First Deal Flopped...Now What?

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First Deal Flopped...Now What?

Renee Yarbrough
Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes

Have invested time in Bigger Pockets for a year: reading, podcasts, analyzing, drive-arounds, learning, learning, learning. Thought my first deal was done, only to have it fall apart in the eleventh hour.

So many of you pros talk about hard times...but man, it is tough!  And difficult to face up to my rookie mistakes that broke this deal.

I'm not asking for sympathy...but do want advice that will get my face out of this bag of chocolate and put my boots back on the ground so I can find my lost grit.

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Brant Richardson
Investor · Santa Barbara, CA · Member since 2013 · 658 posts · 315 votes
7y

 You can only learn so much reading and now you are learning while taking action.  That's real progress.  

You learned a whole bunch making rookie mistakes and it didn't cost an arm and a leg.  Sometime those rookie mistakes are measured in 10's of 1000's of dollars. 

Accept rejection and keep making offers that will work for you.  

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  • Renee Yarbrough
    OP
    Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes
    7y

    @Andrew Zannotti

    What is HM? I'm not familiar with the acronym.

    0Reply
  • Renee Yarbrough
    OP
    Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes
    7y

    @Calvin Smith

    Listened to the first half of Whitney Hutton's podcast on my run this morning. MAN! Good stuff. Can't wait to hear the rest of the podcast.

    1Reply
  • Calvin Smith
    Phoenix · Member since 2019 · 22 posts · 35 votes
    7y

    I wouldn't steer you wrong @Renee Yarbrough ! J... She is awesome!

    1Reply
  • Kian Atkinson
    Foster City, CA · Member since 2019 · 9 posts · 5 votes
    7y

    @Renee Yarbrough this may reiterate what has already been stated, it’s no easy feat to admit that you made a mistake, especially on a public forum. The good thing is there are a ton of positive professionals who will offer solid advice AND you are aware of some of the mistakes you made, which helps assess what happened, so kudos to you!

    Go through your deal from start to finish and see where your pinch points were at and what led you to specific decisions. You can’t gain experience and knowledge without a few bumps and bruises along the way and you went in head first. As you go through your deal, jot notes in places where you felt rushed, stressed, wasn’t fully capable or didn’t understand a certain process to hopefully prevent snap decision and this situation from happening again. Enjoy the challenges but also learn from them so they don’t become habits. You have a huge community here to help you continually move forward. All the best!

    1Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    This may seem obvious now, but I have always operated under the assumption that the more complicated the deal the more risky.  If I am needing to reach out for hard money or friends/family money that is more complicated than getting a bank loan and thus the riskier the deal.  

    I get that there are stories of people bending over backwards and finally pulling off some crazy deal that worked out for them, but that is the exception not the rule.  Same with no/low money down deals.  There are plenty of stories of lottery winners also.  Real estate investing doesn't need to be complicated.  Find a reasonable deal, have the cash to buy it, manage it well and you are printing money.

    In the beginning stages you are going to make the most mistakes so try to ensure they are small.  For example, My first property was a 30k 2 bed 1 bath home.  Worst case scenario, I could manage the mortgage payment on my own without a tenant.  

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Renee Yarbrough:

    @Andrew Zannotti

    I don't mind sharing...especially if it will bring advice or help others who might be starting out.

    Mistakes:

    1. Didn't make sure of loan eligibility before putting an offer on the house, then spent weeks scrambling (and asking everyone involved to scramble) to get DTI ratio in line for approval.

    2. Applied for a FHA loan on an old, worn house which cost the seller thousands in inspector-required repairs, all while I was still fighting to be approved.

    3. Vendors who did repairs agreed to be paid at closing...this one really bothers me, as I don't know when they will be paid.

    4. In the end, I couldn't get approved because of my DTI ratio, a mistake that could have been avoided by taking time at the front end to get a solid pre-approval.

    @Caleb Heimsoth  

    No, this wasn't a wholesale deal.

    this is pretty simple fix  you need a GOOD mortgage broker who is not going to blow smoke up your skirt about what you can do.

    I think now your realize that.. and once you have the recipe tax appropriate steps to rectify 

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    1Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    7y
    Kind of sounds like the seller and vendors screwed up too...... no way am I putting my $$ out there until I am 100% sure the buyer is locked and loaded and EVERYTHING is lined up and in order. The seller still et some value out of that expense since they can use those inspections and repairs for the next buyer..... Probably the most valuable lesson is to have your $$ all lined up before you get very far into making any offer...lesson learned..... move on and don't make the same mistake twice
    0Reply
  • Andrew Zannotti
    Killeen, TX · Member since 2017 · 127 posts · 91 votes
    7y

    @Renee Yarbrough Hard Money, it's a short term interest only loan used for the initial acquisition of a property

    1Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Jack Middleton:

    @Renee Yarbrough

    Congrats. You are getting in the game. Learn from mistakes.

    Remember that Robert kiyosaki says fail early where it’s less costly and learn.

    All real estate investors make mistakes and getting a good deal is not easy.

     For example, it took me 5 years from the time I told my partner that we're going to buy a hotel to the time that we actually did. We went through 4 deals - I striked out the first 3 times at the bat. And talking about cost of mistakes - (and to me there are no mistakes as long as you don't quit), each time I put a hotel under contract, I pay $20,000 or more in legal fees. On the 4th time I hit the ball and closed the deal and I paid $50,000 in legal fees (success has a cost too - LOL).

    And that does not factor in the many hundreds of hours that I spent on studying markets, talking to people, making offers, doing due diligence, etc.

    If it were as easy as what the gurus say, real estate investing won't be as profitable. The more headaches and problems you solve or the more value you provide, the more money you deserve. That's just how the world of business works.

    0Reply
  • England Ibalio
    Member since 2019 · 1 post · 0 votes
    7y

    Everytime you get a rejection. Just remember, you are just 1 more closer. You have to sike yourself out and expect that you will be going through the numbers. 

    If you know exactly where it went wrong. You can learn from it right away and start execute good habits again.

    0Reply
  • Dan Haizlip
    Rental Property Investor · Delaware, OH · Member since 2019 · 6 posts · 6 votes
    7y

    @Renee Yarbrough First let me say congratulations on pulling the trigger and getting as far as you did!  Most people never take the steps you took.  You seem to care about how this impacted everyone so I understand the stone you have in the pit of your stomach, but I can guarantee that the next deal you do will be both smoother and less stressful because of what you'll have learned from this one.

    Good luck in all your future endeavors!

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    As many have said it's all about attitude.

    2 things to remember.

    1.  You either win or you learn

    2.  Success is inevitable unless you quit beforehand.

    3Reply
  • Bryan Lyde
    Wylie, TX · Member since 2018 · 75 posts · 55 votes
    7y

    @Renee Yarbrough I suggest you build a good team first. this would have been avoided with an experienced partner. take solace that you took action which is better than 95% of everyone else. dust yourself off and climb back on the horse. definitely document the timeline of events and ask what should have happened at each point and who was responsible for it getting done.

    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Renee Yarbrough:

    Have invested time in Bigger Pockets for a year: reading, podcasts, analyzing, drive-arounds, learning, learning, learning. Thought my first deal was done, only to have it fall apart in the eleventh hour.

    So many of you pros talk about hard times...but man, it is tough!  And difficult to face up to my rookie mistakes that broke this deal.

    I'm not asking for sympathy...but do want advice that will get my face out of this bag of chocolate and put my boots back on the ground so I can find my lost grit.

    If you just lost a bit of cash and time, you're still "up".  Meaning you learned more than the teaching cost you.  

    BTW, I've been at this for 12 years now.  2000 units bought,  $100m in different loans to buy/refi, I can tell you the mistakes DO NOT GO AWAY.  And honestly, they get MORE expensive.   You just have to learn to midtigate them and don't take on risks that'll sink you.  

    I recently on a deal had someone lose $100k to me (earnest money).  And now I'm $225k earnest money hard in a deal that I need to have closed in a week and it's going to be tight.  I'm sweating balls worried that it might not happen.  If it does, great.  If it doesn't I take my lumps and realize I'm not going to exit this game batting 1000.  But I'll hopefully have won a lot more than I lost. 

    4Reply
  • Alpesh Parmar
    Investor · Dublin, CA · Member since 2016 · 344 posts · 228 votes
    7y

    @Renee Yarbrough learn from your mistakes and move on! You are way better than tons of people who read blogs, listen to all kind of podcasts, attend meetup and still never take any action but complain about building team, market etc.

    0Reply
  • Milad Keshavarz
    Investor · Santa Monica, CA · Member since 2015 · 54 posts · 16 votes
    7y

    @Renee Yarbrough I may be able to help you avoid the same issues on the next deal. Please message me here and I can go over some options to quickly find these types of deals.

    2Reply
  • Alan Grobmeier
    Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
    7y

    This is an easy answer:  if your flip ‘flops’, go into teaching.  ;-)

    0Reply
  • Shawn Gwaltney
    Chesterfield, MO · Member since 2018 · 5 posts · 0 votes
    7y

     A deal falling through is often a great learning experience that you will carry as you step into your next deal.   It can be frustrating, but it's just part of the game.  I had a mind-shift years ago that I focused only on closing as the win, but soon realized the process and growth along the way was quite rewarding.

    My first probably 15+ offers failed in my beginning days of investing.  Had I quit, the freedom I experience today would not exist.

    Stay at it...you started your first deal, that's more than most ever do!

    Now go find another!

    0Reply
  • Martin NealPro Member
    Rental Property Investor · Chicago, IL · Member since 2017 · 293 posts · 383 votes
    7y

    @Renee Yarbrough Don’t look at it as a failure. Everything in life is a learning opportunity. Either you win or you learn. Take everything that comes at you in life as an opportunity to learn even when you get what you want. I’ve had deals fall apart in the eleventh hour and still come back to me so keep your head up. Get to searching for the next one. It’s all worth it in the end.

    0Reply
  • Lawrence Morello
    Rental Property Investor · Freehold, NJ · Member since 2019 · 9 posts · 3 votes
    7y

    @Renee Yarbrough

    At least you got your feet wet and gained experience for the next deal! Great job

    0Reply
  • David London
    Rental Property Investor · Queen, NYC · Member since 2018 · 63 posts · 22 votes
    7y

    @Renee Yarbrough was there any brokers involved in the deal? 

    I wouldn't feel to bad for the other parties involved...IMO you are for sure not the only one who made mistakes in the process:

    1. If there was a RE agent involved they should have asked for a pre-approval or proof of funds...many agents will even ask for it before scheduling a showing...if there was no broker then it's seller mistake not to have one...

    2. Again a good agent and mortgage broker should be able to tell you if a property would have problems getting finance and if you might be eligible for specific program.

    3. Who are these vendors...would like to add them to my vendor list...again all RE deals can fall apart for many reasons and vendors take a risk agreeing to be paid at closing...as mentioned before all the repairs are owned by owner before closing and they should at least have a better house next round (and would be able to repay vendors then).

    4. A newbie mistake...not a big deal...RE agents exist for a reason...when you just start having a buyer agent accompany you is very helpful...meet with as many as you can to find one you feel comfortable working with.

    Good luck next round!

    0Reply
  • Austin Neal
    Specialist · San Antonio, TX · Member since 2019 · 38 posts · 32 votes
    7y

    @Renee Yarbrough Experience is what you get when you don’t get what you want.

    0Reply
  • Renee Yarbrough
    OP
    Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes
    7y

    @Angelo Mart

    Yes! Never give up! Thank you.

    0Reply
  • Renee Yarbrough
    OP
    Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes
    7y

    @Neil Crook

    Thank you for the wisdom...it sounds like you are in the thick of it yourself, but still optimistic about your future. So encouraging to read comments like yours. It helps me keep going.

    0Reply
  • Renee Yarbrough
    OP
    Investor · Chattanooga, TN · Member since 2019 · 137 posts · 122 votes
    7y

    @Jack Middleton

    After reading some of these comments, I realize how fortunate I was to come away from the deal with a pocket of disappointment, but few other losses.

    Thanks for the encouragement. It means a lot to me.

    0Reply
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