JF1525: Leverage A Mentor & Scale Faster with Dakarai Towns
Dakarai had done a couple of wholesale deals on his own and more with a mentor. He was able to partner with someone with more experience, learn the ropes, and build his own business while in school full time as well. We’ll hear breakdowns of some of his best deals and how he made them happen, as well as how he was able to work with a mentor. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Dakarai Towns Real Estate Background:
- 24 year old senior and REI entrepreneur working in real estate for 2 years
- Getting his BA in interdisciplinary studies and doing real estate at the same time
- Based in Columbia, SC
- Say hi to him at DhomesrealestateATgmail.com
- Best Ever Book: Best Ever Apartment Syndication Book by Joe Fairless
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Best Ever Listeners:
Do you need debt, equity, or a loan guarantor for your deals?
Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.
I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him email@example.com
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Dakarai Towns. How are you doing, Dakarai?
Dakarai Towns: I’m doing great, Joe. Thank you for having me again, and hello to all the Best Ever listeners.
Joe Fairless: Well, I’m glad to hear it, and you’re more than welcome. I’m looking forward to learning from you and learning about what you’ve got going on. A little it about Dakarai – he is a 24-year-old senior and real estate investing entrepreneur. He’s been working in real estate for two years while getting his BA in interdisciplinary studies. He has done a couple deals independently, and then he has partnered up with a mentor and done many more. He’s based in Columbia, South Carolina. With that being said, Dakarai, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Dakarai Towns: Sure. A little bit about me – I’ve been in real estate for two years, as you’ve said before, and I started wholesaling real estate and single-family homes. I did a few single-family home wholesales, and I just started to see that my time could be probably spent a lot more into bigger deals, so that’s when I discovered apartments, and I wanted to wholesaling and apartments and combine those strategies together. Then I also discovered apartment syndicating.
Joe Fairless: Okay. So the two deals that you did, those were single-family homes. How many additional deals have you done with your mentor?
Dakarai Towns: We did about ten deals, and basically it was him showing me the ropes, showing me how to calculate deals, how to look at the rehab and give good numbers upfront, before ever sending it out to anybody, and just making sure that they made sense. That’s how that went.
Joe Fairless: Were those single-family as well?
Dakarai Towns: Correct.
Joe Fairless: Okay. It sounds like you are no longer focused on single-family, because you said you were wanting to do larger deals… Or did I misinterpret that?
Dakarai Towns: Well, yes, I am currently taking some time to study the multifamily deals, but I am doing single-family on the side still, so when they come about and if I have a deal, I don’t do it as aggressive. But if I do see some potential deal, then I would still stop by and get some contact information and try to make something out of it.
Joe Fairless: Alright, let’s talk about the two deals you did on your own. Can you tell us about each of them?
Dakarai Towns: Sure. Those were really impactful deals experience-wise, I would say, just because prior to those two deals I looked at probably close to 15-30 homes almost, and the majority of them fell through, but that was just walking and trying to get the experience all I could; I just had to get out in the field.
For the first deal – it was actually a deal out here in Rosewood; it’s a popular area here in Columbia, South Carolina, and it was something that I came across through Craigslist and looking through a few platforms that I used, or free leads. As I came across the deal, I contacted the owner, and he said “Hey, I just wanted to see how this would work”, and I was very transparent with him… I let him know how wholesaling worked, and who would be helping me into closing the deal, and he said “Okay, great. As long as we get it done, I’m fine with it”, and I said, “Okay, great.”
It took about a month and a half, because there were some discrepancies and some smaller things that we encountered during the due diligence…
Joe Fairless: Like what?
Dakarai Towns: There used to be termites in the wall, and they had a whole termite situation on this entire wall next to one of the main bedrooms… So we said, “Alright, we’ll really have to get someone out here for a termite inspection of that nature”, and basically learning how to get all the facts first, and being able to come up with a solution… He was like, “Okay, I’m all for it. Let’s do it.”
One of my buyers that I presented the deal to, he actually sent out a few inspectors, and I actually had another close inspector of mine come through and look at it… They said, “Yeah, this would be done in XYZ.” Down the line we found out that it did have some minor foundation problems, so bringing all those facts in together, I presented it back to the seller to let them know “Hey, this is not gonna be a great deal unless we are at this price point”, just because of the foundation repairs, and that whole wall needed to be taken down and rebuilt, and it was gonna hit my buyer’s pocket pretty hefty.
That deal – I made about, let’s say, $1,250 on it, and that was the first deal. It was about $1,250.
Joe Fairless: $1,250 or $12,500?
Dakarai Towns: Yeah, $1,250.
Joe Fairless: Okay.
Dakarai Towns: That really humbled me, just because of looking at all the seminars, and watching wholesaling videos…
Joe Fairless: You were supposed to make $20,000 a pop, right?
Dakarai Towns: Yeah. [laughs] I was supposed to make this crazy amount spread, and I’m just like, “Okay… Well, this is great! This is a great profession to be in!” So it was really nice to see the satisfaction from my investor, as well as the seller… Because I found out that the seller was actually moving — during the whole process I found out that they were actually moving to another home in Lexington and they closed on another home that same month, I believe… So everything worked out for them, and then even though they didn’t get what they were asking — they were asking $55,000, so I ended up getting it down to around $28,000.
Joe Fairless: Wow… Holy moly!
Dakarai Towns: Yes, it was a crazy deal… So I was satisfied with that.
Joe Fairless: Wow, so you had it under contract at 55k?
Dakarai Towns: Correct.
Joe Fairless: And then it was renegotiated based on termites and foundation to 28k… Wow. What did they want initially? Or was it 55k initially?
Dakarai Towns: That’s what they wanted initially. I said, “Okay, let’s put it on paper. That’s fine.” I’m all for giving people what they want, but at the same time, when I come and find things that will diminish either profit, or somewhere along the lines of my investor’s pockets when it comes to the rehab, I have to bring the facts in, and they can’t argue with the facts. It’s truth. So when they look at the truth and they’re saying — when you hear those first three words, you’re already like “Okay, great. We got them down.”
It took about two times, because they went down to about 45k at one point, and they ended up coming all the way back down to — oh, I’m sorry, it wasn’t 28k, it was 22k, actually… [laughter] The second deal was 28k.
Joe Fairless: Wow. But they did start at 55k?
Dakarai Towns: They did start at 55k, correct. That is very true.
Joe Fairless: Huh… And when it starts at 55k and then it goes down to 22k, was your fee initially $1,250, or was it a percentage?
Dakarai Towns: No, my fee was initially 5k. That was my fee, and during the conversation between me and the seller as well as me and the investor, they were both giving me very tight numbers. So I did my coming down, because I wanted the deal to work out and I wanted this guy to sell his home, and I wanted my investor to have a good investment property, and this area that it was in — I lucked out and ended up getting a very good property in a very prime area. It’s actually a historic area, and most of those homes around the corner from it go to maybe I would say 150k… So at the end of the day, the owner was like, “Alright, let’s settle on this”, and then my buyer came back and said “Hey, I can only do this”, and I said “Okay, great. Well, that matches up, and that works out for me. It’s $1,250 spread, and it works out, so I’m fine with it.”
Joe Fairless: You said homes sell in that area for much higher… When you got it under contract for 55k, how much did you think it was worth as is?
Dakarai Towns: As is, after I did a little bit of homework, I thought it was worth around 40k-45k. So I was like, “Okay, maybe 55k is good–” because I went back again and I checked my numbers about 3-4 times, and then had one of my agents that I was working with, and she ran comps as well, but sometimes the agents like to do the high-end… So she was giving me comps and telling me “Hey, this could actually sell for around 90k.”
Joe Fairless: Uuh… Jackpot. That’s a big difference from 45k.
Dakarai Towns: Yeah, exactly. [laughs] But that was the great thing though – I was just like, “Well, do you mean 90k at the end as retail?” and she said “Yeah.” I was like, “Okay… Well, it should work out then. If I get it at 55k, it should still work out.” So I ended up getting it at 55k, and jumped it down to about 22k, and once we jumped it down to 22k and [unintelligible [00:11:14].11] my buyers came and picked it up. Once they picked it up, they ended up selling it — and I think they actually sold literally like two weeks ago, for 93k.
Joe Fairless: So she was right!
Dakarai Towns: She was right! [laughs]
Joe Fairless: How much did they put into that puppy?
Dakarai Towns: They put in about 37k for rehab.
Joe Fairless: Okay. Well, I hope they took you out to dinner afterwards.
Dakarai Towns: Yeah… Well, the funny thing too is this investor actually — they’re two guys from Israel, so when they came across one of my ads on Craigslist, they gave me a call, and this was six months before we even closed on any deal. I had no deal under my belt. So these guys were very loyal to me when I had nothing, when I was first starting off. They said, “Hey man, you really sound like you’ve been doing this for a while…” I was like, “No, not really. I’ve been doing this for about a month now.” So they still gave me the chance.
Around six months, that’s when we actually came across the first deal, and we did the whole deal, they liked it, they ended up selling it, and then they actually came to visit Columbia last week and we went out to dinner, went and had some beers and had some dessert, and I took them downtown.
Joe Fairless: Awesome. And they paid, yes?
Dakarai Towns: Yeah, they paid. They had me down. [laughs]
Joe Fairless: Good. What about the second deal?
Dakarai Towns: The second deal is almost the second exact scenario, in a sense. The second deal was in a higher-end area in Columbia; it was a bit North. We contracted it for — it was a 3/2, it was about (I wanna say) 1,200 square feet, and this one wasn’t really a big rehab; it was for a rental, so that’s what I wholesold it as. We got it around 65k, initially…
Joe Fairless: Who’s “we”?
Dakarai Towns: When I say “we”, I’m really referring to my team, but I really was the one who [unintelligible [00:13:02].19] I established a big team and a foundation before actually going on to the second deal. We moved to the second deal about two months after the first one. We ended up contracting the first, 65k initially… And I told him, “Hey, this is too much, because none of my comps are matching up”, the numbers weren’t working out. So he came literally about three weeks later… He called me back, he said “Hey man, I know the other number was pretty high, so how about we do 55k?” I said “Okay, let’s do 55k.” At the time, 55k was around the number I was at for the sale, and I ended up getting the guys out there in literally the same scenario.
We had some due diligence done, we had it contracted, and once the guys came out, they said “Hey man, this would need some repairs for the chimney, and it has some cracks in the walls, paint etc.”, things of that nature. So they’re hitting us with some of these facts, and I just laid the facts down on the owner. He trusted me, and he said “Yeah, man… I feel like you’re a good guy and I feel like you really are being patient with me…” Because at the end of the day, there were so many different schedule modifications, because he had to work, and I’m here, and at another property etc.” So I was really trying to work with him so he can sell his home. And just like the other owner, he had another home he was wanting to close on in another part of Columbia, so he really needed this to sell.
Once we got it contracted and once had due diligence and I was showing him the facts, we ran the number back down, and he said “Okay, how much can we really sell this for?” I said, “Look, there’s not much room because of the repairs, and the rehab is really extensive.” They had a very old kitchen. So what happened was I didn’t end up selling this to an investor, I ended up selling this to a hedge fund actually. So it took them a little minute to really come back with the correct amount that I was actually willing to agree to. They came and bought it for 38k. On that one I made about $7,500.
Joe Fairless: Wow!
Dakarai Towns: Yeah.
Joe Fairless: That’s incredible. That’s great stuff.
Dakarai Towns: Thank you. I couldn’t take no for an answer on that one, because I’d just been working with them for too long for them to not come out on top with it.
Joe Fairless: How long?
Dakarai Towns: It was about a month the first time, just to see if the numbers would work out, and if they were really willing to sell, and they weren’t motivated at the time, so they came back three weeks later… So it took about almost two months to sell this one.
Joe Fairless: You said your team… Who was on your team when you were starting out, and how did you recruit them?
Dakarai Towns: Sure. On my team there was a financial broker, and they actually reached out to me. She basically went to a seminar and learned about how to go about loans, and working with these big groups who would help with financing, and things like that. So I said, “Okay, great. This would be great for some of my investors who don’t actually have all the financing for the deals. They even financed rehabs.” So I said, “Alright, this will be awesome.”
So she also unfortunately couldn’t work physically at a job because she was in a car wreck, so she had all the time in the world to stay at home, be on the computer and actually work on deals. And I said, “Alright, I think that would be a great partnership, while I’m actually out and I’ll physically look at the properties that you send me.” Basically, she looks at properties, analyzes them and she would send them to me, and I would analyze them again and let her know whether or not it would be a good deal or not. And if it is a good deal, we’ll move on it. And for those two deals that I worked on, I had brought those deals in, but she would continuously shoot me over deals.
Another part of my team was a real estate agent. She was not as versed in the wholesaling strategy, but I ended up explaining it to her, I ended up explaining how we get things done, and she was okay with it; she was great, she was really transparent with me, and really wanted to get things done fast.
How I met her was I was just pretending to be a buyer at one of these homes that I looked at that was actually on the market, and figured out that it wasn’t a good deal, but she ended up staying in contact with me and I told her what kind of deals I was actually looking for. And she said “Oh, wow, we can get those deals all day”, and I said, “Okay, great!”
From there, we just all partnered up and we said “Okay, anything that we make, we pretty much will split it 1/1/1, or we’ll just figure something out at the end of the day”, but we all came into a contract and then made some money along the way.
Joe Fairless: For the second deal, that $7,500, was that split a third each?
Dakarai Towns: Actually, no. That one was split — I forgot her contract… The agent has to make at least a thousand, so it did eat up some of the profit, but I wasn’t complaining, and then I gave my other partner a thousand. So I personally didn’t pay myself until after everything and everybody else was paid. I kept the rest for marketing and business infrastructure, let’s say.
Joe Fairless: You have two deals under your belt. One you made money (you didn’t lose it), not factoring in marketing costs and your time… And then the second one you made almost seven times more than the first one. Then you partnered up with a mentor – let’s talk about that quickly, and then we’ll talk about something else I wanna ask you… But first, help us understand how you came across a mentor and that structure.
Dakarai Towns: Sure. My mentor [unintelligible [00:18:26].19] Craigslist. It’s a very powerful system. He actually came across one of my old ads that I put out in the Columbia area, about “We buy homes. We’ll help you sell your home pretty quickly”, things of that nature. So he actually reached out to me through one of my Craigslist ads, and he was giving me filler questions… He was acting as if he was wanting to sell his home, and he wanted to see what kind of a response I would give him
After the end of the conversation, he was like “Well, I have a confession.” I was like, “Okay…” [laughs]
Joe Fairless: “Where is this headed?”
Dakarai Towns: Right, exactly.
Joe Fairless: Maybe it’s a murder or something, if [unintelligible [00:19:05].11]
Dakarai Towns: [laughs] Right. It’s like, “Okay… What’s up?” and he’s just like “I’m very intrigued on your conversation, and I really like you a lot. You sound very genuine, you sound very transparent.” I was just like, “Wow, thanks! That’s what I’m shooting for, to kind of give off the natural kind of transparency.” So he said, “Yeah, so I really wanna mentor you.” I was like, “What?” He was like, “I wanna mentor you.” I was like, “Okay, great. I was actually looking for a mentor.” And at the time I was just stunned, because I’m like, “Okay, this is another deal. Hopefully we get this deal done…”, but at the time I met my mentor, and then after that he started showing me a whole bunch of different software, or a whole bunch of different tactics and strategies that normal people who are in the real estate game and are wholesaling aren’t really doing.
Joe Fairless: Like what?
Dakarai Towns: Basically, almost like a thought leadership platform that you always talk about on the Best Ever Show, it’s something of that nature. He was basically telling me, “Yeah, you need to make this like a video, or a commercial”, and at the time I wasn’t really well-versed in how to market. I wasn’t well-versed in how to really get my name out there like that, and how to really get people to know that I’m here and willing to help them sell their home, or vice-versa with the investor.
He basically told me “You need to get on social media, you need to make an Instagram account, you need to make videos and specify them to yourself, and not only for what you can do, but to yourself as a person.” I said, “Wow, that’s genius.”
It’s funny though, because he’s a very elderly guy, and he’s not really well-versed in technology as I am… So what he did is he had me go on his different social media sites, or kind of took some of the data that he had from his computer and let me run it… Because I’m on the computer 24/7, I’m in college, so I’m always on my laptop. And at the times I’m not doing anything, I’m like “Okay, let me go ahead and run these numbers for these leads that i have in.”
From there, he took me on different journeys of real estate, and journeys of how to be more open-minded about different solutions… Because I was always tunnel vision on “Let’s get a deal done. Let’s get it done”, but I wasn’t clear on the different ways that I can get it done.
Joe Fairless: What’s an example of that?
Dakarai Towns: I would say, for instance, just to make it really simple, the fee. I was not thinking about bringing down my fee for a deal, but then when I thought about it, I’m like “Well, why would I bring down the fee? I’m not getting paid as much, and then I can’t do this, that and the third”, but he was reminding me “You started from nothing. You started from literally zero dollars”, and that’s literally what happened… I started from zero dollars, and took a small seminar, took some tidbits from that, and I just kept going with it. And once we met, he started to tell me “Just let this deal flow. This is the first deal, so don’t let this define you as a person and don’t be greedy.” So that’s really what happened, and I ended up coming down on my fee.
He also showed me that you can help some of these investors have money by financing through loans… Because he’s an official underwriter and a loan officer, and I believe an official broker. So he’s really well-versed in the real estate and in the vintage real estate game. So he’s not well-versed in the technology yet, but he showed me a lot of things that he did in the past. He would go out, put poster boards up, put bandit signs up, and he would actually not say “Hey, cash for your home”, he would say stuff like “I have a rental available” or “I have a 3/2 going for this price”, and people would give me calls. It was endless. So that’s pretty much what our marketing strategy was.
Joe Fairless: Did you know him before your first deal?
Dakarai Towns: No, I didn’t know him.
Joe Fairless: Because on that first deal, you took that advice without having known him, right? You lowered your fee…
Dakarai Towns: Well, I lowered my fee and I did know him before — because he ended up becoming my mentor before my deal. So after that deal, he started to tell me more situations and different strategies I could go without having to lower my fee. Then once I lowered it, he said “Okay, this isn’t the end of the world. This is your first deal. This is what it would do for your investor and their pockets, and this is how it will make you look. At the end of the day, you’re not being greedy.” He just basically taught me the ways of not being greedy versus profiting. Because everybody would say “Oh, you took a hit…”, but you still made money, so you technically didn’t take a hit. You just made a little bit less than what you thought.
Joe Fairless: Sure. So you’ve got this momentum with wholesaling. Why shift the focus to, as you said, larger transactions with apartments, larger deals?
Dakarai Towns: I just saw that with the timing and with me being a student, it worked out, if I were to do something that did take a little bit longer. But at the same time, I’m not limiting myself to just apartments, but I see the potential. It took about two months to close both of those deals, and before that, like I said, I was going in to about 15-20 homes and they all fell through, so I would take tidbits and learn from each one that fell through and I would bring it to the table. So during those two deals I was still learning, and it took a little bit more time, but at the end of the day I was able to close those deals successfully.
Joe Fairless: For someone starting out, what’s your best real estate investing advice ever?
Dakarai Towns: Sure. My best ever advice to all the Best Ever listeners out there is to create genuine long-term relationships and bring something to the table… Even if it’s just as little as “Just go visit this property for me.” Because the small things count, and they look at that and they say “Okay, great. I can really depend on this person.” And once the bigger things come, they would at least entertain it. It’s not a guarantee that they would actually go through with it, but your relationships are definitely the definition of who you are as a person.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Dakarai Towns: I think so, let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve recently read?
Dakarai Towns: Currently it’s the Best Ever Syndication Book.
Joe Fairless: Oh, there we go! What’s your favorite part?
Dakarai Towns: My favorite part is the ending questions. I haven’t dug as deep as I want to, but I did skip around for what you had mentioned I believe in the Facebook group. It said something about exercises, so I wanted to check it out and I looked at the exercises, so it gave me a good SAT prep kind of feel; I’m really enjoying that.
Also, how to create the platform, and giving me the advice that I needed to understand what a real thought leadership platform is.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Dakarai Towns: One of the mistakes I made on a deal was letting my seller drive all the way down from — I can’t remember where it was… It was from either Florida, or somewhere like that. But he basically drove all the way down just to hear that he couldn’t do the deal because of the numbers. And what I did was I ended up having one of my partners, which was the financial broker – I ended up having them do the numbers for me, because at the time I was busy with other properties, so I didn’t have time to run the numbers and get back with him with the offer price, so I needed someone else to do it.
By the time I got back, I get a call from the seller saying “Hey, we’re on the way”, and I’m like “Oh, crap… Alright. Well… Yeah, I’ll see you in a bit.” And then I get a message from my financial broker saying “Hey, we can’t do this deal. The numbers are too high.” I said, “What?! We’ve literally waited an entire day for this and you’re just now telling me this? Literally, the guy is on his way.” So that’s what happened, and it was just a big flop from there.
Joe Fairless: So you heard that, and then what did you do?
Dakarai Towns: What I did was I made a few changes to how we operate the business, and also I take it upon myself to do the numbers.
Joe Fairless: I’m more interested in the drama. So you heard that from him, and then did you call the people who were on the road?
Dakarai Towns: Yeah.
Joe Fairless: How did that conversation go?
Dakarai Towns: It didn’t go great. [laughs] They were driving down… He actually didn’t answer my call. I texted him because he told me that he was going to be coming in in about an hour, and he said “Really, dude? You’re gonna wait this entire time?” and I said “From the deepest heart of my heart, I apologize.” If you come now, let me see what we can do; let’s talk it over, let’s figure out if this is really what it’s gonna take…”, because at the same time, the biggest issue was he had a pool in the backyard. The pool in the backyard was gonna take a lot to have construction come in, fill it in, things like that. And like I said, I told him this as well before we ended our discussion the first time… So while he was on his way back, I said “Hey man, let me take you to dinner and let me talk to you, talk the numbers out.” He was just not going for it, he was not interested at all at that point. He was just like, “Alright, we’re done here.”
I ended up losing a potential deal, and it was definitely a lesson learned, to really make sure you don’t hold people accountable too much. So that was just a big lesson right there for me.
Joe Fairless: How can the Best Ever listeners get in touch with you and learn more about what you’ve got going on?
Dakarai Towns: Sure. They can get in touch with me on LinkedIn and Facebook at Dakarai Towns… As well as my e-mail, firstname.lastname@example.org. And just a small advice for getting into wholesaling apartments – it’s really hard, so make sure you contact the syndicator. For example, if I hadn’t contacted Joe, we wouldn’t be on this interview right now, so don’t be scared to contact them and have some face-to-face talk with them sometime.
Joe Fairless: Well, Dakarai, thank you so much for being on the show, talking about how you did your first two deals, as well as the nine after that. We got into the specifics of each of the two deals; I love getting into the specifics and the twists and turns of each deal. I hope you have a best ever day, I’m really grateful we caught up, and we’ll talk to you soon.
Dakarai Towns: Sounds great. Thank you, Joe. I appreciate it.