Jason was putting up bandit signs in 2009 when a police officer took them all down and tracked them down. Jason did give up briefly at that time, but came back better because of that happening. Now Jason is a full time wholesaler with a ton of buyers on his list, and he makes $15-$20k per deal. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Jason McDougall Real Estate Background:
- Full-time real estate investor
- Quit his job in January 2016 to go full time in real estate, with a focus on wholesaling
- He has done about 30 – 40 deals a year since he went full time
- Along with wholesaling he also flips houses, as wells acquires single family houses for rentals
- Based in Dallas, Texas
- Say hi to him at https://www.sellmydfwhouse.com
- Best Ever Book: Rich Dad, Poor Dad
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Jason McDougall. How are you doing, Jason?
Jason McDougall: I’m doing great, sir. Thanks for having me on.
Joe Fairless: My pleasure, nice to have you on the show. Jason is a full-time real estate investor. He quit his job January 2016 to go full-time in real estate and focus on wholesaling. Since he’s been full-time, he’s done approximately 30-40 deals a year, and along with wholesaling he flips homes as well as acquires single-family homes for rentals.
Based in Dallas, Texas, specifically Colleyville. With that being said, Jason, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Jason McDougall: Yes sir, absolutely. My name is Jason McDougal and my company is Next Era Homebuyers. As you mentioned, I quit my job in 2016 to go full-time with this, but if I back up, I actually started doing this – or I tried to do this – in 2009. I was putting out bandit signs with my wife to try to get wholesale deals, and we got caught by the police putting them out… So we got fined, and I was like “I am not touching real estate ever again.” So that kind of put a damper on things.
Then some things at my job that I wasn’t happy with, I wasn’t fulfilled, and I realized that I would never create the life I wanted for my family unless I made a drastic change. My wife was three months pregnant in January 2016, and I told her “Honey, I’ll quit my job. I’ve only done two wholesale deals, but I think I can do this.” She supported me, and that’s kind of how we got started.
Joe Fairless: Wow. How much was the fine?
Jason McDougall: It was $600 for her, because she was the driver, and $600 for me, because I was the guy hammering them in the ground.
Joe Fairless: Is that in Colleyville?
Jason McDougall: It was in Hurst, Texas.
Joe Fairless: In Hurst… Okay. Got it. HEB. Okay. What type of emotional reaction did you have to that? And describe the scene, will you?
Jason McDougall: It was one in the morning on a Friday, so I guess it was a Saturday morning, and we were driving around putting these signs up… We had done it before, but we’d never gotten any deals off of them. The cop just pulled up behind us, and I tried to make an escape to the back seat, and that didn’t work. He pulled us over and cited us to put the signs out, opened up his backseat, and we saw 40 other bandit signs [unintelligible [00:03:12].02] I was like, “Man, I got caught by the wrong police officer.”
It just kind of crushed me and made me just wanna stop anything related to wholesaling or real estate, because I didn’t have the perseverance to just push through it.
Joe Fairless: Fast forward to January 2016 – you have a wife who is pregnant and you mention to her your idea about leaving your – I assume a stable full-time job, to do something that is perceived to be unstable, at least initially. Tell us about your thought process there.
Jason McDougall: Well, I climbed the corporate ladder and I thought that was where I wanted to be, and what was gonna make the most sense for my family… But after getting there, I really didn’t enjoy it and I wasn’t passionate about it, and I just dreaded going to work every day.
Joe Fairless: What were you doing?
Jason McDougall: I was doing forklift equipment rental management. I ran a rental department and we had forklifts going in and out all the time. I didn’t enjoy it, I didn’t love it, and I loved real estate and I was always passionate about it. So that drove me to give it another shot with wholesaling, to get out of that world… And it worked. She had a lot of confidence, I guess, in my ability… Maybe more confidence than I had in myself, and supported me to go forward with that and do it full-time. It was rough at first; getting the deals was not easy, I didn’t really know what I was doing, but we worked through it.
Joe Fairless: Did you go back to bandit signs?
Jason McDougall: Yeah…
Joe Fairless: You did! [laughter] Okay, in January 2016, “I’m gonna do this full-time”, and then you did what to get deals?
Jason McDougall: We started marketing in July of 2015; we would just do a lot of postcards, because I didn’t have time to put the bandit signs out.
Joe Fairless: So a year before you quit you started marketing.
Jason McDougall: Correct.
Joe Fairless: Okay.
Jason McDougall: And that worked… I wasn’t really doing that correctly either, but for some reason I got deals, and made it work, and then eventually we added the bandit signs back into it among other things, to kind of complement the marketing.
Joe Fairless: Okay, so you were starting to do work on real estate in January of 2015, and then you quit a year later… How many deals did you do between January 2015 and January 2016?
Jason McDougall: Two.
Joe Fairless: Okay, so it’s not like you had a system set up, you just got a couple deals.
Jason McDougall: Yeah, it was luck.
Joe Fairless: How much did you make on those two deals, minus all expenses, which includes marketing?
Jason McDougall: Between both deals, minus expenses, we probably made like $7,000.
Joe Fairless: Total?
Jason McDougall: Yeah.
Joe Fairless: Okay, got it. So how did you find your first deal?
Jason McDougall: It was direct mail. It was an absentee owner type list, and she said she needed to sell her house, and I was nervous the whole time. I had no idea what I was doing. I ended up contracting that and selling it to somebody on a buyers list that I had built back in 2009. I was like “Well, maybe somebody on here still buys real estate”, and they ended up buying it.
Joe Fairless: A buyers list back in 2009, when you were originally doing it… How did you build that buyers’ list?
Jason McDougall: I would just go to all these networking events, and I never stopped going to the real estate networking events through that time. I would always collect business cards; every time I got a business card, I would put it on that buyers list and try to build it up.
Joe Fairless: How many people did you have on the buyers list by 2016 whenever you were in full-time?
Jason McDougall: I had about 2,000 people on there by that time.
Joe Fairless: Holy moly!
Jason McDougall: Yeah… I went to a lot of networking events.
Joe Fairless: When you send that e-mail, what’s your open rate?
Jason McDougall: 13%. It’s pretty low.
Joe Fairless: Well, that makes sense, based on how you’re putting them in there… So you’ve got 260 people approximately who are opening it… And how many responses did you get from those 260 people who opened it, about that deal?
Jason McDougall: It’s still kind of this way… We’ll get 5-10 responses pretty quickly, and I’m like “Well, maybe I’ve priced it too low”, or sometimes we might get one or two if it’s just a weird property, or if I priced it too high.
Joe Fairless: And I assume your list has grown from that 2,000… Or is it 2,000 today?
Jason McDougall: No, it’s about 5,000 today.
Joe Fairless: About 5,000 today. I wanna make sure I’m understanding you correctly – you still get approximately the same amount of responses, 5-10 responses, now with the 5,000 list?
Jason McDougall: I do, yeah.
Joe Fairless: Why do you think that is?
Jason McDougall: I don’t know, that’s a good question. Well, a lot of people have Gmail, and Gmail sends a lot of our e-mails to the Promotions tab. So they don’t really go to their inbox, so people aren’t checking that and they’re not seeing any e-mails from us at all, which kind of sucks.
Joe Fairless: Yeah, that does kind of suck. It does that for me, too. I have investors who are like “I didn’t see that new deal…”, and I’m like “Well, you have the Gmail!” [laughs]
Alright, 30-40 deals a year… What’s the system that you’ve set up to be able to do that?
Jason McDougall: I wish I would have set up a system more thoroughly in the beginning to be able to do that, because the wholesaling thing is a job, and it’s really a grind for one person to do it by themselves.
So I don’t have all the systems in place; my wife’s of big help to me to kind of set up the marketing list and get those distributed, but by and large I don’t have any other systems other than Podio and Excel that I use to kind of manage the business.
Joe Fairless: Okay. Who all works on the business?
Jason McDougall: I would say 80% me, 20% my wife. We are looking to hire somebody in July and get an office to kind of help with administrative stuff.
Joe Fairless: Okay… The 20% that your wife does – you just mentioned it briefly, but will you outline what she does?
Jason McDougall: She does a lot with our website, she does a lot with our direct mail, she does all the designs for the postcards, and door hangers and different things like that that we do, different marketing. She designs the bandit signs… Kind of that marketing piece of it, she really helps a lot with.
Joe Fairless: Okay, and then I can probably deduce what your responsibilities are, but what are your responsibilities?
Jason McDougall: I go on all the appointments, I answer all the phone calls, I do all of the administrative tasks, corresponding with buyers, title companies, researching issues on title… Just different things like that.
Joe Fairless: What have you evolved in your — you said you don’t have a system, but what have you evolved in your process, from when you start to today?
Jason McDougall: When I started, I did zero follow-up, I just used paper to keep track of all the leads, and if I didn’t get a deal the first or second time after talking to them, they kind of went in the trash. And I look back now and I realize how much money I had thrown away by not having a system in place to track all those people, to touch them frequently, and to just follow-up with them. Having that in place now has been huge.
Joe Fairless: Is that where Podio comes into play?
Jason McDougall: Yes, sir.
Joe Fairless: With your 30-40 deals, minus marketing costs, how much do you make per deal on average?
Jason McDougall: When we started out, I was happy making $5,000 on a deal. Then I talked to somebody and he said “Why aren’t you making 10k?” and I said “I don’t know.” “Try to make 10k.” I said “Okay.” So I tried that, and I started making 10k. Then someone else said “Man, I really don’t try to make less than 20k. Why don’t you try to make 20k?” “Okay…”, so I started just going in, thinking I was gonna make 20k, and it started working. I’m like, “Wow…” So it’s evolved from making 2k-5k when I started, to usually 15k-20k is an average assignment fee now.
Joe Fairless: It sounds like a bunch of malarkey when you’re like “Hey, I just wanted to make this much more, so I started making much more”, but it reminds me when Tony Robbins talks about how he got from where he used to be to where he is now, and there’s a period of time where he got out of the $50,000 range, and got into where he was making a million bucks a year, and he made it for 3, 4, 5 years. Then I think someone said exactly what you just mentioned other people said to you, and he was like “Oh wait… Yeah, I guess I could make more, because I want to give back more, and feed more families as a nonprofit”, and then he just magically, by intention – but quite frankly, it’s not magic, it’s mechanics, too – was able to increase the revenue.
So within your five to ten and ten to twenty, it was a thought process, but what specifically changed within the mechanics of it?
Jason McDougall: I would go into a deal and I would always be afraid that if I tried to make $20,000 on an assignment fee, that my price wasn’t gonna work for the seller, and that was just my own limiting belief. So if I [unintelligible [00:11:29].11] I wanna make $20,000, so my offer needs to be where I have a $20,000 assignment fee built in. That’s the only change I’ve made, other than telling myself it was possible to do that, and it worked. So like you said, there’s no magic behind it, it was just really changing your thought process and changing your offer a little bit.
Joe Fairless: How are you now getting most of your deals?
Jason McDougall: They’re mostly through — I still do bandit signs, Joe… Bandit signs, we do door hangers, we do direct mail, we do some pay-per-click, and some SEO… So a combination of all of those produces our deals right now.
Joe Fairless: Okay – banner signs, pay-per-click and SEO?
Jason McDougall: Yes, sir.
Joe Fairless: And SEO.
Jason McDougall: Yes, sir.
Joe Fairless: Okay… How would you allocate percentages for those? The banner signs, direct mail, and pay-per-click, and then SEO – out of those four, in terms of deals?
Jason McDougall: It would probably be 30% bandit signs, 30% direct mail, 30% pay-per-click, and then the rest would be SEO.
Joe Fairless: Even though SEO is only 10%, I am curious – do you have a team member that does that?
Jason McDougall: I’ve got a VA that does that, yeah.
Joe Fairless: Okay, alright. As far as the bandit signs go, are you still risking personal fines by doing it, or do you have someone else?
Jason McDougall: I have someone else putting them out, but I guess if they ever…
Joe Fairless: Yeah, you’re busted.
Jason McDougall: Yeah, exactly.
Joe Fairless: Okay. How many do you put out?
Jason McDougall: 150/week.
Joe Fairless: What’s your approach for doing that?
Jason McDougall: I have two guys that put them out for me every week. I order them and they get sent to their house, and they put them out, and I pay them electronically. I would say every 600 bandit signs produces a deal.
Joe Fairless: You do 150 a week, so why not do 600 a week?
Jason McDougall: Because I don’t wanna flood these areas where they get so mad at me [unintelligible [00:13:12].24]
Joe Fairless: Oh, you’re walking a fine line… Okay, I’m with you. How much do you pay these individuals to put the banner signs out?
Jason McDougall: $2,15/sign.
Joe Fairless: $2,15/sign? That includes gas and whatever else?
Jason McDougall: Yup, that’s their fee to do it.
Joe Fairless: Is that per person?
Jason McDougall: No, that’s for both of them to do that; that does not include the price of the sign and the stake.
Joe Fairless: How much is the price of the sign and the stake?
Jason McDougall: I think it’s like another $1,50 for both.
Joe Fairless: For both. Okay, cool. For every $2,000 you spend, you make approximately $18,000. That’s pretty good.
Jason McDougall: Yeah. Sometimes it’s lower than that, but often times it is that.
Joe Fairless: With your direct mail, any tips there?
Jason McDougall: Testing things really is huge. We’ve done letters, we’ve done postcards… I actually bought all the equipment to do letters in-house. I bought an envelope printer, [unintelligible [00:14:04].00] all these machines to do it in-house and save money on it, because the response rate on letters is just so much better for us than postcards.
Joe Fairless: And what about your other method, the pay-per-click? What’s your approach there?
Jason McDougall: I’ve only been doing that for a few months, and there’s a lot of retail leads that we get with that, so it’s frustrating sometimes… We get people like “I wanna sell my house fast, but I want full price”, and like “Well, those two things don’t really work out together.” So that’s a challenge, but that’s just inherent with pay-per-click, I think, because some of the leads you get are gonna be like that.
Joe Fairless: You’re taking some of the profits, I believe – because I’ve read this in your bio, so I assume it’s true – and you’re buying single-family buy and holds; tell us about that.
Jason McDougall: I’ve been buying those with as little money out of pocket as I can. We had one this time last year, now we have six rentals and two notes that are producing passive income for us.
Joe Fairless: That’s great. So you’re not just creating a job, but you’re creating a long-term income stream for yourself, so that you can eventually phase out or put someone else in place of where you’re at.
Jason McDougall: Absolutely, I’m aggressively trying to acquire passive income this year.
Joe Fairless: Where are the homes?
Jason McDougall: They’re all in the Dallas-Fort Worth area; Arlington, Fort Worth…
Joe Fairless: What are the numbers on the last home?
Jason McDougall: I got two under rehab right now, that I just bought, and these will be my first ones that I’m trying to go Section 8 with. One I’ll be all-in into this house for $50,000, and we’re converting it from a two-bedroom to a three-bedroom. It should bring in $1,200/month, with a PITI of $600/month.
Then another one in Arlington, that we bought all in for 107k after rehab, it will be worth — ARV of 165k, and it will rent also Section 8 for $1,800/month. That’s kind of the path I’m going towards now, is the massive amounts of cashflow that I can generate through Section 8.
Joe Fairless: Are you managing that yourself?
Jason McDougall: I am.
Joe Fairless: Have you gone through the Section 8 process?
Jason McDougall: Not yet. I’ve been to their briefings, but I have not had a Section 8 tenant yet, so I might be changing my story on this in a year, but we’ll see…
Joe Fairless: Those weren’t leading questions, I was just curious… I have a Section 8; I have three homes, and one of them is a Section 8, so… But I don’t self-manage, that’s all. I was just curious.
The rehab properties, all-in 50k and all-in 107k – how did you find those two?
Jason McDougall: It was a pay-per-click lead, actually. Someone was appointed as a guardian over someone else’s estate, because he was legally incapacitated, and I purchased that property from him. The other one was a door hanger lead, actually; someone wanted to move out of state and sell his house, and I negotiated a pretty good price on that house.
Joe Fairless: Oh, I didn’t hear door hangers as part of your marketing arsenal… How many door hangers do you send out?
Jason McDougall: 10,000 a month.
Joe Fairless: Is there a reason why that was not included? Is that not that big of a lead generation?
Jason McDougall: We’ve just kind of started doing it, so to be determined on the effectiveness of it, versus how much we’re spending to do it.
Joe Fairless: Okay. When did you start doing it, how long ago?
Jason McDougall: In February.
Joe Fairless: Okay, 2-3 months ago, and it’s already resulted in… One deal, or more?
Jason McDougall: We’ve gotten two deals off of them so far.
Joe Fairless: And how much does it cost to do 10,000/month?
Jason McDougall: With materials and everything it’s probably $2,000.
Joe Fairless: Okay. The $50,000 house that you purchased, where you’re all-in for 50k, what did you purchase it for?
Jason McDougall: 43k, and it needed a rehab of 7k.
Joe Fairless: Is that an all-cash transaction?
Jason McDougall: No, I’ve got some banking relationships and some private lending relationships where I was able to purchase that with no money out of my pocket for the rehab and purchase.
Joe Fairless: Please continue…
Jason McDougall: [laughs] I’ve bought all of my properties that way, with no money out of my pocket, and this was through relationships I’ve built with banks, and through private lenders that I’ve been able to do that.
Joe Fairless: I heard you the first time, but can you be specific?
Jason McDougall: I’ve just focused on talking to several banks, and just kind of seeing what they’ll all do, and all these community banks will do something a little bit differently; it just depends on what their appetite for risk is. Some will say “Yeah, we’ll fund 100% of the purchase and rehab for your rental, and then after your rehab is done, we’ll roll it into a 20-year amortization with a three-year adjust.”
Joe Fairless: Huh!
Jason McDougall: Another bank would say something like “We’ll give you a 10% down to purchase the rental and we’ll cover 100% of the rehab.” Then I’ve had private lenders that were like “Hey, we’ll purchase the house for you, you rehab it, it’s your house, and just pay us 6% interest a year, no points.” So there’s been all kinds of different strategies that I’ve used to acquire these properties that have been really beneficial.
Joe Fairless: And you have six of them, cool. This is great. I’m glad we got to this point, because this is really interesting. You said you work with different banks and private lenders – are there any repeat banks or private lenders from those six homes?
Jason McDougall: Yeah, these last two houses – the one for 50k and the one for 107k were from one bank.
Joe Fairless: What bank?
Jason McDougall: It’s a small community bank in Fort Worth.
Joe Fairless: Which one? I’m from Fort Worth, I might use them.
Jason McDougall: Have you heard of First Bank?
Joe Fairless: I think so.
Jason McDougall: They were just comfortable with my credit and my experiences, therefore they offered me that deal, and I said “Well, how many rentals would you help me purchase?” [laughter] They were like, “We’ll do five.” I’m like, “Okay…” So I got two, and my plan is to get five maxed out with them, and then refinance those into a portfolio loan and do it again with them.
Joe Fairless: Beautiful. So just so I’m understanding it, they’re doing 100% of the purchase and rehab?
Jason McDougall: Yes, sir.
Joe Fairless: Wow! Nice searching! How many banks did you have to go to and have conversations with prior to finding them?
Jason McDougall: I’ve probably talked to 6-7 different banks, and then kind of found out what all they wanted to do after just sitting down with them, explaining what I wanted to do… And some of them — I’ve got two notes, and a couple of those banks let me wrap their loans to end buyers, so I can owner finance those, which has been great, too.
Joe Fairless: When you walk into the bank, what do you do? Do you just tell them “Hey, I don’t want any money out of my pocket, but I wanna buy this property. Do you wanna do a deal?”
Jason McDougall: Kind of… I mean, not really like that, but I tell them exactly what I’m doing and they’re like, “Well, you’re getting a pretty good discount on these properties when you’re buying. We’re comfortable doing that if we ever have to take it back. There’s lots of equity there.” And then my experience and my credit kind of help, I guess, as well.
Joe Fairless: So you’ve got good credit, you have experience, they know you’re a full-time investor, and then from a property standpoint what documentation do they require? From a high-level; I know a lot, but from a high-level what are the main things they require?
Jason McDougall: As far as financials, they wanted to see a P&L from my company for the past two years. I don’t have two years of self-employment taxes filed yet, so they were able to look past that just based on my P&L’s, and credit, and a financial statement.
Joe Fairless: And what about the house itself? Because you mentioned they said they have enough equity in it should something go wrong, so what did they need to see from the house?
Jason McDougall: They did an appraisal on the house, to make sure that — based on my scope of work from the rehab, if the house would appraise for their value, and they were comfortable with that.
Joe Fairless: What is your best real estate investing advice ever?
Jason McDougall: I would say do not give up. I wish I really wouldn’t have given up in 2009 when I was putting up bandit signs, and just persevered through that. I could be much further along than I am today.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Jason McDougall: Absolutely.
Joe Fairless: Alright. First, a quick word from our best ever partners.
Break: [00:21:19].29] to [00:22:00].17]
Joe Fairless: Best ever book you’ve read?
Jason McDougall: Rich Dad, Poor Dad, the cliché answer.
Joe Fairless: [laughs] Hey, if that’s your answer, that’s your answer; that’s alright. What is the best ever deal you’ve done that we have not talked about, and it can’t be your first, can’t be your last.
Jason McDougall: It can’t be my last?
Joe Fairless: No, it can’t be your last.
Jason McDougall: I did a wholesale deal where somebody just called me up and said “I just don’t want this house anymore, you can have it.” I looked it up and I was like, “Man, I think I can make some money here”, and I ended up making $35,000 by wholesaling that.
Joe Fairless: And what did they say originally?
Jason McDougall: He just said “I don’t want this house anymore. I don’t wanna deal with this property.”
Joe Fairless: What was the problem that he had with the property?
Jason McDougall: The house was vacant and he had moved out to South Texas and he had some property taxes that were delinquent on it, and the house was in a really bad shape.
Joe Fairless: So then what did you do?
Jason McDougall: I contracted it and wholesaled — I’ll back up… He was getting someone to go to court in Fort Worth, and he was elderly, and six hours away, he was like “There’s no way I can go to court regarding this house”, so I ended up calling the court and pretending to be his grandson to try to postpone the court date until I could get it sold and transfer the ownership to the new buyer… And that worked out.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Jason McDougall: Trusting contractors too much and allowing them too much leeway, which has hurt me on a couple flips early on.
Joe Fairless: There’s just a tiny bit of irony – the previous answer was you pretended to be someone else’s grandkid, and then the next answer was trusting contractors too much… Right? You see the irony there? [laughs]
Jason McDougall: Yeah, I get it. I’m a very trusting guy, and I was too much so early on when I trusted these contractors to do a good job for me and paid them too much, and they just burned me.
Joe Fairless: Best ever way you like to give back?
Jason McDougall: I have a Facebook group called Passive Income Through Real Estate, where thereR