Joe: Welcome. This is The Real Estate Investing Mastery Podcast.

Joe: Welcome everybody to The Real Estate Investing Mastery Podcast it's going to be a good little episode. We're going to be talking about lease options and we're going to be talking about how you can do lease options, maybe as a realtor or even not, but you know we're going to be talking about some different creative ways to do lease option deals and I got a special guest his name is Jesse Mills. I want to first let you know that this podcast is brought to you by my book Wholesaling Lease Options. You can get my book at WLOBook.com WLOBook.com this is a strategy that I use to quit my job back in 2009 and I know a lot of you guys listening to this, maybe you're listening to this as you drive to work, is you drive home on your lunch break, maybe while you're working and you're not working right now and you should be. Come on.

Joe: I know that's like I was there and you'd like to get out of your cubicle. And that's where I was and I know a lot of you guys can maybe relate. You just want to be able to spend more time with your family. You'd like to be able to travel more, maybe do deals while you travel, maybe do deals from an RV or a camp ground in the middle of Yosemite. How about a cafe in Prague? How about a beach in Spain? Well, not to brag or nothing, but I kind of am bragging. I've gotten to do that and this book, Wholesaling Lease Options, it's kind of my journey into that. Figuring out a little bit about lease options and how I use that to really create a business that supported my life and what I wanted to do, what my wife and I wanted to do with our family and our four kids.

Joe: So if that has any interest to you at all, I suggest you get my book WLOBook.com go check it out. It's free, you just got to pay shipping. There's no fluff in this book. Takes about an hour or two hours to read it's all good content. All killer, no filler as they like to say, right. Again, go to WLOBook.com. Coo so if you like this show one more thing I'll tell you, go to RealEstateInvestingMastery.com. You can see the show notes, you can see the transcriptions, join the email list and if you like it, please leave a review in ITunes as well, okay, great. We've got Jesse on. Jesse has been on the show before, I think a couple of times. Jesse, do you remember once or twice?

Jesse: Yeah, I think I think at least twice.

Joe: Yes. Jesse is one of those guys that just a massive action taker and has done a lot in the business over the years and he comes at it from a really good perspective because he's also a mortgage broker, kind of does mortgage brokering on the side, but his main bread and butter, our lease option deals, he's been doing them a long time and I'm glad to get him on the show because I like getting his perspective on things. You know he looks at it from the investor's side and also from the mortgage broker/realtor side as well. And he does a lot of deals today. He's active in the business. And welcome to the show Jesse, how are you man?

Jesse: I'm doing great man. Thank you so much for having me on again. I am always super grateful to be here.

Joe: Nice. So you're in Minneapolis, right?

Jesse: Yes only Foley, Minneapolis.

Joe: What's the weather like today? It's 49 here in St. Louis.

Jesse: Oh Man. I'll tell you, it's 26 things are melting. We've had a history of breaking snow fall this year, so everyone's going from digging out of blizzards to waiting for it to flood. But you know, hey, we're all right.

Joe: I wish we would've gotten more snow this winter.

Jesse: Yeah, you can have some of ours.

Joe: Well, maybe next year. I keep on saying that maybe next year we'll get more snow. Jesse, for those that don't know, you give a little background of how you got started in the business.

Jesse: Yeah, absolutely. So I have been in the real estate and the mortgage world for about 15 years. Started in the mortgage business in gosh, my mid twenties and have been doing mortgages for about 15 years various, you know, big companies, you know, top, top three nationwide companies, credit unions, various places, and really got into real estate in about 2011, 2012 and in fact, I think your course was one of the first courses I ever purchased coming across Wholesaling Lease Options and did my first deal, I think, I don't know, a month or two after I bought it. I wasn't a massive action taker right away. I bought it then, you know, kind of started trying to know all the answers and since then I just say, hey, you know what, we'll figure it out as we go. And, but first deal did about I think $8,000 on that deal and

Joe: Were you a mortgage broker at the time?

Jesse: I was. Yup. Yup. So I was doing mortgages at the time and you know, I said, hey guys, this is a great way that I can get in a real estate and I can help more of my clients that I am turning down, right. And I mean, I get paid on having options. I get paid on helping people. And when you say, sorry, can't help you, you know, let's try again in a year or two that doesn't pay the bills. And so I was looking for ways to always have options and frankly I went through kind of some rough times with the financial crisis. I was doing mortgages with the collapse. So a shocker and you think I ended up okay with that, I didn't ,right. And so I tell people, guys billion dollar banks go out of business, small mom and pop guys and gals doing loans are not going to fare so well. So I had a rough patch and credit wasn't so, so hot and I said, how can I get into real estate and came across your course actually, and I joke to this day, probably one of the best thousand dollars I've ever spent a $1,000 at the time. I would have paid a lot more than that. I mean, I did 800% off the first deal and said, okay, this works, that's pretty cool. Yeah, so, and I've been doing ever since.

Joe: Good for you. You're one of my earliest testimonials, Jesse. And it's been encouraging to work with people like you because, yeah, this business is legit. You really can do deals. I got a message from a friend who was a coaching client and we worked together for eight months and he sent me, he forwarded me a message that I had sent him. I'm going to brag about myself just quickly, just for a millisecond here because I was so excited about this, right? So excited and super proud of him. He was going through this rough patch where he was getting discouraged and you know, done a little bit of wholesaling here and there was getting discouraged and was not really doing many deals. And he's getting a lot of people telling him, you can't do this, it's illegal, it's immoral, it's fattening.

Joe: You can't wholesale deals. You can't make profits like that, that's a scam. He's getting discouraged. And I was encouraging him and I was telling him, listen, no, don't listen to them. You know when you're facing obstacles, you've got to plow right through them and I said, you watch pretty soon in a little bit, you're going to have 10 or 20 homes free and clear from your profits on your deals because he wanted, his big goal was to own rentals, own them free and clear. I said, pretty soon you're going to own some free and clear 10 to 20 free and clear rentals and you're going to just be crushing it so don't quit.

Joe: Well, fast forward two years, he actually was listening to some of his old Voxers. He sent me that Voxer and said, Joe, you don't remember this but you told me this and it's come to pass. He said, I've just, I'm just now closing on my 20th door and he says, debt free. The only debt I have is my home mortgage. I about fell over, I was like, yes, you did it. And I say that also to encourage all the rest of you guys like you know even when you're going through that rough patch, Jesse, you refused to give up. You refused to give up. And I'm sure you've had rough patches since then as well. We all have, right?

Jesse: Absolutely. Yeah it happens. And you just got to keep pushing through. And I always make the joke problem solvers get paid. It's not just about getting paid, it's about changing lives. It's about helping people. And you know, for a long time when I was growing up, I really want it to be a teacher. And then I realized what teachers get paid and it's horrible WHAT they get paid, I think they should pay a lot more than they do. But unfortunately it chased him away from that career. You know, I love to help people, I love to coach people, I love to see their life improve. But you know, we're in a business where you can help people and you can make a lot of money. And like you had mentioned at the beginning, you can do it from the campground. I closed a deal from the campground in Mackinac Island last summer sitting there with my family in our camper and boom, boom, DocuSign sent it over and it's pretty sweet.

Joe: Some people think that's hype, Jesse, like Ah, come on. You really can't, but you've done it, haven't you?

Jesse: I have. I've done it multiple times. Yeah. I'll tell you what, I even did a video on this, I think a year, year and a half ago. I almost get more done on vacation. This is crazy, right? But I'm so focused on like, my wife's going to be all over my tail, we got two young kids, like I got to get this crap done before they're up. So I wake up early, get the coffee, sit outside, and I knock it out for two hours. But it is focused, you know,

Joe: When I was in Europe, I was getting more done in three or four hours then I was in a whole day back in the United States for one simple reason. I only had a small window where I could communicate with anybody in the states because of the time zone changes, right. And so when it was during that couple, three, well, usually three hours is when I would work and work about three to four hours a day, usually three. But I was hyper-focused and I knew what I planned enough in advance. I had enough quiet time where nobody was in the interrupting me, right.

Joe: Like even when I was with my family, I could spend time with them and I could think when I was watching my kids play in the playground or whatever. And I knew, okay, well I have this three hour window, this is, these are the top three most important things I've got to get done. And man, I sat down, got them done when I was talking to people on the phone it was just bam, bam, bam. It was to the point, no chit chat back and forth. And I was just so much more results focused. I think it's good if people kind of imply or how could people apply those same kind of time constraints on their normal activities, their normal days, wherever they're working from, right. If you could figure that out, we would all be more productive. Do that in our normal lives.

Jesse: Yeah. Well, I've got a buddy who works his tail off and the thing is he just thinks that I leave home when it's dark at night and that's when I go home. I'm like, you realize if you wanted to leave at one o'clock or two o'clock or noon, you could if you got the same amount of things done right. A little less chit chat. Maybe outsource and delegate. Use a team. I mean, yeah, you got to think like that. If there's three things I do today that's going to put money in my pocket and make the most impact, what are those three things? And just hammer them out.

Joe: Talk about that in your own business, what are some of the highest impact activities you do on a daily basis in your, in your business?

Jesse: You know, a lot of it is reminding myself even to not get caught up in the minutia and really having a focus daily and weekly on who are my top prospects, leads, clients, right? And it's easy to get bogged down with returning calls and texts and emails and this and that. But when, you know you've got the one person that says, hey, you know what, I want a home and I've got $15,000 in the bank, that's your best lead, right? Or that's one of your best leads. And you need to be pushing that ball forward every day. You got to be rolling it forward and forward and forward. And I think setting some side of time in the morning before you do anything else, there's lots of different ways and methods and techniques, right? But you got to think of what's going to move the needle the most and then try to block that out so you don't let anything else get in the way. I know easier said than done, of course. And I can't always say I'm a champion of it, but at least thinking about it daily and trying to do it, it makes a big difference.

Joe: That's good. Okay. So Jessie, talk about what your business looks like today. What kind of deals are you doing these days?

Jesse: So as you and I were kind of discussing the other day, I'm pretty pumped up because I've found a way to take leads that I wasn't able to close in years passed and convert them into deals. And I've found a way to close more deals without necessarily having to go chase down a bunch of sellers. Now I'm not saying I don't talk to sellers, I'm not saying I don't market for sellers and I'm by no means knocking that, but I've added just kind of another tool in the tool belt that I've developed over the last, honestly, I've been doing it for probably the last three or four years, but I started out onesies, twosies here and there kind of testing it is does this work, does this not work? And now it's the bulk of our business, is doing it this way and I get to make even a bigger impact with more people, which is really cool.

Joe: Okay. Talk more about that.

Jesse: So as the market's getting hotter and as people can sell…

Joe: Well first of all, just let's set a little context to this. You've got some pretty impressive numbers the last few months. Would you mind just sharing what your numbers are?

Jesse: No, not at all.

Joe: How many deals have you been averaging and these lease option deals?

Jesse: Correct.

Joe: How many deals have you been averaging the last, let's say three months?

Jesse: I'd say over the last three months averaging three deals a month? Two on a low month, probably four on a good month. So three to four a month. And I think in January I did about $25,000 off of one deal. That was one deal. Now they're all not that juicy bitting but I they wish they were. But you know, I'm not doing anything less than about $7,000 or $8,000 and that one was $24,900 to be exact. So it's been about $45,000 probably in the last two and a half months

Joe: Total or average?

Jesse: Total over two months. Two and a half months.

Joe: So you're averaging $20,000 $22,000 a month?

Jesse: Correct.

Joe: And these are assignment fees. Are these deals you're staying in the middle of?

Jesse: So these are assignment deals and what I have been doing is working with people that want to buy homes, which are investors, which are landlords, which are flippers. So I've been finding kind of a different pool that has money that has credit and taking my resource, which is a large active pool of tenant buyers and taking my experience with knowing how to screen them and vet them. And you know, and I do that for other people too, right? That's kind of another business I do for other investors that help them screen them and vet them. And I call it my pre-preapproval and I'm finding investors who, you know, if you could, you could go about it and go buy a property with 20% down and then go, you know, advertise on Craigslist and Zillow and wait a month or two and then fill it.

Jesse: You get a security deposit and now you've got a tenant and now you're a landlord and there's lots of people that still invest that way, right. That's kind of the normal way. Now, maybe not in our world, your world and my world and the people listening, that's not normal. But for most folks, it is people who have a full time steady job, who have a family, who they don't really have the desire to get into bandit signs and Call Rail multiple phone numbers and this and that. They just want to invest in real estate. And so what I've done is I found a really good way in a good system of presenting a deal to them that honestly, it's kind of a no brainer. I tell them they win if it works out they win if it doesn't work out, and I've got years of experience now in doing these personally myself.

Joe: Nice, Nice. So you're finding you have a bunch of tenant buyers and you're finding tenant buyers that have good down payments, I'm assuming, right? And these are folks that are on the verge of getting a mortgage. So their one or two years away from getting a mortgage. They meet the probably the income requirements, right? They have good debt to income ratios. It's just some little things that they might need to fix, establish credit. Maybe they're self-employed, maybe they're just divorced and through the divorce their credit got smacked, but they can do things to fix it. It's not like they have huge judgement’s or tax liens they have to take care of before they can get a mortgage, right?

Jesse: Correct, correct. I mean, sometimes it can get that bad, but the way I look at it is, number one, does your story makes sense, right? Number two, can you get across, I kind of call it the bridge from where you are now, to being a mortgageable, to be able to get financing in a, in a reasonable amount of time, right? And in my opinion in a reasonable amount of time, that was about three years or less. You know, you technically could have just started a brand new business and went through a foreclosure six months ago and you're going to qualify as long as you're profitable, you know, in about two to three years. So most people don't need more than that. But here's the beauty of it, if it goes longer than that, I'm okay with that and my partners are okay with that because we know we're going to keep getting paid every month. We're not going to deal with the normal landlord headaches and eventually they'll buy and if they don't, we do it again. Hopefully they do.

Joe: Related to that, but on a little rabbit trail here, if somebody is self employed, their a small business owner and they pay themselves to an escort with a W2 the, so they set themselves on a salary and they pay themselves if they're trying to get a mortgage does a bank, look at that differently or do they look at that person as like an employee?

Jesse: Great question. So they look at it from both different lenses. So they'll look and say, okay, you get a w two and they'll look at that in the last two years and kind of average that and that's what you get paid and that is a great way to do it. Then they'll also look at what the business makes. Now if the business has a loss though, and let's say you salary yourself $50,000 a year and the business, last $20,000 you still really only netted, you know, $30,000.

Jesse: So it kind of ends up being a little bit of a loss, but it does, it does help. Whereas most people just write off everything, you know? And that's a lot of the folks we work with. We work with self-employed folks and we help restructure taxes, goofy rules, you know their may be part time, they have a part time job but they haven't been there for two years yet. Or they get substantial overtime but we can't count it yet. So sometimes it's just a timing thing.

Joe: So one of the cool things that you're doing now with this is you're working with people who are great tenant buyer candidates and they make good income their just for good reasons they have bad credit.

Jesse: Bad credit or even good credit, Joe, I've got, I've got people that I have put into homes with 700 plus credit scores. They still can't get financing, right. Because maybe on paper they make nothing or new job or a job change or industry change or there's, there's so many goofy rules that if you're not in the business kind of day to day seeing these things and they change a lot, they can still get you hung up. So yeah, they, for whatever reason, they can't qualify, but they can afford to pay on time every month we can show that and they've got some good money down.

Joe: Yep. Excellent. And so how do you find those guys?

Jesse: Well, I'd be lying if I said I'm not using your system because I mean it's using your system. It's, that's the way it, same way that you teach to go find it, right. So it's Craigslist, it's a Zillow, it's networking. I do a lot of networking and that for me has been, I think a thing that's been keeping me successful, right? Not to say you can't find those, those other ways. I mean, I can get 100 brand new people this week from Facebook and Facebook Marketplace and the garage sales, but they're not going to be quality. The quality people, the relationships that I spend time developing with other loan officers, other realtors and people in the business. Financial planners, accountants, attorneys, right. That now what you do, they like you, they trust you and then it's a repeat source of business. So that's where the best leads come from. But you can still do a lot, even if you're just starting out, even if you don't have those relationships yet, you can, you know, use social media and a lot of the public sites to find them.

Joe: You find a good tenant buyer, you prescreen them a little bit and then you have something that you do call the slow flip. Can you explain what that is or do you still call it that?

Jesse: I do. I do. I've been playing with the name because some people you all slow doesn't sound very sexy I want to get paid fast. So it's kind of, I call it the slow flip, but it's slow flip quick cash because I still as the deal constructor, right as the, as the deal negotiator, I still get paid upfront quickly. So it's just like an assignment. But the cool thing is, and here's kind of how I got into it, I had a surplus of tenant buyers a few years ago and I had tenant buyers and I didn't have homes for them, right? And they wanted a home in this area at this price point and I just didn't have it and I couldn't find it and I was going to lose it.

Jesse: I'm like, oh my God, I've got a guy with $20,000 down, but I'm going to lose this guy if I can't find something. And the next, you know, 30 to 45 days. So I had a friend of mine who is, you know, had a couple of properties, was getting into the business, real estate investing and I said, hey look, what would you say if I had somebody who, I already know the day we go buy a house is the day they're going to move in and I already know that we're going to make $400 to $500 a month cash flow. Oh, and by the way, you, we don't need to worry about property management because it's already part of the deal that they're going to take care of it and they might buy it from us, but if they do, you know, we're going to make it good probably, you know, $15,000, $20,000 to 25,000 on the back end if they buy.

Jesse: And if they don't, we just keep on collecting rent. What do you think of that idea? And they said, sign me up. And you know, of course then you get into all of the, well, what if they don't buy and what if it doesn't work out and what kind of a deal is this? Like a lease option is this is a land contract, what do you do? And that's all the details. And so now that's what I help my partners and my investors through, right as I go through. And what kind of a deal should we do based on the property and the person, their scenario. But the end of the day is they're making money three ways. They make money up front because they don't need to go buy a home with 20% down or 15% down there doing it with sometimes only %15 or %10 or even 5% down, right?

Jesse: So the cash on cash numbers are tremendous. And the day they buy is the day that the new person moves in and they already know what they're going to make on the back end. And the only thing you don't know is, you know, I say my crystal ball is pretty good, but I can't guarantee it's going to work out. But what I can tell you is if it doesn't work out, I'll be there to help you do the next one. And if it does work out, you're going to say, let's go do it again. And so now I've got a pool of friends and investors and partners where we'll just go take care of it and I don't need to go wait for a seller. Now if a seller comes across our marketing. Fantastic. We'll do it that way.

Jesse: But this is just another tool I put it in the tool belt and I'll tell you what, if you find that one investor who's ready to do three or four of these deals, that's the same thing as finding three or four sellers except for you only have to present at one time and they get it.

Joe: Nice. Talk about licensing. Do you have your real estate license?

Jesse: So I do, as of this year now I've been doing this as a joint venture partner in the past. So my understanding, again, I'm not an attorney, you're not an attorney, consult with a local attorney in your state. But my understanding, as long as you're working as a joint venture with the investor who is the one purchasing and selling, you can't do it as JV. But I chose to get licensed show and the reason I chose to get licensed is our state's one of one of a handful that is pretty darn strict on doing anything having to do with leasing, selling, buying, putting anybody together and for me it just wasn't worth it.

Jesse: And it really, my thing has been how to be able to be in the mortgage business in real estate. I would have been licensed a long time ago. I mean whatever, you know, spend $1,000 bucks, $1,500 bucks, go take the course, you know, whatever. It's not a big deal. But I had to figure out how to do my business and restructure some things a little bit different with the business. So I did get licensed and that's the beauty. So I'm also getting a piece of the pie of the commission. So if you're someone who's listened to this and you're licensed or you're willing to get licensed, that's another bucket of money that you can get is the commission. So there's a minimum amount that I won't make any less on every single deal and I know that if I get the commission side, it's even more pie.

Jesse: And the beauty of, here's a cool thing, I have closed over six deals in the last few months. Well probably six from these probably since fall that have come from agents, okay. So from agents have had deals that's a preapproved buyer and all of a sudden something happened last minute and it fell apart. And again, because I network and because I'm a lot of, I believe in B to B and, you know, relationships, they're like, hey, I don't know exactly how Jesse's program works, but I think he can help. And they called me up, hey, can you get this person in a house in the next three weeks, four weeks? Yep. Absolutely. And I still able to get them paid as an agent. So they still made money. I made money, the tenant buyer got a home, the agent looked like a hero, right?

Jesse: My investor that was waiting for the next deal, the hit their a desk. Here we go, guys let's rock and roll. So, I mean, it was like a quadruple win. Sounds almost cheesy, but it really was.

Joe: Yeah and those realtors might not have brought you a deal if you weren't a licensed agent, right?

Jesse: Well, these ones would, and I will say this because I've known them for awhile, right? So I've known them for years. But yes, I might not have made as much on those without being a licensed agent.

Joe: But do you have to have your license to do these deals?

Jesse: In my opinion, I don't believe you do. I think if you set up the right joint venture structure with the investors that you're partnering with, right then you are a principal on the transaction and you're working on it together, their role is securing financing and getting the home and your role is leasing that home to the tenant buyer.

Joe: Yeah. Okay. You can partner with investors on these deals too?

Jesse: Correct? Correct. So in fact, as soon as we end this call here, I'm heading to work with a pretty big rehabber here in the area. And you know, this is a rehabber maybe or maybe not with a big well known name that, you know, they do a lot of deals monthly. And so the cool thing is they also are in the pool of like, they're great at finding properties at a discount and rehabbing them and selling them. They don't really get in our world with the creative real estate and lease options and see. They know it a little bit, but enough to be dangerous and they don't want to, they don't want to have to worry about it, but they love the idea of not having to pay short term capital gains, right and selling the home quickly. They love the idea of getting cash flow on the back end and getting some of their money recouped right away.

Jesse: And so I get deals monthly from folks in that market as well, which is just a whole other leg. So there's, you know, multiple legs to how I'm doing it and I can't even think of actually the last time that I went after a seller with specific seller marketing from me. Now maybe it came through another party, right. But nothing that I did that I picked up the phone did any direct mail bought any lists? It's been quite awhile.

Joe: Okay, good. I wanted to ask you about networking, Jesse. What are some tips you have for networking to find these kinds of mortgage brokers, attorneys, realtors? How hard is that? How much time do you spend a week doing that?

Jesse: Well, when I started out it was definitely more time than I do now. Right now it's more of trying to remind yourself to touch base with everybody, right and to stay on people's radar. But when I started out, I did a lot of networking through groups like BNI, right? And different networking groups. And the cool thing is, this is kind of a nice little insider tip. Every BNI group, if you're familiar with that organization or something similar to it, right. Usually have one of each profession in there you've got one lender, you've got one realtor, right? And those spots get taken quick. And you know, someone leaves, they fill up fast, well guess what? No one was in there for my position.

Joe: Which was what?

Jesse: A real estate investor, right. So real estate investor, there wasn't anyone else coming in doing that. Now I had to talk with the realtors in the group and I had to talk with the lenders in the group and say, look, I'm not here to step on your toes. In fact, I want your junk, I want your turn downs so we can work out fantastic together. And then once they understood that that I wasn't a threat, they said, okay cool. And then you can go to other groups and you know, every group has their own realtor and their own lender. And so I mean just that alone you could meet enough contacts, right. Then it's staying in front of people, letting them know, letting them know what you got. And it is a great asset to have properties though that you can market and that of course will bring in more and more buyers as well. So you know, everybody knows if you're doing this business or just starting or have been doing it, more properties, you have the more marketing, you're doing remote calls and emails are getting and then you're building a list.

Jesse: But a list is only good if you could move it right, you know that. So that's, that's where I was getting frustrated was I'm like, gosh, I got to go find another seller. I got to convince them at this and then the numbers have to make sense. And what if I just go buy the darn thing right? Or what if I go find a friend to buy with them? Or what if I find somebody who wants to invest in real estate already and I explained to them, here's what you're about to do. Here's what I can do. I think this is a better way. And so that's kind of how I started doing it.

Joe: You know I've always said it's so much easier to shop for what buyers want and try to sell them for what you have with what you have, right? And this is the way that you can actually figure out, well, what are people, what do people want? You find the buyers first. In a certain sense, you're doing that, but you're also, it's interesting because you're finding two buyers, aren't you?

Joe: Kind of like you're finding the tenant buyer who's got the finance, who has the money for down payment, and then you're also finding the buyer who's actually going to be buying the house.

Jesse: I'm finding a repeat buyer.

Joe: Very good. All right, so then talk about what happens next. You've got a buyer with $10,000 down, you've got an investor now who wants to buy a better rental than just a regular $50,000 house that will cash flow $300 a month in the hood. He wants a better tenant with, they'll take better care of his property. Now what do you, how do you go find the house?

Jesse: So that's again the beauty of networking, right and relationships. So I work with some good friends and partners kind of in another venture of wholesaling and that's their model, right? They wanted to learn creative side and they said, you know what, I just want to wholesale that's all I want to do it. I said fantastic you. You just worry about that and I'll take all your skinny leads, right? And so it's a great system. Again, where why go spend another thousand dollars in marketing when I can get someone else's turn down, get someone else's junk and we can do more deals together and monetize things together. So I'll go that route if I can. And for the investor the, you know, rent to own investor coming in, that's great because they're seeing pretty juicy margins. Now if there is nothing that fits the area, the price point, the condition of those properties from those sources, then we're going to the MLS and we are trying to find deals on the MLS.

Jesse: We're actively looking at things that have been there for a while and something we think we can, we can get at a better deal. But the beauty is I put it in a spreadsheet that I've put together and I run the numbers and I run the ROI and the cash on cash and I reverse engineer it to what I know the tenant buyer can do and what they're willing to do. And then I basically tell the investor, here's kind of where we're at, here's a property we need to look for. And we go down that path and we start looking. And the beauty, I have one right now that we just got under contract a few days ago we'll be closing in about three weeks. And that came from an agent. So the agents, the one out showing them houses, the agents, the ones scouring and MLS, they run it by me and the investors and we say, we don't like that one, oh this one works, okay, this one's great. And we don't even go look at it until they go look at it and they say they like it. I run the numbers, I vet the tenant buyer and then the investor says, yep, this work for us. And then we move ahead.

Joe: Can you give an example?

Jesse: On the numbers?

Joe: Yeah on the numbers. Like what's a typical house price, you know?

Jesse: Yeah. So right now we have, somebody came from an agent that I ended up meeting with I think maybe a month, a half ago, two months ago, a newer agent. I said, hey, here's what I do, here's how I can help. And you know, keep me in mind. And they called and said, hey, we've got a situation, we've got somebody we thought they were good to go, they're not, sounds like the credits are good for the person making the money, the person or I'm sorry the person that doesn't make them money has a good credit, right? So it's kind of just you can't put it together and, and they are getting denied and we're all looking at places because they thought they were good to go, right. How many times have you heard that? Buyers are fine buyers are set and then you realize, no, no they're not once they actually truly get preapproved in front of a lender.

Jesse: So I said, okay, no problem. Let me take a look. So I talk with them first. Why can't you buy? What's the scenario? Where are you looking to go? What's your timetable? How much do you have down? Can you get more money? What are you paying now? What can you pay? I review their credit or review other income and their assets and everything. And then from there I kind of again, work it backwards and say, okay, well we have to look at properties in this range. If this is what you can afford per month, that of course that can change. Which it did with this. And we started at payments of $1,500 a month that they wanted to stick around. So I told them what they need to look at and of course they don't like to hear that.

Joe: That's good example then $150 or $1,500 a month they can afford. What price range did they need to be looking at?

Jesse: I them for the investors to be on board with this type of a deal, we want it to be around $150,000 or $175,000 which they were hoping for a lot more. Because it's got to cash flow it's got to make money. So then of course, well we can probably go a little bit high, what if we went up to $1,700 or $1,800 or $1,900 and so now the payment they're going to be at is going to be $1,875 a month. So again, you can't just go with the first thing that they tell you, right. So now we're at $1,875 a month.

Joe: Which would be what price home?

Jesse: We're buying a $235,000 home and then reselling it to them for about $253,000, $250,000 to $253,000.

Joe: So when you're looking for these, do you need to, are you trying to buy these at a discount?

Jesse: We're trying to, yeah, it's a little tough. I mean, whenever we have come in and lower right now in the market we're losing them, we're getting beat out. But the, the important thing that we look at is, okay, lets you know they might love this place and they might be willing to pay that price down the road, but could we rewrite it if this falls apart, right? I'm always never afraid to talk about what if it doesn't work out and what's our plan A and plan B and plan C. And so if it doesn't work out, can we just rent it? What's the market rents on these? Are they good? Can we get a new tenant buyer ASAP and do it again?

Jesse: Which of course is always the first choice if it doesn't work out. But again, I've got a little bit of an advantage, you know, from being in the finance business for 15 years and having been doing lease options since 2011 I know the scenarios that are riskier and the ones that haven't worked out I've kind of learned from him, right? And you know like, hey, if I would've asked this, I might've caught that. Or if I would have found out that the tenant buyers only had $800 in the bank and the $20,000 they put down was from mom and dad, maybe that would have, you know, led to some more questions. So there's, it's a calculated risk, but so now we're closing on this at the end of the month and they're going to move in, you know, same day we close, they're doing a lease with option with us and they're putting down $23,000 on a $235,000 homes.

Joe: And then the investor. How does any investor cash flow on a $230,000 house, I mean, what's, what's their mortgage payment going to be?

Jesse: Their mortgage would be about they're going to be around $1,400 I want to say give or take cause your cash flow almost $500 a month. So I guess what $1,875 minus $500 that's about where their payment is going to be. So this one, this one's a 19% cash on cash return.

Joe: Are you figuring in vacancies, repairs, maintenance, things like that? Insurance, taxes.

Jesse: Yes. Yup.

Joe: So you're still figuring in vacancies and repairs.

Jesse: We figure in a couple months of vacancy repairs, very minimal. I mean $1,000 to $2,000 bucks. The other thing that I've learned to do is to, we will either do like a home warranty on the property or we will get up set up with a warranty plan. So we have like our local utility company that has a really cool plan. You pay, you know, $15.00 to $25.00 bucks a month and they'll come out and fix, fix, whatever that's covered. So for the most part we're not factoring in like you went as a normal rental? No, we put in, you know, little tiny buffer.

Joe: Because these are nicer homes, newer homes, most likely, right?

Jesse: Yup.

Joe: Good. Okay, nice. So you're making money from some real estate commissions, right? Are you making money from, I don't know if people understand this, I'll try not to get too technical in it, but like even though the commission on the MLS says 6% if you were to bring a buyer to the house, you can still negotiate another commission, additional commission on top of that that you collect from the buyer or the for the investor, am I right?

Jesse: Correct. Yeah, I don't usually, the commission that the buyer's agent gets right for bringing a buyer is going to be between 2.5 and 2.7 at least in our market, that's pretty, pretty standard, right? So if, let's say the lead came from, you know, my marketing that I'm doing and they go through my funnel and get through the system and we screen them and we say this is a good lead, I'm going to get the full 2.7 commission plus my investor pays me and I get a percentage from the investor at every deal. So I get a percentage of what the tenant buyers putting down. And they know again, and the beauty of it is this already discussed in the initial meeting upfront that we go through how do you get paid, here's how I get paid. And so I get paid really from two different buckets because I'm an agent. Now, if I wasn't an agent and before I was an agent, right. Because I've been doing this for years, not licensed, just more as a joint venture partner, right. So yeah, I made a little bit less then because I couldn't get the real estate commission. So having a license is definitely advantageous. And get's you, you know, maybe deals that you might not have had, but you could still make very good money not being a licensed and still doing this.

Joe: Sure. Good. Well, Jesse, how can people get ahold of you if they maybe are looking for deals like this or they're looking to learn about more how to do these things, these types of deals? Do you have something that we can send people to?

Jesse: Yeah, so right now I'm working on putting something together because I really would like to ramp up doing these types of deals. And I would say one of two years from places to go would be our Facebook group Lease Option Secrets, on Facebook, there Lease Options Secrets. And then, also to set up a call with me to run through if this is something that anyone has an interest in doing or even working on together, you can reach me CallJesse.net. So www.CallJesse.net J E S S E.

Joe: CallJesse.net and again with Facebook, if you just do a search in the search bar for Lease Option Secrets, you'll find the group there. It's an active group, looks like it's doing really well and cool, Jesse is the real deal guys. I wanted to get him on the podcast because I know some of you are going to resonate with this and you're wondering about man, how can I do more lease option deals and you've wanted to find the buyers first. You've wanted to work with investors having a hard time figuring that out. Jesse is doing pretty well with it and I think there'll be a lot of people listening to this who might even be have some interest in partnering with him on these deals. Maybe as the investor where you're bringing the money you can buy the house, you're just looking for maybe an opportunity to work with somebody who can find the tenant buyers who can actually help you get the financing as well on the investment property. That's what Jesse can do.

Jesse: Absolutely. Yeah. And that's the cool thing is, so we've had some investors who want to get in and be the deal finder, the deal negotiator, right the way that I'm discussing that I've been doing it. And we've had people say, oh, that's pretty cool, but I'm ready to just do one of these deals. How about just let me know when you've got somebody. Okay, fantastic. So it's been a great system and I really haven't, you know, spent a lot of time talking to folks about it because I wanted to do it for, you know, quite a few deals and do it myself with various partners in various ways of doing it. And it's something that I'm definitely looking to, to work on more and grow in some other areas.

Joe: Nice. All right. Anything else, Jesse?

Jesse: No, I think that's good. I appreciate you having me on again, and you know, I guess my kind of last thought I'd like to leave with, you know, with folks is there's just so many different ways to do deals. There isn't a wrong way or right way, as long as you're being ethical, moral, you have integrity. I set people up to win. I can sleep great at night knowing that I do a very good, thorough job of my tenant buyers and you know, if they don't buy, they typically back out or something happens completely unpredictable, right. But I pride myself on running an ethical, you know, good business that's been around a long time with a good, you know, rating and there's so many different ways to do it so you don't have to do it the way I do it, but it's just one more way. And again, I found myself in that predicament of saying, okay, well I've got something in my left hand but not in my right hand, what can I do with it? And it's kind of turned to a whole new system of doing deals and it's working really, really well.

Joe: Nice. Well good. Thank you Jesse for taking the time and I hope it warms up the soon there for you in Minneapolis.

Jesse: Oh Man. Send some of those 40's up here, we’d love them.

Joe: Okay. It's actually 52 now, so it's got a little warmer since we started.

Jesse: Very nice. All right. I appreciate it Joe. Yeah, thanks man. Have a great day. Thank you.

Joe: Thank you. Hey guys. Again, if you want more information about Jesse, you can go to his Facebook page. Just go to Facebook, do a search for a Lease Option Secrets. You'll find his Facebook page there. You can also schedule a call with him CallJesse.net. And yeah, listen, do, do Jesse a favor? Don't schedule a call with him unless you're ready to do business with Jesse. All right. Like I'm just a little worried he's going to be inundated and flooded with too many calls. I may be wrong, but yeah, don't waste his time unless you're ready to do some business with him. Cool. And that's just the smart way to do things like that. He's been very gracious to open up his calendar and let people schedule calls with him. So that's nice I appreciate that.

Joe: And again, if you guys are driving and you didn't have a chance to write down these links and stuff like that, we keep all of the show notes at RealEstateInvestingMastery.com RealEstateInvestingMastery.com when you're there just do a little search in the search bar for Jesse and you'll see the two or three other different podcasts we did with Jesse and you get a transcript for this of this podcast as well.

Joe: Also one more plug for my book Wholesaling Lease Options. If you want to just get a quick little primer that goes deep actually pretty quickly and how to do lease option types of deals and then just go to WLOBook.com WLOBook.com I'm looking at page 38 right now and I cover in here how to make three different offers to sellers cash offers, sandwich lease option offer and a lease option assignment offer and I actually show you how to do it with real numbers in here, so check that out. WLOBook.com all right guys, we'll see ya. Thanks again Jesse. Take care of guys.

Jesse: Hey, thank you.