My First Deal: How I made over $17k in a few hours of work.

I thought it would be interesting to walk you through my first ever real estate investment deal. At this point you have enough information to start generating your own wholesale deals, so get crackin. (Or Hustlin if you are Herb Stevenson)

First, to explain my situation, i had a business partner who had a small line of credit secured by his personal home. So we did have cash available, but we did not want to use it if at all possible. (It cost my company $7k to get started, between marketing costs, LLC/legal costs, etc, and that was already paid for by his line of credit)

I was/am a licensed realtor, and I was always digging up deals in the MLS for other investors prior to this, so i had that advantage. I had also trained another real estate agent in my office to work with me. What i had done was find a hack in the MLS to search for all of the bank owned listings (prior to the bastards putting in a “Bank Owned Yes/No” field in the mls), and call the listing agents to feel out the banks motivation.

The agent i had trained came back to me and found a house that the listing agent had basically said, “make an offer, it needs to be sold, the bank just wants to get rid of it”...

So my agent in training took me out to the property. It was a city property that needed a tiny bit of work (paint, kitchen counters, a tiny bit of drywall repair).

Lets run through the numbers:

The ARV at the time was $69,900

The Repair costs was $1200-2000

The List price was $39,900

I went back to the office and made an offer for $20,000. The bank promptly came back at $29,000 (WIN!), i then went back at $25,000, and we finally came to an agreement at $27,900.

Now, the only issue was that we had to use our line of credit to buy this property. If we didnt have that line of credit available to us, we would have had to get “Transactional Funding” (Hard money that has a very short term, and very little credit requirements from the borrow). Now i needed to find a buyer for the property...

Literally the week before we bought this property my friend had called me and told me about his new hard money lending program which would do 100% financing on properties with the right credit score, he also had a friend that he already qualified for the program, just needed a house to fit his needs.

So, I called my Hard Money dude’s friend. The friend met me at the property, and immediately wanted it. So we drew up the paperwork, and submitted it to my hard money guy.

I was able to sell it for $45,000, with a $1000 non refundable deposit, with a 45 day settlement (i knew he needed the time to clear up his LLC issues and what-not).

He ended up settling a little early, and it took a ton of phone calls to “talk the buyer off of the ledge” once it got close to crunch time, but it all worked out. Luckily no title hiccups or anything happened.

This property was my first one, and with a gross profit of over $17k, i consider it a very successful deal. Feel free to ask me any questions! @mikeswords on twitter!

Happy Dealing!