Transcript:

Steven Butala:
Steve and Jill here.

Jill DeWit:
Hello.

Steven Butala:
Welcome to the House Academy show entertaining real estate investment talk. I’m Steven Jack Butala.

Jill DeWit:
And Jill DeWit broadcasting from sunny Southern California.

Steven Butala:
Today. Jill and I talk about a step by step instruction on how to double your house money.

Jill DeWit:
What, [inaudible 00:00:16]?

Steven Butala:
Exactly.

Jill DeWit:
It’s like… you know how you make that noise? How do you make that noise?

Steven Butala:
Which one?

Jill DeWit:
Oh my gosh. A needle going across the vinyl. Does anyone know what I need? Okay, a lot of you listening do, but there’s a few of you that don’t know where the needle going across the vinyl sounds like.

Steven Butala:
Yeah. I know what’s it like.

Jill DeWit:
Okay, thank you.

Steven Butala:
It happened when my mom had enough of the music I was playing when I was a kid.

Jill DeWit:
What does vinyl sound like when it hits a wall?

Steven Butala:
I just saw this. Speaking of vinyl, of all the resurgence of stuff that I think is just about as silly as it gets, this resurgence, music sounds better on vinyl.

Jill DeWit:
No it doesn’t.

Steven Butala:
It’s pure fiction.

Jill DeWit:
It does not.

Steven Butala:
There’s this whole thing on YouTube now-

Jill DeWit:
That’s funny.

Steven Butala:
For people that have vinyl, to literally play records. Record it like it’s 1981, with a microphone and stuff and put it on there.

Jill DeWit:
When you really look at it-

Steven Butala:
And then listen to it on the internet.

Jill DeWit:
We know. Wait, it’s funny. People don’t even realize. By the way, the vinyl that you listen to today, after 10, 20, 50, 100 plays, it sounds different. It wears it down. I remember, I’m dating myself now, but I remember the transition to CDs and digital and it’s studio quality every time I’m like, what do you mean studio quality every time? It really is, the vinyl wears down. I’m not going to talk about other things that would wear down. But anyway…

Steven Butala:
What would wear down?

Jill DeWit:
Like cassettes, we are getting into [crosstalk 00:01:46].

Steven Butala:
Why aren’t you going to talk about it? So [crosstalk 00:01:48] you can date yourself.

Jill DeWit:
Well I remember cassettes and those too were down. And it’s really interesting, people… I went to sound recording school because I thought I wanted to do this as an occupation and learning how the vinyls are made and how they’re pressed and everything. It’s really interesting. Yeah, it’s really cool.

Steven Butala:
There’s nothing better than a digital audio recording that’s delivered through a wired device. That’s it.

Jill DeWit:
Studio quality.

Steven Butala:
Yeah.

Jill DeWit:
That never, that never fades.

Steven Butala:
Yes.

Jill DeWit:
And that’s what we have now. It’s amazing.

Steven Butala:
What do you think this vinyl thing, I mean, oh my God. Isn’t this supposed to be about real estate?

Jill DeWit:
I know. I really want to talk about houses.

Steven Butala:
Why are you guys talking about vinyl and stuff?

Jill DeWit:
Okay.

Steven Butala:
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:
Julie wrote, what’s the difference between mobile homes in parks and ones that seem to be on owned land?

Steven Butala:
Oh my gosh. Why are you guys all of a sudden talking about mobile homes so much?

Jill DeWit:
Right? Gosh.

Steven Butala:
I thought this was the House Academy show. I thought we were supposed to buy a house and mark it up and sell it for more. And by the way, all you’ve ever said, ever Steve, is you’re going to make 20 or 30% on your money with houses, not double your money. Why? All of a sudden is… Here’s why.

Jill DeWit:
Wait, answer the question first and then do the show.

Steven Butala:
Mobile homes are great right now and so are buying very inexpensive houses in D to C grade census areas, but I’ll get to that in a second. Mobile homes. There’s mobile homes in a park, which is the vast majority of mobile homes. You buy the mobile home. You pay, a lot of times you pay 10 or 15 grand for it. You own the mobile home.

Jill DeWit:
Like a car. Like you own a car.

Steven Butala:
Yeah and then you pay what’s called a pad fee. And so you pay between depending on where you are in the country, between a hundred and let’s say six or $700 a month. If it’s on the ocean here in California, it’s closer to 1,200.

Jill DeWit:
You lease a land.

Steven Butala:
You lease a land. And if something goes wrong with the mobile home, then you’re responsible for it the way you are with the house.

Jill DeWit:
And you get to use the pool and the laundry facilities and the rec room. Whatever it is that they may or may not have.

Steven Butala:
Right.

Jill DeWit:
And they pay them. They take care of the pavements and the gate, the guard gate.

Steven Butala:
Great lifestyle. I personally don’t invest in that ever. That’s not real estate. You’re buying a… It’s like buying a car and selling it and there’s a lot of appreciation and devaluation involved in that scenario. But it’s always asked-

Jill DeWit:
But it’s cheaper.

Steven Butala:
Yes.

Jill DeWit:
People love it because it’s just cheap and easy.

Steven Butala:
Great lifestyle. Yeah. Hands down.

Jill DeWit:
It’s a very, very low expensive way to have a home and again, and have a pool and have a guard gate and all that stuff. You don’t have to think about any of that.

Steven Butala:
Well…

Jill DeWit:
What?

Steven Butala:
You’re describing a mobile home that the ones that… The mobile home parks that you’ve seen.

Jill DeWit:
Oh yeah, the nice ones. Sorry.

Steven Butala:
I don’t think that there’s guard gates or pools in most of them.

Jill DeWit:
Okay, sorry. Yeah.

Steven Butala:
I think it’s, “Yeah, that guy sells crack over there. This one’s got the meth market.”

Jill DeWit:
I’m talking about the one in Palos Verde’s here. There’s a guard gate and a golf club.

Steven Butala:
The ones that are not in parks are the ones that we love. So they’re on a piece of real estate that’s owned typically by the mobile home owner and they own it, just like they would a house. It just happens to be a mobile home there instead. And I think that’s the best of both worlds. You get a rural lifestyle, most cases are rural. You get a lot of acreage associated with it so you can kind of spread out, do stuff that I think human beings were supposed to do, not live in an apartment in Los Angeles. I think humans were supposed to go out and maybe engage in hunting and gathering, and-

Jill DeWit:
Riding bikes.

Steven Butala:
… Auto mechanics and stuff. Yeah.

Jill DeWit:
And throwing a stick to your dogs.

Steven Butala:
And ATVs. That’s the picture you want to paint by the way, for whatever you’re selling. Rural, vacant land wise or mobile home wise. So you own it all and because the structure itself is usually less than a hundred thousand dollars and it’s not taxed the way a house is, what you’re really getting taxed on is the land. So it’s all good. Everybody wins. The taxes are really low. You are enjoying… Hopefully if you do everything right as an owner, you enjoy the whole thing is appreciating, not depreciating like a regular mobile home would in a park because of the land. Mobile home itself is probably depreciating or going down in value. So that’s the difference. And I’m a huge advocate of the ladder here.

Jill DeWit:
I just want to add real quick that not every piece of land will allow a mobile. So please check that.

Steven Butala:
Right. I mean there’s some States like Arkansas and Texas who are very, very mobile compliant. And then there’s some places California… Like Los Angeles is one of them that they just haven’t caught up with the times and they’re not… They still have this perception that mobile homes and mobile home parks are… They kind of junk up the place, which I just think the further we get into mobile homes, that’s just not the case.

Jill DeWit:
And I think honestly, I’m going to say [inaudible 00:07:04]… please think mobile home and tiny houses too because it’s all encompassing and everybody’s got a big thing about tiny houses. It’s like the same thing. They have wheels on them. That’s really it. You’ve got wheels on it. That’s how it gets there.

Steven Butala:
Right.

Jill DeWit:
So my other thing I was going to add too is check also because some counties will allow mobiles in some areas and not in other areas within that same county. So don’t rule out a county because one location that you looked at had to be zoned a certain way. A little further out might be okay.

Steven Butala:
I’m in the writing process of doing Mobile Home Academy, which will be part of House Academy, which is the house show. It’s a good time to talk about that. It’s not going to cost any more or anything else. Just it’s more value added. And now it’s the time. If you’re going to ever… If you ever thought about doing mobile homes and you’ve successfully bought and sold real estate, now’s the time to get involved in it. I’m writing and filming as fast as I can.

Jill DeWit:
Right after Car Academy.

Steven Butala:
Yeah, which is done. I just got note, but we won’t release it today. But it’s very close to being released and it’s very similar. It’s mobile homes.

Jill DeWit:
Cool. Wow. I feel like that was a light bulb moment. That was like… That was a Steven light bulb. That’s hilarious. Dang, that’s good.

Steven Butala:
Today’s topic, step-by-step instructions on how to double your house money in these virus times. This is why you’re listening. Oh my gosh, Jack. All you ever said was if you buy and sell houses, you’re going to hit singles. There’s no real chance of your hitting a home run and doubling your money. Well that was before the virus hit. We’re in a recession now and here’s what we did. Jill and I did and around… from 2010 to 2012. And I expect some version of this is going to happen. In every single, every single MSA, any big city.

Steven Butala:
There are census tracks and we own a website that’s free to the public called CountyWise and you can access all the census data, the map census tracks and stuff, right down to the County. And a hundred percent of the coverage in the country. What you want to do is identify places… Like here in Los Angeles, it’s Compton, I ran all the tests. You want to identify the places that are going to see the largest reduction in house price through recessionary times and it’s always those real low end markets. But I want you to be careful because there’s places like some sections of inner city Detroit that don’t fluctuate at all. They’re just always bad and there’s places in Flint, Michigan and other places, specifically in the Midwest for some reason, just never recover. So that fluctuation that we all live for as investors, that huge price fluctuation, you just don’t see it.

Steven Butala:
There’s also markets and we live in one of them, where the top end just doesn’t fluctuate. It’s relatively recession proof for lack of a better description. You want to stay away from those too. Stay away from the extreme bottom. Stay away from the extreme top. Look for that C to D census track area-

Jill DeWit:
Which is like the… Okay, wait. So the top, the bottom. So I’m going, it’s like the 40 to 60% window if I-

Steven Butala:
Yeah. It’s also not the middle of the bell curve. I mean, if the bell curve is measuring variance, you want to be at the middle of the bell curve, but it’s not the healthy blue collar environments. They don’t see as much fluctuation either. You want to scrape the bottom, but not, not the inner city bottom.

Jill DeWit:
Not the bad bottom.

Steven Butala:
But you drive through Compton, it’s not that big of a deal. It’s not that bad of a neighborhood. But there’s a lot of trading of assets at this time because of the income’s more volatile than it is in a let’s say more stable, blue collar neighborhood. So there’s places in Phoenix you can… Once you capture this concept, what I’m talking about, you’ll look at a map and you’ll go to San Francisco, let’s say, or anywhere. Chicago, and you’re going to see the places that are not… that will experience those just by common sense, especially if you’ve spent some time there and lived there.

Steven Butala:
So that’s how you double your money. So here’s the step by step. You go to Redfin data and you download, we do this on our Thursday webinars. Download the places, the data that you think are going to experience this dramatic price change and it’s the C and D census tracks. And you get them by zip code, download the data and test it against national data or state data or county data. I’m throwing a lot at you right now. If you’re brand new to this, it’s going to sound confusing, but it’s really not. And test it and what you’re looking for is quite simply this. Was the price of the property in 2012, in this zip code, these houses, more than double or triple than it is now? What you’re looking for is 300%. That’s how you double your money.

Steven Butala:
That’s going to- we’re already seeing if you go under realtor.com and click through these neighborhoods and go and look at Joe’s favorite thing, like what do they pay for this house? What was it worth in 2012? What was it worth now? You’re going to see just a cliff fall off in pricing for this last month. So that’s it. That’s how you do it. If you’re in a group and you’re listening or watching this, please attend these Thursday webinars cause I go through it. I show everybody exactly how to do it step by step by step. In this medium, it’s hard to do that. But that’s the deal. That’s a professional real estate investors do. This is not something I concocted. Well I kind of started that but it’s not… We’ve proven it. Jill and I were buying… In Phoenix, we were buying properties for-

Jill DeWit:
It sounds nuts.

Steven Butala:
Yeah.

Jill DeWit:
That’s the thing.

Steven Butala:
It sounds not possible.

Jill DeWit:
It sounds not possible but when you go look at history and look back like the dates you were talking about, you’ll see it. So this is how I describe it. Click around, find an area that you think this happened or maybe Vegas, we all know what areas that got hit hard back the last time. So go check and confirm your suspicion. Your hunch. And I’m sure there’s areas, for those of you on the East coast, there’s probably areas that you’re very familiar with that we are not. We just know the ones that we’re closest to or where we were in and saw it and lived it.

Jill DeWit:
But go click around and as you see, he said, you can go bought for this, sold for that and it’s starting to happen now. It’s really interesting.

Steven Butala:
Definitely starting now.

Jill DeWit:
You can see right now, indications. I do it every morning. I lay in bed and I look on Redfin and realtor and everything and I see, I see back on market and I see the prices listed at below what they pay for it. So you know it’s coming. And you can go back and look, what was it? What was the… How did we get to this point?

Steven Butala:
Yeah, I mean that’s it. So once you find that variance, then you can hone in on real specific sets of tracks or neighborhoods or however you see it.

Jill DeWit:
Exactly.

Steven Butala:
For instance in Phoenix there’s four zip codes that I love but there’s one zip code in particular and one section of that zip code. I’m going to go back to the wild one this time.

Jill DeWit:
Yep.

Steven Butala:
And so that’s really what you’re doing is forget about the real estate itself, just look at the price fluctuations. Analyze that through Redfin data. It’s all free. And realtor.com, the data section, they’re going to… I’m going to cover that today on the calls. Find your data and just find that area and watch [inaudible 00:14:41] on it and you will do great.

Jill DeWit:
Happy you could join us today. Every Tuesday and Thursday you can find us right here on the house Academy show. Mondays, Wednesdays, and Fridays we are next door on the Land Academy show.

Steven Butala:
Tomorrow, the episode on the Land Academy show is called the National Association of Realtors self-serving and what I think are false recessionary predictions. You are not alone in your real estate ambition.

Jill DeWit:
I look forward to it. I’ll talk in about that tomorrow because that makes me mad.

Steven Butala:
Why would real estate… The largest real estate agency in the world benefit from saying, “Oh, everything’s fine.”

Jill DeWit:
I know it’s nuts.

Steven Butala:
It’s not fine.

Jill DeWit:
It’s not. I can’t wait to talk about this tomorrow and I have a lot to say.

Steven Butala:
Me too.

Jill DeWit:
The house Academy show remains commercial free for you our loyal listener. So wherever you’re watching, wherever you’re listening, please subscribe and rate us there.

Steve and Jill:
We are, Steve and Jill. Information and inspiration to buy undervalued property.