Joe McCall Scam? Read This Before You Buy His Programs...

66 Replies

@Jay Hinrichs 100% these can work differently depending on your state laws. However I have done them in multiple States including Pennsylvania and South Carolina, and what I can say is that it is a tool in your tool belt. when you come across a deal that makes sense to make this type of offer you can do it. the laws in your state make it difficult for you to do these types of deals I suggest either don't do them or pick a virtual market in which you can do these types of deals. That's a lame excuse saying I can't do it in my backyard IMO


Originally posted by @Luke Petrozza :
@Jay Hinrichs 100% these can work differently depending on your state laws. However I have done them in multiple States including Pennsylvania and South Carolina, and what I can say is that it is a tool in your tool belt. when you come across a deal that makes sense to make this type of offer you can do it. the laws in your state make it difficult for you to do these types of deals I suggest either don't do them or pick a virtual market in which you can do these types of deals. That's a lame excuse saying I can't do it in my backyard IMO

Exactly some markets this works some its lame to even try it..  you just waste a ton of your time..  

I fund two groups that do these deals and they are both in PA and I do about 20 plus of them a year for these guys. so its real world feedback.. In our markets on the west coast trying to find that unicorn seller that would actually go for this would be a ton of time and effort . Like I said its very market dependent and there has been a lot of abuse on the Investors using this model to sell on lease option knowing full well they will get the house back in a few years .. Just sayin.. I used to fund a group in Detroit in the early 2000s that did hundreds of these just like this.. their average lease options tenant made it 18 months.. And they lease the homes with options without doing ANY rehab. they use us for their acquisition FAST cash then do the lease option. as most of these were institutional owned so leasing them from the lenders who want to liquidate did not work. but the exit was the lease option..

Many ways to make money in real estate no doubt and market conditions do matter.

 

I knew a guy in Rochester who bragged about running a lease to own scam where he would collect option consideration from his "buyer," monthly lease payment for full rental value plus additional consideration representing the rent to own monthly payment. His "buyers" - who could not qualify for a loan because, presumably, they could not convince the bank they made enough to cover PITI payments - inevitably defaulted, and after a few months he would evict and start all over. Is there really any other variation on this merry-go-round or certain failure?


Originally posted by @Darius Ogloza :

I knew a guy in Rochester who bragged about running a lease to own scam where he would collect option consideration from his "buyer," monthly lease payment for full rental value plus additional consideration representing the rent to own monthly payment. His "buyers" - who could not qualify for a loan because, presumably, they could not convince the bank they made enough to cover PITI payments - inevitably defaulted, and after a few months he would evict and start all over. Is there really any other variation on this merry-go-round or certain failure?

EXACTLY Darius its well known in those circles this is why the state of PA is coming out with new laws that will clearly define how the lease option works and treat it more like a seller carry back with Dodd Frank protections.. As i stated above when i first got into funding out of the west coast in 2002 I started in Detroit.. where there were thousands upon thousands of vacant homes.. We funded tradtional turnkey and we funded those that would do the lease option after i bought the asset for them they paid me off short term 60 to 90 day deals on my side.. then they would go the lease with option to buy.. And many times the houses were not touched.. so sweat equity.

there were companies in Texas that would prey on non English speakers.. they trolled BP a few years back.  Also Texas came out with some very strong laws on lease options as well, that is well documented.  Is just about consumer protection act.. 

their model was get CA investor to put up the money.. then sell to non English speaker on terms.. and rinse repeat.. 

So state AG's are getting wise to the abuses and in PA in particular.. as I have 2 vendors in PA that I have funded for years.. who work variations of this model.. But we are just the bridge money.. So I believe they now have a RMLO do their lease qualify and options. There was some very big companies in PA that brought this to the forefront and have created this new legislation to protect the public.

this model works in most areas of the mid west rust belt were there are more homes than butts to put in them.  

your going to have a hard time talking someone who owns a home in Sausalito to lease it to you with an option to purchase. Not saying it cant happen.. But most would just either rent it.. or sell it..  

But all the little burgs out east have these areas of old housing stock and that's my clients sandbox.   So its kind of fun to see how this all works.  

 

Originally posted by @Darius Ogloza :

I knew a guy in Rochester who bragged about running a lease to own scam where he would collect option consideration from his "buyer," monthly lease payment for full rental value plus additional consideration representing the rent to own monthly payment. His "buyers" - who could not qualify for a loan because, presumably, they could not convince the bank they made enough to cover PITI payments - inevitably defaulted, and after a few months he would evict and start all over. Is there really any other variation on this merry-go-round or certain failure?

PS Rochester and Buffalo were ground zero for much of this stuff also there were groups buying those homes for 10k packaging them up and selling them for 80k to investors from England. the city / state finally cracked down on that and there was some folks that got in trouble on the criminal side of it.. you can google it.. wont mention names but you can find it if you dig deep enough

But this is nothing new.. buying hood rates for pennies and selling them for dollars to foreigners and unsuspecting out of state folks. 

I mean look what Clayton Morris pulled off.

 

Yikes I am almost afraid to jump in on this one, however, I know Joe personally and he is not a scammer. He is the real deal and is still an investor.  So am I.  I am not out on the teaching circuit anymore, but I was for 15 years and have written 4 books, and many courses, on the lease option topic (one for the UK), so this topic hits close to home for me.  There are some scammers, you are right, however I wouldn't say 95% are scammers. Here is what I would suggest to see if someone is good - Google their name and see what people say about them knowing that as a teacher/coach you can't please everyone.  Also, for anyone who is serious about investing should buy someone's course on the topic they want to specialize in.  It will help them tremendously - IF they actually follow it and do it.  I would suggest the same thing to my own daughter.

Heck, I have found out many of my members at MREI paid 40-50k to one of the high end "gurus".  Even to them I say, "Well, I wish you found us first and saved 40-50k, however, use what you bought and make millions.  You already paid for it now so make sure you really get your money's worth.  Crush it with investing and one day that will seem like such a small investment to you."  

I hope this helps a little bit.  Feel free to ask me for any additional questions on how the biz of "gurus" works.   

@Darius Ogloza I really depends on one’s intentions. If my intentions were to benefit myself at the expense of others than I could use the lease option strategy to do that. If my intentions are to make a win win situation for everyone then I can use lease options to do that.

Here are some examples of making it a win win situation. We had 3 tenant buyers exercise their lease options in October. One of them stepped into 175k of equity, another into 70k and the other was able to walk into 40k of equity. So first off I would like to tell you that I had no idea that appreciation would happen like it has over the last few years. But secondly, we already build our profits into the deals and we made probably 160k among those 3 properties over a 3 year period of time with very little effort to manage once the tenant buyers were placed into the home.

So yes, it is possible to make lease options very beneficial to everyone.

Originally posted by @Wendy Patton :

Yikes I am almost afraid to jump in on this one, however, I know Joe personally and he is not a scammer. He is the real deal and is still an investor.  So am I.  I am not out on the teaching circuit anymore, but I was for 15 years and have written 4 books, and many courses, on the lease option topic (one for the UK), so this topic hits close to home for me.  There are some scammers, you are right, however I wouldn't say 95% are scammers. Here is what I would suggest to see if someone is good - Google their name and see what people say about them knowing that as a teacher/coach you can't please everyone.  Also, for anyone who is serious about investing should buy someone's course on the topic they want to specialize in.  It will help them tremendously - IF they actually follow it and do it.  I would suggest the same thing to my own daughter.

Heck, I have found out many of my members at MREI paid 40-50k to one of the high end "gurus".  Even to them I say, "Well, I wish you found us first and saved 40-50k, however, use what you bought and make millions.  You already paid for it now so make sure you really get your money's worth.  Crush it with investing and one day that will seem like such a small investment to you."  

I hope this helps a little bit.  Feel free to ask me for any additional questions on how the biz of "gurus" works.   

Bottom line is nothing is new in real estate transactions or how you put them together its is only new to folks with no back ground in real estate.. And everyone gets their training somehow..  be it 1,500 dollar on line basic packages  20k package  50k package etc. its a huge business the training business but it is a business.. My wife was a trainer for years for Floyd Wickman ( he is a MI guy)  .   

The bottom line is probably 70 to 80% or more of folks that buy any kind of training never really implement.. Or they try for 3 months have no success and quit..  One thing that is known on the real estate brokerage side is if your going to change careers you need at LEAST one year of living expenses for your ramp up ..  

The other issue is the changing laws.. we see this in the how to wholesale houses course.. reality is in Many states its just plain illegal to do what the how to wholesale gurus teach.. just is.. but no one wants to hear that until they get turned in that is. 

Illinois finally took the step to make it very clear you need a license to sell or market real estate you do not have title ownership to.

those hiding behind  ( hey i am just selling a contract) that does not fly when run up the regulator flag pole. 

And of course I am just talking in general not about any specific trainer program etc.. I mean I followed Dave Del Dotto and Carlton Sheets.

Del Dotto got seriously rich and ended up buying wineries in Napa Valley and one was right across the street from my home.. So met him in person and drank a few glass's with him over the years.. he kind of started the reality TV late night TV gig.. 

Then you have all the TV shows that glamorize flipping etc.. so its no wonder there is so much interest in real estate right now.

Then you have the I quit my day job to be a full time investor.. And that is the ultimate in being self employed and its cool when folks can pull that off.. But there are certain skills you need.. to be successful and not everyone has the intangibles.

LIke all sales   there are top producers  there are middle of the road and there are some that just are never going to do it for various reasons. 

 

Originally posted by @Shiloh Lundahl :

@Darius Ogloza I really depends on one’s intentions. If my intentions were to benefit myself at the expense of others than I could use the lease option strategy to do that. If my intentions are to make a win win situation for everyone then I can use lease options to do that.

Here are some examples of making it a win win situation. We had 3 tenant buyers exercise their lease options in October. One of them stepped into 175k of equity, another into 70k and the other was able to walk into 40k of equity. So first off I would like to tell you that I had no idea that appreciation would happen like it has over the last few years. But secondly, we already build our profits into the deals and we made probably 160k among those 3 properties over a 3 year period of time with very little effort to manage once the tenant buyers were placed into the home.

So yes, it is possible to make lease options very beneficial to everyone.

YUP timing is important.. And this is so market specific..  

there are times in every cycle for certain strategies.  And maybe we have another coming up with Covid 

if you have some self employed end up with bruised credit because of what's happened I could see this happening again.

although we know that appreciation was on fire since 2012 when things hit all time bottoms..

Although on devils advocate  lets say the houses never went up . ?  and the lease is due.. how many do you think would be able to exercise their options if they did not have appreciation on their side to add as equity ??  in many markets I think this is more the case than where you did your deals  ( congrats by the way !!  )  

 

@Shiloh Lundahl @Jay Hinrichs
Shiloh: I am not so sure your example truly describes a win-win scenario.  As you concede, you and your tenant buyers made opposite bets on appreciation over the 3 year period in setting the option price.  Had your bet been more "correct," the tenant buyers would have walked into little or no appreciation as the option price at the time of exercise would have reflected the true market price.  For your buyers to "win," you had to "lose."  The fact that you profited from the arrangement over the 3 year option period ameliorates the "loss" you experienced on sale but I think you would agree with me that every dollar left on the table is better characterized as a loss than as a win.  

Nonetheless, I am not out to impugn anyone's intentions and I do understand (as Jay rightfully points out) that the self-employed (my situation for the past 20 years) especially run into times in their lives when conventional lending sources are of no use due to limited reportable income and other factors (such as when, for example, you retire in your 50's and begin to live off of your lines of credit, etc.). My concern is that a lot of younger, inexperienced and unsophisticated folks get fooled into believing that their hard earned money is going to "buy" property in these kinds of arrangements (i.e. believing they are not "throwing money away on rent") whereas throwing their money away on rent + even more money should the option fail is a better description of what is actually happening. My hunch is that more often than not, saving money and getting your ship in order to qualify for an FHA loan is the best and most realistic ladder to homeownership for the vast majority of people.

@Ryan Phu

A very close friend of mine was a chronic failure in every business he undertook. Now he is doing better because he is a “guru”. He now gives motivational lectures and seminars. To be fair he knows how he lost a lot of money but he never mentions his mistakes or flops or talks about that, he just pulls out fictitious stories about his investing and life success. He is my friend and I like that he is doing well. Is he doing right? Maybe not.

Most gurus are just that. If they were successful investors they would be busy investing vs teaching courses. Plain and simple.

Originally posted by @Justin Thorpe :

@Ryan Phu

A very close friend of mine was a chronic failure in every business he undertook. Now he is doing better because he is a “guru”. He now gives motivational lectures and seminars. To be fair he knows how he lost a lot of money but he never mentions his mistakes or flops or talks about that, he just pulls out fictitious stories about his investing and life success. He is my friend and I like that he is doing well. Is he doing right? Maybe not.

Most gurus are just that. If they were successful investors they would be busy investing vs teaching courses. Plain and simple.

Well said. They sell the dream and leave out the fact that they never realized a comfortable lifestyle by doing what they are suggesting others do. For some people they take the motivation and it helps them Have a greater drive and encourage. Plain and simple some students end up doing much better than their teachers, because they actually do the stuff.

 

Ryan, Thanks for the thorough post. When getting started it is important to know which programs offer value and which are more of a money-traps. I will steer clear of McCall's programs. Thanks again for the warning. Quick Question: do you of any programs that offer great value Thanks - Trey (new guy)

Your experience was exactly mine.  Though there is some good information, it can be had for free elsewhere.  The course is a (clever) up-sell, in my opinion.  The refund terms are either deceptive or not clearly articulated.  Take your pick.  I'm not saying you can't be successful using this system, but why would a "guru" not focus 100% of their time doing deals rather than selling courses?  Secondly, why would they create competition for themselves?

On the positive, your losses are light.  Stay on Bigger Pockets, listen and read and you'll get some education on the cheap.  I am skeptical about gurus, because real estate professionals who are truly successful are busy working their own deals.  This guy is an "educator" of sorts.  

Originally posted by @Sam B. :

If they were good at real estate, they'd be in real estate, not education.

Exactly. Real investors make a lot more money in REI than education. gurus can not make money in RE, so they call themselves gurus and try to scam people.