20 Year Real Estate Veteran Starts Over

Mike: This is the “FlipNerd.com Expert Real Estate Investing Show,” the show for real estate investors, whether you’re a veteran or brand new. I’m your host Mike Hambright, and each week, I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility and taking control of your life and financial destiny, you are in the right place.
Hey, this is episode number 443, and my guest today is my good friend Joe Lieber. Joe is a Cleveland-based real estate investor and has never had a job other than his own business after 20 years. He’s bought more houses than he can count, and even his own rental portfolio was into the hundreds.
Today is a unique show. For most of our shows, for you who may not know, but I meet with my guest before we start recording and we catch up a little bit, these are usually people that are friends of mine, and we talk about what we are going to focus on during that episode. A lot of the guests I have on the show, we can talk about a lot of different things, and we try to hone in on to what they’re passionate about right now.
In this episode, you know, right before we started the show, Joe shared with me on he’s changing his business model from the way he’s been operating for the past two decades. And we just decided to just start recording our discussion, have a friendly discussion about his specific situation that you can learn a lot from in the process. Joe has been buying at auction and through the MLS, something that you can’t do in a lot of markets, but you can do in the Cleveland market or you’ve been able to, and he’s bought several, several hundreds of houses that way. He’s decided to jump into the direct-to-seller marketing, which is what I’ve done all along and what a lot of investors do. But it’s brand new for somebody like Joe.
So we talk about it. So whether you’re just getting started in your real estate investing business, or whether you’re a veteran and you’re in the process of pivoting, which we all are, it’s we all are constantly pivoting to try to improve things or adjust things, there’s going to be some great nuggets here that you can apply to your business.
I appreciate you guys as we kind of come in towards the end of the year here. I appreciate you a lot. I have some big changes coming up at FlipNerd.com that I want to share with you in the episodes ahead. I think you’re going to enjoy this one today, though. Let’s go ahead and dive in. Please help me welcome Joe Lieber to the show.
Hey, Joe, welcome to the show.
Joe: Hey, what’s happening buddy?
Mike: Yeah, good to see you. Good to see you. I’m excited for today. This is the first show. . .it’s kind of funny. I’ve told you. . .I haven’t really mentioned this a lot I guess kind of publicly. I don’t really know why. We haven’t really. . .,you know, I feel like we have done some great things, we go a long way. So, yeah. But we’re actually right at about our five-year anniversary of the podcast. I think we were technically published in the beginning of January, but I started recording them about this time in December five years ago. But never before. . .it’s funny. It’s like you start to try to get some firsts, so I can already tell you in the next episode that we do, I’m just going to record myself, and I’m going to talk to my audience, which I’ve never done by myself on the show before. It’s always been an interview.
And you and I have been buddies for a long time now, several years. And we were just talking about, “What are we going to talk about today?” And I know you’ve got some changes going on in your business. And for folks that are listening, we just decided like, let’s just kind of make it up as we go along. Joe’s got some challenges, some things he’s going through in his business. He’s had a very successful business for a long time, enviable really. And he’s trying to kind of reinvent himself kind of a little bit. So we literally don’t even. . .this is like Seinfeld. It’ s a show about nothing, but it’s about everything. Like we have no idea of what we are going to talk about. But we should first, I guess, start off, Joe, with a little bit of introduction. Tell us a little about you and your background.
Joe: So, you know, I’ve been in the real estate business since 1998, so this is my 20th year in business. And I pretty much have done. . .it’s a long time. I pretty much have done every aspect of it, you know?
Mike: And you’ve never had a real job? You’ve always been. . .you started like out of the womb, you . . . no.
Joe: Pretty much, yeah. I mean, I graduated high school and it was time to. . .,you know, I wanted to be in real estate. I didn’t know what that meant, but I knew I wanted to do that, so I started figuring things out. And it’s been a long journey man. There’s been a lot of. . .oh my goodness, man. I always tell people, “Don’t do it the way I did it.” You know, from 1998 to 2011, I did it with no mentors or coaches. That’s a huge mistake. Like oh gosh. I tell everybody, “Get a mentor, get a coach.” You know, if you can get yourself into a Mastermind, if you can get yourself to a level of where you can get involved in that, do that.
Like it was an absolute game changer when I started doing that. But I’ve done every aspect of it. You know, from brokering real estate just to try to pay the bills, and then, you know, you do your retail flips and you do some turnkey, and some wholesaling, and some property management. And it’s been a long ride, man.
Mike: Yeah.
Joe: There are a lot of things going on.
Mike: For sure. And so you’ve done really well as really a buy and hold guy. You are in the Cleveland market, which is very affordable. A lot of Midwestern markets are, you know, the rents are good, the values are low. And to be honest, it’s kind of the Rust Belt, so population is probably stable to declining in all of Midwestern markets. But housing is relatively cheap, and so it’s turned into a pretty good place for buy and holds. And that’s primarily been what you’ve done over the past 20 years, right?
Joe: Yeah, that’s my one constant. You know, I remember way back in 1996 sitting in my parents’ house in my bedroom, and I really remember those Carleton Sheets commercials coming on, where he would be interviewing somebody and there’s a palm tree and a boat in the background in the beautiful water. And, “Holy crap like what are these people doing?” You know. And at that time, the most traditional thing to do in real estate is buy and hold. So that’s been the one constant in my business. I’ve always bought and hold real estate, and I’m grateful for that because really I want cash flow, that’s what [inaudible 00:05:32].
Mike: Yeah. And that is the name of the game. I’ll tell you that I know you’re moving in the other direction, trying to do more wholesale, and we’re going to talk about that in just a minute here. But I think when I look back at all the hundreds of deals that I’ve done over the years, like I wish I had kept more as rentals now. Now, it’s hindsight now, right? I can look back and say, “The value has gone up. Just imagine if those were all paid off now.” Like it’s easy to do that.
But I think that is the ultimate escape from. . .because traditional real estate investing, whether you are fixing, flipping, or wholesaling, is a rat race, right? You’re only as good as your last deal, and then it’s over. But with buy and hold now, and you know this as much as anybody, rentals could be a pain as well. Like you could just. . .you go through some crap that you just can’t believe happens. But in hindsight, building up cash flowing assets it really allows you the freedom to live a life that you want to live ultimately.
Joe: Yeah, it is. But you know what, Mike, like I’ve learned a lot of tricks over the years to like try to take that edge off of having maintenance and all that stuff going on.
Mike: Right.
Joe: Like let me give you like one example of something that I learned this from Ron LeGrand in 2010. I’m forever grateful for this. At that time, I took all my rentals and put them all on lease option. And by doing that, I was deferring the maintenance to the tenants, so they were responsible for all minor maintenance issues. And I saw my net operating income increase substantially just because of that one little twist. So instead of having the rental, it was a lease option to buy, and they were responsible for repairs to the property. And bam, just like that, you know, you’re going to increase [inaudible 00:07:04].
Mike: So to give some perspective, Joe, for folks who are listening before we kind of dive into. . .I say dive in, we don’t really actually know where we are going from here. But you’ve owned, I know you’ve had some a little bit of multifamily up there, too. Not huge multifamily, but you’ve owned. . .I guess at the peak before you started to sell some off here over the past few years, what did your rental portfolio look like?
Joe: 215 units.
Mike: Yeah.
Joe: Mostly single family. I had about 15 doubles and I had a 48-unit apartment building. And it was rough, man. Like everybody is running to this multifamily space right now, everybody is. And that’s great. I hope it works. Like I lived it for 10 years, I owned that building, and it was a challenge every day to make that thing work. I’d say it stole 10 years from me. I could not. . .I got to breakeven, but I couldn’t make it where I can take a paycheck out of there.
Mike: Yeah. Yeah. Some of it is a scale thing too, right? When you have like a couple of hundred units, then you have on-site management, you probably didn’t. . .you were managing it yourself, right?
Joe: Well, yes. But I had a manager there. But like 50 units, 48 units, it’s too big for the small guys and it’s too small for the big guys. It’s a weird spot to be in. And you’re right, like your manager, you know, I don’t know what to say. I couldn’t probably get the right talent there. And, you know, it was a class, a C- building, so it needed a lot of work, and I was always chasing tenants, chasing repairs.
Mike: So you’ve built up your rental business. I know you sold some off and you’re constantly buying, right? But you are at this point where. . .and let’s be honest, because I’ve, you know, I don’t want to talk about myself a lot, but sometimes you question like I don’t really have to work as hard as I do, but something keeps driving me, and I don’t know what it is.
I actually talked to my wife about it for like half-hour this morning. I was like, “You know, I’m like setting these goals for next year, it’s kind of what it is.” And not that you should have to wait till the end of the year to set goals. But I’m kind of thinking like, “Do I go big or do I just keep it simple and have a more balanced life?” Because I’m blessed and I’ve been working hard for a long time and built up some assets and things like that. I don’t have to work as hard. I mean, I’m not in survival mode anymore. Like I live a nice life, we travel, we do a lot of things. But I seemingly I’m kind of constantly willing to risk it all or take bigger risks to build something and it’s like, “Why?” You know?
So without talking about my issues of why we do that, why are you trying to change your business and get into wholesaling after 20 years of building up a rental portfolio. And what we didn’t talk about here either is, you have helped a lot of people buy turnkey rentals, too. Like that was your portfolio, but you’ve done hundreds of more deals, right? That you’ve helped people build rental portfolios in the Cleveland area.
Joe: Huge. Yeah, it’s a ton. So like here’s what’s going on. So like I got to like I said 215 units there. I sold, gosh a ton, over a 100. I’m floating right about 100 units right now. They are all paid for. So I paid everything off with the sale of those 115 properties. And just to add something in there that’s kind of interesting. People say you have pros and cons on this, but I paid my personal house off too. It’s a big deal for me. I’m glad I did that. But people say, “Don’t do that and this and that.” But for me, I didn’t want to. . .I just don’t want the debt load. Like I could [inaudible 00:10:31]. So that was cool.
So now I’ve got all this cash flow coming, which is awesome. But I just turned 40 years old last week, all right? So I’ve got a six and eight [inaudible 00:10:41] home.
Mike: Young guy.
Joe: Yeah. And I got a six and eight-year-old at home. Like I can’t retire. You’re not going to do that, nor do I want to. Like entrepreneurs are not built like that. Like I’m not going to sit around. So what I’m I going to do, right? And turnkey is awesome. I’ve helped a ton of people. And that’s probably part of the problem. I’ve made a lot of friends, man, a lot of friends. I’m always a go-giver, you know. So if someone calls me two years from now like, “Joe, I’m having a problem on a property.” I’m like so quick to like, “Dude, I can jump in and help you,” you know. And it gets a little overwhelming. You know, like you’re constantly trying to be customer fulfillment, and it’s just a lot.
So I figured maybe I should start wholesaling. And everybody talks about just get these houses and you’re selling them off for a little, you know, profits. And it’s, you know, but that might be a good complement. I’ve done some wholesale deals over the years, obviously, not in any scale. But now I’m looking at it and saying, “All right. Let’s try this wholesaling thing. [Inaudible 00:11:37] operations and try to just do wholesale,” right?
Mike: And it’s the allure maybe of the kind of get in and out quickly that’s. . .because, you know, a lot of people truthfully and I’m not. . .those people that are veteran investors and some of them are our friends, you know them too.
Joe: Oh, yeah.
Mike: Obviously, we have a lot of mutual friends that are wholesalers, so don’t take this the wrong way. But there’s a lot of people that do wholesaling when they start because they don’t have money, they don’t have resources. You have all those things, you don’t need those. But for you, it’s the allure, it’s the attraction of kind of in and out fast instead of tenants and toilets and maybe having, not that you don’t like to help people, but at some level, you can’t scale anymore. Like there’s not enough time in the day for me to help people.
Joe: Mike, it’s not even so much tenants and toilets. Honest to goodness, I don’t have that many problems there, I really don’t. The thing is when you’re running 15 to 20 jobs and you’re rehabbing all that, and every day Home Depot is calling the office and you’re dropping $3,000 a day at Home Depot or more. And Friday comes, you’ve got $10,000 going out in payroll just for your contractors, it just somehow just takes a. . .it definitely wears on me a little bit.
Mike: Yeah, I get it.
Joe: I have, you know, a couple of million dollars riding at all times. I’m like, “Oh my gosh. Like get this project done, you know?
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Mike: Maybe having, not that you don’t like to help people, but at some level, you can’t scale anymore. Like there’s not enough time in the day for me to help people.
Joe: Mike, it’s not even so much tenants and toilets. Honest to goodness, I don’t have that many problems there, I really don’t. The thing is when you’re running 15 to 20 jobs and you’re rehabbing all that, and every day Home Depot is calling the office and you’re dropping $3,000 a day at Home Depot or more. And Friday comes, you’ve got $10,000 going out in payroll just for your contractors, it just somehow just takes a. . .it definitely wears on me a little bit.
Mike: Yeah, I get it.
Joe: I have, you know, a couple of million dollars riding at all times. I’m like, “Oh my gosh. Like get this project done, you know? You know, and then I have a second office, a second warehouse, an entire contracting team and project managers, that’s so expensive. So like I have to run a certain amount of volume. And then you have dispositions. So once you get them all done, you’ve got dispose them, right? Or keeping those rentals and putting money behind them. Like there’s a whole nother thing going on.
Mike: Right.
Joe: Like where [inaudible 00:14:49] and when they are done.
Mike: Yeah. It’s like a bunch of small businesses strung together. It’s like the property management or the, let’s say the rehabbing, that’s a whole different business, right?
Joe: It is.
Mike: And you’re probably seeing now with wholesale, which we’ll get into this in a second, lead generation. Because you’ve just to kind of give people that are listening some perspective, you’ve bought a lot. . .you are broker, so you’ve bought a lot. . .in your market, you are able to buy a lot off MLS, you’ve bought a lot of stuff at auctions, right?
Joe: Oh, yeah. Yeah.
Mike: And so even though you’ve been in this business for 20 years, direct to seller marketing is pretty new to you?
Joe: It is new to me. I’ve only ever bought from wholesalers. Like you know how we get those postcards in the mail? Everybody gets one that says, “You know, I want to buy your house cash.” Obviously, it’s a wholesaler. So I always just call them and introduce myself and say, “Well, look. I don’t have a house to sell, but I will buy it from you. I know what you’re doing.” That’s been a great lead gen.
And then MLS was always a great lead gen in the Cleveland area. Like, man, I bought off MLS pretty much my entire real estate career up to the last couple of years you can’t. And then auctions, you know? The court of [inaudible 00:15:53] . . . like in Cleveland, you have to go to court steps to bid. They don’t have any online thing, so that knocks out, you know, 95% of the people, because you’re having to go to Downtown in Cleveland, Ohio, in the morning, unless you’ve got someone here who will do that. And by the way, it’s six degrees most of the time here so [inaudible 00:16:09]. But that’s in the lead gen, yeah. And now, you know, everyone is just like direct to seller, direct to seller, direct to seller. But there’s going to be growing pains when you’re going direct to seller.
Mike: No doubt. What are some of those growing pains you are having now, if you can share?
Joe: Like that about it. So you are going to get an abundance of calls. You know, everybody knows if you send out 5,000 to 10,000 mailers, just 1% call in response for the most part, as high as 2%, but we’ll just say 1 and 1.5%, so you’ve got to manage all those phone calls. And then people are, “I don’t want to sell today.” Well, what does your follow-up software look like? What’s your sequence to calling? When you’ve got to call them back when you feel like it?
Like you don’t know what changed in their life. You have to have a follow-up sequence is then how are you going to manage the calls that come in? I mean, you don’t want them coming to your cellphone. I don’t want to talk to everybody. And those calls can last anywhere between 5 and 35 minutes, people love to tell their stories, which is cool, but, you know, I can’t do that. So I have to get somebody who will be, actually have to listen to them. And, you know, that’s [hard 00:17:07].
Mike: Yeah. And in the last cycle or the last down cycle, you know, there were a lot of people that were buying REOs, doing short sales, like some of those things, and it’s a different animal than direct, isn’t it? It’s more similar to what you’ve been doing by buying offer the MLS or at auctions because direct to seller marketing you are kind of on-call for sellers, right? You know, like you’re mass advertising and people could call you seven days a week, 24 hours a day. And you’ve got to be prepared for that. Now, that doesn’t happen with auctions and short sales and even buying off the MLS. It’s kind of you are in command, you are contacting somebody and, you know, they’ll email you or respond when they get a chance. But it’s more of a kind of. . .it’s really more B2B than B2C, right? That’s kind of the main difference.
Joe: It is. And you’re absolutely right. It’s so easy to wait for a wholesaler to call you or, you know, go in the MLS, you see something you like, I’ll call my admin and say, “Hey, pop that offer around this house.” You know?
Mike: Right.
Joe: But this really is a new game. It can be a great game and you can find some very lucrative deals, but it’s a lot more work, you know? Like it really is.
Mike: For sure. So would you say. . .and one thing too, traditionally, and I don’t know if you’ll agree with this in Cleveland, but when you’re buying off of the MLS or you’re buying at auction, naturally, you’re paying a little bit more than if you go direct to seller on those things. Because, you know, there’s more competition, your bid is getting bid up or rather than going direct to seller. So that is kind of. . .said another way, it would be hard for you to buy off the auction. I don’t know what’s happening with auction volume now in your market, but it’s harder to buy at auction and wholesale it on probably, right?
Joe: Very hard.
Mike: Yeah. But if you’re keeping it as a rental or a turnkey, you can afford to pay a little bit more because you’re not looking to flip it really fast. You’re like, “I’ll worry about that in 5 or 10 years.”
Joe: Correct. Exactly.
Mike: Yeah.
Joe: But there’s a lot of cost to this. I mean, when you start sending mail, that’s expensive, the softwares, the phone lines to answer these calls, the employees to handle the volume. When you start building that in, wow, Mike, it can get expensive quick.
Mike: Yeah. No doubt, no doubt. And so what’s your lesson so far? I mean, ultimately, it’s a game of scale, right? If you have to hire an admin, let’s just say it’s make it up by the time that you’re paying them and taxes, 50k a year probably, right? Maybe it’s less where . . . in Cleveland, I don’t know.
Joe: Every [math 00:19:26] is different. That’s probably . . .
Mike: Would you say it’s somewhere between $35,000 and $60,000, you know, depending on where you are in the country, and just for an admin?
Joe: Yeah.
Mike: Even if you use virtual assistants, you know, which, you know, we won’t get into that. But you have costs. So now it’s like, “Well, I can’t layer in $4,000 of cost unless I’m going to get more than $4,000 in incremental revenue, right?” You’ve got to offset it with revenue.
Joe: Exactly.
Mike: Yeah.
Joe: So far it’s not going too well. So far it’s just writing checks, writing checks, writing checks.
Mike: Yeah. The good thing about you, the advantage you have is you’re, obviously, very well connected and know all the heavy hitters in this industry. You know, a lot of the common friends that we have that can steer you in the right direction. And you also know you have the beauty of having had a successful business, you have, you know, you have some resources, you have the ability to play a little bit more the long game, not that you want to, but it’s not like, “I have two months of advertising and if I don’t buy a house, I’m out,” right?
Joe: Exactly.
Mike: Yeah.
Joe: I say well for the folks listening now, like it is all about your network. Like when I’m having a problem, you know how many people I can call today and talk to and say, “Man, what’s going on? Why isn’t this mail hitting? What do I say when I answer the phone?” or anything. And that’s all because of being involved in masterminds, having coaches and mentors. And I can’t stress that enough. Like I can just imagine the guy who doesn’t have any trying to wholesale property. Like, good luck. And what happens when you do get a yes? Like how do you know what contract to use and all that? Like you have to have somebody.
Mike: Yeah, no doubt, no doubt. It’s kind of funny just to use myself as a little bit of a guinea pig. I hired about two-and-a-half months ago, I hired a personal trainer. Now, here’s the crazy thing is I’m in Dallas, so he’s in London. And so people are like, “What the hell?” So, you know, for me, it’s like, “I don’t really need somebody to tell me to work out more and eat better. Like I know I need to do that.” Like you kind of know what you need to do, but I have an accountability coach, he’s like helping me with mindset stuff.
Like those are the things that you can’t really learn by watching a podcast like this even or YouTube or anything else. Like there’s a lot of content out there, there’s a lot of knowledge out there, but it’s not just packaged in a way if you’re starting your business or starting over like you are, it’s hard to just go and find that on your own, unless you have somebody that you can talk to that’s been there before or a coach or a mentor, like you said, part of a mastermind group to basically say, “Here’s exactly how to do it. This is what you need right now, here’s exactly how to do this.” It’s more like timely, right? Of like, “I need this now. What do I do now?” Instead of, “Let me go see if I can figure out where somebody has talked about this on YouTube before.”
Joe: Yeah. Exactly.
Mike: Yeah. Yeah. So what are some of the bigger challenges you’re having? So you started doing some direct mail and one of the things you told me before we started here as we were catching up a little bit is, you know, you are getting a lot of retail type people calling in from your direct mail.
Joe: Yeah. We’re having challenges with that. And then I thought that, you know, being a broker and I own a brokerage, I thought I could turn some of these retails leads to allow people to list. But surprisingly, that’s not going that well. People they did . . . but we’re not pulling a ton of listings out of this mail either, which is interesting.
Mike: Why is that? Are they saying they already know somebody or . . . ?
Joe: Yeah. They want a fast sale at top dollar and don’t want to have showings on their house and all this stuff. Like unreal expectations. Like, “Dude, are you kidding me? Like this is not going to happen.”
Mike: Yeah. They want the service of a wholesaler type, investor type. . .quick sale like an investor, but they want full retail price for it?
Joe: Exactly. And you get people like to their house [inaudible 00:23:03].
Mike: That’s most people, though. To be honest with you, you’re going to, you know, that’s just most of the people out there. Like, you know, I even say like . . . you’re the same way. I hope I never have to sell my house to a dude like me.
Joe: Yeah. Right.
Mike: You know, so.
Joe: It’s true. And people think they’re giving you a deal because it’s a house worth $100,000 you can get it for $92,000. Like, “Well, I’m taking $8,000 off for what’s worth.” You know? It’s so funny.
Mike: Right.
Joe: But it’s not hard. You know, you are going to kiss a lot of frogs to get the prince and we are ready for it, we expect it. Well, it’s very new to us. It’s only been a couple of months. Yeah.
Mike: So what does your team structure look like? You’ve got an acquisitions guy now.
Joe: Acquisitions manager, I have a transactions coordinator, which she doubles as the operations manager for my real estate brokerage, so she’s in both. She’s transactions coordinator for both, for the brokerage and for the deals that are coming through on the wholesale side, which is not very many anyways, so it really doesn’t matter.
Mike: Did you have an acquisitions person before? You’ve obviously bought a ton of houses over the years, but that was more. . .did you have. . .
Joe: I didn’t. That was my folks and I. Like we would kind of share it. Like my folks helped me out, run to the auction for me, or if I needed them to see a house that I’ve saw from a wholesaler or from MLS, I’d send them out sometimes to kind of just work it together a little bit.
Mike: Yeah. Yeah. So that’s new to you too, right?
Joe: It’s new to me. Yeah, it absolutely is.
Mike: How does your acquisitions guy feel about. . .let me ask you this. Since you have a brokerage, you know a lot of agents. Is it somebody that is an agent or is it somebody totally new?
Joe: He’s not an agent. Totally brand new to the business.
Mike: Okay.
Joe: Two years old, just graduated from a local university here in the Cleveland area, and is looking to start his career, and, you know, we had a chance to meet, and he seems motivated and excited and wants to learn real estate, always has. And I was like, “Dude, you know, like I’ve been around the block for a long time, so I want to start this new division of my company, and you might be a good fit for it.”
Mike: Yeah. That’s awesome.
Joe: [Inaudible 00:24:54] role here, giving him the role.
Mike: Yeah. Yeah. And then one of the challenges you have, you know, just kind of talking with an acquisitions manager or a salesperson, that’s probably commission based, right?
Joe: It’s commission based, but I’m giving him a salary for the next couple of months to just kind of get him going a little bit, because it’s slow here in Cleveland, it’s freezing outside, it’s December. I mean, you know, there’s probably not going to be a whole lot going on, you know? So [inaudible 00:25:17] little salary to stop, try to offset some of his costs. I’m really trying to, you know, put some muscle into this.
Mike: Yeah. And, you know, kind of some advice I can give you, which you are going to know some of this, but for folks that are listening, is, you know, a lot of times are like, “Well, I’m just going to hire an acquisitions manager or we call them a buyer, a homebuyer,” there’s a lot of different names for them, sales guy or a gal it could be. But, you know, one of the challenges there is like, in your business, sometimes I see new investors and they are like, they are not even consistently buying houses yet, and they’re talking about bringing on an acquisitions manager or they do it and it doesn’t work out.
And, you know, one of the problem is it’s like, if your revenue to the business is inconsistent like a general kind of salesperson can’t handle that as much as you might be able to absorb it in your business. So it’s like. . .so said another way, let’s say you buy a house a month and the acquisitions person makes $2,000 a month from that, it’s like okay, are you going to find a loyal, committed person to you and your business that’s making $24,000 a year?
Joe: No.
Mike: It’s like no, it’s not going to happen, right? So when you are advertising and you are thinking about bringing on an acquisitions manager, sometimes you have to like step up your game from a lead generation standpoint to create a big enough opportunity for somebody to come in and treat your business like it’s theirs, you know?
Joe: Yeah. And you’re absolutely right. You do. If you’re uncertainty, you have to get X amount of dollars and put it aside and say, “Whatever it is, I’m going to invest, you know, $50,000 into this aspect of my business. And oh my gosh, I hope it works, man.” You know? It’s kind of where I’m at with it. Right? And we’ll see where it goes. I hope we talk in six months, and I’ll tell you how it’s going.
Mike: I’m sure we’ll be talking before six months.
Joe: Yeah, I know we will.
Mike: But so what are some of the other challenges you are facing?
Joe: Well, you know, there’s that. And getting the house, getting them rehabs. Like the houses I have now, I still have all the turnkey stuff in the pipeline that I’m trying to finish out. So, you know, it’s all the rehabs. You know, checking quality contractors, the retail, retail is slow here in Cleveland. I don’t do retail, but I have like five retail deals sitting on the MLS right now, it’s so stale it’s insane.
Mike: Dallas is one of the hottest markets in the country, and it’s slowing. I have some houses that are sitting for an uncomfortably long period of time right now in some of the most desirable areas. I’m like, “What’s going on?” You know, we’ve taken some price reductions and it’s slowing down. You know, it’s obviously a slow time of the year, relative. But things are slowing down everywhere.
Joe: Everywhere this is going on. I was just out in San Diego last week, and I’ve seen the same thing. Like the whole is country is [inaudible 00:27:48] cool. On the retail side, it’s cooling off a little bit, which I’m actually okay with because like I want to buy. I’ll buy some more houses. I’d love to pick up some more rentals right now at some good [rates 00:27:56]. That’s going to happen.
Mike: Yeah. Yeah.
Joe:I’m all right with it.
Mike:We were talking about that where you were at Investor Fuel here last month and we we’re talking about it with you. People are feeling it across the country. I had a couple of people, especially a couple of the guys, you know, Rashad in California are kind of freaking out a little bit that it’s been hot. And, you know, we always kind of say, you know, California is like the tow in the water. Like when something starts to happen there . . .
Joe:Coming across.
Mike: . . . it’s going to start to head east.
Joe: It’s coming across. You are right.
Mike: Yeah. Yeah. So, Joe, is your plan with some of these wholesale deals is to wholesale them off to people that you’ve done turnkey stuff with in the past you think, or no?
Joe: No, it’s not my buyers, it’s different buyers. A lot of my turnkey guys are either out of state or they are international. You [inaudible 00:28:39] to get that stuff done. So it’s going to be local. It’ll be a whole new buyers group. A whole new group of buyers are going to want this stuff. And we are going to see how it goes. I don’t want to say I’m going to get completely out of turnkey because I don’t know if I really even want to get completely out.
Mike: Sure.
Joe: Like my turnkey style is I like to buy the house and own them for a little while for a couple of reasons. One, I like to get some cash flow. I’m not in a race to go sell a house. Like you, I’m at a point in my business where like, I’m not trying to get. . .I don’t need a paycheck tomorrow basically, right? So I can enjoy some cash flow and the asset and it helps to get the bug out, too. When I say bugs, like you know what I mean. When you get a new house, there’s things that are wrong and this and that. So it helps me get the bugs out of the house, so I own them for six months. And, I don’t know, I believe, we’re going through some new tax challenges, but if own them for a year, the profit is taxed differently.
Mike: Right. For sure.
Joe: Am I correct in saying that, Mike?
Mike: Yeah. It’s a long term capital gains typically. So, you know, don’t anybody listening right now take tax advice or medical advice . . .
Joe:Yeah, neither.
Mike:Don’t take medical advice from me, don’t take legal advice. Doesn’t mean I don’t have opinions on a bunch of stuff, but don’t take my advice, you know, without checking with somebody that is an attorney or a CPA. Yeah, but I think that should be a long-term capital gains.
Joe: Yeah. So that’s going to save me some money there if I hold on for a little while. Yeah, I like doing that. So I’ll probably a little bit of that too and let’s see what happens over the next six months.
Mike: Yeah. One of the things is that I firmly believe this. And of course, no matter what exit strategy you use, whether you are wholesaling them off or whether you’re keeping them as buy and holds or your turnkeying them, you always have to get better at the acquisition side, right?
Joe: Oh, yeah.
Mike: That’s why I like what you’re doing. Even if you decide to turnkey them or keep them as rentals yourself or whatever, it’s great that you are getting into the direct to seller acquisition side because, you know, you don’t want to be a one-legged stool with auctions or anything else. So the best profits, and I know there’s a lot of cost that goes into it, but once you get the business dialed in, the most profit is going to come from direct to seller typically.
Joe: I agree with that. You can definitely get them cheap. I see what some of these wholesalers who buy houses from my neighborhood that I buy from them and I’m like, “Holy smokes. You guys get some good deals.”
Mike: Yeah. But the good part for you is, you know, I think one of the things that I firmly believe is that, your exit strategy might change with market cycles, right? You might change with even your own situation like, “Hey, I’m building up too much inventory or I’m a little short on cash this month or whatever it might be.” But, you know, and the reality is is in the. . .and I haven’t kept a lot of rentals over the past few years because it’s been a sellers’ market. So I firmly believe in a sellers’ market, you should be doing more selling activities, right? It’s just the prices are going up, up, up. And in a buyers’ market, it’s an opportunity to do more holding, doing more buying and kind of not selling off.
So, you know, at the end of the day, you’re a smart guy. You should just kind of ebb and flow with the market and the situation as long as you are good at acquisitions and you can get the machine running, then your exit strategies will change with where the market flows.
Joe: I agree. And I appreciate that advice, too, Mike, like triggers. I always call trigger data, but I call it trigger data where like you’re buying like the probates and the divorces and the utility disconnects and the tax delinquents and, you know, that seems to be the best data.
Mike: Yeah. Sure.
Joe: Of going [inaudible 00:32:00] all that and translate from, you know, the list sources of absentee owner, high equity, it’s didn’t work out so well. So, kind of give those triggers.
Mike: The other thing, though, is even with direct mail and, you know, everybody that you’ve talked to that’s trying to help you with this has told you the one thing you don’t . . . like you probably get a bunch of postcards from people, other investors, because you have a rental portfolio. I mean, I do, too. I get stacks of stuff in our P.O. Box. And, you know, and I’m a student, so I’m always looking at stuff. So like clockwork, I’ll get like some of the big homebuyers in town, some of the big kind of the more professional ones, the mail never stops. Like I get it all the time. And I’ve never sold them anything and they never stop mailing to me.
And then there’s a whole bunch of stuff that I get one time. Like I literally got a. . .I just threw it away literally before we started the show. I got this. I’ve never seen one like it. I mean, it’s a really lengthy, handwritten letter on like stationery. And I’ve never seen one. . .I’ve seen some handwritten letters before, but this one was. . .I actually got it right here.
Joe: Well, this is cool. Show us.
Mike: It’s a long letter. I mean, I’m not going to. . .I want to cover up the guy’s phone number. I don’t know why. But anyway, it’s a long letter. It’s got like the torn edge. I mean, this is like an invitation to something, you know?
Joe: Yeah.
Mike: But anyway, my point is I’m a student. I like to look at that stuff because I want to see what other people are doing. That’s obviously not scalable. I’ve never handwritten anything. But my point in saying that is that I get like whoever that guy is, I got one letter one time. That actually was sitting on my desk for a couple of months, so I just threw it away.
But my point in saying that is I get mail from a lot of investors and I see their postcard, it looks different or sometimes is just a letter. And it’s not uncommon to get it one time ever and I never see anything from that person again. And it’s because, you know, there are some people that get in that don’t have much of a budget and so they might get knocked out of the game quickly or at least in terms of, you know, spending money on marketing, which will knock you out of the game quickly unless you have another way to buy. Or two, they mail one time and they give up. They just, “It didn’t work and now I’m done.”
So consistency is key. You’ve got to stick with it, you know?
Joe: It is. Yeah, I agree with you, man. You are absolutely right. It’s all that. It’s all about consistency and keeping hit up. Like seven touches, I think it is, it needs a great follow-up sequences and all that.
Mike: Yeah. Yeah. Awesome. And I’m excited to see where you take your business. And, you now, I’m here to help you in any way I can.
Joe: I appreciate it. I do.
Mike: Yeah. For folks that are listening right now, how can they help you in Cleveland? You’re looking to build your buyers list up, so cash buyers.
Joe: Yeah. So if you go to . . .
Mike: So where should they go if they want to get on your cash buyer list?
Joe: So just drop me an email and I’ll send it over to. . .or actually, you know what? We’re going to do something different because I’m always the one who want to run into operations. So here we go. This is something new now. I’m going to have you email my acquisitions manager.
Mike: Perfect.
Joe: It’s at. . .what’s his email? What’s your email, buddy?
Male: [email protected].
Joe: [email protected]. He’s sitting in the other room right now. I’m like, “What’s your email? I forgot.”
Mike: So when I ask you about your acquisitions manager, you had to temper what you really wanted to say. Is that . . .?
Joe: Yeah, pretty much, right.
Mike: Awesome. Well add that as cle, for Cleveland, [email protected].
Joe: Yeah.
Mike: Cool, buddy. Well, hey, I appreciate you and I wish you the best of luck.
Joe: Thank you, man. I appreciate you, too.
Mike: Happy holidays. Hey, real fast while I got you. Tell me, you’ve been joining us at Inventor Fuel. Give the group a little testimonial. I mean, you didn’t know I was going to ask you this. And I’m not asking you to say anything that doesn’t come from the heart or how you feel. But what do you think about Investor Fuel?
Joe: So, yeah. You know, I’ve been with you since inception of Investor Fuel. And I’ve really seen this group grow and grow quickly. And really it’s because of the caliber. It’s a great caliber, it gets me to keep coming to the group. And I’ve been around the Mastermind scene for a while now. As you know, I met you at a different mastermind, I’ve been in a couple of others, and it’s awesome. The collaboration of people you are bringing into that group are really, really high caliber.
And even for a guy like me who’s been in business for so long and I’ve seen every aspect of it, it makes me to keep coming back. I want to keep coming. And I’m very grateful to be a part of that group. I enjoy seeing you guys. And Mike, you just go all out all the time, man. You just sent me. . .I just walked in here today, and I saw a coffee and a mug sitting on my desk from you. And you just care and you’re so passionate about the group and about everyone’s success, and that’s what makes the Mastermind tick.
And you are really going all out, man. I think anyone interested. . .I think anyone who’s not in the Mastermind should get in the Mastermind as quickly as possible. And yours definitely is one of the best ones out there now. It really is.
Mike: That’s awesome, man. Thank you. Yeah, for me it’s like, you know, I kind of. . .I literally set just to talk about this. I know we are just casually talking here and maybe some thousands of people who are listening right now. So hopefully, it’s not totally random offshoot, although if you’ve been listening to the show, they’ve heard a lot of random stuff over the years.
But, you know, it’s interesting I’ve been on this kick of improving my life. So I’ve been focusing on health for a while. I’ve actually lost 20 pounds over the past two months. I’ve never really said that on a microphone before. And, you know, I’m trying to like hey, in my business, I have a scorecard where like we are looking at metrics every day and we meet once a week and we have gone the EOS process from the book “Traction.” And we have like a level 10 scorecard. How many leads did we get for each of these businesses? How many, you know, kind of the funnel, how many did we close? Like where are we at? And we drive our business. We are very analytical in our business. But in my personal life, I never am. I’m just like whatever happens, happens and never think about what I eat or whatever, I just do what I want, you know?
So I’ve started to get very systematic about setting goals in like fitness, family, like fun stuff, and friends. And a few, you know, they all happen to be fs. But anyway, just for each part of my life, and I’m not going to show it to you right now, but I have a scorecard. Every day, I score myself. How did I do?
So inside of family, I have my wife and my son. I’m like, you know, and I have a couple of things I’m tracking like, “Did I spend some one-on-one time with my son today?” Because too much time goes by and sometimes I see him all the time, I’m talking him to school all that stuff. But I don’t always sit down. . .not ever. Not enough. I don’t sit down and I say, “What’s going on, buddy? What are you doing? You want to play a video game? Do you want to do something?” You know, it’s like I just. . .I’m more conscious of it now. Like I want to put focus on that, you know? Just little things.
But anyway, when it came to my business, because I picked some of these tips up from this personal trainer that I’m working with and he talked about, he didn’t have friends on there, he had business, right? Some business tracking. Well, I’m only tracking my business. And the more I thought about it, I was like, “My friends are my business.” Like that’s kind of one and the same.
I have some friends that I grew up with in high school or whatever that were buddies and they are not in the real estate game, but it’s very few. I mean, my business and my friends are almost one and the same now. Because of the Mastermind and the coaching, everybody that comes in our coaching programs, not everybody, but a lot of them, we end up becoming friends. It’s like, you know, it’s just how it is. So I don’t know why I’m talking about that right now.
Joe: No, it’s awesome. And Mike, you are absolutely right. And that’s another point to be brought up for the people out there in the real estate business. I mean, you have to surround yourself with people, you know, that are likeminded and like you to help you grow and achieve what you want to do. And you might just think, “Oh, I don’t want to join the Mastermind. It’s expensive or whatever.” But you’re not just buying an education. You’re buying new friends, you’re buying a new life, you’re buying the dream that you want to wake up to everyday, and it’s being around people just like you that think like you and act like you to accomplish those things. So I totally hear what you are saying, man. It’s all great the great things you put out there.
Mike: Cool, buddy. Well, I do appreciate you. I wish you the best in your business. I know we’ll be talking again soon. And down below here, we’re going to add a link for folks who want to get on Joe’s cash buyer list in Cleveland, where to go to get on that list. And I know Joe. He is pivoting a little bit here, but there’s no doubt that he’s going to start crushing it up there. We’ve known each for a long time. I know he doesn’t play games. He’s at a transitional moment here, but so if you’re looking to buy houses in Cleveland, I know Joe is going to have some opportunities for you.
Joe: I look forward to it, my man.
Mike: Thanks, buddy. And have a great. . .we are coming up here on the end of the year, so have a great New Year and I know we’ll be talking soon.
Joe: Look forward to it. Take care, Mike.
Mike: Awesome. Awesome.
Hey, everybody. This is episode number 443 with my buddy, Joe Lieber, up in Cleveland. Really appreciate you joining us. And as we kind of wind down the end of the year here, we actually have some big changes coming up with the podcast. We’re actually right at about our five-year anniversary, and we’ve decided to kind of rebrand and it’ll still be FlipNerd brand, of course. But kind of change the direction of the show a little bit after five years. And so we’re going to keep doing the show, for sure. I love doing it and I love talking with my friends, right? And people that I admire and respect. But we’re going to step up to a new level in 2019. So I appreciate you guys. I’ll tell you some more about that soon.
If you’re not already. . .if you’re thinking, “Well, what does Mike want? What’s on his Christmas list? What does he need?” Here’s what I’d love, go to iTunes, Stitcher Radio, Google Play, YouTube, wherever you watch us at, and leave us a positive rating and subscribe to get our shows. We’ve been creating. . .this is episode number 443. I promise you, that is thousands of hours of work to create this content for you guys over the years. And I love doing it and what really keeps me going is just inspiring and getting feedback from people that, “I learned something great, or we love your content, or keep them coming.” That type of stuff really kind of energizes me to keep coming at you.
So, I appreciate you guys. We’ll see you on the next show.
If you’re an active real estate investor already doing deals and looking to double or triple your business, you should consider joining The Investor Fuel Real Estate Investor Mastermind. We’re a small group of investors that share our best practices, tips, and tricks with one another in an effort to all win. Real estate investing can be a lonely business for successful real estate investors. But it doesn’t have to be.
Investor Fuel members meet four times a year, but we talk to each other 365 days a year. And we focus on improving the profitability of our businesses, improving the quality of our lives, that’s why we do this, right? And making an impact on those around us so we can truly leave a legacy. We limit our membership to only one to two members per market per market, so everyone shares their knowledge, tips, and tricks openly and honestly.
Our members include some buying one to two houses a month up to some of the most respected investors and leaders in the real estate investing industry, some of which have personally done over 1,000 deals. If you would like to be considered for our invitation-only, world-class mastermind, please visit investorfuel.com to request your personal invitation. Our next meeting is coming up quickly, go to investorfuel.com now to learn more.
Thanks for joining us for this episode of the “FlipNerd.com Investing Show.” If you’re not yet a member of FlipNerd, you’re missing out. We have tons of great training, including a new detailed master class published each month and live training webinars with experts twice a month. Plus you’ll get access to all of our archives, where we already have a growing library of master classes and other training videos. Members also get membership in our incredible online Mastermind group, where many of the top real estate investors from across the country, including many of the hundreds of guests I’ve had on the show in the past are already members. Whether you’re brand new, looking to get started, or a veteran, you simply must join today. I promise, you won’t be disappointed.
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