After 3 months of waiting, deal fell through

21 Replies

After searching for around three months I finally found a house worth investing in. It was a short-sale and the asking price was just about right for the area and work needed. Submitted an offer and it was accepted by the seller. After some back and forth with the bank regarding the selling price, they finally came back with a price that was $35k above my offer price of $95k. The house needed $20-$25k worth of work and would only be worth ~$140k when finished. As the title would imply, I walked away from the deal and am back on the hunt.

I'm not sure if I want to keep working in the same market or find a new one to give me a bit of a (mental/emotional) boost... because, I'll be honest, I'm kind of frustrated and dejected. I currently only own two investment properties (both of which are not good investments, by the numbers); they were houses we lived in and were purchased prior to learning about this world of real estate investing. 

I've saved around $50k for this investment and will keep saving but I've been saving for almost 18 months and that's 18 months of zero returns. It's likely to be another 6 months before the money is generating any return. Really hate having cash sit idle. Also, not interested in REIT investing because of the tax implications, as I suspect some people might recommend that. Still want to invest in physical real estate for the cash flow and tax advantages.

So, where to go from here....?

Originally posted by @Tom Gillotti :

After searching for around three months I finally found a house worth investing in. It was a short-sale and the asking price was just about right for the area and work needed. 

So, where to go from here....?

It doesn't sound like you're in a really expensive market at least.  What kind of searching are you doing?   Anytime a bank is involved there will be frustration.  Didn't know short sales existed much anymore so nice find. At least you made an offer.

Searching to me, when I used to do that, meant more than combing the MLS. It was D4D, yard sales, moving sales, networking at meetups, trailers, abandoned stores, restaurants, warehouses, etc.

it can be difficult gaining traction but gets easier as you get to know sellers and investors in your market.  Cultivate relationships and don't sweat having your opportunity fund only earning 2% in a money market. Some day that will just be your reserve fund 👍

Originally posted by @Roni Elias :

@Tom Gillotti

Have you thought about being a hard money lender or JV with a flipper.

 Being a hard money lender? I would have thought I would need to have a lot more money to be a hard money lender. 


What is a JV?

I'm open to anything but tend to stick to things I understand. 

Originally posted by @Tom Gillotti :

I should also mention I am overseas and this is 100% remote.

Which market are you investing in? Is your intention to BRRRR or buy and hold? I'm just getting into contract remotely for 3 properties in Indianapolis with a total down payment of $45K! These are turnkey properties, as I don't quite have the boots on the ground for a rehab quite yet, but should give me a cash flow of $160-200. I am sharing to give you some encouragement that it's doable if you choose the right market and strategy. Additionally, try to think of it as purely business transactions. You are no longer shopping for your home, so emotionally should be a little easier. Before getting into these 3 contracts in Indy, I had put 3 offers in Tampa - market I am more familiar with and already have a team. They fell through, I've changed my market and strategy and am way more excited with what I can achieve in the new market!

@Kena B.

In the United States, to be considered an accredited investor, one must have a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount ...

Don't feel too bad.  The market is still pretty hot.  I was outbid on 3 houses in a row before I found one.  And it was by small amounts either.  By 15k to 20k over asking price.  There are plenty of houses out there for everyone.  I am a firm believer that everything happens for a reason.  Keep on trucking and looking for deals.  You will find one when the timing is right.

@Tom Gillotti #1 looked at how much you learned from your first two properties you still do own. You officially can say you are a real estate investor as you moved forwad and will have legitimacy! I don’t think anyone here hasn’t learned kind of like you have. Count yourself f better for it and now move forward and just know you will scrutinize much more before the next one. Maybe hold the two until they are in a sellers market them cash out and get into multifamily where you can build passive income much faster. As for now if you guys want to stay solo then try something like Roofstock.com. Basically they find the highly discounted house, they fix it, manage it for you and you just provide your good credit amd down money. Might be perfect if out of the country til you guys are back. Otherwise, passively investing in a syndication is totally hands off and will get you cashflow and upon sale usually 3-5 years after a syndicator gets the deal under contract you with get a portion of the equity. Another thing I have heard people do but is a bit more risky is find a rehabber and fund part of their rehab and split the profits but I would seriously have trust in that person but you would get a turn on your money quicker. Then repeat if you have a good relationship with that person and they followed through with their part of the partnership. I hope this helps ir give you ideas.

@Tom Gillotti Don't give my my man! Nobody said this was easy, and it is definitely not a get-rich-quick type game. Your biggest challenge is making sure you have a trusted team on the ground in the location you choose to invest while you are stationed overseas. You have a few options:

1) Use a recommend team that someone has used before that you can trust. One option is to use a turnkey company. There are lots of good turnkey companies, and lots of bad turnkey companies, so make sure you do your due diligence. Or, just use a Realtor and Property Management company that someone you know has used in the past and recommend. A good Realtor, with an investor mindset, can help tremendously. 

2) Build your own team, based on people you know within your network. Choose a market where you have connections  you can trust and start building out your team. This may take a while, but a good way to grow organically. Read @David Greene 's book Long Distance Real Estate Investing. 

Stick with it! You'll eventually get a deal, and it will be well worth the wait. Don't jump into a bad investment, just to say you got a deal. Patience is key to this business. Good luck! 

As a fwiw, short sales are usually always long drawn out processes with lots of twists and curves. So what you experienced is not uncommon at all. I typically avoid them as I don't want to "tie up" my ability to make a deal while one is pending for months.

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