Do your best to control your expectations because this appointment only comes from unmet expectations. All the PPL providers got greedy. They started trying to do all kinds of other cheaper forms of marketing that were getting terrible quality leads. If you’re newer looking at your first flip or two or three, I would definitely recommend taking either a contractor or preferably a really experienced flipper with you because that flipper is not going to be as biased as the contract. For all of those loans, you should have at least 10% of those loan amounts in reserves as liquidity. And on top of that, you should have another at least three months worth of business expenses. Ignore the hype. Ignore the gurus flashing around their Ferraris.

Jason, thank you so much for coming on. I know you’re doing a lot of deals in your area, but I want to kind of take a step back and see what drew you to real estate investing in the first place.

Yeah, man. Well, first of all, thanks for having me on. It’s an honor to be here. I would say I’ve always been kind of fascinated even growing up as a kid. I didn’t have anybody in my family that was into real estate or a realtor or an investor at all, but I just liked the idea of owning rentals and I could understand from an early age the benefit of having rentals that paid themselves off over time. And I just initially I thought I would work my finance career until I retire, but on the side, I would buy one rental here or there every few years. And then maybe when I was retired, I would have 20 or 30 rentals that were paid off and I’d be comfortable in retirement. But then somebody, after I was under contract to buy my first rental, somebody at a friend’s wedding introduced me to the BiggerPockets podcast and I started, then I learned about hard money and private money.

And I was just like, wait a minute, you mean all I got to do is find a good enough deal and somebody will lend me all the money for it? And so I was crazy enough to try it. And I did. I went out and found my first flip and I was super broke. I had no money and found a hard money lender to fund it all, got it done, made some money. And then the progress to get the next two or three or four flips was very, very, very slow. It was that typical hockey stick growth curve that you hear about. And it’s ironic because after the second one, I even told my wife like, “Yeah, I don’t think I’m going to worry about flipping houses anymore. It takes too long to find a deal and it’s too stressful.” And then now, fast forward a few years, we’re doing 60 plus a year and that’s our main business.

But yeah, it’s a lot of fun. And also it kind of came full circle because a couple years ago I had the honor of being on the BiggerPockets Main podcast. And so that was just a really cool full circle moment for me.

Yeah. What would you say to someone that maybe had just finished their first deal and they’re in that kind of loop where they’re trying to look for that second, third and fourth deal before get that hockey stick. What would you tell someone in that specific scenario right now?

Yeah, man. I mean, first of all, I would just tell them, do your best to control your expectations because disappointment only comes from unmet expectations. And if you have the appropriate expectations upfront where you understand that, “Hey, I’m new to this. I don’t have many contacts. I don’t know all the best marketing channels. I don’t have the biggest marketing budget. It’s going to take me a little while.” Then that sets you up mentally to be able to move forward with it because it can take a while if you’re not starting out with big budgets or knowing exactly what to do. So I would just say just stick with it and understand too that everybody understands the concept of compound interest, right? Everybody gets that. But I think Einstein said that compound interest was like the eighth wonder of the world or something like that. But people don’t really think the same way about other tasks that they do related to their business that build upon each other.

Every connection that you make, every phone call that you have with a realtor or a wholesaler, every event that you go to, every post that you make on social media, every ad that you run in your business name to build that brand awareness over time, every single one of those tasks is adding another brick to your proverbial foundation, if you will. So it all builds upon each other, but you just have to realize you’re starting from scratch. So it’s going to take a little while, but then once you start to do a handful of deals, you’ll start to get a little bit of momentum. Some things will start clicking. You’ll find out what’s working for you, what’s not, what marketing methods are working for you, what funding sources are working for you, what contractors are working for you, and everything will start to snowball at some point.

And then you get into that exponential growth curve. So I would just say, just stick with it and put in the work and it’ll come.

Awesome. Awesome. What was your life like before real estate investing?

Yeah. So my wife and I started dating when we were … I was 14, she was 15. We got married at 19, first kid at 21. Now we have five children. And so when I started investing in real estate, we only had two kids so far. I was an institutional trust officer and my department, we focused in funeral and cemetery trust funds. So it was very niche, like pre-need funeral trust funds and cemetery perpetual care trust funds. Not a whole lot of trust companies have a specialized division for that in the country, but I was doing well in that. I was making decent money. And when I started flipping houses, I never thought I was going to quit my job from it. That wasn’t the plan. It just kind of snowballed. And also, I’m super grateful for my bosses that I had there because they were awesome.

They were super flexible and they basically, they didn’t care how many hours you worked or when you were in the office, as long as your job got done. And I eventually was able to get to a point where I could streamline a bunch of my tasks through Excel and other software, and I could push off a lot of the more menial data entry tasks onto a lower position person in our office. So where eventually I got to the point where most weeks, outside of tax time, because that made things heavier, most weeks I was only actually working between four to eight hours a week, and I was using the rest of the other 40 hours in my office on the company computer to look into real estate stuff. And so that really comfortable W2 really, even though I didn’t make enough money to do much more than pay all of our bills, it did at least afford me the time to be able to work on the real estate on the side without having to take away my evenings and weekends from my family.

So super grateful for that. And then as things continued to grow, I started getting more deals from wholesalers and finding other marketing channels that worked. And eventually it just got to the point where I knew I was going to have to make a decision soon because I was starting to not be able to manage both very well, but I still was too nervous to leave the day job. And so I eventually I decided, okay, once I have enough like net passive rental income coming in from our rental portfolio to cover all of our living expenses, not necessarily live super comfortably, but at least cover our living expenses, then I’ll pull the trigger because that way if something happens, the market collapses, I can’t flip any houses for a year or two to make money, then at least me nor my wife have to go back to work on a W2 job was the goal.

And so that’s basically what I did from the beginning. My model was flipping single family houses, including manufactured homes that I still do a lot of, and then use that capital as down payments on commercial multifamily. And once I got to the point, it was really starting from zero to this point was only three and a half years where I had hit … Well, really it was only three years where I had had 60 apartment doors total and then as rentals, and at that point I gave my bosses a six month notice. And then once that six months came, I left. And so I left my, I in quotes, retired the day before I turned 30 years old. So that’s actually what got me onto the BP was I made a post on their forums titled $0 to Financially Independent in 3.5 years and it caught Scott Trench’s attention and he told his guys to get me on the podcast.

So yeah. And then so I jumped ship and kept doing the flipping business full time and it’s just been growing ever since. We’ve been increasing the marketing budget, doing more deals, adding more contractor crews. And today we’ve got myself plus three full-time employees. We’re about to add a fourth to that probably next month and things are flowing really well together now.

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What was the main problem that you were trying to solve when you started investing? And obviously part of it is going to be money, but was there anything else that you were trying to solve in starting that?

Not really. At least when I started initially, before I found out about hard money and private money and all that, I really just, like I said, thought it would be really comfortable in retirement to have some paid off rentals. So maybe retirement income or comfortability is the problem if you’re trying to identify one in particular.

What do you think the most common misconception is from a homeowner standpoint about what we do?

Oh, that’s easy. I would say most folks that don’t really know this side of the industry just assume that we’re all crooks and trying to take advantage of grandma, steal grandma’s house and all that. And while that may happen on occasion, I personally have very rarely seen that happen from people, at least around my area and sure it can happen, but I know with our company, we’re definitely very as ethical as I think we can get. And our lead manager tells almost every single caller right out of the gate like, “Hey, your property’s in great shape. Why are you calling us? You can get more for it listing it on the market with an agent. Even if it needs work, just selling it as is, you’ll probably still get more than selling it to us. Why are you calling us?” And part of the way he does that is intentional sales tactics to get the motivation out of them.

But part of it also is just being honest and being upfront with people and telling them that we’re not the right buyer for most people. The people that we help are the ones that either are in some sort of financial distress that causes them to be too rushed to be able to go through the normal process or maybe the house is so nasty that they’re embarrassed by it and they don’t want anybody else to see it. Or even, I mean, I could give a thousand examples, but another pretty common one is sometimes people have a bunch of properties or they have plenty of other assets. They have more than they’re going to need to retire on as it is and this property has just been a headache to them. So they’re definitely not in financial distress. They just don’t want to deal with the headache of listing it and inspections and renegotiations and all that stuff.

They’re totally fine leaving a good chunk of equity on the table just for an easy sale and peace of mind. So those are the folks that we work with, but I would say that’s the biggest misconception. I get comments all the time from people on our online ads and stuff on Facebook and stuff that are calling us crooks or think that we’re a secret shell company for BlackRock or something like that. But that’s just not the case. We pride ourselves on doing good business. And we’re in a small enough town too that if you didn’t, you wouldn’t be able to last very long.

Oh yeah. Those small towns, definitely everyone knows everyone and they talk for sure. So I’m definitely in one of those myself. So businesses that, there’s so many forums nowadays with businesses that are like … So no, for sure. Well, cool. Now just a quick word from our sponsor. This episode is sponsored by 10X TV, this secret weapon behind some of the most successful real estate investors in the country. Here’s the deal. Most investors are stuck cold calling, texting, spending hours and hours, chasing low quality leads, but the smart ones, they’re using TV commercials to flip the script. With 10x TV, motivated sellers are calling them, already warmed up, already trusting them because they’ve seen them on their TV. It’s high credibility and way less hustle. This isn’t a theory. The founder of 10XTV has been a real estate investor for 24 years, and TV has been his number one lead channel since then.

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Sure, sure. Are we talking marketing specifically?

Anything in the business that you feel like … I know this year a lot of people have been slow, seems like you’ve been crushing it this year. Anything. It could be marketing, it could be on the back end, whatever you feel has been the biggest for you this year.

Yeah. So I’d say, I mean, most people probably want to hear about marketing, what’s working, what’s not, so we can focus there. But I would say three or four years ago, PPL was my secret weapon. Nobody else in my market seemed to know about it. And the lead quality was really high back then because most of the leads were coming from SEO and PPC. Well, then in my opinion, all the PPL providers got greedy. They started trying to do all kinds of other cheaper forms of marketing that were getting terrible quality leads. And then some of them even started reselling the same leads or the duplicate leads to other bidders that had the lower bids for your counties and stuff. And so we just eventually got to a point where, even though PPL was really our secret weapon for a good few years, we have since completely cut that out, gotten rid of it, because our cost per deal with that and return on ad spend was just abysmal.

And so right now, we are mostly doing Facebook, Instagram ads and PPC. And another little, just a small tactic that has gotten us around … About an extra deal per quarter has just been in March of this year, we started putting out little bandit signs only at the front of the properties that we’re flipping while we own them. And I just had some signs that they have … They’re printed on both sides. They have an arrow pointing towards the house, and it says, “We buy houses just like this one.” And it has our phone number and a little QR code to the company website, and that’s it. And we’ll put three of those Bandit signs at the front of each property while we own it. And that one little thing alone, which costs what, $150 worth of Bandit signs, that one little thing that we implemented so far since March, and we’re now recording in November, has gotten us three deals so far.

So if you’re doing a decent amount of volume and not already doing that, you’re absolutely missing opportunity, even if you’re wholesaling. I don’t wholesale at all, but I know flippers in the mastermind that I’m in, I mean wholesalers, that they will put Bandit signs out in front of the properties from the time they get it under contract to the time that the end buyer closes on it, and they get extra deals that way as well. So it’s definitely a very great cheap opportunity for sure.

Yeah, definitely an easy low hanging fruit for sure. What mistakes do you see often real estate investors make that you feel like could be super easily avoided?

I mean, how long do we have? I think initially the bigger thing is either not knowing your numbers, getting too eager, overestimating your ARV, your after repair value, or underestimating your rehab budget. And I think if you’re newer looking at your first flip or two or three, I would definitely recommend taking either a contractor or preferably a really experienced flipper with you, because that flipper is not going to be as biased as the contractor may be. And the flipper should be able to help you come up with that reasonable rehab budget that you can work with, because I see too many new people think that, “Oh yeah, this should take $20,000 to rehab.” And I look at it and I’m like, “No, that’s probably closer to like 50, you’re not even close and that can make or break a deal.” And for the more experienced folks starting to have some success, I think the biggest thing that most all entrepreneurs, myself included, do as we start to have success is we don’t build up enough liquidity or reserves.

And that is something that I ran into a couple of years ago because my model from day one was flip single family, including manufactured homes to drum up capital and then use that capital as down payments on commercial multifamily that I would hold in the rental portfolio. And that’s a great strategy. You get great tax benefits from doing cost seg on the apartments to offset the flipping income and all that’s gravy. But by doing that, I was constantly putting myself in a really tight liquidity position and there would be times where I would under forecast how much expenses I had coming up and you think, “Oh, I’ve got 150 grand in the account, that sounds like a lot.” And then the next day it’s down to 40 because you had so many things come out and contractors paid and interest only payments. And so then you may have to temporarily, I don’t really like this saying, but Rob Peter to pay Paul kind of thing where you may have to go to a private lender and say, “Hey, will you loan me 50 grand for two months until these two deals close and then I’ll pay you back plus a little bit of interest.” And I think just about any business owner has to do that at some point, but the majority of that is completely preventable.

If you instead can start building liquidity upfront … I really liked Marcus Krigler, he wrote Profit First for real estate investors. He did a presentation at the most recent collective genius event that I went to where he kind of mentioned you have these different phases of growing a business and it doesn’t have to be specific to real estate. He said, “Phase one is the hustle phase, phase two is the secure phase, phase three is the scaling phase, and then phase four is the exit phase.” Well, the problem is 99% of us, we do that hustle phase, we have some success, and then we jump straight to that scaling phase. We skip the securing phase, and then we get in a pinch and have to revert back to phase one and start hustling again to keep everything afloat, keep all the balls in the air, and then we probably just jump right back to scaling again if we don’t learn our lesson.

And that’s essentially exactly what happened to me a couple years ago. And ever since I have, for almost two years now, I’ve intentionally not bought any big properties that are going to take a lot of my liquidity so that I can get back to a point where I have a ton of liquidity and very healthy reserves. And Marcus’s suggestion in his presentation was that for all the loans that you have, which I assume he’s only referring to the short term loans like hard money loans and stuff, I could be wrong, but that was my assumption. He said, “For all of those loans, you should have at least 10% of those loan amounts in reserves as liquidity.” And on top of that, you should have another at least three months worth of business expenses. And so for me personally, that looks like I would need somewhere around like eight to 900,000 liquid to be at that level of being really secure and very safe.

And I think with what we’ve done so far and where we’re going, I think we should be able to get there by like the end of Q1 probably. And then I’ll be intentional about not shelling out any liquidity for other bigger purchases until we get above that amount. And I’ll only consider investing or playing with that money that’s over that minimum reserve requirement that we’re going to set for the business. I’m sorry if that was a super long-winded answer for you.

No, you’re good. That was great. Well, what do you think separates the top operators from someone that just may be calling themselves a real estate investor versus someone doing a lot of deals? What do you think the main difference is?

I could really go a bunch of different ways with that. You could say their drive or their why, why they’re doing it because that’s going to be how people have persistence and how they have motivation to continue growing. You could also attribute it to being intentional about working on the business instead of in the business, hiring people, developing systems and processes to where you can then delegate certain tasks and responsibilities and take those things off of your plate to where you can grow because if you’re too busy focused on doing the daily menial tasks that need to be done in the business, you don’t have time to work on the business or spend time learning more about business in particular and how to make your business more secure and stable and how to make it grow more. So there’s really a handful of different things that I would say separate the top performers from the rest, but those are probably the biggest two.

You got to be somewhat business savvy and interested in it and you’ve got to have a driver or a passion for it. And really, I mean, I think you can really mostly sum that up to … I just think you just have to love it. You just have to love what you’re doing. I mean, could you reach massive success and be miserable hating it the entire time? Sure, I guess it’s possible, but do we see that often in business? No. It’s usually the people that love it that are unusually obsessed with what they’re doing that are the ones that have the most success.

Yeah. I think that’s the same in any sales. I mean, if you don’t believe in your product and if you’re not in love with your product, it’s hard to sell anything. So I definitely agree with you there. When it comes to the word success, everyone’s got their own definition of it. How do you define success and how do you strive for that every day in your life?

Man, that’s a good question. That’s a tough question. For me, I’m a believer in Jesus. So the biggest initial factor of success for me is obedience to Christ. That’s got to be number one. And on top of that, I would say obviously being a good and present father and husband and where your kids like you and they’re excited when you come home and trying to respect those boundaries of family time versus working, because I see too many people boast about grinding 80 hours a week and I’m just like, “Bro, you have three kids at home and a wife that’s been home with them all day. Go home.” You may reach business success, but you’re probably not going to stay married like that. And so I don’t know, I’d say if you’re obedient to Christ and your wife and kids love you and you’re providing enough to support them and plan for the future and you still enjoy what you’re doing, I would call that success because for me, people oftentimes will ask me like, “Well, what are your goals?

What goals do you have for the business and stuff?” And I’m a bit contrarian when it comes to that, answering that because I don’t necessarily have a specific goal. I don’t have a goal to do a certain number of net profit per year or do a certain number of deals per year. I kind of just want to continue naturally growing how we’re growing as long as I’m still having fun. So I kind of, rather than a goal, I have just like a kind of general direction that we’re heading, if that makes sense. And for me, I’ve always just said that I just want to continue to grow as long as I’m still having fun. If I get to the point to where I don’t like it anymore and it’s not fun, then I need to stop growing or scale back some. That’s just kind of the way that I see it.

Yeah. And it’s funny you say that because I feel like a lot of people get into real estate investing for buying their time back and time freedom and then they both stop doing 80 hours a week and you’re like, “Well, that just kind of defeats the purpose of why you got in the business in the first place.” So I definitely agree with you there, for sure. What’s the biggest change you’re seeing in real estate right now in the market

Itself? I I haven’t seen any major changes really recently. I think the market has been pretty frozen on a sales side for probably a good couple years now. I’d say, if anything, I think there’s less competition now because of how hard the market’s been. There’s a whole lot of folks that I know that were doing deals, doing a decent enough amount of business three, four years ago. The post- COVID years where everything was going up all the time and you could throw a dart at a wall and it’d stick. And those folks, the large majority of them have since gotten out of the business. And so while yes, it is still a tough market, things are harder to sell, there’s also less competition. So that’s helpful.

Yeah. Yeah. Well, let’s say your business went away. You were going to start from scratch. You get to keep all the knowledge that you’ve accumulated over the years, but your business goes away and you were going to restart. What would you focus on first?

Oh man, you’re breaking out the Graham Stephan question on me there. I don’t know if you know, but he always asks that on the iced coffee hour to his guests right at the end. But I’ve never really thought about my answer for it, ironically. So forgive me, what was the end part of the question? If everything went away, how would I start? And what was the last part of that?

What would you focus on first?

Sure, sure. Okay. So I would just focus on finding deals and I would have to do that with as little money as possible if I was starting with nothing. So I would immediately start networking in local real estate investor meetup groups and I’d join the Facebook investor local groups and start networking, meeting with wholesalers and aspiring wholesalers. And because a lot of times there’s a lot of want to be wholesalers or newer ones that are learning that nobody else is willing to give them the time of day. And if you’re starting out and you have the time to be able to give them and you can help give them a little bit of advice, yeah, most of your time’s probably going to end up being wasted because they’re probably never going to actually find a deal. But on occasion, one of them will. One of them will get lucky.

And if you’re the one, the only buyer that’s on their buyer’s list so far and the one that’s been helpful to them, they’re going to bring the deal to you. You’re going to get first dibs on it. So that’s one way. I think I would probably also, even though I’ve never done it before, I would probably do Bandit signs, like the typical spread them out all over the place because it’s just such a cheap way to get started. And to my shock, they actually work. So I would find a way to maybe use a credit card to buy two or 300 signs and put them out and then just start fielding those calls. And then when I got a deal, I would figure out, I’d find a hard money lender just like I did with my first flip. And if I needed to use credit cards to get a cash advance to pay a deposit to a contractor or materials or whatever, then I’d do what I had to do to get it done.

And what I would do a little bit differently is I would definitely not scale as fast. If I were starting over, I would not have bought one or two of the apartment complexes that I did. I would have instead kept that extra 200,000 or 300,000 in the business bank account so that I wouldn’t have had to go through all those unnecessarily stressful times of low liquidity in my … I mean, I say that, but had I not gone through them earlier on, I’d probably be going through them now because I may not have learned that lesson. However, if I already knew everything I know now and we’re going back, that’s probably how I would start doing it.

Awesome. Awesome. Cool. Where can people learn more about you? Where can people find you? Where can people reach out if they want to ask more?

Yeah. I’m on Facebook and Instagram. There’s only maybe three Jason Veles in the whole country, so I’m not hard to find. And our company’s website is capefearcashoffer.com. And if you had any interest in potentially working with us as a private lender on any of our deals, you can go to the investors tab on that. Or I recently acquired the URL jvwithjv.com. That’s cool. And that URL also takes you straight to that investors tab of the website there. Awesome. Yeah, happy to help however I can.

Awesome. Awesome. Any final advice for any investors that are looking to grow, scale, or simplify their business maybe?

Yeah. I would just say ignore the hype. Ignore the gurus flashing around their Ferraris and saying they have 15,000 doors when they actually only own 0.0001% of 15,000 doors. Don’t worry about having a certain number, like a certain door count. I wouldn’t worry about, “Oh, I got to get to a hundred doors. I got to get to a thousand doors,” or whatever that is, just throw that out the window initially. Just initially focus on making money and then implementing systems, processes and people that can help continue to make that money without you mostly, and then grow that business, build up a ton of liquidity reserves. And then once you have the business with lots of reserves and you’re super safe and established, then maybe go start investing in some of the long-term stuff for the future.

Yeah. I love that. Play it

Safe.

I love that. Well, Jason, thank you so much for coming on. Everyone, thank you for watching and we’ll see you next time.

Thanks, man.