In this video, I have something of a treat today. But I don’t know whether to be happy or to be slightly frustrated. It’s the story of a deal that could have been very profitable for us.
We are on Irwin Street, which is in Old Fourth Ward, a super-super-sizzling-hot neighborhood in Atlanta. Sizzling hot— remember that.
If you want to invest in Atlanta, it’s probably not the best time to invest in Old Fourth Ward because it’s too far gone (in terms of pricing).
This was definitely one hot property.
This house we’re talking about is in a great location, with a very nice view of the downtown skyline, as you can see in the video. We are standing right across the street from this house, which we could have purchased last April for $242,000.
We walked it and liked it, and we calculated that our overall acquisitions plus renovation price would have been right around $350,000. So our acquisition would have been $242,000, and we would have spent a little more than $75,000 to renovate it.
As you can see in the video, it’s a beautiful home and in pretty much the same shape as when we were interested in purchasing it earlier. But we ran into a little bit of a snag.
Here’s why we decided to pass.
We decided not to do the deal because it would have cost us right around $3,000 a month to hold the property, and there were tenants living in the home. I’m not sure if they’re still there. I don’t think they are because the owner decided to sell it; hence, my frustration about this deal.
The agreement was that, if we had purchased the property, the tenants would have to remain until the end of their lease, which is perfectly fine and perfectly acceptable. However, we weren’t interested in carrying that loan for the seven or eight months until the tenants decided to leave. So that’s why we decided not to do the deal.
And here’s why we should not have decided to pass.
In hindsight, though, we should have figured out a way to do the deal and go find some creative financing to make that happen, because this just sold in December for $450,000. And we lost out on this deal big-time. We’re looking at $100,000 in profit that just flew straight out the door.
So when it comes to real estate deals, absolutely be persistent not only with your sellers and real estate agents and everybody else you’re working with but also—and most importantly—your finance people.
Because, yes, you can find good deals. Yes, you can have cooperative sellers, and yes, everything can work just the way you wanted.
But—like this deal—if you don’t have your financing in place and if you don’t have people who are willing to be flexible enough to work with you, then you can lose out on $100,000.
This teaches an important lesson.
So the lesson of the day is this: creative financing is very, very important to the overall success of any deal you’re looking at. Be sure you’re prepared.