How a Contractor Became a Real Estate Investor by Turning Work Into Rental Properties

Felipe De Jesus (00:00)
It was a moment in time because it was, yeah, I was, I was, I still flipping cars by the way. I still, I flipping cars, but the cars I was holding them for so long and sometimes I ended up keeping them for so long and having fun with them. And I like, I think this is no, instead of making money, I losing money here. So I like, I think I put in moving to the houses now. And long story short, my buddy, in those times, he called me like, hey, I have another house. Are you interested in buying it? I’m like, sure. I’m like, what do you need? He like, just give me 10% down and we figure it out.

Dylan Silver (02:11)
Hey folks, welcome back to the show. Today we’re joined by Felipe De Jesus, who is the owner of JN Contracting. He’s also an Oklahoma City-based real estate investor focused on buy and hold residential properties. Felipe, thank you for joining us today.

Felipe De Jesus (02:26)
Thank you for having me, my man.

Dylan Silver (02:28)
Now, as a real estate investor simultaneously running a contracting business, what sparked your interest first, the contracting side or the real estate investing side?

Felipe De Jesus (02:39)
The contracting side, the contracting side always because I mean it’s how I start and it’s how I always been and I think it’s good fit to start learning more about the game of real estate.

Dylan Silver (02:51)
No question. I mean if you’re the one that has experience working on the homes, then owning them will be a breeze. As a contractor, do you have any specific niche that you focus in on?

Felipe De Jesus (03:03)
I focus more on the 3,500 square feet houses and 5,000 square feet houses and also commercial buildings. I serve a lot of the commercial community around here in the city. So commercial is pretty good too.

Dylan Silver (03:18)
Now, when we talk about commercial, this is an area of contract work that of course a lot of folks would like to get into, but it does come with its own challenges. Going from the residential space into commercial, what was that transition like?

Felipe De Jesus (03:34)
The transition, it was great, man. I was doing this, I was working just on residential and long story short, 10 years ago, some of my buddies invited me to do a commercial deal, and we started doing this commercial deal, and man, it’s just different, it’s just different game. The transition, it was crazy because you don’t deal with a lot of customers, you deal with one and most of the time they don’t bother you when you’re in the process of doing the job or doing the work or whatever they have to do because they’re investors too and they just have the time just for doing certain things and you come up there, you fix the problem, it’s just what they’re looking for.

Dylan Silver (04:15)
Now when we talk about other contractors who have made a similar transition from the residential space into commercial, have you seen any specific challenges that folks have faced in making that transition?

Felipe De Jesus (04:30)
Yeah, I see that all the time, especially when looking for contractors, reliable contractors, people don’t show in on time. I mean, it is the whole game. It is you have to have the right connections to be able to move in and get it smooth.

Dylan Silver (04:46)
Now pivoting here, Felipe, you’re in the Oklahoma City area. As someone again who’s active in both sides of the space, the contracting side and then also as an investor, are you looking for deals across multiple segments or do you stick to the single family segment?

Felipe De Jesus (05:51)
Right now, it’s still the single family. I’ve been looking to get more on the commercial side because I’ve been looking, especially a couple of my friends, they’ve been buying these storage buildings. These old buildings, they’re like 10 stories and converted them into storage buildings and all that process. I I’ve been part of some of them, helping them remodeling and getting together to it, putting together to all that. It’s amazing because it’s a big deal.

Dylan Silver (06:23)
No question. There’s so many folks who are now looking at some of those asset classes you mentioned—storage facilities for sure. We get a lot of folks on this podcast who are also looking at, you know, mobile home parks and other, you know, land heavy asset classes. You have the portfolio, which we were talking about before hopping on the show, paid off properties, right? Was that always the goal? Was to pay them off as soon as you could?

Felipe De Jesus (06:49)
That wasn’t the goal. I like I told you before, I come from the ground. I always know what I was doing. So my buddy is like, I have this property. I buy them for other buddies that were dead in the game. I have this property. It’s still plenty of me and the bond. And I just made deals with them. And I got some property state with the work that I was doing for them. And we go through the property and trades and stuff like that.

Long story short, I was hustling for like 10 years, working all day long, working. I still doing that seven days a week to pay these properties off and start like getting them and start renting them. And then I buy them for 85,000 and then in five years, I see the value of 185. And I’m like, shoot. I’m like, this is what is kind of need to be doing instead of just—I always try to buy some other stuff, flip some cars and all kinds of trades try to do and I’m like, well, I think probably it’s better to put my money into the properties and start buying them and buy by one and fix a little bit. And my rent was like double what I was paying for. So I was like, this is great. So then I’ve been using the money for the properties to start buying now more and I start looking more into growing my portfolio. So yeah, right now I’ve been looking to buy at least a couple more deals this year to put in my portfolio because probably a couple more years I just what I’ve been doing is real estate and investments and all that.

Dylan Silver (08:29)
You mentioned that you had done other business ventures. You mentioned, you know, purchasing cars for instance. Was there a specific moment in time where you realized real estate is the path forward for me?

Felipe De Jesus (08:43)
It was a moment in time because it was, yeah, I was, I was, I still flipping cars by the way. I still, I flipping cars, but the cards I was holding them for so long and sometimes I ended up keeping them for so long and having fun with them. And I like, I think this is no, instead of making money, I losing money here. So I like, I think I put in moving to the houses now. And long story short, my buddy, in those times, he called me like, hey, I have another house. Are you interested in buying it? I’m like, sure. I’m like, what do you need? He like, just give me 10% down and we figure it. So I’m like, all right. So I buy this property just like that. And long story short, in the last four years, I buy seven of them. And now he’s giving me a cash flow over 9,500 bucks a month.

Dylan Silver (10:11)
Now, when we talk specifically about acquisitions and looking at purchasing those properties, but also prospective properties in the future, are you looking at each deal from a how much can this cash flow month to month perspective? Or are you also looking at, well, what is the appreciation? Where’s the area? What’s going into your decision arithmetic when looking at these deals?

Felipe De Jesus (10:40)
Now I do before I was buying them because I wasn’t like, I don’t have nothing to invest on. So I was buying them and I kind of do a little search around the area like, this house is going for around this much. Mean, I can, I can buy it. So I wasn’t have the knowledge to do any, any of that. So now I looking into that and looking the property values and analyzing the properties. Now I’ve been learning that for the past six months because I always buy and just like don’t know what I’m buying and just get into it.

And I mean, all those deals, they’ve been coming great. And I think it is the beauty of real estate. You can all, you can all loss. You can come with ideas. Have to, they have to make the property better and how to, can, how you can later on cash, cash value or rent it out. I mean, build, you always holding, you never gonna lose. You always gonna make a little bit of money and yeah, sometimes you gonna buy deals, know, analyzing and you ending like, oh shoot, when you finish the property, it’s not really the value that it was supposed to be and you have to hold and keep it for a little bit, you always, they always going up.

Dylan Silver (11:53)
No, you’re right. I mean the solution to any short term real estate issue typically is hold a little bit longer. I have never met anybody who regrets holding on to a property for, you know, decades and the like. Pivoting here though, Felipe, if you’re looking at a new acquisition and you’re putting on your contractor hat and you’re looking at well, what needs to be done here, do you have a preference for properties that need a heavy rehab like roof to studs or something that is almost rental grade?

Felipe De Jesus (12:27)
I really like roof to studs and I really like old properties like for the 1970s and all that because it is beautiful restaurant and bring them back to life after they’ve been there for a time. But that one they’re real hard because you have to learn about code, you have to upgrade and all this. It’s actually I buy one of those couple years ago and I had to learn a lot that I wasn’t know anything about it. So I just buy in, then the city come knock the door like, guys can do this, you guys can do that. You have to learn in the process a lot. But I think it’s what I like to do. But now analyzing and now knowing how the game moves a little bit more. I prefer just the ones that you just come do a little bit of paint, retouch up, maybe have a garage and add some other room. Those is always good for me.

Dylan Silver (13:21)
Now as a contractor, we get a lot of flippers on the show, but flipping is sometimes like rolling the dice at a casino because you you don’t really know exactly what the exit price is going to be and what the temperature will be when you’re finished with the flip, right? You have decided to stay in the buy and hold segment. Is there any reason why you’re staying in the buy and hold segment and saying, you know, I’m not gonna touch the flips?

Felipe De Jesus (13:48)
Well, the buying force said, man, is… it’s always good because I mean, like I say, it’s not loose. You keep those properties occupied and rent and keep them in good stands. You’re not going to lose the value of the property. You always cash flowing and you got good tenant and you got good, you helping people and the way to to have living in a good property. It’s why I like those two, three bedroom houses because I mean, it’s most of the average people is what is going to rent around here.

Dylan Silver (14:11)
No question.

Felipe De Jesus (14:19)
But the good thing, the thing that we learned in the long game is the don’t rent to family or friends.

Dylan Silver (15:08)
Don’t rent to family or friends. I’m sure there’s a story there. I’ll ask I’ll get a little bit granular here, Felipe. When we talk about managing a rental portfolio, do you think it’s smart for especially newer investors to self manage or do you think they should utilize someone who’s already a professional, you know, property manager?

Felipe De Jesus (15:28)
Well, it’s now in these days is a lot of tools out there. I just find one software that I can keep my properties and send them messages to my renters and collecting money. They’ll always have somebody take care of them. Like my daughter right now is learning because I used to have someone else. Now my daughter is learning, but I’ll be, if you want more than two properties or you’re doing other things, I recommend just get you a property manager and you just—it’s gonna be easier for you.

Dylan Silver (15:58)
Now, when we look at the totality of being a contractor, being a investor, do you feel like you have to divvy up your time like, hey, this is what I’m gonna be doing on this day, I’m gonna be wearing my real estate investor hat? Or are you looking at it from the perspective of, hey, I’m gonna have these deals rolling in and I’ll make time to evaluate these deals, you know, when I’m not on a job site?

Felipe De Jesus (16:22)
Well, it’s easy when you are contractor because you are around people and you are around the neighbors, you are around everywhere. And like, I don’t know, my brain is always looking, like always looking, like always looking properties, always looking that. And I always come around people and properties and I got a lot of networking events with these folks and I learning for them. I see in all these, but yeah, I have to put my—my cut one day, so I’m going to do the roofing business these three days, all in. And if I got these other deals, I have to do these other deals. And the rental size, normally I take on Saturdays and Sundays. Like, all right, on Saturdays and Sundays is what I do. I analyze my deals, I look for properties and all that stuff.

Dylan Silver (17:09)
I wanna ask you about the Oklahoma City market. For folks who are looking for distressed properties to rehab, what is a a good acquisitions price? Realistically, what can people expect to acquire a distressed property for?

Felipe De Jesus (17:22)
Well, it just depends on the areas and every everywhere you go. But you still find properties here for 65 K, 75 K, 85 K. I mean, you still find the improvement. You’re going to go and find a nice property here. You still find them for 200, 225 K. And it’s good deals everywhere. You just have to look for them and cut.

Dylan Silver (17:44)
Now one of the the difficult things that I’ve seen is for for folks who are especially flippers, but but everyone as well, right? If you’re looking at these distressed properties, inevitably you’re going to be competing with ground up new construction. Because if folks are buying or renting, they may be looking at, hey, I could rent this, you know brand new home or I could rent this, you know rehabbed home, how have you managed to stay competitive with all the new construction that’s happening?

Felipe De Jesus (18:14)
Well, really I have been doing these kind of deals for a long time. So I never have an empty property for more than one month. Comparing with those guys, I mean, I don’t really have competition. My competition is myself. So whatever is working, I mean, I just keep doing more of that.

Dylan Silver (18:31)
We are coming up on time here, Felipe. Any new projects that you’re working on? And then also anything you’d like to mention directly to our audience.

Felipe De Jesus (18:39)
Any new projects right now? Actually, I’m looking for a property to flip. I still been working doing my homework to look for this time, look and analyze what I can do and everything, analyze the properties and settle, just buy it. I don’t even know if it was a good deal or not. And so I find out two, three years later on, yeah, it was a good deal. So, know, yeah, I will give the advice to people that always look for you looking for a deal, analyze there’s a lot of tools and here especially in these days AI and all this stuff. They help you kind of have an idea what you’re buying and what you’re getting into. And don’t just buy it because they tell you all real estate is good, it’s because you made money and all this because you’re getting a bad, bad deal really it can be, it can be devastating.

Dylan Silver (19:29)
Absolutely, no question. Felipe, thank you so much for joining us today. Thanks for your time.