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Ryan Williams
  • Real Estate Broker
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Accidental Wholesale! Deal Highlight

Ryan Williams
  • Real Estate Broker
Posted May 1 2024, 06:04

I wanted to share the story of my latest deal. 

I bought this property with a partner and we were planning on flipping it and putting it back on the market. Initially, it had gone under contract after 1 day on the market and we had not been able to check it out. A few weeks later we saw it came back on market, we checked it out and made a quick offer to land it $25k under list price. We closed at $1,275,000 and I put my commission back into the deal. All in after closing/holding costs we were all in at about $1,270,000. We were getting vendors lined up a couple days after closing and I got a call...

"Hi, we saw that you closed on this property, we were the ones that had it under contract before. We had intentions to buy the neighboring properties and build an apartment complex. One of the neighbors told us they had no intentions of selling soon so we backed out of the deal. After you had it under contract the neighbor came back to us and made us an offer, and we are under contract. Now you guys are the only missing piece, what would you sell it for?"

This was a complete surprise out of left field, so I threw out a big number - close to our best case scenario flip profit to see if they would bite. After some back and forth the price came down but they offered us $1,400,000 cash and a quick close. We held our breath to see if any shenanigans would happen during the contract period but everything went smooth and we closed yesterday! This would have been a great flip deal, but it would have been 4-6 months of work and have a degree of risk. My partner has been doing real estate for 15 years and he said this was the easiest deal he's ever done! haha $130k profit in two weeks with no work on our end. I could get used to that!

Has anyone had a similar experience? 

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Bob Stevens
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#5 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Real Estate Consultant
  • Cleveland
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Bob Stevens
Pro Member
#5 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Real Estate Consultant
  • Cleveland
Replied May 1 2024, 14:08
Quote from @Ryan Williams:

I wanted to share the story of my latest deal. 

I bought this property with a partner and we were planning on flipping it and putting it back on the market. Initially, it had gone under contract after 1 day on the market and we had not been able to check it out. A few weeks later we saw it came back on market, we checked it out and made a quick offer to land it $25k under list price. We closed at $1,275,000 and I put my commission back into the deal. All in after closing/holding costs we were all in at about $1,270,000. We were getting vendors lined up a couple days after closing and I got a call...

"Hi, we saw that you closed on this property, we were the ones that had it under contract before. We had intentions to buy the neighboring properties and build an apartment complex. One of the neighbors told us they had no intentions of selling soon so we backed out of the deal. After you had it under contract the neighbor came back to us and made us an offer, and we are under contract. Now you guys are the only missing piece, what would you sell it for?"

This was a complete surprise out of left field, so I threw out a big number - close to our best case scenario flip profit to see if they would bite. After some back and forth the price came down but they offered us $1,400,000 cash and a quick close. We held our breath to see if any shenanigans would happen during the contract period but everything went smooth and we closed yesterday! This would have been a great flip deal, but it would have been 4-6 months of work and have a degree of risk. My partner has been doing real estate for 15 years and he said this was the easiest deal he's ever done! haha $130k profit in two weeks with no work on our end. I could get used to that!

Has anyone had a similar experience? 

 ALL DUE respect, terrible choice, ok so you made 130k, 65k each, after taxes, 40k, so what. I am NOT discounting it. Why would you not keep it, rent and then sell down the road. The biggest mistake of my life was not keeping 50 or so more of the 500 I flipped, cost me millions Sure I made some money but guess what, I had to go back each week and flip another. I had to work vs collecting rent. You want 500k or 25k a month :) Wealth is BUILT not flipped. We are now keeping 4, out of every 10 we do. 130k sounds like you made a homerun, (it's not) but how did your life change with 40k? It didn't right. Now you need to do it again. PLEASE take my advice, learn from my mistake, HOLD THEM. If you're getting 10% or better NET hold them. I look at props I sold ,5 ,6 8 years ago and get sick, there now triple or MUCH more then I sold them for. 

Yes, have I done this before, (many times) made 80k on a 280k flip in a week, sounds great right, NO DUMB!! that building sold last year for 550k!!! 40k on a 80k prob, its now selling for 150k, I can give 100s of SICKINING examples.

One last thing, did I read this correctly?  Your goal was to make 130k AFTER the reno on a 1.2 mill investment? IF this is correct, sorry again this was a TERRIBLE investment you got SUPER lucky. You never invest that kind of money (IMO any kind) to make 10% ish. ONE mistake on reno, poof your profit is gone. You said your partner has 15 years' experience, HMM..... I don't know anyone that would have done this deal. I sure would not have. The RE gods were looking out for you, 

All the best,

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Ryan Williams
  • Real Estate Broker
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Ryan Williams
  • Real Estate Broker
Replied May 2 2024, 05:19

@Bob Stevens I'm a big believer in buy and hold. Unfortunately this one would be negative $2k+ a month at 20% down, and that would be before any renovations to get top of market rents. We are in Denver, our market is a little different than a cashflow market like Cleveland. Also, the only capital I had in the deal was the commission, that being said keeping it as a rental would not be up to me. 

If I come across a flip where we could pull the majority of the money out, or keep only a reasonable amount in and the rents would cover the mortgage, I would consider it but I haven't really seen that here since the interest rates have been over 5%. 

My plan is to take profits from flips and reinvest in Denver into properties that I can force equity into, that are positioned to appreciate, and that would at least break even and pay for themselves. And I will look for cash flow in out of state investments.  😎

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Andrew Syrios
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  • Residential Real Estate Investor
  • Kansas City, MO
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Andrew Syrios
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  • Residential Real Estate Investor
  • Kansas City, MO
ModeratorReplied May 2 2024, 13:36

$130,000 for an accident is a pretty solid "accident" to say the least