Serial Entrepreneur EP111 with Will Roundtree (6/16/23)

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You are listening to Serial Entrepreneur: Secrets Revealed, and today we are talking about real estate and investing in real estate with Will Roundtree, who is a bestselling author and also, um, an investor himself. And we’re going to hear it from Will Roundtree, what it takes to become successful in real estate.

And apparently you don’t even need money to start. So that’s going to be a very interesting show. 

We’re trying to figure out how to decode what it takes that serial entrepreneurs do over and over again, like Will Roundtree this gentleman, let me tell you, he’s a bestselling author. He’s got a lot of systems in place around managing credit and also buying real estate.

So let me just tell you a little bit about [00:01:00] Will. Will has helped over 2000 entrepreneurs secure over a hundred million dollars of creative financing.

This guy knows how to get into real estate, and he knows how to do it with little, let’s say, little or no money. And to prove it, he’s actually amassed a portfolio himself from the very beginning with no other people’s, you know, money. Not with inheritance or anything like that. A seven figure real estate portfolio with his own money.

And he wants to share that knowledge with us. He has two books. I’m going to tell you what they are and we’ll post them in the chat, Mimi, um, as well as the blog post when it’s ready. But one is Credit is King, transforming your credit to Royalty and a book called Full-Time, C EO. The shit they don’t tell You.

I, I love those titles. Will, and I was just telling Colin when we walked [00:02:00] out of our meeting, like, um, I, I love that you help people also focus on credit. It sounds like an amazing, uh, process, an amazing journey. And like I told you, you know, real estate’s been my biggest mistake and my biggest gain. Why, because I didn’t do it fast enough or aggressively enough.

And why it was good, because when I did do it, it ended up being good. And it truly is the, let’s say, the fastest path to wealth. And we know that, uh, what I read recently, I think it was in The Economist or the, um, world Economic Forum. 90% of people that have money have acquired their money principally through real estate.

So will, you know, I I’m personally very anxious to hear what you say and, um, we wanna hear your advice and your techniques and your experience. So without further ado, I’m going to hand it over to you. Will, Hey. Hey. Thank you guys. Uh, so [00:03:00] Startup Club, I want to thank you guys for being on. Colin, Michele and Mimi, thank you for the invite.

Uh, I’m truly excited. I’m always. Uh, uh, you know, humbled to get opportunity to speak on other people’s platforms and other people’s stages. because I want to tell people this has been a journey that I don’t think I’ve could have scripted. Uh, you know, I come from very humble beginnings. Uh, originally from Milwaukee, Wisconsin.

I now currently live in Las Vegas, Nevada. Been out here since October 5th, 2005. I bought a one-way ticket to Las Vegas, uh, wanting to go after my entrepreneurial dreams. There was no social media around back then. Uh, YouTube was barely, you know, on the forefront to, to, to dig into YouTube University. But I remember my mentor at the time had told me, he said, will eventually credit will become the new dollar moved to Las Vegas.

And I quickly found out what he meant by that. You know, I couldn’t rent an apartment without putting [00:04:00] down two to three times the deposit. Couldn’t purchase a vehicle without a, without a co co-signer or 20% down. So here I am, 26 years old, and I, I wasn’t going to call and ask my parents to co-sign for me.

So I figured out I’ll figure this out on my own and I can, ve and i, I, I vividly remember I used to tell myself when I moved to Las Vegas, because I only had $500 to my name, I told myself, I’ll stay in a shelter before I go back to Milwaukee. I’m going to make this work some kind of way. And so that was just something that I, that I had in me.

And a lot of it was because prior to me actually being into this mindset of being an entrepreneur, uh, I, I, I really dove in into personal development and personal development has always been my foundation. And I see that that is really the secret sauce, whether it’s in real estate, whether you’re starting a, a tax business, whether you are, you know, doing an e-commerce, it’s the mental part that’s the hardest.[00:05:00] 

You know, everything else is just a byproduct of being an entrepreneur. And so, uh, few years after being in Las Vegas, uh, I started to learn that the common denominator of why my life wasn’t progressing is because I knew nothing about economics. So I started, I decided to, you know, really take a look at this thing called credit Back in 2006, uh, was it took me about three years to, to work on my credit.

Personally, I had everything to think of. I had two repossessions I over credit card companies. I was on the verge of filing bankruptcy. Uh, and uh, as I started to read about the laws and about credit, uh, I started to work on it. Uh, like I said, was able to finally fix my credit. And if you follow me on, uh, Instagram, I actually posted my old credit reports a few months back.

So people see the four 10 credit score, they see the five 19 credit score. And so once I saw the power and benefit of improving my [00:06:00] credit, I then started to see that money becomes cheaper. When you have good credit. So I was able to, uh, purchase my vehicle with no money down. It blew my mind. I always thought I had to put money down on the car.

Uh, in 2012, I purchased a home. I I moving from Milwaukee, Wisconsin. It, it, I never even fathom being a homeowner, but then I saw that owning a home was cheaper than me paying rent. Hey, will. So yes, I, I, I don’t, before we jump into this, I mean, this is incredible. You show up in Vegas with $500. Yeah. You, your credit is shot.

You’re, you’re pretty much got nothing to your name, you know? What is it at that lowest point that it got you from that low point to say, okay, I gotta get outta this. And, and, and what triggered in you? Like what is something just snapped in your mind? Was it a moment in time? Was it a gradual thing? Like how did you go from that state of mind to.

[00:07:00] Where the, to the journey that led you to where you’re today, but just, just, just to get outta that, just to take the first step. Uh, well, I think it was a multitude of things, Colin. First of all, it was uncomfortable sleeping in my car. You know, they say rock bottom teaches you something that I don’t think nothing else can teach you.

And so, uh, just from that standpoint and wanting better, but the biggest thing and often tell people, Colin, I believe I had an unfair advantage. And what I mean by that is because I, I, I worked on my mindset first. The personal development was at the forefront of my entrepreneurial journey before money making was because it, we didn’t have all of the, the illusions around now.

And so, but I knew that the pain was temporary. I knew that the struggle was temporary and I just had to find one thing that worked. So I just, I just became relentless at finding that one thing. And I’ve tried everything. And so those were the things that kept [00:08:00] me going because I knew that it was possible.

But I’ll tell you really what the light bulb factor was. Uh, so after I started, you know, learning this thing about credit, I remember that that piece of advice a mentor taught me where he said credit will become the new dollar. I started really reading books about Robert Kiyosaki because one of the things that I learned is that, you know, we often talk about financial literacy and information, but the one thing that really separates, I think the, the levels of success that people have is learning about economics.

And so I started reading books about Robert Kiyosaki and he talked about something in his book that changed my life, and it was about leveraging his credit and how credit can create wealth. And so I remember going online and he had a video where he talked about how. Uh, he got into real estate. He mastered the art of sales, but he bought his very first investment property with a credit card.

And when I heard that, it blew [00:09:00] me away because we were always convinced that credit was bad. We were always convinced that having credit cards is, is, is irresponsible. But then what I started to learn is that credit cards aren’t responsible. It’s people who are irresponsible financially, that are bad with credit and that are bad with credit cards.

And so I started to dig into those concepts and then I started to learn that wealthy people utilize credit to create cashflow. And that’s where the whole gain, cash flow, uh, 1 0 1 came from. That’s why he talks about in a book, cash flow quadrant as an investor, wealthy people leveraged debt to create wealth.

And so as I started to learn all of these different concepts, Colin, I started to piece the puzzles together and then. You know, and I, I kind of fast forward a little bit. I actually learned that some of our top 10 favorite companies that we are familiar with were all started leveraging credit. Uh, GoDaddy was started leveraging credit.

[00:10:00] Twitter, Jack Dorsey used credit to start Twitter. Dale Technologies. Michael De started Dell Technology with credit, PayPal, uh, apple, Steve Jobs used credit cards to, to purchase the first components to build his computer. What ultimately became Apple today. Uh, so yeah, all of these concepts just blew me away.

Collin. Hey, will you want to hear a confession? Yes. I used my, I dropped outta my fourth year of college and used my student loans, my credit cards to launch my first company. Wow. Right. So it’s, it’s like, you know, it’s like hitting home right now. But of course we wanna move on and we wanna figure out, you know, what are these techniques and tips and tricks and, you know, what is it that people today, Can do in real estate to, uh, to make money from real estate.

It seems by, you know, when you say real estate to a lot of people, it almost seems like unattainable, you know, the vast majority of people in this country rent. Right. So can you just maybe [00:11:00] start with what would be a first project that someone could do? Yeah, definitely. So, I personally believe as a novice real estate investor, first of all, learning what your end goals, what do you want your end goal to look like?

And the reason that is important is because when I talk to so many people who want to become real estate investors, the first thing they always say is, oh, is, well, I’m looking for generational wealth. I wanna leave my kids a legacy. And it’s important that I position it like that for a couple reasons.

When you say real estate investing, there’s so many different facets of real estate. People think of fixing and flipping. People think of, you know, wholesaling. People think of being a landlord. But when I break it down to people, I say, look, the only way you can build wealth in real estate is you have to hold the asset.

And when you th and when you look up the definition of wealth, the layman’s definition of wealth is [00:12:00] an accumulation of assets. So if you’re being a real estate flipper, you can’t build wealth because you’re not retaining anything. If you’re a wholesaler, you can’t build wealth. If you’re a syndicator, you’re not building wealth.

Now, I’m not saying that those strategies are bad. What I’m saying is, is that, that that doesn’t accomplish what you say you want your end result to be. So the first thing is, is identifying what you want your goal to be. Secondly, is, is that you want to educate yourself on the basics of what real estate is, the basics of the process of real estate.

And so, and I say that because there’s so much misinformation out there, whether it’s through the terminology that people use, whether it’s uh, uh, uh, you know, thinking it was unattainable. Because the unattainable part is, is I think when people see the purchase price. That’s where they get scared. They’re like, okay, this property is 200 grand.

I have to go and save 200,000. Or, where am I going to come up with a down [00:13:00] payment? And that’s where I say, this is where learning about these different strategies and concepts come into place at. So just to kind of give people, uh, you know, an elevator, uh, strategy, let me show you just how you know. I show, you know, my, my clients and my mentees, the approach of how to actually get into real estate investing, being a buy and hold real estate investor, which means you rent the properties out, you make money every month, and how to do it with little to no money out of your own pocket.

So the first thing is, is that we have to identify, uh, uh, you know, markets in which we want to invest in. The reason that is important is because the most important component of real estate to know is that the, your money is made at the purchase price. It’s not on the back end. It’s not in the middle of the deal.

It’s on the front end. And the reason that is important to know is because how you get into that deal is going to determine the quality of that deal. The deal is the most [00:14:00] important thing. And here’s what I mean. There’s some markets where real estate investing as a buy and hold investor, which means your landlord is not conducive.

And I, I have this thing, Colin and Michele, that I say real estate investing is really fifth grade math. Most people, I think, overcomplicate the process. One plus one is two. So when we look at, uh, investing in a place like, let’s say in Los Angeles, California, where the average purchase prices are probably about $900,000, you’re looking at a, you know, a $5,000 mortgage every single month.

Well, you have to see what is the most you could rent that property out for. And when you start to do some just basic digging and looking around, you’ll see you probably can’t rent the property out for no more than about 3000 to $3,500. So off top you can eliminate that deal. That’s just something that you can do just from utilizing common sense from some of the things you know that I teach you from, I say real [00:15:00] estate deal making, one-on-one.

Uh, from that. So now we have to identify markets that are conducive. So let’s say we find a market that works. And just to give you guys some tips, I like the Midwest, and here’s why. In the Midwest, typically you can get in at a lower purchase price. Th but then also the property taxes are a lot lower. Why is that important to know?

Because there are markets where you can get in at lower entry points, but property taxes are high. And so when you’re dealing with someone, maybe a realtor who may not be as versed from an investing standpoint, yeah, they can bring you cheap deals, but if the property taxes are high, it’s going to eat into your profits.

So you want to find markets that have lower entry points as well as low property taxes. So the Midwest is a good place for that. Second, uh, next I like to focus on what are called turnkey properties. Turnkey. I don’t like to find properties. I [00:16:00] have to go in and do a bunch of rehab, especially as a new investor or for an investor who’s extremely busy like myself.

And here’s why. There’s something that I talk about that’s called the velocity of money, which means how fast I put my money out, how fast can I start making a return? If I’m going in as a brand new investor who knows very little about real estate, how to hire contractors, do I know how much is going to cost per square foot to paint the property?

And all of these things, I’m putting myself at a disadvantage to potentially be taken advantage of because I tell people, business is a shark tank, hence the word Shark Tank, the TV show. And so when you’re dealing with people who know you’re new, they potentially could take advantage of you. And so when you’re going in and buying a property that needs a bunch of rehab, you’re brand new, you don’t know who to hire, and you out there and you got hard money loans that you know you may only be able to hold for 12 months.

That rehab may [00:17:00] take 15 months and now that ballooned payment is due. So I, I try to stay away from things that I can’t control. The reason I like turnkey properties and what turnkey means is that the property is already, uh, uh, up to livable standards. It doesn’t mean it’s perfect, it’s already up to livable standards, or that means there’s a tenant already put in place.

There are other investors who are actually looking to either exit out of their portfolio because they want to get liquid to increase the level of portfolio, uh, holdings they want to have, or they’re looking to exit real estate to go and purchase a company, or they just wanna flat out retire. So I’m, I’m looking for what I call turnkey properties, and here’s why.

I already have a level of predictable income that I can utilize to calculate my R o I, which stands for my return on investment. So, Going back to the scenario, wildlife, the Midwest, and turnkey. So let’s [00:18:00] say I go to a place in middle of America and I find a property that’s a hundred thousand dollars. And believe it or not, there are properties that are a hundred thousand.

I just posted one on my Instagram for $61,000 yesterday. So I find a property that’s a hundred thousand dollars needs, maybe just some cosmetics. So I’m not too concerned about that because it’s still in livable, uh, standards. So I know at a hundred thousand my mortgage is probably going to come in at about, you know, 500 to maybe $600, depending on the interest rate.

Now the interest rates have increased, but I tell people we just have to find a property that works for your strategy. So even though the rates are a little higher, we’re still out here buying because we’re able to find properties that can still cash flow. So now I find a property that’s a hundred grand.

The first thing that I already know is, is I have to bring at least 20% down to close this deal. And now you may say, well, will I don’t have $20,000? Well, this is [00:19:00] where we use creative financing guys. This is where I’ve leveraged my credit, and maybe I’ve went to the bank and got a business line credit for 50 grand.

I have a couple credit cards stacked up with maybe 60, $70,000 worth of credit. And so now I’m going to extract the capital off of my credit and, uh, leverage debt the exact same way Robert Kiyosaki talked about to use as my down payment. Because again, remember the bank is going to finance 80%. Through the mortgage.

And then my credit cards are going to finance the down payment of the 20%. So now here’s where you learn about how to calculate your deal. Now, I’ve already predetermined that for that a hundred thousand dollars property, the rent is going to be $1,500. Cause I’ve already done my due diligence. Okay? Now, so I know my mortgage is going to be about $500, including taxes and insurance.

And then the 20,000 I borrowed [00:20:00] from my lines of credit, I’ve already calculated that that is going to probably cost me, let’s say $350. So 350 from the debt, from my credit, $500 for the mortgage. That’s eight, $150. Well, I st the rent is seventh is 1500. So I know that I’m, uh, going to still make up, I think it’s $650 a month profitable cashflow from this property Now.

A person may think, well, 50, uh, $650, that’s not a lot of money. Well, keep in mind you want to compound that over repeating this process, but here’s why people love real estate. For one, I got into that property with no money out of pocket. It it costs me nothing. I’m using all, I’m leveraging all banks money.

I’ve, I’ve, but it’s calculated leverage because the debt is servicing itself. So the deal never costs me anything. Secondly, I’m forcing [00:21:00] appreciation through the, through the tenants paying the debt. The the mortgage isn’t coming out of my pocket. The tenants are covering that debt. Next, because I now have a, a, a property that, that, that is in my ownership.

I, if I ever need to get liquid. I can borrow against that property. This is where the real wealth comes into play. This is the, the quadrant that Robert Kiyosaki talked about. See wealthy people who play in the investment quadrant, or we’ll just use the term investor. The reason they love to use the word, and I’m going to use this purposely debt, is because you don’t pay taxes on debt.

See, for someone who’s working a nine to five trying to save the 20,000, or someone who’s working, trying to, uh, save money to invest in their business, the odds on being able to save 20,000 in two months is slim to none. But if you have great credit and you know the strategies on how to tap into the bank’s money, I can go to the bank and get a [00:22:00] line of credit from 10 different banks if I wanna.

So now I have money that I pay no taxes on. I use it to invest in a vehicle like real estate. And the real estate portfolio is going to pay the debt on the credit. So it, it never costs me any money. And so now all I have to do is continuously repeat that cycle, all using the bank’s money. Now, one thing I do want to add before I, you know, pass it back to you guys, one may be thinking, well, will you still have that 20,000.

From that credit, uh, how do you pay that off in full? Well, as the property I own appreciates in value, I can do what’s called a refinance. Okay? So now I may have bought it at a hundred thousand. The, the, the, the, the, the rents are paying everything monthly for me. But let’s say it’s a few years later and now that property has appreciated to 200 grand.

We, we all know that that’s not impossible. We saw it happen over the past few years. So now I can actually do what’s [00:23:00] called a refinance to tap into the a hundred thousand dollars worth of equity. I can pull out anywhere between 70 to 80% of that equity. So let’s say I go and pull 70% of the a hundred grand.

The bank is going to cut me a check for 70,000 tax free. I use that 70 grand to pay the $20,000 off. Now in full, I can put the rest of it in my pocket, but as a seasoned investor, I’m going to take that additional 50,000 and put it into another deal. So now essentially all I’m doing is flipping the bank’s money.

No different than what the banks are already doing. Think about it guys. Have you ever went onto your bank account in the middle of the night and it said you can’t access your, your online banking due to maintenance issues? It’s not a maintenance issue. What they’re doing is, is they’re actually flipping your money into, into investments and they’re not allowing you to see them, uh, invest it.[00:24:00] 

All right? So this sounds amazing and I, you know, really like what you first said about you make your money when you buy real estate. Like that’s really, really important. It’s almost like, the way I also think of it myself personally is like, the minute you’re walking in the door, you have equity. Okay?

Definitely. Yeah. So will. Like, back us up a little bit. Like, do you, are you going to a bank? Like, you know, just like, what is the, like how do you, you know, I get it, you need the credit and you’re building, et cetera, but how do I make that first purchase when I’m a non, uh, let’s just say I’m a non real estate owner.

Like, am I going online? Uh, you know, can you explain a little bit more about that for us, please? Yes. Yeah, absolutely. So the, the first thing I recommend is that you partner with someone [00:25:00] who’s a little bit more knowledgeable to walk you through the process. So you definitely want to find someone, but just to kind of lay out the foundation.

So essentially you wanna partner with a realtor who’s investor friendly. So you wanna seek out a, a real estate agent. Who solely works with investors. The reason that is, is because their process on how they present deals to you is a little bit different than a realtor who only sells residential properties from that standpoint.

What happens is, is let’s say you find a deal that is ideal for you, okay? So then you’ll work with your realtor, and your realtor will then send you what’s called a purchase agreement or a offer to purchase. So you guys, you get the, uh, offer to purchase agreement. Uh, they typically may have you put down a earn deposit, which could be like a thousand bucks or a few thousand depending on the purchase price, and that allows them to take the deal off of the market during what’s called [00:26:00] your due diligence period, so no one else can make an offer on that property.

Okay? So now your realtor is the one that is working on your behalf. Now, I want to make sure that I’m very clear, make sure your realtor is working for you and not the seller. Because you want a realtor that is going to have your best interest and not the interest of the seller because they, of course, the, if you’re working with the seller’s realtor, they’re, they want to try to get their, their, their owner the most bang for their buck, the realtor that’s working on your behalf.

They’re going to try to get you the best deal, and that’s where this next steps come into play, where you’re going to want to get what’s called a home inspection. You wanna get the investment property inspected. Yes, there is an investment for that. It could be anywhere from three to 600 bucks, but here’s why that’s important.

When you go and get that inspection, essentially that inspector is going to come back and show you everything that potentially could go wrong with [00:27:00] the property or that is currently wrong. Now, a, an inspection report that comes back with some, some things that are out of place, does not mean that it is a bad deal.

That is what I call your leverage to go in and negotiate a deal. I’ll give you an example. So I found a property that was selling for about a hundred thousand and some change or whatever. The inspection report came back and it needed about $20,000 worth of work had needed to replace some, uh, uh, windows.

The roof had some, some things, there was a couple things, electrical and et cetera, et cetera. They, they break it down all in a report. Now that seller either has to fix those things or you can negotiate what’s called a credit, which means instead of a, the property being sold to me at a hundred thousand, we’re going to negotiate and I’m going to be able to get a credit.

So now I may be able to get it for 80. Now here’s why that’s important. [00:28:00] They may, so I get the property for 80 because of the inspection, but that doesn’t mean that it’s $20,000 worth of work. It may cost me. So in a scenario that I was in like that, I got the $20,000 credit. So I bought the property for 80.

The rehab only costed me 12. So now I’m only in at 92,000. So I, so, so this is where I say your deal, your money is made on the front end of the deal through the concessions, through those different things. So, so the inspection report comes back, we negotiate this, the credit, I get the property for 80,000.

Now my realtor is going to run everything through a title company. Or you can have your attorney, because every state is different. Some states you have to go through a title company. And the title company is the company that is used to check that there’s no liens on the property. You just wanna make sure that the property is on the up and up, and here’s why that’s important.

I’ve met [00:29:00] new investors who’ve boughten properties from other investors just because it was cheap and they didn’t go through title, didn’t see if any liens were against it. And I’ve seen people who have wired 40, $50,000 to the investor. They never titled it to the new owner. They took their money and went and sold the property again, or they wired the money.

They took the money and the property had $50,000 worth of tax liens against the property. And you have to pay those. So you always want to ensure that you’re going through a title company. And I have something called My Real Estate, a team, where I show people every single person who you want to have on the team.

So the inspection comes back. Your realtor negotiates the price. You guys agree to that? It goes through title and then, uh, essentially what you’re doing is, is you found a bank who’s going to finance that deal. So again, the property is at 80,000. I just have to come to the table with at least [00:30:00] 20% down. So I bring my $16,000 to the table that I’ve pulled from my lines of credit.

The bank, which typically a realtor is going to partner you with a good bank or, you know, through your research you found a bank that is going to work for whatever your end goal is. I particularly like banks that do, uh, financing under your business name, uh, which commonly are referred to debt service coverage ratio.

Loan banks. You guys may have heard D S C R loans. D S C R loans. The reason I like those type of loans is one, uh, essentially they will do any deal as long as there’s a one-to-one ratio. Meaning if the mortgage is a thousand dollars, the rent just has to be at least a thousand plus and it actually prevents you from getting into bad deals or getting upside down.

Secondly, as a novice investor, you may not [00:31:00] be able to show adequate income or revenues for your business. Dscr loans, they don’t ask for any of your income verification. You can actually use stated, and people again may say, well, will, isn’t that how we got into the housing bubble in the past? No, it’s completely different because again, they will not let you get into a deal, uh, if the rents can’t service the debt.

So there’s no way for you to get upside down. Yeah, I didn’t know the term Dscr R but we actually have been using a company called Host Financial. Okay. And they base the loan simply on the property and the income from the vacation rental. So it’s a, it’s a company that specializes in funding vacation rentals, and they only look at the property and your credit rating, but they don’t require you to have the income standards.

And, and, and you know, one of the reasons we like it here at the incubator [00:32:00] is because we have 10, 15 companies, it’s a very complicated tax return and whatnot. So by just focusing on the property itself, we’re able to do deals and they’re not going to fund it unless it has the income and it also has the valuation.

So they did, and I think our case, we did two or three deals. Michele and Michele and I have a, a vacation rental we partnered with where I think they were 70%. Of the, uh, valuation of the building and we were able to get it at about seven and a half or 7.7%, which is a little higher. I know it was higher than what you could get with a Fannie Mae back loan.

And I know that the lowest interest rates you can get is if is from your income. If you do have an income you can get, go to a, a bank in the United States and, uh, buy up to five properties that, uh, has lower interest rates backed by Fannie Mae. So I do know that that is available, but sometimes if you’re not [00:33:00] in that position, you called it a D dcr.

What’s, how, how dscr, yes. So Dscr, which stands for Service Dscr. Yes. That’s very cool. Service coverage ratio loans. Very cool. Very cool. So you can do deals even if you don’t have income. Absolutely. Yeah. And this is how a lot of. Not only novice, but seasoned investors. We love these type of loans because it allows us to scale a lot faster, you know, and, and again, we like to put deals under our business because Will Roundtree owns nothing.

And I do that from a, you know, protection standpoint to protect myself from lawsuits or people, you know, just trying to get into your, your, your personal finances. So, so yeah. So it’s a really cool way and a fast way to scale. And, and here’s the cool thing, and this only works for markets that vacation rentals, um, would be popular in.

So we’re talking about NAR cases, Fort Lauderdale and North Captiva. And what’s cool is we didn’t even have any [00:34:00] income on the property, but they used, they used a service called Air dna. And so they go and the bank looks at the air DNA ratings. Based on that property, you should generate X amount of income.

Income, nice. So don’t worry, you don’t necessarily have to have the revenue. They did the loan with us without the revenue. Yeah. Just to add on, here’s another beautiful thing. Once you have the revenue, you have monthly income, well, then it just gets easier and easier, right? Will, oh, oh. Not only does it get easy, here’s the, here’s the beautiful thing about the totality of after you’ve accumulated and amassed a few properties under your belt, all of them are cash flowing.

They’re all paying for themselves. And I know a lot of people say, oh, I want to pay them off. Most investors don’t pay off their properties because the money is cheap. And this is why we have to learn about economics. And so now you [00:35:00] have, let’s say, you know, 5, 6, 7, 12 different, uh, uh, uh, you know, uh, assets under your portfolio.

What we then would do is, let’s say we wanna level up, it’s just like the game of Monopoly. You get four houses and you turn it into a hotel. Then you can go out there and get what’s called a portfolio loan. So let’s say you have 10 properties, the portfolio is worth, you know, a couple million dollars, or let’s just say it’s even worth a, uh, uh, 1 million total.

Okay? I can now go get a portfolio loan, which means I can refinance my entire portfolio under one loan, borrow against the equity, again, tax free, and then take that money and go and buy an upgraded, uh, asset. So I may now get a, a, an apartment complex. I may now invest in a commercial building. I may now utilize it to buy a business, whatever you want to use it for.

But the reason investors love debt is because you pay no taxes [00:36:00] on it. The reasons the reason investors love debt is because you can borrow at a faster clip than you can save it. And this is where that whole term O P M comes from other people’s money. It’s really debt. And so I wanna give you guys this thing and then I’ll pass it back to you guys.

So there’s something called debt structuring, and there’s three different debt structures. The first one is called unstructured debt. This is the type of debt that most people are in. This is when you use debt, i e credit, or loans to buy things that do not make you money so that your primary residence, your cars, using your credit for vacations, those things do not make you money.

Then you have what is called restructured debt. This is where people may have to file bankruptcy. Now, I know you may think bankruptcy is bad, but seasoned investors and successful and affluent individuals use bankruptcy as a means of asset protection. They use bankruptcy to protect their assets, not because they’re [00:37:00] going low on money.

And then the, the, the, the, the level of debt structuring that most people want to get to and master is called structured debt. Meaning I know off top I can go to a bank and borrow a hundred thousand dollars and that a hundred grand, depending on the term, may cost me $900 a month. So all I have to do is find a vehicle I e a property that I can invest in that is going to pay me $1,200 a month.

So that 1200 is going to pay the 900 and I have a 200% profit. So this is how we have to start looking at debt, and that’s why I say we have to learn about economics, the cost of money. Yeah, I thought it was interesting. We’ll, and uh, we will open up for questions, uh, for the audience. If you’re in the audience and you’d like to come on and ask a question, please raise your hand.

Uh, this is really amazing advice that we’re getting from Will Roundtree, [00:38:00] bestselling author Will. One of the other tricks we did with the mortgage broker is actually negotiate some of the fees. Originally they posted their fees at Host Financial at 2%, um, origination fee, and we negotiated a 1%. And then, uh, also we, there were terms, uh, on the backend.

Uh, you know, if we, if we try to get outta the mortgage, uh, you don’t necessarily have to pay the full penalties. You can actually negotiate some of those in advance. Can you talk a little bit ab about that before we open it up for the audience? And we’re very, very happy to have anybody in the audience who wants to come on stage to ask a question, please just raise your hand.

Yeah, no thanks Colin. Uh, the thing I love about real estate or business period is everything is negotiable. And so yes, you can negotiate the fees, you can negotiate the terms, you can negotiate closing costs with a seller, especially if you have a, a seller who’s extremely motivated. Uh, I recently just did a deal that’s [00:39:00] called subject two, or you may hear it commonly referred to as sub two.

I know Pace Morby talks a lot about this strategy where essentially I’m able to go into a property and get it for little to nothing down. And so I actually had a property that I paid $3,500 for Colin. And I’ll tell you guys how I did it. So I found a property, uh, the seller was extremely motivated. Uh, he actually, uh, based upon what the property was worth and what he owed, there was not much gap in what his profit margin would be.

And so what I was able to do was, is after I got the home inspection, He didn’t have it in his budget to pay for the repairs. And so I said, look, so that you don’t have to pay for the repairs, I’ll pay for the repairs, but let me give you $3,000 and just let me take over the mortgage. And then once I pay for the repairs, I’ll go and get my own financing.

Now the property was already cash flowing, so I gave him 3,500 bucks, and now [00:40:00] I’m making about $1,100 a month. The mortgage was $600. I had to put in about 1200, about $12,000 worth of work into the property. Got the property value up, I was able to raise the rents to 1500. And so now I’m going to go and attain my own financing on that property and, and get my own loan under my name.

And so that is something called subject two, uh, which means subject to attaining my own financing. So there’s so many different things you can definitely negotiate other than just a purchase price.

All right. I learned something else. I I had never heard of that. How do you, how do you find that? Because clearly I, I’m, I’m going to just say that person was looking to get out of their mortgage if, if I could. Yeah. Yeah. So there’s a couple different ways and strategies. The easiest way or the, the easier deals are finding [00:41:00] people who’s behind on their mortgage.

And so a lot of the times you have people who are behind on their mortgage and they have no means of getting caught up. And so you, you of course, you want to run your numbers. Everything is still predicated on numbers. Not all foreclosure deals are good. Not all short sale deals are good. So you, you want to know your numbers.

And so you find people who are usually either behind on their mortgage, they’re potentially losing the property. Sometimes people who’ve inherited properties who don’t want to be landlords. So there’s so many different scenarios. What I personally think is going to start happening, you had a lot of people in 2022 who went out and refinanced their primary, uh, residency and they went from 3% to maybe 6% pulled money out of their property.

And that the property they live in makes them no money, but their payments increase 30, 40%. [00:42:00] It’s going to be a, a, a, a, um, a great opportunity to find people from an investor standpoint who may not be able to keep up with their mortgages. And so you’re able to go in and negotiate to where you potentially could just take over that property because they may be, may be behind on their payments.

They couldn’t keep up on their taxes. So essentially, you, you would go in and get the back portion of what they owe caught up. You would be able to assume the mortgage. So there are so many different ways and strategies. Of course, you can run all of that through title. So it is actually, uh, uh, uh, legalized.

But yeah, there are so many different ways, Michele, a lot of them. All right. So sounds like pre foreclosure, but, but not always as, as you said, so, correct? Not always. Yes. Yeah. You just kinda need to hit, hit the pavement, like you said, do some research and, you know, and, and find some good opportunities. And hopefully it’s a win for the other person as well.

I, I [00:43:00] really like that methodology. Definitely. But, you know, I, I, this is time, this hour is flying by so fast, and we have Orinda who’s been very patiently waiting on the stage. Orinda, we’d love to hear, um, your questions or your, your, your comments for Will Orinda. Hi, uh, thank you for having me. Um, my question for Will is, uh, do you have, uh, more information on like new construction base, uh, financing and all of that?

Because I have people that are interested in like purchasing and then getting into, in terms of financing, they have struggle in getting like finance to build maybe two or three, uh, properties on the land that they, uh, already have. Yeah, no, great question. So lenders are definitely starting to be a little more careful, uh, because here’s the thing, and I know a lot of times [00:44:00] we have to, uh, we have to start looking at, uh, being an investor or when it comes to dealing with banks from the lens of an investor, meaning we always have to, we, we always want to know that the banks are always worried, how will I recoup my money?

Now there are hard money lenders that will do new construction. The thing to keep in mind, and here’s how I’ve explained to a lot of people, hard money lenders, are essentially investors. I, I loan money out as not necessarily consider myself a hard money lender, but I, I call it gap lending. And typically, if they see that the deal will not make sense at the completion or what they call the, uh, after repair value, they will not lend against it.

And so, What I will say that no good deal will ever go unfunded. There are tons of, you know, banks out there, there are some D S C R loans that will fund new construction. You just really have to do [00:45:00] your due diligence, but you gotta make sure that you know how to convey what it is you’re trying to accomplish.

Because that lender is always going to, is always, uh, going to want to know how will I make my money back if this deal goes bad? And so if they see, okay, I’m borrowing you, lending you guys 500 grand, but the, the value in this market is only going to be four 80. Once it’s complete, that’s a bad deal. So they’re not going to lend against it.

So you want to be able to sell the story of what, what the end goal is because they’re looking at it from the front end because not all real estate is profitable. So, uh, without knowing their total situation, I don’t know if it’s credit, if it’s income, are they using it for, uh, investment purposes? Is it a primary residency?

You just have to find a bank that’s willing to lend based upon what the, the, the end result of why you’re building that new construction is going to be for. Thank you. [00:46:00] Absolutely. Yeah. I, I’m thinking about our properties in North Captivia. We have seven development lots, and we talked to the lender about the idea of doing a, uh, construction loan, and then after you’ve completed the construction, you then flip into a more of a conventional loan.

Is that, does that from your perspective seem to make sense? Yes. So you can definitely go into, uh, a property with, um, with high where, what we call, where the money is a lot more expensive. And that is because some of these hard money lenders will cover the cost of your actual construction or your rehab.

And so once you get into the property, then yes, you are able to refinance into more of a conventional loan. And so the thing is, is again, is that you always want to make sure you know your numbers because that’s where it can be. I’ve seen a lot of people [00:47:00] get stuck in new construction or rehab, high mu, high interest loans because the deal doesn’t make sense on the back end.

So if you, you definitely can take that route, Colin. You just have to make sure that you know your numbers. Wow. Interesting. Um, we had a, uh, another speaker on here named Goran Slavic, uh, and if you go into Serial Entrepreneur Secrets Revealed. You can search for him as well. He’s, uh, a real estate investor.

He has 1100 properties. And, uh, what we learned in that session will, was that he really stays in his lane, you know, and what do I mean by that? He, his lane is section eight. In the case of the real estate business we have here that we run out of our incubator called Escape Club. Our lane is vacation rentals.

And we even have a particular formula close to the beach or close to downtown. We actually, like in vacation rental [00:48:00] world, sometimes a little bit of a grittier area because vacations want to be around the action. They don’t necessarily want to be in a, a, a deep residential community. When you’re raising kids and having a family and you want to go to good schools, you’re looking for those types of properties, uh, that are in those communities.

What we do is we look for those properties that may not be in the best school district, but they’re. There’re, there’re, there’re properties that actually resonate well with people who want to travel to the city. And, uh, actually Michele found a property, uh, a really cool property. It was in one of those communities, but it was bordering on the, the, um, the restaurants behind it with these big walls.

And, and it really turned a lot of people off. And in her particular case, Michele, maybe you can describe the actual, it’s like secondhand and you’re on stage here, but you can describe the actual deal to will, um, but ultimately getting in your [00:49:00] lane. Right. And Michele might, maybe you could talk about that particular deal and, and, you know, our lane is vacation rental in a certain formula.

And then once you learn the formula over and over again, you get better and better at it. Then you repeat that, Michele. Yeah, I mean, for me, what I try to do is, like you said, will, is find a specific area, um, You know, I, I don’t have kids, so I’m not worried about like being in the best school district, et cetera.

What I do know is, you know, I wanna find a good property in an, you know, in a neighborhood that’s appreciating, and typically, and many times it’s, let’s just say it’s at the bottom 10% of the neighborhood in terms of its current value. But, um, what I find is like you just literally have to be on the MLS driving around every day, you know, really just like, really [00:50:00] understand the market where you’re looking at, like you said, and then just really looking.

But basically, yeah, so it was actually, you know, right behind it was like, you know, like a commercial building to the one side was a commercial building, but hey, guess what guys? It did need a lot of work. It actually was part of the Zillow portfolio that they were li liquidating and it took lot, a lot of trying, like I just, you know, I didn’t give up, but basically, um, let’s talk about the good parts of it.

It is a really cool little neighborhood, right behind a major hospital here in Fort Lauderdale. And it’s like, uh, under two mile, like 1.2 miles, like you can walk, I’m not kidding you, straight down the road, the main road in your right on Fort Lauderdale Beach and actually at Pier. So, yeah, I mean, yeah, maybe it’s not where someone who’s [00:51:00] more fluent wants to raise like small children, but you know, I think, uh, the rest of us, you know, kind of enjoy it.

In fact, it has a nice yard. And it’s like very walkable. Like I, you know, am big into what is the walkable, you know, index, which they have for most cities. And um, you know, for us, because we’re in Florida, we know being near the water is, is extremely valuable and people wanted to go on vacations, et cetera.

Um, and it didn’t take too much to fix it up. I kind of went a little overboard quite honestly. But, um, it could have been moved right into I I, I like, I really liked what you said about that Will, because I find a lot of people I know, they, they just jump into these properties that need too much rehab and Oh my gosh.

And then the contractor, you know, goes over budget 50% and then they take six months later and then you’re in a whole heck of a lot of trouble. Mm-hmm. So I, that’s something I hadn’t overtly thought of, but I I [00:52:00] do like what you said about. Let it be a place that you could, not you or you could, you, or you could rent, like, where you could literally move into so that you don’t just drain all your resources.

Thank you. Yeah, yeah. No, no. It, it makes a big difference. And even my strategy and I like, you know, with, with, you know, both of you share, I like to find properties. The reason I like the Midwest is because I, I like to go in what are called c and D class neighborhoods, and a lot of the c and d class neighborhoods I look for are on the BeltLine of the downtown.

And so when you go to the Midwest, most of the cities that are near downtown is where all of your corporate companies are moving to. And so what is starting to take place in a lot of these c and d class neighborhoods, you have a lot of people who, that is now becoming the hub. Because, you know, [00:53:00] arenas are starting to be built.

You got sporting e like all of these things are taking place, and so you’re able to get properties that are cheap, but the values are increasing tremendously. So I have a property I invested in in 2019 for $2,500. Yes. I actually went online and bought it for 2,500. I put about 20 grand into it. That property today is worth $167,000 because it’s two miles from downtown.

So, so yeah. So I, I, I definitely have kind of just my strategy and I have this thing, I don’t always look for the prettiest house. I look for the most profitable, and that’s kind of the lane that I stay in, and it’s been extremely successful. It’s been a easier way for me to show that to someone who also is a new and novice investor.

Because it’s a lot easier to come up with 20,000 down versus having to come up with, you know, 200,000 down as a new [00:54:00] investor, even when you’re leveraging credit. So it is, it is just an easier entry point to be able to, to become that new investor. Yeah. So I think it’s important to find your formula to stay in your lane.

because when you do find it and it does work, you just scale it. You just start scale, exit, repeat, sound familiar, right? That’s the name of the book coming out. But, uh, alright, well we covered a lot today. If there’s any last questions in the audience, please raise your hands, come on stage. We’ve only got about four or five minutes left here.

Uh, will you know, I actually think you should consider running your own show on Startup Club. Uh, a real estate show. I know the vast majority of wealth in the world has been being created by real estate. There are more real estate, uh, millionaires. There are more millionaires in real estate than any other industry.

I know we often talk about tech millionaires and whatnot, but it is such a lucrative market and an [00:55:00] important market. And even, even though I’m a, a tech entrepreneur, uh, we decided to start a real estate business as well. So it is an area of opportunity and it’s just all about learning the formulas. And once you figure that out, it’s all about just start, scale, exit, repeat any, any last thoughts or any last questions from the audience?

Will, any last thoughts there? Uh, no. I mean, I, first of all, thank you guys again. I had a, you know, incredible time. You know, I, I love to just go to different forums and share this information because one of the things that I’ve learned, or many things that I’ve learned along my journey is that, Information is what separates us guys.

You know, it’s one thing to say that you know, you wanna do something, but if you don’t have the proper information, you go into it [00:56:00] all wrong. And with the vast amount of misinformation out there, I appreciate, you know, the startup club, putting together rooms, bringing in credible individuals to come on and, and really just share this information, you know, for free.

because there’s a lot of people, you go in rooms like this and you’re paying tens of thousands of dollars for that type of information.

Well thank you very much Will. It’s been a great show. I know next week Michele, we have another bestselling author coming on. Uh, and, and if you want to learn about who’s coming on Startup Club, you really need just to head over to www.startup.club. And join. Oh, we have a special guest who just showed up and join.

Go to ww dot startup club and join the email list. We have Joe Foster, founder Reebok [00:57:00] on. Sounds like he wants to, uh, ask you a question, will, or make a comment. Are you available? Absolutely. I see you there, Joe. If you wanted to make a comment, uh, just come off microphone. I know that, uh, earlier today Michele said that we had met Will through Joe Foster and uh, he, he’s actually got an interesting story, uh, around catching the big break.

And he’s the chapter in the book Start Scale, exit Repeat, and an upcoming Forbes article that will be out in about a week, I believe it comes out next week. And that talks about how entrepreneurs can position themselves to catch the big break. So, Joe, if you had any, uh, thoughts or, uh, wanted to say hi to Will, Uh, we just have to take you off mute there.

I didn’t know he is coming in from overseas, so pretty far away. So. Give you 30 seconds there, Joe. Or we’re going to [00:58:00] various. Hi, there is, yep. That’s great. We, we, yes. My technician, Julie, she managed to get us into this last, managed to get us into this. But it, it’s great. You know, the networking is so fabulous and meeting new people is so great.

So, uh, we, we love to listen in, become part, um, of this journey and, uh, whichever way we look at this, it’s great to have friends. It’s great to have that information. You know, the networking these days, the networking is so brilliant. I just wish 50 years ago when, uh, when we were, we were building Reebok. I just wish at that part, that time I could have met you guys because it is so fabulous.

So thank you. Thank you very much. Because we, we enjoy this and we’ll be back in the USA very shortly. So. Yep. Great stuff. Keep us informed and uh, we’d love to be part of whatever you’re doing. Well, [00:59:00] it’s funny, uh, we had actually talked about the property you had stayed at Joe, uh, that Michele put together.

It’s actually pinned at the top of the room right now. And, uh, that was an investment property that she put together, designed, renovated, and now it’s renting out. And I can see as I pinned it here, it’s got a 4.96 rating. And, uh, what did you think of the property when you stayed Joe? And then, we’ll, we’ll move on.

Yeah, we really thought it was fabulous. It, it’s great. It’s so nice. It’s relaxed. It’s, it, it is, it is, uh, hotel quality and, uh, yeah, we felt, will felt really comfortable. You know, it was like being at home. And I think that’s one of the best things about, uh, these Airbnbs, if you can make it that quality, which of course the property that we stayed in was such that quality, you just feel as though you can relax.

You know, you, you, you, you’re not on guard. No, you’re relaxed and you’re enjoying it. Beautiful property. We loved it. We enjoyed it. Absolutely. [01:00:00] All the time. And you know, we could be back. We could be back. Indeed. And, uh, hopefully you might, uh, look, uh, you know, nicely polymers and, uh, allow us to go back in that property.

Well, we’re adding a pool to it, so, and you gotta come back and try the new pool and spa when it comes. It is, is built. And that’s coming in September. But, uh, will, any last words before we close the room? No, uh, you know, had a great time. Appreciate you guys. Looking forward to coming back on and yeah, let’s definitely talk about doing an independent startup room with this.

Yeah, I think it’s great. And by the way, I just, I just went in and made you leader as well, um, on Clubhouse. So you can now open rooms on Startup Club whenever you want. If you just wanna try it out, just test it out, test the waters. But do let us know so that we can come in and help you. Promote the room and let our users know who sign up to our mailing list that you’re doing A room, it could be one room one time, or it could be one room a month, or it could be one room a week.

And you [01:01:00] syndicate in podcast however you want to take it. It’s, uh, we’re, we’re willing to help you. And thank you very much again, Joe, for just showing up like that and, and being, uh, a great advisor and, and, uh, you know, helping, uh, helping us out here. Yeah, we, we love being with you, Colin. We feel family. We really do.

And, uh, we’ll, we’ll be there anytime, just today. All right. Thank you. So before we leave or end the room today, I just wanna make sure will everyone knows how to get in contact you should. They like, so why don’t you just quickly tell us that and we’ll hit the wrap up and we’ll see you guys next week.

That’s next Friday at 2:00 PM Eastern. So Will, how do we get in contact with you if we wanna ask questions? Yeah, yeah, no, definitely. So they can find me on all social media platforms at Mr. That’s m, Mr. Will Roundtree. So Mr. Will [01:02:00] Roundtree on all social media platforms. Also have a YouTube channel with over 200 free videos on there.

And then you can go to my main website. Uh, and that is, uh, w Management services. W Management services.com is my primary website. And uh, you can go on there and speak with someone from my office, ask any questions. But yeah, I’m very accessible online and on all social media platforms. Excellent. Thank you and thank you for everyone that came up to the stage or Inda for contributing.

And thank you for hanging in there and listening. And, um, don’t forget, go to WW dot Startup Club. We’ll have, um, the podcast app, let’s just say in about five days and also a blog post. There are a lot of good resources and items research that, uh, will spoke about given his experience. So you’ll be able to grab all that [01:03:00] pretty easily within five to seven days.

So thank you so much and have a wonderful holiday weekend. See you next week. Bye-bye. You’ve been listening. See you later. You’ve been listening to Serial Entrepreneurs Secrets Revealed with Michele Van Ilbo, Mimi Ostrander, and Colin c Campbell. We’ll see you next week. Bye.