The "80's Called and Want Their Wallpaper Back" Gamble

[Owen Dashner]

Investment Info:

Single-family residence wholesale investment in Omaha.

Purchase price: $222,500
Cash invested: $300
Sale price: $252,000

Contributors:
Angela Thiel, Brandon Tauber

Wallpaper aficionados, you will love this bad boy! This was a little bit of a gamble on a wholesale in Trendwood in Omaha. The house was originally on the MLS and way underpriced at $200K. As a result, the listing agent told us he had over 80 showings and 20 offers within 48 hours, with an accepted contract of $252K. It fell out due to financing a week before closing. The agent called us and asked us to offer on it, we bought it for $222,500 under the condition that we close in 1 week.

What made you interested in investing in this type of deal?

This one was not our normal type of buy. It had an ARV of $270-280K+, so our purchase price left lots of room, but the house was so big that paint and flooring alone would have cost $20K. We decided to gamble and try to arbitrage by buying it low and trying to immediately re-list it and sell to make $15-20K. It was a little risky, but we were fairly confident it would sell quickly because it was in a great neighborhood and had a ton of interest already.

How did you find this deal and how did you negotiate it?

An agent knew my biz partner and called him to tell him about the deal. He was pretty forthcoming about the situation and said the owners were pretty upset that the financing fell through and just wanted it sold quickly. Our offer was $30K less, but we offered to close on the same day that they were originally supposed to close, so they accepted.

How did you finance this deal?

We bought it using a line of credit.

How did you add value to the deal?

No value added, we immediately re-listed the property on the MLS.

What was the outcome?

We accepted an offer of $252K, with seller concessions of a little over $7K. After netting out closing costs, we ended up with a profit of around $15K, which is pretty thin at that price point. But, since there was so much interest in it, we thought it would sell quickly, without much effort.

Lessons learned? Challenges?

I think checking in periodically with agents is often overlooked, and we are guilty of it as well. Staying top of mind with an agent when a deal falls through ensures that you'll get the phone call when the time comes.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Angie Thiel was our listing agent, excellent as usual. Adam Shada was the original listing agent who contacted us.