Updated almost 7 years ago on . Most recent reply
Biggest mistakes ever made
What are some of the biggest mistakes, or “oh ****” moments you all have had buying a ‘value add’ property?
Whether the investment was successful or not, tell me about some lessons you’ve learned from those moments.
Most Popular Reply
Hey @Alex Papas with our group, it was on our last property that we had under contract.
It was an 87 unit that would have made a solid value add investment. We got this under contract, got inspection done, plumber quotes, window quotes, basically every issue we uncovered, we got quotes on. We even discovered the boiler needed to be replaced, which was a $120k hit.
All in all we discovered $600k in CapEx that was mostly unforeseen.
We went back to the sellers, asked them to come down or to credit us at closing to help cover at least half of the CapEx and deferred maintenance. The sellers (who were the typical "alpha" attorneys) only budged $50k and we walked.
Lots of time and money spent on legal fees, inspections, travel, etc. But we learned a lot during the process.
The property has since fell through 3 times (we discovered) and the building has been on the market for over a year now.
Still a solid investment, but only if the sellers budge on price, in which they wont.