First time failures.

A fairly quick rundown of how my first handful of wholesale "deals" didn't work out.

Deal 1:

I contacted a seller that had a burnout for sale. We met, and I contracted it for $30,000. I believe the ARV was $70,000 or so, but it was a few years ago so I don't remember exactly. I estimated $15,000 in repairs to get it rent ready. Unfortunately, once I got the property under contract I didn't market it properly. I think I put up one Craig's List ad and sent out a crappy email to my "buyers list". What do you know? I only got one guy to come look at it. Turns out that guy was one of the bigger wholesalers here in Oklahoma, and he offered me $31,000. I should have just taken it. I decided that was too low, and put all of my efforts towards a Realtor to try to bring a buyer for $35,000 or so. Of course, me being dumb, I stopped marketing the property and had to let it out of contract.

Lessons: Always market properly and consistently. Knowing what I know now about that specific wholesaler/buyer, if he was offering me $1000 for it, someone else would have given me more. Unfortunately, I believed it when he said he was putting granite and hardwood into this warzone home. Yeah, right. Also, I should have negotiate better, because a month later, the seller sold the home to someone for $22,000.

Deal 2:

I contracted a home worth around $95,000 for $22,000. I was only able to find a buyer for exactly $22,000, but then the seller finally blurted out there were liens and back taxes on the property as well. I tried to negotiate with the seller to lower the sales price by $2000 or even $1000, then have him bring about $1500 to closing to just get rid of the property. He needed to get out because he had bought the home to flip, but then life got in the way. Of course, he couldn't bring the $1500 to closing, so I lost the deal. I checked a year later and the home was on the market as an REO.

Lesson: Do better at researching the properties, and negotiating with the buyers.

Deal 3:

A friend and I got a probate home for $58,000 and wanted to make just a couple grand each. So, we marketed to my list of buyers and had some interest, but no hard bites. I was going on a spring break trip, and the sellers were pressuring us to try to close very soon. I didn't want to lose the deal, but I definitely didn't want make the seller's situation worse by wasting their time. So, last ditch effort before I went out of town, I called up one of the buyers I thought might take it and he went back out to have a look. I emailed him a couple of times, but never had any response. Since I didn't hear from him I just had to let the property go. About a month later I got on the county site to see what the seller ended up doing. Low and behold they had sold the home to the buyer that I had last contacted for $61,000. Needless to say, I have not, and will most likely not speak to this buyer again.

Lessons: Don't waste anyone's time. Only deal with quality or respectable buyers. Don't give up on a deal because I may have to do it virtually. Give myself more time in the contract.

Deal 4: Funniest and Worst

My friend and I found a home on the MLS for $35,000, but it was worth $105,000 fixed up. However, it needed a good $40,000 in work, easily. We negotiated the price down to $23,000. We felt it was going to be a great deal. The home had been on the market for about 6 months. We found a buyer in a week that was willing to pay $25,000 cash, paying a $2000 assignment fee. He wasn't a buyer that I had already known, though. So, when he went by the property, instead of calling me, he called the listing Realtor on the sign. I got a call the next day from the listing Realtor saying that I wasn't licensed (this was before I got my license), and that they were going to sue me because what I was doing was illegal. I assured him it was not, and I attempted to explain that it was win-win-win for everyone involved. I'd get paid, the Realtor gets a commission, the seller gets the cash, and the buyer gets the property they want at a good price. This wasn't acceptable to him. We exchanged some pretty heated emails (mostly from him, and I still have them to look back at and laugh), and at the point that he called me racist (the seller and Realtor were hispanic) I just let it go. The next day I found out the Realtor took my $500 earnest money claiming I was in breach of contract. Then, two days later the home was sold to the buyer that I had brought to the table, for the price I had negotiated. I ended up contacting a guy I play hockey with who is a lawyer, and he made one call before I got my money back. It was an unfortunate turn of events, but I still felt as though I had finally succeeded.

Lessons: Be clear with the buyers. Go with my buyers to the home. Don't be a racist (oh wait, I'm not.).

These were all pretty tough lessons, but I learned something new in every deal. I knew that real estate worked, I just needed to learn exactly how to go about it. I ended up buying 3 rentals before I actually succeeded in a simple wholesale transaction. Kind of funny how that works, but I'm happy where I'm at today.