00;00;09;21 - 00;00;40;28

Unknown

Welcome to the Profit First for Real Estate Investing podcast. Every week we bring you top investors and experts sharing how they create clarity, cash flow and consistent profit. This episode is brought to you by simple CFO. Profit first. Profit always. Lets go. We have a great guest today Caleb Wu. If you did not listen to his first episode, he talks about how he literally paid off over $500,000 a couple of years ago, and he did that using profit first and using real estate investing.

00;00;40;28 - 00;01;07;27

Unknown

And this one, he talks about what goals he had after he did that, and how he either has hit them or what the next step of the journey is, what piece of mind there is, and having these goals and then reaching them and then pointing the cash in the right direction, the importance of cash flow, cash flow management, making sure you have someone in your corner that knows what to do with the money because real estate is so cyclical, up and down, if you feel like you're making money.

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Unknown

But where does it all going? Caleb has a lot of those same stories, but he's on the other side of that. Now. I just want you as a real estate investor, to have someone in your corner and hear stories like this that will help you and know exactly where you can go, and to give you encouragement and to give you hope.

00;01;26;29 - 00;01;54;21

Unknown

Caleb's story is full of those and some practical tips from this episode. Enjoy Caleb and his background in real estate investing, doing lots of deals, hundreds of deals, and then also in marketing as well to which are going to learn from today's episode. Welcome back to the Prophecy podcast. Have special guest Caleb Luchetti on today. He has a client of simple CFO, but he's a friend as well and also has worked with us in the past.

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Unknown

And I absolutely love working with Caleb. So Caleb, thanks for being on the show today. Yeah, man, thanks for having me, man. I'm excited. I'm excited. Yeah, well, I want to talk about your journey because you reached out to me a little bit out of the blue, just to be about some things that are going on in your life and some changes.

00;02;10;15 - 00;02;34;25

Unknown

But some of these things are really cool, too, so I wanted to dive into that. So what set the stage? So take us back when you first at down with your CFO Michael, a couple of years ago. What about two and a half years go. Yeah, that was it. Yeah. Talk about that at that point. Yeah man. So it was I think later this year will be I think three I think coming up on and really so a lot of a lot of craziness.

00;02;34;25 - 00;03;07;05

Unknown

Right. And so you know everybody everyone's dream I think is to build a business that is bigger than themselves in, in more ways than just one. And, you know, great intentions, great vision ideas, poor execution. How about that? And so, you know, unfortunately put a lot of trust in the wrong person. Managing the flips that we had had, you know, was supposed to be a, you know, a great person, person with integrity, you know, all the things that, you know, you would you would expect.

00;03;07;06 - 00;03;27;03

Unknown

Right. Talk to great talk. The walk. Unfortunately not so great. So really what ended up happening is, is, you know, we built, I mean, W-2 construction crews or got my general contractors license. We were, you know, obviously doing all the marketing stuff, all the inbound, you know, SEO, Google ads, all the stuff that we do and getting deals.

00;03;27;03 - 00;03;54;24

Unknown

Right. We're whole wholesaling some, keeping some, flipping a bunch. Again, the vision of like, hey, we want to create some affordable housing. We want to keep some rental properties, we want to do a good job. We want to provide jobs in the area all the like good intentions. Right? Well, then it ended up getting into there was just lack of checks and balances and systems where I just had given full control to a project, a project manager thinking, hey, he's going to just do it, you know, do the do the right thing.

00;03;54;26 - 00;04;16;02

Unknown

And unfortunately, that did not. And we ended up losing about $650,000. Now, this isn't like Donald Trump writing stuff off on taxes that the Senate is like, show me your taxes. Like where it's just like, like fake lot. No, like this was actual like real dollar bills lost some legitimately that I, I don't have millions I don't like, you know what I mean?

00;04;16;03 - 00;04;38;06

Unknown

Like there's at the age of like 20 and 21, I made more in a year than my parents ever did, and that my aunts and uncles and this and that than anybody ever had, ever. And, you know, at 20 years old and so, you know, come from the from nothing, don't have any deep trust fund, you know, something somewhere I'm like, oh, shoot, what the heck just happened?

00;04;38;07 - 00;04;59;15

Unknown

How do we get there? You guys might ask Caleb, come on, dude, 650 grand. You had a known something was going wrong, right? Well, when you've got, you know, 15 to 20 flips going at the exact same time and the when you're not monitoring things and just, just simply looking at like, well, hey, money is coming in and it's more than what's going out.

00;04;59;15 - 00;05;19;12

Unknown

So we, we must be doing well, right? Not realizing that oh money coming in was some cash from wholesales but also loans, but also this then also that we were overspending on, you know, construction materials. We were oh we did something to a house, gutted it and we did it. That's double the pay all of a sudden. I had no idea because I'm not on job sites.

00;05;19;13 - 00;05;39;14

Unknown

Right. Like things like that. There weren't a whole lot of checks and balances in that. And so that's just it just it snowballed like crazy man. And so enter Michael, you know, a couple years ago and starting there and having to start from that land of okay. So here's here's where we have it. Here's where we are. Right.

00;05;39;15 - 00;05;57;26

Unknown

And you know it's funny because at the time, you know if you as we broke it down man wholesaling dude crushing it nailing it did great. The flipping part is what screwed all of it up. What made it all so terrible was because we had such a great business model on marketing and wholesaling and all those things that were like, we're we're crushing it.

00;05;57;26 - 00;06;12;16

Unknown

Just the poor execution on some of those other things. And, you know, things happen on a couple of them, right? We opened it up. And I mean, termites ate all this. Oh, man, this, oh, man, that. And all of a sudden. Right, there's an extra 50 grand on this house. 20 grand on this house, 25 grand on that house.

00;06;12;16 - 00;06;32;17

Unknown

And all of a sudden. Right, that adds up times 20. At one point in time, we had 23 flips going at the exact same time. One time, a lot of private capital raised. A lot of, you know, everything. I take pride in the fact that I paid every single person back. You know, not like anybody took losses but me.

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Unknown

Yeah, yeah, yeah, it was wild start. But that's the scene of where that's the scene in which I'm probably going to fast forward a little bit, because I believe we recorded an episode, which was amazing, where you talked about paying off like $500,000 and like coming back from that. So if you want to listen to Caleb's last episode with us, where it was, I believe probably a year ago or maybe six months ago, it did.

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Unknown

So what I'd like to know to maybe if we fast forward a little bit is when did you decide to focus on note equity? Because you texted me out of the blue, something that was really cool and one of the goals you'd hit. So when did you focus and shift from what we just talked about to the notes and doing that?

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Unknown

Oh, really? So so I've always loved notes. I've always had this affinity toward not being a landlord, right. And dealing with leaky toilets and stuff. And so I think so what ended up happening is it's probably about a year and a half ago, roughly. Yeah. We, we being Michael and me sat down and. Really. Okay, here's as we're building this kind of execution plan, right, of.

00;07;40;03 - 00;07;55;26

Unknown

Okay. And one of my things to him was, man, I feel like I'm going to do all this and be left with nothing, you know, like I'm, I'm a I'm a failure. I don't have anything. I've, I've done all these things. But at the end of the day, I just paid off bad decisions. And in left with zero right.

00;07;55;26 - 00;08;16;27

Unknown

That was kind of the fear that that was kind of like, oh man, this sucks. And I had had a few notes because some of these houses. Right. I've always done sub two and then wrapped owner financing. And so, you know, just through marketing in general, right? You get a deal that doesn't necessarily work in cash, but they're like sub two just have it and like, yeah, let me go wrap it.

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Unknown

Owner financing. So we would do probably a deal like that a quarter anyway just because just from happenstance because I knew how to do it and, and love notes. Well then we got into the, into the conversation of, okay, we've got a stack cash. Right. We're focused right now. Massive paying off debts here. Right. We've got to figure this out.

00;08;35;22 - 00;09;12;24

Unknown

Well, then we figured out through just some math. Okay, wait a minute. If I wholesale the property right again, we're focused on cash in to pay off a debt and go through this. Well, what if there was a way to have my cake and eat it, too, right? So it's kind of the idea of. Wait a minute. So if I go out and get a house and I can bring still a wholesale fee into the business, 10,000, $15,000 from, you know, buying it, sub two, getting a down payment from a buyer and now have 500 bucks of cash flow and 50 grand of equity.

00;09;12;26 - 00;09;37;03

Unknown

Wait a minute. What's stopping me from doing that? Right. And it kind of that light bulb moment went off of like, wait a minute. The deal that I could have just wholesale for ten, I could get round about that same ten figure still cashing the business, but then keep the back end where it's like, wait a minute, I'm actually now I'm paying off all the bad debt from the last episodes that we went through and all that craziest, but now I'm actually holding something for the future.

00;09;37;03 - 00;09;56;03

Unknown

And it was kind of that moment of like, wait a minute. Maybe I can kind of do both at the same time. And then it just exploded once we figured that that out. So then you went down the note path and then what goal did you set? Because I want to talk about when you hit that goal. But I want to talk about okay around the notes.

00;09;56;04 - 00;10;18;21

Unknown

You had some pretty big goals around that. Yeah. So goal was was to get over $1 million in note equity. You know, most people have like a cash flow goal. Mine was more centered around the equity because I knew if I got to the equity, the cash flow would follow, right? Yeah. Right. Like like that just kind of naturally would happen if I based all around the equity so I could cash flow something.

00;10;18;21 - 00;10;33;19

Unknown

But it doesn't mean the equity is there. Right? A lot of people do and. Right. You know not not here to hate on this, but there are people that teach this and do this that, hey, go buy these upside down properties up to they cash flow. Great. But you're upside down 20 grand of equity. That is like the worst idea ever.

00;10;33;20 - 00;11;07;01

Unknown

Don't do that ever. Right. Don't do it. So if you focus on your equity and you're focusing there, well, your castle is going to automatically follow suit there, that you should be okay. Right. And so because if you're selling it for more then you have it the payments are going to be higher thus your cash flow. Right. So yeah, going through that process, you know, we set it a million bucks knowing that just backing numbers through there for some goals we had of paying personal mortgage payments and doing some different things like that would would follow suit if we got to that threshold.

00;11;07;03 - 00;11;26;25

Unknown

Yeah. So then when you reach out to me, you recently realized that you hit that goal. So without and it sounds like you didn't it didn't fully comprehend. So was there like a white ball moment when you found out I was like, okay, well what was that? It sounds really stupid to say. Like, I didn't even realize it because here's how I treated this.

00;11;26;25 - 00;11;44;07

Unknown

And I told Michael this the whole entire time. I said, we're never going to talk about this cash flow. We're only going to talk about like, you tell me if we're negative, somehow some of these people aren't paying. I'll know, right? Like we'll have an understanding there. But like, I'm not looking at it. I'm not doing it. I'm the only thing you know.

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Unknown

Side note here, side tangent. We're not here talking about all this, but, you know, I operate out of a trust. And so, you know, on a lot of the real estate side of it. And so like I've got a life insurance policy in there. The way it's set up, it can pay for some health insurance and stuff for like the kids and a couple things like that.

00;12;00;27 - 00;12;18;14

Unknown

So that's the we did have out of our cash flow that was paying like life insurance policy and like a couple things like that automatically out of that cash flow, because I knew, hey, we had 1400 bucks or two grand, you know, it's fine, right? Yeah. So that did kind of automatically come out of there and, and but like set it, forget it.

00;12;18;15 - 00;12;49;09

Unknown

Don't even look because most, most people build the cash flow to be like, oh, I'm going to take every penny of that cash flow and pay life bills. And this. And I was like, no, I don't want to do that. I want to just act like this is retirement ish. Like it doesn't even exist. It's just there. And so over the years, I had used that account, I guess over the years, over the last couple of years that used that to like if I was buying one sub two and I needed 70 grand cash, let me go pull seven grand out of that bank account because it's going to go back in there anyway.

00;12;49;11 - 00;13;08;21

Unknown

When we get an owner finance area with 10,000 downloads, go put the ten in it now and it goes up. Right. So it's just that's why I had sat that there and so really had only looked at it for, for that reason. And it's, it's kind of hard to get an accurate number less. You build some crazy spreadsheet out basically of like, hey, here's my equity, here's all this type of stuff because it changes every single month, right?

00;13;08;21 - 00;13;30;00

Unknown

Your underlying goes down, you know, this goes down. And so we we just had the question earlier this year and you know, probably two months ago. Hey where are we. Like we're trying to make some decisions here. And of course, after all that crazy stuff, guess what? We flipped more houses, three houses, big losses. And like, all right, I'm done flipping.

00;13;30;00 - 00;13;51;01

Unknown

That's another conversation, though. But it's we had to pay off some other things there. Just again market went down. Bad luck. Bad timing. Yeah. And so okay. Should we again same conversation here. Right. We have to have cash flow in the business. How do we get the cash flow. What led me to be like okay we got like four houses I really hate to give these houses up, man.

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Unknown

Like, I really don't want to, like, realize the cash is there, need it. But the equity is going to be really good. Like, where are we? Like, I don't even know, man. So it took us a couple of weeks to figure out, okay, how do we, like, figure all this out a spreadsheet. It sounds simpler than it truly is, but all of a sudden we broke it down with all of the existing properties, plus the ones in the pipeline we currently still right now have.

00;14;14;02 - 00;14;29;23

Unknown

Yeah, because there's still two houses that aren't financed yet, but they will be. We're, you know, wrapping those up. And all of a sudden, you know, he reads the number to me and I'm like, no, no, no, no, no, that's not right. No no no no. Go share your screen. That's not that cannot be right. There's no way that math.

00;14;29;23 - 00;14;45;15

Unknown

And I'm literally sitting here all right for okay seven okay. Like I'm literally okay. Give me that number okay. That number. Yeah okay. What's my calculator say. No no no. Do it again. Do it again. No no no no no. That's no no no. So we're literally like three different times. And he's like I know I have the same thing.

00;14;45;16 - 00;15;07;03

Unknown

I'm not going to lie. Like I had you know, and we're sitting there and I'm like, okay, so now what? You know, like like just kind of like I don't even know how to explain that. Just this dumbfounded moment of like, did I do it? I think, I think I did. Wait a minute. How do I like it was not the joy and and excitement that you would think you would have.

00;15;07;04 - 00;15;32;19

Unknown

Like, I hit the goal like you run a race. The finish lines there, you cross it, you did it right. It was just kind of like unexpected. Like I did it, you know? Like, yeah, it's funny. So that's awesome. Quick pause from the episode I've exciting news that's expanding the world of profit. First for real estate investors. You may know that years ago I wrote the book Profit First for Real Estate Investing, endorsed by Mike McCown, that has been read now by thousands of real estate investors.

00;15;32;19 - 00;16;00;10

Unknown

And now we're launching three workbooks, one for wholesalers, one for fixing flippers and one for rentals. These aren't just deal calculators. They're full implementation guides. They're dialed in for each type of business wholesalers. You're getting assignment fee math, marketing, budgeting, planning and how to beat the feast or famine cycle. If you're a flipper, you get a ARV accuracy rehab, budgeting and profit forecasting, and running multiple projects at once without going broke rentals.

00;16;00;10 - 00;16;25;08

Unknown

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00;16;25;11 - 00;16;49;27

Unknown

Just like profit first real Estate investing free workbook. Grab whichever matches your business or you can grab all three free workbook. Go get them. Make more profit. All right, back to the episode. So you also talked about in what you just said like a few minutes ago about paying some of that stuff off in your personal life as well to like the house or whatnot.

00;16;49;28 - 00;17;13;07

Unknown

Like, were you able to use some of this equity? I don't know, like to be able to leverage it. Yeah. So like, what do you do with somebody, you know, as the saying goes, you can't eat equity, right? Right. Right. So so have I, you know, and this goes this should be said, the goal here, the reason it was $1 million and some things like that was kind of like, hey, it's going to pay off our house vehicles.

00;17;13;09 - 00;17;31;13

Unknown

You know, that was the intention to say, hey, like if I just had, you know, what's the the number that would give me a baseline to pay our house off, pay our land off, pay the vehicles off and have some extra overage. Right. You know, it ended up being like eight something and I was like, oh screw it, a million bucks, right?

00;17;31;16 - 00;17;54;05

Unknown

Right. Yeah. Right. And so, you know, now it's like I could just sit here and say, wow, every single person just refinanced every single one of them, right. And that I've sold these owner finance notes to. Yeah, they all just decided to go to the local credit union or whatever. I have a seven figure check coming that I just get to all of a sudden wipe everything out and like, going to the golf course, baby.

00;17;54;07 - 00;18;11;27

Unknown

Peace out. Right. And so that was kind of the you know, again, that was the the goal and the why behind it to be as stress free as possible really. Like that's the stress free. Yeah. Having that peace of mind it sounds like and having something to fall back on. I like that situation versus like the oh shoot we just lost 650.

00;18;11;28 - 00;18;35;13

Unknown

How do we build this? How do we build something which is which again though is awesome because we built such a machine that to dig out of that hole, I still look back and I'm like, we literally netted, netted. In the course of 18 months, almost $700,000. Nice net profit. Yeah. And you're like, you know, I'm sitting here and I'm like, where?

00;18;35;14 - 00;18;55;03

Unknown

Where'd that money go? Hang on a minute. Why don't you know? Wait. Hang on. Right. But but but you sit back and you, like, reflect that, and you actually look at that and you're like, oh, wow. We like, we built a legit business with legit marketing, legit systems, legit employees, great tracking of all of the back end numbers.

00;18;55;03 - 00;19;12;29

Unknown

Right. And like all of a sudden we're like, whoa, I feel like I can go do anything now. Right? And so that's a you know, it's it's been a fun reflection season on some of those things and kind of planning what's next and figuring out, you know, where we're headed. So yeah, which is cool because that's another thing that I want to focus on.

00;19;12;29 - 00;19;29;09

Unknown

But I know like this is the first right podcast. So I wanted to ask about your CFO. You keep bringing up Michael and the CFO that you have on your team there. What role did he have in helping you either understand it or getting there faster? Or do you think it was faster than you would have done this on your own?

00;19;29;09 - 00;19;46;05

Unknown

Or just what do you think having that relationship? I can tell you this I would have don't want to say I would have quit, but I would have failed way more had I not had that guidance because there were definitely things I was like, hey, I think this is the best way to go purely based on just instinct.

00;19;46;05 - 00;20;12;08

Unknown

And then the numbers dictated something else completely different. And I was like, oh, never thought of that. Interesting. And so, that was a really big benefit to that, you know, huge, huge, huge having that because now all of a sudden it was kind of in like an advisory role in, in that capacity of saying, okay. And once we figured out, okay, here's my goals, right.

00;20;12;09 - 00;20;27;14

Unknown

My end goal, like I want to pay off my house, want to pay off my vehicles, I want to I want to live a stress free life. Right? That's that's the objective, right? That's that's what I want. So how do we. Okay. What's that number to get to? Great. Here's our magic number to get there. Wonderful. How do we backtrack that into what we're doing.

00;20;27;14 - 00;20;47;04

Unknown

And so then being able to backtrack that also simultaneously of here's the crazy situation. And he was able to map all of that out and to actually talk through okay, let's take some deals and actually like break this down on our deal by deal basis for you to understand what this looks like. Okay. So, you know, hey, should I flip this house?

00;20;47;04 - 00;21;08;03

Unknown

I can flip it and make 50 and know that and not even more hold more wholesale like we can go quick. Make 50 was going to take three to 3 to 4 months or make 25. And we just wholesale it right now right. Is it worth taking half now next week boom in the bank versus 50 maybe later.

00;21;08;03 - 00;21;25;29

Unknown

And being able to understand actually break down okay. What happens through that. And then understanding our ROI of our marketing channels when okay we got 25 back in. We're putting ten to pay off this over here. 15 back over here. That 15 in 3 months from now can become way more than 50 in the future because of what our ROI was.

00;21;26;00 - 00;21;48;14

Unknown

Right? Like last year, in just as in example, like Google Ads, we, we we had a 9.9 x ROI on Google ads specifically, right? $1 in nine back out Facebook ads was was about an eight. And so all of a sudden we're like, hey, what's 15 times eight? I don't know offhand, but like it's more than 50, right?

00;21;48;14 - 00;22;08;10

Unknown

And so understanding that you're like, oh, wait a minute. No. Totally true. And there's there were many examples the first time that we did it, that it set in, that I was okay, spreadsheet makes sense. I understand it, but like, I, I don't know, but I'm going to trust you. We're going to do it anyway. We're going to see then we break the vendor.

00;22;08;10 - 00;22;25;21

Unknown

We actually do it right. Okay. And that exact deal I just said, right, 50 grand. I'm like, I can hold tail it for 50. I know I can, but let's take the 25. Like you said, let's do it now. Let's actually see. We had ten grand on a credit card left that let's get that high, high interest credit card gone.

00;22;25;21 - 00;22;41;27

Unknown

Right. Because we also talked about what takes you three extra months. Your interest payments are going to be this much more. Okay. Didn't think about that because that would make sense, right. Paying off some of those things. Well then we ended up that same money, went back into advertising, and the very next month was one of our best months ever.

00;22;41;27 - 00;23;03;04

Unknown

That was $150,000 a month of net profit. And I was like, oh, because at the time it was like, well, I might run out of marketing dollars, which I know is not a good choice. That's a terrible choice. I'm a marketer, right? I'm like, that's such a bad choice to stop that. So I guess, well, literally the next month was one of our best months ever in terms of wholesale net profit.

00;23;03;10 - 00;23;23;07

Unknown

And he was like, see? And I was like, all right, all right, shut up. All right. But that proof of concept, I was like, yeah. Oh, that's so simple. It makes so much sense. Right. But, but but having that advisor really there is the thing that kind of tipped the scale for me to say, oh, yeah. No, this is the way this makes perfect sense.

00;23;23;08 - 00;23;42;20

Unknown

Let's go do it now. And ever since, it's just been execution, man. Like, yeah, just getting it done. I love that. It sounds like that clarity helped you a lot, but then having someone there too, so you didn't quit or give up because who knows. Like if you didn't have someone there that you're going back to, it's like, okay, but then on the other side of here, like, okay, I'm glad, glad that this is where we are now.

00;23;42;20 - 00;24;08;22

Unknown

And because now it sounds like you have options and you now have pivoted because you love the marketing space, you love that space. So I did wonder, did that goal that you hit and having that equity and being in a good position like that factor into you pivoting like away from real estate into marketing? Yeah. And absolutely. And that's the you know, I'm a glutton for punishment, as they say, because after I said I'm done flipping, what did I do, David?

00;24;08;22 - 00;24;33;23

Unknown

I bought a house and we whole tailed it. Okay. We hold it. That one. That one though. Deal junky deal. I was like, yeah, I mean I was like, nah, any more than you got any more of them houses, right. But like, you know, Dave Chappelle man. But anyway, but like the whole whole point is that now there was some flexibility there where, where we just had one that I could wholesale it for probably 40 grand, but we ended up pole tailing it or going to make like 80.

00;24;33;25 - 00;24;48;18

Unknown

Right. And so that way I was like, I'll wait. But we did it in 30 days. Yeah. So I was like 30 days wait time, dude. I'm like, let's do it right. And so all of a sudden now. Right, that's giving me the flexibility to go do those things. And so I'm, there's obviously I've built a brand.

00;24;48;19 - 00;25;16;22

Unknown

I mean, I have, right. You got 200 Google reviews, 75 plus testimony videos from real sellers. I, we literally have a wholesale deal right now that my team just assigned right now for like 20 grand that some appraiser who I, I, I don't know, I don't know who they are. I genuinely I went back to records and she was like in an email screenshot, the seller set was like, hey, I know this company.

00;25;16;22 - 00;25;36;17

Unknown

They're great. They're awesome. We've, you know, go, they can buy your house because your house is a wreck. And poor boy. Yeah it is. Termites, foundation problems, brick foundation. It's a nightmare. But she was like, you should not sell this on the market. No one's going to buy this house. They're going to be too scared. You need to go sell it to these guys.

00;25;36;20 - 00;25;54;26

Unknown

Like, who the heck is this lady? Right? So I mean, literally free lead of free wholesale deal because we've got such a reputation. So we're not going to it's not going to shut down forever. Yeah. Right. But but in terms of the volume you've had to pump out over the last three years to get to get out of that hole and the pressure and the all the things that is definitely not there.

00;25;54;26 - 00;26;13;11

Unknown

And so now it's like, hey. Okay. Yeah. What do I actually really enjoy doing? It's coaching people. It's marketing. Right. And so I'm getting to do some one on one coaching with other investors that that want to build a business the way that I have, because I mean, at the end of the day, I got a great team, man.

00;26;13;11 - 00;26;35;13

Unknown

I really, really, really, really, really, really do. And so it's allowed me to do those things. It's allowed me to focus on marketing, which I just love, and helping, whether they're real estate investors or HVAC guys, plumbers, some real estate educators, you know, just doing the things that I love, that I get to go home every night and be like, man, that was a great day.

00;26;35;15 - 00;26;53;23

Unknown

That was fun. Yeah, right. Like getting to actually do those things. For those of you listening, real estate's stressful. You didn't know. We all get burnt out at times, right? There are seasons that we're like, man, this is a bad month, a bad week, a bad day. And so just, you know, hey, how do I kind of eliminate some of those things?

00;26;53;26 - 00;27;11;11

Unknown

Obviously, David, we get on here. And what did I tell you? I'm like, man, I'm in a crazy day. It's stop to foreclosure today. I had to go take cash to the bank. Just not so, like, look like again. Like it's hard to take the real estate out of the guy, right? It's hard to take out fully, but that's a sub two deal that we wrapped 67 grain of equity, you know.

00;27;11;13 - 00;27;28;14

Unknown

So it's a good deal. But anyway so yeah man. So that's kind of where the transition is and I'm excited and some kind of newness on the horizon of like, okay, we've got a foundation. We've got there are a couple other crazy things. Like I said, we've lost some money on a couple other houses last year. We're paying some things off now.

00;27;28;14 - 00;27;47;01

Unknown

And, we have a plan. Hey, this is all knocked out from this deal and that deal to this deal and so forth, and it it's like, hey, I've been here once. It's all right. What's $100,000? We'll be all right. It's fine. You know? No big, you know, no biggie. It's fine. So. Yeah. Yeah, yeah, it sounds like you're more confident now, and you get.

00;27;47;02 - 00;28;12;15

Unknown

And you can rely on those plans. So having the finances dialed in and being able to have that equity has really opened you up to being able to execute with confidence at this point. Big time. Huge. Yeah. Huge. And that's been the part of it. Now that there's a lot of endeavors moving forward, you know, we're in talks to buy a business locally and trying to do some more things on on some different taking our marketing systems and kind of marrying that to some other things.

00;28;12;15 - 00;28;34;03

Unknown

And so just yeah, a lot of really cool opportunities on some on some fronts that I'm getting to work on, some on some things that I actually want to do. And I do have a passion to create some jobs and do some things locally and do some things. But now I realize the mistakes I've made, and so we're going to do a heck of a lot better than we than we did last time, with better planning and better execution and all of it.

00;28;34;06 - 00;28;57;28

Unknown

Awesome. It's great when you when the passion that you have and the skills that you have line up, and then you can put good systems behind them in order to execute. And sounds like that's what you're doing now, and you're taking that with what you have and what you've learned. Now you're just putting it into practice, and now it sounds like you're even going outside kind of outside real estate looking for a different business like, but still touches real estate.

00;28;57;28 - 00;29;21;25

Unknown

But being able to help them from that perspective, which is very cool. So a couple last questions here. You are now an investor who's been through lots of rollercoasters up and down. You've come out of it on the other side. You're still working through stuff for someone that's sitting where you were about two and a half, three years ago, but you had a goal, but not the execution to get there.

00;29;21;25 - 00;29;39;11

Unknown

What would you tell them if they don't have that plan in place? Man? Well, first of all, you got to get your numbers figured out, right? That's the most important thing. Starting there with a CFO. I mean, just to be honest, that's that's priority one. I did not tell Caleb to say that. So, you know, you're not trying to say that I'm serious.

00;29;39;12 - 00;30;01;00

Unknown

No purpose before. Like, like this is so even on like, the the marketing front. Right. I tell everybody like when, when, when somebody has a conversation with me about marketing and ads and whatever, the very first thing, I'm okay. Great. Awesome you want to do is but let's talk budget, right? Because there is a certain amount of money you have to spend what your cost per contract is to even be successful.

00;30;01;01 - 00;30;16;12

Unknown

Right? Just telling you right now, Google ads as a real estate investor, you guys then 5 or 6 grand a month minimum or you're not going to do well. And so you have to be able to know what those numbers look like. And that's why people get burnt out because they think, oh yeah, 2000 or 3000, some great sales pitch that they have, right?

00;30;16;13 - 00;30;37;24

Unknown

That or that they hear, oh yeah, I'm going to do Google ads. That's great. Right. Well, you know, then again I explain how the algorithm works. Cost per clicks 150. But you're spending $100 a day. You can't get the click. You don't have enough money. Right. And just some little things like that, that having that baseline understanding of okay, okay, here's here's the baseline of the business.

00;30;37;24 - 00;30;53;15

Unknown

Because now you have to understand, okay, you're in a crazy situation right. How do we go. How do we get out of this. Well you have to know what's what's worked well for you or the opposite, what hasn't worked well. So you can do the opposite of that to then make it work. Well, the only way you know that is to get your numbers dialed in, right?

00;30;53;16 - 00;31;18;07

Unknown

That's the only way that you know that. But but the other thing to is that most people ignore this. Don't discount digital marketing and how much a brand impacts your business. Yeah, that is such a huge thing. Getting Google reviews, getting testimony videos. I just, I mean, I literally just said we had some random appraiser lady that I genuinely don't know.

00;31;18;08 - 00;31;34;08

Unknown

I've never hired her. She's never appraised one of my houses. At least Claude didn't tell me because I had to go back through and look at every house was ever had. You know, I'm like, who is this lady? I don't know, but yet, you know, maybe she saw a Facebook ad and did some research. I was like, oh, that's cool.

00;31;34;08 - 00;32;01;11

Unknown

And then it just happened to pop up in this situation and she's like, hey, go reach out, you know? But like that brand, that presence is the thing that that brought us all sale deal for free basically. So so those are things if you if you get your numbers dialed in, if you do the right thing and you build a brand the right way, you can really differentiate yourself in a lot of those ways and come at it to help people, and it's going to end up getting you out of the rut you're in, or even starting from the ground zero.

00;32;01;11 - 00;32;18;28

Unknown

If you if you've never done anything and you don't have a hole to dig out of either way, like getting that stuff figured out from ground zero to make sure you don't go into the hole is really the best thing I would do. Yeah, we can talk about marketing and we can talk about all the detailed specifics, but in a general sense, like that's the recipe.

00;32;19;01 - 00;32;39;05

Unknown

And it's the same recipe that as I look into buying an HVAC business locally, as I look to potentially by an in electrical company and maybe starting a company like it's the same foundation frameworks that we're taking, even in the marketing agency. Right? We're doing the same things. Okay, here's the recipe for success. And it works. Yeah. Awesome.

00;32;39;05 - 00;33;06;20

Unknown

So know your numbers and then make sure you have the marketing to back it up. Make sure your marketing is producing the numbers that you want to and really getting there. And the importance of a brand and really, you know, then you have deals come from where you don't even know the people, which is so cool to hear those testimonials and those stories that you have one other question when it's one thing about working with the CFO that you didn't expect would matter as much as it has up to this point.

00;33;06;23 - 00;33;31;06

Unknown

Man, a lot of things. Honestly, I think that the thing that I there's going to be a couple of them, but I think the biggest thing that I didn't think would matter is, is how we chose an exit strategy. That makes sense. I think that was one of the big ones for sure. Is is understanding our true cash conversion cycle.

00;33;31;06 - 00;33;50;01

Unknown

It's not just about profit and loss. It's it's actually funny because one of the things that we did that this sounds very counterintuitive and this is the thing I'm getting at, is we threw all profit out the window. We didn't care if we made money on it at all. Well, again, sounds are like, wait a minute, but isn't this whole business to make money?

00;33;50;02 - 00;34;06;18

Unknown

But really, real estate is a cash flow intensive business. I don't care really. Any of the operations you may run. I don't care what that is, right? It's cash flow. So we looked at it and said, okay, here's our minimum threshold that I never thought about salaries, marketing this and that. I'm not cutting marketing out. I'm the marketer.

00;34;06;18 - 00;34;25;02

Unknown

I'm not cutting that that out, man, I will. Hell and high water marketing stays. Okay, so we have to wholesale a minimum or refinance a loan and get cash back into the business. You have to have this much money to to break even every single month. Anything above that, you get to have some fun, right? Go make that note.

00;34;25;02 - 00;34;39;26

Unknown

And some of the notes we created came out of that concept that I didn't think really. I was like, cash flows, cash flow. It's fine. Right? It didn't matter as much as your net profitability, when in reality when we threw profit out the window. And Damon, look at the profit. Our profit went up because we focused on cash flow.

00;34;39;26 - 00;35;07;23

Unknown

And that was the biggest like light bulb. Moment of of oh I didn't think cash flow really matter that much but apparently it does. Yeah. Awesome. So looking at that cash flow knowing those eggs strategies. So this has been awesome Caleb your experience in the real estate space. The highs the lows really understanding like working through these issues and getting to the root of what really matters to you and pointing your business in the direction of your passion too.

00;35;07;23 - 00;35;22;19

Unknown

Because sounds like once you got through that, you got that clarity, and now it's on the track that you wanted, and being able to do the fun things that you want to do. So I absolutely love that. Appreciate everything that you've said here. All the gold nuggets here today. How can people connect with you if you want them to get in touch with you?

00;35;22;23 - 00;35;48;27

Unknown

Yeah. Really easy. I'm the only Caleb Luke in the world. You literally can't not find me. Oh, super easy social media, Caleb. Whichever one you should see. Follow me on social media because I try to pump out a lot of content on that. I'm talking about crazy deals. I shot a video to today. I'll be live for another week or so, but it did some, you know, you'll you'll get to learn the personality of me following me very quickly.

00;35;48;28 - 00;36;08;01

Unknown

I'm a funny guy, I think. So I laugh at my own jokes. So, you know, I'm just kidding. But, you know, I think that's a great, great, great thing there. Just talking about the real stuff. The wins, losses, the good bad and the ugly. And from what people tell me, they really appreciate it and like it. So I hope hopefully you guys find it valuable and helpful.

00;36;08;08 - 00;36;29;08

Unknown

Cool. So you can find them on social media. Or you could go to his website. Com to learn about what he's doing now on the marketing space, or if you just want to connect or whatever it might be there. So Caleb, thank you so much for being a guest here today and sharing your experience from the real estate industry, the marketing industry, and everything in between and just being a business owner and the responsible business owner.

00;36;29;08 - 00;36;43;21

Unknown

So really appreciate that and your wisdom that you brought today. Man, thanks for having me. It's been fun. Well, we'll do a third one at some point with some bigger updates after I buy another business or something. We'll figure it out. Right? Yeah, I was going to say we got to have another one here. Just keep the streak alive.

00;36;43;21 - 00;37;00;13

Unknown

Of all the ones that you're having in the different ways and the different manners. And, you know, I love the trends that you're going in in direction. So if you're listening to this and you have any of this resonated with you, where it's like you're on the cash flow roller coaster, it's up and down, you're making money, but you're saying, where in the world is it all going?

00;37;00;13 - 00;37;17;27

Unknown

And you're like, who's that Michael guy? Or like that CFO that they keep talking about? You can find us at CFO. Com we would love to be that team member, just like we are with Caleb and other people to give you that clarity. Honestly, at the end of the day, it's about the clarity so you can make good decisions and point the business where you need to go.

00;37;17;27 - 00;37;39;21

Unknown

So if we can help you, that's what we'd love to do. So if you're listening here, remember, make profit a habit in your business, not just an event. Thanks for listening. That's it for today's show. Be sure to subscribe, review and share this episode. If you're serious about financial systems and keeping more of your profit, visit simple CFO to take your free discovery call today.