932: Agent to Broker to Business Magnate: Expansion with Joseph McCabe

October 5, 2020
Successful real estate agents often go on to become brokers, but why stop there? Today’s guest, Joseph McCabe, started a brokerage of his own and then went on to create several other highly profitable businesses. Listen and learn about the easiest ancillary businesses to build as a real estate professional. Plus, Joseph talks about financing business buys, offers advice to struggling agents, and more.
Listen to today’s show and learn:
  • Joseph’s start in real estate [4:38]
  • An alternative to door knocking [11:31]
  • Winning FSBOs over with statistics [14:21]
  • How Joseph recruited over 100 agents [15:51]
  • Joseph’s brokerage during lockdown [23:11]
  • Ancillary real estate businesses [28:46]
  • What agents really need to focus on [36:46]
  • Financing business buys [39:01]
  • Joseph’s advice to struggling agents [43:21]
  • Plus, so much more.
Joseph McCabe At the age of 22, Joseph McCabe opened RE/MAX Experts, with the goal of doing things different and better than all of the other cookie cutter brokers out there. Joseph McCabe is a Graduate of Father Judge High School, and Penn State University, and a Veteran of the US Army. He and his team service the entire States of PA and NJ with Specialists in both the residential and commercial sectors. They have found a home on Main Street in Manayunk a thriving and rapidly growing section of Philadelphia and a good middle point for them to service clients wherever they may be. They call themselves Experts because that’s what they strive to be always learning, always growing, and always helping people achieve their real estate goals. From Pittsburgh to the Jersey Shore they’ve got you covered. Related Links and Resources: Thanks for Rocking Out Thank you for tuning in to Pat Hiban Interviews Real Estate Rockstars, we appreciate you! To get more Rockstar content sent directly to your device as it becomes available, subscribe on iTunes or StitcherReviews on iTunes are extremely helpful and appreciated! We read each and every one of them, please feel free to leave your email so that we can personally reach out and say thanks! Have any questions? Tweet meFacebook me and ask Pat anything. Don’t forget to head on over to Bare Naked Agent for Pat’s answers, and advice. Thank you Rockstar Nation, and keep rockin!

Aaron: Real estate rockstars, this is Aaron Amuchastegui. Hey, I am coming to you to interview– I’m out in California right now. I’m getting to interview Joe McCabe. He’s out in Philadelphia. Joe’s been on the show before. It’s been a little over a year since he was on last. Obviously, a lot of stuff has changed in the world and he has some exciting stuff to share with you for what happened after his Real Estate Rockstars interview and what he’s working on now. We’ll talk about all sorts of stuff today. Joe, welcome back to the show.

Joe McCabe: Yes, thanks for having me on. I’m glad we were able to make the time. A lot of good stuff and hope we’ll deliver some value to the listeners.

Aaron: That’s awesome. You said last time you came on, so many people reached out to you. You’re obviously delivering a bunch of value to be able to help people grow their brokerages and grow some of their side businesses within their brokerages. That’s pretty awesome. Tell everybody where you’re at, where are your offices.

Joe: Right now, our main business that was the catalyst for everything else is RE/MAX Affiliates. Our main location in the northeast in Philadelphia. We’re about 140-150 agents right now, and growing, but we have three locations. One in center city, one in or Germantown, and one in the on Frankford Avenue.

Aaron: You’ve got three offices, a bunch of agents all working for you. You don’t actually produce anymore. Now, you’re not taking listings and buyers yourself anymore. You’re just growing your brokerage and growing your business. Is that right?

Joe: Yes, I’ve solely stopped producing. That’s a big thing when you become a broker. It’s kind of an old school mentality in a way, but a lot of agents never really were a fan of the producing broker, but I was lucky enough to be young enough and not have a lot of– I don’t have a family or anything like that. Maybe it’ll take a little- a lot more risk, I guess.

I was able to stop producing and focus entirely on just recruiting and growing a business. One thing I forgot to mention that’s pretty cool is we’re licensed in PA, New Jersey, New York and Delaware. Soon to be Florida as a real estate brokerage which is unique.

Aaron: How long have you been in real estate?

Joe: Total, I’ve been in real estate about five years. I went from a sales agent at Keller Williams, straight into two or three years later opening my own brokerage with RE/MAX.

Aaron: Let’s talk about that transition and that strategy. Your first year, you were a sales agent. What did you do with volume in your first year?

Joe: Real estate was never supposed to be a full-time thing for me. I set it up to where I was going to finish college. I was in the army at that time. I was going to finish college– I was a reservist. I was a military police investigator. I was basically going to finish up my last year at college, go straight into the police department, and do real estate part-time.

I was working at Keller Williams at that time. While I was there, I just started to notice how easily as a broker I could add on these ancillary services, real estate, mortgage, title. If you really wanted to get crazy, home warranties and everything else, which we never got involved in. I don’t think I will. I just started to realize that there was a lot of ancillary money that could be made and it could be used as a recruiting tool or a retention tool like Keller Williams is really good at.

I took a lot of the Keller model and placed it in the RE/MAX model because it was the lowest barrier of entry at that time. I transitioned right into that. I just realized that there was so much growth and there was so much potential in being an owner and having agents that work for you and want to work for you and giving them shares. That I was able to move from a sales agent into a broker pretty quickly. Sales volume-wise, I was never a killer.

I was never doing 100 deals a year. I was 25 to 40 deals on any given year. I did have a year where I did 120 transactions. It was actually the year that I opened RE/MAX, and that was just a series of investors and commercial transactions that added up to a lot more money than I ever expected. I’ve been pretty good at– more good and more– Over the past few years, I’ve realized that my skill and the thing I like to do the most is the logistical side of things.

Setting things up, acquiring new businesses, and getting into new ventures, and then recruiting agents. I’ve been learning to give away what I’m not good at, what I don’t want to do. That’s been the big theme of this year for me.

Aaron: I have met a few agents that were actually really good at it, really successful, had a lot of sales, but it wasn’t that they didn’t like doing it. They didn’t like going out. For all sorts of different reasons, they felt like it wasn’t a natural fit in their personality as they were out doing it. It’s really interesting to say, hey, you could still take that, realize that it’s not your personality fit, it’s not something that you really want to focus on and then be able to transition that, say, how can I use my skills to make something different.

2015, you became an agent. It sounds like for the first three years, you did between 25 and 40 deals a year. Then near that third year, you said, hey, I want to– I actually want to grow my own office. Instead of doing 25 to 40 deals a year, I want to see how quickly I’ll be able to bring on extra agents, grow this business and what I can build it to. If you’re thinking back to your first year or two, and when you were doing– Were you mostly a buyer’s agent, mostly a listing agent then?

Joe: Yes, mainly buyers. I was your typical buyer’s agent on the team at Keller Williams. I wasn’t getting the leads or nearly as much lead support as I wanted. A lot of that was left up to me, and I don’t regret it for a minute. This is something that is super important that I think a lot of agents come into the business and come into the investing world, and they’re like I’m going to– They’re going to get rich quick and they’re going to make a 100 grand right away, and they don’t necessarily realize how much work they’re going to have to put in. While I didn’t get very much from my team leaders as far as leads and all that goes and giving 50% is painful.

It was really painful for two years. That was because all the leads were family friends or leads that I went out and self-generated. I essentially was just out there every single day, handing out flyers, going door to door, just putting flyers on people’s doors. I was never super aggressive, knocking on the door, here’s what your house is worth. Every single day, I was out there for hours, just putting flyers on people’s doors, calling for sale by owners.

I hadn’t gotten shut down enough to have any issues with that. I had no problem calling it for sale by owner. Nobody had said no to me up to that point. I was getting really, really good at building up a strong pipeline and then keeping that pipeline steady. That was something that my team leader, Nancy, all that– I think she’s still with Keller. She was huge on that. It was having that system in place, teaching me to have a system in place to plug in that deal.

If you’re going to get it under contract, get it under contract day one and move on to the next project. Then next day, don’t start counting those dollars before you actually have them. It’s time to really focus on you have one deal, now start building out that pipeline for six, seven months out. That’s where the successful salespeople were.

Aaron: As you’re talking about calling those for sale by owners. You did two different things, and I really like those two different lead sources. I’ve had a few people reach out to me and email me and say, “Hey, I’m in a slump. I’m struggling right now. I need to rebuild my business, but I don’t want to cold call people. I don’t want to go door knock and talk to people.” It sounds like you were the same way. Instead of door knocking- but you could still hustle.

You said instead of going and door knocking, you left flyers on a bunch of different doors so people would see you and see that you were there, but you didn’t have to have the uncomfortable conversation of knocking on the door. They were still a very non-aggressive sales technique. They see the flyer, they go okay, maybe I’ll give a call. What did you have on your flyer?

Joe: I pretty much just said different variations. I would either reuse other people’s deals that just sold and put them on there and say, “Here’s what’s sold recently in the area,” or I would just put “looking to sell a home”. I think I probably barely had any sales. I would use my team leader sales and say, “Hey, we sold this in one day for 9% more than we listed it. They’re going to close in 15 days for this price.” I did that. It was months before anyone called me back.

What happened was in one day, three guys on the same block called me back. Three older guys who decided to go into a retirement community together called me back. This is Philadelphia. Philadelphia is a high volume market. These are like $200,000 houses. It wasn’t a lot of commission, but $18,000 to a college student is a lot of commission, 50% of that. One day, three people called me back and said, “Hey, we want to list our properties and we’re going to move into this retirement community.” It was the compounding effect.

After that, my business really picked up. It was six months of nothing, except what my team leader gave me. Then those flyers started to compound, the people whose emails I was building up in my CRM sort of they respond. Families started to buy, people started to trust me. It’s really just about putting in that work. I was doing it in somewhat of a passive way because I was never the aggressive salesperson.

Aaron: I really love that. I think a lot of our listeners need to hear that because a lot of the methods we do hear about are very aggressive, make a 100 calls. It’s okay if 90 people yell at you, go to the next step. That works for a lot of people. That is a really good successful method for the people that aren’t able to do- they just can’t get themselves knock on the door and make that. I like the idea of the flyers, just reminding people to go out there and dropping a ton of flyers out there, and you were doing it all the time.

Six months later, it started to pay off. What a cool version of that. It’s really telling people don’t give up because after– People do send out mailers. They send out letters, they do flyers. A week or two later, nothing happens. They say that was all for nothing. You’re saying, yes, for six months, you had to ask yourself, “Hey, was this all for nothing?” Then it started. What about when you call it for sale by owner? What would you say on that pitch?

Joe: I would just make up a lot of stuff. I didn’t have many stats. I don’t remember if I got them from Tom Ferry or Pat Hiban’s show. I would just tell them that for sale by owner sell for 20% last on the market. Just little statistics that I would throw out there. I would let them know that they don’t pay me until it sells. There’s no upfront cost to them. Right now, I live in the northeast, too.

I knew who was on the market for a long time. I would just be persistent with them and say, “Look, you can cancel the contract with me at any time. If I don’t sell it, there’s no loss to you. If I do sell it, I’m going to sell it for 20% more.” Why would you pay a 6% commission? You never get a 6% commission with a for sale by owner, but I would try. You always get the 5%, though.

Aaron: I really like those methods. You did that for the first few years. It started building. Once you got some deals, then that snowball started rolling. You had some momentum and it became easier. Then around year three, you said, “Hey, I’m doing such a good job of generating all these leads for myself. I don’t like sharing my commission.”

It is what it sounds like. You didn’t really like the idea of if you were generating it yourself, you were giving so much of it away. You said, “Hey, I can do this on my own.” You looked around, you found that brokerage. What was it like when you first started that brokerage? How quickly did you hire people and how quickly did you transition from actually doing deals yourself to just helping your agents do deals instead?

Joe: I talked about this a lot, actually, on the previous episode I did. When we first opened up, like recruiting– Recruiting the big agents is a long game. It’s not as as easy as you think it would be. You could offer them 100% commission and annual pay their broker fee. You’re paying for their services, and you still won’t be able to recruit people because it’s really about that relationship. The only tool I had in the beginning was a massive action approach to recruiting where I had a slide dial text message, email, Facebook ad campaign targeted at every 5,000 agents in this four county area.

I was just hitting them with every piece of material I could to try to grab that low-hanging fruit. Within one to two years, we went to, I think, 45 agents, and now we’re up to 140. Part of that was done by acquiring another business. That goes the same for the sales agents. It doesn’t really matter what you do. I don’t know that there’s any secret method to anything, whether it’s acquiring businesses, buying properties. Everyone wants to sell you some program on how to do it right.

I think more than anything, if you pick one to two things, and you just outwork everybody else, that’s all I’ve had since I started. I’ve just always outworked everybody. I’ve got out called everybody. I’ve out texted or slide dial everybody. It got to a point where basically I was focusing on let’s bring in the low-hanging fruit not in a bad way, but the agents that aren’t producing, we’ll make it a no brainer for them. We’re going to give them 85% commission. We’re going to give them a low cap of 15,600. We’re going to give them leads.

I was going to do it in a way that didn’t cost me anything. We were one of the first brokerages in Philly to sign up with Opcity, which for people who don’t know, and brokers who are listening, it’s a good recruiting tool. If it’s available in your market, they basically upfront– They front the cost of the lead. They turn that lead for you. They get them warmed up and then they pass them off to your agents and they pay a referral fee if it closes. If not, no upfront costs, but you have to be a broker to sign up.

It’s a good recruiting tool and retention tool. That was the thing. I got to provide leads, I got to give a no-brainer commission split, and people will come. Sure enough, that’s what happened. Before I knew it, we were going from a brokerage that couldn’t break. I would say on my own, I never broke, 25, 30 million a year for the first two years. By this third, fourth year, we’re now at- I don’t know, what are we? Almost nine months into the year, we’re at 150 million in volume.

We’ve got over 900 transactions, which right there, if anyone in California is listening, that sounds ridiculous. We’re a high-volume brokerage. We’ve got about 140 agents, closer to 150, I think. That’s what our focus is and that’s what I’m always pushing down everybody’s throats is there’s no secret sauce. I wish there was. I wish there was money that you could throw at the problem. It’s really going to come down to grind and work.

Even the guys that do have the money to spend on that and open a call center and crank out hundreds of calls. It really just comes down to the volume piece, how much you’re putting out there, and you’re going to get that back in return tenfold.

Aaron: I love that growth strategy. You went and found a list of all the agents in your area. They could upload the email list to Facebook and blast them with ads. You had their phone numbers, their email, so you would email them and text them and call them and say, “Hey, here’s what I’m doing.” You said I’m going to give them great splits plus I’m going to provide the leads.

Yes, Opcity. I think realtor.com bought Opcity, and Opcity is a really neat– Now it’s a part of a giant business now. I’ve toured the Opcity offices in Austin a couple of different times, and it’s giant. It’s a giant, giant call center. [crosstalk]

Joe: [crosstalk] 50 million who

Aaron: Yes, it’s very, very cool. They’ll call the lead. They’ll make sure that people are interested. If somebody is alive, buyer lead, they hand it off to you as an agent, and you don’t pay for that unless you close the deal. You’re able to tell your agents, “Hey, you’re going to keep 85% of your commission.” Then once that commission comes in, Opcity actually gets a chunk of it, but I’m sure at that point you’d be like, “Well, that’s the cost of a lead. That’s not ours. I’m just going to share our side of that.” Whether you’re growing a brokerage or trying to get agents for your team, I think that’s a great way to try to grow is to be able to give people a better thing, be able to provide them leads.

Then you targeted the people that weren’t doing much volume at the beginning. If they were able to close four or five deals from these leads you provided, that was better than they were doing before.

Aaron: Let’s switch gears a little bit. You’re out in Philadelphia. What has it been like since March? With everything. What’s it like? Are you eating in restaurants? Are you doing sales volumes? What’s your team been like? What’s your feelings been like?

Joe: It got a little scary for me at one point because I don’t like to follow rules because the part that made the army the toughest for me. They shut us down. They shut us down for two months. Without saying too much, I couldn’t follow those rules because I decided it was a good idea to buy the largest RE/MAX in Philadelphia on April 1st. 16 days after, they shut us down. I was like, “Well, shit. That’s all my money. I just bought with basically all my money. I just bought the largest RE/MAX in Philly, and we need to put the pedal to the floor. We can’t necessarily close.”

I had come up with all these ideas in my head. I’m like, “Well, there’s a lot of justification. We have a legally binding contract. Title companies are definitely essential, so are notaries.” I was just telling the agents, “Limit your sales business and we just got to keep trucking on it.” We can’t afford to close without getting into too much of whether or not I believe in COVID. That was the thing is we couldn’t afford to close. We just made this large investment. I just kept trucking along.

Actually, during this time period, they always say, “Well, everybody else is running out.” Other real estate brokerages were closed entirely. I recruited a ton of agents because these companies weren’t letting their agents come to the office to close deals, telling them basically to cease and desist everything. I was like, “Yes, well, you guys do that. I’m going to keep growing.”

We ended up getting– It’s kind of a little off topic, but we ended up acquiring two additional title companies. We’re in negotiations to buy another local brokerage. We ended up buying a healthcare company, a home healthcare company in Texas, a bar in the Northeast. What else? Two little airplanes that released back to a flight school.

Aaron: That’s wild. There’s just so [crosstalk]

Joe: [crosstalk] many opportunities. Yes.

Aaron: Yes. You were able to take the opportunities that were out there and say, “Hey, this is hard.” You started to capitalize on that right away, and just about anywhere there was a need. If you’re finding out that a flight school is struggling, you’re like, “Hey, we’ll buy the airplanes and lease them back to you.” That’s super unique and not real estate related. I think one of the biggest things I’ve learned since March is that you need to be diversified.

You can’t be in just one market, in just one thing, in just one business strategy because there could be a crazy law that makes absolutely– There’s absolutely no way you could predict that all of a sudden it shuts you down completely. One of our biggest businesses is buying foreclosures on the courthouse steps and foreclosures have been shut down since March. I’m so grateful for the four or five other businesses that we have because of that. Even diversifying into, like you said, flight schools and things like that, very, very, very cool as different ways and strategies.

In most places right now, the real estate market feels hot. Meaning, that most listings get multiple offers. A lot of them are coming in over asking as long as they’re marketed properly, because there isn’t enough on the market and a lot of people are wanting to move. Is that accurate out there, too?

Joe: The market here is ridiculous. If it’s on market for more than one day, you’re extremely overpriced. Like grossly overpriced. People are still trying to do that. The way that houses are selling right now, these people are going to be underwater for a very long time. I think a lot of people know, investors know, and not to discourage salespeople because it doesn’t matter whether you keep cranking, but people are over paying for houses.

Now, as an investor, is not really a good time to buy unless you find a spectacular deal in real estate. Just from being around these guys in they all have that same feel where pretty much all of us have sold or cashed out on a lot of the money we’ve made in the market at this point expecting a dip. No one’s really buying single family or multifamily portfolios unless it’s a killer deal. Most of my holdings are– I have a 100 single family homes in Pittsburgh and some other lower income areas, but we’re not really buying anything there right now.

We’re seeing a lot of opportunities on the business side of things. Like buying other companies and people who were just scared. They’ve lost significant cash flow because now’s a good time to buy a business of 50%-60% off, but not on the stock market because it makes no sense that they’re still climbing, in my– [crosstalk]

Aaron: A lot of fun stuff out there. You’re right there. A lot of the rentals that I have as people have been moving out, I’ve been just selling them right now because I believe that I can sell them for more than they’re worth. In six months or a year, I don’t know how long it’s going to be, I’ll be able to buy a better deal to replace that rental. I have to do something different, too, because I’m not buying new houses. If I can’t buy a lot of new houses on the courthouse steps anymore, I have to find other ways to modify and adjust that.

Let’s bring it back to real estate, some really actionable stuff for our real estate listeners out there. I love the story that you’ve take in- being an agent, to growing to build your brokerage, to all these other ancillary businesses. I think that’ll really spark a lot of things in all of our listeners heads, so keep your eyes out. Keep your eyes open, see what’s out there, and look for the opportunity of where somewhere you might be able to help.

Let’s talk about your first transition, though. You get your brokerage. You build it up. You have agents. You’re still just in real estate, just in focus in the real estate transaction space. I think you’ve talked a lot last time about taking that and adding on a mortgage brokerage. Now you’ve added on a whole bunch of things. Was mortgage the first ancillary business you latched on to your real estate company?

Joe: No. It’s funny that you said keep your eyes open for opportunities because this is something that, even just as a sales agent, I noticed with other realtors and teams and they really had blinders on to all the extra money that was out there. Whether it was agent making, selling that home warranty to get the referral fee. Mainly with brokers and team leaders, I right away knew that when I opened my real estate brokerage at some point, and prior to owning the brokerage, I did have the title company.

Having a title company, having a mortgage company, those are crucial as a broker and maybe even as a large team. You need to have those because some people say, “Well, how are you paying your agents 85% commission?” Well, it’s not without getting money somewhere else. I’m getting most of my money, and most of our profit comes from title mortgage, a very large percentage of it, anyway. That is easily, especially in our area, I would say we get a 95% to 99% capture rate on our title. We basically get every single title policy that comes through RE/MAX Affiliates. The agents are shareholders in that. It’s a retention tool for us. It’s huge for brokers and retention is huge right now. It cost a lot of money to get agents in. You waste a lot of time.

Sometimes with agents who then leave you for another broker because they think the grass is greener, and then they get out of the business, and so it was a total loss. You didn’t even help them go somewhere else. What we do is our shareholders this year on title have already received, or will receive, total by the end of the year $4,900 on title share, so it’s pretty good. Same on the mortgage side. We actually implemented shares. There’s so much money to be made there.

It’s so easy to capture the business in-house. That was something that when I was on show I hinted towards was you need mortgage, you need title, we can help you do that. Our title company does joint ventures for the mortgage and title side. Right now, we’re opening quite a few joint ventures on the title side, and nationally on the mortgage side, we have locations. Two in California, one in Arizona, one in Georgia, one opening in Connecticut, and one opening in Virginia, with other real estate brokers who were like, “Hey, I’m going to take advantage of that because I see what you’re saying.”

You could literally double your profit just by having a mortgage and title for doing what you’re already doing. You’re already giving that business to some loan officer, some title company. You might as well get 50% of the profit for doing it. Ballpark numbers, don’t know how many, 50%, but it’s about that. It’s pretty close to– It’s a lot of freaking money.

Aaron: When you went to say, “Hey, I want to start a title company,” or, “Hey, I want to start a mortgage,” did you just research how to do it yourself? Did you find somebody that was doing it for another company and say, “Hey, come and help me”? How did you do that?

Joe: I pretty much didn’t know anything about anything when I started anything that I’ve done to this point, which is probably the most important thing I want to put out there. I just bought a home healthcare company. I don’t know anything about home healthcare, but you find someone to run it, and you delegate those things out. Business principles are what they are. I mean, at the end of the day, if the PNL, the numbers make sense, you should buy it.

Same with real estate. If the numbers make sense, you should buy it. I’m a big fan of not managing anything. Those properties that we own in Pittsburgh, a property manager runs that. We got the CEO of another healthcare company, he’s going come around our healthcare company, that type of thing.

Joe: I did the same thing for mortgage and title. I found a guy on my mortgage side, it’s Bruce Waller. He actually owns this mortgage company in Vegas. He sold it for a shit-ton of money. Now he runs operations and sales for me- with me, rather. We did that from the beginning. We started with one loan officer in-house. I learned to feel it is a nightmare for compliance on the mortgage side, audits are terrible.

That’s why you don’t do them yourself, you hire somebody, so it’s worth spending that extra money. You don’t really have to know anything. You just have to put someone in place that does know it, and they’re going to do it better than you anyway. The same thing on the title company. I got really lucky with my title company. It’s something I dove into a lot on the past show. It’s a little different now, obviously, because our title company which initially was a joint venture of another title company–

Basically, every time we close a deal, we paid them a file fee out of the title premium, and we got to keep the rest as profit. I think we paid $495 and we kept the rest, so pretty good margins if you do the math on a $2,000 title policy. We had gotten so big so quick, especially in April, that we swallowed up the parent company that initially controlled us. Then we went and bought two more title companies, and now we’re doing multiple joint ventures nationwide on title. A few locally here in the Philadelphia area.

We’re taking over for another large company that does these, but they’re having a lot of issues. I have someone in place there. Basically, all those people that ran our previous parent company, if this isn’t getting too confusing, now are running all of our joint ventures for us. Then we use a head hunter or recruiter to find really solid people to fill those roles as we need them.

Aaron: I was going to pull up what your last episode was, what the episode number was, so people can go back if– [crosstalk]

Joe: I listened to it this morning, and I was impressing myself.

Aaron: Yes, you were really– It looks like episode 780, right?

Joe: That’s it.

Aaron: After you came on, in episode 780, you go on a little bit more detail about forming those title companies and mortgage companies. You have dozens and dozens of people reach out to you and say, “Hey, I want to do that. I need your help,” and you started creating all these affiliate businesses with them. You helped people set up these brokerages. You helped them set up their title companies. It’s like different partnerships and things like that, right?

Joe: Yes. Actually, it was funny. I re-listened to the podcast just because I was curious, not only of what I said, but did I actually offer that? It turns out I didn’t even really offer that we did the joint ventures or the mortgage ventures because I don’t know that we actually did at the time. I think, after Pat’s show, so many brokers– I’m talking big brokers. At this time, we had 40 agents, like I said on the show. People with 300 agents plus were calling me. “How can I send up a mortgage company? How can I set up a title company? Can I pay you to help me?”

At first, I’m like, “Oh, you don’t have to pay me. I’ll just tell you exactly what to do. It’s not a big deal,” so I’m helping out all these people, then I was like, “Oh, shit. This is my opportunity.” I called them all back, and I was like, “You know what? It doesn’t make any sense,” so I said, “The new model anyway is to decentralize command, but centralize operations.” We put a loan officer place to run your show who’s really, really good. Someone that you like, preferably someone you work with, same thing on the title side.

Then we centralize all of our operations and outsource as much as we can to the Philadelphia area, and we’ll run the show for you. You don’t even have to call We prefer they do now, but at the time, this is what I was saying. Same with the title company. They can call the title company whenever they want. We’ll run the entire show for them and make them more profitable than what they have in place if they have anything in place.

All these people just started calling me. I probably fielded 30 to 40 calls. The last time I was on the show, nine of those turned into actual physical locations for us. I probably recruited six or seven agents at the time. We were not an impressive brokerage back then. I mean, I talked a pretty good game, or at least I think I did, but now we have a lot to show for it. That’s one big thing that I see a lot of agents in this area doing.

I think a lot of agents get caught up in the flashiness of being a salesperson. I would really, really caution them to more focus on your net worth. If you’ve been in real estate for less than two or three years, you probably shouldn’t have a Mercedes, a BMW, and a million-dollar house, just so you know. You really need to focus. You’ve got to play the long game. If you don’t play the long game, you’re going to get crushed. I see it all the time.

Every bit of money that I bring in goes immediately back into buying another business, buying another property. A good deal, not an emotional deal, but a good deal, or marketing for your team if that’s the angle you’re going to take, but just thinking bigger. I know I got off on a tangent here, but it just came to my mind. Thinking bigger and not worrying about being so flashy.

I promise you that brokers- this is why I was saying it- brokers who were massive, making millions of dollars compared to me were calling me to ask me to help them. You don’t need the Mercedes to close the deal. You don’t need a million-dollar house to close the deal. No one’s going to say, “We’re not going to do business with you because you don’t have all these stuff.”

A lot of them are probably struggling, and that’s the thing. I think they’re going more for image than they are for sustainability, and net worth, and the things that are actually really important. I think that that’s just a dangerous thing and I hate to see people get caught up in that.

Aaron: You’re saying, “Work hard, make the money, but invest that money.” My biggest regret from 2009 to 2012, I flipped a thousand houses in Northern California and we were absolutely crushing it. We’d been making so much money but we didn’t invest in stuff. I wasn’t buying rentals back then. It was just making quick cash and spending quick cash. We were buying all the flashy things.

In 2013, when that got shut down and we lost all of our money, we were thinking back like, “Whoa, what if I would’ve just kept a hundred of those houses or 200 of those houses?” When I got my chance to reset, that was my biggest change that I made is every time we were successful at something, we made sure to invest in something to keep it. That’s been mostly real estate. My second to last question, you’re talking about buying all these businesses?

Joe: Yes.

Aaron: For agents that are new and they’ve done five or six deals, they’re probably thinking, how does that work? When you buy businesses, are you offering cash? Are you financing these things? Are you getting seller finding– Like the planes that you did. You bought a couple planes and you leased it back. How do you finance these?

Joe: Yes, so the money’s out there, and the money’s out there in so many different ways. I forget whose podcast– I think it was on. No, I mentioned it on Pat Hiban’s podcast, too, about how I bought the single-family homes, but just how I do a lot of stuff in general. I think it was on Dropping Bombs with Bradley, and I mentioned it on there too. I will find a way to finance anything, and it’s always with other people’s money, always. I never used my own money. I try to maintain as much of that as possible at all times just because I want to–

I’ve done everything without a dollar, without any money of my own. The hundred single-family homes we basically– Now, actually, it was a hundred single family homes and then multiple deals after this. This is how we financed all of them. We have probably 116 properties total, commercial buildings, you name it. We have the property 100% seller financed and then we exit out of those properties within six months to a year through a conventional refinance. Once you own the property, it’s really, really easy to refinance them and it’s a lot less underwriting.

We’ll get the property seller finance, refinance at 75% to 80% loan to value. You have to do one of two things. You got to have to write the contract then to say that the seller will automatically hold that 20%, 25% difference as a seller second, which can’t be recorded usually, so it doesn’t have a lot of security. Which is fine, they usually do it, or buy it at a 25% discount so you know when you get the appraisal and you refinance, you don’t have a cash in refinance, maybe you have a cash out refinance. It really depends.

I’ve been really, really good at structuring those deals. Then I’m usually good at every business I bought, I bought it at a significant discount because I’m buying at the right time. Right now is a great time to buy struggling businesses, because if they were struggling, before they’re fucking crushed now. Buying RE/MAX Affiliates, buying these other title companies.

What I’m finding is that these other owners either are hurting or they’re hurting because they had another business that really took off, so we’re able to make good deals here. I’ll usually get large cash payment upfront and then structure it so that I’m paying them something over the next two to three years, two to five years, whatever it is. I just raised that money from investors, or I just have the seller a 100% seller finance it for me.

With different things like with planes, with boats. Not a lot of people are buying those items. There are banks out there that will finance those up to 100% of the purchase price, especially if there’s equity in the plane. I’ll tell you what, the plane is actually one of our best investments. Not only did it cover the cost for me to get my pilot license this year, because we didn’t have to pay to rent our own plane, but we probably make $2,000 a month off of that plane.

We 100% financed it I think at $89,000 for one of them, and we’re getting $2,000 a month back on it net profit. We have no liability. They pay the insurance. It’s almost a triple net lease. We’re crushing it on those aviation details, but it’s something you wouldn’t normally think of.

Aaron: Yes, what a way to diversify. Joe, there was a lot of fun stuff we just got to talk about today. We got to talk about when you were a first agent, that you were just placing flyers on doors. You weren’t comfortable door knocking and having those hard sale conversations, so you just left a ton of flyers, and six months later, you started to get the sale. You started to get people calling you back. Then as you kept building that, you were calling and for sale by owners. It was, hey, it’s a no lose situation. If I sell your house, great. If I don’t, you’re in the same boat you were in before.

How you rolled that into then buying your own brokerage and then hiring and then getting out of actually doing deals yourself to building up your teams. Starting your title company, starting your mortgage company. A lot of that’s really applicable. I want our new agents out there that are listening to know that I don’t want them to get overwhelmed by your story. I want them to know that this is actually something that every one of them can do.

What I really loved about hearing with you buying those businesses is saying, no, it’s not- you don’t have millions of dollars that you’re going and buying these businesses. You’re finding somebody who wants to sell a business and you’re finding somebody else that wants to help finance that business. Whether it could be a cash investor helping you on it or a bank loan or different things and just using that analysis of how you can use that money. Really, really great stuff. What’s your final thought for agents out there that are– We have two different things that are happening right now.

Half of the agents are crushing it. They’re crushing it because they’re getting these listings, they’re able to sell them so easy. It feels like it’s 2006 where you put it on the market, you’re getting 10 offers. We have a handful of agents in the other side that are really, really struggling because they’re new at this. They don’t have the pipelines when there is less inventory, it’s a lot harder. What advice would you give to the newer agents right now that are struggling to succeed in today’s environment?

Joe: The biggest thing that I’m seeing, and I’m seeing it with some of my own agents who were part time or they just got into business especially. A lot of people are sitting back right now. A lot of other brokers, a lot of other agents are just sitting back and waiting to see how this plays out. You can afford to do that. We don’t know how long this will last. We don’t know if the market’s going to crash. There’s a lot of unknowns. You have to put all of that out of your head and keep trucking on as if everything’s normal.

Work harder, work 10 times harder, work harder than everybody else. Make the phone calls, make the things that maybe you were afraid to do previously. Pick up the phone and call people that maybe you wouldn’t call as clients. Maybe they need you, maybe their agents sitting back right now on their ass not doing anything. I think that that’s a really important time to really change your business and come out of this on the other side a hell of a lot richer.

If you are one of those agents who’s focusing, who is doing really, really well, start to focus on stacking assets, building assets, things that you can actually buy and sell. It’s hard to sell your book of business in the real estate side, but you might be able to do that if you build a large team and you had a title joint venture and you had a mortgage joint venture or you had a portfolio or property management company. Start focusing on do I have an actual asset? Or am I just a slave to my own business, and maybe I have a ton of cash, but what does that really worth? Is that something you can retire on?

Aaron: I love that for advice right now. There could be people out there that actually have agents working for them, but their agents are not working very hard right now because of what’s going on. If you’re the one out there that is working hard, maybe they’re going to decide they need to switch over to you. Joe, if people want to reach out to you, if they want to ask you how to start their title company anywhere else, what’s the best way for people to find you?

Joe: Yes, phone or email or Instagram. Instagram, I’m @josephcmccabe. Then my cell phone is 215-868-6379, or feel free to email me. I guess the best one is joe@homefrontloans.com. That’s plural.

Aaron: joe@homefrontloans, easy to remember. Joe, thanks for coming on today. Thanks for adding so much value to our Real Estate Rockstar listeners out there. Then maybe we’ll have you back on again in a year or two and see how you’ve taken it at a whole another step again, so thanks for being here.

Joe: Absolutely. Thanks for having me.

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