Deal Case Study - Property Damage While Under Contract

Mike DeHaan: [0:00] What is going on, guys? We are here today with Nick Rozenbeck, who is one of our Instant Investor members. And we are doing a deal case study on what is actually his very first deal, and it is a very interesting one with how it all came together. So I'll let Nick share the details specifically for the deal itself. But I guess for some context, Nick is doing this deal in a rural town in New Mexico, all the way from Paris. So it's all done virtually, which comes with its own challenges. We'll let him dive into that as well. But the deal came with, you know, definitely some some hoops that you had to jump through. So excited to hear about this one. So if this is your first time here, how these deal case studies work we're gonna do a deep dive into a real deal from somebody that is within our community. And we are going to ask the same questions in every single episode so that we can, you know, get a good view about how exactly things transpired. So, Nick, first off, I appreciate you coming on, man.

Nick Rozenbeck: [0:56] Hey. Thanks. Yeah. I'm happy to be here.

Mike DeHaan: [0:58] Yeah. Still over there in Europe doing stuff, and you came and hung out with me in Lisbon not too long ago. So I appreciate that.

Nick Rozenbeck: [1:04] Yeah. It was fun.

Mike DeHaan: [1:05] But yeah. Awesome, man. So excited to dive into this deal. So first off, let's start with what kind of property was this?

Nick Rozenbeck: [1:13] Yeah. This is a single family. Regular is, like, three two, just under 1,600 square feet in the suburbs, basically. In the

Mike DeHaan: [1:21] suburbs of a small town, which I think that's, like, the entire town. They don't really have, like, suburbs, suburbs. Yeah. Cool. Single family, standard square feet, three two, nothing too fancy. Now how did you find this deal?

Nick Rozenbeck: [1:32] Yeah. This was a direct mail lead. So he just pretty much called in and was ready to sell at a discount. Tired landlord, out of state, accidental, just kinda like what we look for typically. Easy enough. As that kinda goes in this one of what kind of seller was this?

Mike DeHaan: [1:50] So you said it was a landlord. They were motivated. Have they owned this property for a while, I'm guessing?

Nick Rozenbeck: [1:55] Yeah. They moved into it, I don't know, ten, fifteen years ago and then moved to Texas Okay. From New Mexico. They had no prior landlording experience, so they just rented out to a family friend. And then there was recently a storm in the area and that was just kinda like the last straw and you're just tired of it. I wanted to get rid of it and didn't really care. You just wanted a bit of money in the bank. So Cool. Easy enough. That's that's kinda bread and butter what we look for.

Mike DeHaan: [2:21] I like it. Awesome. So let's go into the full story of the deal. So we know how you found it. You know what the person looked like. Let's go into the ups and downs and everything in between.

Nick Rozenbeck: [2:31] Acquisition side, like I said, super easy. It was like two phone calls and we're under contract pretty much. And then once we're under contract, things got a little bit weird. Him being an out of state landlord, he was under the impression that the home was still fine after the storm because it's brick and pretty solid. Mhmm. But what we found out after getting pictures was that the roof needed to be replaced. And so we're like, oh, fine. Let's just have the the insurance take care of it. Little did I know. I mean, I don't own any properties myself, but there's insurance deductibles. So that kinda came up, and it went under the rug for a little bit. And then, like, a week later, he asked about it. He's like, so you guys gonna reimburse me for this? And that got a little

Mike DeHaan: [3:14] bit awkward because it was a pretty slim deal for me. I guess your extra strategy on this was to wholesale it. Right? Yeah. It was to wholesale. Yeah. What was that process like before we get into the deductible conversation Okay. About finding the buyer, going through all that? Because I know you definitely had some challenges with that end as well, especially being virtual in a small town as a kind of town where there's, like, a couple of old guys that own the entire town. So you kinda need to weed through that. So let's dive into that process a little bit.

Nick Rozenbeck: [3:43] Before locking this up, I only really had one buyer, and he kinda got wiped out by the storm. So that was my only option there. So I had to do a whole bunch of cold reach out to people. I ended up finding one of those guys that has, whatever, 200 properties in the area. He initially wasn't interested, so I kept calling around property managers, realtors, everything. And then I just kinda like kept following up with him and eventually he was okay with purchasing once he realized that the roof was getting replaced by insurance, but it ended up coming to his offer was pretty much gonna be what I had it under contract for. And so he was willing to come up a little bit from that, just to give me a little bit of room. K. And then from there, it wasn't too bad. Yeah. It did take longer than I was expecting now.

Mike DeHaan: [4:31] Yeah. Yeah. Well, to find that buyer, and that's always an important thing that people need to realize is there's this old adage. I don't know. It's kinda like boomer logic with real estate where they say, if you have a good deal, the money will find you, which is just honestly bullshit like these days. Yeah. You need to search for it. Even if you have like the sickest deal in the world, everyone's going to have completely subjective views about it. And this one was a little bit tight admittedly. But I remember talking to you about this because you had to manually follow-up with all these people before you got someone on the hook because you're ready to drop it for a little while.

Nick Rozenbeck: [5:02] Yeah. I lit I was, like, ready to I was like, well, we got super close, but I guess I'll get it on the next one. But, yeah, took your advice and did some more follow-up and finally got this guy to move forward on it, son.

Mike DeHaan: [5:14] Cool. So now it was moving forward and then the whole conversation about the insurance premium came up. Mhmm. And so I guess from what you said about that, wanna he get reimbursed for it. You didn't really have a lot of room in your fee. You're gonna can't ask the buyer for it. So I I don't even actually know what the outcome of that was.

Nick Rozenbeck: [5:33] It ended up being actually over text. And I think this if I remember correctly, the seller had had followed up with me on that. And I was just like, look. Here's the here's the situation. When we had agreed to the price, we're under the impression that the roof was still in good condition because that's what you had shared with us. After we had it under contract, that's when we did the inspection and found out that it wasn't in good condition and that the buyer wouldn't be able to get likely wouldn't be able to get insurance on the property if it wasn't fixed. So for that reason, you know, the price is assuming that the roof is in good condition, and that was enough to didn't hear anything about it since then, really. I mean and

Mike DeHaan: [6:13] I think that's a great lesson in general. Right? Because he was willing to just eat that cost. He's making his money on the sale of the house.

Nick Rozenbeck: [6:19] And it's such a

Mike DeHaan: [6:20] funny thing I find with new investors where y'all have these sellers that come back and ask for these, like, little concessions because, know, they're gonna try and get as much as they can out of you. And when you're newer and you're kinda desperate to get that first deal across, people will say yes, like, the time. Yep. You know? Or just like and this is one of the problems that I have with some of, the creative financing folks that teach us about theirs. They're like, oh, you know, if you're $10,000 off on your price with the seller, just like wrap the $10,000 into like a second position mortgage and all she's like, or you just, you know, work some sales tax and get them down $10, instead of trying to line up this second position with 0% interest or whatever. They're bullshit, you know? Yeah. People are always gonna I mean, it's a sales conversation. Right? People are going to ask for things back, and that's just kinda part of the gig. So Yeah. You know, good for you for being able to hold on to that because I know it was a small deal in general, and that probably would have made it almost nothing for you if you had to pay the deductible as well.

Nick Rozenbeck: [7:18] I would have paid $600 to do my first

Mike DeHaan: [7:20] Close wholesale the deal. I definitely hope to do that. But so okay. So you ended up ultimately getting it closed. And, I I guess what was the the end result? How much did you make on this one?

Nick Rozenbeck: [7:31] I made $2,000.

Mike DeHaan: [7:33] There you go. Hey. You you at least got the like initial Band Aid ripped off on your first one though.

Nick Rozenbeck: [7:39] Yep. Across the finish line.

Mike DeHaan: [7:41] And you fought for it too. I did. You know? And and I think that's always just a big thing to point out is when you have your first deal and you have to kinda battle for it, it just builds toughness as you get into more stuff, you know? Like, honestly, I've I've we've had people who've worked with in the past that I've seen in, like, other groups. They're like, their first deal is like a $50,000 fee where they don't have to do anything for it. And they're just like, yeah. I'm like the coolest person in the room. Yeah. And then their business just freaking sucks because they didn't learn they never took their licks to get there. Right? They were really given, like, the trust fund at the start. Yep. And they didn't have to, like, earn their first little bit of money. So it sets you up pretty well. You're paid for the education.

Nick Rozenbeck: [8:22] Yeah. Yeah. It's I'm not can't really complain. I'm a firm believer that you get paid in, like, comments in direct portion to how much value you provide. And at this point, I'm still learning how to provide lots of value. So I'm I really can't complain about it.

Mike DeHaan: [8:37] I absolutely agree with you with wholesaling being the exception to that. The hardest deals are always the least fruitful. Like, have had ones where we have spent months working with the seller with all this sort of BS, and then sure enough, we get to the finish line. I'm like, great. We just made $5 on that. Wasn't even worth it. You know? I love other ones where, like, we talk to the guy and we're like, yeah. We gave you 300,000 for the house, you know, for the triplex, whatever it is. And they're like, cool. Send the PSA, and then we assign it for, like, $3.50. And we're like, well, that was easy. You know? That's kind of the challenge with the business is that there is a lot of luck involved, unfortunately, just being in the right place at the right time. So what's next for you? Kinda you got some some more stuff that you're working on down there. Do you feel more confident going into more deals now that you have gotten your first transaction done? You kinda know the process. You have a few buyers lined up.

Nick Rozenbeck: [9:27] Yeah. Something that was a really nice piece of this coming together is that at the day after I got it assigned, I had multiple buyers calling me back. I'm like, hey. I heard about this property that you have. Mhmm. I'm like, hey. Sorry. I already sold it. So training buyers, especially in a market where really nobody's wholesaling Mhmm. The first one may be a little bit rough, but I know that next time a deal comes up, I'll have multiple people that that know, hey. We need to act on this quick or else he's gonna sell to somebody else.

Mike DeHaan: [9:58] Yep. Exactly. And that's a big reason too that I always recommend that even if you are selling something something kinda like back pocket to somebody, still advertise it because it shows, you know, action in your business. It will make people want to respond and and work with you more. So Good. Awesome. Well, Nick, I appreciate you coming on and talking about this deal, man. And congrats on the first one even though it wasn't, you know, a home run. It was kinda like a, I don't know, infield first base hit. It's alright. Still still still a little bit of money. Recover some capital. Yep. If people wanted to to reach out to you and maybe hear about how you've done some of the virtual stuff, what's the best way to do that?

Nick Rozenbeck: [10:37] Currently, I don't really have anything other than my phone number, which I probably won't give out.

Mike DeHaan: [10:41] Yeah. Cool. Just follow follow me on social media, Mike underscore invest, and then you can scroll back a couple couple months, and you can see a picture of Nick and me in Lisbon. And if you want to connect with Nick and hear about how he is, you know, starting up his wholesaling business while living abroad and doing different things, I guess just have to join the instant investor program. So awesome. Nick, man. Well, thanks so much for coming on. I really appreciate it. And guys, I hope that you enjoyed this little deep dive into Nick's deal. They're not all home runs, but it's also hard to go broke when you're making money. And this is just part of the game. So please go and share this episode with anyone who has any interest in real estate investing or, know, just want to know what a hustler's mindset looks like when it comes to doing business, because that's what we dive into on these deal. What do we call this? The deal case says I was gonna say deal deep dive. I go back to bigger pockets, but that's their thing. But shows everyone guys the greatest way to help us grow. And we appreciate you all. And we'll talk to you next week.