What I Learned From Real Estate Investing In A Sun City Condo
Are you ready for some transparency? I want to share my journey of investing in real estate. It’s not all rainbows and butterflies or, cupcakes and dingdongs. Real Estate Investing, like anything is a learned set of skills that make up a successful career.
I don’t care what those gurus and their high pressure sales pitch seminars say. At the end of the day, experience is the best teacher and I am so grateful for my local mentors, who I have been able to lean on while I still transition out of a full time job.
So here is the story: At the beginning of summer, I received a call from a gentleman who need to sell his condo. He went through 2 realtors who couldn’t sell it. He saw my ad and responded. After a discussion and meeting, I ran the numbers. I found that other condos have recently sold for $50,000 – $80,000 in the same retirement condo community. A part of the community also included assisted living facilities. I had one of my mentors come with me to walk through the condo now that I had it under contract. We had a 10 day inspection period to perform our due diligence.
Everything seemed good to go. The condo was in fair condition and I had it under contract at $43,000 with the option to assign it to another person. That gives me the ability to wholesale it. Wholesaling properties is my plan A when finding a property as I still work a full time job and provides me fast cash with nothing out of my own pocket for the transaction.
What Happened On The Real Estate Deal?
I shared the deal with several other investors/flippers as a wholesale deal. Knowing that the condo is in a retirement community, I understood that the market was niche and we are in summer when most people in that market are gone until fall. I had to work fast and could not be greedy. I had a few people look it over and a few others say they may be interested (which I ignored, since they didn’t exhibit action).
My plan b was to fix it myself with a partner. Our rehab plan was to replace the carpet with hard floors. We didn’t get that far. We cancelled the deal. Ya see, there were transfer fees and association fees that ate into any profits. Rents were around $700 a month which weren’t enough to make it worth owning. After everything was said and done, I decided to walk away.
Why? I didn’t find a person to wholesale it too and even though the cost of new floors and possibly a kitchen counter was estimated at $5,000, the added cost of transfer fees and association fees were prohibitive at the price point we were aiming for while still maintaining a decent profit and then there was the risk of finding a buyer in a retirement/assisted living community in the middle of summer.
What I am learning from the education and mentoring is to invest in real estate that provides a minimum of $20,000 in profit, which is at least 20% of most deals. It provides a cushion for unforeseen circumstances.
What I Learned
For me, investing in real estate in Sun City Arizona has too many additional costs. The target buyers market is too small. I prefer the new home buyer market. So I will stick to real estate investing located in other metro areas with a larger pool of buyers.
I hope this was helpful to any would be investors. I’d love to read your feedback. Meet my team and the people who are mentoring me attend one of our events or check the education page.