What Kind of Houses Flip Best Let Experts Tell You (HA 1167)
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy Show?
Jill DeWit: House Academy Show.
Steven Butala: Oh, 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 what kind of houses flip best. Let the experts tell you. I guess we’re the experts.
Jill DeWit: Oh, I thought that was somebody else. Did you have some data you pulled down? I’m like-
Steven Butala: Who made you guys the experts?
Jill DeWit: Did you have a chart? Did you reach out to somewhere? Is there some papers here or a report that you’ve downloaded? Oh. Oh, you mean us. Okay, got it. My bad.
Steven Butala: 16,000 deals later.
Jill DeWit: My bad.
Steven Butala: I think we’re probably sort of know what we’re doing.
Jill DeWit: A little bit.
Steven Butala: When’s the last time you lost money on a real estate deal?
Jill DeWit: Oh, my gosh. Isn’t that funny. I’ll have to get back to you on that one.
Steven Butala: Yeah.
Jill DeWit: So funny.
Steven Butala: Never.
Jill DeWit: I do that every now and then. I’ll be talking to somebody and they look at me sideways like, “Well, that can’t possibly work,” and I just give them the old, “Well, I guess 16,000 deals in, we’re still testing this theory.” And they go, “Oh.” I’m like, “Yeah.”
Steven Butala: If you’re watching this and not listening to it, notice the people behind us. So it’s January 20 whatever. It’s late January. So all the people that started to exercise because of the new year, they’re going to be running behind us. And this is the ones that are just about ready to give up.
Jill DeWit: Yeah. This is what’s left.
Steven Butala: So if you’re not interested in listening or watching what we have to say, which I completely understand, watch the people behind us.
Jill DeWit: Like that guy.
Steven Butala: Yep.
Jill DeWit: That guy, he’s not going to make it, I can tell.
Steven Butala: He’s done. This week he’s done.
Jill DeWit: Those girls are not going to make an either. I can tell.
Steven Butala: No, too much time on the hair.
Jill DeWit: Yeah.
Steven Butala: Not enough time on the other stuff.
Jill DeWit: Exactly. So yeah, this is good. I’m watching for one that I think is going to make it. That’s so funny… While adjusting my hair. Oh, this guy’s definitely not going to make it.
Steven Butala: We have a rear view mirror situation happening so we can see.
Jill DeWit: Yes, we do.
Steven Butala: So you know what? He’s not part of that January crowd.
Jill DeWit: No, he’s not. He’s pulling his dog along.
Steven Butala: This is a whole show.
Jill DeWit: This is good. That guy’s not going to make it. This is good. Watch these three guys here. These guys just found this area and they’re like, “Where are we?”
Steven Butala: I didn’t know people could live like this.
Jill DeWit: Wow. What is this?
Steven Butala: They’re speaking Swedish or something.
Jill DeWit: That’s it. That’s so good.
Steven Butala: That’s their parents. That’s their grandparents.
Jill DeWit: There they are, that’s it bringing up the rear. We should do an hour long or this.
Steven Butala: Whoever’s listening to this is like, “God, you guys are idiots. I can’t see it.”
Jill DeWit: Like shut up.
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: She’s going to make it.
Steven Butala: She’s fine.
Jill DeWit: She’s good.
Steven Butala: She’s not a January.
Jill DeWit: She’s a regular.
Steven Butala: Yeah, she’s been running her whole life.
Jill DeWit: Exactly. Rob asks, “Can you explain some of the differences between the areas of the county when it comes to buying houses or land? Like is the South better or New England for example.” Oh, excuse me, country, when it comes to buying. Is the South better or New England. Okay, good. Oh, for houses and land. Oh, I kind of like this game.
Steven Butala: I’d be happy to explain it.
Jill DeWit: I really like this game. Let’s do one, let’s just do houses.
Steven Butala: Well, let me say this before I actually give you my opinion. Yes. Before I give you my opinion of the areas of the country, Jill will too. The best way to choose an area to buy and sell real estate is to download zip code data. That’s in a local market, like one city. Let’s say a regular city might have 10 zip codes in it, a suburb of a city. What you really need to do after you do this exercise we’re about to do is pit these zip codes against each other and pick the best one. Because the data will tell you, you don’t have to guess. You never want to just say, “I’m going to do this suburb of Chicago Heights.” You don’t want to do that. You want to download all the data, which is free by the way, on Redfin.
Steven Butala: Last week was all about how to do this. So go back and listen to that or keyword search for us in Atlanta investors or house investors or whatever. So, that’s how you really do it. Once you find an area to review. Would you do this in Alaska?
Jill DeWit: Well, you know what? It really is all about the data now that I think about it. It’s too easy to go on these sites, which is what we do. Like the beginning of our member call… We just did this last week or the week before last where you were looking at, look what’s happening in this state versus this state. And it was really more like this city versus this city. We all know where movement is happening. For example, are more people coming into California or going out of California.
Steven Butala: That’s it, you nailed it.
Jill DeWit: Hello. We all know more people are leaving California, we’re the idiots that are still here paying for it. But most people are leaving. Where are they going? Huh? Arizona. Heard about that. Maybe people are still going to Vegas. I haven’t looked in awhile, but for a while that was a thing. Let’s look at Seattle. Are people going into Seattle or coming out of Seattle? It’s not hard to check. So, whatever you’re doing, this is really the House Academy Show and it’s so great for houses because there’s so much real data because it has to be reported, and it doesn’t… Maybe it doesn’t necessarily has to be reported, but it is reported because there’s lenders involved.
Jill DeWit: That’s why I think what drives a lot of the data that we have at our fingertips. It’s public knowledge about these mortgages and what the banks are doing, who they’re lending to and how much. So Alaska, I would do, gosh, 20 minutes of research just to find out. I wouldn’t stop at Alaska, I would look at the West Coast and I would go major market by major market. San Francisco, what’s happening? I don’t think it’s growing, I think it’s decreasing, but that was the last I looked six months ago. All the way down. San Diego, I would pit that against it. And then from there I would get specific.
Steven Butala: If you have attention deficit order to an extreme like I do, you need to look up days on market. And the best way to do that, to look at it all, like a bar graph where you can choose your markets like Jill’s doing. Like you could look at Miami versus San Diego, is on Redfin. So just go to Redfin, type in Google Redfin data and you’ll be able to pick and choose your markets. They default to like Atlanta and Seattle and Los Angeles and stuff. In a very, very, very quick way… What are you pointing at?
Jill DeWit: No, it was just me. I was actually reminding myself of the question, not you. That wasn’t for you, that was a note to me.
Steven Butala: Go to Redfin Data and download and customize a market. They default to certain markets and then that’ll tell you very quickly which markets are… The lower the days on market, the more almost overnight immediate success you’re going to have with a mailer. And number two, you’d never want to buy and sell houses, this is just my opinion, that are like where the retailer they’re selling on online for less than replacement costs or less than a $100,000. There’s just not enough margin. If you want to do that, you can make a fortune in mobile homes. But that’s for a different topic.
Jill DeWit: I was reminding myself, I’m just thinking about this question that Rob asked, and that’s why I was just kind of looking at it. Once upon a time I would have sat here and rattled off areas and I don’t even do it anymore. I don’t want to do it anymore because it changes and it’s too easy now to go get really good current data for the last 30 days. Go compare the last six months to the last 30 days. It’s really easy to see trends of what’s happening and it’s more than reading the paper and hearing that Toyota moved to Dallas, something like that. It’s more than that. You really want to watch for big growth or big decline.
Steven Butala: If you’re brand new at this, you just started listening or watching, I’ll tell you what, in my opinion, there’s no market where buying a house and renovating it and selling it works. It’s completely inefficient. So I’m not talking about renovating houses. We’re talking about buying a house for $125,000 and then selling it to somebody who thinks they can renovate it, or a landlord, for 180. That’s what we do. If it’s a renovation, forget it. An ARV, never even think about it again.
Steven Butala: Today’s topic, what kind of houses flip best? Let the experts tell you. This is why you’re listening. What kind of houses flip best?
Jill DeWit: You just said that’s bad. Don’t mark it up. What do you mean Steve?
Steven Butala: Don’t mark it up?
Jill DeWit: Well, I mean, don’t renovate it I mean.
Steven Butala: I’ll tell you what kind of houses flip best. Cheap ones. Ones that are cheaper price per square foot than the one next door.
Jill DeWit: Shows over.
Steven Butala: That’s great Steve, how do we find cheap houses? Everybody knows that. Everybody knows buying real estate cheaper than it’s worth is a good thing. So what’s so special about this show? This is how you do it and why. And we kind of really got ahead of ourselves when we answered the question. The data’s going to tell you exactly what to do. Do houses that are pretty flip better? No.
Jill DeWit: Oh wait, why picket fence are always better. I’m just kidding. Wouldn’t that be funny?
Steven Butala: That’s for real estate agents that have too much hair spray.
Jill DeWit: Do you know what I think it is?
Steven Butala: There’s no emotion in this. It’s all price per square foot.
Jill DeWit: Well, here’s where I go with this. Tell me if I’m right or wrong, but this is my thinking.
Steven Butala: Oh, I will.
Jill DeWit: That’s true.
Steven Butala: This is the kind of stuff I can get away with on this show. If I said that at the kitchen table, oh my God.
Jill DeWit: Oh yeah, that’s true. So, get it out now. Have fun. I think that in our space, when we say flip houses, we mean buy it in a crappy condition, sell it in the same crappy condition. That’s what it is. I don’t sweep, I don’t do anything. Yeah, exactly. So I think that it’s price range and I take it a step further to mean it’s whatever the median price range is in that market, and I’ll tell you why in a second.
Jill DeWit: For example, here in Southern California, honestly the median price range is probably around a million dollars, median.
Steven Butala: It’s like 780.
Jill DeWit: For a single family home.
Steven Butala: Yeah. That’s such a weird stat.
Jill DeWit: I know. But follow me on this one. Other parts of the country, the median is $100,000. The median is $250,000, whatever it is. And the reason why I look at it that way is because of the buyer’s pool. Here in Southern California, you could find people to buy and afford and finance a $990,000 house all day long. In Texas, not so much. In South Florida, some parts maybe and some parts no. There’s some areas that it’s all over the map. Maybe even like parts of Colorado, the beautiful resorty parts, million dollars I can do, you get over to the Eastern Colorado, not so much. So anyway, whatever it is in that market, those to me is what I zero in on. And then we go into all the other things that we talked about.
Steven Butala: Relativity is what matters here. And Jill says Texas, like it’s all the same or Southern California like it’s all the same. Really, if you’re serious about this and… Not right in the very beginning of your career, but the people that are in our advanced group and that are doing this and making a $100,000 to a million dollars a month or more, micro micro micro mail. They take not only a zip code, they take a portion of a zip code, price it altogether. That’s what Neighbor Skip’s good for by the way, and Parcel Fact. We can draw these polygons, get the data from a very specific, even down to a subdivision for houses, get a price per square foot number of let’s say, I don’t know, a good one for Phoenix is, we do a lot of deals in Phoenix, $145 a foot. You want to be buying properties in there for 80 or 90.
Steven Butala: It’s as simple as that, and all you have to do is send offers to a bajillion people and the people sign it and send it back. It’s that simple. This is, as topics go, and I wrote it, it’s a simple, simple, simple conversation. There’s not a lot of businesses… Every once in a while I sit around and think about applying this business model to other stuff. Like what if you could send out…
Steven Butala: Let’s say you wanted to buy a camera and you could send a letter out to everybody who owns a specific type of camera. There’s no data set that I’m aware of where this is possible. And send it out for 10% of what it’s actually worth. You’re going to get a lot of response. What if everybody who owns a convenience store, you sent them a letter and said, “I own a convenience store and I’m looking to expand. I’d like to buy yours for $10,000.” How many would people would respond? Whatever the number is, it’s consistent, I’ll tell you that. It’ll be a very consistent, if you do it in Miami or if you do it in San Diego, and it’s worth it.
Steven Butala: You’re going to catch that person who’s sick of that store that day, doesn’t know what they’re doing, probably doesn’t have the right computer system, hates his employees, maybe just got a divorce. I don’t know. And you’re going to buy some stuff. So this concept is great.
Jill DeWit: Thank you for not… No, that was good actually. I was waiting for you to take it to the relationship level and I’m really pleased that you didn’t. No, don’t. Don’t. You can’t send offers like that, that’s illegal.
Steven Butala: I mean, isn’t that what match.com is?
Jill DeWit: No.
Steven Butala: I like that one, not that one. I like that one, not that one.
Jill DeWit: I don’t think-
Steven Butala: And it’s not gender specific.
Jill DeWit: Does it let you put in blonde hair, blue eyes?
Steven Butala: Oh, yeah.
Jill DeWit: Seriously?
Steven Butala: I think.
Jill DeWit: I don’t know. Hey, let’s not go there.
Steven Butala: I don’t know from experience.
Jill DeWit: We’re dipping the toe into some bad stuff.
Steven Butala: Why?
Jill DeWit: It’s like, I don’t know. I mean, let’s have an open mind.
Steven Butala: Oh my gosh. You tell me with a straight face, you don’t objectify men.
Jill DeWit: I don’t.
Steven Butala: Really.
Jill DeWit: Seriously.
Steven Butala: We just watched a show together where they were talking about… What’s that movie that you love from the 80s and you’re jaw was on the ground. Dirty Dancing or something like that.
Jill DeWit: That’s not the one that I love from the 80’s.
Steven Butala: What is it?
Jill DeWit: I’m not going to share it. That’s not it.
Steven Butala: If you don’t objectify those… Okay.
Jill DeWit: No, you know what’s funny? The one that I really love from the 80s, the guy’s not that good looking. I just like the guy. I’m past the looks, and he didn’t age well.
Steven Butala: So somehow you’re rationalizing-
Jill DeWit: He didn’t age well, but I still like the guy.
Steven Butala: Objectify this actor.
Jill DeWit: Anyway.
Steven Butala: That the concept works with people that you potentially could have a relationship with. Let’s end it like that.
Jill DeWit: Happy you could join us today.
Steven Butala: Send a love note to like 25 people and one of them is going to respond. You’re going to pay attention to that person. What if you just did a mail merge.
Jill DeWit: Here we go. I keep trying to end the show. Can you tell?
Steven Butala: I’m sorry, go ahead.
Jill DeWit: Every Monday, Wednesday and Friday find us over on the Land Academy Show. Tuesdays and Thursdays right here on the House Academy Show.
Steven Butala: Tomorrow, the episode on the Land Academy Show is called, Do You Enjoy the Process or the End?
Jill DeWit: I love it.
Steven Butala: You are not alone in your real estate ambition. Which one do you enjoy?
Jill DeWit: End.
Steven Butala: So do I.
Jill DeWit: Some people enjoy the process, that’s true, and they drag it out as long as possible. Like other things, but we’re not going to say that too because this is G rated.
Steven Butala: Oh, I didn’t even think about that.
Jill DeWit: Don’t go there.
Steven Butala: A lot of people like you do crafts.
Jill DeWit: Oh, yeah the process probably.
Steven Butala: It’s process.
Jill DeWit: Probably. Yep. The House Academy Show remains commercial free for you, our loyal listener, so wherever you’re watching or wherever you are listening, please subscribe and rate us there. We are Steve and Jill.
Steven Butala: We are Steve and Jill. Information-
Jill DeWit: And inspiration-
Steven Butala: To buy undervalued property.
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