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Show Summary
In this episode, Dylan Silver interviews Cory Winningham, the president of Homes by Ann David, who shares his extensive experience in the new construction and real estate investment sectors. Cory discusses how he transitioned from being a handyman and real estate investor to building custom homes in Florida. He emphasizes the importance of flexibility in construction, catering to clients’ needs, and addressing the affordable housing crisis through innovative home designs. Cory also highlights the significance of understanding financing options and building relationships with lenders, which he believes are crucial for success in real estate investing.
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Investor Fuel Show Transcript:
Cory Winningham (00:00)
So I said to her, I said, well, I’m glad you want to get rid of that house. Let me just point out something to you. When you sell that house, we’re going to have to pay capital gains. The difference between 48.5 and what we sell it for.that’s not a good deal for you. You’re gonna have to pay the closing cost, which you’re a broker and you’re gonna need somebody to bring a buyer. So that’s gonna probably cost us about 6 % of the total.
And I said, with this new DSCR opportunity that has emerged over the last two years, it’s sort of like the re-birthing of the Fannie Mae program of old. And I don’t think a lot of people understand the advantage of the DSCR opportunity. And I said to her, said, would you rather keep that house now that it’s 100 % rehab?
and take $175,000 in a DSCR loan, which we wouldn’t have to give one penny of that away, put all that in the bank account.
put a tenant in there for $1,600 a month because that’s the average market rate of today. That would make it cashflow by about $150 to $200 a month. And then you could depreciate that out again and you could deduct the interest on the new loan and look at all the tax advantage and guess what? You still own that asset.
Dylan Silver (02:54)
Hey folks, welcome back to the show. Today’s guest, Cory Winningham, is the president of Homes by Ann David. They build custom homes in Florida and the Citrus, Marion, and Levy Counties. He also has a background as an investor and a correspondent lender as well. You can find Homes by Ann David at homesbyanndavid.com. Cory, thank you for taking the time today.Cory Winningham (03:18)
My pleasure, my pleasure.Dylan Silver (03:21)
I really wanna dive in here and talk about ⁓ new construction specifically, because right now throughout the country, I’m seeing this as a trend and also something that’s being done to address really affordable housing. You’ve got over 21 years ⁓ in new construction. How did you get into the new construction space?Cory Winningham (03:43)
Well, I got into new construction when I couldn’t find the deals anymore to buy. That made sense. So ⁓ at the time I didn’t know anything about building, but I had a…friend that had built a couple of houses. So together we started building ⁓ a couple of houses. And back in the day, in the late 90s, I mean, I was happy to make five grand on a deal. ⁓ And then when I got into new construction in 2003, ⁓
The first deal that we did, we did 25 grand and it was effortless to sell a new house compared to an older home. So part of the construction evolution came as a result of having so many rental properties that I found myself as a hundred percent handyman. I would just drive around and constantly repair things and fix things and ⁓
Dylan Silver (04:28)
Hmm.Cory Winningham (04:47)
it just wasn’t fun for me to have to do all that on my own because it took away from my attention from finding deals and buying deals and closing deals and all the other things that come with real estate investing at that particular stage. So the construction company was actually formed to take care of my real estate. ⁓ So I just it just morphed into building and I had to have aa purpose different from the big box builders. So we focused on, I don’t know if you’re familiar with public supermarkets, but they are the premier grocery chain in the state of Florida. And so I worked for them for years.
And so I took everything that I learned from that and I applied it to the real estate development game. And we set ourselves above
the normal bills. We were semi-custom and we were flexible with clients who didn’t get that flexibility with the other builders and still they don’t get that flexibility. ⁓ You know, I customize plans. I don’t care what color you pick. I don’t have to live in the house, but if it makes you happy, I let the customers ⁓ develop the kind of house that they’ve worked all their life to own and retire in. So that’s been a good niche for us.
to address that affordable house development.
Product is not an easy thing. So we have created a fresh start series that is designed to help the first time homebuyer get into a quality house. It’s got a little bit of bells and whistles to it compared to our competitor and of course, a retiree that wants to downsize, it would fit their need as well. So we tailored a few homes to that ⁓ category.
But primarily, we have enough business every day from people that do not want to do business with the big builders because of their inflexibility. So flexible is good.
And it takes a lot to be flexible because you know, you’re a real estate investor. Sometimes it’s challenging with different personalities and people expectations are sometimes hard to figure out, but we do everything we can to meet the expectations. And the word of mouth has just been ⁓ good for us. And that’s why I came today primarily to get some exposure out there. So.
I don’t necessarily ⁓ focus on new construction all the time. And if I do, it’s gut investors that are interested in participating in deals and partnerships and things like that. it’s become a pretty successful thing. We’ve got 45 houses under construction right now, ⁓ ranging from…
the potential of 50 to 100 plus thousand dollars in gross profit out of those deals. So, you you’re a realtor. You know what the net effect of closing costs does to the bottom line. But we’re also real estate brokers. And when I got into real estate in 1998, I bought a Carlton Sheets course. I don’t know if anybody remembers Carlton. I was on a business trip and
one of the managers that I took with me on the trip, we had a room together. It was a pleasure trip. And he snored so bad that I couldn’t sleep. So at 2 AM, I went down to the common area and shot the cue ball around a pool table. And while I was doing that, Carlton Sheets had an infomercial running. And I leaned back on the
pool table and I watched the infomercial and the next thing you know I paid $269 for that course in 1995 and as soon as I received it I flipped open the binder and it said 90 days to your first real estate deal and I want you to know that it took 390 days for me to get up the nerve to buy my first deal.
So I purchased the course in 1995. I bought my first house with my wife who’s my partner in 1998. In 1998 to 2002, her and I together bought 104 houses. We kept 75 of those. And next thing you know, just like I said earlier, I was in the game of going around and being a handyman and fixing things all the time.
Dylan Silver (10:28)
Right.Now, when we talk specifically about ⁓ new construction, right, I’m imagining this was a very interesting time to be in ground up construction because the regulations for lending were not nearly what they are today. So, you know, before the global ⁓ financial crisis, I’m imagining being a builder was
not just something that was good from a price entry standpoint because the costs were lower, of course, and inflation wasn’t as high, but also too, you had a buyer pool that was hungry and they were getting qualified quite easily.
Cory Winningham (11:44)
Yes, I found that for me, my focus was on retirees being in Citrus County. I had landed into a plan unit development developed by the Deltona Corporation who went bankrupt in 1995. And they had nine plan unit developments around the state of Florida, one in Citrus Springs, Florida, where I lined up taking aa delinquent tax deed from a tenant that couldn’t pay the rent. And you know, in the rental business, you take what you can get or you get zero. ⁓ And it opened the door for me to come to Citrus Springs where I found this massive plan unit development with over 35,000 buildable lots. And there were only 22 houses here at the time. So you could buy properties for $1,200.
Today, those properties sell for 25 to 40. And they have been up and down through the years. We’re famous for that notorious sky development episode from 2004 where we still go to Fugitive at Large that sold lots multiple times to different people. So you had four or five people that owned the same lot. But here, now,
in the state of Florida since then, we’ve had a lot of exposure to the area and it’s just made for a tremendous opportunity. But speculation building is very good and custom building is very good. ⁓ One of the things that was challenging was where do you get the money to do it? And I’m sure you’re gonna wanna ask some questions about that.
Dylan Silver (13:33)
Right.Cory Winningham (13:38)
You know, money has always been the key to everything. I mean, that’s a biblical verse found in Ecclesiastes, of course. Money answers all things. The wisest man outside of Christ wrote those words, and I don’t know why we don’t heed them. We also ⁓ understand that knowledge is power, and we don’t know what we don’t know. So educating yourself in all categories of real estate just makes, in my opinion, a better investor. That is…Dylan Silver (14:05)
I want to ask you specifically about the lending portion of it, because I know you’ve got a background as a correspondent lender. And from my lens as both a realtor and then someone who’s worked a lot with investors, people like the idea of becoming a homeowner, of investing, of participating in real estate, but really the lending portion of it is the most important part of every deal. Like as a realtor, I can’t even start until someone’spre approved, right? And then if you’re looking to do a flip, you’re not going to be able to, you know, make any headway at all unless you have some type of funding source, whether that’s hard money or investors or what have you. With your background as a correspondent lender, did you have experience working in one specific segment? Was this fix and flip? this buy and hold? And then also second to that,
Today, when folks are looking at getting into real estate investing, do you think that having either a relationship with a lender or on really understanding just lending in general is key to your success? Or is that something that you can learn along the way?
Cory Winningham (15:59)
So again, when I got into real estate, I didn’t understand the money part of it. ⁓ And I tried to do the no money down deals that we read so much about in my time. I tried to find the motivated sellers. I tried to do what so many are marketing in their materials. ⁓ And you you didn’t find a lot of that.So one of the things that I did is I had to understand how to get money because a conventional way was I had good enough credit that I could put 10 % down, but also needed the closing cost money to do that. So back in my day, if you were buying a $60,000 house, which is unheard of today, but you’re talking about 28 years ago, houses were 60,000.
and rental rates were 600. And today, you know, got $300,000 houses and you’re lucky to get 2200. So the negative effect is different today. And I could talk about how do you make up the deficiencies, but…
it would come from having to do some of the stuff that you generally get into do. You got to buy and flip and build yourself some capital so that you can get an equitable position. Now, I wouldn’t have survived in real estate investing had I not had so many houses. And volume was the key to my success.
I know a lot of people get into real estate and they get one or two houses and the next year, you know, they’re drowning because of repairs or from people that don’t pay the rent or from evictions. mean, it’s not as rosy as so many people try to sell it as. You’ve got to have a strategy for everything.
But in my time, Fannie Mae would give you an uncapped amount of mortgages as long as you qualified for those. ⁓ And we did. My wife ⁓ was the first to go into the lending pool and she was able to get 34 Fannie Mae mortgages before 2002 when they changed it from uncapped to, I think, 10.
And she had passed that benchmark. So I took 10 and my mother, God rest her soul, she came to me. She said, I don’t know how to help you. said, mom, let me borrow your credit.
she trusted me and so she actually let me get 10 loans under her credit. So we were able to get 45 Fannie Mae loans and then of course they readjusted to getting down to five and then when we went through the bad times from 2008 to 2018 you couldn’t harm to get a loan from anywhere unless you had some history, you had a strategy, you had cash flow and you knew people.
Dylan Silver (19:05)
Right.Cory Winningham (19:15)
Now, let me backtrack. Shortly after about six houses, before I discovered the Fannie Mae opportunity, I had to find a hard money lender. And I didn’t know what a hard money lender was, ⁓ but…There was a real estate broker on Saturday that I ran into because I always used to ride and look at houses. It was just something I enjoyed doing. Came up on a HUD foreclosure. There was an old man in the door standing there and he had a suit on and he said, hi, I’m Mr. Magic. Now he called himself Mr. Magic because he lived in Orlando and he loved the Orlando Magic. So he took on the Mr. Magic name, got to know him and he said, tell me what you want to do.
began to tell him that I wanted to buy real estate and he asked me did I have a hard money lender and I said I didn’t even know what a hard money lender was. So he explained it to me, set up an interview and in one of the stores that I supervised.
⁓ I met two guys, I thought I was meeting the mafia to be honest with They come in with black suits on and briefcases and they didn’t say much and they threw a residential loan application down in front of me and they asked me just a couple of questions, told me to fill out loan applications, said we’ll let you know if we want to lend you money.
It took about a week. got a call from a guy named Bill Barksdale, who was one of those individuals. He says, ⁓ me and Harvey will lend you money on your first deal. And it just so happened that I put an ad in the Orlando Sentinel that said we buy houses cash. Now I didn’t have no cash, but I had Bill Barksdale. And a guy called me ⁓ and told me that he had a home for sale. And ⁓
wanted to know if I could come by and look at it and make an offer. And I did. I went by that evening after work. He was patient enough to let me get through my day. And I went out there, and man, I didn’t even have a contract. So I looked like a novice. I really didn’t know what I was doing. But the guy was patient with me. He said, well, let’s come up with a deal, you and me, because I need to move to North Carolina.
I didn’t even have a contract. So I had a paper, brown paper bag, and I ripped out a piece of that bag and I wrote up an offer to buy his property. And then I took that paper to the title company and they closed the deal off of writing it up on a brown paper bag. ⁓ But one of the funny thing was, this was my first deal with Bill Barksdale.
And ⁓ when we got to the closing table, ⁓ Bill showed up. He didn’t usually show up, but he was funding the deal. the gentleman and his wife showed up all packed up in their car. was sort of like a Beverly Hills Billy ⁓ thing. They pulled into the title company, watched them come up to the second floor. sat down and the title agent began to explain the documents. He said, hold on a minute. He said, Cory, where’s the cash?
And you know how title companies work. They’re going to cut him a check or they’re going to do something different. They’re not going to give him cash. And he said, Cory, you said you bought houses for cash. I got to see the cash.
So I looked at Mr. Barksdale and I didn’t know what to say or what to do and he looked back at me and I’ll take care of it. So he stepped out of the room and called somebody, maybe the bank that he banked with and stepped back in he said the cash will be here in 20 minutes. And his name was Robert. Robert sat there and he said we’ll wait.
So he didn’t want to talk about any of the documents at all. And next thing I know, a courier came with a bank bag and in it was, I don’t know, $35,000 or $38,000 in cash.
⁓ And he counted every bit of it right there, zipped up the bag. He says, where do I sign? He signed the deal and he got up. says, you’re a great man to do business with. I appreciate the cash. He left and I looked at Mr. Barksdale and at all the hundreds of deals that he did, he said that was a first for him. So hard money guys ⁓ make things happen when you don’t think they’re gonna happen.
Who would have thought in 1998 that ⁓ a guy would show up with 38,000, I think it was 38,000 in cash in a bag to close a deal at a title company?
Dylan Silver (23:55)
That’sone ⁓ story you’ll never forget, because there’s so much about that deal from writing it down on the paper bags and then going to the closing lender shows up. And it’s almost like threading the needle of what needs to happen to keep a deal from going off the rails. are coming up on time here though, Cory.
Cory Winningham (24:00)
truth.Dylan Silver (24:19)
any new projects that you’re working on as well? How can our audience reach out to you or your team?Cory Winningham (24:26)
So you can reach out to us at our website, obviously. There’s an info box there. You can message me ⁓ there. Our number is on the website as well. I build a lot of assets now. I don’t buy them.Obviously, I get better deals that way. I get better insurance rates that way. I have brand new roofs, brand new water heaters, brand new windows, brand new kitchen, brand new appliances. That makes for a better strategy today. But I’m a 28-year investor now. So you had mentioned tax advantages and things like that. ⁓
I mean, we talk about creating an investor series because I’ve heard so many people talk about so many different things. And I’ll be honest with you, half of it is not true. ⁓ And so I would teach a series on the truth that they don’t tell you about real estate. ⁓ But how do you pack all that in this little? ⁓
podcast, you gotta highlight what you can highlight for the few minutes that we have here. ⁓ I build brand new duplexes is one of my favorite things. I build them for investors and I build them to hold. ⁓ We could talk about doors and how doors work, know, triplexes, fourplexes and get into multifamily five and up.
But you find that you get past ⁓ two units into three in some municipalities. Building municipalities require sprinkler systems and things that make the bills a little bit more costly. So we look at that. We try to maximize what a person has to invest. Some people come in here, they just want to cash out of deals. But again, we try to attract people that understand ⁓ that.
These are hard money assets. They’re not like the start market assets. get, you know, something that’s real, something that’s tangible.
And I’ve got an oil guy out of Texas, man. He just doesn’t worry about it. He just bills money, waits to sell, takes the money and whatever he makes, he ⁓ leaves with me to keep building more houses with. My cousin does 1031 tax exchanges into real estate with me. So we partner that way. And how that works is he sells real estate instead of touching the money as facilitator.
within the window of time, ⁓ which is usually 120 days. So I generally have a house designated for that so that we can meet that 120 day window because if I go one day out of it, then he’s paying taxes on that money. And all I have to do is get it CO’d in order for that to be a viable transaction for him. And then he takes the profit out of that and he keeps it in his 1031
strategy and we just keep building and investing his money. The people that I deal with have different expectations on their returns. Some want money, some want to keep going, some want own assets.
I’ve always been a guy that thinks that if you’re in the real estate game, the best path to being a multimillionaire is owning the real estate, not flipping the real estate. ⁓ A lot of people flip and they talk about how much money they make, but you know, once you turn something liquid, it evaporates.
I just want to acquire and hold. Let me give you an example. Just so that my wife wanted to flip the second house that we bought in 98. So we paid $48,500 for this house. It was a two bedroom, two bath, one car garage. And we’ve depreciated it out. We’ve done all kinds of things to make it a tax.
Dylan Silver (28:19)
Right.Cory Winningham (28:49)
⁓ benefit to us and now after 28 years she wants to sell it so I rehabbed it from top to bottom. That means everything from a new roof to a new kitchen to new bathrooms to new windows to new garage doors to new exterior doors to new screen porch to new gutters to new AC you name it I rehab that entire property for $35,000.So there was no debt on it. And so she’s ready to list it as a real estate broker at 250, 249.9. So over 20, what is that? You can figure the mark up.
So I said to her, I said, well, I’m glad you want to get rid of that house. Let me just point out something to you. When you sell that house, we’re going to have to pay capital gains. The difference between 48.5 and what we sell it for.
that’s not a good deal for you. You’re gonna have to pay the closing cost, which you’re a broker and you’re gonna need somebody to bring a buyer. So that’s gonna probably cost us about 6 % of the total.
And I said, with this new DSCR opportunity that has emerged over the last two years, it’s sort of like the re-birthing of the Fannie Mae program of old. And I don’t think a lot of people understand the advantage of the DSCR opportunity. And I said to her, said, would you rather keep that house now that it’s 100 % rehab?
and take $175,000 in a DSCR loan, which we wouldn’t have to give one penny of that away, put all that in the bank account.
put a tenant in there for $1,600 a month because that’s the average market rate of today. That would make it cashflow by about $150 to $200 a month. And then you could depreciate that out again and you could deduct the interest on the new loan and look at all the tax advantage and guess what? You still own that asset.
So while a tenant buys down that new DSCR loan,
and I’m 65, so I don’t know how much longer I’m going to be in the game. But just think, if I kept that house another 10 years, look at the equitable position that I would gain yet again, and look at what I would lose if I sold it. So the re-laveraging and the repositioning of assets needs to be part of the conversation for really.
detailed investors in my opinion, because we let a lot of our future go away. Now, I can’t begin to talk about landlord tenant challenges.
But with volume, ⁓ a lot of that is easy. ⁓ Without volume, a lot of that is hard, especially if you don’t react in timely manner to people that don’t pay the rent. ⁓ I’ve seen some guys go six months and lose six months worth of revenue because they buy in to the stories from people that are just trying to find a way to get another week out of you.
And I hate to be critical because there are people that need help and we do look at those and we have helped lots of people. But as an investor, I’m just talking about the regular tenant that ⁓ can’t make their
obligation and if you’ve got to react you’ve got to have in your strategy an understanding there in my opinion on how to incentivize tenants to pay so we give them discounts if they pay on time and we do a number of different things to help them stay in the homes. Now obviously the longer that you’re an investor you don’t have to pinch the properties for top dollar which
I still have the very first tenant from the very first house that her and I bought in 1998 and she’s been a section eight tenant since then.
And I can tell you the taxpayers have paid for that house three times. I paid $52,900 for a three-bedroom, two-bath, one-car garage in 1998. And that property is worth $330,000 today. And it’s been paid for every month by Section 8. Now…
I mean, on and on I could go with deal after deal after deal, but those are the first two deals that I bought in 1998. So you can see just what I said, how much opportunity there is to be in the real estate game.
Dylan Silver (33:33)
Yeah.Now we are coming up on time here here Cory we’ve discussed so much today from from the idea of you know getting into new construction to buying and holding versus fixing and flipping but then also, you know working with ⁓ Retail buyers and then working working with investors. Thank you so much for taking the time today Cory to come on our show Thanks for talking to our audience
Cory Winningham (34:00)
Well, thank you so much for having me. I really enjoyed talking to you,
