we got that out of the way, what are the circumstances that tell us it’s okay to flip a house right now? Here are my three.
Jill K DeWit:
Number one, it’s not a too hot area. Homes are moving, but it’s not crazy. Why? I’m not getting into a bidding war. You’re never going to make any money if you’re in a bidding war.
Steven Jack Butala:
That’s right.
Jill K DeWit:
So funny because-
Steven Jack Butala:
Very true.
Jill K DeWit:
… we have a sweet, dear friend, where we used to live in Southern California, who’s an agent. And we were talking to her about a while about doing this together, and the properties she kept coming up with were bidding war properties. She’s like, “We better hurry. We’re going to lose it.” I’m like, “No, I’m already out.” I’m not going to compete with somebody because that’s not how you do it. I’ve already lost if I’m in a bidding war. So that’s a number one reason or way that I know the circumstance.
Jill K DeWit:
Number two circumstance I know it’s okay up a house, the numbers make sense. And that means Jack signed off on it. Jack researched the area. Jack ran all the numbers. Jack knows exactly what people are selling for right now. Jack knows exactly how much we can mark it up. And it’s going to meet our criteria that we’re going to make minimum of whatever number we want to make when we sell it to potentially that flipper, or whoever it is. And they’re going to be really happy because it’s still undervalued. And they’re going to walk away like, “Woo-hoo, I just bought this for less than what retail is right now.” That’s my number two.
Jill K DeWit:
And then my personal number three reason that tells me it’s a good circumstance, it’s okay to flip the house is, I have the BOG team in place and they know what they’re doing, because these deals do go fast. I’m not going to do it by the way. I’m not a BOG. I don’t want to a BOG. I’m not-
Steven Jack Butala:
What’s BOG?
Jill K DeWit:
Excuse me, boots on the ground. We are commonly doing this in areas that we are not sitting in, but the numbers make sense.
Jill K DeWit:
Might be three states over. I’m not driving there. I’m not going there. I will probably never actually lay my own eyes on the property, but I’ve got a real good team in place and they’re ready to move. Because when people get your offers for houses and they call and they’re ready to go, they’re ready to go. There’s a situation. And I need BOG, my boots on the ground people, to move in and be, A, able to be friendly sellers and make it easy for them and they want to do this with us.
Jill K DeWit:
And two, I need them to be able to walk in and really know the properties and understand what cracks in the foundation they should look like and things like that. They need to be able to quickly assess stuff. You don’t agree with my things?
Steven Jack Butala:
No, it’s just, you’re really getting into cracks in the foundation there.
Jill K DeWit:
I’m sorry. But my team’s in place and they can move quickly, I’ll leave it at that. This is my [crosstalk 00:09:59].
Steven Jack Butala:
My circumstance, all three of my circumstances are when it’s okay to buy a house and resell it, revolve around one word. In fact, here’s the Roman numeral word, and then I’m going to give you my three circumstances under that. Risk.
Steven Jack Butala:
And the way to remove all the risk from a real estate deal, I don’t care if you’re buying an office building, a house or a piece of land, is to dictate the price to the seller, not the other way around. HGTV is not an instruction manual. HGTV is exactly, exactly 180 degrees different than how you should do a real estate deal. It’s made for entertainment.
Jill K DeWit:
Entertainment.
Steven Jack Butala:
The way the Seinfeld show is or any other sitcom, that their whole point to making those shows is to entertain the hell out of you. And honestly, I watch them and Jill and I, like every other person that sits on a couch and watches those shows, look to each other and say, “This isn’t real.” There’s way that you can get a contractor in there, renovate that house for $150,000. In the real world, this would take half a million bucks. And they do that on purpose to get us to talk about it and to get you to talk about it.
Steven Jack Butala:
So how do you remove the risk in any real estate deal? You get there first. You figuratively stand in front of a seller and the seller says, “You know what? I know this house is worth 200 grand. I’m going to sell it to you for 120 because I want it gone. I don’t want to,” fill in the blank, “list it with an agent, have to clean out the basement.”
Jill K DeWit:
Remodel the kitchen.
Steven Jack Butala:
“I know there’s mold. Remodel the kitchen,” and on and on and on and on.” In fact, I would love to sell it to you. Do you think we can close in two weeks?” And the same thing happens with office buildings, believe it or not. And certainly happens with rural vacant land or any type of land.
Steven Jack Butala:
How do you do that? You do it just like how we buy and sell land. We send out blind offers, thousands and thousands of offers. To the point where you’re staring at a deal, or Jill was the one who does this after I send all the mail. Staring at a deal, saying, “This is a $250,000 house wholesale. I’m buying it for 180.” Done, done and done. Where’s the risk in that? The right might be, well, it does have a cracked foundation or the physical plant itself is in dire situation, where now it is not worth 180. It’s worth 90 to get all that stuff fixed. So I’m still removing all the risk out of it.
Steven Jack Butala:
Number one, the numbers have to work. I just gave you a great example. That’s what circumstance number one. What am I doing with these circumstances? Eliminating the risk in a real estate deal. The numbers worked great in our favor. Number two, for me, and I think I’m pretty sure I’m speaking for both of us. We don’t buy property that’s not tenable in its situation. Might need to be completely remodeled, it might need to be … We walk through there, it stinks, it’s awful. It needs a new furnace, all kinds of stuff. It doesn’t necessarily need to be tenable in an [inaudible 00:12:57] condition, but it’s not falling down.
Steven Jack Butala:
Number three, I need to know no matter what’s going to happen with that house deal, and this is not the case with land, that we will be out of it in 30 days the way it’s priced, and the condition that the asset’s in. So it just comes down to risk and money for me. And why don’t we send out millions and millions of offers right now, like we do with land, for houses? Because it’s such a hot market and where we are physically in these hot markets, it’s not hot market everywhere, it’s just where we like to buy and now sell houses it’s extremely hot. And so we just don’t want to swim with all those sharks.
Jill K DeWit:
Not now.
Steven Jack Butala:
We’d rather go over here and write our own ticket, which is what we do with land. So yeah, not right now.
Jill K DeWit:
It’s not that you can’t do it too. There are pockets of areas.
Steven Jack Butala:
Sure.
Jill K DeWit:
And you know, I’ll tell you, truth time, we do fund all kinds of deals, including houses. So people are bringing stuff to me and they’re finding them. So don’t think that it’s not on our mind and we’re not involved in it, because as we are. And yeah, nah, it’s going to get better.
Steven Jack Butala:
Oh yeah.
Jill K DeWit:
That’s the whole point here too.
Steven Jack Butala:
When the market slows down, probably, and my prediction is 12 to 24 months-
Jill K DeWit:
Right. This would be a good time-
Steven Jack Butala:
… House Academy, we’ll kickback.
Jill K DeWit:
Well, honestly this would be a good time too if you are thinking about this, learn now and watch these people and be ready for it. That’s not crazy too. Get the education and be poised to pounce.
Jill K DeWit:
Happy you could join us today. Five days a week you could find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow’s Jack Thursday, and I’m going to talk about when is it okay to bend the rules to succeed. You are not alone and your real estate ambition.
Jill K DeWit:
Poised to pounce, I kind of like that.
Steven Jack Butala:
It’s a little scary, Jill.
Jill K DeWit:
It is a little scary. Well, I was just going to say, it makes me think of some crazy girlfriends that I have. They are poised, like boo.
Steven Jack Butala:
Makes me think of some crazy girlfriends I’ve had.
Jill K DeWit:
Oh, that’s funny. You know, guys do it too.
Steven Jack Butala:
Oh, I’m sure.
Jill K DeWit:
Oh yeah.
Steven Jack Butala:
Oh, that’s a two-way street.
Jill K DeWit:
Yep, that’s true.
Steven Jack Butala:
It’s just a different kind of crazy.
Jill K DeWit:
That’s true. Thank you for tuning in. And by the way, we would love to connect with you on Clubhouse. Join Jack and I on the first and third Thursday of the month. And where can you find the times and the schedule and the dates and everything if you forget? Just go to Clubhouse, search the Land Investing Club, and you will find us there. And be sure and like us and follow us, and you’ll be in the loop. We are Jack and Jill.
Steven Jack Butala:
We are Jack and Jill. Information-
Jill K DeWit:
… and inspiration.
Steven Jack Butala:
To buy undervalued property.
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