First deal a FLOP :( - Posted by NewInPittPA

import · April 24, 2003, 5:34pm

Posted by Nate(DC) on April 24, 2003 at 17:57:45:

Too bad the first one didn’t go. Here are some thoughts of mine, that may or may not be applicable:

Work on your presentation. If that many people were scared off by your not being the owner, you were probably not handling it as smoothly as you could have.
Double check your values and offers BEFORE making an offer. You were lucky they let you cut the price. Don’t count on that being feasible every time, or even most of the time.
If you didn’t get a buyer it might be because you were overpaying. The fact that you got an offer for $15K suggests that maybe you were.
Most of these buyers, if they didn’t show up, are flakes and not someone you would want to sell to anyway. Definitely need to make sure your buyer is qualified - i.e. has the cash sitting in the bank or with a private lender - BEFORE wasting time showing them the property.

Good luck on #2,
NT

import · April 24, 2003, 5:34pm

First deal a FLOP - Posted by NewInPittPA

Posted by NewInPittPA on April 24, 2003 at 17:34:09:

I wish it was a flip and not a flop. It just didn’t work out. The market in my part of town appears to be dead so I’m going to try elsewhere even if I have to drive a little further. Even though it didn’t work out I still learned a few things that’ll come in handy the next time I try. Basically I found a house that needed rehabbed listed at $29,900 in a neighborhood where similar houses are selling for $65k to $70k. I got it under contract for $24,500 and then advertised it everywhere for $30k. The phone didn’t exactly ring off the hook like it says in all of the literature but I did get about 20 calls in a matter of two weeks. I set up a time for everyone to look at it but only TWO people showed up. A week before everyone showed up I got my contractor friend to go over everything that was wrong. I used his estimates for the repairs as a bargaining chip with the realtor who had it listed. I managed to get my contract price down to $18,500. Only one person made me an offer and it was for $15k. That’s pretty much it in a nutshell. The realtor was cool about me terminating the contract and said she would be happy to help me with any future deals. I think alot of the people who called got scared when they found out I wasn’t the owner. They all probably thought I was working for the r.e. agency. I tried to explain to them the situation so their minds would be at ease but they all thought something fishy was going on. I wish I was in a bigger city with a good economy and not so many stupid people so I wouldn’t have to put up with this kind of BS. Anyway, I’m off to find another deal that WILL work out. Thanks to everyone here who has been a big help so far!

import · April 25, 2003, 8:28am

Re: First deal a FLOP - Posted by Steve-DC

Posted by Steve-DC on April 25, 2003 at 08:28:13:

Here’s a few suggestions that I’ve learned in wholesaling homes:

Focus you’re energy on attracting people. For example, while you’re spending time trying to meet them at the property you could be calling more buyers. Solution: put a lock box on the property or give out the combination so they can get there themselves…

Secondly, work on your buyers list. It helps when you have an idea of who might want the house before you put it under contract…or who WONT want it. I recently had a house under contract that would’ve made a great rental but not a great rehab. I avoided calling my rehab buyers.

Lastly, don’t try to teach people how you do things when you have a deadline. If they don’t get it or aren’t open to trusting you to control everything, move on.

I think you had a great experience. Especially if the realtor was understanding and you didn’t lose any money.

By the way, don’t wish you were in a bigger city…I’d give anything to be a big fish in a small pond right now.

Regarding stupid people…my buddy used to have a bumper sticker that said “fight the stupids”…I agree.

Regards,

Steve

import · April 25, 2003, 6:50am

Re: First deal a FLOP - Posted by Carrie

Posted by Carrie on April 25, 2003 at 06:50:21:

You have gotten some good input.

Here’s a quote that is revelant to your situation.

Success seems to be largely a matter of hanging on after others have let go. – William Feather

I hope you have learned from this situation and you will do great on your next deal.

Carrie

import · April 24, 2003, 10:56pm

Re: First deal a FLOP - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on April 24, 2003 at 22:56:58:

New–¶---------------------

You’ve gotten some good comments, seems to me.

Two things I notice. You delayed having the buyers look at the property. You might do better if you strike while the iron is hot, when they are showing an interest in the property. And I agree with Nate(DC) that you might need to screen your callers/potential buyers so as not to waste time.

You should have called all the people who run “we buy houses” ads in the local newspaper and the classified free paper.

When you call people stupid, it shows something about your attitude. I would not doubt that there are stupid people. But I worry about your approach to things if the only people who can make you money, your prospective buyers, are seen as “stupid.”

My suggestion is to always be asking yourself, “What can I do differently that will get me more of what I want?” I agree with Nate(DC)that it sounds like you are not a “smooth operator.” It may take time for you to pull out yours sales ability.

“The secret of success in real estate investing is persistence.” – Ron Starr

Good Investing********Ron Starr****************

import · April 24, 2003, 8:59pm

Re: First deal a FLOP - Posted by eric-fl

Posted by eric-fl on April 24, 2003 at 20:59:26:

Something’s not right here. 18,500, for a rehab house that will retail at 65k, is a very good deal. Unless this house was a pile of sticks, with fire damage to the sticks, it should have sold. Just how much stuff did your contractor find to be wrong? Was this in a bad part of town?

This may be cold comfort to you, but from my understanding, Pittsburgh doesn’t exactly have the worst economy in the country, nor the stupidest people. It definitely has a unique character, I know the city fairly well - most of my extended family is from that area. If nothing else, it should at least be a big enough economy to support flipping.

I would suggest that, before doing this again, that you make every effort to find a local investment club in the area, preferably one that is a chapter of NAREIA. Mingle with the rehabbers there, tell them about this one, and bring them your next one. My experience has been that, if your deal s*cks, experienced rehabbers won’t be shy about telling you, or more usefully, why.

Finally, I would echo the sentiments that you should have rehabbed and sold it yourself, but I realize you may not have had the necessary resources to do that. Still, even if you have to beg, borrow or steal, you may want to consider it if you are in a similar situation again.

import · April 24, 2003, 7:45pm

Re: First deal a FLOP - Posted by Jorge

Posted by Jorge on April 24, 2003 at 19:45:44:

I am wondering why not find a Hard money lender and buy the house yourself? Fix it up and sell it. If the comps are truly 65k to 70k, even if you put in 30k, you would still have some good profit. But that is IF the comps are truly 65k to 70k.

Just another opinion.

Jorge

import · April 24, 2003, 6:02pm

Re: First deal a FLOP - Posted by Kristine-CA

Posted by Kristine-CA on April 24, 2003 at 18:02:20:

I know where you are coming from. Doesn’t sound like a total flop at all to me. I am wondering if you posted here with concerns during the deal. Because it may have been salvageable. But there is no replacement for experience as I’m sure you are learning. Sometimes I think that if only could get paid for all this learning that I keep doing…

I work with properties in a similar price range. In a large city with plenty of stupid people. But don’t kid yourself. They are everywhere. Just a few suggestions for next time.

I don’t know if you had everyone drive by first–that way you don’t have to make appointments. You need motivated buyers. Ones who drive by and think they want it. And call you back. It eliminates A LOT of buyers, especially retail buyers who think they can handle a “fixer.” The number of people who think fixer means carpet and paint is overwhelming where I am.

I wouldn’t tell people you are not the owner until you have a motivated buyer. There is no point going into contract details and ownership issues for people who are not motivated or haven’t seen the property. When you have a motivated buyer, you can tell them that the property is in escrow and that you are interested in selling your contract (if you are), etc.

I’m curious about your advertising??

So, what were the repairs? And were sure of your comps? $18.5, even with heavy repairs should have panned out for some rehabber, depending on their minimum. Also, landlords often like these kinds of properties, depending on the repairs.

So, I am not so sure you need to look farther out. But maybe find out what it is your buyers will buy.

Hope this helps. Sincerely, Kristine