From Credit Cards to $500K Equity: Real Estate Masterclass

Charlie Einsmann (00:00)
So at one point in time, I had about $350,000 of gold card credit lines that I could get cash advances on, right? Now they all had zero balances. Well, I started looking through the,

foreclosure ads, the substitute trustee ads. I found a good property that I wanted to buy, right? And it was a townhouse in Northern Virginia. And so that the townhouse at the time, and you guys are gonna laugh because the townhouses aren’t worth anywhere like this in Northern Virginia anymore. The townhouse was worth about $200,000. The owner was getting foreclosed on, on $120,000 note, right? So he couldn’t even pay $120,000 note at the time. Well, I literally went and knocked on his door.

Cause I was doing this, was following the pre foreclosure market. I knocked on his door and I started talking to him and I said, Hey, ⁓ Mr. So-and-so I noticed that your house is in foreclosure. It’s going to auction in a couple of weeks. ⁓ can I buy your house? And instead of getting all the nose that I was used to getting, the guy said, yes. And so this is where the pivot part comes in. ⁓ I looked at him and I was absolutely flabbergasted. I was like a deer in headlights. I had no idea what in the heck to do.

And so I looked at him, I said, okay. And it was about three 30 or four o’clock in the afternoon. So I had to quickly pivot because honestly, I had never really done a pre-foreclosure before. I had never brought down my cash advances on these credit cards. And oh, by the way, I was unprepared. I didn’t even have a contract. Okay. So lo and behold, I said to him, I said, nice to meet you. I said, by any chance, what do you do for a living?

Quentin Edmonds (03:07)
Hello everyone. Welcome to the Real Estate Pros podcast. Oh, y’all know I love to say I’m excited to be here. And when I tell you, I am very excited to be here.

I am so excited To introduce you guys to this gentleman I’m I could give his resume and some of the things that his business is doing some of the things that he involved in but I want to give him as much space to talk for himself because He has a lot of things that he’s doing very very well And so I just want to introduce you guys to Mr. Charlie Einsmann. Mr. Charlie, ow are you doing today, sir?

Charlie Einsmann (03:41)
Well, I’m doing great now. mean, it was nice. It’s nice to meet you, Quentin. And I’m really excited to do this podcast. And one thing I’ll guarantee you is we’ll keep it at 20 minutes.

Quentin Edmonds (03:50)
I love it. So listen, listen, I love platitudes. I love bigging people up, but I’m not going to, I’m going to leave all that out and I want to turn it over to you. want you to, I want you to take the time to bring us into your world, right? The things that you do. want you to give us, tell us what your main focus are these days, what you’re operating in and, and what else you want to tell us right now.

Charlie Einsmann (04:14)
Okay, so we are totally involved in the ⁓ real estate investing space. So we’re both on the commercial side and the residential side. And so one of the things that we recently did, if you look behind me, is we wrote a book called the Real Estate Investment Roadmap to Wealth. And basically what that book is, it’s a story of our careers and how we actually had not too many assets and had we built up these assets over period of years.

and that we built up about $100 million in assets, ⁓ especially on the investment side. And so one of the things that we’re focused on is we’re focused on this thing called asset-based lending. ⁓ You guys would know it as hard money lending. That’s what you heard about. And what that means it’s we lend on the hard asset. And so a lot of people ask me, they go, well, ⁓ do you check credit? I say, no. Do you check income? Do you need taxes? Do you need all these things that a normal lender would need? And we don’t do that.

We’re just strictly an asset-based lender. So for example, if you’re a fix and flip investor, so property’s worth 500,000, you buy for 300,000, it needs 50,000 renovation, we’re probably gonna give you a 325 to $350,000 loan on it. And so it’s strictly based on the asset itself. And so we’ve been doing that right now for about 14 years. We fixed and flipped over 400, 450 houses, which is why we’re not scared of the asset.

We don’t want to ever take the asset back because we want you as a fix and flip investor to actually make all the money, right? We’re gonna make a little bit of money, but you as a fix and flip investor, we feel that since you found the deal, we’re gonna reward you with a loan. And then as long as you execute with your contractor at the end of the day, you’re gonna make the most money. And so it’s a very, ⁓ you know, handshake kind of deal, right? I mean, it is.

a formal real estate deal where we put a deed of trust and a promissory note on it, but you’re part of the team. And so we’re pretty proud of that. And so we’ve been doing that for a long time. The other thing that we do, and by the way, we’re in the DC Maryland, Virginia area. The other thing that we do is we’re heavy into this investing category called tax lien certificate investing. So we buy a lot of tax lien certificates from Washington, DC. And so what that means is that if you’re a homeowner,

right? All homeowners have to pay property taxes on their property, either six months or annual, all depend upon where you’re at. Well, sometimes homeowners get behind on their property taxes because they might own the house outright and they got to pay the government the property taxes directly and say to run into some financial hardships. And so what happens is, is once you haven’t paid your property taxes, let’s say for a year, the government or entity in this case, Washington, DC, they will auction off

the amount of money that you owe as a homeowner to an investor. So let’s say you’re behind on your property taxes. You haven’t paid for three years and you owe them $50,000. Well, Washington DC will actually auction off that $50,000 in the form of a tax lien certificate, right? So then what happens is Washington DC will pay you an 18 % return on that tax lien certificate until the property owner has brought their taxes current. If the property owner does not bring their taxes current,

then you have as a tax lien certificate owner, you have legal rights to do what’s called a quiet title lawsuit and get the deed of the property. So as an owner of these tax liens, especially in DC, you’re either going to get an 18 % return or you’re going to redeem the property. And so, you know, it’s a pretty fascinating investment area that we’re in as well. And so we’re in and out of this investment space. pretty heavy. And so that’s kind of what we do.

Quentin Edmonds (08:47)
Absolutely. I was joking with him people. was like miss miss Charlie like Like you got too much free time on your hand. I was joking with him, but you’re here That’s clearly a joke because he got so many angles of way that he’s attacking this and I love I love how you said about the fix and flip you want to make sure that they get the most money out of it, right like and it just it lets me peek into Your integrity your heart you want to serve people help people and I love it. I appreciate it

And I know it’s not always easy in this climate, right, to have that kind of perspective, to be able to make those handshake deals. So Mr. Charlie, guess I’m going to ask you, what keeps the machine running smoothly?

Charlie Einsmann (09:26)
Well, what keeps the machine running smoothly certainly isn’t myself. I have a team of people that work these things on the back end. And one of the things is that I have a few girls that have worked for us for 18 plus years. I have one girl that handles the loan business on the back end. We process all of our loans, all of our investors, they pay us monthly on this thing called the mortgage office. So we’ve got that systematized. have another girl that manages all of our rental properties.

So she manages our residential rentals, she manages our commercial rentals on the back end as a property manager. She also does my foreclosure work, my pre foreclosure work. And so they’ve been working with us for a long time. ⁓ We also have an attorney that’s one of our partners in other businesses. He’s the one that handles the tax lien certificate stuff because there is a lot of legal stuff that goes in with that. And so we’ve got a team of pretty reputable folks that are on the back end that allow.

It allows me to go out there and just find, find, find, find deals, whether it’s a hard money deal, whether it’s a fix and flip deal, whether it’s commercial property that we want to own or residential rental properties. so luckily for me, I’ve got a big team and everything that we do though, is systematized. ⁓ We’re very systems oriented guys. ⁓ believe or not, I’ve got a degree in electronic engineering. My partner’s got an MBA. So we’re a process system oriented guys, even though we’re, you know,

We’re money guys as well. And so that sort of seems to work well and it allows us to expand with very few people. That’s a question. it. love it. But the other thing I have to tell you though is that for the audience, one of the things that Quentin promised me is he promised me that he’s going to come on a scuba diving trip with me. So it’s on the record. Hopefully you’ll keep it.

Quentin Edmonds (11:53)
Hey, hey, Tex, when we get to this part, we’re gonna go ahead and cut that part now. I’ll show you, Mr. Charlie.

Charlie Einsmann (12:02)
Yeah,

you’ll show me, it’s fine.

Quentin Edmonds (12:04)
You never existed. You never said that. He’s very convincing people. He had me thinking about it for sure. And so this is what I love about you. You’re a great storyteller. And so I would love if you don’t mind, of course, you know, there’s moments within business, within these deals when things get real, right? Maybe a deal goes sideways or a time when you had to pivot fast.

Charlie Einsmann (12:13)
Good, good.

Quentin Edmonds (12:31)
Mr. Charlie, you mind sharing one of those songs with our audience at the time maybe when you had to pivot fast?

Charlie Einsmann (12:37)
Yeah, well, it was when I was first, when I first got into the investment space, 19, I’m going to date myself a minute. It’s about 25, 26 years ago. So I was very knowledgeable. I always had a real estate license. I was in the real estate. I just wasn’t in it from the investment side. But what I had is I had, again, you’re going to like the story. I had a really good technology job, right? And so I had good credit, but I didn’t have any, I didn’t have any, I didn’t have much money.

I might have 10,000 to my name, right? And so I was coming out of a divorce. so, but what I did though is over time, since I had great credit and I had a good paying job, I built up all these credit lines of credit cards. So I don’t know if you remember, but back in the day you could get a gold card. Let’s say at the time it was a Chevy chase gold card, a visa, right? And they would give you a 20, $30,000 limit because your income on your credit. But most of that was also a cash advance. Okay.

but they would charge you three to 5 % for the cash advance. But you could, in my case, I could get up to $20,000, $30,000, depending upon which gold card I had. So what I did is I kept track of my liquidity on my credit cards.

So at one point in time, I had about $350,000 of gold card credit lines that I could get cash advances on, right? Now they all had zero balances. Well, I started looking through the,

foreclosure ads, the substitute trustee ads. I found a good property that I wanted to buy, right? And it was a townhouse in Northern Virginia. And so that the townhouse at the time, and you guys are gonna laugh because the townhouses aren’t worth anywhere like this in Northern Virginia anymore. The townhouse was worth about $200,000. The owner was getting foreclosed on, on $120,000 note, right? So he couldn’t even pay $120,000 note at the time. Well, I literally went and knocked on his door.

Cause I was doing this, was following the pre foreclosure market. I knocked on his door and I started talking to him and I said, Hey, ⁓ Mr. So-and-so I noticed that your house is in foreclosure. It’s going to auction in a couple of weeks. ⁓ can I buy your house? And instead of getting all the nose that I was used to getting, the guy said, yes. And so this is where the pivot part comes in. ⁓ I looked at him and I was absolutely flabbergasted. I was like a deer in headlights. I had no idea what in the heck to do.

And so I looked at him, I said, okay. And it was about three 30 or four o’clock in the afternoon. So I had to quickly pivot because honestly, I had never really done a pre-foreclosure before. I had never brought down my cash advances on these credit cards. And oh, by the way, I was unprepared. I didn’t even have a contract. Okay. So lo and behold, I said to him, I said, nice to meet you. I said, by any chance, what do you do for a living?

And so, and so I said to him, said, well, what time will you be home tomorrow? He goes, well, I’m a school teacher. You know, I want to get back to my parents in Indiana, Ohio, a little press. I just don’t like this area. You know, it was April timeframe, you know, the summer lets out in June. plan on meeting, moving to Indiana slash Ohio with my parents then I said, fine, I will be here tomorrow at three 30 with a contract in hand and we’ll come in and we’ll talk about it. So I then had to, you’re going to laugh.

Even though I was a realtor, I didn’t want to use the real estate contracts. I literally went to Staples and got myself a three page real estate contract. Luckily, I had a title company guy that I knew who could do the closing for me. And remember, it’s $120,000 note, but the foreclosure is like in two weeks. So I’ve got to this thing closed in two weeks. So the next day I show up, ⁓ I find out how much he owes. He had been paying on this loan for about five years.

So even though it was $120,000, I think the balance was like 110. But then because he was so late on his payments, the balance was about 120. So then, you you have to make a win-win deal. I wasn’t just going to give him 120 and then take the guy’s house. I said to him, said, sir, I said, in two weeks, I’ll make sure that you get $10,000 in cash in your pocket. We’ll pay off your loan. And so I’m going to buy your house. And so then again, he said, yes. So then again, I’m like, uh-oh.

I’ve committed to buy this guy’s house all cash within two weeks to stop the auction that was in two and a half weeks, but I ain’t got any money. Okay. So now I got to buy this house in two weeks for 130,000. I’ve got maybe $10,000 in the bank. So you know what I did? Because I was so worried and so nervous that my old cash advance idea wouldn’t work. I literally the next day went to the bank and started bringing down $30,000 here, $20,000 here.

So I spent the next week, week and a half making sure that my account was full with 130 grand. So then we went to closing. I owned a house that was, I paid him 130. It’s worth 200, but I had good credit. So about a month later, I got a normal mortgage on that house for 130 because they wouldn’t give me any more than that, even though it was worth 200. It was called a rate and term refinance. And so I got that 130 and I paid back all my credit cards.

So there’s the pivot.

Quentin Edmonds (18:33)
What a fantastic, you talk about a pivot story. That was fantastic. Charlie, you are boring storyteller, man. I’ll tell you, That was fantastic, man. Oh, man. And I see it now. I know, I think you said that was what? 20, 25 years ago.

Charlie Einsmann (18:49)
I still own it. I still own it to my name. Yeah, still on it. As a matter of fact, was my first… And it’s funny because in life, you you make lemonade out of lemons, right? I was coming through a divorce. It wasn’t fun. I didn’t want to rent. I had two young kids at the time. They were six and four. I wanted another permanent house for them so that they could go to. So this property, even though I bought it at a good price…

was my post divorce property that I was only supposed to be there for three or four years, but I up staying there for about 12 years until my kids got out of high school. And luckily for me, what I didn’t tell you is that that house was in my kid’s school zone. It was in their middle school and it was in their high school. So by the time they got to middle school, I just stayed there because it was convenient for them to get on the bus. They could get on whatever house they were going to.

come to my house, come to my ex-wife’s house. So it actually worked really, really well. ⁓ that’s exactly what happened to me. And you go through bad times in life, but sometimes if you just keep positive, kind of like yourself, that’s why I love you so much is you have the best attitude is you just got to keep moving forward and keep positive and know. And if you know things are going to work out for you, guess what? Things work out.

Quentin Edmonds (20:12)
Man, I appreciate that. Great story. The bank was able to put a price tag on a house, but it’s not like that house is priceless, like really. And I can see why you say you still have it.

Charlie Einsmann (20:21)
Well, well, not only that, you know, it’s funny because not only is it priceless, the thing is, and I still own it for a reason, right? So I’m never going to sell that house. So, so guess what I’m going to do now? The house is worth, I don’t know, 500 grand or something, and I might owe 50,000. I don’t even know. So it’ll be paid off here shortly. But for me, guess what I’m going to do? It’s simple. Obviously when I die, I’m still going to own that house. Guess what? My two kids are going to get 50 50 that house. That’s going to be part of their

inheritance because you know that house, ⁓ you know, that was my home as well. You know, that’s what I always tell my tenants is that, you know, we might own the house, but it’s your home. You raise kids here, you know, you have good experiences, bad experience, but even though we own the house, it’s your home. You’ve got memories here. And so I never want to lose light of that. ⁓ and so that’s pretty important.

Quentin Edmonds (20:55)
Yeah.

Yeah.

No, absolutely love it, man. Listen, I want to ask you this because we’re doing well on time, Mr. Charlie, but we we’re deetering because it’s so much I want to ask you, but I’m trying to streamline it in my mind. But let me ask you this. What’s what are you most focused on solving next or scaling next? Like, what’s the next real goal, Mr. Charlie?

Charlie Einsmann (21:33)
Okay, so for us, it’s very simple. ⁓ There’s a space out there in the $120 million lending space that isn’t being satisfied. And the reason is, is because it’s community banks that used to lend into that space, aren’t lending into that space. And the reason why they’re not lending anymore is because they hold on to a lot of Class B, Class C office space debt. So a Class B, Class C office building is basically an office building where workers come, right, to work.

Well, because of COVID, COVID’s changed everybody’s ⁓ habits. Nobody’s going to, no one’s going to work anymore physically. Maybe 50 % of the workforce is going there physically. So they’re all working from home. So what’s happened is all of the tenants in these office buildings, the net operating income of these office buildings has gone way down because of the vacancy rates. Well, because of that, the valuations of these buildings has gone down because of vacancy rates.

And these banks who have these $5 million, $10 million loans where the building is only worth $2.5 million have to recapitalize these loans. Right? So what that’s doing is that there’s nobody lending into the $1 to $20 million space. So our focus right now is building a brokerage model specifically for the $1 to $20 million space because our hard money company, Clear Sky Financial, does not want to give any loans more than $1.5 million because

all the money in Clear Sky Financial, we’re a direct lender. We lend to fix and flip inventors. I don’t like to have $1.5 million more loans. So that’s what we’re focused on now as part of our coaching mentoring program. So we’re focused on the one to $20 million loan space from a brokerage standpoint. And then the other thing we’re focused in on is our coaching mentoring program. Because like I told you earlier, we wrote the book, The Real Estate Roadmap to Wealth. And so we have a coaching and mentoring program.

So we’re really focused on that because our students, we’re up to about 40 students now, our students are all finding deals because our claim to fame in that ⁓ space is how to find distressed assets. Off-market, owned assets, how to deal with the owner and buy the asset directly for the owner. Just like I did in that story on magical drives. Yeah. Yeah.

Quentin Edmonds (23:51)
Listen, I know we’re coming over in 20 minutes. I’m going take the blame on this one because I got to ask you this question, man, because you just mentioned about connecting with people you talked about, even when it comes to the fix and flip to people who you do that with, just making sure they’re taken care of. And so I got to ask you this and get this from your perspective. When it comes to building relationships and growing your network, what’s made the biggest difference for you, Mr. Charlie?

Charlie Einsmann (24:17)
⁓ you’re going to laugh, ⁓ give, give them back teaching, teaching and educating them, giving them, giving them the best advice I can give them. And sometimes that advice is don’t do this deal. And this is why I think you’re going to lose money. I think you’re overpaying for it. I think your renovation budget’s way too low. think it’s going to be much higher. I think you’d be better served moving on to the next deal. And a lot of times people will look at me with a strange eye and I always tell them, I’m like, look,

I’m helping you out. I’m not making any money on this. I don’t care. If you’re not going to make money, I don’t want you doing the deal because we’re always going to make money, but I need you to make money first. So by me educating them and giving them as best advice as I can give them and them realizing that I’m just not out here to try to try and make a quick buck that helps. And so folks that you give them the bad news to, they might get mad at you. They might go somewhere else, but eventually though, they’re going to come back and say, you know what?

I wish I would have listened to you.

Quentin Edmonds (25:20)
Now, I had to get that from your perspective because I’m appreciating your lens. You are giving us a wealth of experience and just perspective. So I had to ask that before we logged off. so listen, before we wrap, if someone wanted to reach out to you, connect with you, collaborate, learn more about what you’re doing, what’s the best way for them to reach out to you? And make sure you plug that book for me too as well.

Charlie Einsmann (25:45)
Okay, all right. The book is called The Real Estate Roadmap to Wealth. I’m on LinkedIn, Instagram, Facebook, at Charlie Einsmann. It’s down there. If you want to call, call anytime 703-887-1039. We’ve got websites all over the place. Probably the best website is www.cskyfinancial.com. And so really, if you just Google me, you’ll find me. Unfortunately or unfortunately, I’m all over the internet.

Including the including the cell phone number.

Quentin Edmonds (26:18)
Got you. Absolutely. Listen, I know we coming up on time. I feel compelled to ask you if you could take two minutes, if there’s any kind of inspirational words you want to give educational word, encouraging word, like anything on your heart that you want to say to the people for your last words. You have anything like that, Mr. Charlie?

Charlie Einsmann (26:37)
Yeah, I do. Um, and I’ll try and keep it under two minutes. First of all, I want to thank you, Quentin, for allowing me to be on this podcast. It means a lot. And so my inspirational words is this. If you ever get to a point in your life where you have created any kind of wealth, whether it’s wealth, you think is substantial or just substantial wealth. And I want to reiterate this and stress it. Please give back, please give back to the community any way you can.

⁓ The way I’ve given back is I run a low income housing charity used to be called Catholic for housing now It’s called creating foundations for hope it’s in the low income housing space for those that are less fortunate It helps put a roof over their head The other thing that I’m doing is clear sky sports angels I give I donate money to various clubs to allow kids to play travel sports that can’t afford it So whether it’s travel soccer travel basketball lacrosse

Anything they can’t afford. even sponsor a BMX bike club to get a low income kids bikes so they can participate. I say if you get wealth, please give back. People are in need.

Quentin Edmonds (27:45)
Well, there he is, y’all. Mr. Charlie Einsmann sir. Thank you, man. This was a privilege. We knew we was going to have fun. We knew this was going be good. And it didn’t disappoint, man. I want to thank you, sir, for your time. I want to thank you for your stories with an S. I want to thank you for your perspective, man. I just want to thank you for just being here today, man, and just raising us with your presence. So thank you so much, Mr. Charlie.

Charlie Einsmann (28:12)
And thank you for your time, Quentin. You’ve been great.

Quentin Edmonds (28:15)
Absolutely. And listen, everyone, y’all know what I’m going to say. You’re watching this. You value it. And so subscribe. If you’re not subscribed, subscribe. I’m telling you, you do not want to miss out on these amazing conversations that we’re having. And so again, thank you, Mr. Charlie, and to everyone watching, we’ll see you one the next time.