My First Deal: Man I Screwed That Up!Feb 22, 2022
Donny Coram: Hello, and welcome back to the Foreclosure Deals Coach podcast. I am your host and foreclosure deals coach, Donny Coram, broadcasting live from our downtown Denver recording studios with credit to my executive producer, Mr. Jonathan Winston, up in the booth, what’s going on, man? Thanks for all your work back there. Let’s get right to it. The title of this show is, Man, I Screwed Up. Donny’s First Deal.
Now, here’s the thing, if you listen to the pilot show, I went into details of why you should listen to me as your foreclosure deals coach. It’s a big thing to take on a moniker like that, to have people recognize you as somebody who can coach them in their real estate investing career. But I have to tell you, I got there through the school of hard knocks, pretty much everything that could go wrong in over 200 flips, since I got started has certainly gone wrong. But none and I mean, none were quite as bad as my first deal that I managed to completely screw the pooch on and yet still made a profit of over $17,000 on my very first deal.
So, I’m going to take you back in time today, we’re going to address this first deal and tell you the story of my first deal. What I’m hoping you’ll get out of this is that my goal is to help you to avoid the pitfalls that I made to avoid making the same mistakes. And here’s the thing: you could definitely go out and figure out foreclosure investing on your own. The trial and error method most certainly works. I am living proof after my first deal back in 2004. Here we are talking 16 years ago now. Since my first deal way back when I am living proof that you can get there through trial and error. But do you want to?
In the YouTube University, the podcast University era that we’re in, right now, there’s a benefit to the power of the information that is available at your fingertips right now, very largely for free. So, why make the same mistakes? I encourage people to go out there and take massive action and get started in foreclosure investing. If you don’t have all the knowledge that you need, there’s stuff you’re not going to learn until you do it. But the key is to get started so you can avoid some of the obvious mistakes that I made along the way. So, with that, let’s get started and talk about my very first deal. I feel like I got to do that whole flashback sequence.
All right, so the time is now 2004 – if you could imagine. And at the time, I was working for a local software company that provided server management software. And if that sounds boring, it’s because it is. I was working in technical support at the time and so basically, all day long, people called up and griped about the effectiveness of the software. That was pretty early market had a lot of venture funding, so tons of money to market, spent a bunch of money on marketing, but not near as much on software development as we probably should have. So, needless to say, the tech support department was constantly busy.
So, I showed up for work as I did every single day regretting and basically hating my job. And if that describes you, that’s my point. The thing about real estate investing is it’s generally an exit from something you don’t like doing. I’ve met absolutely no real estate investors who hate their job—not one. Everyone I know who does this gig absolutely adores it. Now, maybe your mileage may vary. But I can tell you that generally speaking, people are transitioning out of one part of life to get into real estate investing. They just don’t know how to get started. And I was like that, too.
So, at the time, most of the information in 04’ was the fledgling internet compared to what it is now. So, I did a ton of research on that I was buying courses, I was doing all the educational pieces I could do. But at the time, podcasts weren’t quite as popular as they are right now. So, you didn’t have that ability there. YouTube was very much in its early stages, so that wasn’t even a possibility at the time to get information there, you had to go out there and just move it. So, I come into work and my co-worker—if you can imagine these giant cube farms and I have to tell you, I’m shuttering a little bit just flashing back to the era of working in his corporate office environment that I hated so very much.
But I’m sitting in my cubicle, and I am now working on troubles support ticket number 19,844, whatever it happened to be, and I’m dreading my existence as I remember doing quite a bit when to break the monotony, my cube neighbor, a fellow Tech Support Engineer, and a generally great guy to hang out with, Greg, yells over the cubicle wall, “Hey, Donny, do you know what I’ve always wanted to do?” Now, here’s the thing, when you’re sitting in a cube farm, you’re willing to talk about anything but the job that you’re doing at the time, right?
So, I’m super excited, “Yeah, tell me, Greg, tell me what it is you’ve always wanted to do.” And he goes and says, “I’ve always wanted to do a real estate investment property.” Now, I got to tell you, I don’t know if he had been looking over my shoulder while I was working or when I left my computer or if he’d seen the books on my desk. I didn’t think we had had an extensive discussion about real estate investing. But obviously, he knew that I was interested in this topic. But you can’t plant a seed with Donny Coram and not expect something to come of it.
So, that started something for me. I said, “Man, I want to do that, too.” He’s like, “Well, we should do it.” So, the first step, and everybody’s real estate investing life is deciding to do it, it is so much more mindset than it is methodology or tools. Getting a contract signed, once you’ve done it a couple times, it’s pretty easy. Getting access to the dealhunter.io software to start being able to analyze the big data that allows you to find deals, fund those deals, know where to fix them, and know where to sell them on the flip side of the deal is not that difficult.
But getting yourself to be at that mindset where you’re actually going to do your first deal I have to tell you, that is the biggest struggle that people face in my experience. So, that’s what I focus my coaching practice on is helping people to overcome that mindset by assuring you that you’re going to have all the pieces you need once you’ve decided to take that initial step and get started. So, once Greg did that he had planted a seed. And Donny who has been researching this at this point for several months has gone into action. I immediately started looking for deals. Well at the time, Facebook groups were a whole lot more powerful. But there were online groups to discuss deals, and I found a deal in there from a guy who was wholesaling a deal off. Now, I didn’t know what wholesaling meant at the time. You may just be getting started in wholesaling, so I’ll give you the basics. He had gotten it under contract at a substantial discount and he was reselling that contract to an investor that wanted to buy the property.
Well, basically, we went and saw the property I was super interested and Greg seemed scared to death, but was going along with my momentum, as it’s so common for me, the energy is overwhelming. So, people tend to just come along with the idea. So, we bought this property using conventional financing. It was a turn-of-the-century home in Colorado Springs, Colorado, on 439 East Beeson Street. If you’re familiar with Colorado Springs at all, it’s located in the downtown area, just east of the major hub of downtown, a few blocks away great location, but a turn-of-the-century home built in like 1902.
So, if you’re tracking here, there’s two mistakes I’ve made so far: Number one, I know nothing about turn-of-the-century homes. And my general advice is if you’re just getting started, you don’t want to buy something where everything can go wrong with the property. When you’re dealing with something built in 1900, now 120 years old, that house is going to be a big problem.
Number two, I didn’t know how to value it. I didn’t have access to big data just yet, but I’m eager. So, we ended up buying this property, they say you never forget your first right. So, we bought this property for $212,000. Mistake two was not knowing if we were paying the right price for the property. See, we really didn’t know anything about valuation. And this is a recipe that is ripe for disaster. Buying a house you don’t understand because of the age and then not understanding valuation, you don’t have to go through that, you can hop on to dealhunter.io and get access to big data right now and the coaching you need to use that software to effectively do valuation. But I didn’t have that.
So, we get the property and we finally get closed, using conventional financing, which I’ll quickly note was mistake number three, because you don’t want to use conventional financing when you’re buying a fixer-upper. Why? Because banks don’t like fixer-uppers. Generally speaking, you want to use hard or private money lending, sure the interest rate’s a lot higher, but you’ve got a higher probability of getting the deal done.
And I got to tell you, it was a harrowing experience up late at night concerned alone was it going to go through. Then it was on, then it was off again, they didn’t like this part about the condition. We went through multiple lenders to get there, everything that could have gone wrong went wrong because that conventional financing. I kick myself today for going through that process. And I heavily advise people not to do the same. So, you can see here at this point, I’ve made most of the mistakes that you are likely to make in a fix and flip for you already. So, you don’t have to go down that road. You’re welcome.
But we did finally get it closed and Greg and I go down to the property after work. So, we got the corporate grind. And, again, we closed this about a month before my daughter was born. So, I remember my daughter was born in January, so it was bitter cold, we go down there, there’s no heat on, we were definitely afraid the pipes were frozen, which was a valid concern because they were, we get the heat on. We fixed a couple of pipe issues, had a plumber come in, and got that done.
And then once we got the house livable as it were, heat running and all that stuff going, I stood in the living room with Greg and I’ll never forget this, and I go, “So, what do you want to fix first, man?” And he goes, “I don’t know. I thought you wanted to do this fix and flip thing?” “Well, you said you had a background in construction, Greg.” “No, no, I said my dad has a background in construction.” See, we hadn’t discussed how this partnership was going to work. And had this particular partner not been such a great guy and friend, that could be the end of the story, this is a recipe for disaster.
Well, a couple of weeks of going to the house goes by, and we got as far as – wait for it now – fixing the cabinet poles and kitchen knobs. Went to Home Depot, bought a couple of cabinet knobs, we were so excited about doing the updating. And then we looked at the rest of the house and went, Man, we just got started. This is just the beginning. So, at this point, I have to go to work by day, go to the property in the evening to not know what to fix. And of course, I’m going home to my now ex-wife and we are about to have a baby, she’s convinced this house is going to bankrupt us. This is the end, we’re going to lose everything.
So, I freaked out a little bit. And there happens to be a local Colorado Association of Real Estate Investors meeting going on one fateful evening, we go to the house. So, I leave the house, go to the meeting. And there’s one of the resident gurus on stage, a guy that later went on to become my mentor and good friend, Mr. Michael Jake, I highly recommend you look him up. But he’s basically addressing the crowd saying, “I can solve any real estate problem you have, just bring them to me, and I’ll solve them.” It’s almost like a bright light had lit up behind him and he was levitating a bit. Because at this point, he was like a god to me. It was incredible to have this guy on stage, willing to address my problems.
A bunch of people shot problems at him, he knocked them down, like there were nothing, solving all these issues. Finally, he gets to me, I raised my hand sheepishly, I tell him the story of the fix and flip, that I didn’t know how to get started, didn’t know what to do, had no real money to fix it, and no knowledge to actually do the work. And he looked at me and just plainly said, “No big deal, sell it as a fixer-upper.” And I said, “Well, it’s not exactly a fixer-upper.” He said, “Yeah, exactly. So when somebody gets it, they’ll appreciate that it doesn’t need that much work. And they will want to do the work. You know what I mean?” I go, “Man, why did I not think of that?”
So, I put an ad in the paper – yes, at the time, this is how you advertised property, you put a classified ad in the paper. If you’re not old enough to remember that, that’s your problem. I don’t want to hear about it. So, we put this ad in the paper, “fixer-upper for sale, downtown location, easy access to I 25, a local highway there,” just all the stuff I could think of to put this ad and I waited for the phone to ring. And then, sure enough, it did. And a young nurse is on the other end of the phone and she says, “Hey, I’m interested in the property.” I give her the details. It’s a fixer-upper going to need some work and put some sweat equity into it. She said, “It sounds great. I want to take a look at it.” I don’t know enough about this process to know that I’m supposed to show her the property. So, we had put a lockbox on it and I sent her out there to walk through the property on her own.
She called me back on her cell phone and said, “I love it and I’ll take it.” I said, “That’s great. But I haven’t told you the price yet.” She says, “This is the location I want. it’s close to the hospital. I don’t mind the work that it needs. I know you haven’t told me the price, but I will take it.” So, I put the phone down. And if you can imagine me doing the Snoopy dance, just sold a house, just sold a house. And then I realized I got to tell her the price. I haven’t done any analysis on pricing because I don’t know how to do that. I don’t have access to the tools that you have available at your fingertips right now. So, I just made up the first number that came to mind – 247,000.
She said, “Okay, like I said, I’ll take it.” Now come to find out. Because when you don’t know what you’re doing, you’re going to make mistakes like this. The house had to be appraised during the process of selling it to her, and the appraisal came back at $263,000. So, basically, I left like $15,000 on the table, just with my sheer ignorance. That’s like mistake number, what do we got? Four or Five? I don’t know, so many of them. But in the end, she ended up buying the property for that $247 price. And the profits came back in and Greg and I split the profits evenly. And I got a check that day for $17,846.32. Not that I’m keeping track. Duh.
And I took that check, and I cashed it and I walked it back to the house and I showed my wife at the time, I said, “You see that? Do you believe in me now?” And it completely changed my life, within a few months, I was no longer able to function in my day job because visions of fix and flips were dancing in my head. I did my next deal with the same guy who became my mentor for years, he assigned a deal over to me, I did that one and made less money on the second deal, but I was hooked man. I was completely hooked. $17,000 was more money than I’d ever seen in one place at one time. I was a young guy, just had a baby, real estate investing was for me. And I’ve been doing it ever since.
As it sits today, I’ve done over 200 fix and flips, 400 or so retail deals over the years and I’ve helped people just like you to find deal hunters, listeners of the Foreclosure Deals Coach Podcast to build seven figure net worth by buying and holding or buying and flipping foreclosure deals all across Colorado, for sure. And in recent times, starting to work on a more national level through my coaching product.
And I am certain, I mean 100% certain that I can do the same for you. Why? Because the biggest thing that’s stopping you at this moment is not that you don’t have money. It’s really not that you don’t have knowledge because to be honest with you, the knowledge is available in droves all over the place via this very podcast, via the YouTube University, via listening to other people’s podcasts. What comes to mind is Bigger Pockets, Wholesaling Houses full time on Facebook with Alex Youngblood, Max Maxwell’s course on doing wholesaling, the fix and flip information out there is available in droves. So it’s not information.
What’s stopping you from taking your first step right now is your mindset is in the way. And I know that to be fact, because I was in the exact same spot before doing my first deal. But I believe guys in the principles of fail forward fast. And because I believe in that, I just made myself go forward and do it.
Now maybe you can’t do that, maybe you’re not in a position mentally to do that. If that’s the case, that’s why I want you to get started as part of my deal hunters group, my lovely deal hunters out there, we’re solving those mindset issues each and every single day. And we’re adding the methodology, the processes you have to take and the tools you should be using in order to become a successful foreclosure investor. You are only one mindset shift away from doing your first deal and pocketing your first check of $17,846.32. I’m 100% certain we can get you there.
But I did it all wrong, and managed to make a profit. Imagine if you could avoid those pitfalls, if you could not have to walk in the dark of real estate investing, but rather have just a little bit of light on to guide your way to avoid some of the obstacles that I faced, so you can become a professional investor faster, you can support your family in a way you never thought possible. You can change your life and lives for generations to come in your family simply by buying properties below market and then deciding on your exit strategy, wholesaling, fix and flip, rental, whatever it happens to be your key to wealth is right outside that first step that you just have to make. We want to get you there.
So, that’s my story of my first deal and how I managed to screw everything up and still made a profit on that deal. I’d be willing to bet we can get you there much faster, making less mistakes just by tuning in here. So, to get started, I’m going to ask you to join the Foreclosure Deals Coach Insiders Group, the URL to the group is right here in the show notes and get started with the software you need to access big data at www.dealhunter.io. We’ve got so much to cover, I love that you tuned in to my story, I have a lot more stories to tell you right here in the Foreclosure Deals Coach Podcast. But that is our time for today. So, this is Donny Coram, your foreclosure deals coach reminding you now and always, don’t buy a house, buy a deal.
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