How many rental properties do you own? It could be one or one hundred rentals. But, whether you’re a rookie or veteran real estate investor, it’s hard to not be impressed by Jason Rash’s story. Jason has put off investing in real estate for most of his working life, focusing more on passive income streams like investing in stocks. This all changed when Jason saw tens of thousands in stock value disappear from his accounts.
He wanted something more reliable, stable, and calculated that he could control. Of course, real estate investing fits that criteria exactly. So what did Jason do? Did he go and buy one rental, wait a few years, and then try to buy another? Nope. Jason went and bought ten properties over the span of eight months. That more than one property a month within his first year of investing!
David Greene:
This is the BiggerPockets Podcast, Show 566
Jason Rash:
When you’re investing in real estate, it should be the complete, exact opposite experience of you buying your personal home. Your personal home is your personal home like, oh my God, I want to live here. I want to know these neighbors. Oh my God, I love this countertop, I love these colors. Oh my God, the view’s amazing… When it becomes a rental, none of that matters. None of it matters, the only thing that matters is the numbers.
David Greene:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets Podcast, where it is our job to teach you how to become financially free through real estate.
David Greene:
We believe real estate investing is the best way for ordinary people, just like you and me, to build wealth. And we prove it by bringing you stories of people who started out right where a lot of you are today. They’ve taken these concepts and applied them in a simple, but not easy way to find financial freedom for themselves. And I want the same thing for you and so does everyone at BiggerPockets.
David Greene:
Today, we have a fantastic show with Jason Rash. Now Jason ran into one of our producers, Eric, at BPCON21 and Eric was so impressed with Jason’s story that he invited him to come on the show.
David Greene:
Now Jason has been able to get 10, not doors, but properties over only eight short months, all in Alabama. He goes over his strategy, what he looks for in deals, some of the hurdles that he encountered doing this and how he was actually able to scale his portfolio safely and quickly. I think that that’s very important.
David Greene:
You’re not going to miss Jason’s strategies of what he looks for in a property specifically what he looks to say no to. So Jason talks about, he only wants to buy brick houses. He says no to homes with pools and a list of other things that he says, “Nope, that’s not going to work for me,” in order to make the yeses more clear.
David Greene:
You’re also going to see what he looks for in a deal to know that it’s going to work for him and how he negotiates hard, even in a hot market. He gives some very good practical strategies that anybody can use in most markets across the country today.
David Greene:
Finally, Jason’s going to share some of the detail that he looks for when finding property and managing property to make sure that he doesn’t have surprises like air conditioners, roofs, and furnaces that go out that he wasn’t prepared for. So Jason’s got some pretty good examples of the types of property he wants to find that’s going to keep maintenance and capital expenditures low so that his cash flow can stay strong for a good period of time. Without further ado, let’s get into our interview with Jason Rash.
David Greene:
Jason Rash, welcome to the BiggerPockets Podcast, my friend.
Jason Rash:
Thank you so much for having me, David.
David Greene:
All right. So why don’t you give us a brief overview of what your real estate portfolio looks like and sort of the business environment that you operate in, and then we’ll dig in from there.
Jason Rash:
Sure. So first of all, I want to say, thank you so much for having me on the show, David. I’m a big fan of the BiggerPockets and I’ve gone to the events, I’ve read your books. I’ve read a lot of the other books, just Rental Property Investing, How to Invest in Real Estate, things like that.
Jason Rash:
And so my portfolio honestly consists of single-family homes. It’s very simple, I’m not the smartest guy in the room, but I figured out, I hacked it pretty much said, okay, I can do single-family homes. It’s not that hard for me to understand it.
Jason Rash:
And so for me, the easy thing about building a business is having a simple formula, and single-family homes are what I feel comfortable with. And once you get one and you hit one, you do your first one, do your second one and then you can start doing it over and over. It’s the same exact thing over and over.
Jason Rash:
So I’ve been in real estate for about, I’d say less than a year. I did my first deal on February 5th, bought 10 homes in the first eight months of 2021. It was a hell of a ride. And here I am, man. I went to the BiggerPockets Podcast and bumped into Eric and the rest is history.
David Greene:
So where did you buy these eight homes in?
Jason Rash:
Yeah, so I bought the 10 homes in Montgomery, Alabama. I’m actually originally born and raised in Montgomery, Alabama and oddly enough, I surveyed land there. So I happened to pick up things about flood zones there, building types, socioeconomics, demographics, the way things are moving through the city. And I was like, man, I really don’t like living here. So I moved away but then I was like, I needed somewhere to invest. And I’ll talk about at that in a second how I got into this, but I was like, first spot Montgomery, Alabama. I was like, man, I know the area, I know everything about it and it felt very comfortable to me.
David Greene:
That’s right, you said 10 homes in eight months. Now in the book, Long-Distance Real Estate Investing, I actually talk about looking for a competitive advantage when picking your market. My perspective is too many people say, what is the next hot market? And they try to outsmart how the market works. And I say, no, just find a way where you have an advantage and you can pick a momentum. So if you live somewhere and you know the people that are there, you’re familiar with the market, there’s a comfort level. That’s where you start.
David Greene:
Would you mind sharing if that was like the similar mindset you were in and maybe what were some of the competitive advantages that you utilized to get such a nice portfolio so quickly?
Jason Rash:
Yeah. So first things first, you’re right on point, actually that is my next book to read is, Long-Distance Investing, oddly enough, I haven’t done it. I live in Colorado, I need to get around to reading now, that’s the next one on the list.
Jason Rash:
So number one, local knowledge is everything, like local knowledge from a realtor, local knowledge from friends, local knowledge from family or your own personal local knowledge of the area is gold. You can’t get a lot of the stuff that you can find on the internet, you can’t get hard data from like, hey, listen, these homes down the street that are not on the internet, that’s a crack house over there and four blocks over, you got some sketchy areas over there. You’re not going to see that on the internet, nobody’s going to put that out there.
Jason Rash:
So number one, I went to a real estate agent that I knew and trusted. She had actually sold my house when we moved out of Montgomery 11 years ago. I just connected with her, I said, “Hey, I wanted to check back in, see if you’re in real estate.” “Oh yeah. Oh my God. I’ve been in real estate, I’ve sold like a couple hundred homes, 500 homes, 600 homes since you moved away 10 years ago,” I was like, “Oh my God, yes.”
Jason Rash:
So, number one, I went with her. And then I explained to her, I said, “Listen, this is what I’m wanting to do with real estate. I want to come into the market, I want to buy these properties in these parameters, and this is what I’m looking for. Can you help me?” “Yes, absolutely. I can help you.”
Jason Rash:
So I went in, I leveraged that and then all of a sudden I found myself when I got knee-deep into the homes, “Hey, I need a painter.” “Hey, I need this.” “Hey, I need that.” My real estate agent helped me out with that. I had been living in the city for 31 years, I was also able to lean on some of those contacts, like yard guys, electricians, things like that and that’s all valuable.
Jason Rash:
That’s all valuable, when you’re looking to build a portfolio, like having trust in the people that are helping you repair or build or whatever it is you need to do to make ready, having that it’s gold. It’s worth its weight in gold.
David Greene:
That’s really good. So did you go in there knowing these are the pieces that I need to find to make this work, or did you just go buy a property and then figure it out from there?
Jason Rash:
So number one, I think if you’re going to go into real estate, you need to know what the backend looks like. So for me, I want to be hiking through the jungles of Tibet and I want to get a rental check, that’s me. For other people, they want to be more hands on, they want to do flips and things like that, right now in my career that’s not me.
Jason Rash:
So what I did was, I want to buy homes, I’m 1,500 miles away, I need a property management company, number one. So I found a property management company at the recommendation of my realtor. I have a long list of questions. I vetted her out, and I actually vetted two or three more. I don’t think anyone’s word is like gospel. So I had vetted her out, vetted out others, but I did wind up going with the one that she recommended.
Jason Rash:
Now, I knew that I needed a team. So I talked to my property manager, hired her, got a real estate agent, I got contractors, I have everybody in place. So I think that if you’re going to do something like this, that I’m attempting to do, you need people and you need people that you can trust.
David Greene:
That’s so funny. So it doesn’t offend me that you haven’t read Long-Distance Real Estate Investing, in case you’re worried. I’m actually fascinated when other people do the same thing I did, they invest out of state or in a different area and then they just naturally did the stuff that I put in the book. It’s almost a validation that I got it right when the people who did this well are doing the same thing.
David Greene:
So in the book I talk about the core four and it’s your property manager, your deal finder, usually your realtor, your lender and your contractor. And if you have those four pieces, you can put the whole thing together anyway. And what you mentioned is a big piece of how to do this right, is you don’t have to go find four of them.
David Greene:
You start with the realtor and they usually have a recommendation for a lender and a property manager. Property manager probably knows a contractor and you end up sort of vetting different people through the ones that you do like.
David Greene:
Can you just explain a little bit about the specifics of how that conversation went, like what did you say to your realtor to get the recommendation? And when you found your property manager, how did you explain to them what you were going to need to make this work as you were hiking through the jungle?
Jason Rash:
Sure. So when I talked to my realtor, I said, “Listen, here’s what I want to do…” I told her the plan, said, “I need a property manager.” So when I met the property manager I said, “Listen, here’s the deal. Number one, you know my realtor but I need to ask you these questions.” So she went through all the questions and I said, “Number two, I will be your best customer, guarantee you for a fact but the first thing I need to know is what is your biggest client and who is it?”
Jason Rash:
She’s like, “I’m not going to tell you who it is, but they have 30 homes. We have two clients here that have 30 homes with us.” I was like, “Cool. I will be your best client, guarantee you for a fact.” And I said, “Hopefully my actions will show you how serious I am,” number one.
Jason Rash:
Number two, since a couple of things started to break along the way I got them fixed immediately, and I think property managers really can stand behind you more and recommend your homes in front of other people if you’re willing to fix repairs that come up immediately, and you’re willing to be proactive. There’s a lot of people she explained to me that said, “Hey listen, they got molds in their house…” to let them live with, it’s not a big deal. “Hey, listen, we got a little water leak in there.” “We’ll get around to it.” A lot of people, they’re very nonchalant and that’s not me, I’m a very hands-on guy.
Jason Rash:
So I made a deal with my property manager. I said, “How much you charge?” She said, “10%,” “Okay, fantastic. When I get to a certain X-number of homes, because I will get to these homes with you. I want to drop it down to 8%.” She’s like, “Done, not a problem. You’re the only one I’m going to cut this deal for, but not a problem.” And so me and her have a great working relationship.
David Greene:
That’s exactly how I did it too. That’s so funny is, I didn’t just go in there and beat them up and say, “Drop your price.” I said, “Look, when I get to X-amount of homes, I’m going to expect you to do this.” And they said, “Hey, that’s fair.”
David Greene:
And that’s all it took was just setting that expectation in the beginning rather than waiting and then going to them with a sense of entitlement that usually just causes conflict.
Jason Rash:
Absolutely.
David Greene:
So tell me about this first house that you got, what are the details of it and what made you pick it out?
Jason Rash:
Sure. Give me one second, let me pull this up right here. So the first house… Now I want to backtrack this. Okay. So number one, I like to set goals and I set goals with a timeline.
Jason Rash:
So I got into real estate… I think this David, I think we need to back up to how I got into this. So my father passed away in June of 2020, and he had been telling me for a few years before, “Hey, you need to get into real estate. You need to get into real estate.” And so I’m like, “Okay, whatever dad, I don’t understand it.”
Jason Rash:
I made up all these excuses in my mind that I apparently didn’t have that investor gene, so to speak, or the math was too complex or whatever it may be. So I was like, okay, I’m just going to invest in the stock market.
Jason Rash:
Well, I got like three or $400,000 launched into the stock market. I lost 26 grand in eight minutes, poof, just like that it evaporated. And I think it was October 18th of 2020. And I was like, you know what? I feel like God’s trying to tell me something and I’ll be honest with you guys, I don’t know what you believe in, but I always feel like God, the universe, whoever you believe in is trying to talk to you.
Jason Rash:
So I thought about it, $26,000 out of 400, $350,000 is not that big of a deal but what if it was like $260,000 or $2.6 million in eight minutes, a lifetime of savings. And I was like, oh my God, I can’t control this. However good I think I am in picking stocks, I can’t control it. So immediately I started looking into real estate.
Jason Rash:
I hooked up with some friends and some other mentors outside of the BiggerPockets community. And they were like, man, this is a great idea for you to go into real estate and they kind of gave me some nudges as well in the right direction.
Jason Rash:
So in October actually I bought these books. I bought How to Invest in Real Estate and The Rental Property Investing book. I bought these books right here and I also bought Managing Rental Properties as well. And I gave myself a goal. I said, okay, here’s the deal… I’m an action-taker and if you’re out there doing real estate, you got to be an action-taker.
Jason Rash:
Number one, you have to overcome doubt and fear but number two, you got to overcome markets and changing market conditions as well. So what I did was I said, okay, I’m going to buy these books. I ordered them from Amazon, I think it was October 26th, 27th, is how fast I moved. And then I said, okay, I’m going to give myself 90 days. I’m going to close on the very first deal in 90 days. Okay, that’s how fast I was going to do it.
Jason Rash:
Keep in mind guys, I’ve never done real estate. I don’t have any idea how this thing works. So I’m like, okay, I’m going to absorb it. I’m going to invest my time and money. Okay, boom. I’m in the market by December 20, I’d say probably December 21st of last year, I started putting it out there on Facebook, “Hey, I’m going to be a real estate investor. I’m looking to buy homes. I’m looking to buy homes in this area.”
Jason Rash:
I just threw it out there in my hometown of Montgomery, Alabama, and this guy from school who I haven’t talked to in 20 years, reaches out to me and said, “Hey man, I might have a deal for you.” And I was like, “Really? Send me some details.” So he sent like an old Zillow listing of this house, I’m about to share with you. And he was like, “Listen man, this house, nobody lives in it. It’s got new appliances. It’s got a new roof. It’s got new flooring and a new HVAC. It’s three bedroom, two bath, 1,900 square feet.”
Jason Rash:
And I’m like, “Okay,” So I start running numbers on spreadsheets… We’re going to get to spreadsheets in a minute. But guys, I want you to understand something, if you’re out there trying to do your first deal, whenever you put it out there in the universe, you have no idea where people are at in their lives. You have no idea how much pain they have. They may just have this property they’re sitting on, it’s perfect for you, that they just want to dump.
Jason Rash:
I ain’t talked to this guy in 20 years, he just followed me on Facebook. He sends me the thing, he says, “Listen, I’ll sell you this house, because if you don’t want to buy it, I’m going to give it away to charity and turn it into a home or somebody’s going to turn it into a home.” He sent it to me, $63,750 for the whole entire thing, out the door.
Jason Rash:
And I was like, “What? You got to be kidding me,” I started running numbers. So I’m sitting here doing my numbers, right? If it’s $63,000 that’s going to give me about a 25.4% cash on cash return on investment. That’s long-term maintenance and everything’s factored in, and 10% vacancy.
Jason Rash:
And I’m looking at it and this is with $950 a month coming in. Okay, I can raise the rent to $1,000, maybe $1,100 a month. So I want you guys to understand something, the best deal might be right out there, off market, right underneath your nose that somebody’s just sitting on.
Jason Rash:
David, this is how fast it moved for me and I don’t know how it was for you when you went into new markets, but this is how it was for me.
David Greene:
All right, so when you saw that deal, what caught your eye about her? What made you think that’s a house that stands out amongst others?
Jason Rash:
Well, number one, it was like 63,750 bucks, I was like, well dude, if I screw it up, man, I only got $13,000 into it. I mean, I think the down payment was like $13,900 with closing costs and everything. And I’m like, I can’t mess it up too bad. And I’m looking at the mortgage payment, the mortgage payments going to be like $360, $370, something like that, with tax, title, insurance, mortgage payment, everything.
Jason Rash:
And I’m like, I can’t mess this up, there’s no way. I mean, my car payment’s more than this. If everything goes south, I’ll just pay the thing and just sell it. Right, I’ll pay the mortgage payment for a few months and sell it. That’s literally what went through my mind, I’m like, new roof, new appliances, new flooring, new HVAC, three bedroom, two bath, all brick in a great area. I’m like, this just seemed like a home run to me.
David Greene:
Okay, and then how did you research what the income was going to be, what you thought you could rent it out for and what your ROI would be?
Jason Rash:
Fantastic question. So I started going on Zillow and I just started looking around in the areas for rent. Then I just started doing some past stuff and Zillow actually had it all completely wrong, they were off by like a couple hundred bucks, but in the wrong direction. So they were saying you could get like $750 for this house, $850, stuff like that, was another company that I looked at, but I was like, if it goes for like 750, 800 bucks. So I just did the average, I’m like, I could still make this work. I mean, it just seemed like a no-brainer to me.
David Greene:
Did you take those numbers to your property manager and ask him to verify it?
Jason Rash:
So I didn’t have the property manager at the time, that’s how fast I was rolling. I was like, well, it looks good on the spreadsheet… By the way, let me be very clear, I did this first deal without a realtor. I did the whole entire thing myself.
Jason Rash:
And so what happened was I did all the documents myself. And by the way, I don’t recommend you doing your first deal by yourself with no real estate agent. I did the whole entire thing all by myself.
David Greene:
Okay. So on this deal, how has it worked out? Have you been happy with how it performed, have there been any hidden surprises that popped up that you didn’t expect?
Jason Rash:
So I flew in to do my first deal. Okay, I flew in and I actually made an offer on the second deal before I closed on the first deal. And I’ll talk about that in a minute, but real quick, I did hit the 90-day mark. Actually I missed it by one week only because of my lender. I was supposed to close January 26th and I missed it by one week only because my lender dropped the ball. I fired the lender, by the way, I was like, “Listen, this is unacceptable,” I went to a better lender, she’s way better anyway, she crushes it.
Jason Rash:
So the deal’s been fantastic. I’ve had a couple issues, we’ll say like maybe like a toilet leaking underneath and a flapper. They had to come in and put some drapes and stuff up, nothing major, nothing major at all. Fantastic, it’s cash flowed wonderfully for me and I can’t complain, it’s been absolutely magical. It’s been great.
David Greene:
Awesome. So is there anything that you would change with what you know now, if you went back, when you bought that first deal?
Jason Rash:
Probably would’ve negotiated it a little bit lower. I probably would’ve done five or $10,000 lower because I didn’t pick up on how much pain this guy was in, I think I wanted the deal more than he wanted to get rid of it.
David Greene:
Okay. So tell me how you would’ve gone about, or at least the attempts that you would have made to try to get that thing lower. And then also if you don’t mind, what did you see in that seller that made you think, “Ooh, there’s a little bit of blood in the water and I could have been more aggressive.”
Jason Rash:
So he had mentioned to me whenever he first sent me the deal, he’s like, “Hey, listen, man, if you don’t want to buy it, I’m just going to give it to a home.” Now keep in mind guys, this is February or whenever he offered it to me, December 21st 2020, we were in a very different market than we were just last year. Just six, seven, eight months ago, we were in a completely different market, in a lot of markets, for people that are listening to this.
Jason Rash:
So first things first, I would’ve negotiated with him. He would’ve thrown out $63,000, I would’ve said, “Listen, I’ll pay you $59,000 for it or $58,000 for it based on X, Y, Z.” All the home in the area we’re going for like $69,000, $70,000, $71,000, so it was still under market.
Jason Rash:
So I mean, I felt like I still got a great deal, but I would’ve just asked, just throw it out there, “Hey man, I’ll do the deal for $59,000, $58,000.”
David Greene:
Yeah, sometimes you’ll still do the deal at the price that they want, but there’s almost like, the couple thousand dollars isn’t going to make a difference especially if you’re financing it at this rate. I mean, we’re talking about like 10 bucks a month or something, maybe [crosstalk 00:17:37].
Jason Rash:
It’s close, it’s close.
David Greene:
Right, but the experience that you get, I feel like… I’m about to do it again, I can feel it coming, the Jui-jitsu reference. If you go roll with someone who’s better than you and you know you’re not going to win, but you learn something and it’s very similar. Like sometimes I will do the same thing as you, I will push, I will poke, I will negotiate harder. I’ll try to find where you see some softness in the other side, not because it mattered on that deal, but because that experience will help me on the $10 million deal where that is going to help, right?
Jason Rash:
Absolutely.
David Greene:
Can you share a little bit, because you seem like a similar mindset. Can you share some of the lessons you’ve learned when it comes to how to get a little bit more?
Jason Rash:
For sure. Can I talk about another deal I did?
David Greene:
Yeah, let’s hear about it.
Jason Rash:
So I mean I’ve gotten roofs, I’ve gotten HVACs, I’ve gotten all sorts of stuff from people, man, it’s unbelievable. So I want to say the third house that I did, they were real snobby to be honest with you, they were just like, “Ah, this is our house, blah blah,” and the market, by the way is starting to go up at this point, we’re talking like March, April, it’s starting to tick up a little bit.
Jason Rash:
And it’s like, I put the contract in for $100,000 and they’re sitting back, a week goes by, we’re in this deal, they want to get out of the deal because they’re like, “Hey, we can put this thing on the market for $120,000.”
Jason Rash:
They felt bad about it, number one. And I was like, “Listen, I got the deal. I got you locked up in the deal,” and it turns out from the inspection that there were some issues with the roof. It was old, it had some issues with the shingles and stuff like that. I can’t remember exactly what went wrong with it but the inspector was like, “Hey, listen, we need to have this roof replaced.”
Jason Rash:
So I just straight up said to them, I said, “Listen, I’ve met you on your terms. I told you I was going to close in 30 days. I’ve offered you full price for this house, I want the roof replaced.” And we went back and forth and they didn’t want to do it and I was like, “Listen, either I’m going to do it or somebody else is going to have to replace this roof. So what is it going to be? Because I’m going to close and the next person that you give…” By the way, the house has to go back on the market. So someone’s going to be asking, ‘Hey, what happened? What’s wrong with this house? Is there something wrong that the seller backed out?’”
Jason Rash:
So I mean it started to get to stigmatize the house, “Let’s just go ahead and do this deal anyway.” And they were finally just like “Okay, fine. You get the roof,” and they weren’t very happy about it, but it felt great.
Jason Rash:
There’s another one that I did that I got $10,000 out of. I don’t know if I was supposed to mention all this, but I’ll mention it anyway. So there was like a leak underneath the AC unit and it was just like a slow leak in the condenser line. And that was my assumption the whole time, I had an AC guy going there, he verified all the wood underneath the AC had been rotted.
Jason Rash:
And it was the foundation, it has like a little crawlspace underneath, like the wood underneath it started to rot. Anyway, this is probably I’d say June, July. So the market’s changed from March to June, July… This is a different house. And the selling agent wanted to sell this house so bad and my buyer agent was like, “Hey, listen, let’s just go ahead and just buy this house.” I was like, “No, no, no, no, no, no. There’s something wrong on with this. Let’s go and get this fixed.”
Jason Rash:
We were about to close, and the lender said, “Hey, listen, you got to get this fixed. You’re going to have to get this fixed or we’re not going to lend you the money.” So the seller’s agent went and got the first person he could find on the internet, which by the way happened to be the most expensive company. They came in and they were like, “Okay, we’re going to do this deal, but it’s going to be $10,000 to fix this thing.”
Jason Rash:
I guess the seller was like, “Okay, let’s do it, whatever.” So we wound up closing, turns out I got a different guy because the one that he quoted, was busy. It turned out to be only 1,200 bucks, $1,200 to get fixed. And so the other $10,000 went into other areas of the house, fixing it up. Unbelievable man, unbelievable.
David Greene:
So let’s break into some details there, with the house that you had the roof replaced, you said the seller replaced that roof themselves, right?
Jason Rash:
Yes.
David Greene:
Did you work anything in that they were required to have it done by a licensed company and you could check the work, or how did you work that out?
Jason Rash:
Absolutely. So whenever I put in any contract, I’m always saying, “Hey, the work must be performed by a licensed contractor,” this could be electrical, this could be plumber, this could be a roof. I mean, I don’t want their cousin coming up and putting a roof on the house. I also want a warranty, I asked for a warranty on the roof as well. So, warranty of the work, warranty of the shingles, all that good stuff.
Jason Rash:
So absolutely, every time I ask for a licensed contractor, and if they don’t do it, then we’ll just get it ripped out, rip out that work and we’ll do it again. Put somebody who’s licensed, I’m not afraid to go there if I have to.
David Greene:
Okay. And then sort of recap what you said, you went a little quickly on the second deal where it sounded like you negotiated a lot of repairs off of one sum of money.
Jason Rash:
Yeah. So there was a AC unit in the middle of the hallway and underneath, the condensation line apparently had gotten clogged up. So water had started dripping and over the years it just started to drip down, started to rot the wood underneath the subflooring, and then the foundational beams inside the crawlspace.
Jason Rash:
And so we’re at the very last day and my lender was like, “Hey, listen, we’re not going to close on this house because of these repairs, you’re going to have to get this repaired or get a seller credit.” So the guy, that’s the seller’s agent, my buyer’s agent didn’t do it. She put it on the seller’s agent to do it, “Hey, go get a repair. You need to get a contractor to estimate for this, so we can run this through escrow.” So he went and just googled somebody and he just picked the first one available, because that was just who it was, turns out to be the most expensive.
Jason Rash:
They came in and said, “We’ll do this job for $10,000,” And they were like, “Okay, all right.” Like I said, I guess the buyer was making enough on the sale to cover that, they ran $10,000 in escrow. I tried to call the same guy back, he was busy, wasn’t going to be there for a while. I’d say he was probably six weeks out from getting to it. So I just called somebody else, they were 1,200 bucks. So I ran gutters around the house, I got a whole bunch of electrical work done in the house with the rest of the money.
David Greene:
Okay, so you negotiated a chunk of money for repairs and then in this case you chose how to allocate as opposed to telling the seller, “Hey, you go fix the problem,” is that right?
Jason Rash:
Yes, correct. They didn’t want to have anything do it, they were just ready to be done with it.
David Greene:
So I’m curious, when you make that decision, do I ask for the repairs or do I ask for the request for a credit, are you doing that based on just whatever the seller says? Are you saying like, “Hey, I want you to fix it,” and if they say no, then you say, “Fine, give me the money, I’ll fix it.” Or are you kind of strategically looking at this from a financial perspective and saying, “I bet I could get this much money from them and use it more wisely than if I asked them to go make the repairs.”
Jason Rash:
So that’s a great question. So part of it is I live 1,500 miles away. And I will dive in on what I do on most deals, on a lot of deals, what I do is I actually will offer them what they want because I can tell the market was going up. I was like, I’m going to buy this house. It’s going to be worth $5,000, $10,000 more just in 45 days.
Jason Rash:
So like for instance, some of the deals I’ve asked them for full price, only, only, and this is the only reason I did this. It’s got a new HVAC, it’s got a new water heater, it’s got a new roof. Like I came across a deal, I offered $5,000 more because it had all that stuff. New flooring, new kitchen appliances. I was like, hey, listen, I’m going to get outbid on this. I know for a fact, I’m going to get outbid, I’m going to offer $5,000 more.
Jason Rash:
Now when it comes to repairs, I actually offered them full price but I said, “Here’s what we’re going to do. I’m going to meet your price, but you have to meet my terms,” because I’m not there. I can’t walk through the house, I can’t touch it, I can’t smell it. I’ve got to trust my real estate agent and I’ve got to trust my inspector.
Jason Rash:
So I send my inspector through there, I’ve got a great inspector and so he just bang, bang, bang, bang, bang, bang, bang. I’ll come back with a list of 20 items and I’m looking for 50% of them to get done. The big ones to get done, they’re going to cost me. We’re talking like GFI outlets, I don’t want to have to hire a contractor to come in, an electrical guy to come in, like GFIs or new electrical boxes outside.
Jason Rash:
So I will ask the seller to repair this. Most of the time they push it back on me and say, “Listen, we’ll give you a seller credit, but you got to do the repairs,” and I’m like, “I don’t want to do the repairs because I live out of state.” So I want them to do the repairs within 30 days. So basically I can have it make ready. I’ve had the sellers get it make ready, and so I can push a tenant through there.
Jason Rash:
The only reason why I changed on that last one, because we had gotten down to like the day right before closing and that’s why whenever they had that water damage, the guy, he just pulled the first guy he could find, then it was the fastest way to get the problem solved.
David Greene:
Have you run into the situation yet where you negotiate a higher credit from the sellers than what you can actually allocate towards your closing costs?
Jason Rash:
I have not, have you?
David Greene:
Yeah, that one does come up, for our clients this happens pretty frequently. So a lot of people that are listening might not realize, you can’t get a seller credit of just infinite money because otherwise fraud could happen. You could say, “I’ll buy your house for a hundred grand and I want a credit from you of a hundred grand.”
David Greene:
And then the seller gets a hundred grand from the bank and you get a hundred grand from the seller, and then you just let the house go to foreclosure and the bank eats it. So lenders will limit how much closing costs you’re actually able… You can only ask for the amount of your closing costs from the seller.
David Greene:
So one of the techniques that we’ll use on the David Greene team is, in general, most of our clients know the money in the bank is better than the price on the house.
David Greene:
So if you’re going to buy that place for a hundred grand, you’re better off to buy it for $110,000 and get it $10,000 back as a credit because you can take that 10 grand and fix the house up to make it worth more. Maybe you can make it worth $30,000 with that 10 grand or you can keep that money in reserves in case something goes wrong.
David Greene:
You can use it to buy your next property. In today’s market with appreciating asset values and low interest rates, money in the bank is worth a lot more than the actual price on the house. That part makes sense so far?
Jason Rash:
Yeah, actually it does.
David Greene:
So what we’ll do is we’ll negotiate as higher of a credit as we can get and then if that’s more than their closing costs, we’ll use that money to buy the rate down with our in-house lending team that we have. So if your interest rate was going to be, say 3.5, we can now take part of your seller credit, apply it towards your closing costs, buy your rate down to 2.8. And that actually is going to save you money over the life of the loan even though you paid more to get the rate buy back.
David Greene:
And I’m always looking for little ways like that to make the deal more efficient for our clients. And so that’s what I love about what you’re saying is it sounds like you’re looking at it from the same perspective.
Jason Rash:
Yeah, I didn’t know all that, but yes. Yeah, absolutely.
David Greene:
Well, I’m encouraging people to think that way and especially here’s why, when you’re in the price point that you’re playing in, Jason, these repairs can make or break your deal. There is a small margin of error for maintenance vacancies, right? How much is your average rent that you probably get a month?
Jason Rash:
I’d say $950 to $1,000, we’ll say $1,000 for easy numbers.
David Greene:
So, that’s pretty solid. But I mean it’s not two grand or three grand, right? So a couple hundred bucks can make a huge, huge difference in your ROI.
Jason Rash:
I was going to say absolutely, man, like the main issue with some of the houses is I bought them with 1956 to 1954 era, and they’ve got that galvanized piping. And then I made 200 bucks here, 250 bucks there and it’ll eat it up.
David Greene:
One sewer line running under the house that needs to be repaired can screw you over. Sometimes just a tree removal that you didn’t see coming can crush you at that price point.
David Greene:
Now I don’t buy houses in that price point anymore, right?
Jason Rash:
Me neither.
David Greene:
This is going to sound weird, I don’t have to look at the details quite as closely when I’m buying a $2 million asset because the cash flow it produces will cover over a lot of what I miss. But this is why the market you’re in is so good to get started in, is because it forces you to be really, really tight with what you’re doing.
David Greene:
You build very good habits when you’re investing in those markets. Having to look at everything as closely as you are, and the price point is low enough that you don’t need as much money saved up to get entered into it. That’s the strength of the market you’re in, obviously the weakness is that much attention to detail can become very burdensome as you start to go into scale.
David Greene:
So at what point did you realize that and what did you transition into when you wanted to move out from these types of deals we’re talking about right now?
Jason Rash:
So here’s the deal. I went so fast that I haven’t bought any other homes in that price range, but I’m about to put an offer in next week on one that’s built in 2005. It’s a little bit more, but I’m not dealing with galvanized piping, I’m not dealing with plumbing issues in the house. I’m not going to deal with any of that stuff, it’s got all updated things.
Jason Rash:
That’s been my biggest issue in purchasing homes like that, and don’t get me wrong they haven’t been deal breakers. It’s just, “Hey, we had a plumbing issue,” Here’s 150 bucks. “Hey, we had to do this with the stink or shower head,” or something like that.
Jason Rash:
So I’m actually bumping up and I have a guy, who’s a friend of mine and he was like, “Hey, listen, you’ve done great to purchase the 10 that you’ve got. Now, what I would do is…” He’s actually made the suggestion. He said, “Bump up $40,000 more, $50,000, $60,000 more on a house and bump up an extra 40 years too.” And the 40 years is you’re going to have like PVC piping or have updated electric codes. Everything’s going to be a lot more modern and it’s going to flow better with less repairs.
Jason Rash:
And he’s like, “Listen, what do you want? Do you want to keep going down the road? This is totally fine if you want to, but you can expect some of those repairs or you can bump up $40,000 and it’ll be less of a headache. And you could still go march through the jungles of Tibet and get your paycheck without repairs coming off of it.”
David Greene:
That’s really good advice. I recently did a TED talk, it’s going to be released pretty soon here and in the talk, it was basically about how to be successful at anything, how to learn, how to do anything. There’s a pattern that anytime you’re building a skill you always see.
David Greene:
And one of the rules is that you’re trying to build momentum and so you’re lining up these dominoes to accomplish what you want, and people make the mistake of lining up the same size domino over and over and over. And you end up with a hundred single-family houses and yes, you are successful, but you’re sure not taking a hike into Machu Picchu with something like that.
David Greene:
You’re dealing with death by a thousand paper cuts when you have a hundred single-family rentals and there’s diminishing returns. What you want to do is stack your dominoes higher and higher and higher every time. And that’s what I love about your strategy is that you’re evolving into something that’s a little bit bigger.
David Greene:
With the stuff you’ve done, you seem like you pay a lot of attention to detail. Is there a spreadsheet that you’re using to kind of track everything that has to be done in every deal or is this just all still in your head?
Jason Rash:
So no, I use a spreadsheet. My friend actually made it up, I’m sitting here looking at it like everybody else can see it too, but it’s a very, very simple spreadsheet. I’ll be honest with you, before I got into real estate spreadsheets made my eyes glaze over, but the spreadsheet, it literally counts in vacancy, counts in long-term maintenance repairs, it gives me a breakdown.
Jason Rash:
And I didn’t invent this thing, by the way, just throwing that out there. It breaks down like this is your maximum cash flow if you have no repairs, and this is your… Forever until the infinity, until the end of time and everybody pays on time, all the time. That’s never going to happen, right?
Jason Rash:
So then it goes up to long-term maintenance cost, it counts that in. So that’s what I base everything off of is the long-term maintenance cost because I had heard or read somewhere that like 40% of all the money you make will go back into the house in repairs. Is that about what you’re coming up with too?
David Greene:
Sometimes more, when it’s older houses like this, I think it blows people away once they own real estate. See the problem with spreadsheets is that they give us the false sense of security that life can be figured out that predictably, right?
David Greene:
And what you find is if you buy a house built in 2000, 2010, just the amount of money you put back into it, pales in comparison to something built in 1940. But we rarely ever think when you’re looking at a 1940s house, I’m buying a money pit, right? The spreadsheet doesn’t tell you the difference, and so that’s one of the things that I’m constantly telling investors, you can’t be you one-trick pony. You cannot buy only for cash flow, just like you can’t buy only for appreciation. A lot of people lost money speculating in 2000 through 2006, that prices would keep going up and we all learned don’t bet on that.
David Greene:
You need cash flow to balance this out but I think the new mistake everyone’s making, is the pendulum swung too far and they’re only looking at cash low on a spreadsheet. And they don’t realize that even if that property’s making you $300 a month, if the air conditioner breaks after the third year, all of your cash flow is gone.
David Greene:
You don’t actually have cash flow, you have the appearance of cash flow. And so if your property appreciated 50 grand, when that happens, you’re okay. You can refinance it and put on a new roof and a new air conditioner, fix it all and your rent will have gone up. So it’s still going to cash flow.
David Greene:
I’m saying this because I think the word needs to get out there more that if you’re going to play the cash-flow game, you got to do it like you’re doing it, Jason. Incredibly focused on every little detail and it almost makes real estate investing not fun, if you have to be that way. And that’s why I like it to be a little more balanced, because then you can kind of live the life you want and let that property pay for it.
Jason Rash:
Yeah. So like for instance, we’re doing 20 single-family homes and then our next home, our 21st home will be in Airbnb where we want to vacation, let’s say Miami. Or I live in Colorado, so I mean I’m in the mountains already. So obviously it’s going to be a coastal town somewhere and definitely not California, just throwing that out there.
David Greene:
Man, low blow. What’s wrong with California, Jason?
Jason Rash:
Man, first rule of financial freedom is leave California.
David Greene:
That’s funny. Yeah, everything becomes a lot cheaper when you get out of here. I was just in Texas and I was looking at gas prices, were like $2 and something and I was hearing people complain about it. And I was secretly thinking ours are like $4.50 and I’m like, “Oh it dropped down to $4.30, gas is cheap.” You go to a restaurant and you can eat for like eight or $9, you can’t even get an appetizer for eight or $9 in California. Everything’s a lot more expensive.
Jason Rash:
You can’t ever get to the door, man. I just took my daughter to a concert out in LA, a BTS concert. I don’t know if you who they are, it’s like a mega Korean pop band. I took her out there, and man, gas was like four… I think it was like $5.25 or something like that, $4.89 or $4.99. I can’t remember but it was somewhere in there. Unbelievable, man. Unbelievable, what you guys are paying out there.
David Greene:
Yeah, I also talk about that in Long-Distance Investing, is that every market, any market, whether we’re talking at a macro scale like the economy or you’re talking about a micro scale, like a city, they have pluses and they have minuses.
David Greene:
So part of where my wealth came from was I worked in an area that is incredibly expensive to live in, the Bay Area in California, but the wages were also really high. So if you’re able to spend, like I did, a lot of my time working, making good wages and I didn’t go spend it on anything that was really expensive because I was working. I was able to save more money than everyone else and then go invest it into some of these other markets that made more sense and then I learned how to buy Bay Area properties that would still cash flow. And I had perfect the mix where I could buy a Bay Area property with cash flow, I could also invest into emerging markets.
David Greene:
So I’m always encouraging people, it’s easy to see the negative, like California’s very expensive but at the same time, I sell houses here that are a million dollars routinely, which is very good for business. The commissions are high enough that I can afford to pay salaries to people to kind of help run the team. So no matter where you are, there is a strategy that will work.
David Greene:
And I remember, I used to hear Brandon Turner say that all the time and I would roll my eyes, like not where I am, but now I look back and I realize he was kind of right about that.
David Greene:
So as far as the next stage of where you want to go, you said you want 20 properties, then you want to get an Airbnb. What is it about that number 20?
Jason Rash:
Number one, I think a lot of people got crushed during pandemic. I mean, I don’t think anybody saw what came coming in 2018 like, “Hey in two years now it’s going to be a pandemic, so you guys watch out.”
Jason Rash:
I think for me, number one, I like to have a foundation. I’ve got two kids, man, I need a solid foundation. So I figured out mathematically that if I just build a solid foundation of 20 single-family homes bringing me in roughly $10,000, $12,000, $13,000 a month, maybe nine, whatever, wherever I land, that’s going to be enough to offset the Airbnb if something were to happen.
Jason Rash:
I was standing at a spot, it was a multi-family unit and it was all Airbnbs but when the pandemic came along, he had to actually rent one of those out full-time, because he had an investor out of California. And he had rent one of those out full-time because he was getting crushed on all three other ones being vacant.
Jason Rash:
So I wanted, number one, I don’t know what the future’s going to hold. I know everybody’s like Airbnb, Airbnb, Airbnb but here’s the other thing, man. If I buy an Airbnb, buy a house with the intention of doing Airbnb, then all of a sudden this city over here, they change their laws. My business model’s rendered obsolete overnight, poof it’s gone, evaporated. And I can’t rent it out monthly for cashflow for long-term tenants, so I’ve got to have something to cover that shortfall. So I think it’s smart to have… By the way, it gives me targets. I mean, I got 11 properties right now, I’ve got to buy nine more before I get to the Airbnb.
Jason Rash:
Obviously I could buy the Airbnb right now, do the other nine afterwards. So I mean, I’ve got to have goals. I’ve got to have targets. I have to have something to shoot for. And the great thing about the Airbnb is my wife, she’s fantastic at like marketing material.
Jason Rash:
So we were going to do our Airbnb house, she had a theme, had it written up and everything, deal fell through, but she is not excited at all about real estate. She really doesn’t like it at all, to be honest with you but I said, “Hey, why don’t we do an Airbnb?” She’s like, “I like that.” It’s a way for us to get closer together too, man. That’s a fantastic thing, you can’t discount that marriage. You got to keep that growing too.
David Greene:
I haven’t had to deal with that problem yet because I’m not married. So, my heart goes out to the couples that are like, “I love real estate and my husband says, no, he thinks it’s a scam. I can’t get him into it.” It’s just a whole hurdle I’m lucky I haven’t had to challenge.
David Greene:
But when you were talking, I did start thinking about my mom. My mom has been bugging me for years to help her invest in real estate. And I know what that will turn into is, I will say, “Hey, you should look here,” and then she’ll start saying, “Well, what about this deal? What about this deal? What about this deal?” Eventually I will have to pick the house and negotiate it then I will have to run rehab, then she’s going to say, “Well, the property manager said, what do I…” I’m going to just basically take on all the work of doing a deal that isn’t mine.
David Greene:
But I do think my mom would be very good at running a short-term rental, she loves that attention to detail. She loves being hospitable. She has a very good eye for what people like and what people don’t like. And as you were talking about your wife, I started to think, oh, that’s how I’m going to get this monkey off my back, is I’ll buy an Airbnb with my mom and I will manage the financial side of it and I will let her pay attention to the throw pillows that we’re going to use and what pictures we’re going to put on there, because she’s going to love that.
Jason Rash:
Fantastic. Yeah man. I mean, you don’t want another job, we all don’t need another job. You know what I’m saying?
David Greene:
Amen to that, that is exactly right. All right, so what are some of the challenges that you faced building your portfolio to this point, especially having it happen over eight months that you didn’t foresee but that you’ve now corrected and you’re not going to make mistakes going forward?
Jason Rash:
First things first, I was like, “Hey, listen,” like I said earlier in the very beginning of this podcast, “I’m going to do single-family rentals.” One of the biggest challenges is I’ve had so many shiny objects coming at me like so many people, “Hey, you should do storage units. You should do multi-family. You should do that. Just drop all grandiose ideas of single-family homes and do this.”
Jason Rash:
That’s the first challenge is staying focused. It’s like, if I’m going to do something, I’m going to do it but a lot of people that I meet in real estate are not a master at anything. They kind of understand this business model of multi-family, maybe have an Airbnb over here, one or two single-family homes. And they just are kind of like floundering, I’m over here, like crushing it because I’m like the master of my universe of single-family homes. I mean that’s my thing, man.
Jason Rash:
That’s the first challenge, number one was just staying focused and being able to say no to everybody, that’s the first thing. The second thing was, I had to come up with hard-and-fast rules. I actually wrote them down over here. I was like, okay, what do I want in real estate? I want to control as many variables as I can, number one. I don’t want HOAs like condos and things like that. They can just drop, “Hey listen, now everybody’s got to pay 4,000 extra more dollars a year or,” whatever. So I was like, okay, no HOAs, no flood zones because it thinks flood, the house is going to flood but number two, they’re going to keep raising that flood zone insurance. They’re going to keep on raising it.
Jason Rash:
Number three, no pools. I don’t want to have that constant maintenance cost of a pool and by God, if a child died in that pool, I could never forgive myself. I’ve got two kids, I’ve been married 20 years next year so I couldn’t do that.
Jason Rash:
Number four, actually, no basements, with basements, it’s not a matter of if they leak but a matter of when, and last thing is no large decks. And I’d say the sixth thing, to be honest with you is all brick. I like all-brick homes.
Jason Rash:
So I was like, okay, I need to find these control costs something that when I say it’s going to be like this, it’s going to be relatively like this. And the other parameters, 3:2s and 4:2s. I’ve had a lot of people, “Hey man, I’ve got a 2:2 over here, I’ve got a 2:1 over here. I’ve got a 3:1 over here. You need to get it, the market’s going up.”
Jason Rash:
And this is a thing about a lot of investors, is a lot of people get emotional when it comes to investing. Number one, they think that nothing in that zip code’s ever going to come up again. This is the last house I’m going to be able to get, it’s the only one, I’ve got to buy it. And they get sucked into a deal.
Jason Rash:
You’re laughing, obviously you know what I’m talking… I’m a newbie, dude. I’m a newbie, but I’d say those are probably the two biggest things. Timing obviously, and I run another company. It’s a seven figure income stream every single year. So I run that with my wife, and it’s a sales team of people all over the globe.
Jason Rash:
Those are the two biggest things I could tell you that really, really became a challenge. The last thing I would say, is know your numbers. A lot of what’s happened in the marketplace, a lot of prices have been driven up just strictly through bidding wars.
Jason Rash:
And like I said, when you’re investing in real estate, it should be the complete, exact opposite experience of you buying your personal home. Your personal home is your personal home. Like, oh my God, I want to live here. I want to know these neighbors. Oh my God, I love this countertop. I love these colors. Oh my God, the view’s amazing… When it becomes a rental, none of that matters. None of it matters, the only thing that matters is the numbers.
Jason Rash:
I mean, yes, some of that matters. Neighborhood matters, yes, if there’s a car up on blocks next door, a meth lab down the street, all that matters. Right, but I’m just saying it should be almost a complete, actual opposite experience. And I think what we went through this year was just a lot of newbies getting into the market, emotional like teenagers, they just don’t have any numbers.
Jason Rash:
When they get sucked into a bidding war, they’re like, “Oh my God, okay, let’s keep going. Let’s keep going higher, higher, higher,” and their cash flow, it’s just dropping down. You know how it all goes, man, you got to be able to relate.
David Greene:
What you’re saying is absolutely right, there’s a couple points I want to highlight from it. As far as the last point you said, I think a lot of investors get very frustrated that other people are willing to pay more than they would. And I often hear them saying things like, “The seller needs to understand he’s being unrealistic,” or, “They need to realize their house isn’t worth what they say it is.”
David Greene:
But some other buyer is happy to pay that much money because they’re not going to rent it out, they want to live in it and it’s worth it to make your quality of life higher. Get in that school district you want, to have the house with the pool that you’re going to raise your kids in, and to you paying another 40 grand to have that is well worth it. So in a sense that house is worth whatever someone can get for it. It’s not worth it to us.
David Greene:
And that’s the key with not getting emotional, is if you know what you want, you can’t let yourself get attached to it. You have to know that doesn’t work for me and if you get frustrated that it didn’t work out, you were attached. You got to be able to say, “Hey, I’m happy some family wanted to pay 40 grand more for that house because they’re going to use it for a different purpose.”
David Greene:
And then maybe, how can I start looking for houses that a family might not want, that would be the way that I would approach that. I think that a lot of investors, they’re just not used to having to do something over and over and over before they actually find success and so they do get caught up.
David Greene:
Another thing you mentioned that I love, that I want to talk about on this podcast because I’ve never heard another podcast say it in the real estate space ever anywhere. When I was a new investor, I thought like every amateur thinks, and it’s just how low under market value can I get this house? And there’s nothing wrong with that, it’s actually a very good thing to look for.
David Greene:
But it was the only thing that I looked for. I just said like, “Where’s the deal?” And I found what I thought was a good deal. And then I said, “How do I try to justify buying this thing and making it work, even though I don’t have experience or resources or knowledge or any of the things that I would need to make it profitable.”
David Greene:
So I’d end up with the house that I got under market value and a list of headaches that I then had to learn how to go solve and it took a ton of time. What you said was, “I don’t want this, I don’t want this, I don’t want this, I don’t want this and whatever’s left is worth looking at it.”
David Greene:
And while it may sound odd to hear me say this, that is now how I approach real estate. So I like to find Bay Area properties that I can turn into more than one unit to rent out. Like if I can buy a house for $1.5 million, but I can turn it into three units or something like that and I can make it cash flow. Doesn’t need to cash flow a ton in year one, by year five, that thing’s going to be crushing it, but it brings a host of problems.
David Greene:
Where am I going to find a property that has enough parking spaces for all the people that are going to stay in those units? You don’t even think about that when you’re getting a regular house, right? Is this in a neighborhood that that’s going to piss off all the neighbors and they’re going to be calling it in because they don’t like all these renters in their neighborhood? Is the floor plan of the house itself conducive to how I would like to use it? If it’s like a track home, there’s no way to get anyone to the upstairs unless they walk through someone else’s bedroom, that’s not going to work.
David Greene:
So I’ve switched to looking at it like you, does it have all the pieces that I need? And if it does, I don’t necessarily have to get it at 100 grand less than what I think it will appraise for. I need to get that house, because that’s a rare gem that’s going to make me a lot more money. And I just want to encourage people when you can say no to what’s out there, the yeses become so much more clear as to moving forward and I want to give you a chance to kind of elaborate on that thought.
Jason Rash:
I was just thinking about my own house right here. I’m like, man, I should have David come and buy my house. I live at a three-level house. I have literally a million dollar view of the mountains, but what’s crazy about it is just there’s an access door back here. You could put a kitchen up here. There’s one down here. There’s a bedroom down here and down below, they’ve got a little kitchenette and I’m like, David would be the perfect buyer for my house. My house is going in the market actually. Anyway, so where were we? Sorry about that.
David Greene:
No, it’s just that idea that I look at real estate from a different angle than other people do, where every other investor is going out there saying, “How do I find something less than market value?” I’m happy to let them all fight over those same deals and then buy a house that you got for maybe 50 grand less than it’s worth, but it doesn’t accomplish the purposes you had of having cash-flowing real estate instead I look for nos.
David Greene:
I realize the reason that you’re saying, “I only buy brick homes,” is because you see that you’re cutting down on maintenance costs, right? So would you just mind sharing a couple of those reasons of what you look for in a house and how that’s going to save you money?
Jason Rash:
So I think, number one, I really pissed off my real estate agent. First of all, whenever I reached out to her and told her what I wanted to do. We started working together and she was like, “Hey listen, look this really isn’t going to work.” And I was like, “Listen, you telling me this isn’t going to work, isn’t going to work.” I’m like, “This is what I want and this is how it’s going to work.”
Jason Rash:
It was a little rough in the beginning, not really every real estate agent’s going to be about it. So we kind of had a little rough thing, but what it does, it narrows the field of vision. Like everybody’s like, “Okay, house over here, house over here, house over here, house over here,” and it brings it in where I can actually focus and I can run the numbers on those houses.
Jason Rash:
Another thing I forgot to mention, I don’t buy houses with large flower beds and gardens and all that stuff out front, anything that has a lot of outdoor maintenance, like gazebos and stuff, I don’t buy any of that stuff, no matter what the price is.
David Greene:
I’m looking for concrete as much as possible, tenants cannot mess that up.
Jason Rash:
Absolutely man, absolutely. I want something that doesn’t require a lot of attention. I don’t want something that requires a lot of maintenance, so that’s the whole behind the hard-and-fast rules.
David Greene:
That’s such a good… I mean, if you just think about after owning that property for 30, 40 years that you may get it for 30 to 50 grand less, but it has all these issues. You’re going to spend more than that fixing it up and repairing stuff that people messed up over that long period of time.
Jason Rash:
Absolutely.
David Greene:
So what’s something that you think every new investor who’s thinking, I’d love to do what Jason did, but I don’t know how to even get my first house, let alone my first 10. What did you do that you feel like worked out that many other investors don’t realize is possible?
Jason Rash:
Well number one, you have to have a system. You have to have a system. Like I mentioned before, me and my wife, actually we’re in network marketing and we run a company over here. And if you’re going to be successful at network marketing, you have to have a system like you have to have a system to move people around and close leads and things like that.
Jason Rash:
It’s the exact same thing in real estate. If you’re going to do this from either 15 miles away or 1,500 miles away, you have to have a system. The first system is, how are you going to get the money? That’s the first system, how do you get the money and repeatably get the money? Not just something like, maybe I can save $2,000 this month, or I could save $4,000 next month or $4,000 next year, whatever it may be. It needs to be consistently the same thing.
Jason Rash:
A system requires you to work the system, that’s how everybody becomes successful in business. Every business is a system like McDonald’s. David, let me ask you a question, can you make a better burger than McDonald’s?
David Greene:
I’m sure I could.
Jason Rash:
Absolutely man, we could blindfold you and just dump some ingredients in front of you and you just kind of do your thing, man, and whatever comes out, comes out. The question is how come you don’t have a billion dollars yet? Probably because you haven’t built a system around how to make burgers, right?
Jason Rash:
Same thing with real estate. If you’re going to jump into real estate and you’re going to get your first house, number one, narrow your parameters down. Do you want to do single family? Do you want to do long term? Do you want to do students short term. Do you want to do multi-family? Do you want to do storage units? I want to do storage units. I’m going to go into storage units probably in year five, that’s where I’m going to head to but I’m going to build that foundation first.
Jason Rash:
You have to have the system, so get the money right, narrow down the parameter and then build your team. That’s the first thing.
David Greene:
It’s very similar to how athletes don’t just walk in a gym and look at every machine or every exercise and just be like, “I’ll try that one. Now I’ll try this one.” If you’re developing your body for a purpose, you’re working out specific muscle groups in specific ways.
David Greene:
Business is just a different kind of sport and you play it with your mind, so I love what you’re saying. Probably part of the reason you were successful is because you had already done it in the business that you had and you took those principles and applied it to real estate, right?
Jason Rash:
Yeah, absolutely. Network marketing taught me that about business, like I’ve learned so much about how to speak to people, how to close leads, how to get what I want. I mean, that’s been helpful with my lender when my lender was like, “Hey listen, this isn’t going to work,” and I’m like, “Okay, let’s have a little chat here,” bang, bang, bang, bang, bang.
Jason Rash:
I’ve had to get on the phone a lot of times, negotiate with people, negotiate with lenders and negotiate with attorneys. I mean if the attorney’s like, “Hey listen, we can’t close that day,” and the lender will come back and say, “We can’t close….” I’m like, “Give five minutes, I’ll be right back.” So I get on the phone, I’m like, “What’s your name? Let me talk to you for a minute.”
Jason Rash:
And I get on there and I make it happen and my lender’s like, “What are you like Tony Robbins or something? How’d you make that happen?” I’m like, “Listen, you just got to know how to talk to people. Yo, that’s it.”
David Greene:
I think that’s an understated part of your success particularly, is I think there’s a lot of people that their agent says, “Here’s what’s going to happen,” and in their head they’re like, “No, that’s not what I want,” but they don’t know how to articulate that into words. And so it just turns into, “Fine, I’ll let my agent do what they want to do,” it doesn’t work. Whereas you said, “No, no, no. I told my agent, this is how it’s going to work and we kind of went back and forth, but ultimately we settled on the right solution.”
Jason Rash:
Right. Let me just say this for everybody doing their first deal or their 10th deal or whatever, business has to be great for both parties. Nobody can walk away feeling like that they got taken advantage of, no party should negotiate so much that either the buyer got taken advantage, the seller got taken advantage of.
Jason Rash:
Everybody needs to be able to make this work because you never know that seller may know somebody, “Hey, by the way, John’s selling a house down the street, since you did such good with me, John wants to work with you too. Since you close all the time, John wants to work with you too,” you never know. And that to me, David, is how real business works.
David Greene:
I think this is some very good advice. I hope everybody got something out of that. Just understanding if you feel trapped, you don’t know how to talk to people. You feel like you’re being dragged in a direction, you don’t want to go. That’s an opportunity to improve a part of yourself. Your ability to articulate, your ability to come up with a win-win that can help you get over that hurdle rather than just saying, “Oh, I guess I’m not good at real estate.”
David Greene:
And you often find the people that are most successful at this were successful at other things before they did this and this was just another domino in that stack of what they were knocking down.
David Greene:
So yep, that being said, I’m going to move us on to the next portion of the show. It is going to be the Deal Deep Dive.
David Greene:
All right, Jason, do you have a deal for us to dive deeply into?
Jason Rash:
So is this a deal that I currently did or one that I’m working on right now?
David Greene:
Could be either one.
Jason Rash:
I’ve got a deal that I did, okay? And this deal here is $99,000. Okay, I closed at $99,000, it rents out for $950 right now.
David Greene:
Well, hang on a second. I’ll ask you the questions, you can answer those, okay? So we’ll start with what kind of property is this?
Jason Rash:
So number one, this is a single-family home, three bedroom, two bath, all brick.
David Greene:
Okay, perfect. The brick special, how did you find this?
Jason Rash:
Actually I flew in to close on my first deal because I live in Colorado, I was closing in Montgomery, flew in for that first deal. And I came in a day early, I said, “Man, let me look at some properties,” call up my agent and boom, we found this deal. I made an offer on it right then and there. Then I was like, God, let’s roll.
David Greene:
Love it. Okay, how much did you pay? You said $99,000, so we got that. How did you negotiate that price?
Jason Rash:
Again, I didn’t negotiate anything. I looked around the whole entire thing, they were leaving the washer and dryer, they were leaving a really nice refrigerator. I looked around, I was like the AC’s been serviced, everything looks great. And I was just like, “Man, this is a pretty good deal. This is a pretty good deal.”
Jason Rash:
And I started running some numbers, talking to my property manager and she was like, “We can rent that out for $950 to 1,000 bucks, $900.” So I was like, “Okay, let’s just do $950,” and I was like, “All right. That’s not bad, 13% return on my money. That’s not going to be too bad. All right, let’s do it. Let’s roll.”
Jason Rash:
It was an old lady too, by the way. Listen, man, I will negotiate and I will go toe to toe with people like you but a little old lady who reminds me of my grandmother, man. Sorry, I just couldn’t do it, man.
David Greene:
Well it sounds like she already had it priced right, if she’s including everything and it was a good price. Sometimes you win by letting the other side win too.
Jason Rash:
Yeah, it’s worth about $120,000, $125,000 now. So I mean, did I get a good deal? I think so.
David Greene:
That’s exactly how I look at it, versus the person that tried to save another five grand, didn’t happen, they lost out on that 30 grand in equity. Did they get a good deal?
Jason Rash:
No.
David Greene:
Right? Now their money’s worth less because inflation’s worn it and all the other houses cost more and they lost the cash flow of three years. Yeah, taking action is often better than trying to just beat the other party, I agree with you. All right, so how’d you fund this deal?
Jason Rash:
So I literally just put 20% down. Our other business is pretty successful so I just literally put down. It wasn’t even that much $20,000, I think it was 421,000, $22,000 out the door, $22,500, closing costs, something like that. It wasn’t bad.
David Greene:
All right, and then what did you end up doing with it?
Jason Rash:
Rented it out. Literally within, I’d say a week and a half after I closed, boom, property manager came in, dropped the tenant, $950, we’re rolling. Literally no problems by the way, with this house. None. Zero, I’m talking zero.
David Greene:
That is awesome.
Jason Rash:
Fantastic, they pay on time. I mean again, did I get a bad deal? I don’t know maybe I should’ve negotiated at $5,000 but I got great tenants. I mean, no problems and they pay on time.
David Greene:
I just think in 30 years, you’re not going to remember if you paid another three, four or five grand, the house is going to be worth $300,000, $400,000 at that time. And so many things that we worry about during the moment don’t matter when you look at it over the bigger timescale.
Jason Rash:
True, so true.
David Greene:
All right. Last questions, what lessons did you learn from this deal?
Jason Rash:
It’s number one, trust in your gut. Trust in your gut, I would say that’s a big part of real estate. It’s like, you can do all the numbers, I looked at the spreadsheet, everything looked great, but I walked through it, I smelled it. This is one of the rare feelings, by the way that I was able to through before I closed on it. But I looked around, I just kind of looked under the sink, obviously there was no active leaks, no presence of any leaks.
Jason Rash:
I looked at the AC, I’m not an AC guy, I just kind of tinkered with it. I’m over there tinkering, what else am I going to do? I’m going to tinker throughout the whole house. And I’m just like, man, my gut’s telling me like, “This is a good deal. This is a good deal. This is a good deal.” And so I just went with it, man, trust your gut when it comes to real estate, just trust your gut.
David Greene:
I like it. Well, you trust your gut, but know your numbers, right?
Jason Rash:
Yeah.
David Greene:
They’re both kind of operating at the same time. And when you get it right, the numbers determine what your gut tells you and that’s when you can trust it.
Jason Rash:
Absolutely, man. And by the way, when I ask my property manager, “Hey, what’s it going to rent for? Give me the low, give me the high.” And I always shoot in the middle or I’ll shoot towards the low end, to be honest with you a lot of times. Now moving forward, I was a newbie back then, I still kind of am compared to you, David, but I was like, man, if all goes to hell, I can still rent it out for 900 bucks and still do pretty well, it’s not going to break the bank.
David Greene:
Well, it’s funny that you said that you’re a newbie. You’re probably a newbie compared to everyone because you’ve only been doing it for eight months, but you own more houses than the people that are not newbies. So there’s some irony there between, how are we going to define what newbie is?
Jason Rash:
Dude, action. Action. Action. Action. It’ll get you to your dreams faster than reading books and faster than anything else.
David Greene:
All right, well let’s get into the last portion of our show, Famous Four, where we ask every guest the same four questions to find out a little bit more about what makes them tick. So first question, what is your favorite real estate book?
Jason Rash:
Oh, I have to say by far, hands and away, I’d say the Rental Property Investing, this one right here, the BiggerPockets one, it’s by far… Dude, everything you need, by the way, to buy a single-family home and grow it to 10, right here. Right here, you ain’t got to buy anything else. I’m just saying, it starts right here.
David Greene:
Everything Brandon does is just good. He just does good work on everything he does, yeah. I think that’s the top-selling real estate book in the world.
Jason Rash:
It should be, I don’t see why it wouldn’t be. And I read the other one by the way, How To Invest In Real Estate by Brandon Turner and Joshua Dorkin. And this is by the way, let me just say it, it just confirmed everything that was in the other thing. It’s almost like the exact same book, maybe expanded in a few areas, but yeah.
David Greene:
Awesome. Okay, what’s your favorite business book?
Jason Rash:
Oh, yeah man. I mean, that’s a good one. I would say obviously a lot of people say, Rich Dad, Poor Dad, man, I would say honestly, Be Obsessed Or Be Average by Grant Cardone, by far hands down. That, or Sell or Be Sold, by Grant Cardone, because here’s the thing at the end of the day, you’re selling yourself to people every single a day. And if you get in there and you can’t sell yourself to the agent or you can’t sell yourself to the seller like, “Hey, listen, I’m your guy. I’m going to close. I’m going to make this happen. We’re not going to have any problems.” If you can’t deliver that with confidence to your people, and to your lender and everybody else, man, it’s going to be tough. It’s going to be a tough go.
David Greene:
I got to say, Jason. I don’t think a lot of our audience is shocked that you just mentioned Grant Cardone as someone whose business books you like, have you been told yet that you look like an NFT that was based off of Grant Cardone’s likeness?
Jason Rash:
Well kind of, yeah, I’ve been told that a little bit. Like dude, you’re like a younger version of Grant Cardone.
David Greene:
You can tell he’s influenced you for sure, your speech pattern, the way that you project yourself. It’s very professional, very high energy.
Jason Rash:
Thank you, I appreciate that. I haven’t always been this confident, man, to be honest with you. And I feel like he was the first person that came along in my life that gave me permission. Like, hey listen, I’m not different. I’ve always felt different. I’ve always felt like an outcast. I’ve had a hard time making clicks with some of the people, friends with all these clicks and stuff like that. And I realized the whole time, there was nothing wrong with me, there’s nothing wrong with me, man. It’s just, I’ve finally gave myself permission to be who I was born to be and I just stepped right up, man, and owned it.
David Greene:
That’s a great testimony to why we need to be ourselves because you never know who’s out there and sees you and says, “It’s okay that I’m like this because that person’s that way too.”
Jason Rash:
Yeah, it’s nothing wrong with big dreams, man. I’ve been told I was crazy my whole life, man. Like, “Who do you think you are? Do you know where you come…” I come from Wetumpka, Alabama, you ever even heard of that? Probably never ever.
David Greene:
Well, didn’t Grant Cardone come from Louisiana?
Jason Rash:
Somewhere in Louisiana.
David Greene:
I think it’s a similar background that you two both probably came from.
Jason Rash:
Yeah, I did a lot of drugs in my 20s, I’m 44 now, man. I mean, I was like, oh my God, this guy’s speaking my language, man. It’s crazy, man. This is crazy.
David Greene:
All right. So what are some of your hobbies today?
Jason Rash:
Oh my God, what are my hobbies? I would say, I like to hike, obviously I’m here in Colorado. I like hanging out with my kids, I really like doing that a lot. Other than that, business, I workout. I do… What else, man? What else? I’m just trying to think. That’s about all I got time for, to be honest with you just building businesses. I’m working on two more right now behind the scenes and playing with my kids, hanging out with my kids. My kid’s 14, I’ve got another daughter who’s 18 and she’s about to go off to college. So I’m going to cry like a baby, I’m just saying I’m going to cry so hard when she goes off to college. So right now, I pretty much put all the stuff that I like to do on the back burner, I really, really focused a lot of time on her.
David Greene:
All right, so in your opinion, what sets apart successful investors from those who give up, fail or never get started?
Jason Rash:
Oh man, this is an easy question, man. Super easy question, number one, get rich in the niche. Find out what you want to do, own it. That’s about as simple as I can make it. Don’t get distracted with all this other stuff.
Jason Rash:
A lot of people, I’ll be honest with you when I came to the BP conference back in New Orleans, man, I probably talked come to a couple of hundred people, made friends with a lot of them, great people. Everybody, no matter where they’re at on their investing journey including myself, feels like they’re behind the 8-ball.
Jason Rash:
There’s always somebody else to compare themselves to. So they feel like, well, what I’m doing’s not getting me there fast enough, so now I need to transition over here into this. I’m over here doing single-family homes, I must go into storage units or I’m here doing RV storage, I need to get into something else more magical.
Jason Rash:
And a lot of people just don’t ever stop to realize like, “Hey listen, right where you’re at right now, maybe you need to learn something where you’re at right now. Maybe you need to grow. Maybe you need to transition to be who you want to be.” Right? Because a lot of people out here they’re like, “Oh man, I want to make a million dollars. I want to make a million dollars.” Really? Really? You want to make a million dollars? I’m like, okay, you want to deal with family coming after you for money, making you feel guilty, the IRS, all this stuff?
Jason Rash:
And so you got like all these people that are sitting here and they’re doing something, they do it X but they think that the grass is greener on the other side because somebody is a little bit further along, even if they hadn’t started. By the way, I talked to two dudes who even started yet and one them say, “Well I’ve got $140,000 saved up.” “I’ve got $150,000 saved up, well I need to go over here and start saving up even more.”
Jason Rash:
It felt like this comparison game, and guys, if you’re listening to my voice right now, get rich in a niche, do something, own it. Be the master of the universe, so that nobody can ever take advantage of you, that you can get the best deals and so that you could teach other people to do the exact same thing.
David Greene:
Yeah, to your point, I don’t think any anyone at the time McDonald’s started ever thought you could be worth billions of dollars selling hamburgers. That was as a concept, no one had ever considered before, they got rich in the niche of hamburgers and now we got the golden arches everywhere
Jason Rash:
Yes, exactly. Exactly. That would be my biggest thing. And the other thing, I think, David, would be action, man. Like action, granted now listen. Here’s the thing guys, like I said in the very, very beginning, I bought all three of these books. I bought all three of these books, I put a timetable and said, “Listen, I’m going to buy my first house in 90 days.” I’d never done my first deal, had no idea how to do it. I just knew that, okay, I googled these real estate books. I didn’t even know who BiggerPockets was, by the way, let me just throw that out there. Sorry David, I didn’t know the BRRRRRRRR method, however many Rs there are, but I’m just saying I put a timetable on, okay, I’m going to read these three books and these three books only.
Jason Rash:
That’s where I put the cap on, I said, “No more learning, time to do. No more learning, take action. No more learning, let’s roll,” that’s just how it was. And so I said, 90 days, read these three books. If you can’t do it on these three books in 90 days, you don’t need to get into this Jason Rash, this is what I told myself.
Jason Rash:
So that’s the thing there, action is the barrier from where you’re at to where you want to be always, always, if you’re scared, do it. Like as the old saying goes, man, “That what you fear is what you must do.”
David Greene:
Great stuff. Last question of the show. Jason, where can people find out more about you?
Jason Rash:
Yeah. People can follow me, just google Jason Rash obviously, but Facebook, it’s just Jason Rash, and Instagram, Jason Rash. It’s not like pinksunset77… I was born in 1977, by the way, giving away my age. But it’s not pinksunset77 or realestateinvestor77, it’s just Jason Rash. You can find me there and that’s where I’m at. I don’t have any websites or anything like that yet, but I will, I promise.
David Greene:
Well, thank you very much for your time, your insight and for sharing some of the knowledge that you developed over the years, this was awesome. I believe you ran into our producer, Eric, at BPCON, right?
Jason Rash:
Yeah. What’s funny is they did the whole march line thing. We all went to the bars and everything and I was just standing out there talking to some guys and I turned around and this guy named Eric sitting here talking to me and all of a sudden he hands me a card, “Hey man, do you want to be on the podcast?” And here I am, I’ve had a lot of people reach out to me, by the way, a lot of people that are bigger investors than I am, go, “How’d you do that?” I took action, I went to the conference. I went out and meet people. I’m not scared. So many people, just take action.
David Greene:
Eric’s out there like Willy Wonka, handing out golden tickets at BPCON. That’s why got to go to BPCON in 2022, you never know if you’re going to bump into Willie Wonka and get your golden ticket.
Jason Rash:
Absolutely. David, thanks for having me, man. I really appreciate this.
David Greene:
My pleasure. Thank you very much. This is David Greene, you can follow me online @DavidGreene24 and be sure to follow BiggerPockets online as well on all social media. This is David Greene for Jason, 10X your life Rash, signing off.
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