I purchased my first flip property this past March, and every possible thing that could have went wrong, has managed to show its face throughout this problem. This particular property had the potential to bring in close to a $90k profit for my company. With that being said, now it's looking like a potential lost of close to $10k if I sell it now. Most of these mistakes were my fault, but there were a handful that was not avoidable. For the first few weeks of this disaster, I was pointing the finger at everyone other than myself. I was throwing blame all over the place. Recently, I sat down with one of my closest friends and I was ranting, complaining, and bickering about all of this. Every problem I told him, his response was, "That was your fault, what are you going to do to fix it"? My the end of our conversation, I was furious and upset with him. That same night his words sunk in big time, and I apologized for being so upset with him the following day.
I took a vacation back to America with the intention of buy my first flip property. It ended up being about 33 days vacation. The property I picked was selling for $133k, I ended up getting it for $136k. I got a hard money loan totaling $100k, 10% interest, with 2 points upfront. I covered the rest out of my own pocket. Due to complications with the paperwork, we were not able to close before I had to fly back to Dubai. I ended up having to go to the U.S. Embassy in Abu Dhabi and sign the documents there which cost me $50 per notary (about $900).
My biggest mistake throughout this entire process, was having my lovely sister managing this project on my behalf. I estimated the renovations to cost close to $19k, so to be on the safe side, I sent her $25k to cover any unforeseen expenses that might have popped up. Needless to say, everything was a disaster. My money was entirely mismanaged. The roof on the house needed to be replaced. I instructed her that the roof should be the number one priority. She allowed a contractor to steal $5k of the money with a bogus contract. He told her that he would give her a big discount if she paid cash. Turns out, this individual was fired from his company the day prior. He had my sister sign a bogus contract and then stole the money my sister gave him for the down payment.
The second issue, was the realtor. I went against my gut feeling and allowed my wife to talk me into hiring her friend as our realtor. This woman had her real estate license, has her own business as a real estate consultant / property manager. What's the worst that could happen?......EVERYTHING! She listed the house wrong, never even went to the property due to her not wanted to leave the comfort of her office, never put a "For Sale" sign up on the property, pictures were not updated on the MLS listing. My wife kept promising me that things would change and she would talk to her to due her job. With me being overly frustrated about everything going on, I lost all patience and fired her immediately; I do not regret my decision about that either.
So with all of that being said, I am out of money for my renovations, I am stuck paying $1000 a month to the hard money lenders, I cannot rent out the house because it has no counter tops, I cannot refinance due to the condition of the roof, and the relationship between my sister had I has been severely damaged primarily due to $8000 of the original $25k being unaccounted for, and I am stuck over here in Dubai.
Even though I feel as I have exhausted all of my options, I'm down, but I am not out of the fight. There is a way out of this mess, and I am eagerly pursuing a way of turning this around for the better. Selling the house is completely out of the question for me. I have to figure out a way of getting this house completed and on the market as a rental property. It has the potential of being marketed for $1500 a month for rent. I need to get this house refinanced with a $25k cash out (totaling $125k) so that I can use that money as a down payment for my next property.
I'm not so much upset due to losing $10k, I am upset on the means that it was lost. My flesh and blood, my big sister, my role model when I was a child actually had the capacity to steal this money from me. I can bounce back from this. If anything, I feel like I just bought $10k worth of knowledge which will only make me that much stronger of an investor. Nothing along these lines will never happen again in my years to come.
If you are still reading at this point, thank you for hearing out my story and I pray that nothing along these lines never happens in your business ventures. Stay blessed!
Warm Regards,
Willie B. Webb
