We Struck Gold!

Shortly after we realized we wanted to partner up and jump into Real Estate together, Matt and I were trying to figure out what we were going to do. We thought of everything, as many young investors do… Did we want to flip houses? Wholesale? Buy and Hold? BRRRR (Buy Renovate, Rent Refinance Repeat)? Buy short term rentals? We tossed all these ideas out there and were not sold on anything. We knew we wanted and needed to get started somehow, but were not sure what investment vehicle would fit us best.

We decided to hit the rolodex to see if we knew anyone who had more experience than us to either partner with or learn from. After some searching and hours on the phone, we found someone! A family friend who was a successful investor doing house flips throughout the country. It just so happened that he was looking to grow his business as well, so we decided to partner with him and his team. Boy, were we pumped up! Things were rocking, after some introductions and planning, we landed on wholesaling as many properties as we could and we got to work. 

Wholesaling Real Estate, in its simplest form, is an investment strategy where you speak directly to homeowners (typically distressed homeowners) to see if they are interested in selling their home. Once you find someone who wants to sell, you need to buy the home at a significant discount. These homes typically need a lot of work and/or the owner is in a tough financial situation, or they just don’t want the house anymore and want a quick and easy transaction. So, you agree on a price, say $100,000, you then look to immediately sell that home to another investor, say a house flipper. You find an investor and sell it to them for $120,000, you make $20,000 and never actually own the property.

We had a bulletproof plan and we got to work. Creating a CRM (Customer Relationship Manager), buying lists of phone numbers, calling, texting, emailing as many people as we could and much more. Right off the bat we were killing it, we had a couple properties in contract, we were getting consistent leads, working on more contracts, really clicking as a team and learning the process from start to finish. Then, we had a setback…

Ironically, the first person I ever called I was able to get into contract at a great price! Or so I thought… After we did our inspections, we found out the home was in much worse shape than the seller told us initially and we needed to buy the home at a lower price. Needless to say, the seller was upset. She canceled the contact… This is not uncommon in wholesaling, but man did that suck, this was my first taste of what investing and business was really all about. The insane highs and the brutal lows. 

We kept working and working and after several months we had a decent amount of properties in contract, we closed on a few, and had a quality system running, but unfortunately we realized it was a super difficult time in the market to get the business off the ground. It felt like a small plane with too much weight inside trying to take off, bouncing all over the place, lifting off 5 feet, then plummeting back down, never getting enough speed to fly.

After about 7 months, we realized just how tough the timing was. Record low home sales throughout the country, record low inventory on the market, and nobody wanting to move. We started to realize that the massive amount of hard work we were all doing was not as rewarding as we had originally hoped. Unfortunately, we decided to shut down shop. All of us were frustrated because we knew we had a great team, it just was not the best timing. Matt and I were super grateful for that experience and learned A LOT in our first failed endeavor. 

I will go into what we learned in the next post, but to close this out, what we experienced in this venture certainly was a gut punch and very humbling, but neither of us would have changed it. We met a lot of great people, experienced the day-to-day grind of an entrepreneur and got a great taste of how to operate a business and what modern day Real Estate investing is all about.