006 - Just Your Average Joe

When Joe Leonard swapped his corporate cap for a coach's whistle, he also mapped out a game plan for real estate success, one that allowed him to retire at the tender age of 51. Our latest conversation takes you through the courts of property investment, as Joe shares the slam dunk strategies that transformed his financial game, proving that income replacement can be a more valuable play to financial freedom. It all started with a modest two-family home, but Joe's journey is anything but small – it's a testament to the power of smart, strategic investment moves.

Ever dreamt of sipping cocktails on a beach while your investments work for you? Welcome to the allure of passive note investing, a realm where distance from the physical property is no barrier to success. This episode peels back the curtain, revealing how I've tailored a retirement strategy that harmonizes real estate and notes. We'll volley between the principles of payment history, risk, reward, and the sweet spot of consistent cash flow in building a robust investment portfolio. Joe's narrative and my own insights create a playbook designed for those looking to step up their investment game without having to step out of their comfort zone.

Retirement isn't just about kicking back; it's a new season of life ripe with opportunities. This episode isn't just about closing deals; it's about opening doors to leisure, family, and community engagement. Joe Leonard shares how his post-retirement life is a rich blend of freedom and investment passion, from gym workouts to engaging with young athletes, imparting wisdom both on and off the court. His coaching doesn't stop at basketball; financial literacy is part of his lineup, too, emphasizing the importance of teaching the next generation valuable life skills including financial strategy. Join us for this heartening narrative that intertwines the satisfaction of mentoring with the thrill of building a future on your own terms.

Resources and links discussed:
- Videocast on our YouTube Channel
- ANB Funds Website - https://anbfunds.com

About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!

Connect with the Host:
Facebook - bethebank
Twitter - bethebank1
Instagram - bethebankpodcast
American Note Buyers - https://anbfunds.com/
Monthly Broadcast - https://youtube.com/playlist?list=PLzc944w1xydt5aLDrrEPHJhdJeDkBjjD4

Transcript

Narrator: 0:02

Interested in real estate. How about wealth? Well, they go hand in hand, and here you'll learn all about it. Welcome to Be the Bank, a podcast where we discuss and debate the topics centered around real estate investing. Your host, Justin Bogart, shares insights into investing in real estate to create real wealth and passive income for you and your family. He'll share stories of real estate investments done right, Walk you through the process of owning a real estate note and, most importantly, educate you so you can Be the Bank. This is Be the Bank, brought to you by American Note Buyers. Now here's your host, Justin Bogart.

Justin Bogard: 0:46

Hey, hey, listener, this is episode number six of season six on the Be the Bank broadcast brought to you by American Note Buyers, and today it's going to be a little bit different. We actually have an investor of ours that's invested with us for a while now and he's got a cool story. He's actually a high school basketball coach and we're going to talk a little bit about that and kind of his adventures in land loading and lean loading. So Mr Joe Leonard will be on. So stay tuned, hey Joe, that's a Jimi Hendrix song. Right, it starts off, hey Joe.

Justin Bogard: 1:32

I think so. So if I email or text anybody named Joe, that the first thing comes to my head because my dad plays in a band and so he loves the 60s and 50s and 70s music and Hendrix is one of his favorite artists because he plays guitar too. Not let's name it right handed, but yes, I always think of that. Hey Joe, how are we doing? I'm doing really well. Unfortunately, it's kind of gloomy here in the Fisher's Indiana area where I'm currently at recording this, and I think you're not too far from me, aren't you? You know, Hio.

Joe Leonard: 2:08

Yeah, I'm in Akron Kent area, which is south of Cleveland.

Justin Bogard: 2:14

Okay, so you, you basically help LeBron get to the NBA, right.

Joe Leonard: 2:19

Right, I wish, I wish.

Justin Bogard: 2:23

Man, how long ago has he been the NBA? For 20, 20 years.

Joe Leonard: 2:27

Yes, yes, so he was quite the high school player, and he's done the same on the pro level.

Justin Bogard: 2:34

Have you ever run across him?

Joe Leonard: 2:37

I have not. No, I mean, I've seen him play quite a few times, but never run across him when he played for the Cavaliers or like that during high school stuff. During the Cavalier days, high school days. Those were smaller venues and so they usually sold out, so you usually couldn't get tickets.

Justin Bogard: 2:57

Probably two years in advance too.

Joe Leonard: 2:59

Yeah, it was crazy.

Justin Bogard: 3:02

I guess the audience doesn't realize, if they don't already. You coach high school women's basketball as your, as your profession, right?

Joe Leonard: 3:09

Correct. So I retired about about two and a half years ago, and so my my job right now is to coach high school varsity girls basketball, and so that's my passion. The season just ended last week, and so so, yeah, you know I spend most of my time on basketball.

Justin Bogard: 3:32

I love basketball. I thought I was decent at it until I got to try out to the middle school team and then I realized I wasn't that good at playing basketball. It was just in my mind, you know, playing with my buddies, you know, doing doing those no blood, no foul rules was always fun. But yeah, I never could play with the others on the you know a structured environment. So I'm just a pickup guy.

Joe Leonard: 3:55

That's all right, I'll throw in that.

Justin Bogard: 3:58

What did you do before you retired?

Joe Leonard: 4:02

So my profession up until a few years ago, I was in the corporate world of a grocery store, and so I used to travel around as a regional manager of a local grocery store in the Cleveland, columbus, youngstown area, and so, if anyone knows anything about retail, retail is six days a week, and even on the seventh day that you're off it's still going to get called. It's a tough way to make a living.

Justin Bogard: 4:30

Oh man, I'm glad that you got out of that. You don't seem like you're too old, so did you retire early?

Joe Leonard: 4:36

I did. I was 51. And so it was kind of always a goal of mine as I was growing up. And so, as I went about my journey with real estate, my main goal wasn't you know, what am I going to have in 20 years, 30 years? It was how do I replace the income that I'm currently, you know, getting doing a job? And so that's how I always analyze any deal or anything that I thought I might want to get into.

Justin Bogard: 5:04

So so when did you start investing in real estate?

Joe Leonard: 5:10

So, growing up, my dad, you know he had one or two, I think he had one house that he rented out, and so as a kid I was always fascinated by that, and so he actually owned it before I was born. But you know, my brother and I would always ask him questions about it, and we were just kind of always amazed that you could. You know, he had a two family home, and I think him and my mom lived upstairs or whatever. They rented the other part out, and so my brother and I were kind of fascinated by that, and so when it was our turn to buy our first home, we both did that.

Joe Leonard: 5:41

Four streets apart from each other in the city of Cleveland. I was a two family home. This was like middle of the 1990s and so I lived upstairs, I rented the downstairs and then I had a roommate at the time, because I was pretty young at the time, so you know. So the payment at that time was, you know, the nineties was like $400 a month was the mortgage payment. The guy downstairs was paying $600. And the roommate was paying $300 plus half utilities. And I'm like you know what? There might be something to this.

Justin Bogard: 6:10

So I like the numbers already.

Joe Leonard: 6:12

Yeah, it was pretty good. So from there, you know, I just I lived there for about 10 years really allowed me to max out on 401K and just kind of save in any other fashion, and then about 10 years later, I bought another one and then the journey just continued from there. I just continued to buy more and more.

Justin Bogard: 6:37

So when did owning rentals become more of like a part time job, since you had a full time job at the time?

Joe Leonard: 6:47

So I got up to about 10 or 11 houses and I would say about number five or six. It became, you know, it became another job. So I always had a management company. So for me I was pretty busy with my work and so I really couldn't afford to be dealing with phone calls in the middle of the night and all that other stuff. So I had a management company that took care of a lot of it. But you know, there's still the worry of of just owning a rental property.

Justin Bogard: 7:22

Yeah, so you obviously have bought some loans before, which is why you're on the Be the Bank podcast today. And so at what point did you decide, or did you figure out, that you kind of wanted to invest in some notes as well?

Joe Leonard: 7:37

So I always thought the buy and hold real estate would allow me to retire, and so what I quickly learned was that wasn't going to be the case, and so I needed steady, reliable income, and it just wasn't going to happen.

Joe Leonard: 7:52

The you know, I might get $500 from this house one month and then next month I get nothing, or then I get $200. And so it was just too unstable. And so I was at a real estate, one of those meetings in downtown Cleveland, with everyone gathered around, and so, you know, a speaker showed up I'm not even sure who the speaker was, but he was discussing notes and I had never heard about it and so he passed out a flyer. I literally left middle of the, you know, he had an intermission probably about an hour into it, and I grabbed the paper and I said this guy, he's crazy. So I left, and so I went home, and the more I thought about it, you know it had a too good to be true kind of a feel about it at first, and so I began to realize maybe it wasn't too good to be true.

Joe Leonard: 8:39

And so so I did as much research as I could on performing notes and you know all those things. And then the Cleveland area at that time there wasn't a note convention or any type of group that met for notes. I don't even know if there is today, but so I traveled down to Cincinnati and that's where I saw you speak at that meeting down there in Cincinnati. And so when I sat through that meeting I just remembered when you came up you just seemed like a straightforward, honest. You didn't seem like you were trying to sell the group anything. You know what I mean, you just kind of an educator of knowledge. And so I had a real good feel about that. And so shortly thereafter we exchanged numbers and I purchased my first one from you.

Justin Bogard: 9:25

That's awesome. Well, I must have been a very good actor back then to convince you that I wasn't trying to sell you.

Joe Leonard: 9:31

I'm just kidding. I mean, I can remember being on the phone and the first one we bought was in Indiana and you said, joe, this is in my home state, if anything goes wrong here, I'm not gonna disappear, I'll be there for you. And I said, all right, let's do it. And so I remember being on vacation. I got the first payment and I thought, well, this is pretty good. So, you know, it's just kind of just kept building from there. And so eventually I sold all the rental properties that I had and went all in. After I went through COVID with the notes that I had, and I really did very well. I was fortunate. I thought, boy oh boy, I bought all these notes. And now here we go with COVID. What is the dumbest idea ever After COVID happened. It was kind of a proof of concept If you can survive COVID with the notes, then go for it. So I sold every rental property I had. I bought every single note that I possibly could, and then shortly thereafter, a couple years ago, I retired.

Justin Bogard: 10:35

That's awesome. So collapsing your entire rental portfolio and converting it into notes. We had the same assumptions going into COVID as well, with our portfolio. It was like, oh man, this, I don't know how this is going to turn out, but people kept paying and they kept paying and they kept paying. I'm like I'm not seeing any performance going the opposite direction. I'm seeing, if anything, it keeps steady and people are wanting to pay off early, and so we had a great experience during COVID as well, and even after the post COVID stuff as well in our portfolio. So what has been your geographic model with buying notes versus rentals? Because obviously with rentals, you've probably kept them close to where you actually live there in the Akron Cleveland area, right, yes, and so with the notes I bought the first few from you, or I don't know.

Joe Leonard: 11:29

it's probably six or seven that I got from you, and so a lot of those were Indiana and your home state. There At first I still had the mindset of a landlord, so I was trying to get them as close as possible. So I do have probably five or six Ohio. But then eventually, you know, you got to spread your wings and so now I'm all over you know, or Alabama, arizona, oklahoma, mississippi, florida, so it's pretty much just.

Joe Leonard: 12:00

The beauty of notes is that you know you can go all over. I don't have any California, I don't have any New York, I'm not really sure why. I just think I've heard enough that say don't do that. So I just kind of stay away. But really I like the Midwest. But I'll always look at, you know, the location really doesn't bother me.

Justin Bogard: 12:22

Yeah, it's the same thing that I went through when I got into the notes business from being in what I call traditional real estate, where everything was local to me and I could see it and I could touch it and I could walk through it. And the first time we get a note you're just like, well, it's not near me, like I don't, should I be doing this? Like you're starting to question everything about it. But then you know you step back and like it's just a passive investment, like if I was going to the stock market and just picking something out, like it's nothing where I can see and touch and feel. It's like you're dependent on other things.

Justin Bogard: 12:50

Obviously it's there's no security with that different apples to apples comparison, but apples to bananas comparison, I guess. But yeah, it's so, so different. But then, like I like what you said, when you're on vacation, you got that first check, because I was actually on vacation when I bought my first note. I was actually out of the country when I bought it and there's just kind of a cool feeling. It's like I can be here, present, with my kids and my family, and then also I can step aside and do this transaction. I can do it from anywhere in the world and I don't have to be there in front of property, I don't have to be in front of a title company to close, and it can all just happen seamlessly. And I have the same you know rights and ownership as any other bank. It wouldn't be any different. So it's just kind of a cool feeling how this whole process works in the note space and how it's just kind of it's more seamless and streamlined than what you think.

Joe Leonard: 13:38

Yeah, no, I would. I would absolutely agree. I have a few friends who are still buy and hold and I think they think it's cool to have physical properties, like look at all my properties and like, well, you could say what you want. But I remember when I was the landlord, you know they would move out every year or two and then you got to put in money to advertise to get a new tenant. So then the cities in the Cleveland area were getting so tough on landlords that there's no way I would want to go go back to that. In fact, when I buy notes now, I want performing notes. I don't want to take over. I've already been a landlord. I don't want the property. I don't want to get involved in that. That's not my, that's not my goal. So for me I look at payment history, a solid payment history. If it's not solid, I don't care what the yield is, I'm not interested.

Justin Bogard: 14:26

Yeah, that's a good way to analyze your deals and I've always been that way as well Is looking at the pay history and not not really looking at the return. Because the return versus the what you have in front of you you know if you have a great note you're going to get a little bit lower return. But if you have a risky note you're going to get a little bit higher return. Right, because you expect that. But oftentimes that riskier note doesn't give you the higher return because they keep missing payments or it becomes a foreclosure or maybe a drag drag on foreclosure and it can really slow down your deal.

Justin Bogard: 14:57

When you're trying to get cash flow, when you're not worried about cash flow and you're being transactional but you can wait a year or two, then that you know you anticipate non performing to be part of your portfolio. But when you're, when you're strictly trying to replace your income, like you were trying to do, you definitely want to have consistent payers, on time payers and have that predictable cash flow coming in. And then obviously, once you build it up enough 10, 12, 20 loans then you can absorb some of those down times that come in with those loans, because you know there are things that happen in the business with type of loans that we buy. We got payers that you know sometimes they're living a little little bit paycheck to paycheck and sometimes they might have to pinch a few pennies, you know, every month and might be skipping a mortgage payment you. But they typically get caught up and so once you have a big enough portfolio, you just absorb some of those bumps in the road.

Joe Leonard: 15:46

Yeah, I know, I mean that's exactly. I mean everyone goes in it for their own. You know some people want to take the property over, some people, like you said, you know they that yield is most important to them. For me, I didn't want to work, I wanted to do what I wanted to do and steady income replacing my income, plus giving me some buffer so that I could buy and replace the ones that fall off every year because of payment or whatever. So so everybody has their own strategy is just finding what your, what your strategy is, and I just think the no business is definitely the way to go.

Justin Bogard: 16:22

Do you do any other investing with any more of your retirement account anywhere else, or is it mainly just real estate and notes?

Joe Leonard: 16:30

Just real estate and notes. That's pretty much for right now, that's that's. You know, to my comfort level is, and so you know, but I always, I'm always looking around, but for right now that's that's really what I, what I feel most comfortable with.

Justin Bogard: 16:47

What has been an experience in a note investing since you've bought so many loans that you kind of learned some lessons about investing in some of these things that you'd be like man I wish. I wish I would have realized this sooner, or I wish I would have avoided this type of note or this, this red flag that I really didn't see until it was later in the pay history.

Joe Leonard: 17:11

That's a good question. You know, I would say initially I was probably, you know, too conservative and so I probably could have, could have been involved sooner. You know, I think I think, especially doing that first deal, you know, I wanted all, all but guarantee that it was going to be. You know, payments were going to be made. So I think I dragged my feet, you know, for for way longer than I probably should have. You know, I really haven't. There hasn't been too many surprises. I actually have my first note, that is, that is not paying and it hasn't paid for a little while. So they're going down that foreclosure road. So this is new to me. But when I look at that deal, I think I would still do that again. You know, just one of those things that just got to happen as you get into the business.

Justin Bogard: 18:01

So yeah, the the law of averages or whatever you want to call it's going to come into play. When you have a portfolio big enough, something's going to happen to where one of them is going to go bad or not or not pay. It's hard to say that you'll have a hundred percent perfect payers on every single loan that you have every single 100% of the time. Right.

Joe Leonard: 18:19

Yeah, it would be nice if you did, but you know, I mean even this one here I, if they could turn around and start paying again tomorrow, I'd be fine with that, you know, and we could try to work something out. But it this one just doesn't look like it's going to happen Now. It is within two hours of of where I live. I guess I'm lucky in that regards, but you know. But you know, what are you going to do? As you say, once you start to build up enough there, you're eventually going to run a process, and so this will be a learning exchange experience for me as I run through it.

Justin Bogard: 18:54

What does your kind of day to day look like now that you're retired? You don't have the full time job anymore. You obviously you know you do the basketball stuff now for the local team there. But obviously since the season's over now and you have built this wealth with your portfolio you have of your notes, do you spend a lot of time like looking at other investing opportunities? Are you more relaxed and just do other things that kind of make you happy that you want to do?

Joe Leonard: 19:20

Yeah, I mean, I don't really do as much with the investing as I probably should. You know, obviously I check in on the notes a couple of times a week just to get an idea there. But really my time is my time, and so I go to the gym. Probably, you know, five, six days a week I like to go see my mother, who's in Cleveland. Even though the season is over, for us it really is a 10 month season, so it'll begin in 30 days. It'll start back up the month of June and then last summer I did a lot of volunteering, and so I spent a week in Maryland at a basketball camp. Just so I'm just living. I'm doing things that I want to do. You know, I'm playing in a staff against seniors basketball game, and so we have practice tonight, and so, yeah, really most of my time is just. You know, myself and my fiance we do a lot of traveling, and so now that the season's over, that'll start. But, yeah, more leisure than it is business.

Justin Bogard: 20:24

Let me ask some non-note questions here. So did you play basketball in high school and college and stuff?

Joe Leonard: 20:31

I mean I did in high school, but I was, I mean I'm six, six now, but back in those days I was only five, two, so I did not play, did not grow until college, so kind of one of those lucky to be tall, but I could have used it to go back in the high school days. So yeah, I mean I've always, I've always enjoyed doing that. I've been coaching for probably about 10 years, 15 years now, and it's really your passion. They say, find your passion. And if you can do that, you know, then it's not really work. And so I really enjoy that. I enjoy the game, I enjoy just working with the kids, so has basketball always been your favorite sport.

Joe Leonard: 21:17

It, has, it, has it's. You know, even growing up, it would be countless hours in the driveway just enjoying getting up shots. And so you, being from Indiana, how about? I'm sure it's a it's exactly it.

Justin Bogard: 21:33

Yeah, my dad, as soon as he could, he put a pole in the driveway with concrete around in a basketball hoop and we were just out there playing dad versus son like all the time. I never could beat the old man hook shot that he had it was. It was a game killer for me.

Joe Leonard: 21:48

I just no matter what they climb on his back, whatever, it still would go in, yeah that's good and you know, one of the things now is I can you know I share stories with with my players about. You know they always ask me you know how are you so young and retired? And so it allows me to kind of educate them on, you know, only money but, but whatever else, and so you kind of you kind of build a rapport with the kids about that, and so they're certainly inquisitive, you know, about why I can attend practice at 10 o'clock in the morning when they're off for a day, and why I could be there at 6 am for a shoot around if they want. So so yeah, so not only you know, I try to help them out and and and let them know maybe some secrets, that or some things that I've learned.

Justin Bogard: 22:34

That's awesome, to pay it forward, I wish people would have came to my high school and kind of taught more of the of the realistic financial life, of what it is to be an adult. Because you know when, everything that I was taught before I really got and learned about real estate was, you know, you just take your paycheck and you put so much aside and you keep it in a savings account or you keep forcing it into your 401k and let someone else manage your money, and little did I know that you could actually invest in these things and you don't have to use those standard ways of of investing, because to me it was almost like a brainwash thing to where I was told this is like the only thing you do, like, oh here, you just need to do this, without really giving you options.

Justin Bogard: 23:16

So yeah, nice to hear that you're able to pass that on to your kid, to your, not your kids. I meant your, your playing, your playing kids, right?

Joe Leonard: 23:23

Yeah, yeah, absolutely. You know, and some of them some of them are interested and some of them aren't but you know, you always get the ones that say I want to be rich someday and I said, well, why don't we talk about that? You know what does that, what does that mean and how are you going to go about that? So, so, yeah, I think I think they're apt to listen to you when they know that you've actually you know you achieved some financial freedom.

Justin Bogard: 23:46

So yeah, they, they. And then hanging around people that are like minded like that as well. I mean, obviously your, your team, is cohesive because they're all there for the same purpose and the same goal, right. And then putting yourselves with other people that are interested in real estate or interested in notes it's only going to make you better and want to hang out with them because you can, all you know, feed off of each other, right. So that's pretty cool, Absolutely. You got any funny stories yeah absolutely. No, not funny stories.

Joe Leonard: 24:22

We lost in the playoffs last week. So we had a great year. We ended up going 22 and three. And so, even though you have a spectacular year, it's always, it's always a sudden, you know, a sudden end. And so for the seniors, we had four seniors for them, and it's, you know. But there's only at the end. There's only one team that stands so proud of the work. Back when I was in high school, or maybe when you were in high school, they just didn't put in the time and the effort. But now it's a 10 month commitment. I mean, if you're going to do it, or do it well, if you've got kids of your own, you know who plays sports. I coach AAU basketball and that's getting ready to start up next week, and so I've got a team that I'll coach of 10th graders, and so the journey will start with those girls in a week or so.

Justin Bogard: 25:13

That's amazing and you're exactly right. It's completely different today. I have a 12 year old and 10 year old daughters, so one in a fifth and one in seventh grade, which is the same school. We have an intermediate and junior high that are just in the same building now, and it's my daughters don't really get into sports a whole lot, but every now and then they do that stuff and it's, you're right, it's like if you want to be competitive in it, it's just like you know you're, you have to dedicate your life to it, kind of to want to be at that level, to compete with the best of the best, or it's just. It's just, you know, a recreational thing, which is fine too. But yeah, it's a big difference between when I was back in high school and I'm not too much younger than you. I'm a little bit younger, all right, cool. Well, coach Leonard, is that what they call you?

Joe Leonard: 26:02

That's what they call me. Yes, they do.

Justin Bogard: 26:04

Coach Leonard, well, I appreciate you being on the podcast today. Thank you for entrusting me with you know, your investment portfolio and helping you grow that. It's awesome to hear the stories that you went through with Lane Lordy and converting everything to notes. I think that's why you're the perfect candidate to be on the show to prove that you know it does make a difference and it does alleviate a lot of challenges and uncertainties, and especially with, in your case, it was the predictability of that cashflow coming in. So do you have any words of wisdom for our audience here before we close out?

Joe Leonard: 26:36

Well, I would say this I would say when people ask me and I get asked a lot how are you able to retire? So you know, so soon or so early, whenever I tell that story, our conversation, or you know me going down the Cincinnati and you know you're a part of it, you're a part of the story there, so you know I've listened to these podcasts where they've said you know, I've retired and I don't have a nine to five, and I always thought that's not really possible. It is. It is if you have it, you know, figured out, and if you're diligent about it, and so it can happen.

Joe Leonard: 27:09

But for me, once I started to make any money off of real estate, I always put that money right back into buying more. I never used it to go buy something else, a new car, whatever. I just consider that to be a business, and whatever I made, it always went back in there. So I was able to save a lot, a lot sooner. So I'm just a regular guy and I was able to do it. It is possible and I've really enjoyed the note business and I again, I owe it to you as I've said, a part of my story will always be me going down the Cincinnati and hearing your conversation.

Justin Bogard: 27:45

So would you call yourself an average Joe then?

Joe Leonard: 27:47

I think I'm an average Joe. Yeah, I think I'll take that. All right, joe.

Justin Bogard: 27:53

Well, thanks again for being on this show. It's been awesome to get to know you and I'm glad that we're friends and we still stay connected. And, yeah, everybody. This was episode number six on season six of the Be the Bank podcast. You can check out the video stream on our YouTube channel, the American Notebuyer's YouTube channel as well. And Joe, so long, my friend, and I hope to see you soon.

Joe Leonard: 28:13

You got it. Thanks, justin. All right, go ahead.

Narrator: 28:20

Thanks for listening to Be the Bank. We hope you learned something from today's show. If you enjoyed this episode, please rate and review us. Plus, check out our channel on YouTube and follow us on Facebook and Twitter at Be the Bank, and on Instagram at Be the Bank podcast. Be the Bank is sponsored by American Notebuyers. Thanks again for listening.