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
Rolling with the Punches: Sean Gibbons’ Guide to Real Estate Resilience
Sean Gibbons shares the rollercoaster of his real estate career—from acquisitions to complex, sideways deals—highlighting how creativity, resilience, and relationships carry you when plans implode.
• House-hacked a duplex after reading Rich Dad, Poor Dad
• Cut his teeth in acquisitions at Wisconsin Discount Properties before going solo
• Survived a $3.5M greenhouse foreclosure that ultimately settled for $20,000
• Partnered in an indoor shooting range that shifted from acquisition to full-on startup
• Juggles multiple flips under hard-money deadlines and rehab curveballs
• Turned a stalled cabin sale into a win with a creative land contract
• Practices radical transparency with lenders when defaults loom
• Preaches flexible exit strategies and “being like water”—flowing around obstacles
• Stays locked on the destination (financial freedom) while adapting the route
Hey everybody, welcome back to another episode of the Wisconsin Investor Podcast. I am your host, corey Raymond, and again, as usual, I have another amazing guest for us today. This is actually our second try today, so we're going to talk about that. My internet cut out on our last one, so we decided let's just scrap it and start over, and so we're going to get into that in a second. As usual, though, I always talk about our sponsor, wisconsin Discount Properties.
Speaker 1:Today is no different, and so if you are looking for deals and you're not on our buyers list yet, what in the heck are you doing? Get on the buyers list, go to wisconsindiscountpropertiescom, put your information in and we'll start sending you deals to your inbox for free every single week. You don't even have to pay us, just start looking at them, and then you can go to our website. We've added a ton of resources to the website page, so if you need lenders, if you need a calculator, we've got a bunch of stuff on there, so go check out the website as well. With that, let's get back into take two with my main man, sean, the go-getter, gibbons. Mr Gibbons, how are you five minutes after I asked you about how you were doing five minutes ago?
Speaker 2:Still doing all right Hanging in there.
Speaker 1:Well, were doing five minutes ago, still doing, all right. Well, yeah, I thought I thought maybe we could hit record, so we were recording and my internet cut out for some reason. And then I came back in and it was still recording and I thought this is going to be an editing nightmare. Let's just, uh, let's just try it again. So the internet cuts again.
Speaker 1:Sean, maybe we'll just edit this next one and keep rolling. All right, so all right. But that being said, uh, for those of you guys that don't know sean and I'll let sean introduce himself and tell a little bit of his story in a second but how I got to know sean was he actually worked for us in our acquisitions department. So a few years back we made a pretty big effort to start going after some multi-family stuff, which we're actually starting to do again coming up, sean. So not that you want to come back anytime soon, I'm just saying. But Sean was a big part of helping us acquire some multifamilies and wholesale a bunch of multifamilies, and we actually got our biggest wholesale deal ever that Sean was a part of. I think it was one of the first things he was involved with, was one of our first biggest wholesale deals.
Speaker 1:Paid for himself for years and years to come with that one deal, so we were sad to see him go. He eventually flew the coop and he'll tell you why he left the company here and what he's up to nowadays. But, sean, give everybody a little background on how you got started in this real estate game.
Speaker 2:Yeah, like a lot of investors Rich Dad, Poor Dad is sort of the catalyst, combined with Dave Ramsey. You want to purchase cash flowing assets and add them to your balance sheet and you get to live off the cash flow. Buy assets and don't buy liabilities is kind of the general general wisdom that's out there. So that kind of got me in the right sort of mindset or sort of going down that path. So I think we we purchased our second personal home when we moved back to Wisconsin here in like 2016.
Speaker 2:And then a couple of short years, short years later, we ended up house hacking into our duplex Um. So we had used the 5% down um and then the funds from the previous house to move into that. And then that's when we first started receiving rent, which was awesome. So then fast forward to WDP. Wdp was great. That's where I really sort of sharpened and just was able to dial in on exactly what investing looked like, what it looked like to talk to sellers and talk to investors and go through the entire process, start to finish, from acquisition through the transaction, through the wholesale assignment. So it was really interesting and gave me a lot of confidence to just understand risk a lot better. Certainly run my numbers, especially when you're on the multi-family side, commercial side um, you have to be dialed in, you have to know what you're talking about when you're talking to those types of sellers. And it was a trial by fire and I had a lot of uncomfortable conversations early on uh but that's how.
Speaker 2:that's how you learn, um. So the reason I left WDP was actually a creative deal that I had with my landscaping company. So I own this company with my father-in-law. Now I'm a minority shareholder so I don't have like day-to-day operational activities and it's his baby so he runs it. Anyway, we found a greenhouse to purchase and it was like such an insane deal that it became an insane deal, and what I mean by that is it was like a $3.5 million acquisition. There were zero money down and insanely good, basically interest-only payments, which was awesome until it wasn't awesome.
Speaker 2:The owners literally showed up one day and they tried to foreclose on us. They wanted to take the keys, they accused us of all kinds of malfeasance and neglect of the facilities and of the employees and all kinds of just craziness, what. So it was around that time that you know I'm I'm sort of in this like investor bracket, but then I also have my w2 working for wdp and then I also have sort of the side piece going on of of this landscaping company and I mean it was it was like running into a brick wall. It was like all of a sudden I could be on the hook for my portion of this three and a half million dollar foreclosure. It's like, wow, insane, um, because I don't, I don't have near, I don't have a fraction of that money. You know, it's like just a crazy amount of money and um, so, trying to keep a long story short here, uh, basically I had to go figure out what's going on and that was that was the impetus between behind me leaving wdp and I worked for the landscaping company for the following two years.
Speaker 2:Um, ultimately, that whole situation, um, the sellers, essentially, when we finally got to med, which itself took like a year and a half, when we finally got to mediation and talking about it and going back and forth of what the demands are, all this stuff, essentially the attorneys kind of agreed that. You know, there there was a lot of not good with this whole thing the way the contract was written to begin with, and then all of the claims that they had made against us were essentially just nothing. They didn't have a leg to stand on. So we negotiated a $3.5 million foreclosure, essentially down to a $20,000 forfeit to walk away, which still, in the grand scheme of things, $20,000 is a lot of money. So it was still in the grand scheme of things, 20 000 is a lot of money, so it was still kicking the nuts um but we were able to walk away with it and uh, and close that chapter.
Speaker 1:So oh my goodness, dude, what a nightmare. Dude, I didn't realize that was I. I knew I now that you. Once you said that, I was like, oh that's right, I remember that was going on because I was a little bit more removed from the business at that point when you were stepping away, so I wasn't in the day-to-day and getting to hear all this stuff as much as what I am now. I'm much more involved in the business now than I was a couple years ago and wow, that's really fascinating, man.
Speaker 2:So when did that get cleared up? So that was I think we finally signed over the checks and you gotta, you gotta sign all the release forms, like hey, I'm not gonna sue you in the future, you're not gonna sue me in the future, kind of stuff, okay, um, so I think we closed all that out. I want to say it was about a year ago, so about mid, mid-year, june, july 2024 I think. Um, so yeah, that was uh, just that was kind of a wild ride. It was, it was just it was it was insane, was it was insane. I learned a lot about people, I learned a lot about the legal process. I learned a lot about land contracts.
Speaker 1:What was your? So my gut right now, sean, is kind of telling me like you know, I'm a squirrel as an entrepreneur, right Like I. I'm like I want to go do this, I want to do that, I want to do this, I want to do that, in fact, the mastermind I belong to. Physically, I wasn't able to go there, which is sad.
Speaker 1:I try to go to every quarterly meetup, but I wasn't able to make this one and so I was tuning in virtually and again my brain is just like all these things I could be doing right, but these things that could be doing right, but we're limited in our time and you know tension and we've got kids and it's like you know that they deserve a lot of attention right now when they're growing up, and so I'm always kind of battling myself like should I go down this path and do this other venture, or should I just stay on the path I'm on and just keep it simple? And whatever you gotta, you gotta have a lot of things it sounds like going on at at one time. My gut saying your advice might be just pick a lane and stick with it, but I don't know. I'm really curious because I want to hear what you you know, the some of the lessons that you learned from that experience. Uh, now that you've had a little time to reflect back on it, yeah, I, um, I kind of take the bruce lee approach.
Speaker 2:So he has this famous quote. I'm sure I butchered if I I tried to quote it, but it essentially is like you know, make like water, you know. So you imagine water running down a brook and you see the rocks and stuff and the different obstacles. Well, the water doesn't fight the rock, it just moves and goes with the flow, right. So I kind of view my investing journey much the same way. Kind of view my investing journey much the same way. So, like, if a deal comes up where I could acquire a greenhouse, that means I get to essentially buy the um, the, the supply chain for my landscaping company, it seems like a good deal. So what I, what I'm going to do, is I'm going to pull up that thread to see if it's a deal and if it continues to be a deal, and in hindsight, of course, like I said, this was an insane deal. That was too like it was insane.
Speaker 2:So I learned a lot of things, um, but at the time that was one of the things that that sort of drew me in. Is, every time I was sort of like, yeah, you know, I really don't think this is work. Like we got to run it off of the cash flow that it's already producing. Like we don't have a whole lot of extra capital to bring in, to sort of like reposition into, like a new thing.
Speaker 2:Like we're we're really just trying to buy something that exists that we can also benefit from on the purchase side of things for for the uh, the business, um, and then it was just every time we tried to step away, we were brought back to the table of like time we tried to step away, we were brought back to the table of like, well, what if we did it this way?
Speaker 2:Oh, yeah, what if we did it that way? Maybe that could work, and so, um, so then we kind of went down that thing, um, so one of the bigger lessons I learned was you know, choose your partner as well, which is really hard, uh, because it's like a business, it's like a um, it's like a job interview combined with dating. Like you, yeah, you can't have a partnership with somebody that you don't know, or you can, but it it's gonna, you're gonna have some, uh, some difficulty. So then, um, yeah, sort of the following this sort of fluid um approach, like is how I ended up with um being a partner in genesis impact, which is an indoor shooting range in Appleton which is like totally a different business model and everything.
Speaker 2:But my good friend, he calls me up one day and he's like, hey, remember when I told you a while back that we could end up owning a shooting range? Like, yeah, well, it's happening. So we were talking in the bank, there's sort of a short sale situation going on and we have the opportunity to step in and make something happen. And I said, okay, well, I have no money so I can't pay for anything and I have no time, so but obviously I'd love to be involved somehow.
Speaker 2:Yeah, we can figure out a way to make that work, and it was one of those things where it just kind of pushed it away, you know, initially and then it sort of kept coming back, kept coming back Like well, what if we try this way?
Speaker 2:What if we talk to the bank? What if this, that and the other thing? And we ended up buying the distressed assets for significantly under market price, which means that we had equity there, which meant that the bank lent almost the full amount that we needed, which meant that we got into it very low money. The downside is that, again, it was supposed to be an established business running on its own, definitely had some management issues that needed to be sorted out, some backend financial stuff taken care of, and so. But it was this established company, established customer base and all this stuff. But in the middle of negotiating, all of a sudden the seller shut the doors and he announces on Facebook and to everybody hey, we're no longer in business, were no longer in business, so we went from an established business with 5,000 some odd social media followers to zero.
Speaker 2:Okay, wow, we had to. We had to shift strategy from purchasing an established but, you know, distressed business to now we're doing an entire rebranding and a startup. So, again, this was like a lot of conversations with the different partners. There's four of us involved, so a lot of different conversations like are we leaning into this? Are we pulling out of it? What are we doing here? And the consensus, generally speaking, was all right, let's move in. Let's move in. Let's move in Because we all see the opportunity. So that that's been, I think. We opened the doors in march of 2023. It's now september of 2025. Um, and it's, it's stressful. It's like a black hole for money. You want to buy inventory but you can't because you have a rent bill that's due and, uh, you've got payroll and you've got all these, uh, different things. Um, going on, dude, you are.
Speaker 1:You are making me love real estate more and more, the more we talk, because yeah I'm like, listen to this, it's like I've always been interested in like, acquiring some kind of business or something, right, like you know, as a squirrel in me, right, as we said but man, there's so much that goes into that versus like. You know, for me I talk a lot about like, especially if you're a burr investor find deals and find money Once you have a good management company very simple process, right, you run your numbers. If it meets the numbers, boom. You know there's obviously stuff that can blow it up that you didn't check in your due diligence or whatever, but usually you kind of know what those items are and like you said you're at water.
Speaker 1:Right, and then you're at water going around the rock. Okay, that rock came up, we'll go around it, we'll fix it, whatever. But you start getting into some of those business acquisitions. There's a lot of other levers. It sounds like there's a lot of other stressors going on. So for those of you out there listening to this in the audience, the reason I want to have sean on here he's got so many lessons here that can be acquired or can be applied to real estate as well. I mean, these are actually real estate deals.
Speaker 1:he's just acquiring businesses through that as well and, uh man, I tell you what like it's. It's some some great lessons I think that you're learning through this sean and obviously those, those kicks in the nuts probably don't feel great for this, but those dividends will pay you down the road on future deals that you say no to potentially, or when you do find a good deal, you'll now know what is a good deal actually and how do I safeguard against some of these other things that could come up and blow it up right.
Speaker 2:Yeah, yeah, I mean, and that's the whole thing. I mean you know the. So, like I said, the last two years I was working at the landscaping company and the partnership. I, I love my father-in-law, I love, I love my family, but I I've never been a landscaper, never been into landscaping not, not my thing. And then we also have divergent views on how the business should be run, how it should grow, that type of thing. So just wasn't really a good fit.
Speaker 2:So I had sort of an existential well, quite a few moments actually last year of like what am I doing here? Because it doesn't really feel like I'm adding to the business, doesn't really feel like my vision is going to be expressed into the business. So I'm really just kind of spinning my wheels here, like so I really need to be doing for myself. Certainly Genesis is not in a position that it can like take me on as, let's say, like a CEO type or even like outside sales, like it's just not quite there yet. So that wasn't really an option. So then it really just boiled back down to real estate and you know WDP and all that stuff, and I know you're a man of faith, like I am, and so I had sort of these, these prayers and these moments of like you know what am I, what, what's next for me, where am I going to go?
Speaker 2:And I found a deal on WDP, uh, in Appleton, and I was like, all right, I'm going to put the minimum deal and it's an Appleton single-family home. So for those that don't know Appleton single-family homes, through WDP they go quick, they usually go for high price all this stuff. So I think I put minimum, maybe minimum, just maybe a couple grand over asking or something like that as my bid. And that was sort of like a sign to me like, all right, look God, I feel like I'm being tested here. I feel like there's, this is sort of a path diverging in the wood, like if, if I win this bid, like I'm gonna take it as a sign that, like this is where I'm, this is the direction that I'm supposed to go. And, lo and behold, I won the bid.
Speaker 2:Um, fast forward to week, week, day, day I think it was like day two or three, like it was. It was crazy fast. So I closed on the deal. The next day. I have no less than 10 contractors out there. I'm like, all right, and he did this and this and this and this, got my scope of work, got the whole thing and I'm like ready to go, like I'm ready.
Speaker 2:Like, all right, let's get this done as quickly as possible and, following the investor footprint or the investor blueprint of uh, hire everything out, do the little personal work as possible. That way you can stack these deals free of your time. I can go chase time, I can go chase, I can go go chase money, I can just go chase deals. Meanwhile, all these projects are being worked on. Lo and behold, all these projects, all these contractors came back and the bid was twice what I had assessed. Oh, and I even called uh one of the guys at wdp and I'm like, uh, what'd you guys have for re? Did you include this? Did you include that? And uh, yeah, it was.
Speaker 2:So I uh just starting demo by myself and I'm like, I mean, I don't know how I'm going to figure this out, but I just, and so I'd I'd been there like two days and I'd filled up a dumpster or two just my own, like just demo stuff. And um and I I got started feeling sorry for myself and I sat down and I'm just like I don't know what to do. I just don't know what to do. I just don't know what to do. I don't know how I'm going to make this Like I had all of $30,000 sort of set aside and that's that's like our emergency fund, that's our savings, that's you know, that's what we that's the cash that I have available to me and all of these bids are coming back 60,000 plus.
Speaker 2:But I'm just like, oh my gosh, I don't know how I'm going to make this happen. So I call my buddy, corey, here. He's like what if you had like five of these bad boys going? And I'm like, are you nuts? Like this is like bad enough, like this is insane. And he's like, well, and he tied it back to rent. And some of you guys have heard this uh description, some of you haven't. But basically the idea is, if you only have one property, if you want to have one house, and then all of a sudden somebody moves out, you have 100 vacancy, right. So if you have two houses or three, well, let's say you have four houses and then somebody moves out, well, you only have a 25 vacancy. So cory was applying the same model to my flip house of if you have five of them going and one of them goes bad, well, you're probably in a better overall financial position and we can talk about like more on, like the loans and stuff and how all that works.
Speaker 2:But but, essentially that was that. To me, that was another like sort of sign from God, so to speak, of like. You know, I was called. I felt called to do this. I felt like this is kind of where my life has led me, so like either it's a business or it's not, and a business does not consist of one deal. A business consists of multiple deals and moving forward into that, moving forward into that Same for Genesis, same for the landscaping company, same for my real estate you have to push in, lean in, because what I learned from my WDP days and the types of people that I would call were landlords that were old and retired and some of them, frankly, only had like one or two properties, which is great. But when you have a roof, go bad on one of those properties, that's that's.
Speaker 2:That's an entire year's worth of rent in some cases just going to one capital expenditure, um, and that's where that's my, my perception of my, my limited experience of like that's sort of where people go wrong in this field is they get to a point and then they stop. Well then the pig stops feeding itself and it dies, um. So so your really only option is to keep it moving, is is to continue to lean into it and figure out the problems on the way yeah.
Speaker 1:So, sean, was that sound advice, now that you've had a little time to marinate on that and and take some action on it, or do you think that was maybe not the best advice, because I know you got some other challenges going on too. Yeah.
Speaker 2:It's kind of a mixed bag. Yes, it was good advice as far as, like, leaning in, but just because you lean in doesn't mean things get easier. So it's now September. So I've literally been doing this like almost exactly a year. So September 16th, I think, was my last day last year. So it's now September. So I've literally been doing this like almost exactly a year. So September 16th was, I think it was my last day last year. So now it's September 9th or whatever.
Speaker 2:Um, and in that year I've done, uh, six projects. So I've got two that are basically still being worked on, but they're both, or the one is listed. Out of those six, only three have sold is listed. Out of those sticks, only three have sold. Um, uh, let's see. Uh, sorry, I've got my thing up here one, two, three, four I'm sorry four have sold out of six, uh, and the final two, one I'm in default on for my hard money by like two months. Thankfully, they've been very gracious with me and I give them regular updates and we're like lowering prices and trying to get this thing moved. It just hasn't. Yet I'm putting even more money into the rehab that I'm already upside down on. I have a contractor lien against the place. We ended up in this whole dispute over the final bill, so I've got to clear that out in order to get to the closing table.
Speaker 2:Uh, the, um, the, the one project I had again, I'm I'm like flipping, I'm like trying to build up cash reserves in order to buy, make a bigger acquisition, like a multi-family or something along those lines, something a little bit more stabilized, to just give me passive cash flow, right. And I tell you, man, it's been, it's been tough. So this, uh, this cabin that I had up north, uh, same thing, just looking to flip it, I put in I don't know 16 000 on it or something the real, so you know, sort of light rehab and, um, same same thing. That one sat for a few months and I had it listed and she even went to like a of networking events and handed out flyers. She really went and put in the work. And then in the meantime I have a post on Craigslist, I got a post on Facebook.
Speaker 2:I'm joining all these groups within the area, without the area of just trying to get this thing dispersed and I probably fielded about 50 or so increase and that's not even an exaggeration, like there's a lot of people that were asking. But they were like oh, how much land does it have? How much land does it have, like an acre? And anybody's ever shopped for an up north cabin knows that people are looking for land. And in addition to this, uh, this particular property is also completely off grid, so it runs off of a gasoline generator. The closest electrical that I didn't know prior to purchasing it closest electrical was like a half mile north or a half mile south of the road and when I called the utility they have no plans to expand at all and they're like well, if you can get 20 of your neighbors to sign a petition or whatever their form is, then then we can add you onto the schedule. I'm like there's not even 20 people on the road, like it's not happening so, oh my god, there's like a whole town up there.
Speaker 1:You gotta get the sign oh yeah, exactly.
Speaker 2:So it's just not all right, so that's not gonna happen. So then, but this one person that had reached out a couple times, she's like's like you know, would you do? Like a rent to own thing, and I just I tried to put her off for a while and then ultimately I was like all right, let's see how this works. So I went through the refinance process and I told her flat out. I was like my plan is to sell this. I said we're going to walk this path a little bit and see if this works out as a business partnership, because that's what it is, um. And if it doesn't work out, I just need you to understand that that until we get something figured out, like I'm going to keep it listed and whatever, and somebody could bump you out as the potential buyer. So it's very transparent, very upfront with her. She appreciated all that and then, ultimately, that's what. That's exactly what happened.
Speaker 2:I refined, I went through all the numbers with her um, and so now I'm selling that um, essentially under land contract. So the, the, uh, yeah, so it's, it's like a, it's a, it's a win, it's a win. So I really struggle with it because it's like I wanted to accomplish it a certain way, but sometimes success doesn't always look the way that you want it to, so I did technically sell it like I intended. It's going to take a little bit to pay off, so that's a five-year note that I'm working out with her, but at the end of the day I'll probably make $25,000 more than what I had originally had it listed for due to the interest that she's paying over time.
Speaker 1:So now, you and I talked a little bit about this yesterday, sean. Is this an actual rent to own or is this a land contract, cause you use both of those terms.
Speaker 2:Yeah, so I hope my lender's not listening.
Speaker 1:but don't hear this without yeah, Keep this one going yeah In all practical cases.
Speaker 2:in a practical sense it's really both. So I had her sign a lease with me. That helped me get through the financing piece on my side, because they want to see a signed lease for an actual amount of money they want to see a deposit on for an actual amount of money.
Speaker 2:They want to see a deposit on in those types of things. Um, well then, separately, I set up with her directly a land contract and I explained all this to her. This was all very transparent of like all right, this is what I need in order to secure my financing. This is what you and I are going to operate off of. Is this land contract, and so that laid out all the um.
Speaker 2:So there was a little bit of a judgment call there, because I could either do a run to own, but then I'm still the landlord and I've got to deal with the calls in the middle of the night and management and like all those things. Um, and it's only like a two, maybe three season cabin, like it's, it's rough, like I said, it runs off of a generator power and she's very, she was very insistent. I'm, I'm robust, I'm from up here. I've lived like this before. Not a problem, not a problem, not a problem.
Speaker 2:I got a friend who's a contractor that can help me winterize and like all these things and I'm like all right, because I don't want that call in the middle of february, when it's negative 30 degrees outside and you're trying to back out of this thing. And so we've. We uh, we verbally set that up, and then also in land contracts, it's very, very clear that this is, this is your house. So if the roof blows off, like it's just like you would be buying it from a bank, like you're responsible for taking care of those things.
Speaker 1:So did she list you as as an additional insured on the mortgage or on the insurance and all that good stuff?
Speaker 2:Yeah. So the way I did that since I need insurance for my mortgage is I'm just holding the insurance, I'm escrowing all the funds and paying the taxes as well, so it's almost like a hybrid thing.
Speaker 2:And this is where relationships really come into play, because it takes a lot of legally how this works, but I like it, like your creativity here, your problem so, yeah, so, because I have a lease in place, I have a tenant, so now I have a rental, rental insurance policy, essentially. So something goes wrong, I just am the one that has to front the deposit and all that. However, that gives me the security, gives me the security and the control of I'm the one holding the insurance, I know that I've got the right coverage, I know that everything's going to be taken care of, I've got the deductible and reserve, all that type of stuff. Yeah, that was a fun way to get creative I mean I I like the creativity.
Speaker 1:I would just say for the audience you may want to consult an attorney before you do something like this or what sean's doing here, because there are some risks to what sean has put in place here. You know, a couple things are she could. She could go either way with this right, like if the, if the roof blew off because she has a lease in place place. The risk is Sean could be on the hook for that, regardless of the land contract he has. A judge may look at that and say well, your land contract's irrelevant because you got this lease, so they could cancel out. The chance of something happening typically is pretty small. So I think what Sean is saying here is he's kind of taking his chance here to take a turd maybe that wasn't selling and make it into at least a base hit, maybe even a double here if it goes well, if everything goes smooth. And getting out of a situation that, like you said, he was in default and the hard money lenders, and being able to get out of that loan and get it into something that's more manageable and actually start making some money on this thing is a win all day long. How you get there is how you get there.
Speaker 1:So when I do a rent-to-own, I typically explain to them that this is their house. So I do it more verbally. I don't have that instrument of the land contract. I do it more verbally. I do tell them, though hey, if something big happens, the benefit is I am still the owner. So that is the downside of the rent to own. I still got to fix a furnace that breaks, or you know a roof that goes out, or you know some of the bigger ticket stuff. But I tell them like, hey, if you've got a hole in your screen, fix it. If your sink leaks, fix it. Don't call me for that stuff. You and I are not going to get along well if you call me for a leak in sync.
Speaker 1:You're going to fix the darn thing like you're a homeowner, because that's what you want to be. You want to be a homeowner and a rent-to-own, right? So Sean and I were talking about this. I'm glad you brought this up, sean. Rent-to-own probably one of my favorite strategies in real estate. The thing is, not many people do it, because most people either are flipping and they want to get that cash quick and they want to get that property off their books and onto the next one, or they're a landlord and they don't want to sell the thing. They want to keep it for however long, right. And so if you are out here listening to this and you're either looking at doing land contracts or rent to own, they're both very similar.
Speaker 1:Again, there's just some nuances to understanding the laws of what a tenant's rights are or a land contract buyer's right is. I guess you'd call it that. There's some pros and cons to both of them. There's some tax benefits to be aware of, depending on your tax situation, that you may want to be aware of with those, but either one of those are great, absolutely great strategies. The land contract the nice thing is if you know your cash flow in a certain number. That tenant is responsible for taxes. That tenant is technically responsible for insurance. It's their house, you sold it to them, right? And you're just the bank at this point. And so now, if you know you're making $300 a month, you're making $300 a month. You're not getting a furnace all of a sudden. Now that there goes your $300 a month for the year, now you've got to fix the furnace and replace it. That is the nice benefit of the land contract side of things versus a rent to own.
Speaker 2:But both of them have money up front. So it's great, yeah. And what we're really talking about here is risk. What's the risk factor that you want to take on? How much risk do you want to take on that type of thing? So it's a great point about you know the. They could potentially come back and say, oh well, you have police and you have this and that and the other thing.
Speaker 2:Well, what I learned about the legal process is that it takes a lot of time and throughout the legal process, a lot of attorneys will tell you if you can work this out with the person like, work it out with the person and they will. Actually a good attorney will encourage you to do that. Um, and then, even before you get to court, you're going through a mediation process and so, um, I don't want to belabor the point too much, too long, but it's basically like, the way that you set it up today does not necessarily need need to be the way that it is in the future. So so for me, like covering the insurance and the taxes, like that's just me managing risk. I want to make sure that it's insured and I want to make sure the taxes are paid. So that was a risk that I wanted to not take on and make sure that that was that was happening, um, but then also communicating to her like, hey, uh, you know this, this place is yours, you got to maintain it. Um, and the beautiful thing about this is you know this place is yours, you got to maintain it.
Speaker 2:And the beautiful thing about this is, you know, I took this situation that was pretty dire, like it just wasn't a good situation, like I, and then we just turned it into a real opportunity and, at the end of the day, a lady who has overcome drug addiction like she told me her whole life story. Like she overcome drug addiction. She's got you's got some kids, she works as an in-home caregiver. She's just really had a difficult life, but she's also turned it over quite a bit. She's at this point where she's finally signing on new to her house. What people need to remember, what everyone, if you remember nothing else from this podcast, remember this this is a people business and sometimes it's you, sometimes it's your friends, sometimes it's another investor, sometimes it's the tenant or the purchaser that you're working with in order to make them take a step up in their life as well. So the the position there is is really, really important and it's really it's, it's really humbling and it's fulfilling.
Speaker 1:And everybody wins. That's what we always say Great real estate transaction. Everybody wins in the deal and you know so like you're winning, cause you're getting what would have been maybe a turd off your plate and you're turning into a win. They're winning because now they get a house that they probably wouldn't have been able to get it in the traditional sense right, and you're giving them an opportunity and you guys are both winning in this deal and it's a great. That's a great deal.
Speaker 2:You know, and I I found this with like the rent oh sorry, I was just. The appraisal came back 10K more, so she's already got 10,000 in equity. So like she's yeah, she's making out just as well as I am actually, yeah, that's great, you know.
Speaker 1:And the other thing with the, you mentioned it a little bit like her excitement for this house. A lot of folks what I've found with like rent-to-own folks or land contract people, is they really do have that pride of ownership so they're not going to call you for the majority of things. The only time I've ever gotten a call on a rent to own situation was a tree fell on the house and I was like, well, that's kind of a big deal, I should probably take care of that.
Speaker 2:So we got somebody out there and luckily there.
Speaker 1:You know it was like three grand or something. It wasn't a huge deal, but that was a deal that we probably, if we would have listed it on the market, we maybe would have made $2,500 if we were lucky, because we didn't buy it right, the numbers weren't there. We put it on the market it was a soft market. We listed it in November and it was just not a good time to be listing a property. It was like a $400,000 house, not a good time to do it. And we found somebody to do the rent to own and we ended up making, I think, $35,000 on that thing at the end of the day or something. I mean it ended up being a good deal and the only time I got a call that was the only one out of rent to owns that were done were and I self-manage those.
Speaker 1:You guys hear me on this podcast. I'm always like get do, I'll manage the rent to owns because they they're so easy, like I don't ever get calls for them, I don't have to deal with it, people take ownership of it. The last folks I had in my in that same rent to own that I talked about, I told him, if you guys want to do anything to the house? Awesome, just call me before you do it, so that we're on the same page, cause, ultimately, if you don't perform in this as I, if you don't perform in this is I, it's still my house. I got to get back. So I'm like like lime green paint in the rooms? Not, okay, not until you actually get a loan for it. Don't do it.
Speaker 1:Don't do it, you know but I was like I went back to the house after, uh, when they were getting ready to close it, or they sent me, I don't know if I was there, they took pictures, but they had done like a beautiful job. They changed out all the old gold light fixtures and updated them to like today's life. You know, make sure. They asked me about other stuff and I was like, absolutely, they put some hardwood floors in. I mean like people will do awesome things on your rental properties for you because they, in a rental situation, they view it as they own that house and so they're okay spending some cash and and making it their own, which is a great thing. I love having people live in there, pay me rent and improve the property at the same time it's a great way.
Speaker 2:It's a great way to do it. Um, you know, and if you're stacking these on, you know five year, 10 year notes, then you know you're you're just kind of extending that stuff into the future and as you, as you stack more and more deals that way, then you're it helps your balance sheet, helps, helps everything. You know it's uh, yeah, it's, it's a very interesting and good way of uh of doing it. Um, the other interesting thing about that particular project is that the person I was buying it from, he likes to get creative too, and I was like, well, I'm buying this under hard money and I said, but here the thing, I don't really have a ton of cash. So what I was wondering if you would do for me is if you would take $10,000 of that on a note, basically a second hard money loan, and that way I can go to my hard money lender. That lowers the amount that gets me under the 65% ARV. Therefore, the hard money gives me direct cash through that loan.
Speaker 2:And then, uh, the way I worked it out with my, with the seller, is that he was going to get paid back because he knows, he knows I'm a flipper and he's, you know, I said. I said I'll pay you back at the end of the project, just like would my my hard money. So that was real nice way of like. It also helps to under, you know, work with people who understand things like hard money and lending and stuff like this. But it was. It was huge because it covered nearly all of the rehab. So I was basically zero dollars into the thing. And then when I went to refinance luckily the numbers worked out the appraisal, like I said, came back $10,000 more than I had expected. So with the clothing costs and everything else, I ended up walking away with a check of $117.
Speaker 1:But you paid off the hard money and the other guy I paid off the hard money and the loan.
Speaker 2:I paid off the hard money and the loan. And the loan was a bit of an emotional sort of roller coaster there too, because my money is starting to dry up. All of my cash is deployed onto these different projects. Hard money goes so far, but you've still got a gap that you usually have to cover. So most of the flips that I had had up to that point, hard money covered maybe the first 10 to 15. So most of the flips that I had had up to that point, hard money covered maybe the first 10, 10 to 15 for most of them, um, but then you still got to cover the rest of whatever. The rehab is Right, um. So.
Speaker 2:So, as the sort of mountain starts crumbling underneath me and I'm starting to really feel the financial pinch and like I'm not sure if the appraisal is going to work out and I'm sure if the, the refi, is going to work out, you know I had approached the seller and I was like look man, I know we have this note I said, uh, you know it's kind of a long shot, but would you consider taking zero or potentially like a significant discount off of our, our prior agreement? And um, and this is. This is where it's really important to have these relationships and talk to people. Even when you're not wanting to talk to anybody because financial stress can be really isolating you can make you feel like you're on your own. It can make you feel like you're the only person that's ever gone through it. That type of stuff, yeah, um. So I really felt like I was stepping out on a limb, like the audacity right to ask for a discount, like I had I had agreed to this, like it's in a contract, like. So these are all the voices that are going on inside my head of like I don't know that I would agree to do that. Where the tables reversed, you know that type of stuff.
Speaker 2:Um, but I approached him anyway and I was just real honest with him. I said this is what's happening. You know, I was supposed to sell this thing. It's not selling. Oh, I'm trying to breathe by blah, blah, blah and he's like all right, he's like you know what? First of all, I've been there and he said, second of all, like, um, the the node is coming up to be due. And he's like but you're talking to me and he's like let's see how the refi process goes and if you really do need the breathing room. On the refi, he said that we can reassess and talk about it again, and so not really exactly because I, because for somebody to come back and be like, oh yeah, man, I, yeah, take that ten thousand dollars off like that would have been ideal, right um yeah, which is again crazy to ask for, uh, but at least so.
Speaker 2:It wasn't exactly the answer that I wanted, but it was the right answer for the time it was. It was all right. Let's, let's slow walk this a little bit.
Speaker 1:Let's see see where the pressure off you yeah, take the pressure off.
Speaker 2:Like I'm not gonna come here and try to sue you and like all this stuff. Like, I understand you're going through financial hardship, so it's more of like a forbearance situation, of like let's just kind of walk this out a little bit. And because, at the end of the day, there are still options, and that's one of those things when you're in those financial situations that you just feel like there's no options, you feel like it's the end of the road. You feel like you're just waiting to walk off a cliff. Uh, you're just waiting for the banks to show up, you're waiting for the movers to show up and take everything that you own and stuff like that. So, so that's, that's just one example of like really lean on your relationships with these people.
Speaker 2:Like, when people say no bank, they really think of like this you know, conglomerate, big building like this very uh, nebulous and like cloudy, shady, sort of like entity, right, but it's, at the end of the day, like your bank is the guy that sold you the loan. Like he, right, he's the first call of like hey, man, this is my situation. It's embarrassing, it sucks. Uh, I'm not having a good time. I'm selling everything that I own, which is, in fact, what I'm doing. I've sold my guns, I've sold my watches, I'm selling my sports car like I'm selling everything to make it happen. I don't know that I'll be able to keep my personal residence at the moment like things are.
Speaker 2:Things are not great, um, but through that, throughout this process, the important thing is I'm in contact with each of these people and trying to figure out new and creative ways to keep the boat afloat and keep things moving for sure. Um, yeah, so I've got, like, like I said, I'm sorry if I'm talking too much, just throw up your hand or something because I can't do, it's good. Uh, so I've got these three, what I'm calling my last property. They're just my current properties, that I've got the three of them and they're just like I said, all my money is deployed, so it's really just a matter of time. They've got to sell at some point.
Speaker 2:The one property, another lesson learned. It has a poured concrete porch in front of it and it's buckled and it's been patched and stuff which is which was a judgment call for the from the flip perspective, because it was very much budget, because I could have tore the whole thing out, replaced it probably around six or eight thousand dollars, ok, which was a huge spend. Okay, which was a huge spend. Um, but in hindsight, now people are driving by and the seat is buckled, concrete. You don't really know what the situation is and what do they think, they immediately think foundation issues at least that's my perception, because they haven't stopped and told me this. But it's, you know, you can kind of look at the photos and like, all right, yeah, it kind of looks like trash. So a a nice to have became a need to have way too late. So now I'm literally the past two weeks I've been working on breaking this porch out myself and trying to do the whole thing myself and I know enough, so I don't.
Speaker 2:It's not like I'm not like the stereotypical landlord is just gonna paint over the lights, which is like like I know what I'm doing, um, but uh, you know, that's not really a job I wanted to do so, um, you know, and again that that came from talking to my lender and basically walking through like, hey, man, this is my, this is my property, this is what's going on. It hasn't sold yet I did a massive price drop, like thirty thousand dollars. I'm like, I'm like dude, you know. I'm like I'm trying to like I know he's like no, no, he's like I'm looking at it. He's like it looks good. He's like you know, you've been in contact. That's the biggest thing is just, I want to make sure that we're maintaining contact and stuff. Um, and he's like, he's like this thing will sell. He's like, but it has a major curb appeal issue and you really need to get it sorted out. All right, well, we'll look at the porch and get that, get those things taken care of. So so that's the work in progress, yeah.
Speaker 1:Well, a couple of things I want to go back to, sean, cause you shared a lot of good nuggets here about these two, these two deals. A couple of things I want to touch on. One you mentioned it several times now is talk to your lenders, right, and so I think this is one of the things you know. Especially hard money lenders, there's usually a smaller business, right, they're more relationship based. Your community banks, if you're doing commercial loans, they're smaller places. They're much more common sense approach type people. They're not the big as Sean described here, the big conglomerate. You know, behind the, behind the one-sided mirrors, you know, staring at you and laughing at you, right, they're people, they understand things, they've been through hardships. So talk to those people and just keep the communication open with them. You know some lenders are going to say, sorry, buddy, it's due, it's due at this time and you don't pay it. You don't pay it, but at least if you communicate, especially the earlier and the more often you can do it with them about hey man, this is what I was projecting, this is what came up, just a heads up. I'm working my butt off on it and they want to see that you're putting the effort. I mean the fact that you're selling your possessions and you're doing those things. I mean that tells me, if I'm a lender and we do some hard money lending, if I'm that hard back, I can see that Right. You know that's pretty obvious, so that's important to do.
Speaker 1:Another thing I want to touch on, too, is you know the personal sacrifice piece of that right. Like you believe in what you're doing. You've seen so many other people be successful in this. You've been successful in this some degree. You've had hardships here on some of these deals where you're making it work, but you know that it's. You know that you can do it. You know that's possible. There's just this moment right now that you're going through some tough spots, but you're doing what you got to do. You're making those personal sacrifices to make that happen. And then the last piece I want to touch on here about that was about that, that second mortgage piece of it. So let me ask you this, so I want to clarify this the guy that had the $10,000, the seller. You went back to him and you asked him to wipe out that 10 grand. Okay, cool, I love it. Why not ask You're? You gotta make the numbers work, pull the lever right.
Speaker 2:You know I love that. Well, and it it it pays to help. It helps to know who you're, who you're talking to. So the person I was talking to is a wholesaler, so presumably he made some level of an assignment fee on the property anyway, and then extended me a ten thousand dollar note. You know so.
Speaker 2:So there's not really kind of air money for them right, yeah, so so you know, if, if somebody had like given me a lot of ten thousand dollars, like in real money, then then obviously that would have been a different conversation. But since it was really like, just like numbers on paper of an additional sort of benefit that he would get from the property, that's what sort of cracked the door for me of like even even feeling having the balls just like, hey man, would you eliminate this please?
Speaker 1:you know so uh, so so you got to know people, for sure.
Speaker 1:It's about the relationship, right, you're not coming to them just because you want to make another 10 grand, I mean, you're literally coming to them because you're like I don't know if I'm going to be able to make this thing work, you know. So it's a little different, your motivation. I think people can sense that we bought several years ago and the seller carried back a hundred grand, just a silent second due in five years, when our commercial loan ballooned right, no interest, no payments whatever. And I think I sold a flip or something like two years into it or I don't know what it was, but I had. I had, like you know, decent chunk of cash just kind of hanging out, and I was like you know what, I wonder if this guy would benefit from, like me, paying them off early. So I called him up and I said hey, dude, I just sold you know, sold a flip. You can tell me no and tell me to go pound sand all day long, but I just had this feeling like maybe there's something going on where you might benefit from me paying that note off a little early.
Speaker 1:However, I'd only be able to give you 60 grand to make it. You know, make it whole on it. Would you be willing to take 60 for it and, like you know, give me a mortgage satisfaction on it? And he, you know, he kind of was like, oh, I don't know, like. And then he called me back and he's like, actually I could use some money but I would need like 75,000. I was like, okay, I'll do 75. So I got a $25,000 discount just because I called him early and asked if he would benefit from having the money early and we were able to get that $100,000 note down to 75. So and I felt good about it because I'm giving him the benefit he had a project he was working on. He needed the cash. So it was a good win-win deal. Again Like, and again it was air money for him.
Speaker 2:It wasn't like real cash he had, she had stuck in the deal. Yeah, and again it just goes back to that. You know things. Just because things look a certain way now doesn't mean they stay that way. People's situations are always changing. Lenders, situations are always changing. I just got off the phone with a lender earlier this week and they're like, yeah, we're not taking any more flipping type of clients. Oh, all right, even though they were clients. Oh all right, even though they were great to referral and all that. So banks are always adjusting their balance sheets and where they're lending and not lending, and all that stuff too. So that's where that sort of fluidity comes in. They're like, all right, well, this bank sucks. I gotta go to this bank and try again and just try talking to people and getting back out there. That's one of the biggest lessons.
Speaker 1:I think I've learned in this business, sean. It's like you got to be able to pivot quickly and you got to be willing to not be so stuck in your ways in this business, because things change, the market changes, the lenders change, your situation changes, your rehab numbers change. Whatever you think going into the deal, it's usually very rare it's going to come out exactly like what you thought going into it, and so you got to be willing to pivot. You got to be okay taking some punches in here. You got to be willing to roll with things and and yeah and not let it bog you down.
Speaker 2:Yeah, that's huge. I mean, that's that's what I tell my wife all the times, like I, I know where I want to be I want to have financial freedom?
Speaker 2:I want to. You know, I can run the numbers and like all that, but like, like this is my goal, right, so you start with the destination in mind, but they're just like a roadmap. There are a million different paths to get to that goal. So if I thought it was flip starting out, but then it turns out that land contracts appear to help me in that direction too, well, why wouldn't I take that road? Why wouldn't I take advantage of that creative method in order to get me onto that path? Because I don't really care about the path. I care about getting to the destination, and the path is going to be whatever it's going to be, whatever it's going to be.
Speaker 1:Yeah, and I think, as you're saying that, sean, you're kind of preaching to me in the moment of, like, what's the highest and best use of each property? And if you can be an investor who's nimble enough to do that, like, oh, highest and best use, this one would be a great rent to own or a great land contract. That's going to get me the most profit, that's going to get me dip up. I think you're going to be a very unique investor because, like for me, even our main brand, butter's wholesale, we wholesale, wholesale, wholesale, wholesale. We have rentals, we have short-term rentals and all that stuff, you know, and those are great.
Speaker 1:But if I had structured the company differently from the jump, or restructured everything, which would upset the apple cart here quite a bit with our employees, I think, and could just be, just take every deal and be able to be nimble enough to get it to its highest and best use, I mean, I think that profitability skyrockets and there's something to be said about staying in one lane and just becoming laser focused on one thing. You know, as you kind of mentioned, you got too many things going on. I mean it could certainly derail you as well, but just some food for thought for those of you out there listening about to this, like, hey, if you, if you're well-versed in several different exit strategies, you know maybe you can pick up a few more extra deals a year and and and exit them a little differently than maybe most other people are looking at deals and you know that might push you over to hit you hit those yearly goals that you have uh to, to hit some new marks for yourself. So well, sean, this has been awesome man.
Speaker 1:I, uh, I'm glad that we got to restart this, because I think the second one's even better than the first one, and I mean there's so many lessons in this for people out there. There's so much great nuggets in here, and if anybody would want to get a hold of you, sean, just talk through what you've learned or you know anything else that you've got going on. What's the best way?
Speaker 2:for somebody to get in touch with you. Yeah, I'm probably on Facebook too much, but that's probably the best way. Sean Gibbons at Facebook. Or, if you want to, you can email me seanwgibbons at gmailcom. And yeah, I'm happy to meet with everybody.
Speaker 2:So just a quick story on my sports car that I'm selling. So I have that. I'm really channeling my pace, morby of you know making creative deals happen. So I probably coached you know three or four people just through the process of what financing looks like, what personal financing looks like, and explaining that even just the correlation between down payment and how that affects your monthly payment and stuff like this downpayment and how that affects your monthly payment and stuff like this it's kind of a really interesting sort of turn. I never really expected myself to be sort of a teacher in a sense of like showing people how to do this type of stuff, but at the end of the day, if and when I do sell it, I'll probably be selling it over market price because I'm willing to put myself out there risk-wise of taking payments over time instead of just trying to get one big chunk of cash I love it.
Speaker 1:I love it, buddy. Last question for you, Sean Favorite Wisconsin tradition or place to visit here in this great state?
Speaker 2:It's got to be Culver's Just any Culver's.
Speaker 1:Which now you don't have to be in Wisconsin. It's all over the place, man, I know, I know it used to be in Wisconsin.
Speaker 2:It's all over the place, man. I know, I know it used to be like a Wisconsin thing. So I mean we still have New Glarus, so you know we do still have New Glarus yeah that is still a hot topic.
Speaker 1:If I travel places and people know about New Glarus, you know that's one of the things they're asking for on a little gift. Yeah, you Well, man. I appreciate your time. Sean. I know, like you said, you got a lot of things you're working on and all that. So I appreciate you taking time out for the audience to share some of your experiences, and there's a lot to be learned here and a lot of great things ahead for you. I can see you're like the miner that's like right, right, just keep hacking away and you're right there. So keep chipping away, keep learning, keep growing, man.
Speaker 1:I'm excited you and, if we can be of any help here, obviously reach out, as you already do. So we appreciate that. We appreciate the deals that you get from us and we want to be a resource for you along the way. So, for those of you out there listening, if you got some value out of this episode, please share this episode with your audience on socials. If you can give us, do us a huge favor. One of the big things we're working on right now we want to get those ratings and reviews higher, so I know there's quite a few of you guys that listen on a regular basis and you reach out to me and you tell me some value you got. I love that. So I love when you guys tell me the good and the bad, right Uh, of what we can do better on these episodes. But also, if you're getting value and you haven't rated us or reviewed us yet, please do that Also. Comments on YouTube, on the YouTube videos really help us as well.
