Jack Thursday – Fourth Quarter Decision Making Time (LA 1861)

Transcript:

Jill K DeWit:
Camera moment.

Steven Jack Butala:
And we video in three, two. Steve and Jill here.

Jill K DeWit:
Hi.

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 beautiful, scenic land of M22.

Steven Jack Butala:
Wow.

Jill K DeWit:
Boy, wasn’t that pretty? We did a lot of M22 the other day.

Steven Jack Butala:
I’ll explain it in a second.

Jill K DeWit:
Okay.

Steven Jack Butala:
Today is Jack Thursday and I’m going to talk to you about how it is now the fourth quarter, and you have to make some decisions about how you want the rest of your financial year to go.

Jill K DeWit:
Sounds like a football moment.

Steven Jack Butala:
Yeah.

Jill K DeWit:
Okay.

Steven Jack Butala:
There’s a road called M22, the state road Michigan 22. And it goes around… If Michigan were a mitten, it goes around this finger right here, your pinky finger around here. Through… But there’s a big traverse bay here. And Jill and I drove it. I grew up in Michigan, Southeastern Michigan. I never knew this stuff was up here.

Jill K DeWit:
Beautiful.

Steven Jack Butala:
What an amazing drive.

Jill K DeWit:
Yes, we have seen the dunes. Yes, we had lunch in Fishtown. Yes, we thought, “We should buy something here.” Only because, as we’re rolling through, it’s like 75 degrees. We hit… As Jack calls it, a chamber of commerce worthy day. That’s the day that we did M22.

Steven Jack Butala:
Yeah.

Jill K DeWit:
Not January M22. So yeah.

Steven Jack Butala:
January M22, you would do on a snowmobile.

Jill K DeWit:
Yeah. No, that would be fun too, actually. I did see the snowmobile signs as we’re rolling around. Oh, just gorgeous.

Steven Jack Butala:
What’s cool, is that somebody took the concept of N22, the sign.

Jill K DeWit:
Yeah.

Steven Jack Butala:
The road sign. And now they have all these products with M22 on it. They have a directory of things to go to people. Buy dry suits, and actually, while it’s snowing, literally surf. The surfs that… on certain points on the M22, there’s great surfing. And they also have little local bars or restaurants all over the place, so. I just thought that was just brilliant, brilliant marketing. To take some kind of little local secret and just get it out there. Before we get into it, let’s take a question. Posted by one of our members on a landinvestors.com online community. It’s free. Please don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like. Not joking. It’d be great. Because it helps us develop better content, when I know what you like.

Jill K DeWit:
Totally. Steven wrote-

Steven Jack Butala:
This is lengthy.

Jill K DeWit:
… Okay. “Hello everyone. I’ve been out of the loop on here and have a lot to catch up on.” I’m sure he is talking about discord. “There’s always a ton of gold in these chats.”

Steven Jack Butala:
Yeah.

Jill K DeWit:
“I usually pop in here when I have questions about my business. So I ghost whenever things are going smoothly.”

Steven Jack Butala:
That’s just like the typical Land Academy member.

Jill K DeWit:
That’s totally, yeah,

Steven Jack Butala:
“You guys… Oh, wait a second. I just closed a deal.”

Jill K DeWit:
Right? “Discord is where I find out about all the questions I don’t even know I need to ask. So here’s the question I do have though. Last year, around this time, I sent out a lot of mail and set the closing date just before and after Thanksgiving. I had a decent response, but getting any through escrow after Thanksgiving was ridiculously slow. Surely it’s because of the lack of staff at title and escrow, coupled with all the people still trying to 1031, take losses, et cetera. Before the new year. I still need to do $40,000 to make my goal for 2022.” I love it.

Steven Jack Butala:
Me too.

Jill K DeWit:
“I know I need to get the mail out in a big way, but what other strategies can I employ to dodge the holiday season lag and still come in over target?” So one of the people, one of our members wrote in here, and I know you’re going to help. Thanks for including this reply. Greg answered and said, “Hey, Steven, I’ve had some ridiculously slow closings through title companies in the last six months. But, recently I’ve had a couple closings go extremely fast within a week on both the buy and the sell side. I don’t know if it makes a difference, but a few things I did differently were, one, put in a closing day on the purchase agreement and make sure to bring to the title company’s attention when opening escrow to make sure they know you need to close by certain day. Two, as Barb A. mentioned, try to find a title company with an in-house attorney, which seems to save a ton of time. And three, closing with a real estate attorney instead of a title company.”
All great things and all things that we’ve talked about. I’m so glad you guys are doing this. “They seem to be able to resolve quicker issues, resolve issues quicker. And my last couple of closes were all so much cheaper than my experience on closing with title companies. I could have just got lucky in the last couple, but they definitely won’t slow the process any longer.”

Steven Jack Butala:
I agree with all of that.

Jill K DeWit:
All the things that we have found in the past, too.

Steven Jack Butala:
We’ve talked about all this stuff over the years and implement it in our own business.

Jill K DeWit:
There’s nothing more to add.

Steven Jack Butala:
No, there is nothing more to add.

Jill K DeWit:
It’s perfect.

Steven Jack Butala:
And all the comments that I have are actually the topic of this episode.

Jill K DeWit:
Great.

Steven Jack Butala:
Today’s Jack Thursday, and I’m going to talk about fourth quarter decision making. This is why you’re listening. So every year, every month, I look at our financial statements and I see where we are from a tax standpoint. I just run basic calculations and I’m very obsessive about it. And pretty much always have been. Why? I’ll tell you a story. About four, maybe six years ago, I walked into Jill’s office and she was sitting in the floor crying, literally.

Jill K DeWit:
Yes.

Steven Jack Butala:
And it was because I told her how much in taxes we have to pay.

Jill K DeWit:
And I had to write the checks.

Steven Jack Butala:
She was sitting there with a checkbook in her lap, crying, literally. It was a great year for us, a great financial year. And honestly we’ve had many of the years subsequent to that, without exception, have been better. But our tax liability was managed much, much better. Largely because I don’t like to see Jill crying in a puddle.

Jill K DeWit:
Thanks. Don’t make me write those checks.

Steven Jack Butala:
So, I took my financial responsibility, which is my role in this partnership, a lot more seriously since then. And so I, every month do a detailed financial statement about all the stuff that we own. How much property we own, what we’ve purchased, which companies we purchased it in and on and on and on. And I run a little trial if today was December 31st, this is the taxes that we would owe. Is that okay? And the answer’s almost to always no. So what do I do about it? I wait till October, so that we have three months. How do I know about all this stuff? Because I’ve done this wrong so many times. I wait till October and then I start to say, “Okay, we’ve made this amount of money. They have a theoretical taxable income of X, which would calculate to us paying this much money. What are we going to do? Are we going to incur more expenses?” And by the way, this is not, we’re not doing anything illegal at all. We’re not doing anything-

Jill K DeWit:
It’s being smart, it’s just planning.

Steven Jack Butala:
… unethical. We’re just planning, like we would plan to have a child or send somebody to school. How are we going to pay for it?

Jill K DeWit:
Well, you just said… It’s the main point for me is, you said doing it in October. The point here is do it in October, not December 20th.

Steven Jack Butala:
Then there’s nothing you can do about it.

Jill K DeWit:
Exactly.

Steven Jack Butala:
Your liability’s going to be your liabilities.

Jill K DeWit:
It’s done. You have-

Steven Jack Butala:
So, we can choose to incur ordinary and necessary expenses, like, let’s say new equipment. We can hire some more people. We have three months to, full three months, to implement whatever we decide. Maybe we want to launch or start down the path of launching a new company like Offers to Owners or Parcel Fact or whatever else that we’re planning on next year. And we can incur some of the expenses now that we would incur anyway in January, February and March. But, we move it up-

Jill K DeWit:
It’s like balance it out, right?

Steven Jack Butala:
Yeah.

Jill K DeWit:
Just even it out a little bit more.

Steven Jack Butala:
In the land business, there’s a lot of opportunity, especially if you’re cash basis, financial statements versus accrual, opportunity to buy some additional land. There’s also opportunity for us to say, I look at the closings that Jill has scheduled. And I say, “Look, is there any way we cannot close this deal in December? You guys have this in November or December. Can you please check with escrow and please check with the person who’s buying it or selling it or buying it, whatever we have on the buy side or the sell side, and push it back to January. Whichever is in our benefit.” And so, all of these things are normal things that real estate professionals have been doing for many, many, many, many years. Forever. Since as long as we’ve been paying real estate taxes. And there’s very specific, in most cases, rules and regulations that you need to stay in within the boundaries of those rules and regulations to file your taxes. You just have to do it. You have to plan for it. And you need to, if you don’t have an accountant… Finding an accountant in April, when you’re ready to file tax returns is a really bad idea.

Jill K DeWit:
True.

Steven Jack Butala:
Finding one in October, super good idea.

Jill K DeWit:
Sure.

Steven Jack Butala:
They’re not filing taxes. They’re not thinking about it yet. They’re just having planning meetings with people like me.

Jill K DeWit:
Yeah. and then you’re both going to succeed. You could decide how this year is going to go together with your new accountant that you pick, and then be ready for next spring. I love it.

Steven Jack Butala:
These are things that we talk about in career path a lot.

Jill K DeWit:
It’s true. It’s very true. And it was so funny. I had a guy the other day call up. It was like a week or two ago, and asking some good questions right before he was just about to pull the trigger and join Land Academy. And one of his things was, “I want to talk about taxes.” And this and that and all this stuff about taxes. I said, “Well, hold on a moment. First of all, if you’re thinking about taxes…” Or when we really get worried about taxes is because we’re making a lot of money.

Steven Jack Butala:
Yeah.

Jill K DeWit:
So I was like, “Hey, congratulations. I like the way you think. You’re already planning on making some money and worrying about taxes.” It was really good. And thank you for sharing that today. We all need to be planning and be a step ahead. And I think that’s one of the great things that we can do here on the podcast is remind you of things, and be ready for things, and make it easy for you.

Steven Jack Butala:
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 Jill Friday, and we’re going to talk about after 30 days, we’re getting land deals done from the road. So we’ve got 30 days under our belt, and we’re going to ask Jill about, What’s it like-

Jill K DeWit:
Oh. Okay.

Steven Jack Butala:
… to actually run our land business from the road.

Jill K DeWit:
Cool. You are not alone in your real estate ambition.

Steven Jack Butala:
Yeah. Thanks.

Jill K DeWit:
That’s okay. One of the things about running your business for the road is you forget things. Hey, you know what was so cute. I got to tell you something funny. Right now behind us, I just had a flashback of strand.

Steven Jack Butala:
Yeah.

Jill K DeWit:
If you’ve been listening and watching us for years, I know many of you have, you remember when we lived on the beach. And what was going on behind us, there was all these people going by and bicycles going by and the water behind us. And we lived there. Well, I have a different view. I have lake water behind me, but I just watched some bikes go by. I’m like, “Oh, just give me a little bit of, I got a little bit of a California strand hug.” That just made me feel so great. Hey, thanks for tuning in. And Jack said a few minutes ago when we started the show and I’m going to remind you right now, please be sure to check out our YouTube channel. Hit the subscribe button, and comment on those shows that you love. And don’t forget to, if your a remember of Land Academy, jump in Discord. That’s where all the great communication is happening. So much is going on there.

Both:
We’re Jack and Jill.

Steven Jack Butala:
Information.

Jill K DeWit:
And inspiration.

Steven Jack Butala:
To buy under value property. Out.

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