My First "Pinch" in REI....oouch !!

[Reuben Harris]

Hello All,

I'm a spanking brand new REI in the Texas market . BP was high on the list of referred resources for my developing as a pro. Wish I had used this site before my little episode.

My first experience before even purchasing a property was an eye opener. After being referred to a REA / investor who agreed to be a mentor and had tons of experience I was told, recommended a low end " safe" property for me to start with to get my feet wet. The appraisal that he gave it was way above anything in the area. Seemed strange to me but, I gave him my complete confidence. It had an assignment on it. After visiting the property and meeting with the wholesaler and my mentor I was told to be that I needed to buy the contract from the wholesaler with a down payment of $2000.00 (non-refundable). Ok, I did that...and waited. When the "actual" appraisal came in (my $400) expense, it was so low that it blew any possibility of a profitable flip out of the water. After the agent blew his stack and requested another appraisal from someone he liked this time ( not my expense), it also came back low. After raising such a fuss again, the original appraiser/ lender added another $20k to his numbers ( that was strange to me) but wouldn't finance it at those higher numbers. The wholesaler was going nuts wondering when the deal would close so that he could get the rest of his money. I reviewed multiple scenarios in an effort to move the deal forward and not lose my 2k. Well, alas , I couldn't  do it. The person that referred me to the agent said that she had to walk away from some money too and avoid losing more. Everyone was notified by me that I was done. The mentor is very silent now...

I am educating myself of how to analyze deals and moving forward...looking for my first one.   

~Reuben H.

Texas