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We felt we were getting a great deal. We thought we would spend $20,000 on fixing it up and then sell the property for $190,000 to $195,000. We would get our $20,000 fix-up money back, plus make at least $40,000. This investing thing was a piece of cake!

Unfortunately for us, this is not the way this deal turned out. Our $20,000 fix-up budget blew up in our faces. Once we started tearing the house up, we found mold and dry rot. This was not good. We wound up spending closer to $30,000.

Still, we felt we would be all right. We would just make less profit. At this point in our real estate investing, we were doing the major fix-up. This was the biggest one we had ever done. We would buy the property, do all the fixing, and then sell it to a retail buyer homeowner.

We felt this was the way to go because we would make the most money. With this property, we had gotten into a major remodeling. We realized too late that we were no longer investors on this property but were in the remodeling business. Instead of doing the job for a homeowner who was going to pay us, we were the homeowner! We had also violated the Principle of Regression on this property.

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