I hate textbooks.
Don’t get me wrong, I have used them and when needed will still pay a few dollars for one on Amazon or eBay, but for the most part, I find them pretty worthless. Why? Simply put, because everything is always displayed in “perfect world” conditions. As is the case in any business, but even more-so in real estate, these textbook conditions just don’t exist.
Instead of just complain about it, I’m going to take matters into my own hands, and in doing so, hopefully help some people learn as they go on this journey with me. If there isn’t any learning, I’m hoping to at least provide some entertainment!
Who knows what will happen. It may be smooth sailing where budgets and timelines stay intact, or it could be a stormy ride filled with nasty surprises and timelines that get destroyed. At the time of this article, I have no idea how it will go.
This is my 8th project since I began in real estate (1st ever purchase made in June of 2011), so this is not my first rodeo; however, that doesn’t mean that it won’t be a bumpy ride.
This property was purchased from a wholesaler. For those of you out there trying to get into or struggling with wholesaling, it “is” possible, so don’t give up hope! The wholesaler bought it at an auction, added in a few grand for his compensation, and had the price he was willing to sell it to me at.
I met the wholesaler at the house, he walked me through it, told me what he thought it could sell for and what repair costs would be. I then did my own due diligence and after coming to the same conclusion as him, I put down my earnest money to lock up the property.
To me, I love these deals. I’m all for people making money, and with the time and money the wholesaler saved me in finding this deal, I have zero issues paying a bit of a mark-up. Remember wholesalers, at the end of the day, you should have the property under contract at a price where even when you ‘do’ mark it up, the cash buyer still has a hot deal on his hands.
There were a few hiccups in the closing process that delayed it (not the fault of the wholesaler, but the title company being used was, to speak bluntly, a joke), but on May 25th I closed on the property.
The property is located in a nice Grand Rapids neighborhood that is up and coming with many very attractive houses surrounding it. It is a 3 bedroom, 1 bathroom home with 1,100 square feet, a 2 car detached garage, and fenced in back yard.
My exit plan for this will be to resell with owner financing. Here in Michigan, we call these sort of transactions land contracts (other terms used, ‘installment sales’ or ‘contract for deed’).
The timeline is approximately 1 month. The closing date was sprung upon us at the last minute, so I wasn’t able to have my project manager get everything lined up beforehand, so there will be a bit of a delay from the time of closing to the official kick-off of rehab.
Marketing for the property has already started, and given how smoking hot the land contract market is here in Grand Rapids, my hopes are (and believe it or not, they are VERY realistic hopes) that the home will be sold on land contract before the renovations are even done.
My role at this point is pretty hands off. I have a project manager who deals with all the contractors and makes sure things stay on budget. I may get a phone call here or there from him, but being this is our 8th project, we have a solid working relationship (oh yea, it also doesn’t hurt he is my brother-in-law!).
For the sake of not letting this article turn into a novel, the next article I do will cover the Scope of Work and what we plan to do to the property, along with provide an update on how things have been going.
So until next time, wish me luck