Hey guys, my friend Andrew at the gym wanted to ask me some real estate questions. He's actually worried about the golden handcuffs, which is where his job keeps paying him more and he keeps getting these huge options and stock options that best if he stays just another couple years. So he's worried about not ever getting control because it's always so enticing to get those big chunks of cash and stocks. So we had a great conversation, he said he watched every video since 2021, he was asking me about how to get in real estate. So many of you are looking to do wholesaling, which is a great way. If you don't have a lot of cash or you can build your real estate skills, make $35,000. I mean, two episodes ago, that's the reality of our guest, you know, the one before that made $40,000. So you can really make a lot of money finding rundown houses, getting under contract, passing it to an investor and you've got to learn some real estate skills to do that. But when you're ready for rental property, you'll have all the skills to find those smoking deals that you can really make even more money from doing a flip or holding and renting after you fix it up. So we have a discussion about how to find those deals and avoid the golden handcuffs. This is the podcast replacing your W two with real estate investing, specifically wholesaling is what we covered. My name is David Leko. I created a process called deal machine that's helped people close their first deal in all 10,000 states, well, 10,000 deals in 50 states. Okay, so I don't use long term leases because when I got my third rental property, I put her on a rear lease and I gave her a little bit of a discount for that because I thought that was going to help me minimize vacant. Yes, she rented it with her boyfriend. They broke up. Bless her heart. She got a second boyfriend within two months to help pay for the house. And that didn't work out either. So she contacted me that she couldn't pay for it at that point and her car was broke down. So I was in the situation where I could evict her, have it go through a nasty process and this poor girl's been through so much or I just said, I'll let you out of your lease if you agree to get out within three days and go to a family's house that can help you get back on your feet. I'll keep your deposit, but I won't do the eviction process won't have that on your record. And so that's why I don't do long term leases anymore is because it actually just I had a renegue on it, it didn't give me any advantage, but she got the discount the whole time. So I just do year long leases at market price. And I hope that they do renew and I earn that renewal by doing a really good job of helping them with maintenance reflect really fast. So that works best for me. Why do the year long list? I say, do you like, I know that states are like different with how they do eviction and all that stuff. In Maryland, that's where I'm from. It was like a really, my parents rented out the basement and it was actually really an asset process because these two people, they stopped paying and we like legally could not do anything about it. Okay. We were just like, they were just stuck there. Yeah. And it was a really, it was really hard to get them out. I'm wondering, is that like a few something you have to check when you choose like a state or something to. Oh, yeah. So sure. I mean, Indianapolis and a lot of Midwest states are very landlord friendly. So I would, if you're going to invest in rental property, yes, definitely consider that. That makes sense. Yeah. Makes a lot of sense. I'm sorry about your parents based on what happened with the person who was sounding. So if I recall correctly, yeah, they, it was like this young couple. They were pretty normal, pretty friendly and all that. I think they just started getting into drugs. Like I could see like slow changes of like how they would behave louder and this by the end of like the least, like they looked horrible. They looked horrible. They tried like methods on them. And so we wanted to kick them out and we couldn't. I think this, this happened. We, one night I heard something downstairs, like some kind of tumbling and I look, I look out the window and my dad's like like wrestling with the guy and the guy had pulled a knife on my dad. What? Yeah. That's what I got in his own house and yard is they lived on top. Oh man. Yeah, that's terrible. Has been like the cops came and we couldn't, we actually couldn't kick him out. Yeah. Even after he had pulled a knife. I don't know about how they selected that person, but I'll say a few things that protect me from stuff like that is I'll have a minimum 600 credits for no criminal history at all. Yeah. And their income has to be three times rent. Yeah. And so that needs to be from like a W2 job, not like somebody who owns their own bakery or something, you know, I'm speaking from experience that they work out during COVID. So well, so that's what my requirements are. And I stick to never like never ever can but flex on those. Yeah. With the one exception that I have is I'll let them pay three months cash up front, which means they have to pay three months plus a deposit. If they can do that, then I'll have an exception for maybe like a 590 credit score or a self-employed person who just started their business, but other than that, no exceptions. And I've got it written down. So I do that legally, make that selection so that prevents me and has prevented me from I've never done any eviction and I've also never had anybody pull a knife on me, you know, thankfully, and it's been pretty good client telling. So that's, yeah, just in general, random thing. So now, so golden handcuffs, that's when you start earning a lot of your business and it feels like you can't quit, especially when you've got more responsibilities, like a wife, maybe kids, et cetera. So you saw that video and you're like, man, that resonates with me right here. It's the 23, you're single, but you have a girlfriend and you could see things moving forwards. You know, that's why you're kind of interested in real estate. I'm interested in like having freedom, like having options. So not real estate necessarily, but that's, that's kind of why. I think this would be a great avenue. I think I was like 90% of millionaires are made through real estate. I'd earn that too, yeah. So what do you feel like you have all the knowledge at this point? No, absolutely not. Okay. Well, what's something that you have a question about? So being in cost tab, being like shout, well, I have to walk through like how it goes. But I guess let's get one is like, how do you generate the leads, right? Like, do you, do you just stick to one thing? Like if you're going to do your thing where you like, you, you have this machine, like the old machine, right? Yeah. It's a marketing tool for people that look for real estate deals right on the investment in house flipping side. So like, would you just stick to one thing where you're just driving through neighborhoods and just doing that or do you also like incorporate like, I don't know, I guess using like the, is there some sort of website that you could use that enough? So yeah, so in deal machine, you could pull tax delinquent properties and start cold calling them as well. Okay. So I would just pick one of the other and right now, I think a great way to go is like full tax delinquent properties, pull tired landlords and then start cold calling them immediately, just asking if they want to sell their house. Okay. And so that's just as simple as that. I would say in 500 calls that I made so far this month, one of 500 was, was upset that I called that and it, and it really wasn't upset. His wife was laughing. She's like, I'm sorry. He just had a bad day. So also like what's going to happen, like, yeah, yeah, they're going to yell at you over the phone. Like nothing. It's correct. Yeah. So I, I do recommend sticking to one thing because it can be very shiny object syndrome. And so you said, what, you can get into shiny object syndrome, where you're like, Oh, I want to try this strategy. Oh, no. Now I'm going to try this strategy. Yeah. I'm going to try other strategy. You never give any one of them like a big enough effort to really get results because when you're cold calling, like you probably need to call on like a thousand people before you actually get a lead, right? So if you stop at 500 and you go try something else and then you go drive for dollars, you might need to find 500 rundown houses before you find one that wants to sell for a discount. Let's say you stop at 200 and then you go to a third thing. It's like you're spinning your wheels because you're trying all these things, but you're never trying any one of them enough right to actually get a result. So that's what I mean by you want to avoid shiny objects syndrome and really just pick one that speaks to you that seems like an idea that would work well for you. Another question. But obviously city matters right where you choose or what town you choose. If somebody were to like have a job, let's say in Austin, Texas, it's an expensive place to live. Right. Like this would be it might be difficult to find houses maybe in this city as opposed to somewhere like when it was correct, especially when you're talking about you want to fix it up and then rent it out and then have the rent pay for all the mortgage. Yeah. That would be difficult to do in Austin. Yeah. You know how I know if this place I live in, I mean it costs $7,000 a month to rent. But the price is $1.5 million and the mortgage on something that expensive would be 10,000 a month right. So the guy who is my unit is not cash flowing at all. Does that make sense? He's losing $3,000 a month. How does he make it up? Well, some people prefer some people are so rich, they don't they don't need the cash flow. And he thinks that it will appreciate more than what he's losing on the cash flow. Wow. But for me, I'm not rich. Why am now? But I wasn't when I started, right? So the whole point was like, I know I need to create the wealth by fixing it up. But I need these things to pay for themselves so that I can take any active income I have and put that towards getting another one. I don't want to be sucked dry from these investments. You know, I need them to pay for the sauce. Yeah. Yeah, it makes sense. It's market or if you were in Texas, I would go out to Kyle, right? Or which is kind of in between San Antonio and Austin, where the prices are lower and it does have a closer rent to mortgage price point so that you could get it to cash flow. I'll have to get a good idea there. Good. It was a great question. I knew the real questions. I know. That's why they're good. Yeah. I'm thinking of other questions. Sure. No problem. No, the law form video is great. Yeah. I'm going to, yeah, people with that. Yeah. I'm going to go all the shit. I'll try to make more of a conversation instead of like just like interviewing. Yeah, I mean, either one's fine. So you have a question? Dude, no. I mean, you're very consistent with what I see at the gym, right? We see each other every day. Yeah. Yeah. And nobody's telling you to do that, right? Yeah. So I think you've got a lot of self motivation that would do well to be able to find one of these deals and it all starts with the deal. Yeah. I would encourage you to start looking for a deal because you'll always not know all the answers. You know what I mean? Yeah. Another way of saying that is people will have analysis paralysis where they're just not taking the next step because they're having questions about what happens on set five, six or seven. So while it is good to know what's the actual end result, I think you'll actually learn a lot if you're like me by actually just starting to look for a deal. It's actually like a year and a half, right? Yeah. Well, like seven months. Yeah, it's kind of eight, nine years ago now, but I thought at least seven months, right? Yeah. I know for a fact that the guy was receiving mail from me for seven months. Yes. And then, yeah, yeah. But I was probably looking for stuff for like a year and a half. Okay. Yeah. And then I found this guy halfway in and then he received like seven postcards once a month before he called me back. Yeah. Yeah. I think definitely one of the things that you mentioned is like, and I think this is just like general sales, but you have to one like BSP persistent and like constantly reaching out to a client, but also like you need to kind of like branch out, right? Like it can't just be focused on one guy. Correct. You say that people get kind of in. They feel almost like I was laughing when he was like, they kind of feel like entitled to it. I had like, this is my house. Oh, yeah. And I'm like, this is great. You know, they over this shit. Yeah. Right. Right outside where I live, there was a house with a bush taller than the house. Yeah. It was blocking the whole front door. It was like a person who wanted privacy and had lived there for 40 years, you know. And so it just looked so bad. They weren't doing any maintenance either. And I just looked at it every day. I was like, this is going to be my deal. It's going to be my deal. You know what I mean? Yeah. But, but it's looked that way for like 10 plus years, right? So just because I see it doesn't mean that it's my deal. It was wasted mental energy. I should have just looked for more deals. I think I looked recently in that house. So I had sold. So it's like, good thing. I didn't keep worrying about that house because. Totally why? So I haven't done my most deal yet. Yeah. So I mean, it's like just continuing to kind of pump your numbers up. You know what I mean? Yeah. Would be the best way to actually get a deal because it's a numbers game. You want to find somebody that does want to sell. Yeah. Force them to sell or obsess about somebody that you think should sell. Yeah. You think you're a shire before you started doing at least purpose? Yeah. Well, yes. I really didn't even start cold calling. So like recently. What did you do before? Mail. I sent direct mail. Just mail. I let them call me because I definitely was more introverted back then. And so cold calling would kind of drain energy and if they were calling me, at least they probably were interested. So that was like easier call to have. Hey, guys, if you know you want to quit your job in the next three months, make sure you're subscribed to this podcast because we've got some incredible frameworks with step-by-step instruction that you're not going to want to miss. Also, leave us a rating and review to let us know your favorite parts and why you want to get financial freedom. So I have a bit of experience with not cold calling, but like kind of putting myself through uncomfortable social stuff. I'm sure you're familiar with this, but like kind of like the pick up stuff. Yeah. So when I was an e-buy that pick up like you'd go approach women and like try and get their number again a day or whatever. But you have a girlfriend. So before of course. Okay. So when I was like 18, 19, yeah, I was like, you know, not really successful at all the girl. I mean, I'm in high school, right? But never had a girlfriend in high school or something like that. So super frustrated. I would just start going up to with my friend and we would go to malls and we would just start like, you know, it was like corny, right, but we'd go in there and try to get their number or whatever. And it's like, it really kind of builds this muscle where like you can just like go up and talk to people. And if you can talk to a girl who you find as attractive as a guy, it's like, that's a fucking terrible marketing to do. Yeah. Now when you go talk to like some random like 50 year old man or whatever, like houses gonna, whatever, it's like, that's like, that's like, that's, that's cake, right? So I think like it's a little bit easier, even like when I went up to you, right? Like it's a little uncomfortable because it's like, I don't know you. Like I said, I said hi a couple of times, but then I'm like, stranger, you know, let's go, let's go grab, grab, grab, right. And it's like right there, it's kind of like you're putting yourself in that vulnerable position where you can just be like, no, like through weird, like, who are you? You know, like, don't talk to me. And so it's like, you kind of just have to be able to, and you'd be surprised or like most times, like the interactions, even with the call or whatever, they must be positive at least, or at least kind of like boring, or like, not interested, that's it. Like the horror stories with like, I mean, I imagine the horror stories with like cold calling as just like the horror stories would like going up to girls. It's like, it's, they happen with like so far a key between. Yeah. Yeah. Well, it's good. Yeah. It is like exactly the same way. It's more comfortable. And like, I was kind of avoiding cold calling for years because I knew it was going to drain my energy. Yeah. But, you know, I've made like 500 calls so far this month. And like I said, the people who picked up, a lot of them just kind of became my friend. I mean, a lot of them was just neutral. Yeah. They weren't mad. But like way fewer people actually like were scary, you know? Yeah. Yeah. For sure. Exactly. Sure. Do you think it's more like like, let's say somebody just didn't have emotions, they could just do anything that like they said, they were going to do what would be the best, what would be the most efficient way until like, actually get these deals, they would be through cold calling, right? Wouldn't mean they're male. I would matter. If, I mean, cold calling takes time, right? It's like to need two hours to do 160 calls and I, you just got to keep pumping in that time, right? Yeah. The fastest thing to do is to just pull a list of tax delinquent properties and tired landlords in your area and then send direct mail to all of them seven times. How do you fight that? That costs 59 cents a postcard, so it's going to be quite a bit more of an expense. You understand what I'm saying, right? Because if the mail is more expensive, that's what I call it. So, yeah, I mean, deal machine has all that data that you could filter and just send mail to easily for a tax delinquent records and stuff like that. Yeah. A lot of counties have it too. Okay. It's just, it's not in a format that's easy to get typically by county, for example, they put it in a PDF where you can't select the tax. Yeah. Okay. Like this is very difficult. So that's why like it's, it's in deal machine. It's the same data, but it's in a more easier to use like format. Yeah. I guess you could run like some like AI thing on it. Well, you're a software developer. You might be able to find it easier to do that and you definitely can. You can. Yeah. I mean, you still need somebody to send a mail so you could upload it to deal machine send it there. Yeah. Uh, as an option, right? What's cool. Mm-hmm. Well, it's going to be your first or your next move to think. That's a great question. So that post you had with like the golden handcuffs thing, yeah, especially with software engineering. It's, I don't know if they did it exactly for this, but it works nice. Right. We like the RS use where it's like, um, and I got to stay one more year because then then then I cash out, right? No, I don't know what an RS use, but it sounds like a stock option or a bonus structure restricted stock unit. Okay. So yeah, you're just. Yeah. It's the, for example, with horrible like you sign, um, a four year contract. So it's like, you, I'll, I'll give you X amount of money, which on paper, it's, it's quite substantial. Yes. It looks like a, yes. A lot of zeros. And then you divide it by four. And then it's like, you get that for this year, that for this year. And so what's nice about it too is like, is it, if your company's performing well, then like you buy it at a low price, right? Yeah. So it's like your company's doing well. It's like shit, like this is more than what I sign up for. And then you just want to keep going. So whatever goes higher. You have to use your own money to buy them. No, that price. You have the option to. Okay. Like that euro, you are, you are granted bad at cool at it. Um, and, and like how it will, I mean, to be specific how it works, it's like, um, you will be taxed on that money, um, the moment that it invests. So like if it's $50,000, now that's added as like, as like regular income for that year. Um, so, and you can choose to keep it in there. You can choose to not, but like so for me, my RSC for this first year will be dropping in like a month. So it's a substantial amount with that money. I do want to just like first just get myself completely out of debt. And I really don't have any, I don't have any college debt. Um, and it's just paying off my car, which is like $6,000 left, but well, congrats to you, man. Thank you. Thank you. Yeah, working on that life. You're in a good position. I am right. And so I'm, I guess I'm trying to like, I don't want to just say like forward money right now. Like I feel like I'm though I'm like 23 and like now I'll be like, out of debt and like positive, I still need to like kind of build up a little bit to like be able to be something with it. You know? Yeah. Yeah. So that's kind of where I'm at. Um, and it's, it's, it's tough because when you start a career and it's like lucrative from the beginning and like there are tons of like, it's not like this is a dead end job. Right? Like software engineering, like you could see people at, um, like Facebook, open AI, all this stuff. They could be making like 400, 500 plus. Yeah, I know. So it's not like somebody put, they put it nicely like, I think with like the corporate rat race or whatever, like the, it feels like you're chasing a carrot, right? But the carrot isn't high enough with software engineering. The carrot is actually kind of like worth it almost. So like if you, it's like, man, if I really grind this year, it's not like, well, I get it. I get a 5% raise. It's like, no, you can get like an extra like $100,000 in salary or something if you really bust your ass and find the right job, but yeah, I've been it. Yeah. So, so what do you guys seeing Andrew should do? Put it in the comments. What's his next step? Yeah. So, um, so yeah, I don't know, I was like trying to figure that out because I'm like, I think, um, not to just me at all about me now, but, um, I'm quite, I think I'm like, I'm, I would excel in anything that I really focus on. Just like anyone else, right? But like I, I actually, I don't think anyone can, but yeah, you've got the discipline fair and to make that possible fair, but I think, uh, yeah. So like even with this job right now, I'm, I think I'm quite excelling and I have the chance of getting promoted within this year would move you first year. So it's like, shit, if I can do this, like what else can I do? And if that's the case that I can do anything that I sell my mind to, it's like, do I really want to choose this as my average? Do I want to choose something? I don't know. It's just like a lot of questions. Here's what I've told others is that it doesn't sound like it's important enough for you to make the move maybe one day it will. And that's okay. If it's not right now. And what I like to say that, well, that is, I have worked on it. If it was important enough, you would do it. Yeah. Fair. That's how I know. It's not a problem. Yeah. But sometimes when people ask me, well, how do I get motivated to do this? It's got to do it. That's actually the truth. True. How did you know from the beginning when you graduated? Yeah. So I made like 70,000 a year worked on this software for fraternities and sororities on the side. And I sold that to a company that bought it for $10,000 like nothing after I put two years of work in it. Then I took a pay cut, 50,000 a year to work for that guy. But I learned how to be an entrepreneur because he was growing a company around the software I built. And then two years into that, they felt really guilty of how much I was working and were about to give me a huge pay increase. And I just said, no, I'm quitting and did not take the pay increase. And kids, because I was like, I just know so deeply that like, this is what I want. Can you say the words are as honestly like missed? So in the beginning, you were working for a guy in college? So basically, I worked for a corporate job. And then I worked for an entrepreneur. I learned the most about entrepreneurship from working for that entrepreneur. It was worth taking the pay cut to go do that for sure. And then around the time when he wanted to really increase my salary, because I was working my ass off, I said, no, because I knew I didn't have ownership in that. And I knew for me, it was very important to have that freedom of kind of owning my future and not having the golden handcuffs. So I just said, no, and I quit the job. Started doing the real estate of this. So when you said that you were doing this like software, do you have experience in like software engineering? Yeah, I'm like a computer engineer. Like that was my degree. Oh, interesting. Cool. Nice. How did you find the entrepreneur to work for? Yeah. So in college, I was in charge of recruitment for my fraternity. And I read their books on how to recruit. They took the best practices from the Girl Scouts, the US Army, all these great recruiting organizations and helped fraternity men grow their organization like that, right? Which was kind of a breath of fresh air and actually made sense compared to what you would think a frat would do is just give people beers, right? Yeah. And say, join our group. So that really resonated with me. I applied it in college. And then I noticed in my internship, like any type of recruiting, they have like a common tool. It's called like a CRM, right? Yeah. So basically it was like, this guy who wrote this book has good shit, but he needs to have like a CRM that people use to recruit people to recruit other people. So I made it. And I went to a conference, I was like, hey, I made this space on your book. And then he was like, show me. And then he bought it. And I worked for him to grow a business around that CRM that I made. Wow. Yeah. So that was fun. That's kind of how I went on that path. And I mean, I knew I wanted to start a business in the first place. So it also seemed to me like a good opportunity to like take something I know and bring it to him, provide value, and then figured the rest would work out from there. But without general training, well, yeah, this was good. So I appreciate the questions and happy to answer any future questions that you might have or anything like that for more. Thanks. Yeah. I'll see you at the gym. Thanks for listening to the deal machine real estate investing podcast. Please leave us a review and follow along wherever you're listening to your podcast. [inaudible] [inaudible] [inaudible] (audience laughing) [BLANK_AUDIO]
A new acquaintance asked me at the gym if he could ask me some questions. He said he makes a lot as a software engineer, but he is afraid of getting stuck with golden handcuffs.
We discuss how he would escape a job with golden handcuffs thru real estate investing.
Key Talking Points of the Episode
00:00 Introduction
01:23 How do short-term leases help us minimize risk?
06:10 What is the best way to generate leads?
07:20 Why is it important to focus on one thing when you’re generating leads?
08:20 How does location impact the performance of a rental property?
11:05 Why is it important to take action to avoid analysis paralysis?
12:10 How should you approach the leads you generate?
15:21 How can you get more comfortable with cold calling?
16:26 What is the best way to market to leads?
17:41 What makes it so difficult to get out of “golden handcuffs”?
21:20 How can you decide the right path for you?
Links
Instagram: David Lecko
https://www.instagram.com/dlecko
Instagram: Ryan Haywood
https://www.instagram.com/heritage_home_investments
Website: Deal Machine
https://www.dealmachine.com/pod
Website: Heritage Home Investments
https://www.heritagehomeinvestments.com/
