Strategies To Succeed In The San Diego Real Estate Market

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Jason Lee is a highly recognized real estate agent in the multifamily real estate industry He has worked with over multiple eight to ten-figure real estate investors from San Diego County helping them acquire and sell apartment complexes In the last few years Jason has represented over 100 investors and sold over 200 000 000 worth of real estate in San Diego County His transactions have been shared in the San Diego Business Journal and Costar In this episode Jason talks about what you need to know about real estate investing in San Diego He also shares tips on lead generation and building and working with a team 00 01 – 03 38 Jason s Background In Real Estate Juggling studies and being a real estate agent Started his own brokerage five years after 03 39 – 06 48 San Diego Housing Market The market in San Diego is competitive where there are more buyers than sellers Rent has spiked up since the pandemic as more and more people see the value of living in San Diego Building relationships is the key to continuous lead flow Clients get the best deals through their broker s guidance 06 49 – 19 24 Building a Team and Knowing Your Market Why Jason started his own brokerage and the challenges that came with it Word of mouth and social media are ways you can find new talent for the team He empowers his new team members by providing solid framework and guidance on how to do the job The opportunities for real estate investing in San Diego Here are some explanations for why customers are delaying purchases 19 48 – 21 41 Closing Segment The one thing Jason would do differently if he can rewind five years Being ultra-focused and believing in the process is something that people can emulate Vet your contractors Reach out to Jason Links Below Final Words Tweetable Quotes Everyone has that fear that when you hire your first person that you got to make everything be perfect The number one thing for me is I knew I was going to make mistakes but I knew that I was going to spend a lot of time to make him better – Jason Lee I think having that belief in myself and knowing that I could make it and seeing that other people have done it before me has been the number one most important thing for my success – Jason Lee —————————————————————————– Looking to build and maximize your wealth through real estate Connect with Jason Lee on jlmrealestateinc com and LinkedIn Connect with me I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below 00 00 00 Jason Lee So honestly like many places the housing market is down a little bit down here from five or 10 This year so the inventory is going up There s a lot less demand since rates are up So as you know but anyone else there s a lot less buyers so a lot less demand 00 00 26 Sam Wilson Jason Lee is a commercial real estate broker and investor based in San Diego County California Jason welcome to the show 00 00 34 Jason Lee Hey Sam Thanks for having me 00 00 35 Sam Wilson Hey man the pleasure is mine Jason there are three questions I ask every guest who comes on the show in 90 seconds or less Can you tell me where did you start Where are you now And how did you get there 00 00 45 Jason Lee I guess I was a lost college kid at San Diego State University I was kind of trying to network and meet people and see what I want to do with my life fell into real estate A lot of my friends on my network I saw their parents were doing extremely successful in real estate and I joined the real estate club on campus My old mentor and he kind of taught me the whole business how to be a multifamily broker in San Diego Fast forward five years I now own my own brokerage here in San Diego California called JLM Real Estate We have a team about eight agents and brokers and marketing people And yeah that s where I m today And then on the investment side I own and operate EDA units here in San Diego county that I own 50 with my partner so yeah that s quick 92nd tippet 00 01 28 Sam Wilson Man that s awesome I mean that s a good fast five years to grow Did you finish college Or did you finally just get the bug real estate and say that s what I m doing 00 01 43 Jason Lee I did yeah But I got my license the middle of my junior year and then just took night classes and work every single day from a junior-senior year since as you know real estate s a commission-only job So I had to get some nest egg in my bank before graduating So I did finish college but I did some deals for graduating so I could actually support myself in case you know I didn t do any more deals for a while 00 02 05 Sam Wilson Man that s really cool I love that So when you stepped out of college diploma in hand what was your next move 00 02 13 Jason Lee Diploma in hand I honestly just wanted to keep doing what I m doing But really you know put gasoline on the fire and spend more time doing it So you know before since I had school I couldn t be there full time My plan after I graduated it was just to go all in on real estate and you know spend at least 50 60 hours a week you know hitting the phones trying to find sellers trying to find buyers 00 02 36 Sam Wilson What were you looking for initially if you re looking for sellers and looking for buyers what were you looking for initially You know when you first got out of school what was the asset class 00 02 47 Jason Lee I was really lucky I actually the mentor I met my junior year was in multifamily real estate down here So I started interning there my junior year And I I stuck with that asset class throughout my whole career And it s you know been really great because it performed well throughout COVID And there s been a lot of demand very steady demand So yeah I m really glad I fell into the asset class and stuck with it after school 00 03 09 Sam Wilson And that s that s something we ve talked about a few times here on the show is especially in your market because you re specifically focused there in San Diego right So in your market there s not a lot of new supply and then correct me if I m wrong on this because I don t invest in your market but there s not a lot of new supply coming in to your market So for you you guys kind of have a constrained supply and an almost unlimited demand it seems So how are you guys working within In those constraints 00 03 39 Jason Lee I mean you know the last few years if you were a buyer it was extremely hard if you re a seller is extremely easy rents have skyrocketed because I feel like COVID accelerated the growth of San Diego because people have seen the outdoor life here how much there is to do the nightlife There s just the weather you know absolutely perfect So I feel like a lot of people you know there s a huge migration from San Francisco Los Angeles other big cities to San Diego to live in a more you know calm beach town that s not as crazy not as much traffic So that has caused the rents to spike up a lot in the last two three years I mean rents were going up you know almost 20 a year for the last since 2020 So it s been crazy but it s finally slowing down It s kind of stabilizing now but if you are a buyer it was extremely hard to find a deal unless you knew a broker had the relationships how to get network down here If you were coming out of state to invest in San Diego and you want to look on the market there were no good deal So it s extremely competitive 00 04 39 Sam Wilson So how have you gone about finding deals that pencil there in San Diego for your own portfolio 00 04 47 Jason Lee Number one reason is I d say my relationships You know I have a lot of good relationships in San Diego So that s been a huge factor and you know talking to people seeing what s out there what sellers are talking to and then also you know since I own a broker Bridge and I have on the phones my guys are on the phones a lot we find a lot of sellers who are looking to sell at their price And the price makes sense for me or for people that I m working with and a deal can happen But a lot of the times like 90 of time the prices are way too high So it is pretty rare to find a good deal here 00 05 18 Sam Wilson I know you can t tell your buyers this but do you see your buyers acquiring things that you just go Gosh I wouldn t buy that if I mean it just doesn t make sense 00 05 30 Jason Lee I ll honestly advise my buyers against the bad deal If it s really bad like if I know they re not going to make any money on it I d rather broker him a good deal and have not been mad at me in five years So I will give them that advice But if it makes sense for what they re looking for like sometimes you know an investor who has a lot of money doesn t really need cash flow and is looking for an equity play and a really good location by the beach and they put enough down they can pay the mortgage off and it ll appreciate slowly but fast even But I would say that you know none of my buyers have bought deals that have lost the money in the past 00 06 04 Sam Wilson Right No And again I wouldn t suggest that you would put somebody in that position I guess I see some things even coming across you know come on across the channels in the asset class that we re buying in and I see the deals getting taken down I just got I don t understand how even happened So I just wondered you know from a brokers perspective what happens to where you go Hey man you know knock yourself out I don t I don t see the value there But maybe you do And you know that s I guess that s the beauty of the absolute real estate game is that everybody gets to make their own decisions in play play the in the big leagues 00 06 37 Jason Lee Exactly Yeah you can set it better I feel like everyone s goals Everyone s goals are different Like for you I m sure you re in growth mode and I m in growth mode But if someone just looking to park cash and put in a safe investment that those people can pay a lot more for properties 00 06 49 Sam Wilson Absolutely Tell me about growing a brokerage I mean that s it s kind of a business all on its own independent of real estate Now you re hiring people now it s it s you re in the transaction side not necessarily the ownership side Why did you decide to open your own brokerage And then what have been some challenges that you ve faced as you ve opened that and grown your team 00 07 10 Jason Lee To be completely honest with you the number one reason why I branched out on my own and wanting to start my own thing is because I was butting heads and you know stepping on a lot of toes at my old brokerage because there s a lot of brokers they re doing the same thing So San Diego is in a huge market So we re kind of all talking the same people And there s a lot of drama between brokers there But the second reason why was because I want to start my own brand I ve always wanted to own my own company and create a great company culture that you know that I can make and help younger guys do the same thing I did at a quick pace and teaching the system So I think I get a lot of fulfillment now out of training coaching and helping my guys be successful in real estate So overall it s been a much better experience than just being a single agent 00 07 56 Sam Wilson How do you attract new talent to the team For a brokerage team 00 08 02 Jason Lee So it s a great question honestly being consistent on posting on social media platforms especially LinkedIn Instagram and Facebook been okay But LinkedIn and Instagram were the main ones For me that kind of got me a lot of brand awareness Because they saw me selling I was doing deals I was posting educational content Other than that though in the beginning I just hired for my immediate network I just asked my friends if or you know older people in the business if they knew anyone that s younger looking to get in the game that wants to get coaching So word of mouth and social media was the number one way I attract new talent so far 00 08 36 Sam Wilson And when you brought a new broker on the specialist let s rewind to the first new hire because I think a lot of people when they re scaling their company or scaling or portfolios bringing on that first new hire as a big deal they re going okay this new fluid is coming on Now I get responsible not only for making sure that they have enough to do but they have the framework in which to do it How did you tackle those two challenges 00 08 59 Jason Lee That s a great question I mean I think everyone has that fear that when you hire your first person you got to make everything be perfect and you got to make sure all the frameworks great or else you know they re not going to like you they re gonna leave whatever it is all the fears in your head about that But I think the number one thing for me is I knew I was gonna make mistakes but I knew that I was going to spend a lot of time to make him better So I think just having that mindset of you know answering all the questions he wanted doing training at least two-three times a week to make sure that they felt like I was actually engaged and trying to help them because I know a lot of brokers that are you know that are older in the business that kind of just tell their younger new agents to go hit the phones and good luck if you find me if you find a lead I ll give you time but other than that they don t do anything else So I think being really hands-on and actually spending time to show him how important they are to accompany was the number one thing 00 09 51 Sam Wilson That s really cool Yeah and that s that s exactly it Certainly I ve seen enough of that myself where it s like hey go hit the phones Call me you know if you re finding thing now Since like you just watched watch people just wither on the vine It s like okay Well that was a fun experiment So talk to me about this the multifamily market there in San Diego I know you mentioned that it s a small market it seems like everybody already knows each other up the health of the market Give me some challenges you guys are facing currently and then talk about maybe some opportunities 00 10 24 Jason Lee So honestly like many places the housing market is down a little bit down here from five or 10 This year so the inventory is going up there s a lot less demand since rates are up So as you know but anyone else there s a lot less buyers so a lot less demand for multifamily It s been actually pretty steady values have still steadily gone up a little bit not nearly as much as the last two years but it s been actually very steady There s just not a lot of sellers in multifamily here So there s not a lot of inventory There s a lot of capital looking to place money But that being said though this year you know I probably have the fewest buyers that I m working with in the market So I definitely think there s an opportunity for someone who s looking to jump into small or medium-sized multifamily maybe buy their first property there s a lot of opportunity for that because there s a lot of mom and pop sellers here that own like for plexes up to like 20 units So sometimes you know those people are a lot more motivated in the bigger institutions that have unlimited money So yeah that s where it s the opportunity for sure And you know when there s a slowdown there s less buyers less buyers means less competition 00 11 28 Sam Wilson When you say you have fewer buyers what had been some of the reasons that people have been given maybe their past clients of yours and they say Hey you know what we ve taken a pause on acquisitions right now what have been some of the reasons that you ve heard 00 11 41 Jason Lee It s a great question I think the biggest rebuttal I ve heard on why they re kind of sitting tight or waiting to see what happens Number one answers because the debt market is so you know unstable People don t know where rates are going So they want to see where things stabilize Number two reason has been people think that the prices are too high Now they want to wait for prices to come down That s been a big answer A lot of my clients who bought in this uptick are now kind of priced out of the market and want to wait to see what happens see if prices come down But yeah I think those have been the honestly 90 of the answers on why people have you know taken a step step back 00 12 18 Sam Wilson Do you in your in again this is purely subjective but in your estimation are those unfounded fears And does that create opportunity for the people that are still in the game Or do you see some merit to what it is that you re being told 00 12 33 Jason Lee I mean honestly my honest answer to that is I haven t seen their fears unfold I haven t seen the price drop they re asking for I feel like people in San Diego have been saying for the last five years that they re waiting for prices come down and they just won t multifamily is literally the most recession-resistant asset class besides maybe like self-storage mobile home parks and real estate So it s really tough in a market where there s no supply for apartments for prices to come down So I think there s a deal on every single market So I think as you said it creates opportunity for the ones that are still staying in the game They re looking at all markets I mean the best investors I work with the most wealthiest investors you know always telling me there s a deal to be had in every market he s got to be creative and you got to be talking to people 00 13 23 Sam Wilson That s it man I mean you guys have a good there you guys have a perfect storm of a lot of things that maybe other sections of the country don t have I mean one like you said you have constrained supply Couple that with of course our massive money printing so I think people are sitting on our thumbs going we re gonna wait around for prices to come down it s like come down from what I mean we ve tripled our money supply or something close to that in the last three or four years it s like where the price is gonna go But up And even if they stabilize it s still I just I don t see that coming down So you guys have you have um you know constrained supply enormous demand And of course whatever it is that we ve done to our money supply is just you know who knows where this winds up but it s nowhere good I can t imagine So I think that s a really good point where you said that the people that you ve seen you know in the game a long time and some of your wealthiest investors just keep saying there s a deal to be had in every market So we ve talked a little bit maybe about some of the risks that some of your investors are seeing what are some of the opportunities I guess that you see on the horizon right now 00 14 27 Jason Lee I think opportunities for anywhere in the US I think you know there s gonna be less demand than there were in the last couple of years So I think if you re looking anywhere you know for real estate I think there s gonna be less competition which means you have a higher chance of getting a good deal I think there s a lot opportunity always an off-market property but I think if you are an investor or a passive investor and you know people that find off-market deals that s gonna be your biggest biggest value add for you This time in my opinion but San Diego specific or Southern California s specific I think accessory dwelling units or ad use are a huge opera Tuni where it can convert garages into existing units which I m doing right now and also building ground up very easily because there s a housing crisis down here So the government laws to build here have been very lenient lately 00 15 12 Sam Wilson Really that s I want to talk more about that on the ground upside of things because everything I know about California tells me that it s very restrictive and very difficult to get anything through the planning and development Commission s and whoever other boards you got to get through So you re telling me right now there s opportunity to build in Southern California 00 15 33 Jason Lee Yeah but not in all situations So like if you re building a big multifamily complex what you re saying is 100 right it s gonna be extremely challenging a huge headache to get that approved and plan and get permits But if you have like a fourplex or you know you know duplex smaller multifamily and you have like a big backyard of wasted space and you want to add an ADU I mean doesn t get permitted and passed by the city within five six months compared to you know two to three years for bigger projects So if you have some smaller properties when add units to or converted garage the process has actually been very quick for the ADU laws 00 16 10 Sam Wilson Wow that s really really cool So tell me about a project you re working on right now where you re able to do that 00 16 14 Jason Lee I want to just finish was a duplex I bought for 650 Down here in San Diego it had to it a two car garage in the back and a single car garage in the front And they re both freestanding garages And basically what I did was I remodeled the front house remodel the back house and then I got plans and permits to convert the back garage into a two bedroom one bath unit and the front garage into a legal one bedroom one bath overall to convert those garages It cost me about 250 000 The house and the studio cost me like 125 there was major foundation issues So I was all into the project after carrying cost about 400 grand plus six hit give 1 000 050 And the Property Appraised for 2 1 million So that was just the way that you know I had a huge upside on one of my properties from turning a duplex into a four Plex 00 17 04 Sam Wilson Right right now That s absolutely awesome And what s the long term plan with that Do you hang on to those do you What s What s your strategy there for those properties 00 17 15 Jason Lee Yeah so that one s kind of the exception to the rule Usually I all sell it and do a 1031 exchange into a bigger asset But that one since the you know it s a cash cow I m just going to refinance it into an interest only loan which I did and then just hold it But other than that I usually my plan has been to sell the smaller ones and buy the bigger buildings and do the same thing 00 17 36 Sam Wilson Man that s really really cool So tell me about the ad unit I guess portfolio that you ve developed has that been mostly smaller you know two and fourplex properties Or has that been some larger multifamily What s the how have you built your own personal portfolio 00 17 50 Jason Lee Yeah I mean like you said it honestly started that way my partner and I started buying a lot of duplexes and for plexes and then you know we bought them for a pretty good deal And we d fix them up re-rent them and get a huge premium on it And then we d sell it and do a tax to for a temporary one into like an eight-unit or a 16-unit building So now our properties are more comprised of eight units and above but it definitely started that way Start from the smaller stuff 00 18 16 Sam Wilson Right man that s that s really really cool What are you going to do I guess maybe regret the cut that question now And we re going to start this over here Jason Golly I can t even think what s it going to ask you It was about where you are Where you re going with your portfolio Shoot man I have no earthly idea Come on Sam What questions should I ask you I m missing something here And I just wanted a total brain fart I was about to ask you And I lost my train of thought entirely Whatever you want What is something Maybe I haven t asked you about that I know This is exactly where is going Cali Here we go Let me start back over here Jason We ll jump right back in Jason I got this question for you Let s rewind I mean you ve had great success over you know a very short period of five years you build a brokerage you ve acquired 80 Plus units you ve done all sorts of things from 1031s to converting properties you know into the ad use and and finding value on that front If you could rewind the tape five years what is one thing you would maybe do differently if you could 00 19 25 Jason Lee Oh that s a great question Oh one thing I would definitely do differently is bet my contractors more I got hit pretty hard with an unlicensed contractor I didn t vet that much It s actually a referral from a client But you know it was one of my first remodels And my client referred him to me didn t have his license and it seemed like kind of a sketchy guy but I had no idea on how to vet contractors back then I just kind of learned the hardest way you could and he basically on my four Plex that about 10 to 15 grand worth of work kind of cover some stuff up didn t understand how much progress he makes I was so new to it And he ended up taking about 80 000 from me and just taking off and running away So that s one thing I would do different is learn about properties and construction much more before getting into rehabs 00 20 10 Sam Wilson Whoa 80 grand That s that is not an inexpensive lesson early on in your real estate career what gave you the courage to stick with it 00 20 20 Jason Lee You know I take every failure as a learning lesson So I just took that as like the biggest learning lesson of my life and just learned everything I could about remodels about you know how much a roof costs how much your kitchen costs bathroom flooring baseboards windows etc all that stuff And now I know to vet every single person and have everything in writing So I think just believing in real estate and understanding that it was just a mistake on my part and that I m extremely bullish on the asset And not blaming anyone but myself was how I got over that you know big hump 00 20 50 Sam Wilson Man that s those are tough words for a culture that is not anymore I feel like willing to take some personal responsibility you know where it s like hey the default was my own outside of getting everything in writing What else are you doing to vet your contractors before they come out And do I guess 80 000 in work 00 21 10 Jason Lee Oh yeah So I think I have a good team now But when I was when I was asking everyone questions about how to vet the right contractor I think the number one red flag is that they re not busy Like if you call a contractor for the first time they say they can come out tomorrow and start that person probably isn t the best because we re not busy You know the people who are busy are the ones who are the best ones And now I try to get at least three or four referrals from people who have worked with them So one referral isn t enough for me anymore Can t trust all of them So I think those two ways how I vetted them correctly 00 21 42 Sam Wilson And depending on the size of the project I mean if it s a 250 unit multi family project you know that s going to take a different team of contractors maybe than a you know a duplex might require But something it s something I ve used here recently has been actually next door So I have a project actually the office I m standing in here I needed I needed a good electrician had one but then they were unavailable And so you actually got on next door I don t know if you ve used that or not But man the referrals that come in again you get like four or five people saying yeah use this company And we picked up some amazing contractors that way So just just food for thought you know for those of you who are listening that that may be away on a smaller project such as what I m standing in right now that where you can find some decent contractor So that s really cool So that s something you would do differently If you go back five years what is something you feel like you ve done really right that other people should emulate 00 22 36 Jason Lee At least something I ve done right is just stay ultra-focused on the goal And just believe in the process I think real estate s one of the hardest things to stay focused and believe in yourself Because the first two years are probably the toughest two years of your life Because if you don t know anyone and you don t know much about the game and it takes a while to get that learning curve going It can feel really daunting and really you know scary up front So I think having that belief in myself and knowing that I could make it and seeing that other people have done it before me has been the number one most important thing for my success And honestly working long hours I think if I didn t work the hours I did I wouldn t have gotten ahead of my competition So ultra-focus and long hours has been the number one thing for me 00 23 21 Sam Wilson Man I love it I love it Let s assume I called you today And I said Jason Hey my name is Sam I am super interested in buying multifamily properties in San Diego what would you tell me 00 23 34 Jason Lee You know I mean I would ask you some questions about your goals and see what you re looking for and what would kind of fit your needs your criteria And then for the benefit side I will tell you that um you know you re looking at a supply-constrained market where rents are steadily going up and 2008 to 2010 The rents here actually went up about 2 So even in the worst of times if your property s cash flow on day one you can pay your mortgage it s gonna be very hard to lose here The only way you can lose in San Diego is if you re over-leveraged and you know you can t pay the bank So the location is great 00 24 06 Sam Wilson Man that s awesome Certainly appreciate it Jason thank you for taking the time to come on the show today If our listeners want to get in touch with you and learn more about you And the market that you re involved in They re in San Diego County and maybe you buy multifamily property there What is the best way to do that 00 24 20 Jason Lee I appreciate you having me on You re a great host Thanks for having me on And the easiest way to find me that you connect to me is either send me a direct message on LinkedIn or Instagram LinkedIn just my full name Jason Lee And then my instagram handle is JasonJosephLee which is my full name but there s the easiest place to find me 00 24 39 Sam Wilson Fantastic Jason thank you for your time today Certainly appreciate it Thanks man Click here to visit this podcast episode