When there's too many people fishing in the same hole, it's time to reel up the bait and find a new spot.
I've been slamming absentee home owners for several years now. Keeping the list current is a ton of work and the expense has started to get out of control. I started to think about what the more successful investors I know are doing. I also did some research online, listened to some podcasts and decided it was time to switch gears and start working some new niches. My fist goal was to build a relationship with an agent. I haven't purchased a property out of the MLS since 2009! I also put together some new lists and hired a VA to handle list building, cleaning and research. Quite frankly, this year hasn't been all that stellar, but suddenly the phone is ringing again and I'm putting houses into escrow so it looks like I might have an nice end of the year push.
My September deal came from an agent. Since I haven't purchased a property with another agent involved in 6 years, I thought it was worthy of making the cut for my D.O.T.M. The house is a 2/1, built about 100 years ago, but just over 1,000 sq/ft and located in a community that is commuter friendly and freeway close.
I went to see the house and was surprised how clean it was. The layout is a bit funky, but by closing off a pantry and opening a door into that closed up cabinet from the den to make a closet out of it, it will create quite a nice and functional 3 bedroom floor plan. At first, I thought about keeping the property as a rental. Market rent is about $1,300 and I'm paying $135,000 so the numbers wouldn't be that bad. I submitted the property to the local hard money lender under their rental program and contacted my contractor.
Unfortunately, my lender called the next day and said he probably wouldn't be able to fund the deal. His business is crazy busy and they are getting about 50 applications a month and not able to fill all of them. He said finding a lender for a 100 year old house most likely wouldn't happen. The house is worth about $195K so there is still plenty of room in there to turn it. I called up one of my old friends who used to be a retail flipper for many years. I've just started doing loans with him and his terms are quite accommodating. I sent him the address and he said he'd fund the deal 100%! He then said I should clean it and put it back on the market As-Is. That is actually one of my favorite strategies and has worked for me many times in the past. If you're going to spend $25,000 on rehab, why not spend nothing and just put it on the market for $20K less?
I haven't decided that is what I'll do, but most likely it will be my exit strategy on this deal. I have a few other bigger deals in the works so the quick payday on this will keep the machine oiled and allow me to focus on those other opportunities.
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