So as I wrote in post 5, I will talk today about two deals I made, one better and one less good.
# Entrepreneur of the Week Gal Schmuckler # Post 5
Let's start with the less good of course:
This is a Jacksonville Florida deal.
We purchased a 4 bedroom property and one bathroom.
The property owner was highly motivated to sell. It started at $ 65,000. The value of the property in the market was in the region of 80,000 according to calculations we made. We thought the property would require a small renovation.
After long negotiations we closed on 51,500.
On paper everything looks great.
We estimated a $ 10,000 renovation we will rent the property at 1200 to Saskashu 8 then do a refinance and get the money back.
The problem was that we did not evaluate the renovation correctly.
And when you want to work with Saskin 8 you have to take into account that there are many criteria that need to be met.
We went through 3 reviews that took us a long time. We exchanged additional things each time we were asked. We fell for a new supervisor who did our deaths.
In addition the property was problematic.
First of all when there are 4 rooms then one should expect a large family. And a large family needs 2 toilets.
This caused the families we wanted and wanted us to not come hand in hand. And we do not compromise on tenants.
Eventually the property was rented for $ 1000 and it took us two months and $ 15,000 more than we had planned.
So what did I learn from this ??
Do not jump straight at any opportunity you have, especially when it's a property which you are buying.
When you get to the last line, do a thorough check to know that you can avoid most of the bumps that come your way.
Always leave a margin for error when renovating.
The most important thing is to always stay humble and understand that there is still plenty to learn.
Good deal I made:
This is a deal we recently closed and entailed a long journey and giving with a seller who disappeared and returned.
I have told before about this deal but I think there is a lot to learn from it so I will describe it again.
We called 3 months ago to a nice girl who wanted to sell a duplex. She asked for 150,000.
A price that has already suited us.
I estimated the ARV (After repair value) of the duplex at 160,000. (I always give solid estimates and prefer to make a mistake) She also said that she has 3 more duplexes on the same street.
I of course told her we would be happy to move forward with all the duplexes, but we would have to lower the price to 120,000 per duplex. 480,000 for all 4.
After a journey and giving and a good relationship with her, she agreed to 480,000 for all the duplexes.
After I sent the contract, she called and said she thought about it a lot, and even though she has another business that wants to focus on it, and she does not really have time to manage the assets, she decided to keep the duplexes and not move forward with us because it makes her money every month.
.
Despite the disappointment, I did not press and said I would always be happy to be in touch and advise her on anything needed and I am always here if she wants to move forward. I tried a few more times to contact but I saw that she was not interested and after a month I gave up. I signed up to talk to her in half a year.
After 3 months she called and said she wanted to move on with us, even though she had higher offers.
We put her on a contract and after the inspection we were lowered to 400,000. She was very happy and thanked us for sparing her this headache of tenant management.
It was a win-win for all parties.
We are going to save the assets and make a refinance at least according to LTV (loan to value) 640,000 at 75 percent in my estimation.
You can of course sell it at a wholesale and earn over 100,000.
Despite this in order to achieve financial freedom, I will always prefer to get less but earn more over time.
Lander brought us 90 percent of the hard money loan which means we put in about $ 40 initially. (Plus closing expenses).
We raised the rents from $ 3200 to $ 6000.
After 3 months a refinance was made. We will get our money back, plus $ 80 in my estimation and will continue to generate $ 3200 in cash flow per month.
The return on such a thing is an infinite plus, since we have already returned our money and still continue to put money into the account.
If done right, there is no end to it. It takes a lot of work, perseverance and skill, but if done right you can accumulate more and more assets and achieve financial freedom.
What did I learn from this deal?
1. Constantly do a follow-up. After a month I stopped calling and luckily she got back to me.
2. A follow-up in our business is a recipe for 90 percent of transactions. One should always maintain a good relationship with the seller and make him understand that we are always here to help.
3. Know that there are always ways out. If we were not interested in a deal we could always sell it.
4. Always ask sellers whether they are interested in selling or not whether they have additional assets. (You’d be surprised to find out how many sellers own more properties, especially lands they don’t need and didn’t believe anyone would want to buy).
5. Be consistent and systematic and eventually the deals will come.
In the picture - the cute duplexes we closed.
Hope you enjoyed and see you in my last post :)
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