BiggerPockets Podcast 046: Six Figure Profit Spec Building and Marketing for Incredible Deals with Jon Klaus

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On today’s special Thanksgiving Day show, we sit down with one of BiggerPockets’ most active members and biggest success stories, Jon Klaus.

Jon has flipped homes, built new properties, rented homes, and done a huge variety of other activities in the real estate space. Not only is Jon an incredibly nice guy, he’s also one of the smartest investors you’ll ever hear from.

Don’t miss a second of this powerful show, where we cover everything from marketing for killer good deals outside of the MLS, arranging financing for your deals, getting started with no money, and even a step by step journey through a six-figure spec build.

Read the transcript for episode 46 with Jon Klaus here.

Listen to the Podcast Here

In This Show We Cover

  • How Jon got started…using lawn mowing money
  • Mistakes Jon has made involving War Zones
  • The 7,000 sq ft house flip
  • The 2% Rule – what it is, when to use it
  • When to change your strategy
  • The secret for beating other investors with great deals
  • How to market for incredible deals
  • How a single trees can cost you over $200,000
  • A step by step guide for spec building
  • The four elements needed for a successful spec house

Books Mentioned in the Show

Links from the Show

Tweetable Topics

  • With determination, focus, and a little bit of money – you can get started as a real estate investor today. (Tweet This!)
  • The deal flow will always be there; people will always buy and sell real estate. (Tweet This!)
  • Buy the property right – that makes all the difference in the world. (Tweet This!)
  • The key to success is determination and endurance. Winners don’t quit when it gets hard. (Tweet This!)

Connect with Jon

Jon’s BiggerPockets’ Profile

John’s Recent Spec Build:


About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. What a great podcast to listen to on the way to the airport!

    What a great story about mowing lawns and finding your inspiration through somebody else doing the same thing! (I feel he may need BiggerPockets to learn how to systematize his business ha 50 SFRs and still mowing lawns doesn’t make since to me…)

    Happy Hanukkah Josh! And Happy Thanksgiving!

    • Hey Taylor, happy Thanksgiving! I should say the lawn dude had a real business, with a couple of crews. Some of his guys did maintenance and rehab work, as well as lawns. He was still blue collar all the way, though.
      Have a great trip!

  2. Stephanie Dupuis on

    Inspiring and excellent podcast, Jon, Josh and Brandon. This helped me pick up some tools to hopefully get past some hurdles I’m facing. Excited to execute.

    I love stories about the lawn mowing. I know a guy who owned 100 SFR rentals who was a teacher (one of my teachers growing up). He taught and kept buying properties. When I was looking for a mentor in REI, my business mentor set me up with a guy who was my parents former music teacher and he also had acquired dozens of rentals and then traded them in for 10-plexes and I believe still owned some odd SFR. Both guys set out with the goal to buy one SFR a yr. The power of slow and steady. This stuff happens.

    • Thanks for listening and your kind comments, Stephanie. I think it was Bill Gates who said we tend to over estimate what we can accomplish in the short term, but under estimate what can be accomplished in the long term. This is so true in real estate. Can a landscaper or a teacher acquire millions in real estate? Absolutely.

  3. Transparent, experienced, successful, and aspiring are words that come to mind about Jon after listening to this interview. I hope to meet him someday and visit about my vision in our growing, progressive college town here in Louisiana.

    Thanks to our hosts and guest hitting on such a great topic this holiday season that allows time for reflection and planning thoughts to flourish after such an informative podcast!

  4. Jon,

    Thanks for the great podcast. Love the Austin area! Currently investing in the San Antonio market and near Fort Hood, but I keep my eyes open for opportunities in Austin.

    Regarding your spec builds: Do you have the lot re-appraised by the county once you knock down the old building? My assumption is that this would save on some property taxes during the period of the build.


    • Hi Greg, sounds like you are investing north and south of the Capital City, but not in Austin, yet.

      We are in and out of most of our properties in a year, so we don’t bother trying to get a new assessment unless the value is way high. I do have a couple that we are holding long term, and we have protested them. Not a big difference, but every little bit helps.

      Thanks for listening!

  5. Very enjoyable podcast Jon. And a beautiful spec home. Is that in East Austin?

    I own a few in the North Austin area, bought back in ’08. At the time we had a guy walk us around East Austin (East of downtown) telling us that was the area to buy. We even saw 1 very similar to yours. He was knocking on doors, negotiating and offering in Spanish (no takers). The houses were total knock downs, with home made “hotels” in the back yards. We thought he was crazy at the time. If I only knew then, what I know now….

    • Yes, Jason, East Austin. Best example of gentrification I have ever seen. I know of lots that went for $10K in 2003 that are $175K now. We are working on 4 new homes there now, and have 6 scheduled to start next year. I wonder if your guy is still working there?

  6. Carson McGuire on

    Jon, tons of information in your podcast. I am 19 and started a landscaping company over three years ago and have grown it to 100 clients in my third year. It’s pretty cool to see someone start from similar backgrounds. Also, coming from Detroit, your take on going from 2-3% rentals for cashflow to 1%’ers for more steady appreciation is very interesting. Here, it is easy go to into a not so good neighborhood and get great cashflow, but most good areas only follow a 1-1.3% rental price. It calls for important business and life style choices.

    I also have a question, could you explain the limo business and how creating a business to lose money could be of advantage to a entrepreneur with many businesses? Thanks

    • Hi Carson, I’m glad you enjoyed the podcast. 100 accounts is great. Where do you see your landscaping business in three years? Do you know what you want to do in real estate?

      The advantage of having a business loss to offset income or gain elsewhere is largely obsolete now, because of tax lay changes. It was a loophole that got shut down.

      • Carson McGuire on

        Ideally, I can grow it to the point where I can get at crew or two up and running and have an acting manager to be hands off, which will allow me to be hands off. Right now managing 100 accounts by myself and being a full time student is quite demanding. I have my first flip on the market right now. With the profits from that, hopefully quality for a mortgage (which will be tough) and acquire 1-2 rental properties, then hopefully slowly build that portfolio. But, as you know, plans change!

        Thank you for the response.

  7. Jon –

    Thank you for the great podcast. I’m just wrapping up the development component of my first new build. I had to go through a historic district which was very trying on the patience as well as a drag on my time for other deals.

    You elude to your architect providing you a turnkey pre-construction solution. Do you have your architect perform all the permitting required, ie any height variances, stormwater permits, etc?


    • Not all architects will shepherd the process all the way through the city, but ours will. I recommend this for first time builders. You don’t know what you don’t know and the stakes can be big.

  8. Hi Jon,

    Thank you for the great information you provided in your podcast (And thanks Josh and Brandon for putting it together!). Your story is very inspiring and shows what kind of life you can live when you work on your business(es). Being able to enjoy a family of 7 children is a blessing! I am working hard on getting in to my first deal here in the DFW area. I have a plan in place to grow my business over the next few years. But thanks to you, I am now interested in the spec building process! I wonder if my plan will change? I enjoy creating something new out of nothing or out of something that is broken. That idea is what attracts me to real estate. Anyway, I hope to you see around at a BP meetup in DFW.

    Thank you again,

    • I’m glad you enjoyed the podcast, and I look forward to meeting you too, Lucas. Spec building can be very rewarding, but remember, the economy will only support it in various times and places.

  9. Jon,

    Great job! Thanks so much for all you share with the rest of us in the podcast, forums and otherwise.

    Would you consider investing in office buildings NOT as an owner occupant? What’s your general impression of that type of investment? Any tips/advice for someone looking at office buildings?

    • Thanks, Jason. Office isn’t covered very often on BP. It tends to follow the economic cycles closely. And the macro trend of telecommuting is having an impact. Still, there is money to be made in it. However, I doubt I’d be in it if I were not an owner occupant.

  10. I just wanted to comment on the demolition cost mentioned in this pod cast, where I live old houses can be donated to the fire department for practice burns, if the house is not to close to other buildings. This would drastically reduce the waste that needs to be removed, cutting dumpster cost… Just a thought. JM

    • Yes, I’ve heard fire departments demoing houses, too. Where I build, most of the lots are just 50′ wide, and there are typically frame homes on either side, so they won’t do it. You can also move a home elsewhere, or donate the materials if someone will disassemble.

  11. Hi Jon,

    Thank you for such an informative podcast! I am very surprised there are not more comments on this podcast. There is a building boom going on in many parts of the country, and teardowns are a great way to go, especially when you are working with municipalities which have stringent new building codes. I believe you covered the grandfather clause in this podcast.

    I am a wholesaler and find teardowns for builders. Most of my leads come from direct mail. I also drive for dollars and find shacks on buildable lots. Just wondering, what criteria do you set for your yellow letter campaign since your primary objective is to acquire the land the teardowns are on?

    Thanks in advance,

    David White

    • Thank you for listening, David. I market for vacant lots first, but see more competition for them. Also for older homes, pre 1970, and smaller homes. I mail to out of area owners and high equity owner occupants. Almost all of them have good equity where I target, since land values have doubled in the past few years. I have purchased from a wholesaler who made a $10k assignment fee. Worked well for him and me.

  12. Great show!

    As a newbie, I most appreciated the advise on how to approach a mentor as I am seeking one. Loved the analogy of not approaching with a marriage proposal at the very beginning. There were a lot of great info on this show, I also appreciated the advise of starting with residential and staying there until your income can cover you living expenses then transition to commercial. As newbies sometime we think we know enough to jump into both and may end up failing.

    Thanks for the aboudnace of info on this show.

  13. Jon;
    This is not really a comment related to RE or RE Investing. I just wanted you to know that I really appreciate the way that you go about the business of living your life. This week I listened to probably 25 or more podcasts while driving (A moving truck) from SoCal to Cincinnati, and back to SoCal in six days. (I’ve downloaded all of the BP Podcasts onto a USB).
    I admire the fact that your Faith is the center of your life, with your family second and your various business ventures (probably) a distant third.
    I am in the midst of transitioning from a 28 year career in police work to a full time, buy and hold RE business. I am excited beyond measure to be finally (I turn 50 in October) done “working for the man” and to be off doing what I have always wanted to do (buy and hold RE Investing).
    Your Podcast was a gentle reminder that I need to keep The Main Thing, The Main Thing.
    Take Care.
    DL Martin

    P.S. Josh and Brandon, thanks for everything. : )

    • Hi DL. thanks for listening to the pod cast. Listening to 25 in a week must be a record. I bet it seems like Josh and Brandon live in your house!

      It’s easy for us to live life without considering the “why?” For me, the “why?” is pretty simple. Not easy, but simple. It starts and ends with faith in the One who started, made, and runs it all.

      I’m 50 and have enough to retie on, so that helps me revisit “why?” I want to make a long term impact on the people in my life, and especially the ones who are close to me. I don’t want to get sucked in to the “it’s about me” way of thinking, because it’s not I appreciate your comments, and God speed in your change of career/life.


  14. James Stevens

    I’ve been re-listening to the podcasts and this one has a lot of great information. It’s really inspiring to hear how you got your start and original idea for real estate from someone that you never would have thought was a real estate investor. I have learned that you never really know who all might have investment properties. I found out that my preacher had a couple rent houses after he overheard a conversation I was having with someone else at church one day. He was interested in the property that I was trying to flip. I never would have approached him about something like that before that day. I love the info you provided about dealing with the City of Austin as far as permitting and everything else is concerned. I haven’t done anything in that market, so it’s nice to hear about. I just moved back to Temple from Bryan and dealing with B/CS and Temple/Killeen city governments aren’t as complicated.

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