On the show today we talk… Deep Dive Conversation with J Scott!
- J’s own podcast on BiggerPockets
- J’s books on Amazon.com
- Direct from BiggerPockets.com/Store
Show notes for Deep Dive Conversation with J Scott!
The Vantastic Life is…
– is in Crystal Mountain WA.
I started taking long long walks and took a slow down moment and started listening to more and more podcasts. And I found myself absolutely drawn to J Scott, and explaining macro economics and real estate in general here.
That’s when I decided that I wanted to get to know J more.
I’m a super nerd
I’m a pretty big nerd too.
Thank you for helping me get more interested in macroeconomics.
J wrote the book on flipping houses, recession proof investing, and much more! You guys can all connect with J at https://connectwithjscott.com.
Where and how did you grow and get into real estate?
I’m an accidentally real estate investor. My wife and I were both working in the tech world. Back in 2008 we decided to get married and we were both working rediculous number of hours. We knew that we wouldn’t be able to have kids and grow a family or get out of tech and grow a family.
So April 2008 we quit our jobs and moved back to the East Coast. My wife was watching HGTV and said… let’s flip a house. I’m the least handy person in the world, but I wanted her to marry me. So, I jumped on the internet and bought a book or two. It was just something that we were only going to do for a short time. And here we are 12 years later, and the next thing became real estate. We were 50 flips in after a few years.
When you quit you jobs what did you think you were going to do?
We wanted a lifestyle business so we’d have more time. We talked about starting a bakery or pet food store… who knows! We had no idea. The small business route. We both had a lot of business experience. We aren’t real estate people, we are business people.
That’s a great story! I hear that a lot, that people have fallen into it. Or that they knew they were going to start at like 18.
I got into it because I was an accountant and got a job in a real estate company. That’s how I got started.
What’s your relationship with BiggerPockets.com?
It’s funny, I found BG when my wife wanted to flip a house. It was the best community that I could find. Maybe 10-20k people. I knew nothing and started to learn.
Over the next year or two I got introduced to Josh Gorkin, and with my tech background I knew how to help him grow and gave him feedback on tech and growing the business. Then we became really good friends, I wasn’t being paid. Then I’d done a bunch of flips and was contributing to the site. I’d written some books and went to Josh about helping me with the books. Now BG is the biggest real estate publishing company on the planet.
Why did you write the books?
I had a website called 123flips.com and it’s still up. It started getting a big following and people started getting in touch with me and wanted to get in touch, but I’m a huge introvert. BUT I also want to help people. So, my wife suggested that I write it all down and refer people to them. I did it as a way to avoid having to talk to people on the phone and go to meetings.
That’s why we started The Nuts and Bolts of Real Estate podcast, I wanted to answer all of the questions that people were asking me by doing it once and referring people to the podcasts.
Exactly, I never had any thoughts about getting rich or famous with the books.
How long did you flip before deciding to keep properties?
I’ve only been forced to keep one flip and that was the very first flip during the 2008 depression.
I like to tell a story because people ask me for the best advice I have in real estate. A local investor when we started said… his response was “the biggest mistake I ever made was selling any house I ever sold.” I didn’t listen.
AND the biggest regret in real estate that I have is ever house that I’ve ever sold.
It’s not that we didn’t keep rentals, I probably bought 50 in the first few years. But I managed them and got sick of them or they went up in value and became a long term flip.
My wife kept saying… why are you selling? I would say, because I’m making boatloads of cash.
And now we haven’t sold a house since 2015. We still do flips but buy rentals to never sell them.
For a long time no one was ever listening when I’d ask them why they were selling.
You don’t need to flip, but I know some people can’t stop themselves. They want to flip and see their products out there. And see their social media posting.
I can’t figure out any other reason.
I think there are a lot of people out there who are young and think it’s easy, then they park the cash and live off the cash flow. But flipping is a full time job. After a couple years I got burn out and never wanted to flip another house.
I was convinced that flipping houses was fun and easy and I’d want to do it for 20 years. I think a lot of people fall into that trap. Then they get older wiser and lazier.
Everyone has their way to generate their capital. For me it’s being a realtor, or it could be flipping or you day job.
I enjoy brokerage, but you could enjoy flipping houses or working at Microsoft. We do this SO we can go buy rentals and chase the financial freedom. All flipping is, is a day job.
Everybody needs to have active and passive income (cash flow income).
Figure out what your active income is and then plow as much of that as you can into passive income sources.
I feel like there is so much info out there on the internet.
You don’t have to flip to get into the flip game.
Checkout Jennifer Beadles and Addicted to ROI
What’s your 2021 business plan?
I have real estate goals and other business goals for 2021.
Get really good at something no matter how long it takes before moving on. I get bored easily. I’ve don’t a lot! I’m actively getting a foot hold in multi family syndications. And head in the direction of multi family development.
What do you think is the low hanging fruit?
My favorite (isn’t necessarily the best). Some are higher risk, etc. I love angel investing. But it’s difficult to forecast your ROI. It’s a diversification play. I’m a big fan of tech, and prop tech.
Are you watching Open Door?
That was a good investment.
I think that buying businesses is a BIG opportunity! In 2008 there was a lot of opportunities in real estate and a lot of us made a lot of money.
Here at 2020 real estate is at an all time high, but the industry that’s about to fall apart is the business world. There are a lot of small business owners that are losing their businesses or going to.
The government just passed a new stimulus bill and doing more PPP.
There are going to be a lot of small business owners that are going to go away. Either get a 9-5, or retire, or something else. Millions of businesses will likes go away. A lot of them will come to realize they their businesses don’t have to go away via selling or some other creative way.
There are going to be a lot of businesses that can be bought at a very low price.
I think there will be a huge opportunity here!
I’m into layering, just open your mouth. If anyone wants to start a business buying committee let me know. Basically a business buying club.
I can’t do it all myself, I want to continue to surround myself with very smart people.
For those in the Seattle area I think there is so much crossover.
Do you prefer single family, multi, or new construction?
We’ve done all 3. We’ve done hundreds of single family, some single family new construction, and getting into multi family.
For me it’s the thrill of growing the business. Multi family gives more scale, and both give my complication.
Obviously the bigger risk the bigger reward.
Do you think investors should choose a specific niche?
I believe that people have different personalities, but I can’t keep my focus for that long. I wish that I could become the best in the world at something. If you can… I would do focus!
People like me have the shinny object problem and want to switch every 2 years. I like the 80/20 rule, spend 80% of your time on something for a few years until you get that business strategy stabilized. Get really good at it, be able to do it in your sleep, then move onto the next thing.
This is a good balance for someone like me.
Are you writing any new books in 2021?
I do have a book on finance text book for real estate investors. Becoming a better investor by understanding the math. It’s about half done.
For a long time I’ve believed that real estate investors learn this business backwards. I believe that investors should first learn about debt and financing. Instead of learning how to flip a house we should force them to think like a lender. How to be a good borrower, and how it all works!
Because when you learn that…
Absolutely! These are all the tools that investors need to understand. You don’t hire a carpenter that doesn’t know how to use a hammer.
That most successful real estate investors that I know understand financing.
This keeps going down the road, since you are in Florida. Shoutout to Troy Fisher who as introduced me to structured real estate transactions and the godfathers of that.
If you start your education with learning those skills first you will beat out the cash investors. People that people don’t hear about all the time are the 70 year old people in FL who are doing all of these transactions.
How about you J?
I agree with you! Pete Fortinado and I are friends and we’ve done a few deals together. I thought I knew what I was doing. But, wow, there’s a whole world of real estate that I didn’t realize existed.
It’s crazy! I’ve been apart of deals that involve trading deals for personal property, and structuring an 8 person deal. That’s what all of these deals are all about. Creating a win, win, win, win, win.
We just had Kevin K on the podcast last week.
My goal is to get Pete Fortunado on the podcast in 2021.
Pete does a Thursday meeting at Denny’s!
What’s the best thing that happen to you in 2020?
We did our first multi family syndication. I wanted to do it for a while. I found some fantastic partners!
We found something in February but had to back out until June. It was a big deal and tremdious learning experience?
What was the hardest part about that? There are a lot more broker involvement in finding those deals.
Yes, I was really surprised about that. If I hadn’t bought a complex in Houston the brokers didn’t care that I existed.
They are hard but will probably get easier and easier.
I came from big real estate multi family, and when I made the switch I thought I’d get into multi family syndication. But I’m a mom first, and maybe the best buys are out of state. It because lifestyle for me, I didn’t need to conquer the world. I’m a nerd and thrill of the chase.
My problem is that I always thought I had to do it myself.
What’s the worst thing that happened in 2020?
I don’t like to complain. So many people are struggling. I would say that my wife and I work together, and my kids are doing school from home and my wife has had to take the brunt of helping the kids with school. So I haven’t been able to work with my wife as much as I’d like in 2020.
Know that if you’re having to do that, you’re not alone, we are doing that as well.
Who do you listen to and learn from?
Aside from you, I watch MeetKevin! Checkout meet Kevin on YouTube.
Hopefully Kevin will be on our podcast soon!
I’m a believer that the best real estate investors are good business people. Real estate is a business like any other with high priced inventory.
For me… I focus on being a better business owner.
My own podcast that talks about business
The Bigger Pockets Real Estate Podcast (like 90 million downloads)
I listen to the Pump Podcast on crypto currency.
I’m also really into Crypto currency.
The Art of Business Podcast
Harvard Business Review Economics Podcast
NPR Economics Podcast
Where can people get your books?
Barns and Noble
Direct from BiggerPockets.com/Store.
What is your favorite flavor of ice cream?
Mint chocolate chip!
Joe, what is your favorite ice cream?
Cookie dough after a marathon :-).
Mine is rocky road.
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