Who’s inspired by all those fabulous real estate shows? You know the ones, where the realtors just seem to keep winning all the time. The situation works in their favor most of the time. I was inspired two years ago. I wanted to be like those confident men and women I saw on TV. I wanted to be a winner; I wanted to take a risk and reap the gains. I assumed a since of false confidence, basically. I’ll highlight my failed plan.
Choosing an Up-and-Coming Neighborhood
My budget was quite low, and I went in it with a family member. We split the costs. Neither of us are experienced home buyers. We picked what I thought to be an up and coming part of town, in the Midwest. The main highly desirable, more expensive neighborhood was experiencing very good property purchases with little turnover. Since those parts of town were out of my budget, I figured it would be a good idea to buy slightly outside of the city limits. The neighborhood was older, and a little more driving distance to the city center. I found a cute, quaint two bedroom bungalow in one of these neighborhoods. The price was right, and when I think back I realize I tricked myself to think this was a good buy when in reality the red flags were there. The neighborhood was not in demand. In my opinion, an already popular neighborhood slightly out of your budget is a better move if you want max profit and a quicker sale.
Making the Home Look like a Palace
This was my first try at a fix and flip. I put my heart into that little home. I projected my vision of beauty and design unto the home, and needed to realize I am not the one going to be living there. I needed to enhance the vintage touches already there, and update what’s needed. I could have pumped that large part of my budget into a better home choice. I mistakenly thought that if I designed the home uniquely and try really hard, a buyer would fall in love and just “must have” that little bungalow, and willing to pay my sale price. In the future I’m going to look at the home from a potential buyer’s eyes.
My Way or the Highway
Oh boy, how I wish I could go back and kick myself in the head. I had two serious buyers in the first eight months. Since I chose a not-too-popular neighborhood (which I convinced myself would be popular in the future), I had buyers who wanted to price haggle at unreasonable levels. My second buyer wanted to give me a tiny down payment, and didn’t have the credit for a mortgage. I realize my quality of buyers were due to the neighborhood, and possibly the home itself. I think I should of just sold it to the first buyer who haggled me. I should not have been so inflexible. The first buyer’s price of choice would not have been so bad if I did not get wrapped up in the process of home design and frivolity.
After nearly a year of letting the home sit, I knew I had to do something, yet did not want to lose ownership of the property or give it up. My family member partner also did not want to abandon it. He came up with a bright idea..renting! Renting is not very popular in that particular state, so I had not even thought about such a possibility. We made the necessary legal preparations, and put up rental advertisements. I found a great tenant in just two months. After my taxes and fees, not to mention the whole goose chase itself, I will have to rent it out for about ten more years to make my money back. When this tenant moves, I am considering offering a reduced rent upon conditions that the home remain for sale.
So there you have it. Had I not had a decent time renting the place, I would be very angry with the situation. I know eventually this home will sale once I jump back into that process. Don’t see a home through rosy eyes, take your time (this is not a race), think of your potential buyer market, and really focus on location.