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Show Summary
In this conversation, Wendy Coles discusses her innovative approach to property acquisition through a 20-year option agreement. She explains how she helped a homeowner in foreclosure by paying off the mortgage and then renting the property back to him. This strategy not only secures her a potential investment at a significantly lower price but also provides a win-win situation for both parties involved.
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Wendy Coles (00:00)
⁓ It wasn’t until later on I was older so I got a late start in life. I was 48 and we had closed ⁓ a sports training facility for about 12 years and we closed in 2018 and at that point I was unsure of what I was going to do. I’d always wanted to get into real estate so I looked at that as an opportunity to dive in. ⁓ I jumped in, I got my real estate license thinking it would give me more knowledge into real estate. It didn’t really. ⁓I
did get a property that I was going to flip as my first property and I bought that property for $111,000, put about $36,000 in rehab and I sold it for $211,000.
Michelle Kesil (02:14)
Hey, everybody. Welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil And today I’m joined by someone I’m looking forward to connecting with, Wendy Coles, who’s been making serious moves as a buy and hold investor as well as a private lender. So excited to have you on the show today, Wendy. Yeah, I think our listeners are really going to take something away from how you’re approaching overcoming obstacles andWendy Coles (02:33)
Thank you.Michelle Kesil (02:43)
going over any misconceptions that people might face when they start their investing journey. So yeah, let’s dive in. First off, for those who are not yet familiar with your world, can you share what your main focus is?Wendy Coles (02:49)
Okay.Okay.
I would say I have two. ⁓ Specifically, buy and hold real estate. I look for properties that need work and do the rehab. I’ll refinance them and then hold them as rentals. And a couple years ago, I shifted over doing more private lending on a little bit smaller scale. So those are my main two focuses.
Michelle Kesil (03:17)
Amazing. How did you get into that?Wendy Coles (03:19)
into real estate in general orMichelle Kesil (03:21)
in short, yeah, intoreal estate in general.
Wendy Coles (03:23)
⁓ It wasn’t until later on I was older so I got a late start in life. I was 48 and we had closed ⁓ a sports training facility for about 12 years and we closed in 2018 and at that point I was unsure of what I was going to do. I’d always wanted to get into real estate so I looked at that as an opportunity to dive in. ⁓ I jumped in, I got my real estate license thinking it would give me more knowledge into real estate. It didn’t really. ⁓I
did get a property that I was going to flip as my first property and I bought that property for $111,000, put about $36,000 in rehab and I sold it for $211,000.
So that was my first experience into flipping. It was nothing like HGTV made it seem, but it was a great experience. went well, but it let me know that what I really needed was the buy and hold to switch over because having worked for myself for so long, there was no
⁓ 401k, no retirement, no pension set up. So the real estate is my retirement.
Michelle Kesil (04:29)
Yeah, I know. I think so many of the guests are like, it’s not like HGTV. So.Wendy Coles (04:36)
No.Michelle Kesil (04:36)
Yeah, so when you switched over to buy and holds, what like about that strategy was the most supportive for you?Wendy Coles (05:33)
Well, like I said, I don’t have a retirement set up. So with the houses building appreciation where I am, which is in Richmond, Virginia, ⁓ most everything that I have is in Richmond or surrounding areas. So everything appreciates pretty well. So I have the cash flow that.is for the immediate and then it’s building an egg in case any maintenance issues come about. The properties support themselves, but then it’s also building the appreciation. So over time, the tenant’s paying down the mortgage, the house is going up in value, so it’s gaining equity. that’s, you know, down the road, I can either, you know, pull from the equity or I can sell the properties or whatever it may be, but it’s, that’s, like I said, that’s my retirement for down the road.
Michelle Kesil (06:17)
That’s amazing. That’s a good strategy. And how did you decide you wanted to do some lending?Wendy Coles (06:25)
Like I said, probably about two years ago, I just…I had a little bit of cash and not a lot, so I wasn’t able to fund full deals like some of these other investors do. But I was doing more like gap lending and then it branched out from there into more than just real estate. So I would fund contractors who were maybe looking for $15,000, $25,000 to finish a project. And it would be short term, 30 days, 90 days, things like that. I would also, I’ve done people who do government contracts. ⁓
upfront the money for the materials that they need to purchase. The government cuts them a check in 90 days. So all of those things kind of branched to me into doing some lending, also wrap lending, where I find investors who have, they may not even be investors, just regular people who have money sitting in like a CD, that it’s only gaining maybe 3.5 % interest. I can turn that money for them in a shorter time, maybe seven months, six months, for a higher interest maybe
10 % interest. So that’s attractive to a lot of people who aren’t necessarily even in real estate and wouldn’t know how to have some money gain that much interest that is secured also by real estate.
Michelle Kesil (07:43)
Yeah,that’s incredible. Awesome. You mentioned when we were chatting a little bit before the show that there’s a lot of misconceptions that people have about real estate investing. What are some of those misconceptions that you commonly see?
Wendy Coles (07:59)
Well, I was under the impression, that’s why I never got into real estate that, ⁓and I needed to have some experience. I needed to know people in it. I needed money. I needed really good credit. ⁓ I didn’t realize that there were ways to get properties without your own credit, without your own money. ⁓ I didn’t know anything about private lending. I didn’t know anything about DSCR loans. I didn’t know anything about buying properties in an LLC to where it doesn’t even pull from your personal credit or on your personal credit.
I didn’t know any of these things were options. So the first couple properties I got were all in a personal name and a same just a conventional loan. So not until I was probably, I don’t know, three or four properties in and I started going to some real estate meetups and being around people who had been in real estate for a long time and I learned so much more that there are so many ways.
to purchase properties without using your own money, without coming out of pocket, having even the rehab funded unwrapped into the whole project. And once you do a cash out refi, or if you’re flipping, sell the property and then you pay back your lender. And it’s definitely a way to get into real estate and get your foot in the door without having to use your own money.
Michelle Kesil (09:18)
Yeah, I think that’s so important. I feel like so many people believe that you need to have a lot of money saved to get into real estate and don’t know how to start. if someone was like in that position, but they want to have like that retirement fund or that passive income, where would you suggest they get started?Wendy Coles (10:12)
Well, I only started with BiggerPockets. I just listened to tons of podcasts on BiggerPockets. That’s all I did. ⁓ And I just, had a real, I wasn’t a real estate agent at the time I got my first property. So I had a real estate agent helping me find properties that needed work as is properties. And then once I got a couple of properties, I found some local meetups, real estate meetups, Rio groups, things like that. And that’s where I really, I met a few select really good seasoned people that were more thanhappy to help and pour into somebody new that’s trying to learn. So I would definitely recommend anybody in their local area find some real estate meetups and go to a bunch of different ones and see which ones really connect for them and which ones have people that are really there to help and to pour back into those just getting started.
Michelle Kesil (11:02)
Yeah, that is good advice. When it comes to creative financing, what are some ways that have been able to like work for yourself or just that you suggest to others?Wendy Coles (11:17)
⁓ I like options agreements. ⁓I did an options deal on someone who was being foreclosed on. It was actually one of my contractors had reached out to me about selling his property and he owed I think about $23,000. He had a VA loan and it was I 3.2%. He only owed about $113,000 on the property and he wasn’t in a position to move. He’s on a fixed income. He has a couple elderly pets that are struggling. His father is not doing well.
goal is in about 18 months, he’ll probably move in with his father. He makes enough money to cover his mortgage, it just, he had gotten behind and had the cash to pay it, but that’s not what he wanted to do with his cash. So he was okay with letting go of the house. So instead of putting it on the market to sell it as is, he might have had to come to the table owing money after commissions and all of that and what he owed in foreclosure. So I bought the property, I bought it on an
We did a 20 year option which gives me the right but not the obligation to purchase the home. So I paid the money to get him out of foreclosure. I paid it directly to the mortgage company. And then I turned around, we did a master lease and I rent back to him for about $100 over what his mortgage is. So we’ll do that for the next year. And then once he moves with his father, then I will turn around and rent the property out for, you know, $1800, $1900. ⁓
I’m the one that is still currently paying the mortgage. He’s paying the rent to me and all of this was recorded with the deed of trust and the option agreement. you know, if any time between now and the next 20 years, I can purchase the property for the current value of that mortgage. So as that mortgage gets paid down every month, you know, towards the end of the mortgage when there’s $2,000 owed, ⁓ I’ll just purchase the property for the remaining balance on the mortgage. So I will be all in for
$26,000, $27,000 on a property that would be worth about $330,000. So it’s a win for me, but it’s also a win for him.
Michelle Kesil (13:26)
Yeah, that’s awesome that you were able to find that solution that helps both sides.What are you most focused on solving or scaling to next in your business?
Wendy Coles (13:36)
I like the private lending. I’ll probably ramp up doing the private lending, do a little bit larger scale, do some more wrap lending on larger deals. It gives me the flexibility to travel and do the things I want. I can do that from anywhere in the world. When I’m here…I feel like I have to oversee any projects I have going on with the contractors, any buy and hold, flip properties, anything like that. So it’s a little bit limiting. ⁓ So I just take on deals that just come my way. I’m not searching or buying leads. I just take on deals that come my way. So I’m not looking to scale that drastically in any set amount of time. Just as they come to me, I’ll take those. But the private lending, I do look like I’m going to start scaling on that.
and look for other people who would like to have larger returns on their money and have it backed and secured by real estate.
Michelle Kesil (14:29)
Awesome. When you say the leads come to you, what does that like look like?Wendy Coles (15:15)
Well, just like the contractor, know, people that know me know that I look for properties that, whether it’s a death, divorce, ⁓ foreclosure, whatever it is, the house that’s just gotten run down, they don’t want or can’t make the repairs, they just want to move to something smaller, whatever it is, ⁓ inherited houses, I just…People that know me know that I look for things like that. So I don’t, like I said, buy leads or anything like that. But just like my contractor reached out to me when he was in a situation, I try to let people know what I do. So if the situation arises, they would know to reach out to me.
Michelle Kesil (15:51)
Awesome.What have been some of the things that have made the biggest difference in allowing your business to grow and to run smoothly?
Wendy Coles (16:00)
⁓ I would say, you know, I’m not huge. I have 28 doors, so it’s manageable for me. I manage my own stuff. And just growing slowly over these five years has given me the ability to…keep a close handle on things to where I didn’t go too fast that I got out of control and things weren’t being taken care of. I like to be able to, you know, if the tenants have an issue, I want to get to it, you know, within 24 hours and make sure it’s addressed. So I would say just handling myself and overseeing it has kept things running smoothly and to where I am controlling my expenses. I know where everything is going. ⁓
At some point, I probably, if I continue to grow the properties, then I probably will look to outsource some of this so that I’m not, because that is a weakness of mine, just trying to feel like I need to handle everything. But it’s manageable right now. I don’t have a lot of vacancies, so it’s not like I am constantly having properties that come up for rent, and I’m constantly having to clean and show and rent out.
Michelle Kesil (17:10)
Yeah, absolutely, makes sense.Every business owner has those moments where things get real, maybe a deal that doesn’t go as planned, or you have to make a fast pivot. Would you mind sharing one of those moments you’ve experienced and how you overcame it?
Wendy Coles (17:27)
So early on I had purchased a property that I was going to flip. It would have been my second flip. And I had a, my financial advisor actually was the one who had offered to…fund the deal and I would cover the rehab. So I used the money from my first flip to handle the rehab. So this would have been a great flip, but in this area in order to flip it and get top dollar, I would have needed to really fix it up ⁓ top dollar, hardy plank, all of that.
When we got into it, there was some things, unforeseen structural things that we weren’t aware of. And I decided, I didn’t have the money to fix it the way I would have needed to fix it to sell it for the price I would have wanted. So we pivoted, pulled back, and I made sure he was okay, the lender, with me not flipping the property. And as long as he got his money back, he didn’t care what happened to the property. So I decided to just fix it.
not quite as nice as I would have and chop it up and do rooms for rent. So that way I cash flowed way more than if I had just sold, rented it out as a single family home for probably, I don’t know, $1,800 at the time. I rented out as rooms for rent. There’s five bedrooms at $700 a month. So that more than doubled my cash flow. And that was, it was a win-win for me. I was able to refi the property, pay off the lender and still have a little bit of cash leftover.
Michelle Kesil (18:54)
Yeah, amazing. That’s important to know how to like make those pivots when you’re in this business for the long game. Yeah.What are some goals you have for where you want your business to go? I know you mentioned you’re wanting to more focus on the private lending, but are there any other aspects that you’d like to step into?
Wendy Coles (19:14)
I might. have a duplex and some multifamily as far as rooms for rent, but I think I would like to scale up possibly and do a small to mid-size apartment building next. So because I see how the rooms for rent ⁓ and the multifamilies are more profitable than the single-family homes. So for me, I think that would be the next transition up would be doing a, you know, 15 unit maybe apartment building.Michelle Kesil (19:42)
Awesome, that’s exciting.What are some other obstacles that you’ve overcome in order to be able to grow and yeah, reach success?
Wendy Coles (19:52)
⁓ Well, my background, didn’t, you know, I didn’t come from, I didn’t go to college. I actually ⁓ was a teen mom and I had gotten my GED because I had dropped out of high school. So I had a pretty rough start with things. So I didn’t have that college degree. I didn’t have business background. ⁓ So overcoming, I think the mindset really was the key ofthat really nothing can hold you back but yourself. And if you want to have a different life, if you want to have a different situation, that’s the good thing about real estate is it really is an even playing field. It doesn’t matter what your education is, it doesn’t matter how much money you have, it doesn’t matter your credit, it doesn’t matter your experience even, it’s something that anybody can get into. So really it’s just taking the mindset of believing that you can do this and figuring it out.
Michelle Kesil (20:48)
Yeah, that’s so inspiring and incredible that you were able to figure it out and make it happen.Wendy Coles (20:54)
Yeah.Michelle Kesil (20:54)
Did you receive any education or mentorship in real estate?Wendy Coles (20:58)
No, nothing like I didn’t pay for any coaching or mentorship programs. It was literally just being around certain people that I found in these meetups that were very seasoned and very giving and ⁓ just poured into me and helped me learn the creative financing. ⁓ But no, I never, I mean, other than getting my real estate license, but like I said, that really hasn’t helped towards the investing at all.Michelle Kesil (21:25)
Absolutely. So it sounds like networking was what made the biggest difference for you.Wendy Coles (21:28)
Definitely.Yes.
Michelle Kesil (21:32)
Yeah, are there any specific networking strategies that you can recommend to people?Wendy Coles (21:37)
And not strategies, no. I would just say to definitely find your local groups and get out to multiple different ones. Because if you’re new, you don’t really know what, you may not know what area of real estate you want to go into. If you want to flip, do want to wholesale, buy and hold, what is it? So figuring out, I think, what you want to do and then finding people who are really good at that that you can shadow and maybe take to lunch and learn from them and just show up, be in the room.Michelle Kesil (22:04)
Yeah, I love that, so important. So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you?Wendy Coles (22:12)
⁓ Facebook, I’m on Facebook under Wendy Lyn L-Y-N. ⁓ That’s probably where I’m the most active. I’m on LinkedIn, but I’m also on Instagram, but Facebook is probably the easiest way. You can send me a message on Messenger on there.Michelle Kesil (22:28)
Well, I really appreciate your time, your story, and your perspective. Thank you for being here.Wendy Coles (22:32)
Sure.Absolutely. Thank you.
Michelle Kesil (22:35)
Of course. And for the listeners tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Wendy who are building real businesses. We’ll see you on the next episode.
