First Two Deals Closed!

[Jim Viens]

@Mindy Jensen You mentioned you wanted the story of the deal that was held up because the seller was in jail...here you go! :)

This post has been a long time coming. (It's gonna be pretty lengthy so settle in or save it for later.) I finally closed my first two wholesale deals! They were both SFR's near me and the leads were generated from a couple of different sources. There wasn't a huge spread on either of them but, most importantly, I've overcome the inertia and have got some momentum. I've also learned some things to help going forward and no longer have that desperation pushing me into possibly bad deals. So here's what went down:

The first property was a house in my neighborhood that caught fire about a year and a half ago. I really didn't know for sure how to locate the owner but then remembered I had seen her named in a Facebook group I'm in that's for the community I live in. I tracked her down and messaged her to see if she would be interested in selling the property. Due to unfortunate circumstances she had no insurance on the building (apparently she only had structure insurance through her lender and she had just paid the property off a few months before the fire…not sure of the specifics) so she had no way to rebuild. We met at the property and I estimated the repairs at around $45k with an ARV of about $90k. I put together some numbers for her and presented an offer of $9100 which she accepted. I already knew a guy that would take it so I called him and we met and agreed on a total price of $12k. Good deal! But there's always a fly in the ointment. About a week before the contract was to expire I tried to reach her to set a closing date. No answer. Tried the next day. No answer. Tried the third day and her boyfriend answered and let me know she was in the county jail. WHAT?? She had apparently been picked up on a 2-year-old warrant. The short of it is the contract expired while she was in the pokey and my buyer reconsidered and backed out. Ugh. Once she got out I got her to re-sign a new contract and advertised for a buyer. Had a few calls and met 2 different guys at the property and within a week had an assignment executed with an assignment fee of $1,900 and got the update on the title work started.

Not long after I got that one under contract I got an email from another investor here in the area offering me a referral lead. The property is in “the hood” here in KCK (near 18th & Central). I went and met the owner at the property. He had lived there several years but had bought another house and moved, keeping this one as a rental. Problem is this house had been vacant for about 6 years and was in horrible shape. 2 or 3 big holes in the roof. Gut-job needed inside…the works. I offered him $2500 which he readily accepted. Put the deal on Craigslist and got some hits on it. A couple of weeks went by with no real offers. Finally I was contacted by a local guy who offered me $3500. I was desperate as I hadn’t had a deal close yet at this point so we got the assignment executed and opened escrow on the deal. Again…there’s always a fly in the ointment. On this one the title search revealed that the owner had a $40,000 state tax lien against him. WHOA!! Deal-breaker, right? Not quite. On a lark I decided to contact the Kansas Dept of Revenue to ask if they would offer a lien waiver. No harm in asking, right? I mentioned that the debtor does own another property valued at about $40,000. They said if I sent in a bunch of pictures and an “Affidavit of Property Value” stating why I think the property is only worth $2500 they would consider providing a partial release of lien for the subject property as long as the seller would sign over his $2500 to the DoR. I got the seller’s agreement to this and sent in the affidavit and the pics and, lo and behold…they approved the deal! Seemed like it took forever to get everything done on this as the buyer does a lot of business out of town and wasn’t very easy to reach. Finally the deal closed and I collected my first check for $1,000!

Two weeks after this one closed the title company finally got the title updated for the fire-burned house and that one closed and I collected another $1,900! Again, I know these aren’t the huge numbers but the experience, confidence and momentum I’ve gained from these first two transactions has been invaluable. I hope this info can help other investors as they move forward in their business. Thanks to BP for all the info and answers to questions I’ve had!