Difficulties, Uncertainty And Exit Strategies

How it started:

We tried to place an offer on a neglected property, but the agent told us another offer had already been accepted — we missed it.

Instead of walking away, we thought outside the box and submitted a backup offer at a lower price with the condition that if the first deal fell through, the seller would sell to us.

We didn’t really expect it to work.

But to our surprise, the agent called:

The first deal collapsed. The property was ours!

That was our first win.

The numbers:

Purchase price: $260,000

Estimated renovation and holding costs: $160,000 + 10% buffer = $176,000

Extra $50,000 reserve for unexpected surprises (property was in bad condition)

Total costs: $226,000

Even with the after-repair value, we stayed conservative:

Agents said it could sell for $600,000

We planned for $560,000

Projected deal:

Purchase at $260,000

Costs of $226,000

Sale at $560,000

Expected profit: $74,000

Then reality hit:

The contractor originally quoted $7,000 for the roof.

After discovering rotten wood, the price jumped to $12,000.

Then came COVID delays, supply chain issues, and…

The Ukraine war hit.

Material prices and fuel costs skyrocketed.

Our contractor even complained he couldn’t afford gas to get to the job!

The renovation dragged on for six months instead of the planned timeline.

Market challenges:

Once the work was finally finished, we listed the house…

But now interest rates had jumped, buyers were nervous, and the market froze.

We spent over six months trying to sell — far longer than the original plan of six months from purchase to sale.

Everyone told us to lower the price or just wait it out.

Many investors lost money at that time.

Our creative solution:

We found a buyer who loved the home but wanted to wait for market stability.

We offered him a “rent-to-own” option — he agreed!

He rented the home for a few months and then bought it at our full price:

$565,000.

The takeaway:

It was an amazing experience.

Thanks to creative thinking and conservative planning, we succeeded — both for us and for our investors.

Always be conservative with your numbers.

If you’re a passive investor: ask the right questions and never skip due diligence!