All Forum Posts by: Steven Mitchell

So we recently tried selling a house.  The day before closing, the buyers backed out.  No reason was stated.

We only got a quarter of their earnest money.

I was under the impression the earnest money exists to protect the sellers in these situations.  IE sorry the deal didnt go through, heres a little something to help defray your additional holding costs. 

What are the exact rules here? I obviously dont understand what earnest money is.  

Good advice here.  I use propelio myself.  

ARV is one of those crucial skills you will develop with time as you gain experience in the area. We have been doing it a year and are much better at it now than we were. Though there is still a long way to go. The thing about ARV there is not a right answer, there is just a more correct answer. Youll have someone willing to pay 180k, then the appraiser says its worth 170k, then the comps say its 190k. Lots of room to fudge. This is why there is the 75% rule of thumb to rehabs. It gives you alot of room to get the ARV and the rehab wrong and still pay the bills.

Congrats @Marcus Jackson!  Connet with me if youd like, I run a small rehab outfit in town.  We are on our tenth.  Hopefully I can help you avoid some of the major pitfalls we did when just starting.  

@Engelo Rumora thanks for the insight. We will continue to try and look for a lender though. We dont really care what the appraisal comes back at or their LTV. We just like to attach debt to our properties for the tax benefits which materializes all the way up to around a 50% down payment. Without it, the 7% cash on cash return becomes 5.6% very quickly.

@Engelo Rumora

@Engelo Rumora        Yes we know.  We are buying cash and then taking out mortgages afterwards.  Thanks for the response!

Hello,

We are hoping to start doing business with Ohio Cash flow, but we cannot find a local lender.  We did find one bank to call us back, but their terms of 5% 12 years fixed dont work for us.  

Who do you guys use?

Will need to provide references and be intimately familiar with a pro forma.  If the agent is a landlord themself, its a plus.  

What are you guys paying in closing costs to buy these things?  We have been looking at them for awhile.  About to pull the trigger.  

@Nathan Cron

Yes we realize we didnt do the due diligence and lost.  You win.  We were new.  Telling me here right now in front of everyone that we should have vetted your deal more intelligently isnt making your point..

We are saying you dont add value. We are saying you misrepresent yourselves. You dont give investment advice. Your predictions arent rooted in reality or experience or have any predictive value. You sold us on the idea that you were industry experts, you do this all the time, and our money was safe with you. You even say in your first post how you want to talk to people about their investing. You imply you arent just taking half your listings from the MLS. Yes, we realize now we cant really work with a wholesaler like that. We took our lumps. Telling us this, again, isnt making your point.

We had three bids between 17-22k for the foundation.  Im not sure why you think we wouldnt after holding the property for six months and trying to decide the best exit strategy.  I think you sound angry.  For comparison, your bid was 8k.  I think you can see how taking 9-14k out of a deal could kill it.  

Your ARV was based on the neighborhood to the north across the lake. For those of you tuning in at home, we bought this house before we knew how to do our own CMA, lol. Yes, we were stupid.

You are the only show in town who believed in that ARV. Trust me my friend, we wanted to believe as well. If your ARV was the true market ARV we wouldnt have had to sell it for so much cheaper. It would have been snatched up immediately. It wouldnt have been laughed at by the money lenders who do this every day. It wouldnt have been passed up by every rehabber in san antonio. They wouldnt have left in disgust once they did some digging and saw the foundation. It is well known that the largest bottleneck in san antonio is sourcing these things cheaply. If your ARV was correct I wouldnt have held the property for over half a year searching for a buyer.

When you offered to take it back at a 10k discount, were you still believing your ARV and rehab estimate?  If so we are confused on the discount.  We gave you the chance to make things right so we could do another deal.  We werent angry, we just assumed you had messed up.  We just wanted to do another deal.  You wanted the money you made from us more.  We understand.  

The small amount of due diligence we were educated enough to do, we were rushed through by your rep.  We had to close right there, right now.  Please do not pretend this is not how you operate.  I sincerely doubt you are fooling any rehabber here who has worked with a decent sized shop.

My PM just reminded me another property she saw with you.  Mid showing, another wholesaler showed up and kicked her and your agent off the property.  That was our first sign that maybe you guys werent as legit as you claimed.  

Oh, I was just reminded out of the 100ish deals we looked at through you, we only had one that hadnt been shopped to us by another wholesaler that week, or not off the MLS. We do remember one house on Summit that was actually legit. Good work. Do more of those.

I am not sure what seller disclosure stuff you are talking about, but the buyers were all made aware of the foundation issue while they were on site. You are welcome to go knock on the door today and ask them.  Are you trying to discredit me here?  Everyone knows, as I mention it in almost every post from this past year, that we are new rehabbers.  That we arent licensed agents.  That we are a small group of doctors expanding into other businesses.  

Please stop playing the victim here. You obviously know this business much better than we do. We are warning people that you are not looking out for their best interests as you continually advertise and mention here. You are churning your houses and moving on without adding value to the investors, except perhaps by accident. The REI meetings here are filled with people you have burned.