Fail forward and fail fast is my motto

[Jeffrey Edwards]

Investment Info:

Single-family residence fix & flip investment.

Cash invested: $65,000
Sale price: $97,000

This property was a very early lesson learned in private mortgage financings for me. I intended on financing a rehab for $60k with a $15k return after 6 months. Unfortunately it didn't turn out that way and my funds were tied up for 3 years. I ultimately invested $65 cash, $5k in legal fees, and $9.7k in operational expenses while owning the home, and walked away with $17.3k after a judgement.

What made you interested in investing in this type of deal?

I believe that financing is a great way to put your cash to work for a nominal return if you understand the business.

How did you find this deal and how did you negotiate it?

Introduced to a GC through a mutual friend. I negotiated a 6 month deal financial investment with a 20% return.

How did you finance this deal?

I took out cash from my investment portfolio.

How did you add value to the deal?

I financed the deal.

What was the outcome?

I tied up $65k of my investment money for 3 years and sold a property after a judgement for a 5.8% return.
I lost over $20k in opportunity costs while my money was tied up (important lesson learned but wouldn't fit below)

Lessons learned? Challenges?

1.) I lost money (opportunity loss) but I gained a wealth of experience.
2.) Learned some negotiation skills through this deal. I asked the GC as part of the conditional last $20k payment to transfer the title to me after his mortgage note default since I'd paid him $40k in good faith for work reportedly completed but needed rework.
3.) Mortgage note didn't give me sole ownership of the property. Next Mortgage Note will include full loss of interest on the investment property for the GC

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

None that I would recommend.