I am a new RE investor in San Diego. I have read some post and I am excited about sharing my experience with all of you. I moved to California November last year and I heard about flipping houses so I started my own research about my new passion. I have been educating myself since February in Real Estate. I have read a few books about flipping houses, wholesales, multi-family homes and rentals. I get more and more excited about the idea of building my own wealth and be free financially.
After reading for 3 months at home I decided to look for a Real Estate Agent to help me out. I found an excellent Real Estate agent who has shown me a couple of good opportunities. Although I didn't get any of the houses for different reasons.
The first house was a REO. The house was in a very bad shape. I called a contractor to give his estimates and I put an offer higher than the asking price the same day. I was confident I would get it but someone else did it. It was frustrating! I realized how hard the competition is in this market.
The second opportunity was a house off the market. The RE Agent called me and I went next day to see the house. The asking price was $310,000 and the comps in the area were $375,000- $425,000. I could sell it for a reasonable price of $405,000. I was so excited!. My budget to make all the repairs was $35,000. The first difficulty I found it was the house was from 1.942 and I had to pay over my budget to repair it, $51,000!. Also I was to pay part in cash 100,000 and ask for a hard money loan for the rest. I really wanted to get that deal but the numbers didn't make sense... I could't buy the property under 30% market value so I didn't do it. I called a seasoned investor who I respect to ask him for his advise because after being "in a research mode for a while" I really wanted to make my first deal. The first thing he said it was the purchase price wasn't right but he didn't discourage me.
A few days later the RE Agent called me saying if I would offer $285,000 and I thought the house may not be sold for $405,000 because it might have any issue that I didn't know. I offered $275,000 and the agent told me there were offers coming higher than that. I agreed to offer $10,000 to get it . The problem was I had to put the offer very fast and the inspection period was 5 days and I didn't know if I would get the hard money loan. I didn't want to lose the deposit. The Agent told me I can use the inspection contingency to finish the contract and the seller would refund me the earnest money. The offer didn't have a loan contingency. The sell was "AS-IS" and I questioned if this could be a problem if I didn't get the loan and there weren't serious problems in the inspection.
Next day I went to the county to research for NOD and now I am figuring out how to contact with the owners.
Thank you for reading this post, any advice or comment is more than welcome!!
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Dang, if that house really could sell for $405k you should have just wholesaled it.
Between hard money and higher construction costs this is why I think newbies should be wholesaling deals instead of trying to flip.
This could be the way to go. Grab it for 290ish, put it back on the market for 375ish and make 30-40k profit after closing costs. It's the same profit you would ahve if you remodeled it.
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