Some of you know that I got my RE license simply as a means to gain access to comp info for investment properties. For two years my neighbor and good friend Mary Ellen and I had been watching and learning all we could about investment real estate. Her cousin was going to fund whatever she wanted to do so we did lots of drivebys, researched and then attended foreclosure auctions and got close to doing something a couple times. Each time I'd needed comp info I'd call up my good friend Matt. a KW agent, and after two years he finally said "you know Sandy you could do this for yourself?" I had NEVER given any thought to getting a RE license, but he was right. So I talked to his team leader, he signed me up for the online Rockwell course in Oct 2004 and I sat for and passed the licensing exam December 8, 2004! I was pretty jazzed when I walked out considering only 2 of 20 passed the exam and I was one of them!!!!
Now I was ready to get serious about finding that perfect fix-n-flip property. Then came the bad news....Mary Ellen's cousin was to wrapped up in his own ventures building condos in Costa Rica, that he didn't have time to look any of our plans over. To say I was disappointed is an understatement, but I decided to dive into working as an agent, after-all I did have a license.
In comes my husband, Travis. He had been a licensed residential remodel contractor for 10+ years at this point and one of his customers overheard him talking to me about fix-n-flips. She said she had actually been doing a little research herself and would love to do a project with us. We scheduled our first meeting for Monday, Memorial Day 2005. At that meeting they told us they were going to get a HELOC for $300k to use for the home purchase/repairs. I was to do all the research on the upcoming foreclosure auctions and zero in on a few properties to bid on. For those who don't know, watching properties can be a very long process. Often times the day before the auction, the property owner will get the auction postponed or stopped. So you have to be very patient and have several properties to potentially bid on. During that meeting we also presented them with two options. Option 1 - hire Travis to complete all the work, I'll be the listing agent and they'll keep all profits. Option 2 - we ALL work on the remodel together, which gets it done faster and we can get onto the next project sooner. They said they liked option 2, we agreed and said we should form a small LLC. They said their attorney had suggested that as well, but they didn't think it was necessary,we were all friends and they regarded Travis as family. He'd worked on their home on and off for 7 years. They wanted to split profits 50/50 and only wanted an extra $1000 for their financial risk. I told them we needed to eat, breath and sleep the property to get in and get out in 60 days or less. I gave them the MREI 
to study. We talked about trends like hardwoods, granite and stainless steel for kitchens. They weren't so sure about the granite but agreed on everything else. We mentioned again that we'd really like to form a small LLC, nothing we'd have to spend a fortune putting together just something defining what we were doing. They said "we'll see how this one goes and then we'll form one for the next project".
OK so that's RED FLAG #1, we should have turned and ran away right then and there. But....we were so excited about the prospect of fulfilling our dream we agreed to proceed without forming an LLC.
So I go about researching properties. We sent letters directly to the homeowners of a couple we were interested in hoping they'd be willing to sell prior to the auction, but no go. At the end of July we were set to attend the auction for one home in King county and the sale was cancelled. So we settled on a home in Snohomish county. I'd done my research and determined that we should set our limit at $280k. Other then a photo we had never seen the home. It's not uncommon to bid on a property sight unseen. Unless it happens to be listed for sale, you don't go knocking for a look-see of the home you are going to potentially bid on!
We arrived at the court house and there were hundreds of people there to bid and three criers auctioning off the foreclosed properties. I had attended previously to observe and there was always just one crier, so three made it a little crazy, but we finally found the right one for the property we were interested in bidding on. Prior to bidding you must verify funds with either actual greenbacks
or with a cashiers check made out to the trustee. We verified funds and lucky for us there was only one other person bidding against us. The opening bid must be at least one dollar greater then the opening bid amount set by the trustee. We started the bidding and with each bid my heart beat a little faster. It was very exciting and such a rush! We ended up successfully bidding on the home for $276k. $4k under the max amount I'd set. Mrs. Investment Partner & I celebrated with lunch and called everyone to tell them we were official RE Investors. I'd finally accomplished what I'd set out to do nearly three years prior! I could hardly wait to get started!
We immediately called my RE Attorney and she drafted a letter to be delivered to the current occupants. Now we had to wait for 20 days for them to vacate. Mrs Investment Partner and I decided we should do a drive-by of the home we now owned (or she owned as she'd remind me later). When we got there, there was black paper on the windows, the yard was about 4 feet tall and it was hard to tell if anyone lived there. We didn't want to snoop around to much in case someone did so we waited for our attorney to deliver the notice. My sister lived by so I asked her to drive by daily to see if there were any signs that someone lived there.
The first week in August Investment Partners left for vacation that they had previously planned. On August 8th I couldn't wait any longer (the letter stated they had to vacate by the 15th) so I went to the home to snoop around. The letter from the attorney was still attached to the front door so I snuck around back. The black paper was a little scary. Was there a meth lab there? Transients? I did have with me a letter stating I was entitled to be on the property even though our Investment Partners refused to add our names to the deed.
Red Flag #2. If we were all in this together and they trusted us then why couldn't we have our name on the deed as well? Can't really argue with her when the trustee is waiting to fill out the paperwork and needs the name that should appear on the deed.
As I snooped around I went up the back deck and found the sliding glass door able to be opened. The home was vacant! It was time to get to work. I called Investment Partners and told them I was in, that the home was vacant and per our attorney if it was vacant we didn't need to wait until the 15th. Everything was very outdated and would need replacing. The recroom downstairs had cedar paneling that was so dry there was actually a fire extinguisher hanging down there! I asked them if they minded if I ordered the dumpster and got started demoing the house. They said go for it, so my daughter and I went to town!
We ripped out carpets, cabinets, molding, vanities. By the time Investment Partners returned, the house was pretty much gutted with the exception of some kitchen cabinets we couldn't get up and some laminate flooring that needed to come out. We were raring to go. Travis had given me a schedule of what should be done and in what order and I had my 60 day calendar laid out. Investment Partners stopped by for a couple minutes to see the home and what was needed to be done. They stayed about a half hour then they had to go.
Monday rolls around then Tuesday, Wednesday, Thursday, Friday and no sign of Investment Partners. I called Mrs. Investment Partner on Saturday and asked if they were planning to help. She said they'd come by but Mr. Investment Partner was mad because a Husky Football game was on and he wanted to watch it! We actually had to call to see if they were coming!! Remember I had told them we have to eat-breath-sleep this thing to get it done!!
Red Flag #3. Why are we calling to get help? They had agreed that we would ALL work on the house together!! Do you think we ran the other way.............
For part two click or copy this link http://activerain.com/blogsview/236641/The-Tale-of-the
Sandy Noll
Realtor, eAgent
Keller Williams Realty
425-890-0878
sandy@sandynoll.com
http://www.letsachieveyourgoals.com
Woodinville, Kirkland, Bothell
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