Do your due diligence!
This property is in Pfafftown NC which is essentially just a suburb of Winston-Salem.
I bought it from a wholesaler I had a relationship with who texted me saying they were testing the Winston market and asked if I wanted to take a look at this first. I had never been too impressed with their deals but this one seemed to have a lot more potential than they realized so I jumped on it.
I did all my due diligence (or so I had thought) prior to closing, had an accurate scope of work and a contractor lined up. At the last minute that contractor bailed on me and I ended up sitting on it for two weeks as I lined up a new one. Luckily I connected with someone local who I had known for years and hired his crew to take on the project.
Rehab went smooth and painless, no surprises as it was a big cosmetic overhaul. However on the back end of selling the property we ran into some issues that I had overlooked as well as some issues that my inspector’s overlooked. I didn’t dive deep into some structural flags on my initial inspection report and my pest inspector didn’t find termite tunnels but my first buyer’s did. First buyer backed out which was fine because I kept the DD fee and put it towards the repairs, then went under contract with a second buyer! After a few more kinks to work out with that one we finally made it to the closing table. Plot twist: the morning of closing the buyer threatened to sue due to a very questionable claim of “misrepresentation” of the water utilities. The decision came down to either standing my ground because I knew I didn’t misrepresent and extending the timeline by another potential 6-8 weeks which is time and money, or cough up a few grand and swallow my pride to get it done. I went with the latter.
Ultimately it was another great lessoned learned to not only do all of your due diligence but do it thoroughly and with as much certainty as possible. If I had done so in the beginning I may have been able to close with my first buyer and get things done quicker and with more profit.
The Numbers:
Purchase: $179,000
Rehab: $50,000
Carrying/Selling Costs: $59,000
List Price: $339,000
Sold: $339,000
Lessons Learned:
Do your due diligence and do it well! Don’t overlook ANYTHING structural or systems-wise. A few hundred bucks for an inspection or assessment from a qualified professional is worth every penny for the peace of mind.
Have a system in place and a plan of action for your rehab with your contractor. I had a scope of work and loose plan of action ready to hand over to the second contractor who ended up taking the job. This helped us both because he saw that I already knew what I wanted to have done and didn’t waste time getting started since the plan was clear.
Time is money. We all know this. We’ve all heard this. It’s never been untrue. I took a hit to my ego by giving up a few grand to the buyer’s request but by doing so I got the deal done, recouped my working capital and still took home a great profit.
Before
After
