I had learned a few basic things about putting together a business plan at Baylor, but I didn’t think that was enough to get me a loan with no collateral or experience. Carroll didn’t think so either. He quickly said no.
But I wouldn’t let up. I was a perpetual salesperson. I talked Carroll’s ear off, saying, “Look, I’ve got five lawns I can start tomorrow. That means I’ll be making X amount of dollars. I’m gonna quadruple that in a few months, and you guys are gonna make every cent back plus our agreed-on interest. I promise.”
Carroll finally gave in and lent me the money—my first $5,000 loan. I walked out of the bank, walked back across the street to the equipment company, and spent every last penny on the things I would need to get my business off the ground in a first-rate way.
I repaid that loan in six months.
I was so excited by the whole thing. I got hooked—hooked on starting businesses, hooked on borrowing money, all of it. I still joke with Carroll to this day that he created a monster. I love borrowing money!
That was my senior year of college. And over the course of the next few years, as I’ve said, I sold that business off more than once. I built it up to more than a hundred accounts, with a crew, equipment, and a truck. And then I sold it to somebody else who wanted to get into the business.
To be honest, I never made a ton of money off of it. I treated it more like a part-time thing, and I had a lot of expenses paying the crew and everything. But I basically flipped that business the way I’d later start flipping houses. There wasn’t always a ton of profit, but it was enough to keep you in the game until you could hit a lick and do it all over again. I was well on my way to building it up and getting ready to sell it again right when I met Jo.
Chip had basically gone through this whole education in the real world of entrepreneurship, and he told me all of these stories as we were first dating. I was in awe. I’d never met anyone who was such a go-getter at such a young age or who did things in such an unconventional way. It was like every time he opened a door, he encountered another door, and another, and he just kept opening every door. In fact, it was his Uncle David who sold him the eleven-acre property on Third Street that would eventually allow us to launch Magnolia Homes.
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.