In this episode of the FlipNerd.com VIP Flip Show, Jon Iannotti shares his incredible story of rise from a police officer and steel mill worker to one of the most successful real estate investors in America. Jon went on to develop some techniques that he trained some of the biggest named gurus in the country on…only to later venture out on this own to train others. It’s a rags to riches type story that can’t help but motivate you…all based on Jon’s drive to build a better, more fulfilling life. It’s an exciting episode…don’t miss it!
Mike: Welcome to the FlipNerd.com podcast. This is your host Mike Hambright. On this show, I will introduce you to VIPs in the Real-Estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting VIP interview show. Today I have with me is John Ionnatti who is a real estate investor. He has worked for several gurus and he is now teaching his own program. We are going to talk about John’s story of starting from someone that had never done it to doing it to teaching others how to do it behind somebody else to doing it himself. So it’s going to be an interesting conversation today. We’re excited to have John on the show. Before we get started though, let’s take a moment to recognize our featured sponsors.
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Mike: Hey, John. Welcome to the show.
John: Hey, Mike. Thanks for having me.
Mike: Yeah, yeah. Glad you’re on. Like a lot of guests we have on you’re a referral from a previous guest that we had. We didn’t know each other previously. But when I started to hear about your story and research it a bit, I thought it was just a fascinating story to share with our listeners. I think a lot of folks will be attracted to your whole story. It’s very interesting.
John: I tell people, just wait for the movie.
Mike: There you go. What I was hoping to talk about was your story about how you’ve evolved from not having experience to having experience and doing it to teaching lots of others in one way or another. Let’s take it from the top, talk about how you got started in real estate investing at all.
John: Many lives ago, I started out when I was very young as a police officer. I always wanted to be a policeman. Lived it, ate it, drank it, slept it. It was back before there were even police shows on TV. That’s how long ago it was. I did that for about 10 years. I had a young family. Realized I wasn’t able to make it on about $11,000 a year. I started looking for something.
Real estate seemed like something I wanted to do but I wasn’t sure. And I actually did a deal way back when. I think it was 1978. It was my first deal. I didn’t have any training. Just did the deal. It was a “sandwich lease auction”. Today we could call it a “Sandwich Lease Auction” but back then I had no idea what I was doing, but I did it. I made about $14,000 on that deal. It was like, whoa! This is pretty cool.
Mike: More than your annual income.
John: Of course life happened. I shelved it. I didn’t anything with it for about 10 years. Then I started thinking, I need to do something different here. So I left police work and I went into the Steel Mill in Western PA. I spent 24 years in the Steel Mill.
John: I did not like the work at all. I didn’t like the environment. I hated going to work every single day. The only thing I liked were the people I worked with.
One day I was sitting watching TV with my wife and of course, up pops this infomercial about real estate investing. We watched it and she says: “why don’t you order it?” I said, no forget it. So she picked up the phone and she ordered it. We listened to the CD’s and tapes and stuff. We just dug right into it, head first. We didn’t do anything for 13 months with this program. It wasn’t that good of a program.
We heard about REIA club in Pittsburg. We said, “Let’s go down and see what they have to do.” So we went down there. We got into it with some of those guys. We started hearing what they were talking about. We said, “Hey, this is what we want. This is good stuff.”
John: They said, “Well, you need to get down to this big convention in Ohio.” I said okay. We went over there. They had 11 national speakers. I came home with 11 programs.
John: I bought everything that they had to sell. We listened and listened and listened. A couple of the guys, their program actually resonated really well with us. So we said, let’s do it their way and see what happens. We started making money. In fact, in a town of about 19,000 people, our first year of doing it fulltime we did over a million dollars. It was pretty nice.
I was able to leave the mill. About three months later, my wife left her job of 24 years. She got tired seeing me still in bed when she was going to work. We both had been doing it fulltime since about 2003, when I left the mill. Since then we’re closing in on about 1800 deals. I’m saying 1800 creatively, without using our own money. So that is a very good statistic. [inaudible 00:06:51]
Mike: Talk about your motivation to change there. Because there are so many people that go to events like that and leave racking up their credit card bill buying something that they don’t really know what they’re getting. They run to the back of the room, charge their card. They never do anything with it.
John: A lot of it ends up on the closet shelf, never opened up. It’s a shame because there is good stuff out there. If you just listen to it and implement it. It’s great information. You just have to implement.
Mike: You have to execute.
John: As we teach mentoring students, one of the hardest things we can have them do is pull the trigger. Actually get out there and talk to a seller and get the contract. Talk to a buyer. It’s hard to get them to do it. But once they do it and they see “Wow, that wasn’t that hard. That was pretty easy and I made a lot of money.” Because we’re not playing with penny candy here.
John: We’re playing with houses. Houses can be very expensive. You can play with a junk, you could play with a multi-million dollar stuff and everything in between. It’s a beautiful business.
Mike: Yeah. So what do you think made you different to really execute? Was it that is just how you are? Or wanting to change from working in a Steel Mill? Or, a little bit of everything?
John: For me, it was the desire to get out of there. I wanted out of that environment. I wanted to create a monster. And I did. We were going like gangbusters until of course, the crash of the stock market. When that all happened, I called that the short- sell era. When the short-sell era came about we had to switch gears. I had been doing short-sales for probably ten years. Back before people knew you could put those two words together.
John: It actually meant something. It was a pain. I hated short- sales. But what we did when the short-sell era came about was create a system where other people would do the work and we would just sit back and wait for the approvals from the banks. We did tons and tons of short-sales. There was a given when we had at least 140-150 working at any given time.
John: And it worked great for a while, for a number of years. Then we came out of a short-sale era and we moved into the ACTS era. That’s a system that I created. The acronym stands for Assigning Contract Terms System. With ACTS we were able to still talk to sellers, get discounts, get them to sign creative terms on the front-end of the deal. We were doing that for about two and a half years before a friend of mine Ron [McGran] listened to me. The light bulb finally came on for him. He said, “You’re going to create this program, you’re going to get out there, and you’re going to sell it. You’re going to travel the country. You’re going to do this.” And I said, “No. I don’t want to do that, you do it.” So he took the program. We gave it him. He ran with it, and he created the ACTS system that’s out there today. He’s done a wonderful job with it. He’s a great friend, a great mentor of ours.
John: Then came another switch in the marketplace. It became more of a retail market. Probably about two and a half years ago.
John: We had to do something again because we weren’t able to get that big discount. We weren’t able to get the creative terms on the frontend of the deal. I created what I call REACT. REACT is Reverse Engineered Assigning Contract Terms. REACT is our new baby that we’re out there selling right now. The students love it. They’re doing deals like crazy.
In fact, I got one guy; he does 2-4 of these a week, with an average payout of 12,000 bucks. So he’s doing pretty well, with no money out of pocket. It’s a great technique. What I like to do is control everything. I don’t really need to own it. I just need to control it. If I can control it, I can make money with it. That’s what I teach everybody how to do.
Mike: Yeah. We’d like to learn a little bit more about the things you are doing now. I know you have a new REIA club, that’s something to discuss. So talk a little about the evolution of some people that are real estate investors that become good at training and teaching others. In some ways there’s a negative stigma with that. Some people think that this guy is just a guru now, he doesn’t do it anymore.
I’m not saying you. People think that about me, whatever. The reality is that everybody got into this business to make money. It’s never really about the real estate usually. That’s a tool. Some of the folks that are the best develop systems that can then benefit others. I know that you, like me, truly enjoy teaching other people. Talk about the personality it takes to do it and maybe why you do it.
John: You’ve got two businesses there. You’ve got your real estate business. And you’ve got your information marketing business. We’ve been mentoring student since about 2003. We had a huge group up in Western Pennsylvania. In fact, some of those students are still with us. Some of them don’t leave.
Of course, in November of last year, we opened up our Florida Gulf Coast REIA in southwestern Florida. We have what we call a Property Protege’ Group. In our Property Protege’ Group we bring people in from the REIA who we work with very closely. We show them how to do the deals. Tell them what is working today and how to make it happen. Then we profit share on the profits.
So it’s a great way of getting them involved. We have a waiting list of people that want in. We’re doing deals like crazy. It’s just a wonderful idea. You got to have a servant’s heart to teach. There are guys out there that that is all they do, they sell the product. They make money that way.
We could have been out on the circuit ages ago. In fact one of the gurus wanted us back there in around 2002, 2003. We said that’s not us. We want to show people how to take the information and actually use it and become successful. That’s what we want to do. That’s why we went into the mentoring instead and teaching.
With REACT now, they have to have the technique. They have got to have the program in order to know what’s working today. That’s one thing about us: we’re constantly doing business, doing deals every single day. We’re out on the street doing deals. We know what’s working and what isn’t. We tweak our systems and bring it back to the students. We show them what’s working and what isn’t and make them successful.
Mike: You’ve lived through multiple phases of the market, different cycles. To successful as a real estate investor you need to evolve and always be looking around the corner to see what’s coming, to be able to truly run a business. As I like to say there are people that have built themselves a job or a hobby. There are people who truly have turned it into a business. The market is going to change and you need to be prepared for that.
John: It’s always changing, always evolving. It’s cyclical. What worked five, six, seven, eight years ago works today but not as good as something like REACT is. What I’ve come up with, with REACT is, it’s not only going to work in an up market, but it’ll work in a down market, a sideways market.
This technique is going to work all the time. Along with all the other techniques that we’ve learned: the Subject To’s, the Buy Six Flips, the Lease Options . . . Everything that we know works. It’s just that we have to make it work to what’s working today. That’s what we’ve done and we always try to keep on the cutting edge of what’s going on in the market because we’re doing the deals too. We have to know what’s working for our business so we can tell other people what works for their business.
Mike: Yeah. I know you provided a lot of materials and did some training to the gurus to help them improve their products or maybe they were completely selling your product. Then you decided to go out on your own and do it yourself. Talk a little bit about that period of your life where you’re kind of an underling, or somebody is using your product but not getting credit for it. It is what it is but it got you here today. Talk a little bit about that transition from being an investor yourself to actually providing great products and systems for other people.
John: I think what happened was that we were starting to become successful and doing a lot of deals. When you’re at the events there will always be somebody up there who’s being successful at that time. We were constantly being pulled up on stage because we were successful. We caught their eye and their ear. They started listening. Then they started asking us what do you think about this, what about that, and then they would take our ideas and they would run with them.
It’s a form of flattery but again, also I’m still behind the curtain. Not that I want to be up front. I don’t want to be. You’ll see if you come to an event of ours that I’m not going to be in a suit and tie like these guys. What you see me in right now is what you’re going to see me in. I usually have my polo shirt on with “We Buy Houses” on it.
This is me. This is how I do business. This is what you’re going to see. You’re not going to see a suit and tie kind of guy. It’s just not happening. That’s pretty much how it evolved, us getting to where we are. It got to just recently, where we said it’s time to stand on our own, go out and tell the masses what is working today. Because a lot of the stuff that is being taught today. It works, but it’s not as good as good as what we’re teaching. That’s not a sales pitch. If somebody wants to buy something that’s great. If not, that’s fine. It’s the truth. That’s what we try and teach.
Mike: You’ve always got to be suspicious of a four or five year old that is still l being hawked and hasn’t changed. It’s just not reality because the market has changed.
John: That’s it. Something I do that probably I don’t think anybody does is that we give our people that buy our course an online link to our resources. That’s lifetime. If something changes, we put it in there. So they don’t have to pay for that any extra. It’s in there. They get it. If you buy into the system, you’re in. I don’t need to sell you anything because I’m not planning on coming out with anything else. I’m just going to keep building the one we have and give it to everybody.
Mike: Right. Talk a little bit about: there’s always the wanting to work with other people on the business side of it. You have an opportunity to teach what you know and make money doing it which nobody can really fault you for that.
Back to the comment you made about having a servant’s heart. I make money by mentoring other people, which is great. I have an opportunity cost of my time, that’s why that’s important. But I get a lot of joy over the success of other people. Even though I can only take less than 1% of the credibility for sharing my information. They’re the ones who went out and executed it, which you know is the hardest part. But just talk a little bit about that side of the business or that side of the enjoyment you get out of doing what you do.
John: Like I said, we started in ’03 I think it was, mentoring students. We had hundreds of students. We do more of a one-on- one kind of mentoring. It is so rewarding whenever they listen. Even over the phone you can see the light bulb come on. When that light bulb comes on and they actually go do it and they get a check, it is so rewarding. It’s just like your child going out there and doing something good in baseball or dance or whatever. You just start beaming with pride. That’s where we are. We’ve done very well. We give back a lot. A lot of the give back is through our mentoring.
Are we charging for the mentoring? Yes. Because there are costs of doing things. However we’re not charging an arm and a leg for our mentoring and we give back. They get a lot out of it. If they just listen and implement, they’ll make money.
Mike: John, I ask a lot of guests this because I like to get different perspectives. I know it’s very different in the markets where you operate. What do you see happening in the market in the next couple of years? It feels like we’re in the eye of a storm maybe. Interest rates may go up. The dollar could collapse. There are a lot of things that could go wrong. You’ve got more experience than me. Talk a little bit about where you feel like we are right now and what’s going to happen over the next couple of years and some of the things that could happen.
John: I think a lot of the things that happened over the last eight or ten years are going to back full circle again. We do have a heck of a stealth inventory out there, of the foreclosures that have not even started foreclosing on yet. It’s probably even bigger than what’s been through the system. It’s going to come through. We still have the commercial end of it that hasn’t happened yet. That’s probably going to hit first.
I think you’re going to see a lot of the same. Things that have happened in the past eight to ten years start happening again. We’re going to go back in to a short-sale era again. We’re going to go back into an ACTS era. REACT is going to work the whole time during that. I think that if everybody can get those techniques under their belt and concentrate on those. Those are going to be the ones that are going to be the big ones within the next few years, I think.
Mike: Yeah. Not be a sales pitch. I’m not even familiar with your programs. Can you give a high level summary of ACTS and REACTS, the programs you’ve created?
John: ACTS is where we negotiate with the seller on the frontend of the deal to get creative terms or price. We either go out and eight keep that and sandwich it out to somebody, or we just lease option it, step out and take an assignment fee.
REACT is little different. What we had to do is when we moved from the ACTS era to the REACT era, we found that the sellers were more of a retail kind of a seller. They wanted full retail or more and they want cash. We’re trained as investors, if you can’t get 65 cents on the dollar or creative terms, you walk out the door.
Why? The seller still wants to sell his house. So that’s why we created REACT where we can get control of the property and submit it to our funding sources which is what I call my buyers. Because, let’s face it, anybody who brings money to the table to fund my deal is my funder. It’s a seller friendly term that I like to use with sellers. We find out what our funder is willing to pay or what they’re willing to do as far as terms. We go back to our seller, renegotiate and hopefully make it a win-win-win for everybody. If we can do that, everybody wins and we make money.
Mike: Are they getting . . . they’re probably not, typically getting traditional financing? I would assume.
John: No. That’s why it works so well. Traditional financing today is pretty much dried up. Even if you can walk on water, I don’t know if you can get a loan today. It’s just tough. They’re not loosening up. They need to loosen up. A few years ago, we knew they needed to tighten up. They put a noose around everybody’s neck is what they did. Though the course of that, they’ve screwed up everybody’s credit. So now nobody falls within the square that you need to in order to get a loan. That’s why we’re doing what we are doing is we’re showing the seller an alternative to how they can sell their property, still keep the asset and get their debt relief or get the money they want and still make a good deal for everybody.
Mike: Yeah. Great. One last thing I want to talk about is tell us a little bit about your REIA club. We’re a big fan of REIA clubs and understand the importance of them all across the country. So tell us a little bit about your club.
John: Awesome. Last November, after about 10 years of wanting to do it, we finally had a few extra minutes so we decided to go ahead and create the REIA. What my wife and I did is we brought in three other friends of ours who were also speakers and mentors. We created the Florida Gulf Coast REIA (Real-Estate Investor Alliance). It’s fgcreia.com.
We meet the first Tuesday of every down in Bonita Springs, Florida. The club is growing very well. We’re very happy with the way it’s taking off. We based the club on teaching. We want to teach people how to go out and make money. We don’t stress a lot of speakers to come in and sell, though we do have speakers that sell.
The club is more us teaching the membership. It’s not statistics and what’s happened in the past and what might be going on. It’s what happening today. What’s working today, what going on today, where we see the local market going? We’re actually going to take it nationwide. We’re going to take it virtual as well.
We have a group called the Property Protege Group. We partner up with the members that join that and show them how to do their deals from the leads that they bring in, then we share the profits from the deals. We’re going to take that nationwide, the Property Protege Group. We’re going to take the mentoring, we haven’t started the mentoring, but we’re going to do the mentoring. Group mentoring is what we’re going to do and take that virtual and teach that across the country as well.
We’re very excited about it. It’s a wonderful group. If anybody happens to be in southwest Florida on the first Tuesday of every month, check us out. You can come down for free for a meeting. I think you’ll be very impressed with the information that you will leave with.
Mike: Yeah. That’s great. We talked about a lot of different links to your website. We’ll make sure to get all those from you, John, and we’ll put them down below the video here for folks to learn more about each of those things. Definitely appreciate you sharing your story with us today.
John: It was a pleasure being here. I love what you’re doing. If we can be of any help in the future, please let us know.
Mike: Absolutely, absolutely. John, thanks again for your time. Hope you have a great day.
John: You too, Mike. Take care.
Mike: All right.
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