Dealing with the salesperson. Haggling over price. Then comes the inevitable high-pressure attack from the sales manager, followed immediately by the finance manager. It’s almost as bad as pickle juice in your eye.
But at least with a new car you get to pick everything you want: color, features, style, finish.
That’s not the case with a used car. Good luck finding everything you want. No doubt you’ll have to make a few sacrifices. I learned this the hard way a few months ago while shopping for a “previously owned” vehicle for my wife.
She test-drove 5 different models of mid-size SUVs over two months. Each lacked something she couldn’t put into words. Of course, my kids and I really suffered waiting on her to make a decision. You wouldn’t believe all the crying that took place. Who knew a 40-plus year old man could sob that much?
Time Well Wasted
Searching for your first fix and flip deal (and many others after that) will be similar to buying a used car for my wife. It will take time!
One of the biggest frustrations students in our coaching program have is the amount of time required to find, and do due diligence on, distressed properties. They get upset after looking at just 2-3 potential fix and flip projects because:
There’s not enough margin in the deal.
Another investor is willing to pay more than they are for the property.
The reality is you may need to look at as many as 20-30 houses, or more, before you land a deal that makes financial sense.
I recently had a student tell me that he “wasted” his time researching comps and getting rehab estimates on just one property. You heard me…one property! He didn’t end up acquiring the house because it was sold at an online auction to a higher bidder.
But the truth is he engaged in one of the most educational processes any investor can experience. He learned:
The supply/demand and inventory of the area
What other investors are willing to pay for distressed properties in the area
How an online distressed property auction works
How much it costs to rehab a property of this size
The types of finishes and colors houses in this area should have
What trades he can and can’t count on to bid the next property he finds (and buys)
Think about it like this…
If you spend 100 hours researching, finding, acquiring, rehabbing and selling your first fix and flip project and net $10,000 in profit that equals $100 per hour for your time. Not to mention all you’ll learn during the process.