First Chicago Wholesale Deal Complete!
A while back I posted about my First Chicago Wholesale deal here:
Well...we finally closed it!
In a nutshell...
3/1 Brick SFH + basement (1/.5)
My purchase price: 20k
End buyer's price: 25k (ARV 80-90k)
My assignment fee: 5k
Just a few of the MANY lessons I learned:
1. When just getting started, go out and see as many houses as you can to try to learn values in an area. (ex 100 house rule). There's just no substitute for learning your market. In the first 2 weeks of marketing I literally went door to door and put out over 1200 flyers and 100 business cards, talking to everyone I met, and asking about house values and rents in the area. This was not fun to do, but incredibly helpful to learn values.
2. With that in mind...start with a smaller area or zip code and find the "big fish" cash buyers in that area. I wish I had done this sooner. Having a few solid buyers before you start marketing will save you a ton of time and headache. I ended up finding my buyer only after putting out 40+ bandit signs and talking to dozens of tire kickers first. Thanks to Steph Davis from FlipthisWholesaler.net for this advice.
3. Explain to sellers how you arrive at the number you quote them for their equity. Seller originally asked 50k, and I thought he was going to balk at my low offer.....It was a a lot easier to swallow once I explained step by step what my costs were, the extent of the rehab needed, and how much profit I would need to make.
4. Get a proof of funds from EVERY cash buyer that wants to see inside. After dealing with tons of time wasters, I realized that I only wanted to deal with cash buyers, and ANY REAL cash buyer has NO PROBLEM showing you their bank statement. Thank you @George Fosterfor your advice on this one!
5. "Don't Assume a Damn Thing!" - Thanks again Wendell for the timely Giuliani quote! So many mistakes could have been prevented by not making assumptions.
6. Network, Network, Network!
Without leveraging the knowledge and wisdom of colleagues and friends that I've met here on BP and from my local REIA group, I wouldn't have been able to do this deal.
Many others also provided their expert advice on rehab costs and how to deal with the pre-probate issue. @John Weidner
Thanks to everyone here on BP and at the Chicago Real Estate Investors Meetup for the encouragement and advice. @Brie Schmidt @Timothy Riley @Mark Ainley, @Shara Carlton and Joe J. (is he on BP yet Brianna?!)
On to the next one!
Ana
P.S. Here's pics of the house and the checks I received as evidence. :-)