One thing you learn as a wholesaler is never count your money until you actually close the deal. This applies to all areas of real estate, not just wholesaling.
I would love to share some recent disappointments in my real estate journey. Disappointments are a part of the journey (or any entrepreneurial venture). I tell people all the time not to buy the sensational internet version of success. They only talk about all the good aspects, which is a disservice to the majority of people. It creates an unrealistic expectation for any entrepreneurial venture.
Many of us have seen the eager wholesaler who talks about how he will take over his real estate market, only to be missing in action 3 months later. In most cases these people are missing in action because the internet sensation forgot to mention the work and the disappointment that you will inevitably run into.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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My Story of Disappointment
Now, back to my story. I recently had a deal that I’d been working on for months. An out of state owner got screwed by a slick property manager. The owner had not received payments in 24 months. The property manager told the owner that the property was vacant, move-in ready and waiting on a tenant. After months of hearing all types of excuses from the property manager, I told the owner that I would go out and change the locks if he gave me permission. And if I didn’t buy the house, I would send him back the key.
He agreed to that because he realized his property manager was full of it and could not be trusted. I called a buyer/friend to view the property with me because he really likes the area. He also said he had a extra lock to change the locks with. As we approached the property, we noticed that it was not as nice or vacant as he thought. The property had someone living in it. And the person living in it had no electricity or water. We decided not to go in because the house had vicious dogs inside and out. I took pictures of the outside of the house, which was in terrible shape. I sent them to the owner. I also spoke with a neighbor, who confirmed someone was living there for years. And they had no electricity in the house.
I spoke to the owner about a sight unseen price. The owner wanted $50k, the price for which he’d purchased the property — and he’d put in another $10k in renovations. I said, “We can do $40k.” He decided to pass on that for right now. At this point he was really upset with his property manager. I Googled the guy’s name and came to find out the property manager’s realtor license was already suspended in NC. The owner put in a complaint to the realtor board.
I went back to the property to leave a note for tenants to call me, which they did a few days later. Apparently tenants had been staying there for free for around 16 months. And the owner hadn’t been paid in 24 months. Yup, you guessed… the property manager was keeping the rent all to himself. Also, the property manager did not want to fix anything, so as a solution, he just started avoiding everyone.
You might want to interview your property manager before hiring them. The tenant told me to come to the property and let me walk it. The house smelled like death. But they were willing to cooperate with me if I bought the house and allowed them to stay there. After walking the house, I called the owner and told him, “I don’t want the house. Good luck.” He practically begged me to buy it.
I said I would buy it for $30k, knowing my buyer would pay $35k easily. Anyway, we got the deal all the way to the closing table, only for the seller to decide he could not go through with it. I was heartbroken, as I was going to have a $20k month. The seller’s fiancé would not let him sell the house. He was out-of-state, so it was a closing that was going to be done via next day mail. Are there things that could have been done? Yes, such as recording the contract, etc.
A Further Disappointment
Then on the same day, another seller who had contacted me two days prior agreeing to sell me their house that I went to look at and took a buyer who was a close friend to see canceled on me as well. I was set to make an easy $3k on it. This particular seller found me on Twitter and verbally promised to sell me her house because I seemed like a go-getter from my YouTube videos. I sent over the contract immediately. And she called me the same day the other seller let me down to tell me she decided to go with another offer, even though the day before she just told me I had the highest offer.
In conclusion, these things happen more often than people like to talk about. This just reminds me (and all of my fellow real estate investors) to save money when things are good because deals do fall apart. Also, this is a reminder to all to always keep your pipeline full. I was still able to make $11k in assignment fees the month that this has happened. Remember, ABC: “Always Be Closing.”
Have you experienced disappointments with real estate recently?
Let us know with a comment!