Lessons Learned on Money with Jack BeVier

Episode 123: Lessons Learned on Money with Jack BeVier

The Profit First REI Podcast

October 24, 2022

David Richter

Summary:

On this episode of Profit First for REI, we have Jack BeVier, a real estate investor with Dominion Financial Services. He has worked in multiple aspects of investment real estate, and has contributed to the growth of the company into a recognizable name in the national lending scene for real estate investors. 

Jack comes on the show equipped with an abundance of knowledge in a wide-array of real estate investment fields, finance, and business building, offering a wealth of value to the people listening. Catch the discussion here.

Key Takeaways:
[00:43] Jack BeVier and His Real Estate Journey

[08:20] On Starting Businesses and What He Would Do Differently in Hindsight

[13:47] His Lessons Learned on Money

[17:57] Advice for the Next Generation of People Getting Into Real Estate

[21:33] Dominion’s Loan Products Suitable for Real Estate Investors

[23:20] Last Piece of Advice for the Audience

Quotes:

[04:47] “I was fortunate to start young…In real estate, youth is a humongous advantage.”

[16:59] “In single-family real estate investing…it’s best to learn how to do a couple of different things that complement each other.”

[24:15] “Getting into hard assets where you can get attractive leverage and do it at a young age, you won’t help but be able to retire [early].”

Links:

Connect with Jack – rental-loans.com 

Tired of living deal to deal? 

If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David 

Transcript:

Jack BeVier:

Getting into hard assets where you can get attractive leverage and do it at a young age, you won’t help but be able to retire. Well. Before you know, your parents told you you would be at 65, you know at 50 you won’t help but be able to retire.

Intro:

If you’re a real estate investor who’s sick and tired of living, deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the Profit First for REI podcast, where we believe revenue is vanity, Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.

David Richter:

Hey everyone, this is David Richter here again with the Profit First Rii podcast here with Jack Bevere. He is incredible real estate investor, works with an incredible group. He works with a Dominion group out in Baltimore and I’ve actually been there on several occasions seeing their operation. And it is a machine, it is an absolute machine and it’s probably been a couple years since I’ve seen it. They’ve even taken it further than where they were just a couple years ago. But they do a lot of different stuff. They do anything from the typical real estate investing that you think of to lending and you know, a whole bunch of different things. I’ll let him talk about it here on this podcast. But Jack’s a wealth of knowledge, front lines, building a business, building a real business with a lot of employees and, and just excited to have you on Jack.

Jack BeVier:

No, thanks David. It’s great to be here. I was really excited to get to join in today, so thanks.

David Richter:

Awesome. Well thanks for being here and appreciate that. And I wanna know first cuz so that way people who are listening get to know you a little bit. What got you started in real estate? When did you start? Like, and then what has that journey been? So you can go into that as well too.

Jack BeVier:

Yeah, yeah, sure. I’ll try to keep it brief. I, so my partner started Dominion in 2002. I actually interned for the company when I was in college for a summer.

David Richter:

Nice.

Jack BeVier:

And I came in, I was doing lending for a little bit. I drove around at some acquisitions, broke into houses, was crawling through ugly basements and I just thought it was fun. Yeah. and so I ended up doing commercial real estate for a couple years, but then coming back when I was 23 to Dominion and I started doing acquisitions and then moved to property management. Construction management was always very active in the lending business and kind of through the downturn learned a ton just cuz we got our butts kicked like everybody else. But we’re super fortunate to be able to make it through, kind of learned a ton of lessons and really kind of the, you know, the, the, the company was really kind of grown out of that crucible of the, the, you know, the post great recession. Yeah.

 and so we’ve just continued to grow it since there been a lot of funds. We have, we do a couple different things. We buy houses, we renovate them. We either keep ’em as rentals or we will flip ’em ourselves. We’ve been building our rental portfolio since 2002. We’re up to about 750 houses in Baltimore. And then we also have a sister company that is a lending business where we make fix and flip loans to investors nationwide. And then we also have a really attractive 30 year debt service coverage ratio, dscr loan for landlords that are built on their rental properties. That’s probably the thing I’m the most excited about right now. But yeah, it’s been a really fun journey and it was great to see you when you came to visit us in Baltimore. Yeah. We, we’ve kept, we’ve kept it growing and tried to keep building the platform and we’re just having fun with it. So.

David Richter:

Awesome. So what about that, that journey is quite the journey over the last, what, 15 years here. And I love that you interned at the beginning there. Not much that you hear someone interning and staying and, you know, growing this massive empire with someone that they interned with. Usually it’s like, you know, they’re there for a summer. Okay. Goodbye. You know, like going on, moving on. So how is that transition there? And then also just how, what would you attribute growing to the size that you are today and the different businesses in the arm that you have? What would you say that

Jack BeVier:

Yeah, sure. So I did, we, we, we did get, you know, really lucky when I, when I interned Fred, it was basically my partner whose name is Fred Lewis. It was Fred and five or six employees who were like, you know, assistants, you know, doing stuff. But he was really running the show and completely unbeknownst to us, Fred and I just happened to be kind of the classic visionary, an integrator combination. Mm-Hmm. <affirmative> we’re Fred’s the visionary and I’m the integrator. And you know, we didn’t know those terms at the time. We probably didn’t, you know, we didn’t know those terms for 10 years. Right. it just turned out that the dynamic worked you know, in that kind of classic way. And so he’s always pushing the company forward and I’m always, you know, building the systems and processes, making sure that everything’s tight so that we can then, you know, comfortably take it to the next level.

 So it’s been a really iterative process in that way. And I was fortunate to start young, right? Like in real estate, youth is a humongous advantage, right? Like, that’s just a, I think a crucial thing for folks who are thinking about getting into real estate. Like, you can’t start too young and hell, like the, the younger you start, you know, time has this way of really bailing out a lot of okay. Or not so great decisions in real estate. So youth is like a huge advantage. And I’ve just been a, you know, I just, I got in, I got into it very young and learned a lot in the very, in the beginning. And we’ve just been, we’ve been growing it there. So we were up to about 110 employees right now across the three different companies. And there have been lots of phases of growth and lots of mistakes. Lots of really hard lessons learned, particularly, you know, poster session and then, you know, just going through serious growing pains at every turn. And you know, really to this day, you know, we’re still, we’re still learning every day and just wing it. So, but having a good time. Yeah,

David Richter:

There you go. That’s what’s important. But I love that. I love that you’ve been doing this for a long time and you’ve seen the recession, you’ve seen that, you know, like you’ve seen the different things and you’re still in the business, you’re still going out there. I love what you said about time too, like the younger you are, the, you know, the more that you can, you know, get involved in real estate and have those mistakes be covered. But no matter where you are right now, it’s a great time to get your life on track with real estate investing and getting to where you want to be. So I love that. Absolutely. I love that advice. But before we go into like the money side of things and go into that on the profit first, why did you, why did you like real estate? Or what, why did you even intern? Like what, was that something that you chose or was that something where it’s like, well now I just really like the real estate game?

Jack BeVier:

I studied a little bit. I was like, I studied finance in school. Okay. And then I kind of switched over to real estate my senior year just cause I took a real estate class and I thought it was fun. And then I worked in commercial real estate for a couple years, but what I didn’t like about commercial real estate was that you didn’t get to do a whole lot of deals each year. You know, you’d spend a tr you know, I was working 80 hours a week underwriting deals constantly and maybe we’d get to do, you know, two, three deals a year. They were big deals, they were cool, but you know, it was a lot of grind for you. Really hope that something, you know, ends up working out. Yeah. But I kind of fell in love with single family was the, is this the deal junkie side of me?

Like just the, you know, the constant action. The fact that you can, you know, wholesale properties every single week, hell, you know, every single day if you, if you really get your systems input in place. And that part of it, you know, that was just the adrenaline rush, right? Like the dopamine hit of being able to do, you know, to do deals on a regular basis. I just found that really fun. I also really fell in love with the idea in single family real estate that the barriers to entry are a lot lower than commercial real estate or, you know, other larger industries that are also very capital intensive. And so I, I just really fell in love with the idea that if you develop a skill set in single family real estate investing, you can take that literally in any city or town in the country and apply that set of skills and put food on the table. You know, I didn’t have to have an organ, a huge organization behind me to get into that business and I didn’t have to go work for somebody either. Like I could pick up today and move to Wichita and be in real estate investing tomorrow and by the end of the month be putting food on the table. And I just really fell in love with that, you know, the idea that this was an industry that gave you that kind of entrepreneurial opportunity.

David Richter:

Yeah, I love that. That’s great cuz it is that skill. Once you have that skill, it’s transferable to where, where you are. So I really like that. So then you, you and Fred have created a lot of different types of businesses like that are very complimentary, you know, inside of there. And was that a byproduct of like, Hey, you know, like our business is growing and we need this thing. Why don’t we just create this company? Or like, I know a lot of real estate investors go down that road. How did you navigate when it was time to start one of those companies? Would, would this take focus off, you know, like from your other thing, just the, the questions that a lot of listeners I’m sure have in scaling a business in scaling multiple businesses?

Jack BeVier:

Yeah, sure, sure. I mean, originally it was Fred’s conception to start a platform that was in different business models and those different, all but all centered around distressed single family real estate, where those business models were complimentary to each other. You know, the thought was that, you know, if you, if we’re, if we’re buying houses for ourselves, if we don’t win the bid, we can go up to the guy after the auction and be like, Hey, do you wanna borrow money on that? Cuz I know the asset, I had a number on it, so I already know what I’m comfortable lending on it. And then we had you know, when we started building the rental portfolio, you know, the idea of wealth creation was always in, in, in the forefront of our mind. So we’ve always been very focused on building the rental portfolio because we really feel that that’s a strong, you know, the, the, you know, in our opinion, the best way to, to build long term wealth in, in real estate.

And so from a control point of view, we needed to build the property management company. I’d say that that was the hardest part, right? Cause like at least we didn’t get into the property management business because we love the property management business. We did it because we wanted the control over our largest investments now, certainly. Oh. And, and so, and to be able to do that, we opened it up to third party property management. Now that’s got ancillary benefits in terms of, you know, we’re talking to investors, we can wholesale houses to them. We could sell them turnkey real estate, we could offer them lending services. And so there were, you know, ancillary benefits. So, you know, trying to, we try to create this ecosystem where each of the business models were referring business to each other. And to be honest, it was hard.

Like, it was really hard to grow all those things at the same time. We did it through a lot of brute force and working really hard. You know, I’m not gonna sugar coat it. Like, it wasn’t like, oh yeah, we figured out this brilliant mechanism to do it. It was as hard as starting three different businesses at the same time. But the momentum that once we got through a point where you started to get some momentum in those businesses, it really started to like pick up speed. And so there was a, it was a tough, you know, I would say the first eight years, honestly, like from being honest, first seven, eight years were a really tough getting the momentum and getting all the systems and processes built before we felt like we had any real momentum. But then things have, you know, really, you know, continued in, in that vein. So yeah. Nothing, nothing sexy about it though.

David Richter:

Would you go back and do anything different now that you’ve, you’re on, you know, 2020 hindsight’s 2020, right? So what would you do differently, you know, while building those businesses, maybe not to make it so hard or difficult for those seven or eight years?

Jack BeVier:

Yeah, we do lots of, made lots of mistakes. We do lots of stuff very differently. One of the things that we didn’t figure out until maybe three, four years ago, and we’re still figuring it out, you know, we haven’t solved this, is in terms of hiring people. We had a really tough time putting the right people in the right seats on the first try. Mm. and that’s been, you know, a lot of, and a lot of, a lot of wasted energy, a lot of investing in the wrong, in the wrong people or having the wrong people in the wrong or the right people, but in the wrong chairs. Yeah. You know, we’ve made every combination of those mistakes possible. There’s a couple systems that I really like. We use Culture Index. Predictive Index is, is very similar in terms of the math behind the, the surveys, the personality surveys.

That was really a game changer for us, from a hiring point of view. After we really implemented that and trained our managers, trained ourselves and trained our managers on, on, on those systems, our hit rate for putting the right person in the right share on the first try really went up very significantly. And the, and the turnover within the companies decreased very significantly as the managers understood. You know, we gave ourselves a vocabulary to talk about personalities, which we didn’t really have before. You know, like we, we, we would work with Disk or Meyers Briggs, We were familiar with those, but I just didn’t feel like they were quite robust enough as, as as, as systems to be able to have give managers a com a a vocabulary to talk about personality type. And when you’re growing a business, you are leveraging other people’s time. That is the nature of growing a business. And so having the right, you know, finding the right people and putting ’em in the right chairs and managing and communicating with them in the right way recognizing differences between personality profiles, personalities, types, It was a super, it was a late learned lesson for us. And we could have really accelerated in, in retrospect, I think we really could have really could have accelerated a, the trajectory of growth had we learned those lessons a lot earlier.

David Richter:

Yeah. No, that’s, that’s great advice. Great advice. If you’re listening to this right now and going through those pains of making sure you have the right people in the right seat at the right time, making sure you’re doing that. And that can save you a lot of, a lot of hurt and heartache, I think, along the way. I think that’s a great, great lesson. Let’s go into the money side of things a little bit since it’s pro first for real estate investing. What early lessons did you learn about Money Jack that now you think differently about money or compared to how you think today?

Jack BeVier:

Yeah, like I didn’t grow up in, I didn’t, you know, my mom is a school teacher. My dad worked for the federal government, you know, not entrepreneurial people. I, you know, it, it’s cool, you know, they, they we didn’t, we didn’t talk about money growing up. It was, you know, what kind of job were you gonna get? And so I didn’t have those lessons early in life about investing and building businesses. And so the learning curve, kind of like getting into, you know, I just happened to have entrepreneurial, you know, spirit. And so those have been kind of like lots of like learned lessons on the fly in terms of how to build a business and how to think about money and investing in cash flow. All that stuff was not stuff that I, you know, kind of grew up with.

 I think the hardest part about that particularly is, you know, as it relates to folks who are growing their real estate business is cash flow management in the context of growing a real estate business, because we were, we’ve always been very focused on growing on building wealth, right? And I got into it young, so I love that idea. But building a rental portfolio is a cash flow negative activity you have to do. You can’t just get into real estate and be like, I’m gonna go build a rental portfolio because payroll is every two weeks and you and the rent and your mortgage is due and your rent is due, and you have to feed yourself. And in the long term, the rental portfolio does those things, but in the short term it is cash flow negative. So we’ve always had to figure out ways, and for us it’s been wholesaling flipping, and then the lending business where those create those generated current income and paid for the people, frankly, you know, paid for the platform that allowed us to build the, to grow the rental portfolio.

But that’s had to be, that’s been a balance, right? Like we couldn’t just grow the rental portfolio as fast as we wanted to. We had to temper that with cash flow management. And those are, you know, so we felt poor for 15 years because everything that we made, we were syncing it into building the rental portfolio. And until you get to that inflection point where your net rental income greatly exceeds your mortgage payments, you feel really poor growing a real estate business because cash flow is always tight. You have equity, but you don’t really have cash flow until you get the portfolio like past that inflection point. So that’s a, that’s not a, that’s not a two year plan or a, or even a five year plan that’s a 10 year plan before you really feel the freedom of that. So that was a hard earned lesson.

David Richter:

Okay. How, what was your inflection point there? Or like what would you say for, now that you’ve gone through that, what is, what is a good inflection point? Is it different for different, you know, rental companies or what would you say?

Jack BeVier:

Yeah, yeah, sure. And, and like, you know, if you’re, depending on the market you’re in, some, some people are gonna be in, in higher cash flow markets and they, you know, it’s, it’s more property management intensive business, right? But, but the cash flows better versus if you’re in those lower cap rate markets, you’re really focused on equity and you’re really looking out maybe 15 years before you’ve got like, you know, true material net cash flow. So I think, you know, it’s good to focus on not just one i, I, I think it’s really hard to be a one trick pony in single family real estate investing. I think you really need to, or it’s best to, to learn how to do a couple different things that compliment each other, both in terms of maybe the, the, the kind of leads that are generated between the two businesses as well as, you know, the cash flow profile of those businesses. You can’t just do long term investing and only long term investing because you might not, you know, might give up because you just, you know, get tired or you need to send the kids to private school or whatever. So you know, focusing on a combination of things, maybe wholesaling and adding rentals or flipping and adding rentals is a good way to have some balance and so that you can make it through different phases of the business.

David Richter:

Okay. Now I like that a lot. So, depends on where you are, depends on what that ratio is, depends on your specific situation as well too. So that’s really good. So as far as like the money, you know, lessons about money and whatnot, what do you, what would you want to pass on to maybe the next generation of people, you know, or like people coming up now getting into real estate, Like what would you say around money and that mindset or a cashflow flow like you’ve been talking about?

Jack BeVier:

Yeah. One of the things that has happened most recently and, and our business, this relates to some, some of our business something that we do in our business is in the past we’ve always had to, as we’ve grown the rental portfolio, we’ve had to we were borrowing from local banks, right? And you, you can go to your Fannie Mae loans and you get the nine properties in your personal name, but then you cap out there and then you start, we want to buy properties in your llc, and you go to your local bank and, you know, the, the service level from local banks isn’t great, hasn’t been great for 10 years, doesn’t seem to be getting better. And that’s, that’s been a tough thing, right? Like that’s held a lot of people back in terms of how quickly they could grow their rental portfolios.

What I think has changed in the past, just this year, in the past eight months, the, you know, poster session, a lot of Wall Street money has come into single family real estate investing with that Wall Street money buying houses means that the big banks and Wall Street lenders are also lending on that same, in this same asset class, which is just brought more capital to the business. And so we’re, as starting in, when Fred started in 2002 and until last year, we’ve always had to go to our local and regional banks in order to get refinance money. Now you can go into their products. Now the Dscr loan is the one that I think is the best in the market right now where those loans are being issued and then sold into the secondary market. And basically Wall Street bond buyers are buying these loans.

And what that’s done is it’s driven rates down in that product to the point where it is, you get the same rate now in that product as you would from your local bank. And it’s a 30 year fixed rate loan. So you’re gonna get a, you, you’re gonna get a rate in the for, with a four handle on it, just like a bank loan, but it’s a 30 year fixed rate loan. It’s to your llc. And you don’t have to go through the pain and suffering of have to having to convince your banker to, to make you a, you know, $150,000 loan on your next rental property. This program is really designed for that. If Dominion, I say that to answer your question, is that if Dominion had had access to that lending product, oh my gosh, we would’ve gotten to 750 freaking six, seven years ago.

 We’ve had to like always had to make enough money to satisfy the bankers and provide and, and show global debt service coverage and just deal with the, you know, that particular loan officer or loan committees comfort level with single family real estate. And that’s a tough thing, right? Like they want to, they want to do big loans, they wanna do commercial real estate, it’s just easier for them. So doing single family is, has gotten tougher and tougher. I think that this is really a tide change in the industry and I think that young real estate investors have an tremendously exciting opportunity to add rental properties at a faster pace and get to that inflection point faster. Yeah. Then, then we, then I ever saw. So I’m really excited about that. I think it’s gonna change the nature of the industry, frankly. I don’t think over the course of the next two years, I think that local banks are gonna be completely out of the lending to small real estate investors market because their products just not as good as what’s being offered right now. So we’re really excited about that. We’re doing a ton of those loans and I just frankly think it’s for the future of the industry.

David Richter:

Awesome. So then let’s talk about that, cuz I’ve only got a couple last questions here. So where, how do they get ahold of you to talk about that product to see if they’re interested in like, you know, going down that road if they’re building under the rental portfolio for themselves?

Jack BeVier:

Yeah, sure. Absolutely. It’s a really simple product. We only need like five data points to the value, the address, the rent, the property taxes, and the insurance and your fico. There’s no tax returns. It’s amazing. There’s no limit on the number of properties you can, you can use you can borrow on. It’s a really phenomenal product. So it’s very easy to get a quote our website. So we offer these loans, we do a lot of it. Our website for this product is www.rentalloansplural.com, and there’s a web form there. You fill out some real basic information, can talk to one of our loan officers and with those five data points, they’ll be able to get you a quote in less than 24 hours we were to the appraisal and as soon as the appraisal comes back, we’re closed in the following Friday. So it’s a, it’s a, you know, it’s meant to be a very easy, seamless process and, you know, we want to make these loans, you know, you’re not, by the time you close this loan, you wouldn’t have gotten the loan committee yet. So I think it’s gonna make, it’s gonna allow small real estate investors to move a lot quicker than they have in the past.

David Richter:

Wow. Yeah, that’s incredible. That’s, I’m really glad we’re talking here. We we’re in other masterminds too, and if you’re listening to this, Jack, you know, has been talking about this and it’s been incredible. So I wanted him to share about it on this podcast. Gonna talk about it with our clients, probably like, have Jack on there to like, to talk about specifically to them. But this is an incredible product. Make sure I love that website too. Rental-Loans.Com, That’s pretty great. That’s pretty simple to remember. Rental-Loans.Com. Then before, my final question is, what is last, last piece of advice to real estate investors as they’re listening to this podcast? What would say, what would you give as your last piece of advice here?

Jack BeVier:

I’m a big fan of the start early thing. Just as soon as you can, when you’re young, adding rental real estate, the time works for you. Like the time is gonna, does the heavy lifting for you. So get in early, make some mistakes, it’s gonna be okay. You know, you can, you can be into the house for a little bit too much if you’re keeping it as a rental time’s gonna work that out for you. You know, like it, it’s, it’ll be all right. Yeah, just keep operating it and, and equity will can, you know in it’s, it’s a great inflation hedged asset. That’s a big thing that we’re worried about right now is what inflation’s gonna look like over the course of the next couple years. I love being in hard assets right now. So I would say, you know, getting into hard assets where you can get attractive leverage and do it at a young age, you won’t help but be able to retire. Well before, you know, your parents told you you would be at 65, you know, Yeah. At 50 you won’t help but be able to retire if you start young. So that’s my, that’s my best advice.

David Richter:

Awesome. Love that. So the last thing is I usually ask is like, you provide a lot of value here, how do they provide value back? So definitely go to rental-loans.com, but is there anything else that you’re, I don’t know, anything else that you would want or to put out there as far as what you’re needing right now as well too?

Jack BeVier:

I mean, I, I think that, I think that getting the word out on the lending product is what I’m most focused on right now. Because frankly for, you know, we, we had, we’ve seen a couple different phases of the business. I’ve been doing it for 15 years, my partner’s been doing it for 20. And, you know, this is the most exciting thing that we’ve seen in terms of how it’s gonna change the game, so to speak, for real estate investors going forward. And the product is still very new. It’s, you know, just started less than eight months ago. Yeah. So I still think that the word isn’t really out on that, and people are still going to their local banks or still thinking that, that, that you know, that that, that they’re gonna have to deal with the pain of, of working with local banks or that they can’t get a loan because they have to get a Fannie Mae loan.

And I think this really is bringing the barriers to entry to, to building rental portfolios down significantly. And this, it’s the most excited I’ve been about something since you know, when, when you’re the deals we were getting in 2011. Awesome. So I think just really kind of getting the word out on this, letting people know that there are, there are alternatives to borrowing from banks and that we, there’s a product in the market now that has designed for small and mid-sized real estate investors, which has really never existed before, you know? So I’m just really excited about

David Richter:

That. No, that’s amazing. So thank you so much, Jack. This has been incredible. Love that product, love that. And then love all the information you gave here today, the ups, the downs, everything in between. So really appreciate it. Have you on the podcast today?

Jack BeVier:

No, David, really appreciate it. I enjoyed it a lot. And congratulations on the book launch. That’s super exciting. I look forward to picking your brain more on that entire experience. But thanks again for having me.

Outro:

This episode of The Prophet First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn? Learn how David and his team can help implement the Profit First system in your business. Schedule a discovery call @ simplecfo.com right now. We’ll see you next time on The Profit First for REI podcast with David Richter.