REIA 184 Jay Helms: Pushing Through Your Limiting Investment Risk Tolerance

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now here is your host, Dr. Allen Lomax.

Hello, enlightened investors. I'm your host, Dr. Allen, and it is a pleasure to be with you today as we investigate a very important aspect of real estate, and that is pushing through our limiting investment risk tolerance. Jay Helms is an Amazon number one bestselling author, has been featured twice on businessinsiders.com, and is the founder of the W-2 Capitalist, a mastermind community for aspiring and experienced real estate investors. Timid, apprehensive, and fearful about purchasing his first single-family rental, Jay now owns over $1 million in real estate assets and escaped the rat race after just 6 years of the real estate— in real estate side hustle. Knowing that closing on the first deal is the biggest hurdle and mental roadblocks for new investors, Jay has a goal to help 1 million people create million streams of income, achieve financial freedom, and to build Legacy wealth. So Jay, take us into the show and share an experience from your formative years that might've helped shape who you are today.

Absolutely. Thank you for having me, uh, Dr. Allen. Really appreciate the opportunity. When you asked me that question earlier, the very first thing that came to mind was my grandparents and not knowing it at the time. They've both all have passed on and whatnot, but not knowing at the time, my dad's side of the family, they were house hacking before it had a name. And they eventually worked up their way to own an apartment building that my grandparents managed themselves. And my grandfather was a handyman. And growing up, I never really realized what they were doing. I just, I didn't, it didn't really dawn on me that they owned this apartment building and that's how they made their living. Right. And my, I just remember the times where my granddad would go out, sit on the front porch of the apartment building, drink his coffee straight black, and let the tenants come up to him and talk to him. And, you know, that's one of the things. And the more I learned about their ventures, right, my grandmother was bookkeeping and whatnot. And I kind of saw this happening. And she had her adding machine, as she called it at the time, and was doing the rent roll and was doing everything by paper. I had no idea what was going on. Right. But as I worked my way through the W-2, and, you know, studying family history and whatnot, I actually learned that— and this is probably one of the coolest stories I've ever heard. I'm thankful to be in the family that this happened. But the house that my parents and my grandparents that I knew as their house was right next to the apartment building that they owned. Now, the story behind the house that they lived in, it goes something like this. My granddad, he's driving, he's on his way to the hardware store, right? He needs a piece of lumber, like a 2x4 or something. And he pulls up, pulls by this guy, he's taking off a front porch. Think of, think of, give you a visual, a house built in the 1900s, a Victorian-style house, has a wraparound porch around the entire building, right? Guy's out there ripping the front porch off. And he's stacking the lumber by the, by the, uh, by the road for somebody to come pick up later. My granddad just says, hey, do you mind if I get a couple pieces of wood? I need some scrap wood. I'm actually on my way to the hardware store. And the guy looks at him, says, listen, buddy, I'll give you the entire house if you can figure out how to get it moved in about a month. And they did. They— it cost them more to move the house than it did for them to buy the land they put it on.

Oh.

But essentially he got a free house out of it.

Wow.

And this was late 1970s, and they didn't move the house far. It was like 2 blocks down, but it's, I mean, it's a 2-story, high-pitched roof, old 1900s. So, you know, it has some tall ceilings in there for heat evaporation and whatnot. And it's been in our family all up until a couple of months ago. My dad eventually sold it. But yeah, that's when I think of where I'm at today. I think about my childhood not knowing, you know, we were just going to grandmas and grandpas and we weren't, really knowing that we were going to this house and the way they got it, not let alone exploring the apartment building and helping Grandpa go and do and fix things for the tenants and stuff like that. It was just, it's just one of those things that have— now that I'm on this side of investing, right, I look back at that, man, those are some seeds that were planted really early on. Not watered very well throughout the years, but just some seeds that were planted on early on. So that has a lot to do with where I'm at today.

Wow, what a legacy. What a great endeavor for your grandparents. And I'm sure I'm sure they didn't have the internet.

Oh, no.

To teach them all of those various different things. Yeah. Oh, well, thank you for sharing that interesting story there, Jay. Well, as you, as I stated in the introduction, you were hesitant to begin your real estate endeavors and had those hurdles to overcome. So tell us about that initial journey. Tell us a little bit about the trepidation, intimidation, and what you did to overcome that.

Yeah. But, uh, the thing was, when we were, you know, this— we had this, uh, what I like to call this trifecta levels of experience. The company is an information technology company that I was a principal at. It was a startup, you know, I was employee number 5 and helped grow that company to, you know, multiple million dollars of revenue a year. And that company was getting acquired, right? And we were getting sucked up into a much larger organization. The acquisition was not going well at all.

Right.

And recently married, had a kid on the way. So we've got all these, you know, becoming a new husband, becoming a father for the first time, an acquisition that was happening that was just, it was just doing things that really put a lot of stress on me. And it was like, all right, what do we got to do differently? How do we got to do something differently before I lose my mind? And, you know, like a lot of investors stumbled upon Rich Dad Poor Dad and we found that first property that hit our investing criteria. And then unlike the market today, it had been on the market for quite a while. Right. And it was at a reasonable price. We purchased it for $25,000. We put another, I think, $9,000 into it and it rented right away for about $600 a month. But the mental game that I played with myself is one that I think a lot of people do when they first start investing is you play out the worst case scenarios. Right now, this property being $25,000, it was not in the best part of town. You know, I was following in my grandfather's footsteps. I'm pretty handy. So I wanted to be able to do the work to fix it up and whatnot. And, but it's not a place where I wanted to be at night. It's also not a place where I wanted my pregnant wife to be at, you know? And, and then, then all these thoughts and fears come to mind of like, oh man, what if something does happen to me while I'm over there? Now she's by herself raising this kid. And, but ultimately we just, you know, we started doing our due diligence. We've talked to enough people to put us in the right mindset and realize those things aren't going to happen. You should be fine. Let me explain to you why you're going to be fine. We made an offer, it got accepted, and man, once we closed on that deal and we got our first tenant, we were hooked. We have been hooked on it ever since. And I played a lot of mental games with myself and eventually just came down to it. Matter of fact, I have to give my wife credit for this. She was like, stop telling yourself these stories. They're not gonna happen. Just let's just do this. If it hits all of our criteria, we just need to do it.

So Jay, where was this and what year was this?

This was in— market was Pensacola, Florida, and this was in 2014.

So things still had not I don't really know anything about Pensacola, Florida. Florida, but it was a bad part of town. So yes, that could come with a whole lot of headaches and problems. What year was the house built?

1958.

Okay, so it was an old house, lots of maintenance issues, bad neighborhood, all kinds of strikes against it. I can see why you were a little bit hesitant.

Hesitant, yes.

To go through with that. How long did you hold on to it?

We held onto that property for about 3 years. Yep.

And excuse me. So the market had improved by the time you sold it. So you probably did pretty well on that deal. And of course you weren't just waiting to sell that. You had gone on into other endeavors. Tell us what some of those endeavors were, Jay.

Yeah, we, we waited for about a year. I laugh. There's a guy in my mastermind who he's, he's bought 10 properties in his first year and he doesn't feel like he's doing enough. And I'm like, Brandon, let me tell you something, man. We bought our first property and we sat for a year trying to find our next one. And, and so our next one was a couple of mobile homes that about the same price point. We ended up holding onto those for, for a few years now too, or for, for only a few years. There was this theme that we started developing. We, we went into, hey, we're gonna buy these properties and we're never gonna sell any of them. Right. And the, the house that I, Uh, told you about that we started with, we put it on the market to sell, just a for sale by owner, just to see what we could get for it. And got a couple of interested parties, but nothing really happened. We were in between renters. So I had it rented, listed to rent in one spot and had it listed for sale in another spot. We ultimately got a renter in there. And then a couple months after that, had this guy reach out and says, hey, you still interested in selling the property? And I was like, man, make me an offer. You know, no, I mean, you know, it cash flows amazingly. I said, make me an offer. And, uh, he offered me $50,000 for it. And I was like, yep, sure, let's do it. And so, so we took that money and we eventually bought a fourplex. But in between then, we bought these 2 mobile homes. I'd heard a lot about mobile home park, mobile home investing, mobile home park investing. And, uh, you know, the key is if you can just own the dirt and it's somebody else's property you don't have to take care of, it's, it's the best thing to do. But again, these were, it was in a sketchy part of town or questionable part of town. And the price point, which I was attracted to, justified that, right? And we ended up holding onto those for a few years. And it was just a neighborhood, an area that I realized I did not wanna be in. And, uh, we ultimately sold 'em off after 3 years. We took a hit on those. We, we sold 'em, uh, we lost about 10 grand on, uh, on that after we got rid of those. But we quickly moved into a duplex on the best part of town. This is where the story gets exciting, right? Is we, we bought a duplex on one of the best parts of town. I love this part of this story because we had gotten to enough, I guess, confidence about us. That we feel like, okay, if we're going to start doing some investing outside of Pensacola, we've got to go through the notion of not necessarily making offers unseen, right? Having properties that we don't necessarily go in and making sure that we've got our team in place. And so let's kind of exercise this. It was a very affordable house, very affordable duplex. But what I pride myself on saying about this property, it was 5 minutes from where we lived personally. And we all— again, we owned it for about 3 years. So there was this recurring thing, we only averaged about holding a property for about every 3 years. But from the time that we made— I'd never stepped foot inside the property is basically what I'm trying to say. From the time it was listed on the MLS where our realtor brought to us, said, hey, you want to, you want to make an offer on this one? From the time that we sold it, we never stepped foot in it. We drove by it just to look, hey, they're cutting the grass, to, you know, and make sure our property managers were doing their, their thing. But we never stepped foot in that. And what I really like about it, so we bought it for $90,000. So we put roughly $20,000 down. 3 years later, After all the cash flow, and well, 3 years later we sold it for $172,000. And you add up all the cash flow that we put in there, it was, it was close to a 400% return. And I'm like, all right, how do we do this again and again and again? Right? And so, um, that— talk about that first deal where we got the— that got the bug, right? We're addicted now. We can't get enough. You know, who cares that we just lost $10,000 on that experiment in the wrong part of town with the wrong asset type? We get it. We don't want to be there. That's, that's a valuable lesson that we to learn. But now this is, you know, this is what we hear about. This is what we want to do.

So.

Well, interesting trajectory there. And $10,000 sounds like quite a lot to lose, but sometimes it's worth it. And who knows, you could have stayed there. And lost another $10,000 on top of all that.

Possibly, yeah.

So sometimes it's just better to take the hit and get on the road. And that's what you've done. So you have a question here. Should our bosses know that we are investing in real estate? This is if we are working a W-2 job.

Yeah. So if you're working a W-2 job and, uh, you know, I get this question a lot. I've actually, you know, when I used to have a W-2, a company that I worked for, I tried to hide it. I tried to say, nope, I'm not, you know, y'all don't need to know what's going on. And then I closed on my first apartment syndication with some, some partners and one of them posted on social media and tagged me. And next thing I know, the president of our company's Tapped me on the shoulder. He literally tapped me on the shoulder. I just happened to be in the office that day. And he says, hey man, I want to learn more about this apartment investing that you're doing. I was like, all right, things are out there now. And I think to answer the question, should your boss know or should your coworkers know for that matter? It really depends on the company that you work for. And while I say that, the company that I was working for when I first started investing, I didn't let them know. They pressured you to Act like you were an owner in the business when you weren't an owner in the business. And, you know, so that I just— look, you guys aren't— I'm not getting the raises that I think I deserve. There's some, you know, I'm doing my job. There's nothing you guys can say that says I don't deserve this raise other than just not give it to me for— and, and claim that, uh, you're gonna— you're doing it in the interest of the shareholders and blah, blah, blah. So again, that push, that acquisition that happened, that push to figure out how build more wealth and build more cash flow. We just started doing it and doing it on the radar until that post happened, right? And that post happened, then folks who I worked with, I would be on conference calls and whatnot with them, and they either forgot or didn't know I was on the phone call. And I would hear conversations about, well, what's his side hustle? Is real estate his side hustle or are we the side hustle? You know, and so it became a question of during review time for several years, they were like, Hey, we see what you're doing. We don't feel like you're doing enough for the company. And I'd always rebut, show me where I'm failing so far. If I show you, because I was a customer success manager and I was like, look at my customer retention. Has anything changed in the last 3 years? No. Do you guys realize that I get up at 4:00 AM to do the real estate investing stuff? And then I focus on you guys from 8 to 5. And then what I do after that, it's my business, right? So in that, for that company, I wish they never knew what I was doing. Right now, I eventually interviewed and and courted this company. It was kind of my dream job, right? For this company, went to work for them, and during the interview process, I made it known. Hey, look, I invest in real estate on the side, and here's what I do. Here's how I do it. Blah blah blah. It got a lot of interest from those folks. You know, and when I say I courted them, I did. We went back and forth for about a year before they actually ever hired me, and I got hired on in the executive VP of global sales. Was introduced— this is the first day I started— introducing me to the sales floor. And he was like, Jay, tell everybody about yourself and where you came from and all this stuff. And, and so I give him a little 2-minute speech about this, and he kind of looks at me, goes, is that it? That's, that's all you're gonna say? And I was like, well, yeah, what's, what's more relevant? He goes, okay, he's being humble. He does some really cool stuff with real estate investing. So if you guys are interested in that, you might want to take him out to lunch and pick his brain on what he's doing in real estate. And I was like, This is, this is a complete 180 from where I came from. So the answer to that question is, is, is somewhat, you got to know who your coworkers are and what the comp— how the company is. Right. And so, yeah, if you feel like you need to fly under the radar, fly under the radar, they don't need to know anyway, but you never know what connections that you might make. Right. Uh, with your coworkers or with your bosses. Now I strategically never invested with a boss. Because I didn't want a deal to go sour and that be hanging over my head while I worked for them. And, uh, but now that things have transposed and I'm no longer in the W-2 world, those are some good connections to have, right? As potential partners.

Yeah, I think it would be, could be a really touchy situation with some employers. Other employers, like the last employer you were with, makes absolutely no difference. So yeah, I think it's probably something a person should be cautious about and feel out the waters before spilling all of your beans there.

Yep.

Well, what is an investment criteria and how do we go about establishing our own?

So an investment criteria, the way I look at it, I've got a tripod of, of investing criteria that we use, and any potential opportunity has to hit every one of those legs, right? And I think of like it's a bar stool. If you're missing one leg, that is a very unstable, uh, seat to sit on, right? But investing criteria, you really get into Who, what, the who, what, when, where, why, right, of real estate investing. And where do you want to invest? Why do you want to invest there? Does it meet certain specific measurements like cash flow? There are many, many, many different rules and potential ways to evaluate returns. Are you looking at cash on cash? Are you looking at just a straight up return on investment? Are you an IRR person? Basically, your investing criteria, you have to come up with, say, okay, we want to invest in these zip codes, houses within this price point or assets within this price point and in these neighborhoods that are in this school system. that either need some work or they don't, right? You really— it's, it's basically your playbook when you go to look for properties, or I should just say assets, that you say you go through your playbook. Does it check all the boxes? Then, then go after it, right? If it doesn't check off all the boxes, chances are you're just wasting your time going through the motions. But that is your investing criteria. It's basically your playbook to know when an asset or potential asset, you should go after it. So Jay, why should we have Why should you have more than one source of income? Well, one of the things that I realized after we closed on that very first deal, and as we continue to build our portfolio, and we focus on buy and hold, right? We're not fix and flippers. We're buy and hold. We're moving into note investing. And that's kind of like an area I'm really excited about because it's similar to buy and hold. You just don't have to deal with tenants or property managers. And it's pretty nice. But the reason with it, you have multiple streams of income, is one of the things that I recognized You know, we've got all these stressful situations going on, right? Uh, recently married, uh, becoming a new father, acquisition just, just going crazy. And when we close on that first property, I realized, wow, there's— we cash flow close to $400 a month from that property. And I was like, that's $400 that I don't really have to do a whole lot with or do a whole lot to get. And as we continue to add and add and add, I started seeing my stress level For making sure that I, I did everything in my W-2, like I thought somebody was going, you know, just wanted me to do it. I won't say that I cared less, but the focus became, hey, I'm not going to work just to earn a paycheck. I'm going to work because I actually like serving the people that I'm serving. Right. And there's less stress on me personally, because now if my boss comes to me and says, hey, we got to let you go for whatever reason, which happened in May of 2020, I got laid off due to COVID. And it's now spread across these, this portfolio of rental Rental investments, I stress less. You know, so, so most everybody, I feel like when they have multiple streams of income, they're not going to stress over, have angst over one particular avenue. Right. And talk about May of 2020, I got the dreaded call that I was laid off and I was not the only one. There was like 10% of our company that was laid off, over half the sales team that I was running. It still baffles me why we were laid off because we hit our quota 4 out of the last 6 months leading up to when I was laid off. But it's neither here nor there. That's the best kick in the pants and best thing that's ever happened to me. But the day that I got the phone call, you know, the rest of my team that was laid off got the phone call as well. And they, they called me all frantic. And, and I don't— up until that point, I'd only been fired once from a job, and that was in college. So I don't know if that counts or not. But when I got the phone call, it was— it hit the— I took it personal. You know, I didn't, didn't like it, didn't think it was justified. But, you know, putting on the coach hat and my players calling me saying, hey, what are you going to do?

What should I do?

Blah, blah, blah. I just came to this realization that, hey man, I'm not doing anything. I'm not going back to work for somebody else. And they're like, what do you mean? I was like, well, you know, I invest in real estate. And they're like, well, yeah. I was like, we earn enough through that to, to justify our, our living expenses or, you know, our way of living. So I, I think I'm going to focus on building that out for a while, and I'm not going to go back working for somebody else. And they're all, you know, struggling to quickly get their resume up to date. And I was like, Put me down as a reference. I'll be happy to be a reference for you. And which I was for, for, for the entire team and they all moved on, but they were frantic. I was not frantic. I, you know, and at this point in time we had 3 kids. So I, I kind of feel sorry for my boss who had to make that phone call. You know, he's calling one of his really good employees saying, look, man, I know you got 3 kids and everything, but we gotta let you go. So that's the importance of having multiple streams of income. Because if something were to happen to your primary source, then you've got something to fall back on.

Well, Jay, tell our viewers and listeners how it is that they can get in touch with you and what it is that you have to offer.

Yeah, so I'm at w2capitalist.com, and you can, you can reach me there. You can kind of see what we all have offering there. I just recently wrote a book. It's called Make an Offer. It's a parable for, for first-time real estate investors to get over that fear and kind of get out of that Get Out of Your Own Way, essentially. It's available on Amazon. I think it's the only place that you can find it. No, it is. It is. It's— and, um, but we've got that. Also run a mastermind for experienced and aspiring real estate investors, because one of the things that I've realized throughout this entire journey of investing since 2014 is when you surround yourself with like-minded people, you're going to have some success. And so if you're not surrounding yourself with people who are pushing you and holding you accountable and potential partnerships, then you're doing yourself a disfavor. Right. In the way that you want to grow and create those multiple streams of income. So we've got the mastermind, we've got the book, and that's, that's pretty much it.

Well, excellent. Viewers and listeners, thank you for being with us today. And Jay, it's been a pleasure having you, and it's been exciting listening to your journey. And congratulations on all of the success you've experienced. Thanks for being with us today.

Thank you. Appreciate you having me.

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