How does a $ 1000 asset become $ 110,000 in 5 months?
The time was 21:00 in the evening, Thursday, September 2nd.
Outside the noise windows of young guys getting ready to go out to a party.
And I'm home (because I'm not young anymore, and the kids are asleep, and I have no life), going through the duplex documents at 146 E Street in Cleveland Ohio, the closure of which is scheduled for tomorrow.
* Jump in time two weeks back *
I'm negotiating with the Ulsler who marketed this duplex to me.
Real Estate Knowledge Break - Wholesellers are a U.S. property wholesaler.
They use various marketing methods to get Off Market properties, their goal is to get sellers to sign a contract of sale with them on their property at a price lower than the market price.
They then "sell" the sales contract for a commission to the end buyer.
After lengthy negotiations (10 minutes under pressure, because as I said I am not young, and I am already tired by these hours) he tells me that he is not willing to go below $ 45,000.
Because each unit has 3 bedrooms which is cool, and since I know that after renovation I will likely sell the property around 110K, and since I, as mentioned, am not getting any younger, I tell him: “Come on soul. Let's move forward. "
In my heart I think to myself, what a beautiful plant you did not push him into a corner in negotiations, and you would miss the property and also the relationship.
Poor thing, he probably doesn't have much space left.
* Jump back to September 2 *
I open the HUD document which is the document that centralizes the numbers in the transaction, and shows in detail exactly how much the bread-hungry Ulsler is going to earn, and for exactly how much he managed to put the property he is marketing to me, on a contract with the seller.
Then, right there, we discover the difficult spectacle to watch, which my ego was not ready for.
1000 $.
1000 fucking dollars is the amount that the "poor" Ulsler signed with the seller on the sale of the property, which he "sells" to me for $ 45,000, on which he is going to earn a $ 44,000 commission.
By the way, I really have no idea what kind of trip the seller was in that he agreed to sell the property for $ 1000, and maybe there is some combination here between the seller and Ulsler that I am not aware of, but those were the facts.
Now, my first option was to listen to the inner voice that shouted at me “Soul haha wake up. You're a sucker. Do not let him earn so much ”and cancel the deal, or reopen negotiations.
The second option was to go back to focusing on my numbers, which until a second ago my ego woke up worked great for me, cursing the Ulsler a little in the heart, and moving on.
I chose the second option.
In December the property went up to market at 120K, two weeks later it went up on a full price contract.
Of course the appraiser also came along, told me “shit on your face” (which means like shit on your face) and gave appraisals of only 110k ..
Because why should something go smoothly for me ?? No reason.
But yesterday the closure and the money were in the account.
Total investment - 77K
Net from the sale - 100k
Total profit - 23k
Yield of 30% in 5 months.
Morality of Mind # 1
Karma rewards those who deal with their own, and does not open their eyes to the profits of others.
Morality of Mind # 2
It is possible that all parties will benefit from the deal.
The profit of one does not automatically come at the expense of the other.
(Except for the seller, who as mentioned appears to have been on a trip and thought he was a dolphin).
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