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Hey everyone! My name is Manny Ventura and back in December I had a wholesale deal opportunity I discussed here on the forum. Great 3 bedroom 2 bath house, middle class area, for 135k worth 250 fixed up here in Rhode Island. Cost to fix about 55k. I consulted with Jackie and she mentioned- DO NOT REHAB THE HOUSE, DO NOT REHAB THE HOUSE, NOT WORTH THE TROUBLES. Instead get an option on it and do a highest bidder or wholesale the deal. The best advice one could ask for!!..BUT only if you LISTEN and take the advice. So what did I do? I tried my best to get an option on the house and do a highest bidder sale. The seller was not having it and just wanted to sell. It was a probate matter and she did not want the house. She did not want me to expose the house to the public with a HBS. Fine…but I still had to do something. I reached out to my buyers/investor and 1 offered 6k for it. I thought I could much better but the seller wanted me to lock in and close fast. I noticed how much buyers made when they flipped the houses I wholesaled them- 50k, 70k, big ticket money I have never seen. I’ve seen smaller wholesale checks but not 50k or more. I partnered up with a family member to tackle this project. Two complete newbies looking to fix a house. What a stupid idea. First we got hard money lined up (they really didnt trust us and wanted 4 mths guaranteed interest at closing). 12% 2 point and only acquistion funding no construction funding. We thought construction costs to be 25k and thought we could do it…we learned the hard way. We thought not bad. We’ll get some contractors and do this! Well…18k in closing cost, 55k in constrcution cost (had to max every home depot n lowes card we could get out hands on and more of our cash), we projected 4-5mths to finish. It took 8 MONTHS!! Ohh the hard money guys loved us. They truly did $$. We through 3-4 contractors, us trying to do the work, and the stress caused my partner to have severe family issues in the process since the toll was heavy. I was already bald but I think I lost any hair left. After killing ourselves- The project is finally complete. We listed for 255k. We got 250k with purchase n sales signed. Although it was really tough I think we made it out alive. The closing is in 3 weeks. Looking back…PLEASE, LISTEN LISTEN LISTEN to Jackie because I would have taken just the 6k and made many more deals in 8mths and waayyy less headaches. Can I say I rehabbed a house- YES. Would I do it again- NO. Did I live to tell the story…..Barely. Hope you don’t have to go through this learning lesson. But hey look at the bright side…in this world you can do anything you put your mind to- Just don’t REHAB! 😀 I learned my lesson the hard way Jackie!
Hey Manny
So sorry you had to deal with the hassles and expenses of rehabbing a house. I sure hope the closing goes smoothly.
If the seller just will not agree to an option and a highest bidder sale, there are other things you can do besides a full blown rehab.
1. you could get the hard money loan. Then do the highest bidder sale.
2. get a hard money loan then wholesale the property.But it’s always better to leave private lenders and hard money lenders out of the deal when you can.
To get the seller to say YES to your option offer, tell her she will get her $135k AND you will split anything you can sell it for over that price with her 50/50 so she could actually make even more money and you can close in not more than 60 days. This will almost always work.
You learned a very good lesson!
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Sometimes the rehab project cost drives the house somewhat above the local market value as in this story about the Gaines couple’s HGTV ventures in Waco, TX:http://www.businessinsider.com/fixer-upper-hgtv-chip-joanna-gaines-real-estate-investment-2017-9
–Dee
Manny, Can you run your numbers better, can you predict repair costs a little better, do you know a little better the world of the people you are selling to? YES, YES, YES.
EVERYONE should do at least one rehab…..maybe two, in case the sting doesn’t set in the first time. I am better at my evaluations and inspections because of it and Yes I will do another one I a minute with the right numbers, BECAUSE YOU GUYS DON’T LIKE THEM, Especially, Foundation problems, ALTHOUGH TK is as hard headed as I am.
Glad you came out and I promise the next one you get stuck with will go easier.
Chris,
http://www.realestateproblemsolver.com
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