The Magnolia Story(37)

That’s right. So, my dad had worked his way up the ladder at American Airlines to become a vice president. He was making a good middle-class living. But right around the time I was starting my first lawn business, which would have been 1996 or 1997, he got a call from a corporate headhunter. The guy said, “Hey, we want to recruit you to come over and be the CEO of this office supply products company here in Dallas.” He went through the whole interview process, and they wound up offering him the job making five times the money he’d been making at American Airlines.

My parents didn’t move into a bigger house or buy fancy cars when they came into that money. They were just never like that. Dad didn’t do anything with the extra money except stick it in the bank for a rainy day.

Well, he wound up paying as much in taxes that first year as he’d made the year prior to that, so he quickly got passionate about finding ways to save on taxes. He got some advice from an accountant, and the accountant suggested they should divert some of their income by investing in some properties and businesses.

Dad knew I was always talking up these business ideas. So he asked me if maybe I could help him find a house to invest in around Baylor—something we’d be able to rent out. The very next day, I went and talked to ten people and found him a house.

He ended up buying this little ranch on a couple of acres a few miles from campus for a decent price. He didn’t want to manage the renting of it, so he offered me a little bit of money to manage the place for him. I moved into that house with a couple of roommates. They paid rent, which more than took care of the mortgage, and they also helped me fix the place up. We painted it, put in new carpets, all kinds of stuff. And we just had a blast in that little house.

I loved the whole process of helping Dad buy that place, so I kept calling him. “Hey, Dad, I found this other one. Are you interested?”

“Well, hold on,” he kept saying. “Let’s don’t get too crazy. I’ve already got this one. Obviously, we’ll see how it goes. But just hang tight.”

A year or so went by, and once my buddies all moved out, Dad and I decided to sell the house. I remember he made probably thirty-five or forty grand on that one house. I was real happy for him, but I also got to thinking that buying and selling houses was a pretty good business to be in.

On top of that, my parents came down and took me out to dinner one night. “You know what?” they said. “We thought about it, and you did a lot of the work that helped us make that profit, so here’s a check for a certain percentage of that.” They gave me a few thousand dollars, and that got me even more pumped up about the whole house-flipping idea.

Now, flipping houses wasn’t exactly a “thing” yet, so people thought I was crazy when I told them that’s what I wanted to do for a living. But the wheels in my head just kept turning and turning, and I was determined to find a way to make this work.

I knew my “Uncle David” owned a big eleven-acre tract of land on Third Street with a couple of old, rundown rental houses on it. So I asked him if he’d be interested in selling. He wasn’t doing much with that property, and the houses weren’t in great shape at that point, so he agreed. My dad and I went in together on that second deal since I had built up a little bit of cash from the lawn-mowing business. We bought that eleven-acre tract for around $110,000. That was certainly a lot of money, but we knew David was giving us a good deal. To this day I’m still thankful to him for that opportunity.

Dad and I also went in together on buying a little commercial plaza right on the edge of the Baylor campus. We rented one corner out to a sandwich shop, and I opened the little wash-and-fold business on the other corner.

That was basically the last thing the two of us went in on together, because once I was a cosigner on those loans with him, the bank that had given him the mortgage on those properties was perfectly willing to loan me money on my own. That’s when I got started on my whole “Mayor of Third Street” endeavor. I realized I could make as much money flipping a house as I made running the lawn-care business for a whole year.

So when I met Jo, as she said, I had already been through this whole education—half-formal and half-street. I was ready to keep this entrepreneurial life rolling, and it was after she closed the door to her shop that it all started to click for us. There was something just fantastic about what she and I did together that was far bigger than what either of us was capable of doing on our own.

I wasn’t the secret ingredient. I knew how to work hard and how to find good deals, but when we worked together on Magnolia Homes, it was Jo coming in at the end and putting her finishing touch on everything that made all the difference in the world. She was what was so special about our company.

Selling off the bulk of that eleven acres gave us a pretty good windfall just before she closed the shop. We invested that money in some more land and sank it into a few more of the smaller flip houses we were used to doing. We got started building a house from scratch too—our first real “spec home” featuring all of Jo’s design ideas that she’d gathered from running her shop and working with her clientele. People loved it.

Then Jo mentioned to me that she’d like to live in a place like Castle Heights someday, and I figured, “Well, maybe we could get into one of those houses that’s a bit of a fixer-upper. We could live there and renovate it and flip it for a much higher profit than we do these little student-housing-type homes.” It sounded like a bigger risk going in, but I was confident we’d be able to get a bigger return on the back end, so it really wasn’t any more of a risk than what we were doing with the smaller homes. I worked out the numbers in my head and said, “Why not?”