HUD home glitch sale? (wholesale to wholetail)

[Dennis Williams]

I bought a HUD home last year in June 2014 with the intent of wholesaling the property. The property was located 200 miles from me and was for sale at $12,600. I had no way of looking up comps on the MLS so I looked at recent sales on Zillow (not the best source). Zillow suggest the home would sell for $38K to $45K. By looking at the pictures online it looked like the property may need about $12K to get it rent ready. I placed an offer for $5,500 not expecting HUD to accept the offer because it was more than half of what they wanted.

Sure enough, the next morning I had an accepted bid. Now normally I wouldn't go out to see the property, HOWEVER, since the price was sooooooo good I had to see the area and to see if it would make since to wholesale it or buy, fix, and flip it.  I jumped in the car and 200 miles later I was in an interesting part of Jacksonville (Jax). The property looked good to flip and I scheduled two local contractors to meet me at the property that day.  Both of them came in about $4,000 more than what I estimated.  This was my second wholesale deal and I just didn't have the capital to buy the property and spend $16K for rehab. 

Looking at the neighborhood, I notice the street the property was on was good, BUT the surrounding streets were filled with questionable street activity at night. So you guest it, back to plan A.  Now I didn't know the area or how to find buyers in that part of Jax. So I got on Facebook and started a "CHEAP HOME BUY IN JAX" ad focused in that part of Jax for $15,800.  Within two days I had over 32 responses.  Most of them wanted to rent the property and/or rent-to-own.   However, two of the 32 were investors looking to buy the property for $9K.  I know,... take the money and run right.  OOOOHHH no not THIS guy, I wanted at least $12K because I felt the value was there.

45 days later I had no commitments so I bought the property, all in at $6,200. Now I felt like it was not the BEST move having most of my capital tied to one property but I knew I could find a buyer for $12K or just rent-to-own to a buyer with a nice down payment.  I called both investors back to see if they would increase their offer but neither of them budged. I ran my FB add for 1 more week and asked a wholesale buddy of mine to share the property with his buyers and I would pay him $1000.  Two days later he calls me with the buyer for $12K and we closed in 14 days.  As an investor what would you have done differently, and why?

[P. Martin]

I hope you bought it as an investor and not as an owner occupant.