120: From Bag Boy to $1 Billion In Real Estate Deals – Lee Arnold

Today, I’m sitting down with Lee Arnold, a real estate investor, developer, and info marketer, who has spent years perfecting the real estate investing and private money lending process. 

Having been involved in more than $1 billion in real estate transactions, Lee created “The Lee Arnold System”, a training program that teaches clients how to translate workbook education and real estate theory into real estate investment success.

Lee has also been featured as an investment strategy expert by Forbes, the Boston Globe, Market Watch, Reuters, and BusinessWeek.

As the CEO of companies in both the info product and money lending spaces, Lee has experience scaling from $0 to $100 million and beyond in multiple businesses.

In today’s episode, you’ll hear about scaling businesses in both the information product and real estate industries, the most important components of scaling past 7-figures, and how to find a driving purpose beyond your financial success.

Inspiring Quotes

• “Money is attracted to opportunity, not people.” – Lee Arnold

• “It doesn’t matter where you are financially, there’s hope.” – Lee Arnold

• “Don’t take jobs to earn. Take jobs to learn.” – Lee Arnold

• “It is not my customer’s job to remember me. It’s my job to make sure they never forget me.”– Lee Arnold

• “The first million you can get there with just hard work, guts, and luck.” – Lee Arnold

• “Employees are not an expense — they’re an investment.” – Lee Arnold

• “The hardest part about scaling is getting further and further removed from the things that are actually generating the income for the business.” – Lee Arnold

• “If you’re going to invest or lend, then invest in and lend on things that you understand or that you’re willing to learn about.” – Lee Arnold

• “I’m sure there are a lot of people that needed to lose everything in 2008, and I was one of them.” – Lee Arnold

• “Find something greater and bigger than yourself to serve and to make the priority.” – Lee Arnold

• Lee’s background and purpose
• Negotiating 400+ short sells a month
• Cutting your teeth in the education space
• Building and monetizing your list
• Multiplying your success through employees
• The jump from $5M to $10M
• The current challenges in real estate
• From real estate to private equity
• Going from local to national lending
• The funnel for 2,500 funding requests per week
• How Lee’s faith guides his work
• Discovering your own purpose in business

Brad Weimert: Lee Arnold, I appreciate you carving out time, man. 

Lee Arnold: Thanks for having me. 

Brad Weimert: I’m going to aim for this to be as much fun as dinner was last night.

Lee Arnold: Okay.

Brad Weimert: I don’t know that that’s going to happen. We are lacking some of the tools to make that happen, but we are here at the Grand Hyatt for the 30th time in Tampa Bay. You have become inside this group. So, we’re in a mastermind, if you can even call it that, of basically all of the real estate educators in the country, for sure. Biggest group of them. We come to it every year. Very tight group. And you have become one of the powerhouses in this space that people look up to.

I want to talk about kind of how you built this monster enterprise that has now all these different arms in addition to just education. But let’s start with how you got into it. So, how do you start in real estate and this whole world? 

Lee Arnold: Yeah. Well, thanks again for having me, Brad. This is exciting. Love what you’re doing with the show. And clearly, a desire to serve people through this. So, I love the message and I love the concept of it. For me, I started investing in real estate in 1995. I was 18 years old. I was working in a grocery store making $3.90 an hour and putting myself through community college. It was tough. So, credit cards are maxed out. Financially, I don’t have a clue what I’m doing. 

Brad Weimert: Hold up. 3.90? Where were you? 

Lee Arnold: 3.90. This was in Washington State. 

Brad Weimert: Oh my God. 

Lee Arnold: Yeah. State of Washington, ’95, ‘96. And my shift was 3 to midnight. So, you were sharing a story about infomercials. Well, when you work from 3 to midnight, you get home, you eat dinner, watch TV, it’s infomercials. 

Brad Weimert: Yeah. 

Lee Arnold: So, I saw one. I went to the DoubleTree hotel in downtown Spokane, Washington, where I grew up. And, in two hours, they convinced me to race to the back of the room, spend money I didn’t have, maxed out credit cards I didn’t even have yet. And go to the three-day training, what every seminar guru does to this day. 

Brad Weimert: Yeah. 

Lee Arnold: That’s the model.

Brad Weimert: Who was it?

Lee Arnold: It was Russ Whitney. 

Brad Weimert: Oh, nice. 

Lee Arnold: Yeah. So, I went to this three-day training, and at the end of it, they’d convinced me that real estate was my career, was my passion. So, I dropped out of college. I literally burned the ships and said, “Okay. This is what we’re going to do.” Now, I grew up on a farm. My mom was a stay-at-home mom. Dad was an HR manager at a utilities company. So, we were not poor, but we were by no means wealthy. I would say lower middle class but no knowledge of money, how they do it.

My parents did not invest in real estate. The house that I grew up in, my dad built, and he would build it as he got paid. So, they never had a mortgage on the house and in 45 years, they’ve never had a mortgage. So, the whole concept of other people’s money, leveraging against real property, clueless. So, when I get out of this thing, I mean, you want to talk about, wide-eyed and bushy-tailed with no idea what I was doing. I was so clueless, I was reckless to the point of carelessness because I just didn’t know what I didn’t know.

Fast forward to today, started flipping houses. Learned that the money in real estate is really in the money, the finance side. And so, as we continue to grow and scale our flipping business, we sort of acquiring rentals but ultimately got into the money business, lending money to clients. So, we’re now a nationwide private money lender. Lending money to people who are in a similar situation, bad credit, no income or minimal income or no extra income. And just teaching them, you know, my pastor in Salt Lake City used to always say, “I’m simply one beggar sharing with another beggar where I found bread.”

And for me, where I found bread was money is attracted to opportunity, not people. And so, if you’ll invest your time finding deals, then you suddenly become unimportant in the transaction. If you got a deal that’s worth 300,000, that you need to borrow 154, that’s a really good deal to the lender. It’s a safe loan. It’s a secure loan. You’re going to be able to get that financing whether you have no credit, bad credit. You’ve been through bankruptcy, foreclosure.

And so, for those that have been there, where I had been, there’s hope and I think that’s the most exciting part is there’s hope. Doesn’t matter where you are financially, there’s hope. And a lot of people don’t know that. They missed that. And so, my mission, my motivation is to provide hope to people who are in despair. I mean, the economy’s gotten tough. What it costs now to buy groceries and put gas in your car is a very different number than it was even 5 or 10 years ago.

Many people are living not even paycheck to paycheck. They’re struggling to make ends meet at the end of the month. And they don’t have to live like that. There’s options. There’s opportunities. And it doesn’t matter what their credit is or what they’ve been through. As long as they understand these core principles that money has attracted opportunity, you can get yourself out very, very quickly in whatever financial situation you’re in. 

Brad Weimert: Yeah, I believe that. I mean, there are lots of interesting elements of that leaning into the money and saying that the money in real estate is in the money is an interesting frame. And as somebody that’s entrenched in the financial world and banking, it is hard to argue that the golden rule is what really runs the world, which is who has the gold makes the rules. And those are the banking institutions, period.

And you can think that it’s government, but it’s the banking institutions. And all you need to do is go through a financial collapse, which we have seen now in multiple times in our lives, to see who goes away and who doesn’t. And the major financial institutions get excused. And we use the phrase ‘Too Big to Fail’ in the ’08 collapse, ’09, right?

So, let’s rewind a little bit. So, you beat your face against the wall trying to figure out real estate when you’re a farm boy. That’s what I heard. This was the narrative that got painted in my head. 

Lee Arnold: Yep. 

Brad Weimert: How long did it take you to figure that out? And when did you transition into education, into selling education? 

Lee Arnold: So, I spent six years from ‘95 to 2001 flipping and investing in real estate. And at that time, I also went to work for Russ Whitney. So, I had read Rich Dad Poor Dad, Robert Kiyosaki. If you want to be successful, surround yourself with successful people. Well, growing up on a farm, and attending church every Sunday and Bible study on Wednesday nights, my core group of folks was pretty small, pretty limited, and none of them were financially minded or savvy. And if they were, I didn’t see any opportunity for mentorship within that circle. So, I had to broaden my horizons.

Well, the wealthiest people that I had met up to that point was the people putting on the real estate investment seminars, or so I thought. So, I called him and I said, “Hey, I want to come work for you guys.” And they said, “Sorry. We don’t hire students.” Well, one thing that I’ve also learned over the years is, “Don’t tell me no. Tell me how.” So, all right, you don’t hire students. Well, that sounds like a no. So, don’t tell me no. Tell me how.

Long story short, I talked to 50 people and finally got on the phone with the president of the company, and he said, “Look, Lee, I can see that you’re not going to let up. You’re going to keep calling us. So, here’s what I want you to do. Go get a job in sales,” you know, I was working in a grocery store, “Go get a job in sales, do that for two years, and then call us.”

So, now I quit my job at the grocery store. I go get a job selling packaging, of all of the least sexy things you can sell. I was selling bubble wrap, corrugated boxes, tissue paper, wrapping paper. This is what I did.

Brad Weimert: It’s pretty boring.

Lee Arnold: I spent two years on the road selling these things to every little mercantile and shop and store in every little city in four states. And I was on the road 40 weeks a year doing this. On the anniversary of my second year, I called them again and I said, “Okay. I’ve got two years in sales experience. I’ve been flipping houses. Hire me.” 

Brad Weimert: And they’re like, “Wait, who are you?” 

Lee Arnold: Yeah. Well, it was funny because after they hired me, I went and talked to the president of the company, Richard Brevoort, and he said. “Who are you exactly?” And I explained to him. He goes, “That’s funny.” He says, “I tell everybody that bit about two years in sales and call us back.” He said, “In 25 years, you’re the only one that’s done it.” 

Brad Weimert: I believe that. 

Lee Arnold: I now do it to people. 

Brad Weimert: It’s amazing. 

Lee Arnold: They call me up, “Hey, Lee, can I come work for you?” “Yeah. Go get two-year sales and call me.” And you just never hear from them because people don’t want to work for something. They want something immediately. And that’s what I learned through that is the more you can surround yourself with people who will teach you things. Don’t take jobs to earn, take jobs to learn, because the value is in the mentorship and the skills that you’re going to pick up through that. That took me a minute to figure out as well. So, I go… 

Brad Weimert: But you seem to know that when you were 20 doing this, and that’s when you just said in 25 years he had only seen one person do this and it was you.

Lee Arnold: Right.

Brad Weimert: And it is very uncommon. And I’ve seen it sort of as a trend through interviewing many successful people that they find that earlier and they latch on to what can I learn from the situation instead of what’s the immediate reward, specifically when they’re younger.

Lee Arnold: Right.

Brad Weimert: Tremendously uncommon more and more so today in our economy, in the gig economy of like you can turn something around tomorrow and make a quick buck but you’re not building something.

Lee Arnold: Right. Well, and it’s really about focus and it’s about future pacing. Where do I want to end up? And if we don’t know where we want to end up, then we really have no compass on how to get there. And so, for me, it was really important that my goal was to be a millionaire, which meant a lot more in the 90s than it does now. 

Brad Weimert: Sure. 

Lee Arnold: But that was the goal. How do I get there? And so, that’s what I wanted to figure out. And so, I was trying to find the people that could help me get to that point. So, I moved down to Florida. So, I grew up in Spokane, Washington. I moved down to Cape Coral, Florida. Now, I’m on the road every week, flying on airplanes to all these cities all over America putting on these real estate investment seminars.

Now, I’m the guy in the back of the room. I’m not on stage speaking. So, I’m the guy in the back of the room helping people get involved in these programs and these packages. But I noticed that they all had the same issue, the same objection every time, “I have bad credit. Where am I going to get the money?” And so, there’s this missing link in the education space. And that was, “Okay. I’m going to teach you how to make money in real estate but when you find a great deal, you got to go figure that out. Go get your own money.”

And I thought, “You know what? I think there’s a better way.” And so, I went into the education space initially to teach people how to do short selling. So, this is early 2001-2002. You know, the time I was living in Salt Lake City, Utah, where the Olympics were held in 2002. And in anticipation of the Olympics, all of these investors from all over the country had come in and bought these big homes so that they could rent them to ESPN and Fox News, all of these Olympic sports channels.

Well, when the Olympics left, with it they took 30% of the market. And Utah in and of itself was kind of this micro economy that exists outside of what’s going on nationally. They create their own economy internally, and 30% of the market fell out. And so, short foreclosures are rampant. There are short sales everywhere. And so, that’s what we started specializing in was short selling. I mean, I was negotiating 400 to 450 short sales every month on this many files. It’s a huge operation.

And so, somebody approached me and said, “Hey, would you write a book and tape on this?” And I said, “Okay.” So, I did, and within a couple of weeks, I’m now in the guru business, teaching people how to do it. Looking back, I don’t know if I would have gone into the guru business just for being in the guru business. But after being in it 20 years, I realized that it’s an opportunity to influence and encourage and inspire people, and really gave me access to people that I wouldn’t have otherwise.

You know, when you’re flipping houses, even if you’re doing… You’re a big flipper. What are you doing? 400, 500 houses a year, which is a lot, but what is that? 400 sellers, 400 buyers. In the info space, we can influence millions. In the flipping business, you can influence thousands. And really, my goal in our companies is to influence as many people as I can in a positive way both for wealth creation, but also through wealth creation, I also want to influence them through our 501(c)(3) nonprofit, which is called He’s The Solution Ministries.

So, by teaching them how to get wealthy in life, maybe they’ll give me the opportunity to share with them what Christ has done for me and how they can have a better experience from a spiritual perspective. 

Brad Weimert: So, when you, Russ Whitney, it was the training ground and you were working for a seminar company there, but it sounds like you then went off. You said 400. You were negotiating 400 to 500 short sales a month, which is wild. I have a million questions about this, but from a business perspective, had you left Russ Whitney at that point? So, you got out of the education side of things. You felt like you learned real estate investment and you were doing real estate investment. 

Lee Arnold: Yeah. So, I was working for Russ in the late 90s, 2000s. And we were doing an event in Salt Lake City, Utah. And this really pretty girl showed up at the event. And, of course, all of the guys who we were traveling with were like, “Ooh, she’s pretty.” 

Brad Weimert: Yeah. 

Lee Arnold: Long story short, she’s now my wife. We’ve been married 22 years. 

Brad Weimert: Well done, sir. 

Lee Arnold: But that’s what took me from Cape Coral to Salt Lake City was to marry her. And so, we got married in 2002. And so, now I’m off the road and I decide, “You know what? I’m just going to go back to investing real estate full-time. I just want to be on the road.” And so, that’s what we did. I started investing there in real estate in Salt Lake. 

Brad Weimert: And the education thing. So, now you’re looking back on it and saying, “Okay. This is a lever.” Now, this is a sort of top-of-funnel way to get exposure to many, many more people. The other thing that it is for sure is the opportunity to connect with other high-level people because you have a personal brand. And as you said before, I mean, you have to be a behemoth real estate investor for other people to really know you. There are maybe ten people in the country that you point to and you’re like, “That person is a developer,” right? They run an operation.

Other than that, you’re under the radar of everybody. In info, you’ve got a brand but at the time, you said somebody just came to you and presented the idea. Was it just low-hanging fruit for you at that point? Did you just think, “Oh, yeah, I can make a bunch of money this way”? 

Lee Arnold: For me, it wasn’t even about the money. It was really more about the experience and learning. Again, going back to that whole concept of learning, “What can I learn through this?” And my goal when I did the book and tape course was to help people short sale properties and ultimately help homeowners who were in that situation. Foreclosure is a very scary thing. And when you don’t know the rules of engagement, it’s even scarier.

So, what I wanted to do, my goal in that book, first book and tape course, was to bring awareness to this because I had been working with so many homeowners that would come into my office just in the state of despair, “I’m about to lose my house. I’m going to be homeless.” Well, you don’t have to work like that. And we’re able to help homeowners stay in their houses years without making payments as they got back on their feet financially.

And so, I realized, “Hey, this is an opportunity to help people in a positive and meaningful way, not just by their house and get out and flip it and make a quick profit, but to inform and help people understand this is what’s going to happen if you do nothing. Here’s what could happen if you take this thing by the reins and manage through it. And it was just a really positive thing.

Unfortunately, for the company that I had written this book and tape course for, within four months of doing it, they were out of business. And so, I write this book and tape course with no knowledge of other than traveling around, putting on seminars. I didn’t know how to run a seminar company. But in four months, they’re like, “Hey, Lee. Sorry. Here. Go do something with that.” 

Brad Weimert: Oh, but they gave you the IP back. 

Lee Arnold: Fortunately, before I went into that, my attorney said, “Make sure you own the content.” 

Brad Weimert: Amazing. Amazing, because we know a lot of stories where that’s not the case. 

Lee Arnold: Right. So, fortunately, I own the book and tape and the content that was in it. And so, when they shut down, I bought their inventory out of a warehouse and it’s like, “Okay. Now, I got a thousand of these things. Now, what do I do?” So, very quickly I had to pivot and learn the marketing space. And that is a much more interesting and challenging business than real estate. Real estate, looking back, is relatively simple, right? Find junky house. Invest time into fixing it up. Sell it. Pretty simple, right? The marketing… 

Brad Weimert: Conceptually. 

Lee Arnold: The marketing business, you know, which channel do I market on? Do I do direct mail? Do I run on Google? Do I run on Facebook? How do I attract the people that I’m looking to influence and persuade in a positive way? How much do I spend? What’s the revenue conversion? What’s the ROI? What’s the ROAS? All of these terms that I was clueless about. 

Brad Weimert: And never-ending change there, right? So, real estate, one of the beautiful things about real estate is the models, the models, the models, the model, and whatever asset class you’re in. Yeah, there are variances in laws and county-by-county, state-by-state, whatever, but flipping a single-family home is flipping a single-family home. And that model’s been the same for 100 years. Right?

Lee Arnold: Right.

Brad Weimert: And this is the beginning of the empire that you are in the middle of creating.

Lee Arnold: Right.

Brad Weimert: I have to ask to scratch my own itch. You mentioned the fallout of the real estate market in Salt Lake post-Olympics. 

Lee Arnold: Yep. 

Brad Weimert: Is this systemic? Does this happen with every Olympic endeavor? 

Lee Arnold: That I don’t know. I never researched it beyond just where I was at. 

Brad Weimert: It seems like an interesting opportunity for investors to just follow the Olympics around and clean up afterwards. 

Lee Arnold: Yeah. I think there would be opportunity for that, certainly. 

Brad Weimert: Somebody should dig in. So, tell me about the build of the info space because, obviously, we both had a ton of these conversations but there’s this delineation with gurus between operators and information salespeople. Do you have the experience and are you doing it currently or is all your money coming from info? And it’s tough. Like you said, there are different drivers for each side of that business.

Lee Arnold: Right.

Brad Weimert: But running an info product company is not real estate investing at all.

Lee Arnold: Correct.

Brad Weimert: It’s running a seminar company. And it’s a totally different beast. So, what was the runway like there? What were the initial days? How long did it take you to get to a million? What was the next jump-up? 

Lee Arnold: Well, I think again, I don’t know if it was in Rich Dad Poor Dad or in one of the other books that I read. No, actually, I think it was Warren Buffett who said it. He said, “Success is relatively easy. Just find somebody who’s already doing what you want to do,” because they’ve already created the model. The path has been built. Just follow it. And so, I started looking for somebody who could teach me marketing. And it was Yoda who said, “When the student is ready, the teacher will appear,” or something like that. 

Brad Weimert: Abraham Lincoln, Yoda, I don’t know. 

Lee Arnold: They all get credit.

Brad Weimert: Right.

Lee Arnold: So, I’m looking for how do I become a better marketer. And I stumble across this guy named Dan Kennedy. And Dan Kennedy sends me this big info pack and he says, “Hey, I’m putting on a convention in Chicago next month. Why don’t you come?” 

Brad Weimert: I love it. 

Lee Arnold: So, I spent a bunch of money and I fly to Chicago. This is now 2004. And from the stage, Dan Kennedy says this. He said, “Business is about building a list. It’s not about a product. It’s not about a service. It’s about building a list.” He said, “So, how often are you communicating with your list?” Now, to you and I now that seems like such a simple thing. That’s not a big deal. In 2004, for me, it was transformational because I didn’t have a list. I managed all of my contacts on a piece of paper.

If I needed to communicate with somebody, I would call them. There was no rhyme or reason. There was no intentionality behind the engagements. It was just kind of figure it out. Well, building a list is finding the constituents, the people who want to do business with you and just maintaining a relationship with them over time. That’s all it is. So, he sells this really expensive software program, Infusionsoft, in its infancy. It hasn’t seen the light of day. He didn’t disclose at the time that he owned 30% of the company that he was pitching. 

Brad Weimert: Oh, sh*t, I didn’t know that. Do you remember your original? 

Lee Arnold: Which doesn’t matter. Well, I paid $17,000–  

Brad Weimert: Oh my God.

Lee Arnold: –for this new CRM that was just coming to market. Nobody knew what it was. It eventually became the engine behind like 90% of the info space businesses. And now I think you can invest in it for $99 a month. 

Brad Weimert: Yeah. Do you remember your…? My original Infusionsoft account was M191 because it was before you were able to name your account. So, it was like m191.infusionsoft.com. 

Lee Arnold: I’d have to check but it was something like that. And so, I come back from this conference in 2004-2005, and I hand it to one of my assistants and I said, “Hey, figure that thing out.” 

Brad Weimert: Yeah. 

Lee Arnold: It’s clunky. You know, I think it’s built on some beta platform. And so, she’s struggling with this thing. I said, “Here. Load up all of my contacts,” and it was 150 people. That was it.

Brad Weimert: Amazing.

Lee Arnold: So, all the business cards I’d collected over the years, I got 150. I said, “Put these in the system.” And we just started creating follow-up sequences. Email. “Hey, how are you doing? What’s new? How can we serve you?” And that became the driver of the business. So, yes, revenue is important, but so is list building, adding people to your list who want to do business with you. Maybe not now, but eventually.

I have people who have never done business with us and they finally invest in something either they borrow money from us, they come to one of our trainings, they purchase one of our notes that we sell, and they’ve been in my database for 10 or 15 years. And we’ve been incubating them the whole time. And so, Dan Kennedy taught me this, and this is kind of the foundation of how I approach everything. “It is not my customer’s job to remember me. It’s my job to make sure they never forget me.”

And so, from that is the foundation, communicating, emailing, calling, texting, inviting them to webinars and different platforms where they can learn and engage and grow and experience things. That became the engine of the business. And I didn’t realize how important it was. And that really is, for me, the secret sauce of going from five figures to six to seven to eight, and to nine is that list. It seems so simple but it’s so important. 

Brad Weimert: Well, I think that that’s the perpetual frustration of entrepreneurship is that there’s a famous Mark Twain quote, which I never remember exactly, but it’s something to the effect of, “I was going to write you a short note but I didn’t have time so I wrote you a long letter instead.” It is only through mastery that you are able to distill topics to a digestible format. And it’s simple but not easy to have these principles and execute them so people get lost in the weeds, which is the genesis of talking is to figure out what some of those things are and how to navigate through the weeds.

So, before we got going, you said 0 to 1 million was probably the hardest and took time or it was the longest. And then 1 to 5 but 5 to 10 was a significant chunk, and then 10 to 25 was a different thing. Let’s talk about that gap or that evolution because ultimately I want to talk about kind of how money came into the picture, how the nonprofit came into the picture, and when because those nuances are things that a lot of entrepreneurs struggle with, right? When do you introduce new concepts? When do you shift gears? When do you stay focused?

So, you took a while to get to a million and you’re figuring out Infusionsoft and list building. What was the jump from 1 to 5? Did you shift something there where you said, “Hey, I need to do something different,” or, “It’s time to scale this further,” or what did that look like? 

Lee Arnold: Yeah. The first million you can get there with just hard work, guts, and luck. And if you push enough buttons, eventually something’s going to open and you’ll figure it out. But that first million is 100% you. It’s just you driving the entire enterprise and in many respects, it’s just you. But I remember meeting with an investor early in my career, and I was soliciting him to invest money into what we were doing, like, “Hey, be a private money lender for me. Put money into the company. Let’s partner up on something.” And he said, “Lee, tell you what.” He said, “I’m willing to invest and do some business with you.” He said, “But not until you hire a personal assistant.” True story. 

Brad Weimert: You had some great people in your life telling you exactly what to do. 

Lee Arnold: Yeah. And I’m like… 

Brad Weimert: And you were probably too dumb to say anything other than—

Lee Arnold: Oh, so dumb. 

Brad Weimert: —“I’m just going to do it.” 

Lee Arnold: And I’m like, “No,” I pushed back and I’m like, “Why in the world would I need a personal assistant?” I said, “I’ve been doing this for five years now pretty successfully. I don’t know why that would be a requirement for this deal.” He said. “Lee, if I’m going to put my money with you, I need somebody else that I can call when I need questions answered. And you’re a driver. You’re the visionary. I need somebody stable in the enterprise that is answering the phones and completing tasks and projects.”

And I was kind of offended. I’m like, “Well, I can do that.” And he goes, “I know you can, but I don’t want you to.” He said, “Your genius is out finding deals.” That, again, was another aha moment like, “Ah.” 

Brad Weimert: I can’t remember who it is. It’s one of two friends. It’s Cameron Herold or Dan Martell, but one of them routinely says, “If you don’t have a personal assistant, you are the personal assistant.” 

Lee Arnold: That’s right. 

Brad Weimert: And that’s a significant realization you had. 

Lee Arnold: Well, and everybody hesitates to take that leap of faith because they think it’s a leap of faith. It’s not a leap of faith. It’s a smart business decision. Because what you’ll learn as you scale is employees are not an expense. They’re an investment. And they will produce a far greater return on investment than any house you can flip. And that I didn’t realize. You know, even to this day, I’ll talk to a lot of new investors and I’ll tell them, “Go get yourself a personal assistant,” and they’re, “Well, Lee, that’s going to cost me $20, $25 an hour.” Okay. Well, that’s $40,000 or $50,000, but a good assistant should give you a 5X multiple.

So, if an assistant is going to run you 50,000 a year through their efforts helping you, you should easily make a quarter of a million. That’s a 500% return. And I guess, okay, well, let me change the scenario. I got a house right now that’s worth 250,000. You can have it for 50,000. Do you want it? Oh, yeah, I want it. Well, what’s the difference? Well, when it’s a house I’m not directly responsible for making this thing produce 250,000. It’s just the market.

When you hire a personal assistant, you’re now responsible to make them do the things that will produce the rate of return. So, it’s on you. So, now it becomes about accountability and following up and following through and being that person. But that first assistant was transformational because she 10X my business. Because I could be out doing my thing, which was visionary and entrepreneurial, and she could be in the office handling all the paperwork and making the calls and managing the systems and everything else.

And so, I realize, “Hey, if one person can give me an 800% to 1,000% return on investment, what if I had two, right? And now we’re on to something. Now, we’re beginning to grow something that’s significant. And I think now we’re at 100, almost 130 employees because I realized, “Hey, if I can manage one successfully to profit, maybe we can do it with two, maybe we can do with five, and we can do it with ten.”

And it is an investment and that’s what people have to realize. You’re investing in people but know that, and this is a management tool, just everybody has their own visions and dreams and goals. So, I don’t know who said it but this was the quote, “If I will make my employees’ success my priority, they’ll make my customer’s success their priority. And my customers will make the business’s success their priority.” So, it’s really about investing in people and those closest to you and those who work for you.

So, that was the significance and jumps for me is really building out the enterprise. So, 0 to 1 million, one assistant. 1 million to 5 million, I think we had 8 to 10 people on staff full time at that point. 50 to 100 million, currently 130. 

Brad Weimert: Yeah. 

Lee Arnold: But it is about people. 

Brad Weimert: 130 is a lot. Well, I think that’s a noteworthy paradigm shift of the priority becomes success and success of the staff as opposed to your own success with the company’s success. I have a business coach, and I’m like his charity case. His clients are ex-presidents and Fortune 50 and Hollywood producers. And I’m his charity case but we’re very similar. And he at one point said and this is what he does but we’re talking, one morning and he says, “What does success mean to you?”

And I’m like, “For f*ck’s sake.” It was like this deep, esoteric question. He’s like, “Well, what does it look like when you’re successful?” And I was like, “I don’t know. I feel successful when I execute something and get something done.” And he said, “Okay. What we need to work on is redefining your association with that word so that if you get something done but you are not showing somebody else how to do it while you’re doing it, we’re creating a system so that somebody else can do it for you, you failed. You failed, period.”

And I was like, “Oh, sh*t.” And that’s a hard transition. So, when you talk about the phases of 0 to 1 million or 1 million to 5 or 5 to 10, it’s not just the mechanics but it’s the mentality that’s wrapped up in that that allows you to drive forward. And you just articulated that one, right? Okay. It’s about making the staff successful. You mentioned before we got going that you thought the jump from 5 to 10 was the hardest thing. What is it about that area that became difficult or how did things start to fall apart or why was that the challenging part? 

Lee Arnold: Well, from 1 to 5, I’m hiring people that are reporting to me directly. And so, I have direct impact and all of the feedback loop is coming to me and through me. From 5 to 10, I now have to start installing people between me and the actual work product, which means now we need systems, now we need SOPs. We need people following protocols and doing the same thing with repetition and quality. But I don’t have direct control over that.

So, now I’m entrusting somebody else and putting them between me and that deliverable. That’s very hard, especially for entrepreneurs because we’re typically all control freaks.

Brad Weimert: No.

Lee Arnold: Yeah. And nobody can do it better than we can do it. And so, we have to trust ourselves to train people appropriately and then trust ourselves to manage and hold them accountable appropriately to do the tasks that we’ve set out for them to do. So, we kind of lose control or at least we feel like we’re losing control. And that’s the hardest part. And that’s why we talk about 5 to 10, but that’s why 10 to 25 is an even more challenging leap because now we have to trust people indefinitely to the point that all we see is a balance sheet.

All right. So, now I’m managing your deliverables based on the success of the enterprise over the week, the month, the quarter, or whatever we’re tracking, and you get even further removed from the actual work product. And that’s the hardest part about scaling is getting further and further removed from the things that are actually generating the income for the business and trusting the people that you’ve hired and that you’ve trained to do their jobs so better and better and better people. The bigger the enterprise, the more important you’ve got really good, solid people. 

Brad Weimert: How do you think about that kind of leverage and trusting people and how that intersects with what we know to be a Steve Jobs approach where he was grueling in his drive for product perfection, which I interpret as in a lot of levels as micromanaging and being like, “No, no, no, this isn’t good enough,” which means that your fingers are in everything and you’re not fully trusting people. How do you think about those two mentalities, or do you think that they’re totally isolated? Do they intersect at all? 

Lee Arnold: I often wonder, could Steve Jobs do what he did then now? Probably. But he’d have to do it in a very different way because we’ve all read books about Steve Jobs and he was a tyrant and there are as many books about him from a negative standpoint as there are books about him from a positive standpoint because he drove so hard. And in today’s culture, it is all about work-life balance. And post-COVID in the now work-from-home world, it’s really the employees who are dictating the rules of engagement with the enterprise.

“Yeah. You know, I’ll come work with you but I’m going to need to work from home three days a week. And I’m going to need eight weeks of vacation, not two.” And they can dictate it because to get really good quality, high-level people, these kinds of things are accommodated, allowed for. And so, it’s a very different working culture now than what we saw in the 70s and the 80s and the 90s. For good or bad, it doesn’t really matter because it is what it is. So, now we have to figure out how to work within the confines of the construct of the new working class. 

Brad Weimert: Do you think that that’s going to persist?

Lee Arnold: Indefinitely. Yeah. We’re never going back to the Industrial Revolution age. 

Brad Weimert: Oh, I agree with that but I think we did see the swing of that initial trend during COVID of work from home and the flexibility. Every major tech company on the planet has pulled back from that approach. And it’s still hybrid, right? But all of them said, “No, you have to come into the office.” And clearly, if that’s the case, there was an efficiency problem and efficacy problem. It wasn’t working how it needed to, numbers suffered, or else the tech companies wouldn’t have shifted. But when you see these multi-hundred thousand person enterprises say, “No, no it’s time.”

Lee Arnold: Yeah. And I don’t know that it necessarily wasn’t working. It’s that the systems to make it effective to manage it appropriately didn’t exist. I mean COVID hit so fast and so hard that we were all scrambling to figure this thing out and there was no structure around the working-from-home movement. And so, in my opinion, a lot of these enterprises are calling their employees back to the office so that they can figure out what this looks like moving forward because remote work is here to stay.

I think I have 35 remote workers because now if you want to attract talent, and as you grow in your numbers, talent becomes ever more the requirement to drive to the next level, they want to work from home and they live where they live because they choose to live there. We’re having a conversation at dinner and somebody asked you, “Hey, if you could live anywhere you want to live, where would you live?” And you said, “Austin,” because if I wanted to live anywhere else, I would, right?

And that’s the mentality of the people you want to attract and you want to hire, “No, I can do what I need to do right from here. I don’t need to move.” And I’m up in Coeur d’Alene, Idaho. You know, this tiny little dot on the map about 100 miles south of the Canadian border. We have remote workers in Atlanta and in New York and in Miami and in all over the country because they don’t want to move.

And if I want to recruit them into a part of the organization, I have to accommodate the lifestyle they’ve chosen and where they want to be. And so, as an organization, we had to figure out how do we manage these remote workers appropriately. And now it’s going to boil down to systems, processes, software technology, and KPIs. 

Brad Weimert: Yes. 

Lee Arnold: And managing to the deliverables, not managing the person. 

Brad Weimert: And it forces you to be more clear on the outcomes that you’re after and the measurements that you’re after. 

Lee Arnold: Which is very hard for an entrepreneur who gets things done by throwing elbows and fists and just getting in there and brawling it out. Doesn’t work. So, it was a tough transition but it’s one that if you want to go from 1 to 5, 5 to 10, 10 to 25, it’s one that everyone’s going to have to make because you’re just not going to get some of your better quality people to want to live where you live or choose to live the way that you live. 

Brad Weimert: Do you think about, does the role matter in that? So, I have very strong feelings about both sides of this and I have a preference, which is in office for lots of reasons. One is I think it’s easier to build a culture in-office. Two is the pace of information exchange is faster and you eliminate a whole bunch of social dynamics of, do I reopen a Zoom meeting just to ask one question, or do I just Slack it?

But face-to-face, you just lean over and sometimes that makes the whole thing move faster. Do you think about titles or roles or departments that are acceptable to be remote versus in-office, or does it matter to you? 

Lee Arnold: It’s definitely role-dependent and even people-dependent because we have some roles where I was adamant this person needs to be in office. We need this person in-office. But then you find the person, you interview them and you’re like, “Wow. I don’t care where this person lives. I want him a part of this organization even if they can’t be in office.” And so, we’ve made accommodations in that scenario where it’s like we’re just going to have this person. But there are other things.

Sales, depending. If you’re running phone sales, it’s easier if they’re coming in because you got to motivate salespeople. If it’s remote sales where they’re traveling anyway, it’s like, who cares? Because they’re going to be on the road and that’s where you want them. But I think the easiest for us to accommodate remotely was marketing because it’s all digital anyway. All of your marketing is happening in cyberspace. So, you can see the same metrics from Atlanta as you can in Coeur d’Alene, Idaho. So, it doesn’t matter.

But certainly, the real estate flipping business where I’ve got to have people on-site, that’s never going to be outsourced. It can’t be. It can’t be remote. It’s a brick-and-mortar business. It’s boots on the ground. But anything customer, customer service-centric, sales, marketing, those types of positions are relatively easy to accommodate remotely. 

Brad Weimert: I like it. Yeah. We have similar approaches there. I also have had certain roles where their response to whether or not they should be on-site or remote dictates whether or not I want to hire them. So, a key operations hire. If they tell me that they can do it remote, we are misaligned in our approach to how we’re going to run this org. And maybe he just know a lot more than me and I accept that but right now that’s the wrong answer for me.

Or if you want to run our sales team and we have an in-house sales team, I need somebody there. And if you don’t think that that’s also true, we’re too misaligned to move forward, for me. And again, I’m open to being wrong just not right now. That’s it. So, okay. You’re scaling this thing up, the info side of things. Did you continue to do the flipping while you were or the real estate investing? 

Lee Arnold: Yeah, continued flipping all the way up to 2008. 

Brad Weimert: Okay. Those were fun days. 

Lee Arnold: Oh, man. And then the market changed the way that it did, and I was not prepared for it. I had never seen anything like it. 2001, September 11th, 2001 was an interesting period, which was almost insightful to the 2008 recession, just in how the market responded. You know, I remember September 11th very vividly because, at this time, I’m working now. I’ve got my real estate license. I’m working at a real estate brokerage. I partnered with some associates. We now own this brokerage. I’ve got 60 agents that are working for me.

And on September 11th, I go into the office and the phones aren’t ringing. It was a ghost town. It was a very scary time in America for those that remember it but even scarier in business. And it took a good six months for the markets to even begin chugging again. It was a slow burn to get back to where we were, and ultimately, the way that the government got there was they lowered rates significantly. Well, the lowering of those rates to zero is what fueled the 2008 recession and crash.

But from 2002 to 2008, I mean, it was just as crazy, wild ride. And I remember interviewing people in 2010 and 2011 for jobs and, “So, how much do you want to make?” “Oh, I want to make $180,000.” “Well, why would you want to make that?” “Because I did in 2006.” And my response was, “Well, who didn’t?” Some markets, it’s easy to be successful if you’re just in the path of progress. But when the market spins on you and shifts, making money becomes very challenging.

And I was so leveraged in 2008. I was building jumbo homes in Park City, Utah, ski-in ski-out properties. I had a massive portfolio of rentals that I had leveraged so I could lend. I was a private money lender leveraging my portfolio and all of that just went away in 2008 and 2009. It was the most painful experience that I’ve ever had to go through. I went from 68 employees in one day to literally 24 hours later, four employees. We got to lay off 64 people in a day. 

Brad Weimert: That hurts my stomach thinking about it. 

Lee Arnold: It was so painful to have to do it but, I mean, literally, the rug got swept out from under us or at least that’s what I thought at that time. Now, looking back, the rug didn’t get swept out from under me. I wasn’t looking at the market. I wasn’t paying attention to the cycles. Honestly, I didn’t even know what to look for. And so, it caught me by surprise. And it caught a lot of people by surprise.

But you know who it didn’t catch by surprise? Everybody who had experienced it in the 90s and the 80s and 70s, and they saved up for it. I mean, there are billion-dollar enterprises today that were ready in 2009 seeing what was happening and now they came in and they started buying everything up.

That’s the inventory issue we’re having in America today is so many properties are owned by private equity because Warren Buffett, in his annual letter to his investors, makes the statement, “If I were a younger man, I would go out and buy up all of the single-family residential real estate in America and rent it out.” And Blackstone and all these big Fortune 500 private equity firms went, “Hey, that’s a good idea.” And now, they own tens of millions of houses in the US and they’re renting them out.

So, one of the reasons prices are going up so high is we have limited inventory. There’s very few homes available for people to buy. And that’s really what’s causing the current challenges in the market. People think it’s rates, but even as rates went up, people were still buying houses because they needed houses. And it’s going to be interesting over the next coming several years. I don’t see rates going down where they were pre-2008, post-2008. I think rates are going to be hovering above five for a while.

Brad Weimert: So, 2008 was rough. The 68 employees who are tied to the real estate investment side of things.

Lee Arnold: And the education business.

Brad Weimert: The education, so I want to fast forward to the sort of split from education to the money side of it and when you introduce that. How big were you when you did that? And for clarity here, you’re investing, you’ve got the seminar business, and the seminar business is giving you more exposure, connecting with other people in the space through it. And you’re building this thing and you figure out the marketing engine and how to effectively run a seminar company at some point. How big was it before you thought I should be lending money? Because that’s a whole different business model, whole different initiative, and those pivotal moments can either be they’re make or break. They can be super distracting and hold you back and prevent you from your core activity. Or they can create the whole business, right?

Lee Arnold: Yup. I started lending in 2005, 2006, but only locally. So, I’m still living in Salt Lake City at this time, and through my foreclosure business, so I was dealing heavily in foreclosures. That’s why I was heavily involved in short sales. But if you’re unsuccessful in negotiating a short sale, it goes to foreclosure, right? And so, we would follow them. So, from the homeowner getting the notice of default filed, we would follow it all the way to the foreclosure auction. If we were unsuccessful or the banks wouldn’t work with us, we just go to the auction and buy it there. So, now, I’m buying these properties in auction and wholesaling them. But the people I was wholesaling them to were like, “Would you mind lending me money to buy this house?” And I went, “Yeah, sure.”

Brad Weimert: Hilarious.

Lee Arnold: So, I wholesale the property to this investor, I carry the financing. I’m like, “Hey, this is great.” I get a $30,000 markup on the sale. I lock up interest at 12% for 12 months. Life’s great. I’m borrowing money against my portfolio at three, three and a half. I’m lending it at 12. The arbitrage is fantastic. All of this is great until the market shifts, 2008. They stop making their payments to me, which means I can’t make my payments to my lenders. And that’s where the whole house of cards fell out.

So, fast forward, it’s 2010. Through 2008 and 2009 in the info space, I started selling what was called Loan Renovator. So, there’s a lot of companies that were helping homeowners do loan modifications and charging them just crazy amounts of money, $2,500 a month to get loan bonds with their banks. What homeowners didn’t know was they could do it themselves. So, I created a do-it-yourself loan modification program. And this is what we were now teaching in the info space.

The thing I like about the info space is you can change the content as the market shifts because your clients need to know where’s the market going and how do we monetize it when we get there and how do we monetize all along the way. So, we moved heavily into the loan modification, do-it-yourself space in ’08 and ‘09. And then in 2010, the market, that’s really when it hit bottom in most places. And so, now, I start hearing interesting things from my clients. I have some clients that are going, Lee, I’m finding all these incredible deals because, I mean, if you lived in Phoenix, Arizona in 2010, a house that four years ago sold for 400, you can now buy it for about 85. Just insane numbers.

Brad Weimert: Wild.

Lee Arnold: And so, they’re saying, “Lee, I got all these incredible deals, but I don’t have any money.” Well, then I had other people calling me, going, “You know, Lee, I’m so little nervous about the market. I’m not really sure I’m ready to dip my toe in there just yet. But I got like 500 grand sitting over here. What should I do with it?” And I was like, “Why don’t you talk to that guy? Because he needs to borrow 85 and you’ve got 500, why don’t you just lend it to him?” “Well, how do I do that?” “Let me show you.”

So, we started doing what’s called tabletop funding, where I would underwrite the file, get it to the place it was ready to fund, contact this investor. He’d wire the money, and then borrower would sign the note and deed of trust. Lender would get a note and deed of trust, make payments to borrower or to lender. So, we were bringing them together.

Well, we started doing this for a couple of years, and it got to the point where we were getting more requests than we had funds. Or we were getting requests and the funds came too slowly. About 60% of the loans that we fund were being done through people doing it through their self-directed IRA, which is a great strategy, but it’s slow. And so, we had to speed the process up. So, we said, “Okay, why don’t we open our own private equity fund, and then we’ll fund the loan and then we’ll just sell the paper after the fact.” And so, in 2013, we started our first private equity fund, which is a whole different business to be in, from real estate to the info space to private equity, very interesting transition because now, you’re managing other people’s money. And that creates a whole new level of accountability and responsibility.

Brad Weimert: And compliance.

Lee Arnold: Oh, and compliance because even when you set up your private equity funds, now you’re under SEC regulatory.

Brad Weimert: Right. That sounds like fun.

Lee Arnold: I had to learn a lot. But we’ve been in the private equity space now for over a decade. It’s a good business, but it’s a tough business. And I think a lot of people go into it, like I did. Eyes wide shut. You don’t even know what you don’t know. But you get in so far, you can’t retract. Now, you got to keep pushing. But that’s what we did. We just started going, okay, well, here, you want to borrow 200,000? Here’s 200,000. We’d write the paper and then we’d sell the paper to this person. So, now, somebody else is getting the benefits of the monthly payments from the borrower.

Well, we thought, hey, this is working. Why don’t we bring this out to our clients and let’s start doing this in other markets. Well, lending in your own market, where you know it very well, is very different from lending thousands of miles away where you don’t have a clue what’s going on in those little micro economies that exist. And so, we had to learn the market from a whole different scale.

Brad Weimert: So, I want to talk about that element of it because and for anybody that’s not– I’ve said this to you this weekend as we’ve spent some time together, but one of my favorite things about running Easy Pay Direct is getting to understand other business models deeply. And so, the language and business models, you can lose people immediately. So, when you talk about selling paper, if you’re not in real estate and even if you are in real estate, sometimes you’re just gone immediately. And in one phrase, we’ll get you off the train of understanding. So, for clarity, getting yourself in the middle of the funding process, basically, you are creating, in this case, a loan, and then reselling the loan to somebody else.

Lee Arnold: Correct.

Brad Weimert: Which happens everywhere in the lending economy. Everywhere. It’s the whole game. Somebody facilitates the loan, then they sell it to somebody else. So, that’s what you’re doing there. The underwriting component is a really interesting one. And I think that both from an investment perspective and a business perspective, getting out of your comfort zone and where you are or expanding the model to accommodate scale can be confusing, challenging, different. And so, where you’re going here is that you knew the local market so you could underwrite, you can look at the risk elements of a specific property based in the neighborhood because you knew it, right, or based on the asset class. But as soon as you’re talking about three states away, you don’t know the neighborhood. And even though it’s close to city center, it might be in a terrible area, for example. So, how did you approach that shift in that growth? Because huge opportunity to go from local to national and I would imagine you had to completely retool how you were underwriting accounts.

Lee Arnold: Completely. Because we lend to investors only. So, we’re not lending to the owner occupant who’s buying their dream home to move their family in to. We’re lending to the investor who is buying the ugliest house on the block that needs $50,000 to $100,000 renovation. And they maybe have never done this before. And that is a whole new element of risks. So, we had to underwrite it in a way that if the worst-case scenario occurred, that we could manage through it. Do you know what you call a private lender in a downturn?

Brad Weimert: No.

Lee Arnold: Landlord.

Brad Weimert: Yes, yes, yes.

Lee Arnold: So, we had to underwrite in a way that if the borrower defaulted on us in any way, that the property could recover from a loan that it had. So, what are the monthly payments? Would the rental income support the monthly payments? And so, we over time developed a five-point criteria for lending nationwide. We only want to lend on residential, single-family, one to four units. That’s it. We want properties that are 2,800 square feet or smaller. We want properties that are five bedrooms and three baths or smaller. We want properties that are under the FHA cap. So, everywhere and every county in America, 3,300-plus counties, they all have their own FHA cap. Now, the reason the FHA cap is so important is 80% of all the loans that occur in America are under that number. So, when 2008 hit and I’m building $14 million, $20 million ski-in, ski-out properties in the most luxurious ski area in the country, Deer Valley.

Brad Weimert: Did you keep one for me?

Lee Arnold: No.

Brad Weimert: Damn it.

Lee Arnold: No. They all went to foreclosure.

Brad Weimert: That’s great. Deer Valley doesn’t like my kind anyway.

Lee Arnold: Yes, because you’re a snowboarder.

Brad Weimert: That’s true.

Lee Arnold: Yeah, they only allow skiers in Deer Valley.

Brad Weimert: I know.

Lee Arnold: That’s how snobby…

Brad Weimert: I know. I need Park City.

Lee Arnold: And so, when the economy shifts, the government didn’t bail out $20 million houses. But they did bail out first and second-time homebuyers. So, I went, okay, so if you can’t be too big to fail, how do you build an enterprise within a construct that if it does fail, you know the government’s going to intercede and do something. Well, that’s first and second-time homes. So, if the market is shifting, we’re heading towards recession, the government is going to drop rates and everybody’s going to now refinance their house or go buy a new one. So, in our five-point criteria, if we had our investors stay so their retail sales price falls below the FHA cap, even if we experience 2008 again, they’re going to go in drop rates. All of our clients can now sell them because they can get FHA, VA, qualified buyers, and they’re not going to have the issue that we had in 2008.

Brad Weimert: So, super valuable from a real estate investing perspective and granular. I think the lesson to take away from that for all business owners was the criteria that you created was, in real estate, we called the buy box, right? What’s the specific criteria that you’re willing to buy in? And if you’re doing any real estate investment at scale, you have to have a buy box, right? You’re not nuanced.

The nuances create complexity. And so, you deliberately created a structure that allowed you to stay, not really narrowly focused, but stay away from the fringes, which added complexity, added risks. And in any business, there’s a lesson there. Are you making an exception to, because it’s a shiny object or because there’s money there, that is potentially getting in the way of the core business or creating unnecessary risks. I love that.

Lee Arnold: If you’re going to invest or lend, invest and lend on things that you understand or that you’re willing to learn about. I’d spent 10, 15 years flipping single-family residential property, I knew them. So, if I’m in Portland, Idaho, and you’re over in Miami, Florida and you try to tell me that something is going to cost this much money, you’re wrong because we know exactly what a new HVAC system is going to run, what a new electrical system is going to run, what it’s going to cost to put a roof on that house. And so, we could cry foul when an investor was coming to us with wrong numbers, or they were getting shined on by some contractor who saw an opportunity to take advantage of an unsuspecting investor. So, we could help the investor through that. And that’s really how we were able to roll out nationwide, how we were able to build out our underwriting infrastructure, was based on those five-point criteria. And the fifth one was no property over half of an acre for those that are taking notes and have to get the fifth one on. You’re good to go.

Brad Weimert: Why is that one? Just not as sellable?

Lee Arnold: Less than a half of an acre means we’re going to be closer to town, we’re going to be closer to services, we’re going to be closer to gas stations and grocery stores.

Brad Weimert: Easier to sell.

Lee Arnold: Schools.

Brad Weimert: Higher velocity of transactions.

Lee Arnold: Yeah. So, the bigger the acreage, the further it is out from the city core and the harder it’s going to be to sell.

Brad Weimert: Yeah, that’s great.

Lee Arnold: Especially in a millennial culture. Millennials, they’re an interesting group, but the majority of them don’t want to have to take care of land. I live on 10 acres. It’s a lot of work. And I don’t want to have to spend my weekends and Saturdays taking care of trees that are falling down, right? I want to go spend time with friends and hang out, go to coffee shops. That’s the millennial culture. They don’t want the responsibility of this. If you take out the millennial culture as a buyer, you lose like 38% of the market. So, we want to avoid buying properties where we have a limited box of people who want to buy that, live there, take care of that. And so, that’s why we try to keep it near services under half an acre.

Brad Weimert: So, when you took the money business, just for framework here, when you took the money business from local to national, where were you in terms of enterprise size? How big was the info product company? How big was the lending business, either in revenue or headcount or whatever makes sense?

Lee Arnold: When we went into the lending business, we were running south of 10 million. But in 2013, 2014, when we opened our first private equity fund, that’s where we now started moving beyond the eight-figure number, simply because we had to. As much as it was desire to go there just to accommodate the requests for funding, we had to grow in scale to accommodate all of these now clients that were following our education. Hey, this is what a good deal looks like. Here’s how you write the offer. Here’s how you go about buying it and fixing it and selling it. We had increased requests for funding. Right now, we get 2,500 requests for funding a week.

Brad Weimert: Wow. Damn. And the info product company is largely top of funnel, creates the leads for the funding business.

Lee Arnold: It’s interesting. The funding business is actually top of funnel.

Brad Weimert: Oh, interesting.

Lee Arnold: Because nobody thinks they need to learn anything, right? Everybody’s already an expert. So, we learned that when we were spending money to market for, hey, come learn how to flip houses, nobody was interested in doing that.

Brad Weimert: Wild.

Lee Arnold: But when we said, “Hey, we’d like to lend you money to flip houses,” people went, “Hey, yeah, give me some money.” Our first question to an interested party, so they go to our website and they say, “I want to borrow money.” Our first question is, “Do you have it under contract?” If the answer is no, they go to our education business because they don’t know what they’re doing. If the answer is yes, now, they go to an analyst on the funding side. Ninety-five percent of the leads coming in when we ask do you have it under contract say no.

Now, why does that separate the wheat from the chaff? Well, you’ve been investing in real estate a long time, as have I. When do we go looking for funding? When we think we want to buy something, or when we have the thing we want to buy under contract? Hey, I’ve got this property under contract. It’s a million bucks. Loan me $1 million, versus, hey, I think I’d like to invest in real estate. How much will you lend me? It’s such a novice approach to investing in real estate. So, when that’s the answer to the question, no, I don’t have it under contract. Okay, we need to teach you how to invest in real estate the right way because if you come out and this is we’re taught this by all of the wrong people. You want to buy a house, go get pre-qualified. How much can you afford?

Brad Weimert: Pre-qualification.

Lee Arnold: Pre-qualification. Forty-two percent of your annual income is what you can afford to pay.

Brad Weimert: When I get pre-qual requests from people now, I’m like, are you serious? What are we doing here?

Lee Arnold: Yeah.

Brad Weimert: Yes. You want a piece of paper by somebody else that says Brad Weimert is qualified to buy this.

Lee Arnold: Yeah. Well, and even real estate agents have been conditioned, I need a pre-approval letter. So, we offer, you can go to my website and buy a pre-approval, Brad, for $1 million on anything you want to buy because it’s a worthless piece of paper.

Brad Weimert: Exactly.

Lee Arnold: Then what do I need it for? Because your realtor wants to see it, your title company wants to see it. But at the end of the day, pre-qualifications are worthless because the only thing that qualifies you for the funding is the deal itself. Because I don’t care if you’ve got 750 credit and you make $1 million a year and you want to buy a $1 million property. Maybe if you qualify for it financially, but that million-dollar property sits on an old gas station, you got environmental issues, you got all kinds of hair on the property, it’s in a rough area that you don’t want to be lending on, you don’t qualify. Even though you’re perfect on paper, I don’t want to put money in that deal.

Brad Weimert: Well, also, you are a unique lender for– I mean, not unique-unique, but nontraditional lender. So, you are lending on the deal. As you mentioned earlier, the deal is what attracts money, not the individual.

Lee Arnold: Correct.

Brad Weimert: When you talk about single-family homes, traditional mortgages on single-family homes are just qualifying the human. And it is the dumbest approach ever, especially as the economy moves more and more to sort of the gig economy, so over newer space. I’m going to report what is beneficial from a W-2 perspective. And if you’re not looking at the rest of the picture, you’re an idiot as a lender, right? It’s the wrong, and now, there’s a very long conversation around traditional mortgages and FHA and Fannie, Freddie, and the whole picture, reselling those things. But it’s important for any real estate investor to know or ambitious person that wants to get into real estate that there’s other ways to get money. And this is one of them, this investing in the deal. So, how big– what’s the distribution right now in terms of percentage of revenue from funding versus info and whatever else?

Lee Arnold: Info, 70%. Funding, 30%.

Brad Weimert: Oh, wow. So, funding is top of funnel, brings people in, but everybody is ignorant. And so, you send them to the info side of things.

Lee Arnold: Yep.

Brad Weimert: Beautiful.

Lee Arnold: Well, and it’s not even so much about the revenue of the info space. It’s about reducing our risks in the lending space.

Brad Weimert: Amazing.

Lee Arnold: So, an educated borrower is going to be less risky than somebody who came in off the street, has never been to any of our seminars or training programs, and they think they know, but they don’t know. And so, we have preferred financing and premium funding for people who’ve been through our education, simply because in lending, it’s all risk reward. So, if you pose a substantial risk to me, then I’m going to need a substantial reward, which means high points, high interest. And you’re being penalized because you’re risky. So, how do we reduce the risk in lending? We educate the borrower. So, by them, yes, I will go through your educational programs. They’re going to become a better, safer, lower-risk borrower for us. But what’s interesting, and this is really our USP, when you invest money into our educational programs, but then you come back and borrow money from our lending enterprise, I will refund your tuition to the education. So, I tell people, you can pay me for education or you can pay me for funding, but you don’t have to pay for both.

Brad Weimert: Beautiful.

Lee Arnold: So, that’s been an interesting dynamic. And that USP is really what’s taking us to the next level because that just makes a lot of sense.

Brad Weimert: It does.

Lee Arnold: A lot of seminar companies are in the business just to sell classes, and that’s how they make their money. I don’t really want to be in the seminar business, right? I want to be in the lending business. I find it much more interesting and intriguing and exciting. But we have to teach people the right way to do this. But if we can teach them the right way and they’ll implement what we’ve taught them, and then actually come back and use the funding product, here’s your money back.

Brad Weimert: So, the challenge for any entrepreneur here is to think through what you can do to incent the behavior that you want for your core product, and then leverage that through a creative marketing message.

Lee Arnold: Well, for me, one of the easiest ways to create that message is to ask the question, what do I want my customers to do as a result of engaging with my product or service? What is my ultimate goal for them? In the Book of Proverbs, it says the people without a vision will fail. Well, a lot of people don’t have a vision for themselves or their lives. So, when I’m creating messaging or products, what is this going to do for my client? What is the vision they have for their lives, for their families? What is it they want to accomplish?

And so, I give them a vision. And so, we tell all of our clients we have two goals for you. Goal number one, I want you to have a quarter of million dollars in cash. So, we’re going to help you flip. We’re going to help you wholesale. We’re going to help you buy, fix, and flip, buy rentals until you have a quarter million dollars in cash because this is the point in time where you’re not beholden to somebody else. You’ve got some money in the bank. You don’t have to move as quick. You don’t have to make such quick decisions about finances. You don’t need to say no to an opportunity because you got to go punch the clock. You got options now.

Goal number two is an accredited investor, million dollars in investable assets, excluding home equity, or $200,000 a year as a single person, $300,000 a year as a married couple filing jointly. That’s accredited. As an accredited investor, you now can participate in investment opportunities that most people can’t. And there’s only about 5% of the population that qualifies as accredited. So, all of these wealthy people now have access to the deals that are producing 15%, 20%, 25% rates of return where you can’t look at those if you’re not accredited. So, this is the pathway for our clients.

And it’s interesting when we teach this in our seminar rooms because you just see people’s eyes open up like, “I never thought of that. Yeah, that should be my plan. That should be my vision.” So, now, as we’re introducing them to the company, they know exactly what our goals for them are. They now have a goal for themselves that they didn’t previously have. And we’re now all moving in the same direction. So, for the person watching, regardless of what the business is, the question I would be asking is, how does my product or service benefit my customer? And by them investing in it, buying it, using it, how is it making their life better?

Brad Weimert: What’s in it for them?

Lee Arnold: Yep.

Brad Weimert: Yeah, when we create avatars, ideal client profiles, one of the things that we do internally at Easy Pay Direct is look at the avatar and say, what do they want and what do they need? And there’s usually some alignment, but they’re not always the same. And so, what somebody wants, they might not know what they need. And your job, if you are taking the responsibility, is to not only know what they need based on what they’re saying they want, but lead them to it. And in your case, you’re doing that through information.

Lee Arnold: Well, and you and I have known each other for a long time, but we haven’t been doing business together the whole time we’ve known each other. Because when you came to me, what you had wasn’t something that I thought I needed, right? And your business is very interesting because most people don’t realize they need you until they need you. And then it’s like, Brad, I need you right now. And so, for you and what Easy Pay Direct does, you guys are incredible at this. What I appreciate about your business and your team is I really don’t have to worry about all of that because you’re dealing with it. So, your USP to me is Easy Pay Direct. If you’re involved, I don’t have to be. And that’s a beautiful, beautiful thing. So, you guys have done an amazing job.

Brad Weimert: I love it.

Lee Arnold: I appreciate working with you and thank you because your job is not easy.

Brad Weimert: I appreciate that. Well, the FTC attorney here told me that I need to get a written sign-off to use that affidavit in our marketing, but I appreciate that.

Lee Arnold: Yes, you do, after they sign it.

Brad Weimert: Awesome. I love it. Okay, so I know we’re coming up on time, but a really important part of your life that you’re vocal about is giving back and the 501(c)(3), which is also heavily tied into religion and faith for you. At what point, and you could answer this a million ways, but let’s start with the business side of it. At what point did you prioritize that being a part of the business ecosystem?

Lee Arnold: So, I grew up in church. My dad was a youth pastor, so I was the preacher’s kid, the PK, as it’s called in those circles. And I was walking with God, I was on fire for God, I was leading the youth group with my dad. I was playing. I play piano and guitar. So, I would lead worship at church. And when I started investing in real estate, I’m 18, 19 years old, and I started making a lot of money. And suddenly, that took a priority for me, and my relationship with God and the church just became further and further and further away to where I was so focused on money that my walk with God just disintegrated. And my lifestyle took a very drastic and unfortunate turn. And I went places I shouldn’t have gone and I did things I shouldn’t have done. And I was so far removed from God when 2008 came. I honestly felt like I had caused the recessionary crash because God was trying to get my attention. That’s a pretty arrogant thing to say.

There was a lot of things. But I believe that God’s in control of all things at all times. And I’m sure there’s a lot of people that needed to lose everything in 2008, and I was one of them. And so, when we were recovering from that, so August of ’08, late Bear Stearns goes down. September, Lehman Brothers goes down. And that’s where the whole thing begins to unravel. That’s where I have to lay off all these employees, and all of my rental properties gone through foreclosure or short sale, all of my notes that I had lent on foreclosed. I mean, it was a mess.

Now, I didn’t file bankruptcy in the midst of all this. I was advised to by a lot of people, but I said no. All bankruptcy is, is having somebody else negotiate your problems. I can do that. So, I spent the next 18 months meeting with every subcontractor, contractor, lender that I had a relationship with and sitting with them, just like this and saying, “Look, I’m sorry that we’re here, but we’re here. This is what I got. This is what I can give you. If we can agree to that, we can work through this. If not, you can sue me, you can get a judgment. And you’ll force me to go into bankruptcy. Your decision.” And 99% of them said yes. And so, we were able to work through that.

But now, I’ve got nothing left. I mean, everything’s gone. And so, my wife and I felt like, okay, maybe this is God telling us we need to go somewhere else. And so, I started looking. Where do we go? Well, we had just had three kids in 14 months. We had twins, December of ‘06. We had our third child, February of ’08, and then the market– so I got three kids in diapers and I’ve lost everything. We better go back near family.

So, my wife grew up in Salt Lake City, but her parents had moved down to Vegas. We didn’t have a lot of family there. So, we got three young kids. Let’s go back to where I come from, that’s Spokane-Coeur d’Alene area. So, in 2010, we moved. And it’s so bad that I had to borrow money from my whole life insurance policy to pay first and last month’s rent because my credit was shot, I couldn’t qualify to buy a house. So, now, we’re renting, and we really have to start this thing over, build back from beginning.

The only asset that I brought with me from all of those efforts previously was the list, the database. I still had my customers. I didn’t have much else, but I still had my customers. And so, my wife and I sat down and we said, “Okay, what are we going to do different this time?” And we said, “Well, we need to make God the priority of this business.” And God kind of got a hold of me. He said, “Lee, you’ve spent the last 13 years of your life teaching people how to get rich, but you didn’t mention me. So great. You’ve improved their financial well-being on planet Earth, but what about their spiritual well-being?” I wasn’t being true to what I believe. And that is, if you leave this planet without a personal relationship with Jesus Christ, there’s heaven and there’s hell. Not everyone believes that. I believe that to my core. And I wasn’t sharing that with people.

Well, as a believer, as a Christian, that’s my job, is to share the gospel, to be a disciple of Jesus Christ and to share the message of love and peace and hope and joy. I wasn’t doing that. So, we said, “Okay, this time, we’re going to make God the CEO of the business and we’re going to use the business as our ministry.” And so, it’s through the platform of the for profit that people might entrust me enough to share my faith with them. And perhaps, through that, I can help lead them to Christ as well.

And so, now, when you look at what we call our circle of wealth, which is all of the different businesses and enterprise within the organization, the top of funnel is He’s The Solution Ministries. We want to start with that. And so, all of our events now open with prayer, closing prayer. And that’s not for everyone and that’s okay. But that’s how we’re going to do things, that’s how we do things. And I’m sure we’ve offended people along the way, but we’ve also attracted a lot of people along the way.

And now, we teach people how to do something similar. Use your business as a ministry. So, how can we improve? The message of Jesus Christ, how can we share it with other people through our business, through our efforts? People often say, when I retire, I’m going to go do full-time missionary work. Well, the Bible’s very clear that when you invite Jesus into your heart and make him your Lord and Savior, that’s your mission field. Mission starts now.

So, we can share our faith through our work. We can share it through our clients and our customers. We ship thousands of Bibles out around the country. When we move a new tenant into one of our rentals, they get a Bible. When we sell a house to somebody, they get a Bible. We put on the largest evangelical conference now in the Pacific Northwest called the Be Bold for Jesus Conference. And we literally made God the CEO. When you look at our org chart, CEO -God, CVO – Lee Arnold. So, I’m the chief visionary officer, but God is the CEO.

Brad Weimert: So, we’ve talked about this in detail. And one of the things that I appreciate about you is your capacity to be convicted in your approach to the point of integrating it to your whole life and business and remain open-minded and communicative of other opinions, concepts, ideas, and interested in them as well. And I think that’s beautiful. I am, as you know, fairly, I’m not going to even say firmly agnostic because I think that the fundamentals of being agnostic are not that firm, but not convicted in a higher being. And I think for people that are not, they frequently get lost in a lot of the communication that you just gave. And you’re very clear that that’s great. My message isn’t for you, right? It’s going to turn some people away, but it’s going to attract the right ones for you.

And my message to them and to everybody, the takeaway there is for somebody that’s not going down that path is who are you? What is important to you? And how do you create alignment within your business to communicate those things, to create the authenticity that’s going to not only create a life for you that’s important, but for your client base as well?

Lee Arnold: Well, it boils down to purpose, right? There comes a point in your life, in your career, in your business where you’ve made enough money. And another million dollars is not going to dramatically change how you live, where you live. So, you can very quickly lose direction, you can lose motivation, you can lose drive because I’ve achieved everything I’ve set out to achieve. It’s not really fun anymore. So, how do we motivate ourselves? Well, we got to motivate ourselves around something bigger than us, that’s important to us that we can influence, persuade, and improve. It doesn’t have to be religious in nature. It could be supporting a local food bank that’s 501(c)(3), but it’s not religiously based, but it’s serving people and it’s helping people. It could be going on mission trips. Whether you’re a believer or not, there are mission trips that are non-religious in orientation, and some that are.

But what does your business stand for, from the standpoint of, okay, you’re making all this money, good for you? But is it just to get another G-Wagon and a bigger house in another location? Or do we have all the things that we need? Now, how can we start serving and helping other people? Because I’ll tell you this, if your business is focused on serving someone else, something else, it’s going to be harder for you to lose that driver motivation because it’s no longer about you. It’s about all of these people that you’re now influencing and serving and helping in a very important way that now drives you. And that’s what drives me.

I tell people all the time, I could probably personally make more money if I shut all of this down and just went back to running my real estate portfolio and flipping for my own benefit, but I would lose the reach. I mean, we have access to millions of people through this company that I would not have in just the real estate business. We talked about this earlier. So, by running the enterprise that we’re running and scaling the enterprise that we’re scaling is all about reach because through reach, we have the opportunity to share and influence and persuade, and hopefully, get people to come into alignment with what’s really, truly important.

And it’s not about money. You only think that when you don’t have any. But when you have some and you realize there’s got to be more to life than this, and there is. But again, it doesn’t have to be religious in nature, but find something greater and bigger than yourself to serve and to make the priority. And I’ll tell you, especially in hiring, there was a study done. I don’t know who did it, Barna research, I think, but they studied millennials. What are the top five things that are most important to you in working for a company? Income was number five. So, everybody thinks the millennials are, oh, I want to make more money. No, they actually want to be part of something bigger than themselves. They want to know what they’re doing. Every day is important and serving a cause beyond just profit. They’re the least profit-minded group that we’ve ever seen because they want to live for something. They want what they do to matter. And it’s not just all about the money.

And so, we share with them. This is our mission. This is the ministry. These are the groups we support. These are the charities that we serve. These are the mission trips that we go on, so that they can go, “Oh, what I’m doing is important.” It’s not just about the bottom line and the EBITDA of the business. We’re actually doing something important for people. And so, for those watching, my desire from a key takeaway standpoint is be very clear about what your business is doing outside of the business to serve other people in an important way because that’s what people are excited about.

Brad Weimert: Yeah. I think that a lot of that hits home with me and I also want to extend that point to those that are in a phase of life where they hear that and they think, “I don’t f*cking care. I just need to print more cash.” And I will say, and you hit on this, but we glazed by it, if you want to look at all of this from a purely self-serving perspective, recognize that the way to motivate yourself the most is to rope you into something more than money. The way that you can, if you want to look at all this just from a selfish perspective and how you’re going to grow your business, you are doing it in a way that maybe you would grow something bigger without it, but I would argue that point. But for sure, if you have a bigger purpose than just adding to your top or bottom line, you’re going to be more motivated, you’re going to drive harder, you’re going to drive faster, and you’re going to build something bigger.

Lee Arnold: Yeah. Well, and the whole concept of the tithe, right? So, in the Bible, in the Book of Malachi, God challenges us to tithe. He says, be faithful to the tithe. And so, my wife and I, in 2009, when we’re now going to make God the CEO, we said, we’re also going to be faithful to the tithe. And the rest of that verse is, if you’re faithful to the tithe, see that I will not bless you with abundance to where your storehouses are overflowing. So, there’s so much abundance, you can’t possibly spend it all. And since 2009, we’ve experienced that like crazy. But also, in 2009, a book came out called The Secret by Rhonda Byrne. You remember this?

Brad Weimert: Oh, yeah.

Lee Arnold: The Secret is the Book of Proverbs from the Bible built on the– what did she call it? The universe, right? So, give to the universe, and the universe will give back. I mean, this is a religion, just like anything else. It’s a belief in this higher power called the universe. And if I give to the universe, the universe is going to give back. So, this whole concept of tithing, it’s not a religious principle as much as it is just good business practice. When you give to others, the laws of reciprocity give back. And so, making something bigger than your business, the priority of the business, it’s going to give back. Now, you can do that in a selfish way where, okay, well, if I give the universe 100 grand, is the universe going to give me back a million? Well, that’s a very self-serving approach to this whole concept of the tithe.

But budgeting for the tithe or the gift, I think is really important. So, if I come in and look at your business, religious in nature or not, do I see a line item on your budget for charity, for donation, for gifting? For a lot of businesses, it’s tied to tax savings, right? Because we can write a lot of it off by giving it away, but is that the reason for doing it or is that we’re doing it because we are genuinely interested and concerned and passionate about whatever that is? It could be doctors without borders, dentists without borders. So, we’re serving the community in that way. But I would encourage everybody, add a line item to your budget, specifically for gifting and tithing and benefiting other charities, religious or not.

Brad Weimert: Yeah, I love that. And to take it back to the selfish again, you mentioned the tax benefits potentially and businesses do it for that reason. But you also used gifting as one of the possible options. And if none of the former sank in, I think about the gifting side of things for our clients and prospective clients as an open-ended ROR, return on relationships. I’m not interested in, I put something in and what did I get out? I’m interested in, did I develop the relationship? And that life is long and the game is long, and if you are operating transactionally, which is ironic because my whole business is transactional. If you’re operating transactionally, you’re doing it wrong, or it’s at least not as fulfilling and it’s not as much fun. So, I love the sentiment, love the message, love the open-minded nature of it. And I appreciate you carving out time, man.

Lee Arnold: Well, in return on relationship, I just want to mention this because you are one of the best at this, of anybody I know. You are incredibly generous. The time I’ve known you, you’ve always picked up the check everywhere we go. So generous and so kind to people. And you’re always thinking of others. Even as you’re out traveling and you see something, you think, oh, I can give that to so-and-so. And so, you buy the thing and you ship the thing for no reason, other than to say, hey, I was thinking about you. Here’s the thing. And just that spirit of servanthood and the desire to give, it’s just such a beautiful thing. And I just appreciate that about you. And for those that don’t know you or have a relationship with you, they would be fortunate to have that.

Brad Weimert: Thank you.

Lee Arnold: So, for those watching, if they haven’t started working with you or doing business with you or just getting to know you, I would encourage them to do that because getting to know you and working with you has been great.

Brad Weimert: Really appreciate you saying that. It’s been a pleasure, man. If people want to find out more about you or the business or whatever you want to drive them to, where do you want to point them?

Lee Arnold: Well, let’s go to the ministry.

Brad Weimert: Yeah, obviously.

Lee Arnold: The ministry is HesTheSolution.com. Quick note about that, in 2003, when I was doing the short sale business, I started a company called I’m the Solution. Yeah, and so…

Brad Weimert: There’s that arrogance.

Lee Arnold: I’m the solution to your foreclosure problem, right? Well, in 2008, when I lost everything, he was the solution.

Brad Weimert: I love it.

Lee Arnold: And so, that’s where the name of the ministry comes from, so it’s HesTheSolution.com. If you want to learn about our national conference, it’s bb4j.com, BeBold4Jesus.org. And if you want to transact with us and look at doing business with us, on the lending side, it’s CogoCapital.com, C-O-G-O, CogoCapital.com.

Brad Weimert: Awesome. Well, we will put it all in the show notes.

Lee Arnold: Cool.

Brad Weimert: Thanks so much for carving out time.

Lee Arnold: Thanks, Brad.

Brad Weimert: Thank you