Results: Property Acquired!

Whew. The whole process of finding and securing a project for a fix and flip is difficult and much harder than I ever anticipated. The hardest part was finding the funding actually, and inexperience really is a bigger factor than most people realize when trying to work with Hard Money Lenders and other financing institutions. With the help of an excellent mentor, I was able to secure funding and have close to $50K in available capital for the project that we acquired.

But, on to the good news! My team and I were able to secure a property in an excellent area! The property is located right behind an elementary school and is a foreclosure property. It's currently listed at 3 bed / 1.5 baths, but with some smart rehabbing and framing we can create another bedroom to list it at 4 bed / 1.5 baths. It's a beauty of a fixxer, with a hole in the roof, the copper piping stolen by heroin addicts, and mold damage to the home. It was listed at $149,900 and I submitted an offer for $122,000. the bank countered with $126,000, and I'm countering back with an offer of $129,800 with 3% to closing costs. The ARV of the home is $225,000 and will probably sell pretty quickly based on its location alone. I'm waiting to hear back from the bank to confirm our verbal agreement in writing at this point but am confident that the newest offer will be accepted. Having good communication skills and an INCREDIBLE Real Estate agent have made this process rapid. The story of how I acquired it is also worth telling as well.

I initially started looking for potential projects back in August after feeling like I had done enough research to begin acting. The Book on Flipping Houses by J Scott is well worth the money and the many articles and forum posts about rehabbing a home have been very useful in giving me a knowledge base to feel confident in tackling any issue. I did a walkthrough on the property in August and estimated that it would take about $40K to rehab it, and at its then current price of $125,900, I felt confident that an offer at that price with a 3% contingency to closing costs would be easily accepted. I even had my General Contractor come out and give a firm estimate for the rehab work ($43,500 is what it came to). My funding fell through, though, around this time period and I wasn't able to move on the property and secure it. An offer was accepted by the bank and I resigned myself to looking for another property to acquire after I secured funding.

Well, I secured funding about two weeks ago and was beginning to be proactive in doing walkthroughs on properties again. And then, it happened. My Real Estate agent sent me an email indicating that this property I had looked at and gotten an estimate for work was back on the market! The offer that had been accepted fell through and so I immediately had my Agent put an offer in on the house that same day. The offer was made on Tuesday 10/4 and I was in verbal agreement with the bank on Thursday 10/6! The counters were made on Friday, and with the bank holiday on Monday, I was able to confirm my newest offer on the property just yesterday, with my Agent being extremely confident that the offer would be accepted. 

Once the verbal agreement has is put under contract, closing will be on 11/4 and work will begin on the rehab on 11/5. The estimated timeline to complete the project, including holidays and a conservative estimate is 12/23. We will then list the property at $225,000 in January and get a jump on the Spring fever buyer's market that occurs each year in my area.

The journey has been excitingly hectic and I've learned a ton about financing and communication with sellers through this process. I'm looking forward to getting to work on the actual rehab and learning more about the process of managing a rehab project. If all goes well, then the anticipated profit for this deal will be about $35,000. We'll set aside some of that money for business expenses and capital gains taxes, but then we will probably be able to pocket around $28,000 in payouts to my team and I.

I've tried to be as clear as possible with my wife to alleviate her skepticism that I opened my blog with, and she is being gracious and supportive of me in this endeavor. I believe that once she sees the pocketed profit margin that will occur with this deal that she will no longer worry as much about getting into REI and will be a proactive supporter of the business. She's a wonderful woman, and I'm eager to prove her worries and her fears to be things to be overcome by proactivity and faith.

Speaking of faith, this process has been very insightful for me and has caused me to reflect on why this has been as successful as it is. In the grand scheme of things, I went from knowing very little about REI in January of this year when I began to really educate myself, to knowing a great deal about REI and flipping and acquiring my first property. I'm a firm believer that this has everything to do with my faith in my Dreams and Beginnings post and in The Action plan post. I believe that faith, as scriptures say, is a visualization of things that haven't occurred yet in reality but you believe will occur in reality, contingent on your effort and work to bring that vision to reality. I visualized, almost every night, what it would feel like to have that $28K in profit and what I would use that money for. I visualized myself owning the particular property and walking through it with a GC as the work is being done to transform the property.

And as I visualized, I found that the imagination and dreams I had visualized for so long had insulated my mind and my heart from the frustration or doubt that would have occurred. I think that this is the power of faith. It insulates your mind and your heart from the emotions of unfortunate things that occur that would prevent your faith-based vision from becoming reality. This insulation allows the faith-based vision to make a safe transition from your mind into reality without being marred by negativity that could otherwise be in your mind. Faith is the act of transitioning your dream or vision into reality, and through the help of God (or whatever deity you worship or higher power you believe in) that dream is empowered to become reality in a way that really is kind of miraculous. I'm a 26 year old kid with no experience in REI. But, I was able to acquire my first property after two and a half months of seriously searching for one. It might be that my market is good, that circumstances are right, and that everything has fallen into place. I believe that those circumstances have fallen into place through the guidance of God, and I'm grateful to Him for empowering my faith.

I believe that God will empower you too, dear reader. I believe that we're brothers and sisters, and that God is a Heavenly Father of us all. Having become a father, I am beginning  to understand the depth of His love for us and how much He wants us to succeed in Life, in securing the Coin of Life. And I think he wants everyone, regardless of faith, race, political views, etc. to be successful in whatever they put their mind to. So, God bless you and I look forward to your own success!