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SHOW NOTES FOR #057 – SPECIAL OPS LEASE OPS
Even though the emphasis of this podcast is generally on buy ‘n hold real estate investing, there are many different types of real investing. In this episode, Joint Ops Properties, LLC founders James Vreeland and Bob Scott discuss their lucrative real estate investing business that buys distressed single family homes and sells them to tenant buyers with lease-to-own option agreements.
What You Will Learn
- How Jimmy purchased his first investment property while on a 4 month deployment in Afghanistan
- What is Infinite Bank and how you can finance properties with life insurance
- How to turn a loser rental into a win-win cash machine
- What an “Excel Millionaire” is and how to avoid becoming one
About Joint Ops Properties
Joint Ops Properties, LLC, is the brainchild of two United States Military Officers and Academy Graduates. In 2014, Jim Vreeland (USMA ’03) partnered with up Bob Scott (USAFA ’06) to create Joint Ops Properties and capitalize on unique opportunities in the US Real Estate market.
With decades of experience behind them and an emphasis on the St. Louis area, Joint Ops Properties has been able to secure over 100 distressed properties, often at just 30 to 40 cents on the dollar resulting in day 1 equity for their investors. Joint Ops currently focuses on single-family homes and tenants seeking a lease to own option resulting in tenant buyers with more “skin in the game” as opposed to a traditional tenant with no long term interest in the home.
This tried and tested formula has resulted in a 0% default rate and a steady stream of passive income for those looking for a safe and higher return on their long term capital. As Joint Ops Properties continues to expand additional opportunities for investors are being purchased every month while families move into homes they can afford and reside in for decades to come.
About Our Guests
James Vreeland
Jimmy Vreeland is a 2003 graduate from the United States Military Academy at West Point and Army Black Knight football alumni. After receiving his commission, he joined the force as an Army Field Artillery Officer where he would serve a deployment to Iraq in 2005 with the 3rd Infantry Division. Subsequently becoming a US Army Ranger, he would deploy again to Iraq with the 2nd Ranger Battalion as a Fire Support Officer in 2006 followed up by a tour to Afghanistan in 2007.
Exiting the Army at the rank of Captain in 2008, Jimmy set out to make an impact in the private sector through sales with Stryker Orthopedics and, in less than 2 years, he became the highest grossing rep for the entire St. Louis branch and would hold that title for the next 6 years.
In 2014, Jimmy partnered with fellow Academy grad in Bob Scott (USAFA ’06) to form Joint Ops Properties, LLC.
Bob Scott
Originally from St. Louis, Missouri, Bob grew up working in his family’s antique and retail business where he learned first-hand the value of customer service at a young age. After graduating from high school with two state championships under his belt – one in football and one in baseball, he went on to play Varsity Football at the U.S. Air Force Academy and graduated with a Bachelor of Science in Civil Engineering. While in the Active duty Air Force, Bob managed construction projects ranging from facility renovation at Eglin Air Force Base in Florida to new construction of multi-million dollar facilities in Baghdad, Iraq. Bob finished his service with the rank of Captain, and decided to jump into the world of Real Estate Investing.
An avid investor, Bob is an expert a structuring real estate transactions of all types: wholesaling, fix & flip, subject-to, auctions, REOs, short sales, work for equity and sandwich lease options. Bob co-authored the book, “The Ultimate Real Estate Survival Guide” published by Celebrity Press. In his free time, Bob loves to scuba-dive, snowboard, wake-board, and travel. He is also an avid reader and is passionate about self-improvement.
How they got involved in real estate investing
- On deployment overseas, there is lots of downtime, waiting for the next mission
- James took to reading 2 books per week
- One of those books was Rich Dad Poor Dad – the book hit home
- A type “A” personality he became quickly motivated to create passive income
- Bought his first investment home while in Afghanistan – his brother helped purchase the home to rent/share with fellow students near his brother’s med school
- In a short amount of time, they had acquired a four-plex and 5-6 SFR rental properties
- Unfortunately, because of things like repairs/maintenance and tenants not paying, they weren’t making any money
- Later, back in the states, Jimmy attended a local REI meeting and heard someone talk about lease options and it sounded like the answer to their problem
- They shifted their model to lease options
What is a Lease Option?
- You give the tenant buyer the right to purchase the property from the owner typically in a 2-year option)
- Tenant must give the owner a non-refundable deposit ($3,000 to $10,000)
- Then every payment is credited to the purchase price
- At closing (any time within the 2-year period)
- Because of the deposit, the tenant buyer has a completely different mindset than regular tenants
- They understand the value of holding real estate long-term
- For some, this may be the only way they can own a home
The Homes They Buy
- 70% of the homes they purchase are distressed (foreclosures, short sales)
- 30% off market from wholesalers
- Try to fix-up the houses cosmetically, updated, but no major rehabs. Tenants do the rest
- Buy at 30-50% below market
- Sold at full retail market price
- Buyers are responsible for all future repairs and maintenance
The Process
- After they buy house for $30-50,000 with single investors funding the house
- Advertise
- Interested tenant buyer leads funnel in through their website
- Get bidders to get best down, best monthly rental rates
- Full screen of prospective tenant backgrounds (more lenient on credit scores)
Top Advantages
- If the tenant misses payments seller gets to keep the house and evict
- Deposit protects them from eviction
- Can get above market rents
- At close of escrow, seller gets equity out of property
Biggest Mistake
- Trying to buy ‘n hold
- Saw that they were “Excel Millionaires” and believed it! – See their “Excel Millionaire” video on YouTube
- Not understanding that the model does not always meet reality
Biggest Success
- Short sale deal brought to them by agent they knew in St. Louis that knew they could close quickly
- Needed to close quickly
- 4-bed, 4 bath, 2300 sq ft, on an acre of land, great area
- Paid $75,000, appraised at $155,000
- Lots of interest from lease option buyers
- Buyer paid $8,000 down, $1,535 monthly rent
- Got good financing deal
- Cash flowing $750 per month
- See the house on their YouTube channel
Advice for Old Dawg Listeners
- Buy a whole life insurance policy loan
- “Infinite Banking Concept” – Becoming Your Own Banker by R. Nelson Nash
- They learned about this when they applied for loans but didn’t have the liquidity
- Didn’t want to have
- “Infinite Banking” concept
Future Plans
- 300 in St. Louis
- Add a turn-key business
- Offer the system to U.S. Air Force Academy grads
Rap-Up
- Favorite real estate book: The Ultimate Real Estate Survival Guide by Jack Dicks and Ron Legrand
- Favorite business book: Anti-Fragile by Nassinm Nicholas Taleb
- Favorite website: Strategic Coach (Dan Sullivan)
- Favorite app: podcast app
- In you lost everything and only had $1,000 left, how would you get it back? Wholesaling, subject -to deals, sandwich lease options, go to REI meetings, network with other investors, direct marketing
How to Reach Jimmy and Bob
- Their YouTube channel – Joint Ops Properties
- jointopsproperties.com
- IBC Practitioners Program – Ryan Lee
- Email: jointopsproperties@gmail.com
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