When Will This Recession End (LA 1238)
When Will This Recession End (LA 1238)
Transcript:
Steven Butala:
Steve and Jill here.
Jill DeWit:
Hello.
Steven Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit:
And I’m Jill Dewit, broadcasting from sunny Southern California.
Steven Butala:
Today jill and I talk about when will this recession end?
Jill DeWit:
I’m really liking the sweat pants, slippers, I’m being sarcastic, lifestyle.
Steven Butala:
Keep going.
Jill DeWit:
It was fun for one day. You’re like one… You know what it is? It’s like one cold day once in a while. It’s raining and you have a book and you… I sit in my chair by the window and I drank my tea. Do I want 40 of those? No, I don’t want 40 of those. I’m ready. I’m done. I’ve been done. I know you have too.
Steven Butala:
Yeah. During the last recession, it was about 2008 or nine or 10 somewhere along those lines and a good friend of mine who is a great friend of mine now, and a client, we sell a lot of houses to him. Our kids were in preschool together. That’s how I met him. And we had this exact conversation. He said, “I don’t want this recession to end too fast. I want it to end, but I don’t want it to end too fast.”
Steven Butala:
And by the way, I was on the other side of the conversation, ready to pound the guy because it took us to our knees. I mean it beat us down to our knees real estate wise and money wise. And it was all because I didn’t have stuff structured correctly and we were buying selling property through One channel and the channel failed. It’s not that buying and selling the property failed.
Steven Butala:
By the way, buying and selling real estate never is bad. It never fails. The prices change. How you finance stuff might change. It’s always a great deal. It’s got to go back up.
Jill DeWit:
Exactly.
Steven Butala:
So I mean I wanted it… I’m not saying this without compassion. I don’t want the recession to go on forever. No one does. I don’t want us to be stuck at home either. That’s not part of this. This is really the real estate perspective. So my point in silly little story is I do have some compassion because fortunately for this time around, we’re prepared for it. And we do shows like this because some people aren’t.
Jill DeWit:
Right.
Steven Butala:
Some people aren’t prepared for it. We’re here to help, so this doesn’t happen again or so you can make the best of this one. That’s why we have multiple channels for access to capital. If you’ve got a great real estate deal, we would love to hear from you. And so that’s going on in land investors right now.
Jill DeWit:
Mm-hmm (affirmative).
Steven Butala:
A lot. They’re like, bring the deals.
Jill DeWit:
I know.
Steven Butala:
Because we have been waiting.
Jill DeWit:
I know. Yeah.
Steven Butala:
So before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.
Jill DeWit:
Rebecca wrote, what percentage are you offering on land and houses? Oh, it looks like-
Steven Butala:
I repeated the question.
Jill DeWit:
Apparently you did. I was going to say, “God, I’m sounding like a weird deja vu.” Let me make up my own question.
Steven Butala:
Yeah.
Jill DeWit:
All right. Here’s my question. Jill wrote, “Uh-oh.”
Steven Butala:
Jill, you’re a crack up.
Jill DeWit:
My mailer was a little too good. I do not have the money to complete all these deals. What do I… Can I put 20 into the Land Academy Deal Funding? Do I sprinkle them out? Is LandTank the best place? Help. Help me team. What do I do?
Steven Butala:
It’s like, help me. You’re my only help.
Jill DeWit:
Yeah, exactly. All right, now answer the question.
Steven Butala:
I want you to… It’s like your younger self was asking your older self this question.
Jill DeWit:
Yes.
Steven Butala:
So now older self answer.
Jill DeWit:
Breathe. This is a good problem to have. Like dating. Congratulations, you learned to up your numbers. So yeah, this is my older self now. Okay, now this is me, not Jill answering the question for that, Jill.
Jill DeWit:
So here’s what I want you to do. Don’t just blindly submit them all. I want you to go through all of them and pick out the best ones. I want you to do your normal due diligence. Put them all in a spreadsheet. I’m guessing you have, what’d you say? You said 20. Fantastic. You probably don’t want to buy all 20. Maybe you do. Let’s make sure. So put them all in the spreadsheet and I want you to do all your normal due diligence and then I want you to rank them, one through five and I want you to start with all those ones, first of all.
Jill DeWit:
How many of the ones can you buy? And part of the thing too, with your due diligence, I want you to find out how hot are these sellers? Are they like, you can have hound it but we got close on Tuesday because I got to have the cash kind of thing and they’re willing to take this. Because this is what I’m finding. Some people are willing to take darn near any price because just to get rid of it, be done with it and have the cash and move on kind of thing. So those go up to the top too. Those should be…
Jill DeWit:
So say you got, of those 20 ,you got five hot ones. I want to address those hot ones first. Buy the ones you can.
Steven Butala:
Always the hot ones first.
Jill DeWit:
Yeah, that’s right. Date the hot ones. Don’t let the hot ones get away. The other ones that are kind of scrawny. They, whatever, they make the cut, but you know, they’re not marriage material.
Steven Butala:
Or it’s possible to have some redeeming quality but let’s get to the hotness first.
Jill DeWit:
Exactly. That’s where you rank your property with the hotness factor. There you go. So buy the ones you can, flip them as fast as you can. And I want you to be using that money for the other scrawny ones that are down there that still have some redeeming qualities, like Steven said.
Steven Butala:
Scrawny. Where’s Jill’s mind?
Jill DeWit:
You know that… Maybe, no, not scrawny. They’re-
Steven Butala:
No, I think scrawny is what you want.
Jill DeWit:
No, they’re the ones that-
Steven Butala:
You don’t want a scrawny man.
Jill DeWit:
No, no. There’s a better way. I want the ones that aren’t quite so ambitious or aren’t quite so, what’s the word I’m trying to say?
Steven Butala:
Pudgy?
Jill DeWit:
No. I don’t know. Anyway.
Steven Butala:
Mentally ill?
Jill DeWit:
Stable. Mentally stable yes.
Steven Butala:
Bankrupt?
Jill DeWit:
That’s it. Those guys never make the list. Anyway, just kidding.
Steven Butala:
I have a few more if you’d like.
Jill DeWit:
Okay. All right, so you have those five. You could afford, you could afford three. You buy those three. I want you to put those other two into the Land Academy Deal Funding or LandTank or a couple of places and just, it’s kind of first come first serve. You would not hurt my feelings, by the way, if you submitted a property to Land Academy Deal Funding and you put it on LandTank and you put it in the Land Academy Deal Board and somebody beat me to it, good for them. You would not hurt my feelings and I would love you to do that.
Steven Butala:
The only way you’re going to hurt our feelings, and this is, I say this from my heart, is if you reel a great deal in and you say some version of this to yourself, “Damn, I wish I had 25,000 bucks. I’d get this deal done. It’s a great deal. I just don’t have the money.”
Jill DeWit:
And you let it go.
Steven Butala:
And then you let it go. You don’t call us. You don’t call a hundred other people that are in the group that are deal funding people. We want you to get the deals done.
Jill DeWit:
Oh, yeah.
Steven Butala:
That’s what this young Jill to old Jill really means. Don’t let any deals go to waste because you don’t have the money.
Jill DeWit:
And so there’s three places right there. One is us, which is Land Academy Deal Funding and you find it on LandInvestors.com. By the way, you don’t even have to be a member. So if you’re listening to this show and you’re in this business, you’re not a member of ours and you’re like, “I got some deals that meet that criteria. We got to fund these babies,” submit it because I do deals with people that aren’t members too. Like you said, no good deal should go to waste. I don’t care who you are or where you found it. Let me know, I’ll help.
Jill DeWit:
Second, we have our deal board. Well there’s the land Academy Deal Board, which is a hidden thing for members only. You can put it there. And then the third one is LandTank. You put it on there and somebody else in our community very well will grab it. And every time I go to LandTank and I talk about LandTank, there’s nothing available because it gets snatched up. So it’s pretty fast.
Steven Butala:
Yeah.
Jill DeWit:
If it’s a good deal, it’s going to be fast.
Steven Butala:
Properties that we get in for Deal Funding for us fall into one of two buckets. Number one, the people who submit them are just checking to see if it’s a good deal. That doesn’t make us smile very much. In fact, it’s a bunch of work.
Jill DeWit:
Yeah.
Steven Butala:
And people have a hundred reasons to do that. What we want to do are great deals.
Jill DeWit:
I’d say it hasn’t happened very much lately-
Steven Butala:
Oh good.
Jill DeWit:
So I really appreciate that. No, the word got out. So, and I’m really glad.
Steven Butala:
Yeah.
Jill DeWit:
So I know, those of you submitting Deal Funding, you’re really doing your homework for me and I appreciate that.
Steven Butala:
Awesome. I didn’t know that.
Jill DeWit:
They submitted books, to make sure that it’s good-
Steven Butala:
Oh, great Jill!
Jill DeWit:
Oh yeah, yeah, yeah. They’re not using it as a temperature check. They’re looking at it like let’s get this done.
Steven Butala:
It’s Jill’s way of saying please move on.
Jill DeWit:
Thanks.
Steven Butala:
Today’s topic, when will this recession end? This is the meat of the show. Recessions are when all the economic indicators are down, versus before when they were up. So it’s kind of a sine wave or an acoustic wave. There’s a thousand ways to look at this, but every single thing’s a cycle. There’s good years and bad years. You personally have good years and bad years, good weeks and bad weeks depending on who you’re married to. Good minutes.
Jill DeWit:
Good days and bad days.
Steven Butala:
It’s just a cycle. People get pounded by recessions when they have a single point of failure in their life. And so I’ve always said, I just don’t think it makes sense for most people in this country, especially the way the world is now, the way our country is now, the internet is to have a single point of failure with revenue. So if you have a job and that’s your only source of income, I’m not sure that’s the best idea, safest idea for you or your family or whatever. So go ahead Jill.
Jill DeWit:
Well, you can come back. Here’s my thing too. I’m just thinking, even if that’s a situation that you’re in, you don’t have to give up. Your hands are not tied. I’m sorry if I’m saying this too soon in the conversation, but I’m thinking about the single… This is good helping. This is hurting. Hands down, people are losing businesses. There are people losing their way of putting food on the table. Their lifestyles are going to change, but it doesn’t have to be forever. You can come back.
Steven Butala:
We happen to be in the business of buying undervalued real estate in good times or bad times. Right now it happens to just be cheaper than it isn’t good times. So yeah, Jill’s exactly right. I’m not saying this without compassion and if it makes you feel any better at all, I was exactly in the just about bankrupt situation in 2008, nine and 10. And we got it together. Jill and I got it together and started buying and selling houses. We were doing it with land forever and still do it. Obviously do both now. There’s ways out of it. She’s exactly right. So I don’t say this without compassion, but I knew this was going to happen again so I had 10 years to plan. I thought it was going to happen in 2017. Fortunately I was wrong.
Steven Butala:
So when will this recession end? To answer the direct question, this is going to be a lot shorter than the last one because it came out of nowhere, number one. And number two for people in real estate, it’s probably going to be relatively short and I say truly relatively than last time because the demand for houses and housing is so pent up, solely based on our population growth.
Steven Butala:
We are experiencing in this country, the largest population growth ever. Ever since the country has ever been here. And it’s not just like 10% more, it’s a lot. This millennial generation, they’re starting to have children and they want houses in the suburbs just like we all did, at one point. So that’s going to prop this… I shouldn’t even say prop up. It’s going to fuel supply… regular growth and supply and demand for housing, but there’s going to be about a 12 month period. That’s my prediction. When will it end? In the end, at late 2021. And so we have a lot of real estate between now and then to buy and resell.
Jill DeWit:
Mm-hmm (affirmative).
Steven Butala:
We’re not here to buy and hold.
Jill DeWit:
Right.
Steven Butala:
We’re here to clock as many deals in, in and out, cash in, cash out than we possibly can, all through the rest of this year and next year. I guess that’s it.
Jill DeWit:
I don’t have lots of add. How funny is that?
Steven Butala:
And really, on a personal note, I wanted to drive this home. If this is really affecting you, my heart goes out to you, both of us. We were there. I know exactly what this feels like. You don’t know if you’re ever going to rebound. You know where the next check’s coming from so I do understand but please, no matter what you do, because it will end. This whole thing will end. Whatever you do, plan for the next time. Don’t be surprised about it-
Jill DeWit:
Right.
Steven Butala:
… the next time, 10 years, or eight years, 10 years from now.
Jill DeWit:
It’s true. Thank you. I’m happy you could join us today. Every Monday, Wednesday and Friday, you can find us right here on the Land Academy Show. Tuesdays and Thursdays, we are over on the House Academy Show.
Steven Butala:
Next week join us on the Land Academy Show for another interesting episode. You are not alone in your real estate ambition.
Jill DeWit:
I like your prediction. Obviously we don’t… I say this like you would know obviously, but we don’t talk before these shows really at all, so I never know what you’re going to say. You never know what I’m going to say, but I didn’t know that you kind of had a date that you’re kind of thinking in your head about when we’re going to come out. So when you had this date in your head, are we going to be back to the level of pricing we were going into it or we just going to be stable at a new level?
Steven Butala:
Stable at a new level? That’s a great question. Stable at a new level, that’s much lower than it was in let’s say February of 2020, which is when this whole thing hit. So there’s going to be a great solid uptick and a lot of it is going to depend for houses anyway… Land always bleeds into the housing market and vice versa on mortgage, how easy it is to get loans and the competence that lending institutions have. Right now they have none. So it’ll, it’ll stable… It has to be a low enough price where a bank looks at the price and says, “Wow, it’s a lot less than it used to be.” And they look at the credit risk that they’re taking in the person and it’s acceptable.
Jill DeWit:
Right.
Steven Butala:
So that’s… They have to have some confidence and right now their confidence is dwindling every day.
Jill DeWit:
Right.
Steven Butala:
And when they’re lending confidence dwindles, so two acquisitions. So do people buying and selling real estate.
Jill DeWit:
Right.
Steven Butala:
It’s an indicator for us. That’s not how we do it.
Jill DeWit:
You know what I want to come out of this whole thing? I just want it to be that every 25, 30, 35 year old, I want these guy… I want them to be able to afford to buy a house. There’s a lot of them right now that walk around and saying, “Well, my parents can buy it. I can’t.
Steven Butala:
Yeah.
Jill DeWit:
If I’m lucky, someday I’ll be able to afford a house. Before all this, some people said, depending where they lived, I’ll never be able to afford to live here. I’ll never be able to buy a house here. I’ll have to rent and I don’t like… I think that’s wrong. I hope it resets enough that they can afford to buy property.
Steven Butala:
I have lots to say about that.
Jill DeWit:
Uh-oh. Are we going to cover it now or you want to save it for next week? Go.
Steven Butala:
Anyone in this country can afford to buy a house. Maybe just not on the block that you want to afford, where you can buy it. And because of this virus, here’s the good news. You can probably, within reason, live wherever you want now. Most of us are all working at home. We never dreamt we were going to do that.
Jill DeWit:
Yeah.
Steven Butala:
So there is a certain section of people, there are also the section that people on TV cover the most, that are really affected by this. Restaurant workers and people that have what I call on location jobs and that’s all there is to it. So the delivery service that they provide, let’s say it’s a restaurant, is there, and that’s it, the vast majority of it. Manufacturing, they have to be there to manufacture these goods.
Steven Butala:
So there’s restaurant jobs and manufacturing jobs all over the country. In fact, if you’re working in manufacturing, that’s what’s happens that some of the cheapest real estate in the world is. In the world! Not just in our country. You have so much freedom, when recessions create freedom. Freedom from jobs. It’s not voluntary, which kind of sucks, but freedom from jobs. Now with the internet, you can… There are $12,000 properties you can buy in Illinois right now in a nice area of Illinois.
Jill DeWit:
Thank you.
Steven Butala:
And get a mortgage on.
Jill DeWit:
Thank you. I’m happy. All right.
Steven Butala:
It’s positive. It can be positive.
Jill DeWit:
Okay. The Land…. Yep. The Land Academy Show remains commercial free for you, our loyal listener. So wherever you’re watching or wherever you’re listening, please subscribe and rate us there we. We are, Steve and Jill.
Steven Butala:
Information.
Jill DeWit:
And appreciation.
Steven Butala:
To buy undervalued property.
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