After a year of making offers, I finally got my first house under contract earlier this month. There was a vacant property on my street and several months back, I'd made contact with the management company and told them I'd be interested in buying the property whenever the owner was ready to sell. When the time came, they reached out to me and several other investors. When they told me how much they wanted, I felt they were a little optimistic with their asking price and their estimated rehab budget, but after a few rounds of negotiating over text, we agreed on a price that was $15k under their original asking.
The numbers were:
Purchase price: 80k
seller repair estimate: 35k
ARV: 180k to 195k
My hard money lender would only lend up to 65% of the ARV and they chose to go with a conservative number at $175k, so based the 65% rule I had to be all in at $117, so that gave me a budget of $37k.
In a perfect world I would have had a GC give me a quote before I made an offer, but in this case, I was only able to get quotes after the property was under contract. My first bid came in at $70k, so for the next GC, I knocked a few repair items off the list. Their number came in at $50k - but I never would have hit the $180k ARV with the scope of work. Finally, the last GC came in and he walked the property and offered to manage the project for me and would teach my how to be my own GC, so I would learn how to rehab using his subs. This was great, but the only problem was his quote would get back to me 2 days before closing. I needed to make a decision as closing was just over a week out, and I was going to be out of town for the rest of the week. I was worried I'd have to pull out and risk losing my EMD.
Since I lived in the neighborhood, I didn't want this house to be a rental. I wanted to do a retail rehab to keep values up. I reached out to local rehabber who had done several retail flips in the neighborhood. I knew he could close fast, so I offered it to him first. He was very interested and within a few hours, and several texts, emails and phone calls, the deal was done. I didn't even raise the price when I offered it to him, but he cut me a finders fee (which I got in a signed contract) anyway.
So I'm a little bummed I didn't get to do my first flip, but I'm happy that I was able to control the deal and make sure the house will eventually go to a homeowner instead of a renter. On a positive note, I made some new contacts and learned a few things along the way that I can apply to future deals. Hopefully it wont be too long before I get another deal under contract and many more after.
