I LOSS 6K ON A WHOLETAIL Deal!
As some of you know I been making a name for my self in my Local Market in Charlotte, NC. I came across this deal that I thought I could do a wholetail, for those of you who dont know what a Wholetail is. It is basically a strategy where you close on the deal. Basically doing no major rehab and reselling it to a Traditional buyer. The first time I did it we made about 52k on that deal. We split it and it was a good day. Well I figured let me try it again this was a smoking deal. I had the locked up at 72k it was worth 150k. I am in a hot market so I figured I could sell for 99k. I lined up the money. My lenders lent 70k at 10% a month that gave a 700 a month payment and 3k in points I paid up front. Boom baby we closed on it and I was ready to make some money.
One of my lenders told me to price it conservatively and dont out price people. He said to price it at 89k or so. Of course I did not listen to the successful guy who as lending me money. lol I decided to list at 99k. The first week I had multiple offers at 80k through 82k. Of course I wish I would have taken that but we are entrepreneurs and we are risk takers. Anyway I figured I'll hold out to I will get 90k. That will make it worth my while. So weeks past and 1st payment was coming around. I said dont worry I will sell it this month. So after that 1st payment we decided to lower the price to attract more buyers. And we had many showings on the weekend. But time would just past and we will get no offers.
Then we finally got a offer where we will make money. But one problem it was a FHA LOAN. Well FHA loans requires you to have a seasoning issues meaning we must own property for at least 90 days. Also we can only make x amount of money with out doing any work. And home must past all inspections. I have nothing against HOA and think its a great program for the consumer. It just wasnt something I could get done But fortunately the realtor said before we lock it up and waste time let me send a friend out to the property to do a soft inspection. And it was some issues under the house. The house had mold under it. Just my luck so that offer went down the toilet. Well after about 3 months of payments. e finally got a hard money offer. I would have bent over backwards to make this offer work. Everybody made money except for me. I lost 6k on this deal and gained a few lessons.
The lessons I learned were there are different type of loans and some have seasoning issues. So going forward as a investor you may want to get a basic knowledge of each of them. Also dont be cheap & clean up the property to appeal to your MLS buyer. Dont be too greedy , make your money and get out. Those are just a few of the lessons I learned on this deal. Please be sure to watch the video above. I hope that helps you guys.
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