5 Properties After Spending 8 Years in Prison (With ZERO Credit!)

Ashley:
All right, you guys. Rookies, before we get to today’s show, we have a quick favor to ask.

Tony:
Yeah, guys. So here is the deal. We want to make this show better than ever heading into 2022, and we need your help to do that. So if you’re a super fan who listens to almost every episode, maybe you’re amused by the way Ashley changes the number nine to niner, or maybe you’ve DMed me on Instagram about my house in Shreveport, I can’t sell.

Ashley:
Are you calling from a walkie-talkie? Then we want you guys to join our Rookie circle group. We are going to give you guys access to some of the episodes before they actually go live, plus the chance to personally appear on live shows with us. And this is just all free. We just want to include you guys and have you a part of the Rookie community. All we ask, is that you’re willing to keep listening to the show and provide us with regular feedback through email surveys.

Tony:
So does that sound fair to you? If so, sign up at biggerpockets.com/circle. That’s biggerpockets.com/circle. And we’ll put a link in the show notes for today’s episode, too. One more time, head over to biggerpockets.com/circle for access to exclusive content and a chance to make your feedback heard. Now, enjoy the show guys.

Ashley:
This is Real Estate Rookie 129.

Jason:
I’m at the point now where I might not have to wake up with an alarm clock. I can just have my son come wake me up and I could watch him grow, and it’s amazing. It’s amazing the 180 in my life is pretty much turned into because of real estate.

Ashley:
If you guys are sick of hearing the niners, I just want to say that Tony reminded me that this was a niner episode because I originally said 129. So blame Tony. Anyways, I’m Ashley and I’m here with my lovely co-host, Tony, who we had to pause for a second so that he could text his wife and asked her to warm up some food for him. Because we have about a 15-minute break before we record another session.

Tony:
Priorities, Ashley. We got our priorities in place. We’re podcast recording, food, in that order exactly.

Ashley:
Yeah, yeah.

Tony:
Got to get it all down. What’s new in your world?

Ashley:
Well, when we come back on in 15 minutes, it will be both of us eating. That’s always what happens when will be like a minute late and here’s both of us shoving food [crosstalk 00:02:33].

Tony:
You guys would be so surprised if you saw the behind the scenes of making these podcast work. But luckily you all just get the finished product. The finished polished version of Ashley and I.

Ashley:
Actually the worst part of us is when we’re recording ads. The blooper reels for that is… That’s entertaining. If you guys were at BPCON, you probably saw some of these bloopers being played during the intermissions and in fact to see the real highlight reel behind the scenes.

Tony:
Yeah.

Ashley:
So Tony, tell us about Jason, our guest today. What did you think?

Tony:
Man, I absolutely love, love, love, love this conversation. Jason’s story, I won’t get into it too much, but I think he’s the first guest that we’ve had that spent an extended period of time in prison, and still came out on the other side to build a successful career as a real estate investor. So many, so many, so many good just life lessons, not even just real estate, but just life lessons in today’s episode that I know will for sure have a positive impact on everybody that’s going to be listening.

Ashley:
And I think if you are thinking that there’s something holding you back from real estate or that you’re not good enough or you don’t deserve it or you can’t do it or just that you don’t have the resources or anything, listen to this episode. It is very motivating and inspirational to see what Jason has done to get to where he is today.
He said, “I’ve hit a low in my life already. So no matter what I do next, I’m not going to hit that low again.” So this is a really great episode to listen if you need a kick in the butt. Because Jason went through a lot, and he has done a great job of becoming the real estate investor he is today.

Tony:
In Jason’s motto, I feel like we didn’t really touch on it enough in the episode, but it was feed off fear. Right? That’s what he mentioned to us right before we ended up wrapping up. So just keep that motto in your mind as you’re listening to today’s episode, feed off fear, and just let that motivate you.

Ashley:
Well, let’s bring Jason on to the show.

Tony:
Jason, welcome to the Real Estate Rookie Podcast where they’re super excited to have you on.

Jason:
Absolutely. Super excited to be here. Thank you guys for having me.

Tony:
Yeah, man. So let’s start with your background. Tell us a little bit about yourself, who you are outside of the world of real estate investing, and then how you got started as an investor.

Jason:
Okay. Yeah. My name’s Jason Peterson. I’m from Milwaukee, Wisconsin, if you can tell from my accent. I pretty much started real estate investing because of family support. I grew up in a broken home, single mom. She struggled for money very hard to make ends meet. And I watched that, and it influenced my life. I had a absent father. So a lot of times young boys especially, have a problem with finding a good role model. And that’s exactly what happened to me.
So I started to get into a lot of trouble and the trouble spiraled out of control. And after high school, I partied the years away, caught myself and joined the Marine Corp. I tried to make right with my life. However, I didn’t clean up some past behaviors, and I came home on 96-hour leave after infantry school and got into some more trouble. So needless to say, I screwed that up. So it’s a series of failures.

Ashley:
Failures are lessons learned, Jason.

Jason:
Absolutely. Absolutely. And from this point on, I take all of these lessons that I’ve learned and use them to pivot and grow stronger. So I came back from the Marine Corp, it was about ’07 into ’08. I went back to a former job that I used to squander away my paycheck at, and the recession hit.
And I got laid off. An idle time is the devil’s play thing, and I got into some more serious trouble. And consequently, I was incarcerated for eight years, and I deserved every single day of that sentence. And it actually made me turn from a immature boy and made me mature into the man you see here today.

Tony:
Jason, what a background, what a story, brother. Kudos to you for pushing through all of those obstacles. And it’s crazy, because I feel like a lot of the guests that we’ve had on recently have had these backgrounds where there was some adversity that they had to overcome, right? Like Nick Cooley from Episode 109 that just aired yesterday. We’re time traveling, so it doesn’t quite add up anyway.
Nick Cooley from Episode 109 had this ice cream sandwich story, and you with your background. I think a lot of people, Jason, they let their current circumstance dictate their future circumstances. And it sounds like it took you a while to learn that lesson, but eventually it did click. So just kudos to you for having that switch go off. But how did you go from all of that adversity earlier in your life to, “Okay, I want to become a real estate investor.” Because it’s not often that you hear folks that spent eight years in the prison system come out and do better for themselves. So how did that change happen for you?

Jason:
Well, absolutely. And going along with your story about Nick Cooley. In that same episode, you had mentioned something about a $15 copay when your son was sick. Well, there’s these times in life where you’re struck in the face with, “Hey, I need to make a change. I need to propel my life into one of success and something has to give.” So a little story that goes along with, now as I was being sentenced for the crimes I committed, I have a pretty strong relationship with my family. They’re pretty close-knit, and they were obviously utterly shocked that I was in this trouble.
And before sentencing, they offered an opportunity to write a letter to the judge and plead on my behalf. So when I returned back home, I stayed where else but at my mother’s house, and she had a box of mail that was everything that was collected throughout the eight years that pertained to me. And upon reading through this box, I think it was unintentional, but I found the letters that were written on my behalf from all my extended family pleading for me to the judge.
And it struck me very hard. I almost get emotional thinking about sitting in my childhood bedroom reading the letters from my extended family just saying that how rough of a childhood I had, but I’m a very good person with a good heart. And they just prayed for my success and they believed in me. And at that point on, I knew that I had to make good on my promises that I will better my life with their support. I mean, I’d be letting not just them down, but letting myself down ultimately, anyway.

Tony:
I just think one super important point from there, Jason is, it sounds like the people that you cared about played a big role in this mindset shift that you had. And I think that’s an important lesson for everyone that’s listening, regardless of the adversity that you’ve gone through. If you have a change that you want to make in your life, whether that’s becoming a real estate investor, whether that’s getting rid of your debt, whether that’s getting into a better relationship, whether that’s earning more money, whether that’s getting more fit, healthy, whatever it is. Sometimes you being the only person that you focus on makes it harder to stick with that goal.
But if you have someone that you care about that’s impacted by you achieving that goal as well, I found in my personal life, that it’s easier to stay committed to that, right? I’ve shared on the podcast many times now, I’m a teenage father. I became a dad super early. And a lot of people look at me with sympathy for going through that, but I’ve always looked at it as an advantage. Because it gave me this crystal clear focus and discipline because I had someone else depending on me. And Jason, it sounds like it was a similar impact for you and your family.

Jason:
Absolutely.

Ashley:
Jason, do you want to give us just a quick overview of what your portfolio looks like today and where you’ve come to today, just from getting into real estate?

Jason:
Yes, absolutely. I hit a home run of a deal on a house hack that I’m actually in right now. If you can see it on YouTube, I’m in the wooden room here. Hit a home run of a deal on that, and I pretty much launched from that property, and now I have four more. And it all happened within two years. And I bought with equity and did a lot of maneuvers, too. I started with $3,000 to my name and an FHA loan. So, there’s so much power to be heard. And if you get creative, have good teams behind you, lender, realtor, you can move mountains.

Ashley:
So you’ve had this mindset shift. You’ve had this incredible story and journey to get to real estate investing. What made you decide to take this route? I mean, why didn’t you go and start wholesaling or go flip a house? Why did you decide on this strategy?

Tony:
Or sorry. But even not even just wholesaling or flipping, but why not start some other business or why not get a regular WT job, just real estate investing in general. What led you down that path?

Jason:
I have the very fortunate experience of my mentor cousin. And shortly after I was released from prison, one of my uncle’s had passed away. And upon passing away, we had a remembrance get-together for him. And at that get together was a cousin. A cousin that I hadn’t seen in probably over eight years because before that, he was a busy guy. At this current time, he has 102 properties within the Milwaukee area. And he was very influential in taking me under his wing and teaching me everything he knew. But then ultimately cutting the cord after the first one, because I think he pretty much came to the conclusion that you got to just jump in and do it. No one’s going to hold your hand, no one’s going to pick up the phone for you.
When a tenant calls you with something broken, you have to just jump in and get it done. And that’s what we did. But yeah, my cousin was very influential, and I’m very thankful for him that he took a chance and saw that I was ready. And he pretty much told me to read Rich Dad Poor Dad. And like every guest that’s been on every BiggerPockets, it just changed my mind. Just opened my mind of to just the possibilities of having your money work for you.

Ashley:
Jason, I want to know, how did that conversation start with your cousin? Did he approach you about real estate investing, or did you approach him like, “Hey, what are you doing? I want to learn.” I think there’s a lot of people that may know somebody who’s doing real estate but not sure how to strike up that conversation and get them to be a mentor like your cousin has become for you.

Jason:
Absolutely. And it was a little bit of both. So it was a little bit of him feeling me out to see where my mind was at. A stigma of people that have just done some prison time is that they’re shifted that their mind is on a different level. And that’s a stigma that’s untrue, because a lot of times people use it to better themselves and learn. But it was a feeling all process. So I came to him and I said, “Hey, I’ve heard of all your success. You’re retired by 40. Tell me how you did it.”
And he came to me and said, “I think you’re ready to learn and you’re eager. And I will invest this time in you.” For him, it’s giving back as well. And I think he really enjoys that. It’s fulfilling for him to give back and teach what he knows. And his whole strategy is buy and hold, and I fell right into it. Milwaukee is a market where you can find cash flowing rentals. I think it’s like you, Ashley. It’s where you can find pretty, moderately priced cash flowing rentals. It’s just a great market for the buy and hold strategy.

Tony:
Yeah. I think one thing I want to point out for the listeners here, Jason, is I think all of us have someone, like you said, in our circle… Or not all of us, right? Because I definitely didn’t. But a lot of people have someone in their circle that is doing what they want to do, right, or has achieved the level of success that they want to achieve. And they don’t use that relationship, not to their advantage. But I guess they don’t leverage the power that can come with that relationship. Right? So I think the point for the listeners is that you A, we’re aware enough to recognize that, “Hey, this is someone that I want to model.” Right? “I’ve done my past, my past has happened, I’ve learned my lessons. But this is who I want to become or he’s got the qualities that I want half of myself someday.”
So you were self-aware enough to notice that. And then B, you have the courage to walk up to him and ask those questions of like, “Hey, teach me your ways. How can I do what you’re doing?” So for the rookies that are listening, if you have someone like that in your life, do the same thing, right? The worst they’re going to say is no. But if you can find some way to provide value to them in the flip side, then it’s a win-win for both of you, right?
If that means that you’re going to their job sites and sweeping up or doing supply runs to Home Depot, or screening their tenants, posting their stuff on Facebook Marketplace, whatever it is you need to do to provide value to them, you should be doing that. So I guess my follow-up question, Jason, is what was that relationship like? Did he bring you under his wing and just give you some tasks to do to help in his business? Or was it you’re meeting every week for coffee? How did that relationship evolve?

Jason:
We actually met at a sandwich shop, and he said, “Bring a notebook.” And, of course, I did. I mean was pretty much getting a four-year education at a sandwich shop with a notebook. So I came like a kid on his first day of school, and I had my notebook. And I wrote down everything he told me to write down. And pretty much there were a lot of rules I had never heard of. The 1% rule, the rule of 70, all these rules that were foreign to me. But he said, “I’m going to give you these notes, I need you to do a little research on your own.” And that’s another thing too, I think you need to be very self-motivated.
You can have all the mentors in the world, but they’re not going to do it for you. You have to take some of that onus on you, and you have to do it. And that’s exactly what I did. And I have to thank BiggerPockets for it. And he actually did put me up on BiggerPockets, too. He said, “You need to start listening to this podcast.” So that’s exactly what I did. And I have not missed an episode on either the rookie portion or the OG podcast. And that’s what I did. I delved into it, and I soaked it all up.
So upon getting all this information from him, he told me, “Be on the lookout for For Sale By Owner signs”, And that’s what I did. I’m a pretty active guy, and so I jog a lot. And as I was jogging around my hometown neighborhood, I saw the coveted For Sale By Owner, and immediately stopped what I was doing, took a picture of the sign, came back home, made a call, organized a showing. And my cousin, he was available that weekend. He walked in with me, and he looked at me in the corner as we were with the sellers and he told me, “Buy this house. Buy this house.” And we submitted an offer, and it was accepted. And my life has been changed ever since.

Ashley:
This is so exciting, and I love it. And I want to talk to that moment where you started actually looking for houses. How did you get comfortable and confident enough to actually know that you’re ready to purchase a house?

Jason:
I think I gained strength through my background somewhat. There was really no low, no rock bottom for me. The risk wasn’t as grave as maybe people in other situations. But for me, I’ve been at a rock bottom point, so it can really only go up from here. So the issue upon my release was having a zero credit score, and that took some time to build on my credit. And that was another thing that I was advised to do, is to get my credit right. But as far as the looking and… I knew I was ready when I was in the sandwich shop with the notebook. I knew I was ready. I’m an action taker. And you have to be. So that’s what I did.

Tony:
Jason, I love the point that you just made about when you’re going through life and sometimes you hit those moments that feel like rock bottom, everything else just seems a little bit easier after that, right? And it’s like to someone else that maybe might not have had some adversity earlier on in their life, the idea of going out and talking on the phone to the stranger about this house that you’re trying to buy for them, that might make them like, “Oh, my God, there’s just…”
But it’s like if you’ve been through some things, if you’ve been through some challenges, that’s like, “Oh, man, all right, cool. Yeah, let’s do it. Who’s next? What’s next?” And you’re able to kind of run through those things a little bit easier, so what a great point for the listeners. I think one follow-up question for me on that, though is, how much time passed after you were released from prison, up until that day when you were jogging to the neighborhood and found that For Sale By Owner?

Jason:
Okay. So I got out of prison December of 2017, and I pretty much worked in my W-2. And the same one on that today, I work 40 hours a week still. And I found that duplex in August of 2019. So about a year and a half until I found the one and my credit was good. I was pre-approved and ready to go.

Ashley:
How big of a role did your cousin help you with that process? Getting the lender, looking through the house, estimating what the rehab that can be done on. Or did you take that on yourself, all of those things?

Jason:
He gave me the outlines and he actually helped me submit the offer because this was a private sale, no realtors involved. I think the sellers just had a lawyer that they did the escrow with. But as far as the rehab portion, I was on my own. He could point at things and say, “Hey, that’s probably about three grand, that might be a couple grand.”
But I think I underestimated the amount of work. This initial property has pretty much been a live-in flip that’s a BRRRR, it’s a HELOC, it’s everything all rolled into one and a great way to learn. And I love it. I wouldn’t change it. I’m still here today with four other properties, so love it.

Ashley:
Jason, that’s so awesome. And with the property you’re in right now, do you intend to flip it or you’re going to rent that one out? The one you’re in, specifically living in.

Jason:
I’m going to rent it. I’m on the lookout for another house hack, and I’m going to just do it again.

Ashley:
Okay. So worst case scenario, you can’t rent it out, you can still afford to cover those mortgage payments, correct?

Jason:
Absolutely.

Ashley:
Would you just talk about the risk of that when going to purchase a house hack and being able to afford the mortgage payments in case something does go wrong, just to lower your risk compared to going out? How come you didn’t go out and buy a $500,000 duplex with high-end luxury and depend on the other tenant to make that payment and then not be able to afford it if they moved out? Can you talk about why you decided on the price point that you did and the affordability of the mortgage payment?

Jason:
Well, this house was a one of a kind thing. And it came like I said, it was a grand slam of equity off the bat. I acquired the house for 97,000. The first appraisal came through at 165. So I bought it on an FHA loan. Yeah, absolutely. And-

Ashley:
So you didn’t even do anything to it yet?

Jason:
Nothing. Nothing to it yet.

Ashley:
Wow.

Jason:
So it seasoned and for six months, I held it as FHA, and I was worried if it was going to pass or not. It has some faults to it, and I took another risk there. I paid $700 for FHA appraisal. And if you flunk that, you don’t get that money back. But that was a risk I was willing to take, obviously, and I paid off and passed FHA standards. So it got through and then I pretty much, what’s the old cliché? You make money on the buy. And that’s pretty much what I did.
So everything past that point has just leveraged off of my initial $3,000 investment, and there was really no reason why I would go for a higher price point than that. Because like you said, if something happens and you can’t rent out either unit, I can still cover it. I think it was about $100 more than the one bedroom apartment that I was renting prior to this. So it’s a no brainer. And then there was a no brainer. And I actually use seller credits, too. I don’t know if you want to get into that later, how seller credits can help somebody with not a lot of funds available to them. But I mean, it was a home loan.

Ashley:
Yeah, let’s talk about that. I’ve never even asked for that or used seller credits before. But why don’t you go into that right now and explain exactly what that is and how it’s an advantage to somebody.

Jason:
Okay. Yeah. So my margins were getting pretty tight. Cash reserves were an issue and I… For the FHA, sometimes you have to pay it up front, like mortgage insurance premium, it’s like MIP. It’s pretty much the same thing as PMI. But for an FHA loan, they call it MIP. So there was some more cash to close. And sometimes people don’t realize that with FHA that there’s a little more hidden costs than just the three and a half down payment.
So basically, the seller concessions, if the house appraises higher than the purchase price, you can use up to 6% and reposition the loan amount, and you can use seller concessions to help with your down payment, closing costs. It’s 6% on government loans, 3% on conventional primaries, and 2% on investment properties, conventional. And I’ve used them on three out of my last four deals. And it’s something that I think people should utilize. It helps when you’re not coming from a position with a lot of cash on hand. Helps you to close, and it’s what I’ve used.

Tony:
Can you define seller credits, Jason? What is that, and how do you work that into the negotiating process?

Jason:
So basically if you negotiate a purchase price of 100,000, just for example, 100,000 and the house comes in and appraises at 105,000. Now when you’re putting a regular down payment on to the $100,000, you’d have to come up with a cash to close, 20% down payment, if it’s a single family investment.
What you can do is you can make an amendment to the offer to purchase, and you can actually change the loan amount to 105,000. And basically what will happen is you’ll get $5,000 kickback to you. And your loan amount will go up some, but it’s mortgaged over 30 years and at these interest rates, it’s like free money. So you can’t go wrong. It’s a small price to pay to maximize not using your cash on hand.

Tony:
That is super interesting. I’ve never thought about doing that before. I was just telling Ashley before we started recording, I just put an offer on a cabin in the Smoky Mountains. And if it gets accepted at what we offered, I’m almost fairly certain that the appraisal will be higher than the purchase price.
And we were initially going to use hard money to try and fund some of the rehab. But now talking to you Jason just got me thinking, can we just get the loan for the appraisal amount and get a refund at closing and use some of that to fund it? So interesting concept, man. You just taught me something new, brother. I appreciate that.

Jason:
Yeah, absolutely. And you have to have a pretty creative mortgage lender, and you actually have to have the seller agree to amending the offer to purchase. I don’t see why they won’t. I mean, it’s the same bottom line price that they end up with. So seller concessions are a great tool, especially for a rookie investor with little cash on hand. It’s great to use for closing costs, and then you don’t have to negotiate and get into that fine line, “Hey seller, will you pay the closing costs or will you split them with me?” You can pretty much just take it to make the deal happen.

Ashley:
So Jason, do you want to go into one of your deals and we’ll get very specific on the numbers and how you acquired it and break it all down?

Jason:
Absolutely.

Ashley:
Okay. Which one did you want to do?

Jason:
I’ll do the one I just closed on a single family on Tuesday. So I can get [crosstalk 00:29:51]. Thank you. Thank you.

Ashley:
Yeah.

Tony:
Yeah.

Ashley:
Okay, I’ll just do a quick little fire round and ask you some questions and then you can go into the story of it.

Jason:
Okay.

Ashley:
What was the purchase price?

Jason:
72,000.

Ashley:
And you said it was a single family?

Jason:
Yes.

Ashley:
Okay. And what are you doing with it? It’s going to be buy and hold, flip it?

Jason:
Buy and hold. Buy and hold all day.

Ashley:
Okay. Does it need rehab?

Jason:
Just some cosmetic things. But otherwise, I have to put a baseboard heater and run a heavier gauge wire into… It’s like a bungalow. It has the upstairs and I overlooked that. I get a little jumpy. Just make an offer. Make an offer.

Ashley:
What do you estimate the rehab to be? What do you estimate that cost to be on the cosmetic updates?

Jason:
Probably about $2,000.

Ashley:
Okay. And then what do you expect the ARV to be after you put in that little bit of money.

Jason:
It appraised at 75. So I would say, the ARV, I wanted to refinance my primary and appraisals have been all over the place. I mean, the market is doing what it wants right now. So ARV, I would say probably 80, hopefully more. But ARV is honestly more of a cash flow guy. So the value doesn’t concern me as much.

Ashley:
You’re going to hold it. We doing over your ARV round 80k. And how did you find this deal?

Jason:
Through the MLS, actually.

Ashley:
Oh yeah?

Jason:
Absolutely. And I offered below list price too, which is pretty crazy, once again, for this market. And it flew. I think it was on the market six days, which is like an eternity these days. And I have a pretty good realtor. She’s been great, which is another key component. You need to find one that knows your goals, what the 1% rule is, because if it doesn’t meet that, I probably won’t even look at it.
But she sent me a link and I was actually looking at a duplex she sent me and she’s like, “Well, I’m just going to see if this one’s right down the street from it, maybe we can view it the same day.” And I ran the numbers on it and straight, great numbers. It looks good.

Ashley:
Just a little side note here real quick. Can you just say how you found your realtor?

Jason:
Now, this was also on my notebook from the sandwich shop. When in doubt and you see a listing and you want to look at it, call the listing agent. So months prior to this, I actually did that as I was analyzing deals, because that’s all I would do. I would pour into every deal I could find. And upon doing this, I found her name listed as the listing agent. So I called her up out of the blue. I said, “Hey, I’d like to see this property.” That property didn’t work out for us, but we created a relationship. And to this day, that’s how I started working with her. So very key components in my success.

Tony:
Great point. And that’s how we found our agents in Joshua Tree. We found a property that we liked, we just called the listing agent and said, “Hey, we’re buyers. We like this property. You can do a representation if you want to.” And he has. We’ve purchased now three or four houses with that agent. He’s probably going to represent us on a house that we’re about to sell. He did our last house we sold in Joshua Tree.
So yeah, just reaching out to the listing agent is a great way to start building that relationship. Just bringing us back to the deal, Jason. So you find it for a decent price, very little rehab, you just close on it on Tuesday. How much time do you think it will take for you to get the property ready and find a tenant? And once that tenant is placed, what do you expect it to actually rent for?

Jason:
I’ve been putting the pressure on the electrician that I use to… He’s kind of blocked, and then putting the pressure on him because I’d like to minimize my holding time with it. But he said in about a week, unless somebody cancels, he can get in there and take care of what we need to. And I advertised it on Craigslist. And I actually have to take the post thing off. I don’t know what’s going on with the rental market, but my phone will not stop ringing.
I advertised it for 1150, so I’m getting quite a bit good return on this one as a single. And the markets knots, I mean, honest to God, I have to turn my phone off most of the time because it’s just blowing up. It’s just people… And that concerns me to a bigger picture step outside and take a look from the outside and I see something at hand with just the demand for rentals right now. I mean, I’ve seen it in the news. I delve into papers in the housing, in the rental market. It just keeps going up. So I think I’m in the right space, though. I mean, I think we all. Right?

Tony:
It’s a good time to be homeowner.

Jason:
Absolutely.

Tony:
Yeah. It’s a good time to be a homeowner, for sure. So say that you are able to rent this out for 1150, what are your projected expenses on this property and how much do you plan to net?

Jason:
Well, since it’s a single family, there’ll be in charge of the water and all utilities. So that’s one expense that I don’t have to deal with, as if it was a duplex, because I’m used to duplexes being my bread and butter. So this one will be a welcome reprieve from that, not worried about the over consumption of water notice in the mail.
But the expenses, I do 20%, that’s capex, that’s maintenance, that’s everything. So I’m very conservative with my numbers. And if they hit $500 net per property to go for me, that will pretty much replace my income very, very shortly. I think by next year, I’ll be able to be financially free, which is crazy to even say.

Tony:
Wow.

Ashley:
That is so awesome.

Tony:
Yeah. Just yeah. How amazing.

Jason:
Absolutely.

Ashley:
Very, very cool. So what is your why? What’s the reason you want to be financially free? Why did you decide to go for that? What lifestyle you’re looking to build once you hit that financial freedom?

Jason:
Okay. So I’m married, and I have a almost one-year-old son. And I think a lot of people, when COVID hit, there was a lot of pivoting. I guess that’s the word of the COVID pandemic for investors, was the pivot. And I didn’t feel secure at my job. I mean, I needed to provide for my growing family, and I needed to ensure that we would be okay financially, regardless. And my why is my son and my wife. I want to spend as much time with them as I can. And I think real estate is the quickest path. Absolutely the quickest path to being financially free.
I mean, each property is basically another paycheck, and you can completely replace your need to be in your W-2 with properties. I mean, even my recreational bills are covered by properties. I have a monthly ju-jitsu gym that I 120 a month for ju-jitsu. Well, I have a property that covers that. I’ve been very good that I had to give my wife a lot of credit, too. I mean, if you see behind me, there’s motivational quotes on the wall. And she’s been through the struggle with me.
I mean, we had a plywood countertop when we first moved into this house for a month. And it is what it is. She sees the bigger picture and it all worked out. And I think that’s another thing too that rookies need to understand that, hey, take your time. It may not be comfortable, just focus on one room. I didn’t have money. I didn’t have money to rehab the house in one fell swoop. I had to pick and choose which projects I was going to do.
And just last month after I had some cash flow accumulate, I just poured a driveway here. I mean, you’ll get there. There’s sacrifices that have to be made in order to understand the bigger picture, and I’m very fortunate that I have a supportive spouse. And I’m at the point now where I might not have to wake up with an alarm clock. I can just have my son come wake me up and I can watch him grow, and it’s amazing. It’s amazing the 180 my life has pretty much turned into because of real estate.
And I got to thank you guys. I have to give BiggerPockets credit because, man, every day it was like a secret obsession. Everyone’s like, “What are you listening to? What are you listening to? Please tell me what is so important.” And I’m like, “You guys won’t understand.” And then I could hit them with real estate terms like, “You don’t know about a BRRRR? How do you not know what buy and hold is, a house hack?” I’m spitting these terms out. But yeah, it’s complete 180 and I love my life and real estate helped me get there.

Tony:
Jason, you’re going to inspire so many people with your story today, man. I absolutely know it. Your DMs are going to be flooded with people telling you how much they enjoyed hearing your story today, man. But a couple of things you said that I just want to really highlight here. The first thing you said is, each property is another paycheck. I’m like, “I’m going to get that on my T-shirt, and I’m going to start rocking that around town because it’s so true.” It’s like every time you add a little piece, it’s like you’re giving yourself another raise. Right?
It’s like you just got a promotion at work every time you get a new property. And if you can approach it with that mindset, maybe the single property by itself isn’t super exciting. But once you understand that they stack and they stack and they stack and they stack and they stack, that’s when you can really start changing your life and be in a position like you, Jason, where you bought your first property, what, in 2019, and now you’re talking about retiring from your W-2 job. It’s because you knew that every single property was another paycheck. So how to point that out.
And the second thing you said, which I think is super important, is to take your time. I think for rookies specifically, it can be… Not even for rookies, I think for everybody, right? Just like human nature in general. It’s super easy to see the people that are ahead of you, and start comparing yourself in a way that’s not conducive to your success, right, in a way that’s detrimental to your own mental health. Right? It’s like I see the investors with the tens of thousands of doors, and they’ve got the exotic sports cars, and they’re traveling all over the place. And I’m here in Southern California answering questions from guests about how to unclog the toilet and why can’t they check in and do all these crazy things, right?
So you see the people who are living the lives you want to live, and sometimes it’s easy to compare yourself. But if you remember that everybody’s on their own path, and that person that you’re comparing yourself to, we didn’t see the 10 years they spent building their business, right, all we see now is the success that they’re enjoying. You got to remember that everyone put their time in. So the taking your time piece, man, super important. I loved that you said that, brother.
So man, so many good things coming out of what you said here, brother. I want to take it back just a little bit, because I feel like we glossed over this at the beginning. But you said that when you first came out of prison that you had no credit, right? You had a zero credit score. How the heck does someone go from a zero credit score to owning multiple properties in the span of a couple of years?

Jason:
That’s an interesting story because when… I miss the technology shift in common culture. I didn’t have a cell phone. From 2009 until the end of 2017, I was cell phone free. Didn’t know mobile banking, anything like this. So basically, I did it old school. I walked into my bank every Friday. Every time my paycheck was direct deposited, I actually physically walked into the bank. And I’m sure the tellers were like, “Why does this guy keep coming in here? Does he not know he can do this from his phone?”
But at that point on, I mean, I was in the stone age, I didn’t know any better. So I would walk in there every Friday, I would withdraw $100 for spending money, the rest of my paycheck I kept in there. Now upon talking with my cousin at my uncle’s funeral, he told me, you need to build your credit, and you need to do it fast. So I had a credit score of zero, non-existent. So what I did is I had a prepaid credit card through my credit union, and I used it. I used it for gas. And then every Friday, like clockwork, I would come back in there, I would pay off the balance on a credit card.
So in such an unconventional way, over time, I built my credit. And I think when I purchased my first property, my credit limit was $500. So here I am with a mortgage for 100 grand, and I have a $500 credit limit on my credit card. But hey, I got it done. FHA is a little more lenient for credit score, which is a pretty good rookie tip. You don’t have to have 740 for an FHA, it can be considerably lower. However, I had to do it the old-fashioned way. But looking back now, I wouldn’t do it any other way. I mean it helped me minimize my expenses and keep my savings rate high, which is also something you’ll need.

Tony:
Yeah. Using the preferred credit card is a great idea, right? I feel like a lot of people don’t even know that’s an option as a way to build your credit. We see so many posts about, “I don’t have the capital, I don’t have the credit score, I don’t have XYZ.” But you’re just living proof, Jason, that all of those obstacles that people build up in their mind are really non-existent, right? And there’s a way around almost every single one of them.
You’ve just got to have the tenacity to go out there and make it happen, brother. So man, you’re dropping knowledge bombs left and right, man. So I want to take us into our mindset segment, Jason. So this is where we break down the psyche. And we’ve already talked a lot about mindset, but I want to drill down specifically to the real estate investing side. So when you first had that conversation with that cousin, I’m sure you started thinking about all the things that come along with becoming a real estate investor. Right?
All the good things, all the bad thing, all the reasons to do it, all the reasons not to do it. What were some of the misconceptions you had, some of the fears you had, some of the challenges you made up that turned out to not be true? The once you actually got into it, you’re like, “Man, that wasn’t as bad as I thought it was going to be.”

Jason:
Pretty much, I would say the fears that I’ve had were that I would be getting incessant maintenance calls. And that’s just not the case. It’s not what you think it is. You’re going to get a lot of naysayers that are going to tell you, “Oh, you don’t want the headache. You don’t want to deal with tenants’ problems.” And they’re going to try to talk you out of it.
But that was absolutely the biggest misconception is maintenance calls, and even sold the severity of a maintenance call is something you can handle. I mean, if your cash flowing well enough, you should expect that. I mean, I think that is why you need to be conservative with your estimates and take your percentages out. You’re going to have maintenance, especially when you’re buying properties that are somewhat older.
I mean, I think the property I’m sitting in is 122 years old. So you’re going to have problems. But that’s another aspect to this, is I think you need to adjust yourself and realize that you are a problem solver. You have to be a problem solver to be a real estate investor. You don’t have to be a handyman, you don’t have to be super mechanical or have all this knowledge that you think people might tell you, you need to have, you just need to be a problem solver.
Even if that’s just picking up the phone and paying somebody to do it. And that’s my preferred method, by the way is actually. There’s things I can do, but what’s your highest and best use of time? I pick up the phone, I call somebody. And that might be a little hit to my masculinity, as they call it, but I don’t care. I’m picking the phone up and I’m not changing out the toilet myself. So that’s one of the misconceptions.

Ashley:
Yeah. Jason, one thing I think to add on to that too is communication, too. With your tenants, your vendors, can make property management a lot easier too if you’re communicating while you’re problem-solving. You might not have the solution right away for your tenant as to what you’re going to do to fix the issue. But if you’re communicating to them and letting them know the steps you’re taking and touching base with them and keeping them informed, I think really helps a lot. Are you using any software or anything to manage your units right now?

Jason:
I have RentReady, and I have one tenant in the duplex that uses it. However, Milwaukee, we’re a market where deals are made on handshakes, and it’s the old school method. A lot of my tenants, they don’t even have an email address. So I get rent checks taped to the door, I have to go pick them up. And hey, you know what is at the end of the day? 15-minute drive to pick up another paycheck. Why not do it? Plus you’re checking on the property.
But I do have RentReady, and I do utilize it. I sent everyone that gave me an email address. I sent them the link. Whether they use it, maybe they don’t. But usually I get the mailbox money. I have legitimate mailbox money, it comes to a PO Box that I rent. So it’s old school, but it’s Milwaukee and I wouldn’t have it any other way.

Ashley:
That’s how I started out, too. I was doing a 40-unit apartment complex and every single person would pretty much bring their check to the office or they would mail it. And every single month, I was depositing 40 checks. And then maybe some people would come to the office and pay cash. But I remember my very first, it was actually my first day, I started on April 1st, and I was so nervous because I didn’t know anything about property management and I was all on my own, that I photocopied every single check before I deposited it, because I was so paranoid that I was going to mess something up.
And I did that for 40 checks. I did it for a couple months until I was like, “Okay, I’m doing this correctly. I can put every, with the program they were using then was QuickBooks, but yeah. Okay, so I want to take us to the Rookie Request Line, and Jason I think you will definitely be able to help somebody out here. So if anyone has a question, you can call 18885-ROOKIE and leave us a voicemail, and we may use it on the next show.

Julian:
Hello, I’m Julian and I currently live in Phoenix, Arizona. Despite bankruptcy, I’m investing in my first property soon. Basically starting with no money saved than having money vanish. I wanted to know which finance strategy will help with down payments and closing costs the fastest. High credit card limit, personalized on credit, or cash savings and any others that I haven’t mentioned. Thank you so much, and it’s an honor. Bye.

Jason:
I’m confused by the question. So he had a bankruptcy or…

Ashley:
Yeah. He had bankruptcy and he doesn’t have any money saved. He wanted to know which finance strategy would help with the down payment and closing costs. So you can’t bring cash to the table. Would doing a credit card, getting a personalized credit line, or is it just cash savings? Or is there any other way to pay for the down payment and the closing costs? So maybe this is where you could mention that seller concessions.

Jason:
Yeah. I would probably suggest, as long as you haven’t explored the option of a land contract, I think that you can have a lot of wiggle room within there, seller financing type of operation there. However, if you want to try to use seller concessions to minimize your down payment and your out of pocket cost, go to seller concessions. 6% government loans, 3% on primary conventional. So if you’re going to live in the property, 3% and 2% on investment properties. So that can definitely absorb a lot of the hit out of your pocket for closing costs and down payment.

Tony:
I think another thing to add on there too, right? If you’re rebounding from a bankruptcy, even if you do have the cash to close, getting the actual financing might prove to be difficult as well. So I don’t know if you can bring in a partner, someone else who might have the kind of credit background to assist with that, or going with maybe a lender that looks at the property, not so much the borrower themselves. There’s different ways to kind of structure this. Or just straight up seller financing, right?
Ashley’s favorite question to ask on every single offer that she submits at any point in time is, what you can seller financing. So different options for different strategies. So before we wrap up here, Jason, I just want to give a quick shout out to this week’s Rookie Rockstar. So for those of you that are listening, if you are not part of the Real Estate Rookie Facebook group, make sure you join it. It’s literally one of the most active, one of the most engaged real estate Facebook groups out there. So just search Real Estate Rookie, you can join the tens of thousands of people that are already in that group.
But today’s Rookie Rockstar is Alberto. And Alberto just closed on not deal number one, not deal number two, but deal number five, which is a cottage in Galveston, Texas, which they plan to Airbnb. They bought it for $85,000, planning to put about another 70 or so into the rehab and have their holding cost about 15k. And when it’s all said and done, after the refinance, they’ll leave about 15,000 in the deal and have a pure cash flow of about two grand per month from this one property. So Alberto, kudos. Way to kill it.

Ashley:
Well Jason, thank you so much for coming on the show today. Your story is going to inspire so many people. And I want to tell you how proud that I am, and I’m sure Tony is as to how you have done that 180 in your life, and congratulations. And I hope that you’re really proud of yourself, too.

Jason:
Thank you. Thank you. But it really is the old cliché of surrounding yourself with the right people. And you need to avoid negative people and negativity in general like the plague. You’re the people, you’re the some of the people you spend the most time with, so I owe it to that. Thank you guys.

Ashley:
If anyone needs another takeaway because we had so many from this episode is, cleanse yourself of those toxic people that are around you. So Jason, where can people reach out to you and find out some more information about you?

Jason:
I am trying to launch a website and podcast. If you want to reach out to me, I’m open for it, email me, [email protected]. So feedofffear.com.

Ashley:
Is that going to be the name of your podcast?

Jason:
Absolutely.

Ashley:
Yeah, awesome.

Tony:
Love that name.

Jason:
Yeah. It’s pretty much using whatever fear you have and just examining fear, and why that holds you back and how to feed off of that and find success. So there’ll be plenty of stories and value on there where people overcame their fear and they’re in a different position today, a successful position.

Ashley:
Very awesome. I can’t wait to listen.

Jason:
Awesome. Thank you.

Ashley:
Yeah. Thank you so much for coming on today, Jason. I’m Ashley at wealthfromrentals and he’s Tony at Tony J. Robinson. And this has been another episode of the Real Estate Rookie Podcast. Make sure you listen on Saturday for Rookie Reply.