So…after about 4 months of mentoring….listening to me (Bernadette) drone on about the website, marketing, branding and social media and listening to Peg (JEM Property Group) on deal structuring, writing contracts and more…I just got this blog post! I can’t tell you how proud of Mike and Jacqui I am for actually listening to us, taking it in and then, above all, taking action! This is WAY BEYOND COOL!
We finally have some exciting news! We have an offer accepted for our first rehab deal and will be closing by the end of the month. I have to say, we were starting to get discouraged. We had been marketing with door hangers, direct mail, driving for dollars and attending as many networking meetings as our free time would allow. But so far, no deal. Weeks turned in to months and we just felt like nothing was going to happen. Then one day we suddenly had a house and we are overwhelmed (in a good way) with the amount of work to do.
How did we get the deal? Mike and I spent a lot of time working on our website with the help of Thrivehive and wanted to make sure that if someone did come across our webpage it would be easy to navigate and easy to get in touch with us. We have received leads through our website about potential deals before but this is the first lead where we were like “Wow! We NEED this.” (*note from Bernadette, the tracking that Thrivehive provides is awesome, and they build the website using your ideas, so glad they listened on this one and their website – www.FitzProperty.com looks awesome!)
A seller was calling local investors to quickly sell his home. When we returned the call the seller stated he had accepted another offer with a national rehabbing company. Mike asked “Did you sign anything??” (He didn’t!) We told him we would view the property that night and get him an offer by 8am the next morning. So we grabbed our flashlight and ladder and snuck around in the dark peeking through every window and door. We were able to see the heating system, water and electricity through the basement windows. The upstairs was UGLY which is perfect for us. We went to bed confident and excited that we could get this house. This was exactly what we were looking for.
The next morning at 7:30am Mike gets a call from the seller who says he is sorry but he is only accepting the first offer. WHAT!? Even though we hadn’t even been inside the property we decided to take action. We made an offer during that phone call…. rejected. We made an offer over text message…. rejected. We tried to call again… ignored. Finally Mike decided he was going to email the seller an official offer with a copy of our check to purchase. A few hours later we received a call from the seller’s attorney. After a conversation between our attorney and the seller’s attorney we had a signed and accepted offer. Talk about a roller coaster of highs and lows. Peg was very helpful giving tips on how to pursue this deal and then walking us through the financing process. We may not have been able to seal this deal without her!
Now that we have an accepted offer how are we going to pay for this? They say the money will come when you have a great deal. True and false. The money comes with a price.
What we learned so far:
1. The quote “It takes money to make money.” is true. With this deal we had no issues with finding lenders, the problem is they can come with a big cost. We are looking at putting out a minimum of $35k with the private money and bank options we have considered so far. Do your research and be prepared to go all in, if you don’t believe in your investment who will?
2. Set up your business legally. The week we got the deal under contract we had to scramble to get our LLC registered. We had no idea that the majority of lenders only loan when you have a business.
3. Get all your ducks in a row. Be prepared and have your key group of people readily available. Lawyers, contractors, plumbers, electricians, real estate brokers, lenders. Mike and I needed some help here. Thank you to our mentor, Peg, of JEM Property Group for being available 24/7!
4. Be prepared to make a very detailed list of what you plan on doing with the property. Exit strategy, marketing plans, comps, rehab plans. You will need to present this to potential lenders and investors. It is also just good to have a business plan for your own reference.
We plan on having 2 open houses (one during construction and one at completion) for Boston AREIA members and Fitz Property followers. We look forward to seeing everyone and answering questions and hearing your advice. In the meantime we are continuing to market and look for future rehab deals. Keep reading the blog in to hear about our progress.
Also please check out www.fitzproperty.com where we will be posting pictures of our recent major remodel of an apartment in one of our rental properties.