Why It Makes Sense to Make Your Hobby a Business (LA 1739)
Why It Makes Sense to Make Your Hobby a Business (LA 1739)
Transcript:
Steven Jack Butala:
Steven and Jill here.
Jill K DeWit:
Good day.
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 Dewitt, broadcasting from the valley of this sun.
Steven Jack Butala:
Jill and I talk about why it makes sense to make your hobby a business sometimes.
Jill K DeWit:
My latest hobby collecting cars, what’s yours? Kind of the same.
Steven Jack Butala:
Well, here’s what I’m going to talk about. If your hobby is price is no object, I want to collect statues and I will pay top dollar then making your hobby a business is a super bad idea. If your hobby is to try to get stuff cheap, it’s obviously our hobby like land. Then maybe you can make a business out of it, which we’re in the process of doing and I’ll describe 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. And also people don’t know this. We have a full, Jill and I own and op rate a full blown commercial printing company called Offers 2 Owners. Over the years, jill and I internally developed a system to send blind offers to owners, tens of thousands in the mail sometimes through direct mail. And we found out the through, after we started Land Academy that our members wanted this product. So we launched it. Probably several years ago.
Steven Jack Butala:
Today we mail between 700 and 800,000 offers a month on our members’ behalf and I would just want you to know about it. Contact support at offers2owners.com there and just check it all out. It’s pretty straightforward and simple.
Jill K DeWit:
Thanks. Mark wrote, “Just read this great article. I had a question. When I’m buying a land property, I will buy with tile insurance. Then when I’m selling with a title company, I’m also purchasing tile insurance for the buyer, like $5,000 plus the purchase price. Will you …” I can’t read the whole question here.
Steven Jack Butala:
That’s it.
Jill K DeWit:
Okay. So I didn’t know, this Aaron, his name is used a lot. I didn’t know if you liked all his questions or if it was a typo. So that’s why I didn’t say Aaron. Sorry. I made it. But if it really is Aaron, I believe you. So this article is-
Steven Jack Butala:
Let me explain this, how this works. When you go to buy a piece of-
Jill K DeWit:
I know what he’s saying. Oh, okay.
Steven Jack Butala:
Let me super, super clarify this, because this is a popular question especially with my people. When you go to buy-
Jill K DeWit:
Am I doing double work?
Steven Jack Butala:
When you go to buy a piece of property, whether it’s your house or a piece of land, you go through the escrow process. And when you look at the closing statement, one of you, the buyer or the seller is going to pay for stuff. Or sometimes it gets combined. When you buy a piece of property, the person before you, the seller pays for your title insurance policy. When you go to sell it, because now you are the seller, you pay for the title insurance policy for the next person. Don’t ask me why. This is just how it is. And it’s a very small amount of money on vacant land, usually two or $300, but it varies around the country. So it looks like you’re paying for it twice. What you’re really doing is paying for the next guy when you sell it.
Jill K DeWit:
You know what? Sometimes I have to, no offense, I have to interject here. Because sometimes we have to pay closing costs and we pay the title insurance.
Steven Jack Butala:
That’s correct.
Jill K DeWit:
That’s where he’s going with that. Like, wait a minute, wait a minute, wait a minute. Are you guys advocating this, which is, I think of the question, when I buy it, I told the guy, “Here’s a deal net to you is …”
Steven Jack Butala:
10,000.
Jill K DeWit:
Exactly. And I’ll pay all the costs. And so I make sure that guy, when he gets his check from escrow, it has one and four zeros on it. Correct. Because that was part of my deal. Well, you know what Aaron? Yeah, you’re right. Because you want to get tile insurance. You’re doing it all correctly. Make sure that there’s no issues. That was right. Yeah, you’re kind of eating that cost. But remember it’s because we’re teaching you to do what we do where you buy for 10, you sell for 30. So you’re kind of baking it in there. Yeah. You have paid in extra. I know. When you look at the whole closing thing, maybe it’s like, five to $800 is what the actual title insurance cost. Not all this stuff, but just the title insurance policy. Yeah, you’re paying for that out in the buy side. And then you normally pay for that on the sell side as you do it. Yeah. Bake it in. Big deal.
Jill K DeWit:
1600 bucks of title insurance that was maybe redundant, but it doesn’t matter because you bought it for 10 and sold it for 30. You like that? That’s the point and you’re right.
Steven Jack Butala:
Exactly. It’s all math. Buy for 10, sell for 30. Buy for 30, sell for 90, which is really what Jill and I do. We can afford to eat some costs to make it easier for the seller to digest, “Hey, you’re going to get a $10,000 check.” Not, “We’re going to buy a profit for $10,000,” and then they end up with an $8,200 check after closing costs. It’s a little confusing, but it’s all in those closing statements.
Jill K DeWit:
That’s part of what makes us special and why these people’s say “Yes, I’ll make sure you get that much money, period.” So good job.
Steven Jack Butala:
Today’s topic. Why it makes sense sometimes to make your hobby a business. This is why you’re listening.
Jill K DeWit:
Oh, I have all kinds of hobbies that I want to make a business.
Steven Jack Butala:
I’ll give you a great example of a hobby that Jill and I created into a business for a bunch of reasons. And it ended up being incredibly beneficial for us from a money standpoint and a tax standpoint against our regular land business that’s called Land Academy. You know, Jill and I were happily going along buying and selling land and very, very successfully. Around 2015, we got tired of answering people’s questions about how do you guys buy this property so cheap that you can sell it to me and still be in business? And then we would tell them.
Jill K DeWit:
One by one by one.
Steven Jack Butala:
We would have consulting calls. And in the beginning we did it for free under the guise of, well, these people have purchased a lot of property from us. They’re wholesalers. We want them to continue to do that. And they did. And so it got to be so popular, we decided to make a whole company out of it and teach people how to buy and sell this stuff. So in that case, it made a lot of sense.
Steven Jack Butala:
I’ve had other people come to me and say, when you’re buying a selling a land and you’re driving a real fast car and you don’t really seem to really do any work at all, people start asking you questions like, “What do you do? What is this all about?” And you answer them. And invariably they say, “You know, I’ve had this idea for a while.” Yeah. And they lay it all out. And while they’re in eighth of a second they’re into and I’m like, “This is never going to work.” But I say that to myself.
Jill K DeWit:
Why don’t you tell them that?
Steven Jack Butala:
Well, I do eventually after I can’t take it. Sometimes if you’re lucky they buy a real expensive glass of scotch while they’re telling you their story. The fact is there’s tons and tons of work involved in starting a company and making it viable from a financial standpoint, one part of which, and this is a super essential part in my opinion, you actually have an interest in it. I have a pretty good friend who is very smart who bought from, this is a lot of years ago, five oil change shops and proceeded to run them very quickly straight into the ground. In my opinion, super bright guy showed up to work. He just wasn’t interested in changing oil.
Jill K DeWit:
Well, I have pizza. Yeah, we did that.
Steven Jack Butala:
Tell the story please.
Jill K DeWit:
Yeah. Yeah. We thought we’d diversify a couple years ago and buy a pizza place and we’re going to make it a chain, but we didn’t want to go there. I didn’t want to make the pizza. I liked to eat the pizza occasionally. That was kind of about it. And it was really fun when we had parties. We could have our own pizza delivered from our own place. That was fun. That was the extent of it. We’d have a good hard look at ourselves and say, because we could have done it. So this is a thing too I want people to take away from this. Making your hobby business can happen with darn near anything if you’re into it, man, and you pour your heart and soul into it.
Jill K DeWit:
So we had to take a step back and look at ourselves and say, “It’s a turning point in time. Do we want to continue on the path and be Land Academy and land focused and all of that? Or do we want to shift gears and build a pizza empire because we know how to do it and we know we can do it?” And we both fortunately were on the same page and said, “No, pizza’s got to go. As fun as that was, that’s not what I want to do. The land stuff’s better.” So we did. So we sold it and moved on.
Steven Jack Butala:
And here we are not doing a pizza shop.
Jill K DeWit:
And we could.
Steven Jack Butala:
I know.
Jill K DeWit:
We could be the only pizza podcast out there. Not kidding. We would be the pizza podcast out there.
Steven Jack Butala:
I bet there’s another one.
Jill K DeWit:
I don’t know. But building a business, maybe not. Building a pizza empire podcast, I bet there’s not one out there. No matter what we would’ve owned it because we don’t know how to not go a hundred percent and go 90 miles an hour. And if you were watching us this week, you would witness this firsthand if you were in our home. So whatever it is, maybe that’s, this is for me, this is sounding like Jill Friday so thank you for letting me have my moment here, whatever you really want to go for, if you put your head down and put blinders on and not get distracted by other things, you can turn whatever you really want to into a business.
Steven Jack Butala:
If you are a member of their land companies out there, there’s three or four that are credible and reputable I think.
Jill K DeWit:
Education places?
Steven Jack Butala:
Yeah. Education. Like Land Academy, but not Land Academy. Yeah. I can name them by name, but I won’t because I have a little bit of respect for some of them. Most of them, they won’t tell you this, but they started and continue to teach or instruct how to buy land because like it’s your hobby or you buy and sell a couple of properties because you’re into it. You know it works, however you managed to do that and maybe it offset your mortgage. That’s not what Land Academy is.
Jill K DeWit:
Kind of skipping along the top thing.
Steven Jack Butala:
If you had the personality where, “Wait a minute, I just bought property for $4,000 and sold it for nine or eight or 12 or whatever,” and you sit up straight in your chair one day and say, “Well, what if I did 20 of these a month, a year? I would …” And then you do the math and then you find out you’re going to make half a million dollars your first or second year. And then you start to have thoughts like, “Well, then I wouldn’t have to have a job. Then my wife wouldn’t have to work. Then we could have an extra baby,” whatever you’re into. Yep. Because of all that Land Academy is for you. I’m not selling you anything. But we don’t know, jill said it perfectly, we don’t know and our members don’t know most of them how to not go a hundred miles an hour. This is not a hobby. We.
Steven Jack Butala:
Jill and I, for some reason, both love cars. We always have. We like separate types of cars. True. And so we’re just going through our heads right now, should we get our dealership license and make this a business because we’re buying these cars and selling them for a lot more because we don’t know how to not buy assets cheap.
Jill K DeWit:
Exactly.
Steven Jack Butala:
We are not going to walk into, there’s a few exceptions. Retail jewelry is one of Jill’s exceptions and we’ve never talked about having a jewelry business.
Jill K DeWit:
No, we have not, but you’ve done that.
Steven Jack Butala:
I have and failed at it.
Jill K DeWit:
And I’ve done that.
Steven Jack Butala:
So I hope I’ve made my point. If you’re the person who has to hundred miles an hour and figure stuff out, check us out.
Jill K 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, the episode in the Land Academy Show, well, I’m going to sit down and on the video, Jill and I are, and we’re going to walk through the Land Academy discord channel, and I’m going to show you what’s going on because it’s just blown out of control in a great way. And all of the Land Academy members that we have are helping each other out. I’m in there every day, making comments. We’ve got three moderators who are responding to just about every question. So I think it’s time to really do a walkthrough and we’re going to do it on YouTube. We’ll post it on YouTube like we do all the podcasts, but I’m going to try to do it so that if you’re listening in your car and you listen to the podcast, many more people listen to this than watch it. And so I will explain some stuff, but I will walk through it verbally too so you can get a feel for what’s in there.
Jill K DeWit:
You’re going to want to see it if you can.
Steven Jack Butala:
Yeah. Hey, you’re not alone in your real estate ambition.
Jill K DeWit:
I would like to make a comment. I picked up on a funny phrase that you said a few minutes ago which is, if you, if you want to have an extra baby. Who wants to have an extra baby?
Steven Jack Butala:
Did I say extra?
Jill K DeWit:
Yeah. You said extra baby. Boy, there’s a couple extras that we have now that-
Steven Jack Butala:
I exclude this. Obviously I exclude us from this stuff, but some people are like, “I want to have a baby, but I can’t afford it.” that’s all.
Jill K DeWit:
Okay. It’s kind of funny. Never heard a person say an extra baby. “Hi, have you met Johnny? He’s our extra baby. We got into this little land business so we could afford him.”
Steven Jack Butala:
Thought we were going to have two, now we have five.
Jill K DeWit:
Now we have five. Turns out we make a lot of money in it so we had three extra babies.
Steven Jack Butala:
Yeah. If your hobby is having babies, maybe you can make some money off of that.
Jill K DeWit:
Yeah. All right. We need to stop that now. Thanks for tuning in. By the way, Jack and I are actually very aware that not all of you have extra money line around to buy and fund your own deals. So don’t worry, we are here to help you. We at Land Academy and many of our members love funding other members’ deals. So check out our site, either go to land investors.com or to go to land funding.com and you’ll find out more information. We are Steven and Jill.
Steven Jack Butala:
Information
Jill K DeWit:
and inspiration
Steven Jack Butala:
to buy undervalued property.
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