Profit First Radically Changed His Business: An Interview with Joe McCall

Episode 8

Profit is not what you make, it’s what you keep!


Today we have an INCREDIBLE guest on our podcast!

Joe McCall was the man who introduced me to Mike’s books years ago.

Joe’s story is truly incredible!

He has helped thousands of investors with his education and also does deals himself.

And today he shares his story of how Profit First radically changed his business and life.



David: Hey, everyone, this is David Richter with the Profit First REI podcast. Another exciting interview episode with Joe McCall. If you don’t know Joe McCall in the real estate space, then you are missing out, and you’re probably under a rock. Because I feel like I see Joe a lot of all over the place with- with what he’s doing and he’s done a lot of good in the real estate investing world. So Joe, do you want to say hi to everyone real quick?

Joe: Well, hi, David! Hi everybody!

David: There we go. So Joe is actually- he wrote- he wrote the book on a wholesaling lease option. So he’s got that book at that he’s- that’s one of the I think that is your main- your passion is the wholesaling, the lease option and helping-

Joe: There are different types of lease options that you can do and- and wholesaling them is just one of the- my favorite strategy. Yeah.

David: Awesome. So he wrote the book on that, and I love- I was perusing your website too, and I love right at the top you help find simple ways to make money in real estate. It’s not simple to say. No. And so you help people to find simple ways to make money in real estate. Love that such a clear message and what you do and what you do to help the real estate investing community and one of the reasons why I wanted to have you on. Because for the listeners out there, I was in a mastermind several years ago. The Collective Genius where he got up and stood up in front of everyone and said that he had just read a book by Mike Michalowicz called The Pumpkin plan, and that was my first introduction to Mike and to his-

Joe: Was it really?

David: That was my first introduction to it. Yeah, years ago now and now I’ve read all the books. I’m a huge profit first fan, obviously, so braiding Profit First for Real Estate Investors to the market. So that was my first introduction to Mike Michalowicz and his books. So I’m very appreciative to Joe. So I needed to have him on here because he was the one that got me into this, so I’m sure I’ll be telling that story a lot in the near future herewith what’s going on. So I’m really appreciative to Joe. He’s a huge Mike fan too, so we’ll go into- he’s- he’s implemented profit first in his business. He is a big fan of all the other books too, so we’ll talk about that. But before we get into all of that and the meat of the actual podcast. Tell us a little bit why you got into real estate and why real estate and just what you’re doing now to Joe?

Joe: Well, I got into real estate, and I started getting interested in it in 2006. I had some friends that were doing deals, and they’re buying apartments small little multi-families. They were buying little single-family homes, renting them out, and barely using any of their own money, getting really good returns on their money. And I looked at my- I was an engineer working for a civil engineering company and looking at the corporate ladder thinking I don’t want to climb that you know it’s- I was looking at the middle managers where I worked they were working the hardest they got their first left- the last they were tired than anybody else and you know there’s a whole bunch of them that’s kind of where everybody’s going to end up right? Only one person ends up at the top and the chance to get in there a really small and it’s 30,000 member company. So that’s why I got- I don’t- I don’t aspire to be a middle manager like I can’t imagine living in this cubicle for the rest of my life for the majority of my life. And so mean I was blessed, I had a good job. I shouldn’t complain about it, but I thought there’s got to be more. I want to be able to control my own destiny, and I remember thinking about this to like heard somebody talking about how you think that having a job is safe, you think that having a 401k is safe, and you think that retiring with a company is safe, but that’s not. I mean, that’s one of the riskiest things you can do put all of your eggs in one basket. What if the company just decides one day to fire you and you’re in your mid-50s? How hard is it going to be to find a job then? Wouldn’t it be better if you control your own destiny? You had your own business? You can make your own money and if you didn’t get fired, whether you want to quit your job or not. But if you did get fired or if they transferred you and told you you know you need to go halfway across the country and you don’t want to go? Wouldn’t it be cool if you just said you know what? I’m not going to go. I quit, and you had something to fall back on. Wouldn’t it be cool if you can have residual income, passive income from your investment properties and also know how to make quick cash through wholesaling and things like that? So anyways I started studying a lot in for like 3 or 4 years I was a professional student I like to say because I bought all of the courses and books and manuals and the book camps and coaching. I never really did anything with what I learned, but I felt like I was learning something. So it wasn’t until though my back was against the wall. I did buy some properties, but I bought them all wrong at the height of the market. I ignored the fundamentals, and I didn’t have enough cash flow, I didn’t have enough equity in these deals, and when the market crashed and tanked, I lost a ton of money. And you know just one or I had about 10 or 12 homes at the time, and when you have two or three vacancies at a time, it wipes you out and so I started getting behind on my mortgage payments for my personal residence and my investment properties. So when the market crashed, and it was 7:08, and you know I almost lost everything, we almost went to bankruptcy. But you know I’d always heard these people talk about making fast cash strategies like wholesaling or making money, where you wholesale, you flip properties. So I started doing that in 08, 2008-2009, and I started making a lot of money, just wholesaling properties and also doing lease options. So I started doing lease options, and that’s finally in 09 spring of 2009, I quit my job because I was making more money doing lease options part-time on the side than I was in my full-time job. So I did that consistently for three months, and I knew at that point I- I just wanted to go.

David: Awesome.

Joe: So everybody thought that I was crazy quitting my job. My wife supported me, though, thank God. So yeah, I’ve been doing real estate I’m ever since.

David: Awesome. That’s definitely a key there, having someone to support you right by your side. And your story really resonates to because that was my dad. He worked in Property Management high-rise apartments in downtown Chicago for 24 years, and you know, like the first owner that he worked with for like 18 years, sold the building the first time so that and that went really well he worked there for five years after that. But then after 24 years that you know that’s 24th year, they sold it again, and a new company just let everyone go. So I mean, he was thinking, oh, this is going to be where I retire, this is going to be the rest of it. And he jumped into wholesaling; he jumped into a-

Joe: Did he really?

David: With another. Yeah, with some people that we knew and where we were living at that time, Northwest Indiana. He was a part of that company and started like being one of the guys that would go out there and actually acquire and sell and stuff.

Joe: How old was he when he did that?

David: Ooh, boy, that was about eight or nine years ago. So in his 40s, so mid-forties, late forties when that actually happened. And it very much resonates with your story because it’s right there on the cusp of 50, you know, and being right there and thinking that he is going to retire the rest of his life in that company. So I definitely resonate with that and really and I got to see kind of that transformation of going from employee to kind of entrepreneur type person, and he made the transition while he’s still out there doing it. So it’s- I love that.

Joe: Is he still doing deals?

David: He’s still doing deals. Still in the property- he has rentals with someone too and like helping on that side too. So he’s still in that real estate side, and I really- it’s been a- that’s been an inspiring journey too. But yeah, you’ve probably might have met him. He came to a couple of times to Collective genius and what not when we were up there. So he- it’s an inspiring story even there, but I love that. I love what you’re doing, and I love what you’re helping people do. Because that was us that was basically us you know ten years ago so. So I really love that. So let’s dive into the meat then. Profit First, Mike Michalowicz, let’s get it all out there. We’ve got the little The Love Fest here with Mike and all of his books, and we love the way that he writes his books and the different stuff that he writes so. I guess, how is- how did you hear about the Profit First? Was it from already reading his other books, and that was just the next one that came out, or I just tell us your experience with Mike and his books?

Joe: That’s a good question. Because I- I think I remember hearing about Toilet Paper Entrepreneur first. But I still have never read that but somebody- I remember one thing the book One Thing was really popular.

David: Yes.

Joe: And I have read half the book, and it was good, but it was like I don’t know I just didn’t connect to it for some reason and part of it was like everybody’s talking about the One Thing right? and so I’m kind of contrary in a little bit like man, I don’t want to do what I don’t want to follow the herd and do what everybody is else is reading so but somebody else talked about the Pumpkin Plan. I think it was in a mastermind, and this was in 2012, and I was running a lot of different directions you know, trying to do a lot of different things, and I was trying to be, and I’m running to this problem constantly trying to be a jack-of-all-trades, but I find out that I’m really master of none.

David: Mhm.

Joe: And so, Mike did a real good job in that book of talking about the power of focus. Power of focusing on one customer, right? One problem, one solution to the problem for that one customer, and it’s scary to do that, right? It’s like really scary. So he talked about The Sweet Spot and during that remember of the sweet spots a combination of three things I think it’s the right customer ok? A unique proposition are you doing something that’s unique? And the third thing is whatever you’re doing can it be systemizer or automated?

David: Mhm, yeah.

Joe: Can you build systems around that? So when you have the combination of those three things, that’s your sweet spot, and so at the time when I was doing some wholesaling, I thought, what can I do that’s unique? Well, I can wholesale deals to out-of-state investors that I’m not going to provide the turn-key, but I’ll give them three different property managers. I’ll give them three different contractors. And I’ll just be their boots on the ground, but I’m not going to be managing the rehab or managing the property form. That was something that I could be- that was unique and could be automated and systemized with my just the of team of assistants. And then it was my unique customer-this is really what got my- my wheels spinning because I had always thought in real estate, you know that you’re unique- your customer is the seller you know as a realtor you try to give a listing agreement with a seller. You know, as an investor, you try to go find seller leads and you make offers to sellers but, I thought about that’s not right. Really our customers are the ones with the money. They’re the ones spending the money; they’re the customers, the buyer. So I started focusing on finding buyers first instead of finding sellers, finding buyers first, so that was my sweet spot. When I started focusing on that, my business really exploded. So we went from doing a bunch of seller marketing trying to pre-screen a bunch of seller leads, make him an offer, and then try to find a buyer. We transitioned into finding the buyer’s first, and it was a crazy revolutionary for me. We started doing more deals with a lot less work, making more profit, and so fast forward; then, it was probably to 2020. Fast forward about three years four years, I started making a lot of money, and I started running out of tax deductions because I’ve gotten used to because we’ve adopted four kids, and I had a ton of write-offs from the crash. So as I was building my business, I had a lot of tax credits and a lot of write-offs where something happened. I started making more money, and I started having less write-offs, and so all of a sudden, I was hit with a huge tax bill, huge six figures or more.

David: Wow.

Joe: So I started panicking and freaking out, and I heard people say you know if you don’t have- you don’t know your numbers you don’t have a real business and people were saying that at Collective Genius. Yeah, it doesn’t apply to me. I know my numbers, but I really didn’t- I didn’t know my numbers at all, so I was all a sudden caught with my pants at my ankles owing this huge tax bill that I wasn’t even prepared for. I didn’t have anything set aside for that. Then I went into a little bury my head in the sand hoping the problem goes away and it didn’t so then I started paying my old taxes, not paying my new taxes, you know? I just kept on digging a bigger and bigger hole for myself. So it’s all of a sudden you know I- I’m in a world of hurt, and I don’t- I mean, I was completely flustered. I guess it is easy, a polite way to say it. So I had heard people talking about this book Profit First, and I thought, you know what, I should maybe read it. Right about this time, I had some friends that were reading it, and they were getting off- they were freaking out about how exciting it was. I started reading it, and I thought that it sounds really good, but I didn’t- didn’t know how to apply it. I didn’t want to hire a bookkeeper because I knew I thought I could do it, but it turns out I couldn’t do it myself. So finally, fast forward, my friends were encouraging me: listen, just hire a bookkeeper, give the bookkeeper the book Profit First, tell them to implement. So about three or four years ago, started doing that, and guess what happens when you- when you start setting aside money for your taxes, and you start setting aside money to pay you first? To pay yourself a profit, to pay yourself a salary, and then whatever is leftover goes to overhead, guess what happens? You start making more money than ever before, right? and you start not stressing out about paying the tax bill because so anyway I totally changed everything and worked out an agreement with the IRS and then got current on my current taxes. So I don’t go into too personal details yet, but I have been current now for four years on my taxes, right? Current.

David: Awesome.

Joe: Again, paying a huge chunk every single month towards my old taxes, it’s frustrating still today. But I’m like way better off than I was before, but I am- I was doing really well like my- I used to joke that my goal was to pay $1000000 a year in taxes. That was my goal, a joke about that, and I realize now it’s not what you make; it’s what you keep.

David: Yeah.

Joe: So making money is easy, you know relatively, but I was not disciplined enough, so I hired an operations manager who’s also my bookkeeper. Every dollar that comes in, she puts it into three or four different savings accounts, right?

David: Mhm.

Joe: I put myself on a payroll. So now I get a paycheck every two weeks just like my three or four systems do, and they take out taxes out of the payroll every two weeks, right?

David: Mhm.

Joe: But I also set aside some extra money in the tax account. So that I can just- it’s just writing you know a check every two or three months to the IRS. Plus, my monthly check that I’m paying as- but anyway I’m in a much better, I can’t tell you how nice it is to be able to go to sleep and not be worried about you know how am I going to pay all these people that I owe money to? Because it’s not even- when you’re in the coaching education business, you also pay affiliates, you know, and you have people that sell your course that you owe money to, and you have to pay them within 15 to 30 days after you collect the money right? And so just having somebody that understands that stuff and can take that money and put it aside in an account that I can’t touch right? and then- so the money goes in there for profit, for taxes for what I owe other affiliates or referral commissions things like that and then whatever is leftover is for overhead, and you know marketing and staff and all of that. Sounds so simple like, but so few people actually apply it or take it seriously, and a lot of people like me don’t pay attention to that kind of stuff until it’s too late.

David: Right.

Joe: and then- it’s you’re in a world of hurt.

David: Yeah.

Joe: So I- I love Mike, I love his books. I was reading the a- there’s a show on Discovery called “I quit,” and it’s about it’s following seven different entrepreneurs that just quit their job to start a new business, so it’s kind of like a reality TV series. And I wrote a long Facebook post about all of the lessons I’ve learned since starting my own business and looking at these people and seeing the mistakes that they’re making, bringing back all the emotions and the feelings of that kind of stuff, but I said on there that number one thing they need to do is they- anybody who starts a business it should be required reading- to read Profit First. Period. I mean, you will always be profitable, always, you will always be profitable if you apply the principles from that book. It’s super simple. Every dollar that comes in, you know you first set aside some money for profit and then for taxes don’t forget the taxes and then whatever and your salary and then whatever is left is your overhead right. Snd so you’ll know really, really early on whether your business is a viable business or not if you don’t have any money left over for overhead, so you maybe you shouldn’t be doing this. There’s- so many people could save themselves a world of hurt, emotional pain, and drama if they just apply that stuff. Does that make sense? I hope I didn’t talk too long.

David: Oh, no. That was great because I mean, I usually ask a bunch of questions to pull a lot of that out, and you already have- you covered a lot of that. I mean, you told us your whole journey from you know, from the very beginning basically up till now. And how profit first has affected you so.

Joe: It’s an embarrassing journey but-

David: But it’s not- you’re not alone in that journey. So I would even say I know you’re contrary, but I mean that’s- to be contrary now you have to manage your finances I almost feel- you know like because there’s such a big- a big percentage that just like you said: buried their head in the sand and don’t-

Joe: You know what’s crazy? Since I’ve been more open and talking about you know the- the problems I’ve got myself into the more people I’ve been kept as becoming to me or been telling me: I have the same problem you know I had the same problem, I have the same problem. You know, sometimes it’s just like we just don’t know what you don’t know, right?

David: Exactly.

Joe: Sometimes you just- you know in our own arrogance we think that we’re different or we think we understand or know better or we think that oh, that’s- that’s the old man advice, you know. That’s- that applies to them. I’m different, my business is different. The IRS doesn’t care how old you are and whether you’re making your money doing this or that they do not care. And you need to figure that out today, and that is funny at CG Collective genius. I remember guys coming to me and telling me, Joe, you’re making a lot of money. You need to start thinking about taxes; you need to start being prepared you to know you need to start thinking about not just setting aside money to pay your taxes, but you need to start thinking about how to shelter some of your rep- your income and things like Roth IRAs or self-directed IRAs or how to- the game becomes not how much can I make but how much can I keep? and how can I invest this money in real estate or different assets so that I don’t have to pay as much in taxes? I’ve learned a lot of valuable lessons, and it’s funny too because my boys are getting into real estate themselves.

David: Awesome.

Joe: They are 16 and 15, and I’ve been talking to them about these things talking to them about the importance of saving now for retirement. I mean, they’re just saving like a hunt; they’re saving $30 a week right now, so about $120 a month. When we look at the numbers, if they just saved $120 a month until they’re 65, I forget the numbers like conservatively 6 to 8 %, you know they’ll have like over five or six million dollars.

David: Right?

Joe: And not just saving even any more than. Just a hundred twenty a month until for the next 50-60 years.

David: Yeah.

Joe: So anyway, the older I get, the more I understand the importance of the stuff, and I wish I would have listened to Mike earlier. But I do whatever I can just kind of spread that message of you need to know your numbers you know you need to know, and you need to learn how to manage your cash flow and a real- the simplest way to do that is with we know with a book like Profit First.

David: That was one of the things that I loved about the book, was we had heard that message so many times from Masterminds or even Robert Kiyosaki and saying like make sure you pay yourself first and The Richest Man in Babylon. All these books tell you to do it, and you like, okay, you know I’ll take a drawer I’ll do this or that, but they didn’t give you a system. That’s why Profit First makes it the whole; it’s you know it’s counting, but that he doesn’t call it counting or anything, it’s totally about making it very, very simple for anyone to understand and it’s a whole system to manage it so.

Joe: Here’s an important thing too. Most of the people I think you know you entrepreneurs- I don’t have the mental capacity to think about that kind of stuff. Like the accounting, the bookkeeping being- thinking about okay when this dollar comes in, I just can’t go out and spend it all right? So you need to hire somebody to do that for you, and it’s an expense that you can’t afford not to pay. Does that make sense?

David: Yeah.

Joe: Like you have to get somebody to do that for you if you can’t do it yourself. And 99% of you you all listen to this you can’t do it yourself you think you can but you can’t, right? So I mean, maybe a few of you can, but like it didn’t turn around for me until I hired an operations manager. I could have hired a bookkeeper, but I also needed somebody to help manage my team, but that was the first thing I told her, and I paid her- I’m paying her very well. But I told her I said you have to- I told her everything I’m going through, and I said you have to fix this for me, and I said read The Profit First book, and she actually said I already have three times.

David: Nice, really good.

Joe: Oh, wow, okay, good. And she said that’s exactly what she does with her own finances at home and with her real estate investing business. So anyway that’s been- it’s super important that people understand this. Those two books, I think one of the best most important business books I’ve ever read the Pumpkin Plan and Profit First.

David: That’s a pretty powerful statement right there. So with all of that with your journey or whatnot. Do you have any other advice last-minute advice here on profit first or finances or anything for Real Estate Investors? You’ve given a ton of value already, but is there any other things that come to mind?

Joe: The biggest thing is to read the books-

David: There we go.

Joe: Read the books but hire somebody to implement it for you. Because I just- I just keep on going back to 4 to 5 years ago the stress that I would have I was making a lot of money right, but I will just spend it. I think I’d look at my- look at my checking account to see what was in there, and I would think okay what it- what is he call that a checkbook accounting?

David: Right check balance accounting. Yeah.

Joe: Yeah, and so I don’t do that anymore. I can’t, right? And then put yourself on the payroll; for me, that was a big deal. Some of the people that are listening to this might think, duh, are you an idiot? Like you know, don’t you know that? Like, but for me, that was a huge difference because now it forced me to put myself on a budget. It forced me to look at my own expenses, and I know I can go into my business account, and I can transfer money to my personal account, you know. But when you are on a budget or on a fixed income like that and-, and I do pay myself very well, it just forces you to pay yourself first, right? But it also forces you to be more responsible and disciplined with your money.

David: Yeah.

Joe: and having somebody do that for you. I’m fortunate to have somebody that I know and trust, you know I will say this too I- I do have a friend who implemented profit first, and he hired somebody that he thought knew how to do Profit First. She said she did, but it turns out she didn’t, and he actually got hit with a huge tax bill and talked to this bookkeeper. I’m trying to keep it super anonymous, and she said, oh, I’m sorry, I didn’t know she was- I think what she was doing is she was saving like 10% of not the gross dollars that came in or something like-

David: Ooh, okay.

Joe: I don’t know what she was doing. You know what I mean?

David: Sure.

Joe: So she was like saving 10% of the net profit which-

David: Okay.

Joe: You can’t do that.

David: No.

Joe: It needs to be 10 or 15% of the gross dollars that comes in needs to be set aside for taxes.

David: Right.

Joe: And so he was hit with a- with a huge tax bill that he had to pay a lot of penalties on it and she just- she freaked out or something and just disappeared like she would not return his calls he couldn’t reach her or talk to her anymore. Like I don’t know- I don’t think she did it intentionally, but she-

David: Right.

Joe: So if you hire somebody, make sure they know what they’re doing right, and then you need to look over their shoulder and manage and make sure you’re getting the reports every week, and you’re seeing that okay this is going here and this is going there, and that’s okay good.

David: Yeah.

Joe: But there has to be some accountability there. This friend of mine just trusted his bookkeeper too much and paid for it.

David: Yeah.

Joe: He got it fixed eventually, you know, but.

David: And that’s the responsibility of the owner because at some point you have to know at least some very basics and just read the book would give you a good basic understanding you don’t have to go take a course on accounting or bookkeeping or anything like that. But having the basics of a Profit First book would help you with something like that too.

Joe: Yeah.

David: So yeah, I totally second that in taking the responsibility there.

Joe: Yeah.

David: Well, then honestly, that was awesome, Joe. So we appreciate every one of us that’s listening to this now, and I appreciate it as a host here all the value that you brought today with your personal story. Is there any way that our listeners can provide value to you and any way to connect or a product or anything that- that would provide value back to you?

Joe: Well sure, I have a- I have a book people can get for free just pay a little bit shipping and handling called wholesaling lease options, and it’s how I actually quit my job when I was in 2009. I was making good 75-85 grand a year, not bad, but when I started flipping lease options, I started making more money doing this part-time than I was in my full-time job. So I wrote a little book about it, and if anybody’s interested, you can get it at It’s free. Just pay a little bit of shipping and handling, and it’s a real book, and I also have a podcast if anybody wants to just go search podcast whatever app you use. Do search for Joe McCall or real estate investing mastery. I do about three episodes a week, and I’ve been doing it since 2011. So almost ten years now, and it’s so- I really love the podcast, and I love teaching and helping people.

David: Awesome. Well, there you go. There is several different ways that you can provide value back to Joe, and if you were interested in what he’s offered there, he’s got some great stuff he’s- you can tell too. I’ve known this guy for years now and like he’s still in those groups he hasn’t hit under a rock like that bookkeeper, so you know we know that- that way you can know that you could trust Joe and that I know he’s very well respected in the communities that were apart of so. There you go, and then you heard his story, his Profit First journey. Hopefully, that helped you. I know that it helped me a ton too. Joe, thank you so much for being on today.

Joe: Thank you, David. Say hi to Mike for me, would you?

David: Will do.

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