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BP Podcast 065: Creative Investing, Mistakes, and Bulletproof Vests with Wendell De Guzman

by Brandon Turner on April 10, 2014 · 32 comments

  
Post image for BP Podcast 065: Creative Investing, Mistakes, and Bulletproof Vests with Wendell De Guzman

On today’s show we talk with a real estate investor who started with no money – and has done well over 100 deals using a variety of creative methods to finance his deals with little to no money out of pocket (including a $6 million dollar deal!)

Wendell De Guzman from the Chicago area tells us his story of starting out without any cash, working with other investors, tips for wholesaling dozens of properties every year, and a lot of other great tips.  Wendell is incredibly honest about his struggles – including a foreclosure – and how he overcame them to run a powerful investment company doing dozens of successful deals every year.  Don’t miss a moment of this powerful interview!

Listen to The Show on iTunes

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show, We Cover:BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AM

  • How Wendell started with no money down
  • Using a lease option to buy properties that have no equity
  • Profiting $37,000 on a house most investors pass up… with no cash out of pocket
  • Is subject to investing illegal?
  • Why Wendell invests in different states
  • How to look like a fool when wholesaling
  • Should new people start with wholesaling?
  • How Wendell purchased a $6 million apartment building for $5,000 down.
  • How to work with other investors to find greater opportunities
  • Wendell’s major mistakes in his REI career… including 
  • And so much more!

 Links from the Show

Tweetable Topics

“Don’t buy in areas where you have to wear a bullet proof vest” (Tweet This!)

“Real Estate is not all about the numbers” (Tweet This!)

“Real estate is an art, not just a science.” (Tweet This!)

Books Mentioned in the Show

Connect with Wendell!

Screen Shot 2014-04-09 at 9.13.53 PM

The Backwards Bowler

 

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{ 32 comments… read them below or add one }

Gerald K. April 10, 2014 at 1:58 am

Great Podcast guys! Wendell, thanks for sharing insight on the deals you’ve made. Lot of very helpful information with tips you don’t hear everyday. Hope to see you on the BP forums.

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Wendell April 10, 2014 at 9:13 am

Thanks Gerald.

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Paul April 10, 2014 at 12:17 pm

Great job Wendell

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Tracey April 10, 2014 at 12:42 pm

Thanks Wendell, lots of great tips
Tracey

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Mehran Kamari April 10, 2014 at 1:34 pm

Wendell, I’d have to say that this is one of my favorite podcasts so far. I appreciate you taking the time to share with the rest of us, I learned quite a bit :). It’s obvious you know what you’re doing! I’d also like to point out that it felt like I was listening to one of my Uncles talk the whole time because of the Filipino accent.

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Wendell April 10, 2014 at 2:01 pm

Thanks Paul.

You’re welcome Tracey.

Mehran, I am glad you learned something and thanks for your kind words. My hope is no one here on BP will commit the same mistakes I made…or if they have made the same mistake..that they don’t quit investing in real estate.

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Bernard Carpenter April 10, 2014 at 2:05 pm

Wendell, I agree with Mehran – one of my favorite podcasts as well. Congratulations on your success and especially on your willingness to stick with it!

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Wendell April 10, 2014 at 3:07 pm

Thanks Bernard!

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Paul April 10, 2014 at 3:40 pm

Great show Wendell,

I really learnt a lot and will be following up on your advice about co-opetition!

Thank you!

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Wendell April 10, 2014 at 3:56 pm

Welcome Paul. Co-opetition works. I focus on finding great deals and I farm it out to other wholesalers who have big buyers’ databases. I get to focus on what I do best. And yes, I do give some of my profits away but I get to do a lot more volume.

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David Krulac April 10, 2014 at 4:20 pm

Great podcast and great successful career!

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Wendell April 10, 2014 at 4:47 pm

Thanks David!

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Gualter Amarelo April 10, 2014 at 7:52 pm

Wow, a family member lives in a 125 unit complex that is going for $6M and I couldn’t fathom how it was possible to purchase something like that. What an amazing strategy! I could see how a similar strategy on smaller deals could actually work for me.

Also I like what you have done with the lease to own options. I am currently looking at purchasing an sfr with the idea to flip it, but if I understand it correctly, a lease option to buy could actually help reduce my tax bill if I hold it for a year. Since I would only pay capital gains!

Reply

Wendell April 11, 2014 at 9:29 am

Hi Gualter,

Consult a CPA or tax expert to be sure about the tax consequences of doing lease options for 1 year vs. selling outright. Generally, you get some tax advantages when you do lease options vs. selling a rehab house immediately. But each person’s tax situation is different so that’s why consult a CPA or tax expert.

Acquiring a big apartment complex vs. 10-units…the work is the same. The analysis is the same. And believe it or not, raising capital is easier for the bigger complex than the smaller one. However, whether you have a small deal or a big deal, you have to have a GOOD DEAL. Your job is to find the good deal and the money follows.

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Julius April 11, 2014 at 1:09 pm

Thank you Bigger pockets I need the help, my dreams of owning property is coming to life. I hear about Bigger pockets when I was on the streets of Chicago from a teacher at Loyola Academy High School. I still think the Chicago real estate market is over price

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Lawrence April 11, 2014 at 2:38 pm

Great show Wendell. I especially liked the wholesaling advice. I visited your Diligent Wholesaler blog and I was wondering what questions you ask your cash buyers to understand what type of deals they are looking for?

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Jared Christian April 11, 2014 at 4:23 pm

Wendell,
Awesome, awesome episode today! Thanks so much for being so willing to share your knowledge. I was excited to listen to this episode because it focused on creative REI, which is how I want to enter the game.

Question with respects to wholesaling: I am going to buy yellow bandit signs and place them around the town I live in. I am trying to strategize on where I should place the signs. Do you have any recommendations? Places I should avoid, etc.?

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Richard Tuley April 12, 2014 at 1:54 pm

Could you describe the equity structure you had with your investors in the 100 unit apartment complex? Did they own a portion of the LLC that purchased the complex? Or was it debt? Are there minimum guaranteed returns? What returns did the investors require, etc? How do you calculate what their dividend or payout will be each year?What is your exit strategy?

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Wendell de Guzman April 12, 2014 at 8:24 pm

Lawrence,
I ask the ff. questions to prescreen buyers:
1. F – what is your financing? cash, hard money or bank financing
2. A – which areas or parts of town/city you want to buy houses in
3. T – what is your timing? ready to buy now, or wait until you get qualified for financing or wait until you sell your property?
If I like what I hear with the F.A.T. questions, that’s when I ask other questions like:
4. P – what is your price range
5. O – are you the owner of the decision to buy or are you a broker or agent or partner
6. P – tell me more about the Property you’re looking to buy (SFH or MFH, how many bedrooms, how many units, with basement, with garage, brick or not, etc)

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Daniel Sanchez April 13, 2014 at 7:29 pm

The podcast was fantastic, lots of good learnings!

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Wendell April 14, 2014 at 10:58 am

Jared, you can put the signs in high traffic areas – choose 4 intersections and put 4 signs each. Do this every Friday night. You should get calls. Of course, first check if there’s an ordinance in your city against signs.

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Wendell April 14, 2014 at 11:02 am

Richard,

Combination of debt and equity. Exit is keep it long term until no more mortgage (and maybe refi at that time).

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Travis Daggett April 14, 2014 at 11:22 am

Wendell-

Thanks for the great insight from your successes and failures. Also, props for mentioning the Bible as a great business book. Sometimes we forget that the richest man who ever lived (King Solomon) wrote a a great deal about his successes and failures with money.

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Wendell April 14, 2014 at 3:12 pm

You’re very welcome Travis. You got that right with King Solomon. :-)
They say that one who learns from his mistakes is wise.
I say…one who learns from other’s mistakes is wiser.

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Vinet Fils-Aime April 15, 2014 at 12:06 pm

Hi Wendell,
I am curious to know what area in Florida you are investing in.

Thank you.

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Wendell April 15, 2014 at 4:43 pm

Vinet,

Lee county Florida primarily. But we just acquired a property in N Miami and another in the Orlando area…

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Vinet Fils-Aime April 15, 2014 at 6:13 pm

Thank you Wendell.
The Podcast really inspires me to move forward with my investments.

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Sharon Tzib April 19, 2014 at 12:37 pm

Well I finally got to listen to your podcast, Wendell, and you did not disappoint – wow!! I learned a ton.

So, one question. You said you got foreclosed on for that horrible apartment deal, which was a loan you had assumed. Does that affect your credit, or does the original seller just take the property back and your credit isn’t affected? Not sure how that works in an assumable situation.

Thanks so much!

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Wendell April 21, 2014 at 11:04 am

Sharon,

Yes it affected my credit…unfortunately.
Whenever you get a loan, usually it’s “with recourse” – meaning the bank can go after you. However, what I like about my 100+ unit building is the loan that we assumed is “with no recourse”. That means in the worst case, all we have to do is give the key to the bank.

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Vana G May 2, 2014 at 2:47 pm

Wendell, thank you so much for your sharing your experiences. This is definitely one of the best podcasts so far and have learned so much. I especially appreciated your approach to learning from your mistakes. My interest in RE investing developed out my desire to take my existing investments to the next level and unfortunately I didn’t think to buy an investment property before my credit was hit. RE investing wasn’t even on my radar then. However, I am a big proponent of staying positive and not letting things keep you from moving forward towards your goals, no matter how bad.

Thanks again for sharing and looking forward to your next podcast!

Vana G.

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andrewgregory May 21, 2014 at 4:09 pm

Thanks Guys!
These Podcasts are so helpful!
I’ve heard a couple podcast now where y’all asked the guest what kind of primer they used to block smoke stains/odor and they couldn’t recall (Not sure if this one was one of them for sure).
The best primer is a shellac based primer. Zinzeer BIN primer is shallac based and can be found at homdepot. Another primer that can be used is an oil base primer like Zinzeer cover stain or Kilz Original(not the latex kilz 2)!
Just wanted to help. I hope I’m not sounding rude. I’m new to bp and lovin it! I listen to the podcast all day when I’m driving for paint estimates so I just wanted to give something back.

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Vince October 27, 2014 at 3:08 pm

Wendell, I appreciate your honesty and courage to take action. You’re positive message and perseverance is inspiring.
Thanks,
Vince

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