Current Market Stats Support Massive Foreclosures End of 2020 (HA 1275)

Current Market Stats Support Massive Foreclosures End of 2020 (HA 1275)

Steven Butala:
Steve and Jill here.

Jill DeWit:
Howdy.

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

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

Steven Butala:
Today. Jill and I talk about current market stats support massive foreclosures at the end of 2020.

Jill DeWit:
Again, I’m so happy to be here.

Steven Butala:
What is it about this type of show that just now you’re not into it?

Jill DeWit:
Well, I read this stuff. I do this stuff. It’s just painful for me to talk about. I’d rather read it, get the answers and move on. You revel in it.

Steven Butala:
I do.

Jill DeWit:
See, that’s the thing. It’s just me.

Steven Butala:
I revel with it. I need know to why.

Jill DeWit:
You do. You roll around in it. You love on it. You spend your day on it and that’s okay. And there’s nothing wrong with it. It’s just not me.

Steven Butala:
Because it’s so profitable.

Jill DeWit:
We’re a good team. This is why I have you. And this is the reason why you have me. You and stats don’t talk on the phone, don’t communicate. You don’t send emails. I do with my properties and the sellers and buyers.

Steven Butala:
Just for fun here, what do you think this show should… How would you write this title to make it… A topical interest for you?

Jill DeWit:
The same topic?

Steven Butala:
Yeah. We all know and we’ll get into it here in a second, but we all know.

Jill DeWit:
Here’s what I would write. The end is coming. Don’t miss it. Don’t miss the boat and it’s coming. Don’t miss the boat. PS, stats will tell you when.

Steven Butala:
Oh, Gosh. So you just want to make everything a little bit more cute.

Jill DeWit:
Yeah. Well, but then I would still talk about it like that. I would still say, “Look, I don’t need to bore you with the details. I will cut to the chase.”

Steven Butala:
And then cut to the chase for us.

Jill DeWit:
Watch what happens in fourth quarter or whatever.

Steven Butala:
You don’t want to tell them why you got to this conclusion?

Jill DeWit:
No, they trust me. I’m just kidding. You know what? You too can read the 161 page report I posted, or you could listen for 10 minutes.

Steven Butala:
Okay. Well, make it [crosstalk 00:02:13].

Jill DeWit:
Remember the Wall Street Journal?

Steven Butala:
It’s still out there.

Jill DeWit:
I know. I should get that. Darn it. I should get a subscription to the Wall Street Journal online because I remember seriously as a kid, I ordered and got the Wall Street Journal paper because I loved it. Who doesn’t love 60 words or less about the topic. And I think didn’t they have a thing in there too where it’s like… I’m sure there was a page and had every state listed, and there was one paragraph.

Steven Butala:
That’s USA today. But they’re both them. They’re both similar formats.

Jill DeWit:
Okay. Well, I like the USA today version of that too. It’s like every state, one paragraph about what’s going on.

Steven Butala:
You know that both of those papers are written in… That’s written in eighth grade.

Jill DeWit:
Why are you telling me that?

Steven Butala:
And I think that that’s how people understand stuff. Me included.

Jill DeWit:
I did not know that. That’s an interesting piece of data.

Steven Butala:
The Wall Street Journal is way, way older. I had a buddy who used to say when people asked him what he did for a living, he said, “I’m a photographer for three of the Wall Street Journal.” And people would say, “Oh, that’s cool.” Because you’ve never read the paper once. And I don’t know if this is still true. There’s no pictures. It’s just drawings and edgings.

Jill DeWit:
I love that. Oh, I’m going to use that one. That’s really good.

Steven Butala:
He said like 95% of the people would say, “Great man. That’s awesome. That must be a cool job.” But then the 5% are just, it’s a crack up. Just like you reacted.

Jill DeWit:
That’s good. Totally going to use that one. I love it.

Steven Butala:
Before we get into it, let’s take a question posted by one of our members on the house academy.com online community. It’s free.

Jill DeWit:
Byron wrote, “Hi, I got a signed offer back in. I’m still confused about what the BOG does. Things are really moving in this area. Should I do it myself?”

Steven Butala:
Okay, let me uncrypt this question. Byron probably sent out a bunch of offers to buy people’s houses. Probably for about 60-80% of what he thinks the retail value is right now. He got one signed back. Obviously, thinks it’s probably a pretty good deal, and he’s using BOG here. It’s an acronym for boots on the ground. And so what we teach in our program in the House Academy program is to get somebody or do it yourself that does all the work. So you brought the deal in. You either have the financing, or you’re going to put the financing together in the form of a partnership or hard money or however you do it to buy the house for cash. Well, it turns out there’s a lot of stuff to do, like go through the house, meet the inspector there.

Jill DeWit:
[crosstalk 00:04:52] the inspector.

Steven Butala:
Turn the utilities out and off. There’s just stuff to do. Probably meet with the seller. You have a signed contract. You really need to go meet with the seller, sit down at there with a cup of coffee at their table and say, “This is how my process goes. I’m glad you agreed to the price. Is there anything crazy going on in the house?” So there’s a lot more stuff to do than there is with a land deal just because of the real estate aspect of it. So there’s pros and cons with land and houses. Houses can be, I call it just hitting single after single, after single 20-40,000 bucks over and over again. And with land, you can, as Jill described yesterday, you can hit standup doubles and triples regularly money-wise and percentage. So his question is, he’s confused about what the BOG does. And I think I answered that. Okay. Go ahead.

Jill DeWit:
Only add, you should be the decision maker and the check writer, and the BOG is just taking care of all the ons and ends and all the physical stuff. So if you do it right, just like we do it, we can buy and sell properties easily in other states because the BOG is the one doing everything on the ground. Heaven forbid that our weeds need to be trimmed or something like that, whatever. The BOG will actually physically go do it or hire somebody to do it, kind of thing. That’s really their job.

Steven Butala:
My test for it is when I get up from my desk, it better be to get a sandwich or something, but it better not be for business reasons because it’s an efficient. This is all. I mean, this is all businesses, whether it’s a pizza place or buying and selling real estate or anything. So a lot of people in the beginning of their career have a tough time with that because they’re so used to micromanaging everything. And so you need to spend more time at your desk hiring or finding the right boots on the ground to do all this work and cutting them in on the deal. And it’s a lot, I’m making it sound easy. It’s hard. They’re doing the stuff that a real estate agent is supposed to do.

Steven Butala:
And in fact, I would start by if you need to find a BOG, I would actually try to get a real estate agent. A good one, who’s proven themselves in the market and proven themselves by their completed sales in the market recently because they’re probably going to know what to do. They will know if they need a locksmith and all that stuff.

Jill DeWit:
Let us stay at your house.

Steven Butala:
Yeah, perfect job. And if you end up listing it, which we are more and more often doing, then that’s part of it.

Jill DeWit:
I would do that.

Steven Butala:
But there’s a lot of real estate agents. The vast majority of them who have the same concept that I do, that they don’t want to leave their desk. And that’s not who you want hire. You want a busy body, totally social, constantly on the phone, a go-getter with a proven track record. So I’m not saying that’s the only place to do it. We’ve had very successful BOGs that are real estate agents and very successful ones that are IT people. They loved the real estate part of it. But you have to love the real estate part of it, which I don’t. I love the data part of it.

Jill DeWit:
We understand that.

Steven Butala:
Should you do it yourself? I think I just answered that. In fact, no. But you might want to the first couple of deals do it yourself so then you can decide that you don’t ever want it.

Jill DeWit:
I wouldn’t mind. Well, if you did a couple just to get your feet wet and understand the process and create your own system, get to know the inspector that you like and things like that. So that way, when you do have your BOG, you can hand them a checklist and say, “Here you go. I just set three of them. Follow these 10 steps.” Done.

Steven Butala:
Today’s topic. Current market stats support massive foreclosures at the end of 2020. This is why you’re listening. If you’re not Jill.

Jill DeWit:
Exactly.

Steven Butala:
Here’s the deal. I’m going to throw one stat out there. There’s a million stats that I can throw out there. I’m going to make this crazy simple, and then you decide for yourself. 30% of the people who have mortgages in this country are either in forbearance or foreclosure at this moment. And what’s the day today? June 25th, 2020. Let that sink in for a second. 30%.

Jill DeWit:
That’s a lot.

Steven Butala:
50% of the houses in this country have a mortgage. Oh, I guess, it’s not going to be one stat.

Jill DeWit:
I would like to point out what you just said. This is what sinks to me. 50% of houses have a mortgage. I always pick out the positive. 50% of them don’t have a mortgage. People often are shocked by this when we talk about houses. We send out offers to buy houses where there is no mortgage, and people go, “Well, who are those people?” And I say, “Tell me about your parents.” “Oh, they paid off their house two years ago.” I’m like, “Duh. Well, they’re on my list.” They’re like, “Oh gosh, I guess you’re right.” Hello. There are so many people out there. So this is not what this show’s about, but one of the great things about houses is there are a lot that are paid for. You don’t even realize how many. So when we send out these offers are really are dealing with a person, we’re not dealing with the bank. And that makes me so happy.

Steven Butala:
How many houses are there in the country right now?

Jill DeWit:
I like this.

Steven Butala:
95 million. Oh, I guess that’s the third stat.

Jill DeWit:
[crosstalk 00:10:36], I guess.

Steven Butala:
So 45 million or 46, a very close number to that. Half of 95 have a mortgage, and 30% of those… 30% of 40 is 10 about. That’s 25. So about 12 to 15 million properties, houses are not paying. They didn’t pay this month. Steve, how do we identify these properties? Well, I’m glad you asked. And do you want to single those out anyway because you’re going to have to deal with the bank on that. So there’s a lot of ways to skin this thing.

Jill DeWit:
This is true.

Steven Butala:
My way, my data away, and it’s been proven since the early ’90s, is to send everybody a letter who doesn’t have a mortgage and let them figure it out themselves. Talk about efficiency and not leaving your desk. You send out 10,000 letters, it’s going to cost you like five grand. 10,000 letters. You’re going to buy three houses ish right now. If you make 25,000 bucks a house, which is a low number, you spent $5,000 to make $75,000.

Jill DeWit:
I can do that.

Steven Butala:
That makes sense. The statistics are only getting better and better and better for us, us house and land investors. These numbers, they’re getting worse and worse and worse. And it’s not, “Oh, those poor people can’t afford it.”

Jill DeWit:
[crosstalk 00:11:55] the house numbers. Oh, what’s happening to the foreclosure and stuff. Got it.

Steven Butala:
And it’s not a version of this, oh, those for poor people. They lost their jobs and they can’t pay. That is certainly part of this, and that’s terrible. But what you’re doing is saving them from going through a foreclosure process. If they are of the right mind to receive help, your help in exchange for some equity in the house, then yeah, it’s a positive thing. What’s really going on, in my opinion, this is not even close to one stat. It’s a lot of stats. What’s really going on is that the people on the TV-

Jill DeWit:
I’ll be over here.

Steven Butala:
The people on TV told you it’s okay not to pay your mortgage. It’s okay to say, “I’m in forbearance, and I’m not going to pay my mortgage for a few months even though I have a job. Just tack it onto the end of my mortgage. It’s fine.” Believe me. It’s not going to be fine. It’s so much more expensive to pay all that interest for, let’s say, 15 to 30 years.

Jill DeWit:
Who wouldn’t want to have an easy out. I look at it that way. If it was me and the writing’s on the wall, “Hey, baby, we’re going to hang out at his house as long as we can. I’m not sure what’s going to happen to our credit. I’m not sure what we’re going to get out of it if anything. Not sure about the situation. We’re going to ride it out.” And it’s going to be a paperwork, phone call nightmare.

Steven Butala:
So this is all going to end to wrap this topic up. This forbearance-

Jill DeWit:
I would want that.

Steven Butala:
I agree with you on a personal level. This forbearance, right now, the federal government has issued instructions to banks that it’s not okay to foreclose on properties. They put a… I don’t know what the correct legal term is, but a stay. A stop.

Jill DeWit:
Moratorium or something.

Steven Butala:
Yeah. Moratorium maybe. And so people that are living in their houses for free indefinitely right now until the people in the TV say, “No, it’s okay for you to foreclose now.”

Jill DeWit:
Would that be Ernie and Bert?

Steven Butala:
It will be a day luge, a waterfall of massive foreclosures. I believe personally that this administration is waiting after this election. They can’t lose. This administration can’t lose by saying, “You don’t have to pay your mortgage right now. Vote for me.” And then so if they win the election, they can say, “See, I’m awesome. You don’t have to pay a mortgage.” If they lose the election, the person who takes over early of next year is going to deal with that decisions. So it’s a no lose situation. And probably if you’re into that kind of thing, good politics. I don’t care if you’re right or left there, it’s really hard to argue with trying to win an election. That’s what they want to do. So who wins in this? Us.

Jill DeWit:
Us listening.

Steven Butala:
Us, land investors or in-house investors. So, get your investors in order, get yourself educated about how to send these mailers out because it’s coming. And our numbers are land. I call it mailer yield. For X amount of offers you send out, you get a deal. Not only is our mailer yield up, but the amount of money that we’re making per deal is dramatically up. And this isn’t going to stop for at least 24 months. I think, for houses, it’s going to go out a lot longer.

Jill DeWit:
Thank you. Side note. I’m trying to imagine… I got to say this. You talked about the people on TV and what they tell you to do. I would like to see Ernie and Bert. No, I’m not kidding. We should came up with a-

Steven Butala:
Talk about their mortgage?

Jill DeWit:
Yeah. Or give advice to each other about what to do. Yeah. That would be so funny. Can you imagine a whole Sesame Street all about foreclosures or what’s coming or something or just talking about the mortgage?

Steven Butala:
What if you got puppets made out of you and I? How funny would that be? Like Muppets.

Jill DeWit:
Can we do that?

Steven Butala:
And we did a whole course.

Jill DeWit:
Who can do that?

Steven Butala:
Not sure of it. If you’re a puppet maker, please email me.

Jill DeWit:
Please let us know.

Steven Butala:
We’ll do a whole show like that.

Jill DeWit:
We’ll do a puppet show. Would that not be funny?

Steven Butala:
That’d be a good change up too. For the seven people who listened to this show, that’d be real entertainment.

Jill DeWit:
All right, now I’m into it. I’m totally into it. Maybe that will be our Friday shows. We’ll do our regular, and then the Friday shows will be the puppet version of Steven and Jill talking about it as in Sesame Street form.

Steven Butala:
You know what? Actually, I think this [inaudible 00:16:39]

Jill DeWit:
I think we would like that. [inaudible 00:16:39] really good. Like what’d you buy this week?

Steven Butala:
I can get puppets made of us.

Jill DeWit:
Yeah? That would be cool. Thank you.

Steven Butala:
I always give myself stuff to do.

Jill DeWit:
This is so cute. Happy you could join us today. Every Tuesday and Thursday, we are here on the House Academy Show, at least this week. And Monday, Wednesdays and Fridays, we are on the Land Academy Show.

Steven Butala:
[inaudible 00:16:58] the episode on the Land Academy Show is called Why we have stopped yelling at title agents to close faster? You are not alone in your real estate ambition. I’m going to listen on this show, then tomorrow I’m the listener.

Jill DeWit:
Okay. And not yelling at title agents results in not yelling at each other.

Steven Butala:
Of all the stuff that we could dream up about yelling at each other title agents is like the last on the list.

Jill DeWit:
Exactly. We’re both on the same page there. 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.

Steven Butala:
We are Steve and Jill, information…

Jill DeWit:
And inspiration…

Steven Butala:
To buy undervalued property.