Podcast

Episode #91 – Maximizing Deal Flow Using Lease Options with Joe McCall

You know wholesaling, rentals, fix & flips and a dozen other ways to make money in real estate. And you probably like one better than the rest.

But let’s be real: All of them can be headaches. Rentals are high maintenance, wholesale has small margins and the expenses on fix & flips is high.

But there’s a silent group of investors getting wealthy with a “weird” business model. It’s called lease options—and Joe McCall is one of the top experts on it.

On this episode, Joe stops by to show you what lease options are and how you can use them to build your own wealth.

If you’re ready to stop hustling for leads and want a smoother REI business, listen now!

Show highlights include:

  • A virtually unknown book that shows you how to get “dream tenants” that fix your property themselves.([5:23])
  • How 2 months of vacant properties can erase 10 years of progress. ([9:44])
  • Rockefeller’s devious success secret that lets you see success without the downside. ([12:33])
  • Why getting a job and saving for retirement is NOT the safe option—even if your REI business can’t feed you yet. ([19:20])
  • The difference between REI coaches you should hire and coaches you should block on Facebook. ([23:21])
  • If you don’t know how to continue, ask yourself this question and you know how to take action. ([31:33])
  • How a 14-year old closes more real estate deals than most “investors”. ([33:54])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Find out more about Joe here: https://www.wlobook.com/

and on his podcast: https://www.realestateinvestingmastery.com/

Read Full Transcript

You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.

Dan: Okay, what's up everyone? Welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com. And if you are looking to talk to someone by your marketing, just get some help, figure out what other investors are doing that's working right now, and have my team put together an entire marketing strategy for you for free, go to AdWordsNerds.com/strategy and we'll help you out. [01:10.1]

Now, this week I have got quite the interview for you. This week I am interviewing one of my all-time favorite real estate investors and that is not an exaggeration. I am talking to the one and only Joe McCall.

Now, if you don't know Joe, he is a fixture on the real estate investing scene. He is an investor himself. He's also the person that's probably done the most in our industry to popularize lease options in the modern day, and specifically wholesaling lease options. Joe is an incredibly creative and thoughtful business person. He has got a knack for systems like really no one I've ever met before. He lives the lifestyle, man. He is a walking, talking example of what you can do if you really use your brain about real estate investing, and really try to think about how to help the seller and yourself at the same time. [02:07.3]

We have a really interesting conversation, man. We go all over the place. We talk about his background, how he came up with wholesaling lease options. We talk about risk and uncertainty, and how to make decisions in times of stress. We talk about how lease options can help you close more deals. Right now, this is a perfect time to start thinking about deals and involve some kind of creative financing or alternative exit strategies.

I just couldn't be happier with how this interview went and I hope you feel the same. Without any further ado, let's get into my conversation with Joe McCall.

Dan: All right, this is Daniel Barrett and I am here with Joe McCall from the Real Estate Investing Mastery Podcast. Joe, welcome to the show, man. Nice to have you.

Joe: Dan, good to be here. Thank you, man.

Dan: Yeah, I've got to say before we jump into this, I don't know if you know this, but this is true. Way back when I was getting my start, you and I had someone have me on the wholesaling … What's the name of the podcast? You had me on your podcast. [03:05.1]

Joe: Real estate investing mastery, yeah.

Dan: Perfect. Yeah. So, Real Estate Investing Mastery, right. You had me on that podcast. It was the very first podcast I ever went on.

Joe: I remember.

Dan: And clearly you have an eagle eye for talent, which I appreciate, so thank you so much. You're kind of one of these sort of … I would say, a really influential figure in our space. You do a lot of stuff. You've been investing for a long time. You've been coaching and kind of mentoring for a long time. So, if anybody's out there that’s not super familiar with what you are doing now, give people the overview of who Joe McCall is.

Joe: Yeah. By the way, that was October 2015 that we interviewed you. Can you believe that?

Dan: Oh my gosh, that seems like a million years ago, man. It seems like forever.

Joe: That's when we released it, so it might've been September 2015, but …

Dan: That's wild, dude.

Joe: Yeah, so I got started in real estate. I started accidentally getting involved in real estate because we’d just bought a house and my employer at the time—I was working for a big engineering company and we were building power plants—and my degree is in civil engineering, but the company transferred me out to a job in California. [04:19.3]

And it was supposed to be a two year job assignment, but then 9/11 happened and the job was trimmed down to just 10 months. So, we had rented our house out because we thought we were going to be gone for two years. We came back and there were still two months left on the lease and we were stuck. We had no place to live.

But during those 10 months, it was horrible because the tenant was late all the time. There was a struggle to pay my mortgage and then every week it seemed like there was a new thing I had to fix, a new toilet leak, a roof leak, a garage door that wasn't working. And it was an older house, but we had only been in there a few … maybe about a year and loved the house, but when you rent it out to a tenant, they expect it to be the Taj Mahal, and I just said I'm never going to own another rental property again, this is ridiculous. [05:10.2]

But then somebody recommended to me a book and about five years later, Rich Dad Poor Dad was really popular and friends were recommending it to me, so I read it and I was interested in real estate again.

And then, this one guy recommended a book called Secrets of a Millionaire Landlord and I thought, This is interesting because I don't want to be a landlord ever again, so why am I reading this? But he had a chapter in there about lease options and it was about how you can put tenant buyers in your house that are going to fix it up and take care of it, and they're going to have more of a homeowner's mentality. So, I became interested especially in lease options.

That was 2005, 2006, and for the next three years I started buying tons and tons of courses, books and studying, and I was a professional student. I was spending way more money on my education that I was actually making in real estate. I started spending a lot of money and I did make … [06:07.6]

I started buying some houses, but I was buying them with bank financing. I was buying with owner financing and I was taking on way too much debt. I had a lot of private money on loans, and then the market crashed and I crashed with it big time and I knew I needed to learn wholesaling. I needed to learn how to make fast cash and not do long-term cash strategy.

So, I started wholesaling. About a year or so I did wholesaling and then I got tired of throwing away all these leads that didn't have any equity in them. And so I thought, Why can't I wholesale lease options? And I started getting properties under contract to lease option and then selling the lease option to tenant buyers. I started doing that in 2009 when I was living in St. Louis and was making more money doing that than I was in my job. And so, I quit my job and haven't looked back since. That was 11 years ago today. [07:06.4]

Dan: That's wild, man. It's so funny you, you share a lot. A lot of the most successful investors that I talk to on this show, because I start pretty much every show by saying, How did you get started in real estate investing?

Two of the most common things among the people that are really crushing it now are, one, Kiyosaki, right? Some kind of early exposure to Rich Dad Poor Dad. And then, obviously a lot of them went through and not just made it through 2008 but took a significant hit in 2008. Right?

It's surprising to me the extent to which today's successful investors are like, Yeah, it's not just that I went through it. I was very, very, very hard hit by that. I'm wondering, do you look back at that experience of going through 2008? Because especially now we're in the kind of coronavirus era, right? We're in the COVID-19 kind of period. Do you look back on that as having taught you some kind of particularly valuable lesson or just the experience being valuable? What did you take from that? [08:15.1]

Joe: I've been thinking a lot about that lately and the thing that I took out of it was you have to be careful with debt. I didn't meet one person who went into foreclosure, had short sales, bankruptcies, lost a lot of money in that last crash who had very little debt. In other words, I didn't meet anybody that had lost everything, who had very little debt, I guess. Does that make sense? I just said something.

Dan: Yeah, so the people with debt were the ones that tend to lose everything, and the people without debt, they're hurting like everybody, but it wasn't as extreme. Is that [right]?

Joe: Yeah. If you remember, what happened back then was values, you would owe $175,000 on a $200,000 house and you were fine. You did 25 grand in equity. Prices always go up, or if it flattens, it may go down a little bit. All of a sudden you owed 175 on a house that was worth 100. [09:12.8]

Dan: Right.

Joe: That's how dramatic it was, right?

Dan: Yeah.

Joe: And you were okay before with having $100, $200, $300 a month in cash flow, and you had to have a portfolio of 12 or 15 properties that were cash flowing $200, $300 a month. You were good, right? That was the formula to get out of the rat race. You get more cash flowing assets that pass your expenses. So, my goal was to have a couple hundred houses and slowly pay them off over time.

But the problem was now, when you have one house that's vacant for two or three months, that wipes out all your cash flows. And then, when you get a bunch of houses that all of a sudden are vacant, now all of a sudden you have negative cash flow, and your overhead and your debt obligations—maybe before your debt obligations were 30 grand a month and you were cash flowing in 35 grand a month. You were great, right? [10:06.2]

Dan: Yeah.

Joe: But one month or two months of vacancies on a couple of three properties and then some things that you have to fix up on the house, and all of a sudden you're negative a couple of thousand dollars a month. Where's that money going to come from, right?

Before you could borrow private money to hold you up a little bit. Maybe you could go buy a property and do a cash out refinance, right, to get some cash? Now you've also got a bunch of private lenders and they're wanting their money back. They're like, Hey, you know what? We want out now. Before it was easy to get private money. I could replace private money with new private money, but nobody's lending any more money now on these deals.

And then, you have a bunch of tenant buyers that you're hoping will buy the properties, but they can't get financing, so they're not buying them. And then, you have properties that you have rehabbed and you can't sell because of a couple of reasons.

Buyers are scared and lenders are scared. They're not lending any money. So, you rehab this house. Maybe you went over budget, 10%, 15%, not a big deal. It took you maybe a couple of three months longer than you were planning on, not a big deal. I'll sell it. [11:10.8]

So, you were hoping to sell it for 300,000 and you're all in 280, so you're hoping, Okay, I'll just break even worst case, but you can't even sell it at 280. You have to sell it for 250, so now to sell that property, you’ve got to bring money to close it. All of those scenarios I've just talked about, about what happened, what was happening to tons of people—they had apartment buildings. They had commercial buildings. They had lots that they’d developed and were hoping to sell the lots to builders—and in almost all the scenarios, people got in big trouble because they had too much debt.

I'm not a big proponent of all debt is bad, right? But I'm saying, if you're over leveraged and your best scenario is kind of what you're counting on, if you're counting on the best case scenario, you're going to be in big, big trouble. And a lot of people are really scared right now because they're starting to realize like, Oh crap, if I don't sell this house in the next three months and prices go down a little bit, we're going to be in trouble. [12:11.4]

So, I swore to myself at that time, I don't want to own any more property. I don't want to own. I don't want to be on any more deeds. I don't want to have any more obligation to a lender or a bank on a property.

And that's when I started finding out wholesaling and I started figuring out lease options where you're just actually flipping paper. You don't own the property. And there's this thing that Rockefeller said once—the secret to success or wealth is to own nothing and control everything.

And so, I thought I needed to figure this out, and I started wholesaling because, at the time, too, I was looking at wholesaling as ballots for beginners. That's for rookies. That's for people that are just new. That's the info, late infomercial, the scam thing, right?

Dan: Yeah.

Joe: And I started thinking, You know what? I could go buy this property and hold onto it, and maybe in six months make 30 grand on it, or hold onto it for 20, 30 years and cash flow eventually $1,000 a month—after 30 years, right?—or I could just get this property and wholesale it, and sell it to somebody and make five grand in a few weeks. Just like that and I'm done. But, oh, that's not passive. [13:22.1]

Dan: Right.

Joe: You want passive income, right? That's a bunch of B.S. to begin with, right? You’re thinking that you can buy 20, 30, 100 rental properties and call that passive income. There's no such thing at all.

Dan: I love that you said that, man, because I wasn't even thinking about that in connection to this conversation, but for lack of a better word, it's a meme. Right? The whole “passive income” thing. And I feel the longer I'm in business, because that was always my ideal, too, I'm like the most passive I've ever gotten is still not passive and it's hard to do it. It's even hard to do that. Right? You're always doing something. [14:05.0]

I am very curious because I want to get into lease options, because I think lease options are really, really kind of a hot topic now. I think you've done a lot. You're talking about [how it] kind of had this stigma. You've done a lot through your work of popularizing lease options or bringing lease options into the 21st century, whatever you want to call it.

Before we do that though, I'm super curious—you mentioned in the beginning that you were an engineer, right? So, engineering was, I'm assuming, your academic background.

Joe: Yeah.

Dan: I'm curious, do you feel you took stuff from engineering, either mental models or ways of approaching problems or anything that that you now apply in the real estate space or in your coaching business, or what you do now?
Joe: Good question. I think sometimes it can be a hindrance because, for me, when you're taking your calculus classes, there's one problem and there's one solution, and there's usually only one way to that solution. Right? [15:07.3]

Dan: Yeah.

Joe: And so, when you're looking at construction drawings and plans for a power plant or a building, or whatever, a school, there every step of the process is laid out in advance. You have the drawings for the foundations. You have the drawings for the frame, the structure, and then the exterior and then the interiors, and everything down to the gnat’s butt is in detail and you see it all laid out in advance.

The problem is with real estate and in business in general, no deal is ever the same. No seller is that. You're dealing with people. You're dealing with buyers. You're dealing with sellers and realtors. No deal is ever the same. I tried, the reason why I was a professional student for so long was because I felt I had to get all the answers, questions to my answers, answers to my questions.

I felt I had to get all my i's dotted, all my t's crossed, and I had to know from beginning to end how it all worked, all the different “what if?” scenarios, and that was really holding me back. I was afraid to make a mistake because I thought if I made a mistake I was going to get the wrong answer. If I was going to build the wrong building, the building was going to fall down. [16:17.5]

And so, it wasn't until my back was really against the wall, and like what I was saying before, I was looking at all this stuff and thinking, I just need to make money. You can't eat. Somebody told me once, you can't eat equities, because I was trying to build up a bunch of equity. He was like, Wait, you can't eat equities, like Wheaties-equity. And there was a popular book at the time called

Dan: Let me get the Wheaties part of the reference.

Joe: Wheaties.

Dan: Yeah, I like it.

Joe: There was a guy who wrote a book at the time called Equity Happens and it was all about you buy property; you take care of it; equity automatically happens. And so, there was this myth at the time that real estate would never go down. If it does, it goes a little bit. So, I was over leveraged and then now I'm looking at maybe wholesaling is something I need to look at. [17:06.2]

And so, I started wholesaling because I realized I can make five grand in a couple of weeks, and during that six months and it takes me to rehab that house and make 30 grand or 40 grand, I can wholesale a bunch of properties, make just as much money, if not more, and without all of the risk and the debt, and the structure of the problems of dealing with realtors and contractors, and all the different things that can happen. I'd rather make a quick nickel than a slow dime.

This is what happened to me and this kind of relates to your very first question. I realized if I want to survive in this market and I quit my job one year into the last recession, I need to learn how to make a quick nickel rather than a slow dime, because a slow dime is there are a lot of unknowns and things bad that can happen going forward. So, I started focusing on making quick nickels.

I started wholesaling, but I got frustrated with throwing the leads away, so then I thought, These properties that don't have any equity, what if I got them under a lease option contract and sold that lease option contract to a tenant buyer? And I found out those were easier to do, especially back then, than traditional wholesaling deals were. They were way easier to do. [18:18.0]

Dan: It strikes me, something that's interesting about your story, and you just mentioned this—you left your job a year until the last recession, right? And then, the other thing that I immediately picked up on was you were saying that you were just a perpetual student, just a self-learner. You were spending a lot of time, you were spending more money on teaching yourself than you were actually making for real estate. Right?

So, you clearly are and were a person that was willing to, I don’t know if bet on yourself as the right word, but invest in yourself, right? And you were willing to make the jump in what must have been an incredibly uncertain time. I mean, you weren't jumping into real estate at the peak. You were jumping in when things were pretty dire. [19:03.1]

How did you make that decision or what do you think drove you to make that decision, rather than do what I think a lot of people would say the safe thing would be, which is, hey, they're always going to need engineers, right? So why do you think you made the call to kind of bet on Joe McCall?

Joe: People think the safe thing to do is to have a job and to save for retirement, and work for an employer for a long time. That's the most risky thing you can do. Because I saw people getting laid off and I thought, Man, if they shut the job down and I lose my job, I can still get another job somewhere else because I'm highly educated and all that, but I'm going to have to move. We’ll probably have to move outside of St. Louis to another city and move again after that.

And I felt I couldn't or didn't control my own destiny. I wanted to control how much money I made. No matter how hard I worked, I got paid the same. No matter how much profit I brought to the bottom line, I got paid the same every month. And if I was lucky at the end of the year, I'd get a 3 percent raise and I wasn't expecting any more raises because the economy was going down. [20:08.6]

So, I thought I would rather have more control of how much money I make in my own destiny and stuff. For about three months in a row, I was making more money doing lease options part time than I was in my full-time job. My wife, she gave me her support. She was like, Yeah. Then I wanted to make sure she felt safe.

Also at the time, though, I remember very clearly, I felt I was a jack, trying to be a jack of all trades and I was a master of none. I'm not good at multitasking and I was trying to do real estate. I was trying to do my job. I was trying to be a dad and a husband, and all that. But I was failing miserably at all of it because I was so distracted. I was doing too many different things.
And so, I knew I had to decide, real estate or my career in engineering. I had to choose one or the other, and I tried choosing. [21:03.7]

There was that one time I did choose my career. I gave up on real estate, but I couldn't get away from it. I kept on sneaking into Craigslist and looking for houses, looking on the MLS, calling realtors. So, I just couldn’t get away from it, right?

Dan: It's pretty much the least bad illicit thing you could do on Craigslist around 2011, the most mild thing you could possibly have been doing.

Joe: I was just looking at houses, man. And I was fascinated with systems like, How can I get VAs, virtual assistants, to do this stuff for me? So, there was a time when in my job when I was doing deals, I had a virtual assistant doing all my marketing. I had a local friend who was talking to the sellers and negotiating, and getting them under contract, go to the house if he had to. And then I had a local realtor that was selling my houses for me. So, I had three people doing all the work for me.

Now I was making maybe 40 to 50 percent of the profits because I was paying all these people, but I was doing nothing. I thought, Well, if I could do this while I'm working, how many more deals could I do if I'm not working and I'm just focused a hundred percent on this? [22:08.7]

And it was about a year after that that I thought, maybe it was less than that because nobody was really doing this. A few people were, but people kept on asking me, Hey, can you teach me how to do this stuff? And I was getting invitations to speak at local real estate clubs, and I thought maybe I could teach people how to do this stuff, too, and make some money as well by teaching people this stuff.

And that kind of opened up the whole education side of the business and publishing, and I started my podcast two years after I left my job in 2011. So, I've been doing both ever since. Makes sense?

Dan: Yeah.

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Dan: I was having this conversation with someone else actually earlier today about coaches and how “coach,” and specifically people will throw out the word “guru”—and that's kind of the epithet, right? Like there are gurus, right?—and it’s this very common thing. And we were talking about coaches and I was saying, the difference is there's the coach that coaches because they can't do anything else and there's the coach that coaches what they do. Right? And you're kind of the classic example of someone who has real skin in the game, meaning that you were teaching what you were doing for yourself. You weren't teaching something you read in a book.

Joe: I want to challenge you on that.

Dan: Okay. Yeah, I'd love it.

Joe: Do you like football? [24:00.0]

Dan: I do love football.

Joe: Who's your favorite coach?

Dan: My favorite coach, Belichick.

Joe: All right. How much football does he play today?

Dan: Physically play, probably very little.

Joe: None.

Dan: None.

Joe: Who's that coach for the Rams? The youngest guy, whoever to coach. He brought them to the super bowl a year or two
ago. Remember? Young guy, mid-thirties.

Dan: I'm going to Google it. Let me see if I can find it. Is it Sean McVay?

Joe: Sean McVay. Guess how much football he plays today? Guess how much football he played ever?

Dan: Is it none?

Joe: None. Never even played college football and here he is coaching the Rams in the Super Bowl. Now, maybe you could say, Well, they lost, right? And then, then the next year fell apart. Okay. You can look at some of the best coaches in the world who coached the Chicago Bulls when they won all those championships—was it Phil something?—all right, how much basketball does he play today? These coaches now, okay, yeah, they're older. They can't play at that level. But here's my point. Now, I'm still doing deals today, right? [25:08.1]

Dan: Yeah.

Joe: But I think it's wrong to say, if you're not doing deals today, then you're not a good coach, because there are people who do deals today that would make horrible coaches. They're just not good with teaching and breaking things down into systems and laying it out in a simple, understandable way, right?

And there's people that have the gifts. They've done deals before and they have gifts. They're good at teaching, right? I would rather learn from somebody that has experience, that has done, and they're a student. They've applied themselves to be the best coach in the business. The best coach in the world for the NFL is Bill Belichick, right? I mean, the guy is insanely smart, but if you told him you can't coach because you're not playing football today, then we wouldn't have … This is a bad example, but Dr. Ruth, how much sex do you think she has? [26:02.6]

Dan: Well, not likely a lot.

Joe: Well, hopefully not.

Dan: It’s probably … I don't know.

Joe: So, here's the thing, guys. I understand where that comes from and I don't agree with this thing that those who can't do, teach. That's the stupidest thing ever.

Dan: Yeah.

Joe: Don't believe that or agree with that at all.

Dan: Okay, so I actually agree with you. All right. And so I think you're right, and let me rephrase this a little bit, all right? It's not so much that you have to do it; otherwise you can't teach it. But I do think you need to suffer if it doesn't work, right? So, there's kind of a thing in coaching where it's, Here's my thing, no refunds, see you later. And there's another thing where it's like, here's my thing and my cell phone number, and I am also in the game with you. Right?

So, I think you're absolutely right because Belichick is a really good example of that. Belichick doesn't win. He keeps losing, and he loses and loses. Soon or later, he’s not going to have a job, right? He's got skin in that game, just like the people on the field. But I think that’s actually good. [27:05.3]

Joe: He works extremely hard. He works very, very hard, right? He's a student of the game. He knows people. He knows. He thinks 20 steps ahead and the players are actually doing the stuff. All they're thinking about is that next play. You need a coach with the experience and the wisdom that can think 20 plays ahead and think about the opponents, not this week, but next week's opponent as well. And so, that's what a good coach does.

I've always refrained from bashing the gurus, even though I don't like a lot of them. But I thank God for Carleton Sheets and Ron LeGrand, and even Robert Kiyosaki and I don't agree with him much on anything. But I appreciate those guys because they were out there willing to teach this stuff and get paid very well for it, but also have a huge target on their backs from criticizers, people that criticize them, from the government, the SEC. But they taught somebody how to do deals and that somebody taught somebody how to do deals, and then that somebody taught me how to do deals. Right? [28:11.2]

Dan: Yeah.

Joe: And so, I think the gurus are super important. There are some guys that I won't mention names, but that coach in the Coach Realtors. All right?

Dan: Gotcha.

Joe: And they have these huge multimillion-dollar businesses when they coach realtors, and you look at them and you think, Man, they're not even doing any listings. There's one guy who's a dad and his son also. Maybe you know them. They don't even do real estate today, but you know what? Who cares?

They have realtors all over the country that are killing it. I would rather have somebody that guy who is really good, who spends all of his effort and time on honing in his craft, honing in his skill, and learning how to coach and inspire people to have success.

If he's out there trying to do listings and do stay in the business of being a realtor, he's not going to be a good coach, because he's spending his time building up his business, training his trainers, and focusing on creating good, relevant content that's going to help his listing agents. Right? [29:17.5]

Anyway, I think you can understand this when you look at it differently. You know what? Most of the deals I do today, I'm not taking calls from sellers anymore. I'm not going looking at houses. I do deals through my students, through my boys. My boys are doing deals right now. Through friends that I have, we're partnering on deals.

Dan: Your actual children?

Joe: Yeah, my 16 and 14 year old boys.

Dan: Really?

Joe: Yeah, they are.

Dan: Can we talk about that for a second? That's amazing.

Joe: Sure.

Dan: So, did they come to you or were you like, You’ve got to learn this, or how did that happen?

Joe: They want to start making money and I'm like, Well, you can go get a job if you want and make eight bucks an hour, 10 bucks an hour, or I can teach you how to do real estate and you can make a lot more than that, you know? So, the way I do it with them is I pay them hourly, but then I get reimbursed. They're on a draw, so they get paid out of the deals. Does that make sense? [30:06.0]

Dan: Yeah, that's amazing. So, what has that experience been like? I have two kids. I have two sons. They are six and four, right, so they're not doing real estate yet. But I'm always kind of curious, because they've seen me work a couple of times. They like my office because I have all these toys and comic books and stuff in there. And they're always like, What do you do? and I have trouble explaining it.

So, if you ask them what they do and you're like, Oh, what does your dad do? and they're like, Oh, he makes money. They think I physically produce money somehow out of a printer or something. And I've thought a lot about, What role do I play in their lives as they get older, as they enter the workforce? And do I try to teach them entrepreneurship? Do I wait for them to show an interest in it? These are things I've thought about, but I don't have a good answer for.

So, I'm super curious, for you what the experience has been like. Honestly, these people, you've literally known them their entire lives, kind of coming into your world. What has that been like? [31:07.9]

Joe: They’ve always known me pretty much as working from home. They're surprised sometimes that everybody's dad doesn't work from home. We've had the privilege of traveling all over the world. We've literally gone to Europe twice for three months, two to three months at a time, gone on an RV trip for three months. But I was able to do my business from anywhere.

So, I've talked to them about like … This is important. I talk a lot about being a producer versus a consumer. And I try to encourage them and talk to them about, Do you want to be a producer that can contribute to society or do you want it to be just a consumer?

There's a funny meme that I showed my kids one time of this guy, this really rich old guy who was leaning against a sports car. I wish I could remember it. I'm going to mess it up. But the caption says something like “My boss said if I work really, really hard and put in a bunch of extra hours, and increase the profit and the bottom line of this company, he's going to buy himself a new sports car.” [32:15.2]

Yeah, that's funny. So, I asked my kids, “Who do you want to be? Do you want to be the guy working hard to make his boss rich or do you want to be the guy who has that car?” No, it's not about the money. It's about the freedom for me. Right?

And so, my boys can go get a job or flipping burgers if they want or whatever, but I don't know if they want to do real estate or not, but I do know this. They want to be in business for themselves. They want to own their own business and that's what I'm encouraging them to do, because there's so many things that they could do that this is so much better.

I could pay my son right now. He's really good with audio and video stuff and on the computer. I'm paying another company, I'm not going to say how much, but a lot of money every month to edit my podcast and my videos, right? [33:05.7]

Dan: Right.

Joe: I can pay my son to do that. Maybe it’s going to take him a little [practice]. I'll have to train them, but he could probably just from my friends or people that I could recommend him, he could be easily making 50, 60 grand a year doing podcasts and video editing.

Dan: A hundred percent.

Joe: Just editing people's podcasts, editing their videos and stuff like that. As a 14-year-old kid, he could be doing that. And so, I don't want to tell him or encourage him to go work at the grocery store and bag groceries when he could be doing that, working for himself with his skills and things that he's really interested in.
So, the land stuff, I took them to a couple of boot camps with me. My friend Jack Bosch does them.

Dan: Yeah, [crosstalk 0:33:48.8].

Joe: Then it was online. I bought an online course and then went to his boot camp, and they got really interested in land. They were just wide-eyed when they’d see all these testimonials of people and how much money they were making doing vacant land, flipping vacant land. And I said, “Do you want to do this with us?” [34:03.6]

And so, we set up some systems where we’d send out the mail. The calls go to a voicemail. The voicemail asks them, Hey, just please leave the reference number of the letter in the voicemail and we'll send you an offer. So, we send them an offer before we even talk to them and we get about a 10 percent response rate with our letters for direct mail when the average response rate is maybe 1 or 2 percent with direct mail. We get a high volume of calls coming in.

And then, my boys look at the reference number. They put it into our CRM. They do a little research on Zillow and a couple of other sites that we have, and they come up with a ridiculous low offering that we make an offer that’s at 20, 25 cents on the dollar. And they put it all together in the CRM. I review it, and then, from the CRM, we send them an offer back in the physical mail and we send them a text saying, Hey, we just sent you your offer.

Then, after that, if they accept our offer—we get one out of every 20 offers accepted, let's say—I have some friends of mine that will go then and work on selling the house, the vacant lot. They will start advertising and marketing the vacant lot to sell it, and my boys get a certain percentage of the profit and then I pay them on a draw. And so, so far it's been great. [35:16.5]

It would be really easy for them once they're done with school to just start doing that full time and they could be making easily five to 10 grand a month as teenagers, flipping vacant land. It’s hard to when they're going to school and then in the evenings where we used to, not anymore, but they're doing school all day and then in the evenings they have sports and music and activities. But, yeah, does that make sense?

Dan: Yeah, that's fascinating, dude. I love it. And I love your whole approach that’s more about, and it's not so much “be part of the family business.” It's “think about the role you want to play just in society in general,” right?

And so, let's talk about something I wanted to come back to because I really want to get into lease options, not me personally, but I think for the audience. One of the things you said, you said this early and I wrote it down, and I actually underlined it three times because I thought it was one of the or the perfect encapsulation of this kind of idea. [36:17.2]

When we were talking about success, you were talking about being over-leveraged, right? And there you said you don't want to be in a situation where you are counting on the best case scenario, right? You said don't count on the best case scenario. For right now they're, things are very uncertain. There are a lot of investors that are kind of looking at their existing business model. There are people who are kind of withdrawing their marketing money. People don't really know what to do.

And I know there's a ton of interest that people have in things like lease options or in some kind of creative financing, or some other way to do deals. So, if you're talking to just kind of Joe Investor—Hey, I mostly wholesale. I do a couple flips—what is your pitch to that person to learn lease options and start incorporating lease options into their real estate investments? [37:05.6]

Joe: Yeah, so if you're throwing away a bunch of leads that don't have any equity, why do that? If you're only a one-trick pony, if all you know how to do is make one offer to a seller, you're losing. You're leaving a lot of money on the table. So, it's important to know to be able to give a seller sellers options. It's important to be able to say, Listen, if that cash offer doesn't work, then we'll do this, or maybe we can do that. And then, just following up with them.

There’s a lot of money left on the table. If there may be a house that's worth $125,000 or $100,000, there's not enough equity in there for you to get it under a cash contract and then sell it, right? So, what if you offered them owner financing or lease option or something like that?

Then there are opportunities and the cool thing about that is when you offer, make an offer on terms, you can negotiate many different things. You can negotiate the price. You can negotiate the rent. You can negotiate the interest rate. You can negotiate the term, the down payment. Maybe some monthly credits that you get. So, it just gives you much more opportunity. [38:06.3]

Yeah, it is more complicated. It's more complicated to learn how to make lease option offers or owner financing options, but once you learn how to do them, it's not that bad and it's a great way to make some money. So, you can go from getting one out of 30 offers accepted to three out of 30 offers accepted, triple your deal flow, just by giving the sellers options. And so, that's what I started doing and it's been great because I can help sellers. I can do more deals. Why would I not want to do that, you know what I mean?

Dan: Yeah, and it strikes me, too, that we're heading into this period where really utilizing every single lead you get, really maximizing the revenue that you get for every advertising dollar you spend is so critical. So, just having this extra … not even extra, but these additional ways that you can help people just seems it makes that process so much easier. [39:02.9]

Joe: Yeah.

Dan: But you're currently, and I want to kind of promote this because when you came on the show, I was asking about stuff that you have. You have a book that people can get for free. They can go get it at WLOBook.com. Tell us a little bit about this kind of book that you’ve put out. What's the deal with that?

Joe: It's a real simple book. It's what I did in 2009 to quit my job. I was flipping wholesale. I was doing wholesaling and I loved the idea of fast cash, but I found it easier to do these deals to flip lease options, because I didn't have to go spend money on marketing. I stopped doing all my direct mail. I just started going to Craigslist and Zillow, and looking for landlords and for sale by owners, and sending them a text saying, Hey, would you want to do a lease purchase? Would you want to rent your house for a couple years and then sell it?

And if they said yes, I didn't have to negotiate with them. I didn't have to beat them down on price, get them down to 60, 70 cents on the dollar. If they were willing to wait for it, I’d say, What do you want to sell it for? Okay, I can get you that if you're willing to wait. That's it. I didn't have to negotiate or sell things anymore. [40:09.1]

And then, I'd just give them a contract. I use a flexible option contract and then I just say, Maybe we can lease this, and if you sell it before I do, you can just cancel the contract. You don't owe me anything. So, it was really easy to sell these things. It was very, very rare to get a yes on the first call, but I’d just follow up with them, send them something in the mail, and then they’d call me back, and I started doing a lot of lease options with other investors who had rental properties or rehabs. And so, then I found that it was just easier to give them whatever price they wanted as long as they were willing to wait for it. You know what I mean?

Dan: Right. yeah, it really strikes me as an approach that is so profoundly different in a way, because rather than trying to force someone to fit a solution that you have, you're sort of retrofitting the solution to fit what they want to do. Right? It's really interesting. [41:02.6]

Joe: Yeah.

Dan: So, WLOBook.com. They can go there and grab the book. What's the deal with the book?

Joe: It's free, plus shipping and handling, and it's a book about a quarter of an inch thick. I was real bummed because I worked so hard on this thing and I’d started thinking it was big.

Dan: Right. Yeah, it's never as much. You're like, This took me … I feel every time you write anything really long, it takes a year off your life and, yeah, it’s never as much.

Joe: Look, it's all killer, no filler. It's all really good stuff. It's how to do these deals from beginning to end, and you just pay a little seven or eight bucks for shipping and handling to get it out to you. And I teach you how to do deals from beginning to end, kind of the mindset behind it, what I do, how I talk to sellers, how I come up with my offers and how the whole process works. And, yeah, it's a simple book. It's a simple idea. It's a simple concept.

And so, I wrote a book about it. I've been selling it now for a couple of years, and I really do believe it's one of the fastest and easiest ways to make money and do real estate today. [42:05.0]

Dan: Yeah. And I should say that if you are looking to kind of hear more from Joe, obviously he's got the real estate investing mastery podcast, which you can get at RealEstateInvestingMastery.com and, of course, anywhere high-quality podcasts are sold. But one of the OGs in the real estate podcast and game, I’ve got to say it, too, you were literally I think the first real estate investing podcast I ever heard. I knew there were other people doing it, but Joe has been doing it and does it better than I do and better than most people, so you’d better go check that out as well.

Joe: Thank you, man. I appreciate it.

Dan: I want to say this, too, because I want to wrap this up and I know you've got to go. I will say, just as kind of an aside to the audience, I work with tons of real estate investors and real estate investing is a small world, so you hear all the gossip and I hear all the feedback from people. But people would go through coaching programs and stuff, and people buy products and everybody kind of talks about this stuff, and I've heard all sorts of things, good or bad.

I have literally never heard a single bad thing from anyone who's gone through Joe's programs or bought his products. And I almost never give people an endorsement like that, but I literally mean this. Unanimously, people get a ton of value out of Joe's stuff. Otherwise, I wouldn't have him on the show, so I just want to throw that out there. [43:16.9]

Joe: I appreciate that, Dan. Thank you.

Dan: Yeah, man. Hey, you did the work. All I did was show up and turn on the Zoom call. That's all I did. But I really appreciate you coming on and sharing everything with our audience.
WLOBook.com and RealEstateInvestingMastery.com. I'll have links to those at the show notes, which you can get at AdWordsNerds.com/podcast.
Joe McCall, thank you so much for coming on, man. I really appreciate it.

Joe: Thank you, Dan. Appreciate it, man.

Dan: That's it for this week's episode of the REI Marketing Nerds podcast. Hey, if you are not in our Facebook group, whatcha doing? You need to get in there. It's free. I’m posting in there every single day. I go live. I share data about what's working, what we're seeing. If you want to get in there, you absolutely should. You can get there by going to AdWordsNerds.com/group or just go on the Facebook and type in “REI Marketing Nerds” and you'll find us. I hope to see in there soon. [44:12.1]

And if you have any questions, as always, hit me up. Let me know. You can leave a comment or a review on this podcast. I'd really appreciate it. And I will be talking to you next week. Stay safe. Stay healthy. And I'll talk to you.

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