My First Deal as a Real Estate Investor

My first deal

When it comes to finding deals it can be a long, confusing, and stressful process if you are new to investing in Real estate.

In December 2016, after about a year of looking for the right deal a tough decision was presenting itself to me. A realtor from Pennsylvania came to us with a deal on a single family flip in one of the Class A neighborhoods in Pennsylvania. This deal was a foreclosure, an all cash deal that we could get our hands on for 175k and with about 20k into it we can see an ARV somewhere in the low 300s. On paper, this deal looked great, with one issue. Houses weren't selling in the area at the rate I would have liked to see, and were spending a lot of time on market, stagnant. Knowing this made it a tough decision, but we needed to act fast. As we only had about a day to decide whether or not we are going to put an offer in. Being such a large all cash investment there were 3 people involved. Myself, my father, and my mentor/partner Ken(Founder of Uniq Real Estate). At first we decided we weren't going to pursue this deal. But after thinking about it for a while i thought to myself it was about time I got myself into a deal. I realized that no deal is going to be perfect, and waiting any longer, letting good deals pass me by wasn't going to help my real estate investing career. That night we decided to move forward with the deal and put in our offer the next morning, we were accepted by the bank and after about a month we were in the house ready to get working.

We had put together a list of things that we would need to do in order to get the house ready for sale. The house didn't need a whole lot of work, just a refresher. We knew it needed a whole new paint job, new appliances, new light fixtures, carpet cleaning, polishing of the floors, and a lot of cleaning up. While we had a pretty good grip on what needed to be done, we didn't know who was going to do it. We know two contractors in Pennsylvania who could do the job, both came and as expected gave us prices that were way over what we were looking to pay. After a few long weeks of deciding who is going to do the job, we decided that it would be best to contract this ourselves. To be honest this decision should have been made quicker, we wasted a lot of time frustrated on who would be able to get this done. With our knowledge of construction and connections in the field we were able to put together a team to get the job done. We first hired the painter to get In there and paint the whole interior of the house, this took a little over a week. Once that was done we were there almost every weekend with a carpenter or two to work on what needed to be done. We installed all of the fixtures ourselves and were constantly cleaning up. When we were done with the bulk of the work we hired a professional cleaning company to come in and clean the house top to bottom, which in the end really showed it's value on the finished product.

We listed the house with the same realtor who presented it to us. After only about a week on the market we had a few offers on the house, this was very surprising to all of us. Without hesitation we took the best looking offer at 320k.
With only about a week left to close we got an email stating that something went wrong with the buyers loan and they will not be able to close in time. This was pretty disappointing, but that's just real estate. After a few days of waiting to see what was going on and getting very uninformed answers we decided to put the house back on the market. With hopes of the original buyer fixing the loan issue and coming back to purchase, we waited. A few weeks go by and were back in action, the buyers were able to work out a new loan with the bank. We extended the contract and are set to close no later than July 19. Although this deal has yet to close, I have learned a lot going through this process and will use this knowledge on my future deals.

Things I took away from my first flip:

• Do extensive due diligence on the neighborhood you will potentially buy in

• Know what work needs to be done and who will do it before closing, not after.

• Do not underestimate the cost of renovation, go through everything and make sure there is a safety net in your budget.