I will talk to strangers about it and introduce what we do. And if they are interested, then at that point, then I’ll lay it all out. If you’re doing seller finance, you want to have what they call papered anyway. So if you want to ever sell that note to somebody else, it’s all papered and been done the right way. If you don’t collaborate with somebody and you’re trying to keep it all in, you’re not going to get very far in this business. It’s too small a world. Success to me is my time with my family, the time that I want to use with my friends, things like that. That’s what success says. It’s not about the money for me. It’s about buying the time back. Wholesaling is great, but an average wholesaler at one point in time, they’re making $7,500 a deal, maybe up to $12,000 a deal was about it. With what we do with our buying hold.

What’s going on, guys? Welcome back to the REM podcast. Today we have John from Mesa, Arizona. John, how we doing?

We’re doing good.

Awesome. Happy Friday. You too. I’m curious, John. I know you said you’ve been in the business for over 30 years.What initially drew you to this niche?

I wanted a passive income. Didn’t want to work for Uncle Sam and all that kind of stuff. Wanted to be able to do my own thing. And I was actually working a full-time job when I got started. I had a family friend that was in the real estate business and I told him I wanted to buy rental properties and he came to me with a little triplex right here in Mesa, and it was a seller finance deal. And so we ended up buying a little triplex. That was in 1993 is when I got started, and it’s been going great guns ever since. So it’s all about passive income. And I started making more money with our properties than I was in the jewelry business for years and making six figures, and I started making more money with the rental properties. So I went full-time real estate.

Awesome. I’m curious if you can kind of think back to the days before real estate. What was your life like before you started investing?

Decent because I was making good money and the problem is I was working retail. So you’re working 60 hour weeks or more. You’re answering to a boss in the jewelry business. You never really knew if you had a job when you went into work or if they’re going to fire you or close up the doors. And I actually worked for Hellsburg Diamonds at the time and then they sold that to Warren Buffett. It was a good time, but as I was in the jewelry business, we started doing rentals and it was more fun and more challenging than the jewelry business. Made more money.

Yeah. Fair enough. And what does your business look like today?

Today we have a team here in Mesa. I’m a buy and hold investor. We own properties in 15 different states. I am not a landlord. We do it totally different. We do it with a lease with an option to purchase. At the end of the lease period and they do their option, we turn it into seller financing. I become the bank, so I hold a note and it’s all about the mailbox money. So or passive income is what it’s all about. But our team here, we are heavy into PPC. That’s where most of our leads come from. And they first look at every deal. Can we take it down and cash flow it? Because every deal we do take down, we get paid six to seven different ways as opposed to wholesaling or innovations where you’re getting paid one way. So we like that a lot better. At the same time, if it doesn’t work, then we are typically no vading deals out today. Very little wholesale, but it’s usually nobation or take it down.

Awesome. Awesome. What was the main problem that you were trying to solve when starting this business?

More time with my family. I had little ones at home and working the jewelry business for so many hours and working retail, working in the nights and stuff. I just didn’t want to do that anymore. And when we finally got this going, I bought my time back. And that’s what the passive income was all about. There for many, many years, we would travel to San Diego in the summertime and spend one to two months over there and I wouldn’t even have to come back to work. Everything was done virtually and so forth. Obviously back in 93 and stuff, we didn’t have computers like we do today. Didn’t have gurus and coaches that were coaching, but I had a great mentor that taught it to me. And I had a maintenance guy that I had on staff, so he would do everything I needed to have done if I was out of town. So that’s what was nice. I bought the time back and had the passive income so I didn’t have to report to somebody.

That’s awesome. When it comes to investing, I feel like everyone gets in it for probably about that reason is just buying your time back and really just being able to create your own schedule. And then I feel like a lot of investors, when they get into business, they just keep chasing that next deal and they kind of spend more time than they would. How do you balance that and why do you think so many investors overlook that part once they get into the business?

Well, like most, I mean, a lot of times you get into the business as a wholesaler and wholesaling really isn’t investing. It’s a one transaction deal and you’re done and you’re out of a job. And then the next stage is usually going to flipping homes. Again, that’s transactional and it’s a job. The next stage, I typically go and buy a rental property. The problem with rental properties is there’s not a lot of cash flow. I mean, if you’re making 150, $200 a door, usually you’re doing damn good. So the next stage in my mind is going to the lease with an option because I don’t have property management. I don’t have vacancies. I don’t deal with any of the repairs. We deal with tenant buyers. So they’re actually buying the house right up front. And the only thing I got to do is get them in the door the first time. They’re there for five years. And I think a lot of people just don’t know how to transition to the next level. And it’s tough. I mean, to stick your way boss out there and go buy a house that’s going to be a rental property, especially if you’re doing it virtual. I mean, like I say, we own in 15 states. So if it’s not right here in Arizona, I’ve never seen the property and really don’t care to. But we have a process that we put together over the years that works. And the cool thing about what’s in our office is if you’re working in our office or if you’re one of my students and stuff, we teach you how to actually build that portfolio with no money out of your pocket. So I don’t use any of my money for investing. We either do creative sub two wraps. I don’t do sub twos, but I do sub two wraps. And that’s old school stuff, seller finance. And we use a lot of private money. And I teach everybody in our office and my students how to do that and to buy with no money out of pocket and get that six or seven pay stubs through the properties they own in their portfolio. I had one guy in our office that he was here for less than 13 months, bought eight properties making six, $7,000 a month and left. He didn’t have to work anymore. He was a single guy and loving it. That’s what I like to see.

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For those people that are struggling to find private money, where would someone start? If you were to restart from scratch, no money, but you had all your knowledge, where would you go first?

Come up with that 30 second elevator speech and you talk to anybody and everybody. And I still use my 30 second elevator speech. I own a private equity firm and they’re going, “What’s a private equity firm?” And we tell them that we work with people that want to invest money, but they want it secured and we secure it with a promissory note and a deed of trust with real estate and they’re not having to play that stock market and they’re getting typically a double digit return. And with that, they love it. So it’s a matter of talking to Amy and everybody. I mean, I’ve got one of my private money investors is my mechanic that works on my off-road cars. I’ve got another guy that owns a hardscape business for landscaping, ran into him because we were talking motor homes one day and now he’s one of my biggest investors. I’ve got another guy that my wife owns her own company and he was the builder for her salons and he’s one of my investors. You just never know where it’s going to come from. It doesn’t have to be somebody that has millions of dollars. Our private investors can get started with $10,000. That’s it. So just talk to everybody.

Why do you think a lot of investors overlook the private money piece and how do they overcome that hurdle? Very commonly I hear like, “Oh, private money is too much of a hassle to go get or too hard to find.” What would you say to people like that? And the easiest way obviously is to just start and try it, but any other advice that you would give to someone like that that’s in that mindset?

Take action, get out of your own head because if you’re doing that 30 second elevator speech, all you’re doing is setting the seed. You’re not asking anybody for any money right now. And sometimes that’s hard to do. A lot of people that teach private money, they say, “Go talk to your family, go talk to your friends.” I can’t do that. That’s not me. I will talk to strangers about it and introduce what we do. And if they are interested, then at that point, then I’ll lay it all out. We do have prospectus on our company, prospectus on each property that we actually do. So if I get somebody that’s interested, I usually don’t really have a deal right then and there. Sometimes I do, but I’m always talking to them. I say, “When I have a deal, I will bring it to you. If you’re interested, great. I’ll just move to the next person.” And they tend to love that. Because they go on the deed on a deed for deed of trust, they are secure just like a Chase Bank for Wells Fargo is. And when they start understanding the concept, they get it. A big place to go get private money is people that have self-directed IRAs, or if they don’t, their 401ks that they no longer work for that company, have them switch it to a self-directed IRA and use that money. And then it becomes tax-free until they start taking it out. And we do a lot of that. So that’s just another way of doing it.

That’s awesome. What do you think the biggest misconception among investors are about what you’re offering with the rent to own or the newer one that you’re doing? For people that are still in the fix and flip or the buy and holder, what’s the most common misconception with that?

It takes money to buy these properties and it doesn’t. I don’t use hard money to buy them. We do use private money occasionally, but a lot of them we buy creatively and just take over the mortgages or seller finance stuff and it takes very little to get into them. I’ve got one gentleman here that works with me. He just bought a property here probably eight months ago. It’s his very first property. He’s 23 years old, Gary, Indiana, and he needed about $6,000 to close it. He actually asked a buddy one day and said, “Hey, you got $10,000, I’ll invest it, pay you back 12% interest.” And the guy said, “Heck yeah, I’ll do that all day long.” Especially when he goes on as security with a deed of trust and promise right now, it’s just a matter of getting out there and doing it. Just like I just told you about that left after 13 months, he didn’t use any of his old money either. It was all about doing it the right way and making sure everybody’s secured. He used some private money. And some of the deals, they were basically all you had to do is pay the closing costs, which is a couple thousand dollars. Well, that you can bang your credit card on if you have to and you’ll get that right back with the option fee because when we do our lease options, we get an average of $15,000 option fee upfront. So the people, our tenant buyers have skin in the game. That’s the whole idea behind it. I’ve got two portfolios that I run. My average on my portfolio is a little over $650 a door. So that’s payday number two. Payday number three is if they close you out in five years and you don’t become the bank, now you’re going to have a Lyft. If you bought it for 100,000, you’re selling it to them for 150, you got a $50,000 lift on it, plus you got that option fee upfront and the 60 months of $650 a door or whatever it is. But at the same time, you get depreciation. You get appreciation the way our paperwork is written. You get principal pay down and the ultimate is if they don’t exercise their option and go outside and get outside financing, you become the bank and now you’ve got another 15 to 30 years of payment every single month and it’s their baby at this point in time and you’re just the bank. So you lose the depreciation, appreciation, all that kind of stuff, but who cares? You go out and buy some more. So if they close you out, take that money, go reinvest in another house.

Yeah, that’s sweet. I love it. Yeah, it’s cool. I like that model. It’s definitely different than … I’ve heard a couple of people talk about it at Masterminds, but not super in depth. So it’s super cool.

There’s not a lot of us out here doing exactly this. I mean, our avatar is somebody that can’t get a mortgage today for whatever reason. They don’t want to be a renter anymore, but they can’t get a mortgage. Now, if I become the bank, yes, you do have to put them through the SAFE actor. Some people know it as Dodd-Frank because I’m a professional investor, I have to do it or I can go to jail. So you got to do it right. And besides that, if you’re doing seller finance, you want to have what they call papered anyway. So if you want to ever sell that note to somebody else, it’s all papered and been done the right way. So there’s not a lot of people out here doing it. My philosophy is everybody has to have a place to live. And I used to do some multifamily. Do a multi-family, you can make a lot of money, but it is a job. You have to have somebody on site typically, depending on how big that complex is. So now you got employees you got to manage, that kind of thing. And again, you’re dealing with the rentals. If you buy a multifamily in a bad area or at an okay area, let’s say you’re buying in a C area. All of a sudden that area goes to a D, now you got a problem. And I had that happen. And when that happened to me, I went, “Okay, I’m done with this stuff.” Everybody’s got to have a home to live in. I don’t have to do multifamily. Yes, it takes longer to scale. There’s no question, but it just depends on what your goals are and so forth. I personally don’t like commercial because like during COVID, commercial went to shit. And here in Phoenix, it’s still building up. Yeah, warehouse stuff is good, but office space, you can find office space all over the place. So that’s why I don’t like commercial. I like houses. I’ll do it one at a time and slow and go and get to where you want to be. But you think about it, and I don’t look at any of those six or seven ways except for one, and that’s the monthly cash flow. $650. I teach everybody what’s your monthly nut a month. If it’s $5,000, $10,000, whatever that is, how many houses do you have to buy at $650 to make your monthly cash flow and to take care of that nut? Once you have that net done, everything else is gravy. So that doesn’t count the option fee you’re getting and all that other stuff. So that’s what I teach people. And then from there, if you want to go out and buy a new toy, you want to go and buy a motorcycle or a side-by-side or whatever, go buy another house. Let that house pay for that. It’s no different than Rich Dad Poor Debt. It’s exactly what it is. And buy the asset, not the liability.

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Right now, we only use PPC. We have been for the last six years or so. It’s a nice warm league coming in. We actually have two different PPC campaigns. One of them is statewide in the states that we like to be in. The other one is more niched, which is more for the innovation side of it, but we get crossover on both of them, but it’s just so we can play with different markets and different campaigns with the PPC. But it’s just so easy to do with it. We’re getting about one in every 15 leads. We’re writing a contract and we’re getting about between four and every four to five offers, we’re getting the contract. Awesome. Yeah. So it works very well. The matrix are really good for us. We’re getting about a four and a half to five X on it is where we usually run. So it worked.

Yeah, for sure. What mistakes do you often see investors make that you think could be really easily avoided?

Get out of your own head and take action. Quit doing all the studying, just go take action. If you can get in and work with a team, go work with the team, learn what happens in an actual organization. Try not to do it out of your bedroom and stuff like that. And if you can’t do that, you can’t work with a team, then get yourself a coach. Get yourself a mentor of some kind. That’s the only way I got started. And back then, there wasn’t any internet and that kind of stuff. I just got lucky and had a great mentor that I was able to actually partner with for several years. And when I partnered with him, he and I built up a rental portfolio over 120 rentals right in Mace, Arizona itself. And then we ended up exiting it and started building million dollar homes. It was great to have a mentor that knew more than I did. So find somebody that can help you with that.

That’s awesome. Obviously there’s a lot of people that call themselves real estate investors and then there’s really high level investors. What do you think separates the top operators from everyone else in your experience?

The top operators? The ones that I know, and of course Phoenix is full of top operators. They take action, they network, they get around like- minded people. They can push them to the next level. They get into different masterminds. They have their own masterminds and meetups, things like that. And they’re not afraid to talk or share their knowledge with other people. If you don’t collaborate with somebody and you’re trying to keep it all in, you’re not going to get very far in this business. It’s too small a world.

Yeah. It’s funny. We go to a lot of masterminds and you see the same people and everyone. It definitely is a smaller niche than you would think, for sure. Weird. Yeah. When it comes to the word success, everyone’s got their own definition for it and see it differently. How do you define success and then how do you strive for it in your day-to-day?

Success to me is my time with my family, the time that I want to use with my friends, things like that. That’s what success is. It’s not about the money for me. It’s about buying the time back. And that’s what I truly believe and that’s what I try to teach all of our students too, is if you get your monthly net done, you’re buying your time back. You can go make money anytime you want to. You can’t buy time.

That’s awesome. When it comes to challenges, what are the biggest challenges that you’re seeing, particularly in the real estate space right now?

It’s a weird time right now. There’s no question. 2025, I thought it was going to be a little better than 2024. In all honesty, it hasn’t been for us. We’re doing okay, but it’s not any gangbusters. We thought once interest rates started coming down, we’d see appreciation start going back up. None of that’s happened. We do a lot of innovations. And what we’re seeing right now is buyers aren’t buying. Even if it is priced right and price really low, the buyers aren’t buying. So we’re looking at some other avenues and one thing, being in this business for 32 years, you have to pivot when things aren’t going so good or a trend is starting or whatever. And we’re pretty fast to pivot. We’ve already started a couple new things in our office. It should go into effect probably Monday morning. So we’re still doing innovations. They’re just not as fast as we want them to be. And of course, time cycle of money is slow on innovations. We are having problems finding properties to take down for ourselves. Of course, they have to be, we call them rent ready, pretty houses so that we don’t go in and do a lot of rehab. Very little rehab. I’m not a flipper, so we don’t do that. So we know people that are flipping, they’re doing okay. Wholesaling, I don’t know a lot of wholesalers that are truly wholesaling anymore. Most of them are doing innovations, but buyers aren’t buying right now. I have no clue why. It’s just weird. But it’s just part of the ups and downs of real estate.

Yeah, we’re with you. We definitely thought 25 was going to be a little better, but take the punches where we can get them.

Yeah.

The whole new buzzword, AI, everyone’s raving about it. What do you think it’s going to do to real estate? And if you are using it currently, what are you guys using it for right now?

We are using it. I’ll put a plug out to our guy, Steve Train. Everybody knows him in the industry. Real estate disruptors, we use his system. It works very, very well for us. So we’re using it for all of our training, for our acquisitions, and we’re also using it to answer calls after a certain timeframe that our acquisitions can’t get to, and it sets appointments for us. And right now it is working. It works very well. So I think it’s going to make it easier. A lot of people are talking and same thing as Steve. He thinks that eventually we can get away from a lot of our acquisitions except for the final close. And AI can do a lot of that. And I got a feeling it can happen that way because some of the AI we’re using right now of his that’s truly setting appointments, we can go back and read the transcripts and these people have no idea they’re even talking to AI. It’s that good right now, and it’s only going to get better. You got to have it if you’re going to stay on top of stuff.

Yeah. Yeah. We use Steve’s stuff as well. So quick plug, if anyone’s not using Steve’s stuff, we have it listening to the calls and rating the calls. It’s pretty accurate on what we would agree with. It’s pretty good stuff for sure. Let’s say you were to restart completely. Money-wise, you still get your knowledge of what you know now, but the whole business, all your money goes away. What would you focus on first to rebuild?

To rebuild? I would go personally after buying hold stuff. And the only reason I say that is wholesaling is great, but an average wholesaler, at one point in time, they’re making $7,500 a deal, maybe up to $12,000 a deal was about it. With what we do with our buy and hold, I’m getting between 10 and $15,000 on opts and fees up front, but then I also own the property and now I get a monthly cash flow at the same time. I can go out and find those properties about as easy as I can on a wholesale deal. So I would start there. I remember way back, a lot of my education came from Ron LeGrand and things like that, as well as my mentor. And the only thing we used was Zillow, Craigslist, and we were just looking for sale by owners, that kind of stuff. And we’d do deal after deal after deal, and we would only do it in Phoenix. And there’s deals out there like that. You got to go grind, but you got to go grind for wholesale too. That’s where I would start. And if you ran across a deal, didn’t happen to work as a buy and hold, turn around and wholesale it back out. Get yourself a good list of buyers. Here in Phoenix, it’s pretty simple because there’s some middlemen that will dispo for you and take a small cut. And if you gave me $100 to go out there for two or three weeks, I’d make my first deal pretty easy.

Yeah. Awesome. What drives you to keep innovating and keep pushing yourself to strive for that success that you were talking about? Where do you find that inner drive?

I’m a deal junkie. That’s what it comes down to. I semi-retired two years ago and then we hired a lady into our office and with her, she started driving me a little bit more because she came from corporate. And then I got asked to speak onto a community that a friend of mine has. And so I spoke on the community about what I do because not many people do what I do. And he calls me up after me and he says, “Berger, why aren’t you teaching this shit?” I said, “Well, I teach anybody that comes to my office. I don’t want to be a guru. I don’t want to be on Instagram. I’m not one of those guys. I’m too old to sit there and have the phone in front of me and pull that kind of stuff.” So it’s like I don’t do that. And he says, “No, you need to teach this. ” And so the young lady was working for me, they got me, we made a course, all that kind of stuff. Now it’s fun as far as the teaching side of it. But honestly, I’m a deal junkie. I love to take deals that no one else can figure out and figure out how to make them work in whatever creative way we can. That’s what I really enjoy. So I come into the office and they made me bring one or two deals to me a day, maybe not even that, but it’s a matter of working the deals and then teaching students how to do what we do. So that’s what drives me and seeing what they do. Until my wife sells her business, I’m a deal junkie and I’m a workaholic, so I’ll be here.

That’s awesome. That’s awesome. Who has been the biggest influence for you or mentor for you since coming into the space?

My mentor, Dale Hillard. He’s passed now. He was huge. He taught me all the creative world back in 93, and he was obviously probably 15, 20 years older than I am. And so he’d been doing it for years. Ron LeGrand is a big name out there when it comes to creative financing. And so I learned some stuff from him. I got very lucky. Early, early on, I was able to work with his main trainers that live right here in Mesa, and they taught me a ton at the same time, along with my mentor. So those are the ones that really pushed me and pushed me harder. And then that’s where I got out of being a landlord was basically through Ron LeGrand and that team and started doing lease option stuff because I didn’t want to be a landlord anymore and went to that next level.

Awesome. Awesome. Well, where can people find you? Where can people connect with you if they want to learn more?

JonBerger.com. That’s J-O-N-B-U-R-G-H-E-R.com is our website. You can reach me on Instagram, Facebook, YouTube, and TikTok under the same name. And I mean, if anybody wants to talk to me, we do have a course, we can set you up. But before we do any of that, book a 30-minute free call with me and we’ll go see if we can even help you at all.

Awesome. Awesome. Well, thank you guys all for watching. John, thank you so much for coming on. It’s been a pleasure.

Thanks for Having me.

Look forward to talking to you soon.

Absolutely. Thank you so much.

Alrighty. Bye everyone.