Jason Lucchesi has found success in real estate through a number of avenues. He was a successful lender, mastered the art of buying short sales, invested heavily in notes, has wholesaled many properties, and is a coach. Jason has learned to adapt with the ever-changing real estate world, and he talks all about it on this episode of the Invest Four More Real Estate Podcast.

How did Jason first get started in real estate?

Jason was a competitive body builder when he was in his late teens and early 20's. Jason feels the rigors of being a body builder helped him develop the discipline and work ethic that is needed to succeed in life. But body building does not pay very well, and Jason had to have a job as well as train. Jason had sold Cutco knives, but decided to make a change by becoming a loan originator. Basically Jason was given very basic instructions and told to go get clients! He did a lot of cold calling and very little training, but eventually found some success in the lending field.

After a couple of years, Jason got a job with Countrywide where he was given training and found a mentor. He flourished and at one point was Countrywide's top lender in the nation. Jason's primary client were people who needed subprime loans. Either they had bad credit, no credit or did not make enough money to qualify for a regular loan. At the time Jason was doing what he was taught, but looking back on it he estimates over 50 percent of the loans he originated defaulted.

In 2007 Jason was hit with a massive blow. The housing crisis hit and subprime loans were no longer available. His bread and butter business that had pushed him to the top of the lending business was gone.

Here is another great podcast from lender Mike Bowen.

How did Jason start investing in real estate?

After the subprime loans disappeared Jason left the lending business. He moved to Indiana and decided investing in real estate would be his next venture. He borrowed some money to learn from a real estate mentor, who he admits did not know much more than Jason did. He called it the blind leading the blind. Eventually Jason found his niche as a wholesaler. He used short sales as the way to source his deals and sell them to investors or in some cases retail buyers. He set up a team to negotiate with the banks, and business was booming.

How to get a great deal on a short sale.

Jason did very well with short sales for many years, but the laws and regulations began to change with short sales. New laws made it harder to be a negotiator with the banks and the banks themselves started to add clauses making it harder to wholesale short sales. Jason did not give up real estate, he found new ways to source deals. One of his favorite ways to get great deals was to buy notes directly from the banks.

How did Jason find banks that would sell him notes?

Jason likes to target small banks who are more likely to sell small packages of notes to investors. He would find contacts on LinkedIn and then convince the banks it was easier to sell him their non-performing notes than it was to take properties through foreclosure or complete a short sale. Jason was able to buy notes for 50 cents on the dollar or less. He says the note business has become more competitive, but he can still get great deals on notes.

How to invest in non-performing notes.

What is Jason up to now and how can you contact him?

Jason is still wholesaling deals, but has set up his team to do most of the work. He likes to look at the big picture items and improve his business from the outside (smart guy). He is constantly trying to increase his passive income and one of his goals is to buy a large apartment complex (over 50 units). Jason also offers some coaching for real estate investors and you can find him on his blog JasonLucchesi.com.

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Transcript

00:00:58.9] MF: Hey everyone, it’s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four More Real Estate Podcast. I have a really awesome guest on today’s show. I’m really excited to talk to him, Jason Lucchesi has been an investor, a lender, a coach. He has been through a lot in his real estate career. I’m really happy to have him on the show.

 

Jason, thank you so much for being on. How are you doing today?

 

[00:01:24.0] JL: I’m doing great, thanks for having me on the show today Mark. I appreciate it buddy.

 

[00:01:27.9] MF: Yeah, no I appreciate you taking the time to do it and I’m interested to learn more about your journey because you have done a lot of different things in your career. The first thing that I always ask people is how did you get first started in real estate? It looks like you became down the lending field around 2002, is that right?

 

[00:01:47.1] JL: Yeah, it was actually interesting. I needed a job because I was competing. I was a competitive bodybuilder from the age of 19 to 21 and I needed a job when I wasn’t training for shows. So I got into the mortgage business as a telemarketer at first. I first started doing telemarketing to where I was getting leads for the loan originators and then I saw how well they were doing. I decided to hop in and become an originator myself and that was actually the start of I would say a pretty long career in the mortgage business because most people, they typically, they’re good for about six months to a year and then they fizzle out because it’s not for everybody. It’s not everybody’s cup of tea.

 

[00:02:42.6] MF: Yeah, I can imagine. I’m curious before we get too in depth. I’ve talked to a few athletes, do you think being in competition, I mean body builders have crazy regimens and diets, it’s insane to see what they go through. Do you think that helps you become more successful in life just having the habits and the work ethic that that built into you?

 

[00:03:04.0] JL: Well I would say yes. Most people that I’ve worked with, military people and people that played some sort of athletics or still play athletics from the competitive standpoint, I always feel like they are the ones that really know what it takes. Know that it’s going to take hard work because man, it’s a grind especially from a competitive bodybuilding standpoint. You’re constantly critiquing yourself and it’s hard work especially getting ready for a show.

 

I was up at five in the morning to do cardio and then typically I would have one or two meals and then I’d be back in the gym for my weight training session and then I’d be off for a little bit during the day and that’s when I would work. I’d go to work and then soon as I get off work which is right around 9 o’clock, I would go back in for another hour session of cardio. So yeah definitely. It helps me stay a lot more organized and from a business standpoint and just trying to be on top of my game as best as I can.

 

[00:04:15.1] MF: Right, no that makes sense. I know with athletes and body builders, you only have so much time in the day and you have so many things to fit in. I imagine that helps you filter out the junk and focus on the really important things when you’re in that situation.

 

[00:04:30.4] JL: Yeah, absolutely and in high school, it was football, basketball and I threw shot put my senior year and you had to make the right decisions or else you would fall behind and I always wanted to be at the top and I wanted to do whatever it took to get there. You have to be very disciplined if you want to be at the top of anything not just sports but in your own company, in your own business.

 

[00:05:01.8] MF: Right, that makes perfect sense. So what was it like getting into the origination business? Was it what you thought it would be? I mean were you cold calling people? What was that like when you first started?

 

[00:05:13.8] JL: Yeah, it was cold calling people. It was pretty difficult at first and I was kind of used to it because as soon as I graduated high school, I was doing lots of cold calling because I was selling Cutco Knives. A lot of people actually know what they are just because they get hit up from graduated high schoolers, it’s a way for them to make some money over the summer and I was fine doing that.

 

I always told myself I’m like, “If you’re able to sell $20,000 worth of knives in a 40 day period, you can pretty much do anything in the sales standpoint.” So I really hit the ground/floor running and it was really difficult at first just because you needed to fill out the borrower application just perfect and you really need to be on top of your game especially from understanding that at that time, it was the closing costs.

 

You needed to make sure that it was under the threshold for the State of Illinois from closing cost perspective. So the high cost standpoint, so you really needed to really be sharp and on your game and it did take a little bit of time. I didn’t really have a strong mentor helping me out every step of the way, which it could have sped up the process quite a bit if my manager probably would have spent some time with me.

 

[00:06:37.0] MF: Yeah that always helps.

 

[00:06:38.6] JL: Yeah, absolutely.

 

[00:06:40.1] MF: Yeah. I tell the agents the same thing because being a real estate agent is very similar to a lender I think. A little different job description but it’s about relationships and training and if you go into being an agent with no training, like you said, most people would fail in the first six months.

 

[00:06:55.5] JL: Oh yeah. It was definitely tough for sure man and if I wasn’t living at home with my folks at the time, it would have been really, really tough and it was a struggle for probably the first two years just because I had no idea what I was doing and I ended up going to like three different brokers and they all do the same thing. They all said, “All right, well here’s your rate sheets, here’s your desk. Good luck.” I didn’t even get a computer or anything. They just said, “Here you go, good luck,” and that was it. No proper mentorship or anything so it was definitely a struggle at first.

 

[00:07:30.1] MF: Wow. Yeah I can imagine with no guidelines at all and after that, a couple of years it sounds like you’ve moved to country wide and things changed around a little bit there.

 

[00:07:39.7] JL: It did. I had proper mentorship country wide at the time. That was a large bank. It was a large company so I received lots of help, lots of mentorship and I would say after my first 60 days of being with Countrywide, I really started doing eight, 10, 12 plus deals every single month consistently and I was a top producer not just in my own branch but within the whole company.

 

I really started seeing what I could do and I started climbing up the corporate ladder. I really thought I was going to be with Countrywide like 20 or 30 years and retire, do the normal thing that you’re supposed to do, and that didn’t happen. But I thought I was doing everything I was supposed to be doing.

 

[00:08:32.7] MF: And what exactly happened? I imagine it had something to do with the housing crisis but what happened with Countrywide?

 

[00:08:38.1] JL: Yeah, well I was with their sub-prime side and they called it the Countrywide Full Spectrum Lending Division and I moved up pretty quickly with Countrywide. I started off as an account executive, which is their loan officer and I was doing lots of volume, became what’s called a team manager. So you’re right below a branch manager.

 

They sent me and another guy off to Grand Rapids, Michigan. We were doing really, really well there, we turned the branch around and then I got another promotion. I came down here where I live now, Indianapolis, Indiana and what happened from there is, this was probably early 2007. So this was before the market really took a turn for the worst and one of my friends who is my mentor at the time, he decided he was going to go out to the east coast to the New Jersey, New York area. I was like, “Okay, I’ll go with you,” because I was very loyal and he gave me tons of opportunity. So I went out there. Wasn’t out there for long and all of a sudden, we’re unable to do sub-prime anymore in August of 2007 and I’m like, “Oh man, I wonder what’s going to happen here?” Because we were only starting to do just a paper so prime deals.

 

So people that had the 6-85 plus four or above where the people that we’re able to work with. No more people in the 500’s because the branch that I was at, we were not licensed yet to do FHA. So we couldn’t do FHA or VA loans at that particular branch. So I was just like, “Oh my gosh what am I supposed to do here?” My wife and I at that time, we got married in October of ’07 and we were just completely freaked out.

 

We didn’t know what to do, the cost of living out there is just crazy. So we decided to come back here to Indianapolis, I actually put in my resignation on December 31st of 2007. So literally, I wanted to start a brand new year fresh without Countrywide or anything that was going on and we literally packed our stuff up and moved back here and we never looked back.

 

[00:11:07.7] MF: Wow. That’s pretty crazy with the timing there and for people that don’t know sub-prime, is it defined as under 630? I can’t remember the exact definitions, like the credit score?

 

[00:11:18.8] JL: We could do stuff all over the place but in all honesty, you can have a FICO score of 500 and as long as you have some equity in the house, we could go up to 70% loan to value at the time and we’re doing some crazy stuff. You can do — they had special stated W-2 programs as long as you had a 580 FICO score, you can get a 100% financing.

 

So it was pretty crazy but no, we went all the way on up. We had to make it justifiable so if somebody came in and they had a 720 FICO score and they were getting approved for sub-prime loan, we had to state a reason why they were going to sub-prime versus a prime loan. So it just really kind of depended at that time on what they were trying to do because Countrywide would always want us to do the right thing.

 

If somebody isn’t sub-prime, they need to be in prime paper and that’s how our underwriters work. So we needed to make it justifiable because as you know, I am not sure if everybody has seen or read the book, The Big Short but a lot of our loans were packaged up in triple A ratings. We’re talking these loans that we were doing, they probably got defaulted on probably 65 - 70% at the time.

 

They were being packaged up and triple A rating packages and being sold off on the open secondary market. So I didn’t realized it at the time what was going on but looking back on it, it was like, “Holy crap, I can’t believe we were able to write some of those loans that we did.” I think I still have some of the old rate sheets of 580 FICO scores can get a 100% financing and I kid you not man.

 

Six months or a year later, people would come back. They’d be like, “Hey can we do a refinance?” Because what we typically did with these people is we had paid off all of their debt, they would refinance, they’d paid off all their debt, they would come back to us in six to 12 months later, they’d be back in 50, $60,000 in debt and I’m like, “Didn’t you learn from the last time?” What happened here?

 

[00:13:34.2] MF: Yeah that is nuts and The Big Short is an awesome movie. You really have to be in real estate to understand what’s going on, but it is really interesting how all that worked, and yeah I imagine the economy did so well for a while there because people were refinancing their house and taking out all these money all the time and just dumping it into the economy. Then once that stopped, it’s like a double edge sword. All of a sudden housing is crashing plus people couldn’t refinance and kind of cure their bad habits with their house anymore.

 

[00:14:05.8] JL: Right, exactly. Yeah it was the most interesting times I could ever remember within our period of time, it was nuts.

 

[00:14:18.0] MF: Wow, so what happened after you started fresh, January 1st, 2008, what did you do at that point?

 

[00:14:25.5] JL: Yeah, so I started doing a lot with getting into real estate investing. I actually paid and I shouldn’t say I did, but I borrowed some money from my mom. It was weird how everything happened. My grandmother passed away a year prior, they just sold her house. It forever to sell it. This was right during the crash and they sold the house and I asked my mother if I could borrow some money for mentoring.

 

Low and behold, it wasn’t a solid program. I think I was being taught from somebody that may have done a deal, like one or two deals within the last five years so I wasn’t receiving the right type of mentorship. So I was just kind of — a blind with a steering a blind and I didn’t know really what to do and so I was putting offers in on all these properties and some of them were getting approved.

 

Then I looked at the numbers just from using some of my originator background and I was like, “This does not make sense. There’s no money here.” It took me a while before I really got started. I actually went back into the mortgage business with a company here and it was awful. Talk about awful, I have no college degree or anything so the only drive was I was being offered a 100% commission and I had a son on the way.

 

So the pressure was on because all of my money through Countrywide was gone pretty quickly because their stock went from $42 to $12 really, really fast. So I didn’t have much left so I really needed to get something going. I ended up working for a company and they micromanaged and I had to start all the way back at ground zero and it was not fun.

 

I ended up actually, I hate to admit this, but I actually got fired mainly because I was starting to focus on real estate investing and I think that they saw that my productivity wasn’t there. Mentally, my mind was already gone from there and I needed to focus on something for myself. I wasn’t going to work 40 to 50 hours a week for somebody else and make them a ton of money. I just figured I should do this myself, and that’s when I really started getting into short sales. I started doing a ton of short sales and that’s really what kind of took the business and blasted it off from there.

 

[00:17:03.1] MF: Nice, yeah sometimes being fired can be the best thing that ever happens to someone.

 

[00:17:08.2] JL: Yeah, in that case it was. I actually, I remember being fired and I was actually smiling the whole time. I was so excited. I was excited but I was also so fear shocked. I was like, “Oh man, okay now it’s settling in. I’ll probably have to live on unemployment to unemployment check and this is just going to be awful,” and that’s what I ended up doing. I was literary on unemployment check to unemployment check during the first few months of being a real estate investor.

 

[00:17:42.7] MF: Wow. So with the short sales, were you wholesaling them? Were you buying them to flip? What was your angle with the short sales?

 

[00:17:50.6] JL: So what I was doing was my angle was we found people off the notice of default list. So it’s a notice of default list here in Indiana. Some states maybe lis pendens and what we would do is we would find these people. We would talk to them, let them know of what we can do from a short sale standpoint and I had about five to six agents working with me.

 

What we would do is we would get the property listed and my company would do the negotiations. So we would do the negotiations, we would put in our offer on the property and once we received an approval from the bank, what we would do is we would turn around and quickly sell it the same day. So we actually did close on it so most people know, it has an A to B transaction. The seller was the A, we were the B so we were the buyer.

 

We closed on it with our own funds. We use transactional money and then we turn around and we sold it the same day to an end buyer and that transaction was called a B to C and we sold it the same day and that’s what we did multiple times over and we did do some rehabs. Some properties that made really, really great sense. We took them on and rehabbed them but 90% of the transactions were same day closings.

 

[00:19:13.4] MF: Cool and that’s basically impossible to do now with short sales with our new guidelines but at the time it wasn’t too bad. Are you still doing any short sales now or is it all evolved to something else?

 

[00:19:23.8] JL: Well I would say we don’t it the way we used to do it. We do it in a way where we just find the deals, we put in our offers and that’s it. We don’t do any negotiations or anything like that anymore because the state did come down hard on people and if you don’t have what’s called a mortgage foreclosure consultants surety bond, then you are operating illegally.

 

So they did come up with that in 2010. You needed to have that mortgage foreclosure consultant bond because a lot of people were misleading home owners and telling them they could stop foreclosures and stop sale dates and all that kind of stuff and kind of made it a bad scene for people that were doing it the right way.

 

We still do short sales yes but that’s definitely not our main bread and butter. Just because there is deed restrictions on approval letters now especially from the big banks and you have to hold them for 30 days minimum and we can do that and it’s not a big deal but it’s definitely not the model that we did back in ’08.

 

[00:20:31.1] MF: Right. No, makes perfect sense. I actually had another guest who is doing very similar to what you are doing and had the same exact thing happened where the deed restrictions came in, some legislation came in and they pretty much tried to stop that dead. How did you progress from doing the short sales? How did your investing expand and progress? What were you up to next?

 

[00:20:52.9] JL: Sure. We ended up, I say “we” all the time but the company is an imaginary person. It’s not us because according to tax law, it is considered a person but anyways, yeah I moved forward. I started doing notes and we started doing more wholesaling. So we’re going after absentee home owners, probates, vacant properties.

 

We did some commercial stuff with some apartment buildings, nothing like gigantic or huge but we got into those types of deals and I started doing more rehabs and wasn’t focused so much on the short sale. We had a pretty big staff, I had negotiators, I had a couple BPO people and I just ended up parting ways with those folks just because of the mortgage foreclosure consultant stuff. So we just completely moved in a different direction and I really like doing the notes. It made sense, I knew what to look for in the mortgage documents that they would send me and it was a good opportunity.

 

[00:22:00.7] MF: That’s one thing I have not talked about anybody yet is note investing. So do you mind expanding on that and how you would look for notes and what your end play was for those?

 

[00:22:10.7] JL: Yeah, absolutely. I do feel like I was one of the first to really break the mold with finding people on LinkedIn. I started really showing people and teaching people what I was doing on LinkedIn with finding asset managers, portfolio managers, loan workout officers, I was finding these people on LinkedIn and most people have to realize especially the people that are listening to this is I wasn’t going after the top 20, top 25 nationally recognized banks.

 

Those banks only sell off big blocks of properties like 10,000 blocks or more and you’ve got to have $30 to $40 million to proof up with and I obviously didn’t have that. I was going after the smaller banks and I was talking to state level and regional level banks about them being able to liquidate and sell off some of their non-performing assets.

 

That’s the way I was doing it, was I was using LinkedIn’s platform to find these people because before I start doing the LinkedIn strategy mark, I was cold calling a lot of these places and if you know this or not, it’s really difficult to get past the gatekeeper if you don’t know who you’re asking for. So I really branched out on LinkedIn so I could have a name of somebody I can talk to in a department.

 

What I quickly started to understand was if you connected with those people on LinkedIn, you had all of their contact information. You had a direct phone number, you had their e-mail address, you could connect with them on Facebook or Twitter, you had their website. So it went from having an 800 number to having a direct contact number to their office and some of these people put their cellphone number on there. So it was pretty remarkable.

 

Some would put their instant messenger on there like Skype and I don’t think people use AOL anymore but they had instant messengers, their screen names on their so I was like, “Wow, this is phenomenal.” So I did that and I still do that. It’s one of the best ways for me to connect with people and I started doing that a lot and we started getting our note deals that way, was working with state level and regional level banks.

 

[00:24:45.6] MF: That is really funny because my main business as a real estate agent, I’m an investors as well too, but is an REO agent and working with HUD and banks and asset managers and I did the exact same thing whereas trying to find not to buy notes but to list their properties and LinkedIn was the best resource in the world getting through the gatekeeper because it was impossible to cold call a bank and find anybody to talk to so that’s funny.

 

[00:25:13.4] JL: No, no that’s great. I haven’t come across many people that did the cold calling recourse, so it’s refreshing to hear that you actually did it too because you know that if you don’t have somebody’s name, you’re not getting past the gatekeeper. There’s just no way. So it’s cool and it’s refreshing to hear because LinkedIn, most people like same to LinkedIn and their putting their resume out there and it’s so much more than that.

 

[00:25:40.2] MF: Yeah and one of the problems I had was nobody at the bank knew what I was talking about to begin with so they couldn’t even send me to the right department. It took eight calls just to get to the right department and then they’re like, “Oh yeah, we don’t do that. You need to just stop calling us,” was pretty much their answer.

 

[00:25:57.0] JL: That’s too funny.

 

[00:25:58.6] MF: So what did you do with those notes once you were able to buy them? Were you holding them? Were you selling them off? What was your strategy from that point?

 

[00:26:08.4] JL: So it actually turned out pretty cool with what I was doing. So I would find these properties to where the note was in a non-performing stage and what I would do at that point is I would make sure that I would get a proper due diligence period from the bank. What I would do is I would talk to the home owner or I’d have an agent talk to the home owner and let them know their options for when we became the new bank.

 

I would typically let them know the two options and those two options were we could do a deed in lieu and in some cases, we would do cash for keys but we obviously wouldn’t say that right off the bat. We’d let them know how we could do a deed in lieu and how it would be different from if they went through like a large bank.

 

How we would do it is we would just do a deed in lieu and we would report to the credit bureaus that their account has been paid, zero balance and if you know anything about credit, that dramatically raised their FICO score considerably compared to what the banks do. They were reported as an account settled for less than owed amount and that reports back to the credit bureaus as extremely negative. So these people really don’t have a shot at getting another home for quite a while.

 

So we reported it much differently and what we would do is we would get a deed in lieu signed. Obviously, we couldn’t execute it because we weren’t the bank at that time. So we held it in escrow at the title company and we had an agreement in place with the owner of record that once we became the bank that that document would become executed and that they would be taken care off according to the agreement that we had in place with how we would report to the credit bureaus.

 

So we would do that, we would have that completely already negotiated before we even closed on the note. That would all be done. Some people that were like, “Hey, you know I’m not going to do that. I’m going to wait until the foreclosure date.” That was pretty rare. I would say that we had a pretty high success ration with people doing the deed in lieu option, but there were some people that are like, “All right just take it to foreclosure,” and we did.

 

If it made sense, we have to. It’s unfortunate but they wanted to stand until the very end but most of the time when we have a deed in lieu signed and that was completely taken care of to where they’re completely fine with doing that, we would actually have a same day close. We already had a buyer lined up for the deal from our buyer’s list.

 

We would let the buyer know that it’s going to be a property that they’re going to own free and clear. There’s not going to be any liens on the property, it’s going to be 100% theirs and that was true because as soon as we took ownership of that note, we executed the deed and by executing that deed, there was no longer a mortgage showing up on there and it was always clean title in most cases.

 

I’m not going to say every time but in most cases, it was completely fine. There was nothing on there and then we had turned around, we would close it at the same day. We would do a personal transaction in the morning where we were acquiring the note and then we would do a real estate closing at the same day.

 

So we would typically spread those out. I would close at nine or 10 in the morning on the personal transaction with the note. I would give my title people enough time to go down to the country recorder’s office, record that deed in lieu and then we would closed in the afternoon which would show that my company was the proper owner of record. So that’s what we were doing just a quick flip on those.

 

In some cases, we would take it back, we’d do the deed in lieu and then we would do some basic stuff to get the property sold like do some carpet and paint just to show people, “Hey the property is move in condition ready,” and they would move in so we would have some retail buyers and then we would also have some cash buyers that would come, see it as an income producing property.

 

They would come in look at that opportunity and come take it from us. They would put in an offer and buy it from us. So we do sell off a lot of properties to investors that want to make the property a turnkey opportunity.

 

[00:30:33.1] MF: Wow. Now what kind of discounts did you see on those notes from the bank? So I imagine it was much more than you would see from REO’s or homes that are around the market.

 

[00:30:41.8] JL: Yeah, they would be anywhere from 50, 40, 30% discounts on properties and we’re talking not on UPB, which is what the home owner owes from an unpaid principle balance. They were going off of their current BPO or appraisal and most of the time, those were fairly accurate. Not all of them were but most of the time they weren’t too far off the numbers.

 

The discounts we were receiving were good enough to uphold the values that they had so we had large profit spreads in those most of the time, and I think I said it incorrectly but no, we were getting them at either 50, 40 or 30 cents on the dollar of what they were being comped out as from a fair market value.

 

[00:31:30.4] MF: Wow, that’s awesome. Do you still do that anymore or has the market changed?

 

[00:31:35.3] JL: It has maybe risen a little bit but not dramatically. I would say you’re going to still be able to get them at 60, 50, 40 cents on the dollar and if you’re buying more than one, two or three, you’re probably going to see maybe 20 or 30 cents on the dollar.

 

[00:31:53.6] MF: Wow. That’s good to know because I have followed. I’m a HUD listing broker so HUD’s been selling off bulk packages of properties and some of the big banks like Fannie Mae, Freddie Mac, Bank of America have been doing it too and the price some of these large hedge funds are paying is crazy. I think I saw, I think it was last year, but they’re paying 78 cents on the dollar for packages for thousands of homes which I don’t know how they’re make any money doing that.

 

[00:32:21.5] JL: Yeah and to be honest with you, that’s where I see the next issue coming up with our market across the county is these hedge funds have been buying up lots of inventory and, like you said, they’re buying at such a high amount that they don’t realize where the profit margins are and most of these people are extremely intelligent. I’m not saying they didn’t buy at an intelligent cost, but they’re buying so many of these properties and they’re not putting them into an income producing stage which most of them want to do.

 

Because I talk maybe on like a quarterly basis with some people over at Black Stone and their bread and butter right now is they want to buy properties that are in B and C class neighborhoods. They are your bread and butter type properties and they want to be able to have a gross rent of $1,200 or more and if those properties don’t meet it, they will flood the market with whatever else they don’t want.

 

So I do see properties coming on the market here again in a way that will be more than likely haven’t seen before. Yeah, it is much different in ’08. I don’t see it being like it was in ’08 but even the guy that really saw what was happening before everybody else did in The Big Short that Christian Bale’s guy, Michael Bury.

 

[00:33:51.9] MF: Right.

 

[00:33:52.9] JL: He just came out about a month ago and said that there’s another economic crisis coming on caused by the housing market again.

 

[00:34:02.8] MF: Interesting. Yeah, on the last crash, I think a lot of people could see what was going on from the lending standpoint because like what you said, it was crazy the loans that they were giving out.

 

[00:34:14.1] JL: Right.

 

[00:34:14.4] MF: I don’t see that happening now but the hedge fund is an interesting thing to see what they’re going to do because I know. One difference is they have billions of dollars so they don’t have to sell those properties but if what you say is true that they decide to dump a bunch of them because they don’t need their standards that could definitely change the market.

 

[00:34:32.5] JL: Yeah and like you said, they bought up billions of dollars on real estate so it’s going to be interesting. It’s going to be interesting especially because some of the bigger banks are still holding onto some shadow inventory and I know it’s been something that we’ve been talking about for years now but it’s more than likely going to come out here pretty soon especially from a commercial standpoint.

 

Commercial loans are being called due and owners of record are unable to take care of their balloon payment by getting refinanced because a lot of these banks, it’s tough to get a refinance with on a five year balloon that just ended. They want their money, they want to get paid and they’re not in the landlord business so they want to get rid of these properties as quickly as possible.

 

[00:35:25.0] MF: Right. I’m curious of what do you think — do you think if we do see changes in the market it will be mostly regional in certain areas that have seen huge price increases or maybe areas like Florida, New Jersey and New York where it takes three years to foreclose on a house and they have a built up shadow inventory, or do you see like a national down turn? What are your thoughts? I know you can’t predict the future but…

 

[00:35:47.2] JL: Right. Yeah unfortunately, what was the lady’s name in the late 90’s that had all the infomercials, the 1-900 lady? She had the Jamaican accent? I forgot her name but I don’t have her crystal ball but yeah, I think it’s going to be somewhat on a regional level because I have been talking with folks in California and they said their back to values before the previous crash.

 

I’m like, “Oh my, are you serious? Like, has nobody learned?” Because literally like San Francisco, San Diego, Northern and Southern areas of Cali, houses that are as soon as they are out in the market they are pretty much gone within a day or two. Same places like Vegas and Scottsdale and Phoenix and certain parts of Florida. I think it’s going to be more of a regional level because the Midwest didn’t really take that big of a punch on the chin during the crash because we didn’t have those dramatic value increases.

 

Here in Indi, it’s still a pretty stable market and some parts of Michigan took a really bad beating just because of the car industry up in Detroit but Michigan from a standpoint if you eliminate the trait is actually a really good market. Same with Ohio, Illinois, Kentucky, there are still a lot of great markets out but don’t get me wrong and they are still going to be great markets out there but to mainly get your question, yeah I think it’s going to be more of a regional level than a national level.

 

[00:37:27.6] MF: Right, and I’m in Colorado where we’ve had the highest depreciating markets in the country and I can tell you prices now are probably 30% higher than they ever have been in the history of Colorado. So before the crash, I mean we didn’t crash as hard as many of the other areas because our prices didn’t go up quite as high but our median price before the crash and my town was probably $180 and now, it’s $250 so it’s crazy what’s going on over here.

 

[00:37:58.9] JL: Yeah, you know, we talked to folks all the time that are like, “The Denver area, it’s just such a hot market right now,” and I think I started seeing Denver become a really solid market in 2012. I started hearing all the good things, the positive things with Colorado in general. Yeah, that market is super-hot right now.

 

[00:38:24.8] MF: Yeah so we’ll see. I’m thinking about selling off some of my properties and reinvesting in other places just to put my money to use but it’s just…

 

[00:38:32.4] JL: Yeah, I hear you.

 

[00:38:33.6] MF: Yeah, very cool. Well, we’ve been talking for a while, what are you up to right now? What’s your main focus and is it the coaching side, are you still investing, what are you working on at the moment?

 

[00:38:42.8] JL: We still have a full time investing business. I do a lot of it. I don’t know if a lot of your listeners have read the book The E-Myth, but they should. That’s a great book and I look at my business like that. I don’t want to be constantly working in it so I work on the outside of it. So we still have a full time investing business. I have a lot of my team running that but we still do a lot of wholesaling, rehab, we purchase a lot of packaged deals and just constantly, just like you are, constantly building up that income producing portfolio.

 

So we’re still doing a lot of that so we’re going after probate still, absentee home owners, vacant properties, we’re still going after pre-foreclosures. We’re just doing things to have a successful investing business. A lot of different stuff to have business come in. It either comes from banks, we’re buying deals from hedge funds, we are doing a lot of mail. We are doing a lot of different things within the business to really have a good consistent business coming in.

 

[00:39:55.9] MF: That’s awesome. Are you primarily focused in your area or have you expanded to other areas?

 

[00:40:01.4] JL: No, we’ll do some stuff nationwide. It just has to make sense. We look at some commercial buildings in other states and we’ll have some of our students bring us deals and if those deals make sense, we’ll get involved with them but yeah, we do coaching but since I do have a full time investing business, I don’t do the whole come do an event and there’s 300 or 500 people in the room. I work with people but on a very exclusive level, only like 15 people at a time just because I have my full time business.

 

[00:40:37.4] MF: No, that makes perfect sense and I agree with your strategy on that. It takes a lot of work to do and pull off all of that and pretty much, it seems like the companies are doing that. That’s all they do. They’re just doing coaching, they’re not investing, they’re just trying to teach people.

 

[00:40:51.8] JL: Yeah it’s true and the reason why I have to do it so small like that is because people work directly with me. I don’t outsource anything to a filment center in Utah or anything like that. People work directly with me and it’s much different than working with the people that you see on TV and stuff so that’s why people do come to us and want to work with us directly.

 

[00:41:19.1] MF: Very cool. So do you have any big goals in the future? Anything you want to do in the next couple of years, either investing wise or otherwise?

 

[00:41:28.4] JL: Yeah, personally I would love to get a big apartment building. Probably 60 plus units, get a nice apartment building and if I need to do like some sort of a value play to get it up to a higher occupancy rate, buy it at a 50-60% occupancy rate and do some value plays to the property to get up to 90-95%, I would love to do that. I personally think self-storages if you buy them at a great price, they could be great income producers for you and so continue to do that.

 

I’ve only bought some and flipped them really quick, that’s why I didn’t have them for a long period of time but I would like to put some of those in my own personal portfolio and continue doing what we’re doing right now but we’re also going to get into land opportunities and also some mobile home opportunities. So that’s from a business standpoint. I would love to do that, I would love to still continue to work with people as well on an individual basis.

 

[00:42:37.2] MF: That’s awesome. You have your plate full it sounds like, I tend to do the same thing and start. I have big dreams and hopes but there’s only so much time.

 

[00:42:45.9] JL: I know there is. It is yeah. You’ve got to always dream big and if you fall a little bit short, it’s still probably — if you fall short of half of what your big dream is, I would still consider that a success.

 

[00:42:58.7] MF: Yep, for sure. I am working on developing a small minor subdivision now. So I just got word from the water department this morning. They are approving my water plan so that’s nice to hear.

 

[00:43:09.6] JL: That’s awesome man, congrats.

 

[00:43:11.1] MF: Thank you. Very cool, so what’s the best way for people to reach you Jason? If they want to e-mail you or go to your website, how should they find you?

 

[00:43:18.8] JL: Yeah, if people want to check out my blog, it’s just JasonLucchesi.com and I know I got a weird last name there but it spells L-u-c-c-h-e-s-i, JasonLucchesi.com and there’s ton of stuff on there, tons of stuff. Lots of freebie stuff that I do and if you want to come and check us out, I share tons of content on there Mark, and people are more than welcome to come on over, check us out and yeah. I don’t have anything to where they have to buy something from me to get some stuff, some freebie stuff. I’m an open book, I try to help out as best as I can.

 

[00:44:03.9] MF: Very cool. Yeah, I’m the same way. I’ll put a link up on our website too so people can reach you there. Yeah, I’m the same way about giving away free stuff. I probably give away too much free stuff but at the same time, you know?

 

[00:44:14.0] JL: Yeah.

 

[00:44:14.6] MF: There’s my main goal. My main business, like yours, is investing and it’s more fun for me to build and help people than to try and strain every dollar out of them.

 

[00:44:25.0] JL: Exactly, yeah. No, I think you hit the nail on the head there. Yeah, I wish there was more blogs out when I started it to where I could really find some information but I think the internet, people were just getting involved in internet marketing at the time and there weren’t quite as many blogs out. So there’s ton of information out there.

 

You just need to choose the right person out there and Mark, I’ve checked out a bunch of this stuff and he seems to be on the right track with getting the right people for you guys to listen to and get some great tips from. So you’re doing a great job Mark and I appreciate again having the opportunity to be on your show.

 

[00:45:04.4] MF: No, I appreciate that. Thank you very much Jason. Well, yeah I know we’ve gone a little longer than I said we would so I will get us out of here soon but thank you so much for being on the show.

 

One last thing, if someone is just brand new to investing and they wanted to get started, do you have any quick tips for them? Let’s say they wanted to get involved on notes, is that something they should start out with or do you think they should start in something else first before they move into the note business?

 

[00:45:30.6] JL: Man, that’s a great question. I would recommend doing the easiest barrier of entry for real estate investing and that would be wholesaling. Getting into notes right off the bat I think may be a little bit too overwhelming for folks but after you do your first three to five deals, it’s absolutely something you can do. I don’t want to be the one to tell you that you can’t do it but you absolutely can.

 

Wholesaling really gives you a good perspective, a good general overview of the business. You can walk through the property, you can kind of take a look at things. If some of your end buyers want to go with you and you’re like, “Oh what do you think of this property?” They could start telling you what they would do to the property.

 

So you can really become a sponge and you can make some really good money wholesaling properties and become a sponge to some of your buyers to see what they would do to certain properties. So I recommend that. That’s a great foundation to just get that moving and this may sound really, really simple but some people don’t do it.

 

I recommended taking, getting just an eight by 11 or eight by 11 and a half, whatever it is for the legal pad. Get a legal pad and every single day before you end your work day, write down the top five things that you need to accomplish for the next day in order for your business to be successful and it goes a long way. It helps you stay organized.

 

I know there’s tons of stuff out there on the internet that could help you stay organized but this is something from a visual standpoint and I don’t know about you Mark but when I write something, it just becomes more real and more authentic more than typing on a keypad. So it’s something that I’ve always done since I’ve even been on the mortgage business. It’s helped me stay on a really good narrow path with being organized and knowing what I need to do to be successful for that day. So hopefully that helps and does that answer that question?

 

[00:47:38.3] MF: Yes, that’s awesome. I do the same thing and I have notebooks all over the place that I write in because I keep some notes on my computer and on my phone that I need to have access to it or whatever but I try to write down, physically write as many things as I can. Because just like you said, it engrains in your brain and you see it. It just feels good writing sometimes out your goals and thinking about it in that way.

 

[00:48:00.4] JL: Absolutely, yeah. That’s one of the reasons why I do it. It just helps you stay on track and if you put five things on there, once you finish them, then you move onto another project. For those people who haven’t heard of that Ivy Lee story, I’d recommend just Google the Ivy Lee story. It’s probably worth five to 10 minutes reading about it. Where Ivy Lee tried getting himself in with I believe it was Dale Carnegie with Bethlehem Steel. I don’t want to ruin it but go check it out. It’s really, really good and it’s some valuable information.

 

[00:48:36.0] MF: Cool, awesome. I wrote that down too because I haven’t read that one yet.

 

[00:48:40.5] JL: Oh, it’s great. It’s great stuff for sure.

 

[00:48:42.7] MF: Cool. All right, well Jason I’ll let you get out of here. Awesome job. Thank you so much for doing this. I really appreciate it. I learned a lot listening from you. I’m sure the listeners learned a lot as well. JasonLucchesi.com again is where to reach you. I will put a link on that in the little article write up I do for this podcast and any parting words before we go?

 

[00:49:04.4] JL: I would just say, again, I appreciate you inviting me to be a guest on your show. I appreciate your listeners for listening to your podcast and don’t be afraid to ask questions. That’s the only thing that I would say is there’s so many entrepreneurs out there not just in real estate but just in businesses in general and they’re afraid to ask the questions.

 

It’s like when we were kids Mark, we have no problem asking a gazillion questions to our parents and then for some reason, we started to stop asking those types of questions as we got older and I would just tell people get back to that mentality when we were kids and we asked a gazillion questions like “Where are stars from? Where do babies come from?” Just the simple stuff, just ask questions and I promise that will help out quite a bit.

 

[00:49:57.1] MF: Oh, that’s awesome. Great advice because yeah, too many people are scared and it doesn’t hurt to ask. Nothing bad can come from it.

 

[00:50:05.9] JL: Because the thing that comes away from that is, if you don’t ask your question, your answer is always going to be no. So if you need to know to that answer and you don’t want the answer, then that’s what you’re going to get but seriously, just go out there and ask questions. You’re on this podcast right now listening to it, Mark is putting out a ton of great stuff. Don’t be afraid to ask questions to him, to me, to any of his other guests around the show because we’re not afraid to give you those answers.

 

[00:50:37.8] MF: Right, very true. Very true. Awesome. Jason, thank you so much for being on. I really appreciate it. I hope you have a great rest of the week and hopefully, we can be in touch again soon and catch up on everything that’s going on.

 

[00:50:50.8] JL: All right, thanks buddy. Have a good one.

 

[00:50:52.8] MF: All right, you too. Thank you.