All Forum Posts by: Tai DeSa

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $76,000
Cash invested: $5,000
Sale price: $108,000

This was not a good deal, and we were lucky to get out of it due to the hard work and grace of our private lender. We paid $76,000 for this house via a short sale. We thought the ARV would be $129,900. We were wrong. We hired low-skill people to work on the house, and we had to hire others to undo the poor workmanship. We borrowed $100,000 from a private lender. Since we finally sold for $108,000, there wasn't any money left for us to make anything.

What made you interested in investing in this type of deal?

I thought the ARV was $129,900. It was more like $110,000.

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

An agent I worked with brought it to me. It was his short sale listing. I made an offer (in retrospect, too much) for $76,000.

How did you finance this deal?

We borrowed $100,000 from a private lender. Technically, I had very little of my own money in the deal.

What was the outcome?

Our private lender graciously took far less interest on his principal. I lost the few thousand dollars I put into the deal, plus my time. It took almost two years to sell the house. I'm glad our lender didn't lose money, and he would still lend to me today if I came to him with a better deal. It's better to go through a bad deal with good partners than a good deal with bad partners. The lender is a good person for what he did for me.

Lessons learned? Challenges?

I failed to calculate the ARV correctly. I offered too much. I worked with a partner who insisted upon hiring unlicensed, poor quality workers who caused more problems. We had to pay contractors to undo their work. Also, I should have planned for and budgeted to convert the 5-bedroom, 1-bathroom house into a 4-bedroom, 2-bathroom house. And, I should have made the kitchen much larger. Better yet, I shouldn't have bought the house in the first place.

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $69,000
Cash invested: $1
Sale price: $95,000

My agent showed me this listed 3-unit property in need of work. I made an offer for $69,000. Unbeknownst to me, the seller owed about $60,000 to his mortgage lender and was facing imminent foreclosure. I found a landlord who wanted a fixer-upper multi-unit. He agreed to pay me $95,000. I bought the property days before a Sheriff's auction, and I sold it an hour later.

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

Even though I was a licensed agent, I was working with a great agent who knew the listing agent. My agent brought me the deal and helped negotiate a quick closing.

How did you add value to the deal?

I helped the seller avoid foreclosure and put about $5,000 in his pocket. I sold it to a landlord looking for a fixer-upper multi-unit.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $70,000
Cash invested: $1
Sale price: $84,000

I saw this bank-owned house listed on the MLS for $59,900. I knew the ARV was $150,000+. Since there were multiple offers, I offered $70,000. I didn't have the money at the time to pay $70,000. I found a cash investor who wanted a house to fix up for his parents to live in. He agreed to pay $84,000. He paid me $84,000, and I used $70,000 of it to buy it. He signed the paperwork an hour later to become the owner. I bought it with none of my own money.

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

It was on the MLS. The asking price is largely irrelevant. It was worth far more than the $59,900 list price. Even though I didn't have the money, I offered $70,000 for it. I found a cash investor who was willing to pay me $84,000. He and I both knew the After Repair Value was around $150,000+.

How did you finance this deal?

I used the investor's money to buy the property and then sell it to him an hour later.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $39,900
Cash invested: $40,000
Sale price: $57,765

I saw this house on the MLS the morning that it was listed, and I knew it was a good deal at the asking price due to the desirable school district. I made a full price offer that day, and it was accepted. I bought it and found a landlord who was looking for a fixer-upper in that school district. He bought it 23 days later from me. He renovated it and rented it, and he told me it appraised for $103,000.

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

I check the MLS daily. I saw this on a Saturday morning the day it was listed. I knew instantly it was a good deal at the asking price. The seller was a lady who had lived there for 63 years. I made a full price offer, which was accepted that day. I sold it 23 days later to a landlord.

How did you add value to the deal?

I bought it for $39,900, which was the full asking price for the lady selling it after 63 years. I sold it for $57,765 to a landlord looking to spend around $15,000 in renovations. The landlord rented it and refinanced it. His bank appraised it for $103,000. With a 75% LTV, the landlord pulled out all his cash. This house rents for around $895 a month, which makes it a rare yet affordable unit in an award winning school district.

Investment Info:

Single-family residence fix & flip investment in Allentown.

Purchase price: $45,000
Cash invested: $1
Sale price: $53,000

I saw the house listed on the MLS originally for $95,000. It was lowered to $60,000. I viewed the property and made an offer for $45,000, which was accepted. Before buying the property, I showed the house to an agent and his flipper client. The flipper agreed to buy it from me for $53,000. I owned the property for about an hour. It was a quick little deal. The flipper sold the property later that year for $83,000.

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

I saw it on the MLS. I made an offer for $45,000, and the seller accepted it.

How did you finance this deal?

I had the cash and owned the house for about an hour.

How did you add value to the deal?

I bought it for $45,000 from someone who had lived there and who had paid $23,000 for the house when they bought it. I sold it an hour later to a flipper for $53,000. The flipper fixed it up and sold it later that year for $83,000.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $128,000
Cash invested: $1
Sale price: $201,000

This was a short sale. The house had been purchased as a newly built home for $299,900 in 2006. I negotiated a short sale purchase price of $128,000. I borrowed $160,000 from a busy business owner. I purchased the property with the borrowed money, and then I spent $15,000 of that money on the renovations. I hired a home stager for $1,000. I paid our Realtor 7% commission, telling her to offer 4% to the buyer agent. We had multiple offers, and we accepted an offer above our asking price.

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

Since I was negotiating hundreds of short sales, the sellers and their agent came to me to ask for help.

How did you finance this deal?

I borrowed $160,000 from a busy business owner. I paid him back the $160,000 plus $10,000 in interest only five months later.

How did you add value to the deal?

I got the remaining debt forgiven for the sellers, and they did not owe any taxes on the forgiven debt. I purchased the house from them, improved it, paid the agents generously, and increased the values in the neighborhood.

What was the outcome?

I made money in five months by spending no money of my own.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $128,000
Cash invested: $1
Sale price: $201,000

This was a short sale. The house had been purchased as a newly built home for $299,900 in 2006. I negotiated a short sale purchase price of $128,000. I borrowed $160,000 from a busy business owner. I purchased the property with the borrowed money, and then I spent $15,000 of that money on the renovations. I waited 91 days before putting the house back on the market, so as to stay compliant with the FHA Anti-Flipping rule since I sensed we could attract FHA buyers. I hired a home stager for $1,000. I paid our Realtor 7% commission, telling her to offer 4% to the buyer agent. Indeed, the ultimate buyer was an FHA borrower who offered above the asking price. All told, I paid the cash investor $170,000 ($160,000 + $10,000 interest to him). I invested none of my own money. I spent only $15,000 on upgrades.

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

Since I was negotiating hundreds of short sales, the sellers and their agent came to me to ask for help.

How did you finance this deal?

I borrowed $160,000 from a busy business owner. I paid him back the $160,000 plus $10,000 in interest only five months later.

How did you add value to the deal?

I got the remaining debt forgiven for the sellers, and they did not owe any taxes on the forgiven debt. I purchased the house from them, improved it, paid the agents generously, and increased the values in the neighborhood.

What was the outcome?

I made money in five months by spending no money of my own.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $75,000
Cash invested: $1
Sale price: $93,000

This was a fixer-upper short sale listed at $125,000. The seller had purchased it for $142,500 three years earlier. I put in an offer for $75,000, which the seller accepted. The short sale was approved. After it was approved, but before I bought it, I told a Realtor and his flipper client about it. The flipper agreed to buy it from me for $93,000 cash. I purchased the house for $75,000 and sold it an hour later for $93,000. The flipper sold it a year later for $195,000.

What made you interested in investing in this type of deal?

Short sales can be great sources for deals if the investor is patient.

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

I found it on the MLS and made a low, cash offer.

What was the outcome?

I bought it for $75,000 and sold it for $93,000 the same day. I owned the house for about an hour.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $122,000
Cash invested: $21,000

We bought this one as a long-term rental in a desirable location. After going under contract yet prior to the closing, we marketed it for rent. We found the perfect tenant the day before we bought the house. We spent $1,500 on renovating the house.

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

We found it on the MLS the day it was listed for sale. We saw it that day. We check the MLS daily for deals. We moved quickly. There were two other offers. What made the seller choose our offer is that we waived inspections and called for a closing in 17 days.

How did you finance this deal?

Keller Mortgage, which offers no points or origination fees. It is for Keller Williams agents, their clients, and the buyers of Keller Williams listings.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $49,820
Cash invested: $150,000

I purchased this property at an auction and overpaid for it. I didn't perform a home inspection and ended up spending way more on renovating it than I anticipated. One problem with 100+ year old properties is that many major systems (plumbing, heating, windows, roof, electrical, etc.) need complete replacement. I lived in one unit and rented the other unit. I no longer live there yet still own it. Today it is a cash cow, producing $600 a month in free cash flow.