Mike Jones's real estate journey is nothing short of inspiring. Starting from a challenging past, Mike turned his life around after a stint in prison for selling drugs. Transitioning from construction to real estate, he found success in property flipping, wholesaling, and now manages a rental portfolio while spearheading new construction townhome developments.
Mike Jones's real estate journey is nothing short of inspiring. Starting from a challenging past, Mike turned his life around after a stint in prison for selling drugs. Transitioning from construction to real estate, he found success in property flipping, wholesaling, and now manages a rental portfolio while spearheading new construction townhome developments.
All right, everyone. Welcome to the real estate game changer show. I'm your host, Mike McKay based in the Jacksonville, Florida market. And each and every week we do this show with people who are changing the game of real estate all over the country. And this is a live show guys. So if you have any questions, please put them in the chat for our guests to answer anyone in the Jacksonville area, whether you have real estate experience or not, we are looking for acquisitions reps for our team. So if you have sales experience and you're interested in learning the real estate business, feel free to reach out to me or send me a DM on Instagram. And this week on the show, we have Mike Jones. Mike, welcome to the show.
Mike Jones:Thank you for having me. I appreciate it.
Mike Mckay:Absolutely, man. For people who aren't familiar with you, could you tell us a little bit about how you got into the real estate business and how that's kind of led you to where you are today?
Mike Jones:Sure. Yeah. I mean, today primarily focus on wholesaling. I've done a lot of fix and flips and then we also focus on new construction development, primarily like townhome development. The way that I got into real estate, just to give you some backstory and some context is I went to prison when I was 19 years old for selling drugs. And after going through that season you know, there's not a ton of job opportunities out there where you can make a substantial amount of money. So my whole thing was I got into starting to work on houses, you know, I was working kind of various odds and end jobs here and there, and ended up getting a job at a manufacturing facility. And it was making decent money there, worked my way up to, to a nice salary and, you know, ran operations there. But even that just realized there was a certain cap and there was only so much that I was going to be able to achieve there. So started working on houses on the side and. You know, started building this remodeling business, working with a lot of different investors, things like that, and quickly realized that honestly, I was on the wrong side of the table. We would be at a house for three or four weeks working on it, and the investor would show up for 15 minutes, come in and out. And this guy's making three times as much as me and I'm here all week killing myself. So that was like an immediate red flag of, I'm, I'm playing the wrong game. I'm doing the wrong thing here. So that's what led me into fixing flips. And then you know, last September, August, obviously super uncomfortable for a lot of us fixing flippers, having a couple million dollars out on the street was not a great feeling as things started to shift, so. That's when I kind of took a step back, realized, let me dive into wholesaling. It's a great business. It's a good model. Let's focus on that. That way, you know, it'll be give us a way to earn cash, but also be a deal finding machine that we can kind of pick and choose. What projects we want to take on. And as we add rentals to our portfolio, we can pick and choose those as well.
Mike Mckay:Yeah. And when you decided to make that transition, like you've ramped up, like fairly quickly, we were talking offline, you've, you've already got like, you know, you and two other salespeople on the team, like how, how did you accelerate that so quickly to, to get to that point?
Mike Jones:I would say, honestly, working with coaches, number one, and just having a really good support system. So I've got an executive coach, Rob that I work with. So being able to have those conversations with him my partners as well, just to be able to sit down, strategize, realize what's working and not working. And I think as investors, that's a primary responsibility of ours. The market is always going to ebb and flow no matter what. So the people that stay in this game are the ones that can move and adapt and survive with whatever the market's doing. So, you know, really just having high level conversations and creating a strategy and when you stop and take the time to create a strategy. The execution just falls in place.
Mike Mckay:Yeah. So when you decided to jump in I get into the wholesaling business from fixing and flipping, like what was your first like major strategy that you implemented
Mike Jones:So I did some wholesaling in the past. The biggest strategy, because all of our fix and flips came from wholesalers and realtors. So that was the first thing that I leaned on instead of, you know, going to ramp up this huge marketing budget, which I've done in the past. It's for me, it's just, that's uncomfortable to have 20, 30, 40 grand a month in marketing. You don't know where the next deal is coming from. So the first thing that I did was I leaned on my referral network. So talk to the different wholesalers, realtors, you know, offering referral fees or JVN with other wholesalers. That was the first thing that I leaned on.
Mike Mckay:and then, so they were giving you deals and then you were finding the, the, the buyer or how, how was that kind of structured?
Mike Jones:Yeah, so if they acquired the deal, I would go find the buyer. Realtors, you know, they would give me a call, see if I wanted to buy the property. Just from deals that we've done in the past, they, they knew to give me a call and just walking them through, Hey, you can either list the property for this, or you could partner with me. Here's how you can do it. Have the seller sign a non representation form. And almost teach them how to wholesale, go get the buyer and do the transaction from there.
Mike Mckay:Talk a little bit more about that. Cause I haven't really heard about really anyone, you know, Doing the strategy in that specific way. So you said, so they have a seller to maybe go in a little bit more depth, like step by step there.
Mike Jones:Yeah. So, and I love teaching this to realtors cause most of them don't know about it. So they'll have a seller approach them. They want to list their house. The realtor can either list the house on the MLS or come to me, get a cash offer for the property. And instead of getting paid a commission on the sale. They can have the seller sign a non representation form and either JV with me or wholesale me the property. So say the seller wants 150 grand and I'm willing to pay 160 for it. The realtor who found the deal can put the seller under contract for 150, assign the contract to me for 160, and then I can either assign that contract or, you know, close on it and purchase it myself.
Mike Mckay:Gotcha. And you said they, they have the seller sign a non representation form just so it's like clear that they're not representing them. So it's all
Mike Jones:Exactly. Yup. Exactly. Well, they can act as a wholesaler in the transaction instead of a realtor and they're able to make more money. So instead of earning that, you know, two and a half percent for listing the property, they in that case were able to earn a 10, 000 fee.
Mike Mckay:Yeah. Cool. And then like, how did, is that just like realtors you had because you were buying a lot of flips from them previously? So you kind of already had a lot of them or did you kind of expand that more once you started the wholesaling business?
Mike Jones:Honestly, it was from contacts that I already had. You know, we've been buying properties for a while in the area. We've, you know, built a good reputation and have a lot of different contacts. So just leaning into my, you know, circle of influence and the people that already have relationships with. I've, you know, executed on deals before. So they, you know, there's no, they know me like me and trust me. So just really leaning into that.
Mike Mckay:Okay. And then you did that, like what, what were some other things that you implemented in the wholesale business after you kind of leaned on your initial circle of influence?
Mike Jones:Yeah, we were able to get a couple of deals done like that. And then I started looking at the marketing channels. So from experience in the past, you know, there's marketing channels like PPC, which are pretty, you know, capital intensive. They have ramp up periods, things like that. So I was looking for, you know, what is the. What can give me the ideal outcome with the least amount of effort and least amount of risk. And for me, that was cold calling. So we went and hired two cold callers and we're able to start just driving leads that way. And at first it was just me on the phones handling the leads. And then from there we built out a good commission structure to bring in a sales team to be able to handle those leads as well.
Mike Mckay:Gotcha. And is that still kind of your main method of marketing is, is the, is cold calling or has everything changed since then?
Mike Jones:Yeah, no, it's, it's still our same main form of marketing. The texting, we did a little bit of that up front and it's just so inconsistent. It's hard to predict or create anything reliable based off that, at least in my experience, I'm sure. I know there's others out there that have seen success with it and, you know, do it very well, but just for me personally, I wasn't able to get a good result from it, so. Right now we do we do some texting. Most of our texting is in our built in our drip campaigns. So when the cold call lead comes in, you know, we'll try to get them on the phone. If we can't, we, we've been into a text strip campaign.
Mike Mckay:Gotcha. And are you guys running in person appointments or are you kind of making offers over the phone with that, that sales team that you have?
Mike Jones:I like doing it over the phone. For me, it's something that's, that's worked well for us. I, I like that model. I will go run appointments. There's, you know, some sellers where you're just having that conversation. You can kind of feel that, you know, they want the face to face connection. So I think that's where we're able to stand apart a little bit is we're local in the area. So it's like, you know, hey, I can be there in 30 minutes. You know, if you want to talk about it in person, no problem, I'm on my way. So, it helps us stand out a little bit, but primarily we try to do it over the phone.
Mike Mckay:Gotcha. And talk about like hiring and building that sales team, because I know that that's a challenge that a lot of people in face of finding the right people. And having them execute, I mean, including, you know, we've also had struggles with that over time. So, we would love to hear your insight and how you, how you built that out.
Mike Jones:Yeah, and I, to be honest, I'm still trying to figure it out and find out what the right balance is, but you know, there's a lot of people out there that like the base pay and the salary. That's something, especially as you're starting up. That I did not want to allocate resources towards. So I'm very much about let's create a great commission model that has really good upside to where if someone wants to come in and earn, we can create a clear path for them. Saying, Hey, this is what it's going to require. Here's what it's going to look like. Here's how much time you have to spend on the phone. And this is what you should result and create a compensation plan that allows them to come in and make a good amount of money versus, you know, putting them on a base. That's just my personal preference. I've had a salary in the past. I left a very comfortable salary to come do real estate full time. So I understand the you know, scariness of jumping off that cliff. But I think for the people that really have faith in themselves and what they're going to do, that they're going to really put in the effort. They're going to go for the eat what you kill model. And to me, it's like. It just creates so much alignment to where, you know, everybody's on the same page shooting for the same goal
Mike Mckay:And where did you, like, find most of the people that you ended up hiring to be these, you know, for the sales role?
Mike Jones:through our network. Honestly, that's, that's that's been the way that we've done it so far. We've done, you know, different postings on Facebook indeed. So there's been people that reach out to me, you know, that they might see me on social media. They see what we do day to day. They come in and see what the culture is. So they want to be a part of the team. They want to grow. You know, we've got different facets of this business with the development company and the lending company. So we're able to provide a lot of resources and a lot of outlets for someone that wants to get into real estate and they're able to learn about, you know, almost every angle of the business within our organization. So
Mike Mckay:Do you find that most of the people you hired, like had real estate experience or they kind of just had sales experience or maybe neither?
Mike Jones:honestly, the, one of the guys has neither, which I honestly prefer. To me, I just look for the tenacity in somebody their willingness to learn to not only be a leader themselves to, you know, lead themselves, but also to be a student and to be led. So I'm all about just the different qualities of a person and their, you know, what they believe versus their experience or whether they've been in real estate. I've noticed, you know, sometimes dealing with those guys, you're, you're bringing in old habits. So you got to work through different things like that. So I almost prefer that they don't have experience as long as they had that willingness and that, that tenacity to, to learn and do it. I like teaching somebody, you know, from the ground up, essentially.
Mike Mckay:Yeah. And what, what else are you like? What else is in your hiring process to make sure that you're hiring the, you know, the best people for this role?
Mike Jones:Yeah, great question. So, they'll talk to a few different people from the team. So, they'll talk to Maddie, our administrator. She'll do the initial interview. They'll have a secondary interview with me. And then they'll either sit with, you know, one of my partners. David Clemens or Caleb Delgado or possibly our executive coach, Rob Fall. So they'll go through a couple of different people. We'll ask a lot of different questions from different perspectives. Get a good feel of what their values are primarily.
Mike Mckay:Okay. What, what's an example of a question that you guys asked to figure out like what their values are
Mike Jones:A fun one that I like to ask is what is a good example of some recent adversity that you faced and how'd you, how'd you deal with it and overcome it?
Mike Mckay:and what's the, what's the answer that you're, the essence of the answer that you're looking for there?
Mike Jones:So there's not like a specific right answer. I just want to see that they had self awareness through the situation. I want to see that there was some sort of tenacity and willingness to problem solve. I think as real estate investors, one of our biggest things to all this is being a solution based person and solving problems. So I just want to see, are you willing to solve a problem? How'd you solve the problem? Did you care? Did you not care? Are you just kind of winging it? Are you running away from adversity? Are you leaning in towards it? So it shows a little bit of their character traits, you know, depending on how they answer it.
Mike Mckay:Gotcha. And then, then once you've chosen that person, you know, once you've made that higher, like, how are you, how are you getting them onboarded?
Mike Jones:Yeah. So we've got different SOPs that they'll go through. I'll do a lot of one on one trainings. We've got different sales trainings that we've, that we've purchased. And so we'll put them through those sales courses. But just a lot of one on one time. And just teach them, teaching them our script, letting them sit in and listen to me talk on the phone, role playing, things like that.
Mike Mckay:Yep. Gotcha. And then you know, we were talking a little bit offline too, that not only were you guys flipping properties before, but you also have a development business. How did you kind of get into the development side?
Mike Jones:The development side, as far as like the, the new construction.
Mike Mckay:The new construction. Yeah.
Mike Jones:Okay. Yeah. So, I mean, it's, as far as kind of going back to the fix and flips, it's for me, that's a very like market dependent game. So there were limitations on our supply. So working with the different wholesalers we were working with, we could only get so many deals. We had a certain buying criteria that we were willing to pay. So we'd have a lot of, you know, mom and pop fix and flippers come in. That might be doing the work themselves. They might be a licensed realtor. So they're including their commissions in the profit. So they're able to come in and pay more than we can. So we had a supply issue with the fix and flips. And for me, it was just, okay, let's focus on wholesaling as the primary business. Well, what is we talk about this thing in a mastermind that I'm in called the Whale Club. It's led by Steve Trang and Paul Sparks. Not sure if you guys are familiar with them, but they talk about this barbell theory. So the barbell theory is you have your reliable income and reliable bets on one side. And on the other side, you have your asymmetric bets. So what are you doing and how do you have your business designed that's giving you reliable income? Whereas a lot of developers, you know, it, it can be a very like feast or famine game with wholesalers. So it's like, what are you doing? That's giving you reliable income. And then what are you doing? That is going whale hunting. That you're gonna, you know, be able to hit those big checks and, and do those big deals as well. So it's really balancing the two and, and creating a, an even barbell in essence of where you're getting reliable income and you're also going after, after bigger checks.
Mike Mckay:And for you guys, the, the new construction is, is the bigger checks here in the wholesaling businesses, the reliable, reliable income
Mike Jones:Yep, exactly. And I'm still working on basically refining that wholesale business. I wish it was reliable right now, but We're still going through a growth phase where I'm I'm working on making it reliable But yeah, the new construction for us that's you know, we could do let's say two or three townhome projects a year And create a substantial amount of income from those deals.
Mike Mckay:And then like, how are you, I don't really know much about development at all. Like, how do you, are you like just kind of sourcing the land for those deals? And then you guys are going through the whole like process of getting, you know, entitling the land and all that, or like, where, where are you picking up? I guess, where are you starting on that deal from where someone else left off?
Mike Jones:Yeah. And it, it kind of goes back to the initial strategy of having the wholesale company be a forever deal finder for us. So we'll identify an area that I never want to be the pioneer. I don't want to be the first guy in, and I don't want to be the last guy in. So we'll find an area that there's some new construction in the area. In this market, for example, South Tampa, certain areas of St. Pete. Those are very desirable areas. There's other townhome projects going on there and really understanding the zoning codes with the city. So, the city is constantly updating their zoning maps to increase density. So, from a wholesale perspective, We look at that zoning map and we'll target areas that might have previously been just single family residential and are now zoned multifamily, whereas a lot of people, including the homeowner, won't know that yet. And same thing with other wholesalers, we're able to go in and basically make a completely different offer versus your typical wholesaler that's just looking at ARV you know, minus repairs to get their offer. We're looking at it completely different where the house doesn't even matter. So it's just a shift using the same tools that we already have, but just a shift of the game, if you will.
Mike Mckay:And then is it in the Tampa area, is it mostly like you're buying a property that, that has a house there and then kind of knocking it down and doing this development or is there even, is there even raw land left? I, I don't know. At all. Jacksonville is plenty of raw land,
Mike Jones:Yeah, no, it's the raw land is, is a little bit more few and far between. Typically there, there is a structure on it. Not to say that there isn't raw land out there. Typically it's not in the most desirable area. So yeah, it's just really just identifying those areas, whether it's raw land or whether there's a house there, just identifying is the, that property and parcel itself zoned for what we want it to be zoned for. Cause it saves a ton of time and a ton of uncertainty, you know, buying a property, hoping to get it approved for something that it's not, that's not a game that I really want to play.
Mike Mckay:gotcha. And then are you handling like the construction on that kind of like you were for the flip and fix and flip business or you just kind of outsource it to a builder at that point or what's, what's your strategy?
Mike Jones:No, yeah, we, we do it all in house. My background is in construction. So, you know, it's, we, we deal with all that in house. We've got, you know, a super that we'll put on the project and we work with a lot of different subs. And that's, I think the biggest difference has been. Your subs and crews for remodeling and fixing flips are not your subs and crews for new construction. They're very, very different. So that's kind of been the biggest learning curve for me is realizing that you're using a different set of subs to work with on these projects. So, and then just really understanding the construction process from front to back. We've got a lot of good tools that we use and a lot of good things that we put in place. To be able to, to run these projects,
Mike Mckay:What, what are some of those tools that you guys use to run these projects?
Mike Jones:Microsoft projects, for example, is one of them. So we're able to go in there and build a chart of every single thing that needs to happen on this project from A to Z. And then you're able to make them reliable or to rely on a previous part. So let's say for example that a lot of people can relate to, you know, I need to get my painter in there to prime the walls before my flooring goes in. So you're able to create a schedule for these subs and something that you can manage internally saying, Hey, this has to get done before you're able to move on to this. So really taking the time upfront, just like we mentioned before, taking the time up front, budget properly, strategize properly, and take the time in the planning. And it just, it, it creates a whole different outcome.
Mike Mckay:Yeah. And when you guys were like full on fix and flip, like how many projects were you guys running in like a given, given year?
Mike Jones:Well per month, typically we would have anywhere from six to 10 projects going on at once.
Mike Mckay:Okay.
Mike Jones:So we, we had a decent, decent cruise going on. We had a decent like sub team built
Mike Mckay:Yeah. So how were you I'm just curious, like how were you, cause we don't run anywhere near that many fix and flips and ones for like two, maybe three, like what did you do to get that to that level? Like those systems in place, like, I guess, how did you structure it?
Mike Jones:the same way I'm doing the new construction with just having those tools which I'm happy to send to you or anybody else that, that wants them after this. It's really just project management spreadsheets that I've built out, and then we'll use the Microsoft projects as like an interactive program to help us manage it. So it's the same thing, really just creating good systems and having the subs plug into those systems. So, for example, we'll create a schedule that we'll put on site that's called a look ahead. The look ahead will have. Every single thing that needs to happen at the house who it's assigned to. So sub one, we'll be doing floors, tile and cabinets. Sub two, we'll be doing, you know, painting drywall X, Y, Z. And then it's literally just a chart with the four weeks that we're going to do this project. And it's got a box for each day and you just put on there an X for when it's supposed to be completed. So that way, anybody who walks in that project can see, here's where we're at in the project. Here's what's going on. Here's who is doing what and when they're supposed to be finished by. That way, the next thing can happen. So, that's, that's one good example. Another one is spec guides. Creating a spec guide, we're laminating it, we're putting it on site. We email it to each sub that way they know you know, exactly what needs to happen. I've, I've gone through it plenty of times where you go put tile on site, this tile goes in this bathroom and you write on it, here's the wall tile. Then you put the floor tile in there and it's, it's a different type of tile you write on their floor. You come back and they're switched. And it's like, come on, man, it's here. I labeled it like I could have teed it up for you any better. But somehow it always, always managed to get messed up. So here's a laminated picture of exactly what I want. Here's the tile spacing that I want. Here's the grout color that I want. Here's exactly what it should look like when you're done. So just using tools like that. So really just set proper expectations,
Mike Mckay:Got it. So it's even got photos of like what it should look like and, and model. Isn't even like model numbers for materials and like having, how in depth does this go? Okay.
Mike Jones:Yeah. Shirley Williams paint codes, everything's on there. And we, we typically order all the materials. So we'll have the material sitting there on a will call for them to pick up, but just in case they ran out or maybe we didn't include it in the order and screwed up on our end, everything's there that they can, you know, go to the closest home Depot, get exactly what they need and they know exactly what to use.
Mike Mckay:Gotcha. Cool, man. And then, like, you're just having, like, is there like a project manager assigned to each project just to kind of oversee everything, making sure it's moving along or
Mike Jones:Yeah, we eventually got to that point at first I was doing all that. And certainly things were definitely falling through the crack. It's, it's a lot to manage or especially using different crews. Everybody's is a little bit different. But yeah, it's, we, we got to a point where we had a project manager come in and. They would help us with, you know, Hey, here's your three projects. Here's your three projects, you know, do a site walk once every three days and just make sure you communicate with subs, things like that.
Mike Mckay:gotcha? Was there a reason you guys had to go kind of that route versus like, kind of using a, like, multiple different GCs and just giving a house to a GC?
Mike Jones:No, honestly, it's I looked at that before I could just, with our pricing, it was difficult to find a GC that was willing to work with us and be able to handle the volume. So a lot of them, just the pricing that we were seeing using our subs. It was making the deals work for us versus using a GC that it's, you know, just didn't really pencil and it makes sense.
Mike Mckay:Yeah, what did you find like that percentage wise difference was, if you remember?
Mike Jones:That's a good question. I, I want to say 15%, 10 to 15% just off, off the top of my head. But, and for us, it's that, that made a difference, you know, if we've got the system where, where we can manage it. And honestly, a lot of those guys, depending on who you're using, if you've got a good GC, great. But there's also ones out there that are not so good. So it's a lot of the same management anyway, to where if you get a remodeling crew, you know, it's, it's kind of the same thing. They've got four or five guys and just figuring out setting expectations properly is really the biggest thing.
Mike Mckay:Right, right. And you would just sub out different parts to different people then or different crews or? Yeah, okay,
Mike Jones:Yeah. So we would have like a preferred painter that was our, our paint guy. He did the drywall too. We had our preferred remodeling crew that was really good at doing tile and floors. We had our preferred cabinet and countertop guys. So really just working kind of with all the key people to be able to go in and tackle these projects versus like giving one remodeling crew, the entire project, they get overwhelmed. They're trying to do a bunch of different stuff. I'm really setting them up for failure because they're not able to maybe handle that entire project on our timeline. So really figuring out who is good at what. So it's like, hey, crew number one, you're really good at floors. But you, you're, you're terrible at cabinets and paint. You're slowing me up. So it's like, let's just only have you do floors. Here's five projects for you to go do cabinet guy. Here's five projects for you to do. Both of you can stay plenty busy. Instead of, you know, each, each of them trying to take on both things and not being great at it.
Mike Mckay:right, right. Then they're only good at one and not good at the other. And yeah, you don't get what you want. Gotcha. So another thing that we were talking about briefly online is you know, we, we flip a lot of mobile homes and it sounds like you're a big fan of mobile homes as well. Do you want, you want to talk about some mobile home projects you've done? That
Mike Jones:some of our biggest wholesale fees. Some of our biggest flip returns. It's, it's honestly, it's one of our highest returning rentals. So for me, I'm, I'm a big fan of them. The insurance, not so much. That's been a little bit
Mike Mckay:was my next question for you. It actually was.
Mike Jones:I don't have a good answer, so I don't know what to tell you. You know, we primarily focus on the mobile homes that are newer than 1977. So we can, we can finance them. Really, I think the biggest thing as far as flipping mobile homes was learning the finance products on the backend. That way you can cater to the buyer. So understanding that, Hey, if you're buying a mobile home that is older than 1976, typically they can't get insurance, so you can't finance them. So now you're only going to be able to market that to a cash only buyer versus if it's older than 1976, you can get insurance. Here's the financing products. Somebody can typically put anywhere from, you know, 20 to 40 percent down on them. And just understanding that, that way you can cater to the end buyer and, and get them a good product.
Mike Mckay:Yeah, so you guys will do the ones all the way back to as far as as old as 1976.
Mike Jones:Yeah. Yeah. I've actually got one right now. I think it's like a 79 that we we took on as a fix and flip and it's listed on the market. We're under contract and we're, we're scheduled to close next week.
Mike Mckay:nice. What's what's your kind of criteria outside of obviously being newer than 1976? Like, what are you ideally looking for in your area for, for a mobile home?
Mike Jones:The biggest thing is it's got to have the land. Can't be any HOA or lot fees, anything like that. I don't like dealing with septic tanks or wells. The, I learned that lesson very quickly up front where I was not familiar with septic tanks, I didn't understand the cost of them come to find out. Of course the drain on it was bad. So 5, 000 unexpected dollars later. Learn that lesson, check that one off. So now I, I, I don't want to deal with septic tanks, no wells, both of them are expensive and, and unknowns when you're buying these things sight unseen. So I'm really looking for that. I like the bigger ones. So I like the double wides, single wides, we, we still do as well. They're a little bit harder to finance. The financial products forum are a little bit more rare. So I tend to lean towards the double wides and honestly it's about return. So I'm looking for at least like a 25 percent return on my cash when, when we go to do it. Yeah,
Mike Mckay:Have you found like anyone who will finance single wives? I, I haven't had any luck with that.
Mike Jones:we've got the one that we're doing right now, actually, it's in Newport, Ritchie, that's a single wide and they were, they were able to get conventional financing for that.
Mike Mckay:Really? Okay. It's funny. You say no septics or wells, good luck finding a mobile home in Northeast Florida that doesn't have both of those things. That's all it is. That's the only option.
Mike Jones:Yeah. Luckily there's some down here, especially like the Newport Ritchie area that are, that are connected to city. So. That luckily is, is not such a problem for us. But you know, unfortunately it's like sometimes you're right. You, you do have to deal with them. We've got like up towards like North Pasco County, Zephyr Hills out in that area, a lot of those are septic and well, so it's like, as long as I can get time to get an inspection on them, I'm fine. But if it's like, I got to send a deposit in the next hour and I'm doing a sight unseen. No, thanks. So
Mike Mckay:Gotcha. What about insuring the mobile homes when you're fixing and flipping them? Have you guys, we've run into some struggles there. We've ultimately kind of, kind of figured it out over time, but have you guys been able to figure out any solution to that?
Mike Jones:not any good ones. Um, you know, before it was, we were just getting builders risk policies on them. It was pretty easy. I want to say that was probably two years ago now. And then after the hurricane, all of that stopped, we have tried to do a couple different things, working with like a blanket policy to where we'll have X amount of properties on there. We'll say, you know, Hey. 30 percent or less at any given time will be mobile homes and we'll just roll them on and roll them off. That's something that we tried to do that we weren't able to execute. At the end of the day, it just didn't make sense for the money that we had to put down and what had to stay in it. So I have not really been able to find a good solution as of late for it. You know, we've, I know there's different like rent or I want to say occupied policies that we can get. Sometimes we've been able to get like a, a vacant policy. That's kind of what we've leaned towards as opposed to the builder's risk. So we've kind of, it's, it's been hit or miss. I haven't really found a good solution for it yet though.
Mike Mckay:Yeah, I think it's one of the hardest things with, with mobile homes, at least that we've, we think we have someone good who's doing it and they're doing it. And then they call them the next time and like, Oh, we can't, we can't do that on this one. I'm like, well, why not? They're like some, some, weird.
Mike Jones:man. You're a day late. Yeah.
Mike Mckay:So it's like a cat. But I mean, I guess that, you know, lowers the level of competition, right. And which is maybe why there's a little more margin in it,
Mike Jones:So we, we, that, the biggest thing for us on that is we had to stop doing it at scale. So we had to draw back and it's like, Hey, we're either going to take a risk and just do this with all cash and understand that there's no insurance. Or, you know, we need to be able to get a vacant policy and we're just, you know, going to only be able to do X amount that we can ensure. So it was more like a question of like, what's our risk tolerance and then how much do we want to scale and operate this right now?
Mike Mckay:Yeah. Yeah. No, for sure. I had another question for you on mobile homes. What, what's your opinion on there's, there's some people who say that mobile homes are more difficult to renovate than single families. Do you, do you agree or disagree with that?
Mike Jones:Yeah, that's I get that all the time when I talk to different remodeling crews or different contractors, like, oh yeah, no, we don't, I don't know how to do mobile homes. What don't you know how to do? You know, it's, it's a house and typically you've got space under the house where your plumbing and electrical is going to be. So it's a lot easier than a concrete slab. I think where I know at least where I ran into issues up front was it's not the same materials. As it is for home. So your door sizes are different. Your windows are different. Depending on whether it has the paneling in there, that's going to be very different as opposed to if you have to go replace that and if you can even find the thing that matches it. We found a lot of difficulty in that. So we had the, actually the one that we're doing now, half the ceiling was messed up and it had the the ceiling panels that run long ways and they don't make them anymore. So there were, we had to take some sections of the ceiling, move it into another room to fix that repair. And then we had to drywall some of the ceilings in the bedrooms. Just because we weren't able to find the material and couldn't make it look good. So, I think really just understanding that, understanding the door sizes. Different pricing. So the bathrooms, you know, a lot of time mobile home tub is not a regular house tub and there is an upcharge for it, believe it or not, even, even though it's smaller, so being able to price it out correctly, those were all expensive lessons learned upfront, but
Mike Mckay:Yeah.
Mike Jones:the box. So
Mike Mckay:Yeah. Anything else that like you found that's kind of unique about doing mobile homes versus versus single family?
Mike Jones:I would say a piece that sticks out is the, um, the HUD plates. So making sure that if you don't have the HUD plates that. We typically try to order them ahead of time for the buyer. That way, you know, there's not a delay in closing where they have to go. I forget what the website is, but they've got to go order them and get it certified. And, you know, they got to pay an expedite. It takes a week to get them. So making sure that you got the serial numbers another big thing is making sure that's retired to the land. So that's something that we learned pretty early as well. And especially from the lending company standpoint. As they're underwriting the deals is making sure that the property is retired to the land because you could purchase this thing tomorrow. Somebody could come drive it off of there literally if it's not retired to land and there's nothing you can do about it.
Mike Mckay:For the people who don't know what they're tired to the land means, you want to explain that a little bit?
Mike Jones:Yeah, great point. So it's, it's making sure that the mobile or manufactured home itself is connected as an asset on title to the property, to the, the piece of land,
Mike Mckay:Yeah. Most people don't realize that. Like, if you have a mobile home, there's like the, you know, the deed to the land and then there's the title of the mobile home and they don't have to be connected. You can sell one or the other. Uh, I have an interesting deal right now where that land is owned by someone in the mobile home, it's owned by someone else and I'm actually buying, but I am buying it together from both of them. And they kind of came to an agreement of who gets what and all that, but it's a. Funky deal, right?
Mike Jones:That's good. Good. Negotiating.
Mike Mckay:Right. Well, it actually works out better for both of them. Cause I'm like, one of them was like, would you buy just a mobile home? And I said, well, not for that much. Cause I'd have to move it. And then you can't finance it when you move it and yada, yada, yada. Unless you've found a way around that. Have you found a way around the moving it financing thing here?
Mike Jones:No, absolutely not. We, we've had people come to us in the lending company asking, you know, can you finance a mobile home that's not on site or container homes, things like that. And it's like, no, what, where, what is being backed? What asset am I backing? With the loan, because if it's not on site, who says it's going to be on site? You could get the loan, decide not to do it tomorrow. And now I I'm stuck with a piece of raw land
Mike Mckay:Yeah,
Mike Jones:perspective.
Mike Mckay:yeah. Oh, I meant the ones where like, you know, if someone's moved the home once like it's it's been moved to the new plan like we just, when we, we don't really buy those because we can't find any long term lenders who will finance it for the buyers, but I didn't know if you've.
Mike Jones:yeah, no, we have not been able to find a solution for that either.
Mike Mckay:Yeah. Yeah. That's a, that's a difficult one. That's a trap.
Mike Jones:Yeah, it really is.
Mike Mckay:cool. Awesome, man. Yeah. I love talking about mobile homes. What is the, what are the price points that mobile homes are going for in, in kind of your, your areas?
Mike Jones:It's all over the place. It really depends where you're at. I mean, it can go, we put one under contract the other day for 40 grand with the land or it can go anywhere up to two 50, 300, depending on the size of the land and where it's at.
Mike Mckay:Gotcha. Yeah. Kind of similar here as well.
Mike Jones:Yeah,
Mike Mckay:People always think it's crazy when I'm like, they're like, you sell a mobile home for 260 grand. I'm like, yeah.
Mike Jones:yes. Thank you.
Mike Mckay:I do. You want to talk a little bit about the lending business and kind of how you got involved in that?
Mike Jones:Yeah. So the lending company DKC lending is actually owned and ran by David Caleb and or David Clemens and Caleb Delgado, my partners. So that's their baby. That's their side of the business. They've really seen some really good growth over the last couple of years. They do a phenomenal job at it. So it's all private loans asset based loans in the state of Florida. We work with different brokers that are nationwide as well. So if someone's looking to do, get a private money loan that's out of state, we can, you know, happily work with them as well. But that's it's, it's really been an interesting piece because I've, I've used hard money loans before in the past. But just learning what I've learned in the past two years from the two of them has been phenomenal. It's just such an intricate business and it's just such an integral part of everything that we do as investors. So it's, it's really been interesting all the learning everything about it and all the different facets of the business,
Mike Mckay:Yeah. And what would you, what would you say are some of your biggest takeaways that you've had from that side of the business in the last two years?
Mike Jones:just understanding capital and understanding how it works. So I think the biggest thing that I've taken away is You can structure a deal a million different ways, but as an investor and coming from a borrower's perspective, understanding things from a lender's perspective. So now it helps me go do deals in a better way because I can structure the deals that are that and make it attractive to an investor. Versus before it was just like, okay, what's out there. What lending products can I get, you know, really having a better understanding of how funding and how private capital works and making it attractive for both sides has been extremely helpful.
Mike Mckay:What is, what are some tips you can share with the audience? Like how to make a deal attractive to private capital?
Mike Jones:Yeah. So, I mean, you've got to love a lot of the new people when they're calling asking for, you know, I want a hundred percent financing. Okay, great. You got any experience? Nope. This is my first one. What are the numbers on the deal? Yeah, I'm really not sure this guy just sent it to me. So it's like, no numbers. Number one, go get someone who is experienced to work with. And really when I say make it attractive to the investor is if you as the operator and the borrower. Walked away from this project tomorrow and didn't make another interest payment where, and what position would that leave the investor in to where they're still secured with the capital that they've put up. So it's like on a lot of our asset based loans, we require a 30 percent down payment. So worst case, if the borrower disappears tomorrow, the investor is protected with that asset because they've got it 70 cents on the dollar. So they can come in after, you know, all the foreclosure fees and the attorney fees that they have to pay for. They can come in and still have that piece of collateral and be able to have their capital that's secured You know people work really hard for the money regardless of how much they have of it So you it's it's all about protecting the money. Honestly at the end of the day.
Mike Mckay:great piece of advice. You mentioned also a little bit offline, like you've got about like 26 rental properties that you guys have in your portfolio. Is that something you're still actively trying to grow in this interest rate environment or what's your current strategy?
Mike Jones:Yeah, so that's that's a good question It's definitely been a fun ride We've we've bought four rental properties this year two or three within the last couple months so being able to a set a goal of, you know, do I want to accumulate assets? What type of assets do I want? Do I want to manage them internally? Do I want to have somebody else manage them? So really we sat down and created a strategy behind that. Figured out what our specific buy box was and what type of returns we wanted to see. And then we went and found assets to plug in to that model. So for us, we primarily use the birth strategy. So we bought a distressed asset. We rehabbed it, we rented it out, and then we refinanced it. So for us, when I'm underwriting those deals, I want to make sure that, you know, if what I'm purchasing it and what I have to put into it to fix it up and figuring out what the loan product is on the backside. To see what my cashflow is going to look like. So how much money do I have to leave in the deal? And then what return am I going to earn on that cash that I left in the deal? So that's where it came into play again of, you know, understanding the finance products, what are the different loans that I can get? You know, it's we've, two of them are in the 8 percent interest rates and they're still cash flowing and it still works with the cash that we had to leave in the deal. So. It's not really, I don't look at it as a matter of like, Hey, I'm just, I'm out of the game. I'm not buying. It's just what do I need to buy it at to make the cashflow work?
Mike Mckay:Gotcha. Yeah. And you're, are you looking mostly at like the single families and mobile homes for that portfolio or what's the makeup?
Mike Jones:No, the mobile homes take up a pretty small percentage of it. Primarily block single family homes. Like the three twos or two twos got a couple of two ones in there. But really just block single family home. No septic, no well, so make, make sure we don't have either of those. So yeah, that's, that's primarily it and just hitting our, our minimum cash on cash return
Mike Mckay:Yeah. And for the people outside of Florida who are listening, what, why are you looking for block homes?
Mike Jones:because I've learned some very, very expensive mistakes. Wood frame homes is. The rehabs on those things are just always a nightmare. The budget always somehow magically ends up being probably almost double. It's just, there's so many, when you're going in these deals, there's already enough unknowns to add that level of uncertainty to the deal. Not knowing where your rehab budget's going to end up, the termite damage that you're going to face when you open up a wall things like that. It's just for us, it's just not worth it. And especially with the hurricanes insurance. So making sure that, you know, these properties, they've got the proper windows in them, or we have like a hurricane plan in place where we've got, you know, a bunch of plywood stored away in a shed and people ready to go. Once we get a storm alert to go board up windows and, and make sure that the assets are, are protected and that our tenants are protected too.
Mike Mckay:For sure. Is it, is a lot of the housing stock in Tampa, those wood frame homes, like pretty old in your area
Mike Jones:Yeah. If it's a wood frame home, it's probably pre 1950s. So especially like Hillsborough area, there's a lot of 1920, 1930 homes, a lot of bungalow style homes. So that's, that's why it's like, we, we primarily focused a lot in like Pasco County and the affordable housing sector. So a lot of those are your 1970 to 1980 build block homes with slabs.
Mike Mckay:And you said kind of making the decision of like, whether you're going to manage it or outsource the management, what did you guys decide? And why?
Mike Jones:We do it internally. Personally, because we're good operators, we've got a team in place. We've got a system in place. We've accounted for that in our cash flow. So we want to make sure that, you know, it's being done the way that we want it to be done and that we, we have control of it. So that was our decision. I think that's something that a lot of people overlook to where they'll see a rental property. Oh, this is going to be great passive income and I'm going to manage it myself. Well, taking calls about the three T's, right? Toilets, termites, and tenants. It's, it's work. It's a job. It requires, you know, being involved. It requires, you know, being available, dealing with problems, things like that. So it is, it is not passive by any means. So it's either make sure you account for putting a team and process and system in place, you know, we've got software that we, we pay for. To use we use Buildium. So that's a good property management software that we use. And just having those different tools in place.
Mike Mckay:Yeah. Yeah, for sure. It's definitely not passes if you're you're self managing your properties. Which is why I don't want to self manage. anyway. Well, we're we're getting close to the end here, Mike, but there's always two questions I like to ask at the end. And the first is just kind of a fun one, which is, what is the craziest or most uncomfortable situation that you have ever experienced? Yeah.
Mike Jones:I've, I've got a good one for you. It's we had a wholesale deal couple months ago that this house was in complete shambles. It was a mess and it was tenant occupied. So. We brought the buyer, closing happened, the tenant moved out of state and I would say probably like four or five days later, tenant calls me and says, Hey, I forgot something in the house. Did you guys find a box? And I'm like, there was a million things left in the house, found a hundred different boxes. What are you talking about? He's like, well, actually I forgot a really important box. It was my mom's ashes. Her urn still at the house. My buyer has already came in started doing demo. So I had to call his crew that was on the ground get the description of the box see if they found this thing and By the grace of god, they did found it and the tenant wanted us to ship The ashes back to him so we could have him. So we, we overnighted this poor guy's mother's ashes that he forgot at this property to him, but that's, that was, that was definitely a first. So I've never had a overnight ashes before, but
Mike Mckay:Well, good. Good thing. Good thing. The trash that wasn't complete. Otherwise that would have been a worse, worse outcome. Geez.
Mike Jones:so
Mike Mckay:Yeah. Cool. What second question that I always like to ask is if you go back in time and give yourself one piece of advice when you were looking for your first real estate deal, knowing what you know now, what would you tell yourself?
Mike Jones:that's a great question. I really, cause I think about this a lot and reflect on, you know, what could I have done differently if I had someone in my corner learning all the things that I've learned now. Paying for all the different stupid mistakes all the expensive mistakes. And I think it really comes down to like a three prong approach. Number one is just be relentless. Everything really looks good on Instagram when we're closing deals, cash and checks, all the good stuff. It's, and I'm guilty of this as well. I do not do a good enough job of. Displaying and showing how hard this can be on the days that you're just getting punched in the face back to back to back. I mean, we had two deals last week that fell apart at the closing table and lost over 40 grand in revenue. It was a bad day. So just being relentless, understand that you've got that faith in yourself to keep pressing and keep going on and understand that if this is what you want, You will accomplish it. You just have to get through, through the tough times, which there will undoubtedly be no matter what. Second thing is just being undeniable. And what I mean by that is at the beginning, I think I lean more towards chasing a check, trying to get money, just trying to get paid versus creating and mastering a craft. That you are just, you provide so much value that you are just undeniable when it comes to somebody writing the check or paying the fee, whatever it is. There's no question. And they're happily doing it because you just over provide value in what you do. So that, that would be my second piece is just become undeniable. And third off is get a coach. So I think something that would have saved me years. Of going to listen to 10 different people on YouTube and listen to all these different podcasts and doing all this different stuff is just to go find somebody that's doing what you want to do and what you want to accomplish and either pay them number one. Number two, if you can't pay them, find a problem that you can solve for them so you can learn from them. That's those, that's kind of my, my three top things reflecting just back on what the different things that I've gone through and what I wish I would have done different and, and known then.
Mike Mckay:Yeah. Yeah. I think that's great. I've never heard someone say undeniable. I think that's interesting. Just become so good at that one thing that you provide so much value that it just comes to you almost because people
Mike Jones:Yeah.
Mike Mckay:Yeah.
Mike Jones:mean, it's, I'm sure you get it all the time. The wholesaler sends you a deal that they don't know anything about the deal. They don't know why it makes sense from a number standpoint. They don't know how to run numbers. They, they're selling it as a fix and flip and have never done a fix and flip in their life. There's no value in that to me. You're, you're just passing along information. And slapping a fee on it because you think you deserve it to me. It's like, even in our sales, from our sales team standpoint, you're there to provide a solution, listen, find out what the problem is and be the absolute professional in the conversation to find them a solution. So it doesn't matter when it comes down to price and, and the offer that you're making or what we're going to sell the property for, none of that matters. Are you there and do you actually care and are you actually providing a solution that you've taken the time to understand and you're taking the time to train yourself, invest in yourself and really just master your craft?
Mike Mckay:Yeah. Yeah. Great piece of advice. Mike, if people want to reach out to you after the show, if they have questions maybe they want to send you guys some deals around that kind of Tampa area. How can they go about getting in touch with you?
Mike Jones:Instagram is probably the best way. So R E Mike J on Instagram. I'm on Facebook. You can email me at Mike at elite cash buyers, fl. com or go to our website, elite cash buyers, fl. com. I would say those, those are the best way.
Mike Mckay:Cool. Awesome, man. Well, thanks for being on the show. This is great.
Mike Jones:Awesome, man. Thank you. It was great speaking with you.