For starters some may not look at this as a success story, but I most certainly do. For one I got all of my money plus interest back that had been promised to my lenders on my first flip and two, I learned a very valuable lesson which is to always get it in writing....even if it is a so-called friend you're doing business with!

The beginning of July 2019 I had been trying for months til that point to find my first flip and hard money lender without success. It wasn't until I had an old friend Justine Fey and his wife Amber Rose reach out to me to do some repairs to a house they owned which had damage done to it from a kitchen fire started by a tenant.

It was nice catching up with Justin because him and I both had a real passion and love of Real Estate from a young age after High School...and so in catching up after so many years, I decided gave them a really heavy discount on the repairs I had done. While nearing the end of the repairs, the more we talked about real estate investing, the more and more Justin, Amber, and I thought that simply partnering together and flipping the property would be much more advantageous for everybody involved. With that said the three of us decided to flip the property.

I'm a full-time contractor myself, So I told them I would take on the remodeling and project managing as long as they could help out where they could and when they could since neither had experience in project managing such a project on this scale. Another important detail is that this property's ARV was at most 50k according to the CMA my realtor did at the beginning.

Justin, Amber, and I had discussed from the very beginning that they wanted their 22k back which is what they told me they had paid for the house 6 years prior, and that I would put together and find the money needed for the rehab costs. I knew this was certainly no get-rich-quick flip or even barely pay the bills flip from the beginning, but I was motivated to get my first flip under my belt...and more importantly to use it to attract a bigger fish who would bring money to the table for flips going forward.

To stay completely transparent to the details, I approached my dad with this project and told him I needed 11k for Rehab costs and that I'd pay him a flat 13.5% interest rate which to my surprise he agreed to! I budgeted 4K for labor and the remaining 7k for material which I knew was an extremely tight budget (even impossible) in order to get the property to the condition it needed to be in to fetch that 50k ARV. I formed an LLC, and put a lien against the property for the $11,000 plus interest a month after we had already commenced work and had spent over half the 11k (VERY stupid and would never do again!!)

Around September 2019 is when I realized there was no way we were finishing this property on the original $11,000 budget and that I needed to find more money. Fortunately, I learned another valuable lesson about a month before that the worst thing you can do is not at least ASK for something, because the worst someone can tell you is no. I had reached out to a previous customer of mine that I did a kitchen and bathroom remodel for and asked him if he was interested in investing. In real estate... and for the second time that summer to my surprise he told me yes he was!! After a couple hours of talking over the phone, he committed a six figure budget to my next flip! I was ecstatic with excitement! I explained to him that we were working on our first flip already and that I was looking to acquire more money for the budget in order to finish it to get it to Market. He asked me how much, I told him 4K and he agreed to loan me that amount at a flat 15% interest rate with no collateral, just a promissory note between him and I. I went and discussed the arrangement with Justin and Amber and we all agreed that it was the route to take. (Note: I should have done a second lien on the property between Justin, Amber, and I for the $4,000 plus interest that I borrowed...but I didn't because we were what I thought at the time, friends)

Now fast-forward to November 2019, the house has been completely rehabbed ( new roof, Windows, siding, flooring, doors, HVAC, Electrical, Plumbing ... basically the whole nine yards at a budget that no other contractor in their right mind would have ever remotely considered) and my realtor performs a new CMA which brought to light a new comp that brings up our ARV to a new listing price of $54,900! We list the property and within about a week have three offers! We countered the highest offer and they agreed, bringing the agreed to purchase price to $57,222! You would think in this situation everybody would be thrilled and congratulating each other... Especially because I ended up putting an additional $2,900 of my personal money into the property to finish up some of the essentials. Unfortunately, that wasn't the case at all.

For the next month and a half mostly because the buyer was having issues with their Bank which got cleared up.... Justin and Amber for the most part ended up and ghosting me through phone calls and text messages. I continually tried to set up a time to sit down with them and go over all the receipts and numbers to determine where everybody stood and they'd constantly cancel on me for one lame excuse after another because suddenly there was all the sudden nearly $7,000 of expenses they told me they also needed paid back for on top of the 22k. I continually tried to call both their cell phones and never got a response or call back and the only responses I would get would be vague explanations through text messages of where this supposed $7,000 came from that was never once discussed in the 6 months of rehabbing and numerous conversations the three of us had about the budget and expectations.

All in all, the house finally closed about 2 weeks ago, and I got my dad's money plus interest back my investors money plus interest back and my Nearly $3,000 of personal money used to finish the property back. I've still yet been given an explanation on where the nearly $7,000 profit went but I have a good idea that Justin and Amber just got greedy and knew that we didn't have anything in writing.

So in conclusion of this long stressful and Irritating situation that I have nobody to blame but myself, I learned to ALWAYS
get everything in writing before ever commencing any work or spending any money! My lesson was learned, and I have since purchased my second flip with that same partner and his six-figure budget... and the numbers are looking to be a much more profitable payday at closing then that 7K that was stolen and ruined a friendship. I just hope This helps somebody else not make the same mistakes that I made at the beginning of their investing career

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GET IT IN WRITING!!!

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