Flip This Wholesaler

The house that I went to look at on Saturday needed a whole lot more work than I expected. The kitchen and bath both needed to be completely replaced, it needed a new lawn + landscaping, new fixtures, flooring, etc. etc. No way the numbers would work with the added repairs.

I got two calls yesterday from the postcards I sent out last week. One guy told me his house just appraised for $ 179,900, and he would “let it go” for $178k. I am not making this up. When I explained to him that I am an investor and buy properties at a discount, he got really mad and told me to immediately remove his name from my mailing list. I think I might send him a few more postcards just to get under his skin. The other call came from a guy who is moving in with his elderly Mother to take care of her. He just bought her house from her (not sure why), and wants to sell his house. He was willing to sell for what he owes (I don’t have the numbers in front of me right now), but there wasn’t enough equity to do anything with. I think it was around 80% of FMV that he owed.

I have been dealing with some issues (not real estate related) the last few days that have pretty much taken up all of my time and energy. I haven’t had any time to do any marketing or follow-ups from last week. It looks like I am also going to have to get another part-time job bartending (which I am really, really dreading), in order to stay on top of my bills. I really thought I would be able to generate some quick cash with another flip (which I am still going to try to do), but if that doesn’t happen, I am going to start drowning in bills. I have put myself in this position, so I am not going to sit around and feel sorry for myself, I just wish I would have taken action sooner. Another lesson learned the hard way.

So, I’m going to try really hard to re-group and get back into the swing of things tomorrow. I have many lines in the water right now, so hopefully something will turn up.

I had a very busy day today. My intentions were to go look at the three properties that I picked out last night and make offers on all of them. As soon as I got up, I got a call from a realtor who had a client that received a postcard from me. He bought two pre-construction homes less than a year ago, and was trying to get rid of them. Neither one had enough equity to do anything with. I had a nice talk with the realtor and told her a little about what I am looking for. She said she would keep my info. in case she comes across anything I might be interested in.

A bit later I received an email from a seller trying to unload a condo he bought last year, fixed up, and now can’t sell. ARV is around 280k, his mortgage balance is 199k. The unit has been completely redone. He said he would take 235k. I thought it might be worth pursuing if I could get him to sell for what he owes- maybe a subject to. Then I found out that the HOA fees are $565/month. Holy cow.

I got another call from a guy who bought a property 2 months ago with the intentions of rehabbing, then selling retail. He bought the property for 135k, getting financing from an HML. His payments are $1800/ a month w/ a 1 year balloon. He installed central heat/air, did some minor cosmetics, then ran out of money. The ARV is around 200k. The house still needs flooring throughout (it has terrazo floors), and updating in the bathroom. The house is in an area I am not familiar with, so I am going to meet him there tomorrow morning to check out the house and the neighborhood. I spoke to him several times today- originally he was asking 145k, but then said he would take less and is willing to negotiate. I called the investor I flipped my last property to, as well as another investor I met while I was trying to find a buyer. The investor I flipped my last property to told me to call him after I take a look at the house and see what condition it’s in. The other investor told me it was probably too tight, but he would ask around. He is mainly wholesaling right now, and is doing very well. I asked him if he would like to get together next week for lunch to brainstorm, and he agreed. I have recently decided that I need to surround myself with like-minded people who are out there making things happen.

This last week, I have really pushed myself to step out of my comfort zone. It is not easy to venture into unknown territory, but once you do, it really feels good.

Tomorrow I have someone coming to look @ my townhome that I rehabbed and am living in . Sure would be nice to sell this place before the end of the year.

Went to view the property I saw on Craigslist today @ 10am. Waited 20 minutes in the driveway for the realtor to show up (being late is a huge pet peeve of mine). Everything looked ok, except updating in the bathrooms is needed. House has been on the market for 5 months, vacant for 3. I put in an offer this afternoon for $160,250.

I have had my eye on a townhome for sale near where I live that has been vacant and listed since June. The owner bought another, bigger townhome in the same neighborhood and is now paying two mortgages. The listing says the seller is extremely motivated, make an offer. So, I did. List price is 160k, ARV 175k. My offer was $121k. My realtor called the listing agent and told her he had an investor interested and told her the price I was offering. My realtor said the listing agent laughed at him. She said the owner would maybe take 10k less than the list price, but only if we could close in one week. What a bargain.

I can sense that my realtor is already getting annoyed with me, and think that down the road I will just go directly to the listing agents and make my offers to them. I used to be intimidated by making low offers to agents, but now I don’t really care.

This evening I got the first call from the postcards I have been sending out. The sellers moved out of town in March and have had the home for sale since then. I had a rental/lease option/rehab disaster in the same neighborhood, so I know it well. I had a long talk w/ the seller about different options (subject to, cash offer, lease option). I asked her what was the lowest amount she would take in cash if I could close tomorrow . She said 215k, but I think she will go lower. Mortgage balance is 180k. ARV 260. She is going to call me back tomorrow.

I’m going to sift through some listings tonight and pick 3 to go look at and make offers on tomorrow. I also sent out about 45 more postcards today (the postcards I’m sending out are targeted to motivated sellers that I find on Craigslist, the newspaper, FSBO websites, and listings that my realtor sends to me).

I am amazed at how many people (realtors and sellers) still do not realize that the market has changed drastically in the last 6 months. Some realtors are still using appraisals and comps from the beginning of the year to assess value. Maybe they know better but just think I’m stupid.