DeJuan Shares His Recipe for Building Wealth One Rehab at a TimeReading Time: 10 minutes
DeJuan recently purchased his first property from MyHouseDeals, but he is far from a newbie. He’s coming out of a long break from real estate investing more determined than ever to build wealth with Chicago investment properties.
DeJuan takes advantage of his existing connections and relationships which makes vetting a property, identifying comps for a property, and finding a contractor that much easier. He currently works full-time in addition to his part-time investing work, so maximizing his resources is crucial for his time management.
DeJuan has big plans for the future. The next chapter of his real estate investor business includes plans to build a subdivision. DeJuan would like to see this come to fruition in the next 10 years, but for the next two years is focusing on meeting people, building more relationships, and growing his own liquidity.
Listen to our conversation with DeJuan, during which he talked about his recent deal, plus…
- How to find profitable neighborhoods to invest in
- What two upgrades you should always do to increase your rehab profits
- Why you always need to have a property inspected
NOTE: Since DeJuan is a Premium Elite member, he received a FULL refund of his up-front membership fee for simply doing a deal! Find out more about our Premium Elite membership here.
Tell Us More About Yourself…
Can you tell me a little bit about your experience? How long have you been investing and what motivated you to become an investor in the first place?
Actually I’ve been doing it since I was 18, so about 20 years. I got out of the business back in 2006,’07-ish, when the market took a turn, but now I see the market coming back and I want to get involved again. This is actually the first deal I’ve done from your website.
What was the jumping point for you in getting back into real estate investing?
Talking with other investors. I just knew that the market was turning around. It was a buyer’s market for years, a buy and hold kind of market. Now it’s at the point where you can buy, fix up and sell again. It’s a seller’s market. Interest rates are down. I think it’s easier to get approved for loans than it was several years ago.
Are you a part-time investor or a full-time investor?
Currently just a part-time investor, but I want to get back into it full-time. I have a job now, so I have to be only part-time right now.
How many hours a week do you spend on part-time investing?
Actually in this property, I’m on site almost every day going over stuff with the contractor, making sure things are going the way that I want them to go. I go to work and then I go to the property after work so I’m spending quite a bit of time during the week. I’m a hands-on kind of guy; about 25 hours.
When you first started investing at 18 years-old, was it difficult to take your first steps?
It was hard for me to branch out on my own. It was a little difficult. When I first started, I worked with a couple of guys who did all my deals for me, and I just gave them money. They would give me a return on my money, but then I felt like they were making more money than they were giving me, so I thought, I need to figure out a way to do what they’re doing and use my own money, so I figured it out and I started doing it on my own.
How did you research that process and make your first step?
Hanging around these guys. Just hanging around them and picking up little things here and there. I laid in the weeds,and they probably didn’t know that I was picking up information from them. I mean, I’m 18, 19 years-old, they’re probably not thinking that I’m thinking that way, but it was all a plan.
Tell Us How You Used MyHouseDeals to find Chicago Investment Properties?
Can you tell me a little bit about how you used MyHouseDeals.com and what you found to be helpful on the website?
An investor had been sending me houses over the past year and I really hadn’t paid any attention to it, and then I saw a house that he emailed me, but that deal fell through for whatever reason. I Googled the house and it came up that it was listed on your site. I went on the site and visited it, but I couldn’t really get the addresses and stuff to some of the properties. I wanted to see the properties before everybody else, so one night I came home from the club and it was about two in the morning and I thought, “Let me go ahead and sign up.” I signed up and went through the site and I saw this property, and actually that same night, I emailed the seller and then now I have the property.
How do you use the website now? Do you still get on it and look for properties?
Oh, I’m on it all the time. Every time I get an email update, I go on the site and I look through the properties, because I’m always looking for the next good deal. I’m on the site 4 to 5 times a week or a day.
When you were looking for the property that you bought on MyHouseDeals, what kind of Chicago property were you looking for?
I was looking for specific areas. I was looking for the penny on the dollar, so I was looking for something that had a little more room to make some money off of, but also had to be in a decent area. Those were my criteria.
How do you research and choose the neighborhoods that you’re interested in?
I always visit the neighborhoods. I mean, I’m pretty familiar with the Chicago area, especially the city. There’s some areas that I will avoid, I’m being honest. If I’m interested in a house and I feel like the area is decent, I go see the area, drive around, walk around, and see what’s going on in that area. Are there new buildings going up, new condos going up, new houses going up? Are there a lot of For Sale signs in the yard? Then I also get comps on properties that have sold there in the past six months. That’s the research I do before I make a decision on buying.
What do you use to do your comps?
I have a friend who can do all that stuff for me, so I just consult with him.
When you decided to make an offer on this house, what was your strategy for negotiating the price?
Not a full price offer; I would never do that. I’ve negotiated contracts before, so I have some experience with it. I would never go in and offer anybody what they want.
What’s your process for estimating the repair estimates?
If I go in there and just do the minimum work that’s needed, that is one price. Then if I want to go in there and upgrade it, is another price. I wanted to upgrade the bathrooms, change out the flooring, redo the kitchen, restructure the kitchen. My contractor and I, who I’ve known for 20 years, just got together and came up with some numbers.
What is something new you have learned with Chicago investment properties?
I’ve learned some things about how things work in Illinois, in Chicago, as far as some of the things they charge at closing and some of the things that you have to deal with, with construction, remodeling and stuff like that. This is actually my first property that I’ve bought in Illinois.
Tell Us More About Financing This Deal…
How did you finance the deal?
I went through a hard money lender.
Has your financing strategy changed over the years?
Not really. I think getting a loan is a lot harder now than it was back then. I think the value of properties have definitely went down. That’s why you have to find those deals that are worth the work and selling. You have to make sure it’s enough money in there where you can make some decent money off of. Other than that, I think it’s pretty much the same process as it was back then.
Since this was your first deal in the Chicago market, how did you find a hard money lender that you were happy with?
From the investor who was emailing me about properties. He sent me a couple of companies that he has dealt with over the years, and I contacted one of them and they seemed legitimate. They worked really well with me and we got the deal done. I’ll use them again for sure.
How did you decide what to rehab and what to leave alone?
I just always know that a house sells by the kitchen and bathrooms. Every other room is just fresh paint. If you’ve got to put carpet, new carpet, paint, or this house has all hardwood floors, so basically just painting and staining the floors. It’s some upgraded light fixtures and stuff, but other than that, the kitchen and the bathroom is what people really don’t want to have to come in and do. If you see a nice kitchen, nice bathroom, that’s done. Anybody can come in and paint some walls the color that they want, so you just paint them white. That’s how I decided what to do in that property.
How did you find your contractors for this property?
I’ve known this guy for 20 years. I went to high school with him, and we’ve always planned on doing some deals. He’s been in construction for 20 years. He’s a 4th generation carpenter.
When you sell this property, do you plan to use an agent? Do you usually use an agent?
Yes, I will use an agent. Back in the day, no, because back in the day the market was a lot different. Well a majority of the properties that I flipped back in the day were to investors. I would basically sell them myself, as For Sale By Owner. Now that I’m trying to actually sell it to somebody who will live there, because I want to get maximum dollar for it, I’m going to use an agent because they’ll list it and know what people are looking for. If someone is looking for a 4 bedroom town home, an agent can take them to the property instead of me having to sit here and try to find people and take off work and all that kind of stuff. I’d just rather not deal with that.
Ten years from now, what do you hope your real estate business will look like?
Hopefully I will have built a subdivision somewhere.
Do you know the steps for what that looks like?
Yeah, I actually researched it back when I was in the business. Before the market went south, I did a lot of research about getting that done. I was on my way to getting something like that done, but like I said, the market went south and you had to run while you could.
What are your goals in the next two years that are going to help you get to your ultimate goal of building a neighborhood?
Building relationships again. That’s basically it. I think you need to know a lot of people, shake a lot of hands, meet people. I think that’s the most important thing. The money will come. You’ll find the money; I don’t think that will be the big issue. I think it’s more meeting people, meeting the right people, putting yourself in the position to do things like that.
Is there any advice that you have for your younger self as a real estate investor?
For my younger self, I would have told my younger self to hold on to more properties. Don’t live for the fast cash, live for the long haul. But now, I don’t see it that way because I’m trying to do something bigger and better. I want to have the liquid, versus the properties, but I would have told myself back then just hold on to it. I probably had 50 properties where I was free and clear, just renting instead of selling them.
What advice would you have for investors just getting started?
I would tell them to do their due diligence, make sure that they do their research: Study, study, study. There’s information out there that you can read that will help. Find somebody who knows the business and talk to them about it. Get as much information as you can, because this could be a great thing, or it could be a bad thing too if you get in over your head. Also, when you find a property, make sure that you get it inspected. A lot of unforeseen things can pop up, and that will eat away at the money that you’re trying to make off of it.