My First Deal

To be honest, I had no idea what in the world I was doing when I jumped into buying my first fix and flip property in Newark NJ. I just always knew, ever since I was a little kid, that I want to own real estate when I grow up. 

So here I was a young man getting started and taking a leap of faith. It was an abandoned, bank-owned two-family home. With some good rapport that I was slowly building I was able to buy the property for $113,000.

As you may know, when buying a property from a bank you can not get bank financing. This is because the bank wants to offload the property in the fastest, simplest way possible. However, one can still get a hard money loan from a lending company at a higher interest rate. So I took a hard money loan, hoping to be able to pay it off quickly, after a speedy fix and flip process. 

A Shocking Discovery 

To my dismay, while under contract, I discovered that there was an underground oil tank at the property! Scary stuff, huh? It definitely scared the daylights out of me then. These days? I don’t think twice about it. After many years in the business, I’ve learned that every problem has a solution and everything is fixable, with the right research and resources. 

Anyway, back to my crisis. As I said, since I was inexperienced then, I had no clue how to deal with the oil tank and finding the right and affordable solution took quite a chunk of time. Meanwhile, it was also taking forever to get building permits, which was delaying construction. The reason it was taking so long to get permits was that the contractor I had hired, although competent, was not familiar with the local township and building department. Because of his unfamiliarity, we kept failing inspections, dragging out the process. 

The Heavy Price of a Hard Money Loan

I found myself holding onto the property for much longer than I’d anticipated and I was paying hefty interest every single month! 

As you can imagine, this was beyond frustrating. The prolonged high interest I was paying would surely dig into any potential profit. It was a nerve-racking time, to say the least. 

But I didn’t give up. I stuck to it, knowing with certainty that this is the field I want to be in. I knew that all beginnings are hard and with consistency, hard work, and resilience, I would gain experience and become an expert. 

Oh, I didn’t share the end of my first property saga. 

Happily Ever After?

Nope, there is no happily-ever-after ending to that story. The longer-than-expected flipping period took a toll and while I ended up selling the fixed-up house at a nice sum, the high interest I had paid shaved off the profits of that deal. I was lucky enough to just about break even. But there was no profit. 

But wait, there IS a happily-ever-after ending in the larger scheme of things. Because now several years down the line, I’m a successful real estate investor with a regional real estate portfolio valued in the millions and dozens of flipped properties under my belt. And yes, I’m loving every minute of it. 

• If you can stay away from hard money loans, please do! Rather get an investor on board and split the profits. The peace of mind is worth it because the high interest these loans incur eats up your profits. 

• Always take a contractor who is familiar with your township zoning and construction laws. Taking a qualified contractor isn’t enough; he must know the ins and outs of local construction permits. 

• Don’t give up! Beginnings are almost always marked with difficulties and setbacks. Be consistent, determined, and resilient and you’ll get to where you want!