FCP 098: Forever Cash Success Stories – Meet Steve Hilbon

Jack: Hello, everyone, and welcome to another episode of “The Forever Cash Life Real Estate Podcast” with yours truly, Jack Bosch as your host. Today we’re going to talk about solar. We’re going to talk about land flipping. We are going to talk about tax deductions, we’re going to talk about a whole bunch of stuff with our special guest today, Steve Billabong [sp]. So that’s get started in just one second.

Announcer: Welcome to “The Forever Cash Life Real Estate Investing Podcast,” with your host Jack and Michelle Bosch. Together, let’s uncover the secrets to building true wealth through real estate and living a purpose-driven life.

All right, so welcome again. And again, my name is Jack Bosch, and welcome to “The Forever Cash Life Real Estate Podcast.” I am super excited to have a friend of mine on the line today. Steve, how are you doing? Steve Billabong.

Steve: I’m doing great. It’s a pleasure to be here with you today, Jack.

Jack: Well, wonderful, wonderful. Now Steve has been one of our students as we call them, but really he’s a master already for many, many years. Like you came across our program and our stuff. When was that? In 2008? Pretty much when we started, right?

Steve: It was Halloween weekend of 2008

Jack: That’s right. You were at the very first-ever live event that we have done.

Steve: First or second. I think you said you did one where there was nobody there and then there might’ve been one before me, but it was Halloween weekend. I’ll never forget it.

Jack: So we did back in the days when we got started wanting to teach this and wanting to create 1000 millionaires, we really didn’t know how to go about this. So the very first time we put up an event, we hosted it in our office because we had a conference room and we literally had nobody take us up on the offer. Nobody signed up for it. And the second time around, I think we did, we had two people sign up and then we figured out how to actually get the word out there because this was all a matter of marketing and getting the word out there. And then the next time around, this was the event that you attended, which is our first official event outside of the office. We had 300 people and that was when you were a part of that and it was on Halloween weekend.

We didn’t think about it too much because wherever our house was, nobody had come trick or treating the years before and coming from Germany where we’re not into much into Halloween spirit yet, and we had only our daughter was 9 months old so she didn’t trick or treat yet. Only afterwards did I realize that you don’t want to have a live event on Halloween weekend. But anyway, so Steve, so you came to us right in that time when the market kind of was melting down. Tell us a little bit about your experience, give us a little bit the scoop about who Steve Billabong is and what you experience in real estate was at that time or what it is now.

Steve: Well, I’m probably not your typical student because I came in to seeing you, I had already been a full-time landlord since I sold my last business in 1997 and this was ’08. So this is 11 years later. I had accumulated like 25 houses already and I had a portfolio out in Phoenix actually out by Ian [SP]. And then, as an entrepreneur in real estate like you are, we’re always interested in anything that has to do with real estate. Hey, if it’s interesting and you can make some money and it’s fun, let’s do it.

So a buddy of mine who still lives out in Phoenix, Ron Pearson [SP], I don’t know if you know him, he sent me an email advertising your seminar. And what you did was, and I’ll do it right now, you had a filing cabinet and you whipped out all the drawers and you said, look, here’s all my deals and now I got drawers full of deals. And here’s my list of how I keep track of what I’ve done. I’m up to close to 300. I mean, which is nothing compared to what you’ve done. I mean, it’s amazing, absolutely amazing what you’ve done, but hey, it’s good enough for me.

And after your seminar, I never bought another house. I’ve strictly done land. I’ve strictly done land. I’ve divested myself of most of my rentals I’ve done. I have about 10 left. That’s my income. And the land stuff is fun. I enjoy it. It’s entertaining. And so I’m a little different from most people that are just trying to make a living off of it because I do almost all my deals now my IRA, my Roth IRA. And it’s just almost a challenge. Like you say, you want to build 1,000 millionaires, I want to see if I get my IRA up to 1 million bucks. I’ve never taken a penny out. I’ve always kept putting money back in and back in. And, so it’s just, we travel a lot like you, 12 to 15 weeks a year, and I work when I want and if I don’t want to take phone calls, I just don’t take them. And if I lose a deal then I’m gonna lose the deal. But I just, I enjoy it. It gives me something to do. I really enjoy it.

Jack: I love this kind of like, yeah, relaxed kind of [inaudible 00:05:03] around how you approach things. So you’re not out there to maximize the land business, you’re just doing it basically as a hobby. Yet you told me that the land business over the last what is it, like 10/11 years now has produced how much for you?

Steve: I’m sure it’s produced in the seven figures and I’m for them…

Jack: It has produced a seven-figure as a hobby. So basically that means a minimum of like almost like 100 grand a year just doing part-time or [crosstalk 00:05:35].

Steve: Easy 100 grand a year. And I’ve always espoused with anybody that’ll listen to me. I’ve sent a few people your way that have joined your program that if you really are good at this and diligent, one guy’s my dentist and he’s actually taken a day, a week off now just…his name’s Phil. I don’t know, I forget his last name but he’s taken a day, a week off just to concentrate on doing this. I’ve always said you really, you know, are adept at numbers and good with this, you shouldn’t make less than a quarter-million bucks a year. I just can’t believe that you will make less than that. That’s my opinion because I make 100 grand, and I think I made 100. I made a lot. I had a bunch of deals this month. I got really lucky. And if you want to get into this thing with the solar issue here, it’s just an amazing situation that just happened to me. I don’t know. Do you want to talk about that now?

Jack: Yeah, let’s talk about that just a second. First I want to jump into the Roth IRA kind of piece. So you’re doing our land deals. I mean for those listening, you go back to the very, very beginning of the podcast, there is several sessions where I explain in detail how the land flipping works. Listen to any other student interviews that talk about how the land flipping works. So we’re not gonna jump into the steps and things like that now but basically in essence, you know, we’re buying these properties for 5 to 25 cents on the dollar and then, and we’re selling them for 50 cents on the dollar, or 75 cents on the dollar or we’re selling with seller carry-back, seller financing for owner financing for cash flow.

So having said that, you do a lot of your deals in your self-directed Roth IRA. So tell us a bit about what you do there, how you do that because I think lots of people if you’re new to listening to this, you might not even know that you can do this in an IRA because typically most people have their IRA with like Charles Schwab or Vanguard or one of these companies.

Steve: Well, to qualify that, if you call Vanguard or Fidelity and you ask them, hey, I want to buy real estate with my IRA, the first thing they’re gonna tell you is you can’t do that. And to qualify what they’re saying is, they can’t do it for you because they’re not gonna earn a commission on, they don’t have a real estate license. So you’ve got to go through a specialized trustee. Now there’s about 10 of them around the country. I know Ron LeGrand spouses Quest. But I’ve analyzed it and I go with Equity Trust in Westlake, Ohio because they have a fee every year, but they don’t get you for every transaction. And that’s important to me because I have like 30 or 40 people that pay me every month, 30 or 40 checks go back every month. And there’s always a couple of deals I’m buying, I’m selling and I don’t want to get hit up for a fee each time. So at the end of the day, that could add up to a couple of thousand dollars a year.

And the reason when you asked me how much have I made, the beauty of a Roth IRA is it’s completely tax-free. There’s no accounting for the government. As far as I know, I do not fill out any documentation about what I’ve done. Even with an HSA, a health savings account, they’re gonna give you a document saying how much you contributed and how much you paid out. But for a Roth IRA, nothing. I don’t have to fill out any forms. It doesn’t get reported on my income taxes. So I don’t keep track of it. I mean, I know how much people owe me, but I don’t have an amortization schedule on each file. I know that they’ve got to pay me, let’s say till May of 2021, 100 bucks a month or 200 bucks a month, but I don’t really know what the balance is. So when you ask how much have I made, I just guess. I’ve done so much deal and if I made five grand to deal times 300 deals then I made a million and a half dollars.

Jack: You know you could also outsource that. You could have a loan servicing company take care of that, charge you a $25 fee, pass that through to the buyer and then have the loan servicing company do what they do. They do one deposit into your bank account a month for all the 30 that are coming in and therefore they keep track of the amortization and they can keep track of the balances and they send you a statement and beautiful things like that.

Steve: Jack, this is the entertainment value. Every day I go to the mailbox and there’s checks in the mailbox and I love it. It is great. I don’t care what you say.

Jack: I agree with you. I like that too. I mean, we have converted almost all our land loans to ACH, so we don’t get checks in the mail anymore. It’s kind of sad. I really, I mean, there should be hundreds of checks coming into our mail, but now we just get a bunch of hundreds of deposits into our bank account, which is obviously nice too. So I get my juice by logging into my bank account when I see like boom, boom, boom, boom, boom, boom. All these deposits. But the checks is really fun. You go to the mailbox and there’s a stack of checks. The only thing is we travel so much that we don’t want them to be sitting around forever and so on. So we’ve converted everything to ACH and we only have one current customer that I think she just doesn’t have a bank account. She keeps sending in a cashier’s check or a money order every single month, but that’s cool. The next part…go ahead.

Steve: Well, the only downside to the Roth IRA is you can’t get money by PayPal. You can’t get money by wire, you can’t get money by direct deposit because the IRS regulations would consider that constructive receipt of funds. So what you need to do is you need to get a check in the mail, check or cashier’s check, and I’m just the conduit. I get to check in and I pass the check onto the trustee with a deposit slip. So those add just a little bit of a complication because sometimes people want to pay you and you say, hey, you got to send me, you know, they feel a lot more comfortable paying through PayPal or something like that. But I don’t think I’ve ever lost a deal for it, but maybe one. You just have to be credible and the people, in general, will believe you. That’s the only downside to that.

Jack: Absolutely. Or also you can do what a lot of our students are doing is they’re doing some of the smaller deals in their personal name or in their LLC and things like that. And then some of the bigger ones, some of the real home run deals, they do them in their IRA, particularly if they’re cash deals or so, so that it’s just like, well, flip done and it boosts their IRA by like $50,000 or so in one transaction. So you can play with that. There’s many different ways to do that. The key here is that, if you’re listening to this or watching this, if you do not know that you can actually do real estate in your IRA, now you do. So there’s custodians as they’re called, there’s a whole bunch of them. And I love your distinction that you want to look at them not just based on the annual fee, because they all charge an annual fee, but also on their ongoing fee, what they do.

And then what another thing I would ask you to look at is do they allow a concept called the Checkbook IRA. We’re not gonna go much into this right now, but in essence, somewhat some do, some don’t allow that your IRA can own an LLC, all right? So if your IRA owns the LLC, you can be the manager of that LLC and you can now write your own checks and you can actually deposit them in your own bank account and you don’t actually have to go deposit it into the IRA anymore because the IRA is a 100% owner of that LLC and that bank account and you’re just a signer on it as a manager.

So there’s ways that you can go still do all of this and avoid those fees if you’re already with them, with an IRA company. So we’ll put the few names of IRA companies into the show notes like Vantage IRAs is one of them that we use. Specialized IRA services is one that we have worked with. And another one is the IRA club, iraclub.org or .us. I can look it up and we’ll put it into the show notes for that. But now let’s talk about your land deals. So you told me in the pre-talk before we started here the show, that you just sold a larger property for a quick $8,000 profit or so but you talked literally about one deal on a 40-acre parcel, which is an area that I actually have not yet played in. It’s something that is in the back of my mind. I have my notebook here. It’s one of the things that is listed that kind of gets transferred from page to page on an ongoing basis that I need to look into but I just haven’t had the time and bandwidth to do it. We’re buying apartment complexes. We’re flipping land. We just sold a property yesterday, sold a piece of land the day before. We just keep selling land like crazy these days. We have obviously the educational side of things. We are about to go on vacation right now. So there’s lots of stuff going on and I just haven’t gotten to that part, but that is the solar kind of deal. So tell us about what kind of letter you’ve received then and about that kind of deal there.

Steve: Well, just let me tell you about this deal. I buy most of my parcels at tax auctions and actually Craigslist. I haven’t done any marketing in years and years and years.

Jack: That’s something else we’re going to talk about in just a second because this is a little different, but that’s okay. Yeah,

Steve: I’m on Craigslist, I see this a posting for 50 bucks an acre for land and I know I can usually sell it for $300, $400, $500 an acre. And it had just been posted earlier that day, the day before. On Craigslist, there’s a thing where you say “Reply.” Sometimes they give you a name and number and sometimes they give you a whole big train of letters and numbers and then you email them and they have to email you back. So I didn’t want to wait.

This guy was giving it away. I said, “I want this.” So he gave the parcel numbers and I have a working relationship with a title company, which is very important that you need to have that. You absolutely need to have a title company customer service. I emailed it over the parcel numbers and the gal responded. She says, she showed me the deeds. I saw the guy’s name on the deed. And I went to Google, I looked it up and there’s the guy’s name. He’s right here in San Diego County, just south of me. There’s the guy’s name and there’s his phone number. So I called him and I says, “Hey, you’ve got these parcels for sale. I want to buy them.” He says, “Okay, what do we do?” I said, “Well, I can send you a contract. I can take care of everything.” He says, “I want to go through title and escrow.” I says, “Great.” He’s still giving them away. Anyway, I got 38 acres for $3,100 all in with title. It’s was like $80 an acre and we closed escrow.

Now I’ve got these two letters in the mail. One came last week. Here’s one. Here’s the other. One guy, he’s done a bunch of solar projects and he offered me, here’s the number right here, $3,425 an acre, 3,400 and I paid 80 bucks an acre. This is like a home run beyond. This is fun. This is great stuff.

Jack: Say it again. So he offered you what?

Steve: Okay, he offered me an option for four years at like 50 bucks an acre to do his due diligence and whatever. That’s fine. And this guy has done a few projects. He gave me the name of the project he’s doing and I Googled it. He’s already filed the EIR, Environmental Impact Report, which out here in California, is like 400 pages. I saw it from the county it’s in. And anyway, and then he sent me a proposal, 3,400 an acre. If you add it all up, that comes out to about $130,000 for $3,000…

Jack: Straight out purchase. So he wants to buy the property for a hundred something thousand dollars. And this is so exciting. Not just because of the numbers, because it shows something very, very distinctive. That is a question I get all the time and the question that I get is, Jack, why do some people pay so much more money for these deals? Why don’t they go directly to the owners themselves? Well, in this case, you’re going to you for the owners, but why doesn’t he pay much less money? Why didn’t he go to the original owner of blah, blah, blah? So the thing here is other people, and we get that within empty lots. It’s like, why would a builder buy a property at $80,000 when you bought it for something thousand dollars? Because builders are not in the marketing business. They are not in the land acquisition business. They’re not in the deal business. They’re in the building business.

This guy is in the solar business and he runs his numbers based on the solar. He says to solar, I can produce it for so much. I can sell the electricity for so much. I can do this based on that. I can afford to pay this much for the land and he probably can afford $200,000 for the land but he’s basically telling you, okay, let me offer him $135,000 so there’s some wiggle room to go up, right? So for him, $135,000 is a good deal on that property based on the business model that he’s putting together, right? So he lives in a different world. He’s not looking at it from a point of view, how cheap can I get this? Can I use Jack’s technique and Michelle’s technique, the land profit generator technique to go find deals for $3,000? He’s looking at it from a business model, the revenue costs and thing and says like, here’s what I can pay for this land and it makes still total sense for me. That’s why he comes back.

A builder does the same thing. He says like, it’s gonna cost me $200,000 to build a house, the houses sell for $400,000 so I have $200,000 buffer. The cost of the construction loan is gonna cost me, the realtor is gonna cost me, some other things, holding cost is gonna cost me. So I have $150,000 left. I want to make a $75,000 profit. I have $75,000 left to pay for the land. So if you bring him a piece of land for 60K, they’re gonna jump on it because it makes sense irrespective of whether you bought that piece of land for $5,000. They don’t care because they’re coming from it from a different kind of angle. Does that make sense? So do you agree with that?

Steve: Yeah. But here’s the most ironic thing of all. When I was talking to this guy, he mentioned the name of the seller. He said, you know, I spoke to these people last year and I offered them. I don’t know if he made an actual offer because when I first spoke to him he said he wanted to see my interest in everything and he said, I’ll send you a proposal in the mail and email you a proposal, which he did the other day. And he said he spoke to these people last year. So these people knew that the solar people were interested in it and yet they still sold it to me. They gave it away.

Which I’ll regress to when I first met you, your comment was, basically, I’ll generalize it, hey, it works. People will sell you properties for cheap. And the first 10 deals we did, my wife and I, Sherry, we looked at each other and we said, who’s buying it and why are they buying it? And the answer today is the same as the answer we [inaudible 00:20:22] each other. We shrugged her shoulders and say,
“I don’t know.” I don’t know why people do what they do. Just make the offers and sooner or later and say, this is what it’s worth to me. I don’t want to insult anybody so I always use the phrase, this is what the property’s worth to me. You’re interested, great. If not, I’ll make another offer to somebody else. And so why, you know, maybe I can get more out of this guy. You know, the old Ron LeGrand saying, “Is that the best can do?” I don’t know. But now another guy has come along with these same two parcels. I don’t think he’s done any business. He doesn’t have any projects going on, but he offered me to lease it for $850 option…okay, lease price. $850 per acre for 20 years, Jack. That’s almost $700,000. This is like unbelievable and that’s an understatement.

Jack: So he’s offering you basically $32,000 a year to lease the property from you and then probably put solar on it, right?

Steve: With an escalation clause of 1.5%. So it’s even more than that.

Jack: And that escalation of 1.5% more every year. So you now have two really hard choices to do here. One of them is, do I sell it outright and make $135,000 or potentially live with more after negotiating or do I make a cash flow of 30 plus thousand dollars, $32,000 a year on this property for the next 20 years.

Steve: And that’s just the lease and I still own the property but I don’t know if this guy…

Jack: And then you still lease. And then [inaudible 00:22:01] that point of time solar, they’ll probably the extend the lease at that point of time because I mean, the nice part about solar is that doesn’t really, unless I’m not too knowledgeable about solar yet, but it doesn’t really damage your property, right? I mean, it’s not like you’re spilling stuff on that. There’s just putting a bunch of…installing a bunch of infrastructure on it that’s stationary and that just needs to be probably cleaned every once in a while.

Steve: Well, another analysis of this is that no matter where the economy’s gonna go, I think we’ll all agree that by next year or a year or two, the economy is gonna take a downturn. Prices are gonna go down. It’s just inevitable. But electricity here, especially here in California, they have mandates where any brand new house being built must have solar on the roof. Must. It’s a mandate, yeah. And so electricity prices are just going through the roof. We pay over 20 cents a kilowatt-hour out here, maybe 25 cents. You probably pay half of that in Arizona. So there’s not gonna be a lack of need for electricity. So no matter where the economy goes, these numbers are going to be valid. People have to have electricity.

So the answer to my problem is what did I do this morning? I called up the county planning and I want to speak to the guy and say my instincts right now are leading me towards the guy with the lesser offer that’s going to give me three grand an acre and I’ll get 130 grand because each one of them is offering like a four year option period at which time they can just bail and both of them can’t build a solar farm in the same place. I only had those two, that one 38 acres, 2 parcels, each one’s 19 acres. So only one of them can do it. You need to assemble a bunch of 1000, 2000 acres, whatever they need to do. And I want to go with the person that’s gonna pay me. I don’t want a guy offering me 600 grand and then three or four years now he says, well, I didn’t assemble enough land, blah blah blah and I’m out.

Jack: Last one has experience. The other one doesn’t.

Steve: Right. So I’m gonna talk with the city planner and try to get, he has no horse in the race, so I’ll talk to him and see what I get in feedback from him. But other than that, do you have any other ideas where to take this?

Jack: Well, let’s talk about that. That’s a creative way to spend our time here. Where else can you take this? Now, my immediate instinct as what I always call ourselves the contrarians is, as contrarians is everyone is looking for solar, but you are not in the solar business. You’re in the land business, which is actually great. So what can you do? Could you go to the neighbors of all these guys and yourself try to assemble a larger piece?

Steve: No. That’s a job, Jack. I don’t want a job.

Jack: No, not in terms of a job, but see if you can pay $10,000 for another 20 acres things like that. And just have a bigger piece because the bigger the piece, probably the higher value. You can go back to these guys and said like, well I now have 100 acres, how about that? Is there a premium for that? But I think other than that, I think you’re doing the right thing here with your properties. But my immediate thing is like, if this is a movement, if this has started and I agree with you and yes, probably we pay half of it but because it’s so brutally hot here, we have to crank the air conditioner up twice as much as you do. So in our house in April, we had a $600 electricity bill and that was in April when the temperatures were in the 80s and 90s. So once July comes, I’ll probably have a $1,500 electric bill.

Steve: We have a compound like yours. I mean, what do you expect Jack?

Jack: Yeah, that is true, that is true. Five air conditioners [inaudible 00:2:36] a bunch of them.

Steve: The comment on what you just said about assembling more for me, I just came into title on this the end of April, about five, six weeks ago, whatever it was. So he found me being on title in less than a month, so I think he blanketed the whole area. So I used to be able to sell to the land trust, the land preserves. That was like shooting fish in a barrel. You found the parcel and they would tell you what they would pay for it before I bought it. But now they have blanketed the area. Anytime these come up for sale, the tax sale, I can’t outbid them. You can’t outbid an end-user. So I don’t think I would go that route that you just said.

Jack: My point though is, is the following, my point there is if there seems to be a fast-growing demand for properties like that, then generally speaking, what you could do is you could, when you talk to the county official and talk to them about where they would like to see these solar plants to be installed because the county always has a wish. One of the biggest problems and the biggest mistakes builders make, particularly commercial builders as they come into a space and with an idea of what they want to build and that idea might be head-on colliding with what the county or the city wants them to build there. So one of the best ways and the smoothest ways to build something, I know from my builder friends, is to actually go to the city first and ask them, listen, I’m looking at that area. What do you want there? What do you guys want to see there?

And if they say, oh, we would love to see some apartment complexes there, we would love to see some retail there or something like that. Then you go in to the market and search for properties based on what you already know is going to be the easy way to approval. So you can do the same thing here. You can call the counties like which part of the county would you like to see those things? Do you want them to be right next to the town or you want them to be like 30 miles away? Which area have you kind of like in your discussions earmarked as far as a great area to do this in? And then you go there, go pick up a bunch of parcels and then go to the developers or get perhaps a letter even from the county that says we support this area. And then you have that. And then you call that guy, same guy back and say like, listen, I got 80 acres, 100 acres in this area. Here’s a letter from the county. That’s what they wanted to see. And now you have basically you have already made the case that your properties are prime properties for that.

So if this is a development, go ahead of the development, find some parcels there and you’ll have ready set buyers of [inaudible 00:28:32] properties that because of the business model they’re talking about are willing to pay literally like in this case 100 times that you’ve paid for the property.

Steve: Yeah, yeah. I mean for lack of saying it any other way, I just stepped in it with this one.

Jack: Sure. And that’s often, actually, that’s often when people say like, Jack you’re lucky. No, I know I’ve gotten lucky. Luck is a part of it, but the rest of it is freaking hard work.

Steve: You know something Jack, I’ve said to Sherry a million times, my success, whatever success I have is built on 99% failure. Because when you make offers, you expect no. “Hey, I’ll give you 1000 bucks for a $50,000 parcel or $20,000 parcel.” Most of the time you’re gonna get a no then you can give them the go… most of the time it’s failure. Every once in a while you get lucky, but you can’t give up. You can’t give up. That is one of the keys if you’re anybody that’s phenomenally successful, you got to have perseverance.

Jack: Exactly. So I love that. [inaudible 00:29:31] I’m going to steal that with your permission.

Steve: Oh, that’s fine. Hey Jack, I swear to God, I thank God that I came across to you. You changed my life, you really did, for the better.

Jack: They really very much. I appreciate that. We love having you in our lives, but so the [inaudible 00:29:36] is what I want to say that is and it’s so much fun having you guys and your success stories and you’re just fun to be around. That’s why I said before we were out there like we moved into the new house and they’re like, when is the party? Well, the party already happened. But I told you guys, anytime you’re in Phoenix, we can have a small party just with you guys and we can sit in the backyard and have a good time. But to the point is like luck always plays a role, but luck is meaningless if it’s not combined with preparation. If you stumbled into this thing, but because you understand land now, you know what you can do with it and it might often be a lucky strike that opens the door to something brand new.

Without luck, we wouldn’t be in the land business because our first mailing went to houses and land, but you know, the only people responding were land people. So we’re like, okay, let’s buy this thing for 400 bucks and then we sold it for $4,000. And that was just coincidence, but because we were prepared for it, we saw it as an opportunity and went that route. So this might very well be an opportunity for anyone listening here right now there’s like, solar, there’s movement over there. Let me get ahead of it. That might just be a great opportunity.

Steve: Well, it’s just one of the tools of the trade, you know what I mean? Just one more thing to keep your eye open for. But you know, commenting on what you said about luck, I can’t remember. I know it’s going to come from me, but someone famous said, “The harder I work, the luckier I get.” That’s probably the bottom line of it all. Just can’t give up. You can’t give up.

Jack: Because you literally can make your own luck. There’s actually a book and I don’t know if I still have it, but it’s called, “Make Your Own Luck.” That was a game-changer for me when I read it because it talked about that. It talked about that you want to put yourself into the right position and the right knowledge and you ought shout it out what you’re looking for. He was like, you got lucky you find this XYZ. No. I told the world I’m looking for it and then the world, people is like, well, I have this connection. I have that connection. All of a sudden you’ve connected to the person you wanted to be connected to. Everyone thinks you’re lucky, but now you actually put it out there and then it happens. Like we’re looking right now for a new acquisition manager for apartment complex investing and I just put it out there and it got five people saying like, hey, I’m interested. Is that luck? No, we put it out there.

Steve: Yeah. I mean just to tell anybody that might be a newbie for what you’re doing. Like, I bought a lot of stuff through tax sales and then I started when the timing was that you could buy anything for cheap. Getting rid of it was the problem. Now it’s exactly the opposite. It’s real hard to buy stuff, but pretty easy to get rid of, okay? So, up until last year I would buy, you know, at the auctions and everything was fine. Last year I got nothing. I got shut out of the Riverside, San Bernardino, and the Los Angeles auction. I’ve always bought stuff at those auctions every year. I got nothing last year and that was very disappointing. So then San Bernardino had their auction about a month ago. In fact, we were in Las Vegas, we were in Las Vegas when the auction was going on. I’m sitting in the room, I’m on a laptop, bidding. I got three parcels, paid about 20 grand, and I figure I’ll get back about triple my money. So I didn’t give up. I just said hey, and, sure enough, I found a few more parcels. So even though it was disappointing and that can happen, there’ll be a low, sometimes there’s a high, it’s a roller coaster, you know, up and down, up and down, but just don’t give up. That’s your bottom line.

Jack: Just don’t give up. And the beauty of it, you [inaudible 00:33:23] these properties and we did of course too when the market was low, right? Even in 2008 and ’09. That’s the beauty of this method. It works in any market.

Steve: Yeah. I think maybe I was stuck in a little bit of a mindset of what I used to pay for properties. Let’s say I paid about 100 bucks an acre and now I’m paying about 200 bucks an acre for large parcels. I’ve had to upgrade my thinking.

Jack: There’s a definitely a difference in that when the market in 2009, ’10, ’11 you bought properties at 50 bucks an acre or 100 bucks an acre and you sold them at $300 to $400 an acre.

Steve: [inaudible 00:33:58], yeah.

Jack: Now you have to pay $200 or $300 or $400 an acre, but you’re selling them at $800 an acre.

Steve: Yeah, if I can buy it for two and sell it for five, you know, you always kind of espouse about getting for 10, 20 cents on the dollar, I might be paying 30% or 40% maybe 50% on the dollar. But again, my methodology or where I am is different because I’ve sold houses and I’ve accumulated money in my IRA and I’m interested in the return on my money. I’m interested in the dollar aggregate number. Say It’s 20 or 30 grand, but I’m interested in the percentage return. If I can get about 30% or 40%, you know, the rule of 72. So if I get 36%, I’d double my money every two years. Well, go to Wall Street and tell them that’s what you want. And they’ll say, wait a minute, this is a scam. When Wall Street gets 10%, when it hits double digits on a return, red flags go up all over the place, you know?

And so I don’t want anything to do with Wall Street, you know, it’s just not for me. I don’t have any control over it. I have total control over this and I love that. And another point I want to make at the point I am in life, you know, I’ve gotten social security, I’ve gotten medicare. Let me tell you something. Medicare is great. Oh my God, fabulous. Zero down. It’s no deductible and a couple of hundred bucks a month. But you’ll see on a lot of the newsfeeds like on Google and Yahoo, you know, about Wall Street, you take social security at 62 at 65, how much money should you have to retire? But that’s one part of the equation. The other part is you gotta have a purpose in life. There’s a lot of people like you. You’ll never retire. As long as you’re mentally able, you’re gonna do this until the day you die because you enjoy it. You love it. It’s who you are and it’s me too.

Jack: I said yesterday to somebody that the last real estate deal I’ll do is probably two weeks before I die and that hopefully in my 107 years old or something like that.

Steve: Yeah. Because people work at a job for 30, 40 years and a big part of their social network is where they work. People, they work, they go to office parties and blah, blah, blah. And then they retire and they say, okay, I got my honey-do list. I’ve been meaning to fix this around the house and after a year or two, they’re all done. Playing golf gets old and they say, well, what am I going to do now? But this for me is a purpose in life. So I get to do it when I want, but I don’t religiously say at 10:00 on Thursday morning, I’m gonna go look at Craigslist. I might be sitting here looking at my bank accounts and all, I got 10 minutes to kill or whatever. I’ll go look at Craigslist. And I’m sure I miss deals, but that’s okay because I live in the world of good enough. So long as you have time, money and health, that’s the complete package for me.

Jack: And that goes to a very good point. I love that by the way. It goes to a good point that people, particularly if they’re used to our deals, they ask us, Jack, “Why in the world do you have your ad in something like apartment complex investing to that where you only make like say a 15% return?” Because as you go through phases in life, right? You go from a great building phase or like in the land deals we do, like you said, like buying it for a $200 or $100 an acre, selling it for $500 an acre. That’s two and a half times your money or one and a half times profit. So I get 150% return on investment in what, a matter of six weeks? And so that is one way of doing it. But we are preparing not to stop it by all means, we are always going to do this, but you have built up an inventory of houses that bring cash flow and that is now your fund money is the land flipping. And we have built up in a portfolio of houses and we’re building our portfolio of apartment complexes so that that will pay any our bills even in our, what did you call it? For the compound and all this kind of stuff.

And I don’t want to have the compound be paid by active income. I want my cars, my house, my daughter’s education, all these different things. I want that to be paid by everlasting long-term cash flow and then the rest is still the fun money, basically. Right? So we do that and you do the same thing.

Steven: Absolutely.

Jack: Go ahead.

Steve: Yeah, absolutely. We go away and even if a vacation that costs $5,000 or $10,000. We come home and there’s maybe that much money accumulated while we’re gone.

Jack: Right, exactly right. And that’s the beauty of it. So as you go through different seasons in life, you have to focus on different parts of the equation, all right? So if somebody is in their 20s they want to build up cash and they should probably do land flipping just very, very active and not focus on much other things. Just build up $1 million, $2 million, whatever it is they want to build up and then use that and then to transition the other pieces. If you’re in your 80 and your 70s, probably a similar thing because if you’re in your 70s then you have no income, then you’ve got to generate income. But if you already have some assets, then the point becomes making those assets and that cash last and bring more income for the other things. So for the rest of your life. So there’s different pieces in it. Then you’re obviously in a position that you have income and you’re adding the fun income, six figures in fun income a year from just the land deals, which is obviously a beautiful place to be.

Steve: What you’re saying is you go through life, you know, your 20s, 30s, 40s and you accumulate and then you know, your 50s and 60s you gotta kind of spend it, but you know you work for your money and then you make your money work for you. That’s exactly the way it has to go.

Jack: Yeah, exactly. Work for your money…

Steve: Work isn’t a lot of fun.

Jack: …then as soon as possible, you want to get to that point.

Steve: I mean, when you look at statistics, and I’m not making this stuff up, it’s all over the Internet from the government. Ninety-five percent of the people by the time they hit 65 are broke. I think 50% of people social security is their whole income or 40% and 60% social security is half their income and the average social security check is only 1400 bucks on average. The most you can get is $2,700 at 66 and if you let it go to 70, you can get like $3,600 or something. So two people that were high earners and you can get seven grand a month, you could probably be okay on that but that’s not most people.

Jack: That’s not most people. Definitely not. So thank you very much. I think we want to wind up the podcast right now with just one question about what percentage of how many properties do you get on Craigslist? Now Craigslist is not part of our general strategy because I consider it a little bit more of a like a treasure hunt and we do our mailings as a more predictable kind of thing where [inaudible 00:40:58] the business, but I like the idea of adding Craigslist deals here and there. Why not keep an eye on it? So how much time do you spend on Craigslist and how many deals do you get through places like Craigslist?

Steve: In the last month or two I’ve gotten five or six and two of them I got from wholesalers. And like I said, paying about 200 bucks an acre, but thereafter cash and I’m gonna take it and sell it on terms for 500 an acre. Maybe they’re not willing to wait for the payments. So, but just to tell you, over the years I’ve bought stuff on eBay and resold it. I’ve bought stuff on LoopNet and resold it. I’ve bought stuff on realtor.com. Last year we got two parcels. It was on a realtor.com, I think it was started at $12. We got him down to $6,500 out the door. Everything was seven. We turned around and sold them for $18,000 I think. I mean I hear you say, people that get stuff.

I’m always fascinated when I go to your seminars and I hear people buying stuff for $10,000 selling it for $40,000 or $50,000. I say, wow, what are they doing? I got to learn something there. But my deals or you know, if I can buy it for $8,000 or $10,000 and sell them for $15 or $18 or $20 you know, just keep going, turning them. Some are better than others. I can count on one hand that time I’ve lost money and I think one time I lost two grand or something, but it happens, you know it’s gonna happen. But in general, I’m not out for the last buck. I’m out for a fast buck. I like to buy them. I like to sell them and in between holding them. That ain’t no…

Jack: And you like the cash flow, right? You like the cash flow because if you make a couple of $8,000 deals and then you have one that you get a date and you sell it for $20 with seller financing, but you don’t get an $8,000 down payment, well the other one supplemented that. Overall you still have a cash positive and now you’ve got the cash flow.

Steve: Yeah. I advertise all my properties on terms and I’ll always say, if you give me cash, I’ll give you 10% off. And that’s what happened with the one I paid $10, $750. I advertised it for $20,000. And here’s an interesting story on that one where the gal said to me, she calls me and she says, “I want to buy the property.” Because I take all my own phone calls, I like to talk to people if you don’t know that I like to talk. And so the girl says to me, “Well, no.” I said to her, “Well do you want to buy it or do you just want some information about buying it?’ Because you know, sometimes people say what they say. They don’t really mean what they say. She says no. She says, “It was on an auction site and we had bid on it. We thought we bought it and then it turns out when we went to pay and it was already sold.” And obviously, I had bought it. Not on the auction site but direct from the seller who was a wholesaler. So she says, “I know the property.” she says, “We want that property.” I says, ” Okay. Sold.” And she says, “Well, I’m paying cash, is there a discount?” And I’m like, listen, I always say, 10% off for cash. So I went down from $20 to $18. I got a check in the mail a couple of days later and I had to send off to get the deed notarized, which will come back in a couple of days and away I go. I made like 70… 18 minus 10 cents. I made $7,200 or something. Great. Life is great.

Jack: Very nice. Life is great. All right. So, thank you very much. I mean this is awesome. Any more trips planned these days? Where are you going next?

Steve: Yeah. We’re going to Cancun next week and then we’re going to the Galapagos, going to Machu Picchu, going to the Baltic in August. We’re going all over the place.

Jack: That’s beautiful.

Steve: We’ve crossed paths. In Hawaii. I crossed paths with you, Maui, a few years ago.

Jack: Yes we have. That was fun. And yeah, we’re about to head out to Europe then to the Maldives. I mean Germany then the Maldives and then back to Germany or Switzerland and then Germany and then to Paris and then back home. And then 10 days later to Hawaii again, to Honolulu and then to the big island and then back again. And then two weeks later, three weeks later, school starts for our daughter again. So we are trying to do as much travel as we can in summer. So it looks like we’re going to be all over the world here. This time our paths are not crossing, but I love the destinations. So I love Machu Picchu. Michelle has been there. I haven’t yet and Galapagos is definitely on my bucket list too.

Steve: Yeah, a royal celebrity built a brand new ship called the Flora. If you get Costco I just looked through it their monthly magazine, they have a…here’s a great one. We were gonna go…our anniversary’s June 9th. We were gonna go in like the second sailing of Flora and it was late being built. They just took possession of it I think earlier this month. They were late. So they said to us, “Okay, since we’re being late, we’ll give you back some of your money.” We were gonna take the cruise like two weeks later. We said, okay. Then they said, “We’re way late. We’ll give you back all your money and you can go for free in September.” So I said to my wife, I says, “Well, do we want to go a couple months late for free?” Yeah, sure we do.

Jack: I’m sure you did, absolutely.

Steve: That was pure luck again. But if I didn’t give the money…

Jack: The harder you work, the luckier you get.

Steve: Yeah, yeah, yeah. That’s all good.

Jack: All right. Wonderful. So thank you very much, Steve. That was a lot of fun talking here and talking shop and talking to some of your deals. I love the solar deal. I hope it goes through. I love the other ones. So thanks a lot.

Steve: My pleasure.

Jack: And with that said everyone, this concludes our episode of the “The Forever Cash Life Real Estate Podcast” with yours truly, Jack Bosch and our guest Steve Billabong. Thank you, Steve.

Steve: Great, Jack, thank you very much. I’ll keep you apprised on the solar. I’ll let you know when it happens.

Jack: All right, let me know. Thank you, everyone.

Steve: Auf wiedersehen.

Jack: Auf wiedersehen, yeah, auf wiedersehen.

Steve: [foreign language 00:46:42].

Jack: Bye-bye.

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