$50,000 Down The Drain | Here's Why

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

Who is Titanium Investments and What Have We Accomplished?

Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

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Chapters

• 0:06 Premise: A $50,000 Mistake
• 0:46 The JV Backstory And Trust
• 2:30 Tulsa Trip And Due Diligence Role
• 3:42 Bridge Money Ask And Terms
• 5:25 Deal Collapses And Scam Uncovered
• 6:03 Reputation On The Line, Debt Repaid
• 7:22 Chasing Shiny Objects And Consequences
• 8:17 Extreme Ownership And Lessons Learned
• 9:10 Close: Do Due Diligence, Like And Share

Transcript

SPEAKER_00: 0:06

Welcome back to Oh, that's fucking adorable. The series where I break down terrible things that have happened in my career so you don't replicate the exact same result that I did. So you can learn from these lessons. Today we're gonna be talking about how I lost$50,000 in earnest money on one transaction. Now, what's hilarious about this is the quick synopsis is I didn't even have a contract on the property and I lost$50,000. So how does this happen? Well, this all started with a long-term relationship that I had with a joint venture partner. This was someone that I had done hundreds of deals with, right? He was one of my initial partners where he would dispo the deals, we would do the acquisitions, and we had built up a level of trust together. Now, I'm not pointing the finger at this person because this person also got screwed over in the transaction. However, the final result ended up being the death of our relationship together. I i hold no hard feelings of this person whatsoever. It was my own fault. Extreme ownership. I should have done better due diligence. So let me explain what happened. This JV partner went out and got a large apartment complex under contract in Tulsa, Oklahoma. Now he wasn't local to Tulsa, Oklahoma, and he needed boots on the ground. And so he asked me and Cassie, and this is back in 2018-2019. So this has been many, many years. Okay. He asked us to go out to Tulsa, Oklahoma, take a look at some of the properties that single-family properties that he owned in Tulsa, Oklahoma. He was looking to get rid of those, liquidate those, and then also perform some due diligence on this apartment complex. So we went out, we took pictures, we walked all these properties, and that was essentially all of our role in this transaction. We were basically just helping him, and so he compensated us for our time, and that was fine. However, what took place after that was he went out and he got lending on the apartment complex. But as the due diligence period expired, the lender wasn't prepared to close yet. So this JV partner reached out to me and Cassie because he knew at the time we had access to plenty of capital, other people's money, our own money. And he reached out and he said, Hey, listen, this is my situation. Is there any way if I brought you in for a small piece of this transaction, this deal that I'm going to be taking down? I'm going to be holding for a while. If you could bring this$50,000 non-refundable, I've already got the lender lined up. I'm prepared to close. We're just we need an extra two, three weeks for the lender to get everything lined up. So everything checked the boxes in theory, except the issue was the lender was not legitimate, and I did not do my due diligence. And this is how quickly, if you just willy-nilly stuff and you don't do your due diligence and you don't protect yourself in real estate investing, you can lose your rear, and that's what happened on this deal right here. I trusted the JV partner, I trusted that he had already appropriately vetted out this lender on this transaction. And so I reached out and I asked one of my private money lenders, hey, can you give me$50,000 and I'll turn around and I'll give you$55,000 once this closes? Well, it was a no-brainer for that private money lender, right? I'm gonna turn around and I'm gonna get 10% on my money in just a couple of weeks. Absolutely, let's do it. And for me, giving up that$5,000 was nothing because I was going to get an equity stake in this large multifamily complex in Tulsa, Oklahoma, until the deal didn't close. Once that closing date expired, contract was terminated,$50,000 was taken by the seller, and we were booted out of the deal. Now, there was a lot of back and forth between this lender, but point blank, this lender was not legitimate, they were a scammer, they were trying to broker the deal. If they were even was successful, that that even might have been a lie. But we ended up finding out that there was multiple cases against this person that was pretending to be a lender where he had screwed over people and they lost money. But at the end of the day, there was nothing that we could essentially do besides you know slap them on the wrist, open up another case. It didn't matter, the money was never coming back to us, and so here I was basically a bystander of this deal, and got looped in. What ends up happening is everybody else leaves me at the altar, it's not their relationship with that private money lender, it was my relationship, so they didn't care that that fifty thousand dollars got lost. Nobody else in this transaction cared, and that's the part that kind of bothered me, but honestly, it was my fault for not doing my due diligence to figure out that this lender on this transaction was not legitimate, and so I ended up having to pay my private money lender back 100% of the proceeds of the fifty thousand dollars of his that I lost, and that's where we hear all these stories about using other people's money, and you don't have to have any skin in the game. Well, that's true, except for your reputation, your word. That's what's on the line here. And because everybody else ran away when the deal fell apart, I was the one that was left paying my private money lender back the$55,000 that I owed. So I had to work out a payment arrangement instead of just coming out of my pocket the$55,000 and getting that private money lender paid back. And this is one of the many stories that I had during that time of 2018-2019, where deal flow wasn't an issue. There were so many opportunities that were coming our ways, whether it was a flip, a rental, seller finance, sub twos, uh, in this case, multifamily, they were abundant, and I was chasing each and every one of them. And why? Because social media told me that's what I was supposed to do. Don't sit there and solely focus on wholesaling, RJ. You're supposed to go out and create your legacy and have that freedom, passive income. You can be a part of this large apartment complex deal in Tulsa, Oklahoma, and it's going to be fantastic for you. But at the end of the day, what ended up happening was I lost somebody else's money, and that's one of the worst feelings in the world. And it was because I saw the shiny object and I did not do the appropriate due diligence. I never even placed a phone conversation to that lender before asking my private money lender to give me his hard-earned$50,000. And because of that, I was left with the bag at the end of the day. So that's how I lost$50,000 earnest money on a transaction that I never even had a signed contract. And yes, could I have gone after people? Could I have sued them? Could I have written demand letters? Absolutely. But I looked at it and I said, you know what? This is all on me. This is my fault. And because of that, we took the heat and we paid back the loan. Let me know if you guys have ever lost this kind of money on a transaction. Hopefully you haven't. And the next time you have an opportunity that comes your way where you're thinking about being involved in a shiny object, slow down, do your due diligence before you lose somebody else's money. Show me some love. Please like today's video, and we'll see you guys tomorrow.