Derek Dombeck – The Generations of Wealth

On the Challenging Relationship Employers Are Forced Into: “Speculation and appreciation doesn’t pay your bills or keep your family fed. It looks beautiful on a spreadsheet ,on a balance sheet, until things go the other way.

Real Estate Investing is a powerful tool for growing your wealth, as well as building a legacy for you and whomever you would like beyond your life.

But some real estate investors just want to invest in real estate, and not deal with tenants, painting, plumbing issues, 3am phone calls and the paperwork that comes with owning property.  Some investors prefer to just invest their money, get a decent return and continue the process of having their money work for them.

Derek sheds light on innovative solutions for storage unit businesses, his own path in the real estate industry, and the importance of understanding local markets and regulations. We’ll explore the nuances of investing in places like Madison and Milwaukee, and uncover why he advises starting with single-family properties and values local real estate investor associations.

With the launch of his Generations of Wealth podcast slated for March 14th, Derek is set to share his comprehensive approach to wealth, which extends far beyond financial gains. You’ll learn about his commitment to helping Wisconsin locals navigate the real estate market without hidden costs or tricks.

We’ll also delve into the significance of effective communication and negotiation in closing deals, both in real estate and beyond, and the challenges posed by the evolving landscape of customer service in an AI-dominated world.

Whether you’re dealing in duplexes or many door count multifamily properties, this conversation boasts invaluable insights, including Derek’s tales of overcoming adversity during the 2007 market crash and how building relationships can form the backbone of any successful business venture.

Listen as Derek explains how to get into the real estate investing game without having to get dirty into the real estate investing game.

Enjoy!

Visit Derek at: https://thegenerationsofwealth.com/

Authentic Business Adventures Podcast

Podcast Overview:

00:00 Passing on real estate wisdom to future generations.
06:25 Speculation doesn’t pay bills, control business.
12:26 Ethical real estate broker helps sellers profit.
18:26 Structuring installment sale, focusing on mutual benefit.
21:57 Suggest talking to professional for personalized tax advice.
29:18 Reluctantly filed bankruptcy, stood by decisions.
33:40 Risky debt led to starting lending company.
37:33 Networking in person is more effective.
46:20 Shows, wealth.com, contact info, investing experience, Wisconsin.
49:31 Embracing diversity, solving problems, and staying humble.
55:14 Start small in real estate; seek local advice.
01:00:47 Authentic Business Adventures introduces successful business owners.

Podcast Transcription:

Derek Dombeck [00:00:00]:
I have to call people. What if they answer? And and I said, okay. Let’s look at it this way. Twist your mindset. If you know you have the skills to help somebody and you choose not to call them, you are by default harming that person.

James [00:00:17]:
You have found Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. Downloadable audio episodes can be found in the podcast link found at draw in customers.com. We are locally underwritten by the Bank of Sun Prairie. Today, we’re welcoming slash preparing to learn from Derek Dombek, the founder of Generations of Wealth Global. And today, we’re chatting real estate, which is, I think, almost everyone knows you can make a couple bucks with. So, Derek, how is it going today?

Derek Dombeck [00:00:50]:
It’s going really well, James. And, you can make a couple bucks. You can also lose a couple bucks if you do it wrong.

James [00:00:56]:
So It’s funny you say that because I just had someone on the show a few weeks ago who lost quite a few dollars. It was just interesting to to get the whole, not every project or house or apartment building is a piggyback that you can just break into and take the cash.

Derek Dombeck [00:01:15]:
That is a fact. In fact, the majority of them are not. We’ve got plenty of, plenty of failures and the t shirts to go along with them. So,

James [00:01:24]:
Nice. You get a t shirt.

Derek Dombeck [00:01:26]:
Oh, yeah. Never wanna wear that one again. Nope. Nope.

James [00:01:30]:
Well, tell us, what is generations of wealth? Let’s start there.

Derek Dombeck [00:01:33]:
Well, so generations of wealth at this point, it it’s a platform, after 20 years in in the real estate industry, you know, investing in real estate here in Central Wisconsin, throughout the state of Wisconsin. We we learned a lot of stuff the hard way, and now we’re passing on our experience, our knowledge, to the next generation and all generations. And so Generation of Wealth is just my platform. I’ve I’ve got a show out there as well. And and, but it’s really our tagline is live your vision, love your life. And what we’ve seen and lived ourselves is entrepreneurs in general are either workaholics or or just bad decision makers when it comes to potentially, you know, thinking about their their their health, their life, their time with their family, everything else. We all wanna go out there and build some monster business without necessarily having any end vision for it. And so we we believe, again after making all the mistakes, we want to have a vision figured out for our personal lives, living our personal lives the way we want, and then build our business to support our personal lives.

Derek Dombeck [00:02:46]:
Instead of what most entrepreneurs do is just work 70, 80 hours a week, 7 days a week with the illusion that someday they’ll get to enjoy the fruits of their labor, but someday doesn’t always come.

James [00:02:59]:
No, just keep spinning that wheel, right?

Derek Dombeck [00:03:01]:
Yeah. And so, you know through our journey we’ve figured out that we can live our lives, we can have our cake and eat it too, but we’ve gotta have a plan written out. It’s gotta be something, and it’s ever changing and should be, which is a written vision. And and that’s that’s the the short version of what generations of wealth is all about.

James [00:03:23]:
Fair. So is the idea that you help investors get into the real estate game broadly speaking so they come in green versus more experienced investors?

Derek Dombeck [00:03:33]:
It it doesn’t really matter when it comes to figuring out a vision. Like, everybody should do that anyways. But for us, we we started in 2003. I’ll just give you the short version. We started in 2003. My wife, Tracy, and I, we were buying cash flowing properties in Wisconsin, but we also got involved with a a couple organizations in Florida. So we were building new houses in Florida, and, everything was going very well. We were using bank financing for everything because we had good jobs, we had good credit, banks were fighting over our business, and we didn’t know any different.

Derek Dombeck [00:04:10]:
And then 2,007 hit, and we had built up about a $4,000,000 portfolio, and it went down to 1,000,000 within 6 months on paper. And ultimately, we we lost pretty much everything. And that was a shift in in our mindset because we were no longer bankable. We couldn’t I couldn’t borrow a nickel from a bank at that point. So

James [00:04:36]:
either that you were you were that far leveraged?

Derek Dombeck [00:04:40]:
We that was the interesting part because of the the times back then, we weren’t over leveraged when we did the deals.

James [00:04:47]:
Okay.

Derek Dombeck [00:04:48]:
But when the markets crashed and the banking industry went under, then absolutely we were over leveraged.

James [00:04:55]:
So is the idea I imagine just from a from a dollars and cents point of view, were these 5 year balloons that were just amortized over 20 or 30 years when their value dropped and you went to refinance? So bad day, or how did that work?

Derek Dombeck [00:05:10]:
There there was a a whole different array. So all of our properties in Wisconsin, which were bought based off of cash flow, were completely fine. It was the new construction projects in Florida. They were built with the idea of breaking even or making a small cash flow. And the idea was that they would appreciate, and they did appreciate, except they also depreciated. And when you buy assets that don’t cash flow, in my humble opinion after living it, you are putting yourself at at risk. Fair. So for us, even to this day, I have passed up literally 100 of deals that I I could have done and probably would have turned out just fine.

Derek Dombeck [00:05:58]:
Especially the last 5 years as the market just climbed and climbed and climbed. But the reality is, I don’t buy unless I can cash flow at this point. I I just I’ve been there, done that. I won’t take the risk, and it’s it’s not worth what we went through.

James [00:06:14]:
That’s fair. Because you’re moving from a speculation game

Derek Dombeck [00:06:18]:
It’s speculation.

James [00:06:19]:
I can clearly see the money coming in, the money going out kind of thing, and it’s much less speculation.

Derek Dombeck [00:06:25]:
And speculation and appreciation doesn’t pay your bills or keep your family fed. It looks beautiful on a on a spreadsheet on a balance sheet until things go the other way. Right. And and the other thing that we learned is, and I’m not anti bank by any means, but by using banks, especially if they have call provisions or, you know, 3, 5, 7 year balloons, you are not in control of your business. And so many people that bought apartment complexes as one asset class, that bought at really low cap rates, there’s they’re in trouble right now. And many of those people also went and raised private money in a syndication to get the 20 or 30 percent upfront that they needed and then had the bank finance the, you know, the the lion’s share of the deal. Well, the people they raise money from are in a heap of trouble right now as well on a lot of those deals. So I I just like I said, to me, it’s not all about money.

Derek Dombeck [00:07:24]:
It’s about keeping what we work for and, and being safe.

James [00:07:29]:
So tell me so they’re they’re losing money or they’re having a bad day? Tell me help me understand that.

Derek Dombeck [00:07:36]:
Okay. Well, let’s just say that somebody bought a $1,000,000 apartment complex, and the bank is gonna fund 700,000 of it, and they’re gonna raise 300,000 of it from a syndication. Now that’s likely on a 5 maybe a 5 year transaction with the bank. Now the bank says, okay. Your loan is due. We’re gonna rewrite it, but interest rates are 2 or 3 or 4 percent higher than what it was when you bought.

James [00:07:59]:
Oh, gotcha. Okay.

Derek Dombeck [00:08:00]:
So the valuation the valuation isn’t there. So the bank’s gonna say the only way we’ll rewrite it is you have to bring cash to the table. Well, if they don’t have the cash, right, they get wiped out. They they’ll get foreclosed and thereby that syndication of investors will get foreclosed as well. So now that that property owner has to go back to their syndication and say, okay. We’re having a cash call. We have to raise another 100, $200,000 or we’re gonna lose this all. And they can’t sell the property because based on today’s cap rates and today’s interest rates, it won’t sell for as much as they leveraged it.

Derek Dombeck [00:08:37]:
They are overleveraged.

James [00:08:39]:
Got it. Okay. Interesting. I just I wanted clarity on that because I see apartment buildings going up left and right everywhere I go. Your your neck of the woods in Mhmm. I guess where did you say you’re out of Wausau?

Derek Dombeck [00:08:53]:
Near I’m near Wausau.

James [00:08:54]:
Okay. And I’m just outside of Madison, Wisconsin. Apartments are popping up, like, I don’t know, dandelion seeds. Are just everywhere.

Derek Dombeck [00:09:04]:
Well and you’re talking about you’re talking about new construction apartments. Right? Yeah. And, you know, a lot of those people are and and I don’t know that business. I’m not I don’t buy and sell apartments as much as I do residential single family and small multis. But a lot of those people are either trying to keep their crews working or it takes a long time to put together some of these transactions. They they may have bought that piece of land a year or 2 years ago, and they had all these commitments. So they’re hoping and praying, which is 2 very bad things that you should do as an investor is hope and pray. Mhmm.

Derek Dombeck [00:09:41]:
They’re they’re hoping and praying that interest rates come down or rents will increase, but rents have stabilized now. And in some cases, they’re starting to decline just a little bit, not a lot. But, I mean, there there is still pockets where there is definitely demand. I mean, Madison is one example. Madison, Wisconsin, there’s still high demand and until it touches up. But as a region across the state or the Midwest, and nationwide, a lot of these apartments are are underwater.

James [00:10:15]:
Interesting. So tell me repeat for me again the property types that you invest in. I remember you mentioned single family and then small multifamily?

Derek Dombeck [00:10:23]:
Yeah. So, traditionally, I’ve been involved in mostly single family, but I I do dabble a little bit in, I’ve I’ve got a couple quarries. We’ve got a 12 unit building that we lease out the per bedroom. So it’s more like a boarding house. I get involved in joint ventures with other people. So sometimes I’m helping negotiate storage unit purchases, contracting businesses, RV parks, and resorts is something an asset class I’m interested in. So it it just, it never you never know what’s gonna happen when the phone rings, James.

James [00:11:02]:
That’s fair. That’s totally fair. Tell me, let’s just take those 1 by 1 here. Let’s start with single family. Is this something that you’re buying and flipping, buying, fix and flip or buy and rent?

Derek Dombeck [00:11:13]:
Yes. Yes. And yes.

James [00:11:14]:
It’s very,

Derek Dombeck [00:11:16]:
it’s very case by case. So primarily, if I’m going to buy something with cash, then I’m going to usually fix it and resell it. If I’m buying something where, either the seller is financing it with me or I’m bringing in private capital and doing a longer term hold, I like to hold those not as straight rentals. I like to lease them and give the tenant an option to purchase them. Oh. And so that I like that model. And and sometimes I and I just did a transaction here recently where the seller, is taking payments from me, and then I turn around and I resold to, people I know, and I’m taking payments from them. I’m kind of doing a wrap around scenario, and, that I make a spread on the on the interest.

Derek Dombeck [00:12:07]:
So

James [00:12:07]:
Nice.

Derek Dombeck [00:12:08]:
So it just does depend.

James [00:12:10]:
So is that set up with that specific transaction? Is that land contract with the seller?

Derek Dombeck [00:12:16]:
No. I typically want a promissory note and a mortgage that I pledged to the seller, and then I I get the same thing on the back end.

James [00:12:26]:
Gotcha.

Derek Dombeck [00:12:26]:
But I disclose everything to the sellers. It it’s completely all above board as far as they need to know, and I’m I’m very passionate about, first of all, negotiating the right way, not taking advantage of people’s bad situations, and and working to solve their problem, their their real estate problem. I can’t solve all their problems, but I can help solve their real estate problems. So the the story goes, I I bought these 3 properties from a guy named Tony, and Tony has not made a dime in the 7 years he’s owned these properties. The properties were located in 3 different cities, 2 in Wisconsin, 1 in upper Michigan, but he had a management company that was just raking him over to Kohl’s. So literally in the 7 years he’s owned them, he’s either been spending money to fix them or they’re having bad tenants and, you know, loss of rents. So he’s never cash flowed. And but he was very stuck on his purchase price or sales price, I should say.

Derek Dombeck [00:13:27]:
So I I make offers in multiple different ways, and if I’m going to buy something for cash, that’s a lower offer. If I’m going to be able to make payments over time, I can increase my offer. In this particular case, Tony didn’t want the chunks of money. He just wanted to stop the bleeding and he wanted to stop the stress. So we structured a deal where, I’m making payments to him over the next 10 years and we all 3 of the properties needed work. So I gave him full as is value for his properties, but I didn’t wanna keep him, and I told him that. So I just, you know, called friends of mine that I know in each of those areas that want to hold long term rentals. They have the time and energy to go in and fix these up, and, and they’re gonna, you know, cash flow them long term.

Derek Dombeck [00:14:19]:
So we make a spread between what I’m paying Tony and what my people are are paying me on a monthly basis and, just carrying the paper as they say.

James [00:14:30]:
Nice. Alright. Well, that doesn’t sound terrible. Tony’s happy. Your people are happy. You’re happy. Yeah. Everybody’s happy.

Derek Dombeck [00:14:38]:
And and the best part about that, James, is what I’m really doing with Tony, and and he’s well aware because we’ve had this conversation. He’s actually done a testimonial video for me stating this. But once he’s paid off, then I raise private capital from people all the time. And and right now, Tony’s getting 0% interest. That’s our agreement. He’s taking 0%. However, once I pay him in full, he wants to keep his money still working. Now he becomes a private investor of mine, and I pay my private investors anywhere from 6 to 10% depending on the deal.

Derek Dombeck [00:15:10]:
Alright. So he’s very happy, but he gets to know me first. Right? We build the relationship. He knows I do what I say I’m gonna do, and and then over time, he becomes an investor. And and that’s that’s beneficial for both of us.

James [00:15:26]:
Sure.

Derek Dombeck [00:15:26]:
And he’s secured by the property with a promissory note mortgage while it’s being improved in value. So his security actually gets better every day as the property gets fixed up and renovated.

James [00:15:41]:
Got it. Very cool. So during all this, who is technically the owner as this keeps going? Is it you or is it the other people on your side?

Derek Dombeck [00:15:52]:
Well, if we got really deep into this, I I bought the property in a title in a trust, and the trust is still the owner. I sold the trust to my end buyer. So my end buyer is in control, but everything is secured using mortgages. So if they don’t if if they don’t pay me, I’m still gonna pay Tony. I’m gonna go after them.

James [00:16:17]:
Got it.

Derek Dombeck [00:16:18]:
Right?

James [00:16:18]:
Okay.

Derek Dombeck [00:16:18]:
But, ultimately, they are the owners of that trust that owns the property. Alright.

James [00:16:23]:
So just keeping track of all of the shells. Right?

Derek Dombeck [00:16:25]:
There’s it’s a little bit of a shell game. It sounds way more than it is. I mean, it’s it’s it’s yeah. You gotta have a decent bookkeeper.

James [00:16:33]:
Yeah. I happen to

Derek Dombeck [00:16:35]:
live with mine, so, it it’s a little beneficial.

James [00:16:38]:
Oh, there you go.

Derek Dombeck [00:16:39]:
And I’m married to her. So

James [00:16:41]:
Tell me about small multifamily.

Derek Dombeck [00:16:45]:
The small multis are are really when you’re talking, you know, duplex, triplex, 4plex type of stuff. You know, we’ve had that off and on for years. It’s not my favorite asset class because most of those are are a little older, especially the the up and down duplexes. You’re dealing with a lot of noise complaints and smells and all these different things. So that was really early on in my career. Now I I do have several that are I like. I have a a side by side that I picked up this last year, and that was another kind of a interesting transaction where the the seller was an 83 year old woman. She lost her husband, so she’s widowed.

Derek Dombeck [00:17:29]:
Then her son was helping her with maintenance, then she lost her son.

James [00:17:33]:
Oh.

Derek Dombeck [00:17:34]:
And, you know, the properties just went into disrepair. But, again, she didn’t want the chunk of money. She wants the the monthly revenue, the the cash flow. And so I and I know for a fact because these guys approached me afterwards, 2 other local, house flipper landlords offered her more money than I offered her in the previous 6 months prior to me even meeting her and she turned them down. And and here’s the challenge, James, is most people think that money is the the sole decision when there’s somebody trying to sell a piece of real estate. And in this case, it wasn’t. It it was the monthly cash flow, not the chunk. She has actually some serious tax consequences if she sells for a chunk because of capital gains and and all of that stuff.

Derek Dombeck [00:18:26]:
So in structuring an installment sale, she she was putting in her pocket with my deal the same money that she’s been putting in her pocket for years without the joys of management and not having to stick $50,000 into the property because that’s what it needed. Right? Alright. So so that’s that’s what I do is I really get down to what does that person need? It’s it’s not about like, internally, I know if I’m gonna do the deal or not. I know what profit margins I wanna hit, but so many of my competition, I guess, we’ll say in in, you know, air quotes, is looking at it only from their side. And they think that they need to win the negotiation, meaning they have to take advantage. And to me, nobody wins if there’s one side that that has buyer’s remorse or seller’s remorse. We really have to work this through together. And that’s what I did.

Derek Dombeck [00:19:28]:
I made her 3 different offers. Certainly, there was a cash offer, and then there was a couple different types of terms offers. And they each had different interest rates to them. They each had different timelines to them, and she chose the one she liked. Alright. So now it hopefully, it doesn’t happen, but if if she passes away during the term of of our payments to her, it doesn’t stop the payments. They just go to her estate. So she was, you know, happy about that.

James [00:19:59]:
So in this particular instance, is she still living in the property?

Derek Dombeck [00:20:05]:
These were investment properties of hers.

James [00:20:07]:
Oh, gotcha. Okay. Okay. Got it. Alright. And how do you end up finding things like this places like this? Because I imagine she didn’t talk to a real estate agent and say, hey. Slap a sign and a sign in the front yard You putting this for sale.

Derek Dombeck [00:20:22]:
I gotta tell you that, I I would never disclose her name, but she is a licensed real estate broker for over 30 years in the state of Wisconsin and chose not to put it on the MLS because, honestly, she was embarrassed. And she was she knows. We had this discussion. She could have sold that property for way more money than what I gave her.

James [00:20:47]:
Okay.

Derek Dombeck [00:20:47]:
But, again, it wasn’t about the chunk. It was about the longevity. And so, yeah, she very much, knows the business, has been in the business for years, and still chose to do it this way. And how I find them, you know, like anything, if you’re reputable and you do good business, people talk. If you’re not reputable and you do bad business, people talk.

James [00:21:13]:
Fair.

Derek Dombeck [00:21:14]:
I I get referrals. I do a fair amount of direct to seller marketing, mail campaigns, social media campaigns, things like that. But it it’s it’s really just take care of people and do the right thing, and and these these deals, they appear.

James [00:21:32]:
Alright. Fair enough. Tell me, you mentioned the tax thing with her specifically, and I imagine taxes in real estate are a whole game. So sometimes it’s really why people get into the game. Mhmm. So when you are working with people through the generations of wealth, can you tell me what you’re steering them towards as far as taxes go for depreciation and all that jazz?

Derek Dombeck [00:21:57]:
You know, I hesitate to talk to anybody about taxes other than give them a broad overview and then suggest they talk to their professional because we are all in such completely different tax brackets, tax situations. For years, 20 years I’ve been doing this, and people are like, oh, I I don’t wanna flip houses because then I gotta pay taxes. Well, you’re only paying taxes if you made a profit, and if you don’t wanna make a profit, you shouldn’t flip out. You’re not gonna do what it takes, but it’s just kind of the in my mind, the wrong mentality. I pay my fair share of taxes and my fair share just, you know, is as low as I can legally have it. Right? When I’m discussing with anybody that’s going through a sale or having, you know, any challenge with it, instead of me telling them what they should do, I often will just tell them stories about other deals I’ve done and, you know, discuss, like, what what happened with that duplex. And and then advise them to go talk to their accountant because, you know, like Estates. We’ll just talk about Estates for a second.

Derek Dombeck [00:23:07]:
If I buy an estate, depending on how it was deeded and owned prior and who’s the heir, they could get a step up in tax basis And then they could sell to me capital gains free versus if it’s an entity and the owner of the entity dies, well, there may or may not be a step up in basis. It depends what happens to the entity. So it it’s just not black and white, and that’s why I hesitate to get too deep into it Sure. With anybody.

James [00:23:41]:
Fair. How did you end up getting into the real estate game?

Derek Dombeck [00:23:45]:
I lost a bet.

James [00:23:47]:
And, Literally?

Derek Dombeck [00:23:48]:
No. No. I I started out really, quite young in my early twenties and, not investing, but I had bought a property close to where I grew up and I renovated. I I have a construction background. So I knew it was possible to, you know, buy something, fix it up, get that that equity from from sweat equity. Right? Build it up myself. And then when I was in my mid twenties, my wife and I were approached by a person that was trying to sell us into a financial services product. And, of course, they’re also always recruiting.

Derek Dombeck [00:24:30]:
So they were trying to recruit my wife into the financial services industry, and I was that person that was sitting here at the at the table with my arms crossed, kind of leaning back. And and then pretty soon I’m leaning forward and then my arms were uncrossed. And, you know, I was getting a financial education that I’d never gotten before.

James [00:24:48]:
Right.

Derek Dombeck [00:24:48]:
So they ended up recruiting me. And, I I started meeting with, you know, husbands and wives typically, and working with them on on their financial plan, and I part of that was we could write mortgages.

James [00:25:04]:
Wow.

Derek Dombeck [00:25:05]:
So I was selling life insurance. I was selling mortgages, and I was selling securities. And I don’t like securities, still don’t to this day because I’m a control freak, and I have no control over them. But again, that that 2 years of my life, I I didn’t really sell a lot, but I learned a lot. And one of the things I learned was I could put the best plan in front of 99% of people, in the country, and they would say no because they just don’t feel like actually taking those steps to improve their life. But I knew how I could improve mine, and I knew I was passionate about real estate at that point. So, you know, we just 2003, we we bought a couple fixer upper properties here locally, and and then we got involved in a couple in in Florida, and it just grew and grew and grew until, like I said, o seven, it crashed. But, it it was well, I’m that personality type where I’m I’m ready, fire, aim.

Derek Dombeck [00:26:04]:
So I’ll just dive in and learn as I go. Some people, they’ll just cringe when I hear that, but that’s honestly what we did, and it and it worked out.

James [00:26:13]:
Alright. So how tell me let’s go back to that the 2,008 time. How did you end up recovering from that or making it out alive, however you wanna put it?

Derek Dombeck [00:26:25]:
Fortunately, I’d never quit my job. So I was I was running my business full time. I was working my job full time. My wife was working. So we entered into negotiations with 8 was it 8, yeah, 8 properties that were actively being foreclosed on against us. The properties that were local in Wisconsin, I was dealing with 3 local community banks, 2 of which got shut down, but one, did okay. So I this was my life lesson is is learning how to talk to people.

James [00:27:04]:
Mhmm.

Derek Dombeck [00:27:05]:
And and this is one of my biggest pet peeves now, James, is especially in this day and age where everybody is just texting and emailing and nobody has a a conversation. I had to learn how to have conversations. So I went to that community bank. I talked to my loan officer, and I said, I wanna have a meeting with the bank president and you. Can you set that up? And we went and sat in a conference room at the bank, and I said, this is what’s happening. This is our plan to get out of it. And, we’d we would really appreciate you working with us because I had commercial loans back then on 3 year balloons. Oh, wow.

Derek Dombeck [00:27:43]:
And again, all of our properties in Wisconsin were paying for themselves. They did cash flow, and these banks, I’d never missed a payment with them. So as I laid out there I mean, I had papers scattered across the entire conference room table showing them what was going on. And the bank president said to me, he said, nobody does this. Nobody comes and calls a meeting like you’ve done. Everybody just hides from it. And it was a little moment. Right? Like, just don’t follow the herd.

Derek Dombeck [00:28:14]:
Do the opposite. So at that point, it took 3 years. I mean, back then all these foreclosures were hanging over our heads. We, you know, we had a lot of stress. Well, that’s when we really started flipping properties because we needed the chunks of money. And we were robbing from Peter to pay Paul for a long time, but eventually we worked through it. And, I got to the 8th property out of 8. I negotiated 7 short sales.

Derek Dombeck [00:28:41]:
And as part of those negotiations, they agreed not to come after us for any deficiencies or any losses that that they took. The 8th property, that lender was taken into receivership by the NCUA because it was a credit union, and they would not waive their right to come after me for a deficiency. And in the state of Florida at that time, they could come after you for up to 4 years after the foreclosure was done. Essentially, they wait until you get back on your feet, and then they can they can come and wipe you out again.

James [00:29:16]:
Okay.

Derek Dombeck [00:29:18]:
And I had taken on a new business partner, and I I didn’t wanna jeopardize him. So I was always against filing bankruptcy, and I just, you know, I was the one that signed on the dotted line. It was I’m responsible. Ultimately, I was forced into bankruptcy anyways. And looking back, I could have filed 3 years sooner and been over it 3 years sooner, but I don’t regret our decisions. You know, we did what we had to do. But even in bankruptcy, the only thing that I wiped out was that debt in Florida and a couple of lines of credit that got called on me. But all of our other debts, we reaffirmed all of them and, you know, I I live by that decision today, like that that kept my relationship strong with my local lenders and everything else because they had to sign off on all this stuff.

James [00:30:14]:
Oh, sure. Okay.

Derek Dombeck [00:30:15]:
I mean, they’re they get named in a bankruptcy. Yeah. So but we reaffirmed all those debts at the risk that once you reaffirm, if it goes bad again, you you can’t there’s nothing you can do. You can’t file again.

James [00:30:30]:
You used your get out of jail free card kind of thing. Right.

Derek Dombeck [00:30:33]:
Right. Interesting. But here’s the reason that it was the biggest blessing I’ve ever had in my life. 2007 through 2010, that stressful time in our life, that’s how I learned how to do what I do today. This is how I can go and help people today because I didn’t just read it in a book. I lived it. And if I sit across the kitchen table from somebody and I say, James, you know, I understand you’re going through foreclosure. I understand the feelings that you’re having and the emotions you’re feeling because I went through it as well.

Derek Dombeck [00:31:03]:
And I’ll tell them that story, and I’m truly there to help them. It’s it’s a game changer. And, so, you know, moving forward, the the generations of wealth movement is is really that. It it’s the financial education certainly of of gaining wealth, but it’s the, you know, the physical wealth, the time wealth, the emotional wealth, all of those things. Like, we business owners, in general, usually run on the ragged edge, and and we can wear ourselves out pretty quickly. And and when you have these challenges come up, not not if when these challenges come up, how you handle them is is crucial. Right?

James [00:31:50]:
That’s fair. Totally fair. Tell me so since 2010, when you’re looking for deals, you’re still in the real estate game. What are you looking for differently that you wouldn’t have either noticed or you didn’t consider it an issue before when you’re looking at deals?

Derek Dombeck [00:32:06]:
Well, as I mentioned earlier, I only buy in cash flow at this point. Right. So I’m looking at deals that many people might say, yeah. This is in Madison. It’s gonna go up in value. Fair assessment and true in most cases, but not every case.

James [00:32:24]:
And as far as we know. Right?

Derek Dombeck [00:32:27]:
Right. Exactly. It’s musical chairs, but eventually the music stops. And that’s what we’re starting to see right now, regionally and and across the country, not necessarily in Madison specific, but the music has stopped to a certain degree. I have I have people in my network that are in new construction. I mean, they are having to cut their prices on their spec homes by 100 to $200,000 on the West Coast to get rid of them. Wow. East Coast, it it’s well, you you think about the longevity or the or the life cycle of building new construction.

Derek Dombeck [00:33:02]:
By the time you start with a lot, you go through the permitting phase, you get the property built, and then on the market, it’s not uncommon to be, you know, a year. And so a lot of these people, when they started the project, the numbers made sense. Interest rates were low enough. Now they’re trying to sell something, and and it’s going to cost the homeowner almost twice as much in in a monthly payment. And so the only way they can dump these properties is to lower the price, which cuts into their profit, or they have to come out of their pocket, make zero profit, but actually pay to get rid of these properties.

James [00:33:39]:
Wow.

Derek Dombeck [00:33:40]:
Because the majority of them are are bringing on expensive debt to build these spec homes and to build these properties. But when I I mentioned I took on a business partner, and that’s why I filed bankruptcy, so I wanna jeopardize him. We were raising private money for all of our own deals, and, we got to a point where we had raised more private money than we had our own deals. And we’ve also, you built up a pretty decent network across the state of Wisconsin by this point, and we had lots of friends that were looking for the money for their deals. So to keep our investors money active, we started an arbitrage lending company. So pay our investors 9%, and we lend it out at 12%. And and it was a side gig for a while, and then it grew a little momentum. And before we knew it, it was a a full fledged animal on its own.

Derek Dombeck [00:34:38]:
And and, so the last 4 or 5 years, we were averaging 20, 25 loans a month. And,

James [00:34:46]:
Wow.

Derek Dombeck [00:34:46]:
Doing about 25 to 30,000,000 a year in loans. And these are all short term private loans to house flippers and landlords. And, so just just the lending business, I was involved in well over a 1000 loans. And, and on the real estate side, I I don’t keep track, but I’ve I’ve done 100 and 100 of real estate deals. So I’ve I’ve even in in the lending space, certainly, you don’t close every loan that comes in as an application. So that means we’re looking at properties with about a 60% closing ratio to applications. So to to close a 1,000 loans, we we looked at, you know, 1600 to 2000 deals over the years. That’s a

James [00:35:36]:
lot of deals to look at. Holy cow.

Derek Dombeck [00:35:38]:
Yeah. But it it keeps your fingers on the pulse of of the market. Sure. Because when we’re when you’re lending statewide, I could see what was going on in Madison versus Milwaukee versus Green Bay or Wausau. And what I would definitely track is, you know, the average days it takes to sell a property. Not just what it sold for because it might have sold high, but if it sat on the market for 6 months to get it, that’s not interesting to me. You know, I don’t wanna sit on something 6 months to get top dollar. So so that’s that was kind of 2012 through, last year.

Derek Dombeck [00:36:13]:
And then my business partner actually bought me out of the lending company here not too long ago.

James [00:36:19]:
Oh, nice. Congratulations.

Derek Dombeck [00:36:22]:
Yeah. Yeah. It was, it was we we had a good run, and and, the lending business, honestly, is boring.

James [00:36:29]:
Oh. Yeah.

Derek Dombeck [00:36:31]:
I’m I’m kinda I’m kind of a deal junkie, and, those weren’t my deals. I’m just lending on them.

James [00:36:37]:
And Alright.

Derek Dombeck [00:36:38]:
I wanna be out doing my own acquisitions and and working my own deals and and growing generations of wealth platform and things. So so so that’s that’s really where the knowledge came from. It was just in the trenches, making all the mistakes, trying to learn as many as I could from other people, And and I would say the my first half of my career, I was a closet investor, meaning I didn’t really build a network. And second half, I am all about building a network.

James [00:37:08]:
It’s Alright.

Derek Dombeck [00:37:09]:
The people that you communicate with and that you can trust, can make or break you.

James [00:37:16]:
You know, it’s interesting that you mentioned that because I’m right there. I agree with you completely. I was listening to another business podcast, with a younger guy and younger, like, 3rd thirties, whatever. Yeah. To my kids, they’ll be ancient, but whatever.

Derek Dombeck [00:37:33]:
Younger to us for sure. Yeah.

James [00:37:33]:
Younger to us. And he’s interviewing some younger girl in her thirties, and they were talking like, I don’t know why people network. Why do they go out and shake hands and meet for coffee or lunch or whatever when you can do all this stuff online? And my first thought was, what kind of a moron am I listening to? Because I’ve gotten more deals done by chatting with people, meeting them for coffee and lunch and all that kind of stuff, even sometimes meet them at a bar or whatever. I mean, just the the hand shaking, you get to know people and you don’t know what kind of network that person has individually. But I do know that when I meet someone in person or over something like this, it’s way deeper, definitely in person, way deeper than just throwing up a post on social media and people get their little thumbs up or whatever. It was just a bizarre I’m like, is this a generational thing, or what am I missing here?

Derek Dombeck [00:38:27]:
And and that’s what I mentioned earlier. People don’t know how to actually talk anymore. It’s just text and email. And when when I’m sitting down at the kitchen table or or on the phone, I do the majority of my business over the phone because we we do work statewide. So I’m not gonna drive 2 and a half hours. Since I’m in Central Wisconsin, I can be anywhere in the state in 2 and a half hours. So

James [00:38:50]:
I’m

Derek Dombeck [00:38:50]:
not gonna drive 2 and a half hours to go look at something that is got a 10% chance of coming together or a 0% chance. So I’ve I’ve gotten very good on the phone. And the biggest, I I think, success story for me is is when I can get somebody in a 15 to 30 minute conversation to essentially agree to what I’m offering to the point where it’s not worth our time to get together, that takes a skill set that the majority of people in our our society today don’t have. They just don’t.

James [00:39:26]:
Oh my gosh. You’re so right. You’re so right. And I I’ll just give you a really quick example to back that up. I’m trying to sell a motorcycle on. I have it on Facebook marketplace and it is hilarious. Mhmm. The communication that I get from people, once Once you figure out, like, okay, you’re not a bot.

James [00:39:42]:
I think you’re human, but you still are having a very hard time speaking like a human. They don’t know how to negotiate. They don’t know like, I put my phone number in there. Just give me a call.

Derek Dombeck [00:39:52]:
Yeah.

James [00:39:53]:
Right? Just and then I don’t know if they don’t know what to ask because this is the 1st motorcycle they ever bought or or first thing they ever bought. It was so bizarre how just I’m gonna dare say socially inept Some people are, and you’re talking, you know, it was $3,000 here. It’s not pocket change, but it’s interesting because I’m like, man, if you, like, try to get a real estate deal or get a job in a job interview or something like that, and this is how you’re talking to that person, you are gonna have a rough time, man. Just get a magic marker and a cardboard sign, stand on the corner, and hope for the best. Because, oh my gosh, there’s just this lack of communication skill. It’s bizarre.

Derek Dombeck [00:40:38]:
A 100%. And I I do teach a a 2 day negotiations training course. So, you know Nice. This is really kind of fresh because I just did it a couple weeks ago in Milwaukee and I had a room full of people. And and I ask people, what’s your biggest fears? And, of course, everybody has different fears, but the majority of them are are just the the monster under the bed. It doesn’t really exist. Mhmm. And, you know, they’re like, well, I have to call people.

Derek Dombeck [00:41:05]:
What if they answer? And and I said, okay. Let’s look at it this way. Twist your mindset. If you know you have the skills to help somebody and you choose not to call them, you are by default harming that person.

James [00:41:20]:
Correct.

Derek Dombeck [00:41:21]:
So if you can shift your mindset around to that, there’s you’re selfish to not call them. If you truly know that you’re ethical and you have the right morals and you can help them. And, you know, okay, so that’s a little bit of a mind shift for people. And then I say, okay. Think about that other person, and your Facebook story is exactly right. That other person probably sat there for minutes, if not hours, agonizing over being nervous to call you. So there’s nothing to be scared of. Just get on the phone or get in person, talk to each other, and and, you know, solve some problems.

Derek Dombeck [00:42:00]:
Just have a conversation. That’s all negotiations are is a conversation if you do it.

James [00:42:04]:
My gosh. Yeah. You nailed it. Yeah. You nailed it. So I I have a call answering service, and I have to describe I have to reinforce to my crew that you have to understand what happened in that person’s mind that’s calling us. Mhmm. Whether they’re just scheduling a massage, stealing scheduling, I don’t know, spay or neuter for their path or something like that.

James [00:42:24]:
Like, they had to pick up the phone, which is a rare thing these days. Mhmm. They had to look online and find a phone number. They called 10 other places before they called us because the 9 places before us didn’t answer the phone. They finally got someone with a live human that can help them.

Derek Dombeck [00:42:39]:
Uh-huh.

James [00:42:39]:
Like, you gotta understand that they have gone through somewhat of a tumultuous hell to get you on the phone, but you pick up the phone and it’s you’re one second in. They’re already 15 minutes in.

Derek Dombeck [00:42:53]:
Yes.

James [00:42:53]:
So sometimes they’re gonna be a little grouchy because they’re like, somebody help me. Right? Mhmm. So I give them things to say and do and all that kind of stuff so that the person on the other end of the phone, the actual caller knows that we can help them. And once we get that point across, then it’s easy, smooth. But before then, they’re like, oh my gosh. I’ve been right. Just going through. And I had to work them through this whole exercise.

James [00:43:18]:
I’m like, okay. Tell me the last time that you called the service company, landscaper, anything. And somebody’s like, I called the car dealer detailer. Alright. Was that the first card detailer that you called? Like, no. I think I called 12 of them. Great. What happened to the first eleven? And they’re like, well, one guy called me 3 weeks later and, like, all this stuff.

James [00:43:38]:
Like, okay, now understand that that’s just normal for people. Anytime they pick up the phone. So even if they text or email or something like that, like it’s tough. So when you’re good at communication, you can get stuff done just because you’re there. A 100 percent.

Derek Dombeck [00:43:55]:
A 100%. And to to piggyback on that right now, and this is never gonna get better. It’s only gonna get worse. But right now, if you actually have a live person because I don’t answer my phones. Like, when when somebody’s calling in, if they’re trying to sell a house, yes, they go to an answering service, and it is a live, you know, virtual assistant. And then they that person puts them on my calendar. But they’re getting a live person, and you are spot on, and clearly you’re in the business. Just setting yourself apart and not having a bot or a computer answering your phone makes so much of a difference nowadays.

James [00:44:32]:
Oh, yeah.

Derek Dombeck [00:44:33]:
Yeah. And that’s gonna get better for people like us and worse for everybody else.

James [00:44:38]:
You know what’s interesting digging into the AI thing? I had a guy. I was he’s a software programmer, and I was talking to him about how we could introduce or incorporate, I should say, AI and some of the stuff that we have with our phone system. And he’s like, why do you need people? And I was like, get that thought out of your head right now. Maybe in 5, 10 years, that’s going to be a thing. But right now we’re not there yet. So just people are going to be part of it, at least in our business as is right now at this moment. So we need tools to help them do their better their job faster, smoother, all that jazz, which that’s that’s what I’m talking to you for. Mhmm.

James [00:45:18]:
But removing them as, like, why do you need people? No. No. No. No. No. No. No. No.

James [00:45:24]:
We’re not there yet.

Derek Dombeck [00:45:25]:
See and to me, AI, it’s, I mean, it’s a great tool. It’s crazy how quickly it’s advancing.

James [00:45:31]:
Mhmm.

Derek Dombeck [00:45:31]:
But I don’t see AI ever replacing me at the kitchen table negotiation because it can’t tell body tone, body language. Somebody’s slumping in their chair. Somebody’s got a little tear beating up in the corner of their eye. AI is never gonna do what I can do in in my mind.

James [00:45:50]:
It’ll be a long time. Yeah. I’d I’d dare say never. I’m afraid to use that word never.

Derek Dombeck [00:45:55]:
Yeah. That’s true. That’s true.

James [00:45:56]:
But it’s I don’t think it’s gonna be we got a while. We got a while. Presumably, we’ll both be long retired by then, but who knows? Who knows? It’s tough to say. Yeah. Derek, where can people find you?

Derek Dombeck [00:46:11]:
Well, the generations of wealth podcast is, is my platform. It’s actually launching March 14th.

James [00:46:19]:
Nice.

Derek Dombeck [00:46:20]:
And, we’ve got, we’ve got some shows recorded and in in the can, so to speak. But, the generations of wealth.com is is where that can can be found. And everything else about me is gonna be there as well. My contact information, what we do. You know, I’ve I’ve been I’ve been doing, this investing for 20 years and in this type of rate of deal structuring and different things that I do for a long, long, long time. And, specifically, if you’re listening in the state of Wisconsin, anything I can do to help you, I’m an open book. You know, there’s there’s no no hidden cost, no no tricks or gimmicks. It’s I’ve had people throughout my career that that helped me at at times and and, you know, I look forward to to giving that back.

Derek Dombeck [00:47:10]:
So Fair.

James [00:47:10]:
Fair. When you make it to the top, send the elevator back down. Right?

Derek Dombeck [00:47:14]:
That’s right. That’s right. Or or, you know, just jump off and hope

James [00:47:18]:
the stairs are open. There actually, there’s 2 other questions I wanna ask you about. Mhmm. 1, when I think of Wisconsin, I am under the impression though I have no fact to back this up with. I’m under the impression that there’s other states in the country that match this in similarity where they have 1 or 2 cities that are doing really well, like Madison real estate wise is Mhmm. To me, I’m like, how can stuff be this expensive? Household in our neighborhood in less than 3 days for at least a 150,000 more than I thought it should. You know, you go walking in your neighborhood and you see a for sale sign. You’re like, oh, what are they asking for? Woah.

James [00:47:52]:
Are you crazy?

Derek Dombeck [00:47:53]:
Yeah.

James [00:47:54]:
And they sold it. They sold it. It was in days, few days. It was bizarre. But then I look at stuff, for example, in Milwaukee. I’m like, bigger city, more I’m gonna dare say opportunity, and it’s going for a third.

Derek Dombeck [00:48:10]:
Mhmm.

James [00:48:10]:
It’s bizarre to me, even Green Green Bay, Fox Valley. So from your point of view, is that common for states to have little pockets where the real estate is just in its own little world?

Derek Dombeck [00:48:23]:
Yeah. Absolutely.

James [00:48:24]:
Okay.

Derek Dombeck [00:48:25]:
It it is. And, you know, obviously, Madison is is driven a lot by the the medical community, the the the campus, the college, and everything else there. And and, you know, for me, if if I lived in or near Madison, I would be that person that would drive 30 minutes to, you know, Jefferson County or or, you know, the suburb type of stuff. But a lot of the people that want that that midtown lifestyle, I don’t know. I don’t know why they pay what they pay. I I mean, I’ve been in this business for 20 years and I still don’t fathom why they pay what they pay. I I talk to people from the Midwest all the time, and then I talk to people from the West Coast, East Coast all the time. And, you know, my in fact, my good friend moved from Madison and is currently in Orange County, California, and what just paid for a condo, a beachfront condo, I mean, he could have bought up 4 houses in Madison right now.

James [00:49:27]:
Sure. Yeah. Orange County. It’s yeah. Yeah. Yeah. You’re getting pricing in California.

Derek Dombeck [00:49:31]:
But, I mean, he loves it, and people love to be in Madison, and people love to be in other parts. I love to be in the middle of nowhere with some acreage, and, you know, I can I can do what I want when I want, and that’s my my heaven? So I stopped trying to figure out why people do stuff anymore and and really just tried solving their problems for them and and and meet them at their level. Prejudging anybody doesn’t really do you any benefits. And and that’s actually a lesson I learned from raising money. I mean, over the years, I’ve I’ve raised, I don’t know, in excess of $20,000,000, And a lot of people I raise money from, if you met them walking down the street, you would have no idea. They don’t carry themselves like they’re, you know, worth 1,000,000 or anything else. So prejudging people, if you’re in any kind of business, I would really try and steer you away from that because my my greatest friends, my best relationships are typically with people that they don’t brag about what they have. You would never know what they have, and and they’re humble.

Derek Dombeck [00:50:45]:
And those are the people I like to spend time with.

James [00:50:48]:
Fair. Yeah. I was just I guess I’m curious on the pricing because, I guess, me personally, into the real estate game a little bit around here at Madison, and I wanna get in more. But when I look at cash flow I can’t make the numbers work to save my life. And I was talking to a banker friend of mine and I’m like, am I missing something? And he’s like, nah. Okay. Okay. So it’s interesting because I don’t I don’t have the experience in real estate to say, this is why this little pocket is here.

James [00:51:25]:
Because I look at Green Bay as an example, I look at Milwaukee. Milwaukee’s got tons of commercial stuff to get university, but lake, You know, there’s Summerfest and all that jazz. I feel it’s marginally closer to Chicago. Got a decent sized airport. But, yeah, stuff is going for way less than Madison. Madison’s cool place. Don’t get me wrong. It’s a it’s a great place.

James [00:51:48]:
But it’s You

Derek Dombeck [00:51:49]:
also have to look at local politics. And and not not to steer one way or another, I don’t have an opinion on it. But if if you have tenant landlord laws that are pro tenant versus pro landlord, that’s going to affect real estate values, you know, Milwaukee, the city of Milwaukee within the city limits, for a long time, and and it may still be this way today. But if you went and bought an inner city house that was already tagged by the city, the moment the ink is dry on the deed, they’re gonna be on you and you need to improve that property and you’ve got a very short time frame to do it. Oh. So now if if you buy a house in the inner part of Milwaukee for 25, 30, 40, $50,000 thinking I’m gonna be able to just fix it up a little bit and rent it out and make cash flow, and the city comes in and says, well, you’ve got a $100,000 worth of improvements to do to it, and it’s still only worth a $100,000. You’re you’re upside down. So that makes it less desirable for people to buy.

Derek Dombeck [00:52:52]:
And we did a lot of lending in Milwaukee, specifically the last 4 years, and and I learned the city of Wausau or Wausau, the city of Milwaukee, because I had to by default. I was I was doing all the valuations for all of our loans. So until I ran the the comps and and decided what that after repair value was gonna be, that’s that’s what we determine how much we would lend on it. So, and then I started spending a lot of time down in Milwaukee driving neighborhoods, and some of them, you know, you you wanna have a pistol locked and loaded, and some of them you didn’t feel that way. But that’s that’s what you need to do to learn a market. Yeah. I mean, we we lent money to some people that their houses, as they were working on them, got broke into and stripped several times. Yeah.

Derek Dombeck [00:53:40]:
And, you know, copper’s gone, utilities, everything’s stripped. Well, that’s going to depress that market.

James [00:53:48]:
Mhmm.

Derek Dombeck [00:53:49]:
It’s just human nature. Right? Yeah. Let’s go back to Madison. Madison’s, you know, for the most part, got a fair amount of rules, and it’s designed that way to keep the, dare I say, upper class people happier

James [00:54:05]:
Mhmm.

Derek Dombeck [00:54:06]:
With their neighborhoods, and it pushes out. People can’t afford to live there. They’re gonna go to, you know, the suburbs or even further. They’re gonna drive in.

James [00:54:15]:
Oh, that’s a very good point.

Derek Dombeck [00:54:17]:
So who’s who’s making the rules in Madison? Are they making them for the for the, you know, $20,000 a year employee? Are they making them for the $200,000 a year, executive?

James [00:54:29]:
Sure. Fair. That’s totally fair. That is insightful. I guess I never really thought about that. Mhmm. But I have I have some buddies that are in construction in Milwaukee. And some of the stories that they tell me, I’m like, where are they where is somebody bringing brand new copper to? That’s like, oh, this seems legit.

James [00:54:49]:
Yeah. Some cash for that bizarre. Yeah. Bizarre. But, I don’t know. It’s a different world. Next last question that I have for you, is if someone was interested in getting into the real estate game and they have never been in it, maybe they have a day job, or maybe they’re just young and looking for something to do to advance their career or whatever. Mhmm.

James [00:55:10]:
Where would you recommend that they start as far as the type of property?

Derek Dombeck [00:55:14]:
Well, type of property is going to be specific to what you’re comfortable with. So single families are easier to get rid of. There’s a bigger buyer pool for them. And if you start getting into small multifamilies, duplexes, triplexes, 4 plexes, yeah, still fairly easy to get rid of. You start diving into if your first deal you ever do is a 20 unit or a 50 unit apartment complex and it doesn’t work the way you thought it would, you you may have a little harder time liquidating that or or coming out from under it. So it’s fairly common for most to dabble with the house or duplex and then just kinda grow from there. Gotcha. But anybody that does wanna get started, I would highly recommend just go and find your local local real estate investor association group and start meeting those people.

Derek Dombeck [00:56:05]:
You know, we’ve got a great network around Wisconsin, and, I actually do host one of the locations for the Wiskorria. So, Oh, nice. But there’s a, you know, there’s a location in Wausau and and, Madison, Green Bay, Appleton, Kenosha, Sheboygan, and Eau Claire. So you can you can go and and just get together with other local house flippers and landlords and, you know, start building your network.

James [00:56:33]:
Yeah. We had Chris Hakon here from the Madison one.

Derek Dombeck [00:56:37]:
Yeah.

James [00:56:39]:
It was a long time ago. It was pre pandemic. So that was a while ago.

Derek Dombeck [00:56:42]:
You guys probably didn’t learn much from my buddy, Chris, but, I I just I just spoke in Madison couple months ago or February.

James [00:56:50]:
Nice. February. He so I’m gonna ask you another question because he’s running down the road and pushing many warehouses. Yep. And you mentioned many warehouses.

Derek Dombeck [00:56:59]:
Mhmm.

James [00:57:00]:
Can you tell us your perspective or opinion or any information you have on those? Good, bad, crazy, psycho? I don’t know.

Derek Dombeck [00:57:07]:
I I don’t have a lot of experience with them other than what friends of mine have gone through. You know, your biggest hurdles with them is if people start trying to dump toxic waste in them, dump tires, dump that kind of stuff. Or, you know, one buddy of mine, he had some people trying to live there, live in a unit for a while. Wow. Okay.

James [00:57:28]:
And

Derek Dombeck [00:57:28]:
probably get they get evicted from their rental and,

James [00:57:33]:
they

Derek Dombeck [00:57:33]:
can rent a storage unit for $75 a month versus $750 a month. People will do it. So but the nice thing with them is your evictions are not you’re not evicting people. You’re evicting stuff. So it’s a different process, but it’s quicker and cheaper. I just just got a call 2 hours before we recorded this from my attorney. I had to evict somebody, and my my eviction costs are almost $2,000 now just to get somebody out.

James [00:58:06]:
Wow. If

Derek Dombeck [00:58:07]:
I, use the attorney. And I can do it myself. I can go to court, I can file my own evictions, but my schedule doesn’t allow for it because of how much I travel. I if a court date lands when I’m traveling, I, you know, I don’t have that luxury anymore. So so it’s it’s certainly, in my opinion, it’s easier dealing with stuff than it is dealing with people that live in a property.

James [00:58:30]:
Fair.

Derek Dombeck [00:58:31]:
I I like the storage units. That said, some areas are very overbuilt.

James [00:58:37]:
Mhmm.

Derek Dombeck [00:58:37]:
And so you it’s buyer beware. And then there’s a lot of pockets that could still use more units. So

James [00:58:44]:
That’s alright. Yeah. I was just in Beloit this morning, and I can’t believe how many, many warehouses I saw or groups of them. All I could think is there must be a lot of boats around here that I don’t know. I don’t know. There’s tons of

Derek Dombeck [00:59:00]:
them. Yeah.

James [00:59:00]:
Tons of warehouses.

Derek Dombeck [00:59:02]:
I’ve talked to Chris about

James [00:59:03]:
it a lot.

Derek Dombeck [00:59:03]:
I mean, he’s deep enough into it now where he’s starting to figure out what size units are the best to have, you know, what’s the most most sellable, so to speak.

James [00:59:13]:
Mhmm.

Derek Dombeck [00:59:13]:
And, it sounds like the the 12 by twenties, the the small units, the little 5 foot wide units, 10 foot wide units, or 10 foot deep units, they’re they’re hard to fill. I bet. I bet. And then the other trick is and this is what he’s doing on his new builds. He’s making the center wall removable. So if you’ve got a a 12 by 20, but it’s back to back with another 12 by 20, and you can take out that center section, now you’ve got a 12 by 40.

James [00:59:41]:
Wow. Okay.

Derek Dombeck [00:59:42]:
And, so he’s doing that now, and and people are are loving that because it for the boats, the campers, the, you know, the the toys. Yeah. So that’s Oh, that’s clever. I would buy them if, I got the right deal, but there’s a lot of competition at it, and I don’t follow the herd. So

James [01:00:02]:
Fair. Fair. Yeah. I love it. Well, Derek, thank you so much for being on the show. You shared a ton of insights. Can you tell us that website one more time?

Derek Dombeck [01:00:11]:
The generations of wealth dot com will go live March 14th, and the generations of wealth podcast, It’s like I said before, it’s not just about raising or, you know, making money. It’s it’s just everything about true wealth, Time wealth, physical wealth, spiritual wealth, financial wealth. And you know we have awesome guests that come on in in all different aspects. It’s not just real estate investing. So love to have you follow us. There’s also generations of wealth, Facebook group. So but join the community. It doesn’t cost you anything, and we’d love to have you.

James [01:00:47]:
Nice. I love it. This has been Authentic Business Adventures, the business program that brings you the struggle stories and triumph and successes of business owners across the land. We’re locally underwritten by the Bank of Sun Prairie. If you’re listening or watching this on the web, if you could do us a huge favor, keep the algorithm happy, give it the big old thumbs up, subscribe, and, of course, share this with all your entrepreneurial friends, especially those that may be interested in getting into the real estate game, fun and profitable and challenging as it may be. My name is James Cateman, and Authentic Business Adventures is brought to you by Calls on Call, offering call answering and receptionist services for service businesses across the country on the web at callsoncall.com. And, of course, the Bold Business Book, a book for the entrepreneur in all of us, available wherever fine books are sold. We’d like to thank you, our wonderful listeners, as well as our guest, Derek Dombek, the founder of Generations of Wealth Global.

James [01:01:44]:
Thank you so much, Derek, for being on the show.

Derek Dombeck [01:01:46]:
Thank you for having me.

James [01:01:48]:
Past episodes can be found morning, noon, and night at the podcast link found at drawincustomers.com. Thank you for listening. We will see see you next week. I want you to stay awesome. And if you do nothing else, enjoy your business.

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