In 2011, I bought my first foreclosure and decided to live in it when it was finished. A successful renovation gave me the confidence to jump into flipping.
I put my first property, a hud home, under contract at the end of 2012. We closed in Jan. of 2013. (The hud closing process takes FOREVER.) It was a huge success, as an investor walked in a week after closing and offered to buy. I made around 14k on that first flip.
Two months later, I closed on my second property. Incredibly, a neighbor walked over during the inspection before I had even closed, and made an offer. Apparently she was trying to buy the property at the same time as me, but the bank accepted my offer. I made nearly 10k on that property.
Fast forward to Dec. 2013, when I closed on my third property. Another hud home that had sold in 2007 for 183k, and I purchased it for 79k. I immediately put a for sale by owner sign out, hoping that my luck would continue.
But like all good things... they eventually come to an end.
Jan. 9th, I accepted an offer of 137k from buyers who are using FHA financing. To encourage them to buy the property, I offered to paint colors of their choosing. Mistake #1. Waiting for the appraisal, I am now in a holding pattern, because I refuse to paint the colors they are wanting until I know everything is going through. Who paints a dining room eggplant/black?
Just so happens, the inspector they chose was quite a bit more thorough than mine. My previous inspector quit the business, so I had to use a new one. Needless to say, his inspection was left wanting.
Also, I've basically turned into these guys contractor. Agreeing to allow them to pick out faucets, finishes, etc. Also, the contract we signed with all of their requests is full of vagueness, which had been clarified in conversation, but now they are coming back saying different things, interpreting the contract in a way that it benefits them more... ignoring the conversations that we had had.
Then there's the electrical contractor who was supposed to "clean up" the handyman wiring in the 1901 house who covered up open spliced wiring with insulation, which I then had to pay another contractor to come and clean up costing me another 800.00.
Now, the good news is, as long as the home appraises, I should clear about 26k on the property. But goodness, am I having to work hard for it.
Lessons learned so far.
1. Put EVERYTHING in writing.
2. If you are letting people pick out colors, limit the number of colors. (every room has a different color now)
3. If an electrical contractor is cheaper, theres normally a reason.
4. Every home inspector is different.
5. Did I mention, put everything in writing?!
Oh well, we will make it through this and live to flip another day.
Thanks to all the posters on bigger pockets and Josh and Brandon for the podcast. Learning so much... some the hard way.
