Journal of a new RE investor in San Diego: approaching first deal

[Mercedes Cantero]

Hello everyone,

I am a new RE investor in San Diego. I have read some post and I am excited about sharing my experience with all of you. I moved to California November last year and I heard about flipping houses so I started my own research about my new passion. I have been educating myself since February in Real Estate. I have read a few books about flipping houses, wholesales, multi-family homes and rentals. I get more and more excited about the idea of building my own wealth and be free financially.

After reading for 3 months at home I decided to look for a Real Estate Agent to help me out. I found an excellent Real Estate agent who has shown me a couple of good opportunities. Although I didn't get any of the houses for different reasons. 

The first house was a REO. The house was in a very bad shape. I called a contractor to give his estimates and I put an offer higher than the asking price the same day. I was confident I would get it but someone else did it. It was frustrating! I realized how hard the competition is in this market.

The second opportunity was a house off the market. The RE Agent called me and I went next day to see the house. The asking price was $310,000 and the comps in the area were $375,000- $425,000. I could sell it for a reasonable price of $405,000. I was so excited!. My budget to make all the repairs was $35,000. The first difficulty I found it was the house was from 1.942 and I had to pay over my budget to repair it, $51,000!. Also I was to pay part in cash 100,000 and ask for a hard money loan for the rest. I really wanted to get that deal but the numbers didn't make sense... I could't buy the property under 30% market value so I didn't do it. I called a seasoned investor who I respect to ask him for his advise because after being "in a research mode for a while" I really wanted to make my first deal. The first thing he said it was the purchase price wasn't right but he didn't discourage me. 

A few days later the RE Agent called me saying if I would offer $285,000 and I thought the house may not be sold for $405,000 because it might have any issue that I didn't know. I offered $275,000 and the agent told me there were offers coming higher than that. I agreed to offer $10,000 to get it . The problem was I had to put the offer very fast and the inspection period was 5 days and I didn't know if I would get the hard money loan. I didn't want to lose the deposit. The Agent told me I can use the inspection contingency to finish the contract and the seller would refund me the earnest money. The offer didn't have a loan contingency. The sell was "AS-IS" and I questioned if this could be a problem if I didn't get the loan and there weren't serious problems in the inspection.

Next day I went to the county to research for NOD and now I am figuring out how to contact with the owners.

Thank you for reading this post, any advice or comment is more than welcome!!