Now is the Time to Act on This Market Condition (LA 1314)
Now is the Time to Act on This Market Condition (LA 1314)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hello.
Steven Butala:
Welcome to the Land Academy show, Entertaining Land Investment Talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill Dewitt, broadcasting from sunny Southern California.
Steven Butala:
Today Jill and I talk about how now is the time to act based on this COVID marketing condition we’re in.
Jill DeWit:
Do you think this is a surprise for anybody?
Steven Butala:
I don’t know.
Jill DeWit:
I hope it’s not a surprise for anybody.
Steven Butala:
I think you have a different take on what the show’s about.
Jill DeWit:
Well, I think we’ve obviously been talking about this for a while, and I was listening to somebody else’s podcast, yes I do that now and then when I’m on my walk, and they were talking about it in their words and I just kind of wanted to hit it home for all of us.
Steven Butala:
Give us a little hint.
Jill DeWit:
I just did.
Steven Butala:
What were they talking about?
Jill DeWit:
They were talking about if you’re sitting on the sidelines waiting for stuff to happen right now, you’re an idiot as an investor.
Steven 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. We’re going to find out why we’re all idiots in a minute.
Jill DeWit:
Did I do that wrong?
Steven Butala:
According to Jill.
Jill DeWit:
No, I didn’t say that. Did I do that wrong?
Steven Butala:
No.
Jill DeWit:
No, you asked me what they said. I verbatim told you what they said. I mean, that was really the gist of it.
Steven Butala:
Okay.
Jill DeWit:
Okay. All right, Lucas wrote, “Hi all, I just got my first response on my initial Craigslist ad. It’s very gratifying and a nice reassurance that I’m doing the right thing. The parcel is 30 acres and not far from blank city in North Carolina, beautiful area. The seller is a half owner, undivided half interest.” Yikes. “He said the other owner may also be interested in selling depending on the offer.” Well, it’s kind of important by the way, we’ll go on here.
“I’m also trying to do due diligence now. The land is in a killer location close to town and a major freeway. Comps are 10 to $20,000 per acre retail in the neighborhood. A similar lot on the other side of the hill is on Realtor for $310,000 and other comps in the area have sold for $90,000. My biggest concern, other than the ownership issue, is access. The land is not directly on a road. The next parcel over is on the road. So it appears that the father probably owns the roadside parcel on the son owns the interior parcel, but shares the ownership with someone. I can see the land was timbered recently.” How many flags are you counting?
Steven Butala:
As if there’s not enough, I was just going to say the same thing. As if there’s not enough issues, now it’s been timbered recently.
Jill DeWit:
Yeah. I’m sitting here counting red flags on my hands. “Many of the trees have been cleared and there are quite a few logging roads crisscrossing across a lot. The exit road passes through the father’s land. Because of that, I’m thinking there is a row through the father’s lot to the parcel in question. So my question finally is for you,” well this is long to get to the question. “Which is the best tool to determine if legal access exists on a property? I’m having trouble getting my [inaudible 00:03:10] account set up. I’m going to call them tomorrow.” You get that as a member, by the way. “If ownership issues and access are cleared up, I’m thinking $60,000 could be a good offer. Could be tempting for each [inaudible 00:03:24] to get $30,000. I feel I could easily sell this for $120,000, especially with the other properties nearby at a much higher cost. Many thanks to all.” I have a lot. I know you do too.
Steven Butala:
Let me start with the really good news. This person, what’s their name? Lucas is extremely intelligent and probably set up, he knows the language, and he’s set up to do this. He’s looking at all this stuff, he’s weighing it out, and then finally he’s doing what I think is the most important, he’s doing it fairly quickly saying, “Hey, is this worth my time anyway, let’s say I go forward with it. I’m going to buy it for 60 and sell it for 120.” The answer is heck yes, that’s what we do.
Furthermore, this Craigslist business that he’s talking about in the beginning, here’s the deal. If you go to our website and download the free ebook, we’ve had the ebook for a lot of years, what I say in the very beginning is drop what you’re doing, forget everything you’ve ever learned, post an ad on Craigslist, this is all free, that says, “Hey, I want to buy some property in your area.” Now you’re in the real estate business. My whole point to that exercise is to get, really is, Lucas-
Jill DeWit:
Just get your phone ringing.
Steven Butala:
It was perfect for Lucas to get, what I say in the thing is just to get you in the real estate business. Now you’re in it. It’s that simple and it’s free. And so he did that and he got one on the line and he’s checking it out. So, we’re in the business of buying a property and reselling it for more. We’re not in the paralegal business of solving people’s legal issues that are associated with real estate. So that’s what’s happening here. He got a good property, there’s a bunch of things wrong with it. I would run away from this property, just on the first one was an undivided halved interest. I mean, that’s a deal killing issue. I stopped, Jill and I, we agree on this.
Jill DeWit:
That’s why I stopped right there.
Steven Butala:
Stop right on that.
Jill DeWit:
Because if the other guy doesn’t want to sell you have no deal anyway. Don’t waste two hours on all this other stuff for two days.
Steven Butala:
Or if you can’t find him.
Jill DeWit:
Who cares.
Steven Butala:
We’ve had properties where people are in different countries, like the rogue brothers in Mexico, and isn’t available to sign. We got all the way down, ready to do the deal and you can’t find the guy. So, undivided interest, just runaway. Access, we live and die by access, so if there’s no real access, that’s a huge, huge problem. Does it mean it’s completely going to kill the deal? Sometimes no, but the way we do it, wouldn’t it be easier just to send a bunch more mail out?
Jill DeWit:
Well, here’s the other thing too, just to point out the obvious. Again, this is just an exercise that we do just to show you, put it out on Craigslist, watch how many people call you and you go, “Wow, I guess people do want to sell.” You stop right there. That’s the point of the exercise. Because it’s not to try to negotiate and get a deal, and as of right now already, Lucas, aside from the obvious things, like we don’t even know where the other guy is, we don’t even know what price they’re willing to sell at. And the last thing you want to do is be in a little negotiation battle here. How about this? How about that? You know, kind of thing. If the other guy said, “I do want to sell,” the only reason I would ever act on this is if everything was perfect, it was owned by one person, let’s just call it easy right now, and the guy said, “Here’s my bottom number.” That’s it. And then all Lucas has to do is say, does that work for me? Yes or no. Move on.
Steven Butala:
See, Lucas is clearly new at this and very intelligent, and Jill and I have, combined maybe 50 years of now jaded real estate experience about what can go wrong. So you really have to gauge that. When I was young, I probably would’ve just eaten this deal for breakfast.
Jill DeWit:
Really, like tried to make it happen?
Steven Butala:
Oh yeah, and made it happen. Put the people together [crosstalk 00:00:07:03].
Jill DeWit:
Found the right guy.
Steven Butala:
60,000 bucks, raise the capital.
Jill DeWit:
Would you call a private investigator, found the missing person.
Steven Butala:
Or something.
Jill DeWit:
Yeah.
Steven Butala:
Or maybe I would have realized that that’s a good area to do this in and send some mail around it.
Jill DeWit:
That makes sense.
Steven Butala:
There’s a lot of stuff. I would have answered this question a lot differently 25 years ago. Now my answer is this, just send out more mail.
Jill DeWit:
Yeah.
Steven Butala:
Do you want to stare at three signed offers on your desk or 30? When you went to go get your first job, you want three job offers or 30? You’re going to pick a much better job, you have a sample of 30 to pick from. So this is a great question, and there’s a reason I added it. Lucas, whoever you are, I know you are going to have a fantastic, unbelievable real estate career. It sounds like maybe you already sort of do, or at least you have somebody with you that really knows some experience. So, that’s the good news. Today’s topic, now’s the time to act on this market condition. This is the meat of the show. As Jill said, haven’t we talked about this enough.
Jill DeWit:
Yes. We have-
Steven Butala:
Obviously not.
Jill DeWit:
But it’s still coming up and I think it’s still coming up because people are still not doing it. They’re not getting it. But some of us are. I laid in bed this morning, I tell you, I’m looking through, just not far from our area, I’m looking at homes and every morning, I’m like, right now, shocked and amazed and impressed how many are pending, contingent, it’s amazing.
Steven Butala:
Houses? In our area, yeah.
Jill DeWit:
Yup. Amazing.
Steven Butala:
So you know today’s Thursday and Jill and I record all of our podcasts for the next week on Thursday, and then we also after that have our Thursday calls and consulting calls and stuff, or webinars for our members. And I always do a presentation, ends up being 15 minutes to 30 minutes and the whole topic is about this. So I’m going to bring this up now, because I really believe that it’s very pertinent to the topic. There’s strange buying patterns that are creating volatility that no one’s ever seen, certainly since I’ve been alive, but I don’t think we’ve ever seen this in our country’s history.
So just six months ago, there are developers or renovators for commercial properties that were building these properties that had 14 to 18 foot ceilings. Families of three or four were living, professional families, in the city in one big, huge room with maybe a bathroom that’s closed off. You know, this big loft like. Lofts have been popular since we were kids, since the eighties. So that’s all gone. The sort of suburb, half suburb, 900 square foot house with two bedrooms, which we all, we’re avoiding, six months ago we were avoiding buying, I call it a cracker box.
Jill DeWit:
Okay. Thought you were saying crack house.
Steven Butala:
That’s the hottest thing in Seattle right now. It is a 10 mile Cracker box house that was slapped together in the thirties, forties, fifties, maybe later than that out here.
Jill DeWit:
Right.
Steven Butala:
I know for sure in Michigan it’s like that. And that’s what everybody wants, they’re all under contract like Jill said.
Jill DeWit:
Yep.
Steven Butala:
Because everybody’s spending time with their kids or their significant other in one big room and they’re tired of it. Here’s what you need to know though-
Jill DeWit:
Like in a studio apartment, because that’s what we can afford?
Steven Butala:
Yeah.
Jill DeWit:
I got you.
Steven Butala:
In droves. That’s part of my presentation too. People are moving out of apartments in droves.
Jill DeWit:
Yep.
Steven Butala:
So here’s what you need to know as an investor. Volatility in any market is great. When you have stagnant, flat market, whether it’s pricing or demand or supply, there’s not a lot of money to be made. This is stock market, any markets, commodities, real estate, you name it. We have more volatility in this real estate market and I don’t believe that’s going to change, I think that’s going to go on for years. We have this strange thing right now, this is why the titles, Now’s the Time to Act Based on This Market Condition. The market condition is this volatility. So right now we have this forbearance, this order from Congress that says here’s your forbearance rules and you can’t foreclose as a bank.
So the asset managers in banks everywhere are just sitting there twiddling their thumbs. Probably in a one bedroom apartment in a large Metro area and they’re sick of their kids and looking for a house. But anyway, the point is, we’ve got right now, this weird demand to get out of the city. At the same time the cities have this reduction in price because of that, because selling their house. So anybody whose ever wanted to live in, let’s say, San Francisco or Chicago, has got some of the cheapest housing that you can ever get. So there’s that, because they don’t care about this COVID thing. So that’s pretty soon some huge market opportunity for investors like us. That will eventually stop. People are eventually going to go back to work. And when that happens, at about the same time, we’re going to get this waterfall of foreclosures, which is going to take us, last time it happened it took five years to solve it between around 2007 and 2011. So now is the time. Go ahead, Jill.
Jill DeWit:
Don’t sit by and watch. That was my whole thing. That was the whole point of today. If you don’t jump in on this, you’re nuts. You’re going to sit by and watch all of us do some amazing deals. They started much faster than we thought. And I’m excited. Happy you could join us today. Every Monday through Friday, you can find us right here on the Land Academy show.
Steven Butala:
So the episode on the Land Academy show is called, Acquisition Diversification Has to be Part of Your Real Estate Investment Strategy. You are not alone in your real estate ambition.
Jill DeWit:
I would [inaudible 00:13:15] dead horse, dead horse topic.
Steven Butala:
On that topic.
Jill DeWit:
Yeah.
Steven Butala:
The topics been the same, but I’ll tell you there’s new reasons all the time. There’s new proof support, there’s new support and backing and reasoning for why, it’s just keeps getting better.
Jill DeWit:
The more time goes on the more we can show the trend, the more we can see the data, we have more data.
Steven Butala:
Jill and I spent, three weekends ago, we got in the car and drove around one market that I identified on the internet as being very, very logical. This is a house market now, but that’s close to us, logical buy and sell candidate, and we’re buying houses there. And all we’re doing is buying them for about a million two, and immediately reselling them for a million three, five. And it’s working very, very, very well. It’s like day trading.
Jill DeWit:
Yep.
Steven Butala:
If that doesn’t prove the point, I’m not sure what does.
Jill DeWit:
Exactly. Thank you for joining us today. We hope you find our content valuable and we appreciate your support. If you haven’t already done, so please check out our YouTube channel and hit the subscribe button.
Steven Butala:
Hey, your comments and suggestions help us create the type of content that you’re here for and hitting the like button helps to support our channels algorithm and gauge your interest for future shows. And you know me, it’s all about the data,
Jill DeWit:
We are Steve and Jill.
Steven Butala:
Information.
Jill DeWit:
And inspiration.
Steven Butala:
To buy undervalued property.
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