Worst deal of my life
Most investors will only tell you about their good deals, but I want to be transparent and show you guys my worst deal ever. Negotiated the purchase price to $60k. My agent showed me comps of “similar” homes that sold for $100k. That was my first mistake was not confirming the quality of rehab of the properties that sold for $100k in 2019. When working with buying agent always keep in mind that they just want you to buy a property so they get commission. It is your responsibility to do a thorough due diligence. Trust and verify. I trusted, but did not verify because he was a “professional “ . I put $14 k into the rehab. Unfortunately, Covid hit right when the property became rent ready. The neighborhood was already a C neighborhood and when Covid hit the neighborhood suffered economically harder than other sub markets. Finding a quality tenant was difficult. The first tenant stopped paying and left after a few months. The 2nd tenant was always late on rent. Meanwhile, the landlord still has to pay for taxes, insurance, and repairs. Additionally, when we appraised the property it came in super low at $63k. When I challenged it and got a 2nd appraisal it came in low again at $64k. I felt like I was a failed investor for violating Warren Buffett’s only rule of investing which is “never lose money “. However, the pandemic actually was a blessing because the low interest rates pushed the price and we just sold the property for $78k. So after commissions and taxes I probably made a thousand dollars profit. That is a bad deal because it’s only a thousand dollars ( you want to hold properties for at least 5 years to see real returns). Also, it took me 1 year and 6 months to exit this deal. Remember guys, time is more valuable than money. It takes the same amount of time to tackle a $60k single family house deal and a $1 million multi family apartment deal. Luckily for me I sold at the right time and at the tip of the market. I am aware that if we were in a down market the results would not have been as advantageous. Also, I am super lucky because my property manager got the tenant all caught up with back rent. Now I can focus on bigger deals .