The Wisconsin Investor
Each week, we bring you interviews with some of Wisconsin's top real estate investors who share their tips, tricks, and strategies that you can implement right away. This show is dedicated to helping Wisconsin real estate investors elevate their game. Along with interviews, I'll also dive into hot topics in solo episodes and feature experts from various real estate sectors across Wisconsin.
The Wisconsin Investor
Family First, Business Second: Brothers Navigating Real Estate Together with Reese and Kyle Brown
The episode features Kyle and Reese Brown, who discuss balancing new parenthood for Kyle, their sibling relationship, and partnership with real estate investing. They explore partnership dynamics, the impact of family on investment strategies, and share valuable insights on seller financing and private money lending.
• The influence of new family dynamics on real estate investments
• Partnerships and trust as critical components of success
• Selling financing as a viable strategy for cash flow
• Balancing personal investments with partnership obligations
• Tips for navigating real estate as a family connection
• The importance of adapting approaches based on life changes
• Establishing clear roles and responsibilities in a partnership
If you're interested in more information or investing, reach out to us at wisconsindiscountproperties.com.
Hey everybody, welcome back. We are here with another episode of the Wisconsin Investor Podcast, and today I've got brothers on here, mr Reese and Kyle Brown. What's up, boys?
Speaker 2:How are we doing? How are we doing?
Speaker 1:We're doing. We're doing, excited to have this conversation with you guys and today audience, you guys are going to be in for a treat because these guys have kind of a diverse group of things, I guess, that have happened or are happening and, I would say, maybe a little newer to the real estate world too. So for those of you guys that are newer to the space, hopefully this will give you guys some insights on next steps for you going into this new year with some new goals, if you're listening to this as it drops, drops and this should be a lot of fun, I guess. First and foremost, kyle, congratulations. Just had a baby, correct?
Speaker 3:Correct, that is correct. He is two weeks old as of today.
Speaker 1:Yeah, so I'm sure that's going to influence some of your real estate decisions in this next year. Let's start with that. How does having a new addition in the family maybe change some of what you had been looking to do previously? To what? What's the shift going into this next year?
Speaker 3:For sure. I mean honestly, I think you know I feel very, very happy with where we're at right now and in terms of our real estate. Where we're at, I mean just kind of setting, setting him up for the future. You know, with you know we, like you said, we're fairly new to this real estate investing. You know stuff with you know, got like three years under my belt, but you know, setting him up for the future and having, you know, having this real estate that's, you know, cash flowing a little right now but in the future, ideally, you know, once the mortgages and everything paid off, we're going to have a nice little fund for him, whether he wants to use it for college or whatever. But I think this investing in real estate is huge.
Speaker 1:Just putting my mind at ease, having a little guy at home and not having it in the market where who knows what yeah market's been hot the last where you know who knows what you know. Yeah, market's been hot the last couple of years, but who knows?
Speaker 3:I mean one. You're one tweet away from losing half your Exactly Having having that solid, concrete land that you can call your own. I mean that just puts me at ease and, and I think you know, it's going to be huge as as we grow our family For sure.
Speaker 1:So I want to stay with this quick and then Reese, I'll tackle some stuff with you, like maybe you guys and the partnership and stuff like that. But when, when you got into real estate Kyle, was this a focus? Was that part of the reason you got into it? Was you were thinking of the future of family planning, or is this new kind of perspective, more recent, since you know, having the child, no, no, I mean honestly, just a big, a big influence on me was was Grant Cardone.
Speaker 3:I, you know I followed him, you know, through college and just you know, watching how he's kind of grown and developed in the real estate industry, and I've always thought, you know, if I could get into that space. I wanted, I want to and you know, I think nothing against what my parents have done. They've been very successful financially, but they're they're a lot majority of their net worth is is in the market, is in, is on a piece of paper, right, and I think I think that kind of scared me. You know, looking at just having, you know, you never know, like you said, one bad tweet away from you know. So I like the idea of diversifying. I have some money in my 401k, I have some, a lot of money in the market, but I think having that, having that concrete land, that can you know, no one once it's yours, it's yours Right. And and you know, yes, the market can fluctuate there as well. But if you look at the trends, I think you know real estate, I don't know. It's just, it's gold, it's gold. They only make so much of it, right, they only make so much of it. So I think I've always had that in the back of my mind of I really want to diversify and get into this real estate.
Speaker 3:And then, you know, we picked up our first property through Wisconsin Discount Properties and you know that just it just clicked. It was like, you know, I was so we're so scared to pull the trigger. We pulled the trigger and it was like, oh my gosh. You know, we put a lot of sweat equity into it. We needed to really do some remodeling on it. But I mean it's just like, wow, this, this is, this is the real deal. And then from there it's just kind of snowballed.
Speaker 3:I think that first deal was um was tough. But once we got that first one under our belt, I mean, and it's like you know, the number, it's just math, right, it's just numbers, just math and numbers. So it's like your numbers work and Reese is really good on that side of things. We can talk about that with the, with how we do it with the, with the brothers. But I mean numbers work, the numbers work right. Like it's not. You don't have to be subjective, you can be very objective about it and just look at the numbers and go from there and that's kind of where you know we've we've gone with it. That's awesome.
Speaker 1:I think one of the things you mentioned there I want to highlight. You know, at our at Wisconsin discount properties we used to do walkthroughs for the properties, like people could physically show up and walk through the property. We've really gone away from that. After COVID happened it made us go away from it and then what we found is so many of the investors, even first timers, it took away a lot of the emotional part of the decision.
Speaker 3:Oh, 100%, I 100% agree with you Because you don't look at those, you don't go into this property and these properties are not going to be perfect. There's going to be little things that are wrong with them. And when you go see it in person, that then you start having all these little flags like oh, how am I going to fix that piece of trim? How am I going to fit? You know, like you don't even have to deal with it Cause you don't. You don't see it, which is actually a good thing because it doesn't matter. It doesn't matter, those little things don't matter.
Speaker 1:Yeah, so we do the. You know all the big stuff you got to take care of. And then you got a video walkthrough which you see. You still get to see layout, you get to see you know age of stuff and all that. But you're not seeing all the little nicks and dings and that kind of stuff typically and you're looking at it more objectively. And then you know people who get comfortable with that system. I always said I wanted to set it up so people could you know evaluate a deal while they're sitting on the can.
Speaker 2:They can make some money while they're sitting on the can. I'll say the inspection reports too. To that point, we get them from a third-party person. It's not someone internally that's doing these. I would 100% trust someone licensed to do an inspection over myself who I don't know too much at all about how a house is built or functions.
Speaker 3:Yeah, Another thing to highlight just with buying through a wholesaler or buying through Wisconsin discount properties that, like I literally just found out about, not found out about, but I met with my tax professional, which is huge.
Speaker 3:So we can, I can write off that, that closing cost, that big closing cost that you, you know with with with uh, uh, uh, you know, a wholesaler, because wholesaler needs to make money too, right, you have a closing cost for commission. That closing cost, you can write that off in taxes, which is huge. Which is huge, I mean, if you think about you know. I mean we don't have to get into specific numbers, but like it is huge in terms of getting your, getting your, your taxable income down, right. So, like, my goal is to buy from a wholesaler, at least as we grow our LLCs, at minimum one a year, because you're just, you're minimizing your tax burden.
Speaker 1:Yeah, I didn't even think that was a thing.
Speaker 3:So if you, if you, you know you could go buy a house on the market for a hundred grand, right, say, or say you pay Wisconsin discount properties that same same hundred grand. But you're, you're, probably, you probably have maybe 10 grand, whatever closing costs, you can write that 10 off, which is huge, yeah.
Speaker 1:Yeah, that is awesome. Well, kyle, we'll send you a check in the mail after this for that little plug, cause that was great and I just I just learned something there as well. So you mentioned the first one that you guys pulled the trigger on it, that one, it sounded like from the language you were using, kyle and Reese, that sounds like that's a partnership deal, that that you and your other brother, so the three brothers are in on this deal.
Speaker 1:Yep, talk to me about like why? Why have a partnership and what value are each of you guys bringing? How are you setting that up so that Thanksgiving and Christmas is an awkward? If and when we have to, you know, divest this like was there anything you guys did on the front end? For sure, make sure and talk about For sure.
Speaker 3:Yeah, I mean me and me Reese and my other brother colin, older brother colin, we've always been tight, right.
Speaker 3:So we have that. We have that, that bond, that and and that trust, right, I think the trust is the big thing, that's the number one thing, right, you're not going to go into a partnership with anybody, I think, if you don't have that, that trust. So we've always had that. And then, yeah, on the front end, we just we really did our due diligence in setting it up in terms of everyone has their set out responsibilities written in our LLC operating agreement and we sat down and really dived in and talked about each individual's role in the business. So that I agree. So there are no, because we all know those. We all know those stories of families who are torn apart, right, families who are torn apart right, like when we get into that with that mindset of like the last thing we want to do is make a couple thousand bucks and ruin our relationship, right, so that was a big thing for us and we had that all laid out right?
Speaker 2:Yeah, we have it all written down. I'm looking at it right now. Kyle and we have it all written down into our duties, we're all compensated, right? Kyle does the property management, so he has, you know, he gets 5% of the income every month from rents. He gets a certain percentage. When he, you know, finds a new tenant, I get a certain percentage for, you know, doing all the financing on the backend, colin, when he has to go and, you know, do some maintenance on the property, he gets a certain amount for the first hour, then continued on and it's all written out and then we all signed it.
Speaker 1:So perfect, perfect. Now, do you guys have anything in your operating agreement or when you guys set this up, of? Like, if somebody wants out, how does that look for you guys? And what was that discussion? Like like one of the brothers wants to be out of this partnership or needs to liquidate something or need some cash out of it or something like that.
Speaker 2:Yeah, so we've. We've talked about that. It's mostly the way that it's been set up. Right now, though, is so for Kyle and for Colin, they would be the ones to sell first, because they're older than me, okay, and they like the purchases. The intention of the purchases for Colin so far has been once for one kid, once for the other kid. With that in mind, we're not too worried about that. That being said, with three people, we can discuss that with voting, because there's an odd number. That's another thing that we've kept in mind. That's a good point for us to maybe consider as we review this annually. Kyle and I just had a conversation about percentages and what we want to do going forward, something to bring up here earlier rather than later.
Speaker 1:Well, do you guys feel like having three is an advantage over having a partnership of two? Oh, 100%, I think so.
Speaker 3:I think so. I think the big advantage we all just bring a certain unique thing to the, to the partnership right, where Colin, our oldest brother, he's very hand, like he, he's an engineer, mechanical engineer, like the guy can fix pretty much anything. He, he can look at something and evaluate it and know like, hey, this is out of my scope, you know, let's call somebody. Or hey, nine times out of 10, he can handle it, right, and you know, I think. And then what I bring to the table is you know, I, I, I'm in sales, I deal with people all day, every day. So I deal with our tenants, I deal with that side of things. And then Reese is so good with numbers and Excel and finance, he can bring that.
Speaker 3:So I think, having those us three, we all kind of bring our own special thing to the table, which I think is is huge, right, and like, reset to it, you have a disagreement with two, it's, it's 50, 50, right, we, we, we have a third. You know, if two people are having a disagreement, we can bring in a third guy who's kind of, you know, maybe he has a different perspective and you know. So I think, having that, having all three of us there we can. If there is a disagreement, we always we figure it out because there's three of us, right.
Speaker 1:That's really interesting, cause I've known, I've known a lot of partnerships are two people. It's easy to get two people together and go do something. I also think there's some disadvantages to having partnerships, right. What are? What are some of the disadvantages, if you guys have noticed any so far?
Speaker 2:I mean, for you guys it's pretty fresh, but go aheadese I know the first one, our first property we got was wildly successful and to now only own a third of it kind of sucks. Yeah, that's that's like. Honestly, it was like at first it was really nice because I wasn't, you know, there's not as much risk involved. I got sure you know kyle and colin doing a lot of the work with me, but then once you refinance it it sucks when your check is not what it could be.
Speaker 3:Yeah, yes and no, but you mitigate your risk, right, I think, by having that partnership, right, I think, it's easier for all of us to sleep at night in terms of knowing hey, we all got each other's back too right, but yeah, obviously your cash flow. I mean, yeah, when it got each other's back too right, but yeah, I know, yeah, obviously your cashflow. I mean, yeah, when it's 100% yours, yeah, that's it's true.
Speaker 1:On the flip side, though. If race, I'll be devil's advocate. Now I'll go to the partnership benefit. Something goes wrong. Big expense. Now you only share a third of that, right? Yeah, yeah, yeah, there's. It's both sides of the coin. I know that with HOAs. I hate being in HOAs. Like our office is in an HOA and I hate it. But then, like when there's something wrong with our exterior of our building, I'm like, oh, everybody else has to pitch in for this special assessment too. It's kind of nice, right, you know, it's kind of similar to that Now with the, with the properties you guys have. How many properties are in the partnership?
Speaker 3:three, three, seven units so, yep, two, two, two duplexes and then a triplex, so three yeah, so no, like we said, I mean we we started. When do we buy the first one? 2022, 2020, 2023?
Speaker 2:2022, 2022, refinance in 23, and then the other ones are in 2023 as well yeah, okay, cool.
Speaker 1:When you guys set up this partnership, that was your first. All of your first purchase was in the partnership.
Speaker 2:And then I had a.
Speaker 3:I had a duplex that I was living in I had. I was living in one side of the other, so that was my truly, that was my, me and my wife's first rental property, but I mean we, it was our first home too.
Speaker 1:It was our first home too. Okay, little house hack action, yeah, outside of, just without house hacking. This would be the first. So when you guys set this up and like when you had the partnership going, what was the vision for this partnership Is it? Did you guys have a long-term like we want to have X amount of units or we want to get to this part? And then you guys each have kind of branched off and done some of your own things. Now, so talk about, like, how that evolved and how do you guys decide what to put in the partnership and what not to?
Speaker 3:And that's what I think our vision really was just getting in the game right. Like I had the one that was house, or I was living in one and renting out the other and I was learning. I had kind of learned how to be a property manager. I bought that in 2020 and I was, you know, living right there was so nice because you know my tenants right there. Right, I learned the ins and outs of being a property manager.
Speaker 3:And then that first one, I think we just really wanted to get in the game Right. We want it. You know, we have been following you, you know following some other real estate guys, and we just wanted to get in the game. We didn't really have a have a plan in terms of, you know, five years, 10 years out, we just wanted we want to get that first property. And we had been looking and that one came up and it just we ran the numbers and we all kind of pulled.
Speaker 3:We were able to purchase that one with just all of us pooling in our cash. So we were very, we were very, very conservative in terms of, you know, we didn't want that, that hard money loan on our shoulders. We didn't. We had never done anything. So we just kind of that's another we were all able to pull in our cash and just buy it straight out with cash and we didn't have to have any of the other stresses Like we you know we we did. We got it done in a timely manner in terms of the the you know rehab and getting it rented out. But that was huge for us, just with it being our first one, being able to pool our resources and kind of come in on it together and not have that hard money loan kind of on your shoulders.
Speaker 1:Yeah, that's huge, especially like you said first one, you guys have that ability to not have to get it done in six months or less. Exactly Otherwise you have the kneecaps taken out have the kneecaps taken out.
Speaker 3:Looking back, looking back, cory, we should have.
Speaker 1:You know, we probably, we probably could have gotten hard because we got it done in like four months.
Speaker 3:We probably could have done the hard money loan. We probably should have hired out a lot of the work because we'd gotten rented it sooner and probably, you know, we probably should have done it that way, looking back, and been way less work and we would have not had to, you know, take all our cash.
Speaker 1:But, but it just helped us.
Speaker 3:It helped us, I think, mentally to, to tackle it, you know yeah.
Speaker 1:Yeah, reese, what were you saying? You could have started earlier we started.
Speaker 2:We could have started, you know, with the amount of cash we ended up bundling up and saving. We could have started two years prior to when we got that first one, if we would have used, you know, our money.
Speaker 3:So, yeah, no, I think, I think we, you know, we were super conservative, we were, you know, and I think that's what we needed to do to make the leap, though Right. So I don't think we would ever would have done it. But you know, looking back, we, we definitely could have gone hard money, we could have, you know, hired out a lot of the work to get it rented sooner, and we would have ended up right where we're at, you know did you guys pivot then to the next one?
Speaker 1:when you went on to the next one, Correct the next the next one.
Speaker 3:The next one was so much easier on us. I mean that first one. We, every single weekend we were there on us. I mean that first one.
Speaker 1:We, every single weekend, we were there, we did everything. It's a good way to bond. It's a good way to bond as brothers.
Speaker 3:Yeah, no, it was, it was right. I mean there were some weekends where there were some weekends where we didn't want to be there. But I mean then the next, the next one we did I mean, reese, you tell me, I mean that one we gutted the whole thing in one week and then we hired out pretty much everything and we were able to turn it so much quicker where our numbers afterwards we maybe spent maybe a thousand dollars more in terms of just, but we were able to turn it so much quicker with hiring out guys to come during the weekday and do work it was so much easier on us too, because we had our weekends back.
Speaker 1:There's a metric I always like to look at and talk to investors about. It's like profit per hour. In the long-term rental game it's a little bit different because you're looking more at projected equity that you gained and that kind of thing when you're doing these refis and stuff, but it's still the same exercise, right? You look at how much equity did you gain. You probably gained more equity, if I had to guess on the first one, but you put a lot more work and a lot more time in and your profit per hour is probably way lower. For sure, A smaller chunk of equity, but you can turn it so much quicker that then that velocity of money starts to snowball and you can start doing more deals and build more assets and get tenants eating your debt quicker and all that other stuff. So I love that. Now you and all that other stuff. So I love that. Now you guys did some seller financing on some of these, right? So you did the cash thing. So it must not have been on that one, Was it on the other two?
Speaker 2:Yeah, Reese, you can tell. Yeah, we did. Then the next two duplexes we got were under the same seller financing umbrella, and then I bought one with a different partner around that same time as well, I guess. Do you want me to hit on that? In what way?
Speaker 1:Well, talk about. How did the deal come to be? Were those deals that we provided at WDP?
Speaker 3:Yeah.
Speaker 1:Okay, and then when you were looking at those, what was the enticing piece and how did you evaluate that from a seller financing perspective versus the other one where you were evaluating it looking at it from a cash or, you know, refinancing after the cash perspective?
Speaker 2:Yeah, I started learning. You know, once I started learning about seller financing, I think the biggest, the biggest positive for me is I realized when I eventually will sell my properties, I want to sell them as seller financing. So if I believe this is a good product, this is a good product for the seller, I reverse engineered it to okay, that's how you can set it up. When you're going to talk to someone who's got a duplex, owns it outright, You're like, hey, these are all the reasons why this is beneficial. You got your capital gains tax. You can defer that. If you're talking to someone who's going to retire in, say, five years, they want to be in a lower tax bracket when they retire or when they sell this property, right? So that's one of the benefits. I think some of the other ones is the money.
Speaker 3:What was the big thing for us, though, in terms of I mean, why did we do seller? I don't, I honestly don't even know Was, was was the rate a lot better.
Speaker 2:Yeah, that's what I'm getting. That's what I'm getting to you. Know what I love about that?
Speaker 1:question real quick, kyle, is that? This is truly why you guys are a partnership. You're like Reese I don't even know what did you get Like this is why you have a good partnership right.
Speaker 2:Yeah, yeah, yeah. So they will have delayed capital gains tax. The next thing that they're going to have is a seller is over this time period of. We set it up as a 30-year amortization right, so the loan term is over 30 years, but a five-year balloon. So we're going to pay off this loan after five years, kind of like an arm in that sense. But we refinance and in that five years I am paying a lot of interest at the buyer.
Speaker 2:So here another reason why it's starting to sound like why would I do this as the buyer? And the reason being is I'm going to be able to pay a lower down payment. That's one of the reasons why we did it, kyle. Second reason is lower interest rate. When we cut the bank out of it, instead of paying seven and a half, I'm paying 5% interest. Instead of the seller getting 4% in their savings, they're getting 5% from me, and so I'm low money into the deal, a nice interest rate, cash flowing well, and I have five years now to renovate the units, five years of appreciation on this piece of real estate. So it's kind of like a no brainer when you start to break it down on both ends, I think yeah.
Speaker 1:Seller financing is such an awesome vehicle to get into some properties. I picked one up this year and I had some 1031 money and so I reached out to some of my network and just let them know hey, I've got 1031 money. If anybody's got a duplex or side-by-side duplex they're looking to sell or whatever. And lady I had done a deal with prior on seller financing reached out and so I went and looked at the duplex and it needed some work and it was a nice little side by side and I was like, ah, and I was like I really don't want to put 20% down on this thing. Like, do you need the cash? And she was like, not really. I was like okay.
Speaker 1:So I said I don't really want to put any money into it, though Like my whole idea of a 1031 is like I don't want to take all my money that I have sitting on the sidelines and put it in. What if I just gave you this price and didn't give you a down payment? And she's like, well, you know, she kind of fought me on it for a little bit and I was just like all right, I didn't really care if I got it or not. So that's a great position to be in as well, being able to walk away.
Speaker 1:She's like well, what if you could give me? You know she wanted another, like five or 10 grand, on the purchase price, which was like okay and no money down, all right, what the heck let's do?
Speaker 2:it. The purchase price just doesn't matter.
Speaker 3:So explain that a little further, corey. So you basically you did a 1031 exchange and you just set up a percentage.
Speaker 1:No, I had a 1031 to use, and that was kind of what got us to start talking, was I said, hey, I got a 1031. I need to buy something.
Speaker 3:Okay, gotcha.
Speaker 1:Yeah, and then when I went and met with her, she wanted me to put 20% down and do all that stuff and I was like well, I don't really want to. For this property, I'll just give you some more money to. There we go.
Speaker 3:Bad to uh. There we go back, cut out their internet. Thanks, no, no, you just said so.
Speaker 2:You're explaining he's up in okay, we're back no internet up there, no, in the north woods no internet up here.
Speaker 1:I don't know where we left off, but hopefully we go.
Speaker 3:You were, you were explaining. You were explaining the the 1031, where she wanted you to put 20 down on on the place, but you didn't want to. So this was a seller-fied deal.
Speaker 1:Right, yeah, so I was going to sell her financing and I actually did end up doing that with another duplex down in Oshkosh. I used part of my 1031. I broke my 1031 up into different pieces.
Speaker 3:Oh, you can do that. You can do that with a 1031?
Speaker 1:Yeah, so the 1031,. The way that works is you only have to have so. Say you sold something for 200,000, your next purchase just has to be a total of 200,000 or more.
Speaker 3:So you could break that up. You could buy three different duplexes for 100,000 a piece, correct?
Speaker 1:That's awesome, I didn't know that. Yeah, you can break it up. So that's what I did. I bought, I think, two or three different properties with selling. I sold one of them and bought like two or three different other properties, so that's the time.
Speaker 2:What span of time did you have? How much time did you have to do that?
Speaker 1:You get 45 days to identify the properties and that it's 180 days to sell it or to actually close on the sale.
Speaker 3:To close, close yeah so you lock that one in with no money down. Do you mind saying what your, what the, what was the interest rate on it?
Speaker 1:uh, three percent, yeah, yeah, but I gave it more than we're paying her.
Speaker 2:I was gonna say I know where this one is, yeah it's probably worth.
Speaker 1:it was probably worth like 275 as it sat and I paid her 315 or actually we ended up. We ended up settling on 300 cause I did have to bring. I ended up bringing money to the table because when she got there to the closing she didn't realize they had done a special assessment on the property, you know years ago for sewer roads or something, and so she was going to have to bring 10 grand to sell her duplex. And she's like I'm not doing that and I was like all right, well, take 15 grand off and I'll bring 10 grand to the table. So I ended up getting it for 15 grand less if I put 10,000 down. So it worked out.
Speaker 1:But, that's what I mean with seller financing. You can get creative all day long and, like you said, Reese, the purchase price is kind of irrelevant if you get the right terms right.
Speaker 2:That's what so many people miss. I've bid on two seller finance deals and I got them both and I bid a lot higher on them and I didn't really regret it at all Because when you put it into your calculator and how it cash flows, it really doesn't matter if you're overpaying for the property.
Speaker 3:Yeah, no, I guess that makes sense, but I guess my question is so say my concern. If I was going to sell and do seller finance, I guess my concern would be how do I know this guy is going to actually you know, is actually going to pay me every month, right, like you know that that would be my biggest concern, because you know it's it's different than a bank, right? I feel I feel like I I don't know how does that work, though you know what I mean.
Speaker 1:Yeah, I think there's a trust factor. Kind of like you, I did give her money down on the previous one and I'd been making payments to her consistently every single month since a year prior to that. So I think that helps when you go hey, I'm not going to give you any money down, they go. Well, I know this guy's good for it. He's not running the Tijuana with my property. He's going to keep making the payments. So part of that. And then it's reputation too.
Speaker 1:I've been in this game now seven years. A lot of the people know that this is what I do. I'm not going anywhere. It's a small town, small area. That's Wisconsin, right, I mean most of the time you get, unless you're in Milwaukee, madison, where it's a little bit bigger. Even there it's still a small, tight knit community. Word gets out pretty quick if you're not doing things the right way. So that helps a lot in seller finance.
Speaker 1:A couple of things you can do just from a security standpoint for them is I personally guarantee the note that I do with them. So it's a personal guarantee, meaning even if I'm doing it in my LLC, if I stop paying, they could come after all of my personal assets If they want my financials, I'm happy to give them my personal financial statement, bank statements. I don't care, I'm an open book. If I'm going to buy somebody's $300,000 property and they want my financials, great, let's build that relationship and have that trust. So those are a couple of things I know there's some other things you can work out with your attorneys.
Speaker 1:We had Sean St Clair on a while back. He's probably the top attorney that I hear about as far as seller financing goes. So if you haven't heard that episode, go back, check that one out. But he would be a guy I'd reach out to as well if I was a seller. As far as setting up a deed in lieu of foreclosure type of a situation, so they can just get the keys back, land contracts are actually probably a little more favorable for a seller where they can speed up getting that property back versus having to go through a full foreclosure process if they have the land contract as well. So a few different instruments they could do and a lot of that stuff, if you know you're good for it and you're not going to stop making payments and all that stuff. It's like whatever, yeah, yeah, give the seller whatever they're comfortable with and get the deal, get the deal done.
Speaker 1:You know, let's talk now. So, reese, you've got one you're picking up as a flip, correct Yep. And then Kyle, you've got another one outside of the partnership, right?
Speaker 3:So yeah, me and my wife have. We have three duplexes outside of the partnership.
Speaker 1:How do you guys decide that? And like Reese, how do you do you go to the partnership first to talk about like hey, I want to do this one as a flip. What do you guys think? Do you want to do it? Not do it? Like, how have you guys set that up for each of you to do your own thing but also still have this partnership rolling?
Speaker 2:We kind of have a good idea of where we're all at in our lives. Like for this last one, I think I bought it the same week Kyle had his first child, so it wasn't great timing there and I wanted this one's closer to where I live so it made more sense for me. But most of the time I'll bring it to like, if it's multifamily, if it's something long-term, that's kind of our niche, I think, as a as a family, I would bring it to these guys first. Cool.
Speaker 1:Awesome Kyle. What about those duplexes and stuff Like what's?
Speaker 3:Yeah, I think it's more. It's more of just typically we bring it to the partnership first, right, and then, if you know, if, um, if, if we feel like we want to go in and together, great. If not, you know there's there's two of them where, um, my, my one brother was he. It wasn't a good timing for him. I don't think it was good timing for you either, reese, cause Reese just got done with school, he was paying off some college debt.
Speaker 3:So, uh, I think we we typically bring it to the you know, and Reese finds, obviously he finds a lot of the deals and we typically, you know just kind of text in our group chat, like what are we thinking? And if, if none of us want in, then maybe maybe we just pass on the property altogether, or maybe you know one of them, one of us, wants, then we just kind of go go that way. So typically we kind of bring it to the partnership if it's a long-term deal, like we've done in the past. Um, but like you know, we're so, we're so fresh at this and new at this, Corey, like I mean I think, uh, you know, sky's the limit. It's like re, I'm super excited for Reese picking up this one that he's going to flip here partnership, you know, you know, see how this one plays out and, um kind of go from there.
Speaker 1:Cool. Do you guys see the partnership uh, just kind of dissolve, not dissolving in the sense of the future management piece, but as far as future acquisitions go, where, like you guys are like okay, cool, cause it sounds like you guys use this as a vehicle to give yourself all comfort, to get into the game. You feel like now that you've kind of gotten in the game and you get your feet wet, that maybe now or in sometime in the near future it'll be like kyle does his thing, reese does his thing, colin does his thing, and then I'm curious to see what kyle says on this.
Speaker 3:First, yeah, I don't know. You know, I don't know reese. I'm curious what you have to say too. I think I love, I like the partnership a lot, because it's just like I utilize Colin so much and I utilize Reese so much in terms of stuff that I don't want to have to deal with, right? So, like some of me thinks honestly, before this kid I might have said, yeah, maybe I could see us going more the other way, but now it's like I don't. I really lean on those guys a lot.
Speaker 3:Right so like and I think, yeah, I what I kind of envisioned too. I think as we grow more and more, I think the partnership is going to be much more advantageous for those bigger deals If we get, we start going to. Maybe if we go to a 16 plucks like I don't want to deal with that myself, I want to have Reese and Colin on that. So I think maybe these smaller side-by-sides, yeah, I think I like the cash flow of just me getting it selfishly right, but I think the bigger if we grow this to, we're dealing with bigger all under the same roof. I would much rather go partnership just because why not right? Yeah, yeah, reese where are you?
Speaker 3:because why not Right?
Speaker 2:Yeah, yeah, yeah. Where are you at with that?
Speaker 1:I like that.
Speaker 2:I'm playing. I'm playing mediator over here. This is great. Yeah, I was going to say I like that, the idea of once we get them all under one roof, right. Most of the time, if you're into a 1632 unit, you're getting other investors you have just for the down payment You're. If you're into a 16, 32 unit, you're getting other investors just for the down payment. You're going with other people. So why not do it with the people that I know and love best For sure? Correct, yeah.
Speaker 1:And there's the old saying we can go further, faster together kind of a thing. I don't know how the saying goes, but something to that, some kind of cliche, something about that doing that kind of thing. Now, another way you guys are looking at possibly partnering is doing some private money lending, right. Talk a little bit about where that's at and how that conversation started.
Speaker 2:Yeah, I think the same way I look at private money is the same way I look at seller financing. Right, a lot of people are like, oh, I don't want to ask my family, my friends, for money. Right, that's weird. Talking about money with family is weird, and it's this. You know, this is such an opportunity for my family, right, for Kyle making 4% in his bank account. Hey, if you lend me, you know, for six months, this amount of money that's sitting in your bank account earning 4%, I'll give you eight and I'll be happy as hell to give you 8% and there won't be closing costs on that. So so many ways to save money, especially comparing it to like hard money, for sure.
Speaker 3:Yeah, I think like, yeah, reset right now. I'm not the next two, you know, the next two, three, four months. I'm really not in the position to go purchase a property with a newborn baby and all this. So you know I might. We're talking about, yeah, I mean my money. I've got some chunk of change sitting in the bank, earning three to 4%. Why not give it to Reese? You know, let him go do his thing, and I can earn seven to 8%, and he's getting a deal cause he's not having to go to the hard money lender. So I think I think it's advantageous for both of us. It just depends. I think it depends where you're at, though, right, where you're at, with your circumstances, for sure.
Speaker 1:It might be just like a good timing opportunity, but not not a forever type of a like we're going to keep being a private money lender. It might just be in this moment of time. While I got this baby over here, I'll get my money to work a little bit harder for me out there.
Speaker 1:Yeah, that's great and what I love. Rhys, you said this A lot of times. There's a stigma just from our childhoods or whatever era our parents grew up in, from their depression, baby parents or whatever the case is. You didn't talk about money with family and whatever. So a lot of investors I hear is like, gosh, I don't have any money, how am I going to get it started in real estate? I'm like, well, you do you know anyone? Like, do you know any other humans? You do? Okay, well, my guess is they either have money or they know another human that has money earning probably less than 4%.
Speaker 2:You know how many people have HELOCs right now after the past five years of what real estate done. Anyone who bought real estate or bought their house more than five years ago has a lot of equity in their home and you know they can get it for 7%. You can pay them nine and I'm sure they'd be happy For sure.
Speaker 1:Yeah, exactly. So there's a lot of ways to use people. It's just going to get outside your comfort zone for a lot of people. It's not people, it's just got to get outside your comfort zone. For a lot of people it's not, it's not comfortable.
Speaker 1:And what I what I coach people on is you don't ask them for money. You say, hey, I've got an opportunity, I'm buying a property. Do you, or anybody you know, got any money sitting on the sidelines, not not earning anything, and want to make a better return? Most people are going to if they have any cash they like and trust you. Another thing I hear a lot of times people ask me hey, who are your private lenders? Like I need some money and I'm like they're not going to lend you. They don't know you, you gotta, you gotta. It's a relationship thing in the private money game, so it's gotta be friends or family and it's an opportunity. Like you said, it's not one taking from the other. Kyle, you're going to benefit from having cash sitting there not earning a bunch. Reese is going to benefit from not having to use a hard money lender and you guys both win in this scenario.
Speaker 1:So it's a great win-win situation. So I love that last question for you guys. It's kind of a fun one and we'll wrap it up here. We do this on every episode, so if you guys have listened to these you're going to, you know what's coming. Baby, we got it, we got it.
Speaker 2:I got it already. I got it already.
Speaker 1:We got to honor the great state of Wisconsin here, Reese favorite Wisconsin tradition or place to visit, sir.
Speaker 2:My favorite Wisconsin tradition, and I think I speak for Kyle and I both brought some props here.
Speaker 1:Oh.
Speaker 2:Watching my Minnesota Vikings two times this year. Take down the Packers, wow.
Speaker 1:And then go into my work meetings and be able to talk about it with all my fellow wisconsinites yeah, you know, prior to this podcast, reese was our uh head dispo agent and we might have to have a talk.
Speaker 2:He's still employed at wdp yeah, yeah, I don't know if you recognize this hat too, kyle. Yeah, that's my hat.
Speaker 1:Okay, are you? Are you also a queens fan?
Speaker 3:here I am, I am, oh my gosh, how did raising the, raising the raising baby julian, to be a viking fan as well I can't believe.
Speaker 1:I can't believe we didn't have this on our screening questionnaire when we were for race to join the team. All right, kyle, can you give me something other than vikings here?
Speaker 3:oh yeah I'll give you. Uh, so so Eagle river, eagle river, wisconsin. We always my parents, actually, we've been going up there since we were kids and my parents just moved up there, built their dream home up in Eagle river on Cranberry Lake. So going up there in the summers and skiing, wakeboarding, hanging out best place in the world, nothing beats that area that's in the world.
Speaker 1:Nothing beats that area. That's one of my favorite places too. Well, this has been awesome guys, other than Reese putting on the Viking stuff. This has been a great episode. Thanks for hanging in with us. If you guys stuck around to get through the internet issues here up in Fish Creek, wisconsin, we got you know we're still a little behind the times up here, but appreciate but appreciate you guys hanging out listening to this. Brown boys, I appreciate you being on and taking some time to drop some knowledge bombs on this audience and if people want to get a hold of you, kyle, and ask you any questions about what you got going on, do you have a place for them to reach you?
Speaker 3:Yeah, for sure. Just shoot me a text or call 920-973-9324. I'm always down to talk, talk, real estate, and I'm sure, uh, if you're calling, I'm probably going to learn more, more from you than you learned from me, but it'll be nice race race.
Speaker 1:What about you, man? What do you want to drop on here for the audience?
Speaker 2:Oh, you already know, Corey, they, they know where to go. Wisconsin discount properties is going to be my, my plug here.
Speaker 1:Yeah, wisconsindiscountpropertiescom. And if you guys are out there and you're listening and you're out of state and you're like man, I've been looking for another market to get into and I want to learn more about investing in Wisconsin, give us a call or just go on the website WisconsinDiscountPropertiescom and fill out a little contact us form. You'll probably hear from myself or Connor or Reese when you fill that out, and there's no obligation for you to buy anything or start getting in deals or anything. We just really want to get to know you and see if we can help you start investing here. Or if you're in Wisconsin and you're listening to this and you're like man, I want to be like these brown boys and start getting in on some deals. I'm scared, I don't know what to do. I don't know who to talk to. You said I got to like just go to the website, fill it out and we'll get you connected to all the right people to help you get started in your journey.
Speaker 1:And, guys, we're going to have another great episode coming up next week. So thanks for tuning into this one and if you had a, if you had a good experience here, you got some value out of it. Please share the episode. Sharing is caring folks, as I always say, and the more ear balls we can get this into ear balls Is that a real thing Ear holes more ear holes we can get this into uh the more people we can help get started in this awesome journey that we all are so passionate about, we love so thanks for tuning in, guys. We'll see you on the next episode.
