E25 – J Lucky Henry Pt 1

 
 
00:00 / 32:38
 
1X
 

*Intro and outro music are from an original piece by

Carl Zukroff of The Blue Hotel

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You have stumbled onto another episode of “Get Your FILL, Financial Independent and Long Life, where we discover the best ways to achieve those two goals. You know how sometimes you meet someone and you know that they are on their way up. That is exactly how I felt when I met our next guest. Take a listen to JLucky Henry and see if you don’t feel the same way.
Lucky thanks so much for joining us today.
JL: So I got into real estate a while ago. Firstly, as a wholesaler. Because why not? Right, you can, it doesn’t take anything to do it.
I was making money, it was a flexible schedule, and I felt cool. I’m an investor that title, etcetera. So I got into that probably eight years ago, now and then I was five years into it. I was doing it, I never took it super seriously I was never full-time wholesale as my only source of income, but I was definitely doing it and I realized that there’s a lot of deals being left on the table, right?
Some houses that you can’t wholesale, sometimes the people wanna buy something after moving and I was, I was thinking I’m not… One: I’m not capitalizing all the income I could make, but two of not able to fully help, I’m able to help part of the situation but not the whole situation. So I decided that if I got my license, I would be able to help all around. I could help wholesale the property, help the seller find a new place and of course get paid for all the work but it is more work right to do, so that’s when I decided to get my license and so I’ve been active with my license for almost three years now.
C: Well, you said something that I like to hear about helping people because as a wholesaler, you do get into situations where people are not in a good place and you are helping them out of a mess.
What was your first wholesale deal?
JL: I did my first wholesale deal in Connecticut in Bridgeport, Connecticut. It was a two family and it was pre… It could have, as a realtor now looking back, it could have been a short sale, probably, but at the time I had no idea what a short sale was or how that worked I just knew that they needed to sell and my spread wasn’t big to be honest.
I would be a horrible wholesale coach because I’ve never made more than $10k on any wholesale deal.
Even if it was there, I just never did because I… And I don’t wanna come off like “Oh I’m so altruistic about it”, it’s just that – It was more laziness to be honest, is more… But I can get this done quicker, if my fee is smaller. And so, my first one was $2k on the two family and I was like, Cool, this is perfect. It just made two grand. I helped these people get their house sold… And other wholesalers were like, “Man you could have made at least $10k on that or $15k” and I’m like… But I didn’t have $2k, yesterday and I had $2k today. And these people are out of the situation.
Have you done wholesaling too?
C: I haven’t done any wholesaling. No, I haven’t, I started off – my kind of history I guess, which we don’t need to talk about but – I buy these places and this is how I always done it – I buy these places, I think. Oh, I love this house, I’m gonna live here forever, I’m gonna fix up to be just exactly how I want and then when it’s done, I’m just like… hmmm, what’s my next project? So I’d say I’m like a long-term flipper. I work on it myself. Recently, I’ve gotten into doing Airbnb stuff, so I have a couple of places where I do that and I’ve done a lot of different kinds of investing, but I’ve never done wholesaling and I think it’s because wholesaling, you kinda have to have a certain amount of guts to knock on someone’s door and say, “Hey what’s your situation? It looks like you could use some help, whatever.
And I’ve always felt very… I’m weird about even friends, people who I know who would be happy to see me, I don’t want knock on their doors. So, yeah, I guess I’m just really weird about… Maybe I’m a recluse or something, I don’t know.
JL: I think there’s nothing wrong with that, I mean, sometimes I wanna recluse myself. Look at me, it’s a Monday and I’m clearly at home, right, T-shirt hanging out – So yeah, I get it.
Wholesaling is…I mean technically, yeah, you definitely gotta have some guts go out there to get the leads right but, I mean, it’s… You may have wholesaled before without considering it a wholesaling because really you’re just selling buying a helping someone facilitate a deal as a middle person.
Like if you took on a project like the long-term flip, but halfway through it you decide you want it, out, you already found a better project.
Technically, it’s flipping kind of wholesaling in a way – it depends how you define it.
C: Well, so when you… How did you get started? And first of all, not everybody knows wholesaling exists. So how did you find out that it was a thing? And then how did you kinda get started?
JL: How do I find out it was a thing? I asked someone actually who was driving a really nice car. So this is actually a true story. I was at a gas station and this guy had a really, really nice car. I don’t know what the exact make of the car is, but it was a Porsche. I know that and it was really nice and I remember thinking – I was probably just moving to the US at this time so I was 18 years old, and I walked up to this guy in the gas station and I look around the gas station and I’m like: who looks like they own this car? And I find this one guy and I’m like: Hey, do you own that car? He’s like: Yeah. I was like: What do you do? He’s like: I own a bunch of beauty salons, tanning salons.
So what does that have to do with wholesaling? And I’m like: Interesting. And we talk about that for a little bit, and then he’s like: Well take care kid – and he’s ready to leave, and I was like: Wait, how did you get started because I don’t have money to wake up tomorrow and buy a beauty salon. I can’t afford that. So how did you really start? And he said: I started with real estate, I started with wholesaling, and I’m like, “What is wholesaling? He’s like: I would help people – he kind of briefly explained it, and he was like: I would find someone who’s willing to sell something for less than what it could be worth because they have some type of situation, they have to do it quickly, so if they’re willing to sell it for $50 and it really could be work $75, if you put $5 worth of work into it but they don’t have time or the money to put the $5 worth of work in to it, so they’re willing to sell it for $50, help them find someone who will pay at least $55 or $60 for it and you’ll make that difference. And I was like, “I hear you, but… And he was gone, he didn’t have any more time to talk and he left me with a little bit of a nugget.
C: So now, do you read, do you listen to podcasts – how did you kinda get or how did you start getting information?
JL: So definitely typed in a Google ‘wholesaling’ – came up – I had to spell it correctly first. But I got to it eventually and wholesaling is… It’s about finding the leads. So it wasn’t that big if it was even around at the time I don’t remember exactly. Now, I’m dating myself, I’m getting to that point.
Then figuring out how to get in touch with people, going to public deeds, figuring out that you can look up probate leads, people who have to sell, vacant properties, absentee owners, etc, figuring that stuff out, and just going and learning and figuring out who actually needs help who doesn’t. Learning and learning and meeting with a lot of people really.
That’s really what I started to realize I enjoyed was even if I didn’t get a deal was I enjoyed meeting more and more people and talking and learning about different situations and packing a whole lot of experience into a little bit of time because then the more – Someone told me this last week, actually: good at judgment comes from experience, and experience comes from bad judgment and I was like: Yeah right. So I gotta get experience by making – what will be considered bad judgment, which is spending time with a lot of qualified or unmotivated potential clients: people that really don’t wanna sell or don’t need to sell – to spend a lot of time with them to learn. Like, Okay, what is one who does need my help look like.
C: Yeah, yeah, interesting. We have a guy in our office whose whole business model, is he just uses Mojo Dialer, calls random people on the phone. Hi, do you want to sell your house? Do you wanna sell your house, do you wanna sell your house? But I listen to him – I just don’t see myself ever doing it, you know what I mean? It’s not my business model – but when he get somebody on the phone, he’s so good, he makes sure, “Well okay, so if I come and sell your house, where are you gonna move, what are you gonna do, what’s gonna happen? And then when it does seem like they’re ready, the stuff he says, he’s just got it down.
There’s a lot to be said for just getting yourself to a point where you are just comfortable being uncomfortable. I’m gonna find out what’s the right question to ask, so that I know that in the future, I’m not gonna spend time with somebody who’s not ever gonna sell their house, who doesn’t need to or isn’t qualified or whatever.
JL: Yeah, for sure. And I really feel like they’re more from my time as an agent – I’ve only been an agent for 3 years – but my time as an agent and doing my investing, my personal investing, I find that it doesn’t really matter what strategy you pick, because if you get good at it, if you just keep doing it, you get good at it, and sometimes you try something new and it works really well. And you’re like: Oh this gonna be the best thing ever and you keep doing it, but in the law of averages begins to act on it and after while you’re like, “Oh this sucks. I don’t wanna do it anymore, but… Or you start off, and it doesn’t work and you quit too early because you see someone else having all this success, but no, I have friends who are like that, who cold call all day long, if they don’t do it four hours a day, they don’t feel like they went to work.
And I’m just thinking like I don’t wanna talk to that many people – four hours a day on the phone call. I personally just can’t deal with that much rejection.
C: For me, even if everybody I called was delighted to hear from me, just four hours on the phone, I’d be ready to go out and shoot myself. And they’re like, “Oh I’m so glad you called, I really wanna give you $50,000 just for calling me today. Like, okay, thanks, now do I have to call somebody else who’s gonna say the same thing?
JL: That’s so true and then you find what works for you. So I imagine you do probably – do you do letters and stuff – because I like letters, I’m a big one for letters because I can write it one time copy it, send it out a bunch of times and I don’t have to talk to 1000 people, but I’m still communicating with 1000 people.
C: Yeah, yeah, that’s more my style. I like to help people too. I agree with that. And you see a way that somebody needs something: they don’t understand how things work. Now, you could potentially say, Hey, we can do a short sale here and you’re gonna be in a better situation and it may be even better than selling it, you still can wholesale it or whatever, however it works.
But they didn’t know that they could get out of that crappy situation that they were in and you’re bringing your expertise to them and it feels good, it feels good. That’s the whole thing for me. It’s great to make money, right? But you don’t wanna make money at somebody else’s expense.
JL: Exactly and I feel like – this is not a knock on people who do make big commission checks wholesaling, Kudos to you if you get the person out of the bad situation. But I always feel like: I’ll make some money, but it’s a reasonable amount. I’ve seen people make some checks that I’m just like… How did you make $100,000 wholesaling that thing? If you can make $100.000, you could put $50,000 in the seller’s pocket and you still would have been okay, right?
And as a broker when you list properties – and of course there are brokers who also make $100,000 commissions, but in order to make a $100,000 commission, you have to be selling something that’s worth oodles and oodles of money.
If you sell Tom Brady’s house and you make a $100,000 commission, that’s okay. That’s totally fine. Tom Brady’s gonna be okay. It’s not hurting Tom at all. He’ll happily pay that if you sell his $40 million house.
C: And you’re probably not gonna sell that to the first person who walks by the street, either. So that’s a long-term commitment. You got a lot of upfront cost. You’re not just gonna say: I’ll take some pictures on my phone and then I’ll just put these on MLS and somebody’s gonna come and buy Tom Brady’s house. I don’t think so.
JL: Not at all. So true.
C: So now that you’re doing both is that… Have you done other kinds of investing now that you’re sort of getting to be an expert?
JL: Oh, sorta getting to be an expert, I like it. Sorta getting… I feel like I’m always a student, but I can be an expert student if that works.
Yes, so we bought, my parents and I bought, we owned a couple of multi-families in Connecticut we’re down to one now and lessons learned. I love my parents. Don’t invest with your parents, right? Decision-making is hard, when you’re still their kid, you’re still seen as the young one in that dynamic – or if you do invest with them, you bring more money to the table, so that it’s clear that you’re in charge of the situation. So, I did that. And now, I’m looking – right now actually – looking to start a portfolio in Mass more out in Western Mass, like Springfield, Holyoke, Fall River, those types of markets.
Looking to start my own portfolio, I’ve helped a couple – as a broker – helped a couple of people buy in those areas and just seeing the numbers – it’s kind of interesting being on both sides because I put together packages for people and I’m thinking: This is a really good deal as I’m serving it. It’s like having a nice meal on a platter and you’re bringing it out and like I wanna eat this, but I have to put it on your table so you can eat it, right? And I think that there’s a good balance that you have to find, when you’re an investor and an agent because really good deals, you want them but to keep a good relationship, you wanna give your clients and your partners a lot of good deals.
You’re like, “Where do I get to invest? And so for me, I find that that’s a part of the reason I’m looking out there.
And I also started only wholesaling now really far out of Mass or out of Boston proper, at least, and further out and I’m starting to look at Virginia and Georgia and a few different markets to wholesale virtually because I don’t wanna compete with myself and compete with my own options. And of course, when I go on listing presentations, if it makes sense to wholesale the property I absolutely will, but I don’t intentionally try to wholesale deals when I find them. I look to list them first now, right, and I’m looking to become more active as an investor who’s actually putting the money out. I’m looking at other wholesalers in Massachusetts saying: bring me some deals. I’ll use hard money and buy the deal now.
C: Yeah, where did you move from? You said you just moved here at 18.
JL: Aruba
C: Oh yeah? A good friend of mine is originally from Aruba.
JL: Nice, and they live in Massachusetts?
C: Yeah, now, until he retires then he wants to go back to a warm place.
JL: Yeah, of course, of course. No, I would love to. I don’t meet too many people from Aruba. It’s a really small island 19 miles by six miles, so not big at all and we don’t, many of us don’t leave. It’s a paradise.
C: Paradise exactly, so why did you leave?
JL: Oh man, because one in what, maybe seven or six people, in Aruba on vacation are from Boston.
So apparently Boston is a good place to make a living, because everyone can afford to be on vacation.
C: That’s the problem with a lot of paradise is it’s hard to become a millionaire when you have such a small footprint, to choose from.
JL: Exactly and it’s a very niche industry there. Either you’re gonna be in hospitality or you’re gonna be a politician, basically. Those are kind of really like your two choices and I mean of course if you’re something specialized, a friend who lives here, part-time, and works in Aruba part time. Literally, he runs a business in Aruba and he’s there two weeks out of the month, two, two and a half weeks and he’s in the US, two to two and a half weeks and he has a partner. They’re on rotating schedules, like that. One of them runs the office for two and a half weeks, then they switch and then I’m like… So when you go to work, you go to Aruba to work, and then you’re in Boston, and you don’t do anything. I’m like, it’s a pretty good set up.
It seems a little backwards but it can’t be that bad. If you go to work 9 to 5, and then go to the beach for two and a half weeks, and then you come back and you don’t have to work for two and a half weeks.
C: Yeah, you feel like you’re always on vacation. Do you have a long-term goal for yourself, a long-term vision?
JL: Absolutely. So I have a long-term plenty of long-term goals set out for myself and my family, in terms of a certain amount of investment properties that we wanna own, certain amount of land we wanna own, we own some – they own some – land in the Caribbean. I don’t wanna make it seem like they’ve already given it to me but I’ve told them, make sure they hold on to it ’cause I want it.
And so my goal is I wanna be a really big broker. When I first started as a broker and I didn’t really wanna be a broker I really just wanted to get it ’cause it was more opportunity but now I enjoy brokering. And I enjoy brokering and working with investors as a broker because I get it. I understand it and numbers is really something I like talking about, so my long-term goal is I wanna run my own big, big, boutique brokerage. If that makes sense, right?
I don’t wanna have a 1,000 agents or 50,000 agents globally. I wanna have a small army of agents. We do business globally, internationally. You wanna buy a condo in Aruba by the water? Let’s do it. You wanna buy some investment property down here, let’s do it. A global reach, but are really a small boutique firm. That’s gonna need a lot of investment properties with good cash flow in order to sustain that – for the start-up cost.
C: I was gonna say, it should just sustain itself, right?
JL: It’s start-up costs and the start of in that brokerage will take a lot but I want our primary client to be investors and basically anyone that sees real estate as an asset. So if you view real estate as an asset and you treat it as such and then you’re the ideal client for us to work with because we want to work with people that are making numbers-based decisions.
C: Using their logic. That’s a big difference, right, that’s the theoretical difference between investors and regular home owners is that one uses logic and the other uses emotion, although you do see a little bit of emotion going into investment decisions, right? I’ve seen people try to tweak the numbers a little bit so they can invest in the property.
JL: Exactly, exactly, and I’m totally guilty of that. For example, I went to college in North Andover, and I lived in an apartment in Methuen for a little bit and I saw that the house was for sale – it was a three-family – and I was like: Oh I wanna buy that. And I’m thinking to myself: the numbers don’t make sense, if there’s no reason to buy that place. The fact that you lived there for a year and you emotionally just want to buy that makes no sense. And I actually went to look at it twice and looking back, I’m like: Why did you look at it twice you knew exactly where it was, you already knew what it looked like but you wanted to try to convince yourself that somehow it could work.
I think that one of the best ways to avoid that if you are a stone cold investor is like having a team. Because my partner definitely was like: Yeah, no that is a stupid investment, we’re not doing it. Because they have no emotional attachment to it. So one always stays logical most of the time in most situations.
C: It does definitely help to have a tag team to have somebody who’s… One person’s going a little crazy the other person is gonna say: Hello, come back here and get back to reality.
So you have a fellow investor now, a business partner?
JL: Yeah, so right now my team consists of a contractor – GC general contractor, a property manager/project manager, a videographer and a part-time admin assistant. We’re a solid team. And what I like about the team is all of us are well-versed in investing, understand investing. The contractors has done lots of flips for other people, a couple for himself. The Project Manager, her full-time job, she builds really big buildings. So we’re all on the same plane, we get. And it took a while. It’s been three years, almost three years… And it took a while to find the right team. Because it’s important that you guys get along based on your visions and goals because otherwise you will make decisions based on their goals and you’re making the decision based on your goals and it’s kinda like dividing which route you should go.
C: And I think it’s more than just getting along it’s also that you bring different things to the table that you have different skill sets and different personalities but that you are also respecting each other and respecting each others’ differences.
JL: Absolutely.
C: I think that sometimes the best partner is one that sometimes drives you crazy. They’re so conservative, I’m gonna kill myself. But then it’s thank God, that person was there.
JL: One of my partners is definitely like that. We have a deal or we’re looking at a property we’re like, “Hey you know what, the numbers make sense at 500, two of us will say, yeah, it makes sense at 500. He’ll say: Let’s start at 480, and we’re just like… But it makes sense at 500, but he’s very much like that. But it’s good because it definitely keeps us from over-spending and we’re at least here, ’cause if we left him to his own devices, he probably would never put in an offer, and because he’s just always like, No, it doesn’t make sense, it’s too high.
So, but you said something important there too about bringing different skills to the table and I think that that’s huge. And one of the things I found out with a team is that I got my license basically when I was wholesaling so I could bring more things to the table, ’cause now I’m the guy who can wholesale your property or the guy who can list it for you.
And now to have the team of contractors and property managers, we’re able to help sellers. Look, if you wanna sell it, we can list it on MLS. If you need to sell it for less faster, we can buy it or wholesale it. If you just need, you’re just stressed, you don’t wanna manage it and that’s the only reason you’re selling it, we’ve got a property management team.
If you need more rent and you need to do some repairs but you can’t afford to do it, we’ll figure out a way to… We have the contractor, we can repair it and figure out how you pay us back, whether you take us on as property management at a higher price to get the… We have a lot of options now with the team, because we all bring something different to the table, which is something I really like.
C: You can have them cut you in on an ownership piece, too.
If the repairs are worth $25,000, we’re gonna take on a 10% ownership or something like that. Whatever makes sense with the numbers. I actually talked to somebody at one time who instead of getting commission on big transactions, if it was an option for the investor that he would become a small partner instead of that. And the other thing that he did is say, I’m gonna loan you back my commission and you pay back over 10 years. And so, he liked having that income stream.
So you’ve done 30 deals and they’re each paying you 100 bucks a month you know what I mean? It’s pretty good.
JL: I like that, I like that that’s very smart. I’m familiar with the one about… Instead of doing the commission make me, cut me in as part-owner on it. But I like the one about him loaning the commission back. That’s a bit of alright.
C: It’s kind of cool and yeah, it works out really well for him.
JL: That’s one of the things. So having your license and understanding the investment game, right?
And I’m noticing there’s more and more people starting to do that. I know I definitely was not the first one to go with that idea, but I know there’s a lot more people starting to do it, and I’m curious to see in the future how it shakes out, or the next couple of years with… I know some states have banned wholesaling or limited the amount of wholesale deals to two a year
C: Really, how do they do that?
JL: How or why?
C: Well, How?
JL: However, legislation works. It’s in one of those Facebook groups, like Wholesaling Daily or Wholesaling Full-time. I don’t know if you’re in those groups because also but kind of like a Black Diamond-type group, but national they’re talking about it’s a state in the Midwest.
So I looked at it and I was like, “Oh this doesn’t bother me, but sucks for those people, but they are now limited to two wholesale deals a year.
Kind of like in Massachusetts, we’re limited to 10. If you do more than 10 sales of real estate in a year, you have to classify as a real estate dealer. If you sell more than 10 and you don’t have a license, so it’s that type of ideology they followed where if you do more than two transactions as a wholesaler, if you don’t have the license, without a real estate license, you can’t do more than two basically is it?
C: So that’s interesting because like wholesaling to me, I think of it as you really just being an intermediary. You’re never actually taking possession of the property.
JL: So I think what’s happening though, is a lot of people are learning how to wholesale from online people, real estate gurus etc, and they’re not really telling the seller, there’s no fiduciary responsibility – like when you have as a realtor – So they’re not telling the seller: I don’t actually intend on buying your property not giving the seller that impression and so that’s kind of causing issues. That’s one. I know the other issue that’s being caused is – are you familiar with the double close?
So, when you are saying you’re gonna close on a property, so you have one company and then someone else is paying you a little bit more than you’re offering the seller and technically you close on a property before you own it, so you get the money in your bank account, and then close on the other property. But how can you actually close on a property you don’t own yet? But some states allow it with an attorney. Where one attorney kinda handles the whole thing. Sometimes they do that so that the seller never sees how much they made on the transaction.
So when they make a 100 grant, the seller never knows that they made 100 grand profit.
Whereas, I typically always do an assignment where in the contract says either I’m going to buy it or one of my assignees and the seller always will see how much I made on it and that’s why I think that’s partially also why I never made a big one because I was always like… Yeah, I don’t want the seller to see me making 80 grand on this. When granted, they made money too, but they’re walking away with about the same as I did and they were the ones who owned the house for 20 years, right?
And yeah, I just never could have run my head around making the same amount of money as a person who owned a house for years.
C: Yeah, I agree and I definitely think honesty. You just come in and you say, “This is what’s gonna happen. I’ve got these contacts, this is what I’m bringing to the table and whatever, and I’m planning to sell your house at a profit. And as long as they get what they want and everybody’s fair to each other, I feel like that’s a better way to do business. Karma’s a bitch.
JL: So you have a lot of properties around here.
C: A lot of my stuff is in the White Mountains, actually The numbers work better there. And it’s fun, when no one’s in there, I can go in and use it myself. You can get started with a much lower… a much smaller amount of money up there. The first two places I got up there were under $100,000.
JL: See, and that’s what… So I run a group called Boston young investor network, BYIN acronym, we call it the buy-in. I know technically, there’s no U but in Boston, we do pronounce things how we want to – so that’s one of the things we talk about is, especially if you live in Boston, right? You can make some good money at a regular salary job in Boston, right?
But the cost of living in Boston is high. And if you look to try to invest for your first property in Boston. You’re like: It’s impossible, I can’t do it. It’s so expensive, but if you look in those western markets out there, you can find two families for under $100k right?
And it’s not quite sexy right to say you own in some of those markets, but the numbers work and that’s one of the things that we emphasize and teach and try to talk to and say, “Of course, of course we wanna get in Boston, ’cause it’s a perfect to buy in Boston and you get the perfect combination of cash flow and equity value add, and then on this perfect hybrid of a property like the Boston is one of the unique places that gives you that, but if you don’t have the money to get in the game, you don’t have the money to get in the game.
And if you don’t have the experience, you don’t know the experience, to raise money either… We talk about that and see trying to teach and help people understand that. You can get three, four properties out there for 300 or 400 grand, which still wouldn’t even get you a multi in Boston, yet.
So, own that for a couple of years, put a portfolio together of those, sell that upgrade to something in Boston, right?
So there’s ways to get in the game earlier rather just saving for four, five years so that you have enough to buy your first one in Boston, because that… Now your first one is a huge risk because you’re wiping out your savings to go for this big project with a lot of undertaking when you could be doing three/four over the next four years. Smaller ones, put ’em together, and it’ll take the same amount of time but you’ll be more experienced by the time you get to the Boston one.
C: Absolutely and not only that, you’re gonna make a profit on your – theoretically – on your money, is not just sitting there in some stupid 2% kind of savings thing or whatever or in the stock market.
JL: So yeah, no, right, too bad I didn’t see that coming.
I know that after that you wanna hear more from JLucky Henry and happily, part two of my conversation with him is gonna air next week, so be sure to join us. In the meantime, have an awesome, intentional week.