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Real Estate Deal Analysis & Advice

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Marquest Page
  • Investor
  • Pittsburgh, PA
15
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49
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Short Sale Flip Via Wholesale

Marquest Page
  • Investor
  • Pittsburgh, PA
Posted May 22 2016, 16:38

Hey BP! Well I just closed on my second deal and figured I would ramble about it here and hopefully have others enjoy the read. Just to give a background story. I am a NEWBIE INVESTOR in the Orlando, FL market, just started taking action last year and completed my first deal on my own. I found a motivated seller from probate records and got the property under contract and then sold the contract to a cash buyer whom I found through craigslist.com. While I was in the process of doing my first deal I was being very public about my adventures into REI on my Facebook which gained the attention of a friend of mine whom was investing since 2008.

He later became my mentor and I probably bugged him to death on a daily basis asking questions as well as being on biggerpockets and reading. I decided to look into pre-foreclosures. Since my good friend and new mentor has extensive experience with short sales I decided to look into those as a lead source. ended up finding two motivated sellers. I ended up losing one of the leads due to her choosing to work with a realtor but was able to continue working with the other seller. This had became the Second deal that I made mention of before.

SHORT SALES TAKE FOR EVER! lol, I knew about this going in based on the content out there but reading about it and going through it is another story. My seller lived out of state in Ohio but owned a property in Orlando, FL. They were in debt with their bank with about two years of non payments. She took a reverse mortgage out on the property and was unable to make payments on the note. I reached out to her and we began the process. Since she was in her golden years she wasn't well versed in anything that has to do with technology so documents had to be sent via snail mail and that added to the length of time. Also the mortgage company wasn't to organized either. The seller didn't have any desire to receive anything for the house and just wanted to get rid of it and signed the purchase sales agreement with no expectations of being compensated.

After receiving signed contract I sent the documents to my mentor and partner in this deal and he handled the negotiations with the bank. Sent the contract to the title company and began to request for a BPO from the bank. The bank eventually sent out their Broker to do his Price Opinion on the house but we found that the house had been broken into, locks changed and a dog was occupying the house which had no power or running water. Since we couldn't gain access we had to cancel the BPO. We ended up calling the cops to file a police report right then and there and spoke with many of the neighbors in the process. They provided a great deal of info on the squatters. I gave them my business card and asked to give it to the people occupying the house.

I revisited the property a few days later and seen the house was vacant and no dog. came back a few days after that and same situation. After I realized the squatters ran off due to the police being involved I contacted a property preservation company and had them change the locks on the home and place a lock box on the door. We then rescheduled the BPO and ended up getting a price that we thought was too high but we worked with it. The property was a 4/2 1397 sqft and was priced by the bank at $137k. The bank would give us a 5% on this price to purchase which had us at $130,150.00 to acquire the property. We then had the property listed by an agent. Only issue we had was at this point, so much time had passed with the delays that the property had a foreclosure sale date which was set for 05/25/2016. We listed the property on 05/09/2016.

Due to their being a foreclosure sale date set we knew there was a limited amount of time to find a buyer which eliminated our chances of finding conventional loan buyers as we would need to do a double closing to exit this deal and this may have taken longer depending on how fast the buyers bank would complete their end. We basically needed a cash buyer and only had one initial cash offer of $134k. My partner first suggested on moving on this deal and I was very hesitant. I suggested waiting a few more days and luckily it paid off. We had an all cash offer for the listing price which was $143k. That's a spread of $12,850 that my partner and I are splitting and we officially closed this deal on 05/20/2016.

This deal wasn't easy as I put a lot of time and effort into it. I had to clean up after the squatters and their dog nearly destroyed the property. The dog used the house as it's own personal toilet and crapped and urinated everywhere. I had to mop the floor about half a dozen times. I threw away the belongings that were left behind by the squatters as well. Had to rent a U-haul and get cleaning supplies and got my hands dirty. I honestly wouldn't change anything. It made the closing of this deal that much sweeter because of the effort and time it took to ensure that I was successful and I honestly have to be thankful for it. I am still learning and it's great to earn while I am getting my education in this business. I hope you guys enjoyed the read and feel free to comment.

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