Did I let a deal slip through my fingers?

[Chris Lipumano]

Hey Everyone,

I wanted to get everyone's opinion on a deal I might have slipped through my fingers.

I got this lead from a postcard mailing sent to absentee owners. I did my research and placed the property with a ARV of 550000 (conservative) to 575000. My MAO was 350000 depending on repairs.

I met with the seller and checked the house out. I realized this was going to be a full gut rehab. After we got to talking the motivation was there. The property was too big for him to take care of. He was an elder man who was ready and retire to his other property next to the beach.

In the end my offer was just to low for him. He owed 160,000 on the house and wanted 460,000 for the house. I called him back a few times to follow up but wouldn't budge on price.

I checked redfin yesterday http://www.redfin.com/CA/San-Diego/6808-Camino-Estrellado-92120/home/6243637 and realized that the property was bought at 481,500 and is now being listed for 649,900. The investor who bought this property did a great job. Beautiful rehab and in a perfect amount of time. His mark up was close to 80,000 more than my ARV of 550000-575000.

Should I have signed a contract with the seller when I had the chance? Any advice is appreciated, thanks!

[Tim G.]

Okay, well first of all. KILLER attitude Chris.

I could go on and on about that 70% rule but instead I'll go over what I consider the most important rule. KNOW YOUR MARKET.

Maybe that rule works elsewhere but I find it so misleading for it to be the spoken gospel of rehabbing because it is not and takes no consideration into different markets.

The person that bought your deal I sold them one in December at 82% of ARV less repairs. They did well on it.

Know your market, know what buyers are paying for deals. You can see people operating on slim margins that come nothing close to that rule. That should teach you several things.

1. You want them to be your buyer
2. You see the slimmer spreads people are willing to work with.

Maybe the investors here don't want to work with that but they aren't everyone. There is a buyer for everything and I cannot wait to show a current deal I'm working on just to prove that point even further.

Death to the 70% rule in SoCal if you ask me, well if you can lock it up for that then awesome. But sell it at the 82-85% range.

Remember, know your market! Don't let someone in Ohio tell you what values deals should be done in San Diego or vice versa it just doesn't make sense.