On the show today we have… My First 3 Deals with Dion Johnson!
Show notes for My First 3 Deals with Dion Johnson
The Vantastic Life is…
– is on the Hawaiian island of Kauai!
Joe told his story about the NaPali Coast Trail adventure.
Dion is sitting in his car while his kids look in the windows.
Welcome Dion Johnson to the podcast! We’ve knows Dion for many years. He has 3 boys, and an awesome wife Katie!
Dion grew up in Renton Skyline area and graduated from Renton High, then worked for City Light. Then got married to Katie, where they met in church doing youth ministry.
They started thinking about what they could do more… joined FortuneBuilders and gave all their life savings away. Learned a lot, and started bird dogging. Basically I’m good at putting deals into place, and finding the right people to get it done.
So now you’re out on a 4 acre farm in Shelton as a result of real estate…
What did you do when you first got started?
The first thing was direct mail marketing and I made my own bandit signs from the dollar store. I love talking to people so I would door knock.
Even when Katie and I got married we would door knock as a family. 🙂
Then I would hit up all of the networking events.
What was it that worked best for you?
It was the networking and the door knocking.
Door knocking helps you cut your teeth, and networking helps you meet the right people.
I got my first deal from networking. Someone asked me if I wanted to do it.
How did you get the money together to pay for that deal?
The investor just didn’t want to do it. They said to give the referral fee at closing.
We used Eastside Funding and other FortuneBuilders for private money on that deal, which was awesome!
Did you guys hear that… we just had a match making happen at our meetup where someone was looking to lend and another person needed money, and they’ve already done a deal.
Let’s keep trucking.
How did the process of the first flip go?
We used a FortuneBuilders contractors contract that Scott Hildebrand went over for us to adjust for WA state.
It’s cool because having a contract will weed out a lot of bad contractors. And we found our contractor for Home Advisor.
We had a walkthrough that we posted on Home Advisor, and walked 5-6 contractors through the house and interviewed them.
Interesting, I’ve never heard of people doing this. How did you think that went?
There were some bumps in the road with Home Advisor, but we did find a great contractor eventually. We were there for 4-5 hours talking with contractors.
Did you end up making money on that deal?
Yeah, we bought it for 150k and held it for 2 months and sold it for 245K, so we made some good money on that.
If you have tools in your tool belt these days, you can get these types of deals done.
We are still in a great market, it’s just less predictable.
There’s still the possibility for quick in and out. But it’s easier if you have all the tools that you need.
So, now you’re all excited.
You are still working for City Light at that point…
Did you put your money into another deal?
On the 2nd deal we were more project management, and that was a joint venture. We didn’t even bring the money, we just were project managers.
Well, that’s a great setup!
How did you find that opportunity?
Just networking and showing other investors that you’re hungry and wanting to grow.
They gave us like 20% of the deal.
Let me caution everyone on one thing… I love this, but you always have to have plan b and c in place. You have to be able to get out of your hard money loan, and should be looking for a traditional loan if you can.
Anybody who owns 20% or more will require a credit check. So make sure that you’re not going to damage the credit process.
What an awesome effort you made by putting yourself into that situation.
Yeah, we learned a lot!
This was a bigger project. So, at City Light I operated a lot of machinery. And the investors didn’t have enough money for the landscaping. So I rented an excavator and cleared out the back yard, and cleaned everything up.
This is awesome! You should all sit and access what your skill sets are. This is huge!
You need to think about what are you good at…
You guys made money on that one?
Yeah, that was a fun one!
And going deeper when networking, and I like what you’re doing with SIC.
What happened on number 3?
Oh jeez! At this point everyone is jacked up. We found it through a wholesaler by networking.
Let me say that contractors are hard to find in Seattle.
I took this down before I had a contractor by putting the fee into escrow.
A contractor came out to the deal and said they could do it.
On this deal I was using hard money and private money for the rest of it.
There was an issue with a closet and square footage. An architect said that we could do that and get to our ARV (after repair value).
Then our private money lender said that we couldn’t do it. They didn’t like adding the extra square feet.
So I had to pull out, and gave it to another investor.
I lost like $2k on this one.
Ok, so bummer, but what’s next?
The next one… I’m trucking and going to escape the rat race, and still working for City Light.
I’m going to networking events and found one in Mount Baker and it had a long close. But the house was super bad, and needed to be gutted. It was an old craftsman that a new investor should be looking at. But I was like, whatever.
On this one the wholesaler wanted the $10k out of escrow.
So, you just wrote them a $10k check right away out of escrow?
So, then I have no contractor to do the deal. My original contractor said it would cost $150k, but all of the others were saying it would cost $250k.
At this point I was just trying to get out of it, and no one would take this on. You would have to put in dormers to hit the ARV. I had all the big players come out on this one, and they were like… sorry Dion.
What ended up happening?
I actually saw someone buy it for more than what I bought it for. But I haven’t seen what happened.
Sometimes you have more in your tool belt that allows you to pay more.
So you backed out and lost your assignment fee, and ever closed on it.
If it means that you’re going to lose a deal because a wholesaler is requiring the fee out of escrow, lose the deal.
Doing deals with a long close time is a risk.
But people get emotional about deals.
What happened next?
I also lost more money to the architect and designer.
How are you feeling at that point?
I’m feeling like a failure and an idiot. This is not what I heard about in FortuneBuilders and real estate. Nobody talks about this. Just some stupid decision that you make can really hurt.
That’s why we do this, and appreciate you sharing.
The next one was in Seattle as well, but again, contractor issues. I took this one down.
What kind of contractor issues?
Mostly the time that it takes to find a good contractor.
I made a mistake of working with the same wholesaler where I put the fee outside of escrow.
Actually my first contractor was going to do it, but he came back with a crazy high number.
You’ve already released your wholesaling fee, and you don’t even have a contractor yet…
So, I’m still working on getting a bid, and I finally get a crazy high bid. Nothing against this guy, he needs to put food on his table.
I couldn’t figure out how to take this down, so I found another investor that could do this.
Which caused me to lose $3k on that one.
The number one lesson that I learned is that you have to have your contractors in place.
And don’t pay your assignment fee prior to closing!
What happened next?
I found an apartment deal in Seattle with NC commercial zoning. It was priced at $1.3 million, and I said we could beat that. I had not money, but knew I could find someone. This deal took a long time and it was a partnership with the owner. I kept following up and following up. And it actually just passed permitting.
Nice! The old FU. Follow up got you this one. Community equals confidence. We can’t state it enough how important it is to join a community.
Get deep into a good community and your life with change.
So, that’s a success, but no money made yet…
Well, at this point I’m making my career change to the police academy.
We are talking about the police academy from City Light.
They gave me $5k every month for 4 months, which was great while I was in the academy. Because I wasn’t doing real estate while I was in the academy.
I’m in the Seattle Police Department, and we get paid really well. There’s a lot of overtime. It’s definitely a tough place to police.
Did Olivier become a police officer?
Yeah, he’s in the process. It’s fun and rewarding! I think I made $17 in one month from overtime. It’s good!
It’s a great idea to not quit your job. We should link the Keith Pitsch podcast here.
Can you find deals while driving?
We did another deal in Hoquiam that we made money with, and we have another few long term rentals that we are going to sell on lease options.
You partnered with Jacob Weaver on those creative deals. One of the guys that I talk to almost daily.
Wow, what a power skill set to have, creative deal structuring.
I originally found these from a seller in Ballard. The Ballard deal didn’t workout, but she called and said she had some houses in Hoquiam to sell. I actually passed them to another investor. But she came back to me about a year later. So I called up Jacob, he’s awesome, and he said, yeah, we can do those.
We’ve made money on one, and have a few others that we’re working on.
The thing that I’m hearing here is how important the networking is in being successful in real estate investing.
This is all such good information! I wouldn’t be surprised if you get some calls about becoming a police officer.
I want to hear more about your property in Shelton. And tell us about your YouTube series, Join the Johnson’s.
We were living in a 670sqf condo. Katie and I would be talking in the bathroom because we had no where else to go.
We were looking for land, and maybe building. This was listed for $67k with a manufactured home on 4 acres. It looked too good to be true.
This one actually had 15 offers that wanted this thing.
My wife called and they said, I can’t believe that 15 people want this thing.
But it couldn’t be bank finance able because of the condition.
Then we called a hard money lender that said they’d do it, but then backed out because it’s manufactured. But they backed out.
So, we couldn’t close,
But we finally found a hard money lender that was close with a conventional lender that does this all the time. And we were able to do it.
It was Entrust Lending who said that knew me from a networking event.
So you’re good to go. You approached it as an investment to get the financing, and then refinanced it to move in.
We have an 1800sqf garden, and I’m trying to talk Katie into getting cows, and chickens, and goats. But I think we’re just going to start with chickens.
We are actually heating the whole house with our firewood stove.
This house just need paint, carpets, and some landscaping. That was it. Oh, I had to wire up the well and the shop.
The wiring was cut because there was a divorce and they were mad.
We get the house because we told the agent we were investors, and asked what we would need to offer. It was $120k and we put $30k into it.
We could flip it, but we love it!
Checkout YouTube Join the Johnson’s
Dion Johnson is still cooking.
We look forward to seeing you sometime?!