First Deal Flopped...Now What?
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.
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.
@Renee Yarbrough girl you just have to grab onto those nuggets of knowledge you gained from this flop, go out and try again and this time make new mistakes. The people don’t stop are the ones who make it. You got this!!
Love your post...so energetic. And so true! After receiving so many encouraging and wise posts on this thread, I feel like a champ!
I assume from your answer the RE agent was representing the seller...since they are the professional...the mistake is mostly his/hers...again many will not even schedule a showing (to not waste their own time) before getting a mortgage pre-approval.
A buyer agent is simply a RE agent who represent the buyer in the transaction. An agent can represent the seller..the buyer..or both (which present somewhat a conflict of interests). All agents can be both although some would prefer to specialize and choose to focus on being either a seller agent or a buyer agent.
Typically when a seller agent list a property on the MLS the seller will pay 6% at closing to the agent or agents involved...If you as a buyer is represented by an agent they will split the commission 50/50...bottom line is that it make sense for a buyer to have an agent who represent them and is obligated to take care of the buyer interests...the seller agent obligation are first of all to the seller...You as buyer don't pay more for this representation...you can find a lot of explanation on that by just googling 'Buyer Agent'...The buyer agent guidance is particularly helpful in your first couple of deals/offers.
I found the agent I work with the most after I scheduled to see one of her listing (which I didn't made an offer on) we did had a good conversation though and she started to send me tailored listing alerts emails...which led so far to many offers and two deals with her...Most important thing is to find an agent you feel comfortable to work with and who understand your goals and parameters...In my case particularly since my market is out of state she was very helpful in navigating all the differences and details of the offers and deals.
You can work with multiple buyer agents (on different offers/deals of course) until you find the one you feel most comfortable with...avoid signing exclusive agreements with any if they ask...or at least consult the forums before doing so...
I must brush up on my terms! The agent I worked with was my (buyer) agent, and the seller had an agent, too.
@Renee Yarbrough. Failure is not a failure if you learn from it
@Renee Yarbrough All deals aren’t meant to always go right. Just keep moving and look for the next one it’s always out there. Don’t look for deals create them. I’ve had the same happen and realized some of those deals fall apart as well so don’t lose hope. Keep grinding and make it happen! Best of Luck!!!!
Hi! Congrats for getting in the game! So many people talk and ever do it! Give yourself some credit! Learning how to fish, you feed yourself for a lifetime, when someone gives you a fish, it only feeds you for a day. You are learning how to fish! ( I modified this old wonderful old saying to your situation). Did you have any help? Any other investors, coach, or mentor? If not, then I would highly suggest you start networking and find some experienced investors to help guide you, or a coach and mentor. While this might cost you, it will save you $$$ in the long run and expedite the learning curve, so the $$$ return will be greater and faster. I always tell new investors, if you do 10 deals, there will likely be 4 good ones, 4 ok ones, and 2 not so good ones. You simply need to win more than you lose. This comes from experience and often getting help. The only thing you have to remember, is that you don't get to choose which one comes first. Sometimes investors make a killing on their first deal and think it is easy only to find out that it is not, and hit roadblocks and losses on their next deal or two. If the first one does not go well, then it often kicks some investors out of the game. Real estate investing is by no means, easy. TV and social media often make it look like it is. You cannot just read this stuff in books, you can learn things, though it is not the same as being in the trenches and doing it. The lessons from doing it are invaluable and if you can get help to expedite the lessons, then you will be better off for it. 3 Things Grant Cardone says to invest in... RULE #1, Invest in yourself first! RULE #2 Invest in your business, marketing, branding, people, collaborations.. RULE #3 Invest in Real Estate - Real Assets - Cash flow. SEE RULE #1
Your post is packed full of wisdom.
No, I don't have anyone to walk alongside...have been learning online, and through books, articles, podcasts, and BP. Will begin to network in my area, and look for a coach, mentor, or investor.
Grant Cardone's three rules are keepers.
Thank you for taking the time to encourage and educate. It is SO appreciated.
@Renee Yarbrough
Nothing better than real life mistakes and learning. Seriously. It’s how our brains have been wired since we were making fires in caves.
I have a 4 Unit I bought seller financed back in januAry. On paper it looked great. But it’s been sort of a nightmare, still trying to get out a non paying tenant, hoarder got sick and left, cost me $4000 just to clean it out and the unit is trashed looking at another probably $5-10k to turn over. I really did not plan on spending all that cash, and losing all that cashflow. LOL nothing EVER goes as planned. But I know in the end it’ll work out and I’ll have either a great property , great experience, or both.
Just keep your head up and keep going. When it gets hard try listening to podcasts, books, YouTube’s , on people who have gone from nothing to something. They always help remind you that if you have grit you can make it no matter what happens
@Renee Yarbrough
Thank you for your candidness. Don't see enough Pro's share the despair. Keep trudging through! The only way to defeat, defeat is to embrace the challenge of starting again. Best wishes.
I subscribed to your newsletter...thanks for the advice!
Thanks Renee. There are different ways to reach the same destination. Do not be discouraged. Stay on the track and keep taking action.
I'm sorry for your situation...a bummer for sure. But your attitude is incredibly helpful, especially since my issue is small potatoes compared to yours.
It's posts like yours that help me realize that life is failure and gain and learning and growing. And the learning comes by doing and failing, and doing again.
Thank you for taking the time to encourage and educate.
@Brant RichardsonBrant Richardson is spot-on; when something like this happens it can be truly paralyzing but no matter how much you read or how many podcasts, there are always going to be those unexpected occurrences; the rookie mistakes made on this last deal are less likely to be repeated on the next one. I will say, educating yourself on the strategy you choose to implore is a great practice. Learn from your mistakes (smart) and the mistakes of others (wise). I know I don't know you but based on your post, I can tell you're still taking steps and that is bigger than anything else at this point. Keep going. I'm rooting for ya!
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.
Hey Renee,
I keep a "lessons learned diary" on my computer. When I fail for some reason I just document it there.
The first time you make a mistake is always a learning opportunity. It helps to write down the mistake and then also write down a little bit about WHY you made it. When I was still in quality we always used the "5 whys" as a tool.
https://en.wikipedia.org/wiki/5_Whys
Once you write down your mistakes on this deal you can call it a lesson and move forward. Fortunately all you have here is a lost opportunity and some lost time. If you keep track of why you made some mistakes all you have are learning opportunities.
So the cure is just to get back out there and apply what you learned in practice! You can also take some encouragement out of the fact that you did what probably less than 5% of people that are interested do, you pulled the trigger on making an offer and getting something under contract. So keep going!
For what it's worth my lessons learned diary is almost 200 pages now......so I've made a lot of mistakes haha. Thankfully I'm not in the habit of repeating those mistakes since I have them documented.
First, Renee I want to give hands off to you for taking action because everything you've done is familiar but taking action is what really matters. For new investors, I always say learning is huge although there's nothing like a mentor and learning from their mistakes so you don't have to make them yourself.
To get back on your feet you need a strict plan of action. This advice applies to any type of Real Estate you are in.
#1 Get a mentor that has gone through it all. In general, commitment simply as a good deed in business isn't something you can rely on because people are here to make money, (not to say you can't find good people but remember you need someone that is successful and will give you time).
Find a mentor and tell him that as long as he mentors you, he will get a cut in every deal you close. Create a contract to show your serious and prove to him while you may be new, you are a person who is knowledgable and that is taking action.
2# Listen to podcast episode #340 in Bigger Pockets, where @WhitneyHutton talks about how she gradually took the plunge into Investing and was careful in terms of risk by first purchasing turnkey properties and only then purchased properties with promises of Higher ROI.
Would love to hear how it goes!
Hi Renee,
The best piece of advice I can offer is partner up with an experience investor on your next deal. You can find them at your local REIAs by networking. When you partner, they can tell you if it's a good deal or not. If its a good deal, then they will partner with you and take the opportunity to mentor you through the process. Just make sure to screen the thoroughly.
Please find my specific comments to your deal:
1. Should have gone with a hard money loan, or use private money to invest in the deal. Don't use traditional banks for fix and flips. They are slow to process the loans so therefore you go past the 14 to 30 day closing timeframe.
2. If you can't get the financing squared away during the option period walk away.
3. Never have the seller handle the repairs. Use the cost of the repairs to deduct the price negotiated. If seller won't budge, walk away from the deal. Always keep control of the negotiations and the repairs.
As the steps here are my comments:
@Renee Yarbrough Great attitude! Hard to swallow our mistakes and keep grinding, but I love that you're trying to press through it! That's definitely half the battle!
My advice would be to keep a huge, long-term perspective in mind when doing individual deals. If you keep in mind that you're going to do 100 deals in the next 10-20 years (or whatever your goals are), you're most likely going to have 10 flops and 90 winners. This just happens to be 1 of the 10 flops. It stinks when sometimes the first few deals are the bulk of the 10 flops you're going to have, but if you keep your huge, long-term goals in mind, it makes the individual and momentary losses more manageable and even expected!
Real estate is super forgiving and you can always come back from a flop if you keep grinding!! Keep your head up and save that bag of chocolates for the next time you're watching Marley & Me! =)
Keep grinding!
Conner
@Renee Yarbrough this isn't a flop at all. A flop is losing a ton of money.
You just had a purchase fall through. This happens ALL the time and is not even a big deal.
From reading your post it actually sounds like the seller has quite a bit of fault here too. Should have done a better job of verifying your loan approval before accepting your offer.
The folks that did the work and agreed to be paid only at the sale of the house are crazy. They should have never agreed to that. Only way I will ever do that is with someone I've worked with a ton and I know can get deals closed.
@Renee Yarbrough, yes. ;-)
You can add value with sweat equity, your existing relationships, soft skills,and perhaps just pay for it. Sounds like you're good at finding and qualifying deals. You may have a relationship with someone who is interested in real estate and has money but no time or vice versa. Pair them up with someone experienced you network with at a meetup or REA meeting. That's a win-win-win that will get you more opportunities. You can use your day job skills to fill a need on someone else's team, just be clear what your goals are with them. Or good ol cash to hire a mentor, cpa, realtor consulting fee, etc can go a long way to make you stand out in a sea of people expecting something for nothing.
best example i can give you is I wanted to learn from a multifamily syndicator. I chose to passively invest in their deal and explained my goals. This led to other opportunities to grow.
Great advice to keep eyes on the long game.
A BP podcast guest talked about keeping eyes on the annual return, not each individual deal...and talked about the long game. You are saying the same important concept.
The comments on this forum have been incredibly helpful to cast a light on the bigger picture, to realize failure is really a learning process, and to study past mistakes to create new systems/checklists for the next venture.
Thanks a LOT for taking the time to post an educational and encouraging response. I appreciate it so much.
@Renee Yarbrough keep moving forward! Our first deal isn't going as planned either..
The plan was to turn a duplex into a triplex. We meet all the special exceptions the town had for doing so but we learned they make you jump through flaming hoops to do so. Site plan review (even tho the footprint of the home isn't being change) town zoning board and planning board meetings like crazy, the town being afraid that instead of long term housing we will air b&b it, and so on.
Negatives:
- Will probably be about 30k in the hole when we refi
-put an excessive amount of sweat equity into the project
-the stress had me pulling my hair out for months
-spent a lot more money than expected
-taking longer than expected
Positives:
-My fiance can now recite all town codes, laws, and zoning regulations off the top of her head
-I grew my skills as a contractor/ investor
-We made a lot of great connections with people that work with and for the town
-created and actually changed some rules and codes in our town to changing existing housing stock and density of the homes to create more affordable housing
- Established ourselves in the community as people that are trying to help the community and provide nice homes for people to live
- And the biggest of them all I think is we connected with other local inverters!
So once again just keep moving forward and learning and soon those box of chocolates will be a celebratory box of chocolates with a bottle of champagne to go with it!!!
Wow...Wow...Wow!
Except for the extra money spent, a whole lot of good was accomplished during your duplex-to-triplex journey. The 'positive list' is a dream education, in my book, and will carry you to the next level quickly. Way to stick through it to the end...kudos!