What it took to get my first flip started!
Hello BP members!
I committed to a way of life in January. The way of life I'm referring to is REI. Along with any risky undertaking comes a measure of doubt, and I battled with monkeys in my head concerning what my niche would be. Should I start in wholesaling? Should I do bandit signs? The questions were endless and I was getting nowhere. The one positive thing that came of these five months is that I have read as much material as possible, networked with investors and agents, and soaked up a lot of good information. I joined BP very early and it has been the smartest decision I made as a newbie.
I am an ex-GC and I had no intention of going into business in that capacity again. So I knew I needed a niche, or did I? There was a recurring theme in most of the very successful investors, and that was that they were just in action. All the time. It was a lifestyle. They live and breathe deals. They are opportunity seekers of ridiculous proportions.
My point is: Creativity is necessary, imagination is warranted, discipline is mandatory for me to be a success.
I spent the last three months looking at many properties and not finding one that was sweet enough to get a JV partner in on. I did, however, have a homeowner that was in default that reached out to me after seeing one of my craigslist ads. She is the widow owner of a two family residence in MA. She has some equity in the property, but she had a huge HUD loan of $67,500 due upon sale to the city. That lien made this deal unapproachable. I did a little research on these 0% interest HUD remodel loans and saw that cities were granted money from HUD and then used it to loan money to it's constituents. Because of the nature of these programs, some cities have 15 year forgiveness clauses.
This city did not have any forgiveness clause. I contacted the city anyway and actually was able to talk them into a board meeting and then I had to meet with the mayor. The city has agreed with me and the homeowner to settle the $67,500 for $9,000. I now can make the offer that makes the deal lucrative to my company. I spent a total of maybe 18 hours over the last 3 months including visits to the home to make this happen.
A senior citizen will not be foreclosed. I have budgeted a large check for "furniture and appliances", so that she can get into an income restricted senior community she wants to go to.
It was a long story, but that's what it took to get my first deal. When the numbers come back after the rehab, I will report again. It feels good to see the creativity pay off. Big thanks to BP for all the resources.
Tim Wilkinson