My real estate career started when my partner bought houses, I fixed them up, and then we split the profit. We did a few deals this way, and it taught me alot about the rehab process. I also worked maintenance for him at a couple of apartment complexes he owned. This way worked for a while, but then I decided to branch out on my own and use my partner’s money to buy them on my own.
My company bought it’s first property in July of 2005. It took me 3-4 months to rehab it, but by the time I finished it, it was near Thanksgiving and the market died, plus my realtor told me to list it for $69,900. As this one was wrapping up I bought my second one.
My second one was an interesting story. I bought it from a lady that was behind on her taxes and thought she just needed to unload it. I bought it in September of 2005. I gave the resident 2 weeks after closing to be out of the house. Well, they weren’t. I ended up having to evict this lady and take her to court. I wasn’t able to gain possession of the property until December 15, almost three months later. After a long rehab, this home has been on the market for 3 weeks now. I started the listing at $79,900, and this past Friday I lowered it to $74,900. I expect an offer or two this coming week.
I made alot of mistakes on both of these properties. The first property was in a less than desirable location, and I listed it WAY too high. The second property I had unrealistic expectations thinking that they would be out in two weeks, knowing in the back of my mind that there was no way they could be due to the amount of crap in the house. I also listed the second one too high. In the second project I took on too much. I refinished hardwood floors throughout, put in ceramic tiles and wood floor in the kitchen, and paid too much for ceiling fans and sinks and faucets to “spice” things up a bit.
When I started in REI I read Ron Legrand’s How To Be A Quick Turn Real Estate Millionare. My good God did it make real estate sound easy. I was less in to due dilligence and more into throwing money around trying to be a hot shot. I set up a postcard campaign and blew close to $10,000 in marketing, getting numerous leads that I didn’t know what to do with. I couldn’t recognize what type of deals were in front of me because I did not educate myself. I’m sure I have looked past 20+ possible deals.
The bottom line is this. All of you newbies just starting out: Do your homework, know your market, have an exit strategy before you make those offers, be clear and direct in what you are putting into the rehabs, get a realtor that you can trust and that has a good understanding of your market customer and the neighborhoods that you are working, and the most important thing of all… this is not rocket science, but IT IS NOT EASY. The guru’s make you think it is a piece of cake and within no time you are having 2-3 closings a month taking your significant other to celebratory dinners every weekend.
Also don’t give up. I have had my a$$ handed to me over and over and over, and I see those as learning experiences. Does it hurt? Yes. Is it necessary? Yes. This stuff takes time and does work, as it is working for me. I felt inspired to write this because I know that when I was starting out I wished that people would have been more honest with me about it, instead of the GET RICH QUICK stuff that was laid on me. Any newbies have questions feel free to email anytime. I will help with what I can.
Thanks for reading and good luck to all of us.