Private Money Lending Strategies That Actually Work (Real Estate Investor Tips)

Erika (01:31)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m joined by someone that I’ve been looking forward to chatting with, Walmsley, who’s been making serious moves in the private lending in real estate space. Christian, I’m glad to have you here.

Christian Wamsley (01:48)
Erica, it’s great to be here. Thank you.

Erika (01:49)
So let’s dive in. First off, for people who may not be familiar with your world Christian, give us the rundown. How did you get started in the private lending in real estate world?

Christian Wamsley (02:00)
What kind of got me started in private lending in the real estate world was there was a good opportunity to buy a piece of property that was looking actually to be what I think my seventh buy and hold and We have a local private lender around here, but he ran out of money so when that happens it led me to the internet and I started searching and then I came across a lender who was actually

giving broker training, right, for not your homeowners, but for investors to find those type of products to help investors fund their projects. And that’s how I got started. that course offered some reimbursements if you were able to close a certain amount of deals in a certain amount of time, which I was successfully able to do, but it came to knowing how an investor thinks.

what they’re looking for and be able to educate them on what they’re getting themselves into. And from there, I just started growing that side of the business as well as my portfolio and it kept going.

Erika (03:11)
That’s awesome. Tell us about headache property relief. What’s your main focus there these days?

Christian Wamsley (03:17)
⁓ Just a quick headache. Proper relief was designed in the beginning to be like a wholesale company. ⁓ It did do some wholesaling back in the day. It did very well. It’s just something that didn’t want to spend a lot of time in because I wanted my first goal was for buying holes and keep keeping that portfolio. Now it’s kind of moved into that private money, hard money type, brokering type stuff.

And it’s also kind of has its subsidiaries companies with one being a property management company another one being like a coaching company and And I’m looking maybe in the future maybe creating a construction company or a realtor type company to go with that so that’s That’s kind of like the 30,000 foot view of what the company’s been doing lately

Erika (04:09)
That’s exciting. And Christian, how do you decide which markets you want to work in? How do you prioritize that?

Christian Wamsley (04:16)
depends on where we’re focusing on. If we’re focusing on where I like to shop for my buy and holds, my local market’s been very well. And it’s over here in Augusta, Georgia, and it’s still a great market. But at the same time as being in the business of lending, you start learning all these other little markets from those investors.

And I’ve had taken advantage of those and able to invest in several other states. So like I have some in Louisiana, Indiana, South Carolina, and also Georgia. And it’s just been a wild ride with all those type of clients and just keeping the growth of headache proper relief.

Erika (05:03)
So speaking of that wild ride, when it comes to private lending, how do you balance the speed of funding with doing your due diligence ⁓ to ensure that these deals are solid for both you and the investors?

Christian Wamsley (05:18)
Well, first step is about the numbers. ⁓ Understanding what we’re getting the property for, what could that property sell for, and how much transactional costs are we going to be losing and the renovations that go with it.

As as there’s a good enough spread, typically an average flipper would like to say 20K is what they want to end up making on a deal. ⁓ If I’m partnering, ⁓ I’m looking at doubling that.

typically I’m partnering, I’m looking for a spread about 40K at the end of the day. ⁓ If those preliminary numbers work out, then it goes into, all right, let’s change some assumptions to facts. Let’s prove this ARV is going to hit it with a scope of work from a contractor, right? Voting those contractors, looking at their scope of works, not saying the cheapest.

The of work is the best scope of work because it also has to be backed by somebody who’s reputable and understand what they’re doing. And everything else is kind of standard, know, yearly taxes, insurance, origination points, you know, and interest rates of those things based on the criteria that me and my partner can bring together.

I have a decent credit score. If they have a decent credit score, great. That helps experience. I could probably carry the weight of that on my shoulders as a partner versus, you know, a partner who may be their second or third deal. ⁓ I know I wouldn’t really join in that partnership if they at least had two deals because they’re going to be project managers, right? I’m just the funding partner and as long as they can demonstrate that they understand and

use those funds appropriately. ⁓ That’s good. So how do I do that? ⁓ One is a credit report. I’m not looking for how bad their credit score is. I’m looking forward to it. Do they make payments on time? Are they reliable, not missing those type of payments? And at the same time, do they file their taxes? Because if we’re getting this partnership,

and the government’s after them because they didn’t file taxes and they’re going to start seizing assets, potentially could be one of our assets that we’re working on. So there’s kind of those things of due diligence of setting that out. As far as the property, have an appraiser who can do that, right? Or if I’m doing internal, that partner take pictures of the property inside and out, like you would for a wholesale deal. So you can understand the scope of what we’re looking for as far as…

fixing that property. Does that help you out, Erica?

Erika (08:52)
Yes, yes it does.

Christian, can you break down what sets your approach apart from traditional bank financing? Do you have any creative deals that you’re able to offer?

Christian Wamsley (09:04)
So what I think stands HBR out from a lot of other lenders out there is that I’m not there just to collect your information and say yes or no. Right? I’m there to understand what you’re trying to achieve with your project and what you’re trying to achieve for only not yourself, but your company as well. So it’s more of, I’m trying to be a team member of your team. I’d be that funding representative.

to whatever I could do to fund your project. If it’s not coming from my own money, it’s coming from somewhere else, right? That I have affiliated or connected with throughout my time to make it make sense for you to move forward with this project.

So that’s the biggest difference that I kind of offer to a lot of my clients is that I’m not here just to take, give me your information and I’ll tell you yes in a couple of days, right? What was the second question, Erica?

Erika (10:31)
I was asking about creative deals.

Christian Wamsley (10:33)
So creative, could do this. Anything is a negotiable in a transaction. If you keep that mindset, you can make everything work out. Could we do transactional lending? Yes. Can we do gap lending? Yes. Can we do seller carrybacks? Yes. Can we do seller financing and have it structured in a way that the seller is pretty much taking the brunt of all that transactional funding upfront? Yes. ⁓ Those things are…

a little bit more, not difficult, but just a little tweaking in time. Because the biggest thing an investor wants is like, how long does it take me to, will take you to close? Well, if done correctly, anywhere from like 20 days, business days. I know everybody’s like, oh, we could fund you tomorrow. A true private lender in that sense that has 200,000 or 500,000, sure, but you got to get past their trust barrier.

meaning that you have to have that relationship on. And a lot of investors do have somebody like that, where they have somebody with an IRA that they can use, somebody who just has stacks of money in their bank account and has developed a relationship to be funded through that way, which is great, right? Kudos to those type of investors. But a lot of investors don’t have…

maybe about $30,000, $40,000, $10,000 in their liquidity to be able to move to do something with, but they want to get into real estate or keep growing into real estate. Structuring those can happen. Even offering 100 % from my company with partner up with one of my lenders where I’m allowed to have that 100 % up to 70 % of the ARV.

That includes everything, not just when you hear a lender say, we’ll call it 100 % of purchase, % of rehab, but you got to come up with closing costs. And I’m talking about the closing costs as well. So if it fits all in that 70 % ARV bracket, good. We’re 100 % in. ⁓ Yes, the partner is going to have some, and that’s a partnership, what we call a joint venture between myself and that person who we’re working with.

Erika (12:44)
That’s great. Now, Christian, you have had a wide gamut of experiences in this industry. Was there a moment, maybe like a deal that went sideways or you had the pivot fast? Do you have a moment you can share like that?

Christian Wamsley (13:00)
Yeah, I got one like happening now. ⁓ So here’s the scenario. ⁓ partner up with a person who didn’t really have the money or the experience, which is big red flags in the business, right? ⁓ But he had persistence, right? He was really persistent in getting it done. Did he have other…

properties in a sense, it was very unsure, right? There was no like actual documentation exchanged on that. But being, it was in close proximity, you know, like a few hours from my location, which also weighed on that as well. So it became a joint venture type deal. My company bought the property, his task for his company was to renovate it and get it rented. And then we would have talked.

you know, split some equity or profits at the refinance of it into a buy and hold. He would keep the property, I would get the cash. Pretty much that’s how the structure of the deal was gonna be. ⁓ Went through, got the funding for everything we needed and went through the whole draw reimbursement process and it was like, ⁓ we used all the funds, great. You know, once it was a duplex.

Once I got rented out, I was like, okay, good. Now we’re looking at the other side. was like, where are we at? Well, we just got some punch line, punch items to punch out. Okay. Then two weeks go by, haven’t heard anything from my partner and I’m in Boston, my other deals and things like that. It was more of things were going great. I don’t need to have that much attention on the project. And come to find out he calls me up one day and goes, Hey, could.

I am having anxiety about this deal, this property. I gotta walk away. ⁓ I can’t. So once you’re told that, I was like, okay, clarify. Are you walking away? Yes. Okay. Then you understand that everything you put in this is no longer yours. He’s like, yes, I understand. So from there is I had to get my

property management company to kind of get on board with the tenant that’s already on one side, get them stabilized and organized, and then figure out what’s going on with the other side of the unit of the duplex. So I had my contract, my new construction team, which was fortunately there are an hour away from this, this property had to go down and my contractor project manager for that.

for that partnership, he looked at it, he’s like.

this looks like a slum property. was like, really? was like, from all the pictures I’ve seen through the reimbursements, it looks like a lot of good work was going on. And he’s like, the things are not done completely to a hundred percent. And he knows how I don’t, I want a property that’s clean, safe, secureable for tenants so they can, you know, live their life without any issues with with the, with the property.

So he goes in there and he looks around and he’s like, the fix this one side is going to cost roughly about another $15,000 to $20,000. And this is money that I’m not expecting to put into the project because the budget that we had was sufficient to get it to a point to rent it out and also refinance it out. I wasn’t planning on keeping this property. So it went from that point and once my

Property management company was looking into it. They found out that the other where the tenants are living is not really in stable condition either. Subfloors weren’t really anchored down. AC unit wasn’t blowing into the unit. So there’s compounding things. So roughly about 25, maybe 30 K left of work to just to fix it to a point where it got stabilized it and then go for that refinance.

Am I mad or angry or upset with the partner? Who wouldn’t be, but at the same time that delays what needs to happen. ⁓ At the end of the day, whatever funds he put into it is now mine in the sense that it’s in the property. So essentially, I’m getting this property for what I got to put into it now. ⁓ Roughly about, I’m projecting about $30,000.

The property worth, once we’re done, is going to be about 230. The loan that’s on this property is 107. So you kind of add those numbers together. I’m still going to make my money back, but I also get a cash flowing property at the same time. that’s, it starts off being a bad news. Once you start planning it out and figuring out how to way to creatively make this work using your network of friends and other investors.

you could more likely come out of it unscathed or just a little bit into the property because the goal is always to burrow it out. You know, make sure you your money go on to the next project. So that’s, that’s kind of how that one worked.

Erika (18:53)
Yeah, yeah, turning a challenging deal into a success story.

Christian Wamsley (18:58)
Yeah, it’s very stressful. Don’t get me wrong. I mean, it’s it’s not like it’s easy peasy. okay. This is do this. No, it’s you have to validate all these things and making sure that you you got the right people in the right places and and things are a lot of this was a lot of fortunate things and that really came to fighting partnership with somebody else. I wouldn’t be able to fix this partnership. ⁓ So it was that was fortunate and I’m grateful for it and

things are moving along that path.

Erika (19:28)
Yeah, that’s great. You were talking about networking. What’s made the biggest difference for you when it comes to building relationships and growing that network? Because as your story has shown, there will come a time when you will really need that network.

Christian Wamsley (19:46)
The in this real estate investing network is really key. We start off trying to be on our own, right? Cause we were, guess I would say if I had to, in my own opinion is we want to be successful, but we don’t want to ask for help. Right. and when we ask for help, it’s usually too late in the sense of trying to preventing.

a tragedy or something devastating to what you’re trying to complete. And I was like that the same way. But over the years, when you share your story and your experiences and what you can do to help others, you’re naturally a group of people. If I’m referencing the millionaire real estate investor by Gary Keller,

He kind of talks about that and having a core group of network team members and out and then a larger ring of other type of network team members. It’s almost in that sense. Yes, I have a core group that I will always go to for certain things. Like I’ll go to my real estate attorney for real estate matters. Even though if you look at it, I probably have like three in my group of…

networks but there’s only one I really will activate if I need to and other ones are kind of bouncing ideas off of. ⁓ Same thing with CPAs and other investors and realtors. Those people all have their aspects and they also have their own aspects of networking groups too so they can it just multiplies if you really put it on the maps like hey I know I know John well John knows Susan and

and Eric and David that does these things. And of course those three know more people as well. So you’re kind of integrated into this web of people without realizing what power you have at your disposal. asking the question, Hey, this is my situation. How can you help? You’d be surprised what information you’ll get back from people saying, Hey, this is probably the person we want to talk to, or I could do this for you. And

and work that out. The biggest thing that came into what I like about doing your own networking and growing and talking to these people, it’s there’s no monetary value to it. It’s just more of helping each other, right? Like as friends, right? We’re all here to grow together. Why not help each other? Right? Because we know that if I help you, it’ll be a time that you’re going to have to, you know, I’m going to need some help and you may be that person to help.

Erika (22:26)
Yeah, that’s great. Like you said earlier, people are the opportunity.

Christian Wamsley (22:32)
Yes, people are

the opportunity.

Erika (22:34)
Well, Christian, before we wrap up, if someone wanted to reach out, connect, maybe collaborate or learn more about headache property relief, what’s the best way for them to reach you?

Christian Wamsley (22:45)
Well, I’m all over the net. HeadacheProperty.com is a website, but it’s going to take you down to a funny funding type thing. But if you just want to build a network and just have a conversation with me, ⁓ Christian at HeadacheProperty.com, send me email. Don’t get offended if I don’t get to you for about a day. It’s just because I put a lot of priority in the clients that I’m actively helping.

and we’re moving forward with solving their problem. So that’s the best way to get over. I do have an assistant who kind of helps me manage that and will definitely put you in front of me to really work out a time that we can chat and kind of figure out how we can help each other. And at the end of the day, always come out of that call as friends.

Erika (23:34)
Christian, thanks for being here and thanks for doing things in the industry the right way.

Christian Wamsley (23:39)
Thank you, Eric. I appreciate it.

Erika (23:41)
And for those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming up with experts who are out there building fantastic real estate lending empires. We’ll see you on the next episode.