215 – Jon Carcone–House Flipper

My guest today is a relatively new investor who’s having some incredible success. I read about his story on a success forum and was pumped to bring him on the show because he’s so relatable.

Jon Carcone got into real estate investing in 2009 when he bought a two-unit rental property outside Washington, D.C. He started wholesaling in 2010 and also did his first flip that year. In 2011, he switched counties and flipped two more properties. He flipped eight in 2012 and 17 in 2013, when he decided to go full-time in the business. He’s targeting doing 25 flips this year! While Jon isn’t exactly new in the business, he’s made huge strides in the past couple of years.

Jon went to school in North Carolina, graduated in 2004, and immediately went into a sales job. He didn’t feel like he had a particular passion and ended up in D.C. randomly. His first job involved cold-calling executives, which caught him by surprise, but he did well at the company. He kept getting promoted until around 2008-2009, when he started feeling like his trajectory had gone flat.

Around that time, Jon and his three younger brothers, who were also in the area, decided to move in together, so they got in touch with a realtor. It just so happened that that realtor specialized in investment properties, and specifically two-four unit multi-family units. Buying a property made a lot of sense for them since they could spend less than they would in rent, and when they moved out eventually, they could rent it out and have cash flow. This experience got Jon exposed and interested in real estate investing.

At that point, Jon started to educate himself online and through real estate investing courses. He didn’t intend to flip houses initially, but he researched a variety of ways to start his own business and got the sense that real estate was a reliable and predictable way to make money. I too think that, despite what you often see in the media, real estate is one of the more stable, safe ways to invest. If you really do your homework and know your numbers, it’s relatively routine. Jon says that you own a property for such a short amount of time that the market can only go down so far, so the risk involved isn’t huge.

Talking specifically about Jon’s experience with real estate education, he says that, while he learned something from every product, if he were to do it over again, he wouldn’t spend thousands of dollars on any once course. He suggests spending money on joining a mentoring group run by someone who’s actually doing deals.

Jon joined a mentoring group run by an investor in his area who also ran the local RIA meetings. Through getting involved with her, he became interested in flipping houses.

The majority of his deals right now are listed properties on the MLS. Jon is licensed as a realtor, which he recommends that new real estate investors do. Every day, he spends thirty minutes to an hour going through the MLS listings in his target areas and seeing for which ones his offer price would come close to the list price; generally, he wants to offer about 65% of the list price. Once he’s figured all that out, he passes on the information to a virtual assistant who puts the offer together and sends it to the realtor. He has a template for a sales contract ready, as well as an excel spreadsheet with all his calculations. He also has an email template with information about his business and all necessary attachments ready to go. Jon generally waives his realtor’s commission when he buys a property, which I think is a great big-picture strategy which pushes his offer to the front of the line and  starts a great relationship with the seller’s realtor. Jon says that one of the most important things he has realized is that this is a relationship business. Realtors control 98% of the houses that get bought or sold, so building good relationships with those realtors means that eventually they will be bringing you deals proactively instead of you having to chase them.

Jon also talks about some of his early mistakes in the business. He makes sure to emphasize that mistakes are a part of the learning process and you can’t beat yourself up too much. One of those mistakes was to pay for a direct mail guru who was in California, which taught him that you should really have someone local mentoring you. He recommends going through the MLS, searching for sold renovated houses in your area, and calling up someone who has flipped a lot of them. You can tell them that you are a real estate investor and have either time or money to offer, and see if they’re willing to meet with you. That’s a great way to find a mentor.

Jon recommends wholesaling as a good way to get your foot in the industry, and then moving on to rehabbing. He says wholesaling is all about finding motivated sellers, and he suggests finding one buyer who will be your “mentor” and who you will bring every deal to. He says you’re going to make less money at first that way, but you will learn a lot more and build a strong relationships that’s going to pay you back. He also warns against chasing every bright shiny object, and spinning your wheels thinking about every possible real estate investing method. You have to stay focused at first, and you can branch out eventually.

Jon explains his process flipping his first few properties with the help of his mentor. I haven’t heard of it being done that way before, but there are a million ways to get started in this industry and having a mentor guide you can really help ease your fears.

Going back to Jon’s current process, Jon went over how he finds deals and how he finds money.

Finding deals:

  • evaluates 25-30 houses every day
  • puts in 2-5 offers a day
  • roughly: 25% from wholesalers, 65% from the MLS, 10% from direct mail campaigns and advertising

Finding money:

  • For his first flip, he covered the purchase price using a mortgage loan and his mentor covered the rehab.
  • For his first flip in Maryland, he used his own savings.
  • His mentor connected him to a hard money lender, who then loaned him all the money for the next two deals. What a great example of the power of relationships!
  • In 2011, he amazingly got a $350,000 credit line.

Jon is a phenomenal example of taking massive action to get started. He actually went out, made phone calls, and knocked on doors. I really do believe that money loves action.

Jon’s biggest piece of advice for someone starting out is to drive for dollars. If you’re motivated, you can do it. Look up market statistics to find counties and zip codes that have a low median sold property price, write down the address of every vacant house in that area, and send them all letters or call them. Also call every single number on realtor signs. Jon also recommends getting a realtor’s license, which gives you a basic education on contracts and access to the MLS.

The easiest way to find more information about Jon or to contact him directly is through his website.

There’s a lot of great information in this interview, and I hope we’ll talk to Jon again in the future and do an update!

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