Near-deals don't pay the bills

[Matthew Allen]

My wife and I completed our first flip in San Antonio at the end of last year. We got a great education and got paid for it. To start the year we're giving Google Adwords a go to develop a system for developing leads (I have a good & flexible job, so this is a good fit for me). In 3 weeks I've received 8 leads. Most all of them feel like near-deals to me...to make them work by my figures I'd be cutting them razor thin, but I've got nothing to compare against. I'd appreciate some thoughts on a few of the scenarios. What would you do? What would you offer for flip, or for a rental?

1) ARV: $230k Rehab: $20k Seller is asking $180k

2) ARV: $175k Rehab: $5k (plus unknown cost to repair slab foundation on 16 year old house) Seller owes $116k plus 3 months missed payments/fees. Currently vacant, but rents for $1250/month.

3) ARV: $105k Rehab: $35-40k (old, bug infestation, wood rot from a longtime bath leak) Inherited House. Offered $30k and seller said they'd been offered $50k

I appreciate any input!

[Rick Pozos]

Near-deals dont pay the bills AND Bad deals will put you in bankruptcy or at least cause lots of financial issues for you. Dont do the near deals. There are always issues that turn them into bad deals. The deals you mentioned above are not good at all. If you could sub-to #2, I would rehab then sell. That is the way to make that one work. Definitely not a buy and hold.

What most people dont realize is that this is not a get rich quick thing. It takes time to build up your marketing which brings in the deals. Your negotiating skills take time to develop also. Truly there are not many people who can do some marketing and make an extra 20 or 30k in a year while keeping their regular full time job.

This is really another full time job. If you go at it part time, your results will be part time job results. I tell all new people that if you put in an hour per day and 5 days per week that you should be able to do your first deal in about 6 months to a year. Your next deal will usually take about half as long as the first. Keep going and dont get frustrated. It takes time to build a business.