Before this year I had an average turn around time of only 5 months.  So from the day I bought the place, all rehab, on the market, and closing was only 5 months.  This year however that number has bumped all the way up to 8 maybe even 9 months.  So on even a low end house that is an extra 3-5k in holding expenses.  Even worse than the cost of owning it is the stress it causes.  You are constantly wondering will this thing ever sell?  Will I have to lower the price?  Am I going to lose money?  This has also made me very scared of the market.

For the better part of the year most of my money has been tied up.  The money I did have I was just too scared to put it into play.  I had to keep my risks low and thus I have not purchased a property this year.  In the business I am in if you are not buying houses you are not making money. Simple as that.  In the area of investing I am in there is a saying.  You make money when you buy, you get paid when you sell.  That is absolutely 100% true.  So in essense you can argue I have not made a dime this year.

I finally put my first offer in on a house last week in probably 5 months.  It was a good feeling and while I thought it was a long shot I was excited and hopeful I would get the house.  I will give you guys some stats on it.  It is a bank owned property.  They were listed at 70k and it had only been on the market for 15 days.  The house is a wreck.  Someone went in and decided they didn’t like the floor plan and just demolished about half of the inside.  I have no idea what they were thinking I just have to go on they were on crack.  Not only did they do stupid stuff they did it in a shoddy manner.  Even if I wanted to use their remodeling I couldn’t as it is just idiotic.

Normally I can walk a property in 5-10 minutes and know exactly what my remodeling plan is and about how much it is going to take.  This property took me 40 minutes because I just couldn’t figure out what this jackass did to the place.  My plan is to bring it back to the original floor plan and it was very difficult figuring out how it was layed out.

I get home and come up with right about 20-23k to put this place back into the condition it should be.  That figure is with me not lifting a finger and subbing everything out.  At first I want to make a 40k offer but you have to fire in at a number that the bank will even consider countering.  If the property had been on the market for 6 months I would consider 40k a reasonable starting offer.  Since it is a fresh listing though I decided to go in at 47k with a goal of getting at 50kish.  I fire in at 47k with a 10k Earnest Money Deposit.  I also make my offers with no option period and no inspection period.  I want the bank to know I am serious, I have already inspected the property, and I won’t be backing out without losing 10k.  Does this help?  I don’t know but I would assume it does.

They fire back at 68k and then the next thing I know they have multiple offers.  I hate multiple offers.  People start bidding crazy amounts during multiple offers.  In fact I have even just backed out before during multiple offers as I rarely win them.  I have won a few though so I decide I will go ahead and fire in again.  Before the multiple offer subject came up I had it in my head I would pay a max of 55k if I had to.  I believe this place is worth 120k but I am running all my exit numbers on 100k to be super safe.  I don’t feel like wasting my time and not making any money as I have done on a couple of my last deals.  So with all these numbers in place I will walk with 15k in profit if it sells for 100k and I have an upside potential of about 20k.  So in theory I could walk with 35k which would be a home run deal in my opinion.

I will probably know tomorrow about this deal.  The deadline was today.

I hope I get it.