Wholesale: Crash and Burn? Survive and Learn!

[Cory Baker]

I have an ad for the property but here's the back story.

I learned from some guru auction guys about site that allow you to bid on bank owned properties...with the hook that if you completed the course and became "cetified" you'd have access to the "vault" of private money lenders to fund your deals.

 "On a platter."  And a 30 day $ back guarantee if you weren't satisfied for any reason.

 2 of us partnered up, and took the course and the cert exam together.

The funding sources weren't at all what they were purported to be and we could not get one deal funded not even the EMD. Oh there was at least one that would help with 16.5% down first...

 Anyway, we got the money back. 

 Oh, the customer service wasn't really so helpful.

That's the 2nd program where the csr's of a program knew very little or nothing about real estate investing questions. Another factor...missing.

So I lost out on a property I tried to bid on.

Well, later, that property's contract must have fallen through and it came back to auction at a lower price. 

I went for it! I was able to borrow $1000 from two sources and using joint venture agreements collected the EMD borrowed a partner's POF as he had an LLC.

And it looked like I was a contender!

***Didn't know only a realtor could allow one in to see property.***

What might have been wiser:

1. Spending the $75 for a title search ahead of time.

2. Checking closely the sales price history like on Trulia..saw later.

3. Not relying on "comps" from realestateabc, or solds on Zillow. (But Realtytrac had a decent ARV estimate)

Anyway, I came up with 70-90k ARV, a partner saw up to 105k ARV and about 84k was the best estimated answer I'd learn later

4. Join a local online meetup group before investing money in the area. (I got pretty well ridiculed for trying to work a war zone, or thinking I could make money on this deal.)

5. There is the 'own backyard thing' but I'm not willing to concede that point just yet.

It can be done but you need good intel either from yourself being there or a reliable team of experts there working with you.

6. The Termite inspection at $125 or the House Inspection at $250 may have been money well spent as to what needed repairs...

A home inspection period contingency was in place even for this auction deal. That might have been the time to get out and still have most or all of the Ernest Money returned.

7. What I did right was considering the downside (Art of the Deal).

If it fell apart could I live with losing the 1k and owing the partners that money back at zero interest within 2 months and they be okay with that?

$500 each. Yes! And it was written up in our JV agreements.

(By the way, may be a good way to raise EMD if you don't have it is like $500 from the first JV partner for say 40% of the deal, and $500 from the second JV Partner for 25% of the deal. You get 35%.

So, if you have a deal and and after the Auction and realtor are paid and you have endbuyer pay all the rest of closing costs let's say you and your Joint Venture net $5000:

JVP #1 gets $2000

JVP #2 gets $1225

And You get $1750 for orchestrating and driving the whole deal)

But, now I'm in the mode of either magical thinking where some family member wanting to keep grandma's house in the family, some celebrity wants to live there because it's close to their auntie, or some movie producers want to use it in a film... Either the far out longshot possibilities or

the crash and burn with as minimal impact as possible scenario.

Landing this crashing plane into a pond and hoping to survive.

Since title issues were discovered the bank can and did move the COE. That bought me time but ate about 200 dollars of the EMD in underwriting. If the seller cannot deliver clear title or if they failed to do a prior statute enforced step...they may need to take it back and reprocess, or allow me to cancel.

Just so you know if I had been the one needing to postpone closing, I could do so if agreed and if I paid $300 plus $100/day.

Meanwhile, I can see that back up bids are coming in on this property that 'no one wants'.

We can't list on MLS as the listing agent would need to cancel listing agreement with the bank the bank. It would seem that if she has a contingency that she receives commision if it sells within 3 months maybe there's an angle there. Don't want her to lose her commission, if there were somehow to list it with my own agent... That'd be favorable.

It seems unreasonable to think a newbie will never be at risk in some way when daring to be an investor, but you don't have to make all the mistakes possible, if you can learn from others' mistakes and make small ones of your own you probably will survive.

(Tried ads in Craigslist, Backpage, and contacting 'We buy houses' and 'sell fast' and sending multiple emails, and texts...lots of work...)

What a pack full of mistakes and lessons here.

Hope someone can benefit from this epic failure.

But, I'm still in the arena.

I may just survive this crash or maybe 🎥 the Justice League will save me.