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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Jack May, a seasoned real estate broker and investor. Jack shares his journey in real estate, focusing on flipping houses and managing rental properties. He emphasizes the importance of networking, understanding market dynamics, and maximizing ROI. Jack also discusses various investment strategies, including the recent changes in legislation regarding manufactured housing in Kentucky. He provides valuable insights for new investors and highlights the significance of having a reliable team of contractors.
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Investor Fuel Show Transcript:
Jack May (00:00)
I mean, I was selling as many as 150 homes a year, but living a great life and I wanted some wealth, so I started investing in real estate, ⁓ flipping houses, holding some for rentals. at 55 years old, I didn’t have any rental properties, even though I’d been in the business for a long time. now have12 rental properties and currently flip around 40 houses a year,
Michelle Kesil (02:00)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil And today I’m joined by someone I’m looking forward to chatting with, Jack May, who is a real estate broker, property manager, as well as investor who focuses on flipping houses. So excited to have you on the show today, Jack.Jack May (02:20)
Thanks for having me.Michelle Kesil (02:21)
I think our listeners are really going to take something away from how you’re approaching your real estate company and investment business. So let’s dive in.First off, for those who are not yet familiar with you and your world, can you share what your main focus is?
Jack May (02:38)
Yes, my main focus, I’ll give you a little background. I’ve been in the real estate business for 33 years and in the last seven years or so, you know, lookingsaved and I’m like, boy, I should really get more into real estate investing than the actual brokerage.
I mean, I was selling as many as 150 homes a year, but living a great life and I wanted some wealth, so I started investing in real estate, ⁓ flipping houses, holding some for rentals. at 55 years old, I didn’t have any rental properties, even though I’d been in the business for a long time. now have
12 rental properties and currently flip around 40 houses a year,
⁓ which also you can make a lot more money flipping a house than you can sell in a house on real estate market right now these days. So anyway, it worked out well.
Michelle Kesil (03:35)
Yeah, absolutely. That’s important. And are you only flipping and working in the Kentucky area or what markets do you serve?Jack May (03:44)
I do. I work out of Louisville, Kentucky. I’m licensed in Indiana. My basic rule of thumb is I will flip or sell or list houses within an hour of Louisville. So it really doesn’t matter. I’ve got some that are 30 miles north of Louisville. I’ve got some that are 40 miles southwest of Louisville. And, you know, as long as the deal is good enough. Now, I will tell you the further I go out,the less work I want to do on that house. It’s tough to get contractors, at least the ones you use in the city, to drive a long distance to renovate a home. So I try to stay as close to the city as I can. But if it’s an easy flip, if it’s just paint and carpet or something like that, I’ll buy a little further out.
Michelle Kesil (04:33)
Yeah, absolutely. What are some of the main keys that have made the difference in allowing your business to be able to grow and to run successfully?Jack May (05:31)
So the main thing that I want to reiterate to people is network. You’ve got to meet people and be part of their network. So I belong to the local RIA group, the Real Estate Investors group here in town. There’s 850 members. I joined the board there a few years ago because I wanted to get really involved. And I knew that if I joined that board and I was vocal and helped people, then they would give back. ⁓The networking that I’ve made with literally 100, 150 wholesalers is fantastic. Now, I don’t have to go search for that deal. Even though I do have my own lead system and I am bringing in business that way, I’ve got other wholesalers that are sending me deals. So I’m getting texts or emails from these people.
Anytime I see a We Buy Houses sign, I’m calling that person just to say, put me on your cash buyers list. so now I’m getting, like I say, three, four, five deals a day come across my desk. They’re not all what I would purchase, but I can sift through them and make my choice.
Michelle Kesil (06:46)
Definitely, I think you’re spot on with networking and relationships being at the center of this business. They’re everything in this space. ⁓Jack May (06:57)
Mm-hmm.Michelle Kesil (06:57)
You mentioned that you are part of the local organization, but do you have any other networking strategies that you are working with that have made the biggest difference?Jack May (07:07)
You know, I belong to a BNI group for 25 years. BNI stands for Business Networking International. They’ve got chapters in every city and it’s a unique networking group because I’m the only real estate professional in that group. There’s only one accountant, there’s only one ⁓ attorney and so forth. And we are all like salespeople looking for business for everybody else in the group. So, you know, I’m looking for business forthe painter in my group and whoever, the marketing director that’s in our group. And they likewise are looking for people to give to me, people that need to sell their house, people that need to, for instance, if it’s an inherited property, I’ve bought a lot of properties that way that my group has brought me. ⁓ They need to sell fast, for instance, I can help.
Michelle Kesil (08:03)
Yeah, that’s amazing. It’s great to have those people that can support each other.So I know that you are usually flipping. Are there other investment strategies that you work with as well?
Jack May (08:16)
Flipping is the main projects that I’m involved with. The biggest thing that’s coming down the road right now here in Kentucky is they recently passed a law, which was House Bill 160, that allows manufactured housing to go anywhere that a stick-built home is currently built, unless it’s in a homeowners association that restricts certainknow, buildings and so forth. But the local governments can’t dictate as to where you can put a manufactured home. And the reason obviously is because house prices have gone up so high that home ownership is really hard to attain for some people when they’re trying to make sure that people have the opportunity. So I’m looking at purchasing properties that need to be flipped. For instance, I’ve got one that was on five acres and I’m renovating that house, but I
subdivided an acre lot off of that piece of property and I’m putting a manufactured house on that. I’m going to be able to do the whole project for the manufactured house for about $160,000 and I’m hoping to sell it between $200,000 and $225,000. So it’s a quick thing. I’m not building it from the ground up so it’s not a six or eight month project. I should be able to get it done in a couple months and make good money on it.
Michelle Kesil (09:37)
Yeah, absolutely. That’s exciting. I know that you’ve been in this business for a while. Is there anything when it comes to maybe flipping or other sort of investment opportunities that you wish that you knew earlier on in your career that you could share with people now?Jack May (10:29)
I would say that the biggest thing is investors don’t take into consideration all the things that affect price. It’s all in the purchase. You’ve got to make sure that you purchase the right house at the right price or you’re going to get shelled. Don’t fall in love with it just because it’s in a particular neighborhood. ⁓ You want to make sureYou got to take into consideration if it’s got the real small backyard where kids won’t have room to play or if it’s missing any ⁓ deck or a patio in the back. know, mean, people want that sort of thing and that will affect the price. You know, so there’s a lot of things that people don’t look at. You know, for instance, if it backs up to a railroad or if it’s got a steep driveway or if it’s on a busy road, all those things affect price. And it’s you really got to learn the market so you can.
buy it right and know what you’re gonna be able to sell it for.
Michelle Kesil (11:27)
Yeah, absolutely. That’s important. Thank you for sharing that.What are you most focused on solving or scaling to next in your business?
Jack May (11:38)
I would say just…making my ROI a lot better. You I want to make more per deal. You only got a certain amount of time. So you either got to hire more people or you need to find a way to make more money off of each deal. I’m very selective, especially in this market, which has shown signs of declining. You know, I went through the 2008 debacle where the real estate market collapsed.
and people didn’t realize it was happening until it was too late and they were chasing a falling market. So they lost a lot of those houses. They were using last month’s ⁓ numbers and they should have been using this month’s. It’s better to price the house under the market and have there be a bidding war, which will sell higher than the price you’ve sold it, than it is to price it too high.
and people not make you any offers and then the next month you drop the price but the market’s already fallen and so even though you drop the price you’re not changing your position in the market you know so people got to be real careful about what’s going on in their community.
Michelle Kesil (12:49)
Yeah, definitely that’s important. So you mentioned increasing ROI. What does that look like? What action steps would you need to take in order to do that?Jack May (12:57)
I just think it’s really studying your market better. Building in that extra amount of money that, if you think you’re going to make $20,000 on it, throw that number out and look for that number that needs to make you 30 or 35. Because you’re going to have surprises. There’s surprises in every house that you didn’t realize that the crawlspace had mold or that…the furnace was not working properly, even though it was 10 years old, it had a crack titty exchanger or something. there’s different things that, you know, or there were animals in the ⁓ attic that you didn’t know about and all this, all the insulation had to be taken out and re, you know, submitted into the, into the property. So there’s a lot of surprises that come up and you have to, you have to plan for those or it’s going to affect your bottom line.
Michelle Kesil (13:52)
Yeah, definitely. So I know that you are also running a brokerage and a rental property management company. Can you expand on what those roles look like for you?Jack May (14:00)
Mm-hmm.Yeah, so I’ve been selling real estate for many years and I currently am a broker. I hold licenses for 10 other agents under me right now. I have a small staff as well that help with the listings and the marketing and collecting of rents and the property management side. But you know, the biggest advantage is I’ve got different buckets of income. So I’ve got income coming from my flips. I’ve got income coming from
me listing somebody’s house and selling it. I’ve got income from managing the property for somebody and so forth. And back in 08 when the market crashed, a lot of people were underwater and I was like, hey, let’s, we can’t sell it for the price that you want to sell it for. Let’s put a renter in there. And so they treaded water for two or three or four years while that we had a renter in there. And then once the market straightened down,
they were in a good position to make money with that property instead of lose money. So, and that’s kind of what I’ve been telling some people in this market right now is, you know, we’re not getting the showings that we were getting six months ago, you know, so you might want to consider, let’s put a renter in there and then try it again in the spring or, ⁓ you know, a year from now, or if, you know, there’s just, you’ve got to have
different exit strategies in order to get the most out of your properties.
Michelle Kesil (15:35)
Yeah, absolutely. What do you suggest for people to be able to differentiate what that most optimal exit strategy could be?Jack May (16:26)
You just got to study the market. Learn as much as you can. Join your local REA group. Learn from people that have been in the business a lot longer than you have. I still ask questions quite a bit, even though I’ve been in the business so long and sold so many houses. I learn stuff every day still. I’m constantly listening to podcasts. I’m constantly going to conventions or seminars.in the business and learning more. ⁓ Listen to some of the audiobooks that are out. There’s a lot of great information. Even if you pick up one or two different ideas off of a book, it’s worth it.
Michelle Kesil (17:06)
Yeah, absolutely. When you’re working in your brokerage, are you selling to investors as well or mostly first time buyers?Jack May (17:17)
Usually, I’m selling a past client’s house. I have gone the route back in 08 when the market crashed. I helped one investor purchase 20 or 25 properties. Made him a fortune, you know, because he was buying it at the right price. What I have found is it’s really tough to work with investors and make a lot of money because stuff sells so fast. You find a house, you go out and see it real quick.And then you call your investor client up and say, hey, I found a great house. And by the time you can get him over there, it’s sold to somebody else. So you’ve got to be able to make that decision right then and there. So if he’s not willing to go out and just look at houses with you, you’re going to lose out. And it’s important that you strike when the iron’s hot, so to speak, because that’s what I do. If I walk in a house and I like it, I’m telling that guy I want it right now.
Send me a contract.
Michelle Kesil (18:16)
Yeah, absolutely it’s important to take action when you’re ready.So what would you suggest to people that are maybe earlier on in their journey with flipping and are looking to grow that side of their business? Is there any sort of advice that you would give them?
Jack May (18:36)
I think most people fail because they don’t get started. They’re too afraid to jump in and do it. You’re going to make mistakes, you know, and they say, well, I just want to try this one. Well, guess what? If you lose money on that one, then you’ve lost money, right? But if you’re doing two or three at the same time, the chances of you losing money on two or three at the same time are very, very slim.Me, myself, I currently have 16 houses that I’m currently working on in one capacity or another. Either I’ve got it completed and it’s sold on the market, I’m waiting for it to close, or it’s under construction right now, or I’m getting ready to buy it, or it’s on the market right now. there’s different, you know, because I’ve got so many going, you know, the chances of me losing money on all of them is slim.
And I would say that your biggest asset is to find good contractors. That’s the toughest part about flipping houses is to have contractors that will complete it in timely manner, complete it at the right cost and the right condition.
Michelle Kesil (19:51)
Yeah, absolutely. That can definitely be a challenge for investors to find the right team.So before we wrap up here, if somebody wants to reach out, connect, learn more about what you’re doing, where can people find you and connect with you?
Jack May (20:06)
They can email me if they want to at jackmayatmayteamrealtors.com. They can reach me there. on Facebook as well. And always willing to help people. I really enjoy helping people with, I get people out of the blue just call me up and say, hey, can I bounce some ideas off of you? Or I’m new to investing. And you know, quite frankly, I’m always selling that to people. You know, hey.do you own or do you rent your house, it’s very important that you try to get into home ownership. Then it’s, you know, please, you know, please ⁓ buy a rental property, you know, because dollar for dollar, it’s going to outperform the stock market tremendously. You know, you not only, you don’t make a lot of money usually in the rents that come in, but the appreciation is tremendous. You only have to put down a certain amount of money. And if you
If you burr it, then you’re going to basically buy a piece of property and refinance it and take all your money out. And you’ve got no money in the deal and you’re making money with it, three, four, or 5 % a year, with little invested. So the stock market can’t give you that.
Michelle Kesil (21:20)
Yeah, definitely. Awesome. Well, I appreciate your time and your perspective. Thank you for being here.Jack May (21:26)
Well, thanks for having me.Michelle Kesil (21:27)
And for those listeners that are tuning in, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Jack who are building real businesses and we’ll see you on the next episode.
