The primary reason he got into real estate was because he wanted the time to be actively part of his daughter’s life — a freedom his W-2 didn’t allow. His ability to cultivate meaningful relationships is the reason he has been able to find so much success as a real estate agent and investor. Jay heavily emphasizes the role his mentor plays in his real estate career, especially given that when he was new to the industry, he needed someone to show him what the classroom couldn’t. His genuine nature got him his first sale, his first flip, and a continued relationship with his lenders.
Real estate has allowed him to not only free up his time but enjoy the time he has freed up, which to a family man like himself, is the dream. Investing is about more than building wealth, it’s about learning the value of time, especially because you can never get it back.
Lilia Simpson:
This is Real Estate Rookie podcast number 135 with my dad, Jay Simpson. I’m Lilia Simpson, a future investor.
Jay:
So they’re taking a risk, trusting me with their money and buying this property and then making a profit on it and then paying them back. I think it’s more focused on relationships kind of like we talked earlier than the money. The money will come if you really are being authentic with people and truly care about taking care of people. It’ll work itself out.
Tony:
Am I on the wrong podcast? Ashley, you sound a little bit different this today. What’s going on? Is everything all right?
Ashley:
By different, you mean younger? More youthful? More sweet and innocent? Yes.
Tony:
Definitely more sweet and innocent. Yes.
Ashley:
That was Lilia. Our special intro speaker today. Today is her birthday. So happy birthday, Lilia.
Tony:
Happy birthday.
Ashley:
The reason we had her do the special intro is because our guest today is her one and only dad, Jay. We have brought him on the show. We actually got to meet Lilia and her dad Jay in Vegas when we were out there doing a recording. We had recorded with Jay and the microphone was not on. So we are rerecording with him today.
Tony:
There was an hour and a half of just me and Ashley having some really good conversation and then some blank spots where Jay was talking. So we figured that wouldn’t be the best kind of podcast. So we figured let’s do it all over again. But he had a really good story. We’re glad to get him back on. But before we dive into Jay, Ashley, what’s new with you? Give me a life update. What’s going on?
Ashley:
So I just got back from I feel like a cross country tour of events. So we did the Bigger Pockets conference together and I’d gone to Coeur d’Alene, Self Storage Governance. Then I just got back yesterday from a seminar that I was speaking at on real estate investing in Florida. Met some awesome, awesome investors. I took my kids with me and my mom and we turned into a little mini vacation. That was super fun, but I get so motivated and pumped up after talking with real estate investors and networking.
I stay up so late. I do not sleep at all when I go to these events because I don’t want to miss a conversation. If there’s dancing, then I just dance all night. But I love the conversations that happen at a conference or a networking event. Listening to the speakers is awesome, but I’m not a very good person at sitting still. But just talking to people and networking I think is really awesome and inspiring and empowering to me. I think you feel the same way too.
Tony:
Yeah. Absolutely. We were on that parallel path. This is our first time reporting the podcast. It’s been a month, because you’ve both been traveling so much.
Ashley:
I know.
Tony:
And I spent some time in Maui. Then we went from Maui to this YouTube conference. Then from there, went to BPCON. Same thing. There’s just a certain energy that you get when you surround yourself with other like-minded people, some of which are maybe earlier in their journey that you can share some experiences with, and then others who are maybe further ahead in their journey that can share their experiences with you. It’s just a really cool, I think, way to leverage relationships to make everyone just feel really pumped and motivated. I always leave those events just feeling on fire about what’s next for my business.
So I think both of us actually have shifted what our business focus is going into the next year. So I know for me right now, we want to continue to buy these single family short term rentals, but we also want to, I guess level up a little bit and start buying small boutique motels and hotels. That was a realization I had coming out of one of these conferences. So literally our whole business trajectory has changed because of a few days I spent with some other real estate investors.
Ashley:
I know. It’s just the little side conversations that happen. So Tyler Madden, who’s been a guest that on the podcast and has become a good friend of mine and Tony’s, him and his wife cornered me at 1:00 AM in a pizza shop on Bourbon Street in new Orleans and were like, “We have to tell you something about yourself that we don’t think you know about you.” That moment was like, “Oh my gosh.” So now I’m having weekly calls with them. Like, “Tell me more about me and what should I be doing with this?”
But I think that there’s so much value talking, even if it’s somebody who’s more experienced than you or less experienced than you, you are going to learn something from that conversation. Even if it’s how you can be a better listener, how you can be a better mentor to that person, or you’re going to get the at aha moment from them. I think there was three conversations that I distinctly remember from the past couple weeks that were just like, “Wow, I know what I want to do, and this is what I’m going to do.” So my focus now is going to be campgrounds.
Tony:
There you go. I can’t wait to see how are you crush it in the campground space. But I guess just last thing on the idea of relationships, if you guys want a better relationship with me and Ashley, make sure to follow us on Instagram. I’m @TonyJRobinson. She’s @WealthFromRentals. We do our best to post some helpful content there and engage with the folks that are following us. So we’ll keep the relationships rolling outside the podcast as well.
Ashley:
We love conversing with everyone on Instagram. Take some of your stories, we’ll share them. But let’s get to the show. Let’s talk to Jay. Jay, welcome back to the show. You were on with us once recorded live in person. You had so much fun, you decided to turn the microphone off. So the recording didn’t save, so you could come back and chat with us, didn’t you?
Jay:
That was the plan all along, right? I got to milk it for everything I can.
Ashley:
Well, we are super excited to talk to you again. So we were in Vegas, we interviewed Jay live. It was so much fun. Finished the recording and, oh, somehow Jay’s microphone got turned off. Me and Tony, super experienced podcast hosts never even checked to see if the microphone is on.
Tony:
Yeah. I blame our producer, Eric, for not traveling to Vegas with this to make sure all the tech stuff was set up. So Jay, we can put this one on Eric for sure.
Jay:
Perfect. Yeah, he wasn’t there. So it’s an easy scapegoat. I mean, it just goes to show though, even with all the experience, stuff can still happen.
Ashley:
We just need a full-time handler producer to travel with us. So Jay, let’s get into you. Tell everybody a little bit about yourself and how you got started with real estate.
Jay:
Sure. So born and raised in Vegas, more specifically Henderson. Go Gators. I was working at a solar company a few years ago. It was a call center job. I was there for about a year and someone told me about the Bigger Pockets podcast. So I started listening to it while I was working. I’d literally have the phone dialing out in one year and I’d be listening to the podcast in the other year while I was working. I just took notes and I was able to crank through all the podcasts.
At some point I was like, “There’s something to this. I need to get out of here.” So I quit my job. I didn’t know how to get started, but I just knew I wanted to get in the door. So I figured me starting as an agent would be a good option because there was definitely stuff out there for that and a plan to follow. So I quit my job and then I got my license as a realtor, and always with the long term goal of flipping houses and owning rentals in the future.
Ashley:
Jay, so you quit your job before you even got your real estate license.
Jay:
Correct.
Ashley:
Even had another job lined up.
Jay:
Nope.
Ashley:
Let’s talk about that because some people think, “Okay, I need to quit my job so I have time to be a real estate investor.” What is your take on that? Do you think that you could have started without quitting your job? Give us a little more insight on that.
Jay:
Yeah. I definitely think you could do it while still working a job. Just for me personally, I’d reached the end at that job. I was ready to move on. I was ready to stop giving them my time and start giving back to my family. So we took a little bit of a mini vacation too, so we got to enjoy some too. And having a little bit of reserves helped too, to make that jump. But I knew just for me personally, I needed to just pull the plug and start. That was the best way to fully commit was just go all in
Tony:
Jay, one thing I want to tackle on, and you touched on it a little bit, but how were you able to keep the lights on, pay your bills? Just cover your personal expenses during that time? Because obviously everyone dreams of walking away from that W2 job that they don’t enjoy, but how did you actually financially make it feasible for yourselves?
Jay:
Sure. So I had about a year of reserves backed up. I figured if it didn’t work out, I could just go get another job. I wasn’t afraid to go put myself out there and get another job if it came to that.
Tony:
That’s awesome, Jay. I think that’s the part that so many people gloss over is the fact that you did a lot of the financial foundation building beforehand to make it so that when you were financially, or I guess mentally ready, you had the financial backing to actually make it happen, man. So that’s the hard work a lot of people don’t see. So kudos to you for making that happen, brother.
Jay:
Thank you. Thank you. I appreciate it. I knew also for me getting my license, you see a lot of online schools. I knew for me personally, if I really wanted to do it, I probably should do it in person. So I was forced to go. I sat up at the front of class the whole time. Like I said earlier, I’d listened to all the podcasts episodes at that time. So I already had some knowledge of real estate.
I knew I wanted to do it in person. So again, committing myself to it, fully committing to it. So I did it over a month long period. It was 5:00 at night to 10:00 at night Monday through Friday. So I was trying to do it as quick as possible and as efficient as possible. Then after that I went and took the test and I passed first try. So it really forced me to just get it done and move forward instead of dragging it out.
Tony:
That’s a really cool strategy to actually go into the classroom, study. My wife, she’s studying to get her license here in California. It’s one of those self-paced courses. She’s having a little bit of … it’s real dense information at times. So she’s having a little bit of difficulty finding the time to make it happen.
Ashley:
I have paid $99 three times to get my real estate license and I’ve never finished the course. This is when I think back in 2014, 2015, I think in that year and a half period or two year period, I paid to take the course two or three times, the self-paced one. I don’t regret not getting my license. I don’t think that I really need it now. But yeah, that’s great advice to actually go into the classroom and then you’re forced to just it over with and get it done. I did that with my insurance license. I did it in person.
Jay:
Yep. Then same with sitting up front too. You’re forced to pay attention because if you’re on your phone or you’re not paying attention, they’re probably going to call you out on it. So it really focuses you.
Tony:
Jay, so one follow up question because I just want to set the timeline here a little bit for the listeners. So what year was it, give or take, when you discovered Bigger Pockets? And how much time passed before you made the decision to leave that job and go get your license?
Jay:
Ballpark years, it was probably around 2014 when I started working for the solar company. It was probably around 2015 when I discovered Bigger Pockets, and it was probably around 2016 when I actually quit the job. So I was there for probably about three years. I had listened to Bigger Pockets for about a year. So it’s not like I just listened to two episodes and I’m like, “I’m out of here.” It did take some time before I was really ready to fully commit. Then I took probably about three months off where we just enjoyed and traveled, and then I came back and got my license after that.
Tony:
So can you walk us through the journey about what happens afterwards? So you quit your job, you get your license. What happens from there? Are you a multimillion dollar real estate agent on day one? Just walk us through what that journey looked like.
Jay:
So definitely not. To take a step back, I guess, real quick too. One of my biggest issues with me working at a company, or for someone else, was my time. I have a nine year old daughter. She was a lot younger then, but I remember just trying to take time off to go to her plays, go to her sports. It was really hard and I just couldn’t understand it. I’m like, “Why is this so difficult? Don’t you guys have families and want to spend time with your families too?” So that was what really drove me into real estate too. I saw the residual income with rentals and I saw you can make a good income just as living a lot more control over your time.
So me going into it, that was always my focus too, is to be able to work, but also still balance family life. So I got my license. My very first listing was actually a family friend of mine. She was my previous photo teacher in high school. She had reached out and knew I was, newer and knew I was, I wouldn’t say a little bit of a risk, but less experienced. That I was new to this. But she was willing to give me a chance and I helped her sell her house, and then at the same time buy a house. So I had real quick. That’s where I got started as far as the realtor side of things.
Ashley:
Jay, I just have to correct you right there. You did say something in error. Your daughter is actually 10 years old as of today. No longer 9.
Jay:
That’s right. So that’s December 1st, 10 years old. Thank you.
Ashley:
So when you got your license, how did you pick where to hold your license?
Jay:
So that’s a good question. Again, I knew I didn’t want to just be an agent. I knew there’s a lot bigger picture out there besides just being an agent. So I wanted to go to some place where they were investor friendly. So I had a mentor that I had met through meetups. He was starting a brokerage where he flips houses and it was an investor friendly brokerage. So just fell right into it.
Tony:
Ash, can you clarify that question a little bit? What do you mean when you say where to hold your license? Are you talking about what state to be in? Clarify what that means for folks.
Ashley:
Who’s holding your hand? No. So when you get your real estate, and thank you for having me break that down, Tony. When you get your real estate license, you come out as a real estate salesperson. To actually they sell real estate, you have to work for a brokerage company where there’s a real estate broker and they hold your license. This is the same for an insurance agent too. You work for an insurance broker or they hold your license and you’re not an employee, you’re 1099 contractor.
So you have all of these options available to you as to what company do you want to go to? Just think about when you’re on Zillow now, anybody looking for properties, you see all these different kinds of companies, real estate companies, that are selling real estate. How do you even choose which one you’re going to go with? And do you even have an option as the real estate salesperson? Or are you submitting applications? Can you maybe tell us a little more about that process? How do you even approach these brokers about taking you on?
Jay:
So pretty much everything in real estate is negotiable. So even checking out brokerages, they all do things differently. So you could work for a brokerage as just a 9:00 to 5:00 employee, if you wanted to. But most brokerages don’t work like that. Most of them work in some sort of commission split. So some of them are percentage wise. Some of them are just a flat fee. But most of them you just go and you say, “Hey, I’m an agent. I’d to interview you guys.” It’s really more of you interviewing them than them interviewing you most of the time.
So you’re going to talk with them. You’re going to ask them questions and they’ll let you know the splits and they’ll give you information and what they can offer you, whether it’s marketing materials. They might have teams there. So if you’re a newer agent and you need a team where they can help provide you leads and guidance. So they’re all different and some are investor friendly and some aren’t. So it’s all across the board.
Ashley:
So now that you’ve got your license, you’ve done your first sale and your first purchase. When did you actually start investing on your own?
Jay:
So while I was working at the solar company, I had purchased my first home. That was just for my me to live in. This was before Bigger Pockets. Then I became an agent, and at some point I fixed up the home I was in and sold it. Then the next house, I had bought a new house. We bought a new house to live in. Then my first flip, again, I wanted to get my license to do flips and maybe be an agent, but also to roll that into rentals. So my first flip came about as a listing appointment. So a family member of mine had referred me to someone that was thinking about selling their house. I went over there, not even thinking about flipping. Again, I hadn’t done a flip yet. Hadn’t really talked with anyone about numbers as far as that.
I went there and we’re talking. I don’t remember exactly what the numbers were, but I do remember, he’s like, “You know what? What do you think I could it sell for?” So I gave him a range of, “Hey, these are the comps in this area and this roughly what it should sell for.” He said a number that was below what we were selling it for, or what I had suggested. He also mentioned something about selling it quick.
Well, those are two big light bulbs for most investors. He’s trying to sell it quick and he’s willing to take less than what I’m saying. So I talked with him, and essentially he just wanted to sell it quick. He had some stuff in the house that he was concerned about selling. So I said, “Hey, you sell to me, I will buy it for whatever you were going to try to sell it for. You don’t have to worry about anything. Whatever you need, I will take care of it for you.” We closed about three weeks after that. And that was my first flip.
Ashley:
That’s awesome. Congratulations.
Jay:
Thank you.
Ashley:
So is that when you really got the bug for it?
Jay:
Oh yeah, yeah, for sure. We didn’t do anything major with it. It was dated. So we did new countertops, painted it, painted the cabinets, cleaned it up, new carpet, ceiling fans. Just updated it, made it look really nice. We probably put about 35, 40,000 into it. It was really fulfilling to see what it was before and then what it became at that point. Then it sold really quick too. I couldn’t have asked for a better experience for a first flip.
Ashley:
As a new investor, how did you know what updates to do to the property? How did you decide that you were going to do paint or you’re going to do flooring or you weren’t going to put a new kitchen in?
Jay:
Sure. So I think some of that is subjective. We all have different tastes. We all have different levels of rehab we think it might need. My first suggestion would be look at the comps, especially if there’s a flip or a newer house that looks yours as a model match. You probably want to update it to roughly what that looks like. So that was my first thought on it. But then my second one was I talked with my mentor about it. I talked with people that were in the business and had a lot of experience that I didn’t have. So I leaned on them for a lot of that. Same as contractors or prices. Any questions, I just asked people that I knew knew more than I did.
Ashley:
That’s great advice right there.
Tony:
Yeah. I love the idea because I think that’s what so many new investors get caught up on is, “Do I overdo it? Do I underdo it?” But looking at comps and talking to other people who are already successful in that market, I think is one of the best ways to guide yourself as a new investor. I want to take it back just a little bit on how you actually found this deal. So I just want to clarify really quick. So this was actually someone that came to you as a customer for your real estate agent business and said, “Hey, I have this house that I want to sell.”
During that conversation, you said, “Hey, I think that I might be the best person to buy this house from you.” Is that a correct statement of what happened?
Jay:
Mm-hmm (affirmative).
Tony:
When you reached out to that seller and you made the proposition to be the person to buy the house, were you nervous at all about that? Because I know so many people when they submit that first offer, there’s a lot of fear associated with putting that offer in. But for you it’s a little bit different, because you were already talking with this person. So I’m just curious, were you afraid presenting offer to that seller? And if so, how did you overcome that fear?
Jay:
100% afraid. Yep, 100% understand that. So again, like I said before, I hadn’t even really thought about pitching him on that. Now anytime I go to someone, that’s one of the things I talk with them as far as listings. “Hey, if you are looking to sell this, I could buy it from cash. I am a buyer. I will buy it.” But at first I had no idea. It’s always like, “Oh yeah, I want to flip houses. Oh yeah. I want to buy a house.” But it’s scary. But when he said that stuff, I was like, “Okay, well it sounds he might. So I might as well try.” As far as running numbers too, I didn’t know exactly how to run the best numbers.
So I told him, I was like, “I don’t know exactly what I can offer you right now. So let’s go see the rest of the house and we’ll see what condition it is. Then I can call you in a little bit, maybe an hour or two. Let me double check my numbers because I want to make sure I can give you the best number that I can give you.” That’s what I told him, and we were upfront about it. We didn’t sign anything right then. So I went home. Again, I called my mentor, talked with him about it, asked his opinion. I was able to call that client back and I was able to give him a number. Then the next day I met him at his other house that he was currently living at. And we signed it right there. Brought my daughter, brought my business partner with me so she could see it too.
Tony:
Man, so many good things here. One thing I want to really drill down a little bit more into though, is how you actually landed on that number. This being your first flip, it’s not you could say, “Oh, I know that my flips typically cost X dollars per square foot,” or “I spend this much on the kitchen or this much in the bathroom.” So how did you ballpark what those rehab costs were going to be given that this was your first time doing it?
Jay:
So I had run some rough numbers, but a lot of it was ballpark at first. But the biggest thing, again, was the experience and expertise to my mentor. I hate to keep coming back to that, but I still do that nowadays. For anything I don’t know. I will find out. I’m just going to find someone who knows that answer, knows more than me. So just because you don’t know it doesn’t mean you can’t do it. It’s just finding out how to figure it out and talking to people that have done it before.
Ashley:
There are actually a lot of ways to estimate rehab cost. It may take some work. It may take some research online. It may take watching some YouTube videos, or like you’re doing, is reaching out to people who have done it. I always say if you’re trying to really figure out what your rehab costs are, well start on Lowes.com or Home Depot or whatever hardware store you use. Go room by room. What do you need for those rooms? Make a list, find it on the website, what’s the price and plug it into an Excel spreadsheet. There you go, you have a rough idea of what your materials will be.
You can also call places and find out, okay, how much does it cost to install a toilet? They’re probably not going to be able to give you a exact number, but they could give you an average or say, “We charge by the hour for our plumber to come out. It’s a $50 service fee, and then $80 an hour after that,” or whatever it is. But just start trying to learn and find that information. But if you just sit there and say, “Well, I don’t know, so I can’t do a rehab. I can’t buy this property.” You’re never going to find out the answer. As I’m sure with you now, as you’ve continued your investment journey, you know just off the top of your head now, okay, to put vinyl plank flooring in, it costs me $2 per square foot, or whatever that cost is. So there’s also J Scott has a great book on estimating rehab cost too. It’s in the Bigger Pockets bookstore
Jay:
What I did too, after I got it under contract. So I planned for that a little bit, is I put a longer closing date. So a lot of flippers usually can say, “I can close in a week or two.” He didn’t seem to care too much about it. So I think I put four weeks. We closed earlier, but I think I put a month out. So a typical closing for a normal buyer, too. We just got it under contract really quick. So as soon as I had it actually under contract, we opened escrow. I called probably about 15 to 20 general contractors. I posted on my Facebook, “Hey, does anyone have contractors they like?” I reached out to my mentor, “Hey, what contractors do you use?” So I called about 15 to 20.
I was there for two days, pretty much the whole day to meeting them back to back to back. I didn’t have them come in at the same time. But before they came top, I made a scope of work of, “This is roughly what I’m wanting to get done.” But it was pretty detailed. Again, that was something my mentor suggested was, “Hey, give them a scope of work of exactly what you’re wanting to do.” I asked them for suggestions too. “Hey, is there anything that you would do differently or am I missing something on here?”
So I was able to get it probably about five or six different bids on that within the first week. Now it did take some time. It did take some effort of getting them because I called 15 to 20 and only 5, 6 showed up. But that was better than just one. I had some numbers to compare of, “Hey, is this the ballpark of what it should be?” And it matched my numbers that I was figuring,
Ashley:
How did you get the seller to agree to have all of these contractors trumping through the house?
Jay:
So the house was actually vacant. He was living at a different house. I think one of his kids was living there and it was just a headache. But they had moved out, but there was just stuff there. So it really wasn’t a huge deal to have them. He provided me access to the property and I just scheduled it and I notified him when we were there.
Ashley:
That’s awesome. I think another way, too, if you are unsure and you don’t have a mentor or whatever to run your scope of work by … Actually first, Jay, can you explain exactly what a scope of work is actually, and give example?
Jay:
So a scope of work is essentially … it could be written out. I normally type it out, but it’s very detailed of the exact work that’s going to be done at the house. So this size baseboard in these rooms, these doors are going to get replaced. This flooring is going to get replaced to this specific flooring. So again, it’s a blueprint of everything you want done at the property. So when they give you their bid back, it essentially should be line by line where you get numbers of, “Hey, this is what it’s costing for flooring. This is what it’s costing for the plumbing. This is what it’s costing for electrical.” So everyone’s on the same page.
Not, “Oh, it’s going to be $30,000 for the work you said.” Well, maybe we have a difference of opinion on what exactly the work’s getting done. Because if it’s electrical, if you need to upgrade the electrical, maybe you’re thinking just the outlets. The electrician’s like, “Oh, I was going to rewire the whole house.” Well, those are two significantly different things and pricing can be very different for those.
Tony:
I just want to comment really quickly on the importance of the scope of work. We have a rehab that’s going on right now, where very similar thing. I had a bunch of contractors come out, I have my own very detailed scope of work. Anyway, all the contractors ended up ghosting us. So we were scrambling to try and find someone. We ended up finding a contractor and he gave me his contract. But his scope of work wasn’t nearly as detailed of the scope of work that I put together.
We signed the contract, he gets to work. As we’re going through this project, there was so much friction because it was like, “Hey, I expected you to do this.”
He was like, “Well, my expectation was this.”
Or “Hey, you guys are supposed to be paying for this.” He was like, “Well no, you guys are supposed to be paying for this.” So throughout the entire project, we’re just butting heads the whole time and it’s all because the scope of work that was included in the contract wasn’t specific enough to alleviate some of those tensions. So Jay, I love the fact that you’re pressing on the importance of the scope of work, because it can really make the difference between a smooth, easy project and one that’s filled with headaches and a lot of frustrations.
Jay:
Yeah. It’s not that one party’s trying to take advantage of the other either. It’s just like just buying a house. The more detailed you can be, hopefully the more potholes you’re able to avoid. That we’re all on the same page and understanding
Ashley:
My friend, Chris Lawrence, he’s @ChrisFlips on Instagram, I think it is. He started flipping. Quit his job to become a flipper. I’ve gone out to see a couple of his projects. What he does, I love this so much, is he goes through and takes a video of the property and says, “This wall color is going to be this. This door is getting removed. This is the flooring that’s going in here. This tile is saying,” and just does that through the whole house.
He said the biggest thing is it limits a lot of communication, a lot of questions asked from the contractor because they can just refer to the video. Then something that I always do is in each room, I put the scope of work specific to that room in each room, too. So no matter who’s going in and out, that is posted right there. So it’s saying, “The floor is staying.” It’s saying, “New window here,” all those things right there for that room so nobody ever has an excuse like, “Oh, I didn’t get a copy of the scope of work. I’m just a subcontractor and the general didn’t give it to me.” It’s posted right in the room too.
Jay:
Yeah. That’s really smart.
Ashley:
Jay, let’s move on to what’s next. So you did your first flip. You’ve caught the real estate bug. What happens next?
Jay:
So probably about six months a year later, I get my next flip. That came from a wholesaler that I had made friends with. Pretty similar process. Again, I was still working as an agent, but still vacationing, spending a lot of time with family. So I’m not out there grinding the streets 24/7 trying to do 100 deals a day right now. But that’s what I live about real estate, is it’s so adjustable and can fit so many different lifestyles. If you want to do that, you can do that. You can make a lot of money and you can make a really good living. If you want balance where you can spend time with your family and still be flexible and work too, you can do that. So then we have the second flip next.
Ashley:
Jay, it seems you’re really good at networking. First of all, you tricked me and Tony into talking to you twice. But you’ve mentioned your mentor that’s obviously been a really great resource to you. Then you said you made friends with the wholesaler. What are some tips you can give our listeners to make friends in real estate?
Jay:
I guess this is in general, too. I would highly suggest go taking personalities tests. So I think there’s one on 16 personalities which I’ve done before. Then I’ve all also done a DISC test, which I think is on Tony Robbin’s website. I’m sure there’s other ones too. But I would take that, and take it with a grain of salt too, but those are pretty accurate for me. What I got from that, and it’s weird because we know ourselves. But then to read it too, you’re like, “Oh, that’s black and white,” Kind of like the scope of work. It makes sense.
You’re like, “Well, that does make sense. That fits me pretty well.” So one of my core strengths is empathy, is making friends. So I would suggest finding out your personality and then lean into your strengths. So the more you can do that, I think the better and quicker you’ll be brilliant in real estate too. If you’re just a numbers guy, cool, there’s numbers stuff all day in real estate. So for me, it’s making friends, it’s making relationships and just being 100% authentic in doing what works for you.
Tony:
Jay, I’ve said this on the podcast before. I’m not the only guy to say this, but real estate is definitely a relationship based business. I think the better you can become at building meaningful relationships, the more success, the more fulfillments, the more enjoyment that you get from becoming a real estate investor. Because 100% of my growth as a person, as a real estate investor, as an entrepreneur, has come from the relationships that I’ve been able to make and the impact that other people have had on my lives, and hopefully the value that I’ve been able to give back to them in return.
So just for all the rookies that are listening, obviously read the books, do the work, but also focus on who can you align yourself with that’s someone that you just genuinely enjoy doing business with? You would be surprised at where those relationships can take you. I love that you’re focusing on the relationship piece. So I want to go back to your journey a little bit here, Jay. So you get the first flip done. You said it’s about six months-ish later that you find that next deal?
Jay:
Yeah. I’d say six months to a year, roughly.
Tony:
Awesome. So you get that second flip done. I just want to know how much smoother was the second flip compared to that first one? Or maybe it wasn’t and maybe you can share with us why the second was even harder.
Jay:
So the first one was pretty smooth. I don’t know how much smoother it could get other than my experience, my comfort level, per se. Like I said, the three to four weeks that I put in the contract before we closed on it. Realistically we could have closed on it within a week if we really wanted to, to, but that was my comfort level. But as far as smoothness, that one went pretty well. The second one, it wasn’t so smooth as far as closing on it.
So that one was in a trust. It was the grandparents’, they had passed away, and it was the grandson who owned the property. Mind you, there’s also a wholesaler involved too. There was just a lot of headaches with the title company and getting it closed. Once it got closed, it was pretty smooth. That one went pretty smooth too. It was just the closing where it was a little bumpy. I don’t know what I could have done on my end, except for use a different title company. So now I avoid that title company on any other deals I do.
Tony:
Have you done any more flips since the second one, Jay?
Jay:
We were going to do another one. This was our second house. So I guess technically, no, I have not. To answer your question, no I have not. We were going to flip the house we were living at. But again, we always had that back in our head of, “Well, we want to do rentals.” So with the market it was right now, it was very tempting to sell it and cash out right now. But I said, “Well, let’s try it out as a rental.” So we fixed it up. So pretty much a flip, just didn’t sell. It was more of a burb, a live in burr for a while. So that is our rental now that’s doing really well. We have a fantastic tenant. First rental we’ve ever had, too. I can go more in depth on that if you as well.
Tony:
Yeah. I would like to, but before we jump into the rental piece, I just want to talk a little bit about how you funded those first two flips. Because I don’t think we touched on that. I know that’s a big question that comes up from focus is, “Where are you getting the money from?” So just walk us through how you financed those first two flips.
Jay:
So I did look at hard money, but I also at the same time was talking with some family members. Like I said, I’d listened to Bigger Pockets for a year, and then another six months till I’m licensed. So a year and a half, two years down the road. So I’d been telling everyone about Bigger Pockets and real estate in general. So they knew that I was trying to flip and that had been brought up before. I was like, “Hey, if I find a house, would you be willing to finance it?” Eventually we were able to come to an agreement where they finance it.
So they were able to finance both properties. The first one, I paid them a flat fee. But after we closed, we ended up selling for a little bit more than we were expecting. So I ended up giving a bonus. I gave a little bit extra just as a thank you. Like, I did better, and I want you to do better too for supporting me. Then the second one, it was more of a percentage based off of the sale of the property.
Ashley:
I like how you figured out how you could do it different ways, that you didn’t have to go the same, straight route as a lot of investors do for structuring that relationship. That you knew that there’s no wrong way to do it. A lot of people would say, “Oh my gosh, the bonus. Why would you do that? You paid them what you promised them. You paid their money back.” But you’re going that extra step to build that relationship so that they want to lend you again. That’s really cool.
Jay:
Yep. Because it’s like my first listing to some extent, too. I am more of an unknown because I have no experience. I’ve never flipped a house before. So they’re taking a risk trusting me with their money and buying this property, and then making a profit on it and then paying them back. So again, I think it’s more focused on relationships like we talked earlier than the money, and the money will come if you really are being authentic with people and truly care about taking care of people. It’ll work itself out.
Ashley:
That right there was an awesome statement, Jay.
Jay:
Thank you.
Ashley:
That was great.
Jay:
Thank you.
Ashley:
Let’s hear the numbers on this rental property, though. I’ll ask you a couple rapid fire questions, and then if you just want to spew out the answers. Then we will go into the story of how you decided to turn it into a rental. So what was the original purchase price on this property?
Jay:
I believe it was purchased for 175.
Ashley:
It’s a single family, correct?
Jay:
Single family, two story over in Henderson. About 1500 square feet. It’s got three bedrooms, two bath. So pretty standard cut and dry.
Ashley:
How much did you put into updating it?
Jay:
So when we bought it, it was bank owned and they had rehabbed it some. So we lived in it for a while, and we didn’t do anything to it. They had done some stuff. Some stuff was janky, but they changed out countertops, but they left the cabinets. Didn’t paint them. So that was dated. But there was new carpet. I think the tiling was probably left from the previous owners. So we really didn’t do much right away.
Then over the years, we added a patio, added cement. Once we moved out, we’d lived in it for a little while, probably about three years or so. Once we moved out of that, then we fixed it back up and made it even better than what it was before. So I probably spent, over the years, we probably put in 20 grand into it roughly. But 10 of that was the last few months right after we moved out to update it to be rental ready.
Ashley:
Isn’t that funny how you live there and then you don’t make it nice until you’re moving out? I feel there’s very common for investors.
Tony:
For the next person.
Ashley:
Like, “Oh, it’s time to refinance it, put it as a rental,” or something. Or “Time to move out. Make it nice.”
Jay:
That’s exactly how it was with the first one too. Even more so, because I was living without flooring in there for a while and it was just dusty and it gets over everything. It’s like, “It’d be nice to enjoy this for a little bit.”
Ashley:
Yeah. My son, he had built a Fort with blankets, so it was probably a year ago now. He took duct tape to the wall to hold up his blanket fort, and there’s a patch of paint just ripped off. It’s in the corner of our living room at least. But if that happened at one of my properties, it would be fixed right away. But here at my house, it’s still there.
Jay:
Well, we’re okay living with for now.
Ashley:
So how did you finance this deal when you purchased it?
Jay:
So that one, we actually had some money. We had some money saved up, and then that same family member, we were able to take out a loan to help get into the property.
Ashley:
Did you end up refinancing it at all?
Jay:
No, we haven’t. So we’re actually paying him directly. The way it has been now, we’re almost done with it. But we have $100,000 loan out left on it now, roughly. It’s actually less now, but ballpark. We’re renting it out for 2000, a month and we’re supposed to pay it off in the next three years. So there’s going to be a balloon payment essentially at the end of that. Out of the 2000 right now, I think we agreed upon 1000 bucks a month from it. But I’ve just been sending over 1500 because there’s reserves in the account. So I’m trying to pay it off as quick as possible. Again, under promise, over deliver. We agreed on that. I have no problem paying him more, because the quicker I get paid off, the quicker it’s just going right into our pocket too.
Ashley:
Then you want to keep that property for clear or are you going to leverage it?
Jay:
Leverage it. So we’re actually going to try to lean on his connections. We’re going to try to do a portfolio loan with that property. Because we moved out of that house that’s in Henderson and we moved out to Pahrump, which is about an hour outside of Vegas and we bought the house out there. So we’re going to try to do a portfolio loan with both of those properties and then roll those into the next rentals.
Ashley:
Awesome. Very cool.
Tony:
So Jay congrats, man, because it sounds it’s a killer deal. Especially once you pay the thing off, it’s going to be awesome. But this was your first time being an actual landlord, right? Because your other deals, you were just fixing them, flipping them, then you’re off to the next one. So walk us through what that experience been like for you now as an actual landlord. Are you self-managing? And if so, what are some of the lessons you’ve learned along the way to make that process easier for yourselves?
Jay:
So great question. It reminds me, again, my first listing, it reminds me of my first flip. The first of anything there’s always, for me at least, there’s hesitation. It’s very scary because you’re doing something you’ve never done before. It’s stuff you’ve thought of, it’s a goal, but you’ve never actually taken that step and done it. So that’s part of why we were scared to make it a rental. It’s like, “Oh, I can sell it. That’s easy. I’ve sold houses before. That’s no problem.” But we’re going in the unknown of renting it out. So that was scary. I’d listen to Bigger Pockets. I’d read the books, I’ve talked with my mentor, but I knew we really wanted to try it out.
So I said, “Okay, well let’s try it. And we’ll give it a year. And if we don’t like it, then we can just sell it after that, if it doesn’t work out.” So no, I’m self-managing it. We are self-managing it, my wife and I. I put it up on Zillow. I know I’m an agent. I put it up on Zillow, and within the first day it was listed, we probably had 20, 30 people reach out to us. Also I had ran comps. So I have the MLS. You can see comps normally for rentals as well. So I looked at the comps for that and they were all around 1700, 1750.
Well, I knew our house was in a lot better shape. We had just updated it and made it look really good. So I was like, “Well, I’ll put it up for 2000 a month and we’ll see how that goes.” So when I started getting bombarded with phone calls, I knew we were fine on price. So we opened it up for showings and I scheduled it back to back, like what I did with the general contractors because I’m trying going to be as efficient as possible too. We were there for two, three days just letting people come in and walk the house. We ended up having a gentleman apply. I did this all through Zillow. I didn’t even know you could at first. I had just posted it through Zillow and it was a pretty simple process.
He applied and Zillow lets you do a background check too. I think it was 30, 40 bucks. It’s all through their website. Did background check, credit checks. Again, I’m trying to do everything that I think I should be doing. So we were able to screen our potential tenant. Then Zillow also lets them pay through there. So I was like, “Okay, well I’m trying to do this right from the beginning.” So I made a separate bank account where I hooked it up to Zillow. I was like, “I’m not taking checks. I’m not taking cash. I’ll help you get it set up if you need help with it. But you’re going to set it up online too through Zillow. It’ll transfer directly to the account we need it to go to.” Yeah, it’s been fantastic so far.
He’s been great tenant. Just him there. I walked the house last month to go check on it. Him and I actually get along really well. So we talked for a bit. It looks the same as it did the day we rented it out. It looks in great shape. He doesn’t even have stuff in two of the bedrooms. So it’s hardly getting used. Again, we couldn’t have asked for a better tenant.
Tony:
I just want to clarify something, Jay. You’re saying that your tenant is paying their monthly rent through Zillow’s platform?
Jay:
Yep.
Tony:
I didn’t even know that was possible.
Jay:
Yeah. So Zillow does it.
Tony:
That’s pretty cool.
Jay:
And Apartments.com does it too. So I put it on Zillow and I put it on Apartments.com because they both go to different websites, and different people search either one. Zillow, it seemed a little bit easier as far as simplicity and user friendly. Again, me not knowing a bunch about it first. So I said, “Well, we’ll try that and if we don’t like it … Again, if we don’t like it, well we’ll change it next year to Apartments.com or something else I run into.” But I figured it’s better to take some action. At some point we have to do something. I knew I wanted to do it as best as possible. So that’s what we did. It’s worked great so far.
Tony:
I’m just a little bit detached from the long term rental game because we’ve only got that one property left. So this is my once per episode plug. I got to give you guys an update.
Ashley:
We haven’t heard about it in forever.
Tony:
I got to give you guys an update. So the property got an offer last week. We immediately accepted it. Then 48 hours later, the buyer’s agent emails us and says, “Hey, my buyer’s actually going to back out because the flood insurance is too high.” So we had it under contract for all of 48 hours before they backed out.
Jay:
So close.
Tony:
The journey continues.
Ashley:
Oh Tony, I feel your heartache from here. Jay, with your using Zillow and Apartments.com. I want to mention a couple other softwares in case anybody is interested. But Apartments.com actually bought out Cozy.co, which is a rent collection software and a property management software, I guess. Then there’s also Buildium, Rent Ready, who has actually been a sponsor of the show, AppFolio. So if you guys are a first time investor, look at the software because it can make your life so much easier and it can be super cheap. Do you even pay anything for Zillow, to use it?
Jay:
No. I believe the way they make their money, obviously typical Zillow advertising, but is on maybe the background checks and other stuff. But no, I don’t even think it charges them a fee if they link their bank account just to transfer directly to their bank account. Again, it made our life a lot simpler as far as list sting it to be rented, as far as screening the tenants, as far as taking payments. There’s really not much headache on all that. It’s all through their system and it makes it pretty seamless on my end.
Ashley:
Yeah. That’s awesome. I wanted to comment too, that you set the expectations right from the beginning of how you wanted that landlord tenant relationship to look, and that you wouldn’t be driving out to the property to pick up cash the first Sunday of the month or anything that. So that’s also a great tip to new investors. As much as you want to be friends with your tenant, make sure that you’re at least setting that expectation from the beginning.
You want to be a great landlord. You want to work with them, but set those expectations from the beginning, and then it’s always going to be that. You could always add these things to the lease agreement, too. When I used to do my own property management, it said right in the lease you had to pay through AppFolio’s software. It said it in more detail than that. But that was the way that the rent was to be collected, and that was the only way that you could.
Jay:
I know my strengths. I did those personality tests and I also know my weaknesses. One of those is organization and paperwork and numbers. So this helped counterbalance my weakness. So it helps me stay organized. It forces them to pay through that and it keeps track of it. So when it comes time tax season, it’s pretty simple for me. I just hand that over and it’s all right there.
Tony:
Jay, so I love the idea of talking about your strengths and your weaknesses, which I feel is a perfect segue into our mindset segments. So I want to get into Jay’s psyche a little bit,. So if you go back to, Jay, what is that? 2015, when you initially discovered Bigger Pockets. Before you quit your job, before you became an agent, before you got that first flip. If you think about some of the assumptions you made about becoming a real estate investor that turned out to not be true, what were some of those assumptions?
Jay:
I thought it’d be easy. No, it really forces you to take a good look at yourself and focus on your strengths and weaknesses. So going into real estate, especially being an agent, you think you’re going to have a bunch of deals, whether from your family or friends, especially living out in the area that you’re working. That’s not necessarily the case. I’m not trying to scare people away, but is a good reality check. It’s very eye opening, because you are now a business owner. You’re not just an agent. You’re having to learn how to market. You’re having to learn how to talk to people. You’re having to learn contracts. There’s so many different aspects of real estate where it can get overwhelming. So finding stuff to help meet you in the middle or help overcome those obstacles, I think was the biggest hurdle for me.
But as far as some of the things, like positives, there was some stuff that I thought was really scary. It was going to be the end of the world if it didn’t work out this way. It’s really not so scary, talking with people if they want to sell their house to me. I get hung up on all the time. I get rejected all the time and you learn to overcome that. You learn to deal with it. Just part of the business. You know the long term goal, you know there is someone out there that needs help. They are in a tough situation. They need to sell their house and you could be that person to help them.
Ashley:
Thank you so much for sharing that with us, Jay. I think that a lot of people are going to find that very helpful. Let’s take it now to our rookie request line. This is where you guys can call us any time at 1-888-5-ROOKIE and leave a voicemail for Tony and I, and we may choose it to be played on the show for one of our guests to answer. So Jay, are you ready for this week’s question?
Jay:
I’m ready.
Ashley:
Okay. Do a little arm stretch there for me. Here is today’s question.
Mauricio:
Hi, this is Mauricio from Torrance, California. My question was for a rookie investor looking to make their first investment, is it a smart idea to get a short term rental as their first investment? Thanks.
Jay:
Sure. So I think yes, but run the numbers first. It’s always going to come back to the numbers, whether it’s a rental, whether it’s a short term. Talk with people in your area that are doing it, because they’re going to know stuff that you might not know, especially for your first one. Because you can get into legalities of it too, because you don’t want to get into that and then find out, oh, well we can’t make it a short term rental. I’m not allowed to. So talk with people that are doing it. As long as the numbers are good and it looks good and you’ve got an okay from someone else, I’d say pull the trigger and try because a lot of that comes down to just taking some action too.
Ashley:
I just want to say that if you want to take Tony’s advice, I bet he would say that he wishes he would’ve bought a short term rental since we just heard his pitch where he is trying to get rid of his first property, his long term rental. So Tony, what would be your advice?
Tony:
Yeah. Obviously I’m big on short-term rentals and I think that the acquisition portion of a short-term rental is almost identical to a long term rental. You have to find a good deal. You have to analyze a property, make sure that your numbers match. It’s just the after part that’s a little bit different. The management side is a little bit more daily intensive. But in my mind, if someone can effectively manage a long-term rental, they probably have the wherewithal, or at least the ability to effectively manage it as a short-term rental as well.
So I don’t know. For me, I think everyone should have a short-term rental in their portfolio in some way, shape or form. I think it’s just a good set class for everybody to have. Mauricio, especially in California, I think short term rentals are probably the only kind of rental that I would buy on a single family level in California. I wouldn’t buy a single family residence in California and hold those long term rentals. So just my two cents. But I’ve been wrong before. Hence the property in Louisiana that I still haven’t been able to sell.
So Jay, are you ready? We’re we’re going to keep moving, man. We want to give a quick shout to this week’s rookie rockstar. So again, if you guys aren’t active in the Real Estate Rookie Facebook group, be sure to get active there. If you guys aren’t active in the Bigger Pockets forums, make sure that you’re active there as well. That’s where my journey as a real estate investor started was doing a Google search, finding the Bigger Pockets forums and getting active in there.
So make sure you guys are joining the community and those two platforms. But anyway, today’s rookie rockstar is Tim S. Tim said, “After years of podcast, YouTube videos and making offers, my first rental property is finally under contract.” So Tim got this property for $80,000 and Tim is planning to cash about 200 bucks per month, which is an 11% cash on cash return. So Tim, congratulations brother on getting that first deal done. I can’t wait to see what comes next for you.
Jay:
That’s awesome. Congrats, man.
Ashley:
Well Jay, please let everyone know where they can find out some more information about you and possibly reach out to you.
Jay:
Sure. So as I said before, I’m a licensed agent. I’m with Vegas [Elms 00:50:13] Realty out here in Las Vegas. I also have Facebook. So you can find me on there, just search Jay Simpson. I believe I have a page and it is Facebook.com/RealtorInABowTie. I think that’s what it is. Because normally if you see in my pictures too, I have a bow tie. So that was another thing.
Ashley:
I was going to say, where is it? You had it last time.
Jay:
I figured [crosstalk 00:50:33], little more relaxed, so I wanted to wear this. So that was one of the things I was going to mention.
Ashley:
You’re comfortable with us now.
Jay:
Right, right, right. We’re friends now. But is find a way to stand out a little bit. So for me, the bow tie. For me, that’s a little bit unique. I don’t wear clip on. So I didn’t know how to tie a tie. I learned how to tie one. So when I meet with clients, it’s a way to stand out a little bit. For instance, I went to the Bigger Pockets conference in 2019 and met Brandon Turner for the first time. I’m in a banana shirt, a button up banana shirt. I’m trying to make an impression, but at the same time be authentic. But he’s like, “I probably remember that guy in the banana shirt next time I see him.”
Ashley:
That’s awesome. That’s so cool. Well, thank you so much for joining us, Jay.
Jay:
Of course. Thanks for having me, guys. I really appreciate it.
Ashley:
I’m Ashley, @WealthFromRentals and he’s Tony, @TonyJRobinson on Instagram. Thank you guys so much for joining us. We hope you love Jay’s story just as much as we did, and we will be back on Saturday with a rookie reply.
source https://d0llars.com/2-houses-flipped-as-a-part-time-real-estate-agent-full-time-father/
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