Episode 173: What You Need To Know Before Investing In Real Estate With Joe McCall
The Profit First REI Podcast
April 17, 2023
David Richter
For today’s episode of Profit First for REI, Joe McCall joined us to share his journey to financial freedom.
Joe is a down-to-earth Real Estate Guru that cares for people by helping them to make sure that everyone can make money in real estate investing. He is also helping people to improve their lives and reach ultimate financial freedom!
Listen as we share Joe’s story, from financial dependence to financial freedom, and how Profit First helped him get out of that!
Key Takeaways:
[0:55] Introducing Joe McCall
[2:33] More of Joe Before Getting Into Real Estate Investing!
[8:32] Struggles When He Is Starting His Investing Journey
[17:27] How He Used His First Paycheck From a Deal
[21:00] Trying Different Lease Options
[23:25] Reading The Books, “Pumpkin Plan” and “Profit First”
[34:52] Joe’s Advice to Real Estate Investors
[37:03] Connect with Joe McCall
Quotes:
[11:45] “When you get into real estate, it’s different because you deal with people.”
[20:15] “It’s important to understand to keep your expenses low to take on as little debt as possible.”
[22:19] “I guess I’m the case study of how to do things wrong, but not quit, not give up and learn the right ways to do it.”
Connect with Joe:
Website: https://joemccall.com/
Tired of living deal to deal?
If you are a real estate investor or business owner tired of living deal to deal and want to double your profits, head over here to book your no-obligation discovery call with me. Either I or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David
Transcription:
Joe McCall:
<affirmative>, when you get into real estate, it’s different man, cuz you’re now, you’re dealing with people. There is no deal is ever the same, right? No seller is ever the same. There’s always gonna be things that come up. You can’t dot all your I and cross all your T’s like you could in college or looking in engineering, right? You can’t have answers to all of your what ifs.
Outro:
If you’re a real estate investor who’s sick and tired of living, deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.
David Richter:
We have Joe McCall on this episode. We talked to him about a hundred episodes ago about how he had a huge tax burden and how Profit First helped get it out. We only talk about that a little bit at the end, but we talk about his story going from a lack of freedom, feeling the cash crunch with his first few properties, almost going bankrupt and losing everything to being able to get out of that. And with the few things that helped him turn it completely around and how he’s helping today, just make sure that you know that you can make the money in real estate investing no matter what. He is a marketing genius as well too. Just follow him, follow him around. But I know you’re going to get a lot of value from this episode on the Profit First side and just as a business owner. Thank you so much again for listening. Hey, this is David Richter with the Prophet first REI podcast with the Joe McCall here. Really excited to have him back on. He was on an episode in the early days, but if you haven’t, if you’ve been listening for any length of time, it might be like a hundred episodes before, but Joe’s done a lot in real estate. I mean, if you haven’t heard of Joe McCall, you might be living under a rock. I feel like at this point, <laugh>, if you’re in the real estate investing world. But if you are one of those people who will make sure you know him and what he does, he helps a ton of people, has done a ton of deals himself. But Joe, thanks for being on the show.
Joe McCall:
Well, thank you David. Glad to be here, man.
David Richter:
Well, another reason he’s back too is if you’ve read Profit First for real estate investing, his story’s in there, just a little snippet of it, of the tax sides of which he talks about in the first podcast recording. So we might even go down that road again. But I want to get just a little bit in case people don’t know what you’re doing, what you’re about, can you give them just a couple minute overview of like, who is Joe McCall?
Joe McCall:
Yeah, so I have been investing in real estate full-time since 2009. I was a civil engineer by training, kind of working for a big electrical contractor, building a lot of power plants and traveling a lot. Didn’t like, I mean, I liked my job, but I didn’t like the lack of freedom. I, you know, I was kind of at their control doing whatever they wanted me to do. And I was always, I felt like I was stuck on a treadmill. So I started getting interested in real estate, started buying a lot of courses. I joke around, I was a professional student for three years buying course after course after course, and overanalyzing everything. Um, so I started, my back was against the wall. We were hemorrhaging cash. I had a bunch of properties and the market was crashing and I needed to figure out a way to make money. I thought I had equity, but you know, you can’t eat equities,
David Richter:
Right?
Joe McCall:
As they say, equity doesn’t pay the bills. So I was just in a really serious cash flow crunch. I knew I had to learn wholesaling and I always kind of, back then in 2008, seven and eight, I looked down on wholesalers. I looked down on wholesalers, okay. Because they’re kind of the bottom of the ladder. You know, they’re not real serious investors. So I didn’t wanna be a wholesaler. I wanted to be a more sophisticated investor. I knew I needed to figure something out. And, um, so I said, all right, I’m gonna do this. And then I started wholesaling. So I bought one more course and I bought tons and tons of courses. And I said, but I’m just not gonna change anything. I’m gonna do exactly what the guy says to do. I’m not gonna change anything. And then I started, even though I didn’t like it, the guy, I kind of liked him, but I didn’t like, I thought his postcard was too ugly. I thought he’s sending it to a list that everybody is already sending to. I didn’t like his script. I didn’t like his contract. I didn’t like the way he did. Cause I thought, this is Sue too easy. He’s charging way too much for this course. But I kept having to go back and say, all right, I’m just gonna do what he says. I’m not gonna change anything. And well then guess what? Sure enough, I did a deal and uh, my first deal, I made about 12 grand on it. Yes, it was a property about 30 minutes outside of the city in St. Louis at the time. So it was way out there in the sticks and it worked. And I couldn’t believe it. Like for the first time I had actually implemented something that I bought from a course and it actually worked. I couldn’t believe it. And so then I was, I was hooked. I started doing a lot of wholesaling at that time. And then a few years later, um, was able to quit my job.
David Richter:
Awesome. And you’re into, you’ve done a lot of stuff in the real estate world. We’ll go down that road. I wanna focus on one thing. You said you got into a cash crunch, you know, like with your rentals and stuff, was that now you were a professional student too, so like you <laugh> three years as a professional student. So did you start buying, well then,
Joe McCall:
Yeah
David Richter:
You know, stuff while you were studying and like, how many, did you have a portfolio of like 10 properties, 20? Like how much did you have at that point?
Joe McCall:
Well, okay, that’s a good question cuz I was a professional student, but I was buying houses with traditional bank mortgage. I was going out and getting a mortgage and then putting a tenant buyer in the house. So I had very little equity
David Richter:
Yeah.
Joe McCall:
In the deal, very little cash flow. I thought a hundred, $200 a month was enough, right? That would pay, get a hundred, $200 a month. The cash flow, let’s see, I only need 200 of those to be able to quit my job. But that’s what I thought you had to do.
David Richter:
Yeah.
Joe McCall:
And I wasn’t setting aside any of that money for future vacancies, maintenance repairs. And so all of a sudden when the market crashed, we had a bunch of vacancies. I had, um, serious cash flow crunch and I had also bought a lot of properties at the time. Um, I had, uh, maybe five or six subject twos I was taking over existing mortgages.
David Richter:
Okay.
Joe McCall:
And then, um, again, I didn’t have much equity in those and I was, I borrowed some of my profits early from private lenders in those deals. Now, the property that I owed total from the original mortgage and my private investors, I owed more than the house was worth. And my payments to cover that mortgage when it was vacant was really hard to do. And you know, remember when you’re taking over somebody’s mortgage, you’re promising to make their mortgage payment.
David Richter:
Yeah.
Joe McCall:
And if you don’t make their mortgage payment, they’re gonna get a 30 day late on their credit, which is go is really bad. And so I had, I don’t know, six or seven subject twos at the time. I never did miss one mortgage payment of a sellers, but it got really close.
David Richter:
Okay.
Joe McCall:
And these sellers were getting calls from the bank saying, Hey, it’s day 15. You’ve not made any payments yet. What’s going on? And so then the sellers would call me and don’t worry about it. I got it. I’ll, and then I’ll pay the late fees or whatever. And so all of a sudden I got to the point where I had to either make my own mortgage payment or make these sellers mortgage payments. So I started making their payments and I started working harder to try to make up. And then my house got in into a foreclosure in a short sale situation. So this is where I was in a serious cash crunch. You know, I,
David Richter:
Yeah.
Joe McCall:
Any equity that I had was disappearing. The houses were falling. I didn’t buy any of these properties the smart way. I was counting on appreciation, I was counting on nothing to go wrong. I had only one exit strategy. And, um, I realized later that you make your profit when you buy, not when you sell. So anyway, I had a ton of courses. I knew I needed to learn wholesaling. Finally, it was Chris Chico, I think you know Chris Chico?
David Richter:
Yeah, yeah, I know Chris.
Joe McCall:
He had a course at the time called Absentee Owner Profits. And I bought it and, um, started doing what he said to do and did a deal. And then I started doing more and more deals.
David Richter:
So then, okay, you’re a professional student. At that point, was it that the people you were learning from just weren’t teaching you? Were they just teaching you how to get that house? Like the way that you were doing it? Or like, you know, or where do you think that the connection failed of, okay, I’m gonna buy this house, I’m gonna get the cash flow, or was it just that I bought these at the wrong time because we had the worst, you know, the worst real estate market in the history of
Joe McCall:
Yeah.
David Richter:
You know, the US market or whatever? Well,
Joe McCall:
It was a kind of combination of all the above.
David Richter:
Okay.
Joe McCall:
What I mean is, like, I spent, and this was maybe before I started buying houses, I bought a coaching program for like 13 grand and I put it on about three different credit cards
David Richter:
Wow.
Joe McCall:
With my wife and I made the decision together.
David Richter:
Yeah.
Joe McCall:
I remember going through the course and just thinking, this is so stupid. Like, and here I am, like I know better, but this is so dumb. I don’t like what they’re telling me to do. They’re making me put, they’re pushing me outta my comfort zone.
David Richter:
Mm.
Joe McCall:
Um, they’re trying to get me to, you know, call realtors to make low ball offers to sellers. Um, there’s gotta be a better way to do this. And so I never did anything with that program. And looking back at the time, I was actually kind of blaming them for giving me a program. And I thought it was outdated information. It was too simple. You could get this for free from a book. And this is funny because people are still saying that today you could get it for free from a YouTube video. You can get it free from a podcast. This is too simple. So, and then I, you know, what would, I’d just go buy another course, buy another book, buy another program, go to another bootcamp. And so, and then all of a sudden I had a ton of courses and I was never doing what any one of them was saying to do. Like, I would take a little bit of this guy and a little bit of this gal and I would try, you know, I would mix and match their stuff. And then I just was never sticking to one thing. I was chasing short sales for a little while, then I was chasing fix and flip by, you know, re uh, fix and flip rehabs, then lease options, and then wholesaling a little bit. And I was all over the place. And really the houses I were buying, I was buying them all wrong. Bought maybe 12 of them.
David Richter:
Yeah.
Joe McCall:
And so I guess you could say I was taking some action, but I was always in this search for the next secret, the next magic pill.
David Richter:
Yeah.
Joe McCall:
The next, uh, little shiny object and not just sticking to one thing and mastering that.
David Richter:
No, that makes sense. So was that a product of like, the habits from the past? Did you have that a lot? Or was that, did that show up when you started to buy houses and like becoming an entrepreneur or, you know, I’m thinking of you as like the engineer, you know, and analysis paralysis. Like you had, you went out there and actually took action too. So there’s like a lot of different things where it’s like, where did, yeah. Where did that go?
Joe McCall:
Yeah, Well, here’s the problem that I think I had, and maybe a lot of people can relate because I have engineering back background. And so like, I like to, we were building large power plants and, and a lot of different projects. And you get a big stack of plans, blueprints, and you get a big, um, spec manual. And like you can see from beginning to end how everything’s gonna work. You see the underground utilities, you see the foundations, you see the steel structure. You see how, um, all of the exterior elements come in where the windows go. And then, you know, once inside you see all of the, uh, the m e p like the mechanical, electrical, plumbing and where all that goes. And, uh, you see how the interior finishes work and where the equipment. And so like you can see from beginning to end where it all is going to be. And like when you’re taking math in college and calculus, you know, there’s one problem and one solution and one way to get to that problem. There’s always this simple formula. It’s always black or white.
David Richter:
Yeah.
Joe McCall:
This is, these are the steps to get there. Now, when you get into real estate or any small business for that matter, it’s different man. Cuz you’re, now you’re dealing with people, there is no deal is ever the same,
David Richter:
Right
Joe McCall:
No seller is ever the same. There’s always gonna be things that come up. You can’t dot all your I and cross all your t’s like you could in college or looking in in engineering. Right. You can’t have answers to all of your what ifs. So that’s where I struggled. I was like, well, I can’t take action on this because what if this happens? What if that happens? And I had all these Yeah. Buts and these doubts and, um, it just got really frustrating for me, um, because I was stuck in a paralysis of analysis. I wanted to understand how step seven and eight worked before doing steps one and two.
David Richter:
Yeah.
Joe McCall:
Does that make sense?
David Richter:
Yeah, It makes a ton of sense. I think a lot of people get stuck there as well too, of just like, okay, I wanna know the whole process. Like just do the work. You know, like go.
Joe McCall:
So yeah. It wasn’t until I said, all right, I’m gonna trust the system. I’m gonna trust what Chris Chico says to do.
David Richter:
Yeah.
Joe McCall:
And I just did it. And I sent out his postcards to his lists. I made his offers. I used his one page contract. And sure enough, dang it worked. And I just, I was shocked. I remember so clearly how nervous I was like, oh my gosh, this actually worked. Now what do I do?, And so I started like, uh, I couldn’t just trust the system even then.
David Richter:
Yeah.
Joe McCall:
Just do what Chris said to do
David Richter:
<laugh>.
Joe McCall:
I had, I bought, I opened up about five or six other courses that I had, and I looked at all of their, uh, contracts and I pulled together like 20 different contingencies from all these other courses and put them all onto this one contract. Um, you know, I had so many contingencies in there, I must have canceled them out. And finally though, I spent hours pouring over this simple, simple contract. Um, I gave the seller earnest money in cash when she signed the contract, gave it to her in cash. You never do that. You gave it to the title company. Right. And, uh, I was so nervous. Um, and I was, she was elderly. So I made sure that she had her son with her when we signed the contract. Cause I didn’t wanna be accused of taking advantage of an old lady. And, um, she had been begging me to make an offer on her home. I pulled a number out of my butt and she said, yeah, fine. And now I’m freaking out. The son says, dude, yeah, it’s fine with me. No big deal, man. And then she signs the contract without even reading it. And I was nervous trying to, thinking that I had to explain to her every single sentence in that contract. And what did I, and I had to have an answer for everything. She just signed it. Now I’m freaking out. Like, what am I gonna do? Um, I thought whole wholesaling must be illegal. It can’t be this easy. So, um, I stuck a sign in the yard, had tons of people calling me. I bumped the price up 15 grand and it was a three family. And, uh, I had a ton of people start calling me from the sign. And then the first one that I talked to was a realtor. And I thought, oh no, it’s a realtor. He’s gonna, he’s gonna mess up this whole deal. And, uh, I said to the realtor, listen, I gotta be honest with you, um, I don’t own this house yet. I just have it under contract. I think it was for like 50 and I was trying to sell it for 65.
David Richter:
Yeah.
Joe McCall:
I have it under contract for 50 and I don’t know what I’m doing, but like, I don’t own it yet. I hope it’s okay. And the guy’s like, yeah, no big deal. Don’t worry about it. My client wants to buy it. I said, well, I can’t. How do the realtor commissions work? How do you get paid? And, well, I don’t own it yet. How does this work? He said, don’t worry about it. We’ll just do it as a cash transaction. He said, well, I don’t have a title company. How am I? He said, oh, well just use mine. So I said, okay. So he gave me the name and number to his title company in that little small town. And you know, I, so I called that title company up and I said, Hey, um, I just wanted you to know right up front, I don’t want any surprises. I don’t own this property. I’m a wholesaler. I have it under contract for 50. I wanna sell it for 65. I hope that’s okay. And they’re like, relax dude, this is fine.
David Richter:
<laugh>,
Joe McCall:
It’s a cash transaction. No, it’s not a big deal. And so at the end of the day, I got a check for like 12 and a half thousand dollars, 12,500 and something. And changed.
David Richter:
Yeah.
Joe McCall:
And I never went to go look at that property. I didn’t even put a sign in the yard. I had a friend do it. Um, I met the lady, the seller at a Y M C A, a local Y M C A where I knew she knew where it was. And um, yeah, I couldn’t believe it. I sold it, made 12,000 something in change. And, um, I became a believer in this business at that point that even though I had done deals before, they were like, they weren’t good deals. They were bad deal. And I didn’t listen to my coaches and the people who wrote the books and bought the courses from, I didn’t do exactly what they said to do
David Richter:
<laugh>. It still worked out. I love that. And that you’re able, everyone starts somewhere. So there, there was Joe, I could just picture you like, ah, is this, is this, uh, with the title company? Uh, is this okay? You know, like
Joe McCall:
Yeah.
David Richter:
Yeah. That’s great. I absolutely love that image cuz like now I know Joe years later and like the hundreds of people who’s helped, maybe even thousands at this point in like all the different deals that he’s done. And then we all start somewhere. So if you’re listening to this, you could start somewhere. Let me ask you, since the pro first REI podcast, what did you do with that 12,500? Do you remember?
Joe McCall:
Well, at the time I spent it all. I’m sure I didn’t. Yeah.
David Richter:
Yeah.
Joe McCall:
That was back in 2008.
David Richter:
And that was, did that cover some of the mortgages at that point? Cuz you had said like, Hey, we’re, did that cover your mortgage? Like,
Joe McCall:
That’s a good question.
David Richter:
Do you remember what that first check went to?
Joe McCall:
That’s a good question. I don’t remember, to be honest. You know, probably went back into some marketing, um,
David Richter:
marketing yeah
Joe McCall:
And, probably I, you know, at any, there was a period of two or three years where I owed so many people, so much money and I was behind on everything.
David Richter:
Oh, okay.
Joe McCall:
That any money I did make, I’d go to pay off some debts, some bills, student loan payments. Uh,
David Richter:
Was that all during this time? So you make that 12 five and you’re just trying to dig yourself out for the next few years it sounds like.
Joe McCall:
Yeah. The, my period of trial and tribulation was, uh, 2007 and eight when the market started.
David Richter:
Yeah.
Joe McCall:
Crashing, um, to 2011.
David Richter:
Okay.
Joe McCall:
Right during that window. Um, yeah, I had to, I never did miss a mortgage payment on my subject twos.
David Richter:
Yeah.
Joe McCall:
So I’m proud of that. And I paid all my private lenders back, every single penny. Really proud of that because I had borrowed, I mean, at the t knowing some knowing what some people these days borrow, I, um, I was, I had only borrowed maybe 75, 80 grand from private investors
David Richter:
Okay.
Joe McCall:
Over, um, five or six deals. Okay. But I paid them all back. And at the time that, that could have been $800,000, it was a lot of money.
David Richter:
Right.
Joe McCall:
And, uh, I didn’t have, there was no more equity in these houses. They were all upside down.
David Richter:
Yeah.
Joe McCall:
Um, I was getting threatening letters from attorneys and, you know, sellers and from attorneys of sellers and investors and tenant buyers that were threatening to sue me. Um, but I was able to, like some of the houses, I just deeded them back to the owners.
David Richter:
Yeah.
Joe McCall:
Um, but I gave them a tenant that was paying rent. So I just told the owners, listen, I can’t make next month’s mortgage payment, so I’m gonna deed the house back to you with a quick claim deed. I’m sorry, here’s the tenant. And the tenant is just gonna send you the rent to you next month. Um, and they’re like, okay. They weren’t mad. I thought they were gonna be really mad at me, but my private investors, I kept on, I had to have those uncomfortable conversations so many times. It was really hard.
David Richter:
Yeah.
Joe McCall:
Sorry, I can’t pay you, but I will. Um, I remember one time my, uh, dispositions manager <laugh>, this is such a disaster. Um, I won’t go into all the details, but like, I had to come up with only like 12 or $15,000. And again, that time, that could have been $150,000.
David Richter:
Yeah.
Joe McCall:
I had to come up with $15,000 to pay back this private investor, or the private investor was gonna sue me, and the seller was gonna sue me. And, um, I was so my dispositions manager who, um, I dunno at the time wasn’t making that much money. She lent me like that money and I was able to get out of that and then pay her back. So anyway, at the end of the day, um, I learned the importance of cash flow.
David Richter:
Yeah.
Joe McCall:
Like, uh, it’s important to understand and to keep your expenses low, to take on as little debt as possible. And, uh, this is why, um, at the time I remember saying, I don’t want to own another deed ever again. I never want to be responsible for a mortgage payment.
David Richter:
Yeah.
Joe McCall:
On my investment properties. Um, no, I have had some mortgage payments since then, but what I started doing was wholesaling and then I started wholesaling lease options. I started getting, you know, lease options where you control a property without owning it. And I got really interested in that. Like, how can I, how can I get the same benefits of owning a rental property without owning it?
David Richter:
Yeah.
Joe McCall:
Just controlling it. So I started doing a lot of lease options at that point. Um, and this, so then when I started flipping lease options, like what I call wholesaling lease options, I was able to quit my job in the spring of 2009.
David Richter:
Okay. So that helped you, I’m assuming that helped you during those dark times. Cuz you said up to 2011
Joe McCall:
yeah
David Richter:
was just basically <laugh>.
Joe McCall:
So I still had another two years of digging me
David Richter:
Yeah.
Joe McCall:
Digging out of a hole. But now I had more time to do it. Okay. Because now I didn’t have a full-time job, you know, I was working 50, 60 hours a week back.
David Richter:
Yeah.
Joe McCall:
But I was wholesaling, um, these lease options and making more money doing that part-time than I was in my full-time job. So
David Richter:
Then you were like, see ya. Like, I’m gonna do
Joe McCall:
Yeah.
David Richter:
Full-time.
Joe McCall:
But then, you know, also, I made so many mistakes. I mean, God’s been really helpful and good to me. Um, like I didn’t even think about insurance. So my insurance home ins, uh, health insurance costs, you know, doubled.
David Richter:
Oh, wow.
Joe McCall:
And then it was also hard to get. So there were a lot of these little things. And then I, you don’t realize this, but um, and we’ve talked about this in the last one, taxes. Like when I was working for an employer, um, you, uh, they take your taxes out every, every two weeks and usually you get a refund at the end of the year.
David Richter:
Yeah.
Joe McCall:
Um, and so when you’re now working for yourself, you have to set aside that money. So eventually that cut up with me too. But, um, yeah, I, you know, I’m, I guess I’m the case study of how to do things wrong. <laugh> but not quit, not give up and learn the right ways to do it.
David Richter:
Yeah.
Joe McCall:
And so now maybe I’ve, I can help other people.
David Richter:
Right, exactly. You actually took that and did probably the best thing possible you could do is number one, stick with it. And then number two, help people avoid that and be, you know, and really help them in their life and their journey. Let me ask this, so you’re on that 2009 to 2011, kinda like just a, not the greatest period of time. When did it click or when did you read um, pumpkin plan? Because I remember from the
Joe McCall:
Yeah
David Richter:
First one that was the one that kind of changed the mindset. Was that the first book that kind of helped you with the business aspect of real estate? Or like what was the, what made it go from I’m doing these deals and I’m get, and I’m paying all this off to where now I can actually focus on making my business better?
Joe McCall:
I think pumpkin plan, I read that in 2012. So
David Richter:
Okay.
Joe McCall:
I quit my job for after a couple, three years.
David Richter:
Yeah.
Joe McCall:
And, um, I needed, I felt like I was still trying to be a jack of all trades and a master of none I was doing, I was doing well.
David Richter:
Yeah.
Joe McCall:
But I really felt like I needed to focus. I remember the one thing came out about that time.
David Richter:
Okay.
Joe McCall:
The book, the one thing from Gary, Gary Keller. And yeah. And I started reading that and I had a hard time finishing it for some reason. Not that it’s a bad book. I just had a hard time finishing it. And then the pumpkin plan, somebody said, Hey, this is like the one thing, but it’s better. So I read it and I, I’ve really liked it because he talked about, um, and I haven’t looked at it in a while, but there’s three consent, there’s three circles, you know, so if you wanna find your, um, your best business, like the one thing you should be focusing on, it’s a combination of these three things. I think it’s your best customer. So knowing who your best customer is. Second thing is, do you have something that can be automated and repeated like a system?
David Richter:
Yeah.
Joe McCall:
Do you have a repeatable system? And then the third thing I think was, um, is a high profit, you know, does, so if you have the combination of your best customer, you, and it’s something that you, somebody that you like working with, it’s repeatable and it’s high profit. Or maybe the third thing is it’s something you really love to do, you’re passionate about, I forget. But, uh, when it’s a combination of those three things. And so I looked at the different businesses that I was doing and, um, at the time in 20 12, 20 13, the market started rebounding a little bit and um, a lot of money was coming back into the market.
David Richter:
Okay.
Joe McCall:
A lot of investors were starting to buy houses. And, um, so I saw all this cash coming into the market and um, so I thought, and I got kind of tired of doing lease options at the time. I wanted to do something different. So I started doing a lot more cash wholesaling again. At that point, I wish I would’ve started buying houses and holding onto them. But, um, I was still afraid of taking on any deeds I wanted a quick nickel rather than a slow dime. So, um, I changed kind of my strategy and started focusing on finding the buyers first cuz they were my best customers. I realized from reading the pumpkin plan, my best customer is the guy with the money or the gal, the lady, the company with the money. They’re my customers. Not the sellers that I was trying to go after. The buyers with the money were my customers. And then, uh, so we started, stopped all of our marketing for sellers and started marketing for buyers, cash buyers. And they were easy to find. We, they were already buying properties outside of St. Louis and other markets. And then, um, we started then getting other people to bring us their deals. Other wholesalers would, we became known in the area as the best the buyers with the money. Um, so we started just networking with every realtor, property manager wholesaler in the market and saying, Hey, give us your deals. We’ve got money, we’re looking for deals right now. So people started bringing us their deals and then we would then turn around and flip them to our buyers and, um, became a lot easier because, um, it was just so much easier. We’ve got the buyers with money, other people have the deals, they bring ’em to us and we’re in the middle and we wholesale ’em. Um, so that book helped me because I was doing like, again, I said three or four different things, different strategies.
David Richter:
Yeah.
Joe McCall:
And it helped me really focus on my giant pumpkin. And at the time my giant pumpkin was wholesaling deals to cash buyers. Um, and when I started focusing on that, we went from doing couple deals, three, four deals a month to doing three or four deals a week.
David Richter:
Yeah, that’s great. Cuz then it sounds like starting to become a real business. You know, that’s repeat
Joe McCall:
Right
David Richter:
About that and you’re focusing on that. Is that, and then that’s probably what got you into Profit first too. Correct. Like, you had already been a fan of Mike Macau, it’s cuz he wrote Pumpkin Plan, but then read Profit.
Joe McCall:
Yeah. You know, so what’s funny is I read, uh, profit First shortly after that, but I didn’t finish it.
David Richter:
Mm-hmm. <affirmative>,
Joe McCall:
I don’t remember why. Not that it was bad. I just, maybe I have a bad habit of not finishing books.
David Richter:
<laugh>
Joe McCall:
And I, well, I thought, I get it. I know it. I’ll do that. That’s a good idea.
David Richter:
Yeah.
Joe McCall:
But I didn’t do anything with it. And then until it was, you know, a few years probably after that um, when I, all of a sudden now I’m making a lot of money and I’m not paying my taxes and I’m filing my taxes late. And we talked about this in the last episode
David Richter:
mm-hmm. <affirmative>
Joe McCall:
That I did with you. And, uh, all of a sudden I got this huge tax bill. I’m like, oh crap. And after I’d filed two extensions, so I, here I am in late summer, right,
David Richter:
right.
Joe McCall:
And, uh, I owe 60 grand to the irs. Like, oh shoot, so what do I do now? Well, I start paying off those old taxes, but I’m not setting aside any money for my new taxes. So then the next tax bill comes around and I file a couple, three extensions,
David Richter:
<laugh>,
Joe McCall:
You know, and, uh, that’s just a mess, you know. And then I’d give my shoebox of receipts to my accountant at the end of the year, figure this out. Um, and dang it, I owe another a hundred thousand dollars in new taxes. And so it just, I kept on, I was making a lot of money, but I wasn’t taking, I wasn’t writing enough off. I didn’t because I wasn’t buying houses either at the time. I was just wholesaling them.
David Richter:
Yep.
Joe McCall:
So I didn’t have any write-offs. I ran out of all the write-offs that I had from my losses before, from before. We’ve adopted four kids. So we ran out of, we had, there’s adoption tax credits we ran out of those. So yeah, now I gotta start paying taxes. Um, and that kept on snowballing until, um, I forget the year. But, um, you know, I got a, I’d been kind of working with the I R S I was getting a bunch of letters. Um, I was on these plans, these payment plans, um, and I was keeping up with them for the most part. I might miss a month here or there. Um, but then I wasn’t setting aside any money for new taxes that were gonna be coming next year. And I kept on getting into a bigger and bigger hole. And then the penalties, the interest, I just kept on compounding a bigger, I owe the IRS about 520 grand.
David Richter:
Whoa.
Joe McCall:
And I had liens on my, on everything. And, um, it really had affected my credit. Now, um, I, you know, I wanted to buy a house and I couldn’t cuz of these federal tax and stuff like that. Um, so finally I got serious about it and I picked up the book again, prophet first I picked it up again. And this time I said, all right, I’m just gonna do what the guy says to do. I guess I have this problem,
David Richter:
<laugh>,
Joe McCall:
this is,
David Richter:
it’s recurring. Yeah.
Joe McCall:
I’m just gonna do what he says to do. I’m gonna stop questioning it, I’m gonna do it. And then I, um, I hired, uh, an assistant who was gonna also be my bookkeeper. And I just told her, your number one job is to implement profit first.
David Richter:
Yeah.
Joe McCall:
For me. And, um, I said, I don’t know how it works if I try to get into the weeds and try because it’s not my strength, it’s not my
David Richter:
Right.
Joe McCall:
I became smart enough I think, to figure out, I need to find somebody else who’s good at this. Let them do it for me. And, uh, I can focus on how to make money cuz I’m good at that. I can make money. I’m not good at saving the money, paying taxes and all of that stuff.
David Richter:
Right.
Joe McCall:
So she took it and, um, did really well. She, and then the irs, I had a good come to Jesus meeting with them and, uh, they scared the living JIS outta me. And, uh, basically said, you know, we could send you to jail. We could take your house, put your everything, sell it, put your family on the street. Um, you need to start taking this seriously. And I said, yes sir. <laugh>, yes sir. Um, and uh, they said, listen, stop, don’t worry about your previous taxes. Get current on your current taxes. And so I did within a few months, maybe four months, maybe more, four to six months, I got current on my current taxes, started filing them quarterly and, um, put myself on payroll. So I’m starting to get a paycheck every two weeks. And, um, they were taken, I set up the payroll where they were taking the taxes every two weeks.
David Richter:
Okay.
Joe McCall:
Out of my check.
David Richter:
Yeah.
Joe McCall:
In the past I’d just been doing owner draws.
David Richter:
Yeah.
Joe McCall:
Um, so now they’re taking the taxes out and then I’m setting aside a little bit every, every two weeks as well for my quarterly taxes.
David Richter:
Yeah.
Joe McCall:
So that’s taken care of. And then I, then they put me on an installment plan to pay off my old taxes. And it would’ve taken me about 10 years on this plan that they had. And I was like, this too depressing. I can’t do this for 10 years. So I just started paying triple four times what I was supposed minimum
David Richter:
O sure
Joe McCall:
And when I’d have, you know, a, when I make a lot of money or something, did a big deal, I would pour more money into that to pay it off. And, um, yeah, it was a couple years it took me to pay all of that off. It the plan that I was on was like, I don’t remember 10 years, but man, what a relief. Right. And once that was paid off, I was able to get a mortgage and buy a really nice house. And, uh, dang. <laugh>.
David Richter:
Yeah. <laugh>.
Joe McCall:
I would, I’ve never met Mike Mcz, but I’d love to meet him someday. And, uh, his those two books were some of the biggest influences in my business. Um, uh, understanding the power of focus, focusing on your giant pumpkin, cuz we all have one. And, uh, there’s what do I always say there, um, focus will make you rich.
David Richter:
Mm-hmm.
Joe McCall:
Right. Focus will make you rich. So when you focus on that one thing, your giant pumpkin, you will start having success.
David Richter:
Yeah.
Joe McCall:
You will start doing, you will start making my money. But then when you start making money, what do you do with it?
David Richter:
<laugh>,
Joe McCall:
Right?
David Richter:
<laugh> right.
Joe McCall:
You’ve got to know your numbers, you need to manage your numbers, you need to, um, get somebody else to do it because, you know, some of us think that, well, I can do it or I can learn how to do it. I don’t wanna spend the money on a bookkeeper or an accountant. I can do it myself. Man. That’s the recipe for disaster,
David Richter:
Right
Joe McCall:
Like when you can’t do everything, you’ve got to get somebody who can, who’s better at it than you are, who is not involved in the emotions of everything that’s going on, could look at it from an outside perspective and have a better view of it and just give them the authority to do it. Tell them, all right here, read this book, go implement it. Or there’s companies you can hire like yours that can do it for them. Right. So
David Richter:
Yep.
Joe McCall:
Just stop asking how do I do it? And just ask who, who can I get to do it? And that’s finally when things started turning around for me.
David Richter:
Yeah. So it sounds like what a journey there of going
Joe McCall:
Yeah
David Richter:
Through lots of different learning points from, you know, the cash crunch at the beginning to then focusing on, you know, the wholesaling lease option. But you’re still focused on several things but then finding the pumpkin plan and like focusing on what you’re really good at. And then I like how you said like your best customers were your buyers at that point. Just fulfilling their orders, really honing in and then making sure if I’m gonna make all this money I need to make sure that the tax people don’t come knocking on my door anymore. So like getting that outta the way. So yeah, that’s a incredible journey. I’m really glad you were able to share your story here. One, just one, two last questions. One, the before I ended and you know, where do people go for you, but is there any, if someone was going to implement profit first or do that, what would be your biggest advice for them? You know, like, I know you said use someone else, but like is there anything else that you wanna get out there? If someone was going to actually implement it?
Joe McCall:
Uh, well you gotta read the book, that’s number one. But then read it all the way through to and then, uh, just implement it. Stop asking what if, start asking what next? And for me something like that’s really important. I’m too busy to worry about it. I am not good at saving money. I’m good at making money.
David Richter:
Yeah.
Joe McCall:
Um, I’m not good at managing my expenses. I’m not good at counting calories for my diet. Like there’s certain things I’m just not good at, but I am good at making money so I can hire people to do that stuff for me. Right.
David Richter:
Yeah.
Joe McCall:
And um, I think, you know, one of the first one or two or three people that you hire in your business better be some kind of bookkeeper, an accountant or somebody that can manage your books for you because you’re probably not good at it. You’re probably not like, and you gotta be honest with yourself and swallow your pride and just say, this is, I need help with this.
David Richter:
Yeah.
Joe McCall:
I this is that important that you can’t just put it off to the end of the year and worry about it later. Um, you can’t just once a month try to do all the books yourself.
David Richter:
Right.
Joe McCall:
Uh, when you get the time to do it, um, I would say don’t even get your spouse. Maybe your spouse can help you do it, but like you need somebody outside third party who can do it for you, who can look at your stuff and say, um, yeah this goes here, this goes there. And uh, these are the three buckets. And so every dollar that comes in, certain percent goes here, certain percent goes there and uh, just get it done.
David Richter:
Yeah. No, that’s good stuff. So then Joe, lots of value here. I think just hearing your story, your journey, your personal journey and then how overcoming some of those things, what uh, how can people reach out to you now if they want to get involved with you? Cuz like I said, Joe can teach you how to make the money. He’s very, very good.
Joe McCall:
<laugh>
David Richter:
On the make the money side, he’s a marketing expert. There’s a lot that stuff to learn from Joe. So how can they find you?
Joe McCall:
Yeah, thanks man. I guess, uh, I’m on YouTube. I’m on um, podcast. I have a podcast, the Real Estate Investing Mastery. I guess you can see my logo, but it’s backwards on the video. It’s flipped my image. But anyway, I have a podcast called the Real Estate Investing Mastery Show. Um, I have a YouTube channel just search for Joe McCall on YouTube. Um, I have just a lot of things you can go to joemccall.com. I have, my main thing I’m doing now is flipping vacant land. There you go. Uh, that for me is my giant pumpkin right now. Flipping vacant land. And it’s okay if your pumpkin changes.
David Richter:
Yeah,
Joe McCall:
You can have, you know, one year you can have this giant pumpkin, you know, maybe you shouldn’t switch pumpkins every single year, but right now my giant pumpkin is vacant land. I love vacant land. I used to do a lot of houses, now I’m doing land. They’re just easier to do. Um, and you can great, you can make great money. Uh, you can make great cash flow with just a few thousand bucks buying a vacant land and selling it on owner financing. Um, so I’ve been doing that and a lot of people, I’ve been teaching people how to do vacant land flips as well. And if you’re interested, I’ve got a book, Uh, Sorry I had a book. I swear I did it. I’ll tell you it looks like this, but this isn’t it. Um, and you can get the book for free if you go to simplelandclass.com, simplelandclass.com and that’s the webinar that I do. And then at the end of that webinar is, uh, I give you the option to get the book a PDF for free simplelandclass com.
David Richter:
So that’s what his big pumpkin right now and how it can help you if you’re looking to, if you’re already in real estate and looking to add another stream or another exit strategy, or if you’re like, Hey, real estate sounds great, go to Simple Land. What was it again? Simple Land Class, simplelandclass.com. We’ll make sure we put that in the show notes. Then if you’re also listening to this and you resonated with Joe and you’re like, I do not wanna go down that path and I do not wanna be accosted by the IRS and almost taken away, please go to simplecfo.com if we can be your who, uh, at least for getting on the phone and seeing if we’re the right fit or if we’ve got someone for you, you know, like in our network. So that way you don’t have to be struggling on the financial side of your business. Know where every dollar is going. Be very intentional with it, making sure that you’re keeping more of it. So please go to simplecfo.com if we can help, but we just wanna make sure that we’re helping you make profit a habit in your business. Joe, thank you so much again for coming on the Profit First REI podcast.
Joe McCall:
Yeah, thank you David.
Outro:
This episode of the Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call at simplecfo.com right now. We’ll see you next time on the Profit First for REI podcast with David Richter.
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