Housing Market is Back and so is House Academy (HA 1278)

Transcript:

Steven Jack Butala:
Steve and Jill here.

Jill DeWit:
Hello.

Steven Jack Butala:
Welcome to the Land Academy Show. Entertaining land investment talk. Well, it’s really the House Academy Show today.

Jill DeWit:
Yeah.

Steven Jack Butala:
I’m Steven Jack Butala.

Jill DeWit:
Hi, I’m Jill DeWit broadcasting from the Valley of the Sun.

Steven Jack Butala:
Today, Jill and I talk about how the housing market is back or is coming back. And then, so is House Academy. In the background for years and years and years before I met Jill, she was buying and selling houses and so was I. We met and we really focused on land because that’s always been my primary focus and I think I kind of introduced it to her, but she always knew about buying, selling houses and we never stopped until COVID. We stopped because I thought initially it was going to crash like it did in 2010, the exact opposite happened to every economists and the planets dismay or amazement. Including us. Some of these markets got so hot, we just decided, you know what? We’re not going to-

Jill DeWit:
Plan up.

Steven Jack Butala:
We’re no… I don’t want to swim with sharks. I want to swim with goldfish and have not a lot of competition. So we’ve been watching patiently. If you’re in the group, you know we talk about this on that Thursday call all the time, in the Land Academy group. And it’s statistics now, and I’ll talk about this in a minute, are showing serious signs of, yep, let’s get back in here and do it.

Jill DeWit:
Agreed, I’m excited.

Steven Jack Butala:
Before we get into it. Let’s take a question meets you posted on the one by one of our members on the landinvestors.com online community it’s free. And don’t forget to subscribe on the Land Academy YouTube channel and comment on the shows you like.

Jill DeWit:
I think we’re going to have a house channel on the Land Academy Channel. I don’t know, look around. We’re going to come up with some more good house stuff for you. I’m just tying back to how-

Steven Jack Butala:
On the Land Academy YouTube Channel.

Jill DeWit:
Yeah.

Steven Jack Butala:
We will have a House Academy playlist very, very soon. If not, by the time that you listened to this. In the past, forget about the past. We had its own separate House Academy Channel. So we’re moving all that content over.

Jill DeWit:
It’s going to be cool.

Steven Jack Butala:
So it’s going to roll it all up into one kind of thing.

Jill DeWit:
Totally.

Jill DeWit:
Charlie wrote, “What tricks do you have to help buyers get a survey completed in a timely manner? I’m going on three weeks since we opened escrow. Title could have closed last week and we’re still waiting on the survey with no estimated date of completion. At this point, I’m willing to do anything before my buyer decides to walk.” I hate the situation. It’s happening. You’re not alone. Charlie. It’s frustrating. There’s a lot of things that are behind, your Amazon deliveries behind not kidding. I mean, I’ve like not so much Amazon, but they’ve moved things around a little bit, but I’ll tell you FedEx and UPS and other services are behind. My bigger point is, I think people are having a hard time finding workers and there’s a transportation issue and just people to show up. So, that could be going on. Maybe this poor guy went out and did his stuff and it’s waiting on the office staff to finally put the paperwork together to get you his survey.

Steven Jack Butala:
Why are we doing a survey?

Jill DeWit:
That too. Well, there are very, very infrequent. Let me go back to this. You’re right, overall, don’t do a survey.

Steven Jack Butala:
Like 99.999% of the deals you will do in your career will not require survey.

Jill DeWit:
Correct.

Jill DeWit:
1% of the time you have something like a, what did I need it for?

Steven Jack Butala:
I think it’s way less than it was-

Jill DeWit:
It was like a forest station plan. Not kidding because it kept the taxes down for property and in the middle, like, every new buyer has to do it. So even though I was only going to own the property for five minutes, I still had to complete this item. If you won’t check it off the list, otherwise they would jack up the taxes. So, but yeah, 99% of the time, you don’t need a survey. Don’t do it.

Steven Jack Butala:
No, it’s not even 99%. It’s 99.999%.

Jill DeWit:
This is true.

Steven Jack Butala:
We’ve done almost 16,000 deals. I think we’ve done three surveys over, I don’t know how many years.

Jill DeWit:
Right.

Steven Jack Butala:
And those of the ones I’ve done and I’m involved in several right now, or for minor splits that take 1PN an APN and make it five.

Jill DeWit:
And that makes sense.

Steven Jack Butala:
That I agree with completely.

Jill DeWit:
That you need it because we don’t know what the new lines are, but the other part, we don’t need to do that.

Steven Jack Butala:
Right.

Jill DeWit:
Excellent.

Steven Jack Butala:
Everything because of this COVID you can cut on whatever label you want to give it. Whatever happened is happening now. And it’s kind of here to stay. That’s actually pretty on topic for what this market, with this episode. And unlike in the past thing, events, world events, especially as sparked recessions and depressions, economic depressions and recessions. And that’s just not what’s happening here. This is all new for all of us.

Jill DeWit:
It’s true.

Steven Jack Butala:
Today’s topic, housing market is back and so is House Academy. This is the meat of the show.

Jill DeWit:
I have three questions when you’re ready.

Steven Jack Butala:
Sure.

Jill DeWit:
That I’m going to ask you. Tell me, do you want a beginning, middle or end?

Steven Jack Butala:
Right now.

Jill DeWit:
Okay. So has-

Steven Jack Butala:
I have a bunch to say about this because it’s really profitable for everybody.

Jill DeWit:
Okay. Let me ask my questions and you can wrap it. Then tell us what I really need to know because that’ll tie in. Number one. What should I be watching for in my area? I’m thinking about doing houses.

Steven Jack Butala:
That’s excellent. That’s part of what I wanted to talk about. So statistically, like everything in like Land academy, we look at the numbers and we make decisions based on that. We don’t base our decisions on feelings or dark boards or talking to my mother. We don’t base things like that. We look at the statistics and fortunately for the housing industry, not unlike the Land industry, they love statistics. The national association of realtors loves it. The federal government, HUD, all the insurance companies and finance companies and the data companies now are huge. They love stats. Look, they track everything.

Jill DeWit:
Do you mean like days on market?

Steven Jack Butala:
The county loves all this data. So it’s real easy to get key factors, here they are. Days on Market, and you can break it down by zip code really quickly, Days on Market is quite simply when a house goes up for sale. How many days is it on the market before it’s sold? There’s varying definitions of that, but that’s the basic step. Number one, number two. How long does it take? How long or how much inventory is available in any zip code you might be interested in buying and selling houses, is available? And has it gone up or down?

Steven Jack Butala:
Are there too many houses on the market? And this zip code that I’m interested in? Or are there too few houses on the market? Supply and demand like that. So I go into great deal about these statistics in House Academy. And I am kind of right here too. Get yourself a set, or copy mine, go back to the old House Academy shows. I talk about it a lot. And take a look at what statistics make sense to you. If you have to pick one and you just want to base it all on that, look at days on market.

Jill DeWit:
Okay. Question number two. How much money should I save up?

Steven Jack Butala:
For what?

Jill DeWit:
I want to do houses.

Steven Jack Butala:
Zero.

Jill DeWit:
Thank you.

Steven Jack Butala:
Is that the right answer?

Jill DeWit:
I’m asking you. I’m not baiting you. I’m like, I’m asking like I’m pretending I’m new here.

Steven Jack Butala:
Jill and I don’t run around and say this, but I’m just going to say it. This is not a get rich quick scheme by any stretch, but we have tons of members now. Many, many members, us included, who have accumulated a lot of money in this business and other businesses and we’re very willing to spend it on a great real estate deal. So, if you think you need a coach, 2, 3, 4, $500,000, like I did, by the way-

Jill DeWit:
That’s why I’m asking.

Steven Jack Butala:
I had to start with pretty close to $700,000 because I closed a huge commercial real estate deal. I was very lucky at a young age, but that’s just not the case anymore. You don’t need any money to start any money for acquisitions to start this all.

Jill DeWit:
Well, wait a minute. Does that mean I need to go out and pre-qualify with a bank and all that stuff?

Steven Jack Butala:
No, don’t talk to a bank, you explain it to us. [crosstalk 00:08:00]

Jill DeWit:
I know? I’m trying to pull the information out of you. Because I-

Steven Jack Butala:
How’s the deal work right Jill?

Jill DeWit:
Let me back up. Here’s what I want to say. I listened to so many shows like on clubhouse, where people are talking about getting a line of credit and they-

Steven Jack Butala:
[inaudible 00:08:14]. Don’t get any debt.

Jill DeWit:
I maxed out my cards to the down payment [crosstalk 00:08:17] or whatever. They’re all this creative financing. That’s what I hear this term thrown around. I’m like creative financing is getting creative on who you’re going to pick to fund your deal. That’s about it.

Steven Jack Butala:
Don’t do that. [crosstalk 00:08:30].

Steven Jack Butala:
Creative financing leads to bankruptcy.

Jill DeWit:
That’s true.

Steven Jack Butala:
Or criminal charges.

Jill DeWit:
That’s awesome. That’s your, don’t get too creative. No, the point is-

Steven Jack Butala:
Don’t get any.

Jill DeWit:
… I know.

Steven Jack Butala:
Don’t get any financing.

Jill DeWit:
So here’s the point that Jack is trying to make. We as do many others in our community on House Academy are sitting on dough. You know what? We are sitting on dough, waiting for you. Waiting for you to bring us a smoking deal that you wish you had the money for. But I do. And we’re going to do great together. You present the deal, speaks for itself. When you come to me and say, “Jill, you’re not complete this, look at, 605 South Main Street.” And I pull up on the map and go, “And you’re getting it for what? You have it under contract for how much?” Oh yeah, you great. Is that’s not an escrow. Please get an escrow right now. And I’ll send you a real quick one-page thing, a quick partnership agreement and you and I agree on what the split is going to be.

Jill DeWit:
And you and I real quick on the same phone call, agree on what the split is going to be. And who’s going to do what work and that’s it, man. And then I pay. I’m going to fund the deal and we’re going to do each what we agree to. And often it’s you doing the work, and I’m the bank. That’s usually the easiest for me, but everybody has a different versions of that. And whatever you want to do, we can work it out. And then I buy it. You sell it, or an agent sells it for us. Whatever we agree on. And then at the end, whatever percentage that we agree on, we split that up. It’s perfect. And you’re paid right out of escrow.

Steven Jack Butala:
Completely different than financing [crosstalk 00:10:07]. Entirely different. It’s a partnership.

Jill DeWit:
You don’t have to do the money. Right. [Crosstalk 00:10:09].

Jill DeWit:
Exactly. So that’s my point. Thank you. So, if you’re worried about, “Oh no, I’m listening to this and houses are coming back. Shoot. I only have $20,000 in the bank. That’s not going to get me very far.” Don’t worry about it. Number three, my final question.

Steven Jack Butala:
How am I going to spend that 20 grand anyway?

Jill DeWit:
True. Yeah. Spend it on education, spend it on mail, spend it on finding deals. And once you have that deal in, you have that deal in escrow, work on finding another deal. That’s going to still work itself out. I don’t want you to do one deal all the way. I see people doing this too. This is a little sideshow, but don’t do that one deal all the way to the end and go, “Well now I’m going to start over again.” Just keep it churning. So my third and final question is to you, Jack. I’m new to the houses. I get all this other stuff. How do I know I’m doing it right? What should my returns be?

Steven Jack Butala:
Well, I can tell you what ours are. We don’t buy a house unless we make $100,000 on it. So we might have to spend $300,000 on a dumpy little house. And then erase after fees and all that stuff. Sell it for four 50. If it commands-

Jill DeWit:
This is for six.

Steven Jack Butala:
… If it commands that price, there’s a great example. Hold on a second. If it commands that price then it always works because selling houses is, especially in this market that’s now happening. It’s cooling off a little bit. There’s a much more innate demand. If you go to a zip code and you look at what the days on market, there’s 12 or some crazy low number. No matter what goes up for sale, it sells. Your job becomes very simple. Get a great deal on the acquisition because the sell side is going to sell itself.

Steven Jack Butala:
I tell a lot of people in the Land Academy, in the land business that come over to houses. It’s twice, it’s half as easy or twice as easy. You’re removing the cell sales effort entirely. You don’t really need a website. You just need a landing page. There’s a lot easier stuff about it. So what this episode is really about is why now? Why do you guys just keep this under your hats? Have you been doing this the whole time and not telling us? Not at all. Market has been too hot. There are too many new people getting into it like wall street type firms who are failing at it, by the way. There’s these regional shows now you see if you watch Daytime TV, you’ll see their advertisements. We can give you an offer on any property in 25 seconds and on and on and on.

Steven Jack Butala:
So, that’s not how we do this. And how we do it is what we teach in Land Academy. We send out a lot of blind offers. We generally have to send out more offers than we do for land because it’s a little bit more competitive and there’s a little bit more work to do babysitting to do with the seller because a lot of times they live there. And so, but it’s very accomplishable. They it’s very predictable. And so the market is cool. Why now the market is cooling off to a point. Now, number one. That acquisitions are not as hot for any competition that we might have. Plus kids are in school. It’s just got a lot to say about this stuff. Number two, and this is really what I want you to remember. This is why I wrote the title of this episode. Rural markets, which has historically had terrible statistics that I was talking about earlier, real high days on market, not high quality houses, they’re hard to move.

Steven Jack Butala:
Nobody wants to live there, there’s no jobs there. All that stuff’s gone because of COVID. Anybody could work anywhere. Kids can work, go to school on online, if that’s your thing. And so these rural markets, these so-called zoom towns, are amazing acquisition targets for us. And through this goes on and I don’t see it stopping really ever in our lifetime. More, some of these defunct old factory towns are going to come back to life.

Jill DeWit:
Yeah.

Steven Jack Butala:
Huge opportunities, massive opportunities. We were just waiting. I was waiting for the statistics to get back in line. There is such a feeding frenzy for about a year. Year and a half.

Jill DeWit:
I concur. It is easier. And it’s awesome. Well, I’m going to add one more little final thing. Your numbers are your numbers. I know plenty of people that are happy making 25, 30, $40,000 on a transaction. That’s very attainable. That’s not crazy numbers at all. So just think about this for a second. You’re doing a couple, a handful a month. You could be making you make $25,000 each time you do it. And you’re finding these deals from people and I’m your bank by the way. And someone else is selling it and you’re sitting, or you’re just working in an area that’s, 10 or less days on market. What’s to think about? You can make a $100,000 a month.

Steven Jack Butala:
Easy.

Jill DeWit:
Mm-hmm (affirmative)

Steven Jack Butala:
Easily, make a hundred grand a month doing this and marking them up 25 to $35,000 net.

Jill DeWit:
And that’s not crazy numbers and everybody gets it and nobody’s going to get mad. Like, “Yeah, thanks.” Yeah. I didn’t have to clean out the garage and I didn’t have to remodel the kitchen.

Steven Jack Butala:
And we don’t do any improvements ever, by the way. We sell it, we wholesale it to the person who is going to go do the improvements in it. [crosstalk 00:15:09]. And set them top dollar market. That’s not who we are. Just like land. We don’t want to improve anything.

Jill DeWit:
Exactly, that’s usually how it goes. [crosstalk 00:15:15].

Jill DeWit:
Yep. So keep listening. So, and I’m happy you could join us today. So five days a week, we are here. A couple of days we were talking about land, and on Wednesdays we’re talking about houses.

Steven Jack Butala:
Tomorrow on the episode on the Land Academy Show is Jack Thursday. And how we now control just about all aspects of our lives. This is a happy show tomorrow. You are not alone in your real estate ambition.

Jill DeWit:
So this is sounding more like a Jill topic. Not really tech focused or data focused. This will be interesting. Or maybe it is.

Steven Jack Butala:
It’s not. You have the tech focus thing. That’s you. You keep saying Jack Thursday is tech focused. And I don’t know how that happened.

Jill DeWit:
Oh, well you’re kind of serious, I guess. What is Jack Thursday?

Steven Jack Butala:
Ranting.

Jill DeWit:
Oh.

Steven Jack Butala:
Rant Jack Thursday.

Jill DeWit:
I didn’t know that.

Steven Jack Butala:
And then this is going to be a little rant that everyone will be ranting tomorrow. And if you know what? Tomorrow I’m going to rant about some of the mistakes I’ve made really recently where I kind of looked at myself in the mirror very recently and said, “You know what? You shouldn’t be upset about it.”

Jill DeWit:
I thought you were saying version and you were going to be like, “What happened?”

Steven Jack Butala:
Like, “Who’s that guy in the mirror?”

Jill DeWit:
Yeah, staring back at you like, “That guy’s got to get in a gym.”

Steven Jack Butala:
Thanks Jill, that’s awesome.

Jill DeWit:
No wait, this woman’s got to get into gym. Don’t worry about it. No. This one was on a diet. I will totally share that. Thank you for tuning in. We would love to connect with you on Clubhouse. Join us most Thursdays. Right now as every other Thursday, check Clubhouse for the real schedule. And it’s at one o’clock Pacific time in the Land Investing Club. Go there and you’ll find the shows.

Steven Jack Butala:
We are Steve and Jill information-

Jill DeWit:
And inspiration.

Steven Jack Butala:
… To buy undervalued property.

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