Selling the Flip Gone Wrong in Baltimore
The rehab cost was too much and time to rehab was too long. We just didn’t have the funds to carry us through to the end. This is assuming there would almost certainly be more delays and unanticipated issues with the rehab. We couldn’t get through any more hiccups having barely gotten started when we had to fire the contractor.
It’s been longer than I anticipated since our last post! And I still haven’t finished the story of how we got started flipping houses. Our business took a hit and then things got busy – however, we closed two more deals since the last post!
Why We Buy Houses in Maryland
We closed one for a seller who was ill with cancer and needed to be done with her headache of an investment property so she could focus on her health. The other property, the owner had passed away and the property was going to be auctioned off by the state due to medical liens and other bills. We were able to pay those liens and provide additional funds to the owner’s son so he could move out of state and start a new life. THIS is why we do what we do!
No Deals Currently
We are in a bit of a lull right now as we have no active contracts to sell or close on and no seller appointments today, so I figured it’d be good to make an update regarding where we are with the flip gone wrong. We also (thankfully) have more than a handful of pending contracts/appointments on the horizon and I wanted to get a post out before things got busy again.
Buying Houses From Difficult Sellers: Lessons Learned
Do. Not. Do. It. Just don’t – unless you REALLY REALLY REALLY need to close a deal.
I “fired” a seller yesterday… for being difficult. We are in this business to help people (see “Why We Buy Houses” above). This particular seller didn’t need our help. I only want to work with sellers who will appreciate the work we do, as everyone knows customer perception is extremely important to the growth of a business. We also have bigger goals fueling our business.
Anyway, so yeah… I’ve been down that rough and tumble road with difficult sellers before – it’s rarely worth the time and energy in the end. It is almost unbelievable how bad it can be until you experience it for yourself.
When you first get started investing in real estate, you may find yourself so hungry that you are willing to work with any seller who says, “yes,” no matter how many red flags they through in your face! However, after doing that a few times, you quickly realize it’s not a good use of your time, even if there is money at the end of it. Well… maybe it IS a good use of your time if you have no other prospects. Just keep in mind that they will take you for a ride, and then some!
Like I said earlier, we aren’t ONLY buying MD houses for the money. If that was the case, I would have quit investing in real estate long ago to do something easier than buy houses in Baltimore, like maybe stick with my relatively cushy career as a school psychologist.
Baltimore Flip Gone Wrong – The Broker Too?
I’ve decided to seek out a different broker (or just skip the broker and go right for the lender) for the next property we buy. The one I used to buy the “flip gone wrong” told me to get new bids for the work since I had to fire the contractor and get a new one. It took TWO weeks to get 4-5 more bids for the work.
After I collected the contractor bids, I went back to the broker with them. I had to wait several more days just to find out they wouldn’t be able to adjust the rehab loan anyway. So, Mr. Broker, why did you tell me to get new bids if you couldn’t redo the loan?!? And why didn’t you find that out sooner?!?
Then, after that I was considering purchasing a 3-unit but needed an approximate idea of what the numbers would look like so I could flush out the deal. Seeing as they already pulled my credit, I didn’t want to have this done again (for several reasons). Well, the broker never get back to me with the numbers, despite my reaching out several times over two weeks. I simply stopped asking after the last excuse of, “Oh, my computer crashed and so I can’t run the formula…” Ok, and what happened the prior two weeks?
I’m over it… I’m over the old contractor. I’m over the broker (soon to be old). I’m over people dicking me around because I’m a “nice, girl.” I am a woman, a wife, a mother, and a business owner. I don’t have time to teach people how to treat other people. I just move on until I find someone who does. Fortunately, there are plenty out there, it just takes a wee bit of trial and error.
As I said, I’m at a point in life where, if you aren’t going to follow-though and do what you say you will, you are no longer worth my time. Yes, the broker was initially helpful (or tried to be), but I need someone more reliable and on top of their game than this.
Things are going to start getting really busy around here. (Our main motivated seller site is ranking on page 1 of Google for “We Buy Houses Maryland” and page 2 for “We Buy Houses Baltimore”). Those on my team are going to have to step it up. Oh, you’re not going to follow through with what you say? Then neither am I. NEXT!
Back to the: Baltimore Flip Gone Wrong
So… back to the flip. After thinking about it for a long time (I had a lot of time to think waiting on everyone to get their sh*t together), and weighing several options, I’ve decided to move on. Cut those losses (no AMAZING “before” and “after” pictures for the website) and sell it. Details regarding the numbers( and what we gained or lost) will be shared once things are finalized with the sale/closing of the “Flip Gone Wrong.”
Reasons to Buy vs. Reasons to Sell
Here were the things I considered when deciding whether to move forward with trying to salvage the rehab or sell the property AS-IS:
Location – The area was hot, now word on the street is that it’s starting to cool down.
Timing – We were initially supposed to hit the market by February/March and be sold and out of there by April/May. All speculation of course but since we planned to price it “right” I didn’t anticipate having any issues in selling it. The new time put us finishing at June or later which would put us on the market in the middle of the hottest months for buyers, i.e. directly in the middle of a lot of competition.
Price – Rehab estimate was initially 50-55K. The latest numbers were 60-85K. I’m not sure I trusted the 60K number as it was more or less what I had stated would be my max budget… and the contractor kept pressing for a budget. Which I understand but at the same time…
Trust – I had just been long conned, having built a relationship with this sh*t contractor for several months. I didn’t trust my ability to detect if someone was lying. Nor did I want to be pushed or rushed into something just to wind up in an even worse situation.
Emotions – This property initially brought joy but now mostly just brought pain, stress, and tears. It was time to let go
Layout – I was planning to keep the layout as-is for a quick turn-around. Now that the original plan was smashed, “let’s determine the best layout!” I realized I didn’t have the time or funds for the “best layout” and I wasn’t so sure I’d be able to recoup the additional cost when I went to sell, even if I could somehow go that route.
Numbers & Size of the Project – Initially, they worked and it felt doable. After obtaining 4-5 different contractor bids and all those varying opinions, well… it was overwhelming. There was little consensus about what could or couldn’t be done, what should or shouldn’t be done, and how long it all would take.
And after all of the noise began to settle, it no longer felt doable which lead me to…
My pride was hurt. My dream had died. I felt ashamed and embarrassed (still do but it’s slowly fading). My heart no longer sang and frankly, I was angry (and still am but I’m learning to let go and file a complaint with the MHIC of course, haha).
I realized I was too emotional to make a rational decision in selecting a new direction with a new contractor. I was not in a place to trust again and the stress of it all was almost unbearable. I mean, look at what I had done to my family. I couldn’t put them through that again, having not even healed from the first blow.
I knew we had a finite amount of funds to carry us until the property sold. With no guarantees as to the feasibility of the project, when it would be completed, and when it would ultimately sell, it was just time to cut those losses and move on.
The contractors were all told that I planned to sell the house AS-IS. I thanked them all for their time (though I don’t think a single one replied back) and let them know I’d keep them in mind for future projects.
The Execution of the Sale (MLS For the Win!)
So now came time to sell. This part I was a little excited about. This is what I DO! Locate buyers for investment properties. Not to say I’m an expert or anything but having been doing this for over a year full-time in this market, I had a feeling no one would pay what I needed to sell the property for unless I listed it on the MLS.
Needless to say, I still tried but I got no bites from the investors I knew. Why would I? They are all cheap like me! HAHA! I’m telling you, the MLS is the quickest and easiest way to drive competition for your investment properties. There are buyers out of the state and country who have agents representing them and looking on the MLS for deals. They understand the value the MLS brings and are often willing to pay more for this premium and service, knowing that a realtor is involved.
With no luck selling the property to our investors, I listed the property on the MLS for a flat fee through one of those flat fee services (if interested in knowing which one we went with, feel free to comment below). For the price, and if going the route of “For Sale By Owner,” I highly recommend using a flat fee listing service to get more exposure for your property, particularly if it is an investment property or one that needs some love.
Update: We’ve Found New Contractors!
In lighter news, I do think it I safe to say that I have found at least 1-2 contractors who are trustworthy and reliable for when we come across our next flip. Slowly but surely I am building our team and scaling the business. Once this property sells, I plan to pay off our debts and really take a closer look at our bottom line and where we can reallocate resources.
What’s Next for The MD House Buyers?
- Hiring another VA, at least part-time is on the horizon for this year
- Setting up our systems and getting more things automated
- Putting more resources into our SEO efforts to build our online presence
We Will, Without a Doubt, Dominate the Baltimore Market!
I love the support and encouragement I get from my SEO group! They are one of my favorite parts of my SEO program. Seriously! No one else in my life understands SEO or gets anywhere near as excited as they do when good things happen!
Though, I can’t blame anyone in my everyday life for that – I didn’t know what the heck SEO was all about before joining the program. And I sure as h*ck didn’t get excited about it… backlinks, domain authority, blog posts, articles, page authority, alt text, anchor text, what in the bloody h$5L?!? No worries, I’m learning fast.
I’m very much looking forward to the continued online exposure for our company. This will allow us to get in front of more clients and to work on our mission! Just need to begin operating at a profit this year then we can begin our focus on that. It’s a lot of work building a business from the ground up but we’ll get there.
How do I know?
I’m not quitting!
Have you been hesitant to flip a house for fear of something going wrong? Well, let me put that fear to rest right now and let you know that something absolutely WILL go wrong. There I said it, now go flip a house!
Have you experienced contractor woes? Comment below! I’d love to hear your story!