Gut feeling or Mentor? 1st deal screw up...

12 Replies

ok here's my problem first off if everyone does not know i am a complete noob in real estate investing. i only became interested in REI the begining of this yr. i am full time+ network admin from jacksonville fl. and joined a local REIC late Jan.
since then i've been exhausting all resources creating a buyers list and contacting sellers for good deals. i just recently came across a deal where an out of town invester was selling a property here in jacksonville for 45K. it's a 2bd 1 ba etc. i go and check out the property. it looked ok from the outside and was in a decent neighborhood. i checked zillow, bank of america, and had my realtor pull comps and the ARV was 95k. so i call to setup a time to see the inside. my plan was to get the property under contract and let it go for 50k. since i am a noob i asked my mentor/captin (our REIC club broke us up into groups and assigned each of us with more seasoned investors for guidance and moral support) to accompany me so i wont screw anything up but he could not make it on that particular day. so i went by myself. again i'm a noob but from what i can see everything check out ok especially for the asking price and my gut feeling was to get this thing on contract. but i stalled and said i would like to wait until my "partner" takes a look. long story short the next day i met with my mentor/captin and first off he said i never should have told the guy i planned on wholesaling the property (which i did and i agree) and secondly he said it looks like the house needs a lot of work about 25k worth and to make a offer of 39.9k then said no make it 35k. i didn't think the guy would go for it b/c someone started to rehab already and just had to stop work on it for whatever reason so the electric was upraded already, about 55% of the walls were done and painted. i also didn't think the guy would go for it b/c i thought i screwed up by telling him i was planning to wholesale. but i've never done this before so i was trusting the person who has done this before.(my mentor/captin currently has a few rental properties, he's wholesaled, reahabbed and resold) so i planned to call the guy monday with the offer but i got little busy at work and and besides i was was hesitant anyway b/c i thought i screwed up and i just didn't think he would go that low. so this morning i had a meeting with a guy from realnet usa, they loan money to investers, buy/sell properties etc. and during the meeting the gentleman hands me a list of available properties he currently has on contract and lo and behold at the bottom of the list is the very property i vistied this weekend. they're selling for 52k with a 95k ARV with estimated rehab @ 15k. i didn't say anything i played it cool and finished the meeting, we exchange info and i went on my way. once i got outside i beat myself up pretty bad(mentally of course) for not going with my gut feeling but again i was hesitant b/c i've never done this before and that was actually my very 1st time meeting with a seller and feeling good about a particular property. all others i looked at did not seem good for me @ the time. i called my wife vented and got back to work and called my mentor/captin but havent talked to him yet. and even called the invester who originally showed me the property ( i didn't mention anything) i just gave him some info he requested and told him to keep calling me when he has properties available and he gave me one right away and asked could i go out to check it out. i guess i wrote all this to say first off i'm a little discourage, not enough to ever quit of course but enough to feel like a total moron and second.... i don't know i just would like some feedback. sorry for the long read guys and gals :violin: but i must admit i feel a tad bit better now. thanx!!

off to find the next deal ... :superman:

ericsupreme,

Hey good to see you on the forum!

I'm a "noob" myself, and I'm looking to get started ASAP in investment properties. I've recently closed on my first Condo (owner occupied) and I'm feeding my brain in order to minimize my mistakes when I start moving.

Even though you are discouraged right now I just wanted to let you know that I think it's cool that you are actually out there making it happen.

Failure is the only way to success. If you want to succeed you have to fail first. Almost everyone eventually learns to walk, but in the process you fall down many many times, but when you are that young, you don’t know that you should feel discouraged, in fact you don't even know what "discouraged" is!

It's social conditioning and comparison that leads to these feelings, don't let them get you down. Just try and realize that if you want to succeed you will succeed, no matter how many temporary set backs you experience.

I'm rooting for you! You're gonna make it big!
-Sean

Im just a noob too so take anything I say with a grain of salt. Im just thinking out loud I guess.

When you looked at the house, did you estimate the repair costs? Also, I have heard its a good idea to be up front with sellers about your intentions. Maybe mentioning a partner, without actually saying "wholesale". I dunno. I'd also like people's advice on this issue. I've also heard you should offer a low price, never what they are asking. Some even say you shuld be embarrased by your offer. :blush: Of course, thats assuming the guy is a motivated seller, and not just looking to make money.

Sorry I don't have any advice for ya. I also don't know if I'd trust my gut or not. I'd rather trust the numbers, which you should have done completely, if you didn't.

Hey you learned a great lesson - Don't be scared to make a lowball offer. The worst that can happen is they'll say NO. So what? So they said no. Maybe they didnt even acknowledge you cause your offer was so embarrassingly low, they were actually offended. SO WHAT!
Who cares. You'll never know if you don't try.
Don't worry about your mentor. I'm sure he could understand. It takes a little conditioning to learn to not fear rejection. Learn and move on. Next time just make that offer, even if it's so low it makes you cringe to spit it out.

Originally posted by "ericsupreme":
once i got outside i beat myself up pretty bad(mentally of course)

I just had a mental picture of Jim Carry beating himself up in the bathroom in Liar, Liar...

Lighten up, whatever happens - happens to the best! Learn your lesson, cut yourself some slack - it was your first experience, but experience is what counts! Good luck! :rock:

Sometimes they get away! I'd rather let one get away (and I've had plenty do it) than to JUMP TOO FAST. Too fast can also mean before I'm "comfortable", with the house, the neighborhood, the needed repairs, my ability to pay for the deal, my ability to do the work etc.

Sometimes the ones that get away turn out to be nightmares to the guy that got them. Sometimes they turn out to be bigger money makers than you imagined they'd be. Houses are like women. No matter how hot some girl looks to us, somewhere, some guy is GLAD TO BE RID OF HER.

Suck it up, keep studying, keep looking. You'll find it.

all cash

35k???? wheewww, where you lookin? moncreif? there arent very many areas in this town that I can think of going for even 50k and the ones that are, I wouldnt even touch my brakes goin through

sorry about your deal though that really sucks

A long time ago I wrote a book and sent my manuscript to one publisher and got rejected. I was so mortified that I threw it in some drawer and in my moving a few times, it got lost. Later I found out that John Grisham - and many others - had been rejected by so many that he had to self-publish his first book. The rest is history. I guess what I'm trying to say is you will be rejected many times, but as Minna says, SO WHAT?!
All cash, You're too much. I guess from a guy's standpoint you're probably right, I just find your analogy a little funny. Have a good Easter.

alright yet another newbies opinion... so go get your blood pressure checked with all this salt you are taking in :) If you have a mentor or not, ultimately the one that is responsible is YOU. My personal feelings for my first purchase has been... buy somehting that if for some reason does not sell or rent out, i can afford to make the mortgage without putting my life savings in jepordy. That way if i do really screw things up i can take it as yet another lesson from the school of hard knocks.

oh and btw here is my personal feelings on "mentors". I have talked to many people, i have even traveled 300 miles in a snow storm to talk to two people in cleveland oh (and that was extremely valuable lessons), I have e-mailed many from this web site (and every last one has been extremely informative and willing to give their opinion)... But ultimately it is YOU that needs to make the decisions. I for one would have a hard time bringing a mentor to look at a house that I wanted to buy.. After all isnt he/she in the business to make money also? so long story short, I like picking the professionals brains, then go out and make my own decisions.. right or wrong!! Oh btw that was some of the advice i got from the 2 guys up in cleveland