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What if you could combine the benefits of flipping properties with the benefits of being a landlord into one seamless real estate investing strategy? It’s possible, when you learn the Hybrid Investing strategy. In this episode, Jeff interviews Jesse Mills, an investor, coach and expert in many aspects of real estate investing. Jesse has created and perfected an approach to investing called the Hybrid Investing strategy that could be a great fit for many real estate investors. Check out this interview to learn more about Jesse and the Hybrid Investing strategy!
What would it look like if I could go buy a piece of real estate, but I would only buy it if I knew exactly what I was going to sell it for. And I knew when I was going to sell it, I knew how much I was going to make, and I know who I’m selling it to. And what if in the meantime, I can get cash flow every single month? But I know what that cashflow is, right, I’m not guessing what the rent Zestimate is and what the rent comps are on this and that website; I know exactly what it is, or I don’t do it. Right. So what if I knew all those, you know, variables, what if I knew who the person was and everything about them. And so I’m getting all the good stuff, all the good stuff. But none of the bad stuff, right; I’m reducing most of the bad stuff and the risk as low as you can go.
Welcome to Racking Up Rentals, a show about how regular people, those of us without huge war chest of capital insider connections can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented deal makers. We sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.
Hey, thank you for joining me for another episode of Racking Up Rentals. Show notes for this episode, including a transcript of the interview you’re about to hear and can be found at thoughtfulre.com/e175. Please do us a big favor and do yourself a big favor by hitting that subscribe or follow button in your podcast app. It makes sure you don’t miss any shows, but also really sends a message back to those platforms that you are listening and helps them spread the message to other fellow thoughtful real estate entrepreneurs just like you. So thank you for doing that. Onward with today’s episode.
In today’s episode, I’m really pleased to share with you a conversation and an interview I recently had with my new friend, Jesse Mills. Now Jesse and I are part of the same kind of community where we have both been coached, but we really just got a chance to meet recently. And not only did we sort of hit it off, I think in terms of personality and spirit and whatnot, we also kind of found that we had some interesting, different things that we could both talk about. And as I got to learn more about Jesse and what he does, I discovered this thing that he does that he has created called hybrid investing. And actually, as we’ll discuss, you could look at it as a reverse lease option. So it was really fun to sit down with him and to hear much more about his story, but also have him explain this really cool and unique real estate investing strategy. So I am excited to share that with you today. So without further ado, let me stop talking and let’s get to our interview with Jesse Mills.
All right, Jesse, thanks so much for joining me today on Racking Up Rentals. Welcome.
Awesome, man. I’m super pumped to be here. Thanks for having me, dude.
Yeah, absolutely. It was nice to meet you recently. I was just thinking about like, how, you know, how did we meet? Well, we have a lot of common friends, I guess, which is maybe kind of normal in this industry overall. But, you know, it kind of goes back to I think connections that we have through the group of the community called Power Players that Greg Pinneo has, you know, started and cultivated that we’re both members of. But yeah, I’m really glad to get a chance to learn more about what you’ve been doing these last couple months as we’ve gotten to know each other a little bit. So can you just start by; I’m such a big picture guy. I have to start big picture so give us like the 60,000 foot understanding of who Jesse Mills is first.
Yeah, I like it to man. That’s the way to get into it. Right? It’s dangerous, right, so I was eight years old on a road trip to California. J Well, we’ll start a little after that. Let’s talk a little bit after that. Yeah, I’m from Duluth, Minnesota born and raised on the tip of Lake Superior; only child so I was forced to make friends or talk to the mirrors. So hey, I love people; I just love to get out and connect with folks and learn what everyone’s about and what drives them. I’ve been super fortunate to travel around the world quite a bit as a younger lad and student. I’ve kind of been an entrepreneur since high school; I would say I was 14 or 15, I went door to door for like 30 houses, handing out I’ll mow your lawn flyers, because that was way better than being in the mall, selling comic books for five bucks an hour.
And that led to doing that for four years; that led to having a sunglass kiosk in the mall when I was in college, I had three different locations in the malls and 15 employees. I went to school for four and a half years, maybe five like Van Wilder and dropped out and never got that degree. But just knew I wanted to work for myself, I knew I wanted to kind of be in control and have business to be my path somehow.
I got into the mortgage business in my early 20s. So really, that kind of led to a lot of what I do now, is I spent 15 plus years in the mortgage industry. As a mortgage originator broker, I did the big bank, the small bank, the credit union, you know, hopped around, like most folks do with the mortgage business and real estate business, and went through the crash. And hey, that was fun, right? I realized one of life’s lessons in 2008, that things can change, they can change quickly. And you know, when you run your life where you don’t think things are going to change, and you don’t have necessarily a cushion or preparation, or you know, a budget – the B word right – some people don’t like to hear things get bad. So, I actually went through a short sale, short sold my own house; I went through bankruptcy. So anyone who’s listening who has ever been through hardships like that, I feel you, I hear you. Life can throw some curveballs at you, and the important thing is to learn from it, right. And I think I definitely have, and, you know, still a risk taker for sure. But a little bit more calculated risk taker. But yeah, started investing in real estate 2010, 2011.
I said, well, I made a lot of people a lot of money by helping them get investment properties or just even their own home, and started really thinking you want to work forever, having to work. I love to work. I love what I do, I would probably work seven days a week, but it’s because I want to. And even when I’m not “working” I’m reading a business book about work, or I’m watching videos or a podcast about something that I want to grow with my business. But the whole difference is I don’t have to.
So you know, it’s important to learn from that, right. But yeah, so I got into real estate investing. And because I had gone through bankruptcy, and I gone through short sale, and credit was tough post 08, 09, I started diving into how does this work without good credit? Or how does this work without having a lot of money? And I stumbled upon some people on YouTube, podcasts were kind of just coming out and getting bigger, some books, and ran into a few different folks that I started learning from, Wendy Patton for example, Joe McCall, Ron Legrand, people like that. And I started thinking this is pretty cool. Because I know the mortgage world, right? I know how that works. And I know when I say yes or no, and the rules and the guidelines, and what’s a good risk and a bad risk. But I’m like, Okay, this is interesting. So I can actually help more clients get homes, even if I can’t get them the loan, right. So if I deny them, I can still help them get a house and get paid. Or I can go get my own home without having to go to the bank and go through the same crap that I’m making people do. So like, this is pretty cool, so I really started diving in. And this is why like, I’m so grateful for people like you, Jeff, and what you do, and friends of ours and mentors of ours, like Greg Pinneo. Oh, my gosh, humongous respect for Greg, I love him and what he does.
But the stuff you just don’t know about, right, you don’t know about it unless you go look for it. And there’s information out there, but is it good? Is it bad? Is it from the right people? Is it from the people actually doing what they’re teaching? Are they doing it in an ethical way and with integrity? All of this stuff you got to look at.
And so I stumbled upon an online course, and it was $997. Not 1000 bucks, because that’s the magic marketing number, I guess. And you know, it’s funny, I’m sure we’re similar this way, but some people are like, Oh, that’s $1,000; gosh, what if it’s a rip-off? What if it’s a scam, you don’t know this person, they’re on the internet. Again, it’s 2023, it’s not 2008 anymore, it’s different, but still, there’s a lot of folks who think like that. I’m the kind of person that says okay, well, you know what, maybe I get scammed, but if I spend $1,000 and I can go do a real estate deal that is five times that, or 10 times that, I’m all in; I’ll take that chance, right? Do my due diligence a little bit, but I’m not going to be scared about getting scammed.
Bought this course, did my first deal to help this family get out of their tiny little town home that they’re running a daycare out of; they couldn’t get financing to buy their own house, they went through a nasty divorce, they fell in love, self-employed, right? They had all the all the hair on the deal. And I helped them get into a new home, way bigger space, bigger yard, and they loved me for it. And I made $8,000. So I’m like, Oh, my God, I just made eight grand. Now had I done the mortgage on this, by the way, I would have made like two grand.
So I made four times the money doing something I couldn’t do, and helping them and they were so appreciative. I’m like, Oh, my God, my normal buyers, they’re like, Hey, what’s your rate? What’s your fees? What’s this guy down the street? And these people were like, wow, oh my god, I’m just so grateful and happy. Like, I like this. I don’t like being a commodity over here, like every other loan officer, offering something unique and different. And my brain got it. So that’s really kind of when I went in and started two businesses, essentially; I started my creative financing business on the side, my side hustle, and then my day job was a mortgage broker, and I did that for a number of years. Until all of a sudden I started making more money and having way more fun doing the investing business. And I’m like, alright, I think it’s time to put them out there and leave my job, even though I’ve always been 100% commission, but you know how it is right? We can have that steady, sort of steady income of what you know, and leave it. So yeah, yeah, that’s the 60,000 foot view to here.
One thing you just mentioned that I was struck by is you use the word commodity to describe being a mortgage broker. And I just think it’s so interesting to me, because as the mortgage broker, you’re feeling like you are a commodity, right? From the normal sort of everyday buyer borrower’s perspective, they feel like, a lot of them, not everybody, but a lot of them feel like they are the David to a banker’s Goliath. They are the ones who are beholden to the grace of the banker, will the mortgage company make me the loan? Oh, thank you so much, you’re so benevolent. But what you just mentioned from the spot of being the mortgage broker, is you feel like a commodity. And I actually really wish that more borrowers would realize that mortgage loans are just a commodity. That’s actually one thing that Greg Pinneo says; people put money on a pedestal; take the money off the pedestal. In his words, one of his famous expressions is money is a box of nails. It’s just a commodity that we need, like a box of nails, we need like a palette of lumber or some windows or whatever. And I just had to point that out; I know, it’s not the point of what we’re talking about, but I just had to point that out because it is a commodity and I feel like if more buyer borrowers would reframe it as that, they wouldn’t tie so much emotionality to the idea of what it takes to get a loan,
Absolutely; I think a lot of that goes back to, there’s a way of doing things that the general public does, because that’s what they know. Because either that’s what they hear, that’s the circle of people that they run with, their family and friends, or they don’t choose to investigate. And here’s the thing: anyone listening to a podcast, or watching a YouTube channel, I already love you, whoever you are, I love you, because you’re trying to not just be in that. Here’s what I know, and here’s the world; you’re looking to learn and grow. And is there different ways to do things? Are there better ways to do things? And so, yeah, it’s just a tool. And, until you’ve done something, you don’t realize A: it’s possible, B: maybe it’s easier than what you think.
I mean, my last two short term rentals, I purchased literally zero down, no money down whatsoever. And one of them I went to the bank, I think six months later and actually got a check. They gave me a nice $50,000 check. So I came in with zero. Now I did fix it up. I think I put 12 or 13 grand into it using someone else’s money. And then I went to the bank and then I got a check. How cool is that, right? But no one ever taught me that. I had to go learn that by seeking people like you and like Greg Pinneo, and the real estate folks of the world who are teaching this stuff and sharing this stuff. So that’s why I have a podcast, that’s why I help coach and mentor people as I want to get back to people who are hungry, and want to just know more of what is possible out there in the world.
Yeah. I feel I feel exactly the same. Sometimes people ask me like, well, you know, actually from a place of like skepticism, honestly, like, they’ll be like, Well, why do you do coaching, right? Because sometimes they have this mentality that’s like, well, if you can’t do then you teach. And I say, there’s really two reasons. I mean, one is I am the product of an amazing coaching relationship. And I see how I’ve experienced how powerful that is. And secondly, I’m flabbergasted by the fact that like, the way that I do things, isn’t is not May. It’s the opposite of mainstream. Why is it so little known? I guess, I feel like it needs to have a bigger audience. And so I really, totally understand kind of what you’re saying about like, why you do that? We’ll circle back to that in a few minutes, too. But I think I think it’d be awesome to pivot towards geeking out on a little bit of real estate here.
So I know one of the things that people in this probably what I’ll title the episode two, I think one of the things people are going to be excited to hear about is the concept that you have been cultivating using yourself and then coaching others on of hybrid investing sort of the term I think that sort of, you know, best describes what you’re doing. So can you just give us a sense to start the beginning? Like, what is hybrid investing?
Yeah, love it, man. And again, geeking out, right? This is a product of my upbringing and my background. So I tell people, oftentimes, right, you find people who are in the mortgage business, the finance business, right, they understand credit, and guidelines and rules. And they’re great at that. They don’t really know a lot about real estate, sometimes they pretend they do, but they don’t. Right. Their world is money underwriting guidelines, this and that. The flip side, you have agents and realtors and real estate agents and brokers who like to think they know a lot about credit and financing in the Senate, but they don’t, right, they know enough to be dangerous. And that’s great. Like you have your lanes, I’ve happened, you know, spent 20 years in both lanes. And because of that my unique background of being in both lanes, has helped me kind of carve a little niche of a niche, if you will, and help a few different groups. So when I’m talking with folks, if you’re a real estate investor, or you want to get into real estate investing, and you want to do more, go further, faster, with less money, I can help you with what I do, if you’re looking to get into a home of your own, or maybe rent a home, but you can’t qualify to get into house right now. Because of whatever one thing or a list of things and the bank saying sorry, come back and see us in a year when you fix the stuff I can help you.
So I help people get homeownership, while also helping folks invest in real estate and create cash flow and you know, great retirement at the same time. And then I teach this right. And so I’ve been doing this in the Midwest market, you know, and Minnesota for, you know, 11 years now. And I teach what I do, but hybrid investing is really taking kind of the best of a couple strategies and combining them. So flipping a house, right? Where you buy at one price and you sell at a higher price. That’s easy. That’s the easiest way to save flipping.
All the other stuff is not the fun part, right? All of it work and guessing how much you’re gonna spend on rehab and getting guessing what it’s going to be worth when you’re when you’re done with it, guessing what it’s going to sell for and how quickly it’s going to sell. All of that is a guess. Right? It’s all estimates. Right? But it can be some sweet profit. And people you know, some people make a great living and amazing living. Some people breakeven, some people lose money. But that’s what flipping you know, real estate is, then there’s being a landlord being a landlord. You have the tax benefits and depreciation, and you have cash flow, and you have someone paying down your debt for you and your assets are going up. It’s fantastic.
But you get to deal with the three T’s, tenants, toilets and trash, right? Who wants to deal with tenants toilets and trash right? Now, of course, I’m a people person, you’re a people person, right? And it’s great when people are great people, but we deal with everything. And so sometimes, you know, that can be the tough part of you know, land lording and being, you know, being an investor. So, you know, as I was learning all of these different tools and strategies in in the world, I’m like, what if there’s a way to kind of take the best of both worlds, put the good stuff together, get rid of the junk, get rid of the risk, get rid of the unknowns, and just take the good stuff? What would that look like? And so really, it’s like, what would it look like if I could go buy a piece of real estate, but I would only buy it if I knew exactly what I was going to sell it for. And I knew when I was going to sell it. I knew how much I was going to make and I know who I’m selling it to. And what if in the meantime, I can get cash flow every single month.
But I know what that cashflow is, right, I’m not guessing what the you know, rent Zestimate is and what the rent comps are on this and that, you know, website, I know exactly what it is, or I don’t do it. Right. So what if I knew all those, you know, variables? What if I knew who the person was and everything about them. And so I’m getting all the good stuff, all the good stuff, but none of the bad stuff, right are reducing most of the bad stuff and the risk as low as you can go. Okay? Now take that a step further. What if you could do that, Jeff, but you came in and you bought a property.
Now again, I know you buy properties, the ninja way I like to say, as do I many times right without the banks, seller financing, creative deal structuring which I freaking love. But let’s be honest, most people in the world don’t know that don’t have the time to do it. Right? Unless they’re really digging in, which is great. And you teach it I teach it, it’s awesome. But for the majority of the folks out there, they’re like, I just want to go to the bank, I want to put down 20% I want to get a piece of real estate, I want to cash flow. And that’s it. I’m in the game. I’m a landlord, right. So what if you could go drop 20% down on that property and then mortgage like you have to with the banks, but you get 10% back the same day? What if you get 15% back to same day? What if in some cases, you get all of your money back and hour later? Well, that’s what I do. So I call that hybrid investing. And I basically another kind of verbiage for it that I’m using, right? Because some people like I said, you’re a geek out in a really in the business call, I call it reverse lease options. So instead of getting a property and trying to find the magical person that wants that property, I go find the people that’s all about People First, let’s say you go tell me what you want. You can’t get it, but I can write or one of my partners can one of my investors can, we’re gonna go get you what you want. But we’re getting it at today’s price. That’s what we’re paying for it and you’re gonna be buying it from us in the future at tomorrow’s price. And you’re gonna be putting some money down up front. And that money you put down up front is fully credited towards your house, when you get your house and you pay us off in a year or two or three or maybe five, right? But typically two to three is the sweet spot. And if you don’t, you would forfeit that money, right?
So why would I want a tenant who never wants to own this house, who’s going to slam the door every day and say screw it, Jesse will fix it, whatever, right? He can go do this, he can do that, who take my $1,200 security deposit. When I’ve got this person on the other side who said, Hey, I got 30 $40,000 down on my house that I lose if I don’t take care of my place, and I don’t pay on time. And I’m in the process of fixing what I gotta fix to make it mine. It’s a beautiful, beautiful thing. And so if I were looking at having, you know, 50 grand or 100 grand in my bank to go invest in real estate, the normal way that most people know they’re doing one deal, man and they’re tapped now they gotta go work for another year. My way, I might be doing two deals, maybe three deals instead of just the one. So it’s a pretty cool thing.
Okay, okay, so I’m gonna paraphrase. Yeah, well, let me paraphrase, make sure give it back to you and see if I’m getting it right. And then I want to ask a couple specific questions. So whereas most people might go out, they secure a deal and then they look for a tenant buyer for that deal. You start by finding the tenant buyer and then going backwards and sourcing a property specifically for that tenant buyer. Is that accurate to begin with?
Yes. And instead of me having to go find it, I’m letting them find it. Just tell me what you want. It’s like walking into a Starbucks, but you don’t have your wallet. Like, what do you want on the menu? I’ll buy whatever you want.
Yeah. Okay. So let’s, let’s make it like really tactical. So your tenant buyer is Jen; Jen wants to pay $200,000 for house. She’s got let’s just say 20 grand down, but she knows she can’t get financing. So she comes to you. And she says, Hey, can you source me a deal that I could buy on a rent to own basis? About 200,000? I’ve got 20,000 to work with? Is that a fair way to think about it?
Okay, so then let’s take it from there. So then what do you do? You go out and you’re looking for that property, but so I guess one question, sort of just generally without giving away all your secret recipe, but like, generally like how do you find that? Or like, where do you go to find that? And then what role do you play? Do you just go find that seller and say, Hey, seller, I’d like to introduce you to Jen and you’re gonna take a fee or you’re gonna like actually buy this house yourself and resell it to Jen in the form of a lease option.
Yeah, so, again, right. There’s multiple ways to do everything, and there’s easier ways and there’s harder ways, slower and faster. If we can negotiate directly with the seller, that’s great. But I’ll be honest, Jeff, that’s, that’s not the business model. We’re buying off the MLS half the time, right? Now, I’ve got a lot of great friends and connections and business partners in my world that have off market stuff. They’re wholesalers or rehabbers. They’re investors, which is great. But most of the time, it’s, tell us what you like. And, and a lot of the times we’re working with people already in the community. So we’re working with the realtor that brought them to us, we’re working with a loan officer that referred them to us, or an accountant or a financial planner, right?
So we advertise on other social media platforms and, you know, direct to public, definitely. But what I have found, and this is a big thing, because my first five years of doing this was Craigslist, and Zillow, and bandit signs and all this stuff. And, you know, I could sound super cool man and be like, hey, I can get 100 leads in a week or in a day. It sounds awesome. But a lot of them are not good. And it takes a lot of time to filter those leads. And again, I want to separate right leads and people are not the same, right? Obviously, we want to help people and we care about people, but you have to just get through the data and people who qualify or don’t qualify. So what I’d say is, you know, it’s we let them go pick up the MLS, here’s the home you want, here’s what you want to get. And what I like to say, as we buy it at today’s price, but you know, we’re of course, we’re not a bank. So we’re not going to say well, we go buy for 200 grand, and you’re gonna go buy it for 200 grand from us. Right? Because that takes up the flip part of what we’re doing.
So that’s part of the hybrid investing, is there’s a margin that we make. So I like to say, hey, you know, what, what is our girl’s name? Jen, right? So say, Hey, Jen, if you wanted this home, right, and you were to come back and three years from now, and try to get this home, do you think it’d be the same price? Probably not. It’s probably going to be worth more money. Now. No guarantees. No one knows anything. Right? Let’s be honest. But historically, this is, you know, what’s been happening, this is probably what it’ll be worth, give or take in three years. So is it fair that if we can get it now and you know, and you can’t, that’s your price? Because that’s what you’re paying us off? Most people like, yeah, absolutely. Right. That’s what it would be, except for I get to get what I want now that I can’t get.
So we purchased that property, we close on that property, and the day we close on that property is the same day Jen is moving in. But the beauty of it is we don’t even close on that property until we know what Jen’s gonna pay us in three years, until we know what Jen’s gonna pay us every month. And until Jen says, Here’s my $20,000 down, that goes towards my house that I lose if I don’t buy it on time, which again, we don’t want her to lose the money ever. But it’s way better than a security deposit. And it’s skin of the game. And it really takes tenants and renters and turns them into homeowners and homebuyers; it’s a different mentality.
So when you close on the property that you’re instantaneously even pre-agreed to lease option to Jen,
who is closing on it? Is it actually you and your company? Or is it like a separate investor? Or is it you and your company funded by a separate investor? Is there a separate investor paying cash? Are they getting a loan? Like what’s the typical kind of model for that? Because I let’s say that she’s looking for like a $200,000 house. So you go and find like, $170,000 house or something like that, and you buy it, and you know, you’ve got your spread on the value there. How is the closing and the financing and funding happening on that initial purchase of the $170,000 house?
Yeah, awesome question. The answer kind of is all of the above. There is a norm that we typically do, but it is, you know, my company’s Home Solutions Group, right? We have solutions where the creative financing specialists right there. We don’t say no unless we have to. We want to do good deals and take care of people. But we try to find a solution. So we do a little bit of all of it. But typically what we do, Jeff, is either I will be the investor or me and one of my direct partners, and we’re buying the house. But here’s the cool thing. You know, I wish I had endless funds to sitting in you know, breaking gold bricks and bank accounts, but I don’t right now at this point. Yeah. So sometimes I can’t be the investor. So sometimes I get to sweet deal. And I’m like, Oh, my God, this Jen girl is awesome. She went through this horrible divorce and got totally screwed over. She’s kind of starting all over again. She’s got a great job. Her credits just a little shy. She’s got money down. Let’s give Jen a chance. Right? And so I go to a friend of mine, or one of the investors in our pool, which we have hundreds of investors in our pool. And of course, we’re always looking for more, because we want to help as many people as we can, and that’s growing every year. So I go to one of our investors that I know is ready for a deal. They are ready to buy another property. They’re pre-approved and they say Jesse, the next Jen you get send them my way. And so what I do is I, of course, take a little bit of a fee for finding Jen for screening, for vetting her, for going through all of her income docs and asset docs and credit and knowing her problems and how to solve her problems, right? It’s a lot of upfront work, I’ll be honest, it’s a lot more than most people do. It’s not here’s money, and here’s the house. That’s what the bad people do it, the ones that don’t work out, the ones that don’t go full circle, the ones that get sued, right? You don’t do this for over a decade and have an A rating with a better business bureau for not doing it the right way.
So we do all that stuff, and we take a fee, and then I say, hey, investor friend, here you go, here’s Jen, here’s all the details. By the way, you’re gonna make $500 to $600 a month cash flow, because she’s already agreed to this price, and your monthly payments gonna be here, give or take the financing you get, and you’re gonna go put down 40 grand, but guess what, you’re gonna get back 20,000 of that day one minus what we take out of that, which isn’t too much. Our investor always gets most of the meat of the bone. And they just got a sweet deal.
So what I teach at our coaching program is there’s today money and there’s tomorrow money, and people need both, right? People need both. So there’s months run by, hey, I want to just help a bunch of my friends and partners and investors get some deals. And you know, Daddy’s got to make some money because we’re doing a new addition on the house, or new vacation or new a vehicle. And there’s months where I say, hey, you know what, alright, I want to scoop up some properties myself. And you get to do either one, which is kind of fun.
Just out of curiosity, a very specific question. But how in this case was Jen like, what is it typical length of her option window? Is it like, Hey, you got 18 months to figure this out? Or is it like 510 years? Give her a long runway? What’s the sort of typical timeframe for that?
Yeah, good question. So it’s really about the people. And so 90% of the time 95, we’re less than five years, we’re two to three years, typically. But it depends on the situation, right? So again, with my mortgage background, which is a big difference, I know when people need a year, and that’s it for six months. And if they only need a year, I’m gonna give them more time, right? That’s again, one of the signs and you know, maybe jot this down, folks, if you’re listening to signs of someone who’s doing bad business versus good business, more time is always better, right? The people that are that are that are sketchy in this in this business, which is horrible, and I want them all to go away. It’s the people that don’t know their story, don’t care, don’t know the reason, don’t know how long it’s going to take them to do it, don’t know what they need to do to go from a no to a yes. And so if we think it’s a year, we’re gonna give them two years, if it’s two years, we’re gonna give them three years.
Some of our investors are like, Hey, I don’t care if this is 10 years, 20 years. Why? Why would I care? If you’re gonna fix most to almost everything in the house and pay me every month and take care of this? Like, it’s your house but I’m the bank – why would I want you to do this any faster? And I would say, I don’t disagree with you. On the flip side, I have investor friends who have five of these going right now. So imagine knowing you have 30 to $50,000 profit coming, or more, per deal. And you have five of these in play. And in the next two, three years, it’s pop, pop, pop. And now you take all that and you throw it into a multi-unit or apartment for vacation rentals, or you do 10 of these instead of five of these. So the cool thing is we design this word there’s, there’s no right or wrong. It’s some people want to get paid off faster. Some people want to just take it for the long haul. But kind of the steps are usually about the same.
So you just mentioned you’ve been doing this for a while. And I think that everything you described there is very evergreen, right? It’s this kind of works all the time. This is a concept that just makes sense in lots of different scenarios. But you know, as you and I record this right now, we’re about seven or eight months into like a pretty dramatic kind of shift in the market. We kind of went from this seller’s market type of thing towards cooling, leveling out, maybe even to some people feeling like it’s a buyers’ market. And while this is a timeless and evergreen concept, what is it about this concept that is especially applicable now in this changing kind of market that that we have? Do you feel like it is even more applicable?
Yeah, it’s interesting with creative real estate, and I know that’s a big encompassing phrase, but I think there’s ways to make money going in an up market, down market and flat market if you know the tools and you know the tricks. There’s potential negatives that can happen, right? So obviously, if we’re buying at 200, and Jen’s agreeing to buy the house for, say, 220 or 240,000 in a couple years, and it’s not worth that, what happens then is usually one of the top questions. And the way I would answer that is say, Well, number one, you only need three and a half percent down with FHA. So what is that? 6, 7, 8 grand, right? That’s all you need. Or zero with a USDA or a VA, or, you know, maybe a grant program, right? So you don’t need the 10% or 20%. That’s what we’re requesting because it makes sense.
But number two, that’s the beauty of this. So you asked before, do we talk to sellers a lot? I used to do that. I’ve done hundreds of those, right, where I got the seller to I’ll give you 1100 a month. And then I have a Jen who gives me 1900 a month, and I do a sandwich deal. And I make an 800 cash flow, which is awesome, and I put no money down. Those are great, beautiful deals. But guess what? The seller doesn’t want to be an investor, they’re not an investor. So if they want to get paid off pretty quick, that’s a problem. Because Jen also does something stupid, and now she needs another year. Well, I get to come in and pay that seller off, don’t I? Okay, well, if I can do that, I want to do that, great.
But it hit me about four or five years of doing the way I was doing it as property first, buyer second. Why don’t I just deal with people who already are doing this? And they know what could happen? And they’re okay with it could happen. Right? So let’s say Jeff, you and I did a deal, right? And let’s say it’s one of those situations where I’m like, hey, you know what, I just bought house last month or about two. I’m not buying anything this month. So my deals are going to whoever wants it this month. And you’re like, hey, sign me up. Let’s try one out. And we’re planning on Jen buying in two years, right? And you’re making 600 bucks a month cash flow every month, and you only put down half of a down payment you normally would have with the bank. Great deal. Jen needs another year, are you going to be mad that you keep getting cash flow for another year? And maybe her price goes up a little bit? Or maybe she pays an extension fee? I don’t think so. But Mr. & Mrs. Seller, who I talked to two years ago is like, I don’t care about Jen’s situation, I want to move, I need this paid off. You’re blocking me from getting new financing, or whatever, right? So we don’t care. We’re investors. So if we need to extend it, we’ll extend it. You know, and we’ll make sure that they can afford it as best as possible.
So that’s a big thing. I have a proprietary underwriting system that we do we actually work with licensed mortgage originators. And we have our own special forums, that we do this pretty big vetting upfront, to say, does it make sense now we get we get part of it, right? We’re not the bank, though, still. So I get it, when someone comes in and makes 200 grand a year on taxes, and they netted $30,000, the bank is like Sorry, man, you make no money, we get at what it kind of looks like. But if you make 30,000 a year, and you made a negative 30, you’re not getting a half a million dollar house, because he can’t afford it. So we still do that kind of ability to repay and want to make sure we’re setting up our people to win our investors to win. And that things make sense. You know what I mean?
But here’s the thing with where we’re at in this current environment, and the market and rates and this and that: more and more people are getting denied from the banks. And we can provide a different solution. I’ve actually been able to get people interest rates lower than the banks, which is kind of crazy on certain occasions, just because of the way the market is. Now it doesn’t always work that way. But there’s been like an inverse situation here. And there are, you know, again, we can overlook something, because we’ll take a chance on it. And we’re okay with it. And we know, all of the variables. So it’s a great market, this works fantastic. And a downward market, honestly, it works just as well. We have more people that need us.
And we can pivot, right. And so when we’re the decision makers, we can pivot on things versus being really locked into it. Do people back out? Of course they do. Do people change their mind? They do. And even then we try to work with them as best as possible, where we can make it a win-win situation for everybody, no matter what if we can.
Love it. All right, Hybrid investing. And now I really do understand, like, why you would refer to it in some cases as reverse lease options as well. Because you’re really starting at the end and kind of working backwards, you’re placing a deal with a buyer rather than just finding a place and then hoping to secure a buyer later. That makes very, very good sense. Awesome.
So I wanted to ask you just a couple of different types of questions before we before we wrap up. You know, one thing you said at the beginning, was that you that you love to work or you love the work that you do, and I also know that you’re lifestyle oriented person, and it feels like a conundrum to a lot of people is like how do you how do you manage those two things? I mean, I just say personally I always kind of like grappling with this a little bit too, because I do love to work, I love to be productive. I love the kinds of things that I do. But I also, you know, feel lifestyle oriented as well. So what are some of your thoughts about like, how does, how does that work? Because as an entrepreneur, it seems like you’re, you’re doing a good job of trying to battle with those two things that could be seen as like, you know, creating a tension between them. Does that even make sense?
Yeah, no, no, definitely, man. Well, let me start by saying, I don’t have it figured out. I don’t, and I’m working on it every day. And you know, depending on the day of the week, you asked my wife, she’ll definitely say, No, it’s not figured out. But it’s, there is no true balance. Let’s just be honest, there isn’t in life, there is no true balance. And I’m kind of the type of guy that thinks you’re either moving forward, or you’re moving backwards, right? You’re never standing still. You’re forward or backwards. And so for me any idle time that there is, I’m not sit in, you know, play games on my phone count again, I’m not certain, you know, binge on Netflix, unless maybe it’s a cool show about business. And you know, how the Rockefellers did their thing, you know, 120 years ago, like business stuff. And, you know, people that I think are, you know, amazing people, right, but yeah, I’m not saying right or wrong, my wife has a very different interest in what she likes. You know, she’s a nurse, she’s saving people’s lives. Right? And I joke when she has a bad day, and I have a bad day, it’s not even comparable, right.
But I think the big thing is, is being on the same page with, you got to know what you want, you gotta know what you want, you have to know, what does an ideal life for me look like? And so I love to travel. So how can I travel more, I can travel more if I can work anywhere. Well, I can work anywhere doing hybrid investing, I can work anywhere, being a coach and a consultant, right? I can work everywhere for free when I have vacation properties that are paying for themselves. And you know, when they’re open, I pop over to that place in Florida or in the North Shore of Minnesota or in Arizona. And it’s open and it’s paid for which is killer, right?
So, you know, that’s one of the things I’m passionate about, as well. So, but you know, having boundaries, man, it’s tough because I’ll just go, I’ll just go all day all night. And so I’m trying to be definitely working progress, but I’m trying to be more protective with my time and, and focus on kind of time blocking, right? So if I’m with the kids and with my wife, for vacation, you know, even if I work on vacation, I say Honey, I’m gonna be up, you know, from six to eight to doing some stuff. You’re sleeping in anyways. Right? So who cares? You’re not even awake. Sleeping, I love it. It’s great. I might be getting my exercise it while I’m on the phone, right and jamming out phone calls as I’m going for a three mile walk. Or at night, hey, I need two hours. I’m running a coaching call where I got to talk with somebody to help. But that’s it. And then the rest of the time you got me. Right. So but again, man, it’s definitely easier said than done. How about you? I love to hear. I’d love to hear what you’re doing, can you share with me?
Yeah, I really I constantly struggle with this. And it’s funny. You said time blocking. Like, every time it seems like every just few months, I sort of bring this up in my conversations with Greg. And he’s like, Jeff, time blocking time blocking. And so I’m working on that. Definitely working on that. I heard somebody say once and when you say Well, hold on, when you say working on it, are you not putting it on your calendar? Or are you not sticking to it? Because that’s more like sticking to it? Yeah, yeah. Like not respecting the time blocks or, you know, I’m sort of I give myself permission to just pivot and just, you know, pave for whatever I might have. Like, there’s no way I’m going to just randomly blow off a scheduled call with you. But I will absolutely randomly blow off a scheduled meeting with myself. And so I’m always working on that.
100% I hear you.
Yeah, I know, you mentioned balance like that. There’s no such thing as balance. And I think I absolutely agree with that. I heard it described once. It’s such a simple, nuanced little description, but it really stuck with me is like, it’s not about balance. It’s about balancing, because balancing is like an active thing. Like, even as I’m standing at a standing desk right now, I’m kind of shifting back and forth between two feet, right? And it’s not like balance being this perfect thing that we’re trying to create and maintain. But it’s just more about the act of like balancing constantly and whatnot. And so I try to actually embrace that because to me that kind of like is permission to give oneself a little bit of grace, you know, like, hey, sometimes the balancing is going to be a little, you know, little rougher than other times, but instead of just this sort of utopian mythical balanced state of being it’s more about the process of balancing. So I try to say it that way like that.
That’s a great way to say it, it’s kind of targeting. Well, I don’t know if you’re this way too. And I’m sure we could go down this rabbit hole for a while, which is fun. But like, I’m kind of my wife says this all the time. I’m like, Yeah, you know, 12 years of marriage, I’ve started to realize that you’re right, but I’m kind of an all or nothing kind of guy. Right? So like, right now I’m doing 75 heart. I don’t know if you’ve heard of that pronoun before, right? 75 days in a row, two workouts a day one’s gotta be outside, right? Gallon of water, read 10 pages of a book, which that’s easy, because I love to read. But all of that jazz, right? And then I worked out more in January than I did in 2022. January, I added it up. I’m like, wow. So I’ve got a hot or a cold. But for me, this is something I think is kind of a, I think a unique takeaway or good takeaways. It’s about momentum. Momentum is so important, right? Because as entrepreneurs, if you wake up A sleep and because you have no reason to get up early, because you don’t have anything going on. And then you’re like, I’ll sleep in and Well, shit, it has really nothing pressing, there’s really nothing time blocked on my calendar, make some eggs go for a walk, watch this. That’s negative momentum, because you’re not busy.
So for me, like, you know, do I get like that? Hardly ever. But you know, I’m human. It sets in maybe every, you know, once a year. But I need to be so damn busy that I don’t even have the time to think like that. Like, I’m up at 11 at night, because I’m like, Oh, what about this? What about this? What about this? Or there’s ideas and things I got to do. I’d rather be that way than twiddling my thumbs going, oh, boy, what did we do today? What do I do today to put some food on the table for my family? Right? Yeah. And it’s tough. It’s a tough thing. So it’s like this momentum, you know, there’s probably a really cool word for but I can’t think of it, like a scale, you know? Like, once you get it rolling, then it’s there and it’s powerful. But once it slows down or it stops, man, it’s tough getting that ball pushed back up the hill.
Yes, I literally think about a boulder all the time. Like, it’s really hard to get the boulder moving at first, you got to really work hard at that. But once it’s moving, it’s much easier to keep it moving. But I feel like that’s an awesome segue to I guess the last thing I want to touch on is, you know, momentum is created through goals. I know you’re a goal kind of guy. I know you created a cool tool. Can you tell us a little bit about the goal planner that you that you’ve shared with me? I’d love for everybody else to be able to take advantage of this too.
Yeah, absolutely, man. Yeah, thanks for bringing that up. I was thinking this morning that I haven’t looked at that for a couple of weeks. So I got to look it up myself. But the cool thing is I did it, and it’s filled out and it is looking at it. But so I had this idea, right? I think I was out for a run sometime in middle of December. And I’m like, you know, where am I at right now? Exactly. For my goals for this year on, you know, my financial goals, right? My relationship goals, my health goals, you know, what have I accomplished? You know, because, you know, I think everybody gets a little reflective come December, right? There’s all the new year’s resolutions, and it’s a clean slate, and you start all over. And I don’t really believe in resolutions, per se. But I do think it’s kind of a cool time to reflect. And then kind of get yourself excited again, for a maybe a fresh start, right? And so I was thinking like, where am I ending up, right? And I’m like, I just gotta be cool. I just need to jot it down, right? I’ve got a billion files of this. And I’m like, I want to make something where I can track it. And so I got on Voxer on the walkie talkie app, I you know, send a message to my VA.
So I have an amazing VA team in the Philippines and say, Hey, guys, let’s create something like this. And so I want something where I can have what my goals were for the year, right what they are for next year? Did I hit him this year or not? No, if I did, why, right. Because what did I do that I want to keep doing? Because it worked? And if I didn’t hit it, why didn’t I hit it? Because I don’t want to do that again this next year. And so I thought about that. And we’re kind of putting it together. And you know, what’s really cool is I invest more in myself, and self-education and masterminds and events and coaching and trading right, as a paying person, as well, as somebody that puts that on, time is so freaking important, right? And so I’m like, What is my dollar per hour time? I mean, there’s days, man, right, we’re losing money. It’s a negative, right? Like, we just lost $8 an hour. And there’s other days that one hour man is probably $1,000 an hour. Like we make surgeon money in real estate. Like for real. Now, it’s not maybe 60 hours a week. Maybe it is I don’t know. But it’s you know, it’s a huge roller coaster.
So I need to know, if I want to make, let’s say half a million a year, one million a year, 2 million a year, $100,000 a year. Doesn’t matter what your number is, that’s regardless, I don’t care what it is, whatever you’re striving for, but I need to know what my time is worth, right down to that week. Like, if I didn’t make it that week, I’m behind, right to the day, to the hour to the minute. So if you and I are blessed for 10 minutes, and you know, we can go, Hey, man, we just wasted 80 bucks. Right? Let’s get to it, we gotta get on with it, right?
So I put this new year goal planner together. It’s totally free. It’s an awesome tool. And so you can even put in there, I want to make X dollars per year. And it’s not just money, right? Because it’s about time and lifestyle. So what if you want to take four weeks off this year, and you want to make 100 grand? What do you need to make per month, per week, per day, per hour per minute to do that, you can figure it out. And you can put all your goals in there. So you know I one of my goals for new properties is three short term rentals this year, a bare minimum, right? Probably five or six, hopefully, but three absolute bare minimum. Well, I’m already working on number one, it will be close in a couple of weeks. So great. I’m ahead of the goal so far with that one, right? health goal. I’m crushing that because I decided to do 75 hard so I that’s off the charts. Right kill that goal already. If I stay with it, but anyways, yeah, new year goal planner. It’s super dope. And I have a little video that it kind of walk people through it as well. But yeah, if you want to share it with anyone, it’s totally free. I’m not gonna call you and spam you and send you a bunch of stuff. It’s just maybe a couple follow up emails and make sure you got it and how you like it. That’s about it.
Awesome. So NewYearGoalPlanner.com.
Okay, fantastic. Jesse, thank you so much. This is fun. I have I do have a feeling like we could go on for three or four hours probably. So if people want to connect with you or follow you, you’ve got a Facebook group, a podcast – what’s the best place or way for people to just kind of keep up with you and stay part of your world and you get to be part of theirs?
You can pretty much find me on all the socials at The Jesse Mills. I’ve got a pretty awesome group on Facebook. It’s called Lease Options Secrets; I’ve got about 5500 people in there. So it’s great. And then my website is TheJesseMills.com. And yeah, I do I love Racking Up rentals. I love it. And one of the things that I was gonna say at the beginning; I got and we’re coming back to it is, it’s not about one rental, right? Like, you know, say, I’m an investor. Yeah, I got one. I mean, that’s fine. I’m not dissing those who have that. That’s great. But if the goal is financial freedom, lifestyle freedom, taking your kids and family to Disney World and doing a Disney cruise for two weeks, because you can, right? One’s not going to do it, so you got to rack up rentals. And so I’m super passionate about helping people get into business. And the way we do it, the way you do it, Jeff, which is similar, but also very different in a lot of respects, it’s cool, because it’s multiple tools, right? And so yeah, I dig it, man. And I think it’s super cool what you’re doing and putting out there into the world helping people make the life that they want. I figure you’re the director of your own movie, right? Yeah, no one pops out of the birth canal and you’re stuck in someone else’s movie. You’re the director. So what’s your movie? How do you want to make it?
Well said. Well, thanks again for being here and sharing some of your movie with us and how you go about doing everything. I’m sure it’s created some light bulb moments for others like it has for me, you’ve probably seen me reach over a couple of times, what I was doing is grabbing a little sticky note and writing a little note to myself, like I need to think about this or follow up on this or whatever. So yeah, thanks for creating this lightbulb moments.
Awesome. Hey, thanks for having me, man. I really appreciate it and look forward to lots more conversations together. Definitely.
Me too. Thank you.
There you have it, my interview with Jesse Mills. I hope you found that as enjoyable but also maybe interesting and thought provoking as I did. Gosh, there’s just so many different flavors within the real estate investing ice cream scoop shop, if you will, so many different ways to go about doing everything. And I really enjoy being exposed to new thoughts because it certainly gets my own wheels turning and I hope it did for you. I bet it did.
So that’s it for today’s episode of Racking Up Rentals. Again Show Notes can be found at thoughtfulre.com/e175. Please do us a big old favor by hitting that subscribe button or follow button in your podcast app and even bigger, to rate and review the show would be so appreciated. Did you know also that we have a Facebook group for thoughtful real estate entrepreneurs. It’s true. It’s called Rental Portfolio Wealth Builders. We’d love to have you join us and hang out over there in this unique mindset of a small subculture of the greater real estate investing community. You need to hang out with your fellow thoughtful real estate entrepreneurs. So just go to group.thoughtfulre.com and the magic of the internet will redirect you to that spot on Facebook and you can join our group. Alrighty, I will see you in the next episode; until then this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.
Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember: solve the person to unlock the deal and solve the financing to unlock the profits.
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