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James Wilcox is a Real estate investor out of Central Kentucky, a Stessa power-user, and host of the YouTube channel: https://www.youtube.com/c/REIJames In this episode, James shares his investment journey, his strategy, an insider's view of the Central Kentucky market, and some tips on being an effective real estate investor.

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Transcript

Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.

 

Tom:

Greetings, and welcome to The Remote Real Estate Investor. On this episode, I'm joined by James Wilcox, who has been investing since 2012. James is a buy and hold investor in Kentucky. And he is a power user on the stessa platform. Alright, let's get into it.

 

James, thank you so much for joining us.

 

James:

Yeah, thank you so much for having me. I'm really excited to be here and share a little bit of my real estate investing knowledge and journey with all your listeners.

 

Tom:

Awesome. I'd love to go back to the beginning. But before we do that, let's start with one of your best days as a real estate investor. So can you think of a day that stood out like, Wow, it's so awesome being a real estate investor XYZ happened? That'll be my opener, upper question.

 

James:

Yeah. So I mean, that's a really great question. And, actually, I've had a lot of great days, but I really want to focus on like, my best day was also probably my worst day possible, during my whole journey. So a little bit kind of background on that I purchased my first property back in late 2012. And through that process, you know, everybody's got to work with contractors and kind of get the property back up to snuff, so to speak, this one had a lot of deferred maintenance on it.

 

So I did some of the work myself, but I had to call in a GC to do like some more of the heavy lifting. And like we redid the foundation and stuff like that things that I couldn't personally do. And I'm not really a big, super good handyman, I might know how to do it, but making it go from my brain

 

Tom:

Know enough to be dangerous

 

James:

for my brain to the hand, you know, it gets mixed up a little bit. But so I had hired someone to come in and do some of those things. And whenever we got toward the end of the project in 2013, they had kind of basically skipped out on a lot of the punch list items. So I was left with a property that was you know, probably like 80% done of where I wanted it to be. And so I work a full time job. And at that time, you know, like I said, I'm not super skilled at handyman type stuff. And so I'm going over there, you know, after five at night, and also working when I can on the weekends and stuff to try and get this property back up and back on the market at the time we had wanted to sell it ended up becoming a rental. And that's kind of how the journey got started.

 

But I'm over there and had no power on at the house, and no lights or anything. So I'm sitting there basically, like late at night trying to get things done, I'm sweating, because there's no HVAC on anything like that. And I just just Yeah, really, really frustrated because I had this giant punch list of things to do. And it just seemed extremely overwhelming.

 

So I just took them in and just sat down. I won't say that I shed a few tears. But it definitely got very emotional because it just felt so overwhelming have so many things to do. But right then and there is when I decided that I wasn't going to give up. And then I was going to get this across the finish line. It did take a little bit longer. But that's when I decided that real estate investing was for me because of the challenge of it. And that's why I ended up being my best day because that's the day that I chose not to give up.

 

Tom:

I love it. So you kind of came into it, you know, and then really kind of got put in the burner and tough situation with the property need a lot of work and just committed to it.

 

James:

Yeah, trial by fire is definitely how I've succeeded.

 

Tom:

I love it. So now kind of going a little bit backward. What How did you initially get into real estate was it? Did you have friends or family or I'd love to hear about how your initially got going into the into the space?

 

James:

Yeah, so I had no real estate background or no real direct family that was involved in real estate. my story's a little bit on the sadder side. I had had my father passed away when I was a senior in college. And we had always lived with my grandmother. And she ended up going downhill soon right after that. And so she had passed away that put me next in line for her home. And even though there was, you know, some debt to pay off and things like that some medical bills and things such I did end up sharing half the house with my uncle.

 

My uncle has also had health problems at the time too. So I just felt like at the time it was such a burden on him to try to figure out what to do with this house that had just seen a lot of deferred maintenance. My grandmother did not like people coming over and fixing things you know and stuff and that was the house the first property. And so I ended up buying out him we agreed on a price and since I own half I gave him you know, a portion to buy out his house, so I did own a home, you know, free and clear, but it wasn't exactly the best quality home by any means.

 

So whenever I started doing that he did some napkin math, you watch HGTV, oh, it's fine, you know, throw some paint, you know, rip up these nice gold, shag carpets, you know, and do all that and just put it up on the market and I'll make some money. Well, that didn't, you know, obviously pan out really well. And you heard a little bit of that background of that story with some GC problems and the project taking way longer than I needed to, you know, the yard got so high that I was getting letters from the city, you know, and I had to go over there and mow it and is basically up to my shoulders and things like that and, you know,

 

Tom:

Just grow a corn maze.

 

James:

Yeah, yeah, it ended up being just, you know, a big long process. But because of that trial by fire, I ended up keeping pushing forward with it. And I did get the property back up into a shape that I was happy with. And once I did the actual numbers on it, and had someone a real estate agent, come look at it and stuff. At the end of the day, it looked like I was gonna maybe breakeven on it, and probably lose a little bit as well. And someone else had come up to me and was like, well, you should rent it out. Because the market over here, there's always demand for rental properties and stuff. And he's like, okay, yeah, well, that kind of maybe kind of fits more my personality anyway, because we don't really do a whole lot of flipping, you know, it just makes my stomach turn, trying to figure out what first time homebuyers want, you know, and paint colors and tile and all these types of things, you know, I like clean and functional, but still looking nice and stuff.

 

So I was like, well, I'll try that for a little bit. And I ended up managing that property from a distance, since it was in a different city than I lived in for a little while. And when I got that first rent check for my first renter in the mail, because that's how we did it back then. And it was just amazing feeling it was just like, man, I didn't do anything this month, and I actually got a check. You know, I own the property at this point, you know, free and clear and everything like that. So it was really great. And it just took off from there.

 

Tom:

That Mailbox money. So that's a that's incredible. So you you inherit this property and buy it out. And you know, it's great with real estate, you now have options, having options to either sell or to buy or sell or to keep it as a rental and just identify that as a better hold property. How quickly Are you know, what was your kind of next step after getting that initial property check in the mail? Was it oh, you know, this is pretty awesome, I want to add some more properties. I'd love to hear how it evolved from you kind of strategy and all that good stuff.

 

James:

Yeah, so that first property is always going to be your hardest. And that one took, you know, several years to pretty much get lined out from the actual purchase to the rehab to actually even getting it rented out. And I had kept that same tenant for a little while. And then they ended up leaving and I gotten another tenant and kind of did on my own more or less for that for a little while a couple of years. And during that time, I consider that kind of more when I started to delve into more the background and the education trying to work out to improve my processes and things. And I'd really dug into it a little bit when I first purchased the property. But whenever it was me being on the front lines, being the property manager, I knew I really needed to step up my game, then, but I had always been a fan of bigger pockets. And I've been on that website for a very long time. And I've been a permanent member for a very long time as well.

 

And So basically, during those couple of years of me being the property manager, I really took the time to read a bunch of books. I mean, I've read probably every single one of them out there, or listen to them through audible and stuff. And then I browse the forums, you know, on bigger pockets, you know, anything, I can find YouTube and stuff to make myself a better real estate investor. And then so once those couple of years have passed, and I felt a little more confident that I knew a little bit more, that's when I pulled some money out of the properties or that property and then went on to buy a lot of more small multifamily. And that's really what we focus on right now. You know, duplexes, triplexes four-plexes type stuff?

 

Tom:

That's fantastic. Yeah, love the BiggerPockets communities is a great resource for for folks. I'd love to hear about your use of Stessa. So having a couple of properties. When did you first hear about it? You know, how do you use it? Why do you use it love to hear you just kind of talk about your relationship with that software?

 

James:

Yeah, Stessa has been great. Back when everybody first get started, you have no accounting whatsoever.

 

Tom:

Back of the napkin Yeah,

 

James:

So I just started out, you know, just like everybody else with no accounting whatsoever. I did switch over to kind of using Excel a little bit for a while trying to keep track of you know, the rental coming in expenses, stuff like that. But I'm a very data driven visual type person. So I love charts and graphs, and everything and tracking everything possible. So then at that time, I had switched over to an online software that was much better at tracking metrics, and kept me a lot more organized. I'm not in actually a very organized person, my wife will definitely tell you that I have a bunch of paperwork, I keep tons of paperwork on stuff just because I like having the, the physical and the data but…

 

So that property management software, it had property management and kind of the accounting built in. It's called rentec. Direct. And back then it was very, they've had a refresh since then. But there was very old school feeling like it provided you with a lot of tools and bells and whistles, but it just just looked really old. I did, I did like it, it was something I paid for, you know, a small bid monthly for. But I did want something a little bit more visual, something that I can also import the data into, like using Excel. And I was spending a lot of time still in that program. Typing all the transactions in manually. And I didn't like that, because it was taken a lot of time to do that. And back in 2017 is probably when I switched over to Stessa and started, you know, importing the data and more trying to automate things a lot more. And it's been great ever since then for that.

 

Tom:

Awesome. That's great. I'd love to you know, you talked a little about doing property management yourself. Are you still managing your properties? Or have you you pulled in some some third party property management lift that burden?

 

James:

Yeah. So that very first property is the only one that I actually property managed myself. Once we had graduated up and started buying those small multi families that we do now. I immediately switched over to third party property management, and the fun story of how I actually decided to do that. So I Live in Lexington, Kentucky, which is central Kentucky, and that property was in Mount Sterling, Kentucky, and that's about a 45 minute drive one way it was, you know, where I grew up and everything like that, but well out of the way whenever there was, yeah,

 

Tom:

Little out of the way.

 

James:

Little out of the way 45 minutes, you know, mostly Interstate, but to get there door to door. And with you being the property manager, sometimes you're the one going over your boots on the ground, you know, you're solving problems and fixing things. So I had had a tenant call me in the winter, and they said we can't get the heat to work. So anybody who's been in property management knows that. If the heats not working, and it's cold outside, that is the number one red flag priority you need to address that.

 

Tom:

Yeah safety.

 

James:

Yeah absolutely. So like 100%. Let me go come over. I'll be over there. 45 minutes, drive all the way over there. I look at the thermostat. It's that cold.

 

Tom:

Oh, geez.

 

James:

So I went over there, flip the switch to heat, it turned on immediately start heating up the house, so and then. So I was like, Oh, man. So I got back in the car. And I'm driving all the way back 45 minutes, you know, cold outside snow and all that type of stuff. And it was just like, yeah, I need to get property management. That was the moment that I decided that because I like that is not worth my time. And I ended up getting another tenant and they had called me, you know about that? Around the same time, too. And I told them, I was like, yeah, that thermostats a little tricky. Like, you just need to switch it from cold heat. And that'll solve it. And sure enough, it was at least I learned my lesson, you know, but it did take me a little while to find a property manager that I felt like I could trust over there. And I went through even a couple property managers throughout our career in real estate investing, but the ones that we have now, I'm super happy with.

Tom:

Yeah, I think that's something you know, in in using third party property managers, oftentimes, you know, at some point, you know, it might make sense to look around. If it's not, you know, meeting what you're looking for. Would you give any advice in selecting a property manager in your, you know, experience and having interviewed and selected and then re selected property managers?

 

James:

Yeah, absolutely. your property manager is going to be by far, I think, the best key person on your team. So you really need to have a great property manager, whether you're investing out of state or investing locally, having the good boots on the ground, and someone who's got great systems in place, is definitely going to be a key to finding a great property manager. I think probably one of the best things that when the interview in property managers is to really see how many properties they do manage, and what various types of properties that they do manage. Are they mostly A class single family, or are they large multifamily, maybe they only do apartment complexes and find the one that's going to fit best with you.

 

Really a good property manager is going to have great communication with your tenants and with you being the owner. And anybody who's got great systems in place, you know, we're going to do a counting, we can send it to you PDF, Excel, you know, you're going to get it this time of the month. You're going to get your deposits this time of the month. You know, ask them about everything that they do on the day to day, and if they got good answers to those questions, they're probably going to beright for you.

 

Tom:

I love that in just in wrapping up the same type of properties that you have and making sure that they can they have experienced them, you don't want to be the the test dummy into it. Kind of a related question. I'd love to. I'd love to give your hear your feedback. Looking back. What's one thing that you wish you had known when you first started investing in real estate?

 

James:

Yeah, so my number one

 

Tom:

What’s a tip that you would give the 2012 version of yourself, but what would be the tip?

 

James:

Yeah, so whenever I first got that property, as working on it, and stuff, I really treated it more as a hobby. So it was just kind of like, Oh, yeah, I'll go over there, you know, knock out a few things are, I'll work on it on the weekend, it's like, that was a mistake, I needed to treat it like a business from day one. And I needed to know that, with that property being vacant, it's costing me money, you know, and I need to really get the ball moving on that. And if it means me not being the person doing the boots on the ground, doing the work, you know, changing out the light switch covers, doing electrical, or cleaning, and all that type of stuff, and just paying the extra money and hire someone else out to do it, if they can get it done that much faster, is gonna be better on your profit margin.

 

You know, like, it's, especially with single family, it's a lot of feast or famine. So if that property's rented out, and there's no problems, no repairs, things like that, you're good, once it's vacant, and your vacancy rate, you know, is 100% on that. So it's like, you really need to get those turned over quickly and get them re rented back out and where I'd kind of him hauled around about on it and treated it more as a hobby and just like something I did in my spare time, which is fine. I think everybody needs a side hustle and things like that to motivate them. But if I treated it like a business, from day one, I would be so much better off and actually having, you know, better accounting, being a great part of that too, you know, and not just having horrible accounting.

 

I, tax time was always horrible for me. And only recently, in probably the last five years or so do I feel like I've gotten in a really good space? And stessa? You know, would be definitely big key to that. But I would spend tax time, you know, always file for extensions to get more time. And then you know, it's been just hours and hours and hours of going through receipts and

 

Tom:

Digging it up.

 

James:

Yeah, yeah, I tried to go through it all. And it just was not not good experience and even West. So like how you are there's other programs too, that do that where you can take a picture of the receipt, and it scans it in. Like that's so he, I feel because like a lot of those papers and receipts and stuff after a year like the inks disappeared on it. Good luck going back trying to figure out what that was, or which property it went to, or even how much it was or anything like that. So definitely treat it like a business from day one.

 

Tom:

James, how important would you say the the social aspect and what I mean by that of real estate investing is like mentorship, mentoring, I don't know that you're a part of any masterminds. But I'd love to hear kind of your thoughts on I know, the general the importance of having a community as an investor.

 

James:

Yeah, I think community is super important. And that's why I'm so actively involved here in central Kentucky, and developing other real estate investors. I help run a local organization here, that meets through Facebook and doing local meetings. And we do try to do them once a month. You know, this is COVID time. So some of the in person meetings, you know, aren't happening. But I have done a lot of live streams throughout 2020, especially over different topics to help educate people on various topics with real estate investing.

 

I'm also president of a nonprofit landlord organization back in Mount Sterling, Kentucky as well. So with being so involved in local community, I cannot stress how important it is for you to surround yourself by those that are like minded and those that are willing to help you.

 

I had a mentor when I first started, he was a local commercial broker. And they were the large commercial broker here in Lexington. And I started working with him back when I was thinking about buying into the small multifamily and stuff. And he really told me that whenever we were successful, that we needed to pass that on to others. And I've definitely tried to keep that close to heart and tried to stick with that. And that's why we're so involved in trying to help others teach them how to be successful in real estate investing as well. But I think just if you can find anyone locally, that is a real estate investor, they will definitely talk your ear off and be more than happy to share information with you and try to educate you because we all feel pretty much in this community that real estate investing. And buying properties are what's going to help set you up long term. And especially it's going to be great for your own retirement and personal wealth generation.

 

So we're just having an abundance mindset, especially here in central Kentucky and in our group. So we're more than happy to share with you, anything to help you to be successful and I guarantee there's so One near where you are locally anywhere, that would be more than happy to do that as well. So you need to go find those people.

 

Tom:

That's fantastic. And I, you know, I think one of the being involved in some mastermind and mentorship groups, I think it's, that's one of the best ways is to learn it is to teach it, you know, and talking about it and thinking through and it's a, it's a sanity check. It's an accountability aspect. On some of the meetups. I'd be curious, like, what are some of the topics that you guys discuss at the real estate investing meetups?

 

James:

Yeah, so our group is definitely the core of it is for networking. So a lot of the Facebook group example is contractors, local vendors, things like that real estate agents, wholesalers, real estate investors that are buy & holds like myself, short term rental property managers, you know, short term rental investors, things like that. So we cover various topics, it can be anything from having the police department come out or fire department and give you you know, public safety type things that you can do in your properties.

 

We do like a short term rental one every year that I have a panel, I usually try to get several people from various types of short term rentals, whether they be building their own homesteads, you know, and glamping, and tree houses. And then we have Red River Gorge nearby here that has a lot of cabin rentals, but I do some myself. So I do urban rentals, mostly like city focused ones. We've had wholesaler meetings, we've had real estate agents on home inspectors, you insurance. And basically anything that you can think of that has to do with real estate in any way, shape, or form, probably at least covered at once.

 

Tom:

That's awesome. That sounds like an awesome community that you have in central Kentucky. I'd love to hear you kind of speak to the central Kentucky market. As you know, this is a kind of a national audience. You know, what would be your you know, Top Reasons to invest in central Kentucky.

 

James:

So I'm in Lexington specifically. And I think Lexington can be a really great market, I work with a lot of out of state investors, you know, just given them advice as well. So I'm glad that you brought that up. I think Lexington in particular, and central Kentucky in general, can be a great market just because our price points are a lot lower. I know some people are probably listening here from California and stuff. So like your your dollar can go a lot further here in general.

 

Also, with us being the intersection between 75 and 64 split. Lexington itself is a good place for businesses to start up, because they can get on the interstate and go north to south, east to west very easily. And Lexington in particular, I think is a very strong market. We do have we are a college town. We're a foodie town, we're actually voted as one of the best entrepreneur cities in the country. Easy for startups and things like that. So I think that Lexington it has something very unique about it that you don't find in any other city really in the US and that we have what's called an urban service boundary, which is basically the area outside of a circle of the city cannot be developed without consent from the city.

 

So basically, if anybody that's familiar with Kentucky, and Lexington, there's probably a couple of things that come to mind. And it's basketball, bourbon and horses. So in a way for us to protect our natural resource of the land for the horses, for the city boundaries itself to expand, they have to get authorization to do that. And they only look at that every five years. So land becomes a little more crucial here in Lexington.

 

So it's kind of got built in appreciation in a way. So right now we're not looking at expanding the city boundaries. So the city is working itself on what's called infill, so basically vacant land and stuff that's within that city sector and they're looking to develop and stuff so if you own any basically a home anywhere in Lexington, since land is at a premium, you're going to have some built in appreciation just right on top of there much less the market itself.

 

Lexington if anybody's familiar with Kentucky in general, most of the jobs are in Northern Kentucky near Louisville, Cincinnati area or in central Kentucky and then you'll have some out west and kind of the Bowling Green Viduka area. But Eastern Kentucky itself doesn't provide a lot of opportunities for a lot of people. It can be like a lot of one stoplight towns are kind of poor town. So a lot of the younger people do tend to want to kind of move away from those areas and they usually end up kind of in that first stop in the central Kentucky area.

 

Georgetown itself is this Sitting next to Lexington is the fastest growing city in Kentucky by far, population wise. It holds a Toyota being a big manufacturing job there. Basically every Toyota that's coming off the line is coming right here from Central Kentucky, to Lexington, Georgetown Frankfurt, Louisville area, they're kind of all on a strip, you know, going to the interstate there. And with Lexington being right next to Georgetown. You know, Central Kentucky is just hot as can be.

 

Tom:

Yeah, I mean, universities, blue chip companies. Would you say Kentucky is fairly investor friendly? You know, I don't know, it's a term that's thrown around. But as it relates to, you know, landlording laws and taxes and all that.

 

James:

Yeah, I would say Kentucky definitely in general is very landlord friendly. It's very investor friendly as well, you know, our taxes aren't near as high as places like New York, New Jersey, California. So we're definitely very positive on that. So Lexington itself got a great diversity in the job market as well. We got high amount of jobs and health care education with UK and a lot of the universities that are around to you. And high tech jobs to like we have Lexmark headquarters here. We got Valvoline headquarters here. And then Toyota, like I said in Georgetown as well, and we have tons of manufacturing and stuff jobs. And then you also have the farming jobs too, as well with when it comes to the horse industry means that it like a king land or on the horse farms themselves.

 

So I think that makes Lexington and central Kentucky just in general, just a strong market, just from the job perspective, either.

 

Tom:

Awesome.

 

James:

I want to give like one more tip, just for anybody out there. So I think there's four things for you to be successful in life. And that could be in real estate, investing your work or anything like that. And so I call it so you want to be the GOAT, right? The greatest of all time, everybody knows that. So there's those four things and those four letters there that I really want to drive home. So G, you got to have grit you got to power through whenever times are tough. And that's something that I've learned about that that best worst day ever, you know, that grit

 

Tom:

In the dark with a big punch list?

 

James:

Yep. Yeah, you just gotta power through sometimes. And sometimes life's gonna hand you just a bad hand, and you just got a pat on the through. So that's the one key thing that you need to keep going, you know. O, you got to have opportunity recognition. Whenever there's opportunity that's presented to you, you got to really know your numbers, and know exactly when Lady Luck is kind of smiling down on you. So being able to know for real estate, knowing your market, knowing your price points that you need to hit. Just that opportunity recognition is so key for you to be successful.

 

And then A, you got to take action. One of these days, you can even read as many books as you want to read as many forums, but in the day, you got to jump in the deep end. You know, you got to crack some eggs to be successful and you got to take that action.

 

And T,  you got to do training. You always got to be re educating yourself. Keep learning something new, and keep training yourself to be better.

 

Tom:

James, I love that. Did you come did you come up with that acronym?

 

James:

I did. I did.

 

Tom:

That's really good. We're totally gonna reference you but like, give the James James Wilcox. GOAT acronym. That's fantastic.

 

James:

Appreciate it.

 

Tom:

Yeah. Awesome. And one last time where can people reach out to you watch on YouTube, all that good stuff.

 

James:

Yeah, so I have a YouTube channel. It's called REI James. So basically the acronym real estate investing James, and you can also reach out to me on Instagram at ReiJamesWilcox.

 

Tom:

Awesome. Thanks, James.

 

James:

Hey, thanks very much. Thanks for having me.

 

Tom:

Thanks again to James for joining us today and telling us about Central Kentucky, his story, how he uses Stessa. If you enjoyed this episode, please like subscribe, all that good stuff and as always, happy investing.