148. DealMachine Origins and Driving for Dollars with David Lecko

Hey, welcome back to the Average Joe Finances Podcast. I'm your host, Mike Cavaggioni, and today's guest is David Lecko. He is the CEO of Deal Machine. David, I am super excited to have this conversation with you today. Thank you for joining me on the show.

Thank you, Mike. Like you, I'm really passionate about building passive income and wealth through real estate and other side hustles. That's been my side hustle, so it's a pleasure to see what you've done with the podcast and to finally be a guest.

Yeah. No I definitely appreciate that. Now right off the bat, I want to ask you the same question I ask everybody that comes on this show, and we wanna know more about you. So if you could share a little bit about yourself, your background. Who is David Leko and what is Deal Machine?

Absolutely would love to share you. A little bit of my background. I grew up in a thousand square foot house. My parents still live there today. They're really happy. But for me, I noticed that some of my friends, they had parents that had like really awesome houses and cool cars, and I was asking around what they did. and that inspired me to read some business books. Cause I felt like most of them, were CEOs of companies or had started their own business. And I was curious at my street level, motivation was to have, it started with having, a cool house and a cool car. So in high school I was reading like the four hour work week picked up Rich Dad Poor. Had been primarily saving a lot of any money that I was making at my job at McDonald's. And then later some college internships and trying to invest early in the stock market cause I knew time was on my side. And then ended up switching gears when I worked for somebody who had five rentals and he's I've read these rental properties because you can control the income unlike the stock market that goes up and down and you've got no control. And that made me feel. Really intrigued and the stock market had gone up and down on me, right? I had a couple years that weren't great, had a couple other years that were good, but I didn't really have control over that, so I was very intrigued by this real estate investing. And I searched out to get my own rental property. Did this thing called Driving for Dollars and. I was, my stomach dropped. Okay? When I realized I missed out on the perfect deal. And if you don't know what driving for dollars is, it means you look for a rundown looking house and you look up who owns it, and you send them a letter. It says, would you like an offer on your house? And you do that enough times, you'll probably find somebody that wants to sell their house. That's what I was doing. I felt like I missed out on this incredible deal because the address was stuck on a piece of paper in my passenger seat and I did not reach out to them at all, but three weeks later I saw somebody else working on it and I looked up who bought the property. Somebody just bought it and it was for a price that I felt like I could have done. I like that could have been my deal. I could have made money on that. and I just miss it. And that really motivated me to automate the process. So I made a little widget for my phone that would look up the address right when I was there. I could pin it on the map and send out a piece of mail for me right there. And so I just used that on my own phone to get my first rental property. And I just kept going after that. And I've just been so thankful that I didn't listen to my parents when they were like, Hey, we're really worried about you doing real estate. Why don't you be an engineer and have a nice house and a nice car in your driveway and all your benefits? But I was like, no. I'm like really passionate about real estate investing and I'm talking to people who are successful and I love you guys, but I'm gonna keep doing it. So that finally, whenever I did do it, And had some success, actually treated my parents to like a couple trips, which felt amazing, right? That was like the best way that I could show them that it worked well. And it was really fun to spend that time with them after they were so good to me and raised me and gave me a great childhood. So that's my story and that's what I'm really proud about, I saw the, my own path. I was very passionate about it. Close people didn't really support it or understand it, but I was still able to get there from listening to podcasts, just like this one, hearing other people that were successful do it and that giving me confidence to do what I had never done before as well. In short, that is a little bit of my background.

Yeah. David, that is awesome. So a lot to unpack here with just that short little bit of a story, right? But, okay, so you grew up in, in a thousand square foot home and, you had friends that had the nicer, bigger homes and nicer cars and everything and said, man what are, what are they doing differently? What are their parents doing differently that, than what mine are.

Yeah.

And it got you thinking a little bit different, right? So you started picking up some of those business books and checking that out. So I'm just recapping a little bit. Now you started investing in the stock market, right? You understood that, hey, I got to start investing to you. Make my dollars work for me instead of me working for them all the time. So you wanted to employ your dollars, so you started doing that, but the stock market, the volatility there with it going up and down, you were like, ah, some something's got to give, I need something a little more stable. Something that's gonna gimme a better return or a more stable return. , you start looking at real estate. What I find fascinating is that that one deal that you missed out on, right? Everybody's got one of those stories, but for you, it's a little frustrating because you're like, man, I wrote this down. And if you would've just grabbed that piece of paper instead of it falling between the seat or wherever it was, man, you could have had a really great deal right there to start off with. I can see where that motivation to make, create something different came up and, innovation happens when there's a problem. And you identified a problem that a lot of people are facing when they're driving for dollars. And I'm glad you described what driving for dollars is because I was gonna ask you if you could, so I'm glad you did that. Now you created this widget on your phone, right? So you were like, I found this property, you're out there driving, you're like, okay this one right here. This is the one I want to check it out. And basically you just go in there and pin it and you send them a letter. So how did you go from this widget that you created, that was, more self-serving for yourself so you can go out there and make your real estate deals. How did you turn that into the monster of what Deal Machine is today?

Thank you for calling it a monster. It's a friendly monster. It's a very friendly monster. Once you guys get monster deals, that's right. Yeah.

There you go.

Really I focus on creating the app that I wanted to use that didn't exist yet and I didn't really seek a lot of validation from outside, but I was doing what everyone else was doing. Everyone was driving for dollars and so I just made the app that I wanted to help me with the problem I was having. And if nobody else used it, it wasn't a problem. I didn't even put it on the app store. It was for me. And then some friends wanted to use it. That was the thing that made me put it on the app store cause it was just easier to get it on their phone that way. And people just trickled in and started to use it. And then there were some YouTubers that started sharing about Deal Machine. And we have a link where you could share it and you get like $5 of free direct mail credits that helped other people share it as well. And so it grew into what it is today without me doing any marketing at all, which it's not, I'm not bragging, I'm actually saying that's pretty good skill that you should know if you have a company is how to market. That we've had to learn later in our learning, but It was all just pure making a product that was working to solve the problem that I was wanting to solve and being open when other people started wanting to use it and to help them out. Then start asking, what are the other things that you know about real estate investing that we can help you with and to do beyond driving for dollars? And do list builders and comps. People, always wanna know what a property's worth. Some people have their own mail designs they wanna upload. Just building onto it like that I think has led to the success that we've had so far, and that our members have.

Yeah, any good developer's gonna update and go with what the users are, asking for, right? People are gonna say, Hey, what about this, what about that? And you're gonna get great ideas from other people that are using your app, right? That you may not have thought of. You came up with this problem just because you came up with a solution to a problem just from, missing out on that one deal. And you're like, man, I got to do something different. But the fact that other people said, Hey, this is really cool. I wanna check it out. And they started trying it out and then some YouTubers started sharing it. That type of organic marketing, you can't beat that. That is not something that, you'll get out of running ads or anything like that. That word of mouth and that social proof that you get from somebody that just really enjoys your product means more than anything else out there. For those of you that are listening I'm not sitting here trying to promote Deal Machine or anything, but what I'm saying is, the proof is in the pudding, right? When you look at what it does and you know what it provides. It's more than just driving for dollars now. And that's that's awesome. Like creating these lists getting property values and everything like that. That's a lot of work that you can cut out and save a lot of cost on. Definitely Awesome David. As you have developed this app, and like I said, it's grown into the monster that it is today. What are some of the things that you've seen over time I guess that in the real estate market that's changed that, maybe you had to update the app or like changed with it. Is there anything that you've really noticed or as it's staying pretty strong with the basics that it's always had?

Yeah, the basics are really critical. I think that any market shifts what I'm thinking of is like what's happening right now where a lot of people are predicting we're gonna have a recession. People are curious what to do. A lot of people are doubling down on their follow ups. So those are leads that you've talked to, but they didn't want to do a deal at this time And following up with all of them is a great way to spend your time if you've got the budget. Doubling down on marketing if you don't have the budget, if you don't have a lot of excess cash, doubling down the follow ups are the two things that I see people doing right now. Hasn't necessarily affected how we've changed the app per se, but I just thought I would mention that since it's timely.

Yeah. No, that's great. and that's a great point too. And for those of you that are listening and understanding or one of the things you should understand is what is going on in the current market. So you need to pay attention. cause each market's gonna be different, right? And one of the beautiful things about the Deal Machine app is that, it's going to work in every single market, right? It's just a matter of what you need to do as an investor, whether it's doubling down on your marketing like he was talking about, or doubling down on your follow ups. It's all market dependent, so I could tell you the market out here in Hawaii is a lot different than the market in Memphis. , there's so many different factors that you need to factor in and make sure you're making an educated choice with what it is that you need to do on your next steps as you're trying to close on some of these deals, absolutely awesome. David, is there anything you want to add to that?

I guess one random thing that we did do is we did make things a little bit too complicated. We had some advanced users, this was like a year and a half ago. I thought it might be interesting. We had some advanced users, advanced investors that wanted very sophisticated mail sequencing options, and so we built that. But it actually confused people who were just picking up the app, just getting started in real estate investing. And so we intentionally went back after learning that lesson and made the experience very simple, as simple as possible. So that way it didn't prevent anyone from taking action because sometimes, When you're new and you're learning a lot of information, if you have a lot of choices, it just becomes confusing and you struggle to have the confidence to know you're doing the right thing. And so that was something that we did learn with the app that we did change course on once we realized what we had done. And so those advanced features are still available for like the elite package, which is our like, top end, high end that lets you have a bunch of team members and drivers and all that. But we've intentionally gone, back to basics, made things as even simpler than we had before. So that was a learning moment for me.

Yeah that's great. Actually let's talk about that a little bit too. So if somebody's using the app for themself, right? And they're a one person show at the current moment, right? Because everybody needs to scale and grow. So they have the option of using it and driving for dollars themself, right? And going out there and marking the homes that they want to have these letters sent to. What about, as people start scaling up and they wanna have other people drive for dollars for them, what does that look like?

Yes. So on our starter package that it is like $49 a month, you get yourself and a driver. So if you have like a spouse or a partner or a friend or somebody that wants to drive out there for you. You've got a spot for that and then I think if you want to add a couple more, it's like the next level up which is I think like $99.

Okay. Right on. There's options to scale up as your business scales, right? Yeah. Yeah. So for those folks that are all the way at the elite, they still have all those, I guess more sophisticated options. Do they still have that mailing sequences and everything available in that package? Or is it something that's kind of went away?

Oh yeah, you've definitely got the ability to send direct mail. You get 10 templates that are proven, that we've used with the language default that you get access to. Yeah you just need to resend those, and with a click of a button, right? You don't need to determine all the intricacies of what day of the week what moon cycle and, what order, stuff is sent out. cause they all work. You just need to send one on repeat every 21 days. So that's one example of how we've made the experience a lot more simple and reduced the decisions that you have to make that don't really matter when you're starting out. What matters is adding properties and sending mail. That's it doesn't, nothing else matters at all. Talking to people, whatever you got to do, talk to people.

Awesome. All right, so let's say somebody's sending out these mailers and yes, they get a response. Is there a way to track that in the app, like a CRM System?

Yeah, there's a place where you can also put notes. You can see every time a piece of mail sent, when you get a call back, you can put a note, you can change the status of the property to call back. The thing that's really cool that happens automatically is with Deal Machine is if you send a piece of mail most of all of our postcards are actually barcode scan. Every time they get delivered, you get a push notification and if it's return to sender, which happens when you're sending mail at. Level. When it gets returned to sender, we automatically turn off auto repeat. So you're not paying for a mail to go to a person who's no longer at that address. And that's something that's automated, which is a unique thing cause a lot of times you would have to do that manually and it just gets forgotten.

No, that's fantastic. Especially with it being automated. I love automation. It's like the eighth wonder of the world if you ask me, or ninth, right? Because the eighth wonder of the world is compound interest. So it's the ninth wonder of the world. Automation is amazing. I like to set things up and let it run itself, and then I don't have to worry about it. I do that with a lot of the stuff that I use in my CRM systems. Sequences that will go out and I don't have to worry about it once I set it up. Absolutely Awesome. Now, okay you can update, you could put notes if you got called back, everything that's in there. What happens when you get a property under contract and you go to close the deal. Is there anything else special that Deal Machine provides?

When you get the property under contract and you close the deal, there is an option. So you can actually market the property if you're wholesaling, which means you get the property under contract and then you wanna sell it to an investor before it's time to close and take the assignment fee. You wanna market your property, and so if you put the status of contracts signed, then it'll open up a free public web. That you can put all the photos of the property on you can launch that through the app. You can use our default description that we populate for you, or you can customize it. And then you can email that to anybody or text it to anybody and use that as like a way to market the property that you've got on your contract to somebody who wants to buy it from you. So that's a pretty useful tool that maybe a lot of people don't know about, and I would highly suggest use it.

Yeah, that's awesome. I wanted to ask that for that reason because like you know, Deal Machine is like that one stop shop for those of you that want to wholesale or flip, it's just fantastic. Or even just go out and find great deals to create that passive cash flow by finding rental properties. David, this has been absolutely awesome, man. And I think I learned a little more about Deal Machine just in this conversation with you. I'd like to transition this into something that I call the final Round.

Cool.

Where I'm gonna ask you the same four questions that I ask everybody that comes on the show, they're hard-hitting questions. Three of them are We'll see how David is with being under pressure or being put in a tough situation. And then the last one's an opinionated question, so if you're ready to go, we'll get that party started.

Let's get that party started.

All right, let's do it. All right, David. So the first question of the final round is, what's the biggest mistake you've ever made in real estate?

The biggest mistake that I've ever made in real estate is the very first deal I did was $4,782. It was a very small house, 600 square feet, and I had to do a renovation, but I didn't have cash to do the renovation, so I applied for four no interest credit cards, and I did the renovation. It was like $65,000 max them all out. What I forgot was, that's really gonna affect my credit when you maximize your credit cards for a year and it falls off once you pay it off. So I got through, it wasn't a huge deal. What really got me though, is I was expecting to be able to get a mortgage on that property, but because it was 600 square feet and everything else was like 1200 everything else was run down. But mine was beautiful and brand new, and I was like this thing will surely appraise for a hundred thousand dollars. No appraiser would use my logic until four years later, which was three years after the no interest credit cards were gone, so I was about to pay 20% interest when that interest kicked in. Luckily though, my business took off and I had enough cash to just pay it off, but if that hadn't happened, I would've had trouble. , that would've gotten me into trouble. I probably would've figured out another way, like some kind of hard money loan that with lower interest or private money or something like that. But let's just say this, I'm glad that didn't happen. I'm glad I was able to just get it off the books. That could have been bad, it could have been bad, but I took action. I learned a ton and it worked out. So I'm really thankful for that.

Yeah, that's awesome. Even if it didn't work out, it would've been a great educational piece to always remember, right?

Yeah. So I still am all about taking action even when you don't have all the answers, because most often there's always a way out, there's always a creative way out. You just have to find it. And when you're under pressure, you typically find it better.

Yeah. A lot of people perform much better on I wouldn't say perform much better under pressure, but when you're being forced to figure it, You figure it out.

Totally.

Awesome. Okay, so the next question kind of ties into this but is what is something that you've learned that you wish you knew when you first got started?

Something that I wish I knew when I first got started that I know now is I wasted a lot of time doing and talking about real estate investing while also driving for dollars and finding a couple properties here and there. So I think after three months I had 40 properties and I was feeling down on myself because I hadn't gotten any results yet, and I had been at it for three months now, in reality, I wish I would've known what numbers looked like from actual wholesalers that do deals in Indianapolis where I was doing my deal. So that I could have done the right amount of work. In other words. Probably takes 500 properties contacted three times. So we're talking about like 1500 pieces of mail to get one deal. Meanwhile, I've only added 43, so I was just way off on my numbers. And if I knew that sooner, I could have done my first deal a lot sooner. I could have spent less money. I could have saved myself the emotional grief of feeling bad about myself, and also like just would've made money faster, which is always good.

Yeah. Making it faster is always good, but it's also, the lessons that you learn on the path to doing that are invaluable as well.

Yes.

Yeah. You may have spent a little more money to do it, but you were just paying for an education, right? , that's awesome.

Yeah, I was.

Okay. The next question again also ties into this but what are some tips and tricks that you would recommend to someone that is just getting started today?

Tips and tricks that I would recommend for somebody who's just getting started today is if you've got a low budget, go drive for dollars. Go find the best leads that you possibly can, and of course, use Deal Machine to make it easier for you and to send direct mail so you don't forget to follow up. If you've got a budget, I would say you can get results faster, spending less of your time by building a list, you can build a list. Foreclosures, Pre-foreclosures, utility shutoff lists, 40 year old houses that haven't been updated yet. You'll send more mail, you'll spend more money to reach out to those property owners, but you can do it right away without having to look for all the rundown houses. So you spend more money or you spend more time. And that's how I would decide what to do and I would pick one of those things and I would go all in on it. If you dedicate 15 hours a week, you know whether it is. Finding those properties or doing cold calling to one of those lists there's no way you're not gonna do a hundred thousand dollars of revenue in a year. If you actually dedicate 15 hours a week to revenue generating activities. It's a foolproof business model, so you're gonna be able to do it. It's just about your commitment, knowing the numbers, and focusing on what you need to do.

Yeah, David. I love that. That is huge. It's about that time commitment, right? And one of the things that you also said there that I wanna touch on I think is fantastic. It's gonna be the time that you're spending or the money that you're spending. So you need to figure out what your cost per dollar is and figure out. What's gonna be more beneficial, you taking the time to go out there and do it yourself or spending a little bit more to have those lists and everything provided for you. So that way you're saving that time. And I think a lot of people will find that saving the time winds up being more valuable. Just being able to spend that money a little bit more money upfront. Will be more valuable to them. But a lot of times it takes them spending that time to realize that I know for me it was the same thing. It took a long time for me to realize I need to start outsourcing certain things. . So that's definitely huge. I appreciate that answer. Okay. The final question of the final round, and this is an opinion-based question, but do you have a favorite business investing or real estate related book or podcast or both?

What was most impactful for me, even to this day, is a book I read before I started any of my real estate business or software company and that was Profit First. So I was just a nerd reading about business books and it's been so helpful cause from the very beginning, if I make $10,000, a lot of people see that and they're like, oh, I'm rich. And then, if they're, if it's like a flip or something, they like pay the last of the contractors and they're like, now I have $2,000 left. Holy shit, now I'm poor. And so to avoid doing that, there's a book called Profit First. There's even a version of it for real estate investing is to check that out. It's really helpful to be able to take 30% of every dollar and put it into a special account that you know is designated for profit. Take another percentage and put that into an account that's prepared to pay your taxes at the end of the year. And then the rest of it is what you operate your business off of. And the book just lays out how much you should save for each one of those. So it takes the guesswork out of it from the beginning and you don't burn out cause you have no cash yourself and your lifestyle goes to crap. And it also provides stability for your business. But most importantly, provides stability for you, which is the whole point why you have a business is that you can have stability, you can have a better life. You can have that passive income, move to Hawaii and surf every day and just podcast and have a blast. You've got to take care of yourself in order to be consistent over the long term. And that book, I'm so thankful I read it when I read it. It's been something that I'm so thankful for and how I still operate the business today.

Yeah, David, that's awesome. I was gonna ask you too since you had mentioned Profit First if you had also read the Profit First for Real Estate as well by David Richter. So I guess you have, because you also mentioned that, so that's awesome, man.

It's on my reading list. I haven't actually written this one for real estate investing, but I'm excited to see what his take on it is.

Yeah, it's great.

Yeah, because I love the first one.

He has a podcast as well, Go check that out.

He does.

Yeah. All right, man. Hey I appreciate that. Now that is it for the final round, David, but I do have one more question for you. And this is probably the most important question of all because we were sitting here having a conversation, talking about your story, how Deal Machine was born and how it's grown into what it is today. And there's people listening right now that are like, man, , I think I really wanna start using a product like this, or I wanna know more about David and what he's doing with Deal Machines. So if you could please share with us where can people find more information about you and Deal Machine. Give a website we already know what the website is, but can you share your website? And also any social media platforms people could follow you on.

Thank you so much. Yeah, dealmachine.com or Instagram, @dlecko is my Instagram, so I would love to connect with you guys there. I love meeting new people. Mike, I've got a question for you though, if we have time. First of all, have you always lived in Hawaii because that's like a dream destination for somebody.

No, lived here for about four and a half years.

Got it. And were you financially independent before you made that move?

Nope.

Oh, really?

I came here thanks to the Navy, so I retired from the Navy here.

Well, thanks for your service.

Thank you. Appreciate it. And now I'm staying.

So Love it. And are you financially independent now?

Technically, yes. I do have enough passive income that covers all my expenses. So the fire part, I'm wearing a shirt right now that says FIRE right? So it says Financial Independence Retire Early. I always say I just focus on the FI part. The retire early things not for me. I'm probably gonna go until the wheels fall off cause I just love what I'm doing. So right now I'm just full-time in real estate and podcasting. I get to do the things that I enjoy instead of working quote unquote for the man. So to me.

That's totally get it.

That's what it's all about.

Yeah. The joy of building something is actually fun and it's something I enjoy too. I'm right there with you.

Awesome.

Did you realize when you hit your financial independence or did it just happen and then you're like, oh, I guess I'm here now?

Oh, no. I knew I said, okay. As soon as I retired from the Navy, between my pension and my real estate investments, I am covered. I've got everything I need.

And then last question, did you change anything about your lifestyle once you realized you had been there, you had achieved that?

I grew a beard.

Nobody cares. Yeah.

Yeah. No I grew a beard and cause I don't have anybody making me shave anymore. And I would say nothing really changed for me. Like when it comes to my drive and my motivation to do what I do, however I now do things on my own terms, if that makes sense, versus, trying to squeeze things in whenever I can. Now it's, I get to time block my entire life, which is great. I don't have to be forced into anything, and that's, for me, it's the independence, it's the actual freedom that I have now. That means more than anything else.

Got it. I love it. Thank you so much, Mike, for having me on.

Yeah.

Any other segments of the show before we sign off?

No. David, this was a blast. So I, again, I wanna say thank you so much for coming on the show. This was a fantastic interview. I really enjoyed it. And right now I'd like to speak to my listeners and say thank you so much. For joining me in our special guest, David Lecko, on the Average Joe Finances Podcast, make sure you go leave us a five star review and tell us what you liked about this specific episode with David. Aloha from Hawaii and have a great rest of your day.

Mahalo.

All right.