Ashley and Antonio Denmark have built their real estate business on using lease purchase to help tenants become homeowners. In today’s episode, they talk about how they got started in real estate and how they decided to pursue lease-purchasing. They discuss the system they have in place to actually help tenants, as well as some of the benefits of using the lease-purchase to gain income.

Key Takeaways:

[2:15] At Denmark properties, they work to help people get out of stressful situations and help people become homeowners. Their main focus is lease-purchasing, and they lease-purchase homes and help tenants who may not qualify for a loan at that point get set up in the system to become homeowners in sixth months to a year.

[3:10] Both Ashley and Antonio are from Florida, but they stayed in Alabama because of the price of real estate in Birmingham compared to Florida. Antonio got started in real estate to be a homeowner and also create passive income. They purchased two properties initially — one to live in and one to rent.

[6:20] While they were in college, they built their credit and saved student loan returns so they were able to afford their first properties. They talk about stuff they did in college to help build and establish credit, to set themselves up for success later on.

[12:45] Ashley speaks to her experience about leaving her job to work on real estate full time while raising a family. Leaving her job ended up being a really good thing, and she is able to watch her kids and take them with her.

[16:10] Their first two properties were in West End — maybe one of the worst parts in Birmingham to buy a house to live in. With the property they were living in, they were fixing it up and paying themselves rent. In the property they bought to rent, Antonio fixed it up enough to get it suitable for tenants. They just owner-financed their rental property, and sold the house they were originally living in.

[19:27] After reading Rich Dad, Poor Dad, Antonio realized real estate would be the right avenue to developing their passive income. When they bought their third property, they knew their ventures in real estate would be something special.

[21:38] Their idea to do lease-purchasing actually came out of one of their flips houses. It was a long journey to actually get that property sold, and they became aware of the money they could potentially lose if they were ever in the same situation. Antonio also didn’t enjoy being a landlord, and with lease-purchase, it is the tenant’s responsibility to fix those things.

[25:43] Process for lease purchase: The first step is to get the house, but sometimes it can be to get the tenant first and find out what they want. They look for properties that are pre-foreclosures and they can be all in at 65%.

[28:30] Their process is to buy the house, fix them up, and instead of putting them on the market for resale, they look for a tenant buyer that they can help to build their credit. The tenant buyer ends up paying off any holding costs.

[31:41] If you find a house first, how do they find a tenant buyer? Ashley does marketing on several fronts looking for people who want to own their own home. They work with their mortgage specialist to narrow down their candidates, they put down their deposit, and then work on a plan to reach their closing date. A team checks up on them every three months to see where their credit is.

[35:07] Their process has been a big contributing factor for their lease-purchasing business, especially strong marketing and expectations that hold the tenant accountable.

[37:37] They found their team through word of mouth. Join your local REIA group! They met their agent and lawyer through their REIA group and met their mortgage specialist through their agent.

[38:53] When you lease-purchase, you essentially become their agent — you monitor them and write up the contract when it’s time. On their lease-purchases, they get the down payment, the monthly cash flow, and the back end.

[40:02] The market really doesn’t dictate whether or not lease-options are feasible, as long as you have the people that can help them qualify. If you’re motivated and you want to own a home, Ashley and Antonio can help.

Mentioned in this Episode:

ALAREIA Website

Meetings 

ALAREIA Workshop

Daily REIA Show

Facebook Page

Denmark Properties

Denmark Properties LLC

Contact by phone: (205) 277-6777 ext. 103

Instagram: @denmarkproperties_flippers

Twitter: @dphomebuyers

Denmark Properties on Facebook 

Denmark Properties on YouTube

In this episode of REIXtras, Brian explains the three types of income and the benefits of each: Earned, Passive, and Portfolio.

At AlaREIA, we believe everyone should take these one at a time. It all starts with Earned income. You must have consistent income before you start buying Passive income. And it's probably wise to have some Passive income before you start thinking about Portfolio income.

Listen to this short episode for a detailed explanation of each.

Hey guys, it's been brought to my attention that certain people are coming to Birmingham selling their products and services. There are so many "gurus" out there that I just want to make sure you guys do your due diligence. There are some good ones and bad ones. And guess what? We all have access to this new invention called G-O-O-G-L-E.

Google search these people. Look for good reviews and bad reviews. Read them all. And check with Bigger Pockets too. We (AlaREIA) will never bring someone to town who has a reputation for ripping people off. I'm not saying don't buy. Just keep these things in mind before you buy.

Love you guys!

Todd Murphy has been investing in the Birmingham area for 11 years. Originally from California, he came to Birmingham because of the market and became a franchisee of HomeVestors of America. He dabbles in several facts of real estate: investment, property management, and rentals to name a few. In today’s interview, Todd shares his experience of getting acquainted with a new market, the benefits of rentals for financial stability, and deciding to become involved with the franchise.

Key Takeaways:

[2:58] Todd has a HomeVestors franchise in Birmingham (HomeVestors of America) and serves as a developing agent for the state of Alabama. The biggest part of his real estate venture is his rentals, but he also does fix and flips, buy and holds, and wholesales to other investors.

[4:27] Todd shares his story of how he got involved in real estate, and how he ended up in Birmingham. He grew up in a real estate household — his dad was a real estate broker. Though he tried to resist the pull, he was eventually drawn to the investment side of real estate. The market in California led him to explore different markets across the U.S. and that’s how he and his family ended up in Birmingham.

[6:45] Todd talks about some of the signs he saw in California that indicated the direction of the market. Brian and Todd discuss the market in Birmingham, and whether there are any correlations today to how it was back in 2006 when Todd left California.

[10:02] One of the major adjustments for Todd in regards to real estate was getting used to the slower pace in Alabama, especially when it came to working with contractors and the timeline for projects.

[11:46] For Todd and his family, having rentals is the true long-term way to guarantee financial freedom. It provides an opportunity for the tenant to basically pay the house off, and provide him with money for retirement and money for his children. When he started, he started small — he took time to learn the market, then started off with one rental.

[14:27] To learn the market, you can get online, but it’s incredibly beneficial to drive out and see the neighborhoods for yourself. Getting out to drive the streets and collect data will give you something to work with when you get back to your computer. Looking at trends and histories will help inform you about a neighborhood or market.

[17:00] Todd and Brian talk about some specific areas that are good for rentals, as well as what Todd looks for in an ideal rental house and pricing for those properties.

[19:04] Todd decided to begin managing his own properties so he would have more control over the properties — not just physically, but also in terms of when the properties went vacant, etc. As the number of his properties grew, he was able to form a team to help with this.

[22:30] Now that they have a team, his wife is fully involved in the property management company, but Todd was able to step back from the day-to-day operations and step in when they need him. Todd and Brian talk about juggling this commitment with the time commitment to family. Having a team allows him to be involved to a certain extent, without letting property management run his life.

[26:10] HomeVestors of America is a franchise that is known as the “we buy ugly houses” people. As a development agent for the franchise, Todd can recruit new franchises and coach/mentor new franchises. The multiple franchises in Birmingham work as a team — collectively they advertise together, and the number of leads each franchise receives is based on how much money they are putting in.

[29:55] HomeVestors is a system, and people buy it for the system. Some of the benefits of going the franchise route are marketing and the significance of brand recognition. Also with the system already in place, it takes the learning curve out for people new to the industry.

[33:07] If you’re interested in becoming a franchisee, the first step is to fill out a request for consideration. They are regulated by the Federal Trade Commission so there is a process to follow, but if you have the passion and drive, it might be a good fit.

Todd is a great resource for anyone in real estate — if you’re at the ALAREIA meetings, take advantage of the resources; they can help you!

Mentioned in this Episode:

ALAREIA Website

Meetings 

Daily REIA Show

Facebook Page

Lifeonaire Conference

Real Estate Resources

HomeVestors of America

For more info on HomeVestors, contact Todd at (205) 408-0111

Or [email protected]

Birmingham-native and longtime real estate investor Jonathan Mednick spoke at AlaREIA on September 14. Here is a snippet of his keynote.

Broadcasting LIVE from AlaREIA, Brian and some guests talk about real estate to gear up for the Sept. 14 monthly meeting in which Jonathan Mednick delivered a top-notch keynote. We will be releasing the keynote soon, so don't worry.

Everyone wants to rush into real estate investing. However, you must first Learn Alabama Real Estate. Without the proper training and education, there are so many mistakes you can make. One easy and cheap way to learn is to ask questions.

In this episode of the DailyREIA, Brian goes to Tuscaloosa and visits one of Cindy Tolbert’s flips. Among many other things, Brian and Cindy talk about the power of asking questions of your contractors in order to better Learn Alabama Real Estate. Instead of just hiring someone and forgetting about it, if you don’t know basic home construction, ask questions of your contractors and skilled laborers. Most of the time they will be glad to explain things. And you get some on-the-job training.

To watch the video version of this podcast, go to AlaREIA.com and click on Blog. There you will find our Video Blog that we call #DailyREIA. To make this episode of REIXtras, we extracted the audio from #DailyREIA Episode 073.

You can also find it on our YouTube channel. Search "AlaREIA."

It is impossible to overstate how important it is to network. It's the single-most important thing in most businesses. Real estate is no different. As they say, your net worth is directly tied to your network. Get out there and talk to people and see how you can mutually benefit each other.

On the show, we’ve covered many different avenues of real estate investing. Today’s guest talks to us about the other side: private lending. Tuscaloosa native Ray Burkhalter shares his two-fold experience as both an investor and a lender. He shares advice for investors on how to find a lender, as well as advice for lenders in how to set criteria to keep your money safe as you help borrowers to be able to complete their projects.

Key Takeaways:

[1:30] Ray is originally from Tuscaloosa, and he received a mechanical engineering degree and followed that path for about a decade. While he was working in the automotive industry, he read the Rich Dad, Poor Dad book and began to evaluate his future with that company. He and his wife started their real estate investment business in 2004 to earn some residual income, and a couple of years later he was able to move to doing real estate full time.

[3:25] While they had several houses in various stages of renovation for fix and flips, when the real estate market crashed they had to turn to renting those properties. Fortunately, they were able to get through this period and sell those properties. After that, he and his wife began to focus on private lending, and have been doing that for about seven years.

[7:10] For someone who needs funding for a deal, it’s important first, to be honest about your experience level. If you’re pretty new to the industry, it might be hard to get someone to do private lending for you, at least at a good percentage. It may be worthwhile to spend some time and money on getting a good real estate education first.

[9:10] If you have the experience, there are regulations around using money. You can’t solicit people, but when people notice your success, they will want to invest in what you’re doing.

[12:30] In the beginning, partnering up with right person is important to be successful. Be aware of your real estate knowledge and be professional about entering into partnerships with people who want to lend you money. It may be good to partner first with someone who can provide some experience. The next step is building relationships to find people who are interested in what you’re doing.

[15:03] To find people who are experienced lenders, you can go to real estate investor clubs and network. If people know what you need, someone will help you find someone who can provide that.

[17:16] To make sure your investment stays safe, make sure you are professional about it. Have a real closing and get title closing insurance, and make sure the person lending you money is covered on the property insurance. Don’t borrow too much!

[22:25] As a lender, make sure you have decided your lending criteria. For Ray, he looks for someone who has had three successful deals in the past. You also have to decide if you’re going to loan 100%. He will sometimes, but he doesn’t give all the money up front, so the borrower still has to have some money up front.

[25:25] Some other criteria to look at and consider are: what price range you want to be in — how low would you want to go, and how high are you willing to go? Ray doesn’t usually go above the median price range of the area. You also have to establish what loan-to-value range you want to be in; 60-70% is a safe range to make sure you don’t get overextended.

[30:41] In all the years he and his wife have been lending, they haven’t had to foreclose on anyone. If you do have to foreclose, make sure you still have a professional closing. Though not ideal, if you do have to go through the foreclosure process, it is one of the best ways for cleaning off everything and giving you back good title to the property to move forward.

[34:57] It’s a good idea to know what it costs per day to hold a property. As a lender, if you have interest payments on your lending, it keeps you in contact with the borrower and hopefully will keep the borrower focused and motivated on their project.

[37:37] Why go with a lender who won’t give 100% and has interest? As an investor, you have to think about where you’re making your money. If you’re an investor with a high volume in your business, a higher lender that can fund multiple deals may be the way to go.

Mentioned in This Episode:

ALAREIA Website

Meetings

Daily REIA Show

Facebook Page

To contact Ray: [email protected]

Life is short, right? So why are most of us consumed with a dead-end job, paying bills, just scraping by? Let's make a concerted effort to enjoy a walk in the park or time with those we love most. Let's stop focusing on the bad stuff. The bad only affects you if you choose to let it.