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3 Lessons I Learned by Saying NO to a Flip Deal

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I wish I could say that every transaction you see in real estate will be your transaction and will bring you a lot of profits in a little time and at very little cost. How does it work on TV? Well, as many of us have experienced, that is not the reality.

Last week we analyzed short sale opportunities Correct and flip And I decided to leave the deal. After experiencing it, I thought it would be a great opportunity to use it as a learning opportunity for others! So go here: the story from start to finish with all real numbers of transactions.

Three valuable lessons learned by saying no to Fix & Flip Deal

Lesson 1: Always network.

I don’t have to go into all the different ways you can find deals in this business. However, one of the best ways is to get the transaction to you (rather than having to find it). The best deals are the off-market deals you see at first glance. The only way to look at it is to build relationships with the network. This means that you are always in front of the main characters in your network.

My husband and I live in a small town in New Jersey and have many opportunities to repair or turn over our homes. Recently, I happened to call one of my business contacts in the town, an accountant. I don’t know why, but accountants always seem to know everyone in town. These are the best experts to build your network. Anyway, let’s get back to my story. I called the town’s business representative / accountant to discuss another property that the owner thought he knew. After discussing the property, we spent some time catching up with each other. I was sharing what I was doing, and we are always looking for deals to fix and flip.

The next day, the accountant called me while his realtor’s friend / client was in his office. He handed the phone to his real estate agent’s client, and he told me about the short sale opportunity he just received at his office. He told me that if we wanted to go see it, we would be the first one before they listed it in MLS. I said, “Of course!” He entered the accommodation two days later.

Related: Search escaped: Top 8 Reasons I Lost in Real Estate Transactions

Remember to be in front of the network. That way, people can keep you in mind when the opportunity comes.

Lesson 2: Get as much information as you can before walking through the property.

I love doing transaction research and fact-finding. I don’t know where it comes from my personality. I’m not an overly analytical person, but I love doing property research. We have access to MLS, so my first job is to access MLS and check public records as soon as I’m interested in a transaction.

Public records of properties are very useful for many reasons. It clearly provides the current owner, when it was last sold and the amount sold, annual taxes and more. I think public records are most helpful in ascertaining the square foot of a house. I’ve come across a list of MLSs posting inaccurate square feet many times, and I’m always grateful for the public records to confirm this. We are also grateful for the “MLS history information” in the public records.

The important thing is to prepare as much as possible before going to see the accommodation. That way, if you like properties and transactions, you can make an offer right away.

We planned to walk the property and immediately did some fact-finding. When I said “us,” I and my two-year-old boy were walking around the property. On that day, childcare failed and I had no choice but to take my two-year-old child. It’s not ideal, but things need to work. Don’t be discouraged if you have children and you have to take them with you to your appointment. Realtors tend to be very kind and unjudgmental. Bring plenty of hand sanitizers in case your child touches something they shouldn’t have!

The details of the transaction are as follows:

The property has 3 bedrooms of 1,612 square feet and 1.5 baths. It is a single-family house (detached house) in a middle-class town with a good school system. As soon as I drove home, I realized that there was no driveway. This is a big problem for some families, but it’s pretty common in the old little towns where this house is located.

We walked home and it was clear that it required a lot of work. It was helpful for us two to walk around the property, so we traded two sets of highlights. I took notes throughout and quoted a repair.

During the walkthrough, we asked realtors as much information as possible about their property, what banks think they would take, and so on. The current owner owes about $ 270,000 to the property. She said she thought the bank wanted somewhere between about $ 90,000 and $ 100,000.

When we got home, we thought we might have a lot in our hands! But before I was too excited, I wanted to estimate the cost. By doing so, we were able to know exactly how comfortable we could offer, given a profit target of at least $ 30,000.

We are using software called HouseFlippingSpreadsheet.com It’s very helpful because I don’t miss anything! The breakdown of the repair quote is as follows.

Repair quote

Screenshot 2015-12-11 at12.13.35 PM

The above repair quote totaled $ 54,627. Added 10% contingency factor. We also calculated $ 19,621 as fixed costs (purchase costs, retention costs, sales costs).

Related: How to know it’s time to walk away from the deal of an apartment building

Therefore, we will invest $ 79,711 in assets during repairs, contingencies, and fixed costs.


Lesson 3: Always check the comp.

One of the last discussions with the agent was to get a sense of her market and comp. We know this town very well because we live here, but we also wanted to know her thoughts on Comp. She told us that the repaired property would sell for about $ 225,000. Based on this number, the transaction could be a home run. This is what I mean:

Screenshot 2015-12-11 at12.13.53 PM

From these numbers, a $ 90,000 offer to the bank will work. But I wanted to do my own comp analysis. I can’t believe anyone’s words! Therefore, some analysis has shown that the best comps in the last 6 months sold for $ 180,000 instead of $ 225,000.
Therefore, after reviewing this analysis, there was no way to be content with offering $ 90,000 to homeowners / banks. Therefore, we decided to offer $ 65,000.

Screenshot 2015-12-11 at 12.14.03 PM

This was a short sale, so the realtor offered a $ 65,000 offer to homeowners. Homeowners thought this was too low and banks didn’t accept it. At that point, we had a choice: either increase our offer or leave. We decided to leave. Over the years, we have learned to be more conservative. It’s better to wait a long time than to do something that doesn’t work.


This deal didn’t close, but there was a lot of learning in the process. If you choose to look at it that way, there is always learning in every deal!

I would love to hear from those fixes and flippers out there. What was your biggest lesson about deals you didn’t get?

Thank you for always reading and a happy investment!

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