Theo and Jason are going to get into his story, and how he got into real estate. After we hear that, they will dive deeper into his mobile home park deal – which he bought just 8 months after attending a seminar. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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“Do what you say and say what you do” – Jason Paul Rogers
Jason Paul Rogers Real Estate Background:
- Founder and CEO of Brighter Living Properties, a real estate investment group with seven figures in assets under management
- Acquired his first mobile home park for 1.25 million dollars 8 months after attending Dan Pena’s seminar
- Based in Omaha, NB
- Say hi to him at https://brighterlivingproperties.com/
- Best Ever Book: Rockefeller Biography
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Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’ll be speaking with Jason Paul Rogers. Jason, how are you doing today?
Jason Paul Rogers: Doing awesome. I appreciate you taking the time and for having me here.
Theo Hicks: Oh, absolutely. And we appreciate you doing the same as well, and I’m looking forward to our conversation. A little bit about Jason – he is the founder and CEO of Brighter Living Properties, a real estate investment group with seven figures in assets under management. He acquired his first mobile home park for 1.275 million dollars, eight months after attending a Dan Pena seminar. He is currently based in Omaha, Nebraska, and you can say hi to him at BrighterLivingProperties.com.
Alright, Jason, do you mind telling us a little bit more about your background and what you’re focused on now?
Jason Paul Rogers: Yeah, I would love to. I’m a fairly younger guy, 28 now; I did our first deal when I was turning 28… So my background really wasn’t real estate-based; in fact, it really wasn’t business-based. At the time of recording this, just a year ago – so if you go one year in the past, I was actually something of a nomadic traveler. I was living between Denmark and Colombia, in South America… So something of a traveler, I had a little online business, and was comfortable enough with that.
I then got a bit of a dry — single and don’t have some of those tie-downs, you may say, or some of those challenges when you have a mortgage, or have kids, or have a wife, or have a family… So I thought “You know, if I’m gonna go big and make some moves, this is the time to do it.” As you actually mentioned – I didn’t think you were gonna mention my relationship with Dan Pena, which… It’s not like we have a deep friendship, or even a real business relationship, but he does have a seminar that I decided to jump into. He teaches a mergers and acquisitions style of growing your business by buying top-line revenue… So I actually somewhat got into the real estate game not from a traditional real estate investing standpoint, but from more of an M&A (mergers and acquisitions) standpoint.
I learned everything I could from him, because at this time last year I didn’t understand what a balloon payment was, didn’t really understand how an amortization schedule worked, how I lived 27 years without knowing some of the basic things about finance that I legitimately didn’t understand, I don’t know. But I learned everything I could from him, as well as a host of other mentors and individuals in finance, and then real estate, as I decided “You know what – I really had liked real estate throughout my younger years.” I hadn’t really ever tested the waters, but it had always made sense to me to own a hard asset, something tangible, something that would never lose its intrinsic value, so I decided to go into the mobile home park sector.
I really liked the aspect of it being a recession-resistant asset, that essentially will always hold some level of value, and even if the economy has a tough time, people will always need affordable housing… And I could go through the whole story, but I built a team around me, because without my lack of real estate experience, or legal experience, or accounting experience and all these different things – I don’t have a B school background, or legal experience, or accounting experience, and all these different things, like I don’t have a B school background, or a law degree or anything like that, I figured “Let me build a team around myself to help me”, and once I had that team established, it was just a non-stop hunt for deals and for finance.
Long story short, on August 9th of 2019 we closed our first deal, that deal out here in Nebraska, where I’m talking to you right now, the 1.275 million dollar deal, and now we go on a hunt for bigger deals as we move forward.
Theo Hicks: Do you mind telling us the story of that deal? So you went to the Dan Pena seminar, you landed on mobile home parks, and you mentioned why… So from there, what were the next steps? How did you find the deal? Did you put the team together first? How did you fund it? Things like that.
Jason Paul Rogers: As I remember, when I was putting my team together, I started firstly with putting a team together, I remember explaining to these individuals I was reaching out to – I reached out to a host of individuals with a lot more background; think investment banker types, individuals with a lot of real estate experience, top accounting firm backgrounds, kind of these big four accounting firms, and top legal firms… I was reaching out to individuals of that type. When I would talk to them, they would ask me “Okay, well, do you capital fundraised?” I remember saying “We’re actually gonna be running the bases backwards. We’re gonna be running the third base first, which seems counter-intuitive…” But we figured if we build a world-class team first, it’ll be easier for us to procure financing. So it was almost a “If you build it, they will come” mentality.
So we built the team first, built some strategic partnerships with a quality accounting firm and a pretty high-quality law firm, and then after about two months of really building that team, I went all-out on calling for deals, and started to build banking relationships. We targeted the Midwest for a host of reasons… I’m actually from California originally, went to school in UCLA, so I’m a California boy… But the cap rates and the valuations of real estate in California kind of turned me off, not to mention some of the rent control things and aspects of that nature – it kind of scared me, so we really focused on the Midwest.
After probably about a month of hunting for deals, mainly through cold-calling – we weren’t really using brokers… For one, I didn’t really have any capital to my name, so when you talk to a broker, “Hey, send me proof of funds.” Well, my bank account wasn’t exactly super-sexy for a broker… So we went with the off market deal flow, mainly through cold-calling… And I went on a tour of probably about 15 to 20 mobile home parks in Kansas, Nebraska, South Dakota, all the way up into North Dakota.
I really found that Great Plains area to be advantageous for what we were looking to do. It seemed to have the most opportunity, and it seemed to be the least touched by the institutional buyers, and there seemed to be a little less competition for deals out in that area.
I probably put 20k, 25k on rental cars, and met about 15 to 20 different sellers (or potential sellers), I looked at about 15 to 20 different mobile home parks… We then chose the one that made the most sense to us, which is the deal in Nebraska. From there, I then went on the hunt for bank finance. But as a side note, we also needed equity. You very rarely hear of a real estate deal that you are able to do without any equity.
So what actually happened there was — I can’t put it any more bluntly than to say “I was pretty darn broke.” I was actually sleeping on my grandmother’s couch for a period when I started this process… Which I don’t recommend. I don’t think what I did was exactly ideal. In fact, it certainly wasn’t. But it’s my story, and it’s just the way it happens.
So I knew I needed equity from somewhere, and I had a bit of a social media presence, which I leaned on too a good bit. I shared that I was looking to do a high-quality deal, and that we’re gonna offer a preferred rate of return, as well as en equity stake in the acquisition that we made… And I actually started by going to friends and family, and I was sincerely looking to practice my pitch.
So I went through my pitch, and said “Look, economic occupancy over the last three years has been over 95% (which was true), over the last two years it’s been over 97%. This is a local area without a lot of inventory as far as real estate, so the affordable housing demand is super-strong, you’re next to all these big manufacturers…” And I was going through pitch, and I’m pretending, when I’m talking to friends and family, that they’re the investors. “So if I was to give you, say, 15% to 20% of this deal and to give you a preferred rate of return of 8%, would that be something that would interest you?” And I didn’t actually have to get to this big list of investors that had actually raised their hand as investors (I’d found them on LinkedIn). I didn’t have to get to that list, practicing my pitch, to actually come up with the capital we needed, because very quickly within my network there was some very local interest, if you will, in the deal.
So within a pretty short amount of time I was able to procure $150,000 in equity, and then from there I went on a fundraising tear… Because with the 1.275 million dollar deal, 150k is only 12% of the capital stack; normally, you’re looking for 25%, 30% perhaps on a down payment for a real estate deal.
So my 12% down payment wasn’t exactly great, but what the seller initially did in this Nebraska deal – he had initially said to me “Hey look, I like you…” and this and that and the other, “…I’ll carry the paper.” He was gonna carry 275k on a second-position note, with a matching interest rate to the first lien note. So what that was gonna do is if you could get the seller carryback to count as equity, we had the 150k in total between transaction costs and the down payment that we were gonna use, the seller was gonna match the interest rate to the first lien note for 275k… So it took our “equity” up to – depending on if we used between 100k to 150k of our capital as a down payment versus transaction costs, it was only gonna require the bank going for about 900k of the 1.275.
So I pitched every single bank in town, literally called every bank within a 100-mile radius of the asset… There was certainly some pushback, because my financials weren’t super strong, and that team I’d built – I had told them initially “Hey look, I just want your advice, I just want your insight. I’m not looking for you to guarantee a loan, I’m not looking for you to put in money. Just give me the insight and stand behind me if you will, and give me pointers on how to go forth.”
That was all fine and dandy, they were impressed with the team I had built, but they were like “Well, these folks are gonna guarantee the loan; then we’ll be really impressed, and then we’ll push this thing through. But with you being the guarantor, you guys are bringing a little bit of money into the deal, but how do we de-risk this thing?” So that was a challenge for us. But kept pushing, and there were some banks that were getting more interested.
Then at some point during the negotiation process – I don’t wanna get into the skinny of the deal (there’s some things I’ll keep a little confidential, mainly as it relates to the nuance of the deal, and some of the nuance of what the seller had going on on his end; I don’t wanna speak on that behalf), but what ultimately happened was the seller came back to me, and at this point he and I had built a good rapport, which if we had longer, I would talk more about the importance of building a great rapport with a potential seller, for a host of reasons, including the financial piece… Because he came to me and said “Look, I see the way you’re hunting for bank finance, I also see that if you pay me this big sum of (say) a million dollars or whatever it would be upfront in cash, what’s gonna happen as far as capital gains tax, and all this stuff…”
Long story short, he came back with a seller carryback option, and there was a whole bunch of negotiation – how would that be structured, and at what interest rate, and the amortization, and there was actually a period where he wanted me to run the thing for two years if we were gonna do that deal… And there was a whole bunch of negotiation that happened, but ultimately I was able to not be required to run the thing, and we procured a competitive rate of 6% from the seller… So the deal ultimately closed with an 88% seller carryback, which means we’re pretty darn leveraged. But even at that loan-to-value, if you will, our debt service coverage ratio was really high. That thing freely cash-flows extremely well, and I think that was in part because we went a little bit more rural; our deal is a little bit outside of Omaha, and we were willing to go into a slightly more rural area, that was actually a really strong local economy, agriculturally-based, very stable… But it was one of those deals that was a little under the 50,000 person metro population, so even the midsized investment groups just weren’t quite looking at it seriously… So we were able to find a deal that allowed us to go higher on that leverage than what you would traditionally want to do, yet without — let’s just say our free cashflow was really comfortable, as if we were doing a deal at maybe only 65% or 70% leverage.
So it really has been a good deal. Now, it is park-owned homes, which is the one wrinkle, which means you have to be a little bit more maintenance-savvy… So it’s not a perfect deal, but it got our foot in the door and now it gives us a base to go on and do subsequent deals, which is what we’re planning now.
So that’s in 5-7 minutes or whatever that took, that’s pretty much the story of how it came to be.
Theo Hicks: Yeah, very detailed, thank you for sharing. I’ve got a few follow-up questions before I move on… The first thing that comes to mind – as you mentioned, when you were first starting out you’re like “Okay, I’m gonna build a team first, and then basically leverage their relationships to raise capital, in a sense, and get financing from banks.” And you mentioned that you were reaching out to some pretty top-tier legal, accountants, things like that… How did you win them over to your side? You mentioned you didn’t have any experience, you didn’t have any money… How were you able to get them onto your team?
Jason Paul Rogers: Candor, and a big vision. I would say those were the two main things. First thing — I remember my pitch really well, because I made it over 50 times. I remember starting with saying “Hey, thank you so much for your time”, and then there was this “Look, I know I can do this, but I know I can’t do it alone. Let me be real transparent with who I am and who I’m not, firstly. No real estate background, no B school degree, no law degree… I don’t have those traditional white-collar degrees. I just wanna be clear about it, I don’t have that; that’s in fact why I’m reaching out to you. But what I do have is a relentless work ethic, and more importantly, I believe the ability to make this thing happen. Again, I know I can do this, I just know I can’t do it alone, and I think it’s gonna be a lot easier for us to be successful, because we’ve found this asset class in the manufactured housing industry, or the mobile home park space, that’s ripe for consolidation, that is a real strong asset that will be a joy to fundraise for.”
So I talked a lot about the money. The big question you have when you’re reaching out to individuals like that, especially in the early stages before you really have a track record, and when you really don’t have much capital to talk about, is “Okay, well how are you gonna get the money?” I can guarantee you that’s gonna be the question if you follow anywhere near a model of what I did. It’s “Okay, where is the money?” And I made a pretty strong point that if we have a strong enough deal and a strong enough team, the finance will come… Which ultimately did prove to be true. The bank financing our deal, like I talked about a minute ago, was difficult, but ultimately what I didn’t share is finally a bank did get involved, and albeit the terms weren’t exactly ideal, which is why we went with the seller carryback note, a bank finally did throw their hat in the ring. It took two months of jumping the bones of every bank in greater Lincoln and Omaha metros to get that to happen, but it did happen.
But again, I would say it’s the big vision – I talked about the big vision that I have for Brighter Living, to grow it to be a very successful company, and I told them I would do anything and everything in my power to make sure this was a success… And I made it really clear to them – “I’m just looking for a little bit of your time. I’m not looking for your capital, I’m not even looking to tap into your network for this first deal. Let me prove myself, and then we’ll tap into your network”, which is actually about a year later almost of now recording this, that team now has confidence in me… “Wow, if this kid was able to pull that off without any of our real hope other than a couple of pointers, imagine what would happen if we all opened up our collective Rolodex”, which is why we’re really excited about the future. But hopefully those were some valuable pointers about how I was able to build that team from scratch.
Theo Hicks: Absolutely. I’m gonna wrap the next question into the best ever advice question… So the second thing you mentioned that seemed to be the most important for this deal, because the seller ended up basically funding 88% of the deal… You mentioned that you wanted to talk about this anyways, which is building rapport… So what is your best real estate investing advice ever as it relates to building rapport with a seller?
Jason Paul Rogers: I would say the best advice I can give about building rapport with sellers is 1) do it in person, 2) do it honestly, but 3) even if you don’t have a super-strong base to stand on, don’t sell yourself short. There’s this tough blend on “Hey, I don’t have the world of experience…” I’m talking assuming our listener here doesn’t have a ton of experience. If you have experience, then it’s even easier for you. Then it’s just as simple as “Spend time with a seller and ensure the seller that your goals overlap.” It’s really that building rapport over time, figuring out what are your goals, Mr. or Mr. Seller, what are my goals, and can we bridge them in a way that allows for us both to get what we want out of life… But the best way to do that is through shared time together.
I probably spent 10 to 20 hours in-person with the seller before that seller carry-back offer went through. And the other half – I know this is a multi-part answer, but I don’t believe in the “just one thing.” There’s a lot of factors that go into procuring over a million dollars in bank finance when you don’t really have too much as far as your reputation at that point.
The other thing that goes into this is every single thing I told the seller I would do, I did. “Hey, I’ll see you at 11 AM.” I was there. “Hey, we’ll do a Zoom call at 9 AM.” I was there. “Hey, I’m gonna talk to every single bank in town.” Four days later his realtor was saying “Man, I got a call from two different banks, two bankers that I knew locally, that this guy Jason Rogers was talking about your deal.” So do what you say and say what you do.
When you blend all of those things together, you give yourself the best chance possible to have rapport. But don’t get me wrong, also part of it is just a human thing. There were 15 or 20 other sellers I talked to that I probably didn’t have as good a rapport with any of them as I did with the one seller that we ultimately did the deal with.
There was a shared mindset regarding business and how it should be done, so when you take all of those things together, it’s not just one ingredient that makes the cake, but you put all these ingredients together and then – yeah, it’s a happy birthday, and a delightful cake to go along with it.
Theo Hicks: Alright, Jason, are you ready for the Best Ever Lightning Round?
Jason Paul Rogers: Let’s roll.
Theo Hicks: Alright. First, a quick word from our sponsor.
Break: [00:17:34].26] to [00:18:10].21]
Theo Hicks: Alright, Jason, what is the best ever book you’ve recently read?
Jason Paul Rogers: This one’s not gonna be super-delightful for your audience… I haven’t read a book in quite some time, and I used to be a voracious reader. We can talk about books all day long. I love Rockefeller’s biography, I love Alexander the Great’s Biography, I love Relentless by Tim Grover, I love Meditations by Marcus Aurelius… That being said, I’ve not read a book in probably six months or more. I’ve just been so darn focused on business that I really haven’t got to that.
So there’s a couple of books that I like, but I’d be lying if I said I read a book recently. I just don’t wanna BS the audience here.
Theo Hicks: If your business were to collapse today, what would you do next?
Jason Paul Rogers: If my business were to collapse today, what would I do next… I’d probably go into sales of some kind. I like sales… Only if you’re selling something you believe in. By the way, on the prior question, I would also read the shareholder reports [unintelligible [00:18:54].19] That’s not exactly a book, but I do read those. But yeah, I’d probably go into sales.
Theo Hicks: What is your best ever way you like to give back?
Jason Paul Rogers: I do a whole bunch of – this is a bit self-promotional – free content on YouTube. I’ve been somebody that’s loved YouTube for a long time. So I’d say producing YouTube content that is free, that really is not holding anything back, that tries to add as much value as humanly possible – that’s what I like to do when I’m not working, to give back.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Jason Paul Rogers: I would say the best ever place to reach me would be my LinkedIn, which is LinkedIn.com/in/jasonpaulrogers1. I know that’s a very long URL, but basically just search my name, Jason Paul Rogers, on LinkedIn. I’ll probably be the first one that shows up. So I would say LinkedIn is probably the best ever place to find me.
Theo Hicks: Perfect. Well, Jason, I really appreciate you coming on the show today and giving us really a lot of information in such a short period of time. Very detailed… You walked us through, again, in great detail, your first deal, that 1.275 million dollar mobile home park. You mentioned how you started from being a nomadic traveler, to attending a seminar, to learning all you possibly could about the mobile home park asset class, starting by putting a team together, then focused on financing second… You talked about why you focused on the Midwest as opposed to where you are from, which is California. You talked about how you found the deal, through hunting for deals, through cold-calling, and touring across the Midwest, 15-20 mobile home parks.
After you found the deal, you talked about the entire process of funding the deal, and how you ended up landing on an 88% seller carry-back note with the owner. We also talked about how you partnered with the top-tier people in the market and how others can do the same. You said it was candor and a big vision. Something I really liked about what you said was when you were talking to them you didn’t go in there saying “Hey, I want your network, I want your money”, instead you just said “I’m just looking for your time, and I wanna prove myself first before I start asking for these big things from you.”
And then lastly, your Best Ever advice for how to build rapport with the seller was do it in person, do it honestly, don’t sell yourself short. Make sure that your goals overlap, which is accomplished by shared time together. You spent 10-20 hours in-person with the seller… And then the biggest thing I think is doing everything you said that you’re going to do, you actually did. And I think a really good example was you said you were gonna reach out to every bank within a 100-mile radius, and then the broker called the owner and said “Hey, I got a call from these banks. Jason reached out to them.” I’m sure that was a great way to build rapport with the seller.
Again, Jason, I really appreciate you coming on the show today. Best Ever listeners, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.
Jason Paul Rogers: It’s been a pleasure. Have a great one.