Home

Advertisement

Customize

Previous 20

Nov. 12th, 2009

Under Contract.... Time to regroup...

Well, while I was out of town for my Honeymoon -- I finally got a contract on the place. It's not the greatest, and the final numbers show me losing about $5,000 (Unless the buyers try to beat me up severely on the inspection report) -- but at this point I'm glad to get rid of this place. The deal should be closed before Christmas, so I'll be able to write the loss off of this year's taxes -- and most importanly I'll be able to get some of my money back out of the deal, pay everything off, and stop paying these insane interest payments every month.

Once this deal is closed, it will be time to re-evaluate the business, re-evaluate goals, and regroup for the future. This will be the first deal I've ever lost money on -- and as someone posted in a comment on my last blog --- I need to learn from this, and not let it deter me from future deals. It's not like Donald Trump has never been involved with a bad deal, or never lost money on a deal... Tomorrow is a new day, and lessons that cost you money are sometimes some of the most meaningful lessons to learn.

Cheers,

- Hakrjak

Oct. 15th, 2009

Fire Sale... Bad moon rising!

Well, since the "buyer" dissapeared on us -- I've had some tough decisions to make.  I've never lost money on a flip in the history of my company, but this might be the time when I have to break that perfect record.  It's either that -- or risk losing a lot more in the long run, depending on how much longer I end up having to hold this property.

In the past few weeks, I've been hoping that I can still eek out a profit on this one -- as I've been slowly and gradually dropping my price on average about once per month.  The carrying costs have slowly been eating into my savings as well during this time -- hemmoraghing about $1300 per month in carrying costs.  If this continues, I will be completely broke and borrowing on lines of credit to just keep the lights on in about 2-3 more months.

With this in mind, I've decided that it's foolish to let my pride cause me to risk bankruptcy over such a relatively small amount of money.  After hearing a story from a friend of mine yesterday about how one of his associates lost $60k on a real estate deal earlier this year -- My possibly losing $5k or $10k seems relatively small.  It seems especially small when you think about what my excellent credit is worth in the long run.  If I leave a blemish there -- it will take 7 years to recover, and my Real Estate company will essentially be out of business.  If I'm able to preserve my credit, even though I'll lose money in the short term -- I can build my business back up when the economy is doing a little better, and I can make a lot more than $5 or $10k.

So with this decided, I've gone ahead and dropped the price of the flip to under $100k -- at a $99.9k price point.  This is about $25k below where we started listing it back in June of 2009.  I feel strongly that being priced under $100k should bring out all the buyers, because there is absolutely nothing even close to this price range that is anywhere close to the quality we have provided.

Wish me luck folks...  As Alec Baldwin's great character says in the classic film Glengary Glenross, "It's Fuck or Walk"...

Oct. 8th, 2009

Deal falling through.....

Well, the Real Estate business can be a harsh Mistress.  Just when I thought we had a buyer and we were getting rid of the Quad house, it looks like she's going to let this deal go.  She originally agreed verbally to my counteroffer, but she told her Realtor she wants to look at 2 additional properties.  Her Realtor called us and said don't worry, these other houses are crap -- she'll be back to take yours and submit the agreement to your counter in writing by tomorrow.  We haven't heard anything since.  Just waiting and hoping, but I'm not counting on anything at this point.

Some tought decisions are going to have to be made if this house doesn't sell soon.  I'll need to borrow about $70k from somewhere just to consolidate all of my bills on this one, so that I can hold onto it as a rental for the forseeable future.  Trying not to think about that yet, but knowing it's a possibility.  My business might be put out of business for awhile after this one.

- Hakrjak

Oct. 7th, 2009

So the buyer came back......

So the buyer came back and we now have a verbal agreement for $104k as-is, down fro my ask of $105k...  This is good news for both of us, since I'm ready to move on to the next deal and I know she is not going to find anything else this nice in the price range.  So I'm waiting on the paperwork to make it final....

In the meantime I'm thinking about how to build my business stronger for the future.  It seems like if I would just have more cash on hand, I could really boost my success rate exponentially.   I need to be able to do multiple flips at once, and I need to be able to hold houses for extended periods of time when I need to.  One of the things that has cut into my profit margin so bad this last year has been that I finish a house, and then I'm desperate for money so I sell the house too soon for too little, and walk away with not enough profit!  That has got to change in the future.

Problem I'm seeing is -- there still are not any lenders willing to write easy loans to investors like me.  I may need to investigate another route.  Maybe do a public offering so I can get some investors together to pool their money for me to use.  Other option might be taking on a wealthy silent partner who would put up their money to buy the houses in exchange for 50% of the profits.  Something like that could be a real win-win situation.

The wheels are turning!

Cheers,

- Hakrjak

Oct. 6th, 2009

And that was a complete waste of my time!

House is now listed for $105k, down from $120k -- and the offer comes in at $95k w/ $500 towards closing costs.

Can you say SUCK IT LOSER??? haha... Sorry, but I am already willing to sell this at my cost and work for free the past 6 months -- Now you want me to pay you to buy the house?  No thanks...

I countered at full price, but the bidder apparenly flipped out on her agent and said no way will she pay over $95k.

Next!

Offer coming in this afternoon......

Cross your fingers for me that it's a good one... I can't afford to negotiate much on my asking price, so I'm hoping this is not some Jackass who see 150 days on market and thinks he can make a lowball bid.

- Hakrjak

Ok so I lied.....

I dropped the price to $105k on the 1st of October on the advice of some buddies in the investment club who said, "Just drop it to break even and dump it -- Get your money out and try again somewhere else!"

I've had showings about every other day since I dropped the price to $105k, but still no takers!  Going to leave it on the market until November 1st and then I'm considering putting a renter in on a 6 month lease so I can re-list it in the Spring time and try again.

The amount of stress I'm under right now is pretty unbelievable.  Financially we're barely hanging on, and I think my household budget is actually in the red by $200-300 per month while I'm still making payments on these lines of credit for this flip.  What looked to be a no-brainer when I bought the place (To go ahead and pay part cash, part lines of credit) is turning out to be a major pain in my ass.   I called several bankers last week asking if I could just take out a 1st mortgage on this house to consolidate my debts into 1 low payment loan -- and they all scoffed at me.  Even though I've got perfect credit, good income, and I technically own this house outright -- they will not loan me any money!!!

The credit situation in this country has never been worse than it is right now, from my standpoint.  If things don't loosen up soon -- I forsee lots of small businessmen like myself in the Real Estate business being put out of business.  The ridiculously regressive policies of Fannie Mae and Freddie Mac are not helping either.  Sounds like one of the reasons I can't get a loan is because of a new Fannie/Freddie lending rule that says, "Investors shall not be allowed to do cash-out refi's until they have owned a property for a period of 1 year!"... Are you F'ing kidding me???

Cheers,

- Hakrjak

Sep. 8th, 2009

Price Cut: Down to $109.9k....

I cut the price this week to $109.9k...  Down significantly from our original ask of $119.9k... My Realtor graciously offered to cut his commission in half on this one just so we can get it GONE, and I accepted his offer -- So we've had 2 showings since the price cut, and are now in "wait & see" mode.  At this price I'm making less than $10k on this deal, which -- if sold -- would be the smallest profit I've ever made on a flip.  At this point I'm willing to just sell at break even in order to get my investment out and move onto the next deal.  My next blog entry will not be until I have a contract!

Cheers,

- Hakrjak

Aug. 29th, 2009

Sinking feeling.....

Welp -- Had another great showing this week...  The buyers called down to my Realtor saying that they were qualified for $115k already (Our listing is $112.5k) -- and they having been looking at condos.  My flip is 100X better than any condo you'll find in town, and there are no HOA dues and low taxes, so it sounds like a slam dunk!  They viewed it on Friday, and I haven't heard any news yet.  Not feeling a great deal of confidence though.

Trying to keep from losing hope here...

I spent some free time this week putting together a video tour of the place, and got it posted in all of our Craigslist ads and elsewhere.  Doing anything I can do at this point to try to increase foot traffic.  I feel like we have been as aggressive on price as we can be.  We're already priced close to $15k less than previous sales we've had in the area.... and THEY say that things are picking up?  What gives!?!

- Hakrjak

Aug. 18th, 2009

Been on the market longer than I can remember......

At this point, the Quad house has been on the market now for what seems like FOREVER.  We've continued to get showings every week, but we're not getting any written offers or even verbal ones!  I've been aggressive about cutting the price, and now have it slashed so low I'll be lucky to even make $10k on the deal once it's closed, if it closes for what I'm asking.   Extremely dissapointing for a deal that originally priced out to provide $25k of pure profit when I purchased it!  I've had no negative feedback at all really, so I'm a little stunned.  Everybody who has been through the house has said they loved it, but they don't buy it. 

My life has become one big ball of stress now, waiting for this house to sell so we can get the cash I invested back out, pay back a mountain of debt, and eventually move onto the next deal.  I've also got a wedding to pay for in September, which this house's profits were originally supposed to easily pay for.  Now, it looks like the wedding expenses will be going on credit cards along with everything else until further notice.  In addition I've had some surprise legal fees that are also putting me deeply into debt.  In another month or so I'm going to have to make the hard decision to maybe take a 1st mortgage out on this property (Which, if you haven't read my blog in a long time -- I paid half cash for it, half on a line of credit) -- Just so I can pay back a lot of this debt and get a lower payment for the long haul.  I know that with my luck though, I'll do the 1st mortgage and then the house will sell 1 month later -- effectively stealing $5k in closing costs right out of my net profit bottom line!

Ahhh, I love the smell of Napalm in the morning....

Aug. 3rd, 2009

Pulling out all the stops......

Well, after no activity this week after dropping my price down to $112.5k -- I'm pulling out all the stops.  I actually drove to the nearby hippy town of Manitou, bought a sage smudging stick from a head shop -- and I smudged the fuck out of the flip house.  I smudged until the entire house was thick with smoke, and the place freaking wreaked.  If there is any validity to the theory that burning sage in a house might remove the evil spirits and bring you a quick sale -- We're going to soon find out!  I now smell like a dirty hippy from being in that house for so long! haha...  This just shows my level of desperation as I'm getting tired of carrying this house, and am wanting it GONE!

On another note, the line of credit I had been using to finance $40k of this house on failed to send me a bill this month, so I was late on a payment.  Of course the bank cranked my 5.9% promotional rate to 21.5% instantly!  I'm fighting with them now trying to get them to reverse this action, but they are refusing so far.  This is going to be a very expensive lesson (Aren't they always?) -- because my monthly payment on the $40k just went up from $930 a month to almost $1400 a month....  Can you say:  Son.... Of... A....  Bitch!!!!!! ???

Cheers,

- Hakrjak

Jul. 27th, 2009

2 months on the Market & No Contract / Formal Offers....

Well, it's been over 2 months on the market now.  All 3 other homes on this street we have sold within 2 months, so we're getting into uncharted waters here.  This is clearly the nicest property we've done on this street, which makes this even stranger.  A true excercise in grit and determination.  It's gut-check time once again, and the stress is mounting.  Will I get this property sold before winter time?  Will I end up having to sit on it through a long hard Colorado winter when houses don't really sell here?  The landscaping and yard is the #1 best feature on the property, so we definitely don't want it sitting under a foot of snow when people come to look at it....  More on this as it unfolds...

Cheers,

- Hakrjak

Jul. 16th, 2009

More waiting.....

We had a good showing this week -- A single lady who is apparently "in love" with the house....  To make things even better, she's pre-qualified to buy...  She wanted to bring her Mom by the house to get her opinion, so yesterday we had that showing -- and apparently Mom was very very positive on the place...  So why don't we have a contract yet?  Your guess is as good as mine.  It seems like some people definitely have trouble "pulling the trigger" at times.

- Hakrjak

Jul. 13th, 2009

No contract yet... Another showing planned for today -- 1st since price reduction!

Well, I reduced the ask on the flip to $115.9k from $119.9k, so hopefully that will stir up some business.  My Realtor has no idea why the house hasn't sold yet, saying that he's sold plenty of other houses -- and this one is priced right, and looks absolutely perfect.  In the past we've only needed 2-3 showings to find a buyer... Usually when they see it -- they take it!!!  But not this time, for some reason.... He sat an open house yesterday though and didn't get 1 single person to come in and check it out.  I'm starting to get a little discouraged and stressed out, per the usual around this time.  Maybe more so this time, because I have ever penny I had and am mortgaged to the hilt into this house -- since I was unable to secure a loan to purchase it... So I need it sold yesterday.  I think I'm going to go over today and mow the neighbors 3 foot high weeds.  I'm wondering if that isn't part of the reason the house isn't appealing to buyers.

- Hakrjak

Jul. 7th, 2009

Showings, Showings everything! But still no contract.....

Coming up on 30 days on market this Thursday, and we continue to get good activity on the house but no firm contracts yet.  We have a Realtor showing it today, to a qualified buyer no less -- So keep your fingers crossed for me that today could be my day! ;)

-Hakrjak

Jun. 30th, 2009

3 Showings, one weak, limp wristed offer

Well, we're almost to week 3 and I'm averaging about 1 showing a week, which isn't too bad.  I got a very weak, limp-wristed offer on Sunday from a first timer, who I don't believe is even serious.  They were trying to get me down about $7k from my ask... I told them I'm willing to help and work with them a little, but $7k was just way too much to ask for.  I'm sending out positive vibes and asking the universe to provide me with a buyer this week, so stay tuned.  All I need is 1 person to walk through and fall in love with the place.  We've done a quick comparitive analysis, and everything else in the $120k price range in town is a piece of crap.  I'm not kidding -- they are falling down, piles of junk in this price range... So it shouldn't be rocket science to get this sold in under 1 month!

- Hakrjak

Jun. 22nd, 2009

1 showing, no offers... Going into week 2....

And we wait.... And wait some more....  And hope.....  Once again my least favorite part of the Real Estate business!  You work so hard to make sure everything is perfect, and then you reach a point when you can't work anymore and you've got to turn it over to a qualified Realtor so he can go to work and get his part of the job done.  Feeling especially broke after completing this one since I had to buy it with cash & a line of credit, so a sale can't come soon enough.  Living life in the RED until we get a sale.  This is the time when you have to resist second guessing yourself.  Resist second guessing your sale price, the decisions you made on colors, qualities of product used, etc....  Because after you complete the transction and get the adrenaline rush that comes with it -- You'll be right back in the MLS, digging for the next property...  Going after that next big score...

Cheers,

- Hakrjak

Jun. 18th, 2009

1 week on the market and zero showings....

Ths is wierd -- Seriously wierd.... I've never had a property sit an entire week on teh market without a showing.  Something is going on in our local market - Maybe people are scared because rates have crept up so much recently, but I would think that would be all the more reason to lock in a house before they continue rising.

I put up some directional signs in the neighborhood yesterday and made sure my flyer box is full, and now I wait to hear something.  Hopefully this weekend will produce some activity, because it's going to be the first really nice weather weekend we've had this year -- So something has got to give!

Cheers,

- Hakrjak

Jun. 14th, 2009

Project complete -- Quad house is in the MLS!

I've been uber busy on some unrelated projects, but just wanted to provide a quick update that the Quad house was completed last week on Wednesday and went into the MLS on Thursday.  It's the prettiest house we've done yet on the street (We did 3 prior to this one), so I'm hopeful it will move quickly.  After pics are available on my sale site at http://www.coflipper.com

Cheers,

- Hakrjak

Jun. 3rd, 2009

Countertops in, Sod delivered, Landscaping almost complete.....

The punch list is being banged out this week!  Sod is delivered and currently sitting on 2 pallets in front of the house, and will be installed tomorrow if the crew can work outside, depending on lightning.  We've got a sink that needs to be moved over by our plumber because it doesn't line up under the light above, and it's too close to the wall....  And we've got some doors to finish painting, and get hung....  Carpet will be here on Friday, and hopefully we'll just need a couple days beyond Friday to tie up loose ends before Joe can get the house on the market and listed for sale!  Final pictures to come.

Cheers,

- Hakrjak

Previous 20

Advertisement

Customize