04/28/2023
NO ONE LIKES LOSES! We all have them though. Even after being in the real estate business for half of my life (I’m 30 now), there are still mistakes and “gotcha moments”.
A lot of the real estate market is flashy with big profits and all this passive income. Well it’s not good all the time. This project set our company in the ❌RED ($23,232.34)‼️ So what went wrong?
5 quick lessons to learn from 👇👇👇.
1) Watch your carry costs: This project cost approx $4500/month to carry between interest on the HML, taxes, vacant insurance, yard maintenance, utilities, etc. We ended up carrying this from May 25, 2022 till April 26, 2023. 11 months of carry is $49,500!
2) Timeline management: We tried to line crews up early to get started right away after closing like we normally do. Unfortunately, delays and break down in communication in certain subcontractors schedules really affected us. Example: drywall guy took 2 months after initial scheduling because he took a big out of state job over mine. This affected other subs who were scheduled following his work to have to delay, and it caused a snowball effect in the timeline. Within a few days of not hearing from that sub, we should have been reaching out to another drywall guy instead of waiting.
3) Make clear design decisions and stick with them: We ended up changing the design layout about 2-3 weeks into the rehab which meant we had to go back and redo what had already been finished. It was the right call to make the change, but indecisive decisions during planning slowed down our completion.
4) Market timing: When we finally listed in Sept, the summer market was over and mortgage rates were reaching their peaks. We essentially had 3-4 showings the rest of the year all resulting in low ball offers.
5) Look at the long term consequences: We actually received an offer immediately after listing slightly lower than our final sales price. It was $60k below asking though! If we waited out for our asking price for 6 months then our break even would increase. We thought we could still achieve our asking price, so we waited.
At the end of the day, we sold a fantastic house to an awesome family relocating from FL who plan to convert the basement for in-laws and quasi hut into a world champion goat facility. Who knew training goats was a competition! 🐐🐐🐐