You can sum up Darnell’s Chicago real estate investing business in one line: Don’t ever quit until you get what you want. Darnell has a hunger for success that drives him to push through the challenging times. Darnell got into real estate investing after reading Rich Dad Poor Dad and resonating with the outlined path to success. Once he realized that an “average Joe” can find success in real estate investing, he was hooked.
Ten years later, Darnell has made money, lost money, and has worked with several business partners. Although it has taken him time and experience to learn how to effectively vet a good business partner, Darnell loves the leverage that it comes with.
As a wholesaler, Darnell asks this question: Do I have a solution to this person’s problem? Sometimes the answer is “yes” and sometimes the answer is “no.” Darnell wants to provide a solution for a seller and waits for the right deal to do so.
We recently sat with Darnell to learn more about the deal he found on MyHouseDeals, his motivation to be a real estate investor, and what he’s learned from his mistakes and successes.
Listen to our conversation with Darnell during which he talked about this recent deal, plus…
- The benefits of having a business partner
- How to market to motivated sellers
- Why you should consider getting a real estate license
NOTE: Since Darnell 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 Me More About Yourself…
How long have you been an investor and how did you get started?
Since 2007. I read Rich Dad Poor Dad on the advice of a mentor and it made a lot of sense.
What about the book made sense to you?
The way it was laid it out made it seem like there were several choices to become wealthy, but this one was the one that made the most sense and statistically, it was the one that your average Joe with no special skills or anything could succeed at. Mathematically, it was the safest, most guaranteed path.
What do you like about working with a partner in real estate investing?
The first partner I had was not the greatest in the world for a lot of different reasons. My current partner, Margery, was a client. She was trying to make some extra money for retirement. I suggested that they flip a couple of houses before buying an investment property because an investment property is expensive. I wanted them to be safe so they could use the extra capital.
If you have the right partner it’s the difference between being able to actually get where you’re trying to go and being stagnant. I like having someone else that I can depend on to get through the tough times. Leverage… That’s probably the best way to summarize it. I just like the leverage aspect. Time, resources, and I can be in two places at once. We’re in two places at once right now.
How did you take your first step into investing after reading the book?
I saw a bandit sign to go to a boot camp. The first one was a little weird. They had a speaker who was just about as disingenuous as they come, but overall it was step one into the culture. It’s really a subculture. Eventually, I met my first partner at a boot camp.
How do you divide responsibilities with your partner?
We don’t necessarily have it structured that way. I’m more or less the brains and the labor of the operation, but we’re like a family. We’re very good friends. It’s not like a division of labor or “check up on you” thing, it’s kind of like… This is the direction we’re headed in, this is why, and I’ll update you as things happen.
What’s the difference for you between having a partner and having just a private money lender?
Like I said, the leverage and division of labor. There are so many steps, there is so much research. Even when it comes down to keeping track of all the expenses, paying bills, and documenting things, having a partner is beneficial. I mean, it’s a business.
What is your primary Chicago real estate investing strategy?
Wholesaling and rehabbing.
How do you market for your wholesaling?
We are about to start direct mail. We have a combination of direct mail and online methods, as well as word of mouth. Because I have a real estate license and I’m in the industry, there are always a lot of contacts and one thing leads to another. You run into one person and that person may know something or someone mentions that they have something that may be of interest and so you go there. I found my best wholesaler ever through you guys. It’s tough to find a good wholesaler.
When you’re working as a wholesaler, how do you convince the seller that you’re serious about buying the house?
Well, I don’t feel like you need to convince them, you know? Your job isn’t to convince them. Your job is to present an option that may work for them. If it does, great. If it doesn’t, great. I think too many people focus on their ego or their ability to sell and it’s really not about that. Do you have a solution to this person’s problem? Yes or no? If you do, at that point and time, great. You may have the solution to that person’s problem and they’re just not ready for that solution.
Also, it’s about personalities. It’s a people business. If they like you and they click with you then they’re more likely to sell to you even if you offer less. I’m not the cheapest broker. If you focus on your ability to sell, you’re probably not speaking with enough people because we’re in the type of business that more or less sells itself. If you are the person who’s there when they have a need, nine times out of ten, you’re going to be the person that gets the business if they mesh with your personality.
It’s not about sales, it’s about whether they like you or not. Do they trust you? Do they feel like you actually have the ability to help them?
A lot of times, in my experience it was just about whether you meshed with someone or not. And if I’m excited about a deal, I’m excited about it. If I’m not, then I’m not. I’m just brutally honest with people all the time. There are so many deals. I have a saying that the deal of the lifetime comes along once a week.
Tell Me About This Deal…
How did you find this Chicago real estate investing deal on MyHouseDeals?
I think that another mistake people make in this business is being too narrow. You need to look at your market place and look at every deal to see what can be done with it. You have to think: What are the possibilities? You can’t think: This is what I’m looking to do. It changes the way your brain looks at the transaction possibilities and what the deals are.
Some people take this to the extreme and see an old deli and want to turn it into a bed and breakfast somehow. You know? Other people can look at a hotel that doesn’t perform very well and turn it into a very thriving senior citizen community. I was looking for money. What out there is the deal that’s going to make us some money? It didn’t matter what kind of deal it was. It just so happened that there was this multi-unit building that my wholesaler listed that I called on. I forgot that I called on it and he called my partner, Margery. She called me one day and said, “Hey, call this guy. He called asking about a property or something.” I called, we talked, we hit it off and started talking about a completely different deal.
I got involved and bought that. We paid $40,000 over the asking price and closed on the property.
Did you flip this Chicago real estate investing property?
I intended it to be a small wholesale deal for my aunt because we have a building that my family owns around the corner. We were trying to transition everything over and restructure stuff. She just got cold feet at the last minute. Then we just popped it off to one of our other investors.
How do you find good contractors?
We have not had great luck when it comes to finding contractors. Your contractors are really supposed to be your partners. I’ve gotten referrals from people. We have use Angie’s List and that has been a main method of finding them.
We have used one contractor a couple of times. This time we tried to use someone that I thought was a friend who had experience working in the neighborhood and gave a great quote. She just ran off with $20,000 in deposits, so we are going to court over that, soon. We have good crews now, but it was a process, as all of this has been. It did not line up overnight, I will say that.
What advice do you have for new investors?
Do I recommend that people get licensed? It depends. It depends on where you are. If you have nothing and you really want to grow as fast as possible, I would recommend getting licensed because there’s so much more support for people with a license. It almost legitimizes what you do. If you start off with nothing and no experience and say, “I’m a real estate investor,” they kind of look at you like you’re not serious. If you get your real estate license, people understand that. They say, “Oh, so you’re a realtor.”
You can be so much more than that because there’s freedom in that if you have a lot of resources and you know someone who’s already doing well and you can just kind of leverage their talent. We’re making the switch now from transactional to passive income. It’s going to be a process, but we’re excited. That is the end game.
Do you plan to acquire more rentals?
Oh yeah. Don’t ever quit until you get what you want. I got to the point where I hated this business. I hated it. It was destroying my life. Destroying my relationships, finances, and everything else. It felt crazy, but I am just not the type to lay down and die.
I’m a fighter and so I just kept pushing, kept learning, and kept trying. I just got to the point where I said, “Well, I officially no longer want to do this, but for everything that I’ve put into this, real estate industry owes me about two or three million bucks.” After I get that back, I’ll decide whether or not I still want to do this. Since then it’s just been a matter of getting my two to three million dollars.
It’s a career. Some days you love what you do, some days you hate it. It fits me.
I kind of wish that I had a smoother path. But, I really started with nothing. My parents have backgrounds in real estate, but they didn’t give me anything. They supported me doing it, they kept hold on the finances and gave me some initial startup capital after I had established myself, but for the most part, I had to make it happen. It was hard starting from zero and not knowing anything and having to learn everything.