All Forum Posts by: Toyin Dawodu

@Shannon K.,@Brien OConnor, offering 10% below the asking price is not a low ball offer. In fact, you offered too much and you will not make money on such a flip if that was your intention. My offer would have been $55K on the $99K asking price. As an investor, you cannot make money once you deviate from the cardinal rule. Your offering price should always, (no exception) be 70% of the asking price or ARV minus repairs is your MOP. So in this case, my maximum price on this Fannie Mae deal would have been $69K minus repairs. Let's assume repairs come to $15K, so my maximum offer price would have been $54K. I will tell them, take it or leave it.

That is how you make money in this business if you want to be around for the long haul.

Anyone has a different formula? 

The lien was recorded after the first prelim was pulled. The title company usually pull another prelim just before they record.

When it comes to making money in real estate, it is never a done deal until your check or wire is in your bank. What would you do if you have been working on a deal for almost a year and on the day of closing, the city lien pops up?

I got such a call from my escrow officer on one of my deals.  everything was set to go, until the buyer's lender refused to fund because escrow cannot provide a pay-off on a lien that popped up at the last minute from the city.

When I got a call from my escrow officer about the lien, I almost hit the roof. I said to my escrow officer, why don't you call the city and get a demand. She responded, Toyin, I already requested and they told me it will take them two weeks. I was livid. Fire was coming out of my ears. I began to imagine the frustration of starting over again if I lose this buyer.  Now I knew why I wanted to hit the roof in the first place. I immediately called the city pay-off department and the conversation went like this with the city clerk.

Me,   "My name is Toyin Dawodu, and I am calling about the property located at.. ... can you please get me a pay-off regarding the abatement lien?

City Clerk- "some one just called a few minutes ago and I told her that we will send the demand in two weeks.

Me, "Maam, you don't understand, if we don't have these pay-off today, the lender will not fund the buyer's loan. If the loan is not funded today, the docs will expire, and I may have to find another buyer and start all over again."

City Clerk- " I don't know what to tell you. "Click"  That was the end of our conversation.

What will you do?

HERE'S WHAT I DID.

As soon as I finished with the city clerk, I began making a series of telephone calls to any and every official in my city hall.

I call the supervising abatement officer, I did not get any traction

I call my city councilman and his assistant said they will look into it.

I called the mayor's office and yelled a lot.

I called the city ombudsman and complained.  everyone I called, I asked them one question? 

How can investors help improve your city by fixing dilapidated properties when you stand in their way of making money?

This question confounded them enough for the city attorney to call me back less than two hours after I set the city ablaze with my phone calls. 

My first question to the city attorney was, "can you explain to me why it will take your city two weeks to give a demand on an abatement lien for which the grass was cut three months ago?  Then I used the city's slogan of "city of technology" against him. I said "so much for your so called wired city"

After some back and forth negotiation and maneuvering, the city attorney produced a demand that was sufficient enough for my escrow officer to calculate her estimated closing statement. 

The lender got the statement in time to fund the loan.  I closed my deal and got my check. 

The only person that cared about my check was me. So if I did not know what to do, or I had allowed fear of calling the Mayor or my city officials to stop me, my deal would have been dead.

Fear is the number one reason most investors fail in this business. How would you have handled this last minute deal breaker? 

Have you ever done a "No Money Down" NMD  real estate deal?

How did you structure the deal?
Did you make any money?
How did you exit?

In the eighties and nineties, the late night television audience were inundated with commercials about buying houses with No Money Down.

From the King of No Money Down, Robert Allen to the granddaddy of late night infomercials, Carlton Sheets, the rage was, "Anyone can buy a house with Nothing Down"

If you grew up in that era of real estate boom and burst, you may have bought, followed or been indoctrinated into the process of buying houses with non of your own money. Or have you?

In fact, that is one of the processes I focus on as my business model for buying and selling houses.

If that is the only process you know, you tend to specialize in it and it's your first choice.

So far, in my career, I have done more than 450 deals. I have just completed my house deal number 467. Yes, I have now bought and sold 467 houses, and unlike that famous commercial “doing it, did it, done it, I am not done yet, I am still going strong.

Here's my latest no money down deal. This is a foreclosure. I had to skip trace the owner all the way to China, wait for them to come back to the US, close the deal and negotiated with the bank to reduce the balance of the loan from $419,000 to $106,000

HERE ARE THE DETAILS 

ARV.                                $193,000

Purchase Price.               $106,000

Repairs.                                15,000

Gross Profit.                         72,000

Hard money loan.              120,000

Closing
And Loan costs                     6,544


Cash Down ZERO.                  0.00

Cash in my pocket
at closing                             $7,546

Bonus Check at 

closing                                $6,360     

Total Cash received at closing              $13,906

Total Gross Profit  at exit                       $85,906

This is one of five NMD deals I completed in 2015. The bonus check of $6,360 came to me as my commission for being the listing and the buyer's agent. This should encourage everyone to get a license and to impress on licensed agents that they should be investor agents instead of just agents.   

In fact, this is how majority of my deals are structured because this is the only system I know.  For those who are still wondering, NMD means no money out of your pocket. 

But I know I am not alone. In fact I know there are hundreds if not thousands of fellow investors who specialize in zero down deals.

So I have decided to invite everyone to come on this forum and pound their chest just to prove to Newbies, and other nay Sayers that there is such a Monster as "No Money Down" deals in Real Estate.

In fact, there is a reason they call it "Real Estate", the money is REAL!

To make this a fair competition, you must describe your "No Money Down" deal and be able to prove it with an address and closing statement. 

So I have decided to put my money where my mouth is.

To encourage the newbies and others who may want to learn the art of the No Money Down deal making process, I am inviting everyone to come on this forum to tell us about their classic No Money Down deal"  My final closing statement will be uploaded or linked at the end of this competition.

Over the next 90 days, if you have a deal, that you previously did or you completed within the next ninety days, please come on this forum and tell us how you did it, how much you made and what newbies can learn from your experience.

This may be your way of giving back to the young, up and coming newbie investors.

As an incentive, I have decided to put up the following gifts for the three deals that are voted the best by the forum and a group of veterans.
These tools will be donated by my company for the best three No Money Down deals. My deals are not included

An I-phone
An I-pad
One year subscription to Bigger Pockets as a pro or to Realty Trac.

In addition, if your deal qualifies, you may also be included in the book I am curating for the No Money Down Hall of Fame.

Where the grand daddy of No Money Down Deals will be writing the preface and also describing his favorite No Money Down deal.

So let's have your contributions, send in your stories and let the voting begin.

Forum members can vote on a scale of 1-10. If you have a deal, done a deal or will be doing a deal in the next ninety days, tell us about it.

I like the challenge of No money down deals. If you know how to structure them, you would never have to worry about money again in your life.  

@Chris Reeves It is always good to create new relationships. Unfortunately for me, majority of my deals were done with one or two HML because I was so loyal. But they were not so loyal when the recession hits and I needed them. So I want to have as many as possible in my radar and make them compete for my business. I am their source of income.

I ask this question because some would be investors have it completely twisted. Based on my observations, there are two kinds of investors.

The people who buy for profit know why they are buying. There's no emotion involved.

It's similar to Walmart sourcing for inventory. They don't go to Kmart to stock their shelves. They go direct to manufactures in China or wherever they can find the cheapest.

As an investor, where or who you buy your inventory from determines your profit.

I once hired an Assitant, and she told me she was an investor. I asked her how many properties she owned and she said, "I own three properties, the house I lived in, one rental, and a vacant house in the boonies somewhere in Ohio.

How long have you owned the rental? I asked, She said, "fifteen years" how much money have you made so far? She explained that she had not made any money and the property costs her money monthly. She bought in the wrong are, and for too much money. 

Then I asked, how much are you putting out extra per month? $200 extra she said. So I said to her, you have an an alligator in your hands. First she was puzzled, until I explained to her what an alligator of a property is. When you have to come out of pocket to support a property monthly, then you have an alligator.

NO EQUITY NO PROFIT.

On top of feeding her alligator, she has very little equity in the property.

Then I asked, why don't you sell it. She stated that the renter makes it difficult to show the house, and she may have to come up with money to sell it because of sales costs and comission.

Her other property is in Ohio, she had purchased it in a tax auction, but never had enough money to fix it, so she has been accumulating property taxes on an empty property for six years.

So I gave her a plan to sell both properties immediately and she was able to even make some money within sixty days of putting the plan in effect.

KNOWING WHAT TO DO MATTERS

When you are upside down on a property or close to break even, it is sometimes costs more money from your pocket to sell through an agent. The quickest way to sell is direct to another end user of the property or owner occupant, with some money down and carrying the paper for as much equity as you can get in the back end.

This leads me to my original question. What kind of

Investor are you? Are you in it because your neighbor is an investor, or are you in it because you really want to make some money?

Is real estate a career for you, a business, a passtime, or a hobby?

Your answer to these questions will determine your success in this industry. Secondly, the amount of paid training and or coaching is what really separates you from the wannabes.

Some would be investors refused to take the necessary training, thinking that absorbing all the free information from other investors and the Internet is enough to make them a successful investor.  So the question is, does anyone really need a paid training or a coach to succeed in this business? If so, what kind of training is really necessary and for how long. Let's hear your views.

@Gino Barbaro, you are right. If there's plenty of equity in your deal, LTV is at 65%. The balance of the equity is the only skin the investor needs. There are some here who still think an investor needs a skin in the game. That may be right, if you present a HML with a deal at 100% LTV and there's no upside.

When you buy a property like I was taught to buy a property, there is already a built in profit of 30-40% equity waiting for me when I exit the deal. If you do it any other way, then you are not in this business for real. My goal has always been to buy low and sell lower.

HML have their place as agents and money brokers. I have been one, loaning out my own money. However, I do understand it from an investors point of view. If the deal has enough protective equity, i will not impose further on the investor by asking the stupid question, "how much skin do you have in the game" Most hard money lenders do not buy properties for a living, so don't regard an investor's cost of acquisition and lead generation as expenses and part of his equity. I offered the property I just bought to four so called hard money lenders. Three of them gave me the same requirements I could have gotten from BOA or Wells Fargo. 20% down of your purchase price. based on that, the hard money lender would have been loaning me money at 43% LTV. This did not make sense to me.

@David Begley, you are right, what's my tax return got to do with anything. I control an asset that will pay back your loan. The loan is the security. I am not complaining about HML, they just need to quit trying to be like traditional banks.

@Mike Arias, I am not really blaming the lenders, I just want them to let the world know that they don't qualify as HML. Hard money lending is asset based. Period. Not Credit or skin in the game driven.