You learn just as much—sometimes even more—from a failed deal as from a successful one. So today, we bring you the story of “one that got away.” Unfortunate, but an interesting story nonetheless, which I tell in Episode 23 of my video series “Real Estate Deal Talk.”

Story time!

The property is at 636 East Avenue in Old Fourth Ward in Atlanta. Looking at the video, you can see what a fantastic location this is, with the Omni, a lovely townhome community the city of Atlanta itself as a backdrop. Beautiful.

This house is a brilliant, brilliant home. Unfortunately, we lost this deal.  Here is what happened.  

We acquired it for $220,000.  We had a budget of $250,000 to build a three-floor, 2,750-square-foot modern home in Old Fourth Ward.  Now there are three things at play.  

The city took a crazy amount of time in getting its permit, which was unfortunate, and we just had to roll with that.  As a result, the first position lender, our construction and acquisition lender, got a little nervous. I don’t blame them. But this was their first new construction deal that they had ever funded in Atlanta and they are based out of the East Coast.  So our lending relationship was rookie mistake number one.

Rookie mistake number two: not taking into account the amount of time it would take the city of Atlanta to issue permits.  To their credit, the people at the city have been great recovering from that slowdown a little bit, but they still have some of those challenges, and we should have accounted for that time frame a little bit more.  

Third, we had some folks on our team that had expeditors of the city.  Whenever you have people who say that they have people, you better check the people and the people they say they have.  That is really important.

Overall, we would have made out like a bandit on this one. So $220,000 acquisition, $250,000 new construction, not including the cost of carry. We could have probably sold when we finished between $675,000 and $700,000.  

Instead we ended up selling it to a builder because our acquisition and construction lender was not cooperating and gave us 30 days to sell the project.  So we did, and we barely made anything. We may have made like $500 or something, something just completely ridiculous.

So that is the story of how we lost this deal.  Absolutely crazy.  I would have loved to have lived here.  Now they are probably going to sell this puppy for $750,000.  Just my luck.  

You can view the video here:

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  • Abhi Golhar

    Abhi Golhar is a real estate investor, entrepreneur, 3x nationally syndicated radio show host on the Wall Street Business Radio Network, and media figure, whose experience encompasses print, podcasting, radio, and television appearances.

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