How I Missed Out on a $300,000 Deal
Sometimes in the house flipping business things don't always work out as planned. Just today I missed out on a deal that could have potentially been worth $300,000. To say I was bummed would have been a big understatement.
The property was a single family home in Fairhaven, Massachusetts. It was a decent size colonial style house, right around 1600 square feet. After renovation I estimated the after repair value to have been right around $300,000.
This past week I was ready to act on this property, but the only issue was that for the first 15 days only owner occupied buyers could place an offer on the house. This happens from time to time in the New England area. In situations like this you just have to wait it out, because they won't look at your offer until the 15 days is up.
Yet as mentioned above, things do not always go as planned when you are flipping houses for a living.
10PM on a Sunday Night
Last night my "too big for my pocket" Droid phone started beeping. At the time I was relaxing with my daughter and watching television. It was a Sunday and I had successfully "turned off" the business side of my mind which believe me takes some effort.
I debated for a moment not even checking my phone. If it was an issue with one of my ongoing rehabs or deals I figured it could wait until the morning. I sat there for a few seconds just staring at my Droid.
After a minute my curiosity got the best of me and I opened the message. It was a text from my real estate broker which read something along the lines of:
Mike, the Fairhaven property is available to investors. I just sent you an email. Call me if you want - I'll be up until midnight.
"How is this possible?" I remember thinking to myself. We were only 4 or 5 days into that 15 day waiting period. Either way I suppose the folks selling the home can do as they please. This is just one of the many things that is out of our control as real estate investors.
Yet it was 10PM on a Sunday and quite honestly I was ready to hit the sheets. Plus these days I don't spend as much time with my daughter as I used to. Since the kids started growing up I have realized just how important just 30 minutes in front of the TV with them on a Sunday night really is.
I decided to not respond and instead get the ball rolling on this deal in the AM.
Real Estate Never Sleeps
So today I wake up bright and early and begin preparing my offer, proof of funds etc. for my real estate broker. Just as I'm finishing up, my oversize Droid starts beeping again. It was my real estate broker - this time I decided to pick up.
I could tell the news was not good based solely upon the tone of his voice. The 1600 square foot single family home in Fairhaven Massachusetts, with the $300,000 after repair value, had already been pulled. It was off the market and I had missed my chance.
I could not believe it. How could this of happened so quickly?
Apparently I was not the only investor watching this property. Odds are many other investors in my area were eyeballing this deal just like me. The difference was that someone out there was willing to take immediate action at 10PM on a Sunday night. They succeeded in beating me to the deal.
First off I owe a big thank you to my real estate broker. Talk about a guy who is on top of his game!
Secondly, I learned the hard way that in this business nothing beats immediate action. The best deals are sometimes only available for a matter of hours.
My broker and I spent some time today talking this deal over. What we decided to do was not sulk over losing this property, but instead put together a plan so that next time a situation like this presents itself we are ready to rock n' roll and place an offer.
Together we decided that in the future, when we encounter these 15 days wait periods, I will have proof of funds, and an offer, prepared for him in advance. Therefore if something like this happens again at 10PM on a Sunday night we will be ready to take immediate action.
How to Deal with Deals that Go Bad
We talk a lot about developing a healthy house flipping mindset here on the blog. To be successful in the house flipping business, you need to have a positive mental attitude and be able to deal with adversity in a healthy manner.
However, a positive attitude can only get you so far.
What I have learned by flipping houses for a living is that nothing beats a sure-fire plan of action, especially when a deal falls apart - like what happened to me today.
Being able to deal with deals that go bad is an integral component of my house flipping business. Flipping houses is not a cake walk, and a key to long-term success is being able to bounce back and save deals that seem to be crumbling in your hands.
The ability to handle deals that fall apart in a productive fashion is so important, that my team and I have developed a video for House Flipping School members specifically on this very topic.
What's my goal with this video?
To help you rebound and save deals that are on the verge of collapse.
I hope you enjoy and find this video helpful.
Big thanks to all the new House Flipping School members that have joined up since we launched the new website last Tuesday. It is great to have you on-board.
We filmed more 'members only' videos this past week and will have them posted on the membership side of House Flipping School by Wednesday.
Take care and see you at the top,