Due diligence is always key to acquiring quality real estate deals. In this episode, Monick Halm’s guest, Amada Chan, has an incredible story plus some great advice about doing due diligence properly. After being laid off by corporate America on her birthday, Amada was committed to becoming an entrepreneur. Viewing getting laid-off as “the best birthday present,” it spurred her to create her own future. Today, Amada’s real estate projects, including acquisition, development, and real estate private equity funds, help others grow their wealth. Listen to Amada’s inspiring story, plus some great advice on doing due diligence properly.
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Due Diligence And Real Estate – Interview With Amada Chan
I’m here with another interview with a successful woman real estate investor. At Real Estate Investor Goddesses, we bring you these amazing real estate investing goddesses to share their stories, their biggest mistakes and their best advice. Our guest is Amada Chan and I’m thrilled to have her. She has a great story. She has also some great advice about doing due diligence properly. The due diligence is how you check out a property or a potential partner. She’s going to talk to us about that and tell us about her story. She was laid off by Corporate America on her birthday. After that happened, she became committed to becoming an entrepreneur.
She says that getting laid off was the best birthday present as it spurred her to create her own future. She started from a financial ground zero and she has since built a multimillion-dollar real estate portfolio in ten years which proves her success. Her success is attributed to her desire to succeed, her dedication and hard work. Her real estate projects include acquisition, development and real estate private equity funds to help others grow their wealth. I’m excited to have you here. Welcome, Amada.
Thank you, Monick.
You got laid off on your birthday. What got you from being laid off in Corporate America to real estate investing? How did you get started in real estate?
It was truly by default like many things in life. You didn’t go to school to get laid off. You’re never prepared for it. I used to work for a tech company, a publicly traded big company, and all that. You thought, “This is the way to go.” That’s what we were told and what we’re trained for. I was in the tech field doing web design. All of a sudden, 2001 came and if any of you are old enough like me know that period of time, the tech bubble burst. All the dot-com companies, including the one that I worked for, have heavily invested in the company. Unfortunately, the company stock went sliding down to half in one day. Everybody was in panic mode. Long story short, I got laid off shortly after. They literally gave me a pink slip. I walked in and it was a Monday, my birthday. I thought, “What is this?” They invited me into this big room. It was filled with people and I’m holding this pink slip with me. I was like, “I cannot believe this happening.”
During that time, it was the most devastating thing that you feel you can experience. You lost your job because the company went under. My 401(k) was gone. We also privately invested heavily in this company because we believed in the company. The CEO, Wall Street, everybody is telling us, “You’ve got a great thing going. Go all-in,” and everyone did. I lost my portfolio. I was renting so I didn’t have to go through a foreclosure. I downsized so many times and even the car got repoed. It was a long struggle. That was 2001. I struggled for a long time. I did a lot of odd jobs. If you’re old enough to know what a phonebook looks like, it feels like I have gone through half of the phonebook, anything that I can do to make ends meet. That was tough.
In 2002, a couple of things happened. In 2003, other things happened. In 2002, a friend of mine who was in the MBA program, one of her assignments is to read a book called Rich Dad Poor Dad. I’m sure you have read it and a lot of peers in our network also have. That was a life-changing book not only because it opened up your mind, but also you still relate to that. You know this book is talking to me. I know this book is talking directly to me. At the same time, you feel like, “I know all these elements, but I just don’t know how to put them together.” That was one. The second thing that happened, and I’m not a super religious person, but I truly believe in when there’s a plan for you, something bad might happen first and something else could happen, but you have to know where to find this path as well.
During that time in 2002, other things happened. I got tricked into going to this seminar thing. I never go into any seminar in my entire life. It turned out to be a four-day personal development. That was another life-changing experience. That was an experience that I started to take responsibility for my own life instead of letting someone else or handing it to someone else and let them do it for me. Women, men included, it doesn’t matter what gender you are, a lot of us feel like, “This is just the way it is.” It turned out that you do have options. That was the second thing that happened. The next year, another thing happened. Even if you have all the knowledge, it doesn’t mean that you know what to do with it.Even if you have all the knowledge, it doesn't mean that you actually know what to do with it. Click To Tweet
The third thing happened in the next year. I was struggling. I read the book and attended the seminar, but still what are you going to do with it? I was selling cars. I would walk in the car lot and if anybody is looking for a job, don’t do it. It’s the worst job you’ll ever get. It was terrible and I thought, “Anything could be better.” A friend told me, “My wife got her real estate license. You can be a real estate agent to sell real estate.” I said, “I’m not that smart. I don’t know if I can do this. I’ll give it a try. What’s the harm?” They convinced me to do it. However, I still need to come up with the money to attend this class. I scraped through enough to do that. It was $200.
For sure, I have confirmed my word earlier. I wasn’t smart enough to pass the real estate licensing. I failed twice. I wasn’t smart enough to pass the test. I never got the license during that time I was living in Las Vegas. Something else happened, during that class, I learned so much in knowledge of, “You can do this, you can do that.” Remember, this is a real estate licensing class. It only gives you the perspective of what you can do as an agent to sell a house and make a commission. The best part is the broker who conducted the class, he’s a serious multimillion-dollar investor as well. Most brokers, they just broker and sell real estate.
Most are not investors.
This guy is a serious investor. At one point he knew our credential, which is zero. He said, “You guys want to make some money?” “Yeah, of course. Anybody wants to do that.” He gave us a formula. He conducts a class at any given time and probably has about 150 students. This is a huge class. He has a night class and a day class. I know how many students he had. He told everybody about this formula. The formula is simple. It’s basic math. Follow this formula and you can make some money. I thought, “I don’t have money.”
What was the formula?
During that time in Las Vegas, it was a booming market. It’s about to take off. This is like 2003-ish, it’s not completely in the full boom yet but it was about to. Back in the day, it still wasn’t built. It still had a lot of dirt in the greater Las Vegas area. He said, “Go to a brand-new subdivision, buy in phase one. Buy the smallest house, find the smallest lots and then you make some money.” “How does that work?” The formula is simple, brand new subdivision, buy phase one, find the smallest lot with the smallest house on it. It sounds so simple and it is simple because it will take about 12 to 18 months to build the house. Remember this is just dirt. Back in the day, KB Home or Ryan Homes went to this brand-new subdivision, put a trailer in it and started taking people’s contracts.
This is Las Vegas. You don’t just walk in and buy because all the Californian investors will go in, line up and buy everything. Instead of going to let people buy up everything, they had a lottery system. I did not get lucky, but somebody backed out. They had my information. I was a backup offer person. I got a call and they said, “We have it right now. Do you want it?” I said, “Of course.” I went in and I had no idea what I was doing. It was the scariest thing, but I was so excited. I said, “What do I need to do?” “Bring your checkbook.” I thought, “I have one. I just have no money in the bank.”
I went in, they gave me the contract and I gave them a $2,000 check. I had to come up with $2,000. With some miracle, I came up with $2,000. I said, “Now what?” I’ve never done this before but that’s the best part. The beauty of it is I started with $2,000. I found a partner on that deal. My partner was a lot more educated than I was at the moment. I was resourceful because I had no choice. That’s my first investment deal. The price of the purchase, initially when I got into contract was $200,000. Remember, this is Las Vegas many years ago. It was just about taking off. By the time the house was built, we closed and everything, the house had gone up to $300,000. It took longer than eighteen months. We got into contract sometime in late 2003. By the time we sold it, it was maybe sometime in 2005, 2006. I don’t quite remember the timeline. It took a long time to build that house.
You invested $200,000 and you got $100,000 profit or a $98,000 profit?
When you started, you had this teacher who was with real estate, the broker who gave you this formula to buy these new subdivisions early. Buy them cheap and then sell them when they were completed and worth more.
That was the formula and I know it still works in some area. I don’t think it will work in all areas, to be honest with you. I highly advise, do more homework. Don’t do what I was doing. Being creative and being resourceful is important as well. That was my first investment deal. That’s my first and only flip technically. This flip doesn’t require a hammer. It doesn’t require a contractor. It’s the easiest flip.
You did that first one in 2004 when you bought that, correct?
Yeah. We sold that property in 2005, 2006-ish. I don’t quite remember the timeline. Afterward, for some reason, I thought, “We can do this over again. Keep repeating what we did,” but for some reason, I don’t want to. I felt something is wrong, but I did not have a crystal ball. I have no idea what’s going on. My gut told me, “Something is wrong. Why don’t I hold on and see what will happen?” My then-boyfriend, now-husband, he also has another property that he needed to sell. He sold his at top dollar in 2007. We did the same thing, we said, “It looks like everybody’s making so much money.” We feel like we’re missing out but at the same time we were like, “We’ll wait and see.” We waited enough to see the whole thing come crashing down. It was the most uneasy feeling but at the same time, we were blessed. Looking back, people said, “How did you know?” I said, “I don’t know. I truly don’t.” My gut told us something is up, but we just don’t know what. We listened to our gut, and the whole thing worked out so well for us.
The market crashes and you have all of that cash, which is a perfect way to be. Now you can buy all the property on sale. After the crash, everything was on sale. What happened then? What did you do after the bubble burst?
This is what happened. We went out to do shopping probably around 2010, 2011. Remember that I started my investment career sometime in 2003, 2004. During 2004 to 2010, 2011, I have been doing one thing constantly, persistently and non-stop. I keep learning. It doesn’t matter if I can apply it or not immediately. I read a lot of books about investing, a lot of audiobooks. I’ve joined different programs. It almost seemed like I was wasting a lot of time and money during that time because I didn’t apply it immediately. I felt like maybe the best time to do this is when I don’t need it. When the opportunity comes, I’m already prepared.
That was one thing I always keep telling other people to do. Go to different seminars or webinars, whatever that you can get some new information. That long period of learning, by the time of 2010, we were ready. We went for the trophy property. Instead of starting from single-family or some smaller deal, it will take much longer. It so happened that we also have the capital. Back in the day, I didn’t know how to borrow money or I didn’t know how to do a lot of these things. The preparation helped us to be in the right position. Once you get to a point of your investment, you start to do bigger deals. That is a different velocity of cashflow. It’s a completely different game. That’s my experience. In 2011, I bought my first big deal, which is scary. Anybody who has done that for the first time, it was like, “What if?”
What was the deal?Once you get to a certain point in your investment, you start to do bigger deals with a different velocity of cashflow. Click To Tweet
I still have this deal, an eight-unit apartment building in the heart of Los Angeles. It’s right in my own backyard. It was a crazy story too. It’s a deal where the seller wants to retire. He’s ready to retire when he turned 70. He’s looking for the right person to buy this building because this has been his baby. He remodeled everything inside. He got multiple offers. The craziest thing is, he chose me. I had little experience, but I answered all the questions correctly. I didn’t know he was interviewing me. He asked me, “Who’s going to manage this building?” “My husband has a full-time job. I would like to learn everything about it, but honestly, I don’t have a whole lot of experience.” That was the key. The other thing that pissed him off at the beginning was I asked him a lot of questions because I care, and he told me later on after we closed. I asked him, “Why did you sell to me? You have three offers on the table. The other two are cash offers and I’m not giving you cash. Why did you pick me?” He said, “The other two offers are cash. These people come in, five minutes, and they gave me an offer. They never asked me a question.”
I remembered I had so many questions. At one point he was pissed off. Because of that, we built a great relationship. I convinced him to do seller financing. That’s why everybody was shocked, “He did not take a cash offer. Instead, he did seller financing for you.” I said, “Yes.” We got married for a few years. It was crazy. I worked hard to convince him. I asked him the first time, he said, “No.” If anything, I think women are the greatest negotiator. We don’t stop until we get the best bargain. This is what happened, “Would you consider seller financing?” He said, “No, we don’t want that.” “Okay.” Two days later, “Do you think?” He said, “No.” I asked multiple times again. I said, “I truly think.” He was like, “Okay, fine. I’ll do seller financing.”
I need to make a point about this because that’s beautiful. A lot of people don’t understand that because a lot of people just take the no. If you can keep asking in fun and different ways, then eventually you might get a yes. A part of it is to have fun with the asking. You can almost flirt your way into it. That’s one of the things that women can do, but a lot of women don’t realize that. I love your story. You guys did such great things. Let me ask you a question. What was the biggest mistake that you made and what did you learn from it? The good times are great, but it’s been the mistakes where we learn.
I’m sure everybody, all investors, has a lot. My deal, this is what happened. I started this transaction, it’s the longest escrow ever. At the time, we were negotiating on the contract. To give the audience a little bit of background of this deal, it’s a 6-acre commercial, but the commercial is retail. It’s a car dealership and has some self-storage. It’s like a mixed-use property. It’s highway frontage. It has about 100,000 cars per day that pass by and can see this property. It’s a valuable property. I saw it and I said, “I’m going to buy this.” I’m determined. I want it.
It took me a long time to get to the seller. We’re in the middle of negotiation of the contract. I’m not saying that if you’re going to buy a single-family home, you should hire an attorney, but because this is a complex deal, it involved a lot of moving parts. An important person in my team is my real estate attorney. I had talked to my attorney and told him all the good, bad and otherwise. He’s diligent, but at some point, I let my attorney take over what my job should be. What happened was my attorney was doing his job. He didn’t do anything wrong. The seller also brought in an attorney. We allowed the two attorneys to talk.
That is never a good thing because they got too technical. I should put it out there for all the audience. Attorneys are known to kill the deal.
I’m an attorney. I was trained as an attorney but when you’re working as an attorney, you look for what’s not working. Attorneys are valuable ones as far as I can see. They can spot all the problems. They’ll try to protect the client, but that’s not necessarily the best way to make a deal. That was your biggest mistake, letting your attorneys negotiate instead of you doing the negotiation.
The story goes was the attorney screwed up the deal. I’m not blaming my attorney at all because I should take responsibility and I should read better of what’s going on with the seller and everything. One day I got the message and it said, “The seller doesn’t want to sell anymore.” I was devastated. My husband put me in the suicide watch.
How can people find out more about you or reach you? What’s the best way so that people can come to find out more about what you do because you have such great stories and content.
My website is AmadaChan.com. Anybody who needs help and need advice or share my mistakes, just so you don’t do that, that will be a great way to do that.
We have time for a Quick Trinity. What are you celebrating? What are you bragging?
The one thing I need to brag, and I don’t know if it’s necessarily a brag, is I got out of the rat race. If you have played the game CASHFLOW, which we dedicate a lot of time to play, I wish I had gotten ahead out of the rat race. I’m doing bigger projects than in 2004. The $200 deal then, now I’m working on eight-figure deals. It’s been fun, it’s the same process. It doesn’t make any process different. It’s just the number is different. The amount is different. It’s the same amount of principles do apply.
What are you grateful for?
To have the opportunity to share my own good, bad or otherwise experience with others. Hopefully, other people’s experience will be a lot different in a better way. If you’d be careful and do your homework, things should play out fine. I don’t like to see people walk through any bad experience.
Lastly, what’s one thing you desire?
I’m doing that already. I’m doing it one at a time. I’m helping other people, it could be kids. I’m helping a fourteen-year-old try to make him understand what is going on and what money means. It doesn’t mean that you become a rich person and you ignore the rest of the world. I’m trying to touch him and make him understand that once you become that person, you can help other people. That’s what I’m doing individually, not on the big scale. Not like I have written a book and sold millions of them. If I can do one at a time, that’ll be fun.
So shall your desire be or so much better than you can imagine. Thank you, Amada. That was awesome. I love hearing your story. There’s so much more. You can reach her at AmadaChan.com. You can reach me at RealEstateInvestorGoddesses.com and get a copy of my free eBook there. The Real Estate Success Blueprint: 7 Crucial Steps Every Woman Must Take to Be a Successful Real Estate Investor and connect with me there or on our Facebook page. I will see you, hear you or talk to you next time.
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