We’ve got something special in store as we introduce a new addition to the team, the dynamic Jason Lavender. Join us as we follow Jason’s impressive journey from a 25-year stint in the painting and remodeling industry to becoming a thriving real estate investor and house flipper. Jason discusses the pivotal moments that shaped his transition, the importance of knowing your numbers in the rehab business, and the key aspects of successful deal financing. He shares valuable insights into leveraging private capital, securing funding, and the fundamental principles that drive his successful business. Whether you’re a seasoned investor or just starting, this episode is packed with actionable advice. Get ready to elevate your real estate game with Jason Lavender on Flip Talk!

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You Can’t Rehab Your Way Out Of A Bad Buy With Jason Lavender

Welcome to another episode of the show. We’re going to do something really cool. We’re launching what I call season three of the show. It’s the next iteration of what we’re doing on the journey. We launched this show way back in, in 2016, and it’s been a lot of fun. I get to announce that we have a new and awesome individual who’s going to be coming on and doing episodes with us. He is going to be one of our guest co-hosts, featured host, or additional host to the scene. We’ll be taking over the Wednesday slot. We are going to be doing our shows on Tuesday, Wednesday, and Thursday.

 

 

Jason Lavender, congratulations on coming on board. I’m so happy and thankful to have you. How are you doing?

Good. I’m honored to be here. I’m excited. It’s a big announcement. I’m stoked to be talking to people and spreading the Flip Talk gospel. Say the word. Let’s go.

Meet Jason Lavender

Let’s get into who you are. I know you’ve been interviewed on the show before, but for those who haven’t checked out that episode or maybe it’s been a little while since they’ve read that episode, first of all, let’s talk about how you and I got acquainted. It was way back in probably around 2016 or 2017. That’s how we met. We met and I’ve gotten the opportunity to watch you grow as an investor and a rehabber through the years. How did you get started in the business? How did we cross paths? Where’s your business at? That’s where we’ll start.

I had a painting and remodeling company for 25 years. That was my bread and butter. I was an entrepreneur. The last real job I had was in high school and I hated it. I’ve always been carving my own path. I did that with my painting remodeling company. You’re right. In 2017, I jumped into real estate. Shortly after, I flew out to your office in Fresno. I was one of those bright-eyed, bushy-tailed people sitting out there taking notes like a crazy guy and I took everything to action.

I owe such a huge debt of gratitude to you. You’ve been so gracious in helping so many investors, myself included, that take what you teach. I don’t have to reinvent the wheel because I’m not the sharpest tool in the shed anyway. Do it. Do the thing. You and I have kept in touch. I’ve been a part of the ICE community for such a long time.

Fast forward to now, I am a house flipper by heart. I still love fixing houses. We do have a wholesaling company. We’ve got a long-term rental portfolio and short-term bnbs. There are bnbs in Wichita, Kansas. Trust me. I got a mentor group and launched a podcast as well. That’s a little bit about me. I’m all-in on real estate. I drank the Kool-Aid. I love every part of it. I can’t wait to talk more about real estate, share my story, and honestly be a part of the show.

It’s interesting. Wichita, Kansas, I lived there for a short amount of time, probably 8 or 9 months. It’s the only place that I’ve ever been. I’m sure there are other places in the country. People are probably laughing when I say this, but it’s the only place I’ve ever been where I’ve seen the snow go sideways.

It’s very windy.

Key Aspects To Rehab Success

It was interesting. I remember I had a Firebird Trans Am when I moved there. It was clear weather when I got there. Within a few days, it was ice and snow. I remember the back end of my car would spin. It was a lot of fun. You’re rehabbing wholesale. You’re a good person to talk about this. What do you feel is the fundamental core thing that a rehabber should do to be successful in operating a rehab company? What are some of the things that you do in your business that you feel are the key core aspects of your business that make you successful?

A couple of things. You have to know your numbers. You have to get your rehab number down because that’s going to indicate your buy price. You can’t overcome a bad buy price. You can’t out-remodel something if you overpaid for it. Getting your rehab budget tight is going to be the absolute number one. Another is how to underwrite a deal. It takes reps, but you got to know the deal. What’s a good deal? What’s the stinker or your rehab budget?

Lastly, you have to follow the plan. Your scope of work is your plan. Too many investors and too many house flippers are winging the whole thing. Something you taught me is you get a scope of work where all the plans are detailed. You’re getting bids from that scope of work, apples-to-apples, bids from contractors. You’re evaluating what crews you’re going to be hiring. Everything starts with that scope of work.

Follow the plan. You don’t want to be winging it. You’re not shifting gears mid-flip. You’re not coming up with a new design idea and knocking walls down halfway through or undoing things. If you can follow some of the basics, and that’s what we’ve done. We don’t win any awards for any of our flips. I’m not playing that game. Real estate is a game to me. Follow the script. Those are the main things that I consider. It’s how to understand your rehab budget, buy it right, and then follow your scope of work to the letter.

I love that. I love what you said there. You can’t out-rehab a bad buy. You’re not trying to win any awards. This is about winning profitability, not about an HGTV contest. That’s the two things it comes down to. Many people make so many changes in their rehab. They don’t know whether or not they’re coming or going, so sticking to that plan is important.

Financing Deals

That was something I learned early on because I would walk through and I would knee-jerk decide, “I’m going to do this,” or, “I’m going to do that instead of this.” It’s part of us watching those HGTV shows where halfway through, they’re like, “If we do this, we’re going to be $50,000 over, but we’ll be at the top of the market. We can outperform everybody else.” That’s not the reality in the real rehab business. How do you finance your deals? Are you a hard-money guy? Are you a private money guy? Let’s talk about that

I was a my money guy for my first couple of deals, and then I learned how to leverage and raise private capital. We are 100% private capital. Knowing who to talk to, the conversations to have, how you frame the conversations, and that we give a better than average return, we never stop having those conversations with people. Once you have enough of those conversations and you get a track record, those conversations come to you.

It will never cease to amaze me the people that lend on our deals and how we met them. I know you’ve got some crazy stories. I borrowed money from my dumpster guy. Who knew that was going to happen? Guys I went to high school with that I haven’t talked to for twenty years, they’ll crawl out of the woodwork. The saying that a good deal will get funded is true. The exclamation on that point is that a good deal will get funded. Finding and understanding the people that you can have conversations with, they’re going to fund those good deals.

 

We’re private capital all the way. We secure 100%  of the purchase price and the rehab on one note issued with a mortgage promissory note. We lay out our terms and turn and burn. 92 days is our average. We don’t mess around. We go from the closing of escrow on purchase dumpsters there the first day until we collect our check. It’s 92 days again on average. It’s sometimes less or sometimes more. That way, you can turn people’s money three times a year, which is great.

That’s an awesome average. For everybody reading, 92 days is  3 months and 2 days on average. From the time you buy the property to the time you sell the property and get a check, that means you have your rehabs dialed in. That’s not about being able to turn the money. It’s about dialing in the rehabs and not getting stuck in projects for too long. It’s cheaper because it’s cheaper in interest. That means you’re running a really good business.

There was something you said in there about using your own money, and then you’re using 100% hard money. How did that change your business? What was using your own money doing to you in your business? How was it holding you back? How did it change your business when you went to using 100% of somebody else’s money?

I could only afford to do two deals at a time. That’s exactly what I did for my first two deals. Guess what? I didn’t make the home run that I thought I was going to make on those two deals. I stalled out. You can’t put your foot on the gas very hard if you’re using your own cap, or I couldn’t anyway. I didn’t have $1 million sitting in the bank or anything.

Plus, the other thing that I learned, and it’s probably from you, is there’s a process. This is an ecosystem here. I’m the flipper. I find the inventory. I need partners. I have lenders coming in. I’m not doing all the work myself. I need contractors. This whole thing needs to work together. I can make other people money. I have good friends, people who borrow from us. Guess what? You’ll end up on my Christmas card list. I love that because I can go farther and faster with other people or I can go slower. I can’t turn my own money that fast is the point.

One of the things that I say is you have to treat your own money like kryptonite. If you put it in the deal and your deal is Superman, you’re going to kill your deal. There are so many ways you can do that. One of the most common ways I see that happen is somebody will square peg round hole a deal and they’ll make the numbers work because they don’t have a cost of money. They’re like, “I don’t have to make as much because I’m not paying anybody interest.” That means your money is not working as efficiently as it could.

Finding Private Money Lenders

The other thing that I see people do is they will miss out on opportunities. You can only do 1 or 2 deals. If you tie yourself with 1 or 2 deals and you have a screaming home run come across your desk, you can’t do it because you don’t have the money. You don’t have the relationships. There are a number of ways that using your own money can hurt you. I believe that you shouldn’t, under any circumstances, ever use your own money in a deal. That’s always been my philosophy from pretty much the beginning. If somebody was tuning in to this show and they’re brand new, what’s one of the first things you would do if you had to start over when it came to finding private money lenders and starting those conversations?

First of all, you’ve got people in your network. That goes without saying. You may not think that they’re a viable option. You may not have rich folks, relatives, and things like that, some people that you would maybe think are the normal top of mind, like, “I could go to that person. The first lender that I got was a guy who worked for me in my painting company. I had done two houses. I had done my own funding, a personal loan. I’m in Kansas. You can buy houses cheaply. I bought that first one for $25,000.

In that third deal, this is a guy who worked for me in my painting company. He had said he is a saver and a very frugal guy. He is like, “Is this something you’d ever want to partner on?” I was like, “I’m not going to be a partner in the traditional sense, but you could be my lender,” and he still lends to me. The first thing is to be aware and understand the concept. Be able to say, “What’s your elevator pitch on this thing?” Don’t complicate it. I usually say, “I’m looking for lenders and I can give you a better-than-average return.” You don’t want to complicate it. You don’t want to overthink it. You certainly don’t want to go out and act like you’re begging for money. I’m never begging for money. I’m always looking for partners.

When you’re first starting, it’s like, “I’m looking for partners.” I’m not desperate. You may be desperate, but you don’t want to say you’re desperate. You always say, “I come from a position of power. I come from a position of authority.” I say this. You’re a boss investor. You want to exude that confidence and never beg for money. I’m always looking for partners. There are plenty of people I talk to that I don’t want to work with and we’re not a good fit. However, there are plenty of people we talk to that we are a perfect fit.

The second conversation is, “What kind of rates can we negotiate? What are the terms?” There’s bad money out there, that’s for sure. There are people loaning ridiculous rates that are very predatory, in my opinion. That’s the second phase of it. It is negotiating your rates to where it’s not going to kill your deal. Don’t overcomplicate it. That’s the bottom line.

Words Of Advice

I love that advice. Keep it simple and don’t overcomplicate it. Don’t be afraid to fire a bad lender. Don’t be afraid to say no to something that doesn’t work. That’s the trap that a lot of us get into when we’re new. We feel like we have to accept what somebody’s willing to offer even if it doesn’t make sense business-wise. That’s not the case at all. T hat’s a good way to intro you. Is there anything that you want to say or any advice you want to give to anybody out there who’s reading and is going to be tuning in?

Whether you’re a new investor or a seasoned investor, you can never stop learning. That’s something I’ve learned from you. We’re always learning. There’s always something that we can sharpen our skillset with. My wife’s a therapist and she says this all the time. Get curious. we can start asking more questions because we don’t know it all. If you say you know it all, you’re full of it.

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What I’m excited about is that you have good conversations. Uncover those nuggets of information and take action on it. If all you’re doing is storing it in your head and you’re not implementing any of it, shame on you. I’m a big proponent of learning and uncovering whatever life’s going to teach us in instances like this, and then go do it. Fail forward. It’s never going to look good the first time. The first time somebody picks up an instrument to try to play it, they probably sounded horrible, but guess what? You got to sound horrible for a while. You have to get a little bit better and then move on. That’s how life is.

I love that advice. I always say we don’t know what perfect looks like until we take action on a lot of these things that we’re going to be doing. That’s awesome advice. For those of you who are looking to grow your business, we’re going to take the show to a whole new level. We’re going to be doing our show on Tuesday, Wednesday, and Thursday and we’ll have three different hosts, myself and two other hosts, involved in this. Jason is one of them. He’s got an incredible amount of knowledge to share.

I know we’ll be interviewing different people along the way. We may interview some of the same people, which is going to be cool because we’ll be asking different questions and having different conversations. You have been a phenomenal member of the ICE community. I’ve loved watching you grow. I really appreciate you taking on this opportunity to give back. You’ve always been a giver. It’s awesome to have you aboard.

I’m excited. Thanks for having me.

If you got value from this episode or anything else we do, make sure you go over to FlipTalk.com and check out what we have to offer in the Flip Talk universe. We have everything from free resources, documents, and past episodes. You can always check out what we have going on with our coaching, our Inner Circle community, and all of that wonderful stuff. Jason, I really appreciate having you on. Thank you very much.

 

Important Links

• Jason Lavender
• Rehabbing As An Exit Strategy With Jason Lavender