Low Cost Housing is Here to Stay (HA 78)

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:

I’m Jill Dewitt broadcasting from sunny Southern California.

Steven Butala:

Today, Jill and I talk about how low cost housing is here to stay.

Jill DeWit:

How low, low, low, low, low. You think?

Steven Butala:

Wow, are you speaking in a low voice as a joke?

Jill DeWit:

Am I?

Steven Butala:

I don’t know why I was asking you [crosstalk 00:00:24] for making fun of the word low.

Jill DeWit:

I kind of was.

Steven Butala:

And speaking in a low voice.

Jill DeWit:

I just was making fun. I’m sorry. We’re not allowed to have fun today. I’m sorry. [crosstalk 00:00:35] Are we having to be serious? Excuse me.

Steven Butala:

Wanted to know the depth of-

Jill DeWit:

Is this a documentary?

Steven Butala:

Of your slapstick, pun type humor.

Jill DeWit:

Maybe I am.

Steven Butala:

Okay. I was just checking.

Jill DeWit:

All right. Is this call out Jill day?

Steven Butala:

Not yet.

Jill DeWit:

All right. Oh boy.

Steven Butala:

It could be.

Jill DeWit:

Okay. Thank you. Now, I know … note taken.

Steven Butala:

You know, we’ve been spending a lot of time together.

Jill DeWit:

Yeah. Oh yeah. It’s going great. How’s it in your house? You know that … this is just an unintended delight spending so much time with my family trapped inside.

Steven Butala:

You know what I learned today?

Jill DeWit:

Yes.

Steven Butala:

You can’t freeze the mushrooms.

Jill DeWit:

That’s nice.

Steven Butala:

I’m like halfway done with my life and I never knew that.

Jill DeWit:

Do you know what I learned today? I wish my teenager was in school.

Steven Butala:

Yeah, I learned that yesterday. We are on the same page about that.

Jill DeWit:

Oh my goodness.

Steven Butala:

Before we get into it though, let’s take a question posted by one of our members on the Houseacademy.com online community. It’s free.

Jill DeWit:

Hey, Mike wrote. Hey everyone. We finally closed on our first couple of properties. We’re posting on … This is on the buy side, it sounds like. We’re posting them on Craigslist, Facebook groups, Facebook messenger, et cetera and we are also using a service to get the properties listed on the MLS. Good job.

Steven Butala:

Good work.

Jill DeWit:

Separately-

Steven Butala:

Exactly, what you’re supposed to do by the way.

Jill DeWit:

Put them all out there everywhere. Your site, there’re other sites, if you’re a member, LandPin, that’s okay. Separately, I’ve been in contact … What?

Steven Butala:

No, go ahead. So touchy you are today.

Jill DeWit:

I guess.

Steven Butala:

I am just smiling at you.

Jill DeWit:

Okay. Separately, I’ve been in contact with a broker to gauge pricing for two of the properties. She’s likely under the impression that we’re going to list the land with them-

Steven Butala:

But, you are not.

Jill DeWit:

Which, you might.

Steven Butala:

No, you already posted it on the fixed price listing.

Jill DeWit:

That true. When I break the news, I’ve already listed it on the MLS myself and they can try to sell it for a 3% commission. Is that going to be a deal breaker?

Steven Butala:

Probably.

Jill DeWit:

Yeah. They might want … Land people usually want more, sometimes 10. I’d like to tap into-

Steven Butala:

This is a house show.

Jill DeWit:

Oh, excuse me. Sorry. Sorry about that. I’m all confused.

Steven Butala:

I’ll help you.

Jill DeWit:

Thank you. I’d like to tap into the buyer’s broker list as an extra form of reach. Steve and Jill, talk about using brokers for higher dollar properties, what’s your [inaudible 00:03:06] procedure for listing on the MLS and trying to have brokers sell for you. Thanks.

Steven Butala:

Well, just the very nature … There’s a lot of people who commented on this, some of the more senior members in our group had a lot to say about it because this is a very popular way to sell higher end property. In fact, Jill and I sell a ton of property with agents like this without a listing. You post it on the MLS. There’s a fixed fee, two, three, $400. Is it more than that?

Jill DeWit:

Flat rate MLS?

Steven Butala:

Yeah.

Jill DeWit:

Anywhere from $99 to like $300, usually.

Steven Butala:

Right. What that does, primarily, is let other brokers know that the properties for sale specifically houses. There’s a lot of brokers out there that are working with buyers. They want to know they’re going to get paid and the tip. Real estate commissions work like this, you always hear about this magic 6%, if you list a hundred thousand dollar house with a broker, they’re typically going to take 3% on the listing side, that’s $3,000. They’re probably not going to sell the house … Someone else, other agents are going to be working with the buyers that buy it and that person gets 3% and the seller, the owner, loss … we pay the 6%. If we list it … if we just post it on the MLS, that’s a flat rate, that 3% on the buy side, we have to pay that.

Steven Butala:

So, instead of paying 6%, we pay 3% or if we have the buyer ourselves because we’re working a list because we’ve been in the business for 25 years-

Jill DeWit:

And they are like a flipper or something like that …

Steven Butala:

[crosstalk 00:04:31] We pay zero.

Jill DeWit:

We pay zero.

Steven Butala:

That’s the way to go. [crosstalk 00:04:33]

Jill DeWit:

Then we all benefit.

Steven Butala:

That’s how it works. With land, it’s closer to 10%. Usually, because land is cheaper and it’s just a lot more stuff involved from a … It’s a more sophisticated group of people … buyer group as well.

Jill DeWit:

It’s different.

Steven Butala:

Now, that I’m saying it out loud, I probably don’t know why it is 10% with land.

Jill DeWit:

Isn’t that funny.

Steven Butala:

Doesn’t matter. Jill beats them up in the price, anyway. Get this though.

Jill DeWit:

Take a breath. Take a breath, Jack.

Steven Butala:

Here’s what cracks me up about the 6%.

Jill DeWit:

Talk about fired up, right now.

Steven Butala:

You’re just an agent working there and as a listing agent, you list the property and sign the 3%. You got to give half of that to your listing broker. Now, that $100,000 sale, you get 3% of it, but your agency gets 3%, you get one and a half percent. Now, you’re making $1,500 on $100,000 house sale and it works the other way too, on the other side. Who really wins? No one. The owner wins. Us. Listing agents never win.

Jill DeWit:

Oh that’s a whole nother thing by the way. I don’t know if you want to talk about it now, but-

Steven Butala:

Yeah.

Jill DeWit:

I don’t know what is going on in other states, but here in California … We’re in Los Angeles County, in LA, and it’s a whole big thing. We can’t have open houses and now you got to sign a thing because … We are still trying to buy and sell houses, right? I don’t know if you know about this, but now there’s an, Oh, because we need more paperwork. Now, there’s an extra stack of papers that people need to sign just to be able to … I’m going to let you go into my home and then people have to sign that, I will go into your home kind of thing.

Steven Butala:

Yeah.

Jill DeWit:

Waiving if somebody gets sick, nobody is going to … I don’t know, sue each other, I guess. It’s crazy.

Steven Butala:

I am going to say this a million times, now is the time to have your own buyer list and to find landlords and sell these houses to people in the business. They have cash anyway. They were all waiting for this. Now, is the time to sell to people who own a bunch of real estate in the market anyway and cheap. Make sure you buy it lower than you sell it.

Jill DeWit:

Right.

Steven Butala:

Really cheap. Today’s topic … If you were done?

Jill DeWit:

Yes. Well, thank you for asking.

Steven Butala:

Low cost housing is here to stay. This is why you’re listening. What the heck is low cost housing? It’s a nice way to say mobile homes, RV parks, tiny houses and generally cheaper houses. I personally believe, this is my fourth or fifth recession, forth as an adult, that this one’s going to change the way everything goes on with real estate. I think that … no one’s ever seen a worldwide recession, ever. In recorded history, to this magnitude. The way commercial real estate is used will change forever. This is going to kickstart things like Amazon delivery. People are forced to use this to buy household goods. You don’t need to go to the store anymore. Also, I think low cost housing. Where is low cost housing, Jill, geographically? Out of the city.

Steven Butala:

The more rural it gets, the cheaper it gets. Well, if I don’t have to be in a city to go to work because I got over that and my employer got over that, I’m working from home right now.

Jill DeWit:

Exactly.

Steven Butala:

I don’t have to go to the store to buy anything.

Jill DeWit:

Check, check and check.

Steven Butala:

Amazon delivers my stuff. Low cost housing is here to stay. It used to be drive till you qualify. That’s not necessarily untrue now, but now you can live in a small town very effectively. That is way the heck out of a city where there isn’t any viruses by the way. Believe me, that’s going to be a thing. It’s here to stay.

Jill DeWit:

I agree.

Steven Butala:

That’s it. That’s the show, I guess.

Jill DeWit:

Okay, well, I guess we’re good.

Steven Butala:

Were you just enjoying my little speech.

Jill DeWit:

Yep, kind of was. It’s just so interesting. When you really sit back and think about it, it’s so many employers that were, and I worked for them back in the day, they were hell bent. I’ll say even-

Steven Butala:

Or even dreamed of it.

Jill DeWit:

Not remote workers, nope. They tested it and they said it failed. People are ineffective. It doesn’t work. We need to bring them all in. Now, it’s like they don’t have a choice. I hope that, at least with our staff, it’s … they want to be here, they’re happy to have a job, so they’re really showing up and doing a good job. I hope that everybody’s doing that too, because that would be my goal. If, I worked for who knows whatever company, and I’m home now and I want to stay home, I’d be doing a heck of a good job. If, I didn’t want to stay home, I like the office environment for whatever reason, I wanted to be away from my kids, which I understand, I’d be like … I might not be so into it doing what I have to do. I’ve thought about things like WeWork, I know we are going to talk about that later this week about the commercial side of it, but gosh-

Steven Butala:

It’s over.

Jill DeWit:

It’s going to change a lot of things. I feel bad, Airbnb, it’s so amazing. I was reading an article yesterday, about some of the companies that came out of the last recession and one of them was Airbnb. Now, in this recession, now it’s hurting Airbnb. It’s so interesting.

Steven Butala:

Right.

Steven Butala:

As time goes on here and for more and more reasons, technology-based reasons, there’s less and less of a reason to live in a city. It’s very expensive to live in cities. Very, very expensive. You know, for instance, when things like this happen, it’s like, all right, what am I going to do the rest of my life? This is how I react anyway. We live on the beach. It costs this much. Well, there’s a beach like 80 miles north of here, it costs like half to live on the beach and south. Why do we live here? Why do we live here? What if I go a 180 miles [crosstalk 00:10:36]?

Jill DeWit:

Because, Jill has a good friend network.

Steven Butala:

It’s even half of that. The ocean is the same.

Jill DeWit:

I know.

Steven Butala:

And it’s what? 20% of the price.

Jill DeWit:

He’s right.

Steven Butala:

I’m using myself as a guinea pig here. It’s times 80 when your employer finds out you can effectively work from home and you don’t need to go to the store anymore.

Jill DeWit:

And they don’t need to pay rent on your space there, by the way.

Steven Butala:

And you cost of living. Your salary is the same and what you pay to live. Your cost of living is lower because they’re delivering it to your house because they don’t have to pay real estate. The reason that … Prices are set in retail locations, a pretty good chunk of that is the rents or the mortgage that they’re paying on the building you’re walking through. When you remove that, there’s no … an Amazon seller doesn’t have any rent, so they can charge 20% less for the same stuff you buy at Walmart.

Jill DeWit:

It’s going to be so interesting.

Steven Butala:

This is very-

Jill DeWit:

I can’t wait to see how this plays out.

Steven Butala:

Me too.

Jill DeWit:

I’m actually kind of excited.

Steven Butala:

Me too.

Jill DeWit:

You’re right. How many impulse buys? Those impulse buys are gone because you’re not thinking about it. When you’re shopping on Amazon and all you are doing is looking for … I need dish soap or whatever it is.

Steven Butala:

Right. Getting a haircut right now is a luxury.

Jill DeWit:

Yes, it is.

Steven Butala:

We’re about to cut our own hair.

Jill DeWit:

Trust me.

Steven Butala:

That’d be funny next week. Tune in next week to see what we look like.

Jill DeWit:

That’s great. That’d be so funny.

Steven Butala:

Low cost housing is here to stay, trust me. Along with a tremendous other number of what I think only benefit our group, permanent changes in real estate.

Jill DeWit:

Happy you could join us today. Every Monday, Wednesday, and Friday, you can find us on the Land Academy Show. Tuesdays and Thursdays, we are right here on the House Academy Show.

Steven Butala:

Tomorrow, the episode on the Land Academy Show is called Preppers Have Now Been Verified, They Need Your Land. You are not alone in your real estate ambition. Every single prepper in this planet is doing a dance. The, I told you so dance.

Jill DeWit:

Yes, they are.

Steven Butala:

I told you. They’re sitting there looking at, 42 years worth of water and cans of tuna fish and stuff and saying, you guys all enjoy your virus. I’m going to go down underground here for a while.

Jill DeWit:

That’s right.

Steven Butala:

Don’t knock because I’ve got a-

Jill DeWit:

It’s zombie proof. Stay away.

Steven Butala:

Got an RPG pointed at the door.

Jill DeWit:

[crosstalk 00:12:56] The House Academy Show remains commercial free, for you, our loyal listener. Wherever you’re watching, wherever you are listening, please subscribe and rate us there. We are Steve and Jill [crosstalk 00:13:06]

Steven Butala:

Information

Jill DeWit:

And inspiration

Steven Butala:

To buy undervalued property.

Jill DeWit:

Yes, I did cut you off.

Steven Butala:

I needed to be cut off.