Epic Real Estate Investing - Lease Options with Expert John Jackson | Episode 110

Episode Date: June 16, 2014

How to do "Lease Options" from a seasoned veteran of the strategy... Mr. John Jackson. ------------------------- Download Matt's free real estate investing course "How to Do Deals | No Money Required" at FreeRealEstateInvestingCourse.com or text FreeCourse to 55678 "Click" what interests you most:  Education Properties Income    Coaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey there, Matt here. You know, I've got to stop the regular flow of the show every once in a while just to express my gratitude. I mean, thank you so much for your support of the show. Thanks for sharing it with a friend. Thanks for your fine reviews over at iTunes. I mean, and I thank you for all of that because we depend on that over here. It's what keeps everything moving forward. It's what keeps us producing this show.

It inspires us to continue producing the show. And thank you for doing business with us as well. I mean, thank you for putting your faith and cash flow savvy for your turnkey real estate. investing needs. I mean, we're helping busy people in countless numbers build their cash flowing portfolios while they go on about their normal lives, while they go on and pursue their own careers. And they've got this cash flowing real estate portfolio building for them in the background. And that's what we do over here. And thank you to all of the Epic Pro Academy members. I mean, you guys rock. And it's really starting to show over at the private

Facebook group that we set up for Epic Pro Academy members. You know, as I just got this email a few days ago. It comes from Matt Sewell out of Washington. He's one of my virtual coaching members, and I was helping him with a particular deal, and the deal was kind of tight, really slim, wasn't the options that he had were a bit limited, and we went over that. But then out of the blue, he sends me this email, says, Hi, Matt, I just wanted to let you know that I was able to assign this property to one of the bigger players here in Spokane, Washington. I actually contacted a friend from my mastermind group, Nathan Price, you interviewed him on episode 49, and he was able to connect me with the buyer. And I agreed to split the wholesale fee with Nathan, so I'm only making a couple thousand bucks,

but it was totally worth it to help build the relationship between myself, Nathan, and the buyer. I'm starting to become known around town, and I'm building a reputation. The way I see it, the more money that I can make for other investors, the better the reputation I can have, and the more money I can make for myself through those relationships. Anyways, I just wanted to fill you in on how this deal turned out. By the way, Nathan says hi. Take care. Matthew D. Sewell, manager Spokane Real Estate Solutions.

And if you want to reach out to Matt, you can do that at Spokane Real Estate Solutions.com. All I got to say is that is why I do what I do. So Matt, thanks for sharing this with me. And Nathan, hello. Let's get on with the show. Broadcasting from Terrio Studios in Glendon. California, it's time for Epic Real Estate Investing with Matt Terrio. Yeah.

Super excited today. Hello, and welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Super happy that you're here. This is just a super place to be because it's the place where I teach people how to escape the rat race by investing in real estate. You see, I changed one thing. I changed that one thing just one time, and I escaped that rat race for

forever. And that one thing that I changed, I changed my focus. I stopped focusing on making piles of cash and I started focusing on making streams of cash. And that right there, that changed my life forever. No longer do I work for money. No, it works for me. And if I had to start from scratch, if I were to do it all over again, I'd do it exactly the same way. And I do it exactly the same way whether I had money and credit to work with or not. Because when I got started, I had diddly squat. You see, while I was finding my way, I stumbled upon 12 different strategies of investing in real estate with little to no money. In hindsight, being forced to invest that way, being forced to get started that way, being forced to make something happen with minimal resources, I believe that made me

a better investor. And I'm here because I want to make you a better investor as well. So I put the first two strategies of the 12 that I use regularly. I put those two of which I believe are also the easiest and the fastest strategies to a paycheck in real estate, I've put them into a free course just for you, and you can access that course at free real estate investing course.com. And if you're not in front of your computer and you want to get access to that course right away, just go ahead and text free course to 55678. And that course will appear right there on your smartphone. All right?

So I've got a great show for you today. Our guest is a, he's a fellow investor, a newer associate of, of mine, we belong to the same mastermind group of where these super successful real estate investors from all of the country get together once a quarter. They talk shop, they talk about what's working for them and where they're having their challenges and they all just kind of input and together and they collectively help each other. It's just been such a blessing for me and I'm getting to know our guests today a little bit better. And, you know, he's just an expert at what he does and I'm not, even though I've executed his strategy a few times, I'm not an expert at it.

I know how to do it, but you know, you can learn so much from an expert, so much more than you can from a generalist. And that's kind of what I am in his expertise. So I've asked him to come on and talk about it. So I guess without further ado, I mean, you don't want to hear me talk anymore. Let's talk about talk to our guest, our expert of the day. His name is Mr. John Jackson. Welcome to the Epic Real Estate Investing Show, John. Hey, man.

Hey, thank you for having me. And yeah, nobody wants to hear you talk. tune into your podcast just to hear me, and that's really what it comes down to. It's what it comes down to. Absolutely. Thank you so much for having me here, and, man, fantastic of being part of that group as well. That was a life-changing group, you know, the mastermind group. So I'm so glad you and I got to connect there.

That's cool. And I'm looking forward to hopefully sharing some my background, some information I can share with your listeners. Cool, cool. And real quick about the group. How long have you been a member? That was my first time ever. Oh, it was. Okay.

Okay. I did not realize it. And you know what? It was, it was, you know, I've been a lone wolf, if you will, for 11 years or whatever, and, you know, that doesn't work too well. And being around a group of guys like that, just literally set the fire back on inside, if that makes sense, where you just get burned out. You're like, okay, now what, now what? Being around those guys, I came back. my batteries would charge and I had a whole new outlook and just fantastic guys.

That's great. Yeah, you know, the world of real estate investing, especially when you're doing business, you're doing consistent business or even just general entrepreneurship. It can be a rather lonely business sometimes and just to get around people that are doing what you do and are just as passionate about it as you are. And then it's even more refreshing and more exciting to get around people that are absolutely crushing you and make you look real small. I like that part.

Exactly. It's funny that because I walked in that room, and I know a couple of guys, because I've been in this long enough, and I knew who most of the other guys were. I didn't know them. But I thought, what in the world am I doing here?

I thought, John, you need to get on that plane and get back to Texas because you don't belong in this crowd. But you know what? That's not how it feels, man. It's just family, you know, and I loved it. It's fantastic, man.

Yeah. Well, cool. So you have a Texas that doesn't sound like you have a Texas, You have an accent that doesn't sound like you're from the East Coast or the West Coast. You are from Texas, yes? Yeah, I guess, you know, I don't even think I have an accent, but I travel so much now with the training and stuff. People go, oh, yeah, you're from your office from Texas. And to me, I don't have an accent, but I don't know.

I can hear it. I can hear it. I don't know. No, you also got that Southern charm going on. You're really friendly, and I just love that. I love that about Southern people. I've got a good portion of my whole portfolio was all along the South, and I just love. love to go visit my properties because the people there just so damn friendly.

Yeah, we're just happy just to be alive, you know? Cool. Yeah. So have you been in Texas your whole life? I grew up around the Fort Worth area, and I lived here all my life all 18 years. Okay, all 18 years. Yeah, good. Matt, you've met me, see, no, I'm not 18.

But I've lived in Texas all my life, so born in Texas, raised in Texas, and just there's something about being from Texas where it's, uh, you're just proud of being from here and you love the state and the people and everything. Right. Right. Yeah. Cool. Cool. So, um, have you always been, have you been a real estate investor for 18 years or is that something rather new to you? No. How'd you get, how'd you get started investing? Yeah. I know, it's a, it's a, I'll take a long story and kind of bring it down to about a 30-second snippet. But I think the story's interesting, just like all of our stories are interesting, because those, they'll make, listening to this podcast, or we'll be listening to it, that are wanting to get started in real

estate, and they're dependent, and they're afraid, they're unsure. And the truth is this, guys, my wife was pregnant with our first daughter, and I had a job that I hated, at a place I hated, working with people I hated, making pay that I hated. So I told my wife, I said, you know, since you're pregnant, I want to support the family, so I'm going to quit my job. That's how, That's my contribution. I said, I'm going to quit my job. And that's what I did. I quit my job that I hated.

I actually became a stay-at-home day trader. This was back in 1999, 2000, I guess, became a day trader. Fast forward a few years. One get involved in real estate. And what I found with real estate, this is important for the people listening that are just starting out to understand. With real estate, there's 20, 30, 40, 50 ways to get started in real estate. and what happens is you get the shiny object syndrome.

The reason is because there's so many ways to make money. And I found that was the same thing with the stock market as well. You know, you don't just make money one way in the stock market. There's 20, 30 different ways to make money. You've got to find what works for you and what you're comfortable with. And I looked at a variety of options. And the thing that me personally that I found that really clicked with me for somebody that wanted no risk was my specialty now, which was lease options. And what I found at the time

with lease options is that they were being touted. There wasn't a whole lot out there at the time. What they were being touted as is a way for you as the investor to make money and to rip people off. And I thought, I don't like that. So I basically revamped and reformatted and developed a business leasing to buy, which helps homeowners to their houses, helps buyers get in the, we have a credit improvement, we help them reestablish credit, we help them actually go all the way to finance. So most of our clients get financed within about 10 months of moving in. Great. So it's a turnkey, if you will, turnkey package.

It didn't happen overnight, but that's how I got started is I wanted to get into real estate, couldn't find the niche that I just was comfortable with, finally found least options, and said, you know what, I'm going to totally change the world of least options. And there you go. Got it. Yeah. Okay, so two questions there.

I've got you were day trading in the stock market, and then you made this transition to real estate. Why? Because, you know, that's an interesting question. I don't know if I ever thought about that. I'm, you know, I guess because as an ADD entrepreneur-type, spirit, you're always looking for something else. And with the stock market, I was doing okay. I wasn't crushing it. I actually started trading options, and that's where I started making money.

But, you know, sitting in your office, in your house for, you know, six, seven hours a day, clicking a button and watching charts, I mean, you know, after three years, like, okay, there's got to be more to life than this. And I was interested in real estate just because I knew there was money to be made out there, but I just found real estate to be interesting. So I guess that's why I made the transition. I never thought about that before, Matt, but I guess after sitting three years in front of all these, you know, this is back when I had the big massive screens all around my office, charts everywhere, and, you know, technical data, and three years of that, you know,

so like, okay, now what? Mm-hmm, mm-hmm. You know, you also said something that, you know, there's essentially a million ways to make a million bucks in this business. and you had said that, you know, your recommendation or your advice for someone that's just getting started to find their niche, something that works for them. If they're just getting started, how do they find, or how would you say what would be your advice to go? How do you find that one strategy that will work for them? You know, I think the first thing you have to look at is what is your risk capacity.

And for me at the time, it was very, it was none. I had no risk, capacity, if that makes sense. I need to find something that could generate money without putting money into it. Now, other people may have access to funds. If you have access to fund, and you know, I both know that, you don't have to have money to make money in real estate. But I think you have to, for someone starting off, you have to understand the true numbers, if you're going to actually investing in real estate. Because with lease options and wholesaling, that's not really investing.

You're just flipping paper. But if you're going to be investing, you have to know what the true numbers are and don't be over-think things. But on the same side, on the flip side, I should say, don't be over-analytical. Don't be over-analytical and try to crunch all the numbers because then the deal will be gone. But you have to know what the real number is.

are. And don't get overly excited by potential deals if you don't know what you're doing. So I would say you look at things such as wholesaling lease options. This is the two easiest ways to get into real estate without any money. Then there's rentals, which if we're going to get into rentals, you have to understand what all goes on behind there, whether it's property management, taking care of the property, what the rent values are, what your yield's going to be. There's just so many things that look at. So the people I work with that I help, that most of them are just starting off. And I kind of like that because I don't have to fix what they've learned incorrectly.

So I can just, okay, here's how you can get started off, and I show them the easiest way to get started. Very cool. So how many people do you have working with you? Are you a one-man operation? You got a bunch of help? You know what? At one time, I had myself, I had a business partner. I had, I don't know, 10 different reps is what we called them,

around North Texas, Fort Worth and Dallas. And what I found, of course, this is years ago, what I found is I didn't know what I was doing from a business perspective. And I found that I was basically putting out fires and babysitting. So I scaled it way back to where it's basically just myself and my admin lady now. But what we've done is we've expanded throughout the nation now, where we have people using our business model to do these options in all different states. So I don't have to do any hand-holding, but I'm helping other people build their own business.

But here locally, it's really just, I've scaled it back to me and just my admin lady, but we're actually in the process of putting the pieces in place properly this time. That's the key word properly to scale it back up and really put the machine back together where this time will be done properly. But right now it's just me. And that's something else for someone starting off. You don't have to have an office space and 20 people working for you. You can go for yourself.

You know, if you're doing even five, six deals a month, that's pretty good income for working from your house. Right, right. Yeah, when I first attended our mastermind group, I was like, wow, I don't have nearly a big enough team. These guys got, they got marketing experts. They got a whole team that answers the phone. They got a team that goes out and visits with the seller, and then they got a team that closes the deals, and they got a whole lending team. And I was like, wow, I need a bigger team.

but you don't really. Yeah, yeah, you don't. And you have to scale for what you're willing, what you want and what you're willing to do. You know, at the end of the day, by the end of the year, we'll probably have two people, two other people on board, and that's it. But just those two key people can really make, you know, really be able to ramp it up. It's a matter having to write people, not the number of people, obviously. Right.

You know, I've been there done that, man. I had over 10 people working underneath me, and it was a, talk about a headache. It was a disaster. Yeah. I would just go to bed at night just, you know, in the field position, you know, shaking. I was still. I know. I've been there as well. I can relate. The irony, I think, about you be on this call today and where you're from and the strategy that you implement. Hopefully you can create some clarity around an issue for me is that I've always heard that

lease options in the state of Texas were illegal and then you'd ask one guy and he says, no, no, there's a way you can do it. And then someone else is, oh, no, you can't do it there? And so you're doing it. So can you clear that up for me? Yeah. The way I do it is I just use a prepaid cell phone number, somebody can track me down. Got it.

No, you know, I'm kidding. You know, it's least officers are totally legal in Texas. And I don't want to bore everybody with the details of it. But back in 2005, Latchell back up a little bit further. You know, I teach lease options in Texas, and I'd like to talk about the history of it. And going back to 2000, in May of 2000, a tornado hit downtown Fort Worth and basically destroyed, removed numerous houses that were owner-financed to Hispanic people. Well, there were contract for deed, which, as you know, a contract for deed is an owner-finance where you don't get the deed until you complete the contract. Right.

So what happened is all these Hispanics didn't have a house. They lost their money. And, oh, the crooked investors, they weren't buying insurance. So they had lost everything. So in 2000, the property code was highly amended. Title II Chapter 5, the property code was highly admitted to address contract for deeds. And basically, that's all that killed contract for deeds at that point. Okay.

So let's fast forward to 2005. Well, the property code in Texas covered conveyances, contract for deed, owner finance, landlord, tenant laws, et cetera. It did not cover lease options. And so the original law wasn't even about lease options. The original draft of the law was about amendments to the property code regarding contract for deed and conveyances. However, the law stated that a lease option is an executive contract, and, oh, you can't do an executory contract on a property that has a lien, in other words, a mortgage. That was all it was about.

Well, so basically one-leaf options in the same category is the contract for deed, which contract for deed, you've got pages and pages of requirements and disclosures and just a bunch of stuff. Well, what happened, and I apologize, someone's come in there trying to call in, so I'm sorry to goose up the audio for a second. But so fast forward a little bit. I'm sorry. So in 2005, the low-income housing authority, who was working with ACORN, lobbied so of our politicians, and got legislation drafted, and the original legislation was horrible.

It was absolutely horrible, seeing that lease options were basically, you know, basically a secretary contract, contract for deed. It couldn't do a lease option on property that had a mortgage. Well, we highly, highly, you know, all the investors went totally after these politicians and our representatives. They totally changed the law, highly amended the law. And so the final law stated that specifically there was a very specific section of the law did not apply to a lease option. However, only the following, whatever, seven sections or eight sections of the law apply to a lease option. So you have to go through the law, line by line, go, okay, does this apply, does it not apply?

Does it apply? Do it apply? Does it apply? So we had to amend our contract and put civic verbiage in there. And we just keep on moving down the road. The rumors, unfortunately, had already got out because of the original law, saying that at least option was an executory contract. So everybody assumed, a lot of people still assumed that at least option is basically like a contract for deed in the state of Texas, which it's not. because the law is highly amended, but some attorneys just never re-read the law.

And so, or the final law, I should say. But at the end of the day, what the law states in taxes is that if you do a lease option and it has a mortgage, then the owner has to disclose the mortgage information, has to let the buyer know when the payments you'll make, and the house can't be in default, which makes sense. All the law is about protecting the buyer. Right. They don't want people getting to a house putting 5,000 bound and make free payments in the house closed foreclosure.

Right. So I understand the, you know, I understand the purpose behind the law to protect the buyer because there were some bad people doing some bad things. Mm-hmm. But it's, you know, same old, same old Matt, you know, a few bad apples and, you know, they think everything has to be changed because of a couple of knuckleheads done in South Texas. Well, every clause in every contract is because there was a bad apple somewhere. Exactly. Yeah. Yeah, you know, somebody's taking advantage, somebody's so, oh, we have to just make a clean sweep across the board, and here's what we're going to do.

We're going to punish everybody. Yeah, we're going to punish everybody. And the thing is, is what the people that were really, that were getting hurt were the people that really, the buyers that need to get in a lease option. They were hurting the people that were trying to help is what they were doing. But, so Texas specific laws about lease options, but most of them, I mean, they're really pretty easy. I mean, some of the piddly stuff, like you can't. withhold a rent credit for late payment. So if someone goes to get financed, the seller can't say, oh, wait a minute. Remember in June when you paid on the third? Yeah, your payment's

doing it first, so you don't get any of your rent credits and you lost your down payment. Well, that's ripping somebody off. Right. Right. So you can't do that in Texas. So, but the biggest thing is, you know, the mortgage information, disclosed the mortgage if there is a mortgage and notifying the buyer when the payments were made. So that's really, that's really, about it. There's little penalty things, but, you know, I'm not going to, I don't want to board people. Right, right. No, no, that's good.

That's, so it's legal. That's what we need to know. You just got to do it right. Yeah, you know, let me, let me, let me throw this out here, Matt, especially for those listening. Here's one thing I will say. In Texas, the seller of the lease option has to have fee simple title. Okay. And, and I can't tell you how many times I've had attorneys call me.

And I have to explain to them what fee simple title is. I know. These are real estate attorneys, keep in mind. I have to explain to them. The feasible title has nothing to do with a mortgage. Right. Feasimple title is how we hold title in the state of Texas. It's considered absolute title.

It's the purest form of title. So all that means is that in Texas, technically you can't do, for the law, a sandwich lease option. Because if you're the seller and I'm leasing to buy and we have a lease option between each other, and I turn around and lease option to somebody else on the B side, I'm the seller. Right. I don't have feasible title. Okay. So in Texas, you can't do that.

Again, that's about protecting the buyer, you know. But you can't technically, you can't do a template option. Right. No master leases. Yeah, yeah. Right. So I can't, yeah, so I can't just go out and leave it. Well, I mean, I can sublet it, but I can't sublet it with the option of purchase.

Right. Yeah. Right. Yeah. Okay, super. I got it. So let's get to nuts and bolts real estate. Listen, my crowd just loves the nuts and bolts and the how-to stuff and the technical stuff, the tactics and the strategies.

How do you do this? So let's start and just define and start off, everybody off on the same page. What is a lease option, John? A lease option is a lease with a separate option of purchase that gives the buyer the right to buy the property at a set price. before the end date of the contract. So we set everything up, to give you these specifics, we set everything up on a 12-month lease option. So what we do is our company signed lease options with sellers

for that price, that monthly amount, everything, and we assign our contracts to people that need time to get financed. So we assign our contract. They now have the right to buy that property, at a certain price before the end date of the contract. They're making payments to the owner. They have the right to buy the property. They're down payment.

Their option fee goes towards the purchase. It actually goes towards the FHA required down payment. But that is a lease option. All we're doing is assigning our contract to the end buyer. Got it. Okay. So you're getting the lease option in place with the seller and then you're assigning that to the end buyer.

Exactly. And that's all we're doing just like a wholesale or assigns a contract to a cash buyer. We're assigning our contract to a family that needs time to get financed. Very good. Exactly. In California, a lease option consists of two contracts, the lease and the option. Is that the same way in Texas? Yeah, and the law doesn't require that at all. Typically, we have a lease with a separate option of purchase. The theory behind the that is if you do a sandwich lease option, you have a lease option as one contract between you and the seller, then you have a separate lease with a separate option of purchase on the B side.

But the theory behind that is, you know, first of all, makes it easier to evict people and avoids equitable interest. But, you know, we have a separate lease. We have a lease with a separate option of purchase. Okay. When we go get people financed, because keep in mind, Matt, we take these people to finance. When we go get, when they go to get finance, the lender actually sees our option of purchase and the assignment because our option of purchase sells up everything.

Who's paying what closing cost? I mean, everything. So that's what the lender sees and that's it. Super. Okay. So what is your favorite method for finding deals, finding sellers that are open to your opportunity, your structure? Okay.

I'm going to tell you, and people are listening to this and you will probably go, You do what? I do something very, very unconventional. Because I believe, you know, if you're starting to have to real estate, you try every avenue of marketing and trying to figure out what works, what doesn't work. I finally, years and years and years ago, I thought this is, you know, cold calling isn't working, this isn't working, this isn't back before Craigslist or anything. You know, and I finally thought, okay, John, think about this.

Who's trying to sell their house? And I finally realized, oh, I know people that have. their house for sale. So I do direct mail campaign How did you come to that conclusion? Yeah. I was in Cancun with a bottle of rum

on the beach and I thought, who's trying to sell their house? And that's how it hit me. And you had a vision, right? I had a vision, yes. Go ahead. So we do direct mail to listed houses. Okay.

And that's what I do. I do, we've got brochures, a very nice brochures, postcards we've got to people that had their houses listed in specific we target down to specific zip codes and specific price ranges because we're looking for a very specific type home we've gotten away from lower end homes like you know 90 hundred thousand dollar houses we try to stay in basically the average to upper upper average price home okay I can hear I can hear my audience right now you mean you send direct mail to homes that are under contract with a real

How do you get around to the realtor? How do you deal with that? Is that moral? Is it legal? Can you respond to that? First of all, totally legal because I'm not an agent. So I can send them, you know, I can send them a mail. I can send them a mail in the mail because I'm not an agent. Having said that, it's really interesting because as I teach people and they're like, how do you, how do you do that? At the end of the day, first of all, I almost never ever talked to the agent. if the agent were to call me and say, well, how does this work? I explained how we work, how this comes together. And oh, by the way, we also buy house for cash. And next thing you know, the agent wants to work with me. So I haven't made an enemy. I've made a friend.

However, let's get down to the bottom line. How does that work with the agent? Because it's under contract. The owner of the house calls me. The agent almost never calls me. The owner calls me. And I explained, well, you know, you need to let your... your agent know that you're going to offer this, or do you want to pursue this, at least purchase.

But I tell them very specifically, tell your agent, you need to keep that listing. You want to keep that listing because you'd be surprised, Mr. Homer, how many times we get involved, and within three weeks you've got a contract because we do mass, mass marketing that your agent doesn't do, and you'd be surprised how when we get involved, suddenly the activity picks up grammatically in your house. So tell your agent to please keep that lifting. And the owner will ask, well, how do they get paid? Oh, that's when you and your agent.

There's a few different ways that the agent typically gets paid. The owner will either pay them half a one month's payment, the same as they would on a straight lease, or they'll pay him some flat fee amount of maybe it's, whatever, $800,000, a thousand dollars, whatever. I'd have some owners say, well, if they don't sell, I'm not going to pay him. Well, that's up to you. I mean, the contract between you and your agent, so you all work it out, but just let me know if you talk to them, and we'll move forward on our end. Right. So it's not uncommon at all for our listings that have two signs in the yard, the agent and ours.

And whatever the owner worked out with the agent is between them, you know, it's been better to me. But I do tell the owner, please, you know, do not cancel that contract. I'll be happy to talk to your agent, but do not cancel that a contract because we're just another marketing portal. We're on toes. We're another marketing avenue, and it's your house, and you've got to move this thing. So when I first started doing that, oh my gosh, 10 years ago, 11 years ago, I got a few agents calling me that were mad. And I can't tell you Matt the last time I had an agent call me that was upset. Now they call me wanting to work with me, you know.

Very cool. And I don't need to make it over. simplistic, but that's just the way it is. No, that's fine. It's not complicated. I could just hear the question already because we've addressed it here on the show several times already before, and I just wanted them to hear it from another perspective, and I had no idea what you were going to say, and you said pretty much what I say, so.

Good. The, as far as, so you send these, you do your direct mail to houses that are listed. What is your response rate? Or what is, yeah, let me ask you. sponsor you first. Yeah. It's a, excuse me. That's a good question.

And I'll, uh, it's obvious as you know, with your any marketing, your response rate varies, depending on maybe time of year or the list you're hitting, or whatever. There's different variables. The mailing piece. And the market overall. Right. Uh, so for example, in my response, if I, I basically don't do any mailing, uh, direct mail to the list of houses in July because I know it's the waste of money.

Everybody's on vacation. They're hoping, well, let's see what happens in the summer end, or let's see what happens in the summer. We'll get a contract. I don't agree with the in July. But having said all that, I'll hit the same list, typically at least two times. I hit the same list, and about three weeks later, four weeks later, hit the same list again.

So if I send out, say, a thousand, let me back up, a thousand pieces twice, so let's say 2,000 pieces. even on the same list, okay? I'll typically get that 10, about 10 phone calls off that. Okay.

So, so of a 2,000 pieces against the same list, that's an important note, of the same list, I'll get about 10 calls off of that. Now, here's the key, though. The, when I get calls, my close

rate is out of 10 calls, I'll probably get seven or eight of those houses under contract. It's outstanding. And the reason for that is, well, first of all, because I'm a nice guy, and who wouldn't want to do business with me. Of course. But part of the reason is because the way that we approach the marketing, they're calling me, they're not, so they're inquiring to me, I'm not co-palling them or emailing them. they're calling me, they're interrupting my time.

I mean, you get it. It's a matter, it's a psychological thing. They're calling me. I'm giving them the information, put the numbers together, and have them numbers and contracts within one day, and answer all their questions. So our clothes rate is very, very high. Because as opposed to wholesaling, which I mean, I wholesale too,

but you know how it is of wholesale. You get 25, 30 calls, and out of those calls, four or five or possible deals and you can't get the people on the phone you may end up with one you know just the close rate's very low right for wholesaling versus what we have in place just what we structured it's out of say two thousand pieces we'll we'll get yeah solid ten calls I would say but we close most of them super super um of those of those 10 calls how often do you get like a real like a real like a a cash deal that makes sense. Do you find motivated sellers in that way every once in a while? You know what? On a rare occasion. It's pretty rare that way, right?

And again, Matt, the reason is because of our specific mailing that we're targeting. We're targeting nice houses, nice areas, but they're newer, okay? And so there's not a lot of equity there. Right. Which is great for at least purchase. So for those people listening that are doing wholesaling, you've got to bring least options in the equation because you think of all the leads are thrown away that, you know, the people don't want to deed their house over and stuff too, but they don't have any equity. Right. Boom.

There's a least option. Got it. You know, you get a top dollar, top price, maintenance is taken care of, everything's taken care of. It just, it's very, well, we have it said it's very hands-off to the homeowner. Mm-hmm. Mm-hmm. Cool. So, all right, so we know how you find the deals.

And then you mentioned your marketing a couple of times and how it generates more activity on that listing. What are you doing to attract a buyer that's open to that structure? Yeah, as far as the buyer, that's actually the easy part. And I'll start from the easiest and kind of build from there. The first thing we do is, you know, don't laugh is we take a sign they are. I just had this conversation. Like I always ask these questions like, gosh, how are you doing? doing this goes, a sign, Craigslist?

Yeah. Yeah. I was like, wow, that's rocket science. Yeah, no, that's genius. We stick out, we have to sign, it's a professional sign. It's not some, you know, handmade, because you're talking maybe a quarter million dollar home, $300,000 house. Right. You don't want to put some piece of garbage sign in the yard. It looks like, you know, you know, if you flip the paper over, it's just garage still underneath, you know. It's a nice, it's a nice 18-month-4 aluminum sign. It's a very nice special sign in the yard. We do have some specially done coral signs for directional if we need to, et cetera. But a sign yard, shockingly, that gets so many calls on it still, just old school.

What's the message on the sign? Actually, it just has our logo in my name and phone number. So it just looks like it's a house for sale. Yeah, it looks just like a realtor sign. Okay, okay. Except it doesn't have my big, beautiful face on it. Right. You know what?

Maybe I should start doing that. Yeah. We know, it has our logo, our website, and my name and number. And that's a bit's a nice, you know, professional-looking real estate sign. Okay. That goes in the yard. Then we put it up on our website, leasing to buy. Our website, because we've been around for so long, our website gets, who knows, thousands

and thousands and thousands of hits per month. So we put up on our website. From our website, it feeds into, who knows, 20, 30 other websites. You know, obviously, truly, you know, these other websites. as well. We also have a email list where people that have sent up for our email list, so we notify them when new houses come up. And there's, what, around, 35, 300 people on that email list. Right. So once we get a house, because we've been around for so long, and with our marketing techniques, once we get a house, it's normally gone within, certainly within a month,

for sure. I mean, there's some quirky ones, you know, stick around for a little bit like a bad girlfriend but you know normally they're gone within about three or four weeks right yeah but it's actually pretty easy to market for the buyers we don't do a lot of Craigslist marketing anymore just because the flakes and just the sure the pain the rear plus you got a little higher quality house as well yeah exactly but you know it's coming starting off yeah I would do anything I'd I'd uh get out there with some bikini models and swimsuits to market the house if I had to you know whatever it takes baby what it takes me dress up in the Statue of Liberty outfit and all that stuff.

Yeah, we twirl the sign. Yeah, we do taxes too. Yeah. You know, I was waiting for some tricks from you, John. Gosh, you're really disappointment. This, uh... I mean, nothing fancy. Oh, my gosh, you did.

He does, uh, we do, uh, something we'll do, if the house isn't moving, we'll actually do a fireworks display in the front yard, and we'll roast a pig. And, uh... Got it, got it. Well, cool. So how many deals are you, uh, a month are you doing, you say? You know, it slowed down a little bit, and it's my fault, because we started doing more wholesaling. And then this year, I've been doing a lot of traveling with the training and stuff, and so I took my eye off the ball.

So it slowed down a little bit. But we've done well over 500 lease options. Well over, it's probably getting, it's probably over 550 lease options. We've done a ton of these options. When I had the other machine going, we were doing a minimum of six to eight least options a month. And it's still down a little bit again over this year because of me just because I started doing wholesaling more and started traveling. And my one-man show took my off the ball. And like I was telling you, that's why I said, okay, I got to put the systems in place and get the machine back going.

So I can travel and still do the training and still let the machine create money. Right. But outside of that, we were doing minimum four or five a month, minimum. Okay. So what do you see for your future? Where are you headed right now? Right now, I'm in a transition period of, I should say a rebuilding period where I'm going to build with the machine back in place, like I said, to really ramp up the least

options again, completely build the back end again for the wholesaling side so that that's kind of doing it thing. And on the training side, I've got to get off the road and bring that back into more of a web-based training only

to a couple of shows a year shows, you know, a couple of live events a year. And so that I can then I can just become the overseer and just kind of oversee everything. But right now, We're in a position where we're bringing pieces back in place to ramp up the whole son and the lease option stuff. So I don't have to be involved in it day to day.

Got it. Got it. Yeah. Cool, John. By the way, those people listen. I was telling you listen to your podcast as far as you're on your team and stuff. People are going to listen to those podcasts. That's vital information.

I mean, I'm listening to it over and over as I'm building my team back up because at the end of the day, You know, you go from just a one-man show and you start building it up, you're going to plateau. You're going to plateau and you got to start going, you know what, I'm not surprised at the box. I've got to bring some other people in. Right. And that's where I am with the real fit side and the training side. I'm having to bring other people on to help the training because I just can't handle it all, you know. So for those people listening, look, as you start growing this thing, you will plateau and you have to understand.

You've got to bring people on, you've got to bring the right people on, you know. Not only you plateau, but you'll hit a point where you just, you max out, like, your, just your effectiveness and your energy and just your ability. Oh, my gosh. You know, and I don't want to. It's not a soft landing when you hit that wall. You know what I mean? You know what? Matt, that was the funniest thing.

That's not a soft landing when you hit that wall. When I was at the mentorship group, I didn't get to do my presentation because I got up there. And after slide, too, Todd Tobac and. Jason Medley, they, dude, they nailed me. They're like, dude, you're burned out. I'm like, yeah, I'm kind of burned out, you know. I haven't been home in a month. And, you know, you've got to, you know, you've got to regroup and reorganize

and figure how you're going to get through that wall that you just slammed into. And it takes a little bit of time and putting the right pieces in place. And that's, I think the way it is, Matt, in any business. And not just real estate. You're going to, you know, turn and burn and turn and burn, and you finally hit the wall where you're like, you know, I can't do this anymore, but I don't want to hire somebody because, you know, being a small business, oh, hiring somebody, oh, that's going to cost me money. I don't want to spend money, you know, and you got to get over that. You got to get over it. You got to get over it.

It'll make you money instantly. Oh, yeah. It will make you money instantly. For so long I put that off of hiring people because I was just like, I don't want, I'm making good money and I don't want to give any of it away. and once I hired someone, I started making more, and I was like, wow, what a novelty. Now I'm like, I can't hire people fast enough. I mean, I'm looking, I'm being careful about it, and I want to get the right people, but I can just see how easily it is now to expand and build and scale by asking for help

and getting competent people and people that are smarter than you and people that are more skilled than you are. Asking for help, that's so difficult for someone that's as smart as you and I are, isn't it? Yeah. I'm not belittling on myself. I need some help. You know, it's a psychological thing where you're like, you know, I don't want to ask for help. And that's what's so great about, you know, the group of, you know, singing out with those guys in San Diego. But, you know, and not to get off topic here, but Sean Terry had an amazing presentation on how he hires people.

Yeah. So if you haven't seen that Dropbox, you've got to go check that out. I did. It was genius. Oh, my gosh. Yeah. I love it. Yeah, Sean, he's, I love that.

He's on some next stuff, though. I mean, he's, boy, he comes up with some dozy. That guy is just a workhorse, and he's got the intelligence to go right along with his work ethic. He's an awesome dude. Oh, yeah. Yeah, but yeah, so it's a fantastic guy. But, yeah, you're going to hit, those people listening, as he started building your business, it's a small business and you've got to start growing.

Yeah, you're going to have to bring someone on. I brought my admin lady on, and she's far more an admin, but there's no way, there's absolutely no physical way I could have, I could do what I'd do had I not hired her. And it relieved me immediately, immediately. And I thought, this is stupid. Why didn't I do this before? Right. You know, just kicking myself. But you just got to get over that mental hurdle and go, you know, I got to bring someone else in.

And that's where I am now. It's starting to build that team now, you know, so I can only ramp it up, you know. Cool. Well, the one thing I learned when hiring team was don't look for the skill necessarily as much as you look for the character. The skill can be trained. People can be trained to do what you need them to do. But if you get the right character, then, you know, you'll only hire once, you know, instead of hiring four or five times until you match the two up going the other way. And that's very important.

Yeah. You're exactly right. Indeed. And I don't know all of your business model and pay structure or whatever, but one of the things is when you're hiring people that I've learned is that if you're paying commission, that is not for everybody. Right. Most people don't want commission.

They want nine to five time for money. They want to trade their time for money. Commission is a whole other beast. And you're used to it, and I'm used to it, but most of the world isn't. And so you've got to be careful hiring somebody that doesn't need – you know, 20 bucks put gas in a car to make it home.

Mm-hmm. Absolutely. Then they're done that. Exactly, exactly. I became to thank him, John. Right, right. Well, John, it's been an absolute pleasure. Thanks for coming on the show.

If anyone wanted to get in contact with you and learn about what you're doing, about your training, how should they go about that? Yeah, I've got a couple of, and I'm not going to tell them here, but I do have a couple of events coming up in, live events coming up in Texas

here in the next few weeks, but they can go to, lease option classes.com. Again, that's leaseoptionclasses.com. When you go to the home page and you see that incredibly handsome man on the video, that's me. Okay. But, yeah, leaseoptionclasses.com.

If they want to see what I actually do in my business, then go to our business site, which is leasing to buy.com, and that's leasing to buy.com. Super. And we'll make sure all of those are in the show notes as well for you. They can find me through those websites. Okay. Fantastic. Well, it's been an absolute pleasure. Let's do it again. I think I'm going to see you again in August, right? We'll be in Tampa.

I think, August in Tampa, I think is where it is. Yeah. It'll be fun. I'll buy an iced tea down there. How's the... Love it. All right. Very cool. Man, thank you so much. It was a pleasure getting a know and meeting you and so glad our paths across. And thank you so much for let me come on here and talk a little bit. You bet. It was my pleasure, and I'm sure it was our audience's pleasure as well, so thanks. Thanks, Matt. Okay, take care. All right, bye, bye. All right, so that's it for today.

I am Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoy this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at... Epic Real Estate Investing with Matt Terry O. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.