Rehabbing to Building: Discover the Essential Tips for Success!

Brett McCollum (00:00.92)
Alright guys, welcome back to the show. I’m here today with Jacob Kline and today we’re going to be talking about going from flipping houses to building houses. Yes, there’s a difference. Guys, before we get into it today at Investor Fuel, we help real estate investors, service providers and real estate entrepreneurs to 5x their businesses and allow them to build the businesses they’ve always wanted and live the lives they’ve always dreamed up. Alright, Jacob, without further ado, how are you, man?Jacob Kline (00:25.726)
Spectacular man, thanks for having me on.

Brett McCollum (00:28.294)
Dude, I’m super excited to catch back up with you and I’ve known you for number of years now and kind of what you’ve got going on today. I’m thrilled. I mean, it’s gonna be a great show. I’m really looking forward to it. Yeah, let’s do it. Hey, I obviously have known you a little bit, but our audience may not. Kind of tell everybody who’s Jacob. How’d you get into, who are you?

Jacob Kline (00:40.852)
Absolutely. Let’s get into it,

Jacob Kline (00:52.398)
Yeah, I’m Jacob Kline. I’m from St. Augustine, Florida. Born and raised here. And I mean, I’m real estate investor, obviously. You know, I started in real estate in 2019. I played college golf at University of North Florida. And I’m getting into new construction, so there’s three bullet points for you.

Brett McCollum (01:17.286)
There you go. So college golf, tell me about that. Like, what was that like?

Jacob Kline (01:22.294)
Yeah, I mean grew up, you know, as a kid that was kind of my obsession. Now it’s real estate. But, you know, I grew up playing golf and I was pretty good. And, you know, played national tournaments and stuff like that. You know, and then ended up playing at UNF.

So yeah, I mean, it was just a grind, like just like anything else that you kind of do as your main focus. I practice a number of hours every day and it was definitely a mental, you know, mental thought. Yeah.

Brett McCollum (02:01.637)
Golf is a very cerebral sport, right? It’s a, mean, yes, you have to be talented, no doubt, but at the, mental game is, yeah.

Jacob Kline (02:09.644)
Right. Yeah, that was, was, you know, where I did well when I did well and where I did not do well when I did not do well, if that makes sense.

Brett McCollum (02:19.353)
Man, that translates to business too, doesn’t it? There’s probably a correlation there somewhere. Maybe people smarter than me can pick that up, but I know there’s definitely a correlation there.

Jacob Kline (02:22.988)
Yeah, for sure. Yep.

Jacob Kline (02:32.556)
Yeah, we need to get a psychologist on here or something.

Brett McCollum (02:34.971)
Can you fact check us there psychologist? Exactly. I’m sure. All right. when did you, what was yours was this with golf? Like how long ago were we talking about?

Jacob Kline (02:38.22)
Yeah, yeah, I’m sure there’s some out there.

Jacob Kline (02:49.966)
Yeah, so I guess I graduated high school in 2015. I’m 28. I guess I missed that in the intro, so that’s point number four. But yeah, 2015 I graduated high school. I had committed to University of North Florida in my sophomore year, so I kind of knew where I was going. 2015 I went, you know, there to UNF to play golf and, you know, I…

We can get into this. I I had basically a drug problem, you know, and…

I redshirted my first year at UNF and got myself in a world of trouble. I ended up going to prison actually and got out and that’s when I found real estate. It was when I got out and was like, okay, I’m gonna have to do something on my own here. When I got in trouble, I was 19. And then by the time I was finished with all that, I was 22.

Brett McCollum (03:28.666)
Mm-hmm.

Brett McCollum (03:46.201)
Yeah, how old are you at this point?

Jacob Kline (03:55.488)
So I went to prison for a year and then got out and was kind of on house arrest and probation and stuff. This is all kind of drug related stuff.

And then, yeah, I found real estate. When I first got out, I actually had a business in the e-cig industry, so vaping and stuff. And I manufactured this little component or whatever. And that kind of taught me about business. And then I found Grant Cardone actually on YouTube, because I was cold calling distributors. Right, yeah, I was trying to get our product into distributors and stuff and learned that he was doing real estate and then kind of went through the YouTube route.

Brett McCollum (04:26.554)
Okay.

Uncle G.

Jacob Kline (04:39.312)
hole and then started cold calling like niche records like pre-foreclosure and back in the day in 2019 you can kind of throw a pin and hit a good deal and I you know

Brett McCollum (04:54.521)
Yep. Isn’t that weird to say back in the day and it’s like, it’s 2019. Isn’t that funny? huh.

Jacob Kline (05:00.13)
Dude, six years ago, man. That’s crazy, So I guess that’s when I, you know, when I started.

You know, my friend intro’d me to real estate. The first property I bought was at a tax auction sale here in St. Johns County. Bought a lot for $2,400 bucks and, you know, I don’t know how I got it for that price, but now we’re actually building a house on it like right now. Yeah, yeah, so it’s pretty cool. But outside of that, you know, some wholesaling and kind of a little bit of everything.

Brett McCollum (05:25.721)
No way. Cool.

Brett McCollum (05:34.297)
Yeah, so that was 20ish 19, right? And then you, that’s kind of back around when I met you, I believe the first time you and I met was at, and I’m gonna see if I can jog your memories, if you remember this, it was at a Yellowbird event and I met you there.

Jacob Kline (05:47.734)
Right. Where? Was it at San Jose Country Club or? Yeah, yeah, that was when… yeah, was younging for sure.

Brett McCollum (05:52.155)
Yeah, without the country club,

You were fresh back then, bud. Yeah.

Brett McCollum (06:01.638)
Yeah, you were fresh back then. That’s really cool. so back then you’re wholesaling. Um, it’s 2019. When did you, uh, cause we’re going to take people a little bit on a path here to catch up to speed of what’s happening today. Okay. Um, I know you’d, talked pre show a little bit that you then you wholesale, but then you bought another property that became a rental property. When was that?

Jacob Kline (06:15.32)
Okay.

Jacob Kline (06:25.115)
sometimes, so I bought that lot in like 2019.

Early 2020, at some point I bought just a house that I found off of cold calling for $45,000. Like a little 600 square foot concrete block house in St. Augustine, which I mean you can’t touch even land for 45K in St. Augustine now. yeah, so found that. That was a great deal at the time. Rehab day, got a tenant in there. And at that time I wanted to build a massive rental portfolio and do that.

which things obviously change quickly in this business. And so that was the first property that I actually bought. And I think probably at that time I had wholesale a few deals and was kind of getting into it at that point.

Brett McCollum (07:16.143)
Okay. And then you eventually get to the point where you’re now you’re you’re wholesaling. You got to run a property. Now you’re flipping houses at some point when like talk about that a little bit.

Jacob Kline (07:23.436)
Mm-hmm. Yeah, I mean, I would say probably the first,

The first flip that I did was a mobile home. I had no clue what I was doing, really. I I really didn’t know anything even through like 2021. I started in 2019 and I was just kind of figuring it out. I’m sure a lot of people can relate to that. like having good conversations with sellers and trying to reverse wholesale stuff, building a good relationship with a buyer. And it’s like, hey, I’m going to trust you. Take a look at this property.

and let me know what price range you’re at. And that’s really how I learned how to value anything. So it was quite a bit of that. And then I guess, yeah, to answer your question about the first property I bought was a mobile home that…

I couldn’t wholesale and I think I paid $110 for it and I was in there doing some rehab work. Like I did the demo and like I was just enjoying it, right? Like it wasn’t the best use of my time, but I was just enjoying it. And I think, you know, it probably did okay on that one. Yeah, I don’t remember. It wasn’t anything like notable.

Brett McCollum (08:34.331)
Mm-hmm.

Brett McCollum (08:42.319)
No, but you started doing it. So what people don’t know, cause I know you’re a little modest, so you won’t say this, like you got any reputation, not too, it didn’t take her long, a kingdom, king of trailers, you know, like this is like, like that became like a reputation of yours at one point, you know, why, why do you think that was maybe?

Jacob Kline (08:58.797)
Yeah.

Yeah, that’s a good question. I I always like to talk about this because it’s been a key to kind of my success. like, you know, you got to go where everybody is not, you know.

Brett McCollum (09:13.083)
Who moved my cheese? that the book? Right?

Jacob Kline (09:16.102)
Yeah, yeah. mean, it’s like, so where is everybody? You know, everybody’s in Jacksonville, like in our market, right? Like everybody’s in Jacksonville trying to find, you know, 400 ARV houses or, you know, hood beater rentals that, you know, that you can wholesale. Right. So that’s where everybody was. I mean, I’ve never even marketed to Duval County. And like, you know, for the folks around here, like that’s the county if you’re going to wholesale, that’s the place to go. And I’ve never even really touched it.

Brett McCollum (09:30.651)
concrete block, yeah.

Jacob Kline (09:45.888)
Probably because of some lack of confidence in acquisition, probably. It’s annoying to deal with other buyers when you’re negotiating with the seller. So stay away from that. Mobile homes definitely was a place where I found that I could find bigger spreads and consistently make like 50 or so on a flip.

Brett McCollum (09:46.233)
Right.

Brett McCollum (10:12.997)
Mm-hmm.

Jacob Kline (10:15.792)
If you’re looking online, it seems like everybody’s making $50 on every flip, but the people that are doing volume, if you can get to the end of the year with an average of $35, $40, you’re crushing it. I guess if you’re for a market like ours, where you’re playing in that ARV range of $250 to $300.

Brett McCollum (10:21.285)
They’re definitely not. Yeah.

Brett McCollum (10:38.651)
Oh yeah. mean, some of the most successful people I know, um, quote unquote successful people I know, you know, like, Oh, we, we did, you know, a hundred deals last year and they’re like, they’re average 12 grand. It’s like, wow, that’s a lot, but for what.

Jacob Kline (10:44.183)
Yep.

Jacob Kline (10:50.74)
yeah, right, and overhead eats that. Yeah, if you have any kind of team, you’re not making money, right? Like,

So yeah, and that’s something that’s kind of scaled up for me over time is like really turning it into a business, right? You know, and as I’ve gotten into like flipping more, it’s like, okay, this isn’t just Jacob grinding anymore. You know, this is like, we got to have some sense about how things are done, like putting processes around things.

Brett McCollum (11:13.978)
Mm-hmm.

Jacob Kline (11:22.444)
you know and like staying focused I guess. That’s kind of another thing like with the mobile homes is like I just decided okay this is gonna be my focus like I can brand myself a certain way where nobody else is kind of branded this way. People brought me a lot of good mobile home deals you know over the years and it was just a great way to like kind of build. Yeah yeah for sure.

Brett McCollum (11:26.363)
Yeah, definitely.

Brett McCollum (11:44.912)
Differentiate yourself in the market. Yeah. And especially in that, that the Duval St. John, like it’s a sat, it’s quote unquote, it’s saturated. Yeah. And so it’d be able to separate yourself out of that and create a niche that’s maybe to some people as an as sexy. I love, I think mobile homes are in my opinion, one of the best, it’s there. It’s such a great opportunity. You know, it really is. Especially in Florida.

Jacob Kline (11:54.285)
Berry.

Jacob Kline (12:11.886)
You know, I will say like Yeah, you make your like you make it better margin for sure But you know in terms of like attracting investors and stuff like that It’s not it’s not gonna produce those same results as say new construction, right? Because people don’t see it the same way, you know

Brett McCollum (12:29.691)
Truly.

Brett McCollum (12:33.275)
Yeah, but you did, man. You carved out a niche and you ran with that for quite a long time, up until, I mean, when was it that you kind of started making this transition into new construction?

Jacob Kline (12:47.404)
Yeah, so I mean, was September of of twenty four. Well, yeah, very recently, you know, that was after getting like scaling flipping up to where, you know, we had 50 properties and inventory, you know, consistently.

Brett McCollum (12:53.158)
wow, you’re very recent,

Brett McCollum (13:06.703)
Mm-hmm.

Jacob Kline (13:10.318)
And that’s just, that’s hectic. know, when it’s diff, I mean, every property is different, you know, even if they’re all mobile homes, they’re all different, you know? Um, and yeah, so we had tons of in-house guys, you know, running around like crazy, like very hard to control costs, um, and have like predictability when you’re flipping and especially having in-house guys like that. Um, there’s kind of a lot of variables to it, but.

Brett McCollum (13:12.537)
Yeah, that’s difficult.

Brett McCollum (13:20.57)
Right.

Jacob Kline (13:40.224)
I found that to get good people who would work on mobile homes and actually know what they’re doing, I needed to have a lot of guys in house. Probably, mean, and still, right? Like six or seven.

Brett McCollum (13:51.397)
Yeah. How many crews were you running at any given point?

Jacob Kline (14:02.282)
And I mean, I’ve still got a good amount of inventory, you know, now of flips that we’re selling and obviously still buying stuff, you know, to flip, but it’s got to be really good. Yeah. Yeah.

Brett McCollum (14:13.733)
Yeah, exactly. Yeah, dude, that’s wild. So now you’re in September, we’re only, what, six months? Not even?

Jacob Kline (14:21.898)
Mm-hmm. Yep.

Brett McCollum (14:23.503)
So what was the mindset of going from, I’m gonna flip houses, know, flip these mobile homes, and now you know what? I’m going in on new construction. Because that’s not, like I know some people that like, it’s just not a normal path almost. Like, all new construction. You know, like, catch me up here.

Jacob Kline (14:35.831)
I think so.

Jacob Kline (14:46.252)
I’m yeah, I mean, I definitely like I think it’s just one of those things. I’m kind of just nuts, right? And absolutely. Yeah. I mean, I’m like from having like a very like building up this flipping business to be like very successful. I mean,

Brett McCollum (14:54.755)
I think we all have to be a little bit nuts to do this, but yeah.

Jacob Kline (15:07.234)
doing very well and to just basically decide like, now we’re just gonna ship gears here and kind of abandon this ship and go into construction. Why? Because I like what I, the goals that I want to achieve for myself are significantly more difficult to do with flipping, right? To achieve the skill that I’m trying to achieve, it’s just very difficult to do with flipping.

Brett McCollum (15:36.261)
Yeah.

Jacob Kline (15:37.12)
And with new construction, you don’t see a Lennar or a KB of flipping homes that’s that big. The only publicly traded home flipping company, I think, is Opendoor. Maybe a couple other smaller ones. And Opendoor is historically very volatile. So if the big boys that have infinite money can’t figure this out, I know I’m

not that smart, you know what I mean?

Brett McCollum (16:09.669)
Well, I know a lot of us, you went through your wholesale journey and you flipped and all that. It’s a hamster wheel, The moment you step off of it, you’re grinding to find the next one.

Jacob Kline (16:21.794)
yeah, yeah. mean the pipeline. mean, when you’re running a fully vertical shop like we were and still are, mean, running like marketing, like we’re doing marketing in-house. We’re not like outsourcing that. We have acquisition in-house. We’re not, you know, outsourcing that to say wholesalers. I mean, of course we buy wholesaler deals, but the bulk of our deals come from in-house acquisition and then doing construction, doing construction in-house as well. So,

Brett McCollum (16:46.415)
Mm-hmm.

Jacob Kline (16:51.928)
You know all these you know at least construction is generally outsourced to you know some kind of crew So we’re doing all of these pieces in house to kind of make the numbers work And it’s like man. We’ve got like so many moving parts to just make this thing work Right like you remove one part of that like you know instead of having in-house guys We outsource it and it’s like okay there goes a good chunk of our like net margin so

Brett McCollum (17:18.735)
Yeah, I imagine back when we were talking in the beginning of the show, with the mindset, when you’re stepping up to the tee and you just, that last hole, just shanked it and it’s like, you need to have a short mind and try to do it again. I imagine there’s days like that where yesterday sucked. And then show up again tomorrow, the next day and like, but how did, like,

Jacob Kline (17:39.928)
Yeah.

Brett McCollum (17:46.94)
Anything like in the beginnings, you’re still in the beginning of this whole evolution. Anything in this beginning phases that you’ve, any hiccups that you’re like, wow, I was not expecting that. Anything that’s happened yet?

Jacob Kline (17:52.837)
yeah.

Jacob Kline (18:01.614)
Oh yeah, I mean a lot. I guess I’m trying to think of one significant one. What’s probably most pertinent in comes to mind right now is what we were talking about before we got on here.

I have a significant amount of my own capital into deals at all times. like everyone says, keep a healthy reserve of six months and it’s like, nobody does that actually. That’s one of those things that people say you should do that no one does. you reach, one closing gets pushed back and you’re in a cashflow crunch, big time.

Brett McCollum (18:32.613)
Mm-hmm.

Jacob Kline (18:49.744)
Like that’s happened many, many times where like one closing gets pushed back or a deal falls out that you’re expecting to close. And it’s like, okay, we’re going to pause invoices for a minute. know, like vendors, sorry, you guys are going to have to wait a week until this closes to, you know, get paid. You know, it’s definitely not something I expected, right? Like, you’re in the end to the rules.

Brett McCollum (19:08.72)
Right.

Brett McCollum (19:17.145)
Yeah, nobody tells you that when you’re getting into this, right?

Jacob Kline (19:19.85)
No, no, yeah, I mean, we’re like, we’re, so far deep in it now. It’s like hard to kind of even put myself back at that point. you know, but yeah, I mean.

Brett McCollum (19:30.748)
Yeah, nobody tells you. And that’s kind of what happens, right? It’s like you look back and really, if you think about it, it’s only six years from when you started. And you look back and sometimes I do the same thing. How did I get here? Almost. Now, ideally, it’s in a good, how did I get here? Ideally, that’s the tonality.

Jacob Kline (19:40.632)
Mm-hmm.

Jacob Kline (19:47.724)
Yeah.

Brett McCollum (20:00.284)
But some days it’s, how did I get here? know? Yeah.

Jacob Kline (20:00.328)
yeah, of course.

Jacob Kline (20:04.524)
Yeah, I wouldn’t want to be anywhere else, that’s for sure. I mean, guess some day I wish I had picked another business that has recurring revenue and is like, something that’s more predictable and consistent, but you know.

Brett McCollum (20:22.875)
Well, kind of on that progression, all right, so what, you kind of alluded to it a little bit, like with the goals and the things that you’re looking to do, what is, in a perfect world, like let’s, rainbows and butterflies, we know doesn’t exist, but let’s paint the, it’s a perfect scenario. What is the goal for the new construction thing? What are you hoping to achieve with it?

Jacob Kline (20:51.47)
Um, you know, really like, you know, you kind of stumped me with that question. mean, I like, everybody talks about, you know, having like longer term goals and stuff. I’m just focused on kind of like, let’s, you know, let’s get to our one year goal here. You know, um.

Brett McCollum (21:15.567)
Okay, perfect world, one year. What happens?

Jacob Kline (21:17.326)
Yeah, one year, you know, we’ve completed 50 builds, you know, have a nice solid team with like consistent processes in place where, you know, I am not in the day to day, right? I’m still making decisions on some level, right? Unlike the general guidance and, you know, to be able to…

Brett McCollum (21:21.84)
Beautiful.

Brett McCollum (21:39.002)
Right.

Brett McCollum (21:42.725)
More driving vision. Yeah.

Jacob Kline (21:44.362)
Mm-hmm. Yeah. Yeah. And I mean the goal like eventually is to have multiple companies that are kind of like the same deal. You know, maybe other service-based companies or things like that.

Brett McCollum (21:58.3)
Yeah, that’s, hey, by the way, I’m glad you said exactly what you did. I do some teaching, coaching stuff, and you ask people 10, five, three, one year goals. Nobody really, they’ll have a 10 year vision. But it’s the year one goal that leads to year two to three to four. You’ve gotta have a clear path of what’s right in front of you. I heard an analogy recently. It’s kind of like driving at night. You have headlights on.

Jacob Kline (22:21.228)
Yeah.

Brett McCollum (22:27.289)
you can see only 20 feet in front, whatever it is in front of you, but you can still make it to, you can be driving for five hours only seeing 20 feet ahead of you at any given point.

Jacob Kline (22:30.946)
Mm-hmm.

Jacob Kline (22:37.902)
Right. Yeah, yeah, mean, it’s like one of those things where you’re like, oops.

shoot for the stars, Like, you know, ultimate goal is, you know, were in many, markets, you know, something similar to, you know, like a regional builder, right? That’s kind of, right, the goal where we’re actually developing parcels of land, you know, and kind of taking it all the way through. But we can’t get there until we have a repeatable process of how do you put a house up, you know.

like without asking me questions, right? Like basically that’s the goal is to get this process to the point where like the team can just go build a house and it’s like, you know what you’re doing, right? Like we have selection package one and that’s your stuff. You go, you know, and follow the SOPs to do it, right? And I know that that’s the only way to kind of achieve that goal of, you know, getting.

Brett McCollum (23:42.863)
That’s amazing. Yeah, I mean, dude, you are on a path of, that’s really, it’s just a.

Jacob Kline (23:43.781)
Yes

Brett McCollum (23:52.06)
There’s a lot of people that talk and less people that do. You know what I mean? And what a testament to you, early on in life, young Jacob, you had every reason to not succeed thrown at you in the very beginning. And to be on the other side of that and saying, yeah, in a year I’m gonna build 50 houses.

Jacob Kline (23:57.036)
Yeah, yeah, for sure.

Jacob Kline (24:21.474)
Mm-hmm. Yeah, definitely just so.

Brett McCollum (24:21.785)
And that’s just the start.

What, like, that’s what I mean, like, it’s so, it was only six, seven years ago. It’s like, just think about that. To look back, it’s like, life is, it’s a short season, you know, it’s all short season, you know? It’s like, man, that was, you weren’t a very, the statistics were against you.

Jacob Kline (24:41.74)
Big time. Yeah.

Brett McCollum (24:43.491)
You know, and that’s what I love about real estate too is that on any given day, it’s the, here’s the, it’s the cheesy quote, the night is darkest right before the dawn, right? And I think that’s real estate. It’s like, you can be in some very dark days and if you’re wholesaling, one wholesale deal can change your whole life.

Jacob Kline (24:53.336)
Mm-hmm.

Jacob Kline (25:03.052)
Definitely. Yeah?

Brett McCollum (25:03.897)
Right? And you don’t see it sometimes, you know, because of what’s it, but I mean, you’re a testament to just staying after it, staying after it, staying after it. And guess what? When other people call you crazy for, you know, flipping mobile homes, and then you created a niche for yourself that separated you from the pack. And now people probably saying you’re just as crazy for, you’re gonna dive all into new construction when you had this good thing going? What are you doing, bro?

Jacob Kline (25:31.17)
So that’s definitely what people are saying,

Brett McCollum (25:33.401)
Yeah, well guess what? They can go take a backseat somewhere while you carve the path for them. I think you’re setting a standard for people though, and that’s why I was really excited for people to hear your story. you don’t need, the more people tell you no, it’s probably you’re on the right path. I’ll say that with a caveat though. Unless you’ve got genuine people that are like, hey, I’m concerned that your character has changed.

Jacob Kline (25:37.92)
Right.

Jacob Kline (25:42.914)
Mm-hmm.

Jacob Kline (25:52.13)
Definitely, definitely.

Jacob Kline (26:02.478)
That type of thing, yes. But even, I mean, I’ve learned that like, I seriously, the only person’s judgment that I really can trust is myself. You know? Like especially in business stuff, because nobody’s had the experiences that I’ve had, the individual experiences. I’m not saying that I’m the all experienced guy. I’m just saying I’m the only guy in my shoes today. Exactly, right.

Brett McCollum (26:03.546)
Yeah.

Brett McCollum (26:25.327)
You’re the common denominator for everything you’ve ever been through. Yep, that’s perfect. Well yeah man, so we’re gonna kind of wrap things up a little bit here. you’ve unpacked a lot. I know that we could talk forever about just real estate in general, but if people wanted to reach out to you in some way, connect with you, what’s the best way for that to happen?

Jacob Kline (26:47.278)
man, I don’t even know. I’m not even doing anything like that really. I guess my Instagram, let me see what it is real quick. JKline underscore REI. That’s my Instagram. I don’t really do anything but you know, check me out there. I post some stories of food and travel and.

Brett McCollum (27:10.372)
If nothing more guys than to follow somebody that’s doing it actively. Like I said, creating that path for us. Dude, you’re an inspiration man. Yeah. Cool. All right guys, it’s been a great episode. As promised, and Jake, you over-delivered man. Guys, be sure to check out us on the next episodes and we’ll catch you later on. Take care everybody.

Jacob Kline (27:19.65)
Thanks man, appreciate it.