Creative Financing Strategies That Actually Work in Wisconsin Real Estate

In this episode of The Wisconsin Investor Podcast, Corey Reyment sits down with Madison real estate investor Joe Miller, founder of Rezen, to break down how he scaled from wholesaling to running a vertically integrated fix and flip business in Wisconsin.

We cover:

• Seller financing and mortgage wraps
 • Private money and bank funding strategies
 • Large rehab projects and six-figure renovations
 • Creative deal structuring when cash offers don’t work
 • The shift from wholesaling to flipping
 • Protecting investor capital the right way

If you’re investing in Wisconsin real estate, especially in Madison, and want to learn about creative financing, private lenders, and scaling a sustainable investment business, this episode delivers real-world insight.

Whether you’re a new investor looking to land your first deal or an experienced operator trying to build a more durable business model, this conversation delivers real-world strategy from someone actively doing deals.

Connect with Joe:
 rezenhub.com
 rentrezen.com

For off-market deals across Wisconsin, visit WisconsinDiscountProperties.com.

Transcript

SPEAKER_01 0:39

What's going on, everybody? It's your host, Corey Raymond, of another episode of The Wisconsin Investor. And today I have another Wisconsin investor here that I'm going to be talking to, who's based down in the Madison area. So for those of you guys that have been listening, and we uh at our company, Wisconsin Discount Properties, we are expanding down into the Madison area. And so uh myself and a few other folks from our team took a trip down there a couple weeks ago, and Joe was gracious enough uh to sit down and meet with us and his partner Kent and talk with us about uh what they're doing in the industry. But to give you a little background here, Joe, just a little bio on Joe, I have Joe Miller with us today, who is a Wisconsin investor, as I said, and the founder of Rezen, which is a vertically integrated real estate company based in the Madison area. So I'll let him explain what that is here in a second. But um basically, Joe got a start as a wholesaler and then quickly grew into operations, spanning wholesale, fix and flip, long-term rentals, property management, private lending. So this dude has done a ton of stuff, guys. He's gonna have this is gonna be a fire episode. Um and he specializes in creative deal structuring. So we were just talking prior to hitting record on some creative stuff that he's aware of that I was like, I didn't even know what the heck this stuff was, but it was kind of fun. But Joe, welcome to the podcast, man.

Joe’s Background & First Deals

SPEAKER_03 1:54

Yeah, thanks for having me, man. Super excited to be here. First time doing a podcast, so it should be a great time. Um yeah, and that was an awesome intro. Appreciate um that. And it was awesome meeting your team last week, by the way. That was super cool. Um, good group of guys and girls, it seems like you guys have there. So excited for you guys to be coming to our market. Um, actively. So should be good.

SPEAKER_01 2:21

Agreed, man. It was great meeting you guys, and again, like I said, appreciate the time. I know you guys have a lot going on, and so to sit down and just talk to a bunch of jokers coming into town that you don't know for, you know, for an hour and and and give us a ton of information and a lot of back and forth, and we had some hopefully some good value exchange both ways. Uh it was really, really great to uh hang with you guys for a little bit.

SPEAKER_03 2:41

We learned a lot from you guys, and I really loved how you guys like led with value. You're coming in, like, what can we do to connect some dots for you? You know, connecting us with a property manager for our property management business. So yeah, super excited for you guys to be in our market. You know, we welcome you know more players, especially people that do it right, like you guys. So awesome, man. It's gonna be awesome.

SPEAKER_01 3:02

Well, how did you get into real estate, Joe? Take us back. So you started with with wholesale and I always like starting at how people began because it's kind of fun to reminisce about like the early days and you learn a lot of lessons as you grow. But what was like, what was the what was the catalyst to get you into the real estate business as a start?

SPEAKER_03 3:19

Yeah, so I guess to go even before I was a wholesaler, I was at UW studying business. And so I got to my final year and realized I'd had a good time, but I hadn't really figured out what I was gonna do now. And I found Pace Morby YouTube University, um, went really down that rabbit hole for probably three to six months, you know, doing as much education there as I was in school. Okay. Um, hit the ground running, uh, joined my local RIA, met some, you know, local investors, um, they knew creative real estate. So it happened that A, first my background that I learned myself was really creative based, and then I just happened to get connected up with probably some of the more creative people in our market. And I had this, you know, really good background there, but I didn't really know wholesale and I didn't really have any money. So um I ultimately decided to first lean into creative deal structuring, um, try to go that route, but found I couldn't scale it the way I wanted to, and that's ultimately what led me to wholesaling is it allowed me to generate cash. It felt more scalable, more applicable to the average deal rather than creative is something I've learned. You can't force it, it just has to kind of happen naturally. So, you know, I have not been able to make a complete business out of it. Um, but the wholesaling was very scalable. So that's what kind of led me there.

SPEAKER_01 4:50

Awesome. What year was the what year did you get started? So you when did you graduate? When did you get into actually doing like your first deal?

SPEAKER_03 4:58

Yeah, first deal was 2021. Uh so just about five years ago-ish now. Dude, crazy. Um yeah, but I started really learning like throughout 2020.

2023 Projects & Heavy Rehabs

SPEAKER_01 5:08

Okay. Awesome, dude. Yeah. And and what will you guys do like deal-wise, or what did you do deal-wise last year, just to give people some kind of context here on a, you know, with a mix of everything from the wholesales, the flips, the long-term rentals, you know, we'll kind of leave the property management and private lending on the side for now.

SPEAKER_03 5:24

But yeah, so we're primarily a fix and flip company. So a lot of what we did last year was fix and flip, you know, nothing super creative on those always. Um I think our favorite project from last year was we did a small, I guess it was creative in a way. Uh we took two duplexes that were side-by-side duplexes um that were also side by side, and we split them all up, um, turned them into zero lot line uh residential homes. And so um, not creative in the structuring on the front end, but creative in how we did the exit. Um so really we're able to help the community there um maximize value, actually produce a product that was cheaper to own than it was to rent. Oh wow. That's awesome, dude. That was something we were up to last year. Besides that, just some standard single family flips, handful of wholesales. We're doing a lot less of that these days. Um, I'd say it's maybe like 10 to 20 percent of our deal volume. Um, we're usually doing one or two deals a month, so not like crazy high volume. Um, but we are typically doing more what we call like moderate level flips. So they're pretty involved. You know, we're usually touching everything in those projects. So they're not like super quick necessarily.

SPEAKER_01 6:41

Sure. That's awesome. So deal volume-wise last year, what you guys did what rough numbers? What would you say?

SPEAKER_03 6:47

Rough numbers, I would have to go back and look. It was actually a down year. I think we did maybe a dozen or a little more than a dozen deals last year. Yeah. Cool.

SPEAKER_01 6:54

That's awesome, dude. But that's cool. Like, I mean, I look at what what you've done now. Now you've kind of built like a little spokes in different areas within the real estate business to, you know, if if flips are down, you got this going on. If that's happening, you got this going on, right? You've got a little bit of a little bit of protection from just certain segments, maybe.

SPEAKER_03 7:12

Yep. We try to be multifaceted for that reason. Uh, I think last year, another reason our volume was down, um, partially market related, but also like the projects we selected. Uh, we had multiple projects that were hundreds of thousands of dollars in renovation. Wow. So there was two alone that broke a quarter million in rehab. Actually, three that broke a quarter million. So we had a million dollars in rehab across just three projects. Oh my goodness. You know, that slows you down a little bit.

SPEAKER_01 7:39

Dang, dude. What was that? And how long did those projects take besides just the cat just the rehab cost? Like what was the time to from start to finish on those things?

SPEAKER_03 7:48

So it it varied. So one was that four, those four units, that was one of them. That one went really well really quickly. Um, since it was like kind of a bunch of mini rehabs within a bigger project. Okay. Um it's very scalable, repeatable, and those ones flew, relatively speaking. Um, we had a 3,600 square foot house we renovated uh that closes on Friday. And that one, um, we started out, I remember like a quarter million in rehab budget, but we ended up with like 340-ish, thousand in rehab on that one. So that one took an entire calendar year. Um actually it'll be 13 months close to close when it closes out on Friday. Holy cow, bro. And the third one's still going. We haven't sold it yet. Like we finished the project, we haven't been able to sell it. So um that one was a tough one. Um see the outcome.

SPEAKER_01 8:38

Wow. Let's go back to the second one there that you're talking about that's closing this Friday. Yeah. Uh so by the time this podcast hits out, you're gonna have money back in the bank here. So, what are the numbers on this thing? Are you guys gonna be able to be profitable on this deal?

SPEAKER_03 8:51

We are. Um, and that's by you know the grace of God or whatever you want to call it. Um, definitely got a little lucky. Okay. Um, usually when your budget runs a hundred thousand plus over what you originally expected, um you wouldn't make money, usually. Right. Um, we tend to be pretty conservative on our underwriting.

SPEAKER_02 9:13

Okay.

SPEAKER_03 9:14

And so it's in a very desirable location, Waukesha County near Merton. It's right by the golf course, a block off the lake. Um, it's got some unique attributes to this property. It has two kitchens instead of one. It's basically like almost like a duplex, but it's not. Like the lower level has two beds, bath, kitchen, laundry, the upper level, four beds, two and a half baths, kitchen. It's a big property, and it's very unique. And so we don't have like standardized rules for adjusting for kitchens, and we like to use real data so we don't try to extrapolate too far, and no one was really flipping on this, like our level in this area. Sure. So our comp suggested like we were gonna sell for like 750. Yeah. But we're selling for 900,000. So like we didn't, yeah, exactly. So it's all gonna work out. Um, not gonna be a home run. I we're kind of estimating we probably make about 60 when all is said and done. The investors on the deal will do really well because we held it longer than we expected and needed more rehab funds than expected. So the investors, the private lenders will do really well, probably better than us, but everyone I think is gonna come out in a good place. The buyers are super excited. Um, got to get to know them throughout the process, you know, doing punch lists. So, overall, really good deal, awesome portfolio builder, definitely one that was a little stressful along the way.

Big Flip Numbers & Outcome

SPEAKER_01 10:38

Yeah, a lot of capital being laid out there just sitting there, right? Like, you know, that's great. So you let's go back. You talk about private lenders there, Joe. Like, is that the main funding source you guys use for these flips? Or how are you guys financing these projects, especially with these bigger rehab budgets that you're working with?

SPEAKER_03 10:54

Yeah, um, our preferred financing is like, in my opinion, super boring, but it's it seems to be the most efficient. Uh, we grab 80% of our acquisitions funds from the bank. We have a really great bank that we can work with quickly, you know, no appraisal, quick close. And then we grab the rest, the 20% down, and the rehab funds and holding cost, all of that from a private investor. Sometimes we stack them if needed, depends on how much we need, how much they have, all that good stuff. Sure. Um, but ideally and pretty much always we end up 100% funded using that model. Sweet. And it keeps the cost of capital relatively stable and low because the bank kind of blends the rate down on the front end. Right. And private invest, you know, so you get a blended rate maybe closer to nine or ten percent versus, you know, if you were just purely going like the hard money route, you know, you might be looking more like 12 plus, depends what market you're in.

Financing Stack: Bank Plus Private

SPEAKER_01 11:52

Right. Yeah, you're 15%, usually 12 points or three points. Typically 12% is kind of going right in Wisconsin. Yeah. So you're at least 15% if you go the full length of it, you know, full. Exactly. Yeah. Yeah. Wow. That's awesome. So the private lender piece, this is an interesting thing because uh one of the things I preach to investors in our area when they're asking is like, I I'm a big fan of having multiple buckets of money, right? So you've got your commercial bank you talked about, you've got hard money lenders. If you ever needed them, you bought them, right? You can use them. Try not to. Try not to, but we do, we definitely do. Yeah. They're there, they serve a great purpose, they're awesome for what they're for what they're good for. And then you've got the private lender piece, there's HELOCs that you know, if you've got a home with equity, you can tap into that, assuming that you know what you're doing. I don't recommend if you don't know what you're doing, but if you know what you're doing. So there's there's different ways to finance these deals, but private lenders is one of the secret sauces, I think, to people who want to scale and grow and that sort of thing. What are some of the things you found with private lenders, like raising uh private capital? What are some of the things that have worked really well for you? Are there any kind of hacks you've kind of tapped into that you're like, hey, this is how we found them, this is what we say to them, this is how we do it, like anything that you can provide for people out here listening to to this podcast on the private lender piece of things?

SPEAKER_03 13:08

Yeah, I think I have more to say on like how we've retained them and built them up. So my partner Kent's actually just naturally really good at raising capital. It's less my strength. I I'm not one that loves talking about money to somebody new. Um, I've gotten a lot better at it. Um, but I would say what keeps people coming back to us and then having more capital and you know, just really becoming like, I don't want to say solely working with us, but pretty close to it, is I think communication is key, you know, always updating them along the way, um, usually having really conservative projections to them. And so we when we put something out, we show like, hey, we can probably get to here, we've underwrote it down here. And despite that, you're still, you know, gonna have a loan to value at let's say 75%, so they can see like it's not like we're just squeezing this thing, you know, to the very edge of what's you know, safe or reasonable. And so they can feel really good coming into it, that it's a good deal. Um, and then you know, it's it's that constant communication along the way. Nice. Um, there's been times where if something goes really well, goes quicker than expected, we might even give them a little bonus because, like, hey, we told you we were gonna have you out for six months and we got a wholeta opportunity, sold it in 30 days, so we'll pay you out for three months. You know, we've done that not a lot, but a few times. And so, yeah, I think it's a combination of you know, good upfront underwriting, really good follow-through on the communication along the way, even when things aren't going well, like with the one I mentioned, we had to get an extension on this one selling Friday. But we were communicating that long before, like we could see it, the extension coming months in advance when we were getting hung up an inspection. So that we were keeping them updated on that months and months before they needed it. And then, yeah, when when we do pay off someone super early, we know we try to still make it worth their while. That's awesome.

SPEAKER_01 14:56

That's a really good nugget on that, on that piece about um the little bonus thing. Like, I we don't do a ton of flips, obviously, we mostly wholesale, but we've done flips, we've raised private money, we've done all this sort of thing. And uh I had a similar situation. I had one, we just kind of turned and burned it within 30 days or 45 days, and we were paying, I think, 10% interest on it to the private investor. And when we added up the interest, I was like, I won't even get out of bed for this amount of money I'm about to pay this person.

SPEAKER_02 15:24

Yeah.

Finding And Keeping Private Lenders

SPEAKER_01 15:25

Like I'm just gonna pay him another, you know,$1,500 on top of the$500 or whatever it was supposed to be, just because I want them to come back and do it again, right? And I want to disincentivize them. Like, and then I showed them their return as well. And I said, Hey, look at what your actual return on this money is now, this 30-day period. And they were like, Whoa, you know, you show them the big giant percentage now when you have to. Yeah, blow it out over the year to show what it is, the annualized rate. They're like, Oh my god, what you got any other deals? I'm like, Hey, not all of them are gonna be like this, okay? Just take it easy, but you know, yeah, no, that's great. That's good.

SPEAKER_03 15:57

And there's always a balance, right, between not taking care of the the investor, the private lender, and like not going too crazy to where now they only want like the cream of the crop, you know, have the right expectations for the next one.

SPEAKER_01 16:11

Expectations right there. You said that word that's coming to my brain for sure. The communication piece, too. I think for the audience out there listening to this, communicating. Joe talked about communicate through the process, but especially when things aren't going right, try to get out in front of that stuff. I know with uh the guys at Good Faith Funding, you you know those guys as well. They're awesome, yeah. Yeah, that's one of the things that I hear them talk a lot about. It's like, hey, if something's not going right, reach out to us as soon as possible because they've been in the industry for a long time. They might have people they can connect you to, they might give you some advice, some tips, some other things that can get it out of there before you default on that loan. Now you're calling them a month before you're gonna default, and they're like, bro, we haven't heard from you in five months. What do you mean this thing's not going right? You know, and so it's just that constant, it's a partnership with your lenders, right? Like getting treated that way.

SPEAKER_03 16:57

It really is. Like they're your they're your lifeline at the end of the day. If you're a flipper, a buy and hold investor, whatever it is, and you're using private capital or hard money or even the banks, you know, everyone, like they're your lifeline. And so, yeah, we really do try to take care of them, give them everything that they need, and you know, communicate, communicate, communicate.

SPEAKER_01 17:16

For sure. Yeah, for sure. So so important. And that it's not just in lending, like lenders, that's everybody, right? The the ones that separate the people we like to work with, like, think about a contractor, right? Your best contractors are the ones that communicate, not the one that you show up and they're not there, and you're like, Where are you guys? Like, oh, I had this other project I had to go do. And you're like, dude, you told me you're gonna be here. You're not here, right? It's like just it's just constant communication, man, all the way across the board. Such a such a such a hack right there. Um, talk about protecting your private lenders because I think this is one of the things. If you're brand new, you know, most people out there, the thing that holds them back is they're not confident in protecting that person's capital, right? They don't have the belief yet that they can get this person their capital back. Some people though might just be out there running a gun and going a thousand miles an hour and not know how to protect their private investors. Talk about how you guys, you know, you talked a little bit about the underwriting piece. What are some other things, the instruments you use, the insurance, like whatever else to make sure that your private lenders are safe?

Protecting Lenders & Clean Accounting

SPEAKER_03 18:13

Yeah, yeah. I mean, we do obviously all the what I would consider basic standard things that everyone should be doing, right? Um, they're gonna be uh insured on the hazard insurance, you know, they're gonna have a mortgage recorded, they're gonna have a promissory note, personal guarantee. Um, you know, sometimes we get them a lender's policy, not always. We actually used to always 100% get lender policies for all loans, even the junior. Um now we kind of leave that as an option for them because it was actually our private lenders that came back to us and like, you know, if you're getting one for the first, I actually don't need one in second. Like I feel good knowing that you've already insured the first, it's going through the same day. And so that was like kind of an interesting one. I'm not necessarily giving that as advice, but it is something that I just learned over the years. Like, I was spending money on this policy that at least for some of our lenders there, I'm like, it's actually fine. Like, don't do it. So we normally do it, that's our standard, but we've actually recently had in the last like 16 months, some of our private investors actually say, hey, you can save the money, it's fine. So we used to do all four, we still do all four most of the time, uh, with except for a few exceptions where they've been the one to say not to. Um, other than that, I think the biggest thing that we do, and I I hope everyone does this, but maybe not, is we actually do really good accounting where every project has its own project account. And so we don't commingle funds. And I think especially as you're starting to scale, that's something that's probably really difficult. I know it wasn't easy for us at first. You know, you go from an operating account to like, I mean, we have to have 20 plus bank accounts, um, maybe more, um, because we have so many projects going and we don't commingle funds. So that's I think the biggest thing we do to protect our investors is like they know that if they're giving us a huge sum of capital, it's sitting there and it's only going into this project and we can track everything. So not everyone's doing that they should be on.

SPEAKER_01 20:06

That is a really good one because that I know for us when we flip, like we're not really raising private money. It's either my own funds or HELOCs that I have on investment properties or whatever that we use for funding it right now. But for me, the accounting side of it's a nightmare because I'm like, I put it into our operating account. Like, oh, like right now, I literally just told my assistant, like, hey, we have this bill for like 15 grand for a well and septic or a septic or whatever. I was like, Yeah, can you send a checkout? It's gonna come out of my operating account. Uh and uh my bookkeepers will track it and it'll be in and classed in there and stuff, but cash flow-wise, even it messes up my cash flow for the actual operations of our normal business. Uh or if I just had that separated, I only have that amount of money to spend, and that's the money that's going towards this project. I love that idea. That's so good. It's a little more tedious on the front end, it sounds like, but it keeps it.

SPEAKER_03 20:54

Yeah, it's tedious to get it all set up, perhaps. You know, I would say that's where it's tedious, but it actually makes the accounting easier because we have a full-time bookkeeper, and he knows if it's being spent from that account. He doesn't have to question like what project it's for.

SPEAKER_02 21:10

He already knows.

SPEAKER_03 21:11

I mean, if he sees something that looks like it could be an error, obviously he's still gonna audit it. It's not like he's able to just blindly categorize things, but 99.99% of the time, he knows if it's in that account, it's correct.

SPEAKER_01 21:23

That's awesome. So basically, the way you guys are doing this, just to recap, you're setting up 20 or so different accounts, and then you're picking an account, like, okay, this project on Friday's off the books. We close out that whole thing. Now that account is freed back up to use for another project. Is that how you guys are doing it?

SPEAKER_03 21:39

Exactly. Yep. It closes out like this one for Beaver Lake was the property. It'll close out on Friday and it'll roll right into a next our next one here in Middleton. So we're, you know, sometimes it's a little, you know, a bit of a game of Tetris, like trying to time it out, but uh, but it works really well.

SPEAKER_01 21:59

Yeah, and most I would say most banks are fine opening up different accounts if you need them, right? They're not gonna put up a fight with you about no, we we use Summit.

SPEAKER_03 22:08

They've been great. We can have as many accounts as we want. Um, you know, we were with Chase, you know, I remember we switched mostly because there was like a minimum we had to keep in the account, and it got to the point where it was like actually starting to be a decent amount of capital tied up. If let's just say I think it was like a 2K minimum, you know, across 20 accounts, it's like, well, now you've just locked up forty thousand dollars for the sake of keeping accounts open. So that was that's like one of those things we had to learn early on and just pivot to somewhere where they didn't have that same requirement. Yeah. And so just a little thing. I wouldn't let it stop anyone from doing it, but just to be mindful of like what's the policy at the bank about minimums.

Creative Structuring 101 With Examples

SPEAKER_01 22:47

Yeah, no, that's really good because like even that if I know like my bank account, I think if it's a business account, I have to have a thousand dollars in there. Otherwise, they charge me like 10 bucks a month if I don't. And now you spread that out. Again, 10 bucks doesn't seem like much over 20 accounts, but every month that adds up, right? It does 200 bucks a month down the tubes just because you didn't have you know a minimum account in there. Exactly. Which is interesting. Talk about, let's go to the creative deal structuring thing, because you know, you this is something you've done a lot of, it sounds like over your career. You mentioned Pace Morbies, for those of you guys that don't know Pace, he's kind of like the main influencer out there as it relates to creative financing and those sort of things. But talk about this, uh the some some examples of creative financing, different types, when you use it, how it's been helpful for you, and we'll kind of dive into the creative deal structuring piece of your experience here, Joe.

SPEAKER_03 23:40

Yeah, I mean it's been helpful for different reasons at different times. Like early on, it was helpful. It's what got me my first deal. Okay. And so my very, very first deal was actually seller finance from another investor who had got in seller financing from the seller, and then I turned around and seller financed it on the disposition versus via lease options. My very first deal was like a seller finance mortgage wrap to lease option, right?

SPEAKER_00 24:06

So just kind of just people's brains just went they're like, what the heck does that even mean? I don't even know what he's saying.

SPEAKER_03 24:13

Yeah, and so basically what that means is uh the investor got seller financing from the owner of the property, bought it on terms. He then took, and I don't know if they're gonna be able to see this, but they wrapped that note. So basically he gave me a note that said, my paying his note to him included the payment that he owed to the seller.

SPEAKER_01 24:33

So he's making a little spread on the note he's charging you. He's taking the difference paying his original guy, so he's still in the deal in some aspects with the money movement. Okay.

SPEAKER_03 24:43

Yep, he's in the middle, and so yeah, that's called a wrap. And so he wrapped it to me, and then I had it on terms, and it wasn't like a home run deal. Um and that was okay because I was able to put it out on a lease option, do a rent to own. So basically, in that structure, I had two uh two instruments, a lease, which is just you know your standard lease, a month to month is what I like to use. And then I had the option agreement saying that they could purchase it from me at any point for the next, I believe it was two years, with the ability to extend up to a year twice. So really it was a four-year option. Um, and then by doing that, I was A, able to collect money down from the tenant buyer, which helped kind of offset my cash in the deal. And then B, it also just kind of let me knew they were gonna take really good care of the property, you know.

SPEAKER_02 25:33

Yeah.

SPEAKER_03 25:33

Um and so it reduced my cash in the deal, allowed me to cash flow and basically take what was otherwise probably just a base hit, almost paid retail sort of deal, and actually made it cash flow really well. I think it started out, you know, a couple hundred bucks a month. I still have that property. It's probably making like 400 a month if I had to guess now. Um, so it's yeah, they'd ended up not fulfilling their option, unfortunately, on that one. Okay, um, which is never the goal with those. Um, we always want to see them succeed. Most of them do. Um, unfortunately, that one they had a life change. And so, you know, the family kind of parted ways, and the one that decided to stay didn't want to take on the ownership of the home himself. So he's just like, hey, I'm really sorry. I just I don't want to follow through anymore. I do want to still keep renting it though. So it all worked out relatively okay for everybody in the end. It wasn't our intended outcome, but yeah, you know, we've kept pushing forward um. And so yeah, so early on it was just like a necessity to get the deals done. And then I guess what it's evolved to now is we use it more in the context of a seller who's the cash offers is just not gonna work for them. So super recent example of that. Uh had a seller here in Madison referral deal, cash offer, I believe it was like 180 grand. We thought we could list it for him as well. You know, if the market like you know, pushed because it was a desirable area, he might get into like the low twos. You know, 220 we were like hopeful for, but you know, doubtful but hopeful. Um and so that was kind of his operating range, it was like 180 cash or you know, maybe 220 on the MLS. Realtor commissions come out of that, obviously. So sure, you know, it's not truly 220. Um, but he didn't want to do all the work it took to get it MLS ready. It was a hoarder house, but was really stubborn, didn't want to take the cash either. And so we were able to meet in the middle, put together a joint venture, I guess you could call it structure, um using in this case a note a note and mortgage. And so what we did is we figured out how much money he needed down for the property to get all of his like immediate debts taken care of and have enough to live on during the project. So we got him that money down and we got that money by taking a first position loan against the property from a bank. Okay. And then that also ended up becoming our rehab money. And then he took a second position for what was left of 200,000. So it was roughly 60 grand down, taking a second for 140. And then we kind of put him up in a hotel. He's actually there currently. This property hasn't been sold yet. And so we've been paying for a hotel to keep him housed, um, you know, got him set up with a cell phone and all the things needed in the meantime. And essentially, then what we're able to do is get him 10% more money by paying him a majority of it on the backside, but taking care of all of his needs in the meantime. And it really solved his biggest problem, which was he needed more money, but wasn't able and willing to do the work it took to get an MLS ready.

SPEAKER_01 28:33

Yeah, so I love that dude. That's that's the beauty of what Joe's talking about. Like you can take people who otherwise, you know, if you only have one option in your tool belt, you're gonna miss out on some uh ways to solve people's problems, really, and really serve your clients at the end of the day. And uh yeah, we've done several of these. We actually have one right now with a portfolio that uh my commercial guy's working on. I think it's seven units. It's a probate situation. One sister wants cash, the other one doesn't care and wants, you know, is fine taking payments over time. Um, so we propose like, hey, let's get your sister the cash, and then you carry the rest of it as seller financing for five years. We'll get a we'll get a commercial loan from our commercial bank for the first amount. They'll carry it, and we'll we're also gonna increase that price a little bit to get a credit back to cover all the rehab on these things. So then we'll have no money into this deal. It'll still be positive cash flow. We'll it'll basically be an infinite return on our cash. And there we go. Yeah, I love it. So yeah, yeah.

SPEAKER_03 29:34

No, it's great when you can do that. You can bridge the gap, make everybody happy, you know, meet the needs of the deal of the people involved, and hopefully still have it be profitable.

Keeping It Simple For Sellers

SPEAKER_01 29:44

Yeah, yeah, that's always the goal, right? Yeah, that's the hope, right? Yeah, it's fun to put them together, but if you're not gonna make money on it, you know, what are we doing here, right? Yeah, exactly. Um we did another one with Joe's talking about this is back in the height of the Airbnb days, right? When Airbnbs were the hot thing, but up where I live in Door County, we had a gentleman, similar situation, like he had it listed on MLS. It was a really nice house for like 700,000. Took it off the market after a few weeks, and I said, What you know, why did you take this thing off the market? And it he's like, I don't want to have to get rid of all this furniture and stuff. And I was like, Wow, okay. Well, what if I could get you know just buy it as is? And I was trying to get a cash deal from him. He wanted more money, I wasn't comfortable coming up on the price cash-wise. Yeah, and I said, Well, what you know, we just sat and talked about it. I just said, Well, what do you need the cash for? Like, what do you do, what do you want the money for? He's like, Well, I really don't need the money out of this. He's like, but he's like, I just want that mortgage taken care of that I and I was like, Well, what do you owe on the mortgage? He's like, like 230. I was like, Okay, if I can take care of the mortgage, uh, are you cool just you know, collecting a check every month on the rest of it? And he's like, What does that mean? I'm like, Well, right now he was self-managing the Airbnb, right? I said, right now you gotta come over here, you gotta clean this thing every time somebody checks out, you gotta deal with ten, you know, the people inquiring, all this other stuff. If none of that, you just get a check every single month from me in your mailbox. How would that sound? He's like, Oh, that'd be awesome. Yeah, that'd be great. I'm like, perfect. So we got a first position mortgage. They actually covered the bank, also covered our our furniture and rehab for us to outfit it. And then he took a second position for the rest of it, and he still to this day gets eighteen hundred bucks every month. And he's tickled pink, and he's our like one of our biggest fans. He's like, This is great. I love this check every month. This is amazing. I don't have to do anything for it.

SPEAKER_03 31:26

Yeah, I love how you how you set it up too. It it's not like, oh, do you want to give me a loan or put together a mortgage? You're just like, how would it be to collect some payments every month? Like, that is like such the perfect way to explain it. Because I think the number one thing that I messed up early on is I would get so deep into like the lingo while I was trying to pitch a creative deal that I would lose them, even though I actually had the solution that was better for them, I would lose them before I could get there because a confused mind says no. But as soon as I unlocked, like keep it simple and just explain like the benefits and how it's gonna the cash is gonna flow to them and ran. That's all they actually care about. Exactly. They don't care about it. All the tools you're using to protect them, like that can come later, but yeah, it's gonna blow up the deal in there.

SPEAKER_01 32:10

Yeah, if you start talking about raps with them, they're gone. They're like, what is this guy talking about? Like, I'm not hungry, I don't need a rap. What do you mean? You know, you're losing theirs. So no, that's a really good tip. So if you guys are out there pitching this stuff, the other thing I would say, Joe, like legally speaking, how did you make sure you were doing all this stuff the right way? I mean, when you got this, because this is you're you know, you're potentially messing with people's credit here, and it's a pretty big liability or trust that you have to have with that. It's a relationship you're entering into for a long period of time with that seller and these things. So, what are some of the things you have used to help ensure that what you're doing is on the up and up and you're doing it the right way?

Legal Guardrails & The Right Attorney

SPEAKER_03 32:50

Yeah, I think early on the biggest thing was education, education, education. Like I studied this stuff a lot before I started implementing it. Um, I mentioned I was lucky to connect with some mentors early on that were already doing it, you know, legally and you know, the right way. And so I'm I'm never one to just think I can do something without advice. I try to be humble and know that I don't know what I don't know. And so a lot of reaching out to other investors, networking, um, you know, even doing some joint venture stuff to learn through partnership was huge. Not necessarily always just on creative deals, even just like across the board. That's how I've learned most of my things is finding someone that knows how to do it the right way, giving them a piece of the deal to learn with them to make sure I take care of the seller properly. Um, and then more recently, we do have an attorney, uh Sean St. Clair. Um, he actually does some stuff for Pace Morby, I believe. Don't quote me on that. Um, and he's just like a genius when it comes to creative deal structure and knowing how to do it legally. So whenever we're getting into a structure now that, you know, we're like, hey, we haven't come across this, no one in our network's done it, there's no one to partner with. Like, I know I can call up Sean, spend 30 minutes or whatever it takes on a phone call, send over what we're thinking, and he'll put it together and make sure it's legal.

Why Shift From Wholesale To Flips

SPEAKER_01 34:09

Yeah. So I think that was the key I was hoping you'd talk about is get that attorney involved in this whole thing. Sean, Sean was on the podcast, guys. If you go back, it's early on, I want to say within the first 20 episodes, somewhere in there. You can go back in the archives and find the episode we had. Sean on here talking about creative deal structure and you know all the all the stuff you got to do to protect the sellers and disclosures, and there's a lot of things you got to make sure you're doing the proper way. Because if you don't do it the right way and you're out there just winging things, you can really mess up somebody's life doing it the wrong way. So always make sure you consult with an attorney. And Sean's the best in the business, I think, as it comes to creative stuff. We're very lucky that he uh has a Wisconsin license. So he's licensed in Wisconsin and Arizona. Yeah. So we're very lucky that we have a guy like that who's done thousands of these, you know, structures right in our backyard here in Wisconsin. We can tap into him for those types of things. So that's fantastic. I love it. What is the what is the uh you mentioned moving away from wholesale more into flip? What what was the catalyst for that decision for you guys, Joe, and your business?

SPEAKER_03 35:10

Yeah, um it really came from, I guess for me, finding fulfillment from working with other people, joint venturing. Um, you know, I had done some one-off joint ventures, I had done some more consistent joint venturing with another wholesaler, even when I was wholesaling. Um, but then I met my current business partner, Kent, and he was a licensed general contractor. And when it started out, you know, I knew I wanted to do some actual projects and not just always wholesale, but I also knew that I didn't know how to do a lot of that stuff. And honestly, it wasn't really my strength. And so Kent and I partnered, it went really, really well. And what we found was, you know, we worked such a good team that it just made sense, you know, to lean into what we were good at together, which is flipping. And so it was kind of a natural evolution. Um, I still do love wholesaling. Um, but it is also really satisfying to see the property go from, you know, a diamond in the rough to this really cool thing that a family can enjoy. And, you know, knowing that we get to shape that. And I don't know, I do enjoy the flipping process when I don't have to be the only one doing it all. Like I got to enjoy it by myself. But in a team environment that we've created, it just it feels like the way to employ and you know, incorporate the most people into our system and just have it kind of be the environment that that feels right. Awesome, dude. That's so great.

SPEAKER_01 36:36

You know, Joe, what what Joe just talked about there, guys? There's a book that I love called Who Not How. And it's, you know, what Joe found was he's a he's a who for Kent and Kent's a who for him. And those two are it sounds like you guys are you know your strengths and you're both kind of staying in that lane and you've built a business model around what you guys are both really good at, and those two things complement each other. And some other who's to bring in there to help supplement the other needs that you guys have, which is really, really cool to see.

SPEAKER_03 37:02

Yep, yeah, but I don't think I'd be flipping if I was solo. I can tell that. I can tell that.

SPEAKER_01 37:07

Yeah, one of the other episodes if it's either it's either gonna be after you or before you, it's gonna be around the same time. But we were just talking about this on there's like flipping's a different animal than what people think, right? Like I think people get into real estate and they say, you know, I'm gonna do real estate, and then they go like do some rentals. They think rentals are the same thing as flips, and they're two different, completely different businesses, right? You experience that same thing on your side of things because you guys are dabble in all of it too.

SPEAKER_03 37:34

So yeah, it's all very, very different. Um, I would say the buy and hold rentals for us are more similar to the flips in some ways than maybe it would be for other people, just because we like doing heavy value add even for our rentals. So we still follow a very similar process up until the point at which it doesn't get sold, it becomes a rental. Um so in that sense, that's very similar. But when we were doing all the management um, or when I was doing all the management, it was felt like a very different process. Now that we have a management company and someone that's you know specialized in that, it feels very similar to me now, but in the early stages, yeah, it's very different going out and finding those tenants, dealing with their complaints, um, you know, keeping them happy, uh, making sure rent's paid. Yeah. That that in itself is a full-time job, which is why we had to find a full-time person just for that. Yeah, exactly. I know you have a manager.

SPEAKER_01 38:27

Yeah, you guys have two different businesses, really, though. Like you have the property management business, which is doing the flip. That's part of your business, is built into there. And then you have the flipping company, but those are really two separate specialties, right? Like they just happen to incorporate, you just have the construction piece, which is a huge advantage for you guys in the business. But for most people out there that are just starting out or trying to get a few things, uh, those are really two different animals that you know you gotta focus on. That's why I love the property management company I referred you over to, because they have the construction in-house. If you're a real estate investor and you're in a market that they serve, it's very easy to scale your rentals really quickly because you can literally just buy, hand them the keys, and get out of the way, right?

Flips vs Rentals vs Management

SPEAKER_03 39:07

Yeah, yeah, that's that's an incredible model. But yeah, I totally agree with you. If you're starting out, you definitely need to just pick something, get really good at it. Um, if you as long as you like it, stick with it. And if you don't like it, then maybe consider a pivot. Um, because you do have to enjoy it. Um, that I guess is maybe something I left out uh with wholesale for me personally. I didn't find that I loved the process as much as doing acquisitions for a flipping business. And so even though the process isn't that different, I just found I was getting a lot more fulfillment when doing it as part of a flipping business than I personally was um when doing it for wholesale. And I think it's just because I don't love dispositions. And so that's a very important piece, as you well know, of the wholesale process. And if you don't love that piece, then wholesale can be really exhausting over a long term.

SPEAKER_01 39:55

Yeah, I think I get I get hit up pretty often by people who want to get into wholesaling. And when we really get to the root of it, it's because they think it's it's the easiest barrier to entry to get started in, and they think it's the easiest to do. And really it's the same thing. You have two different businesses. You have an acquisitions business and you have a dispositions business, and those are two different businesses, two different customers, two different needs, two different desires, two different processes you gotta run. It's really you have two different businesses, which is why we have Wisconsin discount properties as one brand that's still in the same company. We have iByWI, which is the acquisitions team, and those two things are two very separate uh different uh messages, uh people, uh daily activities, it's all very different. And so you can wholesale it, you know, casually uh just by going to networking events and knowing other people and stuff like that, but to really truly build like a significant uh business, it's two separate lanes that you gotta have operating at the same time. Two businesses really are operating at the same time.

SPEAKER_03 40:49

A hundred percent. Yep. And I found for me it was like I loved the acquisitions process and I didn't love the dispositions process. So it was either do what you guys did and built out that team, or it's like if we can be our own buyer, do the projects, then I don't have to deal with that disposition process. So that thinking about it a little bit more is probably the biggest reason that we leaned into flipping for at least myself personally.

SPEAKER_01 41:12

That's awesome. Well, I think something Joe just talked about here too, guys, is he's doing something that fulfills them, right? Like we all get to choose what we do every day, right? We can choose to do, keep doing what we're doing, work where we work, build a business somewhere else. But if you don't enjoy what you're doing, why? Life is pretty short, right? So find something you can dabble, right? We dabbled in everything when we started. Like I my first deal I ever did, it was a rent to own on the house that we bought. We lived there for six months and I hated living there. And I was like, I can't sell it now because I'm gonna lose my butt after I pay realtor fees and I've spent like 10 grand on stuff. I didn't have hardly any money back then. And so we did a lease option to keep the realtor out of it, and then it worked out, right? We actually ended up making a pretty pretty good amount of money on that. I did uh a joint venture with another guy on like a creative finance deal because I didn't know how to do those, so I've like you said, partnered with that guy. I did some flipping, we had some burr deals that we did, we wholesale a couple deals, kind of did I call it the buffet of real estate. Sounds like I tried it all out, right? And then I found I I got a lot of fulfillment from the wholesale. Like I loved take like finding a property and getting a good deal on it, and then helping that person, they got a lot of a lot of relief and satisfaction from what I was providing. And then I had this investor over here who was also excited because now they're gonna make some money and change their fruit you know future. And I was like, I love this connection piece of it. It was really fulfilling for me. So we you know, my wife and I just doubled down on that piece of it, but just find what you like to do. It's okay to test stuff out, but find what you like to do and double down on it.

SPEAKER_03 42:40

A hundred percent. That's really good advice.

SPEAKER_01 42:43

I love it. Well, that's your advice. You're I'm just reiterating it. Yeah, that was your experience, yeah. I'm just summarizing it. Yeah.

SPEAKER_03 42:50

Yeah.

SPEAKER_01 42:51

Well, Joe Man, this has been awesome, dude. So we always end with uh a fun question. And part of why we do this is we have people outside of Wisconsin that have, you know, they're looking for a place to put capital or they're looking for a place to start investing in. They're in California, let's say, or Colorado, or some kind of cost prohibitive uh market. They find Wisconsin, they want to know about it, but they don't know anything else about it besides just looking at some spreadsheets and numbers. So we like to tell them a little bit about the state. And they listen to this podcast. So for you, what is your favorite Wisconsin tradition or place to visit here in our great state?

Choose Your Lane And Double Down

SPEAKER_03 43:24

I think my favorite place to visit is a a recent one. It's the Apostle Islands. Oh, way up there. Yeah. So I had never been there until a couple of years ago. Um, got into sailing and we decided to take the sailboat up a few years ago. And it's like another world up there, man. It it's just totally different. Um, it's the only place probably in the entire uh US that there's like no light pollution. So if you want to see the northern lights, that's the place to go. Uh, you can camp on the islands if you're into that sort of thing. It's definitely an outdoorsy place. There's not a lot of population or anything touristy about it. But if you're into the outdoors and want to just get as far away from people as possible, uh the Apostle Islands is a really cool destination.

SPEAKER_01 44:12

Dude, that's a good one. I don't think anybody's said the Apostle Islands yet, but I went up there, I don't know when that was, maybe five years ago or something like that. And first time I'd ever been there. And you're right. It you feel like you're in like uh what is the uh I'm trying to think of the movie Avatar or something. Like this whole different world of like, yeah, this is crazy.

SPEAKER_03 44:32

Yeah, the water's so clear, everything about it's just really unique and special.

SPEAKER_01 44:36

Yeah, for sure. That is awesome. Well, Joe, if anybody Wants to connect with your brother, what's the best way for them to reach out? If they wanted, you know, they got a deal that they want a JV or they just want to connect with you in some other way to talk about you guys are also doing some private lending now coming up or some hard money lending stuff. You've got management down there that you guys have built and you're growing that. Like, what are some ways if anybody's interested in connecting with you that they can reach out to you, man?

SPEAKER_03 44:57

Yeah, they can go online to rezenhub.com if they're trying to connect with us for like our fix and flip business, wholesale business. Um, for property management, we have rentrezen.com. Otherwise, if they just want to connect with me personally, uh, they can shoot me a DM. I'm on Instagram at MillerFlipped. So any of those places are great to connect, and I look forward to having a conversation.

Show Close & Share Request

Wisconsin Favorite: Apostle Islands

SPEAKER_01 45:25

Awesome, bro. Well, I appreciate you being on. Man, this has been great, guys. If you got some value out of this, we always say this. Please share this episode with your network. It helps us a ton. And it helps you a ton too, because people will say, hey, you're doing real estate. They may want to bring you some money, they may want to bring you some deals. They see that you're into this stuff. So it helps you brand build your brand as well. Uh, so we appreciate those. If you're in the Madison area and you're interested in getting into real estate acquisitions, we are hiring right now as well. We are looking for two acquisitions uh reps to join our team. So basically, what you do, you go out, you meet with property owners, and you try to solve their problems. And then we take those and we connect with guys like Joe who can take them and make them beautiful as kind of the uh the model here. But we need some people on the front end. Yeah, we need some people on the front end. We're not looking for people looking for a stepping stone or just for an internship and they're gonna jump ship and go. We need people who are gonna be with us for the long term. You like being part of a team. You like, as Joe said, you want to be the who on the acquisition side that we're looking for, yeah. So if you're interested in that, you can reach out to me, Corey, C O R E U Bi at IByW I.com, and uh we'd love to chat with you a little bit more and see if you're a fit for the team. Other than that, guys, we appreciate you listening every single week. Uh we will see you guys on the next episode.