How I Got Started As A Real Estate Investor


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How I Got Started As A Real Estate Investor

Joe: Hey, my name is Joe Crump. I’ve gotten a lot of emails asking me to tell my story, a little bit about how I got into real estate investing, and how this process works, some of the things I’ve been through, some of the experiences that I’ve had and mistakes that I’ve made over the years. And a little bit about that I’m doing right now.

Joe: I started real estate investing back in 1986. I was working in Los Angeles on film crews and I’d gone to film school and I got a degree in filmmaking and I wanted to do that for a living. And I was working on these crews as a grip. I was making about $60,000 a year working as a grip, a union grip, a union that’s now defunct called NABAD. And we did lighting. Basically, we were the ones, you know, tugging around the, we’d mold and shape the lighting in a film.

Joe: So, one day I was sitting on the dolly with the first camera assistant and he was telling me about his house that he owned there in Los Angeles that had gone up in value that year more than both he and I had made in that year. And I said, wait – you just own this property and it’s gone up in value and you’ve made this much money just because you own the property? And he said, yeah. I said, I’ve got to look into this.

Joe: So I started asking everybody I knew about houses and real estate and I started looking at the market. And the market was crazy good back then. This was in, you know, the late eighties of Los Angeles. It was just booming. It was a bubble market. And so I started, I decided was going to buy. And I bought my first house out in Lancaster. I didn’t know what I was doing, I didn’t know what I was going to do with the property. I didn’t want to live in it. It was an hour away from where I lived. But I knew that I could afford it, I could qualify for the property. It was a, I don’t know, about $100,000, $106,000, something like that, was the value of it at the time.

Joe: And I was able to get a mortgage on it because I had a good job and it took them four months to build. And during that four months that it took to build, it went up about 25% in value so now it was worth $125,000, $130,000. So, I said, you know, I can put a tenant in here, but I could also just sell it. So I turned around and immediately sold this brand new construction home. A real estate agent did it for me and we sold it and I ended up walking away with about $20,000 in profits, which I thought, this is cool. I didn’t really do anything to make this happen and I just made $20,000.

Joe: It would have taken me a third of a year to make that in my regular job. So I immediately took that money and I thought, oh, which if I bought a property that was under market value? What if I bought a property that maybe needed some fix up, and I could fix up and add value to it? So, I bought another property. This time it was a VA foreclosure. I got another loan and did it again.

Joe: And this time I made about $40,000. Fixed it up, my girlfriend at the time who’s now my wife, she and I fixed up the property and we turned around and sold that property and I made another chunk of money. And then I started buying more properties. We bought some properties out in San Bernardino. And then I got an opportunity to start building properties. And we decided, okay, let’s build properties up in the Hollywood Hills. And we started building these beautiful, you know, 5,000 and 6,000 square foot houses that were anywhere from, I don’t know, $500,000 to about $1.7M in value. So we built these big houses. And within three years I had about $17M worth of properties and with a good deal of equity in those properties.

Joe: But, when 1990 came around, the markets dropped because of the S&L crisis that happened. And the values of the real estate dropped. So it dropped about 30%. And because of that, it wiped out all the equity that I had in those properties. Which wouldn’t have been a problem if we’d continued to build and the values had gone up a little bit – we would have been fine.

Joe: But the banks came to me and said, “Joe, since you don’t have enough equity in these properties, we have to take the properties back, or, you have to come up with more money.” And I said, “I don’t have more money to come up with.” You know, there’s no way I can come up with that much equity. It was all in my properties.

Joe: And they said, “No, I’m sorry, we’re going to have to take it back.” So, they took my properties back. They foreclosed on me and took all those properties back and wiped me out. I had dump trucks, I had concrete forms, I had a bulldozer, I had all sorts of junk that I’d purchased. I had a big infrastructure that I’d built. All on borrowed money, by the way, which was my big mistake.

Joe: So, they took all that back. I had to file bankruptcy. We left Los Angeles. I moved back home and moved in with my parents. It was that bad. I lost my cars, I lost everything. And my wife and I were married by then, and we had a new baby, a thirty-day old baby son. And we had moved in with my parents who, I love them dearly, but, you don’t want to move back with your parents when you’re thirty-two years old, you know, most of the time anyway. At least I didn’t.

Joe: So, I went to work and I tried to become a real estate agent. So I got my license and I started learning how to sell real estate as an agent. And I really felt that I had sort of hit rock bottom. This is the worst thing that could possibly be doing. But I found out that I was actually pretty good at it and that I actually enjoyed helping people find a place that they could call home. So, I became a top producer and while I was doing that I started looking at other ways that I might be able to invest even though I didn’t have a ton of money to invest and my credit was completely trashed. There’s no way I could do that, so I had to do techniques that didn’t require any money, didn’t require any credit, and just required my knowledge and my ability – which I had quite a bit of because I learned a lot from what I did in California.

Joe: I just had to learn not to use loans. So I restructured how we did it. And we started coming up with a whole hierarchy of zero down structures, which is what I teach now. That zero down structure hierarchy is in a lot of these videos that are on my blog, so go take a look at the blog and it’ll give you all the details that you need on how to actually do those techniques.

Joe: I got to the point, I think, with my business that I sort of came back. I built a portfolio again, I bought all these properties. This time, I didn’t use banks. I didn’t use my credit. I structured it better. I structured it in a way that it’d be harder to take those properties back from me and I did not count on appreciation when I purchased properties. Everything was based on building value into the properties when you buy them. So, making sure that you purchase them right and then have a good exit strategy when you sell.

Joe: And because I changed that strategy of the way I was doing it, I made a much more stable business. And then when 2007 and 2008 came along when everybody else was crashing and every real estate investor I knew was, you know, going through bankruptcy again it didn’t hit me that way because my business was stable. My business wasn’t built on that kind of debt. It was built in a different way and basically on seller financed debt rather than on bank debt. It didn’t require credit, it didn’t require any money into it. I could have given those properties back to them if I’d had to, but I didn’t have to and it wouldn’t have hurt my credit.

Joe: So, I was able to hold on to those properties during that difficult time and then I also was in a position by then to be able to buy other properties that went on the market during that crash for 20¢, 30¢ on the dollar. So I got some really amazing deals during that time as well. We still get great deals, but that was an amazing time because there were so many properties that had gone through foreclosure and the banks had a lot of properties they were trying to unload. So, now it was my turn to take properties from the bank rather than vice versa.

Joe: So, anyway, I’ve come to a time in my life now where I have a lot of freedom. I probably put in an hour or two a day in my business, in my real estate investing business. And I’m able to do that because I’ve automated most of the things that we do. All the things that I haven’t automated I’ve outsourced. There’s some things you have to have people to do. So I’m able to automate about 90% and I use a system that we developed for that very purpose called You can go check it out yourself. And you can use the same type of business system that I’ve used to be able to build your own business and model it after the one that I’ve built.

Joe: So, all that, 90% of that business, of that work, can be automated. The other 9% we’ve outsourced. So, I’ve got people that are helping me do different things, property managers, you know, agents, other people that I work with that help me through that process. Contractors. And then 1% of that business is what I have to do myself. I still sign my own contracts. I still review everything. I’m still the one that creates the strategy as we move forward in the business and makes sure that everything is on track.

Joe: And I want to continue to do that. I want to continue to do that until the day I die because I find it interesting and it’s fun and I don’t have to do any of the hard work any longer because it’s all laid out for me. I just have to stay ahead of it. I have to keep thinking ahead to see where it’s going next. And most of the things that we do, most of the techniques that I teach are evergreen. We’ve been using these techniques since I started using them from the beginning. And they still work today. We’ve made some modifications because of what’s happened with the internet and the incredible things that we can do now as far as marketing. The internet has saved us so much time and so much money. And because of the automation that we have which has been a huge game changer for us.

Joe: So, that’s left me the ability to do other things in my life. And so I decided hey, I’m going to go back, you know, the reason I got into real estate in the first place is because I wanted to be a filmmaker. And I had gotten to the point where I’d written about a dozen screen plays. I’d actually gotten one picked up by 20th Century Fox at the time, and I even came home one day with a bottle of Dom Perignon to my wife and my sister who was living with us at the time, and said, “I think I’ve sold my screen play.” And it was, you know, a celebration. I was going to make $350,000, it was going to be great.

Joe: That fell through. And it so humiliated and demoralized me that I said, “Enough of this. I’m going to make my own damn movie instead of trying to sell it to somebody else.” And that’s one of the reasons that real estate seemed like a realistic way to make that happen.

Joe: Well, it took me about fifteen or twenty years and I finally got back to making movies. And I made a documentary. It’s called “Children of Internment.” It’s on Amazon, you can go check it out. It’s about Germans who were interned during WW2. Everybody knows about the Japanese that were interned, but not very many people know that Germans and Italians were also put behind barbed wire fence in the United States during the war. So that’s a documentary, a feature-length documentary on that. I did that with my sister.

Joe: And then I wrote, co-wrote and directed another film. This time it’s a story. It’s a narrative film that’s called “The Storyteller,” and it’s also on Amazon. And it’s about a magical little girl and it was so much fun to make these movies and to do this work I decided this is something I want to keep doing for the rest of my life.

Joe: And so I’m continuing with that process. I’ve got other things in my life that I love to do. I love to travel. We go, you know, to Europe pretty frequently. Went to Japan not too long ago. Went to India for a trip, took a motorcycle trip with an old friend and we went, traveled around Rajasthan and went to Pushkar for the camel fair. So, had a great time. When my kids graduated college we went to Japan and went to Tokyo and Kyoto and went all over the place on those bullet trains and saw the sights.

Joe: So, we have the freedom to do that now because of the business that I was able to build. And I would suggest if you’d like to have that same freedom, that you could build your business the same way. And beyond all these other things that I get to do because I have this real estate business, the most important thing that I’ve done with all this is that it gave me the ability to be at home and to be able to watch my children grow up. So the entire time that they were growing up, I was working at home. I’d be there when they got home from school. I’d be able to go to all their, my daughter’s dance productions.

Joe: I’d be able to go to do all the things that my son wanted to do, and be able to spend time together as a family and get to know them. You know, they say that quality time is really important with kids, and I agree. But, you know, nothing can beat quantity time. It’s really hard to get to the quality time unless you have the quantity time. And if you’re working all the time, if you’re putting in 50 hours a week, you know, as a real estate agent, which is what I did for a while, it was hard to be able to be home.

Joe: But, so, being able to come home and work at home, have my own office at home, be in control of my business at home, have time and control of my time, that made a big difference in my life and made it possible for me to start thinking strategically about how to get where I’m at now in my business. I still have lots of dreams about where I want to go and how I want to grow and the things I want to accomplish. That never goes away. And it should never go away. I don’t think I’ll ever retire.

Joe: One of the things that gets me excited now is being able to work with my mentor students. I have a six-month mentor program where I teach people how to build a business like mine. How to have control of their own business. How to start from scratch and step by step by step you know, do this, do that, follow this, make this call, do these things. And if you do those things you’re successful. I go through about 120 mentor students a year. So, about 60 of them are in my six-month program at any particular time.

Joe: Out of that group, 30% of them will make money. They tell me that 5% is normal for these kinds of programs, so, I guess I’m 600% better than average. But, I can also tell you that 100% of the people who get in that mentor program who do the work as I lay it out for them succeed. Everyone who does the work will make money. It’s very rare that I see anybody that goes through this program that doesn’t make money if they do the work.

Joe: So, that’s the goal. That’s one of the things that kind of drives me forward to keep teaching this, to keep doing these videos, these YouTube videos and these videos that I’m sending out to try to train people about this. It really is a satisfying life when you can help other people.

Joe: And I think one of the things, the major things that I try to teach my students, and most of them come into this program with this mindset, but, it’s an idea of service within your business, where you’re helping other people and you’re making money because of the solutions that you’re providing. I’ve found that when things were the darkest for me, when I first moved back to Indianapolis after I’d lost everything, and feeling so sorry for myself, and all that self-pity and all that stuff. You know, you’re thinking about yourself and oh, woe is me.

Joe: But, when I was able to take my eyes off myself and put it on somebody else and say this person here, I can help them. I can solve this problem for them. I can help them find a house that they’re not going to be able to get on their own. If I can do that for them, and focus on their problem and not think about myself, then I’m going to make money. And that money will come as a natural extension to me helping others.

Joe: So, the idea of you know, doing well, doing good, or something like that. You know, it’s just the idea where you put out good things into the world and good things come back to you. And it has proved to be true for me. And I think that it would work for you as well.

Joe: Anyway. That’s my story. I’d love to work with you if you’re interested in getting into the mentor program. You might also take a look at the Automarketer. That’s something that I didn’t talk about a lot about here, but I talk a lot about on my blog, that has a lot of training materials on how to use it and how to build a system and how to build a business that you can proud of, that treats people well, that works for you know, people other than just for you. It doesn’t take advantage of people. You can sleep at night. And you can serve the world by doing it.

Joe: Anyway. I hope that explains it. All right. Thanks for listening.

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