Jack Thursday – Is it Okay to Bend Rules to Succeed (LA 1726)
Jack Thursday – Is it Okay to Bend Rules to Succeed (LA 1726)
Transcript:
Steven Jack Butala:
Jack and Jill here.
Jill K DeWit:
Hello.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land 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’s Jack Thursday. I’m going to talk about when it’s okay to bend the rules to succeed. I have several examples professionally and socially. You’re either going to love the show or hate it. Like all Land Academy episodes.
Jill K DeWit:
If you know me, I’ve never bend the rules.
Steven Jack Butala:
Jill’s middle name.
Jill K DeWit:
I’m a rule follower.
Steven Jack Butala:
Jill’s middle name is-
Jill K DeWit:
[inaudible 00:00:34].
Steven Jack Butala:
There’s several, I’ll save it for the show. Before we get into it. Let’s take a question posted by one of our members on the land investors online community it’s free. And don’t forget to subscribe on the Land Academy, YouTube channel and comment on the shows you like.
Jill K DeWit:
Dan wrote, “Does anyone have any banking relationships for a lender who would lend on a subdivide?”
Steven Jack Butala:
Dan, I’m going to answer your question, but think the bigger question is, does anybody have any banking relationships to help me succeed in the land business? And the answer is emphatically, no. And if they did, and they were in discord saying I’m an asset manager or a lender for a bank, we have tons of money to lend. I would kick them out of our group, you don’t believe. I mean it, Jill thinks it’s funny, but I’m not exaggerating.
Jill K DeWit:
All right, that’s true.
Steven Jack Butala:
I don’t believe philosophically this is me. And clearly maybe not Jill. I don’t believe that all these sayings that we’ve all heard a million times, other people’s money and use other people’s money. Hahaha, I got somebody to give me money and there’s people in our group that are like that. On the other end of that. There’s people in every group that are like that. I don’t think debt is okay. I just don’t, debt.
Jill K DeWit:
Thank you.
Steven Jack Butala:
I don’t think it’s okay in your personal life to really, to any degree with very few exceptions. And one of them is a primary resident’s first position mortgage when rates are really low and the market’s doing what it’s doing right now. I think that’s probably okay. But tertiary debt, which is what I think you’re talking about here is a bad idea. That’s not to say, “Well great Jack, thanks a lot. So, but I don’t have any money.” That’s okay.
Jill K DeWit:
Wait till you do.
Steven Jack Butala:
There’s a massive difference between, no. There’s a massive difference between debt and equity financing. I love equity financing, Jill and I provide equity financing all the time. “Oh Jack, it’s so expensive. That’s terrible.” Yep, it is. Equity financing is way more expensive than debt financing. The consequences of defaulting on debt financing will destroy your life for 10 years. The consequences of defaulting on equity financing. When you have a partner with somebody like Jill and I, or many people that are in Land Academy, usually amount to one or two or three phone calls where the person that provided the equity financing. And we’ve done this many times. We say, “You know what? This deal didn’t work out the way we thought.”
Jill K DeWit:
We say, congratulations you’re out of the deal.
Steven Jack Butala:
Yeah. Tell you what, why don’t you throw us the figurative keys and we’ll take it from here. And when we do sell it, because we lent you all the money to do it. When we sell it, you’re not going to make anything. So I want you to put-
Jill K DeWit:
Not take it back.
Steven Jack Butala:
And I’ll tell you what pal, why don’t you send out another mailer and you’re going to do great. And then it ends right there. Debt, if you want to spend some fun, if you want to blow a couple hours in your life, start researching the origins in the history of lending debt financing. And the very roots of it are involved in wealthy nations going into second and third world nations who have natural resources, lending them a crazy amount of money to the point where there’s no way they could ever pay it back. And when they default taking over all their stuff, it’s mafia related. I don’t like lending. I think I’m making that clear.
Jill K DeWit:
Do you want to hit it home one more time? I’m sorry, professor Jack. I got a history lesson and an accounting lesson, two subjects I hated.
Steven Jack Butala:
Dan please don’t seek out any type of debt or banking relationship to do this. Just call anyone in Discord who says I’m a lender. I’m a equity partner.
Jill K DeWit:
Okay, move on.
Steven Jack Butala:
It’s Jack Thursday. Come on.
Jill K DeWit:
I guess Jack Thursdays, we’re going to let them go.
Steven Jack Butala:
Yeah.
Jill K DeWit:
Okay.
Steven Jack Butala:
Today’s Jack Thursday. And I’m going to talk about when it’s okay to bend the rules to succeed. This is why you’re listening. I have a philosophical question. It’s something that happened to me yesterday. And I was going to ask Jill anyway, just to get the answer. Not that I really care, but because I’m dying to know more about Jill.
Jill K DeWit:
Oh.
Steven Jack Butala:
After our 13 years of being together, Jill and I.
Jill K DeWit:
Everybody here knows me well, if you don’t know me by now.
Steven Jack Butala:
I bought Jill all new equipment for her studio, these mics and all this stuff and because all of our stuff’s probably seven to 10 years old and it’s done great. But we’re starting to have literally issues. There’s things just coming up.
Jill K DeWit:
Which is?
Steven Jack Butala:
In the scheme of things it just doesn’t… And it’s fun for me to go buy new stuff and her, yeah we’re having issues. And so I figured we’ll just replace it all. And that’s what I did. So we have these new microphones and one petered out on us, probably the original microphone after seven or 10 years, it should, I think, probably just ceased to work. The packaging, the model number and these microphones have not changed in any way since we bought that original microphone. So we just replaced them with not even the latest model, it’s the same model number, it’s just new. Should I, here’s my question.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
Take that old microphone that doesn’t work anymore. Pack it back up in the packaging I just got for these new ones and send it back and say it doesn’t work.
Jill K DeWit:
No, throw it away.
Steven Jack Butala:
I agree or donate it or whatever.
Jill K DeWit:
Throw it away.
Steven Jack Butala:
Throw it to somebody that maybe can recondition it. I wouldn’t throw it away cause I don’t want it to go into a landfill, but-
Jill K DeWit:
Right.
Steven Jack Butala:
I agree. So there’s an ethics there and I completely agree with you. And that was my… So this rule bending situation, you have to ask yourself to what-
Jill K DeWit:
Who does that? What made you think of that idea by the way.
Steven Jack Butala:
I don’t know, I’m staring at the old one. I’m staring at the new one. I’m like I could, because it’s Amazon. It’s so easy to return stuff. They don’t ask any question. And I never thought even considered doing it.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
It’s just a philosophical question about, it’s honestly that is why I wrote this topic.
Jill K DeWit:
Yeah. Who would know?
Steven Jack Butala:
So no one.
Jill K DeWit:
No one would know, but it’s-
Steven Jack Butala:
Totally get away with it.
Jill K DeWit:
Exactly. It’s just not the right thing. I’m a karma person.
Steven Jack Butala:
Me too.
Jill K DeWit:
That’s why.
Steven Jack Butala:
So you have to ask yourself in these questions about bending rules, to what end are we bending rules and why? And I know where Jill’s lines are and my lines are almost exactly the same place and this is not something we had sat around and said, let’s set our lines at the same place.
Jill K DeWit:
We just got lucky.
Steven Jack Butala:
We got lucky.
Jill K DeWit:
I would argue, tell me what you think that my lines a little further than your line.
Steven Jack Butala:
Yeah, I agree with that. I completely agree.
Jill K DeWit:
I’m like mm-hmm (affirmative), do you think we could do it a little bit more and then.
Steven Jack Butala:
Here’s another one, and this has come up. I would love to know your opinion on this.
Jill K DeWit:
Okay.
Steven Jack Butala:
I’m not saying we’ve ever done this or ever thought about doing this. I’m just saying it’s a situation.
Jill K DeWit:
Okay.
Steven Jack Butala:
Mom and daughter have the exact same name. Mom owns the property and dies. Daughter has a license with the same name. That’s on the deed. And legally it’s not okay to transfer that deed because it’s got to go through probate and all kinds of stuff. Notary shows up and deceased mom is deceased. The daughter says, “I’m ready to notarize the document to convey this piece of property to Jack and Jill.”
Jill K DeWit:
Do I know this ahead of time, by the way.
Steven Jack Butala:
You know this ahead of time, you know this whole circumstance, this is premeditated.
Jill K DeWit:
Oh, okay. So the daughter has shared this with me. Here’s my idea.
Steven Jack Butala:
No, maybe you come up with it. Maybe the daughter’s like, “What are you talking about? I don’t even know how to convey property.”
Jill K DeWit:
How recent-
Steven Jack Butala:
Is it okay.
Jill K DeWit:
How recently has mom-
Steven Jack Butala:
Let me finish this right.
Jill K DeWit:
All right.
Steven Jack Butala:
Cause you know that.
Jill K DeWit:
Mm-hmm (affirmative) I know.
Steven Jack Butala:
Let me finish this forever.
Jill K DeWit:
Okay, sorry.
Steven Jack Butala:
So the daughter’s standing there with the license in her hand, in front of the notary. Notary knows nothing about any of this.
Jill K DeWit:
Which they shouldn’t.
Steven Jack Butala:
The notary is just there to look at the license and look at the document and see if it matches. And it does. It’s Susan J. Smith, Susan J. Smith mom, Susan J. Smith daughter.
Jill K DeWit:
Okay.
Steven Jack Butala:
Is it okay to bend the rules and have that person sign the document before you answer I have a question. Sign the document and convey the property to you and get the proceeds. So before you answer, ask yourself this question to what end am I bending these rules? And who’s getting hurt.
Jill K DeWit:
That is going to be my question first. Do I have some proof that there’s no other heirs? There’s no one that’s going to be affected, this is all-
Steven Jack Butala:
No, you don’t. You have no proof.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
This is like a philosophy class in college.
Jill K DeWit:
Well, if I had some proof like a will or something and there’s no siblings.
Steven Jack Butala:
There was no docs, she was just deceased.
Jill K DeWit:
So let me answer. This is how I answer the question. If I really trusted and believed and in my heart knew that as best that I could, that it is the right thing to do or just saving a couple steps and making it nice and making it better for that person. I’m not saying, go get an attorney and call me when you spend $3,000, because that’s the way and there’s a quick little workaround and nobody’s going to get hurt. Nothing’s illegal, nothing’s affected. Then I would condone that.
Steven Jack Butala:
So would I.
Jill K DeWit:
So, but again, illegally behind someone’s back or, “Hey, I’m about to get divorce. Here’s what we’re going to do.”
Steven Jack Butala:
Yeah, none of that.
Jill K DeWit:
Nope. I’m not. And I know that there’s some sneakiness going on, I’m out. I’m not going to do that. I’m trying to think of another example, I’m jumping in on your show. Do you want me to keep going?
Steven Jack Butala:
Yeah, no I’d like to hear it, sure.
Jill K DeWit:
So that’s my whole opinion here. Bending the rules to me is like, all right. When I’m skipping this step and no one’s getting hurt and I’m really in my heart going the right direction. Yeah, I’m okay with that. But in the other circumstances, no, I guess it comes back to karma. If anything came back, right, I’d have to stand behind my decision if I could stand behind it, and what do you think?
Steven Jack Butala:
Here’s another one.
Jill K DeWit:
This is a tough game.
Steven Jack Butala:
Well, because in the land business, you’re dealing with all this stuff.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
In any business, you deal with these things every single day.
Jill K DeWit:
Yeah.
Steven Jack Butala:
Here’s another one. And in the land business, you will deal with this. If you are in the land business you’ve been dealing with it for as long as you’ve been in the land business, you buy a property, it’s got accumulated back taxes. The property gets conveyed. You own it. It’s got a thousand dollars worth of back taxes as you’re going to sell it. That’s what we’re in the business for. You bought it for a thousand. It’s got a thousand dollars worth of back taxes on it. And you’re going to sell $5,000. You fully disclose that there are back taxes on this property and that the new person who buys it will inherit these back taxes along with it, back taxes on property stay with the property, not the person. It’s hard for a lot of people to understand that because income taxes stay with the person. If they’re not paid. Is that okay if you fully disclose it?
Jill K DeWit:
Yeah.
Steven Jack Butala:
Are you even bending the rules?
Jill K DeWit:
No.
Steven Jack Butala:
Okay. I agree.
Jill K DeWit:
Yeah.
Steven Jack Butala:
However, I think a lot of miss-
Jill K DeWit:
You probably could beta.
Steven Jack Butala:
If you read the municipalities. They’re probably going to say, it’s not okay to convey property with any type of back taxes on it in a statutory way.
Jill K DeWit:
But you know what?
Steven Jack Butala:
Does everybody do it? Yep.
Jill K DeWit:
Well, because my buyer, me seller and Joe buyer are on the same page and he agreed to that. I disclose it. He saw it. He’s aware of it. He noted it. We’re on the same page.
Steven Jack Butala:
We are still bending the rules, technically.
Jill K DeWit:
Well you know what? Well and honestly, well let me give you this, here’s a way around that. Or do you want to talk? I don’t know.
Steven Jack Butala:
I’ll let you know when I want to.
Jill K DeWit:
Oh.
Steven Jack Butala:
You don’t have to ask me.
Jill K DeWit:
Totally been in this situation. And I can say here’s a deal. There’s a thousand dollars in back taxes. I’ve taken it off, that’s why you’re buying it for this cheap. Do you want me to go do it now, but I’m going to mark it back up to where it should be at $2,000 or do you want to buy it? Because it’s a selling point. Honestly, we can either pay $2,000. I’ll pay the back taxes and make it’s current. When I transfer it to you, I have no trouble doing that. And I have done that many times or I’m going to sell you for a thousand. You know, you got a thousand dollars in back taxes, but here’s the good news. You don’t have to pay it today. You could pay it in six months. You could save up for it. It doesn’t matter. It’s a little bit better for you. And you’re like, “Huh?” Because they’re not going to take it back for four and half more years or so. What’s still in the blank.
Steven Jack Butala:
But you missed Jill. Well that’s mechanically how it works. We all know that.
Jill K DeWit:
Right.
Steven Jack Butala:
My question is, the rules say, you can’t do this. The rules say that you have to settle up when you transfer property and almost all the statutes I’ve ever read the municipality usually the county says, it’s not okay to convey property with back taxes on it.
Jill K DeWit:
I’m comfortable ignoring that rule.
Steven Jack Butala:
Good me too. Here’s what we haven’t talked about. And here’s my real point. This is sort of a trick. The title is this, is it okay to bend the rules to succeed? And the answer is no.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
In it of itself to succeed. It’s not okay, because that implies to me. This is philosophy now, that the rules don’t apply to me. And we all know people, we all may have been married to people like this, where they’re walking on and around this planet saying these rules don’t apply to me. They apply to you. They apply to all you schmoes, but the rules don’t apply to me. That is not okay. So now you’re running through life professionally and socially, recklessly just making up your own rules and whoever’s in your wake dead or a sleep in your wake. That’s their problem, that will get you racked up quicker than anything. But these little… See how Jill went through all this mechanics of, well, it’s not hurting this person. Do they have a will.
Jill K DeWit:
What’s involved.
Steven Jack Butala:
The back tax and full disclosure on a back taxes, I believe this is my opinion. Because it’s Jack freaking Thursday. That that’s okay. And that everything’s being disclosed when you’re not disclosing stuff just to make money and just to succeed. That’s a really bad idea.
Jill K DeWit:
So bending the rules to succeed would be like, “I’m going to sell this property, not tell them about the back taxes stuff. And then I’m going to go dark if they try to reach me.”
Steven Jack Butala:
Yeah.
Jill K DeWit:
That would be bad.
Steven Jack Butala:
That’s with intent. That’s terrible.
Jill K DeWit:
That’s the point.
Steven Jack Butala:
Totally agree, Jill.
Jill K DeWit:
Thank you.
Steven Jack Butala:
Jill’s not bending rules to host somebody or to crawl or top the pile of professional people and stand at the top and say I would be, she’s not doing that. And neither am I. We have no aspiration to be the top 10, the top echelon of wealthy people. That’s not why we’re here. We’re here to do the right thing.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
Make a bunch of money. Share our experience with this Land Academy. We’re giving back.
Jill K DeWit:
Mm-hmm (affirmative).
Steven Jack Butala:
Yeah and try to just make it all work for everybody so that everyone’s happy. The seller’s happy. The buyer’s happy. Land Academy members are happy. We’re doing the right thing.
Jill K DeWit:
Exactly. Thank you for joining us today and happy you could join us five days the week who can find us here on the Land Academy Show.
Steven Jack Butala:
Tomorrow’s Jill Friday, she gets a chance to talk like a cook. Like I just said, she’s going to talk about investing like a girl you’re not alone in your real estate ambition. It turned out to be a good show. I was a little worried about it.
Jill K DeWit:
That was a little hard. I wasn’t expecting some of these big picture philosophy things. I’m like, I got to think about this.
Steven Jack Butala:
I’m going to add another point because I’m from the Midwest. And I don’t think that this goes on all over the country, but there’s a certain section. I don’t know if it’s Midwest or whatever. I grew up in an environment where a substantial number of people who are very successful had this philosophy. You got to cheat to win. There’s got to be some angle or some under this little inside track of information to actually make a bunch of money. And I think that’s really too bad. I think it’s probably how and where I grew up in Detroit, but I don’t find that out west here.
Jill K DeWit:
Okay. Thank you. I appreciate that. And thank you for tuning in. We hope you find our content valuable and we appreciate your support. If you haven’t already, please check out our YouTube channel, hit the subscribe button and don’t forget if you’re a member of Land Academy. Get with us on Discord.
Steven Jack Butala:
We are Jack and Jill, information.
Jill K DeWit:
Inspiration.
Steven Jack Butala:
To buy undervalued property.
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