All Forum Posts by: Toyin Dawodu

I never really understand this logic. Hard money lenders give you a loan at eye popping interest rate. They all seem to have the same policy. "We'll loan you blah blah blah percentage of the LTV, plus 90-100% of rehab." Then they hold all the rehab funds back until you fix the property. Then they will start releasing your money in stages. First they want you to send photos, then they send some inspector, after that they release a portion of what they feel you deserve. Your contractors are in your butt for money. Yes, I understand these lenders have to protect their investors money. However, how do they expect a newbie, and even an experienced rehabber to make ends meet having put all their money as down payment to buy the property? Most lenders insist that you have so called "skin" in the game. Where will the initial rehab money come from before it is replenished from the holdback? These problems have plagued me for ever. As a rehabber, I constantly have to juggle money while praying that my "Shark" HML does not delay or will at least give me some of my money upfront to start the rehab. Does anyone else have the same headache? How did you solve the cash flow crunch? I need some advice on this. Am going crazy with in this shark tank!

Every time I try to wholesale a property, I always fall flat in my face. What does it take? I find a property, apply the formula everyone uses, then I call every cash buyer investor in town. They all tell, Toyin, we are going to pass on this one. Others try to lowball me. So I get so frustrated and rehab the property myself. At the end of the day, I find out that instead of making $10,000 or $15,000 wholesale fee, I end up making $40,000 $50,000 or even six figures on a property that these so called cash buyers reject. What am doing wrong? Please help me. I welcome anyone’s help. I don’t want to rehab every property but these wholesaling gig is driving me bunkers. I can’t seem to get it right no matter how much I try. What am I am doing wrong?

Why do gurus offer a 30 day money back guarantee on information they know takes more than 30 days to implement?

Is it because they know 99.9% of the buyers will not read the information or implement the strategies within the guarantee period?

Why do students or would be investors pony up money when they know that they may or will definitely not implement the system within the guarantee period  or ever?

Why do students complain and cry foul when they have not even attempted to implement a system or strategies sold to them by the guru?

These are the questions I have when I read these threads.

I have bought and sold more than 560 houses. I still buy courses from some of the guru's. I have never bought from Duncan and I don't know him from Adam. 

With my experience, one would think I should know it all. But real estate is a complex business. Any strategy you know today, may change tomorrow and if an "expert" shows up to cut your learning curve in half, you should pony up the money and try to implement the strategy.

Most people buy programs but never use it, me included. Should we then blame the teacher or guru?

@Account Closed, You should get some information and get to know your borrower. As a lender, you are both in it together. It is in the best interest of the borrower to protect the lender because that is the well that produces water. I will lose money first before I let my lender lose a penny. The problem I have is the new age lenders who pretend to be HML , yet ignores the fact that hard money lending is based strictly on the equity in the property. Your security is the property first. The new age lenders mislead newbies by by pretending to be HML. They operate more like traditional banks based on my experience.

I get at least one call a day from the new "hard money lenders"  These are semi institutional lenders pretending to be hard money lenders.  

When I ask for their requirements, it always sounds like I am talking to Bank of America or Wells Fargo and I am trying to pull a Fannie Mae loan.  

I just got a package from one of those "so called big ones" the newbies in the market of hard money lending. Their requests almost included my first born child. 

Since when did hard money lending become giving up an arm and a leg. What happened to the word asset backed lending? Is it just me or is anyone having the same issues? 

HOW LONG DOES IT TAKE TO MAKE A BUY DECISION ON A HOUSE?

As a property investor, when I go to meet a seller, I have to make a decision on value and give the seller an offer immediately. If not, the next guy probably will. When I call hard money lenders, they tell me it will take them 10 days or two weeks to make the same decision. 

Has anyone found out lately that even when you present a 50-60% purchase price of ARV to one of these lenders, they still ask you if you have skin in the game?

Then they make you fill out all these elaborate information online, only to tell you later their loan committee did not approve the loan. 

I am glad, I have my private lenders. One phone call and email of the property with comps, my docs are on their way to escrow.

Is anyone still using these pretend "hard money lenders" or should you be looking for private lenders who can make commonsense property value decisions?

If you are new to property investing, you will probably be better off to find a private lender, who has some money to invest. 

START A RELATIONSHIP 

Let the private lender test you out with a small loan. Then gradually increase it.

That was how I started years back. My private lender, first loaned me $30,000. After seeing my performances over time, he gradually increased it.

What I like best about our relationship is the speed of performance. Unlike so called hard money lenders, I don't have to wait for ten days for a decision. I usually get one in hours.

That is the speed at which profits are made in this business. The last deal I made, a few months ago, my competitor told the seller he will need a few days to decide on the purchase price.  When I got to the house, I made a decision immediately.  The seller even thanked me. They flew into town to sell their property. It was a probate deal. They needed a decision so they can fly back home on Sunday. 

Imagine, If I had to wait for the "hard money lender"? 

I called my private lender and he saw the value. I opened escrow the next day and in five days we were done.  100% financing including all the rehab, no hold backs. 

SIMPLE DECISION-MADE HARD

To me the decision was a no brainier. After repair value for the house, (ARV) was $325K in a very nice part of town. My offer was $205k net to seller. Fix up cost was about $15K My private lender came through with $225K loan.

I did give some of the hard money lenders a chance, but their term sheets were terrible. Plus, they wanted to do an appraisal and it would have taken 10-15 days for an answer. 

I got terms like, "70% of purchase price, plus 90% of rehab, and we'll have to hold the money until you do the repairs."

Based on their term sheets, they will be advancing about $143,500 and holding back the $13,500 repair costs.

I would have had to come up with about $80,000 just to take the deal down.  This is one of the reasons most newbies are having problems getting traction in this business.

So the question is "hard money lender or a private lender? Which is a better choice?

I still find this hard to believe. 95% of would be real estate investors never buy a single house. A few months ago, I ran into a lady who has been going to seminars and REIA for more than ten years. I asked her how many properties she has bought and was shocked to learn.. None... not a single property in 10 years?

Then I begin to research the industry. I found out the failure rate is 95%. Can you imagine if our schools have a 95%

Everyday I ask myself why the failure rate is so high. How is it some many fail in spite of all the information and all the help. Or is there really any help out there? Are the Gurus doing their jobs? or is it the students that are failing the Gurus?

Let's talk about it. Maybe we can help a lot of people on this Bigger Pockets platform.

So if you are an experienced investor, flipper, or buy and hold person? What would you consider the reason for your success?

If you are a newbie or old timer who is really struggling to break through in this business, what do you think is the reason so many don't make it?

Here's my secret sauce. From day one I treated my involvement in real estate as a real business.

This means, I had an advertising budget, a lead generating and follow up process, a back end process and money source and above all an experienced mentor.  My first ad budget was $295.00 credit I got from my local news paper. 

The combination of all the above puts me shoulders above majority of the investors.

After more than 450 deals, everything just seems to fall in place, abundance of leads and lenders throwing money at me.

I actually believe this is possible for a lot of people in our industry. But they probably have to diagnose their problems first.

So what is the real reason 95% of the people fail in as real estate investors? Let's talk.

@Sue Thiel, In response to your claim about the two properties you submitted, I would expect more from a professional like you. I think you claim to be a real estate agent.  When you prospect a home seller and she is not ready to sell, what should be your next move? Can you force a prospect to sell you their property? Since you are a real estate agent, why did you not try to do this on your own and look for the owner and engage the owner to let you list the property.

It is disingenuous of you to come on bigger pockets and badmouth our company for your inadequacies as an agent not able to get or close your own deals. 

     Below  is the communication we have with you on your profile as to what you can do regarding your submission. We did what we could. This is a partnership. If we can't locate the owner, how can we buy the property and pay you? "

        NOTES FROM YOUR PROFILE ON ONE OF YOUR SUBMISSIONS:

<br/>-WE ARE GOING TO SKIP TRACE THE OWNER <br/>-TOYIN<br/>2016-08-03 11:55:16<br/><strong>******************</strong><br/>-WE HAVE THEIR CURRENT ADDRESS WE WILL BE FOLLOWING UP <br/>-TOYIN<br/>2016-08-03 12:06:25<br/><strong>******************</strong><br/>-Please let me know if this property is still vacant?? Please drive by and let us know.<br/>-TOYIN<br/>2016-11-15 20:13:42<br/><strong>******************</strong><br/>-Please call Sonia at 951 452-XXXX Please reference this property <br/>-TOYIN<br/>2016-11-15 20:15:54<br/><strong>******************</strong>

As stated in my earlier response on this forum, it is irresponsible people like you who ruin it for others.  We provide a platform for thousands to earn some money and learn the process of what it takes to become a real estate investor, but loud mouths and faceless people like you who have an agenda and have not accomplished much in life can come on public forums and badmouth legitimate companies. 

You have our email address, you have my phone number, and you have not registered a single request or complain on our website, but you have the audacity to come on this respectable forum to make a complaint about a company that has nothing advertised on this forum.

I am a respectable, reputable and professional member of bigger pockets. You can look at my profile and see how many votes I have garnered in the last one or two years I have been a member. 

I hate to use this medium to debate someone like you, but if I don't response forcefully to cyber bullies like you, others like you would think it's okay to come on line and make stupid attempts to destroy reputations when you have no legitimate basis for complaining.

Even if we failed to act on your submissions, what stopped you from working the deal yourself and keeping all the money?  What are you lacking? Isn't that what attracted you to our website?

So why not engage US DIRECTLY instead of crying wolf where there is none?

@Joshua D., It looks like I was a bit harsh, but this message is for newbies. I just don't like the pretend hard money lenders who lure you with BS and can't even fund your deal. It's very easy to get discouraged when you are being told by people that need your business that you should worship them. Lenders need flippers more than flippers need lenders. That's why flippers should focus on finding deals instead of chasing hard money lenders.

Is your hard money lender doing you a favor?

My answer is NO. If you are a rehabber, you are the one doing your hard money lender a big favor.

As a flipper, you spent your money marketing for deals. If you are good at finding fat and juicy deals, you can write your own ticket.

So when a hard money lender says to me, "can you go to our website and complete our loan application, I immediately roll my eyes at him.

If he now says, we have to check your credit, I immediately say in my mind "FU"

Sometimes, I let them go through their spill.

These are our criteria, "you have to have 30% of your own money in the deal.

First I say, okay, here's my scenario.

I am on contract to by this property. It is worth $340K as is.

How much would you loan me?

The next question they ask you is "how much are you paying for the property"?

In this case, my contract price was $220K

Then the "ignorant" and inexperienced hard money lender tells me, we can only loan you 70% of your purchase price.

I ask him why, and he says, "we want you to have skin in the game.

To which I say in my mind, "really, and followed by "FU" again.

I then ask him, what about the equity I am bringing to the deal?

He says "what equity?" I then remind him again, I am buying this property for $220K

The value as is right now is $340. I am buying it at 65% LTV. I will have $120K equity on the day I close.

Don't you think that is enough skin in the game? To which the dumb hard money lender replies, "we still want you to put your own money in the deal"

Obviously, he did not get my business.

I went with the smart hard money lender who loaned me $225K on the deal, enough to buy and pay all my closing costs.

The dumb hard money lender called me a few weeks later to ask me what happened to his term sheet? I said, "let me check my bathroom" Just joking.

The moral of this story is this. When you live in America, you have choices.

As rehabbers, we spend a lot of money and time chasing deals. By the time you find a good deal, you have already invested a ton of money and skin in the game.

So, for a hard money lender to tell me that he wants me to have a skin in the game or what is my Fico when I put a 65% LTV contract on the table shows that the hard money lender is either a newbie or does not have a good grasp of the business.

I am sure some people would probably disagree with my position. So let's debate.

Who is doing who a favor? Is it the flipper who spent his money finding deals only to be told he needs more money in the deal? Or the hard money lender who controls the money and thinks the flipper does not have enough skin in the game?

I say, if you are buying a property at 65% LTV of ARV, lenders should be giving you a medal and throwing money at you. Especially since you are paying their crazy high interest rate and ungodly points.

The smart ones do. These days, there's a lot of money around. So, as a flipper, just focus on finding good deals and the money will chase you.

By the way, I turned down three other hard money lenders for my deal.

I will be closing escrow on it in a few days.

Purchase price, $220K. Loan amount $225K

Rehab $30K. Sold price, $364K. Gross profit,

$109K.

How many of these do you need per year to make a good living?

Check out the before and after pictures of the property. Happy Thanksgiving. I welcome your thoughts. 

@Rebekah Yearwood, @wendy g, @ sue thiel,  First let me thank you for your submissions. I personally review most of your submissions. They did not meet our criteria for purchase. 

It is unfair to make or pass a judgement on anyone that provides an avenue for you to make a buck.

I have absolutely no interest in taking leads from anyone and not compensating them. In fact, I know how to make my own deals and gicealfinders is my contribution to members of the public that are interested in getting an opportunity to get into the business.

The problem with providing this type of opportunity is that people misconstrue it and make demands that they don't deserve. 

I am not asking anyone for money or their leads. This is a partnership. I spend my time analyzing the deals and if it meets my criteria, I will buy it and compensate the submitter.

Our top locator made over $60,000 in the last 12 months and he has not invested a dime of his money.

Most people will never make money because they are not sincere in their intention. How can anyone complain for getting all the free information we provide.

I cannot force a deal. Our criteria for deal submission is clear. We are looking for vacant and abandoned properties. Most submissions are properties that are pulled from the internet. We can find deals on the net using other means. 

I have done over 450 deals by myself without seeking any deal locators.  So if anyone wants to bad mouth my intentions, I how they will be man enough to thank me for even taking the time to evaluate their submission and giving them an opportunity.

@sue Thiel, I have personally reviewed your submissions, and put comments on your profile of the results of our evaluation. We designed our website to be interactive and even if you did not receive our automatic email responses, it is your job to check your submissions and look at the comments which clearly stated that we have reviewed your submissions and we even sent you the name and address of the owners. What else could we have done for you for FREE?

I hope everyone will be fair in disseminating disparaging information without taking into consideration the damage they may cause.

Our members who follow the rules are making a great living submitting deals and they are getting great responses from us.