Because I have been investing for a long time, many new investors assume I’ve always known how to buy and sell investment real estate. Absolutely not true. No one is less experienced than I was starting out, but I had an absolute goal and I was willing to work hard to achieve it.
Let me tell you about my very first deal:
Jim and I knew we had to let people know that we wanted to buy houses if we were ever going to find deals to purchase. So, we began a little bit of very inexpensive marketing to get the phone to ring – walked neighborhoods putting out flyers, had magnetic signs on our car doors, put an ad in the local Nickel Paper (a three line ad was only $265 for a year). I had questionnaires printed out and stacked by the phone so, if a seller did call, I’d remember which questions to ask.
Like most new investors, I was terrified. Because I didn’t know what I was doing, I really didn’t want sellers to say “yes” to my offers, so I always made very low offers. Investor ignorance is not always a bad thing.
Almost the very first call was a woman calling from out of state. Back at that time, our phone had caller ID and it said the call was coming from “US Gov’t. Baltimore, MD”. I was convinced I was being arrested for doing something illegal, but quickly rationalized with myself that I couldn’t have done anything seriously wrong by that point, so I answered the phone.
The woman’s voice said, “do you buy houses?” What? The government already knew I was buying houses?!
As it turned out, her son lived near us and had taken down our phone number from the magnets on my car doors while I was parked at our local grocery store. The condo she was selling was actually in our neighborhood, and she was calling all the way from Baltimore, MD! This was so weird.
Anyway, it was vacant and had been on the market with a real estate agent for a year. I asked for the property details and promised to call her back. After doing my due diligence, I called and offered 65 cents on the dollar. She said, “Honey, I’ve owned this condo for six years and I still owe more on it than that!” I told her that I totally understood, that I was not going to be her best offer but that I was one solution, and she was welcome to call back anytime if she had more questions during her selling process.
I was so relieved that she didn’t take my offer. That night, she called back…
She asked, “if we did the deal, how it would take place?” I explained it to her, told her we would close with our attorney, and that she would have to write a check for the difference between what I was offering and what she still owed. She thanked me and hung up.
The next day, she called back and accepted my offer.
I had never even seen the inside of the property and was scared to death. Later that day I met her son at the property to check it out. It was immaculate – all new carpets and paint, all appliances including washer and dryer, a 2 story living area with a 2 story stone fireplace, an upstairs office area that overlooked the living area below. It was amazing. Because it was my very first deal and the seller actually paid to have me take it off her hands, I took this as a sign that I was heading down the right investment path!
Morals of this story?
- Don’t think you need to know everything before you start investing. You really learn what you need to know while you’re investing.
- Don’t think for the seller. Many assume that, if the seller owes too much, they won’t accept your low offer. Not true! Many sellers pay to sell. If their need to sell is great enough, they write a check at closing.
- Don’t let fear stop you. No one knows what they’re doing at first, in any job, but surround yourself with people who do know the business so you always have somewhere to turn for answers.
- Always be a resource for the seller. Most sellers need help. Offer it to them. You are forming relationships that will lead to great referrals. Be willing to help, even if you aren’t the one they sell to.
Do you have a story you’d like to share here? We’d love to hear it!
Home ownership, is, both, a right, and an obligation! A smart homeowner considers how, to effectively, maintain, his house, in the best, most effective way, to minimize costs, hassles, and keep the home, well – maintained! Rather than waiting for obstacles and challenges, to become problems, the wise ones, realize and recognize, it’s a good idea, to do, regular maintenance, on a seasonal basis. After over a decade as a Real Estate Licensed Salesperson, in the State of New York, I have attempted to simplify this process, and refer to, this approach, as the 4 Seasons, of Home Maintenance.
I previously shared the steps for creating a professional plan for a real estate project; the importance of obtaining third-party validation; advice in how to find the right financing sources; and suggestions on presenting the project professionally, then closing the deal. This approach will enable you to obtain financing term sheets, letters of intent and/or financing commitment letters from lenders if your project is financially feasible and falls within the lending parameters of the financing institutions that you approach. Nevertheless, financing always requires a cash contribution, as 100{78873ccfce349f8de2455d9c74c13a14561029f75caa79bf4cd727f8af61e134} financing is not realistic in today’s market.
