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Jason Bible - You Can’t Plan for a 1,000-Year Flood

By Dr. Andrew Stotz, CFA

Jason Bible, aka Mr. Texas Real Estate, is a full-time real estate investor who is thriving after a long journey in the field working with buyers and sellers of real estate. He is the co-host of the live call-in Right Path Real Estate radio show on Houston Business 1110AM KTEK, Monday to Friday at 9am. On top of that, he is the managing partner and chief operating officer at HoustonHouseBuyers.com. His knowledge encompasses landlord investing, wholesaling, flipping, lending, banking, money and finance. In July 2013, Jason started a company that specializes in buying distressed houses directly from home owners. He has bought, sold, renovated, and leased hundreds of properties, raised capital, and borrowed nearly US$10 million in bank and private capital. Further, Jason has been an invited presenter at multiple local and national business and real estate events. He completed his undergraduate degree in environmental science from Sam Houston State University then worked for the University of Texas Health Science Center at Houston (UT-Health), during which he completed an MBA in finance and an MS in Security Management. After that, he started as an environmental waste specialist and prior to leaving UT-Health to start his first company, was the risk manager. He lives in Houston Texas with his two sons, Cameron and Carson, and my wife Sarah, he is an avid home brewer and craft-beer enthusiast.   “I will never forget sitting in a meeting, probably two months before, (discussing) should we get flood insurance on (a property in Memorial, Houston) or should we not. And the house … (had) just a little piece of the backyard that was in the 500-year flood plain, so we thought probably don’t need flood insurance on it. Well, this was 1,000-year flood event (Hurricane Harvey).” Jason Bible   Support our sponsor   Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net.   Worst investment ever House refurbished for flipping valued at US$1m Jason’s worst as far as amount of money lost was on a property in Memorial, Houston, one of the last houses that he and his team ever invested in during their flipping operations. It was 3,000-square-foot beautiful 60-year-old house and it needed complete refurbishing, which they had just finished doing. Hurricane Harvey drenches city for four days Of around three houses in flood-prone areas, only with this one had they decided against insuring for flooding. Alas, after 40 about inches of rain per 24 hours of a storm that returned to the mainland a second time and hovered over Houston for about four days, and the ensuing unprecedented flooding across almost the entire city, their $1-million mansion was rehabilitated property was devastated. Signing away $250k was heartbreaking So he and his team were discussing over and over in their sales meeting when exactly they would sell the house. And on about $1 million dollar house, they lost about $250,000. He said writing a $250,000 check to get out of a deal was absolutely heartbreaking. But the real pain comes in thinking that in six or seven years, that house will again be valued at up to $1.3 million.   Some lessons Traits essential for investing in real estate If you’re risk averse, don’t do it. Real estate is not for people who can’t handle the risk. If you look at how the SEC qualifies real estate, it’s called “a considerably risky venture”. Don’t apply the emotion of home ownership to your investment portfolio Jason points out to budding property investors that those areas are two totally different things. You’ve got to take action At some point, you have all the necessary information, so just go and do the deal. “You have talked to all the experts, your wife, everybody in your team, your attorney, your appraiser, your bank, your lenders, and all of them have said this is a good deal. … Don’t stand at the altar, get cold feet and walk away before saying ‘I do!’.” Sometimes there is nothing you can do to prevent a huge loss You can have flood insurance. But the real loss was came down to that of the reduction in value. The reality is your portfolio is just not big enough. How do you hedge for a risk the size of Hurricane Harvey, an event that had never happened before in living memory? It’s really tough.   “Sometimes a hurricane, sometimes a storm blows in and it’s going to rock your portfolio and there’s just not a damn thing you can do about it.” Jason Bible   Andrew’s takeaways You can’t plan for everything Statistically, there are anomalous events that can happen, but if you then build your business around them happening again, you will never take the risk needed to really make money. Don’t overcompensate after tragic events We often see tragedies and cataclysms in America and the rest of the world, and people’s, businesses’ or governments’ responses to them are a massive over-reaction in trying to prevent damage from events that are probably not going to happen for another 500 years.   Actionable advice Make sure you have flood insurance “Time heals all wounds” In real estate, much like personal relationships, time really does heal, if you’re holding on to this stuff a little bit longer, it does begin to heal all wounds. Take action, fix your flip and tenants in them If you own rental properties and they get flooded, just go in and rehabilitate them as quickly as possible so you can put tenants back in. Jason these days is more of a buy-and-hold investor currently.   No. 1 goal for next the 12 months He really wants to be better at playing well with others. He has taken this theme from some reading and video watching about Dr. Jordan Peterson’s works. He has extended this goal to his company and for all of them to be an organization that’s fun to play with. Broadening its network, deepening relationships that are most beneficial in the industry. Parting words I’ll tell you don’t stop if you take a loss. Just keep going. Just keep on trucking it will get better.     You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Jason Bible LinkedIn Website Website (Texas Real Estate Radio) Facebook YouTube Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned Jordan Petersen (2018) 12 Rules for Life: An Antidote to Chaos Hardcover Jordan Peterson (2018) Playing Well With Others (Choiceless Awareness YouTube channel)  

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