got an offer accepted on an investment property and are now waiting for it to close. What should you expect? Smooth sailing or a nightmare? Is there an in-between?
So let's goes over the possible outcomes, it’s good to talk to others who have been there/done that. And even though none of it will insulate you from reality, here are a few ways things can go.
Best case scenario is, of course, that it goes swimmingly, making you think you’ve got a handle on this investor/flipper thing. Here's an example of a couple who had great success with their first purchase. No major issues, making them confident that investing in real estate is much less complicated than they originally thought. But the couple had also done their homework. They took the time to speak to other flippers, studied how to evaluate the value of a property, took notes of what damages or potential expense to look for, and learned how to evaluate the housing market. They also got wisdom from others on the importance of how to communicate with their clients. If you do all these things, “Then you stand a much better chance of having a really smooth, profitable first purchase. Of course, a lot needs to be learned on the job, and you’re bound to make mistakes here and there, but this ‘pre-deal education’ will go a long way.”
The key in the beginning, anyway, is to be involved in EVERY aspect of the investment — from knowing the numbers to knowing the area to analyzing the repair costs. Don’t leave any of this in the hands of others. “Successful closes depend, in large part, on your commitment to, become the expert in your market,
Many investors buy too high; get their rehab estimates wrong; miss something in the walk-through that’s going to cost them later. “Profit on your first deal is by no means a guarantee. However, your first close can make you money. So let’s say you’ve done your homework and educated yourself on the process, how to price and value things, and you’re ready to go. Crunch time. Your accepted offer is accompanied in your mind by a certain profit figure when all is said and done. First home buying experience was exciting, fun and stressful all at the same time. What was supposed to be an 8 month flip with a six-figure return turned out to be a 1.5-year flip and with a mediocre return. “We learned very quickly that it’s good to trust people, but you must VERIFY that their information is true. We are talking permit and contractor delays, hiring the wrong people and finding more repairs than originally anticipated. Hopefully there is enough equity in the deal to cover any such short comings.
Takeaways are the following:
- Learn by doing, not just reading about it. Know that ANYTHING can happen.
- Profit is never guaranteed (at least not what you may have originally had in mind).
- Gather a solid, trustworthy team around you.
- Make sure the information the homeowner is giving you is true. Don’t take their word for it, even if they had good intentions.
Have a heart. You are buying what was once someone’s home. Treat them and the deal with care and compassion. Closing a profitable deal was only half the excitement. The other half is coming through for your seller. To them, it may be much more than a transaction.
Thank you for visiting my blog, I hope you enjoy it and learned a thing or two.
