All Forum Posts by: Tai DeSa

@Ehsan Rishat - I used a series of three letters, one sent per month.  I can't recall 100% on this transaction, although I think the seller contacted me upon receiving the second letter.

@Bryan S. This one we sold by owner in a private sale, avoiding any realty commissions.  We owned it less than three months.  We were lucky to get out of it the way we did.  As mentioned, we paid too much for it plus the market was shifting downward.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $40,000
Cash invested: $1
Sale price: $50,000

This was a wholesale deal. A person whose house was up for tax sale contacted me. I went under contract to buy the house for $40,000. I knew a flipper who was willing to buy it in cash plus pay a $10,000 assignment fee. The deal worked out.

How did you find this deal and how did you negotiate it?

I sent direct mail to people whose properties were on the tax sale list. The seller was willing to sell it for $40,000. He had fooled his bank. The seller's name was the same as his father's name. The father had taken out a loan with the bank and then deeded the house to his son. The father passed away. The son opted not to pay the bank. The bank was willing to release the lien.

How did you finance this deal?

I wholesaled it, so I never owned it.

What was the outcome?

Right after the closing, the Homeowners' Association property manager invoked the first right of refusal clause. Even though they had verbally agreed to permit the sale, they reneged and demanded $5,000. I helped negotiate a $3,000 settlement, which was paid by the title company.

Investment Info:

Single-family residence fix & flip investment in Saylorsburg.

Purchase price: $200,000
Cash invested: $215,000
Sale price: $225,000

This was a quick fix and flip. Ultimately, we paid too much for it. We didn't do much work, and we were lucky to get out of it with a slight profit.

How did you find this deal and how did you negotiate it?

We advertised in the Homeowners' Association newsletter. The owners contacted us. They were slightly behind on their payments, with a tiny bit of equity left.

How did you finance this deal?

One of my business partners took out a mortgage in his own name.

How did you add value to the deal?

We painted the house and added some new fixtures.

What was the outcome?

We sold for a small profit (less than $10,000).

Lessons learned? Challenges?

We paid too much for the house. We were lucky to sell it above what we paid for it.

Investment Info:

Single-family residence wholesale investment in Nesquehoning.

Purchase price: $27,500
Cash invested: $1
Sale price: $32,500

This was a wholesale deal. I put the property under contract to buy at $27,500, and then I found a landlord willing to pay a wholesale fee of $5,000.

How did you finance this deal?

I paid $1.00 as the earnest money deposit. The landlord who I wholesaled the deal to paid $5,000 as the assignment fee. Therefore, I was only out of pocket for the $1.00.

What was the outcome?

The landlord fixed up the house and rented it out.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $50,000
Cash invested: $1
Sale price: $58,500

I put an estate property under contract for $50,000. I collected a contract release fee of $8,500 so the cash investors (two flippers) could buy for $50,000. The flippers fixed it and sold it for $103,000.

How did you find this deal and how did you negotiate it?

The listing agent approached me after having trouble selling her listing for a higher price. It was an estate that simply wanted to sell the house quickly.

How did you finance this deal?

I did a wholesale transaction with a couple of cash investors I had done deals with in the past.

What was the outcome?

I collected an $8,500 wholesale fee. The flippers bought for $50,000, improved the property, and sold it for $103,000.

Investment Info:

Single-family residence fix & flip investment in East Stroudsburg.

Purchase price: $190,000
Cash invested: $10,000
Sale price: $304,900

This was a successful flip involving a partner who put up 100% of the money while I did 100% of the work. We split the profit 50-50. The house was newly built. The motivated sellers sold it for a low cash price, and we didn't have to do much work. I staged the home and tried to auction it. Unfortunately, the auction failed. Then I listed it with a great agent, who sold it for a great price even as the market was falling.

How did you find this deal and how did you negotiate it?

I sent direct mail to people facing foreclosure. We were able to buy this one from motivated sellers who wanted to walk away and avoid foreclosure.

How did you finance this deal?

A busy business owner agreed to invest 100% of the money if I did 100% of the work. We split the profit 50-50. It was a great partnership.

What was the outcome?

We tried to sell via an auction, yet that didn't elicit a big enough bid. It was in a gated community, which deterred some potential bidders. We then listed with an agent, who got us a great price.

Lessons learned? Challenges?

A gated community can be a deterrent to people who want to drive by to check out the neighborhood. An auction in a gated community can result in people not getting into the community due to overzealous guards at the gate.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $86,965
Cash invested: $1
Sale price: $167,829

This was my first Sheriff's Sale purchase. I made two big mistakes: 1) Without due diligence, I ended up spending $24,000 more on the renovation than budgeted, and 2) My asking price was too high and I chased the market down as the housing bubble burst. One thing that worked in my favor is that I had a cash investor who contributed 100% of the cash into the deal. We were lucky to get out of the deal with only a $1,700 loss.

How did you find this deal and how did you negotiate it?

I bought it at the Sheriff's Sale.

How did you finance this deal?

A busy business owner agreed to invest 100% of the money for the deal as long as I did 100% of the work to find it, manage the renovation, and sell it.

How did you add value to the deal?

We dramatically improved the home with a $64,000 renovation.

What was the outcome?

We sold it a year later for what we had into it. The total loss was $1,700. The housing bubble burst right after we bought the home, and we were lucky to sell it with only a minor loss.

Lessons learned? Challenges?

We budgeted $40,000 for the renovation but went $24,000 over budget when we discovered wood rot behind the walls. We did not perform our due diligence. We also priced the house too high (we started as a For Sale By Owner at $215,000) even though the housing bubble was bursting. We were overly optimistic on the eventual sale price and on the renovation costs.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $119,300
Cash invested: $15,000
Sale price: $164,697

This was my first Subject To transaction. I sent direct mail to people facing foreclosure. The seller agreed to let me take over mortgage payments, and I brought the mortgage current. The deed was transferred to my name. I invested $15,000 into renovations and sold it for a modest profit.

How did you find this deal and how did you negotiate it?

I sent direct mail to people facing foreclosure.

How did you finance this deal?

I took over the seller's mortgage payments. I paid money to make his mortgage current. He transferred the deed to me.

How did you add value to the deal?

I invested $15,000 into renovations. I made the house appealing.

What was the outcome?

I sold the house for a modest profit.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $77,000
Cash invested: $102,000
Sale price: $124,000

This was my very first deal. It was a great learning experience. I bought a 5-unit in inner city Philadelphia sight unseen at an auction. One of my tenants killed another one of my tenants shortly after I bought it. I renovated the building, rented it out fully, and eventually sold it by letting the buyer assume my mortgage.

How did you find this deal and how did you negotiate it?

I was an idiot with this one. I had $125,000 burning a hole in my pocket. I wanted to be an investor. I had a bad mentor, who was an auctioneer who told me to bid at his auction. I thought he would guide me well, and so I bid on a 5-unit apartment building in Philadelphia that had a 17% cap rate ON PAPER. I did no due diligence; I didn't see the building; I knew nothing of the area; I had no connections. I bought this on faith and emotion.

How did you finance this deal?

I put down 35% and took out what amounted to a high interest loan for the rest.

How did you add value to the deal?

I renovated the property. I put in great tenants. People in the neighborhood saw that I was making it better. I ended up selling it and recouping my money.

What was the outcome?

I bought it for $77,000, invested $35,000 in renovations, and sold it for $124,000. I learned so many valuable lessons.

Lessons learned? Challenges?

Don't buy properties sight unseen when you are a newbie! Don't buy 100 miles from where you live! Don't buy major fixer-uppers when you have no contractor connections and no construction experience!