Are you ready to rethink everything you thought you knew about creating equity in real estate? In Episode 2075, Steven Jack Butala and Jill DeWit bust one of the biggest myths in the business: that improving real estate is the best way to build equity. Spoiler alert—it’s not. This week is all about tackling the top myths we hear at Land Academy, and today’s topic is one of our favorites.

We’ll dive deep into real stories, like Kimberly’s journey of pricing a property, neighbor letters, and strategies that work in the real world. From understanding market data to exploring the power of off-market deals, this episode is packed with insights to help you work smarter, not harder.

Tune in as we uncover why buying property below market value beats renovations every time and how this simple principle can fast-track your path to wealth. Let’s get into it!

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Debunking The Myth That Renovating Real Estate Is The Best Path To Equity

Is Improving Real Estate The Best Way To Create Equity?

You are tuning in to episode number 2075. All week, we are debunking or dispelling myths. In this episode, the myth is that improving real estate is the best way to create equity. I had to pick my favorite five. This is one of my favorites. There are a lot of myths in real estate. We could do another entire week on the myths that I said about how I can’t fit them in.

You came up with the whole theme for the week. I remember you popping in whatever room I was in. You were like, “Can you give me a couple without thinking about it too hard and brain dump?” I was like, “I got some.”

This whole week is about myths, but it could be easily called the top five questions we get at Land Academy. Each day on the show, we answer a question from our Land Academy Member Discord forum and take a deep dive into land-related topics by popular requests. This is long, but it’s worth it.

It’s a little conversation. Kimberly wrote something. She got an answer back and she wrote an answer back. It’s long.

It’s a story and it ends beautifully.

I’m going to read it verbatim. I’m going to go right through it. Kimberly wrote, “I have a property that won’t sell. Should I reduce the price? I have it listed for $15,000.” Chris wrote, “You should be determining the market price based on like-kind comps in the immediate area, not assessed values. Those are used by the county for tax purposes.

Generally speaking, your selling price should be at or below market price to move the property. As for neighbor letter pricing, are you planning to list with an agent or sell yourself? What is it going to cost to market and sell it? Discount your price by what those costs would be, and send the neighbors a letter with your neighborly price and a deadline for taking action before you list it on the market.” Kimberly wrote back, “I got it for $1,500. There are 2 properties down for sale at $14,000 right now with the same acreage and same everything. I’m sending neighbor letters as soon as I get the deed back in my hands. I was going to sell it myself since it’s such a low-cost property.”

Rebecca wrote, “How long has the property been for sale on the market? Has the asking price on the listing gone down over time? How many views and saves on Zillow? Actual sold prices of similar property are a more accurate reflection of market value than asking prices.” Kimberly wrote, “It has been on the market for a long time now. I was thinking of listing it for $7,000, which would quadruple my investment.”

The Value Of Data-Driven Decisions In Real Estate

These two people are helping Kimberly, Chris and Rebecca. They are telling her to look at the data. That makes me all warm and fuzzy inside. If you dig down into the data about what’s going on in the market and what’s happening with the property and maybe with you personally, you’re going to find the answer to everything. If you’re like, “Why am I not making as much money?” If you dig down into the data, you’ll find out. You’re like, “Why isn’t my property selling?” We’ve all been in this situation. Jill and I have multiple properties that are not selling. If we dig back down to the data, we know exactly why. In our case, we probably don’t care and that’s not good.

Philosophically, and this is my final point before Jill jumps in, a $7,000 sale with a comparison value and 2 properties over $15,000, you won. You tripled your money to $7,000. My question to you, Kimberly, is why didn’t you list it for that in the first place? We would never be having this conversation. The answer is that you wanted to maximize the price. You wanted retail.

Philosophy Of Quick Sales Over Retail Value

We’re not in the business of selling properties for retail value except in very rare circumstances. I say this to everyone, and we don’t talk about it enough. We are in the real estate business to provide properties on the sell side. We’re selling properties below the break point in every single market so we can move in and out of these properties really quickly. Holding a property for a year and getting retail value takes longer. Probably in the end, you make less money than burning, churning, and selling a ton of property quickly.

She’s been on the market for a long time. A long time for me is 30 days. I wonder what a long time is for her. We don’t know. I have a couple of points to make here. Number one, she bought it for $1,500. There’s 1 listed for sale for $14,000. Why would you go in and do yours at $15,000, I have no idea. Chris said, “Do a neighbor letter.” I love that too. I would start with a neighbor letter and I refer to the 1 for $14,000 and say, “Mine’s $10,000. If you’re not into it, I’m going to list it for $12,000 or $13,000,” or something like that.

I wouldn’t go too low because when you have a property on the market that is half the price of the property a couple of lots down, it tells everybody there’s something wrong with yours. I’ve had that happen. I’ve had to go in and raise the price. I’ve tested this and done that. I go back and raise it and everybody is like, “It’s in line.” Everybody sees, “It is a great property like this one.” I’m a little bit lower so then mine moves. That really is effective.

We’re not trying to reset the market, but you do need to do what makes sense in the area. I’m assuming you ran all your Red Yellow Green tests so you wouldn’t have sent out mail there anyway. You did everything right. We need some more. I hope you have three other properties coming through so you won’t be so hyper-focused on this one. Set it and keep an eye on it. Watch your phone. Answer questions. See what they’re asking. Update your listing if possible. Make sure the photos are great. Do all the stuff that we show you to do in Land Academy. If you did your test right and you mailed it to a good area, then it will move.

Every time Jill and I do a live event, I ask this question, “Who here doesn’t like off-market real estate deals?” No one raises their hand, not a single person. That’s because off-market real estate deals are amazing. They’re amazing for the seller and they’re amazing for the buyer. When you send an Everett letter out, you are creating on the sell side an off-market real estate deal and you’re going to get a great response.

A neighbor letter, if you don’t know, is a figurative circle around your property that you have for sale a mile out. Everybody that owns real estate within that mile or ten miles if it’s rural or whatever number you think is appropriate, you are sending them a letter and saying, “I know you own this property here. Congratulations. I bought a property and I’m going to sell it. I would like to offer this to you as an off-market real estate deal before I send it out to the planet. It’s easier for me to sell it to you. It’s faster and cheaper. I don’t have to work on it and you’re going to get a better price than if I post it. Everybody wins.”

Put a deadline in there. I would be really clear like, “I’m going to sell it right now for you for $10,000.” Give them 30 days or something like that. Say, “If you don’t reply by the end of the month, I’m going to list it for $12,000, FYI.” There you go and move on.

This episode’s topic is the myth that improving real estate is the best way to create equity. It’s not. You’re tuning in to this because you want to get wealthy or you want to increase your already wealthy situation, or you want to get into real estate because buying and selling land is something that you’ve always maybe thought about in the back of your head. Maybe you’re so tired of driving down the freeway and wondering, “Who the heck owns all this land all over the place? Why isn’t anybody doing anything with it?” or some version of that.

We call that in our house equity. What’s your net worth? How much equity do you have? Creating equity is why we’re all here. You can go to your W-2 job and get a paycheck. You might be $5,000 or $6,000 more wealthy or have that much more equity that month before you start paying your bills. That’s creating equity.

Two Ways To Create Equity In Real Estate

In real estate, there are two ways to do that. Number one, you improve the property. You might be a developer and put up a regional mall. You might put up a skyscraper in Midtown Manhattan or you might put a shed on a piece of vacant land in the middle of Montana. You are creating or attempting to create equity, the value of the land. When your actual cost of building the skyscraper and buying the land is less than what you would go to sell it for, that’s creating equity through improvement.

In real estate, there are two ways to create equity: improving the property or buying it below market value. Share on X

HGTV is packed and full of improvement programs. Buy a piece of crap house for $150,000 and put $80,000 into it, which ends up being $220,000 and you sell it for $300,000. You’ve created $80,000 of equity. That’s fantastic. The world does it every single day. There’s a bunch of schmoes with a hammer in their hand trying to do this. I don’t like that and neither does Jill. Once in a while, Jill and I do it and we do it very profitably. It’s not my favorite way and it’s not hers. The second way to create equity is to purchase any type of property for less than it’s worth.

That is the easiest.

They’re like, “It’s so obvious it’s silly.”

It’s like, “I bought this car.” It’s Barrett-Jackson time, which is coming up in Arizona in February 2025. We all know this car is worth $80,000 and you get it for $50,000. Congratulations. There’s your equity. That’s what we’re talking about. It’s the same thing. We think of it and see it so clearly in everything else, but for some reason, people look at us sideways like, “How do you do that in land?” We do it all the time.

Here’s one of my peeves in life. It is when people act and don’t think before they act. It’s so automatic for people to buy a house and immediately think it needs a new kitchen and a new bathroom. Does it? How about you get it so cheap that it doesn’t matter and you go to resell it with the existing kitchen and the existing bathroom? They’re like, “You’re leaving so much money on the table.”

Am I leaving money on the table? In the time that it would take for me to renovate this house, I could have done three real wholesale transactions. I don’t mean wholesale like this industry likes to say where you put an offer in, shop it around, and mark it up $10,000. I mean buying a piece of crap house so cheap that you can sell the exact same piece of crap house without ever going into it and seeing it for $40,000 or $50,000 more.

That can work. We all know that that’s documented. We all know when you first get into real estate, you start learning and talking to people. You read stuff and you understand that most of the time, by putting in a pool, and it’s probably $40,000 or $50,000 already to put in a pool, you’re not going to typically see that as an immediate exact cost bump on the sale price. There are some things like kitchen, bathrooms, depersonalizing things, paint, and carpet.

Where is this going? Are you going to renovate a house?

I want to tell you that this can work. That stuff works. If you’re set up for it and you already have a construction company, and that’s what you’ve been doing your whole life, it is a whole different ballgame. For people coming into our world who think, “I’m going to now do this. I’m going to learn that stuff too,” I always say, “Hold on a moment because you’ve changed your job description. You’ve changed your whole business model. You might not be as profitable as you could be because you don’t have all that stuff in place.” That’s where I’m going. It can work, but it’s not the best use for most of us.

Efficiency Over Renovation

What Jill and I are great at is a lifelong career in buying property for less than its actual as-is-where-is value. If it’s worth $100,000 we like to buy it for $20,000, $30,000, or $40,000-ish. We’ve refined the process of doing that. Each time it gets refined, it gets a little bit more efficient. We’re sending out tens of thousands of offers, as you know because this is the Land Academy way, instead of picking up a hammer. Jill is using her skills on the phone to create an off-market real estate deal where there wasn’t one moments before. Isn’t that easier than doing a new kitchen?

Here’s the point too. Time. In a week, you and I could queue up three of these deals. It’s a lot of mail. It’s a lot of time on the phone. I don’t care. Think about this. It’s worth $100,000 and we sell for $80,000. We got three deals that I queued up within a week. That’s $120,000. I could not renovate any house inside of 1 week and create $120,000 worth of profit by renovations.

Here’s another part of that peeve. Every time you pick up a hammer, call a contractor, or do any type of improvement, I don’t care if you’re a developer building a skyscraper in New York. There’s a profit margin in every step of the way. There are real estate agents involved. There are title companies. Some of that is unavoidable, specifically a title company or escrow company.

We are in this business for one purpose: sourcing undervalued real estate. Mastering this one skill—finding undervalued properties and selling them, or partnering with someone who does—can sustain you for life. Share on X

If you go do a new kitchen, even if you do it by yourself, you’re going to go buy the material, buy the tools, and pay sales tax on all that stuff. The government is taking a little bit of profit already. When you go buy a piece of land, no one is taking any profit margin out of that thing at all with the exception of the title agent. If you do enough deals with the title company, you can hammer them and get that cost down. It’s a few hundred dollars anyway usually. The more you develop and the more you improve, the more people who have fingers in that pie.

I agree.

We are in this business to do one single thing. I would really encourage you to seriously think about this. You only have to be good at one thing for the rest of your life, and that is sourcing undervalued pieces of real estate and then selling them on the other side or your partner does.

There you go.

Join us in the next episode where we talk about our next myth, which is that it takes a ton of money to invest in real estate. You are not alone in your real estate ambition. We are information and inspiration to buy undervalued property.