Creative Finance Real Estate Strategy: Scaling Rental Properties Without Traditional Loans

Tyler Vandermolen (00:00)
Instead of putting 25 % down on a property, now maybe you’re coming to closing with $5,000 or $10,000 or even nothing if you found a good enough deal.

take that back to the end lender and you do that refinance process, there’s a chance once again you’re coming to closing with no money. So you could literally purchase real estate with zero of your own investment if that deal pencils out.

Michelle Kesil (02:00)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Tyler Vandermolen who is a real estate investor and focusing with creative financing solutions. So excited to have you here today, Tyler.

Tyler Vandermolen (02:21)
Yeah, thank you. really appreciate the opportunity to speak on this platform and to kind of share some of the things I’ve learned through my experiences, through mentorship, and just everyday being in the business.

Michelle Kesil (02:34)
Perfect, let’s dive in. So first off, for those not familiar with you and your work yet, can you share what your main focus is these days?

Tyler Vandermolen (02:44)
Yeah, currently my main focus is growing my portfolio and the way that I have enjoyed growing this portfolio is through creative finance. Discovering what creative finance is and how to structure deals with non-traditional lending has changed everything about the way that I run my business and even has led to more success.

within the business and I give it all the credit to the ability to be able to scale with the current market conditions, prices, and just the way that the real estate market is today.

Michelle Kesil (03:22)
In which markets do you operate in?

Tyler Vandermolen (03:25)
Currently I operate in Waukesha County, Milwaukee County, and some of the surrounding counties in the area. There is opportunity all over the place, so I think as my career continues to expand, I’ll start looking into opportunities outside of the state and potentially even out of the country.

Michelle Kesil (03:46)
Awesome. And what do you feel have been some of the main keys that have allowed your business to be able to grow and run successfully?

Tyler Vandermolen (03:57)
The major keys that have led my business to grow and run successfully actually stems down to the relationships I’ve created inside of this business. A lot of credit has to go to my mentor, Nick Paoli, who took me under his wings and taught me a lot from the very beginning of how to even get into this business. So a lot of the passion that I have for this business was ignited through his mentorship and guidance and patience with me as an

individual to teach, help me learn and grow as not only a person but an investor.

To further elaborate on that topic, just learned from another close friend of mine, Nathan Hayes, who’s another investor, that relationships are everything. The more interconnected you can get with people that are not only in the same space, contractors, realtors, anybody in your business day to day, the more people that you can create a positive relationship with tends to lead to the higher chance that you’re gonna get opportunities at deals.

you can learn things from people. can take little pieces from each and every person you meet, apply that to your business. So ultimately people are the main reason that I’ve succeeded in this business is just the relationships I’ve made and then just my dedication to the business and the sacrifices I’ve made to grow it.

Michelle Kesil (06:12)
Can you expand more on the creative financing solutions you work with?

Tyler Vandermolen (06:18)
Absolutely. So at the beginning of my journey, all of my purchases started the same way. And I argue that most investors, we all start on the same path. So at the beginning of my career, I would save up my money and I would put 25 % down on a property, which was a lot of cash to close. And then I would renovate the property myself. So I’d be sticking even more money into it. And I would get my rents up. And that’s just what

I did. So with the current market conditions, the prices, the cost of insurance going up…

It becomes incredibly difficult to scale as a new investor because we’re buying at the top of the market. haven’t quite had a modern, a new age modern investor hasn’t quite had our opportunity maybe yet to buy at a severe, severe discount. All I’ve ever seen in my career personally is just incredible appreciation. So where Creative Finance came into play was making once again a relationship and a partnership with

a company that has private money where they are able to fund your deals. They’ve got a metric on how they want you to underwrite them and it’s a partnership. It’s the use of their capital to negotiate with sellers as a cash buyer to be able to negotiate prices down, quick closings and often seven to ten days we can close on a property. There could be a foot of water in the basement as long as that deal pens

out. So that creative finance allows you to buy a property, take that asset very quickly.

at a very below market price and then take that product, aka the asset, the property back to a traditional lender and essentially use the equity as the down payment. So to elaborate off that,

instead of putting 25 % down on a property, now maybe you’re coming to closing with $5,000 or $10,000 or even nothing if you found a good enough deal.

take that back to the end lender and you do that refinance process, there’s a chance once again you’re coming to closing with no money. So you could literally purchase real estate with zero of your own investment if that deal pencils out.

So that process in ⁓ a whole really changes once again the rapid speed that you can scale and how quickly you can acquire assets.

Michelle Kesil (09:01)
Yeah. And what type of assets are you typically going after?

Tyler Vandermolen (09:07)
Typically, we are just looking for any deal that makes sense. So if we’re going to put 25 % down or 20 % down the traditional way on a property, we’re hoping that we’re gonna make at least $200, $250 a door per unit per se. If we are using the creative finance method and you’re once again purchasing an asset with no contribution of your own potentially or a very small

position of your own capital. Now our metrics may change on that. Now we might be willing to purchase a property that might make us $200 or $100 or maybe even $300 a month because our investment, our cash to close was so much smaller.

Michelle Kesil (10:30)
What have been some obstacles or challenges that you’ve had to overcome in your investing journey.

Tyler Vandermolen (10:38)
I would say the obstacles I’ve had to overcome.

would be first of all age. I am a younger investor. I’m 25 years old. So sometimes there’s just a barrier entry ⁓ because other people have like a name. They’ve been around for decades and you’re the new guy on the block and you need people to take you seriously. So I think that was one of my initial hurdles. think as you build your name and people see that you’re credible and you’re closing deals, that problem seems to go away pretty quickly and you can start to really expand your portfolio.

portfolio

and kind of people have a trust in your name when they see it so that was an early on challenge other challenges like I keep repeating it’s just the Difficulty to get these deals to make sense on paper You see a lot of videos out there podcast. I’m an avid consumer of a lot of those ⁓

opportunities out there to listen to what other people say and hear all the time people saying that cash flow is dead or equity doesn’t matter or you need cash flow to grow a business and there’s all these different opinions around those topics. However, there’s values to the different ways that you look at what that building is doing for you, whether it’s equity, cash flow, your tax savings, the depreciation. There’s a million different ways that invest

can build their personal business. So the challenges just lie in finding deals that will align with what your values are and what you’re trying to get out of these properties.

Michelle Kesil (12:16)
And what are you most focused on solving or scaling to next?

Tyler Vandermolen (12:21)
I think the focus here would just be building cash flow because with the process so far, I have acquired a ⁓ number of properties where when you really get good at analyzing those deals and you’re getting smarter and smarter every deal you do, you start to see some deals that you maybe thought.

I should have passed on these. I could do better than this. So there’s ways to self-improve those assets like raising rents, finding better insurance costs is a great way to evaluate that. But I think ultimately… ⁓

The goal is to continue to scale but also to build better cash flow. So one of the things I’m in the middle of evaluating right now is do you want to keep scaling and using other people’s money and leveraging as hard as you can and let the cash flow catch up to you a decade later or do you want to take a step back, pay some assets down, sell some assets that are less desirable and pay down some of your better assets and really boost your cash flow which is going to feed your

business. So those are the things that I’m wrestling with right now just so that the audience knows as you’re in this journey as an investor. It’s ⁓ a constant evolution and growth and process to learn about yourself as a person and as an investor. Those are the things that I’m currently in the middle of trying to figure out really what is the best for my future. So that will change all the time.

Michelle Kesil (13:59)
Yeah, and are there any goals or opportunities that you are looking forward to reaching in this year?

Tyler Vandermolen (14:09)
Yeah, I think my goals started with getting to 50 rental units this year by the end of year.

got off to a really fast start this year. And typically what I do is I go on bursts and I acquire a bunch of assets. You build a momentum. And I started the year and I kind of noticed that a theory that I have is a lot of people, they’re not selling or buying or trading as much in December. They’re enjoying the holidays. But as soon as that calendar turns over, January has become my favorite month of the year to acquire properties. Because what I found out this year is that there were tons of motivated sellers that I was connecting with.

So as I was explaining, you’re riding the highs of the hot streak that you’re on and this January I got off to really fast start. I think I bought probably five to eight units right away and then you have to draw back and you have to stabilize these and you have to get these renovations done and you have to have these refinances all shake out the way that you planned.

Tyler Vandermolen (15:49)
The biggest ambitions for this year, we’re getting to 50 units. Right now I’m currently at 36. But like I said, it’s evolving process. And as you learn and grow as a person, determine what’s important to you. Sometimes you dabble with different strategies and you want to see how does this work with my business? How does this work with my personal life? So I definitely have interest in trying to get an asset paid off. And I had a different mentor.

stress the importance of having one paid off property for about every 20 units. So at that point, or at this point, I’ve already exceeded that theory or strategy that he’s taught me. So I think one of the new important goals for myself this year is to get something paid off and to kind of see how that changes my business. But ultimately, I’d love to get to 50 units. I’d love to continue to self-manage and improve my management style.

in relationship management with my tenants and then also grow my business as far as, you know, sending some of these deals that maybe used to be the right ones for me and are no longer deals that make sense for me to other investors and growing that way where I can connect other people, lead them to the water, help them grow their business while allowing mine to operate at a higher level.

Michelle Kesil (17:09)
And do you currently have a team or system that’s supporting you right now?

Tyler Vandermolen (17:14)
That’s a great question. Right now I have my own systems, meaning I am doing all of my bookkeeping manually through like QuickBooks and Excel. I’m almost to the 40 unit mark where I can start to adopt some of the property management software that’s out there. So that’s an exciting thing I’m really looking forward to. There’s some very robust programs available that’ll help me automate my maintenance and keep better.

record keeping of what’s done on each property and just easier communication and record keeping for each property itself. However, my system’s all, like I said before, really dependent on other people. So I’ve got independent contractors that are doing my work. I manage those relationships very closely. And overall, I’d love to build out my own team that will at one point become full time.

there’s just going to be that tipping point where within my business and cash flow and rental units where that’s actually going to start to make sense. And I think that that number is closer to 80 to 100 doors where you’re going to have the cash flow necessary where you could actually have a full time staff. So as I grow, I see the need to delegate more and more. I’ve tried out some things recently and I’m growing into

using some showing partners to help me show vacancies and fill vacancies with new tenants. And then I’m also kind of dabbling with getting some help as far as one person that can do everything I need on property. So we’re trying to grow and not only nurture the relationships we have, but strengthen what we.

Michelle Kesil (18:55)
Yeah, amazing. And what advice would you give to someone that’s wanting to get started as an investor?

Tyler Vandermolen (19:05)
The advice I’d give to somebody who’s looking to start in the business is just to understand that this business is all about time. You have to put your time into this business to grow and to get to the levels where you could consider even the possibility of retiring off this business. The numbers and the cash flow have gotten very difficult to protect. It’s a long-term game and it really starts with that first deal. I’ve always had this.

saying that it’s brick by brick, it’s one deal at a time, it’s one relationship at a time. So I would stress the importance of getting very hyper connected in your community, finding a mentor, which is the most important part, and then trusting in, if you’re religious, I’m personally a Christian, I trust in God, that’s a big reason I believe in what I’m doing.

And I believe that every single property that I acquire not only will change the trajectory of my family and my financial landscape and future, but it also provides the opportunity for other people. I can manage my tenants the correct way. I can give people respect. I can give them a clean, nice renovated place to live. And I can just care a little bit more than maybe the last person did. So I see it as a huge

beneficial game to everybody. What drew me to the business was just once again the relationships you make while you’re doing it and the way that you can not only impact your life but other people’s lives whether they’re your tenants or somebody that’s trying to learn and grow from what you know.

Michelle Kesil (20:35)
Yeah, amazing. And how do you find the leads?

Tyler Vandermolen (20:39)
Great question, I can’t tell the audience that. For lead generation, it comes from a bunch of different avenues. Typically, like I said, a lot of it has been relationship based, so people are sending me leads. I’ve got several realtors that I reach out to regularly asking them if they’ve seen any distressed properties or talked to any sellers.

that are open to a discount on their property because they know it’s not suitable for the MLS. Those types of relationships are feeding a lot of my business. There’s also other investors that I partner with where, once again, maybe a deal doesn’t work for them, but it fits my buy box. A lot of deals go down that way. And then another avenue is just through reaching out to people very soon.

would like to start investing in more marketing and actually have people calling for me, sending mailers. But mostly everything I’ve built, once again, has been all relationship built from other mentors, from other investors, and sometimes wholesalers that are providing deals.

Michelle Kesil (21:45)
Amazing. Thank you for sharing. Well, before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

Tyler Vandermolen (21:53)
course.

So you can find me on Instagram, the username Tyler P. Vandermolen. You can reach out via Instagram. You can also find me on Facebook with the same username. Those are probably the best ways to reach out, start a conversation with me. I’m always happy to converse with young investors, middle-aged investors, investors of any age to compare what’s working for you, what’s working for me.

I’m always interested in mentoring and helping other people grow their business and just connecting in general with other people that have a passion for this business. So you can reach me on those platforms at any time. And I’m looking forward to the opportunity to learn more about your business and tell you a little bit about.

Michelle Kesil (22:37)
We’ll appreciate your time and your story. Thank you for being here.

Tyler Vandermolen (22:40)
Thank you so much. I really appreciate the invitation.

Michelle Kesil (22:45)
And for those tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Tyler who are building real businesses. We’ll see you on our next episode.