JF1584: German Immigrant With Only 2 Suitcases Grows Real Estate Biz To 3,800 Deals with Jack Bosch
Jack traveled to the US to finish school for a year and go back home. That plan fell through however as he met his future wife and started investing in real estate. Starting with raw land, trying wholesaling, tax liens/tax deeds, eventually moving into commercial and multifamily properties. Hear how he grew from nothing to a very successful investor and apply the lessons to your own business! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Jack Bosch Real Estate Background:
- German immigrant, in 1997 he came to US with 2 suitcases and a bunch of student debt
- Has negotiated, bought, sold, rehabbed, as well as owned and managed over 3,800 properties since 2002
- Currently he holds a large portfolio of properties in land, single family, commercial, and large multi-family properties
- Based in Phoenix, AZ
- Say hi to him at http://orbitinvestments.com/
- Best Ever Book: Turn The Ship Around
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Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks, and I am speaking with Jack Bosch. Jack, how are you doing today?
Jack Bosch: I’m doing excellent. How are you, Theo? I’m excited to be here.
Theo Hicks: I’m doing great, excited as well, and I appreciate you joining us. A little bit more about Jack before we get started – he is an immigrant from Germany who came to the U.S. in 1997 with two suitcases and a bunch of student debt. Since 2002 he has negotiated, bought, sold rehabbed and managed over 4,000 properties. Currently, he holds a large diversified portfolio of land, single-family homes, commercial real estate, large multifamily properties… So he does it all. Currently based in Phoenix, Arizona, and you can say hi to him at jackbosch.com.
Jack, before we jump into the conversation, can you tell us a little bit more about your background and what you’re focused on now?
Jack Bosch: Sure, absolutely. I would love to. As you already said — first of all, I’m super-excited to be here; this is a great show, I’m a listener myself. I’ve been in real estate for 16-17 years now; I’m originally from Germany. I came over here to the U.S. – really just for one year was the thought, just to finish a college degree. Then fate hits, I met who is now my wife; she’s an immigrant herself from Honduras, Central America, so we’re a very international family… And we decided to give this thing a try, and stayed here; we got work visas, worked successfully in the U.S., and through this process after five and a half years got a Green Card… But about halfway through we realized that this job thing is really not as good as it was made out to be. I was traveling 100%, I was constantly gone, I was working 60-70 hours/week, I was not making any money, and I was just tired.
We started looking around until we found real estate, and through a trial and error process – I wish podcasts would have been around back then – we made it work, and we’ve particularly focused on one technique… We stumbled into that technique, we didn’t even know any better; we just happened to come across land parcels instead of houses… So we flipped them, just like other people flip houses, and we ended up doing more and more. We realized that was actually so much easier, simpler for us than houses, because we didn’t know anything about houses… But these land parcels worth 10k, 20k, 30k or 50k – we were able to pick them up for 5 to 25 cents on the dollar, so really pennies on the dollar… And when you buy them at that level, you can do a lot of stuff wrong and still make a profit.
Our first deal we bought for $400 and sold for $4,000. Soon enough, we stopped looking at houses and only started looking at houses again once the real estate market had crashed and we could pick up houses for pennies on the dollar.
Theo Hicks: What part of Germany are you from?
Jack Bosch: I am from the very South of Germany; I’m from the South-West, South of Stuttgart… There’s a big lake called Bodensee, or Lake of Constance in English. It’s about three hours West of Munich, an hour North of Zurich, Switzerland. It’s a rural area, there’s not really that many big cities around.
Theo Hicks: Okay, my mom was actually born in Munich. Pretty cool.
Jack Bosch: Oh, nice, nice. It is cool, yes.
Theo Hicks: Let’s talk about the land parcels then – how did you come across that investment strategy starting out?
Jack Bosch: We came across it by looking into tax liens and tax deeds. Imagine our situation – we’re from Germany, we’re from Honduras, having student debt, basically starting with nothing here in the country… So after a few years working, we bought our first starter home, with 3% down, an FHA loan, and stuff like that; a mortgage up to our neck, and we bought cars with payments, and stuff… We realized we needed to get out of that, but we had very little money to invest, a few thousand dollars… So we were like “We’ve gotta find something that we can get into with very little money”, and something also that’s not very complicated, because again, we didn’t know it… So we tried household selling, and we got a deal under contract, but that deal fell apart because we really had no idea it would cost $1,000 or $10,000 to repair a kitchen or a bathroom, or repair a roof… So we completely estimated everything wrong, and as a result, nobody wanted to buy the thing, and we backed out of the deal.
Then we came across tax liens and tax deeds as the next piece. In the tax lien and tax deeds – first of all, it blew our mind, because in neither Honduras nor Germany does that process exist, like it does in the United States. They actually issue a lien against the property for the non-payment of property taxes, and then they auction that off; then the lien holder three years later forecloses on that – mind-blowing to us. Or even worse, in states like California – or even better, depending on which side you’re looking at it from – and in many other states (Texas) they just take the property and literally just sell it to the highest bidder.
So we looked at that, we attended auctions, we bought some liens, we tried to buy some deeds, but we always outbid… Or when we bought a lien, it was redeemed, it was paid back three weeks later and we made like $4 in interest, or so… We were like, “Okay, that doesn’t work.”
One day we had a thought. That thought was “Well, these people that haven’t paid their property taxes – they obviously don’t want these properties anymore, because otherwise they would have put them on the market, or they would have just– I mean, shouldn’t these guys be willing to sell their properties directly to me, months or years ahead of these auctions?” Once that thought came up, we started figuring out if we can get their mailing address, if we can figure out some criteria – which property owners would be most likely to give away these properties.
It took us a little bit, but we figured it out, and then we started sending direct mail to those guys; first only to people that owed property taxes, but now it doesn’t even matter – we have refined this technique, so it doesn’t matter if they owe property taxes or not.
So we sent out 500 letters and we literally got something like 50 phone calls back, a 10% response rate… Which is extremely high, I understand, and every single caller had a piece of land. There was not a single one call [unintelligible [00:08:07].03] on a house. So we were like “Okay, what do we do now?” Well, we figured we don’t know anything about real estate, we don’t know anything about houses, we don’t know much about land either, but if we make a low enough offer — we figured these people don’t want these properties anyway anymore; if we make a low enough offer, we should be safe from all eventualities and we should be able to still make money. And that’s what happened – we offered this guy $400 for his property, that we figured out was worth about $8,000, and he accepted it. So we bought it, and we literally the next day after buying it, we sold it to the neighbor for $4,000.
We had done nothing to the property, there was not even a tree on the property. Just a piece of land, just dirt. So we realized it’s simple, and we can handle that. Two weeks later we bought 40 acres for $500, and sold it for $10,000 on eBay.
Then we ended up doing more and more and more deals, and after about 10-20 we were like “Let’s not even look at houses anymore, because this is working really well”, and it has continued to work ever since, and now we’re even teaching it. “This works really well, so let’s not even look at houses anymore”, and we didn’t look at a single house until we had done about 2,500-3,000 deals, and the market had completely crashed in 2008 or 2009… I went to a REIA meeting and they basically disclosed what the prices of houses were at that time, and I was like “Oh my god, we can buy houses.” That’s when we started also buying houses, and since then we have built up a very nice portfolio of rental homes, too.
Theo Hicks: Fast forward to now, what percentage of your investment strategy involves flipping these land parcels?
Jack Bosch: Well, of these 4,000 deals that we have done, probably over 3,900 of them are pieces of land. It’s the overwhelming strategy that we have used for 17 years, that we do full-time; we have a team buying and selling them now, we have students that do this all over the country.
The other ones are houses that we flipped, and then we said “We’ll build up a portfolio of free and clear rental houses.” We call them our moat. Basically, if we ever want to stop doing anything — the downside of flipping usually is when you stop flipping, the income stops. So if you wanna retire at some point in time, we realized that we need to roll some of the money over that we made in land flipping… Because with land you can do everything you can do with houses; with land it’s just without the complexity of the houses, and for less money… So we just started rolling our profits over and buying houses. We bought over 50 rental houses that we own right now, we flipped another bunch of them that we just didn’t have a use for in the moment, and then also a few years ago we started stepping one up and started buying larger apartment complexes. But 3,900 – basically, 96% or so of our properties that we have flipped are all land… And we’re really using the other asset classes as a storage of the wealth we have created in land.
Theo Hicks: That’s a solid investment strategy. What are some challenges you faced from starting off to where you’re at now, specifically in regards to scaling? 3,000 land deals is a lot. What systems have you put in place to be able to handle such a large deal load?
Jack Bosch: To handle the deal load, at some point in time you need both systems and a team. We have one guy in our circle of students who is doing about 150-170 deals a year; it’s just his wife and himself, with one virtual assistant. So you don’t need a large team to be able to do 100-200 deals a year, but you do need usually online systems.
We use a software that we actually created ourselves. We named it the Investment Dominator. That software is basically a CRM for land flipping. It walks you through literally from A to Z. So what you need is a place where you can store your information and follow a deal from A to Z, from beginning to end. Nowadays we’re also outsourcing everything. In the beginning we were stupid, we didn’t know; we just took everything in-house, we did everything in-house, even taking the phone calls. We didn’t even think that there would be such a thing like a call center that could take our phone calls. Of course there are call centers to take your phone calls, we just didn’t know about it. Now we use a call center that takes the phone calls when we send out our letter.
We use a mailing house to send the letters for us. The mailing house is outsourced, they already know us, they have our template, they have our thing… All we need to send them is a list and say “Send 500 here.” They’ll send them out.
Then we have a relationship with a call center that has trained people for our system, that literally as our letters hit, they know exactly how to answer them. Then when the deals come back to us now – because after they have taken them, now we do the deal analysis, and for that we have team members in our office; we have a couple virtual assistants that go and find the area of the property, that find the value of the property, they find aerial pictures, and things like that; our software supports that too, and automates a lot of that, too… But even without that – when we started, we didn’t have that – we were able to organize it that way.
I just look over them and make sure that the values are right, and then based on that we use a formula to make the offers. Then we go send our offers out, and when they get accepted, we go and market them. It’s a step-by-step (6, 7 steps) process that you follow, but at every step you can nowadays put in automation and systemization in this system. As a result, people do 150 deals just without even having much help.
Theo Hicks: From your experience doing approximately 3,000 or so land deals…
Jack Bosch: About 3,900, yeah…
Theo Hicks: …3,900 land deals, what is your best real estate investing advice ever?
Jack Bosch: The best real estate investing advice I would think is — and I’m realizing this again now, when we do our large seven million dollar apartment complex deal, with financing involved… Just right now, literally, we’re in the process of closing on 147 units in Oklahoma… And it’s complex and convoluted and complicated, and you have to provide hundreds of pages to financing, and all this kind of stuff… When I think of that, if somebody would have brought me such an apartment complex deal back when we started, my eyes would have glazed over and I would have been screaming, running the other way. That is because at that time neither my wife, nor I, had any real estate experience; we didn’t know.
So my biggest real estate takeaway or my biggest advice is that wherever you are right now on your path to real estate investing, and wherever your level of knowledge, your level of confidence, your level of capability and your level of courage is, you need to find the method that fits that combination of C’s – Confidence, Capability, Courage and so on. Basically, find something that you can handle right now with the knowledge, confidence and capability that you have right now. I know knowledge is not spelled with C, but it sounds the same.
Basically, find that spot that you can take action right now. Again, if I would have gone for multifamily back then, I would have failed, because I didn’t even understand the terminology. By finding land – and these are $10,000 to $100,000; these are not the million dollar lots in downtown – we found a method that allowed us to take action and be successful where we were, with the lack of knowledge we had, and the time that we had, which wasn’t a lot.
But if somebody’s already successful and is already doing a bunch of deals, then great – find something that matches that. But bottom line is a lot of people fail, I think, because they’re taking on things that are too complicated for their current level of capability, knowledge, courage and capacity that they have in their life.
Theo Hicks: That is very, very solid advice. Are you ready for the Best Ever Lightning Round?
Jack Bosch: I am, bring it on.
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Alright, Jack, what is the best ever book you’ve recently read?
Jack Bosch: Best ever book I’ve recently read must be a management book by the name of Turn the Ship Around. I loved it, because we do all these different things, and we have a team of almost 20 people, if we take our contractors, virtual assistants and so on… Because we do multiple things – houses, and apartments, and the education side of things, teaching others how we do these things…
It’s a great book about creating a management structure where everyone is empowered, and knowledgeable, and has the right and has the authority to make decisions without having to go to their superiors up the chain. By implementing that as much as we currently can – and we’re constantly implementing more – it has really made everyone’s lives so much better, and it has created also a culture of fun, where people feel like they’re in charge of their own jobs, and in charge of their own roles, and they have decision power. It has created somewhat magic in our company.
Theo Hicks: This one’s going to be specific to you – best ever German meal?
Jack Bosch: It’s gotta be schnitzel, right? With french fries, or mashed potatoes, or fried potatoes. That’s gotta be the classic one, right? [unintelligible [00:18:42].07] that’s what my mom made for me always.
Theo Hicks: My favorite is Rouladen.
Jack Bosch: Oh, yes. Rouladen is very good. It has changed now… When I was little it was always schnitzel. Now you can find some schnitzels here, but when I go home, my mom always makes Rouladen, which is a mean one, a really good one.
Theo Hicks: Best ever deal that wasn’t your first deal or your last deal?
Jack Bosch: Best ever deal was one piece of land – on the land side – that we bought for $1,860 and sold for $86,000. Another one was a property we paid $5,000 for, that we still own. That is probably worth a couple hundred thousand dollars, and we’re just keeping it, because it’s in the path of growth, and the city is approaching. It’s probably gonna be worth more like half a million in the next 5-10 years.
Theo Hicks: What’s the biggest mistake you’ve made in real estate?
Jack Bosch: The biggest mistake I think is to not outsource enough… Because again, I think we spent a lot of extra money on building a large team – at some point in time over 35 people worked for us – that ate up too much of the profits of the land business. Nowadays we run a volume of well over 100-150 properties a year with basically three people.
Theo Hicks: What’s the best ever way that you like to give back?
Jack Bosch: First of all, we love sharing what we know, but we also love supporting a school for the poor in Honduras, where my wife is from. It’s an amazing school; the kids are getting bilingual classes there, and on top of it, the high school is a vocational school, so they learn a profession. By the time they graduate from high school, they are fluent in English and they have a profession, which in Honduras allows them to literally step out of poverty, start their own shop, start their own store, start their own — whatever profession they learned… And it’s 70% supported by only donations. We donate to them on a regular basis. There’s several buildings on their property that have our name on them; not that we wanted to, but they put it on there.
We find 100% of the money goes there, and we see the immediate impact in the life of kids, that otherwise wouldn’t really have a chance in life.
Theo Hicks: And then lastly, what’s the best ever place listeners can reach you?
Jack Bosch: The best ever place listeners can reach me – that would be either on JackBosch.com, or we have a Facebook group called Forever Cash – Land For Pennies… You can go there, it’s a free Facebook group where we hang out and help each other with our deals. I’m in there every day, answering questions and just posting stuff and hanging out with our friends in the land business.
Theo Hicks: Well, Jack, I really appreciate coming on and talking with us today. A truly inspiring story of how you came over here from Germany, expected to stay here for only a little bit, but met your wife and started to become interested in real estate. Wanted to get into something that didn’t cost a lot of money, wasn’t very complicated, and that’s when you discovered the concept of flipping land. You talk about how rather than attempting to purchase them at the actual tax lien or deed auction, you have a marketing approach that allows you to contact these owners before it gets to auction; you talked about how you had that 10% response rate with all land, so you did land deals up until the crash…
Jack Bosch: We continue doing land deals, and by now we don’t even focus on the tax delinquents only. Now it’s every land between $10,000 and $100,000 is a target… But we continue doing that. Just in 2008 we started adding houses to it.
Theo Hicks: That’s what I meant to say. And then we also had a conversation about how to scale, and essentially you wanna have a system and a team in place for all of the recurring duties. It doesn’t need to be a huge team, but you mentioned how you created your own custom CRM program for a place to store information and follow the deal from A to Z. You also mentioned how you outsource the incoming phone calls through a call center, your direct mailing through a mailing house, as well as team members and VA’s to analyze your deals, as well as creating a formula to help you set offers, and a system for marketing those deals once you got them accepted… And then finally, you gave your best advice ever, which I think is fantastic advice. That is to figure out your current C’s, your current confidence, capability and courage level, and find something that aligns with those that you can do right now. So don’t take on things that are too complicated, and don’t wait until you doubled your current state; figure out what you can do right now, even if that means flipping $400 pieces of land.
Again, Jack, I really appreciate you coming on the show. Have a best ever day, and we’ll talk to you soon.
Jack Bosch: Thank you very much for having me.