School of Hard Knocks

[Gary M.]

I had this fantasy that when I did my first deal I would become a paying member of BP and then amaze all with my tale of success. Alas my tale of success will have to wait and in the spirit of honesty and reality I present my tale of hubris and bungling.

I'll start with the moral of the story which is do your due diligence. I found a FSBO triplex which has been vacant for a couple of years. I brought the property to the attention of a local investor who has been a great help to me as I learn the ropes. He looked at the tri. and told me that if I got it under contract he was certain he had a buyer for it. I had no reason to not believe him, he's a seasoned investor, he did his own estimates of the repairs needed, he has been doing this for a while and has sold multiple properties to the buyer in question. What could go wrong? Well, the buyer said "no". After that I decided I would estimate repairs. So I walked through the house and imagined the worst case scenario for repairs and I was so far from 70% it wasn't forgivable. If I estimated for best case scenario I ended up at 100%!!! I have contacted quite a few investors and nobody wants to touch it. If I had run the numbers when I was supposed to I wouldn't be in this situation. I don't blame my investor friend, he does feel like crap though. I've done my studying into REI, I know better, I should have done the work myself.

The worst part is that the seller is very upset.

Fellow newbies, learn from my failure. There are no short cuts.

Humbly yours,
Gary