Diamond in the rough...

[Alec McGinn]

When it sounds too good to be true, it probably is. Hello everyone! I had an experience this week that was a great learning experience, but also a let down. My current market is hot to say the least (homes go on and off the market in days with multiple offers over asking price). While I am working on a marketing campaign for off market deals, I saw a home go on the market a block from my house and I could tell the home was vacant. I was going to call the selling agent, but ended up stumbling upon the house on realtor.com and got paired with a buyers agent. Upon viewing the 3 bed 2 bath 1959 home with a 91 year old owner and spouse that just passed away. The place had great bones, updated electric, furnace, roof, and siding, but the rest of the property had not been updated since 1959, it also had a small leak in the plumbing. I thought it had great BRRRR potential. I was told by the buyers agent the property had no offers on it and it's been on the market for over a month. Thankfully, I also live in a completely updated 3 bed 2 bath home down the block so I had a good idea of ARV, and knew based on that home it would not appraise nearly as high as mine did at 180k. Giving myself a 20% equity position in the property and contractor estimated rehab costs, I would need $60-70k cash for a 20% down payment and rehab and closing costs. So I offered $70k for the property. I was not expecting the offer to be accepted, but I also felt like this is the motivated seller diamond in the rough I was looking for. The next day, I found out that my offer was rejected which did not bother me, but what did bother me was that the selling agent said another investor in town with over a dozen properties offered a cash offer of 120k three days after it went on the market. I understand this investor has more experience, resources, and can handle more risk than I can, but is this investing or speculation? Also, should I continue to pursue BRRRR in my current market or should I go with properties needing minimal rehab with a 20% down payment that will rent no problem? Either way, I am satisfied with my numbers and still determined, but wondering if I need to change my strategy before spending a lot of money on marketing campaigns.

Thank you for bearing with me for this long story!

Alec