A partnership can be worth thousands in the flipping business.
When real estate entrepreneur Lorraine Beato spoke on a panel at Think Realty’s 2016 event in Atlanta, GA, little did she know that the young gentleman wearing a red cardigan asking to apprentice with one of the panelists would turn out to be one of her first flipping mentees. Thurman Robinson took an affinity to Beato at the Think Realty event, and he has stayed in touch with her since. In summer 2018, Robinson wanted to be part of a renovation project and before he invested $25,000 into someone else’s project, he turned to his trusted advisor who he affectionately calls his “shark.”
“Lorraine has saved me from losing thousands of dollars,” Robinson said.
Determined to start on his real estate investing path, Robinson brought a potential deal to Beato. She reviewed the details and told him she didn’t feel the numbers lined up nor were necessary questions answered. Beato told Robinson she would help him acquire his own deal and she would mentor him through his first flip.
Beato found a wholesale deal where she felt the numbers made sense and it was the perfect project for a new investor. They made a full price offer to the wholesaler who then turned around and said they were going for highest and best. Being an astute investor and Realtor®, Beato told the wholesaler that they would stand at their offer. Two days later, when the highest buyer could not perform, the wholesaler called Beato back.
As with any real estate deal, hurdles often occur. A hard money lender pulled a bait and switch on terms 24 hours prior to closing, but Beato was not going to allow someone to take advantage of her mentee. She called her go-to lender and due to her relationships was able to get new terms just three hours later. She called the wholesaler, explained the situation and asked for a 24-hour extension. The wholesaler gave them 48 hours. Exactly 24 hours after the original close date and time, Robinson had closed on his first real estate transaction!
The second hurdle came when a timeline of five weeks turned into five months. Contractor delays led to finding new contractors and one hurdle led to another. However, even with the timeline delays, the overage on the budget, and the additional holding costs, they turned a huge profit! Although their holding time increased, the market worked in their favor and they sold the home $17,500 above their initial projected sales price.
Beato used her skills as both an investor and a seasoned Realtor® to stay on budget as best as possible. Her design skills came into play when they changed the layout of the home (they opened some walls and closed a doorway). In addition, her retail real estate skills got them multiple offers in less than two weeks and the happy buyer closed ahead of the closing date. Knowing what home buyers are looking for and providing a beautifully renovated home at an affordable price is key in any real estate market.
“This project is a prime example of a “Renovation Rockstar” because I took a young, new investor and successfully helped him flip his first home! Plus, we killed it on the ROI,” Beato said.
After their profit split, Robinson walked away with a 52 percent net return on his out-of-pocket investment in less than six months. Not bad for a newbie — or any investor!
“The next time you attend a Think Realty event, you never know who you are going to run into or what you can learn. Had Thurman not stood up in the front of that room and asked to intern, he may still be looking for his first project or sunk his $25k into someone else’s project and possibly not made any money,” Beato said.
For inspiring professional design ideas, fix-and-flip information, and more visit LorraineBeato.com.