From Losing $180K to Successful Investor (Jeff’s Story)

Reading Time: 9 minutes

Jeff was living a nightmare…

He put everything into his restaurant business and lost…

Everything.

Jeff financially hit rock bottom. BUT he knew he had to do something about it.
He had to take action. And he had to do it for his family.

He took a class on how to flip a house and jumped right in. Due to his financial status, he had to be very creative when it came to financing a deal. And frankly, these creative strategies only make him a more successful investor.

At this point, Jeff is a master of debt reduction and used these skills to grow his investing portfolio and create the financial independence he wants for his family. He’s even pulled his wife into the business…

Jeff prefers to be within about 15 minutes of his investment properties. He needs to be able to check on the property and be accessible during a rehab. And it’s paid off! He found a water leak that would have caused a lot damage (and cost a LOT of money) had it sat there for days.

Houston investment property

Listen to our conversation with Jeff to hear more about the recent deal he found on MyHouseDeals and his investing plans for the future plus…
MyHouseDeals.com Success Stories

  • How to get your credit score up in order to qualify for loans
  • The best way to use a lawyer for debt reduction
  • A creative financing strategy when you’re strapped for cash

NOTE: Jeff Shepherd is a premium member, he received a FULL refund of his up-front membership fee for simply doing a deal! Find out more about our premium membership here.

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Tell Us About Yourself…

How did get into real estate investing?

My wife and I tried getting into the restaurant business and failed miserably. We sunk all of our savings and then some into the dream, and it ended up stripping us of over $180,000.

It was not something I wanted to do, but my wife wanted to try it. There was also pressure from my mother-in-law, so I ignored my reservations in order to appease them. I say that jokingly, but that’s the truth of it. After that huge loss, my wife had a new respect for me. We tried our best at bringing her idea to life, now we were left to rebuild.

We attended a Nick Bertucci course, and although there’s an underlying push for more training i.e. more money, they did offer enough background to be able to flip a house.

We used that information and started getting to know a few investors. Building a strong relationship is one of the most important aspects of the process. We came across advertisements from MyHouseDeals, and I initially avoided signing up for anything. That was until I saw that a one year membership to MyHouseDeals would also carry a guarantee. Even if I only got one house out of it, it’d still be worth it.

What really helped me was that I had the real estate knowledge without being a Realtor. I took a $2,000 course to learn how to be successful in this business, and that was one of the smartest things I did. Second only to subscribing to MyHouseDeals, of course.

What made you interested in investing?

I’d just finished getting us out of debt; I had a three year strategic plan, which consisted of paying off all debts.

After everything had settled, I had some money to invest, and I’d gotten my credit score from a 435 all the to the high 700s. I had about $15,000 in the bank, which actually wasn’t enough, but I utilized the changing credit scores to get new credit cards. In doing so, my credit score increased even more and gave me a financial backing beyond getting hard money. I was ready to conquer the real estate market.

How did you come up with this plan to get out of debt?

I consider myself an expert in not just debt reductions, but also repairing credit.

The first thing is to be cautious as to not to get behind on what you already owe. You have to at least make your minimum payments. Personally, I always pay an extra $20 or $30 every month.

The next step is to take whichever credit card is more favorable and use that when you get the balance down low enough to pay off another credit card. This then boosts your ability to make lower payments because you’re consolidating it with another credit card. Here’s the trick: if you have a zero balance credit card, the credit companies look at that as very good. However, if you have a credit card that’s using 1/3 of the credit, they consider that very good plus you actually improve your score because you’re utilizing your credit.

Another tip is to use free services offered. There are credit calculators that track what your score will look like based on what you plan to pay. These credit trackers are available on almost all the free credit score reporting sites.

By doing those things, I was able to hyper inflate my credit score. As far as getting out of debt, one thing you’re never told is if you’ve fallen so far behind on your credit cards and can’t pay even the minimum, ignore it for two years. After one year of not paying, your debt is then sent to the collection agencies. You can use that to your benefit. If you call them right away, they’re not going to listen to you. If you wait an extra month, call again and offer them 15% of the debt, they’ll turn you down. When you offer them 50%, they’ll ask you to pay 75%. One thing that most people are unaware of is these debt collection agencies are authorized to take a low as 15%.

It may be worth it and it may not. I had to let some debts just sit there for three years. By the time I called collections they were thrilled to take 15%. I settled about $30,000 of debt from the restaurant, for about $6,000.

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Is your strategy now to focus on fixing and flipping?

I may lean more toward fix and rent. My contractors are not going very fast. They slowed down on me and actually stopped because they wanted more money. I work with hard money lenders, so we have to get draws. You have to get the house to a certain point to be able to take that draw. The difficulty was they hadn’t got to that point, and they had gotten no money. I had to use the credit card that had a large amount of money available, and I sent him a PayPal payment using the credit card. It cost me a $90 fee, but when you pay $90 to get $3,000, it works.

I should continue doing fix and flips. However, in our area, there’s a lot of flood houses. Those houses don’t resell the way people think they do. So I’m going to buy one that will probably be available through MyHouseDeals. I look for flood houses that are in the nice area and I fix them up. The renters don’t really think ahead in terms of flooding. They don’t care that much because they’re not actually buying the home.

I included a disclaimer with another house that I’m renting. I strongly suggested that they get renter’s insurance and that they will not be covered for any fiscal losses due to fire, flood, wind or hail. If they are ever robbed or the house floods, I’m not liable for their possessions if the insurance doesn’t pay for it.

So that’s the plan: get a house that I can rent so my family can start building our residual income.

What advice do you have for new investors?

I think it is, but I also enjoy my work. I’m a registered radiology technologist. It’s really good to have that standard income, and it’s nice to find a shift that’s outside the regular 9-5. I work an evening shift. I have to go to work in a couple hours, but I’m still driving around during the day catching up on things like checking on the contractors.Is your end goal to become a full time investor?

The best advice I can offer the first-time flipper is to not listen to the big strategies that say you can flip a house anywhere.  Flip one that’s 15 to 20 minutes away from where you live.

You also want to make sure you have a good contractor. I have a good relationship with mine. He’s good, but he has other priorities. He’s usually good about checking on the properties, but one day I checked and there was a water leak. That water leak would’ve been going for 24 hours if I hadn’t gone and stopped it. The reason I’m mentioning that is because living near the properties I do makes it easy to check in on them.

Use the entrepreneur’s rule of never having a business that’s more than 30 minutes away; preferably one that’s within 10 miles.

If you go for a little while without doing any flips, MyHouseDeals will have one; probably the day after you pick the one you didn’t want!

Is your end goal to become a full time investor?

I think it is, but I also enjoy my work. I’m a registered radiology technologist. It’s really good to have that standard income, and it’s nice to find a shift that’s outside the regular 9-5. I work an evening shift. I have to go to work in a couple hours, but I’m still driving around during the day catching up on things like checking on the contractors.

The best advice I can offer the first-time flipper is to not listen to the big strategies that say you can flip a house anywhere.  Flip one that’s 15 to 20 minutes away from where you live.

You also want to make sure you have a good contractor. I have a good relationship with mine. He’s good, but he has other priorities. He’s usually good about checking on the properties, but one day I checked and there was a water leak. That water leak would’ve been going for 24 hours if I hadn’t gone and stopped it. The reason I’m mentioning that is because living near the properties I do makes it easy to check in on them.

Use the entrepreneur’s rule of never having a business that’s more than 30 minutes away; preferably one that’s within 10 miles.

If you go for a little while without doing any flips, MyHouseDeals will have one; probably the day after you pick the one you didn’t want!

Would you like to add anything else?

I think the biggest thing is keep it close. Don’t jump on the wrong deal because it may sound attractive.

We looked at several houses that would’ve been the wrong deal. If you have a Realtor, and everyone does, have them go over and look at the property with you.

Even if they won’t do their own CMA or ARV analysis, they can still help determine if you’re making a good financial decision. The Realtors, they can tell what’s going to sell and what won’t.

Remember everyone has to make money. I want to see a high profit, but I also want to make sure my Realtor is taken care of. If they can make some money, they’ll be willing to do extra work for future profit.

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Alison Reeves

Author: Alison Reeves

After working for a large wholesaler in Houston for 4 years, Alison joined MyHouseDeals as Marketing Manager in 2016. Alison finds the ever-changing nature of real estate investing and marketing exciting, and loves working for a web services company that is hyper-focused on its customers. When she’s not marketing for MyhouseDeals, Alison enjoys cycling, running, fostering homeless dogs, and enjoying all of the art/music/outdoor public activities that Houston has to offer.