Just canceled my 3rd deal… time to start over
Member since 2023 · 41 posts · 32 votes
Just canceled my 3rd deal… time to start over
Most Popular Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votesI'll take what may be an unpopular stance with some - you did the right thing by backing out of those deals. You didn't know what you didn't know. I've learned that pain is the best educator. I bet you'll check tax records for double lots, look at foundations and plumbing, and inquire about water being turned on for inspections much sooner on your future deals.
46 Replies
- 2yDan GuentherBusiness MemberReal Estate Agent · Longmont, CO · Member since 2019 · 548 posts · 271 votes
@Hector Serna - Sorry to hear about the struggles so far.
Take those first 3 deals as learning lessons and use that to grow. Going into the next deal you should have a lot better idea of what to look for and red flags to avoid. Don't give up!
Ten Ridge Realty LLC514 Reviews - 2yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Hector Serna "and for some reason something always needs to come up" - Can you explain what this means? What was (is) your strategy and what stopped you from closing? What mistakes can you learn from?
Everyone has anxiety and stress when buying real estate. We tend to forget is the risk of NOT buying something, i.e. RE, stocks, bonds, or mutual funds. It all comes with risk and you have to be comfortable with that risk. Some investments you can control and others you can't. You have to be happy with the return you seeks. If you're knowledgeable enough to avoid the pit falls, know the numbers, and understand an exit strategy it's time to buy. Time is against us. All we can do is push forward and find the next opportunity.
- 2yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
There are worse things than not owning property. Be kind to yourself and take inventory of what you learned, avoided, and can take forward.
I'd be happy to help if you think that I can be a resource. I have nothing to sell. Feel free to send me a DM if you want to chat further.
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Jaron Walling:
@Hector Serna "and for some reason something always needs to come up" - Can you explain what this means? What was (is) your strategy and what stopped you from closing?
Everyone has anxiety and stress when buying real estate. What we tend to forget is the risk of NOT buying something. RE, stocks, bonds, mutual funds, it all comes with a level of risk and you have to be comfortable with that risk. You have to be happy with the return you seeks. If you're knowledgeable enough to avoid the pit falls and understand the exit strategy it's time to buy. Time is against you if you don't own any assets. Big or small.
Hey Jaron,
First deal (MU)- After inspection, in the crawl space, found out foundation of the home was in horrendous condition, on top of that it had plumbing issues. Took a contractor with me and I was looking at 70k-80k in repairs
Second deal (SFH) - Great home, once we got closer to closing, turns out the property was on a double lot. Double lot = 2x property taxes. Skyrocketed my mortgage by $400+.
Third deal (SFH) - Short sale. Water shut off. With inspection day nearing, the seller and town weren't willing to turn the water on for a thorough inspection. I was going to pay $1k to turn it on and on top of that, the bank wasn't willing to negotiate the property price to give me a hand to proceed. Just red flags all around.
I have been investing consistently into the S&P 500 and other “safe” ETFS/Index funds for the past 3 years now. On top of that, I have my 401k building, I have zero debt. I’m just looking to expand beyond that.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Hector Serna:
Hey guys,
So I recently got out of my 3rd deal in Cicero, IL (Chicago Land Area). I’ve gone through the process 3 times (Offer accepted, appraisal, inspection) and for some reason something always needs to come up. So it’s time to start looking again. I have faith that it’s all in Gods hands to decide when it’s the best time for this to go fully through, however, I’d like some pointers from the BP community.
Has anyone else gone through this? What did you do differently? Is it the location I’m trying to work in? The state? The town? Is there something I should consider?
For the past 7 months I’ve listened to several podcasts and read books.. I truly feel like I just need to execute now to get that hands on experience. I refuse to stay in the “analyzing” stage.
For now, I’m going to take a month or so to readjust, read more books, save more money.Thank y
You should not even be in contract on these deals. Why did your GC not notice the crawl space issue? I have never hired an inspection co. in all 500 or so of my deals. The double lot, Ok that is unforeseen, Water not a big deal, if there are leaks you fix them, and simply get a price reduction for a couple K. Even if no price reductions, if a few k kills the deals, it was not a deal to begin with.
Good luck
- 2yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Hey! I totally get your frustration with those three Cicero deals not panning out. It happens, but let's dig into what might be going on. Cicero's reputation could be affecting the quality of properties, so branching out to nearby suburbs like Berwyn or Oak Park might open up better opportunities. Double-check the numbers to avoid overbidding and ensure a thorough inspection to catch any surprise costs. I understand analysis paralysis, but it's time to set a deadline, make offers, and act swiftly on good chances. Network with local agents, connect with reliable contractors, and attend meetups to learn from others. Stay flexible, learn from setbacks, and keep at it – you're bound to hit that success soon!
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Bob S.:
Quote from @Hector Serna:
Hey guys,
So I recently got out of my 3rd deal in Cicero, IL (Chicago Land Area). I’ve gone through the process 3 times (Offer accepted, appraisal, inspection) and for some reason something always needs to come up. So it’s time to start looking again. I have faith that it’s all in Gods hands to decide when it’s the best time for this to go fully through, however, I’d like some pointers from the BP community.
Has anyone else gone through this? What did you do differently? Is it the location I’m trying to work in? The state? The town? Is there something I should consider?
For the past 7 months I’ve listened to several podcasts and read books.. I truly feel like I just need to execute now to get that hands on experience. I refuse to stay in the “analyzing” stage.
For now, I’m going to take a month or so to readjust, read more books, save more money.Thank y
You should not even be in contract on these deals. Why did your GC not notice the crawl space issue? I have never hired an inspection co. in all 500 or so of my deals. The double lot, Ok that is unforeseen, Water not a big deal, if there are leaks you fix them, and simply get a price reduction for a couple K. Even if no price reductions, if a few k kills the deals, it was not a deal to begin with.
Good luck
- 2yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
I'll take what may be an unpopular stance with some - you did the right thing by backing out of those deals. You didn't know what you didn't know. I've learned that pain is the best educator. I bet you'll check tax records for double lots, look at foundations and plumbing, and inquire about water being turned on for inspections much sooner on your future deals.
- 2yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Hector Serna That's unfortunate but you learned a lot of lessons. You probably made the right choices not closing on those properties. There's only so many problems investors can handle. If you're new to REI the list is pretty small. As you buy, remodel, rent, or sell properties the problems list get bigger. People level up and tackle foundation and fire damage.
Just keep looking and making offers. In my opinion the best opportunities are distressed properties. That's all I've ever targeted. "as-is" = opportunity and value add. If you can confidently tackle some big ticket repairs you'll win. You can create the value how you like it. Not over pay for it upfront. If you don't have the contractor support avoid those issues, move on, and walk another property. Cheers man.
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Travis Timmons:
I'll take what may be an unpopular stance with some - you did the right thing by backing out of those deals. You didn't know what you didn't know. I've learned that pain is the best educator. I bet you'll check tax records for double lots, look at foundations and plumbing, and inquire about water being turned on for inspections much sooner on your future deals.
Exactly.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2y
Just keep plugging away, gotta kiss a lot of toads before you find your prince. Sounds like you dodged a few bullets and learned a few lessons already, and nothing to be ashamed of there. The more real-world, hands-on knowledge you have, the more confidence you'll have in recognizing the right deal when you find it. Keep going forward.
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Steve K.:
Just keep plugging away, gotta kiss a lot of toads before you find your prince. Sounds like you dodged a few bullets and learned a few lessons already, and nothing to be ashamed of there. The more real-world, hands-on knowledge you have, the more confidence you'll have in recognizing the right deal when you find it. Keep going forward.
Means a lot.
Thank you!
- Member since 2023 · 22 posts · 4 votes2y
@Hector Serna Another newbie here in the world of RE investing. Best of luck on your deals to come!
- 2yMax FeinbergPro MemberReal Estate Agent · Pittsburgh, PA · Member since 2017 · 150 posts · 70 votes
@Hector Serna sounds like some of these things could be resolved/noticed before actually getting under contract
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Melania Martinez:
@Hector Serna Another newbie here in the world of RE investing. Best of luck on your deals to come!
Just another fella coming from nothing, trying to do more although people would consider me successful at this point being only 25 yrs old.
A newbie in RE is RIGHT!
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Max Feinberg:
@Hector Serna sounds like some of these things could be resolved/noticed before actually getting under contract
Looking for advice
Thank you though
- Rental Property Investor · Northern NJ · Member since 2019 · 672 posts · 677 votes2y
Quote from @Hector Serna:
Quote from @Max Feinberg:
@Hector Serna sounds like some of these things could be resolved/noticed before actually getting under contract
Looking for advice
Thank you though
While he may have been brief in his response, you missed his point which is actually excellent advice. Chances are you could have caught a few of those items before you went UC, if not all of them. Now that those things have happened to you, when you are walking properties you should go see if those issues are present on future deals.
For example, I got burned on a retaining wall issue. Do you think I now walk any property I check out to see the status of any retaining walls, no matter how well hidden or out of sight they are? You betcha.
From now on, you should be looking in crawlspaces as much as possible, checking tax records for lot sizes and zoning, and if its a short sale or even a vacant home, you're speaking to the realtor and seller about turning on utilities before an offer is made.
Again, these are experiences that you can either learn from and try to mitigate in the future or choose to ignore and get butt hurt when problems come up you didn't forsee. This will dictate your path in REI. - 2yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
For the second home, you would have known what the taxes were when you put in the offer. A double lot, doesn't mean 2x property taxes. Taxes are based on the land and home, so it would be higher than if it was on a single lot, but the double lot also opens possibilities. Depending on the house placement, you could split the lots and sell one. You could build a second home (a suite) and rent that out.
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Mark F.:
Quote from @Hector Serna:
Quote from @Max Feinberg:
@Hector Serna sounds like some of these things could be resolved/noticed before actually getting under contract
Looking for advice
Thank you though
While he may have been brief, you missed his point which is excellent advice. Chances are you could have caught a few of those items before you went UC, if not all of them. Now that those things have happened to you, when you are walking properties you should go see if those issues are present on future deals.
For example, I got burned on a retaining wall issue. Do you think I now walk any property I check out to see the status of any retaining walls, no matter how well hidden or out of sight they are? You betcha.
From now on, you should be looking in crawlspaces as much as possible, checking tax records for lot sizes and zoning, and if its a short sale or even a vacant home, you're speaking to the realtor and seller about turning on utilities before an offer is made.
Again, these are experiences that you can either learn from and try to mitigate in the future or choose to ignore and get butt hurt when problems come up you didn't forsee. This will dictate your path in REI.I did not miss the point sir. My post is basically saying, “some things went wrong, I learned from them, what else can I be careful about? What else should I consider and pay attention to”
Im just slowly noticing how some people on here will basically restate your post and say, “damn you messed up, good luck next time!”. You can’t tell me it doesn’t come out as patronizing… yet amusing!
I’m here for the positive reinforcement and advice that’s all.
Thank you!
- Member since 2023 · 41 posts · 32 votes2y
Quote from @Theresa Harris:
For the second home, you would have known what the taxes were when you put in the offer. A double lot, doesn't mean 2x property taxes. Taxes are based on the land and home, so it would be higher than if it was on a single lot, but the double lot also opens possibilities. Depending on the house placement, you could split the lots and sell one. You could build a second home (a suite) and rent that out.
What was odd was that there was only one parcel number at the time I placed the offer. It wasn’t until the attorney review that the second one came out.
During this process too, it’s when rate skyrocketed quite significantly. So the double lot + rates, put me in a position that I couldn’t work with.
Thank you for the advice!
- 2yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Hector Serna:
Quote from @Jaron Walling:
@Hector Serna "and for some reason something always needs to come up" - Can you explain what this means? What was (is) your strategy and what stopped you from closing?
Everyone has anxiety and stress when buying real estate. What we tend to forget is the risk of NOT buying something. RE, stocks, bonds, mutual funds, it all comes with a level of risk and you have to be comfortable with that risk. You have to be happy with the return you seeks. If you're knowledgeable enough to avoid the pit falls and understand the exit strategy it's time to buy. Time is against you if you don't own any assets. Big or small.
Hey Jaron,
First deal (MU)- After inspection, in the crawl space, found out foundation of the home was in horrendous condition, on top of that it had plumbing issues. Took a contractor with me and I was looking at 70k-80k in repairs
Second deal (SFH) - Great home, once we got closer to closing, turns out the property was on a double lot. Double lot = 2x property taxes. Skyrocketed my mortgage by $400+.
Third deal (SFH) - Short sale. Water shut off. With inspection day nearing, the seller and town weren't willing to turn the water on for a thorough inspection. I was going to pay $1k to turn it on and on top of that, the bank wasn't willing to negotiate the property price to give me a hand to proceed. Just red flags all around.
I have been investing consistently into the S&P 500 and other “safe” ETFS/Index funds for the past 3 years now. On top of that, I have my 401k building, I have zero debt. I’m just looking to expand beyond that.
I believe you are overtly cautious. I posted how you could have tested the water and plumbing of the 3rd deal for less than $50.
I mostly purchase off market deals. They typically have risk and/or require work. I could always find a reason not to purchase. I will add I regret the properties I did not close on more than any property that I have closed on.
I bid on one property that had no water. The owner had died and the place was in shambles. There supposedly was an agreement to share a well, but the property with the well was sold and new owners cut the water supply to the property I was placing an offer on. Of course the property I placed offer on had no evidence of the agreement to share the well even though they had shared the well for decades. No water at all (no city water and no access to well), place in shambles, leaky roof, yard not taken care of for years. I made a competitive offer but did not get accepted. If it had gotten accepted, I knew how to check the plumbing without water supplied to the property ( I had already talked to neighbor about doing so if my offer was accepted). by the way I had allocated up to $50k for abatement on this property (it was that bad) but still placed legit offer.
You, the water is out and you are told how to easily test the plumbing and sewer for less than $50 yet claim that is your reason for backing out. I think that if that was truly the reason you pulled out, you might as well stop looking at distressed properties now as you will always be able to find something that bothers you about any of the RE in the bottom 25% in terms of the condition of properties (often the best value opportunities). Maybe look and expect to pay for move-in ready properties. Foreclosures, estate sales, thrashed properties or properties that need some work do not seem to be what you desire.
good luck - 2yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Hector Serna Hi Hector. Keep going. Keep looking for more deals. I look every day. It’s what we do. Don’t get discouraged. Try to get to some real estate networking events and meet some other investors. You might find some deals that way. I’m sure there’s tons in the Chicago area.
As far as the plumbing issue goes depending upon how much there was in the house it might not have been that much of an issue. If it was only 1-2 bathrooms, the kitchen, and a W/D that’s just pretty easy to run PEX to if there’s some leaks assuming it’s allowed where you’re at.
If however you’re talking about baseboard heat too then totally agree on backing out! I’m in the process of converting some heat in some multis and it’s been fairly expensive so am assuming a house would easily be in the $10,000 minimum ballpark depending on which option you chose if the heat was all blown.
- Member since 2023 · 22 posts · 4 votes2y
Proud of you! I'm trying to do the same. Best of luck!
- Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes2y
Quote from @Hector Serna:
Hey guys,
So I recently got out of my 3rd deal in Cicero, IL (Chicago Land Area). I’ve gone through the process 3 times (Offer accepted, appraisal, inspection) and for some reason something always needs to come up. So it’s time to start looking again. I have faith that it’s all in Gods hands to decide when it’s the best time for this to go fully through, however, I’d like some pointers from the BP community.
Has anyone else gone through this? What did you do differently? Is it the location I’m trying to work in? The state? The town? Is there something I should consider?
For the past 7 months I’ve listened to several podcasts and read books.. I truly feel like I just need to execute now to get that hands on experience. I refuse to stay in the “analyzing” stage.
For now, I’m going to take a month or so to readjust, read more books, save more money.Thank you.
I think you've received a lot of good feedback here.
First deal - Obviously without a home inspection, there wasn't much you could do to catch the foundation and plumbing issues. That's just bad luck but at least you avoided that nightmare.
Second deal - The listing agent normally discloses if there are multiple parcels associated with a given property, which it sounds like they did not in this case. At least your attorney caught it though.
Third deal - Getting the utilities turned on was a preventable issue if the listing agent and your agent were communicating about the inspection. I've had to learn this same lesson so unless you've dealt with it before it can be easy to forget about.
General tips:
-In the Chicago suburbs, be aware of the village compliance inspections and is the buyer or seller responsible for those? A lot of times the listing agent will post the inspection report on the MLS and have the property sold as is, so the buyer has to take on those repair items.
-Get a sewer scope inspection to make sure the sewer line is in good condition. You don't want to get saddled with an expensive sewer repair.
-Get a radon test. It's not expensive and if it turns out there are high radon levels you can use that as a negotiating tool.
If you keep analyzing deals and making offers, eventually you will close on the right property!
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes2y
Hey @Hector Serna - First off - I completely agree - it's all in God's hands.
I also like to remind myself that some of the best deals are the ones I didn't get...so maybe that was His way of protecting you without you knowing.
Sounds to me like you are exactly where you are supposed to be and the next could be the one! You've learned a boat load over these last 3 deals and thats the most important thing to take away from them.
I actually have a building in Cicero myself and most of our other buildings are in Chicago, so happy to talk through your situation more because I've been there.
Quality Builders4.966 Reviews
Join the conversationCreate a free account to reply, vote on answers and follow this thread.