How Not to Make Money in Real Estate Investing!

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Get this; several months ago I was working on a very nice rehab deal I had come across. As is my luck another deal fell into my lap at the same time (came to me by way of referal from one of my regular subcontractors I use). At the time I had all of my resources tied up with my first project and didn't really want to take on another but the deal was too good to pass on altogether.

When I work on a rehab my subs come in and do work in various stages. They might come in one week and do some work then not return to finish until another sub does his thing. In those cases I put the funds into an account that the sub can draw on at the completion of that particular phase. Let me tell you, by not paying the job in advance I don't have any problems with subs not showing up when they are supposed to. I got burned once paying all in advance; the delays I experienced set me back 5 weeks on the deal.

Anyway, I figured that after purchase price, just shy of 20k in rehab, and reasonable holding costs, the profit would come in at 34-38K so I put the property under contract and proceeded to look for a buyer.

I was given the name of an experienced rehab and holder and contacted him about the deal. I explained what I had and that what I wanted for my trouble was 7k (I knew 7k would float me until the first deal was complete and would give me a fast turn-over). This so called experienced guy offered me 4K for my trouble. I told him I'll tell you what I'll take 10K now. He went ballistic #$@%& and other explitives I won't repeat here. I hung up the phone.

I heard that a friend of mine had just closed on his last project and was looking for something new so I called him and offered it to him for my original price and he snagged it without batting an eye.

The next day Mr. Experience called me back and wanted to know if I still wanted to sell the deal for 10K (he went to see the property). I told him it was gone. Although I think he knew the answer already, he asked me "for how much". Naturally I told him.

Can you imagine blowing off what to him would have been 27-31K in profit for a lousy 3K? (Sheepishly) can you imagine me being so impatient I couldn't wait one more day for an extra 3K? (Something told me he would call back but now it was a matter of principle.)

So we both lost out on some. But as for me I can't imagine being so stupid as to not jump on a deal that had a potential of 30K profit; subject to my own inspection and assessment of course. If you happen to be reading this right now, yes I am talking about you!

My friend made out real well on the transaction. He rehabbed it for less than I had figured and got some extra profit.