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Real Estate Flip Nets $40,000 & Everyone Wins!

by Chris in Rockford, Illinois   

Our first real "investor deal" was a comedy of errors--that worked! I called a Realtor friend and told her I wanted to get into "flips." She said, as a matter of fact, she knew of a distressed owner who was ready to commit financial suicide with an investor who was going to steal her house at 1:00pm. Could I come over by 11:00am to view the property.

We ended up offering $375,000 ($50,000 more than the investor). This allowed us to make $20,000 after repairs. The bank sent out an extremely conservative appraiser who came in with a value that allowed only $334,000 loan amount. Since we had NO money, we wrote up our contract for 100% financing. We went back to all involved and told them we would not be able to complete the deal as we didn't have any money to add to the bank's money.

We forgot about the deal, and everyone conspired to lower all their costs to work the deal with the homeowner to put down some money toward a new house, which would not have happened with the other investor. We ended up with $1,000 back at closing. We flipped the house for $433,000 eight weeks later, netting $40,000.

A win-win for everyone except the Realtor who kicked in all of her commission, and who was the one who put the whole deal together! Since we only want to do deals where everyone feels good, AND we know that "What goes around comes around," we gave the Realtor an option on some Arizona property that was worth $5,000 to us, but the start of what we hope will be a thrilling investing career for her! Sometimes ignorance is bliss!

 
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