First Lesson Learned - Have "Cash" In A Hot Market

[Greg Wempe]

Found what I thought was going to be a great property for my first flip. Got in it five hours after it hit MLS, walked through with my realtors (both of whom have rehab experience), ran all the numbers, and it looked good. Called my GC and he was going to see it the next morning to confirm. Extra bonus, the nearly identical house on the same street had just gone under contract for more than I was planning for my sale price with a "rental grade" rehab, so my plans for nicer finish-out were looking good (even though I wasn't counting it in my numbers).

Due to limited cash funds, I did a 50% cash down payment, short option, 30-day close... and lost it to a lower all-cash offer.

Lesson #1 - I'm going to need "cash" in the Austin market.  Whether it's mine or someone else's, 30 days won't cut it.

Time to line up more immediate financing.

[Tina Glover]

I'm still trying to secure my first deal in San Diego (extremely hot market right now and super competitive for houses that need rehab), so I feel your pain Greg. A lot of my competition here comes from owner occupants, who almost always have contingencies and always offer a higher purchase price, but the upside of that is that HMLs + cash for the remainder (30%) actually work on a fair amount of deals, even if you have an inspection/HML contingency because yours is still going to be a significantly shorter contingency and escrow period, less of a hassle, and cheaper to the Seller than going with an owner-occupant. Of course, if you can waive all contingencies, that's even better. I've gotten countered on at 3 deals recently and that wouldn't have happened if they were concerned about the HML/cash proof of funds. And you can get decent HML rates if you call around. I have talked to probably 8-10 different hard money lenders until I found a really good one here on Bigger Pockets! Good luck Greg!