We Will Never Know the Bottom of this Recession (HA 90)

We Will Never Know the Bottom of this Recession (HA 90)

Transcript:

Steve Butala:
Steve and Jill here.

Jill DeWit:
Hello.

Steve 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.

Steve Butala:
Today, Jill and I talk about will we ever know the bottom of this recession.

Jill DeWit:
People say they do.

Steve Butala:
Said another way. Do you have a crystal ball and you can tell me exactly when it’s be at the bottom? No.

Jill DeWit:
Right.

Steve Butala:
Does it matter? Nope. It doesn’t matter at all. What matters is that you buy assets for way less than they’re currently worth, and that when you go to sell them, and here’s the whole point of this, instead of obsessing on the bottom or trying to figure out, I see this in people, people do this in the stock market all the time. They just revel in the fact that they bought some great stock that’s trading for a hundred bucks right now at the lowest point possible, when in fact that was just incredibly lucky, and probably not repeatable.

Steve Butala:
What matters is this, that when you go to sell something, I don’t care what it is. In our case Real Estate, that the person who buys it perceives that as way under priced because of the environment, because of the recession, because of the virus or however you want to phrase it or attribute the reason that we’re in this situation, which by the way is a good thing, not a bad thing. So, that’s what really, really matters. Obsessing on the bottom. You don’t get a trophy for that, because it’s not repeatable. Wow, that’s kind of our whole show.

Jill DeWit:
Do you know what? I agree with you. Do you know I agree with you, right? While I said that, I was making a joke to people that say they do know. You know what I mean?

Steve Butala:
Oh yeah, yeah.

Jill DeWit:
That’s my whole point and we’ll talk about it more.

Steve Butala:
Yeah. Yeah. 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:
Brandon says, “Hi, I have a property that when going through title insurance found out that the current owner never actually had a deed recorded, but he’s been paying the property taxes for the last 19 years. The company he bought it from is currently nowhere in sight, so that makes doing a quickclaim deed impossible. Quick title claim is expensive. I was told about $6,000 after needing to post it in a public notification. What are the chances that they come out of the woods after 20 years? Is it legal to have a deed between me and the current seller done and recorded with the County and then sell the property with the known fact that the cloud is on the title and trying to pass it on to the next guy.

Jill DeWit:
For example, price is currently $10,000 and then I say, “Hey, how about I give you $2,000 because of quiet title claim? You won’t have anything left on the profit after the sale.” Then I sell the property with a cloud for $8,000 and have the buyer do the quiet title claim themselves. Just trying to think outside the box. Probably going to pass, but the vets think that this is … if the vets think this is a possibility, then I’ll give it a try.

Steve Butala:
Oh, we’re the vets I guess.

Jill DeWit:
We’re the vets.

Steve Butala:
Here’s what happened in this situation and it’s not uncommon and Jill, I see this probably once a month, maybe more in our own deals. This person who is selling this property to you went to a live auction a lot of years ago. They used to be really popular before the internet really kicked in, bought a piece of property on terms, and paid and paid and paid and paid and paid for 19 years, 20 years, and finally got the property paid off. When it was paid off, the company, I can name the company actually that sold this property to him was just gone, and so it never got recorded.

Jill DeWit:
Or he may have even had the deed in his safe for 19 years.

Steve Butala:
Yeah.

Jill DeWit:
You could do, both things can happen.

Steve Butala:
Here’s the facts.

Jill DeWit:
Sometimes people forget. They don’t know that they think when you send them the deed and it’s signed, everything ready to go, they think they’re done. No, there’s one more step.

Steve Butala:
Here’s the facts. This person doesn’t own this property at all in the eyes of the law at all. That’s just how it is, and it’s a very unfortunate situation. The sellers paid for something for 19 years, and taxes and everything, that they don’t own at all. Run away from this deal.

Jill DeWit:
Okay.

Steve Butala:
And I put it in the House show for a reason. This is the House Academy show. When property is inherited, a lot of houses are … we’re going like what? What is this year? 250 in the history of this country, right? It’s like, it’s like a 250 I don’t know, whatever, 1776 till now.

Steve Butala:
People were in like the fourth, fifth generation in some cases. So a lot of property more now than ever is getting inherited and passed through the hands of people. If it’s not done correctly, and this could very easily have been a situation like that, if it’s not, if you live in a house that’s in your parents’ name and they’re both deceased-

Jill DeWit:
Right.

Steve Butala:
You don’t own that house.

Jill DeWit:
It’s just because your name is on the will that you get everything.

Steve Butala:
So it’s a very, very … this is something that everybody in this business needs to know.

Jill DeWit:
It’s a process, yeah.

Steve Butala:
It needs to be in your name. So you can convey it to the next person. And it’s very common, Jill, I see it all the time where people just, they’ve been living in a house for 20 years, that’s their parent’s. Paying the taxes on it, and the whole thing, which is a great thing by the way.

Jill DeWit:
Right.

Steve Butala:
It’s an ideal situation, but you’ve got to get it into your name.

Jill DeWit:
Exactly.

Steve Butala:
And it’s expensive. You know, it can be 6,000. This number seems, for quiet title, seems real expensive to me, but it’s usually closer to 1200, but maybe he’s back East and, I’m not sure.

Jill DeWit:
Maybe.

Steve Butala:
But you have to buy a piece of property from somebody. The person who’s signing it over needs to be the owner of record. Needs to be on the conveyance deed. So, I wanted to include this because more and more we’re seeing it with houses in the inheritance situation.

Steve Butala:
Today’s topic, will we ever know the bottom of this recession? This is why you’re listening. No, we’ll never know. We don’t have a crystal ball and we can’t. I can make a pretty educated guess about when we’re going to hit the bottom and what values are going to be. Only because this is my third time, but it doesn’t matter what I think. Doesn’t matter. For the record, I think it’s going to be around June of 2021 where we’re going to hit the bottom from a value standpoint.

Steve Butala:
But we’re going to do a show later this week about just the silliness of, the absolute silliness of how the media is handling … well, the silliness of how the media is handling everything, but certainly the silliness about values and the national associates or realtors making predictions. Everybody’s making predictions.

Jill DeWit:
Right.

Steve Butala:
And I don’t want to be that guy. But I do think values in the places that we like, not just the national crazy statistic. We’re going to see probably 70% devaluation in houses in the markets that we like, because it happened last time, and it wasn’t as bad last time. This is way worse than last time. Do I mean like Fifth Avenue in Manhattan? No, but we don’t buy property there anyway, so why would we look at those stats? Anyway, we’ll talk about that in the next show. But who cares about the bottom? What matters is this. Buy property that’s way less than you think you’re going to resell it for immediately, and then when you do is go sell it, blame it on the virus.

Steve Butala:
Yep, this is the reason it’s so cheap. I can’t believe you’re getting a smoking deal.

Jill DeWit:
Yeah.

Steve Butala:
Yeah, I’m still making a little bit of money. It’s the same old story. Just like in a really good positive non recession times. It’s the same story. It’s just a different reason.

Jill DeWit:
My notes are the same. I’m like, “No.” I have notes. I’m just letting you go. It’s good, because all I put was bottom. You know, who really knows? Nobody really knows. And if you think you’re going to sit around and … I’m sure some people are micro managing it. It goes up this day. I’ve noticed two days up, three days down. Watch this, babe. I’m sure there’s people that are kookoo out there, are building algorithms to watch it and predict it and they think that ding, ding, ding, this is it. It doesn’t really matter. Because if you wait for that, you might miss it.

Steve Butala:
That’s what I think.

Jill DeWit:
That’s my thing. And with our business, what really matters is speed. Not so much the numbers, but if you’re buying a property and selling a property within 30 days, like many of us are, you’re going to do just fine. It’s not going to usually fall that hard that fast. This is a land show, especially for land.

Steve Butala:
This is a house show.

Jill DeWit:
Oh, excuse me. This is a house show. Well, even the house show … pick one, who knows? And it could be the car show, even the car show. I think it’s more than a 30 day trend for them to really fall that far. Do you agree?

Steve Butala:
Yeah.

Jill DeWit:
Why do it in 30 days.

Steve Butala:
I wouldn’t even worry about the 30 days. I mean I understand your point. Selling it faster is always better.

Jill DeWit:
Right.

Steve Butala:
I mean in our business, there’s some people that have issues with that. My sister has a garage and a basement full of more stuff. They can’t get any cars in there. She has issues selling stuff. She’s in the Real Estate business. Very successful Real Estate Agent and, but we’re just not like that, man. I don’t want to have anything collecting dust. We’re both like that. Real Estate’s the same.

Jill DeWit:
Like women.

Steve Butala:
Gosh. Wow.

Jill DeWit:
Anything.

Steve Butala:
Wow. Where did that just come from?

Jill DeWit:
I don’t know. It’s funny.

Steve Butala:
So you know, you always want to sell it fast.

Jill DeWit:
Yeah.

Steve Butala:
So there’s no mystery in this. This is a celebratory markets times. I don’t care what market. Yesterday we talked about it. I don’t care what market you are into. Buy it cheap. And if you watch any old movies past that talk about stock market, like Wall Street, the movie with Michael Douglas, he was famous for saying, “There’s always people in a market,” let’s just use a stock market for an example, that are the analysts that they sit around and say, well, this company, we all know people like this and they’re always over the age of 60.

Jill DeWit:
Yep.

Steve Butala:
This company has a good balance sheet and their track record is, and then they go on for a half hour, 45 minutes if you let them, when in fact it doesn’t matter at all. What matters is … this is what a high velocity trading is all about. What matters is, in Real Estate, the velocity at which the market is changing and the faster and more volatile it is, the better it is going to be for you. It’s not all about the asset and about the people who run the company in the stock case, or the house itself and what kind of tile. That’s for HGTV people and if you’re a regular listener to this, these shows, we don’t renovate houses here, we don’t talk about window treatments ever.

Jill DeWit:
True.

Steve Butala:
We talk about price per square foot, and how fast we can sell it and what kind of data we can attribute to this to make this easier on our lives. And so I don’t care about the company itself or the piece of Real Estate itself, almost ever.

Jill DeWit:
If it’s west-facing, has a pool, whatever it is, it doesn’t matter.

Steve Butala:
No, none of that matters.

Jill DeWit:
Yeah.

Steve Butala:
The money matters.

Jill DeWit:
Exactly. Days on market matter, buyers matter. Happy-

Steve Butala:
Oh, sorry.

Jill DeWit:
No, you’re okay.

Steve Butala:
And more, and then my last point is relativity. So all of this is very, it hinges on relativity. If you’re buying a stock in let’s say the manufacturing sector, and that stock relative to the other stock is way lower and everything else, all the other boxes are checked, same thing with houses.

Steve Butala:
If you’ve got a 2,500 square foot house in a market where everything’s selling for $150 a foot, and you’re buying it for 80 and selling it for 120 a foot, you’re going to win. It solves all your problems.

Jill DeWit:
That’s it. That’s the bottom line right there.

Steve Butala:
So, blame it on a recession. Blame it … fill in the blank sales blank, but the fact is, it has to be like that to win.

Jill DeWit:
Ding, ding. Happy you could join us today. Every Tuesday and Thursday, you can find this right here on the House Academy show. Mondays, Wednesdays, and Fridays we on the Land Academy show.

Steve Butala:
Tomorrow the episode on the Land Academy show is called Drive Up Access is more important now than ever. You are not alone in your Real Estate [inaudible 00:12:06]. Why would that be?

Jill DeWit:
Private access?

Steve Butala:
Yeah, access is always important.

Jill DeWit:
But why is it more important now?

Steve Butala:
I know why.

Jill DeWit:
I think because our buyers are changing.

Steve Butala:
That’s what I think.

Jill DeWit:
Thank you.

Steve Butala:
Everybody’s flocking.

Jill DeWit:
Exactly. And it’s a difference, a little bit different buyer right now that their eye, their minds are open and we can talk about that more tomorrow. 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/Jill:
We are Steve and Jill.

Steve Butala:
Information.

Jill DeWit:
And inspiration.

Steve Butala:
To buy undervalued property.