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thanks for sharing. proves the mantra “Easy To Do, Hard To Undo”
spencers channel has a lot of good stuff, calls out bs artists. seems like a good guy.
what he did right: he took action, accepted the risk and gained experience, which is huge.
what he did wrong: overextended and made it way too complicated.
what i noticed:
1. went outside his local market as a beginner, where he doesnt know value
2. bought from a wholesaler on craigslist, when he should have found the deal himself or at least already been on a buyers list of someone he knew/trusted
3. used hard money (15% seems high, but im in AZ, maybe different in OH) – if he didnt have the cash, the margin shouldve been higher
4. hard money draws can get you in trouble fast when the contractor goes over budget but the “progress” doesnt meet the lenders requirement to release money. so youre stuck with an unpaid contractor and a lender that wont release funds.
5. didnt use prepurchase inspection time to find problems like the termite damage
6. used a contractor he didnt know and couldnt monitor. first tip-off shouldve been when contractor asked for 40k down but took 15k…if they take 15K, expect 5K worth of work
7. 9 months to flip is insane, the market changes way too fast for the numbers to still be accurate – thankfully the 2nd appreciated
8. sold his owner-financed 4plex! the best deal he had, he got rid of instead of doing refi/borrowing against itbut again, smart guy, took action and hard knocks teach you more than wins.
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Couldn’t agree more with this response. I was unaware hard loans can hold your funds hostage like that.
Spencer seemed to be mimicking the stereotypical “tv house flip” format that has become so popular. I thought the exact same way before I discovered Tom’s channel. Now I immediately start to cringe when I see people like Spencer taking magnificent without even knowing it. I have to applaud him for exposing his own failures so others won’t fall into the same situation.
What I don’t understand is why he couldn’t have invested near home to begin with. Just so many mistakes, probably learned from “Meet Kevin’s” real estate course.
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yep. cant believe he let the owner-financed 4plex go especially when he had some equity already.
the only problem with vegas/henderson is the laws seem to favor tenants/squatters. but still, plenty of deals. he shouldve asked the owner of the 4plex if he or any of his friends had more properties they wanted to get rid of.
live and learn!
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