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Show Summary
In this episode of the Real Estate Pros podcast, host Erika interviews Lori Wyatt, a dynamic figure in the real estate industry. Lori shares her unique journey into real estate, starting from a college student with a small amount of savings to becoming a successful broker and investor. She discusses the challenges and lessons learned in flipping houses, the importance of having a strong team, and her vision for innovative construction methods to address affordable housing needs. The conversation highlights the significance of networking, education, and collaboration in the real estate business.
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Lori Wyatt (00:00)
The first one is that people don’t have enough reserve capital. ⁓ because, and I learned this the hard way too. I got my first hard money loan and called them. I mean, I was really naive. I was like, Hey, where’s my first draw? And they’re like, well, you have to do the work first and then you get reimbursed. No one, no one told me that. So I was like, ⁓ so I had to go scramble around and find money to like start the construction. So then I got my first draw.Erika (01:59)
Hey everyone, welcome to the Real Estate Pros podcast. I’m your host Erika and today I’m thrilled to be joined by Lori Wyatt. She’s been shaking things up in the real estate world with her company Flipping Foundation. Lori, it’s awesome to have you on the show today.Lori Wyatt (02:16)
Thanks for having me.Erika (02:17)
So I want to jump in right away to your story because it’s very unique. Can you share more about what it was like getting into real estate? What led you to flipping and investing?Lori Wyatt (02:30)
Um, well, I sort of fell into it a little bit accidentally. I was in college, um, studying music, came home on a break and I had a friend who was in construction. His brother was in construction and he wanted to do a flip, but he didn’t have any money. And somehow I had managed to, uh, save a little bit. I actually had sold a car that I wasn’t using and I only had, it was $3,500, believe it or not. Um,And my friends were laughing at me, what kind of house can you buy with $3,500? But it was, we did a seller financing because the house was really, really in bad shape. And so that was my first house. was $3,500 down payment on a land contract. yeah, we flipped it. It took a while because we didn’t really know what we were doing. But we flipped it. I made a little bit of money and paid off some student debt and some of my credit cards. And so that was really cool. And that was my first flip. I was 20.
Erika (03:18)
So was there a moment in your journey that you knew you wanted to keep doing this? Was it your first flip? know, what was it some time after you got your feet wet?Lori Wyatt (03:29)
⁓so after my first slip, didn’t really, ⁓ my friend got busy. We kind of went our separate ways and I didn’t really have a construction partner. So I kind of got out of it, but I really had caught the bug. Like I really wanted to do it again, but I didn’t for several years because I just really did was, I was a little bit nervous to do the construction piece. So when I jumped back into it, initially I did some like,
you know, paint, like easy ones where it wasn’t paint and carpet, that type of thing. So I didn’t really jump back into it until it was like, oh, six, like right before the crash, unfortunately. So did some projects then, of course, the crash happened and then that put the halt on everything. And then really, really dove into it full time in 2015. So, yeah.
Erika (04:16)
Yeah, yeah,wow. And to fast forward that to today, there’s a lot more that you do than ⁓ flipping. Can you share what else you have going on besides a flipping foundation?
Lori Wyatt (05:17)
So ⁓ I’ve been a broker. That’s really how I’ve ⁓ made the majority of my money from when I started. So I have my brokerage real estate growth partners. And that’s kind of morphed into, I’m a managing broker there, that’s kind of morphed into investment centric ⁓ real estate. It’s a brokerage firm, but we focus on investors. So we have that. And then my partner, Derek, is ⁓He has Flipping, FlipSmart Loans and FlippingFoundation.com and FlipSmart Loans, we basically started that because we were just pretty frustrated with some of the experiences that we’d had ⁓ as Flippers with some of the lenders that we worked with. ⁓ So he’s like, you know what, I can do this. ⁓ So he’s really good at it, crunches all the numbers. That’s his piece. And I pretty much look for deals, find deals. And then of course, when they’re done, I sell them.
So we kind of have a nice, we can do A to Z, which is great. ⁓ And then the other thing that we did, because we sometimes run into people that ⁓ want to get into it, really haven’t, they’ve never done anything like this, and they don’t have any idea what they’re doing, and we can kind of tell. ⁓ So we set up a,
It’s something it’s called flipping foundation.com and it’s a series of videos where it kind of someone through A to Z like all the pieces that you need to do a flip if you’ve never done one before and you’re just starting out. ⁓ So we talk about marketing. We talk about the financing. We talk about creative financing. We talk really about ⁓ construction. mean literally everything you can think of or are in those videos because we’ve actually run across people. ⁓
you know, as we’ve been doing this that, you know, watched the show or went to a seminar and decided they were going to flip a house on weekends, you know, and they had a full time job. And one, one person that we ran into, the bank was taking back the house and ⁓ asked us to kind of jump in and partner with this guy. it was kind of eyeopening to me. He was literally trying to do it on the weekends, like a huge gut rehab on the weekends. And that just doesn’t work. And so, ⁓
That was kind of why we decided to put together these videos because I feel like it’s important ⁓ to educate yourself and build a really strong team before you start. It’s critical.
Erika (07:41)
Yeah, absolutely. There’s a lot that goes into these flips and renovations. You know, through that process and your desire to build these videos, were you noticing any themes for like pitfalls or misconceptions that people had who were new to flipping?Lori Wyatt (08:00)
⁓ yes.The first one is that people don’t have enough reserve capital. ⁓ because, and I learned this the hard way too. I got my first hard money loan and called them. I mean, I was really naive. I was like, Hey, where’s my first draw? And they’re like, well, you have to do the work first and then you get reimbursed. No one, no one told me that. So I was like, ⁓ so I had to go scramble around and find money to like start the construction. So then I got my first draw.
My reimbursement didn’t know that. So there’s all those little small things like that that you don’t think about. ⁓ know, permits or no permits. A lot of people try to go without permits. And I’ve learned a hard lesson that way because the contractor that I was working with at the time was cutting corners and ⁓ I was trying to do something without permits. They were like, no, we don’t need permits. No, you need permits because permits keeps everyone honest.
and then you ensure that the work is done. Then when you go to sell it, the buyer is going to feel much more confident that it’s a great house because everything’s permitted and all the inspections have been passed. So that’s another one, ⁓ kind of a misconception that you can get away with doing things without permits. Sure you can, but many times it can come back to bite you as well.
Erika (09:51)
And you know, you’ve done a lot of flips yourself. I think you said it was ⁓ over your career you’ve done 150 homes.Lori Wyatt (10:00)
Yeah, yeah, right around 150.Erika (10:03)
Wow, so between thathaving the brokerage, FlipSmart loans, the education, how do you keep all those plates spinning?
Lori Wyatt (10:11)
So we ⁓ have a team of people. So it’s myself, my partner. We have a full-time admin. And then we have some remote ⁓ people as well. And then I mentioned on this big portfolio, I also had a partner in California. So she was working with us as well. And then I feel like we’ve really built a strong ⁓ team with our insurance guys. Great. mean, he’s awesome. ⁓You know, we’ve got the lending piece figured out now, construction team. I feel like that’s just the most crucial thing. We’ve got a four person construction team, like in-house, that’s like, they’re ours. Like they only work for us. And then if we need more, we can obviously sub out for others as well. But we’ve got that like really solid ⁓ team that’s in-house and works for us full time. So we’ve got some.
I think we’re really blessed to have some great people around us.
Erika (11:08)
Yeah, absolutely. And you want to, you know, be smart about who you allow in your circle, who is a part of your team. How did you find them? Were there any networking groups or connections that really helped with that?Lori Wyatt (11:21)
⁓ yeah, actually I am now actually just been sworn in as president of the Southside Builders Association. So that’s, that’s a professional group that I’ve been with for, ⁓ I think 15 years now, a long time. And I ran into them because I was, I did my first like bigger building, and was struggling a little bit, honestly, with some of the magnitude of, you know, it my first like six flat and it was.It was in really bad shape. was a lot at the time. And a friend of mine said, you should go to the Southside Builders because they’ll help you get through the permitting process, get through the whole. And so I did. And I was literally the only girl there for the longest time. But the guys welcomed me in. They were great. They taught me a lot. They were all veterans. They all knew what they were doing. And I’ve made some great connections there.
⁓ They do their lunches every Wednesday, first Wednesday of every month. ⁓ We have a great place, I think it’s called Phoenix in Chinatown, where we meet. So if anyone wants to join in and come have lunch with us, and they always have great, so now they’re doing, ⁓ like they’ll bring in people from the city or like last month we had CIC, which is a lending partner, come in and talk about their programs. ⁓ So we’re always trying to,
inform people and bring in, ⁓ you know, it’s networking, it’s information, it’s staying current on what’s going on with, you know, landlord, tenant ordinances, all that stuff. So that’s been huge for me. mean, such ⁓ really has enriched me a lot. And I feel grateful to have such a great group of people around me. And now the group has grown, it’s really much more diverse and ⁓ we have all kinds of people.
coming from architects to ⁓ construction guys to supply, everyone comes and it’s fabulous. So, yeah.
Erika (13:17)
Awesome.having a good network is so important too when things go south. Have you ever had a moment like that, Lori, you know, in your journey to real estate and what would you say you learned from
Lori Wyatt (13:32)
wow. Yeah, I had a little, yes, yes, we’ve had, ⁓ I mean, it’s construction. it’s, there’s a lot that can, I mean, that’s the thing. There’s a lot that can go south and you think you’ve learned everything and then you do another deal and you’re like, ⁓ well this is new. ⁓ So yes, I’ve had, I had one situation again, where, you know, someone had,told us that they had passed their final inspections, hadn’t passed their inspections. So I really had to take a moment and like think, like, what do I do? And actually went and met with the city and they kind of jumped in and helped. And that was great. And had a, and I won’t name names, but there was somebody in the building department that really kind of, he was just really like a mentor and
helped me through a very difficult process. And I actually went later back to him and said, hey, who’s your supervisor? And I wrote a really nice letter because, I mean, I don’t know how I would have gotten through it. Because he was just like, well, this is what you need to do. Here’s how you fix it. And so it wasn’t easy, but he walked me through and helped me get through it. A really tough, tricky situation where things were done and I had to rip open walls again.
redo a bunch of work that I thought was done and it was like, oh no. But like I said, the city actually was really helpful and great to work with in that case.
Erika (15:36)
Yeah, yeah, help helping you in in a difficult time. And it’s awesome the the thread to see there that you know, you’re you’re helping people with flipping foundation and with the videos that you know, if they’re going through a rough time, not really feeling prepared that you know, you’re helping them make sure they have their ducks in a row and are really understanding that process.Lori Wyatt (15:57)
Well, I think that’s the big thing is like no one wants to ask for help because you don’t want to like go, well, I don’t want people to know that I don’t know. Right. But the reality is you have to be able to ask for help. Like, because no matter how good you are, things are going to happen. You know, you think you plan for everything, but there’s always like a curve ball that comes at you. And so like, don’t be afraid to raise your hand and go, wow, this really took me by surprise and look in your network and say, who, who’s going to help me get out of this?And that’s one of the things that I really, I’m just not afraid to raise my hand and ask for help.
So.
Erika (16:29)
That’s good. And Lori, when it comes to all that you have going on, what is next on the horizon? What are you most excited about?Lori Wyatt (16:39)
Well, ⁓ my partner and I have always done, ⁓ we’ve always renovated very old homes. I mean, that’s the housing stock on the south side of Chicago. It’s all like pre-1900. ⁓ And you know, those are tricky rehabs. So I think once we’re unraveled from the last of the portfolio that we’re working on now, the next horizon for us will be new construction.But not specifically, we don’t want to do like traditional new construction. We want to do more like modular or we’ve been looking into like the prefab walls where it’s a smoother, easier, quicker process, if you will. So you’re not doing like the traditional construction. ⁓ You know, you’re not doing what I call bricks and sticks traditional construction. You’re doing a modular situation or the panelized wall system where it’s going to go much faster.
Erika (17:32)
Yeah,it’s so is that the reason behind that is to to not have as long of a turnaround time
Lori Wyatt (17:39)
Yes, for sure. Because traditional construction can take, mean, if you really know what you’re doing, a year. ⁓ I mean, that’s how I view it, with permits and everything else, start to finish. And Modular can go much, much faster. ⁓ There’s a company that we’ve been talking to out in California, and they were saying that they can actually put up a house in three weeks. I mean, that’s crazy.Erika (18:03)
And withthe market, you know, it’s good to move fast.
Lori Wyatt (18:08)
Yes. Yeah, because when you’re in a construction loan, you’re paying interest every day that you own it. That’s one thing that I did. And this is, it’s kind of a funny thing, but ⁓ when I was doing projects, I would figure out like my monthly construction payment and I would figure out like what it would cost me each day. And I would put it on a sticky note and I would put it on like the board. So I was always looking at that, like knowing how much this project was costing me by the day, because it gives you like this added sense of urgency.when you know how much money you’re spending each day to own something. So that’s why the panelized or modular construction is exciting because you really cut down on that interest that you’re having to pay ⁓ when you’re doing, and that’s huge.
Erika (18:50)
Yeah, yeah, absolutely.Lori Wyatt (18:51)
Yeah, and it’s a way that you can offer housing in a, know, the idea is to be able to offer ⁓ housing and have it be more affordable. That’s the goal.Erika (19:00)
Yeah, yeah. there, you know, are there any other things that you you are doing with with that trend, with that need for more affordable housing?Lori Wyatt (19:08)
Yeah, I’ve been trying to figure out how to create housing where so there’s a lot of areas where there’s housing, you know, cost $400,000 to build a home, but really the max price that families in that area are able to pay is more like maybe 300,000. So there’s that gap, right? And there are I know there are a lot of like private organizations and not for profits that will work with developers andcreate situations where, say for example, like they give the family a one-time grant so that it like bridges that gap. And that’s kind of what I’ve been trying to figure out is like, how can I be a developer and offer like workforce housing or starter homes basically, and still have it be affordable because it’s so expensive to build now. A lot of times you look at a project and say, wow, this community really needs housing, but you can’t build it and have people.
be able to actually afford to live there because it costs too much to build that house. Does that make sense? So trying to figure out how do you partner, how can I partner with some not-for-profits where you take private money and ⁓ sort of like marry a developer with not-for-profit and you marry them together and you come up with a successful solution.
So I haven’t figured it out yet. I’m looking at people. There are people doing it, but not many people have figured it out. It’s a tricky question. So you can build large apartment projects with HUD and those types of government, but they want 200 units. But how do you build a single family home in an area where the median home price is $260 when it costs $400,000 to build a home?
Erika (20:27)
Lauren.Lori Wyatt (20:52)
That’s the question. That’s the question we’re trying to solve now.Erika (20:55)
Yeah, that’s going to take a real collaboration and innovation to make that happen.Lori Wyatt (21:00)
Yes, for sure. a ⁓ lot of dots to connect, if you will.Erika (21:05)
Yeah. Well,Lori, if someone listening today wants to help maybe connect those dots, you know, they want to learn more about what you’re doing, collaborate, what’s the best way for them to reach you?
Lori Wyatt (21:17)
Well, I’m all over social media, our website is flippingfoundation.com. We also have FlipSmartLoans. ⁓ And then realestategrowthpartners.com. That’s my real estate website. But if you Google Lori Wyatt, I’ll come up. And you can always come to our Southside Builders meeting, too. First Wednesday of every month. And again, you can Google that. And ⁓ you’ll see all the.all the information or if ⁓ you want to get on our mailing list for the luncheons, can shoot me a quick email. I’m on LinkedIn, I’m everywhere.
Erika (21:53)
It’s so great having you on the show, sharing your story, your expertise, and ⁓ all that you’re doing in real estate. It’s really inspiring.Lori Wyatt (22:02)
Thank you so much, Erika, for having me. It’s been really great. I appreciate it. No, it’s fine. I was just saying, I really appreciate it. It’s been really great.Erika (22:04)
four are I didn’t mean to cut you off thereawesome. And for our listeners, if you enjoyed this episode, make sure that you’re subscribed to the Real Estate Pros podcast. We’ve got more conversations coming up with pros like Lori who are out there building fantastic real estate businesses. We’ll see you on the next episode.
