Why we Don't Renovate Houses (HA 002)

Why We Don’t Renovate Houses (HA 002)

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Why We Don’t Renovate Houses (HA 002)

Transcript:

Steve Butala:                      Steve and Jill here.

Jill DeWit:                            Hi.

Steve Butala:                      Welcome to The House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala.

Jill DeWit:                            And I’m Jill DeWit broadcasting from gorgeous, sunny Southern California.

Steve Butala:                      Today, Jill and I talk about why we don’t renovate houses.

Jill DeWit:                            Anymore.

Steve Butala:                      We buy and sell houses, tons of them, and so do tons of our members.

Jill DeWit:                            Exactly.

Steve Butala:                      We just don’t necessarily like the renovation process. Actually, the truth is we like it, it’s just not profitable.

Jill DeWit:                            Been there, done that, and we’re going to explain more about that in a few minutes here.

Steve Butala:                      Yep, before we get into it, let’s take a question posted by one of our members on the HouseAcademy.com online community. It’s free.

Jill DeWit:                            All right, Ellie asks, “What are the best places to buy and sell houses?” This is a good question.

Steve Butala:                      Yeah.

Jill DeWit:                            Okay, we all want to know, where is the secret area? What’s the up-and-coming thing? How do I find it? What do I do?

Steve Butala:                      What’s the answer, Jill?

Jill DeWit:                            Well, we-

Steve Butala:                      We smoke it out through data.

Jill DeWit:                            Yeah, exactly.

Steve Butala:                      That’s how we approach everything. We don’t drive down the street and say, “Wow, that’s a really nice neighborhood. I wonder if I can get a house cheap in there. Let’s go and knock on some doors right now.”

Jill DeWit:                            No.

Steve Butala:                      Nothing like that.

Jill DeWit:                            Exactly.

Steve Butala:                      As we talked about in the very first episode, episode zero, we choose an area that makes a lot of sense through a process of elimination by essentially looking on realtor.com and looking for consistency. Once we do that, we pulled all the zip code data down from various sources on the internet and pit those zip codes next to each other to find out which ones are performing the best with existing sales and a bunch of other stuff.

Jill DeWit:                            Exactly.

Steve Butala:                      It’s very scientific, and very simple, and relatively quick to learn.

Jill DeWit:                            What I love about it, too, is that with the data that we have available now, it’s mind-boggling what we have now versus 10 years ago, even like five years ago, at our fingertips. You used to have to be a realtor, have access to your realtor. We all used to all want to get into the MLS and get that inside track information. Now it’s all out there for everybody to see online, so you really can get your fingers on this stuff and make a good decision. And what I love about it is, when you get in, you learn what you’re looking for, how to compare things, the best place to buy and sell a house will jump out at you.

Steve Butala:                      Yeah.

Jill DeWit:                            You’re going to go, oh, my gosh. I’m looking at it right now.

Steve Butala:                      It’ll make complete sense.

Jill DeWit:                            Gosh, I looked at that area and then I dug deeper and I looked at this. And I dug deeper like this, like, well, sheck, I know those two zip codes are exactly where I’m going to do it and I know exactly how I’m going to go about it.

Steve Butala:                      Exactly.

Jill DeWit:                            And exactly how much we’re going to offer. You’ll get into it more, but-

Steve Butala:                      So this is how we do it and so if you’re choosing the right zip codes and pitting them against each other and only choosing the best ones and you’re pricing it the way that we price it, the last half of this question is where you sell it.

Jill DeWit:                            Right.

Steve Butala:                      The very shorter answer is you sell it to the people who are investors in those same zip codes.

Jill DeWit:                            Exactly.

Steve Butala:                      There’s tons of houses, if you look at ownership data, that are owned by LLCs or owned by non-Mom and Pops. You can sort of tell by looking at the data pretty quickly. Who’s the logical buyer for a property that will become eventually a rental house or a renovation candidate or let’s just say the non-user. The point is if you do it all, the acquisition part, correctly, up front, the house kind of sells itself. If there’s a house in a market that has days on market that’s in a 15, 20, or 30, below 30, let’s say, and it’s 20 or 30% below in its as is condition price…

Jill DeWit:                            You’re not going to have any trouble selling.

Steve Butala:                      You’re not going to have any trouble at all.

Jill DeWit:                            Hey, I’d like to pause for a moment and just explain one thing. For anyone who’s new to the show or new to us and doesn’t know us, Jack would you please explain why you love data or what is… I’m hearing you say data data data and I’m used to it, right? Well, for those of you who don’t know Jack, a.k.a. Steven, here, he’s all data.

Steve Butala:                      Yeah. Jill and I have a great, unique and what I think is great history and partnership.

Jill DeWit:                            Right.

Steve Butala:                      I’m acquisition or information and she’s sales or inspiration and she and I… I’ve been doing this since the, what, mid-90s?

Jill DeWit:                            Mm-hmm (affirmative).

Steve Butala:                      Really, early ’90s and Jill has been involved in real estate her whole life, but we teamed up about 10 or 11 years ago. And my existing operation, I think, doubled and eventually quintupled or more the day she got involved. Because she brought an element to this that… I love data. I love data. I love generating acquisitions and I’ve been in some form of real estate acquisitions my whole professional life. And Jill’s been in some form of sales her whole life, so when you team those two types of personalities-

Jill DeWit:                            So great.

Steve Butala:                      We have very different professional personalities.

Jill DeWit:                            The whole key is he is all about making it easy, creating systems, using data, right? And our thing has always been, so you know who we are, hey, make my phone ring. Whether it’s on the buy side or the sell side. So that’s what he does. He goes out there, gets the deals, get those offers out, whatever it is. My phone’s ringing and then I take it from there.

Steve Butala:                      Right. And both pieces are ever-changing. There’s constantly new tools. Better places to get data. Better data sets.

Jill DeWit:                            Right.

Steve Butala:                      There’s better ways to sell property on the internet constantly, so that’s kind of our role in all this is to keep really on the cutting edge of how to buy property and resell it faster-

Jill DeWit:                            And share it with you.

Steve Butala:                      Yeah.

Jill DeWit:                            Thank you.

Steve Butala:                      Today’s topic: Why we don’t renovate houses.

Jill DeWit:                            Anymore.

Steve Butala:                      This is why you’re listening.

Jill DeWit:                            I have to get that in there, because it’s funny. Because we’ve been there, done that. I actually have to say, I had fun. For the periods in our career that we have actually got out there and moved walls and done renovations and I got to do the fun part. So what’s the fun part? I’m leading the design, picking out all the fixtures and where it’s all going to go and the colors and the flooring and, yes, of course, I had to come home every day dirty and awful, because I had to oversee the whole project. So for me that was fun. What the non-fun part is the person who has to write the checks and that part… Go ahead.

Steve Butala:                      We did a great renovation. We did, what I think now, is probably a model renovation.

Jill DeWit:                            Right.

Steve Butala:                      The numbers were… Bought the property for, I think, 140. I think we put 60 to 80 into it.

Jill DeWit:                            It was like in 45 days, too.

Steve Butala:                      All in and we did it in cash-in, cash-out, 45 days. So that was the acquisition period, the sales period, not just the renovation period.

Jill DeWit:                            We put a garage in. It was a carport. We made a garage.

Steve Butala:                      We made, at the bitter end of the day, after fees and everything, probably 30 to $40,000 on that deal.

Jill DeWit:                            That’s what I thought, yeah.

Steve Butala:                      And I hated every second of it and promised myself I’d never do another one. And we haven’t done one since.

Jill DeWit:                            Yeah. That one-

Steve Butala:                      So when you think about that deal. 140,000 bucks.

Jill DeWit:                            Right.

Steve Butala:                      We sold it for what? I don’t know what it ended up being.

Jill DeWit:                            I don’t know.

Steve Butala:                      260ish or something. For cash.

Jill DeWit:                            Right.

Steve Butala:                      For cash. No appraisal. A perfect deal.

Jill DeWit:                            It was.

Steve Butala:                      It was a perfect deal and I hated every second of it. What we should’ve done and if I had to go back and do it all over again, which we’ve done since, a thousand times, is buy it for 140 and sell it for 165. And let somebody else go do it.

Jill DeWit:                            And let that next [crosstalk 00:07:51] do it.

Steve Butala:                      Or it becomes a rental house or whatever. And that’s how we learned… This is why we don’t renovate houses anymore.

Jill DeWit:                            Right.

Steve Butala:                      It just didn’t work for us. And I’ll tell you what, Jill had a blast and she’s a fantastic-

Jill DeWit:                            It works for a lot of people.

Steve Butala:                      You’re right.

Jill DeWit:                            They love it. A lot of people love it.

Steve Butala:                      You’re right, but I would rather make $20,000 doing 10 deals a month.

Jill DeWit:                            Yep.

Steve Butala:                      And just keep moving them. We’re acquisition people.

Jill DeWit:                            This further explains why we’re here. Here’s the big picture. We are the acquisition pros. So we can do it from all the way to finding it, to doing the reservation, to selling it, right? We know how to do the whole thing and make money off it.

Steve Butala:                      We’re data people.

Jill DeWit:                            But/however, and he’s right. What happened was, at the end of the day, when we sat and added up all the hours that I spent camping out in Lowe’s and Home Depot, picking out windows and doors and I came home dirty and filthy, babysitting the project and all that went into that, when we really sat down and looked at, gosh, how many more deals could we have done if we removed that piece of the equation? We went, oh, my gosh, you’re right. It’s so interesting. And it’s funny, because our buyers, most of our buyers, are those people.

Steve Butala:                      Yeah.

Jill DeWit:                            We’ve asked them, hey, look, by the way, why don’t you want to do what I’m doing? You could make even more money by learning what we do to get it to you and then you take it all the way and sell to the end user and most of the time they don’t want to do it. They’re like, yeah, you know what, you still found it for me way better than I could have got it driving for dollars, anyway, and a whole lot less headache. All I do is watch for your text, Jill, how easy is that? I’m like, all right, I get it. So we have a beautiful relationship.

Steve Butala:                      Yeah, they’re used to buying properties off the MLS or you have brokers calling them and stuff.

Jill DeWit:                            Exactly.

Steve Butala:                      It’s already marked up. It’s already fee-ed to death.

Jill DeWit:                            Yeah.

Steve Butala:                      We are anti-fees here.

Jill DeWit:                            Yeah. There’s no broker.

Steve Butala:                      We are anti-real estate agent here.

Jill DeWit:                            Yeah, there’s no-

Steve Butala:                      I’ll just tell you right now.

Jill DeWit:                            Exactly.

Steve Butala:                      We’re the ones who do the deal. We either have a lawyer or an escrow person complete the transaction for around a thousand bucks. That’s all the fees that are involved in it entirely.

Jill DeWit:                            Right.

Steve Butala:                      And the people we sell it to that are generally real estate professionals, whether they’re landlords or renovators, really appreciate that.

Jill DeWit:                            Yeah. Or investors.

Steve Butala:                      They know that it’s easier to pick up the phone and talk to an owner than it is an agent.

Jill DeWit:                            Oh, yeah.

Steve Butala:                      They know that we’re going to see it all the way through to sell it, unlike most agents I’ve ever met.

Jill DeWit:                            Right.

Steve Butala:                      And a lot of title agents are like that. So there’s a lot to be said for the data piece of this and then the actual transaction sales piece and Jill’s got a staff now that handles it, but every single buyer we have calls us every week.

Jill DeWit:                            Yep.

Steve Butala:                      Hey, what have you got this week? What do you have this week? Ready for another one.

Jill DeWit:                            Exactly. So as we progress along this show, we’re going to give you more things and help you really understand how to do this right. We can help you.

Steve Butala:                      Join us next time for the episode called Why HGTV is Fiction.

Jill DeWit:                            And we answer your questions posted on our online community HouseAcademy.com. It is free.

Steve Butala:                      You are not alone in your real estate ambition. Jill, I think we found our groove on this House Academy Show thing.

Jill DeWit:                            I think so.

Steve Butala:                      Or at least we got script, if anybody’s listening anymore at all.

Jill DeWit:                            You’re so funny. Wherever you are listening or wherever you are watching, please subscribe and rate us there.

Steve and Jill:                     We are Steve and Jill.

Steve Butala:                      Information.

Jill DeWit:                            And inspiration.

Steve 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 steven@BuWit.com.

The BuWit Family of Companies include:

https://BuWit.com

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https://landinvestors.com

https://houseacademy.com

https://landpin.com

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https://countywise.com

https://deedperfect.com

https://ownersdata.com

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.

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