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Show Summary
In this episode of the Investor Fuel Podcast, host Leo Wehdeking interviews Jonathan Swanson, a seasoned real estate broker and investor based in Wilmington, North Carolina. Jonathan shares his insights on flipping houses, navigating market changes, and the importance of networking in the real estate industry. He discusses his strategies for finding motivated sellers, managing interest rates, and maintaining a smooth business operation. Jonathan also reflects on challenges he has faced in his career and his future goals for refining his rental portfolio. The conversation emphasizes the significance of relationships and continuous learning in achieving success in real estate.
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Investor Fuel Show Transcript:
Jonathan Swanson (00:00)
I think you can flip houses in any market, but like everybody knows what I’m about to say. You make the money when you buy the houseyou can’t pay too much for the house or spend too much on the rehab.
and make sure you don’t overestimate the
do two of those things wrong, you won’t make any money.
you do three
you’re paying somebody to take it and I call that your real estate master’s degree.
Leo Wehdeking (01:52)
everyone, welcome to Investor Fuel Podcast. I’m your host, Leo, and today I’m joined by someone I’ve been looking to talk to for a long time ago. Jonathan, how are you today,Jonathan Swanson (02:05)
Good, thanks. Thanks for having me. How are you, sir?Leo Wehdeking (02:08)
Hey, I’m actually pretty cool, pretty good and excited to have you on our show, Listen, I think our listeners are really going to take something away from how you’re approaching your business. So let’s dive in into the topic. Now, so first of all, so for people who may not be familiar with your world, can you give us a short version? What’s your main focus these days?Jonathan Swanson (02:31)
Yep. I’m in Wilmington, North Carolina on the coast, just north of Myrtle Beach. Everybody knows where that is. Sort of on the coast communities, not a huge area. I’ve been a real estate broker since 2004. I started flipping houses in 2004. We’ve gathered a handful of rental property in the last couple years, handful of years. Stayed busy the whole time flipping houses, helping people list houses and sell them.represented buyers along the way. Mostly flips in the investment world. We’ve done a little bit of new construction, a little bit of rental property all along, a lot more rental property in the last eight years or so.
Leo Wehdeking (03:05)
Hey, that’s good, that’s good man. And now you told me that you are in Middle Beach, Florida. Are you operating in any other markets around the country or just Florida?Jonathan Swanson (03:17)
We’re in Wilmington, North Carolina, which is a little bit north of Myrtle Beach.Leo Wehdeking (03:21)
okay. Yeah, I know where it is. I know where it is. So are you operating in all 50 states all across the country or only in North Carolina and Florida?Jonathan Swanson (03:30)
just here in North Carolina where we live. So within about an hour and a half radius of here really there’s about four counties that we focus on.Leo Wehdeking (03:32)
Okay, alright.Okay, perfect, perfect. Love it. Now, Jonathan, I want to talk to you about something that really caught my attention and it’s the way that you’ve been able to flip houses. Now, I know that’s something that it’s been going on for a while, but can you give us, you know, like your version on how you do it and how special it is for you?
Jonathan Swanson (04:02)
Yep. So we try to find decent deals with motivated sellers and we do everything from direct mail, SEO, wholesaler network, realtor network. We just try to have relationships that create deals and we get in front of sellers. I’ll do a lot of direct to seller. Sometimes wholesalers bring me deals. Sometimes it’s deals I’ve already seen and if I have, I just tell them.I’ve been trying to get a little more relationships going with realtors in the last couple of years because as they start seeing and we as realtors start seeing more motivated sellers, I’ve learned that not everybody has a cash buyer like I do and like I thought every realtor did. And some of them just don’t want to mess with it. A lady I saw today, she’s one of them that just doesn’t want to mess with it. She’s a veteran. She gets plenty of listings, works with plenty of buyers, runs a team. She doesn’t want to mess with it.
So people like that call me and I’ll go look at it and I’ll tell them all the time, I want the ones that the sellers embarrassed to list and that you’re embarrassed to list. It’s just not gonna be a fun process to put it on the market in front of the world and have people come traipsing through their house. And we’ve seen those houses before. We know what we’re talking about and I don’t need to explain that a whole lot more, but I’m just looking for motivated sellers that I can get decent deals from where I can add value and either keep it and…
hold it as a long-term rental or sell it and fix it and sell it to flip it and make a little bit of money and then do it again.
Leo Wehdeking (05:26)
Okay. Now, when you talk about flipping houses and how the market it is right now, is it a good thing to do right now? Or is it still a good business?Jonathan Swanson (05:36)
⁓I think you can flip houses in any market, but like everybody knows what I’m about to say. You make the money when you buy the house
and you also have to project the costs accordingly because
Leo Wehdeking (06:31)
okay.Jonathan Swanson (06:35)
you can’t pay too much for the house or spend too much on the rehab.Cause if you do one of those things, you’ll probably still make money. If you
do two of those things wrong, you won’t make any money.
And
you do three
wrong, the third thing being sell the house for not what you thought it would be.
you’re paying somebody to take it and I call that your real estate master’s degree.
So those three things again, I wasn’t real clear on that, but don’t pay too much for the house and don’t spend too much on it
and make sure you don’t overestimate the
the after repair value.
Leo Wehdeking (07:05)
youOkay, yeah, I understand that and that’s actually not easy, know, these type of days. Jonathan, something that caught my attention, another topic that caught my attention and you just mentioned something, you know, like don’t overpay, right? Now, you mentioned that the interest rate, it’s changing, okay? So how you’ve been managing your business with all these recent changes?
that have come.
Jonathan Swanson (07:33)
Yeah, so the rates have gone up a lot in the last few years. We hope they’ll go down, but we have to plan for it not going down unless we see it going down and then we plan for it. And I think that’s tightened up the market quite a bit and it’s eliminated a lot of the competition and it’s made it a little bit more difficult to burr the houses where we buy them, fix them, rent them and refinance them and keep them. And used to, a few years ago, we could do that and get all the money back and maybe a little more than we started with. Now,We’re getting the fine cash out refi is done and they’re a little bit less than we started with, but they’re still close enough. And we’ve got enough rental income now to offset the money that we’re not getting back for the BERS. So we’re still building portfolio of rentals and we’re still flipping houses. So that pays us back a little bit more too. So we’re just using everything to our advantage and leveraging different things, different ways to make things still make sense. And we’re just careful not to pay too much.
or spend too much. And rent has gone up, but everybody thinks we’re making a killing on the rent when taxes and insurance have gone up more than the rent has. And their interest rate has gone up. So we’re making less per door on the cash flow, even though we’re collecting a lot more in rent than we used to. We’ve got some rental properties that have doubled in rent income in the last 10 years, but we’re still making less money than we were 10 years ago on that same house.
Leo Wehdeking (08:49)
Yeah, it is what it is, right?Jonathan Swanson (08:51)
That’sright. And it still works. You just got to be careful. And the minute they start, they lower rates, it’s going to be the same frenzy we’ve just gone through in the last couple years. And I kind of hope it stays where it is. So we don’t have to have the craziness that we’ve just gone through.
Leo Wehdeking (08:54)
Exactly.Exactly, exactly. No, and the thing having someone who knows about the topic like yourself, it helps them a lot. You know, they give them confidence, you know, to make a deal with you. So that’s actually pretty good. Jonathan, I want to ask you another question. Now, what’s your recipe, you know, for keeping your business running smoothly?
Jonathan Swanson (10:04)
you say we got about three more hours here today? Or 12 minutes, I don’t know. The recipe for keeping it running smoothly. You always have to do marketing to get the phone to ring or the leads to come in. And then you have to be ready to answer the phone. So do the marketing, the right marketing to the right people, speed to lead when you get the lead coming in. And then you’ve got to, like I said before, know what to pay, know how much it’s going to take to fix it, and know how much you can get for it.And inside of that, you got to have the people ready to do the work to get it to the market value and get it sold before the market changes. And that’s what a lot of people lose sight of is you got to do it before the market changes. So when the market’s stable, or even when it’s going up, you can hold the house longer and make more, or you can get it done and go do it again. And every time you can get it done and do it again, you’re going to make more on that do it again part than you are if you hold out on the one you’re doing now.
Leo Wehdeking (10:55)
Alright.Jonathan Swanson (10:55)
So the recipeis get in, get out, do it again.
Leo Wehdeking (10:59)
And do it again. Exactly. There’s nothing like doing things the right way because eventually discipline, you know, if you do it every single day, like eventually will come up. I don’t know if I made myself clear, but…Jonathan Swanson (11:14)
Yeah, you’re talking aboutcreating a process that you can repeat. And you can kind of do that with flipping houses, but every house is a little bit different. Every subcontractor is a little bit different. Some of them are more worthless than others.
Leo Wehdeking (11:18)
Exactly.every area yeah
I’ve heard about about people you know that they want to flip houses and once they have it all remodeled they said like you know what the neighbor sold the house for
$550,000, you know, I want to sell it in that price, but it means that, you know, the neighbor had a bigger house, you know, maybe remodel the kitchen or whatever. And they don’t take those things in account. So it’s actually very good, you know, that to have someone like you to tell them exactly what what their house is worth.
Jonathan Swanson (11:50)
That’s right.Leo Wehdeking (11:59)
you know, once after after they remodel it. Now, Jonathan, every operator I know has a moment where things got real. All right. Maybe a deal that went sideways or a time they had to pivot very fast. Do you mind sharing one of those moments?Jonathan Swanson (12:16)
Sure, let me think of a good one.There’s a handful that we all have experienced.
One time I bought two houses in the same neighborhood, this is probably 10 years ago. They were almost the same house. One was on a cul-de-sac, one was on just a regular street in the same neighborhood. And I thought, these are both good. The cul-de-sac’s probably gonna sell first, because it’s a little bit more private, a little better backyard. Kids can play in the front yard and in the street, and less traffic. But we got them both fixed on the market. The one on the regular street sold first.
The other one we could not get rid of it. It was in a VA market. So 90 % or more of the buyers have VA financing. So they’re really payment shopping more than numbers, house price shopping. But that one had flood insurance. A little bit of the corner of the lot was in the flood zone. And finally, I figured out that they were.
not buying that house because the flood insurance, which wasn’t very much, it kind of priced them out of the payment based on the base allowance housing, which is the off base housing allowance that they get for living in a house that they buy. So finally we figured that out and I ended up meeting somebody whose next door neighbor worked for a company that does.
Loma letters, letter of map amendment, L-O-M-A. And she said, get a surveyor to do an elevation certificate and regrade the yard so that the yard is above the base flood plain elevation of the flood zone. So we did that literally for a few hundred dollars, got a new elevation certificate, turned it into FEMA or whoever does, I guess that’s FEMA that does flood.
Leo Wehdeking (14:11)
Mm-hmm.Jonathan Swanson (14:33)
elevation certification and insurance and all that stuff. They tell you whether or not you have to have flood insurance. So we basically got that house and the lot outside of the flood zone because it had been inside and after that we ended up selling it to a USDA buyer, financing buyer. So it wasn’t VA but it still was the same principle. They didn’t have to have the flood insurance which would have made their payment more and that one finally went away and I thought I’d never get rid of that one and IDid lose money on that one. I hate to even say how much, but it was a learning experience too. So even though I learned I lost money, I still learned something and now I know how to not make that mistake again. And if I do make that mistake again, as long as it’s just a little bit of difference, I know how to fix it.
Leo Wehdeking (15:14)
Yeah, and look, that’s the kind of stuff that people don’t want to talk about enough when, when, you know, when they lose money, because nobody gets into the real estate business to lose money or to flip a house to lose money. And honestly, for me, that’s what separates the folks who dabble from the ones who actually stay in the game, the longterm, you know, and that’s my personal opinion. Now,Jonathan Swanson (15:27)
That’s right.Leo Wehdeking (15:39)
What’s your next real goal for you in your business?Jonathan Swanson (15:43)
I’m not one of those guys that wants to scale and hire a bunch of people and do 10 times more deals than I’m doing now. I’m always at the point where I want to do the opposite. I want to refine rental portfolios so that I can live on it sooner than later. So I want to do keep the best, sell the rest kind of thing. And when I sell the rest, I want to pay off the best.So that way I have more passive income from the rentals that are the best ones that I want to keep. And still probably flip houses for a while until I just don’t want to do it anymore, which hopefully will be sooner than later because who wants to do it forever? And that way I’ll have passive income with still property management in place and relationships there to keep that stuff moving. And as we pay off
Leo Wehdeking (16:18)
Exactly.Jonathan Swanson (16:28)
more houses that we’re able to keep, that becomes a very different lifestyle than the last 20 years of the uphill battle of flipping houses, dealing with subcontractors, finding deals, making deals, getting to closing on the purchase, getting through the rehab, getting to closing on the sale, and then doing it again. It’s like bailing out a sinking ship sometimes, is how it feels. But then you finally get paid two or three times close together and it feels good untilLeo Wehdeking (16:49)
Thanks for your praise.Jonathan Swanson (16:54)
Six months later, you got six rehabs going and everything’s on the market all of sudden and all the money’s going out and everybody’s been paid but me. And then finally you get paid again and do it all over again. And you can’t space it out. So you buy one and sell one every month. It just never works like that. So you just have to be ready for everything.Leo Wehdeking (17:11)
Yeah, I understand. I understand. Now, I know that a lot of people are listening. They are either earlier in their journey or looking to level up. And I think they’ll benefit from hearing this. When it comes about building relationships, okay, and growing your network, what’s made the biggest difference for you?Jonathan Swanson (17:31)
I think just doing the networking, telling people what you’re looking for, whether it’s a deal or a plumber or a buyer or whatever, the best referrals come from people you know and people they know. And also giving, like just giving back, giving people information and they give you stuff. I’m not saying you give me something and I’ll give you something. I’m sayingLeo Wehdeking (17:38)
Mm-hmm.Jonathan Swanson (17:52)
you ask me a question, I’m going tell you the answer. And then when I have a question, I’m going to ask you, and if you know, great. If you don’t know, tell me who to call. And that’s just how the world should work.Leo Wehdeking (17:54)
Exactly.So in short
words, relationships are everything in this space. Because if I don’t recall, you you mentioned that when you don’t know something, you go to a group of friends that you have that are realtors, investors, and you ask them questions, you know, and someone from there will actually, you know, put their hand up like, hey, Jonathan.
I have that answer for you. So relationships actually do make a difference in this space, am I right?
Jonathan Swanson (18:29)
That’s right.That’s
right. Yep, and like speaking of plumbers, when somebody needs a plumber, I’ll say, here, call this plumber. But if he doesn’t answer, let me know. And then I’ll tell the plumber, if they call you, somebody else that calls you and they don’t pay you, or they don’t take good care of you, or they’re just not nice to you, let me know. That way I know I need to go after my friend to pay the plumber, or I need to go after the plumber to answer the phone when somebody send to them, calls them, call them back, return the phone call, go.
Leo Wehdeking (18:49)
YouJonathan Swanson (19:00)
If you can’t do it, tell them you can’t do it, you’re too busy. So when that happens enough and they do what they need to do, my friend pays the plumber and the plumber help my friend. Every time I call the plumber when I need them, guess what happens? They answer the phone. And then they go do what I need them to do because I’ve been looking out for them, sending them business from people that I know, that I know are gonna take care of them and pay them when they do the work that my friend needs.Leo Wehdeking (19:03)
Thank you.you
Jonathan Swanson (19:22)
So there’s not enough of that that goes around. Everybody’s trying to who do everybody else and get one over on everybody. And that’s just what the world has turned into it seems like when they’re just, good old void network is going in some places and everybody’s out for themselves and it shouldn’t be like.Leo Wehdeking (19:22)
Excellent.Yeah, it seems like that.
All right. All right, Jonathan, before we wrap up, if someone wanted to reach out, connect with you, or maybe collaborate or learn more about what you’re doing, what is the best way for them to reach you out?
Jonathan Swanson (19:50)
Probably the best way is email. That’s Jonathan Swanson, 23 at gmail.com. J-O-N-A-T-H-A-N-S-W-A-N-S-O-N-2-3 at gmail.com. And my website is let’ssellitnow.com. And you can shoot me a message through there.Leo Wehdeking (20:06)
Alright, perfect. Well… Alright, alright.Jonathan Swanson (20:07)
That’s probably the two best ways.Leo Wehdeking (20:10)
Well, listen, Jonathan, I really appreciate your time, your story, and your perspective, man. We need more people in this space who are actually doing it the right way. And thanks again for being here, man. Now, for those of you tuning in, if you got value from this, make sure you’re subscribed, all right? We got more conversations coming up with operators just like Jonathan who are out there building real businesses, all right? Until then, we’ll see you on the next episode.Jonathan Swanson (20:23)
Yes, sir. Thank you.Leo Wehdeking (20:39)
Have a good one.
