EP 465 – The Real Estate End Game with Jason Bible

NCS 465 | Real Estate End Game

NCS 465 | Real Estate End Game

 

Host Scott Carson talks with friend and real estate entrepreneur, Jason Bible, also known as Mr. Texas Real Estate, about making a 90-degree turn in his real estate business and career and where the end game lies for most investors. Jason shares how he and his business partner cracked the code on Airbnb and are starting to get into it some more. Bringing to light what he is calling as the Harvey 2.0, Jason then talks about the Houston market change and the impact of Hurricane Harvey on the higher end market. As he also gets into the rebuilding of the harbor bridge in Corpus Christi and the oil and gas industry, he puts in some great advice for entrepreneurs who are thinking of trying new opportunities.

Listen to the podcast here:

The Real Estate End Game with Jason Bible

I’m excited to be here and we have our good buddy, Jason Bible also known as Mr. Texas Real Estate. How’s it going?

It’s going well. I’m checking out some assets down here. We closed on a couple of properties. It’s terrible when your office is the beach, but somebody has got to do it so might as well be me.

I saw your post of the wet dog with a hat and the beer on Facebook and I was cracking up. You picked up eleven Airbnbs down near the beach.

We picked up four beach houses in Surfside and then a buddy of mine, Sam Craven, contracted one in the Heights which are inside Houston. It’s a trendy little area down there that we’re going to turn into an Airbnb. He said, “We got this multi-unit that’s right behind Hotel Galvez, but the problem is the only way this thing is going to work is if it’s an Airbnb. I figure you may know what to do with that.” I said, “Okay.” I decided I’d just sneak down here and checked out that property. It’s literally within walking distance to the seawall. I’m headed all the way down the island to Surfside to take a look at these four other properties we’ve got. We closed four deals. We did our first commercial deal so I feel like I’ve graduated. Now I get to call myself a commercial real estate investor. I feel that I’ve graduated to the big leagues.

For those that don’t know you because we’ve got people all across the country, share a little bit who Jason Bible is before we dive in. It’s been a while since you’ve been on the show. You were on over a year ago right after hurricane Harvey and it’s been a while. Why don’t you share a little bit of who you are and what happened with you and your businesses?

I started as a full-time real estate investor in 2013. I was a risk manager at a biomedical research institution. We also had hospitals and all kinds of stuff. I did that for several years and decided that I wanted to start my own business. Another gentleman and I partnered up and we started a company called Houston House Buyers where we bought over 100 a year for a few years. It was right after hurricane Harvey where I was like, “I’m done doing the fix and flip business and I want to do more buy and hold.” We also have a real estate education company together. I said, “I’m done doing that.” I’ve always been a buy and hold guy. That’s a part of the business I like.

I sold my interest in those companies to my business partner and since then, I’ve been buying little apartment complexes and buying little single-family houses. We’ve got a radio show and we have an organization called the American Real Estate Meetup, which is little meetups where we get together and talk about real estate and do some peer-to-peer sharing. That’s what I do. I bought a lot of real estates. I’m starting to dip my toe into the commercial stuff. I was joking with some of our closing people and I said, “When I go to a title company to close, I’ve got to wear a jacket because we’re commercial real estate guys. We’ve got to wear slacks and leather shoes.”

It’s been a lot of fun and that’s what I’m doing lately. We’re starting to get into some Airbnb stuff. Rob, my other business partner, has cracked the code on Airbnb. It took him a couple of years to figure it out. It can turn into a complete management nightmare, I’ll tell you that. Your systems have got to be strong. That’s what we’ve been doing. We’re buying stuff in Houston. We’re buying assets down in Corpus Christi. If this 27-unit closes, we’re going to end up with 50 doors down there. We’re doing small apartments and some little single-families.

How has the Houston market changed?

We’re calling it Harvey 2.0. It’s the impact on the higher end market. If you’ve got a house that flooded and it’s near the median home price, the flood didn’t impact the value of your property. However, if you’ve got an $800,000 or $900,000 house in Memorial, you’ve got a problem because now the house is worth $600,000. It’s interesting how it is adversely impacting more expensive properties. That was a wake-up call. There’s still a lot of storm damage inventory out there. There’s a ton of it. It was the flooding that we had a big problem with in Houston.

They think it’s just the houses that were physically impacted. There are households that were financially impacted. There were entire small businesses that wiped out overnight. You’ve got a big economic impact there, but you also have this physical impact of the storm as well. You’re going to start to see a lot more foreclosures in Houston. A lot of people didn’t have flood insurance and there’s nothing there to help them out, unfortunately. Even as big as hurricane Harvey is, the market in Houston is so resilient. Houston is an anomaly. It keeps on trucking. If there’s an oil downturn, the market keeps growing. Harvey market keeps growing. It’s an economic superpower. Although you have these terrible events that take place, it keeps on trucking.

I was talking with Nicole Espinosa about short sales. She’s seen Houston, Harris County in particular, has one of the highest foreclosure rates in the nation because the banks have stopped trying to work it out. They’re like, “We’ve got to get paid now.” She has seen an increase in short sales and we see foreclosure rates and default rates in Harris County, Houston primarily.

The banks have finally figured this whole storm thing out after Sandy, Katrina and a couple of these other storms. The storms are in a real marketplace and not like a beach community. That’s a different thing for second houses. The banks have finally figured out like, “Do not screw around. Foreclose on them and get them off your books.” Some of them are moldy and nasty. “Get them out the door as fast as possible.” The banks are doing a good job of getting people out of these houses and then getting them turned over. If you do not get these turned over fast enough, those neighborhoods will turn into awful places. We see that. We’re at foreclosures and all that stuff are absolutely up.

You mentioned that you went through a bit of a change. Was this a wake up in the middle of the night sweating freaking out, “I need to make some changes,” thing? Are you going through a midlife crisis having to buy late model 1990 cars? You built this machine and it was cranking. Suddenly, you take a 90-degree right turn.

I was in LA. Rob had me out there and he said, “Come out to this event and talk about Houston real estate.” I do an hour-long talk where I talk about the economics of Houston and Texas then I talk about the market in general and how to earn rates of return on single-family. There was this one slide at the end, and I gave a case study on a property that we had bought off of inside the Beltway on the east side of 290. The properties are on 7470 Woodoak. We thought we were big badass flippers. We bought that thing for $75,000. We put $15,000 to $20,000 into it. We were $90,000 to $95,000 into this thing. We flipped it and sold it for $130,000. We made $20,000 on it once it was all said and done. We were patting ourselves on the back and telling everybody how awesome we were.

If you go back and look at that house now, that house un-rehabbed is worth $165,000 and the rents have gone up another $500 a month in the last few years. Rob is sitting at the back of the room and he said, “Jason, what if you just kept 25 of those a year for the last few years? How much cashflow would you make?” We’d be netting $91,000 a month. He then said, “What would your net worth be up to?” I was like, “If I bought 25 of these, my net worth would be up another $11 million.” He famously calls it the meltdown because I looked at everybody in the room and I said, “Is there anybody who got questions?” You can see some people about to raise their hand and I was like, “No.” I grabbed my phone and walked out of the conference. I got on the phone, I called Tom and I said, “I’m done.” This is absolute insanity. It’s a machine and it’s great and it makes a lot of money, but you pay a ton in taxes and every day you’re fighting for that next deal. There’s no end. Your end game is either you close everything, you liquidate it, you take your money, and then you go do something else or you get bought out. There’s no end.

I’m sitting here looking at this thing and I’m like, “This is a gorgeous company we built.” It’s out there. There’s three of them. They’re making great money, but when I looked at it, I’m going to work 80 hours a week. It didn’t make a lot of sense to keep doing that. I’ve got two small kids at home. You know the road life better than I do. I go into this conference speaking at this thing. I’m like, “I’m done with this.” It wasn’t fun. That’s the other thing. It was getting to the point where I was like, “I might just go back to my old job. This is real work here.” A whole bunch of my friends came to me too and they said, “You are literally going to kill yourself if you don’t do something else.” There was that epiphany moment where I was like, “I can’t do this anymore.” I’ve never shared this story publicly. Both of my grandfathers died before I was born in their late 40s.

My dad is the oldest living male. I turned 41 and I started looking at, “What am I doing? If I only have a couple of years left in life, what do you want that to be like?” I couldn’t see sitting at another conference at the Red Roof Inn. I couldn’t see doing stuff. I can’t see a meeting with another private lender so we can go flip another million-dollar house. I was like, “This is insane.” There was that a-ha moment, but then because of how complicated our businesses are and selling them and partnerships, it took a few months for us to get all that stuff sorted out. I can tell you I’m having so much more fun doing this stuff than the stuff I was doing before. It’s a lot more fun.

You’re buying stuff to retain for cash benefit. Your business model’s changed going from bringing on partners to fix and flip houses. You’re bringing on lending partners lending money for an extended period of time. How is that working for you?

When we first got into this business in 2013, there weren’t a lot of good mortgage products out there for real estate investors. You had your 30-year fixed rate Fannie Mae mortgages, but you can only buy ten houses. There was a lot of 5/1 and 7/1 ARMs on a 25-year end and some of that stuff like a five-year balloon. The mortgage products were not like they are now. I’ve got a banker that can get me a 40-year loan the first ten years as interest only on a single-family real estate investment property. The 5/1s and the 7/1s are there. There’s also 30-year fixed rate financing for real estate investments as many as you want in an LLC nonrecourse. Commercial lending is now coming to the single-family marketplace and that’s happened in the last few years.

What we do is we take this down with private money or hard money. I used a hard money lender on a deal, but we typically use private money to a lot of Quest Trust people. They got a couple of hundred thousand bucks in the Quest Trust account and we’ll go buy a piece of property with that. We’ll use it for the acquisition and the rehab and then we will refinance that into one of these longer-term products. In some cases, private lenders will say, “We want you to keep the money at work.” We’ll say, “That’s fine, but we’ve got to lower the rate.” It depends. The world is a wash of money right now. It’s not getting financing and it’s usually not the hardest part. A few years ago, it was a little bit different, but now it’s easy to get the long-term financing on this stuff.

What kind of LTVs are you financing those?

NCS 465 | Real Estate End Game

Real Estate End Game: Making great money but working 80 hours a week does not make a lot of sense.

 

We’re at 70 or 65 back. The two apartment complexes that are at 66%. There is a little hidden market out there for 100 units and below and even 50 units and below. You better be good at operations because those can be an operational nightmare. When you look at all these real estate apartment gurus, they’re all teaching 100 units and above. Professional asset managers, guys like us, when we get into a little space like that, we can get some excellent returns because most of it is mom and pop. We’re playing in a space we virtually have no competition and we’re having an absolute blast with it.

The fact that you’re buying in one area, you can have a property manager that works multiple assets. That’s the thing. Part of the reason they look at 100 units is that that’s where it allows being able to afford a full-time plus a part-time person to manage leases, marketing, in and out in systems. It’s a lot of mom and pops offsite management. In a geographic location, you can buy 100 units for five to six properties.

What we found the trick is we like working with single-family property managers. We’ll go to a property management company and we’ll say, “Tell me a little bit about you and your company.” There are two things I’m looking for. One is that property management company is the principal or real estate investor because they’re going to understand what it means to keep your rehabs at a certain cost. Second, can you rehab an apartment at the apartment cost? It’s not a single-family house. We’ve got to get some economies of scale even on our 27, 10 and 5 units. We will not go into a submarket if we don’t have that property management company. That’s the hardest part of this whole thing.

The guy we’ve got down in Corpus Christi, he said, “I started a property management company because there are some good ones out there, but I’ll just manage my own assets.” Half of his property management company and half of the assets that they operate are his and he does it for friends. That’s what we looked for because otherwise, you will get eaten alive on these small things if you have to take the phone calls from 27 units and then you’re collecting rents and all that other stuff. That’s been the hardest thing. It’s 100 units above. That’s where all the big boys play because they can afford to. They make enough money where they can have that onsite management.

Especially if they’ve got to deal with break-ins and things like that. Corpus is not a bad market. I grew up in Corpus Christi. You’ve just got to be careful on a couple of different areas. It’s a nice area and has not hit the crazy appreciation market like the overpriced market of Austin and Dallas are, for the most part, so that’s good.

We look at a submarket like Corpus and you’re right. It hasn’t hit the appreciation yet. I think you were down there.

I was down there. They are rebuilding the Harbor Bridge in Corpus Christi and redoing the whole Port of Corpus Christi. When it’s done, it will be one of the top four or five ports in the world to be able to bring in the biggest tankers for the oil. It will rival the Port of Houston is what they’re saying.

The problem with the Port of Houston is they run out of room. There’s no more room for development. If you get off of Staples and Laredo street, I bought some assets on Laredo, it’s the rough side of town right now. I was chatting with the guy that runs the development board down there and he said that once they finish that bridge, those are going to be the only two thoroughfares to get into downtown from that side of town. We bought an eight-unit down there for $120,000 to $130,000. We’re in the middle of rehab in that one. We’re going to start picking this stuff up as inexpensively as possible and it cashflows, so we’ll just wait for the appreciation and sell when it makes sense.

You’ve got Corpus as a big oil and gas area industry as well because you’ve got all the refineries there. Valero has got some stuff there, Oxychem, and DuPont is building a big thing over in Ingleside where I grew up at. You’ve got a whole new refinery taking place over there. It’s a huge amount of growth with oil, gas and refineries. There’s a lot of job growth. My mom was driving around my hometown in Ingleside, which is small. It was originally 3,500 people when I moved there and now it’s over 10,000, which is still small but it’s still a quadruple growth. They expect it to be 15,000 to 20,000 before too long.

It’s a secondary market, but it’s on the beach. Corpus is known for the windsurfing regatta. You have to look in those markets and you have to be creative. I want to make sure of one thing here that you’re not recreating the job mess that you did. Let’s talk about that a little bit. As entrepreneurs, we get excited about starting new projects, doing new things and new different opportunities. Sometimes you’ve got to reel in instead of trying to develop an eight-lane highway like the one in LA. Sometimes having a two-lane road is easier and better for you.

It’s way better. My business partner Rob, as soon as we start a company, he’s good at the front end of bringing all these people in. We can spend our time doing the fun stuff and not having to manage this thing where you’ve got to put your fingers on everything. When you look at our portfolio side of our business, we can turn everything off and live off the fantastic residuals that we’ve already built. Now we’re doing stuff for fun. One day, we’ll just decide that we’re done. He’s 52 and he wants to be done by the time he’s 55. His little joke is, “I’ve got a couple of years and that’s it.” I have my little joke at the house. My youngest son will be eighteen in a few years so then he’ll be out of college. When people ask me, “What’s your why? What’s your goal?” I’m like, “I don’t have much going on for a few years. Not that I could sail around the world. I can’t just up and leave. I’ve got a few years hanging out here and have some fun. Let’s build this portfolio.” I am out of the, “Let’s build myself a job business,” because it was not fun.

What did your wife say about the transition?

She likes it. She was like, “You are home and you seem a lot less stressed out.” I had no hobbies. All my hobbies and all the fun stuff went to zero because I was doing a fix and flip business and real estate education full-time. It kills everything. You’re doing these little retreats on the weekend, you’re coaching in the evening, you’re doing your calls and all that stuff. I didn’t have any time for hobbies. That’s all changed. They’ve seen a big improvement. Home life has been a big improvement since I’m around.

You just completed a 100-mile bicycle race.

We did that little MS 150. We did a bike ride from Houston to Austin for the benefits of multiple sclerosis research and care. It was a lot of fun. It’s a little two-day event. That’s a great example. When I read that, I was still in the middle of selling my companies. I hadn’t trained enough. I was miserable. I hated every minute. I’ve done this ride for several years. I had the time to train and hang out with the team and all that other stuff. It was a stellar experience and I was thinking about that during the whole ride. I told my wife, “Do you remember what this was like last time?” She goes, “Yeah, it was awful. You had no time to do anything and train and all that other stuff. This is so much better.” Its stuff like that has improved significantly.

I was of this thought process, “I can make boo koo bucks and I don’t need to do any of that other stuff,” and that is completely incorrect. You’ve got to live life at some point. There’s nothing wrong with putting in a good hard one to three years as long as you’re clear on what the exit’s going to be or what the end looks like. I kept looking down this road. It’s more work. What is the end of this thing look like? I don’t know. Are we going to go to Dallas? Are we going to San Antonio? I’m done. I’ve spent here. I’m ready to do something else. You’ve got to have time for hobbies. You’ve got to have time for the fun stuff. You can’t be at real estate all the time.

You’ve used in your pop up a little bit more going camping with the kids and seeing some more stuff with that. That’s good to see because you were adding a little bit of seasoning relatively quickly in the side of your head there.

Did you notice that? This is what I couldn’t figure out. My mom went gray real young so I’m like, “Is this premature gray or is it that crazy?” It might be a little bit of both, but I saw some pictures of me a few years ago and I’m like, “Who’s that guy?”

You briefly mentioned how both of your grandparents passed early on in their early 40s. Is that one of the driving forces that you’ve taken a step back to look and said, “I can’t do this like I used to. I need to need to switch it up a little bit here?”

I’ve taken stock of a lot of stuff. Life is meant to be an adventure. It’s not meant to be lived in email and Facebook, another seminar or buying another house. My absolutely terrifying biggest fear is that I will be on my deathbed and there will be something I regret. If I look back at all of the big regrets I’ve got, I don’t have very many. It’s only a couple. It was because it was something I didn’t do. Everybody makes mistakes and do stupid stuff, but you forgive and move on. That’s not big of a deal. The biggest regrets I have in my life are like, “Why did I not do that?” Tom, my business partner is fond of saying this. He’s like, “Life is not a dress rehearsal.” You don’t get another shot at this thing. You’ve got one shot and you make the absolute best of it. If you’re not having fun, if you’re not doing the things that you want to do, then what’s the point of building these big businesses?

What’s the point of making all this money if all you’re doing it for is so you can run up the score? There’s nothing wrong with that. If that’s what somebody wants to do and that’s what you’re all about, that’s fine. I’ve got to a point where I’m like, “This could end at any time.” I don’t want to look back and say, “I wish I did this. I wish I did that.” You mentioned the little camper we bought. I’m a hardcore Dave Ramsey guy. We don’t buy depreciating assets. RV, by definition, depreciates as fast as possible. There is virtually no residual value there. I looked at our kids and I’m like, “Here’s the problem.” You will know your children longer as adults than you will when they’re kids. You’ve got this finite amount of time with your kids. People think, “Your kids are with you for eighteen years.” Not really. They’re with you from about seven or eight years old until about twelve or thirteen and that’s about it.

The rest is riding it out as they get older and you’re providing some advice for whatever they’re going to listen to until they get eighteen to twenty years old. There’s this very small window you have where you can build incredibly impactful memories. When I start looking at what would they think is the most fun, “Let’s go buy this silly little RV and then drag it around the country.” We took stock of some stuff and I just said, “I cannot do this.” Your kids aren’t going to look back and say, “I wish dad bought another house.” I couldn’t do it anymore. If you look back, what are you going to regret the most? It’s going to be the things that you didn’t do.

NCS 465 | Real Estate End Game

Real Estate End Game: Life is meant to be an adventure. It’s not meant to be lived in email, Facebook, or on another seminar or buying another house.

 

One of the best advice that my father gave me before he passed on is you can’t take money with you, but you can take memories with you. What it all comes up is the making moments and memories with your kids, your family and your friends. We both are workaholics and that’s why we’re good at what we do, but you’ve got to take that time. You can’t burn the candle from both ends for an extended period of time. You’ve got to take the time to recharge and reconnect. Sometimes you’ve got to make a turn for the better. You’ve got to take stock of what means the most important thing to you. If you don’t take care of yourself, nobody else will.

If you can’t take care of yourself, how are you going to take care of other people? That’s one of those other big things I realized. I did not realize how many people are counting on me. You’ve got your family, but I didn’t realize how many other families are counting on the things that I’m doing for their well-being. You’ve got to think about your employees. It’s not what you pay your employees. They are giving you eight to ten hours of their life five days a week. I can ill afford not to give them anything but my best. When I started thinking in those terms, all of a sudden, priorities got rearranged. Life started to get a little more serious. You’ve got to take care of yourself because you have all of these people counting on you. Let’s say your life gets cut short by a few years, what is it that you’re going to create with those extra few years that could be world-changing?

We don’t know. We’re still young. We’re still in our 40s. When you live to work 90 and literally create something that changes the world. We have a duty to ourselves and to society to make sure that we do take care of ourselves because when you get down to it, there are not a whole lot of people that are entrepreneurs anymore. It’s such a small segment of the population. We have the duty to society at large to maintain some sanity in our lives and not get too much gray hair too quick. We don’t know what the next thing will end up. You just have no idea. We are sat down and we took stock of the whole thing and realized, “If you’re making another couple of hundred thousand dollars, is that going to move the needle?” I felt like I was playing a game that I couldn’t win. I was playing a game that wasn’t fun anymore.

It’s exciting that you’re making money, but at some point, what are you retaining and what are you building long-term? That’s the thing you have to look at. I think about that too a lot of times. You’ve got employees, you’ve got your staff, you have your vendors, especially your big referrer of accounts to vendors. You’ve got your students.

I’ll give you a good example. Curtis Warden and I had this little podcasting we did for a while and it was hard for me to schedule because I had all this other stuff going on. Now we’ve got this new podcast that we launched and it’s the most exciting thing I do all month. We do it in the back of a bar in the Heights. It’s right near all his projects. We set up in the back and we do four or five-hour podcasts. We turn the cameras on and turn the mics on and then we’ll invite some guests. There are these benches out there and people sit on the bench and say, “What’s going on? Are you in real estate business? What do you do?” It is phenomenal. There was no way I wouldn’t have time to do something like that. We also owe a duty to the real estate industry as a whole to do stuff like that.

We owe something to the industry to continue to bring that value. One of the things I felt was because I was so busy flipping and doing the real estate education, I also felt that I wasn’t giving value at large or at scale. It was always behind, “You had to come to one of our events and do that thing.” I felt that I wouldn’t be able to do something like that a few years ago. Curtis and I are having an absolute blast. In fact, Curtis and Rob are doing something that you are going to see on the video. It’s going to be cool. We’re having so much fun with it. We had Merrill Chandler. He hung out with us.

How important is a mastermind to you? We came together and had some fun sitting down. You met Merrill there, you met George Antone and few others.

That was a very powerful mastermind and hanging around with you and all those guys. A year ago, there was no way I want to be able to attend because I had so much other stuff going on, especially sharing all the business stuff. I’m working with the Podetize people now. We’ve got a contract with them. They’re doing all our blogs and podcasts and all that other stuff. It was incredibly powerful to get a look into how everybody else’s business works, how their marketing works, how they generate leads in business. It was phenomenal.

I like to bring people that I respect together and hang out because I usually end up learning more from others. I understand that people are going through issues just like you are. It’s nice to let the guard down and be yourself or it’s going to be on the entire time.

You’ve got to be on 24/7. Rob said, “Being an entrepreneur is lonely.” You’re out here doing your thing. The other part of that is, who do you commiserate with? It’s not complaining, it’s more like, “I’ve got this problem.” People who are not entrepreneurs, they don’t even understand that. It’s not because they’re dumb or anything, they’re just not in the business. It’s fun to get around a group of people and say, “I’ve got these problems.” I’m sure you have run into this issue like, “How do we solve this thing?” It’s alone in a crowded place.

The crowd at the top is lonely. The air is thin at the top when you’ve dealt with people who plan their own peaks and gone through their own valleys. How important has marketing changed for you? You’re doing some different things with marketing-wise to find some of these different deals. That’s what you’ve done before. Is that correct?

What I’m doing is I’m taking a hula hoop and I’m wrapping people in the hula hoop. I’m trying to expand my network. There was something Quincy was beating me up. He was like, “Jason, your network is your net worth.” I was like, “No, it’s not. It’s more postcards, yellow letters and Facebook posts so I can get more deals.” Every time I’d see him, he’s like, “Your network is your net worth.” What he was saying is I was never tapping my network. I’ll give you a great example. My theme personally is playing well with others. I don’t think I played well with others in my marketplace in the last few years. I did, but I could always do a better job. If you’re familiar with Jordan Peterson, one of the things Jordan Peterson says, “When a parent says to a child, it’s not whether you win or lose, it’s how you play the game.” He’s got an hour-long lecture on what it means when you say how you play the game. What they’ve found is that in athletics and other competitive pursuits, the people that are the most successful are those that play the game with others well. You are fun to play with. That’s been hitting me where it’s like, “We need to be more fun to play with and that will, in turn, make us incredible real estate investors.”

As far as what I’m doing marketing-wise now after I sold the company, I just got on Facebook and said, “If you’ve got any deals, send them to me.” I got a flood of deals. I’m like, “Didn’t you know that I bought houses before?” What I realize is you still have to ask. Even though they know what you do, they assume you have enough. Part of living in abundance is also asking. One of the things that I’m doing a much better job of is asking like, “Have you got any the other properties? Have you got any more down here in Galveston?” It may not be now, it might not be tomorrow, but in the next few weeks they’ll go, “I heard you’re buying houses down here.” They’ll then shoot over an email. You look at it and go, “This looks like a deal.” That has been a big change in marketing. We are also a lot more focused on smaller rooms.

I don’t want to have the biggest event in town, but that may change if we decide to do a big event. Our goal is to work with serious people who want to do real estate. This is going to sound terrible, but it’s true. The vast majority of people that show up to real estate events claim that they’re real estate investors are not. They’re real estate cheerleaders. They want to watch the game, but they don’t want to play the game and that’s okay. They want to be the fans sitting in the fan section. They want to sit in the front row and they want to watch the show. It took me a while to figure that out, but then I’m trying to find, “Who are the people that are the players?” We’re trying to find who those players are and in order to find those players, you’ve got to cast a wide net because there are so many people that are fans of the game. That’s been a big change in our marketing. We’re trying to drill down to the people who are serious real estate investors. It’s a completely different marketing scheme.

I’ve also figured out that there is no such thing as a marketing funnel. You hear everybody talks about marketing funnel and I’m like, “That’s not how it works.” It’s like a cloud. You’ve got all these people that are put together in this cloud. You’ve got this cloud and you’re shoving content into this cloud. When you shove something in here, it’s almost like nuclear fission. You shove something in there and stuff comes out all over the place. It’s this crazy reaction. One of our biggest frustrations, when we spend so much money on our marketing trying to figure out what works best and who is doing all that stuff, what we found, is when we shove stuff into this cloud and people go all over the place. When I shoved content in here, they may end up as one of your students. They found me, listened to the radio show, they want to get into notes, and we’re running stuff through our funnel.

You’re running through stuff through yours and they bounce around. They may go to a title company we use or the hard money lender we use, but then they end up over here and they bounce over here. It’s similar years where you put this stuff out there and it sorts itself out. I thought there was this academic approach where you could say, “A lead goes from here to here. There’s money that falls there and customers that fall out of the bottom line.” That’s not how it works in the real world. It is putting out stuff out there and these people ping pong around and then they end up as a lender or they end up selling your deal. You just don’t know.

There’s usually about a six-month timeframe before you figure out exactly where they fall into place. Sometimes the few months before you meet them, you don’t know that they’re stalking you online. They’re watching your videos, they’re listening to you. That’s the thing that most people don’t know, especially in nowadays world with social media. People can follow you. They can watch your videos, they can listen to you, especially with podcasts. It’s not true about the top of the funnel, the bottom of the funnel marketing thing.

When you get your engineer types in your class and they’re like, “What is the marketing piece?” I’m like, “I wish it worked that way.” I wish I could just spam out of people with this one postcard and this one piece of marketing and do these three things and you’ll be a gazillionaire. Life by design doesn’t function that way. You’re trying to hack something that’s unhackable.

A lot of people want a magic pill. “Give me the magic pills to success so that I can have success overnight.” It doesn’t work that way.

There’s no overnight success. Even with the wild success that we had, it was still several years in the making. All of our marketing programs, our sales and all that other stuff are things that I’ve been studying and we’d been doing for several years. It didn’t happen overnight. None of that works like that. One of the things we realized too is that people overestimate what they can do in a year, but they underestimate what they can do in a few years. One of the properties we bought down in Corpus Christi is a beautiful property on the beach. We’re on the very top. It’s got a crow’s nest so you could see out to the water and all that. We’re sitting now on top of this thing and I just had this epiphany. I did not think this is where I would be in a few years. I had no idea. We kept hammering after it and then that’s where we arrived. That’s when I realized you overshoot what you could do in a year, but you completely undershoot what you could do in a few years.

There are so many things that can change in a few years, but you exponentially grow a lot of times. It’s not 10% growth. It’s 10% of 110%. It’s an exponential factor aspect of it.

That’s why I keep telling a lot of people in real estate when they get started, I’m like, “Get started massively because you’re getting a train moving and it takes a lot of energy to get that train to go.” I’ll give you a great example. Somebody said to me, “What happens if there’s this big market crash and you were to lose everything?” I’m like, “You don’t understand, I’ve already got the network built out. We can start over the next day, but it took a few years of 80-hour weeks to get there.” When someone says, “How do I network with people to buy houses the way you do where you just get on Facebook and people send you properties that are deals?” I’m like, “That’s a few years in the making. It’s not that you can’t do it, but know that you’ve got to get this train moving.” It takes a lot of energy to get it down the tracks.

NCS 465 | Real Estate End Game

Real Estate End Game: We need to be more fun to play with. That will, in turn, make us incredible real estate investors.

 

If you plant a tree every day, eventually, it will end up the forest. You can’t plant a forest overnight. You’ve got to do it a little bit each day and it grows. It’s all about consistency more than anything else. You’re going to have ups and downs. You’ve had good deals and bad deals. Everybody has good and bad deals. You just keep marching forward on the next deal if you keep working towards the next with consistency. “I’m not going to buy in that neighborhood again.”

That forest analogy is still great because you’re not spending time watching the trees grow. What you’re doing is you’ve got the tree, you plant it, you move to the next one. You dig the hole, you put the tree, and you’re sitting there. All you could physically see are dealing with these little trees and then one day you’re like, “I’m going to stop planting right now.” You then look behind you and go, “There’s a whole forest back there. That’s what I think people miss. They get so frustrated, “I’m doing just a little tree.” Yeah, but if you do enough of that long enough and you look behind you and go, “I left a huge legacy. There’s a whole forest back here.” That’s a great analogy.

What’s your five-year to ten-year plan? Is there an end in mind?

There is. It’s $100 million in real estate. We’re trying to buy $25 million a year and it’s going to be a different mix of stuff. I’m at $8.2 million between closed and contracted. We’d like to get to about $100 million. That’s the goal. 2019’s goal is 100 rental doors and then an additional 25 Airbnb in Houston and 25 in Corpus Christi. It’s about 125 doors and that’s going to put us at somewhere around $25 million. That’s our goal. We do have a fund. Jillian set up a fund for us and we should have our public where we can take from accredited and nonaccredited investors and we can publicly advertise the big one. We should be done with that in the next couple of months. My long-term goal is “Instead of investing in whatever you’re investing in, why don’t you diversify, put it into our fund, and our fund will make notes, it will do Airbnb, it will do all these alternative assets.” The long-term goal is to build about $100 million to $125 million over a year. It’s not going to happen overnight. That’s our long-term goal.

Where do you think the market is going to go in the next several months?

I am going to be that contrarian and I don’t think it goes anywhere the next few years. I’ve looked at so much data. I would love for there to be a crash. I just don’t see it happening. There will be a little natural recession, there will be a little blip for several months and it will pop back up. For us in real estate, especially us in Texas, I think this market only goes up for the next several years. We’re in the middle of a large cycle. Most real estate cycles are about twenty years. We’re right in the middle of one and it is going to shock people how expensive real estate gets. If you look at the build data, the new permit data, we can’t build housing and replacement units as cheap as we used to. Unless there’s a big technology disruption, which will come from 3D printing, but I don’t even see that happen in the next several years. It still could, but there needs to be some disruption in the construction space because it’s too expensive to build housing. If that occurs, that’ll be a major slap in the face of the market.

Scott, I’d love to say there’s a recession coming and it’s going to be like 2008 all over again, but I don’t see it. I wish it would happen because I want to go and buy this house at $25,000 a door. I don’t see it happening. When Trump came out in Q3 and tweeted and said, “Federal Reserve, you’re bringing rates up too fast. You’re going to crash the economy.” The Fed came out and stopped the rate increases. When they said there might be one increase in 2019 and we may even have a decrease in 2020, I was like, “The game is over. There’s no crash. It’s not common.” California is way too hot. California is such a freak show anyway. That’s a whole different deal, but for Texas, I don’t see it. I see this place getting a lot more expensive and getting a whole lot more populated. If you want to buy cheap houses up and down the 35 and 45 corridors, I’d start doing that. I’d love to see a collapse. I just don’t see it anytime soon.

Texas is going to stay insulated compared to everybody else out there. We’ll see different parts of the country, but you’re right. Texas can stay insulated for the most part. We’ll see a few blips and higher priced homes are going to take a hit these days on the market. Your sub $500,000 or sub $300,000 houses are going to stay solid for the most part.

I play inside that. I like that median home price. I don’t like going much higher net. Million-dollar homes are a whole different animal. Right around that median home price, it just gets more and more expensive.

Jason, what’s the best way for people to reach out to you if they want to?

Do it on Facebook. Follow me on Facebook. Most of my stuff is public. We’ve got a little radio show, Texas Real Estate Radio Network. You can like that page. We’ve got a podcast and all that other stuff. You can find that by googling it up, but the best way is to follow me and then follow the Texas Real Estate Radio page.

Thanks for taking an hour out of your day while you’re running around Galveston checking out beach homes. Enjoy your day, Jason, and we look forward to visiting you in the future.

Thanks for having me on, Scott. I appreciate it.

Follow him on Facebook. Check out the Texas Real Estate podcast and network that he does out there on a regular basis. Go out, don’t sit on the sidelines. If you bought the ticket, get in the game. Start doing something and you’ll be a whole lot happier off in the long run instead of wasting money on popcorn, hot dogs and overpriced beer. We’ll see you next time.

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About Jason Bible

NCS 465 | Real Estate End Game

Jason Bible began investing in 2013 and has closed over 500 houses. He hosts a weekday radio show that can be found wherever podcasts are hosted under The Texas Real Estate Radio Network.

 

 

 


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