Rule #2 - Take The Money And Run

I learned this rule early... on my first house in fact, but only after much grief.

My partner (rule 4) and I had purchased a nice 3br 1ba home in a high demand area. We got it for around $150k with an ARV of $215k.

The first day we put it on the MLS through my real estate company 60dayrealty.com (@60dayrealty for you Twitter followers). Listed it for $175k in as-is condition. In 24 hours we had an offer of $170k.

After my partner and I spoke we decided to decline their offer. I told the Realtor we were not offended by the offer, but had just purchased the property and fully believe the home was worth the $175k we were asking.

We all thought they would counter back at full price and the deal would be done. We were VERY shocked to find out they walked away.

My partner and I weren't too upset b/c we were excited about the possibility of doing the rehab and gaining an even greater profit out of the house.

Essentially we walked away from $10k each for doing no work. Nada. Zip.

Needless to say, we spent the next 3 months managing subcontractors, buying supplies, and doing a lot of the work ourselves. A lot of long, not to mention late, hours. We spent around $25k to fix it up and sold it for $205k with no Realtors involved in the transaction.

For our hard labor, stressful nights and bloated costs we made not $20k, but a whopping $25k! We walked away from $10k and beat the hell out of ourselves for 3 months to make an extra $2500.

Stu. Pid.

This rule doesn't ALWAYS apply of course. With experience you can tell if the fix up and profit is far worth the rehab instead of the wholesale.

In my world though, I live by rule #2. It worked very well on the next property I sold.

Thoughts? Disagreements?