My organization has purchased and sold about 16,000 properties since the early 1990’s which makes us the unwilful survivors of two economic recessions and one depression. We are heading into the next one coming off the most prosperous economic environment our country has experienced in about 5 decades.
Read More
Transcript:
If you enjoyed the podcast, please review it in Apple Podcasts . Reviews are incredibly important for rankings on Apple Podcasts. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
The BuWit Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on Apple Podcasts.
By S. Jack Butala We have been sending landowners offers to buy their land since the late 1999s. Just before I sat down to write this, I looked back to find out that we have sent about 1.2M mailers out over the years. I’m confident […]
Read More
By S. Jack Butala There was a time that our companies relied solely on in-person tax deed auctions to supply our land sales chain. I was on the road in Arizona, New Mexico and California much of the year. These are some of my stories; […]
Read More
by Jason Cochard for Land Academy Some of you know that I come from a film making background and that I’ve been working on a live-to-tape television show for a decade. The rise of online video has conveniently dovetailed my existing skill set and domain […]
Read More
By Steven Butala How I bought 1,100 properties for $11.00 each and sold them for $500 each ($550,000). Just about every year most of the counties in Arizona hold what’s called a tax deed sale. The gist of it is as follows: Property owners fail […]
Read MoreTranscript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hi.
Jack Butala: Welcome to the Jack Jill Show, entertaining real estate investment talk. I’m Jack Butala.
Jill DeWit: And I am Jill DeWit broadcasting from sunny, southern California.
Jack Butala: Today Jill and I talk about how we are in it for the long haul. Those specific signs that you just know that you’ve turned the corner. You’ve done a few deals and you’re in it for the long haul.
Jill DeWit: I thought it was going to be about Jill, are you wearing the data is the new bacon t-shirt again? Because you’re just so in love with data now which I never was.
Jack Butala: That’s one of the signs.
Jill DeWit: Thank you.
Jack Butala: Did you ever hear those jokes like you might be a redneck.
Jill DeWit: Exactly. Here’s how I know. Every vacation is not really a vacation. It’s just … Every vacation is not a vacation. It’s only a new area to check out property.
Jack Butala: That’s what it is. That’s one of my signs.
Jill DeWit: We haven’t scoured this area yet. I didn’t know we’d be looking at property here Mazatlan but I guess we are.
Jack Butala: It’s just a new data set. Everything’s just a new data set.
Jill DeWit: Exactly. Hey Jill, while you’re in Seattle next week, will you please drive by these locations for me and take some pictures? Yes.
Jack Butala: You know it’s funny you bring up Seattle. It’s one of the lowest days on market environments in the country. For some reason, they can get deals done in Seattle, house deals, in six, seven, eight days.
Jill DeWit: Here it comes. I’m waiting for it. I’m going to be there.
Jack Butala: Before we get into it, let’s take a question posted by one of our members on the jackjill.com online community. It’s free.
Jill DeWit: Okay. Steven K. asks: I’m wrestling with whether to let my buyers handle the final closing documents for filing with the county. As another member, Luke, has pointed out to me, they will screw it up is a possibility. True. The transfer tax is almost 2% though and recording is $75 for the first page.
Jack Butala: Hello California.
Jill DeWit: Right. So I’m contemplating whether to send a closing documents package with instructions or biting the bullet and just paying these fees myself and interfacing with the county.
Jack Butala: Jill and I are going to agree on this.
Jill DeWit: I will need original signatures for the transferred tax document from the buyer anyways though so I’m struggling a little bit with which way to go.
For me, do you want me to answer?
Jack Butala: Yes.
Jill DeWit: For me, not a big deal. Honestly.
Jack Butala: Which way would you do it? You have your seller …
Jill DeWit: I’ve done it both ways.
Jack Butala: What he’s saying is this. You post a piece of property on the internet for sale, a $5,000, five acre property in California. And somebody says, I want to buy this property and you say, great. I’m going to send you a bill or click on the thing. Charge the credit card. Okay, great. You bought it. You send them a deed package and you sign the deed over to them. A deed is not a contract, by the way. It’s just your signature and you have two choices at that point. You have the money and you’ve conveyed the property and it needs to get recorded. That’s the final step. You have two choices. You can record it for the buyer as a courtesy.
Jill DeWit: Meaning you don’t send it to them, you’re sending it straight to the county.
Jack Butala: Or you can send it to them with the instructions. Here’s a pile of paperwork. Good luck. Figure out the transfer tax, figure out the whole … I will tell you from experience, 20% of the people that you do that with, 20-25% will never record the property.
Jill DeWit: True. They don’t even know sometimes. They get it. They look at this deed. They think it’s like a pink slip and it’s all done and they just put it in their files and they walk away. And it’s not the end of the world.
Here’s the downside of that. The guy has it. It’s in his safe. He thinks it’s all done and it’s all cool. He really has no idea. He didn’t read your letter at all. So all that’s going to happen, Steven, is you’re going to get the tax bills forever and you’re just going to shred them and throw them away, not even worry about it. Because it’s really not your responsibility. Someday, hopefully he’ll figure it out and record it like when he wants to resell it kind of thing. Or transfer it to somebody else.
Jack Butala: If you’re selling properties every week, trust me. You want to record it for your buyer. And you want to charge them for it. It’s a revenue source. We charge $400 bucks to record a deed.
Jill DeWit: That’s what I was going to say. Sorry I lost my train of thought there.
Jack Butala: So, like I said … I’m saving you.
Jill DeWit: Save me? You made me lose my train of thought.
Jack Butala: What?
Jill DeWit: It’s all good. No, okay. So you record it … Well, here’s the problem. That’s what I wanted to say. So, let me … what I was going to say was you send it to him and these tax bills are coming in. Here’s what could happen. Huh, speaking from experience here. You have staff changes. Things get moved around. These tax bills keep coming in and after three years of the same tax bill, somebody might think we might actually own it and in their best interest, your best interest, they research with the county and say, oh, this one must have fallen through the cracks and they roll it back into your inventory. We’ve done this and we caught them and so you have to make sure and check that because that could get rolled back into your inventory and until you go back and look and say, no I sold it. The guy just never did the deed. You have to be careful of that. So you might create some extra work.
So what Jack’s saying, which is true, and we on some of these, more now because we’re so good at recording and we’re just doing so many deals. It’s just too easy. I will charge an extra fee and do it for them. And just say, hey, look. I’ll make it easy for you. For $50 bucks you won’t have to think about or whatever. If the recording fees are $75, I might even work out something nice. But you know, the fact that I’m doing the work is a big deal right there but we’ll record it for them and then it’s all done.
And then, what I do though, the sellers still want to have something in their hands. I’ll help everybody here. You might say, okay, I got your money. I’m going to record it. Just watch for county. Technically, you could do this. You could say, I’ve got your money. The deed is done. I’m sending it in to be recorded or doing an online recording, however you’re doing it, today. And you will get your final notification that it’s done and recorded because it will come directly from the county to the buyer at that point. But this is hard for these buyers. In some counties, it may take weeks, even months for them to get that stuff to them depending on the county.
So I still will usually, well, we could scan it in … Well, depends on the person or we’ll send them something because they always like to have something in their hands showing that it’s done and that’s just an extra nice step and they love you.
Jack Butala: Yeah, it’s just basic consumer behavior. When you buy something, you want to get something.
Jill DeWit: Exactly. The other thing why I do that too is I want them to have something in their hands and I’ve put in there a note that says, if you have any questions, call the county. Because at that moment, technically, I’m out of it. And I don’t want this buyer calling me back like I haven’t got it back, I haven’t got it back. And I have to keep saying call the county. I try to make it real clear though. No, I’ve sent it to the county. If you have any questions, call them. Because that’s really what they should do at this point. Say hi, this was sent to you on the first. I’m just waiting for confirmation. Can you tell me if it’s been recorded? That’s really how it should go.
Jack Butala: You also could … What we do in an automated fashion is with land is when somebody clicks a button and buys a piece of property, they get a deed the next day. They get a copy of the deed PDF style so they say, here’s your deed. We’re recording it for you right now. Thanks very much. Here’s a phone number if you have any questions. That just gives a sense of … It stays off of causing concern or trust issues or any of the internet things that could possibly go on.
Jill DeWit: Right.
Jack Butala: Your job is to make the person feel as comfortable as possible. Because let’s face it, doing a real estate deal on the internet is just a little bit weird. I don’t get this question too much at cocktail parties anymore but it used to be maybe 8-10 years ago, people would look at me and say, what kind of nutcase are you that you buy and sell real estate on the internet?
Jill DeWit: And you’ve never stood there. You’ve never looked at it? What do you mean you’ve never looked at it? And then you sold it? Well, how can you do that?
Jack Butala: Exactly, Jill. So you want to do everything you can to make sure that everybody is happy and they own it and all of it.
Jill DeWit: Exactly.
Jack Butala: The struggle is a lot of these counties are real rural so it takes them a long time to do stuff. It takes them a long time to record. You don’t see it in the buyer’s name for quite some time so there’s issues that happen. But Jill’s right. You can wrap it all up in a doc prep fee. That’s what we call it. It’s $399. $399 for doc prep fee and we record the property for you. And they just build it into the price. People are used to paying extra. I don’t know where or how this happened in our country but people are used to seeing the price of something is $100 and then but it’s really $120 at the end with taxes and these destination fees and the whole thing.
Jill DeWit: Exactly.
Jack Butala: So use that to your advantage at this point.
Jill DeWit: Destination fees. Have you bought a car recently?
Jack Butala: Yes, I have.
Jill DeWit: Wonder where that came from?
Jack Butala: Today’s topic, the signs that we are in it for the long haul. Like we alluded to at the beginning of the show … Oh, this is the meat of the show. What are the signs that happen where all of a sudden you catch yourself doing something that’s not normal and it’s like man, you had that real estate itch. You have borderline issues with your career.
Jill DeWit: Well, one of them you just said. It’s like you’re at a dinner party and you’re like, what do you mean? Yeah, we do it all totally online. What’s your problem? It’s not a big deal.
Jack Butala: Jill was communicating to me recently that she was at an event where there were a lot of people talking, standing around and talking. And one person worked for Apple computer and they couldn’t wait to not work for Apple computer because they found out what she does for a living and everybody stops what they’re doing and they say, what do you mean you buy and sell houses and make money?
How many diamonds are you wearing right now?
Jill DeWit: That was actually funny when you said that. I didn’t realize what I put on that day.
Jack Butala: Everybody wants to flip houses or they think they do. I blame HGTV.
Jill DeWit: I do too.
Jack Butala: So Jill, what do you think are some of those signs that you may have an unhealthy …
Jill DeWit: Oh my gosh.
Jack Butala: The title says you’re in for the long haul. What are some of the signs? But really, I think there are some unhealthy pathological addiction that goes on to be that successful in it like we are.
Jill DeWit: Okay, one of them is you can’t drive down a street like a normal person and just look at the scenery. You know you have this problem. You know you’re in it for the long haul when you have a Redfin app constantly open and everywhere you go you’re going, hey, that just sold for 2.1. Hey, that’s this.
Jack Butala: Are you speaking from experience?
Jill DeWit: Yes. No, it’s a good thing though. I think it’s a good thing.
Jack Butala: Jill and I have not driven in a car together where I’ve actually driven in a long time. I always sit shotgun and I look at on the screen saying my gosh, there’s a pocket of potential subdivision.
Jill DeWit: It’s fun. Hey, what’s that worth?
Jack Butala: Right.
Jill DeWit: We do that. Yep, that’s just how we drive around.
Jack Butala: Look how that’s presented.
Jill DeWit: That’s true. That’s another one. You look at these … You’re on social media critiquing other sellers and buyers. I do that all the time. I’m like, okay, that was stupid. Why did you pay that? I’m constantly doing that. I see … because you and I are in social media on all these Facebook groups where there’s a lot of properties floating around and a lot of people trying to sell assets and what you’re talking about. They renovated them and they put them back out there. And I’m still not totally in agreement with their pricing on all of them. So, that’s an issue. When all of your … You used to be looking to see who’s having babies and now you’re just looking to see who’s doing deals.
Jack Butala: It’s true.
Jill DeWit: There’s a sign you’re in it for the long haul.
Jack Butala: I never went through the baby stage.
Jill DeWit: Well, yeah.
Jack Butala: Or some version.
Jill DeWit: Or who got promoted. You’re looking at your friends. Oh look who went to the show or they’re traveling. No, all my Facebook and you could easily tell too. Facebook’s made some recent changes where they’re really trying to pull up what you look at the most, they can tell. And none of mine is social. It’s all business.
Jack Butala: Oh yeah. I don’t have a social Facebook presence. It’s all real estate driven.
Jill DeWit: So funny. Yeah. Trying to think what’s another good sign?
Jack Butala: I said to myself before we started this episode. I’m not going to use the obsessed word. But it’s obsessed. If you are really … I spend every waking hour. Not every waking hour. I spend every waking work hour looking and reviewing on how to do a deal faster or looking for diamonds in the rough. Like wow, this is a good market. Or wow, this is a great townhouse/condominium complex. It’s grossly undervalued in my opinion for the location. Or essentially just finding a diamond in the rough where you can buy a piece of real estate, do nothing to it at all, market it in a different channel, and sell it for more. That is really what I look for. Everything else is an offshoot of leading back to that.
So if I say, wow, that house is really … Whoever rented that house is perfect for the environment. They did this, this, minimal cost. That’s really what I’m saying is they created some value. Or created some equity in a real estate deal. And it almost never has to do with renovation and almost always has to do with finding a pocket on a map, a pocket of property, that’s just a little bit outside the mainstream that’s half price.
Jill DeWit: Right.
Jack Butala: Like north in Los Angeles here up in the mountains. There’s all these little mountain cabin communities and if you go slightly, maybe three to four to five miles out of the ring of properties, I mean, there’s a massive, dramatic reduction in price. I mean, I’m talking about $600,000 or $700,000 cabins and then two or three miles out of that, you can buy dirt that’s buildable, that’s ready to build, for less than $10,000. That’s an easy sell. We have members that are killing it out there. For whatever reason, we haven’t chosen to purchase land in those communities yet but it’s probably because we’re having so much luck with houses right now.
Jill DeWit: I know.
Jack Butala: But that’s what I look for.
Jill DeWit: What’s another funny thing that you’re in it for the long haul. I’m trying to think. What do I do? I know what you do and you’re always thinking about it.
Jack Butala: I’ve wrecked your vacations. I know it.
Jill DeWit: That’s okay. No, it’s all good. You know what? It’s what you love to do. And me too. You know what? You know you’re in it for the long haul when you don’t think about anything else. There’s no part of me that says, you know, I think I want to do x or gosh, I’ve always wished …
Jack Butala: Like you’ve considered another career?
Jill DeWit: Yeah, that’s what I mean.
Jack Butala: Geez, I haven’t done that since I was 19.
Jill DeWit: Right.
Jack Butala: You’re right, Jill.
Jill DeWit: And you know what else? I’ve never even considered working for somebody else. There’s no way. I couldn’t go back.
Jack Butala: Yeah, why would you?
Jill DeWit: Isn’t that funny? And I’m not afraid anymore. I know a lot of people that look at us and go wow. They love the idea of being their own boss but the thought of having employees and having that responsibility is too overwhelming for them to take on. But for us, I’m like, no we got this. I am so confident in what we do that I don’t worry about our employees.
Jack Butala: I was just going to say that word.
Jill DeWit: I don’t worry about paychecks clearing. I don’t worry about the money in the bank. I don’t worry about any of that.
Jack Butala: I have deal confidence. And I remember when it happened. Because when you start out, it’s like man, I did everything that the guy said to do. I sent the letters out. They came back. I don’t know. I just don’t know and you have to get over that. I’ve gotten over it long since but that is a sign that you’re in it for the long haul.
Jill DeWit: Yeah.
Jack Butala: if you get a property back, you look … spend four minutes on the internet. You’re researching the whole thing and you say, yep, we should buy it or no, I know we offered $7,000 grand but at $4,000 grand, that’s a huge insurance policy. Bang, bang, bang. That level of deal confidence, you’re in.
Jill DeWit: Yep. And I don’t worry because what do you do? Like even our members, send out more mail.
Jack Butala: Yep.
Jill DeWit: You’re never going to run out of deals.
Jack Butala: It’s not possible.
Jill DeWit: Dude, I gotta tell you this. I was looking last night. I’m on social media, right? And this thing pops up where this guy’s selling a program.
Jack Butala: Welcome to Jill’s ambition.
Jill DeWit: This guy’s selling this program …
Jack Butala: Jill’s just turned the corner.
Jill DeWit: … and it said, here’s how to get two deals a month. What the heck. Who pays money to follow somebody’s program for two deals a month? We’re talking two deals a day.
Jack Butala: I know.
Jill DeWit: We could do more than that.
Jack Butala: My gosh.
Jill DeWit: I don’t understand what has to go so wrong that we think that’s really, really good and we’re selling this as a positive thing.
Jack Butala: I’ll answer it. Because they’re not in it for the long haul. It’s not an obsession. It’s a side business.
Jill DeWit: I just figure they don’t know what they’re doing.
Jack Butala: It’s just a side business. So you want to do two deals a month, you said.
Jill DeWit: He’s saying this is a great, I’m winning. I do two and I could teach you. What?
Jack Butala: It’s just like you said a couple episodes ago that it’s all relative. Money’s relative. Two deals a month for somebody … If they’re two house deals a month and they’re making $10,000-$20,000 bucks, that’s not so bad, Jill. $40,000 bucks a month is pretty good. But I agree with you. I think that’s a perfect example of they’re not really taking it serious like a career.
Jill DeWit: Or maybe they just don’t know what to do. That’s my other thing too. I’m here to tell you, man, if you want two deals a month or two deals a week or two deals a day, we can help you. That’s what we do. Just turn it up, turn it down. There’s no shortage of property out there everyone. Seriously. Whether it’s land, whether it’s a house. We haven’t even started to talk about apartment buildings. We’ve talked about … You and I have talked about a little bit in the past, we having been focusing on it right now but you guys, it’s out there. It’s not a problem. You want your phone to ring? Oh, we’ll make your phone ring.
Jack Butala: Exactly.
Jill DeWit: There you go.
Jack Butala: Like I’ve always said, if you can do two deals a month, you can do 200. If you can do 200 deals a month, now it’s a system situation. The deals themselves are incredibly easy to find but processing that many transactions takes a whole different talent.
Jill DeWit: That’s true.
Jack Butala: That’s another way you know you’re into this for long haul. When you’re setting up systems to set up that many deals.
Jill DeWit: That’s a good point.
Jack Butala: And guess what happens when systems are set up to process two, then 20 deals, then 200? And now, it’s 2,000. It just never stops.
Jill DeWit: Exactly.
Jack Butala: Finding the deals is easy. Maybe that’s how you know. When you say that sentence, think about Luke Smith, one of our real successful members. You think he’s in it for the long haul?
Jill DeWit: I don’t know.
Jack Butala: You think he’s got the deal confidence?
Jill DeWit: Maybe. I think he does.
Jack Butala: He does more deals than us.
Jill DeWit: Yep. I love it.
Jack Butala: Well, you’ve done it again. You’ve spent another 20 minutes with us listening to the Jack and Jill Show. Join us tomorrow where we discuss infill lots or large acre steals. Which ones are better for you?
Jill DeWit: And we answer your questions, should you have one, post it on our online community found on jackjill.com. Go there. It’s free.
Jack Butala: You are not alone in your real estate ambition.
Jill DeWit: That was good.
Jack Butala: Yeah, I think so too.
Jill DeWit: I like that. I’m trying to think of any … I’m trying to think of some other funny things that … I guess you know you’re in it for the long haul when you’re so far past it, you don’t even think about not being in it for the long haul.
Jack Butala: Right.
Jill DeWit: It’s like there is no other option so if anything crazy happens. Let’s just say anything really, really crazy catastrophic happens. The business is never going to go away. We’re just going to change how we do it.
Jack Butala: I’m going to ask you a couple of questions here in the after show.
Jill DeWit: Okay.
Jack Butala: Any previous job you’ve ever had, did you know you were going to be there forever? Did you just accept it?
Jill DeWit: No.
Jack Butala: Me either. How about a previous relationship. Did you know you were going to be there forever?
Jill DeWit: I thought.
Jack Butala: Me too.
Jill DeWit: Yeah. I tried. I wanted to.
Jack Butala: How about this relationship?
Jill DeWit: I’m trying. I want to.
Jack Butala: Jill, you’re hilarious.
Jill DeWit: In case you haven’t noticed, I’m in it for the long haul. How’s that?
Jack Butala: If you’re sitting around saying you know the only thing really stable in my life is my career.
Jill DeWit: That’s awesome. Oh wow. Okay, hey share the fun by subscribing on iTunes or wherever you are listening. And while you’re at it, hey, rate us there.
We are Jack and Jill.
Jack Butala: We are Jack and Jill.
Information …
Jill DeWit: … Inspiration.
Jack Butala: To buy undervalued property.
You know I adore you.
Jill DeWit: I know.
If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at jack@jackjill.com.
The JackJill Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hi.
Jack Butala: Welcome to the Jack Jill show. Entertaining real estate investment talk. I’m Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting from sunny southern California.
Jack Butala: Today, Jill and I talk about those unlikely SFR deal killers. Single family residential wholesaling deal killers that lurk in the background. And you may or may not be familiar with.
Jill DeWit: I can’t wait. I’m sure you have a long list. This is kind of one of yours.
Jack Butala: I do.
Jill DeWit: So I’m happy to …
Jack Butala: We’re going to talk about land killers too, and deal killers. Before we get into though let’s take a question posted by one of our members on the JackJill.com online community. It’s free.
Jill DeWit: Okay, Chris asks: Hi all, up to this point I have always used a cashier’s check to purchase my properties with no problems at all. That was until this past week I had a seller back out of a deal after he agreed to sell and all the due diligence checked out. I sent the deed and cashiers check to the notary to close the deal. The notary then contacted the seller to find out that he was not going to sign it and backed out of the deal. There are other details that I should’ve listened to before sending the envelope, but when the seller agreed I was all too happy to run to the bank.
Having the seller back out of the deal caused me to have the bank to put a stop payment on that cashier’s check.
Jack Butala: Okay hold on a second, Jill.
I didn’t know that was possible.
Jill DeWit: I did neither. You know to be honest with you, I was going to finish the question and then cover this stuff.
Jack Butala: Okay go, yeah.
Jill DeWit: So yeah.
Jack Butala: Yeah, go ahead.
Jill DeWit: Researching, after the fact. I didn’t think the bank should have granted this because now they are in a double jeopardy situation that should that check be presented they have to honor it. Well that’s kind of their problem.
None the less, I was wondering if cashier’s checks are the best option or would a business check serve me better in terms of having more control should a seller back out again? Had the bank not place a stop payment on that cashier’s check, those funds can be locked up depending on the bank indefinitely.
Obviously the sellers, having that bank guarantee, can offer them a sense of confidence that their not going to be taken advantage of. I’m sure there will be various views and I look forward to everyone’s ideas on this. Thanks, Chris.
So my first thing was, I personally, do not worry about these situations because the seller never got the money. And this is why we have the unrelated third party, AKA the notary that you hired in their city who’s handling the transaction. They have the money, they have the deed, they have everything. And they don’t hand them that envelope with the cashier’s check until they sign.
So I wouldn’t have even done any of this work. This for me was kind of a couple of extra steps.I kind of understand where you’re coming from. But for me the fastest thing is well hey notary it’s obviously not going to happen. So in that package, remember you already have a prepaid return envelope that you were going to send the deed back in. So put everything back in that envelope and overnight it to me.
Jack Butala: Yeah.
Jill DeWit: So now, say this was Monday, this all happened on Tuesday, so now Wednesday I’m holding this cashier’s check in my hand. I walk right into my bank, I deposit it, and now I have the money right back in my account. That, for me is the easiest way. So, do you have anything you want to add?
Jack Butala: No I mean, you could not have said it better. Is there a better way to do a deal from different states? Not the way Jill described, no. Cashier’s checks, I’ve always been told this about cashier’s checks. It’s like cash.
Jill DeWit: Uh huh.
Jack Butala: You take it out of your account you’re holding a piece of paper, might be a hundred dollar bill, might be a cashier’s check. If you didn’t spend the hundred dollars on whatever you thought then you go back to the bank and put it back in.
I’m really confused …
Jill DeWit: I personally I’m not comfortable, even the bank doing this and everything. I would not be comfortable with that because I know it’s out there. So until the notary overnighted it back to me in the envelope that they have in their hand, you know, and I have it in my possession. I wouldn’t feel comfortable at all.
Jack Butala: The situation that you’re describing is the reason we hire a notary local to the seller to manage that for us.
Jill DeWit: And we do cashier’s check.
Jack Butala: That’s the reason that we don’t just send a cashier’s check and a bunch of documents for a person to sign, like UPS.
Jill DeWit: Right.
Jack Butala: Because you don’t know that their going to sign, the notary ensures that. Gives you a sense of security anyway that it’s going to be signed.
Jill DeWit: And it’s easier than wiring the money because you want the seller to feel good. You want them to stand there staring at the check. If you said okay as soon as you sign a notary is going to call me and I’ll wire the money, that’s a huge pain.
Jack Butala: Right.
Jill DeWit: And that doesn’t lead a lot of, for me as a seller it depends on the situation and what you’re doing. For most of these guys if I’m just selling a couple thousand dollar property and you’re saying you’re going to wire the money and I just signed it. And I’m standing there waiting, that’s a huge pain too. I don’t want that.
Jack Butala: I can honestly say from experience. I mean Jill and I have done thousands and thousands of deals. I can’t recall a time where we lost, like the check got lost, or the documents didn’t get signed and we lost the money.
Jill DeWit: Correct.
Jack Butala: There’s lots of times where they change their minds and they send the stuff back. We redeposit and it’s over, the deal didn’t happen.
Jill DeWit: Yeah.
Jack Butala: But I can’t. Can you think of a time where …
Jill DeWit: No. No.
Jack Butala: It’s just like where it all blew up in your face. Where you lost money and didn’t get the property.
Jill DeWit: No. No. No.
Jack Butala: Neither can I.
It’s a time tested option.
Jill DeWit: Exactly. So hopefully that helps Chris, next time don’t bother with the bank. Just have them send it right back. If it happens again. Hopefully this … so … all good.
Jack Butala: Right.
Today’s topic? Unlikely Single family residential wholesaling deal killers, this is the meat of the show.
So your traveling around, along the line, doing everything your supposed to do. You get a great data set, you send a bunch of offers out, and the numbers work. You price it correctly and you send out two to three thousand offers to buy a house. And two, or three, or four, or five come back. So you start to look into the houses, just like your supposed to. And there’s things that creep up that can kill the deal that you don’t really think about before you start this. Do you have a list Jill?
Jill DeWit: Before the deal?
Jack Butala: So if somebody signs an offer, you’re staring at the offer on the desk, you’re looking at the computer. You’re looking at the actual property on the internet, on Google Earth or wherever you check it out. In this situation what I do is I try to find something wrong, right?
Jill DeWit: Right.
Jack Butala: I know the price is right, because I priced it and they signed it. I know the zip codes good, I know that’s good. I tried Zillow, Trulia, values are all good. But then sometimes we still don’t do deals.
Jill DeWit: Well before inspection and physical things? Because that’s one thing … that’s usually our first step. When the offers come back, first thing we’re going to do is a quick inspection. We can do it for under 400 dollars, including termites. And that’s what we’re doing. And then we can sign off on it, once we make sure we got nothing crazy staring at us.
Also we already checked too, let’s back up in the processes. We checked, we pull lien reports, and all that stuff. We have access to all of that, so we do our own title company which is really nice. The deal comes in my team jumps in and we’re pulling our own deal reports, lien reports, making sure everything checks out. We got the right people. They’re able to sign, yup no mortgage, everything’s cool, now let’s order. All while that’s happening we’re going to order the inspection, now I’m really staring at a good deal.
So you’re saying, right before … so those are the things that can go wrong. So I guess that’s what you’re asking. A deal killer would be the guy calls up and he really doesn’t own the house. He might be living there and it’s his uncle’s house and his uncle passed.
Jack Butala: You named it, you nailed it. The single number one deal killer that we experience, both houses and land. Is that the person that you’re talking to they don’t even know this, they can’t sign, deed this property over.
Jill DeWit: Close. Right.
Jack Butala: It’s either that or these crazy liens that you find on a house. And I don’t mean a mechanic’s liens for a guy that fixed the garage 18 years ago. I mean there’s a mortgage on the house, but the guy hasn’t been paying for it and nobody’s started a foreclosure proceeding. A this is five years old. The things that are not … the things that will kill a land or a house deal, you can’t see them. Their all in the basic, the deal structure itself.
But that’s not very fun to talk about. Let’s talk about some stuff that can kill a deal, you know two days before it’s closed.
Like the neighbor is raising 12 sled dogs. There’s no way, no way you can know that.
If you’re buying a house in a different state, unless you have some type of representation there.
Jill DeWit: That’s funny.
Jack Butala: I don’t mean representation I mean boots on the ground.
Jill DeWit: I say, let’s make it good. Sled dogs I can work with. Let’s just say their cooking the meth in the garage.
Jack Butala: You know meth comes up in our office sometimes as a joke, but …
Jill DeWit: It’s breaking bad, there’s too much breaking bad stuff because now you’re going back through the whole series. As if once wasn’t enough.
Jack Butala: I’m not sure on the air we should talk about drugs.
Jill DeWit: That’s true, I’m sorry.
But it is kind of funny, I got to say, that you have officially decided that kid number three. That this is like a life lesson, or a learning experience that he needs to go through the whole series with you.
Jack Butala: What, breaking bad?
Jill DeWit: Yes.
Jack Butala: Yeah again we’re talking about drugs.
Jill DeWit: Sorry, we’re talking about a show!
We’re talking about a show.
I guess so, alright so what else?
Jack Butala: Let’s call the deal for us recently, land or houses?
Jill DeWit: Well, I mean price? You know that’s one of the things. This is a good note that whether you’re new or your employees are new. You got to learn that not every deal, just because it comes back is close able. You know, that’s the whole thing. And I talked with our team about it recently too. Hey I think the only reason we’re all jumping up and down, trying to make this one work, is because this is the hot one right now today. Hang on a moment, tomorrow we’re going to have five more and we’re not going to care about this one. So lets all take a step back and look at this objectively. Sometimes you’re trying to make a deal happen when there’s really not a good deal. Maybe the price was off, maybe we found something else out like you just said.
Even the stuff we talked about, where the person may not be the right person who can sell the property. But okay now everyone’s scrambling to find who is the right person, oh and convince them.
Is that really the right thing to do?
Jack Butala: Yeah and we talked about on the show. You’re seeing something that’s not there.
Jill DeWit: Right.
Jack Butala: You’re not looking at the deal for what it is without any emotion. You’re just on autopilot just trying to close a deal.
Jill DeWit: Exactly.
Jack Butala: So that will kill a deal. We had a deal recently where the property the person purchased a solar panel system and they were paying it off over 30 years. If you can believe that. So that got, we think we figured that out and got that out of the way. But there’s still issues that come up. You just have to be thorough.
I would never close a house deal without title insurance. Jill is exactly right. You have to be some version of your own title, title situation.
Jill DeWit: That takes a lot of the worry out for us. I can’t imagine if we didn’t, going into this brand new, and not having these tools. What if you just said hey I’m going to … even just these brand new renovators that say, hey I’m going to be a flipper today kind of thing. Okay. They watch HGTV and they think they got this and they run out and they convince their parents and their family and everyone to help them fund this deal. And they don’t have the tools and stuff that we have going into it. That would be scary.
Jack Butala: Yeah. Here’s a deal killer, time. The longer it takes to complete a deal the more likely it won’t close. So here’s how we stretch our house deals. Letter comes back, we check all the boxes, we open escrow, this is all within one day and we order an inspection. A physical plan inspection. The inspection comes back within three days. If the inspection clears we fund the deal within five days of the inspection.
So now we’re into the whole thing for maybe two business week, ten business days or 14 calendar days. That doesn’t give the seller a lot of time to change their mind or undo the deal. It doesn’t give us … it pushes our feet to the fire to make a decision. So time can really sneak up and kill it. Kill deals.
For land because there’s usually no escrow and there’s certainly no inspection we close deals in three days sometimes if it’s a great deal.
You remember when we used to say run to the bank. Run to the bank and get the thing done, overnight it and have it sent back and record it in three days.
Jill DeWit: But even faster now with online recording.
Jack Butala: There’s no other place I can think of, except a garage sale, where you can buy an asset. You can’t do it at a garage sale but the concept is the same.
You can buy an asset for half of what it’s worth.
No other business I can think of. You can do it with cars but it’s real hard.
Buy a 100 thousand dollar piece of dirt in three days and create 100 thousand dollars additional equity.
Jill DeWit: Exactly.
Jack Butala: Sell it for 200 thousand and it’s worth way more. It’s the stuff we do all the time. It’s a real option.
Do you’re homework I guess is the whole point of this. We’re not your parents telling you to be careful.
Jill DeWit: Use protection. Hilarious.
Jack Butala: It’s not a be careful, oh my gosh you’re going to get hurt, don’t leave the house today. That’s not what we’re saying. We’re saying, you know, send a million letters out. Knock yourself out, like we do.
Jill DeWit: You know what?
Jack Butala: Just exercise some levelheaded caution. That’s really what we’re saying.
Jill DeWit: Well let me tell you what we do. Because we’re talking a lot about houses now, because that’s really what we’ve been focusing on a lot. The last few months here as we’re working on house academy. So what we started with is our own basic, we brought in a team, we’ve been doing this for a while but we’re changing up how we do it. We’re building up a team to take it to a big level, okay?
So what do we do? We start with our own basic check list. Maybe I had five things on there, which is; check ownership, let’s get the inspection, open escrow, fund, close deal, pass on to the buyer. You know, that kind of thing. Well it’s probably I got 30 items now. And this is what you should do.
So sit down, spend some time, have a plan in place of what you think are all the steps you’re going to need to do. Whether it’s land or a house, just like we do, and don’t print it out, it’s not in stone. Because you’re going to be scratching all over the thing. You know it’s going to grow, and you’re going to add, it’s through this whole process I have been building this up. I tell my team, alright to the list, okay add that to the list, we didn’t think about that one. Add that to the list. We joke about it, but this solar panel thing.
It’s not like the solar panels are a deal killing issue. This particular transaction had a weird lease on them. And they wouldn’t come and get them even if you bought them off. Even if you paid them out, which everybody was ready to pay them out in escrow. Just pay off the stupid solar panels so it comes free with the house kind of thing. And there was still the equipment on the roof issue. I mean there was all kind of little things that we were like wow.
Jack Butala: Solar panels in general are good, it’s just that this deal was really bad.
Jill DeWit: Yeah this one unfortunately, this poor seller got one of the … whoever it is not every company is out there to really help people. Surprise, surprise. They were clearly not out there to help her, because even though they were paid off they won’t come get them. They want to go out the full 20 something years and then they may come get them and in the meantime any warranty. It’s weird stuff.
Your list and your due diligence is going to grow, and you’re going to add to it. You’re going to go oh, I’ll remember that one.
I’ll tell you here’s another funny thing. This happens every month, we have a member call with all of our land academy members. And we all talk about different things and we help each other and bring stuff up. And I tell you, it’s like every week there’s one person that says yeah I forgot to check X and I won’t do that again. Like oh like back taxes. That’s a simple easy one, but if you’re brand new you might miss that.
Jack Butala: Or if there’s an HOA.
Jill DeWit: Yeah or an HOA, or some little thing like that. You’re like oh, oops, and that’s okay. That’s how you learn. We jokingly tell them, you know you won’t do that again. And you usually don’t.
So be ready, and it’s all good.
Jack Butala: A lot of it is learn from us, there’s just no replacement for doing it and kind of making a couple of mistakes and saying oh my gosh I’m never doing that again.
Jill DeWit: Right. Well that’s the best. Like you just said, learn from us. Learn from someone who’s been there and done it. You know, that’s the thing. One of our big values I know that a lot of our members find from our land academy program is that we arm them with all this stuff. So they have the list, they know what their doing. And if they forgot one of them it’s like aw shoot, I know you said it, I missed it or I forgot. Whatever. But we’re there to help all the way through.
Jack Butala: Exactly.
Jill DeWit: And here in house academy too.
Jack Butala: Well you done it again, you spent another 20 minutes with us on the Jack and Jill show. Join us tomorrow where we discuss the signs that you may see in yourself that you’re in it for the long haul. We’re obviously in it for the long haul. And we’ll tell you why.
Jill DeWit: Are we?
Jack Butala: This feels like a long time.
Jill DeWit: You know Jack, this whole period right now feels like a lifetime. Just kidding.
Jack Butala: Jill, I couldn’t agree with you more.
Jill DeWit: Alright, and we answer your questions if you have one. Post it on JackJill.com our online community, it’s free, go check it out.
Jack Butala: You are not alone in your real estate ambition.
Jill DeWit: You know those times when things are going great and you feel great and its like wow this week went by so fast this is so much fun. And there’s times you go wow has it only been a week? It feels like a month.
Jack Butala: Yeah, I know.
Jill DeWit: And like today.
Jack Butala: Today?!
Jill DeWit: Just kidding, love you Jack.
But like today. If you feel the same as I do, please share this fun by subscribing on iTunes or wherever you’re listening. And while you’re at it please rate us there.
We are Jack and Jill.
Jack Butala: We are Jack and Jill.
Information …
Jill DeWit: And inspiration …
Jack Butala: To buy undervalued property.
If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at jack@jackjill.com.
The JackJill Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hello.
Jack Butala: Welcome to the Jack and Jill Show, entertaining real estate investment talk. I’m Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting again from sunny Southern California.
Jack Butala: Today, Jill and I talk about establishing seller trust. The good, the bad, and the ugly.
Jill DeWit: I was going to say, we’re going to start with first an example of what not to do, and then we’ll fall into what you should do, yes.
Jack Butala: What if we just had a show about just doing it right all the time?
Jill DeWit: Oh that would be boring too. You’ve got to show that we even fall down a little bit too.
Jack Butala: We just pat each other on the backs all the time and say, “It’s so easy to be a real estate investor. Everything single deal.”
Jill DeWit: “Everybody should do it. You win on every deal. Oh yeah and it’s so easy, you don’t need to train people. You just hand them a phone, they’ll figure it out.”
Jack Butala: We could make cartoons like Walt Disney and make a theme park called “Real Estate Success”.
Jill DeWit: Right. Love it.
Jack Butala: What would you name the rollercoasters or the rides?
Jill DeWit: The rides in Real Estate Success?
Jack Butala: Yeah, the theme park.
Jill DeWit: Oh…”Losing My Ass”. “Drop”.
Jack Butala: “Fatal Real Estate Agent”.
Jill DeWit: “Fatal Real Estate Agent”. “Big Flub 101”. I don’t know. I don’t know.
Jack Butala: “Should I Get A College Degree?” That could be one ride.
Jill DeWit: Oh that’s a good one. That’s true too.
Jack Butala: It’s a small one.
Jill DeWit: “I Borrowed All the Money I Could Get My Hands On.”
Jack Butala: “I Over-leveraged This House”.
Jill DeWit: Yeah that’s it. Oh no. That’s good.
Jack Butala: Before we get into it, let’s take a question posted by one of our members on the jackjill.com online community, it’s free.
Jill DeWit: I over-leveraged my house, oh my god. I over-leveraged my you-know-what. Okay.
Jack Butala: Shouldn’t have married this girl.
Jill DeWit: Oh, Jack. Now.
Jack Butala: That’s a side theme park.
Jill DeWit: Okay. That’s a whole other show.
Jack Butala: Did you ever play that board game “Life” as a kid?
Jill DeWit: Yeah. I mean, I never played it as a kid, I only played it as an adult. I always thought, as a kid, it was too hard and it was stupid.
Jack Butala: It was stupid. Because life is stupid really.
Jill DeWit: As a kid I was like, “Why would you want to play this game, where you get married and have kids and there’s college and everything?” I thought that was stupid. That’s not a kids’ game.
Jack Butala: See, you’re intuition was totally correct.
Jill DeWit: It’s wrong. Don’t do that to your poor kids.
Jack Butala: Not even adults really want that.
Jill DeWit: Do you know what? The only game that was also up there was Risk. That was kind of hard for me, like, playing –
Jack Butala: To this day I don’t like Risk.
Jill DeWit: Yeah building wars and armies and doing this stuff. Yeah it’s very complicated. I like easy.
Jack Butala: That is one board game I just said, “I’m just not going to learn”. Spent a lot of time playing chess.
Jill DeWit: My favorite was Monopoly. We’d drag it out for a week. We put it away, come back the next day.
Jack Butala: [crosstalk 00:02:41]
Jill DeWit: Exactly. Yep. Good stuff.
Jack Butala: Wish I would have known you back then.
Jill DeWit: Thank you. You too.
Jack Butala: We’d be in prison right now.
Jill DeWit: Uh oh. I don’t want to know.
Okay, so Jeff asks, “I’m sure this issue has come up for many of you out there, but I can’t quite find the right answer by Googling or looking through the forum.
When you buy multiple parcels in one purchase, how do you allocate for tax purposes the purchase price across the multiple parcels?”
Jack Butala: Fantastic question Jeff.
Jill DeWit: “Or to rephrase in tax language: what basis to give to each of the several parcels? For example, let’s say you find a seller who wants to sell you ten parcels in one county, each a varying size and value, for $10,000 total. You complete the purchase (as you typically do) by sending the seller a check for $10,000. So there’s no real way to say, ‘I paid $4,000 for property X, but only $800 for property Y’, since the purchase was for the whole package rather than each property individually. If, by the end of the tax year, you’ve sold five of the ten for $12,000, do you report a $2,000 profit? If so, the following year, when you sell the remaining five parcels for, say, another $12,000, do you report all of that next $12,000 as profit? Just wondering how you all approach this as I’m sure many of you routinely face this issue.
Thanks all, Jeff.”
Jack Butala: Right about the time – this is about a master’s degree-level question, it’s great. And thank you producer for getting it into the show. I had this exact issue right about the same time where you are in your career. And I came across it, and in my situation it was very clear that one property in, what did he use here, five? Ten. One of the ten properties in my case, a lot of years ago, was right on a road. And it was a fantastically valuable property, and the other nine behind it – picture a farm, where the farmhouse is located. That’s one APN. Then all the fields and stuff, back the further you go that are up the hills or up the mountains they get less valuable theoretically. Let’s call it not valuable, let’s call it less marketable, or less desirable by a buyer.
But I’m telling you, to directly answer your question, you just divide by ten. Because you’re going to drive yourself nuts trying to figure this out. And the way that the – for tax reasons, what you’re actually really doing – this is just my opinion – we’re all in the business of creating ordinary income. So check with your tax person, but to directly answer the question, just divide equally by the number that you’re purchasing. So your cost basis is the same, and your revenue is the same. Your revenue will be different if you’re doing everything right. Some of them will sell for a lot more, some of them will sell for less. Just make sure you sell them all, that’s the other point of it.
Jill DeWit: Right.
Jack Butala: Every year Jill and I stare at a Excel sheet of property that we haven’t sold yet, and it’s like, “Oh my gosh, what the heck?”
Jill DeWit: Well it’s our fault. Because sometimes we get distracted. You need to make them known and get it out there and all that good stuff.
Jack Butala: I guess my point is – I don’t know what that Disneyland ride would be here, but no matter what you do –
Jill DeWit: “I’ve made money, I don’t know how” –
Jack Butala: There’s always leftover real estate inventory, and when you really think it would take ten steps –
Jill DeWit: I don’t know how to account for the money I’ve been making.
Jack Butala: Take ten steps back and say, like literally Jill, and I looked at it recently. We have like 280 properties in our inventory right now. And so we’re making a mad rush, all hands on deck. The staff who’s listening to this, thank you by the way. And I know you’re pulling your hair out, but thank you. We’re trying to put all these properties up for sale. I mean when you add up 280 properties, there’s some equity there.
Jill DeWit: That’s true. Exactly.
Jack Butala: So I hope that answers the question. That’s a really, really advanced, good question. And if this is – again, a case of, you can just tell who’s going to do well. If you’re asking this kind of question Jeff, you’re doing fantastic.
Jill DeWit: Awesome.
Jack Butala: Today’s topic: establishing seller trust. This is the meat of the show. It’s also one of the things that Jill is an expert at, and I’m not so much. That’s why I named it this, so I could –
Jill DeWit: Thank you. So you could just take a break?
Jack Butala: I can have a coffee right now.
Jill DeWit: Yeah, take a step back. Take a break.
Jack Butala: I’ll lead in by this. It is so important, it’s imperative, when that phone calls and the person says some version of, “I just got this letter. You know, I don’t understand. I’ve owned this property for 20 years, I think your price is a little bit low. Is this a joke? Is this a scam? Because I do want to sell it, but maybe not for this price. But who the heck are you?”
Jill DeWit: That’s easy.
Jack Butala: Educate us Jill.
Jill DeWit: Thank you.
Jack Butala: Because my answer would be, “You know what? Go, enjoy your day. I’ll talk to you later.”
Jill DeWit: So that’s a perfect example of the person that comes to us. So, here’s the thing. First I was going to lead with a what not to do example, because we just recently had one. And I’m just going to kind of point out the main things that went wrong, which was the communication was broken, and too many people were working on the deal. And even back in the day, remember Jack, there was a time where it was just you and I doing deals years ago, and even with just the two of us you think that we’d communicate everything, which we did, but we couldn’t work on the same deals together because they would go sideways.
Jack Butala: Exactly. So let’s start with maybe two or three or four bullet points of things that you want to do, and then we’ll give a couple of examples of how to do, and maybe how not to do it.
Jill DeWit: Okay. So I’ll give you an example, and you tell me how you want this to go.
Jack Butala: Okay.
Jill DeWit: So one is honesty. Being up front and honest.
Jack Butala: Understanding.
Jill DeWit: And so you need to prepare them, and tell them if you’re really going to buy it, here’s why. If you’re not going to buy it, here’s why. You need to change your price, here’s why.
Jack Butala: Here’s my version of that. “Hey seller. Yeah we are going to buy your property for $4,000. And we determine that we’re willing to pay $4,000. Not that it’s worth $4,000, but we’re willing to pay $4,000. Either you want to sell it for that or you don’t. And we are land resellers, please go see jackjill.com. And check us all out.”
So honesty is imperative. If you want to say, “I’m going to build a cabin on it and it’s going to be my dream house”, I just think keep your lies straight if you’re going to do that.
Jill DeWit: Exactly. The other thing, talk to them on their level. To them, $1,000 may be a lot of money. $10,000 may be a lot of money. Whatever transaction price you guys are discussing, you need to know for them, don’t assume anything, and talk to them, figure out where they’re coming from.
Jack Butala: Along those lines, Jill and I get calls from regularly, on a monthly basis, people who are settling their estate, settling their parents’ estate, and their stakes are very large. Substantial. And so they say some version of this, you can hear it in their voice, “I’m working my way down a list of assets that my dad owned. Can you guys just take all these properties? We don’t even really care about the value, but I need to go back to work and have my life again.” And so Jill, our staff handles that very efficiently. We’ll pay $1,000 for 10 or 15 properties all across the country.
Jill DeWit: Another thing. Communicate, talk to them, let them know what’s going on. “Hey, we’re behind on this, or I know it’s going to be this, we did receive your payment.” Actually, I’m thinking buyers. But for sellers, “Hey, I’m mailing it out today. The notary’s coming.” Whatever happened. “It’s a holiday, now it’s going to be Tuesday. We can record it, not record it. However you do it.”
Jack Butala: I personally struggle with this. How much is too much communication? How much is not enough communication? Is it purpose-specific?
Jill DeWit: I honestly think there’s never too much communication with this type of stuff.
Jack Butala: Do you call a guy five times a day?
Jill DeWit: No. I don’t. No seriously, be realistic though.
Jack Butala: That’s too much communication. I’m not putting you on the spot, because I honestly really want to know the answer to this question.
Jill DeWit: You’re not realistically going to call them, but you might call a person daily. “Hi, just checking in. How are you?” This is a seller, we don’t want them to walk, we don’t want them to change their mind. You want them to feel good about you. So yeah, you’re available. Communication works both ways. You want to be there when they call, and you want to keep them posted about what’s going on. Communication too is like, I don’t have to call you every day, but I could say, “Hey, I am working out the details, this is where we are.” Maybe it’s a big parcel and it’s going through escrow, let’s just say something like that. So, there might be three days of nothing because of escrow. So you tell that person, “Hey. I’m here if you need anything. I’ll call you in three days, I should have an answer by then, and hope that we’ll have the title policy ready to go and we can finalize our close date, whatever it is.” That’s communicating. You don’t have to call them and go, “Okay it’s day two. Okay it’s day one.” But maybe that person does need that, I don’t know. You get it.
Jack Butala: Understood.
Jill DeWit: Okay thank you. Alright. And then the last thing is – this is all just about trust, not really about deals. It’s just trust and people stuff. And the last thing is just follow through.
Jack Butala: Yeah, do what you say you’re going to do.
Jill DeWit: Exactly.
Jack Butala: We have a glaring example of a property recently where I think we lost the seller’s trust.
Jill DeWit: We did.
Jack Butala: Without intention. Here’s the whole story. It was a house.
Jill DeWit: There was two things that we did wrong. Go ahead. And I’ll say –
Jack Butala: Well here’s the back story real quick. As always, we sent a ton of offers out. And this one happened to be the first one that came back in that batch. In a zip code that Jill and I are really familiar with, so I was real excited about it. But the first day it came back, it came back signed. And she said, “Your time was perfect, I really want to sell my house.” And so we went down the path of doing that, ordered an inspection, the whole thing.
First thing when it came back that I do personally when I’m involved, is I pull it up on Zillow or Redfin or any of those, and look at the property physically and look at the property plan. And this property happened to be on a major road. A major North-South road in Arizona. And I mean major, where you can’t sleep at night noise road. And I said that immediately. And for whatever reason, the price was so attractive that we continued down the path. But both of us, Jill and I admitted to each other recently, “Man, that one deal was bugging me, that was bugging me, that was bugging me.”
Jill DeWit: Well, we talked about it. We talked about it.
Jack Butala: The price was so attractive, and the deal itself – the house was in such good shape, there’s a lot of things about the deal that would make most people buy it.
Jill DeWit: You know what’s funny though? Let me tell you though. There’s this classic dating fail. This is really what happened. It’s like, “But he’s cute. Oh, but he doesn’t have a job. But he’s cute.” This is really what was going on. There were all these red flags that came up with this property, and we ignored every one because he was cute. That was it. “He doesn’t have a job. He doesn’t have a car. He lives with his mom.” All those things we ignored. You wouldn’t do that in dating, you would have been gone. We should have been gone.
Jack Butala: Well how does it end with that cute guy?
Jill DeWit: Oh it’s painful, and everybody’s unhappy in the end. He’s like “You led me on.”
Jack Butala: Was it fun for a week?
Jill DeWit: No.
Jack Butala: Not even for a week?
Jill DeWit: No.
Jack Butala: It wasn’t worth it?
Jill DeWit: No, it wasn’t worth it. No. Because – you know.
Jack Butala: No I want to hear it.
Jill DeWit: Because you know what? It’s never fun, you were just pretending it’s fun. Every time you have to drop him off and pick him up at his mom’s house for a date, that’s really not fun. But you’re telling yourself it’s fun. You’re telling yourself, “Oh this is sweet.” No it’s not.
Jack Butala: So, you can finish the story yourself. Got contracts, went down the path, and started very diligently pulling in all the established A list buyers that we have all over the place. Every single one of them, imagine what they said.
Jill DeWit: Yeah.
Jack Butala: “Oh great house, great price, love it. It’s on the road, I’ll get back to you. It’s on the main road, I’ll get back to you.” Because investors never say, “No, no, I don’t want that at all.” They’re all deal makers. Including us. Deal makers – Jill’s middle name is “Can’t Say No”. They just can’t say no.
Jill DeWit: Right. Thank you.
Jack Butala: So, the seller finally said, “You know, this is taking too long. I’m going to take another path.”
Jill DeWit: And that’s fine.
Jack Butala: And it is. That’s it. But my point is –
Jill DeWit: And I’m glad. Because we were trying to do the right thing. You’re only supposed to be back up.
Jack Butala: She did.
Jill DeWit: We were trying to do the right thing. We were trying to follow through. You even said, “Hey, let’s for karma’s sake. If we find somebody let’s just assign it to them and walk away so at least she can move on and get this house out of her life. We’ve already lost money, we’re cool with that. We’re not hurting.”
Jack Butala: We lost a bunch of money.
Jill DeWit: We did, I know. We had five people, I counted it out, five people working on it for a couple of weeks, paid for inspections and things like that. We really were trying to do the right thing. She pulled the plug and that’s okay.
Jack Butala: Sounded major rough.
Jill DeWit: I know. That’s the thing. I knew it when we were going down the path, when we were like, “We’re on plan D now.” Trying to make this work, and it just wasn’t working. And I don’t even think that there was any magic price that would really, really work, unless it was a dollar. Any person still, at any price, they have to find a really certain person that’s okay with that location.
Jack Butala: Yeah that’s a topic for a different show. I’m writing that down. Who buys assets like that? That really, they just settle.
Jill DeWit: Isn’t it interesting?
Jack Butala: Constantly I’m driving around – because I always look at real estate, obviously, and I’m constantly saying, “Who the hell lives there?”
Jill DeWit: Who would live right here? Exactly. You’re staring at the freeway.
Jack Butala: And I think they just renovated that house. And I think they put like $1.2 million into that thing. But it’s right on the expressway.
Jill DeWit: Right. Well these are freeways out here. They don’t have expressways Jack. I don’t know what that is.
Jack Butala: I think it’s the Midwest version of a freeway.
Jill DeWit: Oh my goodness.
Jack Butala: What the hell is a freeway?
Jill DeWit: Do you call it the filling station too? Where do you go to get your gas?
Jack Butala: And the ice box? Sometimes I do.
Jill DeWit: Yes. Okay. Just checking. That makes sense now. I got it. Alright so I think we figured out –
Jack Butala: To wrap that up, what would you have done differently with that seller and –
Jill DeWit: Oh you know what I can tell you real easy.
Jack Butala: Hold on. I think you really did establish trust, that’s my version of this. I think that, in the end, it just didn’t – because I think you did a great job at establishing trust.
Jill DeWit: Right. Well as a team, we established trust.
Jack Butala: We just didn’t deliver on it.
Jill DeWit: Well here’s what happened. As a team we established trust. But at the end, we goofed up their trust because another person was working on the deal, which was me, I will be honest, and she had never talked to me before. If she had talked to me –
Jack Butala: The seller.
Jill DeWit: Yeah. If she had talked to me, and if she had spoken to me from the minute one, we would have time to build up a rapport, and it would have been great. It would have been just fine. But not only was I the new person coming in, but I’m also the new person coming in with bad news. So that’s what happened. Number one that happened. And then number two where we goofed up, we didn’t pull the deal soon enough.
Jack Butala: Yeah we didn’t just say no.
Jill DeWit: Yep.
Jack Butala: Yeah.
Jill DeWit: Saved us a lot of time, a lot of money, lots of –
Jack Butala: I’ll personally take responsibility for that. I’ll tell you though, this is a learning experience so I mean hopefully listeners won’t have to look at a property that’s right – this is the exact opposite is for land by the way.
Jill DeWit: Isn’t that funny? I was thinking about that too.
Jack Butala: When land is on a major road, you want to buy it.
Jill DeWit: You celebrate. Yeah. Talk about easy. There’s probably utilities right under that road, this is great. Talk about easy. Isn’t it funny? And before you build the house, you want to be right on the road. Once the house is built, forget it, get off the road.
Jack Butala: The raw land that we look at that’s on a road or a even on a freeway –
Jill DeWit: Oh very good.
Jack Butala: There’s a lot of uses for that. Like a filling station. You don’t want to live there.
Jill DeWit: Right? And you know what, that’s a great place to buy pop. Alright.
Jack Butala: Gosh. I’m going to think of everything in terms of a Disneyland ride now.
Jill DeWit: Awesome.
Jack Butala: Well you’ve done it again. You’ve spent another 20 minutes listening to the Jack and Jill Show. Join us tomorrow, where we discuss some unlikely SFR deal killers.
Jill DeWit: And we answer your questions. Should you have one, post it on our free online community found on jackjill.com.
Jack Butala: You are not alone in your real estate ambition.
Jill DeWit: We kind of covered a little bit – some of the stuff we talked about today will totally apply to tomorrow too. So that’s going to be really good.
Jack Butala: I just think that’s really, really, really valuable information. Seriously.
Jill DeWit: Today? Or tomorrow?
Jack Butala: If there’s any takeaway – if by some crazy accident you’re actually still listening to this, the end of this show here, don’t buy a house on a main thoroughway. That’s just all there is to it. No matter how attractive the deal is, it’s going to be in your inventory for a while.
Jill DeWit: It will. Unless you’re prepared to sit and wait.
Jack Butala: Because here’s what happens. You buy the house for half what you think it’s worth, and then you post it for – I’m just going to throw out numbers. If you buy a house for $100,000 on a major street, and it’s worth 300 like, three blocks back from a major street, and you post it for 150 or 170, the whole world’s going to say, “Well what’s wrong with it?”
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: You’re going to be stuck with that asset, I don’t care what you do, for a really long time.
Jill DeWit: You’re right.
Jack Butala: So please learn from us. As painful as it is for us to talk about it.
Jill DeWit: Exactly. Yep. Exactly. Hey share the fun by subscribing on iTunes or wherever you’re listening, and while you’re at it, please rate us there. We are Jack and Jill.
Jack Butala: (Simultaneously) We are Jack and Jill. Information.
Jill DeWit: And inspiration.
Jack Butala: To buy undervalued property.
If you enjoyed the podcast, please review it in iTunes . Reviews are incredibly important for rankings on iTunes. My staff and I read each and every one.
If you have any questions or comments, please feel free to email me directly at jack@jackjill.com.
The JackJill Family of Companies include:
I would like to think it’s entertaining and informative and in the end profitable.
And finally, don’t forget to subscribe to the show on iTunes.
