How I Made $50,000 on my First Real Estate Deal Even Though I Did Everything Wrong

by | BiggerPockets.com

I first got interested in real estate investing about six years ago after watching a late night Carleton Sheets infomercial. I ordered the course, and after reading it from cover to cover the day the UPS guy dropped it off on my doorstep, I was chomping at the bit and ready to make my first million!

Fast forward two years and I had my first rental property……along with a couple of deadbeat lease option tenants who decided to trash the house and skip town for Alaska in the middle of the night.  True story.   Had I bothered to screen them properly, this could probably have been avoided, but I was so eager to get a paying tenant into the property that I didn’t bother.  (Mistake #1).

I still remember walking into the house after they vacated, and almost getting sick to my stomach- partly because the place was a filthy disgusting mess, and partly because the tenants were supposed to exercise their option the following month, and I would be getting my first big fat check from my real estate investing endeavors.  I already had the money spent in my head. (Mistake #2).

When I bought the house, it had very little equity (Mistake #3), and I had very little cash reserves in my bank account to fall back on if /when something went wrong (Mistake #4).  Luckily for me the real estate market was going bananas at the time, so in the short period that I owned it (less than two years), the value increased close to $100,000.  Crazy.

I could have sold the property at a discount in as-is condition and still made a tidy little profit, but I decided it would be a better idea to rehab it instead (Mistake #5).  I had zero rehab experience at the time, so you can see why I thought this was such a good idea. *sarcasm alert*

I decided to do all of the work myself in order to save money (Mistake #6), and it ended up taking me 3 months to complete a rehab that should have taken one month tops.  I wish I would have taken pictures of the finished product so I could post them here and you all could get a good hearty laugh.  It was that bad.

After a three month rehabbing nightmare, I was so sick of this property that I never wanted to set foot in it again.  I was also pretty close to running out of money, so I had become a bona fide motivated seller.

I received a low ball cash offer from an investor shortly after I put the house on the market, and I took it without hesitation.  We closed a few weeks later, and I ended up walking out of the closing with a check for $50,000.  Thankfully I sold it when I did because the market in Tampa started to tank just a few months later- I got out just in time!

The bottom line with this deal is that I got VERY LUCKY.  I basically did everything wrong, but ended up making money anyway because back in those days it was so easy a Caveman could do it.  If I attempted to pull off the same deal in this market, I would without a doubt get creamed.

Thankfully, though, I made it out unscathed, was able to learn from my many mistakes, and use the knowledge I gained from them in my future investing activities.  Onward and upward!

About Author

Formerly a bartender, Steph Davis is now a full time wholesaler in Tampa, FL. If you'd like to get an idea of what it's really like out there in the trenches, head on over to her blog: FlipThisWholesaler.net!

13 Comments

  1. Hey Nick,

    I didn’t mention it in the post, but I actually bought that property sub2. 🙂

    As far as the video goes- do you mean like the one you did the other day? If so, I’m going to do one soon- next week hopefully. Going to cold call some landlords and see if they want more rentals. Should be entertaining…

    Steph
    .-= Stephani´s last blog ..Focus, Focus, Focus! =-.

  2. You’re a machine!

    I have trouble getting one video up each week. No way I could do one every day…

    Looking forward to watching them- particularly the one where you dance a jig in a tutu. HAHAHAHAHA! 🙂

  3. What an awesome title to your article Stephani!

    I read it and I was like, “Damn! That is a great title!”

    You have given me a great idea for a future blog post as I have a somewhat similar story with my first rental!

    Thanks!

    Neil. 🙂

  4. James Blakeley on

    After reading, still don’t understand why others would not be working hard to make their own mistakes and experiences. Having lost a small fortune in stocks, can’t see how it will ever be a mistake to purchase a home, with the correct purchasing reasons. You did a great job of proving my case, even with mistakes your property rewarded you. This is rarely the case with other investments.

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