Steven Butala:
Steve and Jill here.

Jill DeWit:
Hi.

Steven 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 sunny Southern California.

Steven Butala:
Today Jill and I talk about the best markets to buy houses during the COVID crisis.

Jill DeWit:
I wonder if California is on your list.

Steven Butala:
California is on my list. And here’s a spoiler alert. It’s not the cheapest places. There’s a way to choose these markets that are very, very data-based and very, very historically proven, and it’s not hard at all, and I’ll explain. Every MSA has one, and I’ll explain it in as much detail as Jill lets me.

Jill DeWit:
Oh, goodie. I can’t wait. Can we go through them all? Can we go through the whole list and then dissect them?

Steven Butala:
Yeah, sure, just like a high school graduation, when they read the names and it’s two hours later.

Jill DeWit:
Well, not only read the names, then say something about each name.

Steven Butala:
Hours.

Jill DeWit:
Steven Butala, star football player, class president, and the class clown. Like that.

Steven Butala:
Yeah. What was yours?

Jill DeWit:
Mine was boring. Jill Dewitt, president National Honor Society. Not kidding. President French Club. Not kidding. Overall geek.

Steven Butala:
We’re both geeks.

Jill DeWit:
[inaudible 00:01:37] I like to think I was an okay geek because of the friends that have reached out to me since graduation on Facebook, how many years later. They’re cool people, so somehow I slid in on the coolness even though I was kind of a geek and hung out with a lot of geeks [crosstalk 00:01:53]

Steven Butala:
This computer thing kicked in in the ’70s with Bill Gates and Steve Jobs and many other people, but it became cool in the ’70s, ’80s, ’90s, and it’s never gone away, to be a geek. We were born at the right time.

Jill DeWit:
Yeah. You know what? The first class I ever ditched in high school was my senior year, and then I took a week off because my parents were out of town, so I did it right. And it was so funny, because actually I got seen in the vicinity of high school by one of my teachers, and they’re like nodding and winking at me like, “I know. I got you. Have fun.”

Steven Butala:
Your parents left you for a week by yourself in high school?

Jill DeWit:
Yeah.

Steven Butala:
How did that happen?

Jill DeWit:
It was [crosstalk 00:02:34] time. I know. I don’t remember how or why, but they did. With my brother. It was hilarious.

Steven Butala:
I couldn’t handle that. I couldn’t handle the responsibility at 17 of being just all pent up for-

Jill DeWit:
I was 17. That’s a little scary. I’ll tell you right now, if our son is listening, and I’m sure he’s not, he won’t get that same choice.

Steven Butala:
I’m sure he’s not.

Jill DeWit:
He won’t get that chance. Not going to happen. All right.

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:
[Rebecca 00:03:07] wrote “Hi everyone. Like many, I started out using postcards, then transitioned exclusively using blind offers. I dialogued with a couple of investors this week, one who uses only postcards and the other who uses a combination of neutral letters and blind offers. I pretty much know where this is all coming from.”

Steven Butala:
Me too.

Jill DeWit:
“Both are successful, so they say. The one using only postcards has a pretty streamlined system in place where he can pull comps and text or email an offer very quickly, and hence texts a lot of these offers to people. My question is, is anyone else in this forum doing postcards or blind offers? I thought it was dead, but come to find out some people are killing it using postcards and neutral letters.” I will never use postcards and neutral letters. Do you want me to share why?

Steven Butala:
I would love for you to share why, and then I’m going to reinforce whatever you say.

Jill DeWit:
Okay. What a waste of my valuable time.

Steven Butala:
And money.

Jill DeWit:
Right. We all know I can send postcards by mass to everyone, because I have the best data on the planet, by the way, and tell them I want to buy it. And I want to throw it in too with a neutral letter. And let me go back also by saying… Let me back up here.

Steven Butala:
We define these three things here.

Jill DeWit:
Okay.

Steven Butala:
She’s talking about a postcard.

Jill DeWit:
Like, “Hey, I want to buy your house.”

Steven Butala:
Yep. It might just, “Hey resident or current occupant, I’d like to buy your house. Give me a call. We’ll talk about it.” And then a neutral letter is the same content, but it’s in a letter. So now you’re spending all the money that you would on a specific offer in postage and all that, which is the real expense on these things. So postcard save you a little money, but I’ll tell you in a second.

Steven Butala:
And then third is a blind offer, which is what we send, which goes like this. “Hey, John Smith. We would like to buy your house for $642,000 and 14 cents. We’d like to close on Thursday. And give us, give us a call so we can make the arrangements to do that. And if you’re not interested in selling or you got a different price in mind, write it in and send it back.”

Jill DeWit:
Or let me know.

Steven Butala:
Or call us and let us know.

Jill DeWit:
We’ll talk. Whatever. [crosstalk 00:05:20].

Steven Butala:
So what that does, we obviously exclusively use the third type, is it allows us to utilize the power of data and a mail merge to send out thousands and thousands of offers at a time. People send out postcards and people send out neutral letters because they are afraid of data. They have a fear of doing something wrong in the mail merge, or there’s going to be some negative things. So consequently, because of that, they send these neutral things out, or they send these postcards out, and they get barraged.

Jill DeWit:
It’s a mess. Let me back up and say too, Steve has been doing this since the ’90s. Have we tested all this? Heck yes. So I want to say that right now, too. Trust me, we have tested all different ways of doing this, including texting, including email, including postcards neutral letters, and there’s a reason why we and our whole group are so successful and are sticking to these very professional offer letters. You don’t mind I’m taking over here?

Steven Butala:
No, go for it. Go for it.

Jill DeWit:
The mess that you get with these neutral things like, “Hey, I want to buy your house,” you don’t want to deal with. Everybody’s going to call you back. I would call you back, and I’m going to call you, and I’m going to tie you down and waste up your time, waste up your resources, and I’m not kidding, like the rest of the people on my block, saying… And we’re all at top dollar. We all want what that guy sold his house for back in December or whatever it was, or last summer, when it was the height of it. That’s what we think is going to happen. Do you want that? No. That’s the whole point here.

Jill DeWit:
The best thing you can possibly do, like Steven is saying, is be very strategic in picking an area, and pricing the offers, and getting the best data, and putting these into a really well thought out, professional letter that goes to sellers. And then only, and this is the result, only the real serious, motivated sellers open up your letter and go, “Yep. All right.” And they call. So I’m only dealing with those phone calls. I’m not dealing with every person on the whole ZIp code, which who would call back. I don’t have the time for that or the manpower for that. I want to just talk to the good ones.

Steven Butala:
The mail does all the work for you. So you send it all out-

Jill DeWit:
And the data.

Steven Butala:
And the people who are real sellers, they come to you, not the other way around. The whole real estate industry is backwards about this. Real estate agents wake up every day and say, “I got to go out there and get a listing,” or, “I got to go out there and find a deal.” That’s not what we say at all. What we say is, “I’m going to field all the people that are interested in selling either on my phone or in the mail.” They found me. I just sent a bunch of… casted a net, and some of them swam into the net, and some of them didn’t. And it really, really, really is effective. It’s effective use of time and money. It’s perfected. So [inaudible 00:08:16] question is, why are you sending postcards?

Jill DeWit:
I don’t know.

Steven Butala:
And I’ve asked that to people. I have asked that question.

Jill DeWit:
They’re bored?

Steven Butala:
No. “Why are you sending postcards out? Why do you send postcards?”

Jill DeWit:
There’s no possible thing, because then… You know what I think? People… What a mess. I think they think, people, they have to build a relationship. And I’m like, “If you’re sitting here building a relationship, you’re going to have what? 10, maybe 50 people.” Let’s just talk about this. Say you’re going to build a relationship with people who you think are good sellers and are good buyers. How much time are you wasting while I’m over here in mass doing deals?

Steven Butala:
Here’s the answer that I get. Why are you sending out postcards? And invariably-

Jill DeWit:
I’ve never actually them. What do they say?

Steven Butala:
It’s cheaper.

Jill DeWit:
Oh. Well, great. What do you get out of it?

Steven Butala:
Number one, it’s cheaper. And if you really press them, the real reason is because they don’t know how to do a mail merge and they don’t want to learn. And they’re afraid of data. There’s a former Land Academy member who’s got geek in his name who is absolutely horrified of data. That’s where this comes from, these other groups. And a neutral letter? There’s no way there’s no discussing that, because a neutral letter is the same price and the same process that sending out a priced out letter is.

Jill DeWit:
Exactly.

Steven Butala:
So I’m here to dispel this with this question. If you’re afraid of pricing, it’s very a natural concern to have. These businesses are made or broken by accurate pricing. But it’s something… It’s just like anything else that you’ve learned. It’s an educational process, and if you practice it and spend some time getting educated on it, you’re going to be fine. That skill will carry you through the next 20 or 30 or 40 years of your life financially, so you need to learn how to do a mail merge, and you need to learn how to price.

Jill DeWit:
I would say, if you feel so inclined, do like many others have. Test it yourself, and you’ll find out the same results we did.

Steven Butala:
Yeah.

Jill DeWit:
That’s the bottom line.

Steven Butala:
Today’s topic, the best markets to buy houses during the COVID. This is the meat of the show.

Jill DeWit:
He says it all cheery. “These are the best places during CVOID times.” Like what the… That’s not cheery.

Steven Butala:
There has to be something positive that comes out of this crazy time we live in right now.

Jill DeWit:
Okay, that’s true.

Steven Butala:
This pandemic. And they’re looting. It’s just kooks.

Jill DeWit:
It’s nuts. You’re right.

Steven Butala:
So it will have a pretty dramatic effect on house pricing at the end of the 2020 and probably the most of the way through 2021. How do I know this? Because Jill and I experienced it between 2009 and 2012.

Jill DeWit:
And then he did it again before me.

Steven Butala:
Before that.

Jill DeWit:
In the same business.

Steven Butala:
Before that. But last time it was pretty… Through 2010, ’12 was very similar to this from a number standpoint and from like a unemployment standpoint and all kinds of… There’s various similarities. The recessions before that were very… They were short and didn’t involve unemployment like this, and they were real industry-specific. There was a .com bust and some other stuff that really affected the stock market didn’t affect real estate. And these two times are really [inaudible 00:11:28].

Steven Butala:
So how do you find a market in an MSA, in a given MSA where this to choose? Because not all markets are the same. I use this snow statistic constantly. The average snowfall in this country is two and a half inches. To someone in Vermont, they’re going to laugh at that and say, “That’s great, because it snows like 14 feet here a year.” And to someone in Southern California, where we are, to which I’d say the same thing. “That’s great. It doesn’t apply to me, because it never snows.” But the average is two and a half.

Steven Butala:
So you got to look at real estate the same way. You have to look at your tiny little market, even bring it down to the ZIP code, and look at that ZIP code specifically, and just use the national statistics and all this big picture, foreclosure, forbearance, all this stuff, as a gauge, for you to say this. “Yep, it’s going to snow this year. Is it going to snow where I am? Nope. Then I don’t care. Are there foreclosures where I am? Yep. Where specifically?” The big picture is, it’s going to snow, so let’s see how it affects my local market, if at all.

Steven Butala:
What you want to look for is a few things for these housing markets. The best thing you can possibly do is find data, and we talk about the center Thursday webinars all the time, find data from as far back as you can go to about 2010 to 2012. And you’re going to see what the average price per ZIP code for a house that sold back in ’10 or ’12. I use Phoenix a lot, because there’s three or four ZIP codes in Phoenix where Jill and I were buying 40 and $50,000 houses and selling from 80 to 100. Right there. How do I know that? I can tell you that there were a tremendous amount of foreclosures and a high level of foreclosure activity in those ZIP codes, which led me to sending out mail for a reduced amount. And it’s going to happen in those exact ZIP codes again. And every single market several ZIP codes, if not many. Like Los Angeles has probably 20. And the reason that I can tell is because of the price of these assets in 2012, the average price per house, was so low compared to what it was in the end of 2019 that it has to go that way.

Jill DeWit:
I would like to pause and give you a compliment. It is shocking to me that more people… I don’t know. Maybe it’s not shocking to me. I am so impressed that you do this stuff and you know this stuff. I’ve watched you do this on many of our member calls on the House Academy Thursday calls.

Steven Butala:
It’s not so boring though, is it?

Jill DeWit:
No, it’s still boring. It’s still boring, but I am impressed. It’s valuable. Sometimes you got to do the poopy stuff to get to the fun stuff.

Steven Butala:
That is the fun stuff for me, though.

Jill DeWit:
Well see, that’s, what’s so funny. It’s poopy for me. I don’t like it, so… But it’s amazing to me that more people don’t even… They don’t even know… I don’t know if they don’t know where to dig or they don’t even know the questions to ask. They haven’t even bothered to search and see that the data’s there and available, and free, by the way, on many of these sites.

Steven Butala:
If you go to Redfin Data, which I was talking about, is where there’s all this free downloadable data that goes back to 2012. I think you said one time, if you want a pass… Are you still giving out free passes to these Thursday calls?

Jill DeWit:
Yeah, yeah.

Steven Butala:
So it’s support@land-

Jill DeWit:
Support@houseacademy.com, if you want to get on this Thursday call we’re talking about.

Steven Butala:
AS a guest.

Jill DeWit:
And check out. As just a log in and watch one time, yeah.

Steven Butala:
Right.

Jill DeWit:
And be there.

Steven Butala:
So you can take a ZIP code, if Redfin covers it, download all the data. It’s a ton of data. There’s way more data than we would ever use, which is a situation you want to be in.

Jill DeWit:
Nationwide data.

Steven Butala:
And down to the ZIP code for the vast majority of the markets that they cover. It’s not 100% coverage like [inaudible 00:15:28], but it’s darn good. And you pit these ZIP codes against each other, and so you can take six or seven ZIP codes in a place that you think might work, in a lower socioeconomic, C-class census tract, and pit them against each other, and look at the stats and say, “Well, it’s very clear that houses were selling for $40,000 in this zip code in 2012, and in 2019 they’re selling for 280.” That’s a great indication of what’s going to happen in 2021. And then the ZIP code right next to it, it went from 190 to 220. That’s not enough of an increase over a 10-year period to indicate a place for me to send mail or to indicate that there’s going to be a pretty high rate of foreclosure. So that’s the deal. If you do a ton of research on where the foreclosures are happening, and they’re not happening yet, and that historical variance in price, you’ve found yourself a market.

Jill DeWit:
Thank you. Happy you could join us today. Excuse me. We are here every Tuesday and Thursday on The House Academy Show. Mondays, Wednesdays and Fridays, you can find us on the Land Academy Show.

Steven Butala:
Tomorrow, the episode on the Land Academy Show is called, How to Handle Calls from Old Mailers. You are not alone in your real estate ambition.

Jill DeWit:
And I will cover how to handle calls from old people.

Steven Butala:
Old people and old mailers?

Jill DeWit:
Exactly, because they often go hand in hand. The House Academy show remains commercial free for you, our loyal listeners, so wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill.

Steven Butala:
We are Steve and Jill. Information-

Jill DeWit:
-and inspiration-

Steven Butala:
-to buy undervalued property.