What is House Academy (HA 034)
What is House Academy (HA 034)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hi again.
Steven Butala: Welcome to The House Academy Show this time.
Jill DeWit: It’s been a while.
Steven Butala: It’s an investment talk, oh I’m sorry, entertaining real estate investment talk. This is The-
Jill DeWit: See? Its been a while.
Steven Butala: … House Academy show. I’m Steven Jack Butala.
Jill DeWit: I’m Jill DeWit broadcasting from sunny Southern California.
Steven Butala: Today Jill and I talk about this topic, what is House Academy? I have to tell you, this is a perfect timing. The recording of this show is perfect because Jill and I have some two plus year friends who are asking us last night over some beer, “What do you guys really do for living?” We’ve never talked about it. So we had to explain it to them as if, well, they are, they have just, they came in cold. They have no idea of what kind of a real estate operation we have, really what we did for a [crosstalk 00:00:52] living at all.
Jill DeWit: They don’t understand. It was really funny.
Steven Butala: So we had to, I guess it was a rehearsal for this show, so we had to explain it to them.
Jill DeWit: Exactly.
Steven Butala: So we’ll give it our best shot here.
Jill DeWit: Yeah, and in case you’re wondering, no, we did not break into an abandoned home because you see caution tape behind me. It kind of looks like when you broke into something that’s like under construction, it’s about to be demolished in a day, but no, this is Halloween stuff, so we’re actually recording this a few days before Halloween.
Steven Butala: The kids went nuts with the Halloween decorations. I thought they were too old for this, but nope.
Jill DeWit: Nope, Nope. They can drive. I gave them $150, and sent them off to get decorations and it was fun.
Steven Butala: They spent all of it too.
Jill DeWit: Yeah, exactly.
Steven Butala: Doesn’t include the candy.
Jill DeWit: 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: That says, G Man, is that correct?
Steven Butala: This is for real.
Jill DeWit: Okay, G Man asks, “Hi everyone. Do you split your mailer up into several smaller mailers and paste them out, or do you send them all at once, and deal with a flood of calls?” Well, it looks like somebody already weighed in here, which is really cool. Lisa said, “My experience with land is I get flooded with calls if I send out a few thousand mailers. With houses, it seems relatively quiet.” I have some things to say about that.
Steven Butala: It’s not quiet at all for us.
Jill DeWit: Not for me. “Thinking I could have doubled down on the house mailers and been just fine. I was afraid I’d missed some calls, but that’s not what I’m seeing. Guess I will know better for next time.” Should I share our experience?
Steven Butala: Go Jill go.
Jill DeWit: All right, so we just sent out in LA County about 17,000-
Steven Butala: 17000.
Jill DeWit: … units. I can tell you exactly it hit on Saturday. I know that for a fact, and I know people immediately as the mailman was walking oh down at the steps of their front door were picking up the phone to call me, and to share with me how they felt about my offer. What’s really funny though is it’s not, so think about this. 17,000 units, I got about 30 phone calls on Saturday. That’s not bad. That’s manageable-
Steven Butala: It’s first day [crosstalk 00:03:07].
Jill DeWit: … and then Sunday, I think it’s a Sunday, they didn’t want to deal with it. I got about 10 I’m going to say, so.
Steven Butala: Yes, we work on the weekends.
Jill DeWit: We do work on the weekends. So, but I like these calls, and it’s important to answer their calls, so that’s my thing. You’ll know very quickly what you can handle. For some people, 30 is too many. I didn’t care. On Saturday, I’m fine with it. But you can space them out. What’s funny is the first wave is always a blast of the unhappy people, and then after a few days, it starts to settle.
Steven Butala: They talk to their spouses.
Jill DeWit: Right, and then the real calls start coming in. So like even today, a couple of days in, I’ve got a buyer that just called me. I’ve got a sweet little old lady who told me what’s really going on in her area, and that she’d hang on to my letter. I’m like, “This is fantastic.” I got invited over for tea the other day. This lady just said, “Can we be friends?” It was the cutest thing. “So I don’t want to sell, but I really like talking to you.” I’m like, “Yeah, thank you.” It was really cute.
Steven Butala: That’s nice.
Jill DeWit: So it was very nice. So it’s important to get the call.
Steven Butala: It’s the Jill effect.
Jill DeWit: Thank you. That’s what we call jillifying it. It was really good. That was classic. I mean I’m going to share some of these again because we record them.
Steven Butala: I just sit here as Jill’s guest.
Jill DeWit: Oh, today? Oh sorry.
Steven Butala: No always.
Jill DeWit: Oh welcome to the Jill and Jack show. We’ll talk about that too. Anyway, so I just, I wanted to share that. What do you want to add?
Steven Butala: There’s a famous John F. Kennedy quote, he and Jacqueline Kennedy during his presidency, he went to Paris. Do you know this?
Jill DeWit: No.
Steven Butala: He came back, and he got in front of the camera, and he was interviewed, and he said, “I was the man who accompanied”-
Jill DeWit: Oh yes.
Steven Butala: … “Jacqueline Kennedy to Paris.”
Jill DeWit: This is yeah this is Kennedy. That’s so funny. That’s good.
Steven Butala: Which I think is exactly how it should be.
Jill DeWit: That’s cute. Thank you.
Steven Butala: Today’s topic is called, What is House Academy? This is the meat of the show.
Jill DeWit: Okay. So my goal here is to explain this in a way that doesn’t make your head hurt. How was that?
Steven Butala: Yeah, I really think we need to bring this down to fourth grade today, let’s say eighth grade.
Jill DeWit: I don’t want to get technical. I don’t want to get all detailed.
Steven Butala: She’s talking to me now, not you.
Jill DeWit: Okay. That’s exactly right. I don’t want to get technical. I don’t want to get all detailed. I want to make this very clear and easy for everyone to understand, because when people come along, and they go, “Wait a minute, I’ve been buying houses for years and doing them and yeah, it started to dry up. That’s why I’m here right now.” This is really usually how it goes. “I have to wrap my head around this, and it sounds easy, but there’s a lot to it.” So I don’t want to get bogged down in the details. So do you mind if I just keep going with this for a minute, or do you want to dive-
Steven Butala: I will emcee your comments here if I think it gets out of order.
Jill DeWit: Okay.
Steven Butala: What I think is imperative to understand House Academy and Land Academy for that matter, they’re the same thing. It’s just a different product is that to explain this in order of how it goes. Think in terms of doing a deal-
Jill DeWit: Okay.
Steven Butala: … and start right from the beginning.
Jill DeWit: Okay. Well then you start, how about you explain your part, and then I’ll explain my part?
Steven Butala: Okay, oh good. So yeah, I’m acquisitions and Jill’s sales, and that’s been that way from day one. We didn’t set out to have it that way. We just naturally fell into those roles, which makes us pretty good partners, I think. Well, it’s been a lot of years, well, 10 years and about 16,000 deals later.
Jill DeWit: 11 years.
Steven Butala: Oh is it 11?
Jill DeWit: Thank you for not remembering. It’s okay. Going on 12, but that’s okay.
Steven Butala: The very first thing I do, the big picture overview here is we send out blind offers to owners of houses that are about 70% of the value of the actual house that the day we do the mailer. How do we know what 70% is? Through the algorithms and Zillow, and Trulia and all that, but let’s not get into it. That’s what we do, and a very predictable percentage, and a consistent percentage of people will sign the offer and send it back even at 70%. In the case of land, it’s closer to 30% it’s that much less than the actual current value. Why? Why the heck would anyone ever sell their house for less than it’s worth? Why Jill?
Jill DeWit: Because they’re done with it. There’s some reason. So I just talked to a sweet little lady just right before we sat down to record this show who called me and said, “Look,” and the offer by the way, because it’s pretty low was not what makes sense to her, but she also knows she doesn’t want to do retail. So what she just got off the phone with me and told me, “I’ve gotten many offers. Many people, let’s put it this way, many people have reached out to want to buy my property, but I’ve never gotten an offer and nothing like what you just sent me.” So she’s said, “I had to call you”-
Steven Butala: We get that comment every single time.
Jill DeWit: … “and find out what’s going on.” So it’s true to form, even here in our own backyard, people are doing it and not getting the response that we get. It’s amazing. So she’s like, “Well how do you get this information?” I just said, “Well, you know what, it’s actually just public assessor information.” She goes, “Oh, okay.” Then she goes, “Well where’d you get this price from?” I said, I do the best I can with all the information. I just kind of gloss over the top. I don’t want her to know how strategic we get. She doesn’t need to know the formulas, or anything like that. I know what I sent her, I want to make her feel good kind of thing. I just, “If that doesn’t work for you, what price does work for you?” That’s how it goes, and it just goes from there. This particular lady, I could tell she was older, and she has two duplexes side by side, by the way. This would be phenomenal so-
Steven Butala: Oh really?
Jill DeWit: Mm-hmm (affirmative) exactly.
Steven Butala: Wow.
Jill DeWit: She says, “I’m not ready to sell now, but I will hang onto your letter.” She was really nice. She said, “I’m happy to talk to you.” So I said, “Yeah, call me back in a year from now, or whatever it is. When the time is right, let me know. We’ll see what we can do.” So that’s just what you do. But so many of these people, so what happens is you did your job, the mail it out.
Steven Butala: Let me start from the beginning, okay?
Jill DeWit: Okay good.
Steven Butala: Long before, the very, very first thing I do, “Well how do you know where to send mail? There’s 150 million properties out there, Steve. Where do I start?”
Jill DeWit: How many counties, right?
Steven Butala: I break the whole environment down by zip code. There’s about 16,000, 16 to 20,000 zip codes in this country. I think there’s actually 26,000, but a lot of them are Air Force bases and stuff, and hospitals, or universities. So there’s some number like that. I’m going to get a million emails correcting me on that one. I do this to myself every show. So I start, and I look at a zip code, and I go on to Redfin Data. We have this thing in our House Academy Membership Group called Equity Planner. It asks you to go to Redfin, and let’s say you want to send out, let’s say you like for whatever reason Mesa, Arizona. You like that community. You think it’s a good flip market for whatever reason because you’re just, you’re watching, you’re going out on the MLS on realtor.com, and you see a bunch of totally renovated houses, and you see what they’re selling for, and so you decide, or you live in Mason, because it works everywhere.
Steven Butala: It’s just a matter of pricing. So you take the five or eight zip codes that are in Mesa, Arizona or wherever, and I call it pitting them against each other. You line them all up in Redfin data, you pull all the real estate data out of Redfin, and you look at which zip code is performing the best, the one that has the lowest days on market, the one that has the lowest number of listings in that zip code. Of those five or eight zip codes, every single time two of them just shine. Again, Jill wants to keep this at the eighth grade level here, and that’s true, but I won’t go into or why, but there’s statistics that very clearly say, “Hey properties are moving in this area over this other zip code over here” for whatever reason. So it’s not like I throw a dart at a board.
Jill DeWit: [crosstalk 00:11:09].
Steven Butala: We know it’s going to happen before it happens.
Jill DeWit: Exactly, and that’s the beautiful thing about House Academy. It’s a lot easier than land-
Steven Butala: Yeah.
Jill DeWit: … because we have that information and we know, you know what’s going to happen with a house. It’s going to happen especially if you’re hitting a zip code area with days on market, or less than 30 days.
Steven Butala: Yeah, that’s right.
Jill DeWit: You can very predictably say, “Huh, if I find an asset, a house that’s 70% of the value, and I mark it up and solid at 80% of its value, I’m probably going to sell it pretty fast because that whole area is less than 30 days on market.” That’s it. That’s-
Steven Butala: We try to make between 30 and $80,000 a house.
Jill DeWit: That’s it.
Steven Butala: That’s dollars, not percentages. So however that works out, but then great, I have two zip codes in Mesa. Jill and I are licensed providers of the three major assessor data syndicators nationally, RealQuest Pro, Data Tree and TitlePro247 [inaudible 00:12:03], all separate entirely separate companies, and we pit them against each other too. So I go out into Data Tree for houses, and I pull every single SFR that doesn’t have a mortgage on it so that they actually, this is my flavor on it. We have a lot of House Academy members who don’t care about that. They love to send properties to houses that are highly leveraged. That’s just what we do. So I pull all the assessment data-
Jill DeWit: Someone was just calling me right now, by the way [crosstalk 00:12:33].
Steven Butala: … pull all the assessment data, price it out. We send it. We have this product called Smart Pricing where we send, let’s say you’ve got a universe of 5,000 properties in this mailer, in these two zip codes in Mesa, send it to the Philippines, our virtual assistant group there, and they do what we call smart pricing.
Jill DeWit: Can I?
Steven Butala: Zillow, Trulia, Redfin, Data Tree, all-
Jill DeWit: Can we take it up a notch? A little more on the top, because we’re not-
Steven Butala: Sure.
Jill DeWit: … going to get very far. I want to save stuff for other shows.
Steven Butala: Let’s forget about, Jill’s right. Let’s forget about how.
Jill DeWit: I want to get details.
Steven Butala: 70% of what we think the house is worth today we put it in the spreadsheet, and we sent it to Offers 2 Owners, which is a company we own, a bulk mail printing company, and send them out. We send out every [inaudible 00:13:23] like I just said, 5,000 offers and I’m done.
Jill DeWit: Thank you. Okay, so-
Steven Butala: Jill takes over.
Jill DeWit: … the phone rings just like that. I answer the phone. I work with the sellers, we close quickly with cash. What we do with them too is we are buying these, we tell them too our offer price, whatever we agree on in the end, maybe they say, “Hey if you add 10 more thousand you got a deal,” and you know what? In some areas, 10 thousands it’s like nothing. I’m like, “That’s totally fine because I know how I came in.”
Steven Butala: The Los Angeles market’s nothing.
Jill DeWit: I mean for those people they might say “Add $200,000,” and I might go, “All right I can do that. I have that much wiggle room in the deal” because I know what’s going to happen. So and I tell them, this is part of the attraction is I’m real, I’m credible. They can look us up, we’re very transparent. I’m not here to gouge anybody. I’m trying to make a good deal for them, good deal for us, and our offer prices net to them. I pay all the closing costs, I deal with the inspection, I don’t charge them anything. That’s it. They know that we’re going to close in two weeks or whatever it is. It’s going to happen exactly as we say. Oh-
Steven Butala: Hello.
Jill DeWit: Hello, and that’s it. Then so House Academy is finding it, buying it, owning it, and then we even talk about, we even share and help you in our whole thing. This show, it’s going to unfold more on the show, how do I sell them? How do I build a buyer’s list? What do I do with them? That’s going to go on, and that’s what we do too. We take it all the way to the end, and again, it’s very predictable, easy.
Steven Butala: Consistent.
Jill DeWit: Yeah, and you know how fast it’s going to go.
Steven Butala: Exactly. One of the reasons this works so well is because we don’t sell, typically do not sell the property to the end user. We sell it to a person who’s going to renovate it-
Jill DeWit: Yes.
Steven Butala: … most of the time-
Jill DeWit: That’s true.
Steven Butala: … which is a real wholesaler.
Jill DeWit: That’s what we love.
Steven Butala: It’s so much easier to deal with somebody in the industry. They’re not talking about window treatments and stuff.
Jill DeWit: Exactly.
Steven Butala: They’re just looking at price per square foot because they’re going to rip it all out anyway and make it gorgeous.
Jill DeWit: Right. That’s our perfect scenario, exactly. Some of our members do both though. Some like to retail. We have members in our group that are doing exactly what we do, or they’ll wholesale to flippers who come in and make it great. Some of them do the work themselves, all levels of work, whatever you want to do. Many people in our group too actively own construction companies, they are in the business, they are flippers and their deal flow is drawing up. They’re like, “God, the ways that we used to go find these deals is getting hard.” No kidding.
Steven Butala: Yeah.
Jill DeWit: I got to tell you right now, you know what’s happening to me right now? My phone is blowing up. So they’re like, “This is the greatest thing on the planet.” The money that they spend, once you learn it, the process of learning it and getting the offers out there in the mail, that’s really, that’s the secret I think. Because then the people call back, “I do want to sell, or I don’t want to sell. I like this price, I want this price.” Whatever it is, they’re reaching out to you, and that’s the beauty of the whole thing.
Steven Butala: We have hundreds and hundreds and hundreds of successful members, and they say stuff like this. I get an email like this once a week at least, “I can’t thank you enough for this tiny amount of money that you asked for the education. I have my own business now.”
Jill DeWit: Yeah.
Steven Butala: “I just completely started my own business in three months.”
Jill DeWit: Exactly.
Steven Butala: “We’re buying and selling houses every week now. You’re right, it’s predictable and incredibly inexpensive.” To do a 5,000 unit mailer costs a couple grand total, and you’re making 30 to $50,000 per deal. So if you do everything right on a 5,000 unit mailer, you should do a couple of deals. You’re making a hundred grand on what costs, what 2000 bucks for a data and mail.
Jill DeWit: Exactly. I was going to point out to a lot of people in our community are realtors.
Steven Butala: Yeah.
Jill DeWit: This is a way for them to either acquire properties or corner listings.
Steven Butala: Get listings.
Jill DeWit: That’s a great thing too.
Steven Butala: I’ve been saying this since day one with Land Academy, the people that do the best in our group, they learn first how to do it, the basic mechanics of everything, and then they have their own twist on it.
Jill DeWit: Yep.
Steven Butala: So yeah, real estate agents for whatever reason are really making this work.
Jill DeWit: Yep. I know this is a big thing so and I’m excited to talk more about it on our next show.
Steven Butala: Hey we know your time’s valuable. Thanks for spending some of it with us today. Join us next time for the episode called What Makes a Successful House Wholesaler?
Jill DeWit: We answer your questions.
Steven Butala: This has nothing to do with phrasing a sentence, I’ll tell you that.
Jill DeWit: No, that’s okay, and we’re going to answer your questions posted on our online community at houseacademy.com. It is free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: Feels good to be back.
Steven Butala: You know what we didn’t talk about is the mailer that we just did. Listen to this. We have a guy in our group who has access to a lot of buyers that are very specific buyers in Los Angeles for very specific asset type that you can see in the data by its zoning, so go ahead.
Jill DeWit: No, I think we should talk about this in the next show because that ties into that.
Steven Butala: All right, sure.
Jill DeWit: Is that okay?
Steven Butala: Yeah.
Jill DeWit: All right. Thank you. Wherever you’re watching, or wherever you’re listening, please subscribe and rate us there.
Steven Butala: We are Steve and Jill.
Jill DeWit: We are Steve and Jill.
Steven Butala: Information-
Jill DeWit: And inspiration-
Steven Butala: to buy undervalued property.
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