Joe: Hey. What’s up, everybody? Joe, REI in your car, hope you’re doing well. Listen, I don’t think this will take long, but I wanted to talk about something as I drive here that I think is really important to understand. And this applies to all of us. I’m not just talking about you. I’m talking about me as well. Right. Things are changing in the economy and I’m getting nervous because I’m seeing a lot of people that are going to get in trouble and I’m already seeing it. People have been for the last three or four or five years, no matter what kind of business you’re in, have been very, very prosperous. You know, we thought that everything was going to fall apart in May or March of 2020 and it didn’t. So kind of has given us a false sense of security. With inflation going up, interest rates going up. The recession, if we’re in it or not, depending on what political party here in whatever. Right. Like it’s definitely worse all around for everybody, no matter what side of the political aisle you’re in. But I don’t think it’s hit everybody yet. And so a lot of people for the last three or four years that you’ve seen that being real successful, making a lot of money in business, doing a lot of deals when it’s been easy, has kind of fallen into this thing that, Oh, man, I’m just really good. Everything I touch turns to gold. And the reason why I’ve been making so much money is because I’m so awesome forgetting that it’s the market that has been kind of pushing them up. It’s hard to lose money when the economy is so strong. So now there have been challenges for everything. But I feel like, you know, if this bubble thing is going to pop and I’ve seen this happen before where a lot of people are used to living the same standard of living before a recession, no one recession hits and that things start going down. They’re still trying to live that same lifestyle, still trying well, having the same expectations without any preparation for the adjustment coming down.

Joe: So let me give you some examples. I’ve been talking to a lot of people lately, so if you’re one of the ones that I’ve talked to and you’re listening to this, I’ll keep this very not personal. Right. Like general and vague. But I’ve been talking to a lot of people who were making used to making 100, 200 grand a month, wholesaling houses, rehabbing houses, selling them in a day, doing really well. And then all of a sudden, it’s just it’s not as easy anymore. It’s not as hard. But here’s the problem. You know, like, I forget what the physical law is, you know, but there’s this law of physics where things expand to whatever room that you give it, right? And so if you’re making, let’s say, 100 grand a month, your business expenses and personal expenses are going to grow to fill that. And so if you’re used to only making 20 grand a month in profit, you’re only going to be making 20 grand a month in profit, whether you’re doing $100,000 a month in revenue or $500,000 or million dollars a month in revenue because your business and expenses will grow. I mean, it’s just kind of natural, not that there’s anything wrong with it, but if you’re making a lot of money, heck, let’s reinvest it in the business. Let’s hire more people. Let’s get better software. Let’s do more marketing. Let’s grow, grow, grow. And it’s I think it’s a God given thing that we want to grow. We want to excel and do better and improve. And so many times we improve by reinvesting and putting more money into the business, which then increases overhead. It increases our staff, it increases, you know, subscriptions. I mean, have you looked at, I think, a great analogy of it. If you looked five years ago at the amount of money you were paying in monthly subscriptions, it’s probably triple now what it was back then, because we all it’s easy. Money is easy. It’s easy to make the money. So we subscribe to new software, new subscriptions, new coaching programs, new masterminds, and we keep on upgrading. You see what I’m saying? Because it’s easy. We’re making a lot of money. We’re taking more money home. We’re buying nicer luxuries, we’re buying nicer cars, nicer clothes, etc. We’re going in. We’re not. This is what’s crazy, too. I mean, in times of prosperity, you’d think that people would pay off their debts and save have more in reserves. But that’s not happened. So what’s happened is during the times of prosperity, people’s debts, people are also getting into more and more debt. So I’ve been talking to real estate investors and people in the marketing consulting information product space who man, they’ve got a lot of money out there. They got a huge beast to feed. They got large mouths, lots of mouths to feed. And that stuff doesn’t go away. Okay.

Joe: So if your revenue goes down and it is for a lot of people, the overhead and expenses don’t go down with it. You still have 100 mouths to feed. You still have a huge beast that is requiring you more and more of less and less resources that you have. So we got to be really, really careful for it. And it’s not too late to adjust and correct and make these changes that are needed and you need to make them. Now, if you’re listening and paying attention to this, you need to make the changes now because the markets like this do not turn on a dime. It’s not going to be like the stock market where it’s down one day and then up immediately in the next day. These kinds of things, especially with housing, take time and they’re slow and they’re it takes time to go from bottom to top. Makes sense. So we’ve got a long road ahead of us. I’m not saying everybody since I’m not saying is going to be bad in 2009, but for some people it is going to be as bad for a lot of the people that did not live through ’08 and ’09. This is going to be their new great recession of 2008. All right. A lot of people got in real estate. This is 2022 is I’m recording this. A lot of people got started in real estate in 2012 when the market was at the bottom and it just started coming back up the housing market. Right. And everything they’ve touched has turned to gold. It’s been just an amazing ten year run. And it’s hard not to make money. It’s easy to it’s easy to make money. It’s hard to lose money. And that makes sense. And so when things change now, oh, my gosh, this is going to be bad. It’s going to get ugly. And it comes to business expenses. It comes to personal expenses as well.

Joe: So I just wanted to encourage you guys to think about lowering your expenses, going back to the basics, reading that book again, profit first because it’s revenue minus profit equals expenses. And if you really sit down and visit that. Excuse me. Hold on. Oh, man. So I just ate a Shake Shack burger. I think it’s the are the smoke shacks. The one with the red peppers. Oh, man. It’s so amazing. It’s awesome. I’m going to pay for it later. But it was so good and I got these things in my mouth is kind of on fire a little bit. It’s not that hot, but I should have done this recording before I ate that burger. But anyway, so we need to start cutting back in profit first, understanding that the revenue minus profit equals expenses. And so what you’re going to see, too, coming up here as revenue starts going down, guess what? Your tax liability doesn’t go down from the year prior. If you’ve not been paying your taxes, guess what happens? Revenue is down this year, but last year you’ve not paid for your tax, all your taxes, yet you keep on filing extensions and now the tax bills. Do you keep on putting it off? You try to negotiate an installment plan. Now guess what? Now you’ve got debt as well. And you’re trying to pay off the debts. You’re trying to pay your tax bill and your revenues down. And it’s going to get real miserable real quick for a lot of folks in this business. I know some guys I keep on forgetting to talk about this, but these guys that are were just getting fat and comfortable with $500,000 months. And all of a sudden, within the span of a couple, three months, they’re down to $200,000 a month. Now, 200 grand a month is still great, right? That’s two and a half million dollars a year. But when your overhead is $4 million a year, you’re used to making 5 million and your overhead is 4 million. All of a sudden, when you’re making only two and a half million or 200 grand a month, whatever it is, right. That’s freaky. That’s you’re going to start getting you’re gonna start panicking and you’re gonna start freaking out. And it’s really impossible to make smart, wise decision when you’re panicking and when you are freaked out. I know guys who are you know, we’re used to rehabbing houses and flipping them quickly and making tons of money. And, you know, they’re making 50 grand on a rehab. But then, oh, my gosh, I can I can rehab these high end luxury homes and make 100 grand instead on the low end, like people not chasing any deals unless they’re making 100 grand. So they’re going after million dollar properties. Now, what’s happening? Guess what? There’s guys that I know that are rehabbing million dollar homes, $4 million homes, and they finished about six months ago and they still haven’t sold yet. They’re not getting any showings. Any offers they are getting are lowball ridiculous offers and their money is tied up. And guess what? The bill collectors are knocking on the doors. The tax man is saying, hey, how you doing? Have you forgotten about me? I need needs money. Well, I don’t have any. Well, I don’t care. You owe me some money. You’re right. You’ve got private investors that are knocking on your door. You got. Banks that where you’ve refinance or you’ve gotten some short term bridge funding. You’ve got some short term loans on your big commercial properties because it’s easy to make money. Anybody can do it. So I’m going to go after bigger and bigger deals. And you’ve got now these companies, these debt collectors that are or the banks, the lenders that are saying, all right, time, time is up. You need to refinance. Well, you if you refinance, your interest rate is going to be 2% higher than you thought it was going to be. And you weren’t planned and prepared for that. So anyway, I’m trying to push the pain button a little bit here because some of you know what I’m talking about in some of you. Some of you need to wake up. And before it’s too late, before it gets worse, you need to get your financial house in order. You need to start looking at your expenses, your numbers, your revenue, your budget, your cash flow. And you need to start looking at, okay, this is I need to get this stuff taken care of. I need to get rid of this debt. I need to start selling these things. I need to start cutting back here. Cutting back there. And maybe you’re not at this point either where, you know, revenue is about the same. Maybe it’s not as big of a deal for you. But I’m telling you, you need to have a plan in place in case it does get worse. If you’re used to in your personal life, bringing in $500,000 a year in revenue, oh, my gosh, there was almost an accident. If you’re comfortable if you’re if your balloon kind of is filled to that $500,000 a year mark or maybe $100,000 a year, whatever it is for you. Right. It’s different for everybody. And what happens if you’re if you see a slow month? If you see a couple of three slow months, if you see six slow months, what’s going to happen? Are you going to be prepared for that?

Joe: So listen, it’s better to take those cuts and be disciplined now than it is later when it’s too late. But let me tell you this, too. So some of you are not in this place yet and you’re not in a tough spot, but you need to have. You need to be prepared in case something does happen, in case and I’m talking to myself here. Let’s say business goes from, you know, 100 grand a month to 50 grand a month. Well, not that much. Let’s say you go from 100 grand a month to 75 grand a month. You need to know in advance what’s going to happen when those triggers happen. For example, it could be all right. Well, if I have two straight months of this, I’m going to have to let two people go. I’m going to have to cut back my marketing. I’m going to have to do less of this and more of that. If it goes from selling, you’re taking one month to sell my homes to three months to sell my homes. I’m going to stop doing these high end properties. I’m going to start doing these lower end properties. I’m going to stop whatever it is. Like, you know, it could be, for example, if you’re in the Internet marketing business and you’re doing, I don’t know, Internet marketing or consulting or Amazon e-commerce or something, maybe you have inventory levels in your Amazon stores and you need to be you need to be smarter with your inventory levels, right. Or not use as much debt to buy inventory, you need to sell, start selling stuff first before you ship it or before you buy the inventory or before you fulfill it or whatever. Like it is just it’s time to wake up and get smart and stop being so foolish. Basically, what are your fallback plan? So if X, Y, Z happens, then A, B, C is going to happen. And then if it goes even worse, then this is going to happen. So it could be all right. Once revenue drops 75%, I’m going to need to let two people off. Let two people go. If revenue drops another 75% the next couple of months or the next quarter, I’m going to have to drop this many people and I’m going to have to simplify this and get rid of that. If revenue drops a certain amount, then I’m going to have to cut my take home salary. Instead of paying yourself 50 grand a month, you’re going only going to pay yourself 25 grand a month. I know that sounds crazy, ridiculous numbers, but like whatever it is for you, maybe if you’re self-employed, specifically who I’m talking to. Right? Like you need to adjust your lifestyle so it’s not and your business, your expenses, personal business expenses, right overhead, whatever you want to call it, your budget, you need to shrink that because it’s not going to be as easy to make as much money in the next one or two years. And who knows, it might last longer or whatnot. But like be thinking about this, what can you cut back now and start saving up some cash? Start paying off some debts and just start being getting prepared. It’s not time to freak out and it’s not a time to panic. We just need to be prepared. And we need to have these contingencies in place where if this happens, then this happens. Makes sense. You’ve got to know your numbers. Bottom line, you got to take your head out of the sand. You need to look at your numbers. You need to look at your business. If you hire a fractional CFO, get an outside somebody from the outside of your space, your business in a different industry, get somebody else. Look at what you’re doing and say, hey, give me some advice. What are my blind spots here? What am I missing? What’s the you know, what’s the whole SWOT analysis thing, right? It’s. What are your S.W.A.T.? What’s what are my strengths? What are my weaknesses, what are my opportunities and what are my threats? I need to start doing more of that the more that I’m thinking about it and talking to myself about it.

Joe: So anyway, I hope that’s helpful for you guys. I hope that you’re looking at this. Let me say one more thing in terms of the real estate investing world, right? So like, let me give you some more examples of maybe what I’m talking about, what could be important for you if you have been used to rehabbing, maybe you need to do more wholesaling. If you’re wholesaling, all you need is cash offers, maybe need to look at understanding or learning. Creative financing like lease options are subject to and how to do innovations or learning some new skills and negotiating skills and new ways to make offers that you can start implementing instead of just a cash offer, right? If you’re doing just buy and hold, maybe you need to start looking at how to turn some properties into Airbnbs. Maybe. I don’t know. I’m not. I don’t know. But like maybe you need to start looking at I should wholesale some deals now if you’re wholesaling you also need to look at what are the buyers want there. That’s why I love wholesaling so much and I think it works in any recession or any market in an economy, up or down, wholesaling works fantastic. It’s one of the best strategies in real estate because it’s all about it’s buyer led. So you find the demand, you find what people want and you go get it for them. And even in a down market, there will be people that want housing they investment properties or rentals or houses to live in or whatever. So you need to find out who are those people and what do they want, and then you go get it for them. So you may need to just start going back to rebuilding your buyer’s list, talking to your buyers, getting on the phone and asking them, Hey, look, what’s your outlook on the economy? Are you going to keep on buying properties or what are you scaling back? What are you what’s your 6 to 12 month plan? What kind of deals are you looking for? And then look at the stats in your market. You know, where are out-of-state investors spending their money to buy properties? There’s a lot of money sitting on the sidelines waiting for a housing market to come down so they can start putting their cash back into real estate again. It makes sense. You know, if you’re doing land, where are people buying land? Are homebuilders buying land anymore? Is it a good idea anymore to target areas in the path of growth where homebuilders are building homes, maybe in the new suburbs in the next 5 to 10 years? Maybe that’s not the smartest thing to do. Maybe we should be looking again at cheap recreational land and selling it on owner financing instead of terms. If you’re somebody that does a lot of rehab and buys and sells a lot of homes and you need private money, now it’s time to start digging your well before you’re thirsty. Start going back to what you used to do five years ago. Ten years ago, when you’re first getting started and raising private money, you know, you just got fat and comfortable with easy lending from tons of different banks and hard money lenders and private lenders that were more institutional in nature. Right. And you got used to just easy money, but it’s not going to be as easy anymore, maybe going forward. So start thinking about raising private money, building relationships in your network, and start learning how to raise private money. All right. So a lot of stuff there, guys. I just felt like I really should talk about this because it’s important and I think is going to be at least one person listening to this that I think it might save you a ton of hassle and heartache and pain. And I’m listening to my own medicine, too, as I as I go through this and I’ll be doing this process with you. Stay connected to the podcasting, real estate, podcasting world and YouTube and pay attention to the people that are still doing deals today and be aware of the B.S. There’s so much B.S. out there again, and I’m seeing it just because I know so many people in the industry. Be careful who you listen to, but don’t stop listening to people right? Like you still need to listen to people. Find the people that are doing deals today that aren’t flashy and trying to show off and just try and you know, like you can sense them. You can smell them out, right? But find the people that are actually doing the deals today and stay connected and find out what’s working now today. Because what’s working yesterday is not going to work tomorrow. And we need to stay on the cutting edge. We need to stay in. Involved with masterminds, with other investors, with local investors in your community, in your city, in your area and nationwide. And find out what are they doing to do deals? How are they finding leads? How are they making offers? Where are they getting their money from? What marketing is working, whatnot? All right, guys, I’m out of here. Let me just invite you to I have a webinar on how to flip vacant land. It’s my favorite strategy. We’re getting deals under contract and flipping them left and right. I love it. We have not seen a slowdown with this recession, so things are going well. But I’m thinking about this, too. Like, what am I going to do? If things do change and adjust, I’ll be ready for it. Okay.

Joe: So if you want to watch my webinar, it’s free. Go check it out. You’ll learn how to flip land the steps that I take, and then I’ll make you an offer if you’re interested in investing in my program. Here’s a cool thing that I do that nobody else does. I’m going to give you your money back. Almost all of my courses. I give you your money back when you complete them. So you go through you. You buy the program, you implement it. I don’t care if you do a deal or not, but if you implement it, I’m so confident that’s going to work for you. And a lot of you guys are going to bring me deals to lend on, to partner on, etc., right? So I’m so confident it’s going to work if you go through the program, complete it. This land program that I have and make at least 25 offers, I will refund all your money. I will give you all of your money back. I don’t care if you don’t even do a deal. And I do this because my philosophy is simple. If I can’t make you money, then I don’t deserve yours. And so a lot of people go to my programs, they do deals, and they don’t ask for their money back because the value is so great. But some people do. Some people bring me deals, and I also get great testimonials by doing this. So anyway, it’s how we do a lot of our deals. We, we also try to lend money on deals, etc.. So when you become a student, you go through the program, complete it, implement it, give us a testimonial, and we will refund your money so you don’t even have to do a deal. If you want more information about all of that, go to simple land class dot com. Okay. Simple land class dot com. You can also message my team anytime. Support at Joe McCall dot com, support at Joe McCall dot com. We’ll see you guys. Take care. Bye bye.