147: Mobile Flipping, Wholesaling and Lease Options

SHOW NOTES FOR EPISODE 147: MOBILE FLIPPING, WHOLESALING AND LEASE OPTIONS

Imagine traveling the world while money regularly flows into your bank accounts.  This is not some wild fantasy.  This is the life of Joe McCall, an engineer turned real estate investor, who has set up systems that allow him to remotely do wholesale and lease option deals from anywhere in the world.  In this week’s episode, Joe McCall shares how he can travel to Prague, the South of France or around the US in an RV with his family, while he grows a successful real estate investing business.

What You Will Learn

• How you can successfully run a real estate investing business from anywhere in the world
• The value of building your business and career around your lifestyle
• What does it mean to pursue being a “Lifeonaire” instead of a millionaire
• The 2 critical people needed for a successful virtual or remote wholesaling business
• The problem with borrowing against “future profits”
• How you can flip raw land remotely
• What are the best markets to do virtual wholesaling
• What it means that “you are not in the real estate business, you are in the marketing business”
• Why Joe sees buy and hold real estate as the best long-term retirement strategy

About Our Guest

Joe McCall

An avid family guy, who enjoys hanging out with his kids at the zoo, or golfing with his boys, or swimming with his girls in the pool.  Nothing is more important to Joe than God and family.

Joe has flipped over 100 deals and helped students flip 100’s more.  He loves doing deals and coaching students to do the same.  One unique fact is that Joe invests remotely in multiple markets through automated marketing systems he has created.

Whether living in Prague, Czech Republic (twice, for several months) or traveling across the NW corner of the USA in his RV for 3 months, his teams flipped multiple lease options and regular wholesale deals – without him even seeing the houses or talking to the sellers or the buyers – ever.

Joe believes that the greatest part of this business is that he gets the privilege of working wherever and whenever he wants – from home, from Starbucks, the pool, a condo in Colorado, a coffee shop in Prague, a farm house in Ireland – wherever!

More About Joe

• Degree in Civil engineer
• Systems mindset – always wants to create a tool or automation for everything
• Got married in college
• Graduated in 2000
• Travelled a lot
• Got job with big engineering firm
• Bought house in St. Louis
• Got assignment in California and rented out house – had bad tenant experience
• Had friend who was taking courses, went through info and got real estate bug
• Started doing real estate on the side
• 2006 – New job with new company but got tired of it and would do real estate when he things were slow
• Quit and got fired at the same time
• Got new job but didn’t like working in a “cubic-hell”
• His wife and he wanted to travel
• Have 4 kids and homeschool so could also travel

Aspiring to be a “Lifeonaire”

• Heard about the “Lifeonaire” concept of creating the vision for your life first and then building your career/business to support that lifestyle
• He didn’t want to wait until he was 65 to retire and then travel
• He wanted to travel the world now, with his kids, so they could experience it as a family

Biggest Mistakes

• 2005-2008 – Made a lot of bad decisions in real estate
• Borrowed heavily
• Counting in appreciation
• The crash took a big hit on Joe
• Took years to dig out of it

Lease Options and Wholesaling Business

• Was still working full time job but was working on found his real estate investing niche strategies with lease options and wholesaling
• Really enjoyed it and started building a business
• But working 50 hours per week
• Not much time with family
• Started building systems so he could outsource everything
• He would write down every step in a deal or transaction
• Then would ask, “How can I get someone else to do each of those things/steps so I’m not doing anything?”
• Making more money in real estate part-time than in his full-time job
• Quit his job in 2009 to do real estate full-time

Running His Business Remotely

• He set up his business so that he didn’t have to see the houses, sellers and buyers
• After he got married, Joe and his wife went to Prague in the Czech Republic and fell in love with the country and people
• He wanted to see if his family could go to Prague for 3 months and still run his business – only had 3-4 hours where he could deal directly with team in U.S.
• All he needed was a laptop and Internet
• It went well
• Came back to the US, bought an RV, and would travel with his family for 3-4 months
• Went back to Prague
• Back to the U.S.

His Remote Team

• Two Main People
  • A good assistant (could be in your home town or virtual) – need to pay a very good virtual assistant (VA) $1,500 per month in the Philippines
    • Manages all marketing
      • CRM (Podio)
      • Lead flow
      • Direct mail
      • Craigslist ads
      • Answers all incoming calls, plugs names into CRM
      • Prescreens the leads
      • Manages the CRM
      • Does all follow-up
      • Good lead prospects get sent to local (St. Louis) wholesaler
      • Suspects (80-90% of the leads) – VA sends an offer and follows-up with them every month
    • Local Wholesaler
      • Goes to seller’s house
      • Negotiates deal
      • Gets it under contract
      • Flips it to own of their own buyers
      • Split profits 50/50 with Joe

For Lease Option deals

• Joe usually negotiates lease options over the phone
• Work local realtors or leasing agents to put the tenant-buyers in the home
• He doesn’t do as many now as he did
• He usually flips the lease options once he gets them
• He gets the lease option under contract from the seller as a tenant/buyer, then he’ll sell (assign) the contract to a someone else as tenant/buyer for a fee and then gets out of the deal

Flipping Raw Land

• He’s now also flipping vacant land
• Buying little vacant lots at $.15-.20 on the dollar and selling them for $.50-60 on the dollar
• Creating notes and selling them on terms
• Really easy to do virtually
• He found friends that had lots of time but no money – these people are doing all the ground work on these deals – does 40/60 split (they get 40%)
• To learn how to do this, he bought a number of “land flipping” courses (one of which was from Old Dawg guest Mark Poldolsky – episode #083 “Flipping Raw Land”)
• Done 20-25 deals this year
• Sells most land on Craigslist.com

Creating a Deal Pipeline

• “You are not in the real estate business, you are in the marketing business.”
• You need to get someone to do your marketing for you, in spite of you
• Marketing is everything in this business
• He has become a student of marketing and is always testing what works and what doesn’t
• “There’s almost no problem in real estate that marketing can’t fix,” he says sort of tongue-in-cheek
• If your pipeline is filled with leads:
  • You get better selection of deals
  • You are not the “motivated/desperate buyer” where you have to have a deal
  • Gives you more negotiating power because if this deal doesn’t work out it’s fine because you have plenty other potentials
• He’s always marketing (sending out direct mail, calling, etc.)
• Every time he sees a slow down in his business, it’s usually because of a marketing slow down
• Direct Mail
  • Currently, with land, alone, they’ll send out about 3,000 letters a month. With wholesaling, 4,000 per month

Choosing Markets

• Wholesaling
  • Looks for good cash-flowing markets
  • Midwest is better than west coast. Places like:
    • Jackson, MS
    • Lafayette, LA
    • Birmingham, AL
    • Indianapolis, IN
    • Columbus, OH
    • Kansas City, MO
    • Louis, MO
  • Can find homes for $40-50K, that rent for $900-1,000 per month in good neighborhoods where mostly landlords are buying homes there
  • There’s a good market for these properties
  • You get bigger discounts on properties
• Lease Options
  • Likes to stay in his own neighborhood (St. Louis, MO)
  • Not expensive areas
  • Median price range
  • Only “pretty houses”
  • For example:
    • In St. Louis, median home price is $150,000 (his range: $125-250K) – homes sell faster in that range
  • He wants to do a “Lease Options Challenge”
    • Goes into new market he has never been in
    • Sell as a product for $297
    • Document the process (within a public/private Facebook group). Show how he does:
      • Research
      • Marketing
      • Talking to sellers
      • Making offers
      • Following-up
      • Getting into contract
    • He wants to show if he can do this in a market 800 miles away from where he lives, that he’s never been in before, anyone can do it

The Lowest Amount Joe Every Paid for a House

• $10 – bought is as a lease option
• He also had a seller “pay him” $3,000 to buy their house (beat up house in a very bad neighborhood), liens and other problems

Biggest Mistake

• Borrowing profits early on a deal
• 2006-2008 – buying lots of properties “subject to” (taking over existing financing)
• He would borrow money from private investors – they were safe because he had equity on the deals (some of the gurus were teaching this technique at the time)
• Putting investor in second position, protected with 10-15% of the equity in the house
• Joe didn’t really need the money – would borrow $20K when he really only needed $15K for repairs because he would be getting the profit anyway down the line
• The problem was that, when the market crashed, all the equity he thought he had disappeared!
• Wasn’t buying the properties on “fundamentals” (i.e. cash flow, cash-on-cash return)
• He was counting on appreciation, way over-leveraged
• Within 6-8 months was underwater/leveraged at 110-115%
• Paid back all of his private lenders (except for one whom he’s still paying back because he likes the payments)
• Had lots of private debt but never defaulted on any
• Had to restructure notes
• He could have prevented the problem by buying properties that had at least a 15% cash-on-cash return

Biggest Success

• Successful virtual investing
• Learning how to wholesale deals in other markets from Europe
• Very grateful to see checks from properties he never saw nor from owners he never met

Advice for Old Dawgs Looking to Get Started in Real Estate Investing

• Building Wealth One House at a Time by John Schwab
• Warrant Buffett approach – slow and steady, only buying on sound fundamentals
• Don’t need to have $1 million at retirement
• If you set up a 5-10 year plan, where you buy 2 houses a year and pay them off as soon as possible, with zero debt, you could live very comfortably on $5,000 to $7,000 per month
• Joe’s becoming a buy and hold investor for his retirement
• Also, thinks that setting up payments on raw land (that you buy debt free) can be a great stream of income in retirement

What Currently Excites You About Your Business

• Loves coaching clients internationally (Europe, Lebanon, Malaysaia, Phillipines, etc.) who he sees successfully flipping homes in the US
• When he sees clients quit there job because
• 25% of his income comes from real estate but the rest through his podcast, coaching and his courses.
• Loves teaching and helping people build their systems
• Joe loves making a difference in people’s lives

Rap-It-Up

• Favorite real estate books: The Pumpkin Plan by Mike Michalowicz and Building Wealth One House at a Time by John Schwab
• Favorite business book: Profit First by Mike Michalowicz
• Most valuable web site for success (other than your own): BiggerPockets.com
• Favorite app: Evernote
• Favorite quote: “He is no fool who gives what he cannot keep to gain what he cannot lose” – Jim Elliott
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Buy a computer($300) and a phone ($100) to research, call rentals, for sale by owners, property managers and network to do deals. Do direct mail “yellow letters” ($600) to evictions.  Send hand-written letters every day.

How to Reach Joe

• Websites: RealEstateInvestingMastery.com or JoeMcCall.com
• Podcast: Real Estate Investing Mastery

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