Tailwind Talks
Tailwind Talks is a podcast for high-performing professionals who want to build serious real estate portfolios without leaving their careers. Hosted by an airline and military pilot turned investor, it dives into actionable strategies for scaling your real estate portfolio while balancing the demands of a full-time job.
Tailwind Talks
How I’m Buying over $1,000,000 in Rentals with No Cash Down
How do you keep growing your real estate portfolio when interest rates make traditional cash-out refinancing impractical? The answer might lie in creative loan structuring and relationship banking.
Cole, balancing careers as both an airline pilot and real estate investor, walks us through his innovative approach to expanding his portfolio toward his goal of 100 units. When faced with equity trapped in two triplex properties financed at 3.9%, he devised a strategy to avoid the prohibitive costs of refinancing at today's 6.75% rates while still accessing that capital for growth.
The breakthrough came through combining his existing properties with a new 14-unit portfolio acquisition into one comprehensive jumbo loan. This consolidated approach allowed him to extract equity from existing properties while maintaining favorable financing terms. By negotiating the portfolio purchase from $1.4 million down to $1.1 million and structuring creative financing, he's positioned to add these properties with minimal additional capital investment.
What makes this strategy particularly powerful is how it leverages banking relationships. Cole explains how maintaining connections with multiple lenders creates leverage in negotiations, allowing investors to secure more favorable terms. He also highlights an overlooked opportunity in today's market: while institutional investors chase larger multifamily properties, single-family homes and duplexes remain undervalued and present significant cash flow and appreciation potential.
This episode isn't just about one deal – it's a masterclass in creative problem-solving, relationship building, and persistent deal-hunting. Whether you're just starting or looking to scale your existing portfolio, these principles of leveraging equity, maintaining banking relationships, and finding overlooked opportunities can transform your real estate investing journey. Listen now to discover how thinking differently might unlock your next level of growth.
What is up everybody? My name is Cole. I'm a part-time real estate investor, full-time legacy airline pilot and a part-time military instructor pilot. Today, I'm going to be talking about a deal that I just had come together, and it is quite interesting. What I'm basically doing is I'm taking equity from two existing properties I have. I'm pulling that out, but I'm rolling it all together into one jumbo loan and I'm going to talk about what I did to pull this off. I haven't quite closed on it yet, but it's in the process of being underwritten as we speak, so I'm going to talk to you about exactly how it's set up, how it all came together and what you could do to try to implement this with your own portfolio that you're trying to grow.
Speaker 0:In case you haven't been here before, I am trying to get to 100 units before the end of the year. I'm at 61 right now, with a lot of deals in play. A lot of them haven't closed right now. We've been waiting and waiting for a lot of different things to happen, but I'm trying to get to 100 by the end of the year. So I am hell bent on that goal and I'm not going to stop. Obviously, I'm doing my two other full time careers on top of that. Forgive me if I go some time without making videos. My goal is to do two videos every day for a year on average, so I've got some catching up to do, but it's just been trying to manage all these different things going on, and my normal job is flying. When I'm having to fly, I'm not making videos because I want this to be strictly a real estate page. Maybe I'll talk about the flying, but I don't want it to be all about that. I want it to be focused on the real estate stuff, at least for now. The idea what exactly am I doing?
Speaker 0:So three years ago, four years ago or so, I bought two, three unit properties, and those properties, over time, have gone up in value a because we did some renovations to them, but B because everything else has also gone up in value I'm sure you've probably already noticed and so the thought was that we were going to sell them or cash out, refinance them or do some sort of refinance. The cash out refinance is really hard to pull off, though, because rates are about two and a half percent higher than what we paid when we originally got them. These properties are sitting at somewhere around 3.9 on the interest rate. So to stomach a 6.75 interest rate or somewhere in that neighborhood is really hard to justify refinancing them at this point. So the thought was maybe we'll sell them and then trade into something with a 1031 tax deferred exchange. If you're not familiar with that, I'm not sure if I made a video about it, but it's a way that you can exchange properties for something bigger, better, whatever without incurring a tax liability at that moment. So it's kicking the can down the road, but anyway.
Speaker 0:So we had this equity, we wanted to use it and simultaneously the bank that holds that loan already was reaching out to me and saying hey, the guy that helped me get these loans before had retired. So there's a new guy, guy that I'm working with and we've been talking for a couple of years but we actually haven't done any deals together. I've been going to other banks and he basically said hey, I feel you're leaving me in the friend zone, you're not letting me in, and I'm trying to hopefully make a deal with you. And there were some reasons that we didn't in the past. One of them was loan value set aside in a cash account, basically with that bank. So if you did a million dollar deal, not only would you have to bring your 20, 25% down, but you would also have to have another $100,000, 10% set aside in a cash account and for somebody at my size that's just not feasible. That's not going to help me grow. It's going to really hamstring me and slow the growth of the company. Didn't want to go there, so I went to other places, use other people, and those banks have been really good. We've got some really good relationships developed. But we've left this other bank in the background Just before this deal came together.
Speaker 0:Earlier that day I was on the phone with him for about 45 minutes and explaining my situation and explaining some of the frustrations I've had with other banks. I'm one of those people that if I get rubbed the wrong way for some reason, I'm really probably going to distance myself, and in this case, one of the banks said a couple things on the phone in a deal that they ultimately didn't want to fund. That I just wasn't really a big fan of and I have since not gone back to them. I told him about these things and what I was looking for into the future, and we decided to come together and say, okay, yeah, if I get another deal, I will give you a chance to work it. Maybe it will work out, maybe it won't. And get another deal, I will give you a chance to work it, maybe it will work out, maybe it won't. And then in my brain I started churning and I said you know what? I've got these two properties that have equity in them. I owe $208,000 on them for reference, worth about maybe $500,000 on a good day with the sun shining and the birds chirping right. So there's something there. I don't really know what it is, but there's something there, and I don't really care what it is because I don't have a deal anyways.
Speaker 0:The night prior I had stayed up till maybe one or two in the morning and I had sent out maybe 100 emails to everybody on MLS in Milwaukee that had a duplex older than 19, sorry, newer than 1920. And basically not in a specific zip code that I'm not a big fan of. And I wanted to see everything else that was left over and decide for myself what I was interested in. And so I sent an email to everybody Basically my emails. I said, hey, I own a place down the road, I paid this much for the property, and that's usually a little bit lower than what they were listing it for. Is there any way we can come together on this?
Speaker 0:And that was the idea is just see, just start poking and prodding and see what's out there, and in my search I found a portfolio that was for sale. This portfolio is 10 properties, 14 units, and they just had a price reduction. So I was a little worried because the price reduction that they had was still outside of my striking distance. But I thought to myself huh, I've had a really good history of buying portfolios and getting those to work within my structure. Right. I can usually get a better deal on a portfolio because I'm buying 10 properties off of somebody instead of one, and therefore they are dealing with one buyer for everything. There's a lot less. There's a lot less chance that something goes wrong, because if you're dealing with 10 individual buyers that's 10 individual showings, 10 individual inspections, appraisals, loans it's just a lot more complicated. One person can come in and buy the lot. Then it can really save them a lot of heartache and in my case, it can save me a lot of money, right? No-transcript.
Speaker 0:I drove by them. Try to get a feel for the area. I'm very familiar with the area. I do have duplexes and single families in that area and I've had no issues. So I was familiar with that part. But that only tells part of the story. Right, you want to get into the properties, you want to see the financials, you want to understand what they're doing. For me, all I really need is gross rents, if I can get an idea of what they're renting it's a pro forma to see what the performance would look like.
Speaker 0:I made a critical error. I actually had $3,000 extra per month that it wasn't actually there. It grosses about $14,500, maybe $15,000. And I had it closer into the 17 range high 17s, low 18. I set myself up for failure there, but I did still ask for a price that I thought was attractive. And for the portfolio I asked for $300,000 off their asking price. They had just lowered it to 1.4 million and I want a 1.1. I told him on the phone 1.1 plus or minus 50,000. That's my range. That's where I want to be. If you even think that's in the realm of possibility, then we can look into it. If you don't, then I won't waste my time, I won't waste your time and we'll go our separate ways. It's all good and I was very transparent with them. I'm like, hey, this is what I can pay. These are the rates these days. This is the financials behind these properties Like this is where I'm at. So I understand that the selling agent is trying to represent their seller as best as possible and get them the best possible price, but at the same time, I'm obviously looking out for my own best interests for a deal like this.
Speaker 0:But if you've seen some of my previous videos, all I wanted was single families and duplexes right now, because I think nobody's giving that any attention. Everybody's focused on brick multifamily, because that's the sexy, cool thing out there. There's a ton of opportunity, I think, in the single family and duplexes and there's a lot of reasons why I believe that I won't get into that right now, because it's going to extend the video longer than I want. But the idea is that single families and duplexes are being overlooked by so many people. Because if you're a big investment corporation, a big group, what's more efficient for you to buy a bunch of multifamily or a bunch of duplexes and single families? The multifamily, right. You have one roof instead of 10 roofs. You have one foundation instead of 10 foundations. The units are usually easier to maintain and to manage as a whole, so people are overlooking that. Right, I don't think people are looking into that, unless you're a local investor, and even then, I think I'm one of the only people out there that's aggressively trying to get this done. Long story short, I figure out that these are in the niche that I want. They make enough money that it makes sense to do it.
Speaker 0:And now I'm trying to figure out, okay, how would I fund this deal, and I'm working the deal at the same time that I'm trying to figure out how I'm going to pay for it. I've been joking with my friends lately calling this fake business. Right, I was just doing a bunch of fake business. There's no nothing real about any of this. I don't really know what I'm going to do or how I'm going to pull it off, but I'm still going to try, right, because if you stop at the point of, where am I going to get the money from? Invest with you, or to pull money from somewhere that you already have money stashed away, to pull off a deal, it may not be the size, it may be a fifty thousand dollar deal or maybe a seventy thousand dollar deal, but you could still figure it out and the same concepts apply throughout, right? Basically, what I did from there is I said, okay, where am I gonna pull this from?
Speaker 0:And I thought back to my conversation earlier in the day and I said, like, like, the bank that I was working with for those two loans, or these two properties on one loan, I should say wants to retain that loan. They also want new business. What if I was able to take that loan, increase the size of it but build it on to the rest of this stuff that I'm buying new, so I could take cash out basically on the first two properties that they already have a loan with and I don't want to lose that loan and apply that cash into the new properties as my down payment On 1.1 million, after all your closing cost credits, it's probably going to bring you down to the $150,000 range of what you need to actually bring down to close the deal. And the concept is pull money out of the first existing two, apply it towards these other two, but actually wrap it all together into one big loan. 20 units total and that is what the bank's going to have. They're going to have a $1.1 million plus another 350. So they're going to have about a $1.45 million loan against 20 units that are spread across, I guess 12 properties, and that's the concept. So that's what I'm shooting for, because what would that mean to me If I was able to pull 150 out of here and I was able to roll it all together into one big purchase?
Speaker 0:I'm not going to bring any money down. I might bring some money down, right, it's not going to be zero, probably, but it's going to be closer to zero than it would be without these two involved. Obviously. If, without those properties involved, I'm bringing 150 grand, or whatever the case may be, that may mean I'm going to sell some properties. That may mean I'm going to take a loan out against my 401k. That might mean I drain my bank account of all my cash and I don't want to do all of that right. I want to use what I've already got the infrastructure that I've built over the last couple of years and apply towards expanding the business. So will it work? I don't know. Actually, I have no idea. I talked to them today and they said everything looks good so far, but there's a lot of steps to go in the underwriting process.
Speaker 0:I've tried to be a trustworthy person right. The things that you can control are paying on time every time, not overextending yourself on debt, buying good deals and keeping a track record. I keep a track record on my phone of what I've bought and what I've sold, in chronological order, so that way I can look back and say I know, this loan may be a little bit more dicey than what you guys would prefer you, I bring a bunch of money down 50 down so that your exposure is very low. But I don't want to do that. Obviously. I don't know if I have the ability to do that. So what can I do to offset that? I can show you what I've done and say hey, I understand this is a little bit more risky, but I've done these successful deals. I bought these for at this price, I've sold them at this price. It's all public record. There's nothing fancy about it. You can literally go online and point to exactly what you've done in the market to prove your history. And they know they've been working with me and they've got a couple loans with me. They know I have the capability of doing that stuff.
Speaker 0:But as you get larger and larger loan sizes, there's gonna be more and more scrutiny on what you're doing because you're asking for more money. If you're asking for more money, I can promise you the bank is going to want to know where this investment is going towards. The structure of this deal is very interesting and it's something that I hope a lot of you can take, internalize and say, hey, if I go buy a duplex this year, or I go buy a single family this year and I rent it out, nothing might happen for three or four years. But in three or four years from now, when something does happen with it, it could be pretty interesting. It could be something that could change the trajectory of your life and your investments.
Speaker 0:One thing I would also want to talk about is you can there's a, there's an angle here of saying, hey, if you, we don't do this, I'm going to take these properties from you and I'm going to move them to another bank. So you have to also keep in mind that the banks that you're working with, there's not just one of them, there's multiple of them. There's maybe dozens, if not hundreds, of them, and I love the people I work with at these specific banks, but I'm not stuck enough to say, hey, I'm only going to go to these three people and if they don't give me a loan, then I'm not going to do the deal. No, I'm going to go and try to shop it to whoever. I'm going to start with my core people, but if my core people aren't interested in it, I'm going to go elsewhere.
Speaker 0:If I really believe in the deal and that means that you did your due diligence, you looked at the properties, you understand what you're buying into, you have a plan in place to manage it and all these other things but if you've checked all those boxes, then you can use some of this as leverage and say, hey, I've got these properties, I've got these properties, this is what I want to do. So A, is it possible? And if they say yes, it is possible, okay, I would like to do it with you. That'd be awesome if we could come together on a deal like this. I want to bring you business, I want to maintain this relationship, but I've got bank X and Y, who love doing business with me, are ready to do it. They've got their checkbook out and ready to sign a check because they know I'm going to pay on time. They know I'm buying a deal, so you're going to have to work with me a little bit here. If you don't think you can do it. They're waiting.
Speaker 0:And when people know that, when a bank knows that, they're like, oh okay, like, let's really consider what we're going to do with this one, and they may still may say no, but there is some amount of leverage to say, hey, I have other banks that are funding me right now. Saying diverse with who you're using is really important, because if you can start pinning them, it sounds bad, but if you can start pinning them against each other, it's going to work to your benefit because you're going to get more favorable rates, more favorable terms, and if you have a deal that's a little bit more complicated, they may actually try to figure it out for you so they can retain your business because they know that you can go somewhere else. You want to maintain some amount of leverage. You're not going to have all of it because at the end of the day, you're asking them for money. So anytime you're asking somebody for money, you're on your back foot already, right, but if you think that you can use another bank against them, then it takes you from that back foot position and brings you like even on the feet right and maybe even leaning forward a little bit. So these are the things I try to do to give myself the best chance to make something happen.
Speaker 0:Again. I'm no expert, but I'm trying to make it up as I go. If this deal comes together which I'm confident it will somehow some way come together. It may not look exactly what I think it will right now, but I think it's gonna close. I want it to close, I want this deal. If this deal comes together, this will push me to 85 units. I'm working another duplex deal on the side, so that'll put us to 87 units, let's say, by the end, end of August. So I'm within striking range of 100 units and I am very focused on making that happen. I'm not exactly sure how the other 13 units are going to come about, but I will find a way to do that before the end of the year, as long as there's deals to buy. If there's no deals to buy, then obviously I'll set up my hands and I'll say you know what I tried to get to 100. I didn't quite make it, but we'll keep moving. But that's what I'm doing. That's what I'm up to right now.
Speaker 0:I'm just literally sending emails. I'm not doing anything that you couldn't do without a real estate license. I know a lot of people think that a real estate license is the barrier to entry, but you don't have to have a license for what I'm doing. I'm literally going for stuff that's on market and sending emails and I'm trying to make it sound like I will buy this for a smaller price and or I'm looking for portfolios, because that's where I have my most leverage. Some of this stuff is not as complicated as people think. It's literally just sending emails and you know that out of 100, you're going to get five responses and maybe two will turn into a deal. That's okay.
Speaker 0:But if you really want to do this and you really want to try to get your foot in the door, then you have to be willing to do some of that stuff, because people like me are out there doing it between flights. I'm out there doing that stuff and there's other people like me there. I'm not unique. There's a lot of people that are doing that. So if you want to get your foot in the game, if you want to get a good deal, you don't want to get stuck on your first or second deal where you buy something bad and blow up your whole account. Then you got to try to do something that other people are unwilling to do, and sometimes that's the smallest amount of effort people are unwilling to do. So I'm taking advantage of that stuff. Will it turn? I'm not going to stop because I think it may or may not. I'm just going to keep trying and hopefully make it to 100 units by the end of the year.
Speaker 0:Circling back to the deal that I'm working on right now, the big thing that I'm interested in is the long-term equity these single families and duplexes in Milwaukee. I don't think that most of them are going to stay at or below $100,000 for very long and I think that I'm buying into some that are at very attractive prices for the next five years, six years, seven years. I think that they're going to appreciate quite a bit. I'm not betting on the appreciation of this deal. All I'm focused on is the cash flow. Right, it's cash flowing. I think it turns out to be about $38,000 a year If you wrap the whole deal all together and I brought maybe $0 to closing maybe $20,000, $30,000. We did put some earnest money down, so there's some money that's going to come out, but I didn't bring much of anything to closing and it's cash flowing 36,000 a year.
Speaker 0:So it's not the end.
Speaker 0:It's not the end. I'll be all 36 grand. These days it's not going to get you very far, but that's one of many deals that are working and I think in five years there'll be worth double and I'll have quite a bit of equity sitting on the table. So I think I think appraisals are kind of BS anyway. So that's a story for another day or maybe you've seen it in one of my other videos, but that's the idea.
Speaker 0:Eventually I'll put up all the stats of these properties and whatnot. I just want to get a video out there talking about the structure of the deal because I think it's kind of interesting and it's something that maybe not everybody has thought about. Refinancing cash out refinances right now have been really hard for people to pull off. This is a way that you can find a really good deal and kind of wrap the two together so you can get additional properties without bringing more money to the table Again. It's all just moving chips around on the board and I'm no genius. It's just something that came to me. So let me know what you think. If you think it's a stupid idea, great idea, let me know, and anybody that's watching this. I, as always, really appreciate it and I