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The first deal we ever bought to flip was in Charlestown, IN.
Against all odds, we bought the house.
We were a new company.
We didn’t really know what we were doing yet (still don’t).
We were making offers on the multiple listing service (MLS), going to see houses every day.
We didn’t find anything that we were able to purchase during January.
It was beginning to get a little frustrating.
All that work with no reward.
AN UNLIKELY FIND
Our search criteria was limited (at the time) to finding foreclosed houses (HUD, FHA), houses on the multiple listing service and properties from Craigslist.
Our “ideal” house was a 3 bedroom / 2 bath that we could get into (that needed rehabbed, obviously) for under 50K, that we could sell for 100K or more.
When we were searching for properties online, we weren’t even looking for houses with purchase prices above $70,000.
So, for that first month, we never even knew about the house that ended up being our first deal (I’ll call it the “monster” house).
We had driven past it; seen it and not given it a second look.
Finally, one day, one of the two of us did a search for “as-is” on the MLS.
This house had that keyword, so we finally found it.
THE MONSTER HOUSE
This particular house was a monster.
3,800 square feet.
It had sat on the MLS for months before we made an offer.
It was listed for $150,000.
6 bedrooms (3 non-conforming).
3 full bathrooms.
What the listing didn’t say was it was super-rough.
Mold. Mildew. (The type of house you walk into and want to wear a mask for protection).
It needed a full gut rehab.
We walked in and got excited.
This was exactly what we were looking for.
We knew though, we couldn’t give what they were asking.
Not even close.
It would need (based on our initial estimates, almost 100K of rehab alone).
So, based on the after-repaired-value (based on similar sold houses in the area), we did the calculations and came up with our number.
We offered $53,193 (almost $100,000 less than the asking price).
The seller countered at $85,000.
When that happened, we knew we were going to get the property.
We still were pretty far off, so we countered at $68,500.
After a few tense hours, the seller responded that they would accept that offer, and we moved forward to closing.
We closed on the 19th of February.
As I write this on July 31, 2017, we are headed to closing on the other end.
We have sold the property to a buyer and will close no later than the 10th of August.
Then, on to our next…
In a future blog post, we’ll cover some of the gory details; getting ready for rehab, choosing contractors, the sheer amount of rehab, etc.
Lots of stories….