Bankruptcy to Financial Freedom

David:
This is the BiggerPockets Podcast Show 824.

Jason:
I still own those first two house hacks ’cause I didn’t know about the two-year owner occupant tax benefit at that time. And I was learning the value-add and I learned about the two-year owner occ, where you live in a house the last two of five years, and if you’re single, you can take up $250,000 tax free. So after that, I started just finding the best deal I could find and live in it for the two years and add as much value as I could. And I started buying rentals as a little over $1.9 million of tax-free income that I’ve got through all of my house hacks.

David:
What’s going on everyone? This is David Green, your host of the BiggerPockets Real Estate Podcast. And welcome to the Sharpest Real Estate Show in the West. Today I’m joined by my co-host, the Sundance Kid himself, Rob Abasolo. Rob, how are you?

Rob:
Howdy, partner. How are you doing?

David:
I’m doing all right now. Now, if you’re new to this show and you came here looking for a real estate content, but found yourself in a Western, don’t worry, you are in the right place. Every week we bring you stories, how-tos, and answers that you need to make smart real estate decisions now in the current market. And this week we’re having a little bit of fun with it. We’ve got Jason Lewis, the Lone Ranger of real estate. Rob, what’s the most valuable thing from this episode that investors can take away from?

Rob:
Oh man, we’re going to talk about things, the importance of networking, the importance of building relationships. There are so many lead sources in our life that we are not tapping that are perfectly capable of landing deals across our desk every single day, and these are people that we interact with every single day. We are going to talk about the power of garage sales. We’ll get into some pretty good stuff here.

David:
Yes, we do, and a lot of creativity as well. This is a very cool guest who’s taken an approach to real estate that’s different than a lot of other people, but I think it’s a good one. Before we get into it with Jason, today’s quick tip is very simple. Ask yourself, “Am I running two something or running away from something?” They can both be motivators. Positive reinforcement is when you want something, “I want a Lamborghini, I want money, I want a vacation,” and that’s good, but negative reinforcement is even more powerful. That’s the removal of adverse stimuli. So it’s more powerful if you want to come in outside from the rain than if you just want ice cream for dessert. Jason talks about how in his life he was running away from pain that he experienced in childhood and it’s been a great motivator to keep him grounded, focused, and defensive minded while building his portfolio. I thought it was a wonderful perspective and I’m happy for everyone to get to hear it soon.

Rob:
All right. It’s high noon. We’re about to get into this hero duel, so let’s get into it.

David:
Jason Lewis, welcome to the BiggerPockets Podcast. How are you today?

Jason:
Hey, thanks guys. Excited to finally be on the episode. It’s been long with the journey of the BiggerPockets since back in 2015, so it’s interesting and fun to have it now come full circle and actually be a guest on the podcast.

David:
Little background for listeners, Jason has a $25 million real estate portfolio, has been investing for 17 years and has done over 500 deals. As a fun fact, Jason, I understand your dad sold a bull to John Wayne, I need to hear this story.

Jason:
That was his claim to fame back in the day. John Wayne was a Hereford Cattle, which Herefords is a breed of cattle. John Wayne was a big fan. He had the bar, I think it’s 26 Bar Ranch in Arizona, big Hereford guy. And my dad at one point back in the day, I think maybe when I was still a twinkle in his eye, had sold a bull to John Wayne and that was his claim to fame. So he’s a good old rancher.

David:
Whatever happened to the bull? Did we ever find out?

Jason:
Yeah, I’m guessing that was maybe after it had its run of getting to control the ladies in the field. He probably became McDonald’s, sadly.

David:
Yeah, yeah, I never thought about that. Do you eat bull or is it always cow? Is all beef the same?

Jason:
Yeah, it’s interesting fact that McDonald’s buys a lot of their meat is dairy cattle after they quit producing milk and they’re past their longevity, that is where most of your post milk production goes to a Big Mac.

David:
Wow. Well, that is the fact of the day. So you literally milk it for all it’s worth and then it turns into McDonald’s. That must be where it comes from, the phrase. So in honor of John Wayne’s genre, the Spaghetti Western, we’re going to walk through your story today in three parts, The Good, The Bad and The Ugly, which if you don’t know, is an iconic western movie from 1966. In fact, I don’t know if anyone is able to say “The Good and The Bad” without also adding in “The Ugly.” It’s a knee jerk response at a certain point. So let’s start with the bad. I understand that your family had some hard times growing up on a farm in Kansas. This is also how Superman was originated. So maybe there’s something to your $25 million portfolio and that, was there a low point in that time that shaped you?

Jason:
Yeah, I had a boulder on my shoulders since I was a kid. Still due. People say they had a chip on their shoulder, I grew up with a boulder, with the fact that I thought I’d take over the family farm, ranch, third generation that my grandpa had started back in the day. We’d had some good success, but ultimately my dad was an amazing cattleman. We had 800 head hog operation farmed ranch, thousands acres, and sadly he was not the best business guy. He was more of the doer and he was great at that, and it was before technology and education and YouTube where you could look up stuff. So back in the day there was some just hard times in the farming industry, which it’s very cyclical business. And the bank came knocking on the door when I was a kid and said, “We want it back.”
He had essentially started doing some feedlots, which again an interesting fact about cattle is that feedlots are where you put in a ton of cattle into a very small area and you can scale them. And that’s how I give that analogy in real estate. It’s when people started building multifamily. Used to be a single house, single area. You could only do one in an area, like running cattle in a big open pasture. But now they do feedlots, they do commercial farming for pigs, hogs, chickens. So anyway, he went into that and why my real estate career was shaped before I knew it was he leveraged the farm to build that multifamily of the cattle industry and essentially a COVID-type of event hit where it tanked cattle prices and when you’re fully leveraged, there isn’t much you can do to escape that. So that’s essentially the bank came calling and we moved to town, lost the farm, as they say.

Rob:
That’s crazy. So you grew up thinking your whole life, your trajectory, you were effectively going to be like a farmer. This was your trajectory. Did you know that your dad had over leverage? Did you understand the concept of leverage at this time or is it really only in retrospect that you realized what happened?

Jason:
Yeah, it’s retrospect. At that time I was third grade and we had to go, we had a pond that we were going to build our forever home on. And we had a little play set over there and some stuff, and we had to go get that and like that go move to town, and that’s when that boulder went on. At the time it was very exotic, I guess you could say, or sexy, the farming ’cause I was a kid. I didn’t have to actually do a lot of the hard work. I was watching Dukes of Hazard and cool John Wayne movies. And it was just something that I just thought I would do and it was cool and fun. You’re looking up to your grandpa and you want to do what he did.
So when that got taken away… But luckily I got to see from being a farm kid and even working on farms after and stuff. I just had that entrepreneurial farmer mindset because farmers are entrepreneurs. And nowadays it’s become like everything else corporate farming but a little less entrepreneurial. But historically, they were the first entrepreneurs. You got land and you had to make a living off of it. You make or break, you either feed your family and produce an income or you literally don’t survive.

Rob:
Okay, so what were some of those lessons? Because obviously you went through a lot, I’m sure that was a very significant impact on your life. What was something that came out of that?

Jason:
It’s bootstraps. Literally what I tell people, it’s bootstraps. At the end of the day, my style and how I go about my business, my personal life, my mindset is that every day you pull up your bootstraps and you probably literally and figuratively as a farm person you are going to deal with (beep). At some point throughout the day, throughout the week, you’re going to deal with hard times, you’re going to deal with stuff you don’t want to deal with. As the saying goes, “You pull up your bootstraps and just every day you go out there and do everything you can.” And hopefully at the end of the day when you’re exhausted and you get back home and take those boots off, you’ve added a little value. And then hopefully when you kick the bucket when you’re older, you’ve made something better than when you started. So it’s that mentality of just pulling them up, getting out there, getting in the thick of it and just keep going.

Rob:
I mean I’m sure that also brings a lot of sacrifice too, right? The concept of pulling yourself up by the bootstrap is sort of the mantra of every entrepreneur, but with that mindset and with that lifestyle, I’m sure a lot of sacrifice comes from that too. So were there any sacrifices that you made having to live out this lifestyle and mentality?

Jason:
Oh, for sure. I mean there’s a yin and yang pro and con to everything. And that mentality of that lone ranger, “I’ll just deal with it, I’ll do it myself, I’ll figure it out,” and making sure with that boulder on my shoulder that I did not go bankrupt. When I had a goal as a young kid in junior high high school, I wanted a net worth of a hundred grand and this is all arbitrary. I grew up in a town of 1800, they were only two stories was a grain elevator and the courthouse. So I had no idea about true wealth and money and stuff, but it was just that inherent nature. I wanted a hundred thousand in net worth at 18, I wanted a million in net worth by 30 and I wanted to be financially retirable by 35. And the financial retirable to me was not bankruptable. Because my parents had me at 35, so I thought that was forever away.
I thought 35 was a hundred years old when you’re in junior high. And so I said, “Okay, they had me at 35. My dad went bankrupt. It caused some family tension.” Divorce essentially happened throughout that financial aspect. And I said, I don’t want that to happen so I’m going to run away from something versus run towards something. And I think a lot of people run towards a Lamborghini, a vacation home, a plane, whatever that might be. I always have and probably always will, in a messed up way, run away from something which is that event happening, which was bankrupt, losing the farm as they say. So I’ve sacrificed. Everything I did was like, “Will this event get me further away from bankruptcy event that could happen in my life or closer to it?’ So a $2 soda coke at lunch, that’s $2 further away from bankruptcy or closer to if I spin it or didn’t. So I never used to and I treat myself now to iced tea on occasion, but I still have that mindset. So that’s a sacrifice. And it’s just work-wise, friends…

David:
I can help you with that, Jason. If you get an iced tea but you drink six refills, you just divide the $3 by six, it’s only 50 cents per iced tea, you’ll feel a lot better about it.

Jason:
I like it.

Rob:
I can add onto that. If you get water and you ask for a little plate of lemons and some Sweet’n Low, you can actually make your own lemonade in front of everybody at the table. You can even give them some.

Jason:
All right. Well, I have to toss into that. I’m not a Starbucks because $4 drinks is still out of that realm, but if you get an iced tea or a hot tea, coffee at Starbucks and you have the app, it’s free refills. So I’ll have my meetings there, and I’ll make sure I drink my iced tea and then get my to-go one. And it’s normally 50 cents if you don’t have the app, but it’s free. So who knows, they’ll probably change it.

David:
That’s why people tune into this podcast. Real estate’s really expensive everybody, but you can still save money. Rob, you should start buying avocados and taking them with you to Chipotle. So when they say guac is extra, you’re like, “Not for me lady. Not for me.”

Jason:
So I have to test this. I saw one those TikTok life hacks, which I’m addicted to every one of them, is that you put avocados in water and they last perfectly ripe for ever if you just put them in a bowl of water. And I’m like, that can’t work. But most of those hacks do work, so I was like, “I got to try that sometime.”

David:
You also need to add lemon to avocados to stop them from going bad, which means you can get the free lemon from the restaurant, add it to your avocado, take home some water. You could basically live for free if you listen to this podcast long enough.

Jason:
Literally that is my goal. And to sum up is I try and hack almost everything, from my house, to my cars, to planes, to vacation house, to restaurants, to whatever. It’s a weird little thing that came from that. Now I don’t need to do that, but I’m just addicted to it. So if you guys have any more of those hacks, I would…

David:
Yeah, I’ll share you the Big Mac hack. I learned this from Kevin in The Office. You see you go to McDonald’s every day and you order a Big Mac, but you take one of the layers of the Big Mac out of the burger. And at the end of the week you add them all together and voila, free Big Mac.

Rob:
I love it. Well, listen, if anybody at home has a life hack, please leave a comment of your favorite life hack in the YouTube comments and we will pin our favorite one to the top.

David:
There you go. All right. Now, Jason, I understand that you took out a bank loan at seven years old. I need to hear about this.

Jason:
Yeah. As a farm kid, you do 4-H, that’s if anyone’s grew up in a small town or even-

David:
I’ve heard of 4-H, but no one told me what the 4-Hs are. Does anyone know?

Jason:
Man, right when I said 4-H I knew that you guys were going to ask what that meant. And my 4-H leaders, and my mom probably will slap me if any of them ever would listen to this, because you literally have to say it at every 4-H as a kid. It’s like the pledge of allegiance. Yeah. 4-Hs is the four-leaf clover and it’s Heart, Health, hand something. Man, I literally like-

David:
Hershey’s.

Jason:
Maybe

David:
Our producer has come through in the clutch to save you Head, Heart, Hands, and Health. I was guessing when I said hands, I had no idea.

Jason:
Yeah, hands is the helping part, is that you volunteer, you help others. I do remember the hands part ’cause a lot of it is volunteering and helping and doing good.

David:
My mom was in 4-H. Shout out to my mom who never told me what the 4-Hs stood for, but apparently that was a pretty big thing like Boy Scouts or Rainbow Girls, I believe they were called. So you’re in 4-H and somehow this allows a bank to give a seven-year-old a loan?

Jason:
At seven, you can start showing animals and anything. I mean if you have photo or whatever at the County Fair, you can start showing animals at seven. So I was counting literally the days up to when on my seventh birthday just so I could start showing animals. So I bought my four baby pigs and we raised hogs, but these are show hogs. So you got to go to show hog farm in the middle of Kansas. Drove up there and took our trailer and I picked out my four hogs that were going to be the grand champion of the Harper County Fair. Bought four of them and then you show them. I actually ended up winning Grand Champion Hog and you end up getting to sell, and they still do it here in Douglas County.
In Jeff Coe and places they’ll still have auctions and people buy the hog. Mainly it’s people in the ag industry banks and John Deere dealers and stuff to support kids. And I sold my four hogs and I netted a little over $2,334 that year. And I went down to the bank after end of August when the county fair was and I got my check and paid Jerry Turner back for the four hogs that I’d bought. And my mom made me put the $2,300 in profit into a bank account for my college. And I think I maybe was able to buy some bubble gum and baseball cards or something like that. And then the rest went into college fund and kept doing it every year and did it until I was 18.

Rob:
So the hog hacking,

Jason:
That’s hog hacking, exactly.

Rob:
You sold four hogs, 4-Hs if you will. I’ve always wondered this, when people buy the hogs or the cattle or whatever, are they buying them to eat them?,

Jason:
That’s a very good question. I got excited. I said, “Yeah,” before we even started because I was like, “Oh man, actually someone who asked a redneck question like that, I get excited.” So at least in ours is you essentially buy it, but you’re just paying a premium to that person and you’re writing a check. You have the option at least in Harper County to then buy the hog. And if you want to have it processed and then a processor will come and pick up the hogs that people actually buy. But all of the other hogs are loaded up on a big semi and you get your check from the meat processor, the packing plant that buys all the animals.

David:
Rob is very concerned with the fate of every animal. He needs the story.

Jason:
It’s tough, man. I’ll tell you, it’s real tough.

David:
Because you get close to him, right?

Jason:
Oh, for sure. And hogs not so much, but the cattle, you walk them every day on a leash like a pet dog.

David:
Does it have a name?

Jason:
I didn’t ever allow. I started to in my head, but I never really called. But yeah, I had one 4-H steer that broke my dad’s hand and then ran my grandpa over. So it was the one that I did not, we did not take it to the fair ’cause he would never break, but he went to the local meat packing plant and it was homemade meat after. But that was the one that I was not sad to see. So I’m probably going to get a lot of hate messages after sharing that story.

Rob:
Jason, so you get this loan from the bank, obviously you pay it back, but you’re seven years old. Are they billing you for this? Are you on autodraft, autopayment? How did that work?

Jason:
Yeah, legally you can’t sign any legally binding contract until 18 in the US, so you can’t get a credit card, you can’t get a bank account, but you can co-sign. So I had my own bank account, Jerry Turner, I walked in. He had George Bush, if anyone remembers old school like cowboy dress pants. They’re like stretchy and shiny. He wore those. He looked like good old George Bush did back in the day. And he set me down and gave me the whole speech of financial and being smart and farm kid and all that. So my mom co-signed. So it was under my name, but she was illegally bind that if I ended up losing those four hogs or they got eaten by coyotes or something, she would be on the hook, so legally.

David:
So you learned capitalism at a super young age. You learned the fear of we could lose everything at a young age. And then you learned there’s a benefit to growing something. I mean you literally raised animals from when they were small, which is sort of buying a property and fixing it up over time and then selling it for more. And you got exposed to this cycle of capitalism where if you add value to things, you can make money. I understand that you made $243 in this and in today’s money that’s $5,777. Can you explain that?

Jason:
A little over $2,400. I look back and I remember asking what that was because I don’t remember it’s seven. And then I just looking back on bank stuff when I got to be junior high and it was $2,400 and I think $32.

David:
Okay, so you made $2,400 selling the hogs and it’s a day’s money that’s about $5,700.

Jason:
Yeah, I put that in a calculator a while back, just curiosity when I was chatting with people. And they’re like, “What? You did what at seven?” And I was like, “Wonder what that buying power today would be.”

David:
I mean imagine a seven-year-old making 5,800 bucks.

Jason:
Yeah.

David:
That’s a lot of money. And you’re like, “I bought some bubble gum and a baseball card.” I mean you could have bought a car.

Jason:
Yeah, literally. I mean back then, yeah, I bought my first truck at 13 and I paid $5500. So literally it paid for my 1988 Chevy Stepside.

David:
All right. Now, moving into the good of your story here out of the bad. At some point you found real estate investing. And over the last 17 years you’ve worked with a ton of real estate strategies and asset types. Here’s a quick and very impressive list for the listeners, fix and flips, house hack, burr, new build, high-end luxury, mobile home parks, land, including hunting land and camping land, oil and gas leases, small commercial, short-term rentals. You’ve also brokered residential and commercial deals yourself and have done pretty much everything short of big commercial. How the heck did you get into all these different asset classes?

Jason:
And again, it’s real estate related show, so I want to maybe get away from all the hogs and the farming in case people are not into that or might not be a fan of them, vegans and such, which I fully understand and respect. But how that came about was, I owned a auto motorcycle dealership. I started when I was in high school and I was slinging motorcycles. I had a full license. I had a shop truck trailers a whole nine yards in high school and I was doing that in college. And I was on the KU water ski club team. Yes, there is such a thing as a water ski club team. We literally every afternoon went and water skied with fit college girls in bikinis.
I joked around it was better than the football team having to wrestle around a hot sweaty dude. And the guy who started the club team for KU in the seventies was a commercial real estate guy in Kansas City. And I got introduced to him. And he’s like, “You got to quit slinging these $2,500 deals. You got to start slinging the commercial. So I didn’t go home over Christmas break my sophomore year and I drove in every day to Kansas City and got licensed and interned for him slinging office space in college. And then that’s what I did right out of college.
After I did an eight month round solo round the world trip, came back to Kansas City and I got all three of the big commercial firms were recruiting me there. Went with CB Richard Ellis, world’s largest commercial real estate firm and said, “I’m going to grind 8:00 to 5:00, Monday to Friday. And I’m going to pay myself 1500 bucks a month to live on. I’m going to house hack. And I’m going to put everything else into buying real estate to essentially replace the farm ground that my dad lost because I still had that boulder on my shoulders. And I needed a net worth a million bucks by 30.” And I had a short window to do that.

Rob:
In one word, how would you describe your overall strategy?

Jason:
Opportunistic without a doubt. That’s it. I mean ever since I was seven years old, opportunistic is you have an opportunity in front of you and you got to figure out a way to add value. So opportunistic, value-add, that’s it.

Rob:
Yeah. And so like a lot of investors, I know you use house hacking as a strategy early on, but that’s not where it ended. So can you tell us about your first and most recent house hack?

Jason:
I’ve house hacked every house I’ve ever lived in. There was a short period when I moved to Denver. I was strategically in Kansas City. I wanted to put my four years, had a certain goal to hit there, and then I was moving out and starting my own firm in Denver. So there’s a short window where I wasn’t living in one of my house hacks. But even that situation, the rental deal was a house hack. But every year since ’06, I’ve house hacked and either bought a house, converted it from three bed to five bed and rented the rooms out, 2006. I still own those first two house hacks ’cause I didn’t know about the two-year owner occupant tax benefit at that time. Probably was a good thing because I still own those two houses. They’re about three or four years away from being fully paid off worth three, 400,000 a piece producing $2300 in rent each.
But the goal back then was to house. And I hate saying it like before house hacking was housing, but I just needed a double mortgage. That was it. I had to have a house that I could get, figure out a way to double my mortgage and live for free. That was it. So I just back into that. And then once I got out here in ’08 happened and there was a big discrepancy and the market was shifting. And I was learning the value-add and I learned about the two-year owner occ where you live in a house the last two or five years, and if you’re single you can take up $250,000 tax-free, you’re married, up to $500,000. So I was like, “Game changer.”
Now going back to the word opportunistic, I now found new tool in my tool belt to allow myself to see more opportunistic opportunities that come my way. So after that I started just finding the best deal I could find and live in it for the two years and add as much value as I could. And I started buying rentals with the plan of moving into that rental. And after my next two-year to live there two years to be able to take that tax-free. I ran the numbers for a banker a few months back and the value from my a hundred percent tax-free house hacking is a little over $1.9 million of tax-free income that I’ve got through all of my house hacks.

Rob:
Can you walk us through how that would be? What do you mean by tax-free?

Jason:
The first two, I added the equity into those, so those wouldn’t quite be a hundred percent tax-free. But after that, I lived in a house two years and I sold it and I essentially found a property, a project that I can make $250,000 on and I lived there for free and made $250,000. So I added up every house, what I bought it for, what I sold it for, and essentially I’m happy to even share that Excel sheet with people if they’re interested in seeing true real world 2006 to 2023, what the power of house hacking in all aspects, roommate, renting, and living there can do. Yes, I always preface it that I went through a time period from 2010 to 2020 that we might not ever see that opportunity again. So I’m a big believer in also sharing that, I have $31 million of personal assets that I own just myself.
And I’m invested as a syndicator, a partner in another $30 plus million between apartments and different deals. It would’ve been really difficult for me to get to that number without a 2010 to 2020. I know I’m sidetracking a little bit. It’s just so many people come out and share their story. I have $30 million in real estate. My goal was $2 million of real estate by the time I was 35, 10 houses that were worth $200,000 a piece that I bought for mid hundreds, added value, and I’d had $2 million. That would replicate that return of what my farm, what we’d lost. So to have $30 million is beyond my wildest dreams. Yes, I’ve worked harder than probably anyone out there and sacrificed, but also the timing played a big part in that. So that $30 million, whether it’s $2 million, $20 million, $200 million, I’m not big into the numbers or the door count because I think that can skew people, if that makes sense.

David:
No, that’s wise. I say all the time, “How much equity do you have in your portfolio and how much cashflow are you making? Those are the numbers that matter.” I mean, wouldn’t each of you rather have one property that makes a whole bunch of money than 75 doors scattered amongst all these different areas that maybe make the same money but it’s 12 times as much work? We often talk about the wrong metrics because it’s the title that people will click on, “Oh, I want to learn how they got to 47 doors.” And then you dig in deeper and it’s like, “Oh, these are bad properties and rough areas,” and you don’t even own all of them. You partnered with a bunch of other people on it.
You didn’t scale to 47 doors, you just created this headline that makes everyone feel bad about what they did, versus someone like what you’re describing here, Jason. You went through all these different asset classes, you got experience in many different ways of making money with real estate. You figured out eventually where your strengths are. You sort of made this like a business, like a job in a sense of making money through real estate, not just this passive income dream that people have that frequently doesn’t work out very well. You mentioned that you’re house hacking right now. What do you say to the people who think house hacking is beneath them, that’s a beginner strategy and they want to go on to cooler and better things?

Jason:
If anyone knows me, this is so far from a real statement, but let’s go hop on my plane and fly over my recent house hack. And in a jerky way of just responses that house hacking has afforded me the life luxuries and the ability to give back and donate and travel the world and that “financial freedom” that I never could have had otherwise. And I will keep doing house hacking almost probably till the day I die because it is such an impactful thing on myself, now my wife, potentially future family, whoever I donate all my wealth to or the building I put my name on, they will be impacted significantly because of house hacking and adding value. I’m a big believer in the value-add versus… But hacking is just a much simpler word, a house hack, plane hack, hog hack, whatever it is.

David:
And so you’re working on a house hack right now or are you in a house hack? Tell us about that deal.

Jason:
Yeah. The recent one, the last one I did was a brand new built duplex that I built in the heart of Denver right off Tennyson. Bought the dirt for 515, built a duplex luxury high-end three story rooftop, downtown views in and of that. And I was going to live in one. And the other side was identical, just mirrored. So I was going to live in the first one for two years, take my $250,000 plus thousand I’d have since I built it myself. Live in the next one, do that. I got one of those out of there.
And then this winner, I had the opportunity from a developer to buy a 2.8 acre parcel in northwest Denver that had… And the zoning here allows me to subdivide that and build on one acre parcel. So the plan now is a 1991 original house purchased for 2 million bucks. The house itself is worth $1.4m to $1.6m, the lot’s $600,00 to $800,000. So in the process of subdividing the additional land down to one to 1.8 acres, I’m not sure how we’ll divide it yet. And I’ll either sell that and lower my basis or I will build over there, sell my current house, and then go live in a brand new build custom duplex mountain views and the works and house hack that for two years.

David:
And the numbers on that will work out to where, are you going to completely subsidize your mortgage on that? ‘Cause that sounds like a premium property. Are you going to subsidize all of it or is it just meant to get your overall monthly mortgage down as low as possible?

Jason:
TBD. Up to this point, I’ve never paid to live. I’ve made money on every single… Since graduating college, I’ve never had a house or a mortgage payment or utility. All of that money has gone back into buying additional real estate that was income driven. This one was, I told my wife before we got married, we had three moves, and I had those strategically planned. And after that she got to decide that that was 40 and then she helped make the decision. But up to that point it was financially driven to allow us to have that “financial freedom” the rest of her life through these next moves.
So the house that we have now is an in-between. It will financially make sense, but will I hack it where I’m living for free, TBD. It’s a $10,000 a month mortgage payment that’s not covered by the last duplex. The tenant next door, I rented it for $4,400 a month and my mortgage payment was like $5,000 or $5,200, I think. So they’re almost paying for most of it for a property that was valued at that time over 2 million. And I was essentially living for 800 bucks a month. So TBD on this one. But not to go into the nuts and bolts of it, but it doesn’t matter if it’s your first house, your middle house, your move up home, your forever home, you’re vacation home if you’re willing to pull up your bootstraps and figure it out and go out and hustle, there is a way, even in this market, a way to reach your goals.

David:
Yeah, I couldn’t agree more. Well, you talked about making real estate decisions that let you sleep at night. And I know part of that for you is about partnerships. Why is it that you haven’t really partnered much or gone in on the syndication side of things early on?

Jason:
Yeah, syndication at the beginning, I saw the guys doing it back when I was brokering commercial stuff. It was TICs, Tenant in Common was a big thing. You can have an LLC with up to 36 owners and it’s tax structured that way. So I got to see early twenties, or when I was in my early twenties, that structure. And I saw the downside in ’08 when it happened. I had a gentleman that invested all of his retirement from Hawaii, and before the show we were talking about some stuff happening in Hawaii. He called me once a week crying, older gentlemen, I’m guessing maybe seventies, crying, asking if there was any movement on this office building because all the tenants had vacated and it was going into receivership and this TIC was getting foreclosed on, and that was his life. He was guaranteed 7% from this syndication company and ’08 hit and he was going to lose everything.
And I was 20 early twenties and he was calling me up crying that this syndication company, TIC company, had essentially lost everything. And that as a farm kid, the 4-H, the heart, the hand, all that, my goal is to add value and help others. It’s not to get the fancy cars, the planes, all that. Up to this point, I didn’t feel confident enough and myself to go fake it until you make it, raise money and have other people’s money. I couldn’t have slept well. After seeing my dad lost the farms, having this gentleman call me once a week for six months crying.
I chose to do it on my own. And I was stubborn, I just wanted to do it. I wanted to build a foundation that no one could F with. So I just want to do it on my own. And now I’m raising capital free projects and doing partnerships and stuff. And essentially here on out, anything I do I’ll have a partner in, whether it’s one of my additional real estate ventures, property management company that we have now is amazing partner that’s amazing in it and runs the day to day. And same with my new builds with Miles, partner in that. And on my farm, we have a lands. It’s a hunting farming operation in Southern Kansas. That’s one of my best friends growing up. He partners with me in that. So now that I have the confidence, I’m partnering. We’ll see whether or not I go all in on the syndication and the open door Grant Cardone type model.

David:
What are your thoughts on the rise in popularity with how many people that did not have your level of experience were starting funds, starting syndications, raising money from people, going out and buying real estate while the market was climbing, climbing, climbing. And now interest rates have increased very quickly and quite a bit over a short period of time. And we’re starting to see some of those things getting exposed as bad deals. People are losing money, there’s more capital calls. Do you think that’s just a part of the process that you’re going to have this happen? Or do you think as someone listening to a podcast like this who hears about all these groups making money that they should have a little bit of skepticism?

Jason:
I tread lightly because that’s one reason I’ve been torn on social media. I helped do BiggerPockets’ first office lease with Josh Dorchen back in 2015. So I saw the podcast, I saw the success. He was happening and I got to know him on one-on-one basis. And I couldn’t, because of my background, I have struggled really hard with all the groups raising money, the fake it until you make it. That’s their pitch. When you sign up for one of the courses, say invest a thousand bucks and you have now you are an investor in a thousand doors. And I had anger and bitterness towards all of that and that mentality and the rise of the success.
And that’s not what people want to hear. They want to hear the success and all the positivity and how you can make your Bentley in your plane. They don’t want to hear about it, a guy crying because he lost everything. He doesn’t want to hear about the lawsuits. Bush Development I office with him, my first development or my first project here in Denver and Cherry Creek in 2012. And again this is going a little dark, but he’s no longer with us. This guy had tens of hundreds of millions he had sold anyway. He went big and 2008 hit and he couldn’t recover in 2012.
He’s no longer around. I officed with that guy. I saw the darkness and people don’t want to hear that at all. So that’s going back to the story. I got off a little tangent ’cause it means so much to me. You can hear it in my voice, you can see it in my face, it scares me. But that’s not what people want to hear. So that’s why I’ve taken a little hiatus from adding value in social media and producing content because it does scare me. And I don’t know what to say to that because people don’t want to hear that.

David:
Well that’s why we’re asking it though, right? Because this is a really big podcast, a lot of people listen to this. And there’s even people out there that will be featured in the BiggerPockets world though, blogs, forum or they’ll be active in the forums and you get this impression like, “Oh, you’re a BiggerPockets person, you’re safe.” But BP can’t look into every single one of their 2 million members that’s out there. And it’s very, very easy to just be like, “Oh, this is what I’m doing.” And they make the videos and they show themselves in the fancy car and they portray the image. But I think your avatar is much, much closer to what I see successful investors actually look like.
They’re usually not the Grant Cardone flashy, “Look at my plane, look at my car.” They’re not what you see on Instagram making an edited reel to raise money for something. They’re boring, they’re analytical, they look at what could go wrong. They’re often driven just like you are, Jason, and just like I am, but I don’t want to go back to being poor. I don’t want to go back to having to not have freedom in my life. They look for what could go wrong in a deal and they’re extra, extra careful. And that doesn’t sell on Instagram, like you said. Nobody’s on TikTok following the boring person at all.

Jason:
Even in conversations they don’t want to hear that about that gentleman crying to me. They want to hear that if you do what I do, you can get your Lambo. And that’s just not who I am at all. So I’ve struggled with that because there are some awesome people out there that are doing great things and raising capital and expanding, and it is great. And that’s why I want to stay positive and that’s why I stayed behind the scenes and just watch this BiggerPockets versus doing their helping with the first office lease, I could have jumped in and, “Hey, we promote this. I want to do this.” And I just put my head down. And that’s unique about this surreal now it’s this eight years later from negotiating May of 2015, and here I am and I’m back in that. So I’m rambling a bit, guys. I hope you sense that just it means something.

David:
It’s an awkward conversation ’cause you don’t want to throw everybody under the bus. But at the same time, it is true. When I think of all the multimillionaires I know in real estate, they’re not people that want attention on themselves. They’re really boring. Like, sorry, give me Brian Murray who wrote the Crushing It in Commercial Real Estate, I believe it is. Brian, love you, really nice guy. Not the most exciting dude. He’s a bit of a bran muffin, and that’s why he’s the person that you probably want underwriting your deal and he’s probably going to be extra careful. So just everyone listening to this, you heard it here, it doesn’t mean if someone’s flashy, you shouldn’t invest with them. I would just be extra cautious. I’d look into it deep. Don’t underestimate the power of a really boring polo and New Balance tennis shoes when you’re looking to find the partner that you want to get into in real estate.

Jason:
I have to say that if one of my partners in our property management company, he literally gives me hard time. I wear New Balances and they’re blue. And they’re blue, so he’s like, “Dude, you literally are just coloring the fact that you are wearing white old man New Balances.” I’m like, “They’re blue, they’re hip, they’re cool, and it’s got a little orange in the New Balance.” He goes, “No, just accept it, man.”

David:
This could not have worked out better. That’s perfect.

Jason:
They’re comfortable, guys. They’re comfortable. They’re easy.

David:
There you go. Now, Jason, I understand you keep your properties relatively under leverage. You’re at about 56% leverage. What’s your philosophy behind that?

Jason:
I don’t want to lose the farm, man. The fact that I even said in front of people that I bought a $2 million home and I have a $9,850 month mortgage payment, it’s against everything the farmer mentality is. The more rough the truck is, the more probably wealthier the farmer is because that’s just, they don’t care. And my leverage is just making sure that I don’t lose it. So hearing the number that I have a $2 million house and a $10,000 makes me anxious. It makes me sweat. It will ultimately make me money, but the fact that that’s just not where I come from. So I knew the guys during the 2010 to 2020 era were 120% leverage. They were borrowing for the house, they were borrowing for the down payment and they were borrowing for the fix up and they were scaling.
And I bought my first house, $3852, next to a guy that was doing that. Bought it out of foreclosure. Borrowed a hundred percent of everything, plus he had overhead for his staff. So he was over a hundred percent leveraged. He is financially very wealthy at this point, but I just wasn’t willing to take that risk and lose it all because of the bootstrap. I just want to get a little better than I was the next day. And 80%, 90%, a hundred percent scares me. But again, I am not saying that’s wrong. I’m not saying to not invest in syndication, to not to trust people to not leverage a hundred. If in this market there’s a right opportunity, go for it. It was just my background and I knew who I was and how real estate would affect me negatively. Essentially, if that went wrong, it would affect me more negatively than if it went well that it would affect me positively.

David:
The risk reward ratio didn’t make sense to go big. Now, in the beginning of your career, it may make more sense to be a little riskier ’cause you got less to lose and you can make up for mistakes with just grit, hustle, pouring yourself into it. But once you’ve got a bigger empire, so to speak, if you take your eye off the ball and it’s super, super leveraged and you’re looking over here and that thing starts to topple and there’s no way you can get out from under it, that’s a very different scenario than when this is the only thing you’re doing.

Jason:
And that’s what happened to my dad. If he could have would’ve kept doing single family homes, keeping cattle, running them on our pasture, staying lean, but he went big and it bit him and he had had a lot to lose. But again, Grant Cardone went all in and here he is today. So it’s, you choose who you want to be and what, at the end of the day, what will make you happy and things like that.

Rob:
Yeah, I mean we’ve already covered a lot of this, but I do want to move on to the ugly or the ugly truth, if you will, your no BS advice for investors. So really quickly, can you run us through three things investors listening to should do that? No one else is going to tell them.

Jason:
Yeah. So the first is good old Craigslist white pages, sending letters, the bare bone basics. Some unique ones that I get some leads on is I talk to cleaners and I go to open checkout garage sales and literally stop by garage sales, because if I see all their stuff out there selling and they’re there, you literally get to talk to the person that’s selling everything.

Rob:
Yeah, trying to clean house, right?

Jason:
Literally, clean house. And that’s what they say when you make a bunch of money, “Man, I cleaned the house on that deal.” So Rob, literally, they’re cleaning house. And if you add value and help their life by saying, “I’ll buy the house as is,” If I’m a broker I want to help broker it, then you can get that deal. And a lot of times stuff like that, and then asking cleaners that are cleaning, “Hey, do you have any insight? I bought deals from them. I’ve talked to every UPS, FedEx delivery driver. I meet, I’ll give them my information and I’ll tell them, I’ll give them bonus If they ever come across inside of someone wanting to sell or move, ’cause they’re literally delivering packages to these people daily. So got some deals through that. So again, all this is not scalable.

Rob:
With the cleaners, are you telling them, “Hey, if you have any clients that have talked about cleaning in your presence, let me know and I’ll hit them up,” kind of thing?

Jason:
Yes. Literally, cleaners, the houses are, they’re dirty. They know what’s happening. They have health situation. Most people will try and get lawyers and probate and all of that ’cause they hear when family shifts and health is happening. But a lot of times cleaners are being sent in because it needs, a family member is older that needs cleaned or they’re moving and they’re selling. It’s just insight literally. They are literally in the house. That’s my whole goal, is just finding value-add information, opportunistic information. And a cleaner literally is in that person’s house, just as a FedEx driver is. As the UPS coming to the front door, they’re meeting those people.

Rob:
And what is your last tip for our listeners at home?

Jason:
Man, stress test before you do anything. I know a lot of people say go all in and stuff, but at least what works for me is I’ll stress test a little bit. I’ll go and door knock or I’ll call or I’ll deal with some tenant issues or I’ll help go renovate a friend’s house or something to see, “Okay, do I enjoy fix and flipping? Do I enjoy picking out colors and stuff?” Before you go buy a fix and flip, just find someone, a friend, that needs some renovation and help them. Figure if you find a passion for that. But so many people buy a fix and flip and they’ll realize, “Oh my God, I hate this. This is terrible. This house is disgusting. And I don’t like this. I want to be a broker. I want flashiness.” So then they’ll switch to brokering. So stress test before you jump in. And there’s always a way to stress test almost everything.

David:
That’s awesome. I mean, I’d second that advice to anyone who wants to get into real estate investing. It’s so common that people don’t want to do anything unless they get paid. But just get in there and figure out if you like it. Quit worrying about getting paid per hour. Try to figure out if this is something you’re good at, you enjoy, you’re going to make a lot more money in the future because you took that path. So if you think you might want to be in property management, ask a friend, who’s managing their own properties, if you can help with what they’re doing. Find another person and say, “Let me manage the cleaners for you,” and see if that’s a thing you enjoy doing or if you absolutely hate it. There’s lots of jobs in the real estate space that people could get into that are better than the job they have now.
They don’t have to just try to live off the cashflow. And I’m frequently encouraging people to jump in and see if they like something. So I think that’s a really good advice. I also like your idea of playing defensively. I refer to this as building a financial fortress. It’s not always about scaling and getting bigger and bragging at the next meetup you go to because of how many doors you have. It’s often about building something that you’re not going to lose, that over time is going to be a solid investment that’s going to take care of your future. And like you saw with your dad, when you grow too big, you can absolutely lose money. So I think that this is great advice. Rob, anything you want to add?

Rob:
No, I actually really like the cleaning one. The garage sale one I can speak to. I went to an estate sale and I was leaving and I saw someone behind the desk by the door and I was like, “Hey, by any chance, are you the owner?” And she was like, “Well, yes I am.” And I’m like, “Are you looking to sell the property? What do you want to do with it?” And I mean, I was a little bit more tactful than that, but she basically was like, “Yes, I am.” And I was like, “Would you be interested in selling it off market? I’d love to buy it from you. I live in this neighborhood.”
And she was like, “Yeah, I would totally be interested in that.” So I got her information. I called her. It didn’t work out. It’s all good though. It just gave me the idea though, that when you can meet someone face to face in the moment when they were trying to offload a property, it can actually make closing that deal a lot easier. That was just one scenario for me. But I knew from that moment, if I went to a hundred garage sales, the likelihood of me meeting all those owners and closing a sale or a deal or two from that, probably pretty high.”

Jason:
A hundred percent if you went to garage sale, estate sale… I’m a big fan of the garage sale and finding the older because estate sale, they’re already in action. They’re probably already got a broker. They’re already selling the house. It’s already sold and they’re needing to liquidate everything within two weeks. So I’m a big fan of the garage sale, but if you did that a hundred, you would get something. You send a hundred letters, you’ll get a response. Like the basics, I’m a huge fan.

Rob:
Yeah, it’s a numbers game. You just have to be willing.

Jason:
To do it, bootstrap. Very beginning, we talked about it, bootstraps. Pull them up.

Rob:
Boom. Full circle.

David:
All right, well, thank you Jason. This has been really good information, and thank you for sharing your story from 4-H stud to real estate investing connoisseur who’s got all kinds of different assets and all kinds of different places. Where can people find out more about you if they want to follow up?

Jason:
Yeah. I’m going into my journey at this point and I’m wanting to help people and get the message out there and just add value. So I’ve doubled and everything I have is Journey with JLew J-L-E-W. So Journey with JLew on any social media, LinkedIn, Facebook, whatever. And you won’t see a ton of activity here in the past, but hopefully we’ll get that going. I also have the Creative Real Estate Podcast, was one we’ve done there in the past that we’re getting going again.

David:
Nice. Rob, where can people find out about you?

Rob:
You can find me on Instagram and YouTube at Robuilt YouTube is where I post my long form content that teaches you how to do the real estate thing. And then the short form goofy real estate content is all on Instagram. David, what about you?

David:
You can find me at davidgreen24.com or David Green 24 at your favorite social media. Thank you, Jason. It was great meeting you and getting to hear about your life. And thank you for your transparency about New Balance shoes. It’s tough to go on a podcast that gets 300,000 downloads and-

Rob:
Very vulnerable for sure.

David:
Yes, very much so, but we appreciate your transparency.

Jason:
New balance and mullet wigs, love them.

David:
We’ll let you get out of here, Jason. This is David Green for Rob “all day I dream about sales” Abasolo, signing out.