It’s been a while since I’ve posted about one of our flips, so I wanted to show you guys some pictures of one of our recent ones and share some of the lessons I’ve learned in the past two years.
I bought this flip back in March 2018 from a wholesaler. I was pretty excited about this property because it was much newer than you typically find in Utah/Ogden (2003). I offered full asking price and we agreed/went under contract a few days later. I used my private money lenders to fund this deal 100%. The wholesaler told me that in the original purchase contract, the seller had 30 days post-closing to vacate the property. 30 days after closing came and went the previous owner was still there, slowing removing his belongings/junk. This went on for about a week and we were getting really tired of it, so I contracted the wholesaler and he explained that I had no reason to worry because they had put an escrow holdback agreement in place for exactly this reason. I was pumped – I was going to get some money to compensate me for my extra holding costs…but wait, come to find out, the escrow agreement they had signed really didn’t have any teeth to it or clearly give me the right to collect money if the previous owner took longer than the 30 days. Lesson # 1 – if you buy a property from a wholesaler and the previous owner is allowed to live in the home for a bit after closing, then make sure there is an escrow holdback agreement in place that gives you the right to collect some money in case they don’t vacate. In my view, escrow holdback agreements help keep honest people honest. Anyway, about 10 days past his scheduled move out date, the previous owner finally vacated.
We began demo and a couple of the neighbors came over and were more than happy to tell us that this house was a major party house L We quickly ordered a meth test and it came back with really high levels (not meth lab high, but definitely a party house). The bill to remediate the meth was somewhere around $4,500 and would delay our rehab for about 2-3 weeks. 2 ½ weeks later the meth was gone and Weber County signed off on it so we could move forward with the rehab. Lesson # 2 – We’re going to test all of our houses for meth as soon as we get it under contract. If there is meth, then we can go back to the seller/wholesaler and work with them on getting a concession before we close. If there isn’t, I only spent $100 and now have peace of mind.
After that, the flip went relatively smooth and we had two competitive offers within a week of listing it. Lesson # 3 – build a solid group of private lenders that can fund deals quickly and without a lot of hassle. I think I found these lenders from our business Facebook page – if you share pictures/videos with your followers, you’ll definitely have someone you know that wants to jump into real estate without actually picking up a hammer. This is flip # 10 for us this year and we’re hoping to double that number next year.
