If you want to achieve success and build a hugely profitable business in real estate, taking action with a long-term vision is a must. Otherwise, you will not be able to provide comprehensive offers to clients and be unaware of the current property trends. Joining Jamie Bateman is Georgia Agent DJ Olojo. He shares his real estate journey that started in doing flips, dabbling in rentals, and now delving into notes. DJ explains why agents should establish a close relationship with clients, helping them solve personal issues that impact property-related decisions. He also shares some of the most interesting deals he has closed and how it impacted his current real estate strategies.

—

Listen to the podcast here:

DJ Olojo On Taking Action For Long-Term In Flips, Rentals, And Notes

I’m flying solo as a host but I do have a special guest with me, DJ Olojo, down in Georgia. He’s got a wealth of knowledge about real estate and a lot of experience with flips, rehabs and foreclosure sales. He has gotten into note investing over the last few years, so I’m excited to dive into DJ’s background and story. DJ, how are you doing?

I’m doing phenomenal, Jamie. Thank you so much for you having me on your show and let me share your platform.

We are always excited to learn somebody’s story. I’m sure we will bring a lot of value to our readers. If you don’t mind, can you dive into your background for us?

I’m happy to so I graduated college and I immediately started as a Management Consultant. I was having a phenomenal time as a Management Consultant. I was working for a great firm traveling. I was on boats, planes, and trains and having a great life. One of the things that that consulting firm focused on was strengths and being the best in the world at something. When you work with the best at a specific task, you understand that if you are going to be the best, you’ve got to play with the best. I knew that in the consulting arena I was never going to be the best in the world.

Along the way, I stumbled across real estate. One of my best friends and business partner was actively investing in real estate. I hopped on with him and started riding his coattails doing single-family real estate investing, buying houses, doing rehabs, renovating them and things like that. Fast forward, my daughter was being born and I was tired of traveling.

I knew that if I want to be that dad who was able to walk his child to school and be there, I couldn’t continue that same lifestyle and real estate was taken off for us. I have been full-time in real estate for the last several years and have been having a ball. I have been able to help a tremendous amount of people while at the same time making a great living for my family. I have been tremendously best at this for many years, so it has been fine.

If you could drill down on what your portfolio or your investing life looks like now, and then we will go back and fill in some of the gaps. What do things look like now for you?

My wife and I manage and run a business that primarily focuses on flipping properties. When I say flipping properties, we buy properties, renovate them and resell the property. In addition to that, we also have a rental portfolio that we manage that has about thirteen rental doors. We also now have a notes portfolio that has about ten or so notes in it. Day-to-day, we are helping people get rid of properties that they don’t want anymore. As part of that, we are trying to help people solve a problem.

You can successfully navigate the notes industry if you are comfortable with the risk associated with that investment. Click To Tweet

A lot of times, when people have real estate they don’t know what to do with, they are upside down on and it’s dilapidated, they are like a deer in headlights. Our goal is to help them solve that problem and figure out what’s the best solution. Sometimes the best solution is selling it or staying there. We want to be a problem solver for them in that real estate problem.

The part of the business that I love the most personally is helping people think through these situations because we have this vast experience of real estate. In my career as a real estate investor, we probably have flipped well over 100 homes. From a brokerage perspective, we have done over $50 million in real estate transactions on the single-family side. We bring a good amount of experience and can help bring contacts and resources to these homeowners in their time of need. It’s rewarding and we have enjoyed it.

You’ve got to find where you can add value. That’s where eventually the profit is as well. It sounds like you are in it not just for yourself and your family but to help other people. Hopefully, it has been good for you as a family. Speaking of your family, one thing that gets glossed over a little bit is typically speaking, people are not a “one-man show.” How does that work for you? You mentioned your wife is already involved. How was that transition when you went full-time and have that conversation go? How’s the dynamic work between the two of you with the business? How does family life work? You don’t have to get too specific. It’s a real thing. Sometimes we act like, “It’s compartmented.” You are likely working from home like I am and family life is a big part of it. How does that all play together?

It plays together well. I and my wife have a good dynamic and a good relationship so it works out well. We try not to mix the business tension with the household tension. As it pertains to the career, when I first started, I was working with one of my business partners exclusively. We were going 50/50 on most of our deals. We were working together. It was me and him. He was full-time, although I was working at the consulting firm.

When I made the leap to go full-time, my wife is a licensed pharmacist by training and background, so she was full-time as a pharmacist. We weren’t worried that much from a financial perspective but she was like, “If you are going to do it, now is the time to do it.” She was supportive. Along the way, we went from 1 kid to 2 kids. We’ve got two beautiful girls. She pulled back because she wanted to spend more time with them. Although she still keeps her license active and things like that, 90% of her time is in the business, and then she still will go in one day a month to keep her license active with the pharmacy side.

When I had the business partner, we work together and she would help out when she could. Over the last few years, our business model has changed. I and my business partner were still great friends and we still work together on a lot of different deals but we also have our own portfolio stuff that we do by ourselves. She helps me a lot on the property management side and dealing with the tenants for the properties that we don’t have managed by a third party. She’s also good at being focused on one thing, where I’m like, “I’m all over the place. I’ve got this meeting. I’ve got that and this going on.” She’s focused on 2 or 3 tasks that help drive the business forward day in and day out, and that’s worked well for us.

In all honestly, a lot of the stuff that I don’t like to do, she does better than me. For example, I hate taking the time to go pay bills. I love it if it’s online as quick as auto-pay, great but when I have to write out checks and stuff like that to contractors and things like that, she takes care of all that. It has been a good mash. You definitely have to have the right partner and you have to make sure that your skillsets align. If you don’t, just pay somebody else to do it so you guys don’t argue about it.

It’s definitely something I can relate with, as far as discussing expectations. It evolves over time. It doesn’t mean now is going to be how it’s going to be for the next ten years for you. You’ve got to be flexible with things. You have done a bunch of flips. Do you take some of those flips and make them into rentals? How do you determine which properties you are going to peel off and hold long-term? How does that work?

They say, in hindsight, it’s 2020. If I go back over my career, every property that I flipped, I probably should have held as a rental property and I would be in a different stage of life. That’s one of those learning things that you learn along the way. Nowadays, we evaluate each deal as it comes in. What makes the most sense? How much money will we have in our pocket? Does it cashflow? We try to give a 15%-plus cash-on-cash return when we are doing a rental property. Can we hit those numbers with that rental? If we can, we will definitely consider keeping it. If we can’t, we will probably let it go. That’s typically our model. We try to add at least two rentals to our portfolio each year. If we can do that for the next 10 or 20 years, we will be in a good spot, in addition to notes and everything else.

The reality is it’s easy to look back and say, “I should hold on to that one,” but you also likely got a lump sum of cash from that flip. You may not have been able to hold on to all of them. I hear what you are saying. The regret that I hear from a lot of flippers and longtime real estate investors is, “I wish I had never sold that one.” As far as finding your actual property deals, flips, and rentals, how do you go about doing that?

That’s a proprietary strategy that I can’t share with you guys. There’s no proprietary strategy at all. For us, it comes down to a couple of different things. 1) It comes down to finding homeowners who need relief from this. 2) We buy properties at the foreclosure auction here in Georgia, and then 3), Relationships with agents, brokers, and things like that who provide us with deal flow. Those are the three areas in which we specialize.

Finding off-market opportunities, it’s the commonplace that you will look for people who may be in distress so people who may be going into foreclosure, have some probate issues or are for sale by owner. I’m a licensed agent in Georgia so we checked the multiple listing service here in Georgia. All those places are all saturated. Every investor is looking in those same places.

The difference that we add is, we are not a big firm so I don’t have to take down and try to buy 50 properties a month to stay relevant. If we can buy 1 or 2 houses a month, we are in a good spot. For us, we take the approach of what’s going to be best for the homeowner. That’s a weird approach to take sometimes when you are dealing with these situations because you are saying, “What’s best for me as an investor?”

There’s a way in a lot of these situations where you can help a homeowner get to a better place and you can also help yourself as an investor. That’s what we try to align with. The reason I say that is because sometimes we will walk into a house and the numbers make sense but the owner doesn’t have any place to go. The first question we always ask owners is, “If you sell this house, where do you go?” A lot of them think that the market is the way the market was maybe 10, 12, 15, 20 years ago, where it’s like, “I will just go buy another house.”

You may want to go do a little bit more due diligence and research because if you sell this house and you get this lump sum of cash, you are going to be going to a pricey apartment that’s more expensive than your mortgage. Sometimes, it’s educating them. Sometimes they are like, “Thank you so much. I’m not ready to sell now but when I’m ready, I will call you.” In ten years, when they are ready, they will have my number and call me. That’s one of the things.

 

The other part of it too, is sometimes some people walk into your house, and then the house is filthy. They haven’t been able to keep up with stuff and they are hoarders. In those situations, you have to help them say, “You’ve got to do something because what you are doing is not working, whether your family needs to come to help you or whatever may be the case, you’ve got to get to a better place because now, this is not good for you.” In those situations, we are happy to provide offers and help them think through the next step. These people become your friends and they send you cards. You know that you can help them in their time of need, so that’s great.

We had a deal in Jacksonville, Florida, that turned into a rental for us. It was a nonperforming note. Somebody totally unfamiliar with the situation might say this because we were pursuing foreclosure, “It sounds harsh but we didn’t have to go through with a foreclosure.” We did a deed in lieu and took back the property that way but in reality, we did end up helping the people living there move out.

My point is, they were in a filthy, disgusting situation and they weren’t going to change it by themselves. I honestly feel like we help them get to a better place. It was also a win for us. It does sound like you are a hard worker and a good listener. You are trying to understand their situation, you give them options and you are patient, too. You are trying to add value and solve problems. That’s where the profit lies and that’s a good thing.

I find the same thing with borrowers, particularly CFDs. It’s a matter of educating them sometimes as to what their options are. Of course, you can’t force their hand but you can suggest things. A lot of borrowers don’t understand what a land contract is. “I don’t know what I signed.” “This is what you signed. These are your options.” With your background, that’s good. You understand more easily put yourself in their shoes. As far as your note investing, what turned you on to notes? How did that look like in 2020?

I’m down in Georgia so I’m lucky that I get to have access to guys by the name of Dyches Boddiford and Peter Fortunato. I have been to a lot of their training over the years. You go to those training and seminars and they give you great advice on different stuff, self-directed IRAs, and all these different things. One of the things I always noticed in the back were the guys and ladies with the gray hair always talking about notes, how they don’t have rental properties anymore, they invest in notes, they do owner finance stuff.

For me, I never even thought about notes because I was always thinking, “I need to have a lot more money. I need to be able to take a lower rate of return that I’m making flipping on my money and I don’t have the asset. That doesn’t make sense for where I’m at from an investing perspective.” I listen to what people were saying and I took it all in but at the same time, I didn’t take any action on it.

Over the years, I was introduced to this concept of buying nonperforming notes. One of my other partners and good friends, Matt, introduced me to the concept of purchasing nonperforming notes. I was like, “I can buy these notes at a discount and be in a situation where I can get a higher yield or higher return on your money. I didn’t have to originate them. I didn’t have to make sure all the documents were straight. I don’t have to have the asset. This makes a lot of sense.” The light bulb went off for me when I was looking at one of my solo 401(k).

I was looking at my stock portion of it. Merrill Lynch sent me some documents to review and I was like, “I have had this money invested in Merrill Lynch.” It has been on a roller coaster. It has been up and down. For three years, my average return was around 5%. That’s not how you annualize. That was a total return.

There’s always the risk of losing money in real estate. What’s more important is that you are making more than you are losing. Click To Tweet

In Merrill’s defense and for full disclosure, I wasn’t invested in an index fund that was following the S&P. I was doing my own thing. I was picking hot stocks and stuff like that, so I wouldn’t advise that. I’m not a stock expert. I should definitely stay in my lane of real estate. I don’t want people to think stocks are bad or stocks are great. I have done well with a couple of good stocks that I have chosen. In that particular portfolio, I was like, “This money hasn’t made any money. Let me put this money somewhere where I know how the mechanics work, I understand, and I live and breathe every day.” I took that lump sum of money and said, “I’m about to buy notes with this money,” and that’s what I did.

Where do you find your deals? When was this that we are talking about?

I’ve got that statement in late 2020, early 2021, and I already had made up my mind I was going to be buying some notes in 2021. I was like, “This is the money I’m going to use. Let me go find some notes.”

How did you go about that? What was the next step?

Along my note learning journey, I definitely read some books and listened to podcasts. I found you guys and you have been a wealth of information, so thanks a lot to you and Chris for the great content you put out every week, both on your show and your written form as well. I linked up with a guy by the name of Bill McCafferty. I did some of his training and he has been good.

The thing about me is, I was already familiar with second mortgage notes because I purchased second mortgage notes and I have had to deal with the first mortgage. I have been on the other end of it, where I’m at the sheriff’s sale or the foreclosure sale and I purchased the second position note. I know how that process goes to get the property.

As a result, when I saw the training that Bill had out and when I connected with him, I and him vibed. He’s a good guy and he has been helpful on my note journey. It made a lot of sense for me because, 1) They were a lower dollar, and then 2) I knew exactly what to do if I take the property back. I felt comfortable in that space. Fast forward, I have purchased notes. I purchased something on Paperstac, Keyhole Investments, and a couple of other folks. I’m a part of a mastermind.

You don’t have to give us all your sources. We are just trying to figure out how you go about finding deals because that is a challenge now, especially for seconds. I don’t buy seconds but I probably will in the future. Fewer seconds are floating around than there are firsts. I know it’s challenging for note investors, in particular, to find deals just like it is for real estate investors.

It sounds like networking and taking training from somebody who’s trusted in the space, Bill has been on the show and Chris interviewed him. I’m not sure if Gail was on that one or not. Bill is a wealth of knowledge and he does deal with seconds a lot. It sounds like networking and keeping your ear to the ground and going about it that way is how you have been able to find your deals. Is that fair?

Yes, absolutely.

We had Kimberly Banks Fawcett on and we talked with her. We have had Fuquan Bilal talking about firsts versus seconds. It’s funny because I feel more comfortable with firsts and the reality is I’m not totally sure why. It’s a lower dollar amount with seconds and there are a lot less of your money at risk. Kimberly made it sound like it’s no different as far as due diligence. People tend to draw those differences out more so than they need to be sometimes. Do you own only seconds at this point or have you bought any firsts?

Yes, I have a mix. We have a total of ten notes. Out of those 10, 3 are in the first position and 7 are in the second position. In those situations, the seconds are real. One of the seconds that I bought, the first is an active foreclosure. I’m going to get wiped out. I know that my investment is in jeopardy. There is a New Jersey and I can’t initiate or start foreclosure fast enough to beat the first, so I’m not going to do anything. I’m paying $30 a month to my servicer to hold on to that note to see what happens with the first day and going from there.

Honestly, I hope they file bankruptcy or something. In situations like that with the seconds, that makes them a little bit more scary and tricky but it’s a different play. The beauty of notes is that you can have a lane in the notes industry and successfully navigate that if you know what you are doing and if you are comfortable with the risk associated with that investment.

You mentioned your self-directed accounts. Are these primarily purchased in your self-directed accounts? Are you buying this outside of those?

All the notes we have are part of my self-directed account. My thought process was that I would rather use this money because the life cycle for note, in my opinion, is 12 to 18 months to get a workout of some sort, whether it becomes performing or whether you have to take it all the way through foreclosure. The money I was using was money that I didn’t have an immediate need for and I couldn’t access, so I thought that would be the best place to learn. As things progress and as we understand the market better, some of our LLCs started investing for income. That was my Note and Bolt.

 

Chris and I like to keep it real. There’s no perfect asset class. We beat this one to death sometimes. Notes don’t have any inherent tax benefits. A self-directed account is a perfect way, especially to start out but even to keep using that account to buy notes because your hard real estate does have depreciation and other tax benefits associated with it directly. It makes total sense to me.

Not only that, you are adding another tool to your toolbox so that wherever your business takes you outside of your self-directed account, you’ve got more options. I love it. You are expanding your network, your knowledge base, and hopefully your net worth along the way. That’s good. Where do you see yourself going with notes versus real estate in the next three years?

In the next three years or so, we are definitely still active real estate investors. I still plan to acquire more rental properties. The benefits of rental properties are great as it pertains to the tax benefits, future appreciation, cashflow, and all those things. I’m a big proponent and a big fan of rental property. I’m just not a big proponent or fan of rental properties in your IRA or your retirement account because you can’t effectively utilize the tax benefits of that rental property.

If all things are the same and you have the money and ability to buy a rental property outside of your retirement account or inside your retirement account, I would always choose outside the retirement account versus a note. If you can buy it inside the retirement account or outside the retirement account, I would choose inside the retirement account. Our plan is to do both.

I plan to hopefully, be able to acquire more notes in the future in our retirement account, and then also probably start using my self-directed HSA and other self-directed accounts I have to be able to buy more. In addition to that, increase our rental portfolio significantly over the next few years to be in a situation where we get the benefits of both sides.

I have taken a somewhat similar approach. We were heavily focused on single-family rentals. In the last couple of years, I have been more focused on notes as far as my own time and money. It just got pushback but we are closing on another rental here in Florida. We are slowly expanding our rental portfolio as well. I couldn’t agree more with you. It’s still a strong part of our investing portfolio and strategy. Have you dabbled in multifamily or anything like that or is it all single-family, as far as both real estate and notes?

It’s primarily single-family. We own some quadruplexes, duplexes and things like that. As it pertains to the larger apartments, we have not been able to break into that category yet. In early 2021, my business partner and I had some apartments under contract but they didn’t pan out. After going down that road and spending about six months of the year focusing heavily on trying to acquire those, I realized for myself and my own family.

At this time, it’s better to focus on single-family and notes because it’s the lane I’m already in. Multifamily is a phenomenal space and an awesome space to be in but there’s a huge learning curve. You’ve got to be ready to focus and put your head down and learn it. We will probably be passive on a few apartment deals. I will probably be an LP, a Limited Partner on a few apartments deals over the next couple of years to make sure I stay attuned. As it pertains to taking down some apartment opportunities, they would have to be good and probably have to come along with some other real estate as well for me to take them down.

It sounds like you spent a lot of time on probably some frustration in pursuing that deal but you learned to play to your strengths. There are a lot of ways to make money in this business and to be successful and it’s still an option in the future. It doesn’t sound like it cost you a whole lot as far as your bottom line goes. Is that true?

Yes and no. There are always opportunity costs but the lessons learned were invaluable. You have due diligence costs but at the end of the day, this is the best part of business, every year, we lose some type of money, whether it’s on marketing that does not pay a dividend on a deal that goes bad or whatever else may be the case. That’s how you learn and grow. Thank God, we make a lot more than we lose, so it works out in the long run.

The most important thing about the real estate businesses is making allies and helping more people along the way. Click To Tweet

You had mentioned a deal that stood out to you as far as a good deed. This is the Good Deeds Note Investing show. Do you mind touching on that particular deal and let us know how that turned out?

In this business, we can help a lot of different people in a lot of different ways. My business partner, Calvin, and I were working on a deal a few years back. A family was going into foreclosure and they were in a nice part of town in Atlanta. They had a duplex property. They lived on the top and no one was living on the bottom. The property had a good amount of equity but it needed some renovations. It had a lot of deferred maintenance and needed some repairs. The owners weren’t full-blown hoarders but they were definitely semi-hoarders.

I and my business partner went in there and we were able to buy the property prior to going into foreclosure. Instead of saying, “We are going to buy the property and you guys got to get out,” what we were able to do is we were able to strike a deal with the owners that we would buy the property, pay for all the renovations, and then split the profit with them 50/50.

Essentially, what happened there is that for about six months, we were able to renovate the property. We renovated the bottom unit completely, so it was brand new, a new kitchen, a new bathroom and everything there. We also updated their unit. We had to move all this stuff to paint it because they were still living there. Our painters came in and we took care of deferred maintenance. We painted the outside and we made the property beautiful. We landscaped the back. We spent about $75,000 to $80,000 in that renovation.

That was a few years ago, so things were a lot cheaper than they are now. Long story short, we were able to do that. Six months later, they’ve got to live in the house rent-free for six months. During that time, the husband was able to get a new job and they were able to find somewhere else. When they left that place, they may well over $100,000 or $150,000 on that transaction. They made a lot more than they would have made if they wanted to win in foreclosure.

For them, it was also the peace of mind to say, “When we leave here, we are not leaving here with our heads down. We are leaving here with our heads held high.” We didn’t care about the neighbors or what people thought but they had lived in that community a long time. When they were leaving and people knew that, “You sold your house.” For them, it wasn’t a shameful thing. It was like, “It’s time for us to move on to greener pastures.” Behind the scenes, we were the owners and we were navigating that process. For them, they were able to face their neighbors and they were grateful. More importantly, they were able to have a fresh start with some financial incentive to do so.

It sounds like a win-win all the way around. You also rehabbed the property, so now you brought up the property value, which only helps the neighborhood. That’s how comps are calculated. You are increasing the tax income for the county or wherever this was. It’s hard to even think of somebody who lost in any way on this transaction. Would you agree with that?

Yes, absolutely. Situations like that are where investors can get a good name for themselves and not get a bad rap. There’s enough money to go around. There’s enough meat on the bone for everybody to get a piece and everybody does well. That’s the way we approach it. If I ever see those people again in a grocery store, they would not be looking at me as an enemy but as an ally and as a friend. The most important thing about this business is, how can you make more allies? How can you help more people along the way? The deals work out. There are some deals that I don’t get and I wish I’ve got but at the end of the day, the deals I do get work out pretty well.

You sleep better at night that way.

Jamie, one of the biggest things that I have had to learn and the biggest mental shifts for me in this business, to use a baseball analogy, is that a few years ago, everything that we did was a home run. I did not sign up to do a renovation or buy a house unless I knew it was going to be a home run deal. I was like, “If you’ve got to do 3, 4, 5, and 6 deals a year and you make them all home runs, you are good to go.”

With the market the way it is and everything going on, you have to be okay going up to bat and hit some singles, hitting some doubles. I take that analogy not just in single-family real estate but also in notes. Sometimes, what happens is that as investors, we want the deal that’s the home run. We want every box check, we want it to be perfect, make a 20% yield, guarantee a 20% return and all these different metrics that we check, and then we never buy anything. We are striking out every pitch because we are only trying to hit the home run, versus if you say, “If I get up every time and I can try to get a single,” sometimes that single, you can make it into a double. You have your bases loaded and you will start scoring, and get some points on the board if you continue that process.

 

From an investor perspective, that’s one of the biggest mental shifts over the last couple of years that the market is hot as it is that I have had to make. It’s to be okay with saying, “This deal is not going to be a 20% return deal but if I can make maybe 10% on this deal, and I can do the deal in six months or something like that, then it works out for our metrics for us to move forward. If I look at my annual return, it would be 20% if I can do two of those.

That’s a good analogy. You are not going to go for a Hail Mary or long pass on all 3 downs before the 4th down. It makes no sense. If you can get 3 or 4 yards, then you can move down the field. There is a time to take that shot. You’ve got to be more strategic about it and take the win that’s right in front of you. I like that. Is that your Note and Bolt? That’s a good one, if so.

Yes. One other Note and Bolt that I will throw out there is for anybody who is investing in second mortgages, be aware. This is me speaking from being someone who’s on the other end dealing with the homeowner as they go on foreclosure. There are so many people out there who believe the second mortgage cannot foreclose on the property. You will be surprised and amazed at how many people will ignore information and correspondence regarding the second mortgage, thinking that they have full authority to reside in the house because the first mortgage is paid. That’s one Note and Bolt to keep you out there.

When you are trying to negotiate with these folks, you are having a conversation or you are sending legal when they are not responding, a lot of people are oblivious. They have been provided with incorrect and inaccurate information about the position of the second mortgage. It’s one of those things in that space that you have to deal with, understand and be aware of.

Can you give us a purely $100,000 property, $75,000 first and I’m just making numbers up, the hypothetical scenario where the second would potentially foreclose and how that might play out?

Both loans were originated at the same time or the second loan was originated maybe a few years after. Hypothetically, the first is a performing mortgage. That $75,000 original balance maybe is down at $50,000 or so, hypothetically speaking. We don’t have an amortization calculator. You buy the second and it is maybe $25,000 originally but for some reason, they stopped paying on that. Maybe it has been transferred to different servicers or whatever else might be the case.

In that position, say the property value now is worth $150,000. In that situation, the second would foreclose to say, “You need to pay us our money. You need to come and work this situation out. We need to have a conversation. If your income has changed, we need to have a meeting of minds. We are willing to modify and we are willing to help you. We want you to know that you still owe this money.” As a result, you will go down the same road in foreclosure as a first position mortgage. You send that demand letter, and then after that demand letter, you would ask them to file a complaint then start going down that road until you get to a judgment.

Let’s say you do foreclose then as the owner of the second mortgage, the note holder, what does that do with the first? How’s that work?

If you foreclose and you send it to the auction, and it’s purchased at the auction, you are done. It’s the same way as if you send something else to the auction. If you get it back because no one purchased it at the auction, you have to go through the same process as anybody else to get somebody out of the property. You have to file some more paperwork to do an eviction and things like that. You would try to figure out and contact the first mortgage to figure out how to either pay it off if you are going to do that or sell it in time that they get paid off before you do.

Specifically, we have a property over in Illinois that we are working through. This is one of the ones I bought personally out of Paperstac. I knew all this is going in but the second mortgage has defaulted. They provided a second mortgage with a deed in lieu of foreclosure so we could immediately take possession of the property. The first mortgage was an active foreclosure. When I say active, they were past the complaint and they were going towards getting their judgment.

We stepped into that property and we were able to do a small amount of renovation. We put the property back on the market, and we have the property under contract. It’s in the small town of Macon, Illinois, and the way that deal works out is we purchased the note for about $9,000. We had to do repairs and renovations of another $5,000 to $7,000, and we are going to sell it for about $75,000. The first mortgage payoff is around $45,000 or $50,000. There are some other liens and judgments.

Most of the time, the person under the table in real estate deals is just scared and needs proper guidance in paying off mortgages. Click To Tweet

When you do the math on that, that was not a good deal. That was not a deal that’s worth the time. We will either make a couple of thousand dollars or lose a couple of thousand dollars on that deal but that’s an example of when you are in that second position. Truth be told, I did that deal not because I thought it was going to be the best deal in the world. For me, it was more proof of concept. It was a smaller amount of money to play with to be able to make sure that we are doing this right because that was the first long-distance renovation I had to do.

I had to find contractors, talk with an agent and things like that. Everything else has been local in my own backyard. That has helped me understand what I’m up against when I deal with that. Luckily, I was able to find a great contractor and a great agent. It’s working out and we are supposed to close. In that situation, we are dealing with the attorney for the first mortgage and not the servicer because they were about to take it to a foreclosure sale.

You are definitely an action taker. You can tell that just listening to you. A lot of people get caught in that whole analysis paralysis. What if you lose $2,000? If that takes food off your table, you should not be using that money to investing notes. Hopefully, you make some money on it but take some action. Some people drag their feet because they might lose $2,000 or something like that.

That tension never goes away and you’ve got to take some action if you want to get in the game a little bit. What would you say looking back several years is one of your biggest mistakes, whether it’s a particular deal or a way you approached your investment strategy? What would you say that the readers could benefit from as far as something you probably would do differently if you had to go back?

There are so many different things that I would change if I could. The biggest thing is not thinking about this long-term. Many years ago, I wasn’t thinking about how my 36-year-old self would be investing in real estate and the things I would want. I was just happy that I was making a good return off the house that I was flipping. I was happy that I was able to be in a business that I enjoyed and was able to work for myself. I wish I was thinking a little bit more futuristically and had the bigger picture of where I want to be at age 40, 50 and 60 in mind besides saying, “I want to have a good income and passive income.” I’m being a little bit more crystal clear on that.

I would have held on to more of the rental property. I probably would not have sold some of the rental properties I did. I probably would have looked at refinancing them, pulling out the equity and the cash, and then paying down that debt over time so I could capitalize on the appreciation. In addition to that, I would have taken more action when the market was down versus when it’s up. I was new to real estate and I had no formal education or background in real estate. I just jumped in and was learning as I went.

I would have definitely taken a lot more action and risk because as you get older, as you have more responsibilities, I have a wife and two girls, my risk tolerance is still high but it’s less than it was when I was 24 to 28 with no kids and no spouse. As a result, I would have done more of those things but I’m happy that I did take some action. Now, we live a good life. We are significantly blessed. I wouldn’t change anything because I can now do all those things that I have told you about as I look at, “Where do I want to be when I’m 50?” That’s one of the reasons I’m taking big actions on notes.

I’ve got a board in my back and that is a map of the entire world. There are pins on where I and my wife have traveled to in the world. We want to fill up the whole map. We are big-time travelers. When my kids are in college or when they start their own careers, our goal is to live six months in the United States and then live six months somewhere else. When I say six months, it’s hopping around.

The beauty of this notes business and the real estate is that we don’t have to be here locally to be able to do that. We can do everything via email and things like that. As I plan for that type of lifestyle, I’m putting in the groundwork now so that when I am 45 or 50, I will be able to do that. That’s the way we are looking at it and the plans that we are making as we move forward.

Gurus like to promise a lot of things with note investing and things like that but one of the things that is true for sure is you can do this business from anywhere and rentals as well. We are adding to our long-distance rental portfolio. I don’t even go and look at my local rentals. If it takes more than a three-minute drive out off the beaten path on that, it’s like, “There it is. It’s standing.”

There’s absolutely no need at all.

 

You have mentioned Illinois and New Jersey. Have you bought it in Georgia? What states have you bought in for notes?

We are in Illinois, New Jersey, Kentucky, Indiana, North Carolina and Pennsylvania.

I usually recommend to newer note investors to pick about five states, a handful states but not too many. That’s good. You jumped right in.

I would prefer to get some in Georgia but it seems like the property in Georgia is hard to come by. Instead of being a small fish in a big pond, maybe I can go be a small fish in a smaller pond.

It makes you slightly bigger, relatively speaking. We have covered a lot of ground here. Is there anything else you want to share with our readers before we wrap it up?

There are two things I want to share. For those folks who are advanced and experienced, and who have done a lot of work around notes in real estate, you understand this concept. For those folks who are new, one thing to remember is that around every note and every real estate deal, there’s a story, a person, a heartbeat, and things like that. Sometimes, that person is unscrupulous and sometimes that person is out to get you.

Most of the time, what I found in my experience is that the person on the other end of the table is scared. They are in a situation that they never expected to be in, whether it’s death, divorce, disease or whatever may be the case. When most people sign up to get a mortgage, they never expected they are not going to pay off that mortgage. They never expected they are not going to have the financial wherewithal to move forward. They get scared and they do things that scare people do. They run, vade, and put themselves in a position to make the situation worse versus facing it head-on.

As a good deed note investor and as someone who’s in this business, not just for the profit but also to help people, it’s keeping that in mind as you address these situations. Don’t get me wrong, sometimes foreclosure is inevitable and it’s what you have to do as a business owner. I’m not telling you not to take the action because you have to take action.

At the same time, understanding that there’s a story behind there and trying to help people figure out what to do in their time of vulnerability when they are afraid, alone, old and out of it, it’s where we have the opportunity to make an impact, change lives and do good deeds. That’s one thing I employ to your audience and remind people who want to get into this business. It’s just not about the returns but it’s about the opportunity to help people.

One of the things that smaller note investors like us that have that opportunity, whether the big banks have it or not, they are not going to pursue that opportunity usually. This has been phenomenal. We have covered a ton of ground. You have had about ten Notes and Bolts at least. If our readers wanted to reach out to you, how can they get ahold of you?

The best way to reach me is probably via email. My email is DJ@ASOHoldings.com. You can also find me on LinkedIn, I’m @DJOlojo. You can feel free to connect with me and reach out. I’m happy to help if you have any assets in Georgia, primarily around the Metro Atlanta area. Let me know. If you are taking back some foreclosures, if you need help or you want a BPO, I’m here for the community. You guys have been so good at helping me learn and grow faster. I want to share that and reciprocate that to the group. If I can help you, feel free to reach out and we go from there. If you google me, I’m probably one of the few DJ Olojos out there, too. I’m the black guy with a bow tie.

This has been awesome, DJ. I appreciate you taking your time because I know you are a busy guy. I know that our readership is going to get a ton of value from this. We will definitely have to have you back on. When your note portfolio is 50 loans, we will have to check in and see what you are up to. Thanks a lot, DJ. I appreciate it.

No problem. Thanks again.

For our readers out there, please remember to give us a rating and review. It does help us. I know it’s easy to not do that. Trust me, I listen to a lot of podcasts that I don’t review but we do appreciate it and we do appreciate positive feedback. Don’t forget to go out and do some good deeds. Take care, everyone.

Important Links:

• DJ Olojo
• Dyches Boddiford – LinkedIn
• Peter Fortunato
• Paperstac
• Keyhole Investments
• Bill McCafferty – Past episode
• Kimberly Banks Fawcett – Past episode
• Fuquan Bilal – Past episode
• DJ@ASOHoldings.com
• @DJOlojo – LinkedIn
• https://OlojoAyodeji.georgiamls.com/

About DJ Olojo

As the Managing Director of ASO Custom Homes, LLC., I am responsible for the day-to-day operations of a growing residential and multifamily real estate revitalization firm. I’m a dedicated real estate professional, an affordable housing advocate, and a licensed builder. Blending extensive experience in real estate, construction and customer service, I’ve built my reputation as a problem solver. Prior to this, I established myself as a driven healthcare leader.

During my time with Gallup I focused on generating new business and delivering client value at all times. As a result, I’m now established as an expert in the customer experience, putting the needs and expectations of my clients first.

The relationships I have built not only in this role but throughout my wider career have been incredibly successful and have become the foundation for a strong network. That said, I am always looking to expand my network and see how my connections could help others. I believe that my skills and expertise could help to deliver value to organizations and individuals in need.

I’m interested in all things real estate, building strategic partnerships, and discussing what I can do to help you.