JF2281: From Shadowing To Full-Time Investor With Jon Schoeller
Jon is a real estate investor out of Charleston, WV. Over the past 4 years, he has flipped over 150 houses with his partners and he has an additional 100 in his holding company. He owns, operates, and partners in 8 different businesses. His passion is teaching others how they can reach financial freedom while doing what they love.
Jon Schoeller Real Estate Background:
- Full-time real estate investor, co-owner of multiple business, and financial coach
- Has been in real estate for 3.5 years and 13 years in business, coaching for 6 years
- Portfolio consist of 115 flips and over 100 rent-to-own
- Based in Charleston, WV
- Say hi to him on Youtube at Jon Schoeller
- Best Ever Book: The subtle art of not giving a F
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Best Ever Tweet:
“Networking, don’t just shake hands, get around successful people and stay around them” – Jon Schoeller
Theo Hicks: Hello, Best Ever listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today we’ll be speaking with Jon Schoeller.
Jon, how are you doing today?
Jon Schoeller: Good. I appreciate you having me on.
Theo Hicks: Absolutely. And thank you for joining us. A little bit about Jon’s background — he’s a full-time real estate investor, a co-owner in multiple businesses, as well as a financial coach. He’s been in real estate for three and a half years and business coaching for 13 years. His portfolio consists of 150 flips, as well as over 100 rent to own. He is based in Charleston, West Virginia, and you can say hi to him at his YouTube channel, which is just his name, Jon Schoeller.
Jon, do you mind telling us some more about your background and what you’re focused on today?
Jon Schoeller: Yeah, so I guess real quick, to clear up one thing, I haven’t been in business coaching for 13 years. I’ve been in business for 13 years. I’ve probably been coaching people or helping people with their finances and business for six years now. But yeah, I got started when I was probably 21, 20-21 with my first company, it was a moving company. The funny thing is actually just on my Instagram story yesterday somebody asked if I ever had a full-time job or a W-2 job. And yes, I had several before I turned 21; at Burger King, and Arby’s, and a golf course, and as a mover for another moving company, and a dishwasher… And I got fired from all of them. I was not a very good employee. And I tried to go to community college to get my business degree, because I knew I liked business, but I was very poor in school. I just couldn’t pay attention, couldn’t sit still.
So I was working for a moving company at the time. They were a startup and they were behind on payment. They weren’t managing it very well. They probably hadn’t paid me for two months at this time. And one of their contracts said, “Hey, Jon, we like you a lot. If you go get your own truck, we’ll give you this contract.’ And I took the gamble. I borrowed $5,000 from my best friend at the time, still my best friend and I went bought a truck a couple states away, brought it back, pulled it up the door; it was a mattress company that the moving company was delivering for. I took that contract, and then slowly took pretty much every other contract as they slowly died off, the other company, and built that into a pretty sustainable and pretty substantial moving company. I ran it for about nine years. I sold that to a friend.
I traveled around the US, around the world really, but around the US, living with my wife, who was a nurse and who was doing travel nursing. I was in mini-retirement; that was not sustainable for my mindset and how I can’t sit still; I need to feel useful. It didn’t matter about the money, if I had money or not. I needed something to work on. I had always researched real estate a little bit. I started diving into it more. I tried to dabble in it while we were travel-nursing, but we were travel-nursing in places like Maui, Palo Alto, California, San Francisco, LA… And I had money—we used to joke, we had money, but we didn’t have Maui money.
So from there, we came back home and she applied to [unintelligible [00:06:15].22] school. She got into nursing [unintelligible [00:06:18].02] school, we went backpacking in Thailand and Europe in the meantime. We knew she got accepted here in Charleston, West Virginia, I researched the market before we came. I ran across a few flippers; Steven Andrew, my now partner, was being one of them. I asked if I can meet up with them just to talk one day; that led into me asking if I could shadow him for a couple days. I went in one day to shadow them, never left; three and a half years later we have flipped 120 homes together. They were operational before I got there; they had flipped about 30 or so home before I got there, so 150 in total. We have 100 homes that are rent to own, and we’ve just grown from here. And we have several employees and an office space, and now the thing that is holding us back—well, not really holding us back, but the next step to grow is we’re looking for more private money so we can keep buying more deals.
Theo Hicks: Perfect, Jon. Thank you for sharing your background. Let’s talk about the rent to own first. So most people know what rent to own means. Do you maybe want to explain exactly how you are doing it? Because I know that some people have different rent to own strategies… So what’s your strategy? You find a deal and then you decide that you’re not going to flip it, you’re going to rent to own it… What do you do at that point?
Jon Schoeller: So like I said, I have two partners, Steve and Andrew, and the rent to own part of this business was Andrew’s brainchild. When Steve and him got together, he brought those into the company and we’ve grown it to what it is now. And like you said, there’s multiple ways to do rent to own; it’s also called a land contract. It depends on where you’re at and what you want to call it. It’s interchangeable for the most part, until you get down to the nitty-gritty.
But yeah, you’ve got a couple ways – you can just do straight rent to own if you actually own it outright. You can do a land contract that way too, where you just basically let somebody give you a down payment on a house that you own outright, and you let them essentially pay payments to you, and you give them a year or two to refinance. If they don’t refinance, then you have to move on to the next one, depending on how [unintelligible [00:08:12].23] you are, and you collect another down payment and do the same. Now, the goal was to get them to refinance.
The other option, which we do a lot of, is where you find a house and you can’t flip it, there’s not enough equity, it won’t work for that area, whatever the case may be, and you take over the mortgage and taxes of the original seller and you assume all that responsibility, and then you in return find a buyer to come in and essentially do the same, but for a margin. So if you agreed to buy the house from the first seller for $50,000 and cover their mortgage at $400 a month, you need to turn around and find another buyer for $70,000 and $700 to $800 a month, and there’s your spreads and that’s how you make the money on these deals.
Now, everything I just said is way easier said than done. There’s some legality to it, there’s some complications to it, there’s always the possibility of the bank calling the note, which you should not ever have to worry about if you are paying the bank on time, no reason to call loan due if the bank’s happy. So you do need to have all your ducks in a row to do this. I call this a more advanced strategy. This is not something I tell most people to get started with. I usually steer them towards wholesaling or flipping to get started, or even a small rental portfolio or multifamily. But this is just something that kind of just grew organically, and we’re in a very good area for it.
Theo Hicks: Perfect. So you will rent to own out your properties, as well as you will acquire properties. I actually hadn’t heard that second one before. It’s kind of like a rent to own wholesale type deal, isn’t it?
Jon Schoeller: Yeah, it is like a rent to own rent to own.
Theo Hicks: Yeah. [laughs]
Jon Schoeller: Well, it’s essentially what’s called a land contract where the current mortgage is still in place from the first people. Again, the definitions vary state by state. There is a set definition for them, but people just call them different things. Most people when they think of rent to own, they think their money that they pay each month is going towards the potential ownership of the house, and they’re buying that directly from the owner themselves. But the way we do it, a ton of other people do it, too. In fact, Andrew learned from a guy that has thousands of them. So we’re not the only ones doing this. It’s nationwide. But you do have to be careful because some states are not as lenient as others.
Theo Hicks: Let’s talk about your coaching business for a second. I want to talk about it from the perspective of someone who’s listening, who has some experience in real estate and wants to start teaching others. So they don’t want to have a coach, they want to be a coach; maybe walk us through the conception of your coaching business. Did it just kind of happened organically, or did you set out to say, “I want to start coaching,” and that’s how it started?
Jon Schoeller: A little bit of both. So with 13 years of business experience and my passion for teaching and just educating others, I just do it anyway. Anytime somebody asked me a question, I help. And after a while, you’ll notice you’ll get more and more and more questions, which means that’s your demand. And anytime there’s a demand, you want to give us a supply; that’s how businesses are created. So I knew I had a demand there, so I offered my services.
Now, this is very part-time for me because of how busy I’m. Jon Schoeller Consulting – initially, the idea of that was to do that full-time, just go business-to-business. Well, that’s kind of how I came in with Andrew and Steve, and that grew into a full-time partnership to doing that full-time, so I really couldn’t take on dozens of clients. I have multiple now, but I have to know you’re serious and want the coaching. I’m not as expensive as some of the guru’s, but I’m not cheap either. I know the value I bring and I know if you listen to me, your ROI will be through the roof. But I need to know that they’re serious.
I used to charge $50 a phone call and then $200 to help you for a month, just because it was side money. Well, I don’t want to sound arrogant, but eventually, you don’t need that side money as much anymore; your time becomes more valuable. That’s how everybody should grow and how I tell everybody to grow.
So now if somebody wants it, they have to pay for it. And it could be one consulting call and it could all lead to a six months checking basis to get your business off the ground or corrected. I also come in hands-on on some businesses and I help them straighten out the books.
My strength is finances and strategizing with money. Next would probably be marketing and relationships. And then after that, brand awareness and stuff which could fit inside of marketing… But my main strength is finance. That’s what I teach the most. And I do just coach people on their individual finances. So I call it finance and business coaching all in one. And if you want to do it, you need to just tell people that that’s what you’re doing; people won’t just assume you’re doing it. You need to tell people that you’re doing it. What you charge will be very arbitrary.
Theo Hicks: So a few follow-up questions there… So you said that, it kind of started off where people would ask you questions and then you would be happy to help, you’d answer them. Then you started getting a continuous increase in questions, and recognized that as a demand, and then the supply would be your coaching.
So I kind of want to get more specific, because if I wanna to start a coaching program, obviously I need to have this demand. So where were these questions happening? You weren’t just walking on the street and some random person was like, “Hey, Jon, how do I invest in real estate, or how do I start a business?” So this thing’s on social media? And then where are these people coming from, that are asking these questions originally?
Jon Schoeller: Yeah, so like I ended my last statement with, you have to let people know. That can be as simple as a Facebook post. Just make sure that you have some credibility. Look, if you only been in business on your first business for three months, I’m not saying you don’t know anything, but there’s a lot to learn out here. I probably know about 20% of what somebody that’s 40 that has been doing this longer than me. You can constantly be learning, but you need some sort of wealth of knowledge before you start steering people, especially when you’re talking about their livelihoods. Because at the end of the day, that’s what you’re coaching. If you’re teaching people about their finances or about their business, this is their livelihood. And if you give them the wrong or incorrect information, you could cost them years of their retirement or years of their life of investing in a business and steering it in the wrong direction.
But yeah, social media is huge. I’m all over Instagram and YouTube and Facebook, and I’m constantly giving free advice. And if you give value, you will receive value. And I’ve always believed that. Gary Vaynerchuk talks a lot about that. So I’m constantly giving the advice. And then of course, it’s all general advice. Like, I can tell people to save money, but they don’t know how to save in their specific situation. I can tell people to contribute to an IRA, but they don’t know how to contribute to an IRA for their specific situation.
So by giving away information, I’m still not giving away all of it, because everybody needs their own individual advice. So people who are scared to like, “Oh, if I’m not going to give this information out for free then I’ll never have clients.” That’s not the way it works. Clients have individual needs, and that’s why they come to you. They don’t come to you because you gave general advice. The general advice shows that you have credibility and you know what you’re talking about.
Theo Hicks: So you got to a point you’ve got people wanting to hire you as a coach, you said that now since your time is very valuable, you can’t just take on everyone. So what types of things do you do to screen people to make sure that they actually are serious?
Jon Schoeller: So the first thing I say to somebody is email me, and usually you can knock out about 90% of inquiries just that way, because people won’t take the action to actually email you. The next thing I do is a follow-up email. So I’ll ask questions in that email and I see how long it takes you to respond. So if you send me the email, great, I’ll write back, and I’m somebody who’s very diligent about responding, to my timelines. I don’t know if I’ve ever missed an email for more than 24 hours… Unless, of course, I might go on vacation or out of service or something. But I get back to you. And if it takes you a week to respond to me, you’re not serious.
And look, there is outside circumstances like, “Hey, I got in a car accident right after I messaged you.” So then of course. But if you’re just willy-nilly just answering emails a week later, you’re not going to stay in business very long. So I need to know that you’re serious, and that would be the first advice I would give them back. And sometimes I do that; free advice right away – respond quicker to your clients and to the people you’re networking with. People want diligence, they want you to be on time and punctual.
So once they respond to that second email, I will offer them a service of a consulting call; the consulting call does cost – I usually say like 100 bucks or something like that. That’s an arbitrary charge. I used to charge nothing for consulting. But then sometimes I would set up a call like this at six o’clock and nobody shows up. My time is valuable, so if you don’t show up, at least I have $100 for my time. And it also keeps you accountable. If you pay $100, when you’ll show up, you’ll probably get more value out of it. So I do charge for the consulting call. I give a ton of value in that consulting call. I’ve solved many people’s problems just in that consulting call, which cost me money in the long term. But I do that. And then we just start from there – if you need one more in-depth call, or if you need something like weekly calls for six months, and that’s the call that determines that.
Theo Hicks: Very, very interesting. All right, Jon, what is your best real estate investing advice ever?
Jon Schoeller: Networking, and let me dig into that for a second because I know that that term is very general and overused. Don’t just go shake hands; get around these people and stay around them. I would not be where I’m at today if Steve and Andrew did not accept my invite to come shadow them and I did not reach out to them. So credit on both sides. But if I was not with those guys and asked to shadow them and I didn’t stick around in the beginning for as long as I did, I could be down to two flips, four flips instead of the 120 and the over 20 something that my wife and I have invested on personally.
So get around the people that are doing what you want to do. If you keep talking about it with somebody not doing it, y’all will do that inevitably. Get around the people that are doing exactly what you want to do and stay around them, whatever that takes.
Theo Hicks: All right, Jon, are you ready for the best ever lightning round?
Jon Schoeller: Okay, let’s do it.
Theo Hicks: All right.
Theo Hicks: Okay, Jon, what is the best ever book you’ve recently read?
Jon Schoeller: It’s hard to say a best ever book, but the two that I suggest lately – because I feel like a lot of people get stuck in their own head, including myself… But there’s two books, I have to beep out both of them, because it’s on a podcast, but it’s The Subtle Art of Not Giving a F*ck and Unf*ck Yourself. Both books are phenomenal. A lot of us carry with us a lot of baggage from being young, or we were picked on in school, self-consciousness issues, we’re not good enough, imposter syndrome, where even if we are good enough, we don’t think we are… You’ve got to get that stuff out of your head. I work on this on a daily basis. I’m not perfect at it, but I think that people read those books and should read them at least every six months or so, or read through the notes. It really helps you get out of your own head and get out of your own way. Because at the end of the day, sometimes we’re our own biggest obstacle.
Theo Hicks: If your businesses were to collapse today, what would you do next?
Jon Schoeller: Impossible. They might collapse in the way they look today, but you have to be able to maneuver, you have to be able to bend with the market and move, and that goes for any business. Now, I say impossible because I don’t want to think of that. I guess it is possible. But you need a quick plan B and you need alternate sources of income if you have a business, and that’s something you should be constantly working to. Look – at first, when you start a business, you’re all in, and you should be; you should be completely focused on that.
Another great book is The ONE Thing. Stay focused until you have mastered that thing, and then move on to another one. But you should eventually build alternative incomes and diversify yourself. So if one business were to collapse, you have something else to lean on until you can build that back up again, or move on. But you just need to be constantly malleable with the market and the changing times.
Theo Hicks: Tell us about the best ever deal you’ve done.
Jon Schoeller: The best ever deal we’ve done is probably under contract right now. I don’t want to get ahead of ourselves, but it’s going to be our largest profit I think to date, on a flip. Some people see these profit margins on every flip. But we’re in an area where it could be $80,000 to $100,000 for us, and we’re in an area where that’s few and far between. Our average margin is $30,000 to $40,000 per flip; that’s why we have to do so many. It’s not because of our lack of expertise or our skillset. That’s just the market and how it dictates what you can make around here… Because a medium house around here is 150k grand. If you’re in California, you’ve got to put out $500,000 to $1 million or $2 million. Of course, you’re going to see how our margins, but you’re not going to do 120k usually. So it’s going to probably be about $80,000 I think. [unintelligible [00:20:42].06] extra time because the guy squatted in there… It was a foreclosure auction, but it came out amazing. It’s one of our best before and afters to date, and it’s going to be a good payday.
Theo Hicks: What about the worst deal you’ve done? Maybe a deal you’ve lost money on, and then what lessons did you learn?
Jon Schoeller: So I am fortunate that I’ve never lost money with my personal investments. But we have lost some within the company. And I believe that we’ve left $20,000 on the table before. And what did we learn? Whoa, what didn’t we learn?
This was a couple years ago and the house sat for a little while. But we trusted multiple contractors, we paid contractors ahead of time, we trusted a new project manager too early… It wasn’t so much what we did wrong, I guess, — well, I guess you could say that. We didn’t manage correctly. We trusted what people would say to us and the people that didn’t have any skin in the game for us, and they bit us, and that cost us timeline, it cost us budget, missing material… You name it, we went through it.
And it’s not the only house we’ve lost on. If you’re watching this, if you flip 120-150 houses, you’re going to lose eventually. Now, we’ve lost on a very small percentage. We’ve never lost any investor money, we’ve always made them whole. We’ve done all of our deals on private money. We’ve never touched bank or private money, so we’re very proud of that, and the fact that an investor has never lost money with us in almost six years, three and a half, almost four of me being a part. But yeah, we’ve lost money… And sorry, that might have been too much detail for what you’re asking, but I was just wanting to give some detail.
Theo Hicks: What is the best ever way like to give back?
Jon Schoeller: Teach others; each one, teach one.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Jon Schoeller: Youtube or Instagram. Youtube, like you said, it is Jon Schoeller, just my name, and then on Instagram, you can find me that way too, but I’m The Frugal Investor on Instagram.
Theo Hicks: Perfect, Jon. Thanks for joining us today and walking us through your background of where you started with your moving company, all the way up to your real estate business today. We talked about your rent to own part of the business and how you follow two rent to own strategies. The first one is for someone to rent to own a property that you own and let them give you a down payment and then monthly payments after that for a certain number of years. And then at that point, they have to refinance or you get to keep all that and then you refresh and do it with someone else. And the other one, which I thought was very interesting, is you find a house and then you rent to own it by taking over the mortgage and the taxes and you’re giving the down payment, and then you find a buyer who will also rent to own it at a higher rate, si it’s kind of a rent to own rent to own strategy, and then what you make is that margin between the down payments and the monthly payments. And so you said that this is a more advanced strategy, but still very interesting nonetheless.
And then we talked a lot about your coaching and how it started organically, where you were out there giving out free information on Facebook, on YouTube, on Instagram, and eventually from this content, people would ask you questions, you would answer the questions, and more and more questions came in the more you did it, and then you identified that as a demand, and then the supply was [unintelligible [00:23:44].13] your coaching business.
So the way to generate interest in your coaching business would be to create free content, but you said you’ll give away general advice for free, and then that’s what builds your credibility. And then they see that and then they’ll work with you to get more specific, individual advice, and that’s where the money comes into play.
You mentioned that—and I actually really liked this, and I totally agree… That when you see if someone’s serious or not, you just say “Email me”, and then most of them never ever even do that. So that kind of eliminates most people right there. And then when they do email you, you’ll send a follow-up email with some general questions and then you’ll see how long it takes them to respond. And if it takes them a week to respond, you also know they’re not serious. And then the third phase is to offer them a consulting call for an arbitrary amount, say $100, to see if they pay that. And then from there, you’ll have a better understanding of how serious they are, and then that could be the one call, it could be another call, it could be a multiple month type of deal. But yeah, I totally agree with this, and that’s why a lot of people get confused of “Why do you give away so much great information for free?” It’s because, well, most people aren’t going to take action on it. You kind of mentioned that with the email.
And then you also said it’s very important before you start a coaching program to actually be knowledgeable on the subjects that you’re going to teach, because people are putting their livelihoods in your hands, whether it be their mental livelihoods or their financial livelihoods, and you need to make sure you’re actually able to follow up and take care of them.
And then your best ever advice was to network. So get around people who are doing what you want to do and then do whatever you can to stay around them.
So, Jon, I really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening; make sure to check out Jon on YouTube and Instagram. Have a best ever day and we will talk to you tomorrow.
Jon Schoeller: Thank you, Theo.
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