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Posted almost 9 years ago

4th deal back up strategy compromise

Shortly after purchasing my third deal I was running short on cash and wanted to invest in another flip like my second one. I was able to get a bigger house less charm but more bedrooms and bathrooms in the same neighborhood as my second deal. It was a foreclosure listed at some where between 25 and 30 grand. This house needed extensive repairs new flooring through out new paint, garage fixed, porch and fence painted, some fixtures fixed, about 4 new doors, new windows, and a hot water tank. I got someone I knew from church who said he had been a general contractor in the past to come look at it he estimated 15,000 in repairs and about 2 months in time. I thought that would be a great deal buy for 25 put 15 into it sell for 70-80. I was able to get a loan from the same investor at 4.5% interest for 40,000. It turned into a bidding war with multiple offers so my strategy of coming in 10% below asking didn't work I ended up offering more 27500 is what I got it for. Apparently the floors were bowing so we could not put the hardwood floors in living room like planed had to settle with carpet. They ended up jacking up the bathrooms to put tile in. I ended up paying 2grand more then my contractor had expected which I did not like at all it had to come out of my pocket. Not only that It took 6 months to fix totally unacceptable taxes were over 200 a month and I was paying some in utilities so there was a lot in holding costs. I was very mad with my contractor as he was not doing his job in time it ended up costing more and more time. He did not pay me the 200 extra each month as we agreed my advice always get a few quotes and go with the one with best recent references make sure you get them and do not pay money upfront you can buy materials but that's it all, those were the mistakes I made. I listed it it was on the market about 2 months I was getting nervous and frustrated as there was still a few things my contractor still needed to do like install a railing. I ended up doing a rent to own for 80,000 850 a month as rent 100 going towards down payment and 5,000 down which I split with the agent who found me the tenant. So over all it was still a good deal a good back up strategy. However it was still a bad deal for me as that tied up most my investors money as well I would not have the money to do another great flip which means I would be stuck with my 3 rentals until my rent to own either sold or I saved up enough for another property. I really needed to sell it so I could keep on going at a good pace. At the time however I was still happy thinking I was getting a head with 3 rentals. From then on I kinda lost my focus on the best strategy to build a good portfolio fast. I ended up getting married and bought another house to live in for 25,000 with another loan(sigh bad idea it was eating up all my potential money do do other stuff as banks did not want to loan to me until my rentals had been there at least 2 years). I got a part time job at my church which I love. 


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