PLP – 124 Private Lending With FlipCo Financial And Kayla Wojcik


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Because of COVID-19, those in the real estate industry had to pivot in a huge way to survive and find ways to thrive with the ongoing deurbanization. Keith Baker explores how people in this sector hone their strategies, particularly in private lending, by sitting with Kayla Wojcik. She explains their work at FlipCo Financial, a team of forward-thinking individuals in the real estate investing sector focused on bringing a better financing product to the Houston market and soon nationally. She dives deep into the type of loans they offer, why they don't charge appraisal fees, what a typical bridge loan looks like, and their most common borrowers. Kayla also shares their strategy when it comes to bread and butter houses, which experienced a huge decrease in February.


Private Lending With FlipCo Financial And Kayla Wojcik

Bringing Better Financing Products To The Houston Market

I'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on private lending and how to keep your money safe, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, pull up a chair and pour yourself a drink because this show is for you. This show is dedicated to giving people like you and I the knowledge and the confidence to participate in the most passive form of real estate investing known to man, private lending. If you're looking for a shortcut to begin private lending, then head over to the to learn how you can put your money to work for you by investing in real estate backed loans right here in the Houston area with my friend, Paul Lamnatos over at Blink Lending. Make sure to join the show's Facebook Group in order to connect with other private lenders and to be part of the ever-growing community.

I'm excited to get to the interview with our guest, Kayla Wojcik, who's the Founder and Director of Sales and Operations at FlipCo Financial, which opened their doors and started lending in November 2020. FlipCo is a team of forward-thinking individuals in the single-family real estate investing sector focused on bringing a better financing product to the Houston market and nationally. What makes FlipCo private lender a little different is they were funded and started with one person's capital who wanted to put it to work or a handful of it. It was a private capital that was put to work just like me. The Angel investor that started it had a lot more money to get started with first and was smart enough to hire Kayla to run the business for him. Let's get down to the brass tacks of the show and listen to the interview with Kayla Wojcik as she discusses her lending criteria.


I'm honored to have Kayla Wojcik from FlipCo Financial. Welcome, Kayla.

Thanks for having me.

Thanks for coming on. You have an interesting story and background that I'm a fan of. You're in Houston area providing flips and money for investments. Let's start back, not the very beginning but how did you get into the real estate space. Tell us a little bit about yourself.

A little towards the background around eighteen years old, I worked for an attorney. He wanted to get into the tax foreclosure market. He would throw down the list on my desk. He would say, "I need you to circle the ones that you like." He didn't give me any direction. "I'm going to need you to go knock on those guys' doors and offer them whatever amount I tell you for those deals." I did. I went out there. I door knocked a few times. I got a lot of door slams and people all around not answering. It was the good old-school way of doing it. It scared the crap out of me.

That's a lot for someone so young who doesn't know much about how that works that's my introduction to that. It lit a fire under me. I wanted to learn more about that. There’s something about when people door slam. You're missing something because other than that, they would have stayed and talked to you for a minute. I did set out to learn more about it. Fast forward, I came to the Houston market a few years ago. The opportunity for real estate flipping was a lot more attractive than where I was at, which was in San Antonio, Texas. It’s not a bad market area, but it's still a little bit slower moving, especially when you're looking at Houston. It's almost like you're looking at something that you want to get at that, whatever that is.

I came to the market as a wholesaler. I connected with a high volume wholesaler to help kickstart myself and give myself all the tools that I needed in order to be successful at that. Within my first two weeks of being there, I made my first acquisitions and sold them. They had told me all throughout, "You're not going to do anything for the next 3 to 4 months. Don't expect to get paid, in other words." I hit the ground running with that. I did well with doing wholesaling. A lot of it came from being an honest person and understanding the investor. I know a lot of wholesalers are taught, “Chase the deal, who cares. Make an offer. Go out and find someone. Someone will buy it.”

That wasn't my mantra. It made those people that had hired me mad. They were like, "We need you to work. Stop asking so many questions, just work." I would go to networking events with my little clipboard, "I'm looking to build my buyers list." Everyone was like, "Get away." I did my hardest to learn the most and get out there. I did well. At one point, I sold sixteen properties in one week. It was quite fun. Part of my success was because I found a better lender. What that means is at the time, my deals were falling through. The lenders were not being completely honest. Towards the closing table, my investors were falling out because there are too many surprises. A lot of weird stuff are going on.

I set out to find a better lender and I did. They were based out of Arizona. I started funneling all my business through to them. It was able to make me scale as well as them scale. They asked to recruit me onto the lending side. I took it. I was like, "I would love to get away from this and start learning more about that." I opened up their Houston office and focused solely on the Texas market. I enjoyed it. I've learned a lot. The way that their company was structured was not as creative for what the demand in our market is. It's ever changing. I see a lot of lenders are beginning to change their terms as well to stay relevant. I hit a wall. I hit a ceiling and the next thing I know, FlipCo was born. That's the background story there before FlipCo became a thing.

I'd love to go back and unpack a few things that you said there. San Antonio and Houston are different markets. San Antonio is a major market, don't get me wrong, but compared to Houston, it's a different industry and different drivers. You said that lenders are changing their terms to stay relevant. What do you see in your field of those changes?

I don't want to speak too confidently, but myself and my entire team set out to research the market. We've done some rigorous research for the past few months. I know that doesn't seem like a long timeline, but it was a good amount of people. We've got a lot of good information. I am seeing a lot of new lenders coming to the market. Some of the data that we've pulled in conversations we've had with the older guys that have been in the market for ten-plus years. Back then, their terms were all day long 14% interest in 3 points. That was the bread and butter right there. That wouldn't fly now in the Houston market. I could not speak on other markets but for the most part in Texas, we're competitive.

[bctt tweet="The market is changing, and people are realizing private money is more interesting than conventional lending." username=""]

There are so many new lenders coming to the market. These prices are being driven down. We got started on this research months ago. You go back to those same guys, everyone's vague about this because everything's a case by case scenario, but they seem to have driven down their vague terms into something a little bit lower. You're looking at not usually anything more than 2 to 3 points, whereas before people were confident with saying there would be four points upfront, plus a bunch of other stuff. The market is changing. People are realizing private money is more interesting than conventional lending.

With interest rates and depending on who you listen to, what side of the aisle is going to be great or we got inflation coming. As a private lender myself, I can't wait for interest rates to rise. It's my money generating that cash so the better. I have noticed with some of the lenders around town that I've spoken to, the money that they're lending out have to come down. Therefore, where they're getting their money, they have to give them less as well. A lot of players are hitting the markets. Every time I talked to an appraiser, it seems like there's a new hard money company coming in from someplace else.

Tell me about FlipCo. You found it in November 2020. Your team's been doing a lot of research. I saw from the photos that there are a couple of guys, but you're predominantly a female-based team. The reason I wanted you on this show is I'm a daughter daddy. I love stories like yours. Mike Tyson said it best, “Everyone has a plan until they get punched in the mouth.” I was going to go to college and that has changed. That's a big pivot in COVID 2020. Tell us about that.

It is a risky time to say, "Let's throw pasta at the wall and see if it sticks with this idea." To be honest with you, I was lending even during COVID. I know for March 2020, we settled down a little bit. Everyone was weary of what was going to happen, but I never stopped lending with the company that I was with. What happened with FlipCo was quite an interesting story. I found an Angel investor that listens to the business model and to me. I had already known and realize that business model was still working throughout COVID situation. Real estate was still going. Investors still needed funds. Private money is something that is becoming more and more attractive to a lot of the bigger type of investor.

I call mine an Angel investor. I got lucky with them. I gave them the business model and showed them the track record. They went for it. They did initially put in their personal funds for it, but quickly we found out that wasn't going to be enough. In the first week, we're projected to clear about a little over $1 million and they were putting in $5 million of their funds. There was no way we would be able to scale. However, I was strategic with this one. They have unlimited amount of funds that they're able to use through their bank contacts. They're a large company. They opened a lot of companies underneath. The way that they structure these companies and these models to be attractive to these banks is something that I hope to get involved within 2021 starting with them. It’s already at the beginning stages because that's a whole other animal.

On my team, we have one guy that's solely dedicated to working with the banks that they already do, projecting our business and what would be our scenarios. In that way, we're attracting more and more funds. We now have $10 million to work with. We got started in November 2020. Banks liked the idea especially when it comes to real estate. It hasn't been that hard for them to convince banks to give us money for this lending on these deals. FlipCo immediately gave me everything I needed from IT to attorney, to marketing people, anything that I needed, anyone I wanted to hire. We took off with it. That's why we've been able to go so quickly. When I initially gave it to them I said, "By the 120th day, we would be ready to start looking at deals." We were already funding within 45 days. That's how quickly everyone jumped on board for this. It's exciting.

There was a little chatter on social media where your profile didn't go away but it went dark. It came back quick with FlipCo. We’re talking prior to this interview the speed at which everything came together. What happens when you get everything you've ever asked for?

It never happens like that for me.

In 120 days and funding within 45 days, which is your average bank time of purchase for your personal residence anyway. To go from idea inception to the mechanics of money flowing, that's quite impressive.

I would've never thought it was going to turn into this. At least we know there's a high interest for this kind of business if someone was ever interested in taking this business model over to someone else who was an Angel investor like myself. There are people out there that want to jump into this.

It's hard assets. Things can happen. No investment is 100% safe. No one's going to short a house and drive up the price like they did with GameStop. Things couldn't get manipulated but that's not going to happen. People say, "How many points do you charge?" They always want to know what are your points, what's your interest rate. It depends on the project. I've lowered my rates for some passion projects for people. I've raised it. I don't want to chase risk but if I'm going to do this, you're going to have to pay me some more. Average foreclosure in Texas is about $1,500. The borrower has to come with that fee. They have to pay for their foreclosure to me upfront. I put it away. God forbid if I have to foreclose, the money's there. I send it over to the attorney and I'm done. You got FlipCo. They didn't land in your lap. There was a lot of hard work that went through it, but it came to fruition a lot quicker.

It's almost like the Angel investor fell into my lap. It was in conversation. That conversation was told to someone else who they knew had been working on this model but didn't have anyone to fill in the blanks. I don't know if you believe in the power of manifestation and hard work but it's a real thing.

[caption id="attachment_3087" align="aligncenter" width="600"] Private Lending: Investors financing should be the first thing, but it is an afterthought for most people.[/caption]

I'm a firm believer that everything we want is on the other side of hard work. Talking about the model, what is the model? What type of loans are you putting out there for investors?

We're focusing on fix-and-flip and bridge loans. It’s mainly fix-and-flip loans. The bank likes to see that. That's how we're building our portfolio, our rapport with the bank. What we're offering is 10% interest and 2.5 points. It's case by case scenario. A lot of guys might be in and out of the loan. We are requiring guaranteed interest rate is what we're calling it. At least 4 months on a 6-month loan. That's usually fair because if guys are still trying to get in and out of it, it still takes about four months anyway. It's not like we're saying we're guaranteeing your entire loan of interest. It was a lot of back and forth.

The team was like, "I think that we're a little too competitive with our pricing." We're the new guys on the block. We're trying to scale. We're trying to go national. No one's going to recognize us or pay attention to us unless we look attractive. That's why I would say our terms are where they are at because we also don't charge any other fees. There's nothing. We're collecting that 2.5 and the 10% interest but mostly fix-and-flip. We're still working slow. We're not quite ready to release the dragon.

The fix-and-flip that you mentioned, you don't charge any fees. No appraisal fees.

We don't. We do in-house underwriting.

Let's get into that.

People get nervous, especially lenders. They’re like, "You do what." Our idea is we're not trying to be the lender for everyone. We do want to work with quality borrowers. We want to work with mostly repeat clients. We're not trying to be your next big hard money lender. Quality borrower means that those people have done more due diligence. It says in the background, "Never trust, always verify.” Our job is to pull that thing apart and look under rocks. We do have an in-house attorney that does a search of title. I know title companies are already supposed to handle that, but we have our guy immediately doing that in case there's something that won't be cleared and we won't find that out until last minute.

We do have a good team that has a lot of experience in our market, appraiser or underwriter. If you're licensed for it or not, it's an opinion and value. For us with our knowledge, that's more than enough for us to feel confident on a deal. If it's something that's a little bit more different or it's out of the box, we would hire a third-party appraisal for that. Other than that, we do our underwriting in-house. The idea is for us to be competitive in our market. That would mean that we need to streamline the process. If we say we can fund within 48 hours, we need to be able to do that if all parties are ready to go. We're trying to look attractive.

Are you funding within 48 hours of acceptance of application?

We can approve a borrower within 24 hours. We want to keep it that way. Part of the ability to keep it that way is we will have to hire on more people as we scale. We have enough. We're not moving quite as quickly as we should be. It gives us the ability to approve someone within 24 hours. We're not doing credit checks. We're doing financial statements. We're doing bank statements. We're doing experience. We're doing conversations with these people. I was having this meeting. A lot of it has to do with a borrower's character.

For example, I'm almost to the end of an option period with one of my flips. I've got to change all of the piping. It's a whole mess. A lot of people can't handle that kind of stress. They won't be able to take that to the finish line. This is the fifth extended option period that I've had on this property, but I don't give up. If you have a good feel for a borrower that gives you that mentality, has the experience, has the funds, has the financial statement, that should be enough at least for now. We do plan on pulling credit in the future though like a soft one.

I don't myself, but I make sure that the borrower knows that I can and will if need be. At the end of the day, I'm worried about more of the asset or I break it down. I want to know the person. To your point, know their character. I want to know the process that they're coming to. Is this flip that his doing his 30th flip? That makes me feel a lot better than somebody with three rental properties going, "I'm going to start flipping." There's a process. At the end of the day, it's the property. If the worst comes to worst, I have to take this thing back and foreclose. Are the numbers there? Is the margin there? Is it going to be worth my while?

[bctt tweet="Lenders are set up to...

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