Swing and a miss

[Scooter Williams]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $62,500
Sale price: $51,000

This is one of the few real estate deals I lost money on in 12 years. I was SO pumped when I got this deal under contract. It had 30+ offers in the 2 days and had tons of potiential for the right fit, which sadly was not me.

I had bought a number of deals in town prior to this and built a good relationship with the listing agent. This was important because he knew I could bring a good offer to the table and wanted to work with someone they knew to ensure we closed smoothly and on time. I also put an escalation clause in my offer (shout out David Greene for the tip) and eventually landed the deal for $62,500.

This was zoned as a duplex, in a decent area near a number of colleges. It was the first property that was out of the norm for me, as it required A LOT of work in a newer city for me.

Shortly after it closed I had a feeling of buyers remorse, because I didn’t have any local contractor connections yet and I wasn’t sure what my biz model would be for it.

I started planning for student rentals which made sense until I learned about local regulations. Plus, student rental biz model was something I had no experience with.

Then I thought regular housing. The deal quickly became less attractive with this model, but I knew it very well so it made sense.

I decided to get bids from contractors, handymen and they either had months before they could start, were WAY too expensive or rejected because it was in a…. “historical district”..(huh?)

So I had it sitting for 3 months and that’s when I started getting calls from the Columbia police (code enforcement). They started hounding me, fining me hefty amounts and threatened to demolish the building if I didn’t start construction within 30 days.

Then they told me all the issues inside and out and required I had plans from approved contractors and must design and build it to “historical standards” Talk about a headache!

During this time, I had bought a number of other deals that were easy, smooth and FAMILIAR. After chatting with one of my favorite mentors Dave Lukrich one day, he gave me his perspective and knocked some sense into me.

Shortly after I went back to the agent I bought it from and got it off my hands as quickly as I could. Funny enough ended up getting sold 2 more times after me, so maybe I wasn’t alone…

Moral of the story is… Try to avoid EMOTIONAL investments and focus on what you know and do best. It’s easy to chase the hot thing, but If you have something good going, focus on that and do it really well.

Lastly, a few of you asked where am I going with this and I’m not sure to be honest. I do have access to great deals so there’s def a business there likely, but for now just posting for fun and because I enjoy chatting/helping anyone interested. Happy New Year!

RECAP:

📍 Columbia, SC
💵 Purchased $62,500
💸 Sold: $51,000

How did you finance this deal?

Cash

What was the outcome?

Lost money

Lessons learned? Challenges?

Do your homework