Despite the never-ending heat wave, it's really starting to feel like summer is coming to an end.
Livin' La Vida Luna
So apparently some YouTuber named Blippi is the new Pee-wee Herman...
The Money is in the Follow Up
I try to spend a few hours per month driving around looking for distressed homes.
The ones with overgrown grass, a tarp on the roof, faded siding, or boarded-up windows.
If I see something I like, I write down the address and send them a hand-written letter to see if they're interested in a cash offer.
When people receive a letter, one of four things happens:
- Nothing. No Reply (97%)
- They call to tell me they're not interested in selling right now (1%)
- They call to ask me to take them off their list (1%)
- They call to say they're interested in selling (1%)
A few weeks ago, someone threw me a curveball by actually writing a letter back to me!
I've sent tens of thousands of pieces of mail. This is the first time this has ever happened to me.
So peculiar. I had to dig further.
This house is on the same street as my new construction project, so I was VERY interested in following up.
There was only one problem: I bought my house for $525K and the most you should pay for land in this part of town is $600K.
We were $200K (25%) apart.
When I told my business partner about this opportunity he said it wasn't worth pursuing.
He is probably right, but I set an appointment to go see the house anyway.
The Walk Through
I brought my builder with me on the walk-through.
Even though our business plan calls for knocking the house down, we took a full tour of the home.
During the tour, the seller told us their whole story, including their motivation to sell.
They're an 85-year-old couple that is planning for their "transition". Their son lives in California and their daughter lives nearby.
The fear is they pass down the property and the daughter will be responsible for all the work and the son will sit back and collect checks. It's a recipe for a disgruntled relationship.
I'm impressed by their foresight.
Recently, they sold off a few other properties so when they pass, they can just split the cash evenly amongst their heirs. It's a much simpler process.
Wasting Your Time
The seller used this phrase a lot during our meeting: "You're wasting your time if you think I'm going to sell this place for less than $800K".
I had a few rebuttals.
- "What happens if you wait for $800K and it doesn't come on time?" This is a little morbid, but highly probable. No one is going to pay that price.
- "Similar homes in the area have sold for up to $600K" I brought 10 comp sheets with me that supported that.
- "This is not a waste of time for me. And I can only hope it doesn't feel like a waste of time for you. Things can change quickly in these situations. If it's not today or tomorrow, it could be next month or next year. I'm happy to be here because I want to be the first person you call when you're more motivated to sell."
Making an Offer [They Cannot Refuse]
We left their home on a positive note.
Despite being $200K apart, the conversation was very cordial.
I left them with a stack of comparable properties to review.
I also made them a promise: "I'm going to drop off an offer sometime next week", I told them.
"There's no pressure obviously, just something for you to hang onto and consider."
I included this picture of me and my kids for two reasons.
1) If the IRS ever gives me shit about paying my kids as models for my business, I have tangible evidence that I routinely use their NIL.
2) This was a perfect way to establish common ground with the sellers.
I wrote a short note on the back of the picture as well:
Will They Accept?
If I'm being honest, probably not.
Not yet, at least.
However, I still have a few levers to pull.
The first is price.
I offered $615K, but I have room to go up to $660K if they are willing to provide seller financing.
Second, I'm familiar.
I told them we're going to be neighbors soon (because my new cons project is down the street) so we mind as well get acquainted anyway.
To end this story I can say something like, "I'm happy to play the long game here".
But the truth of the matter is, they're all long games.
That's what makes it so fun.