OfflineHey everyone, I have been meaning to type this up for a week or so, but just got busy house hunting.
I wanted to take a few moments to tell you about another deal I am signing at the title company in two days.
I was going thru the Craigslist postings and saw one that caught my eye about four weeks ago. The house, a 3/1 about 1000 sq ft, was posted for 17k, only a street name given and there were some pictures. The pictures were very small, but I saw some things I love to see. First, the exterior looked good, but the trees on the property totally covered the house, it was virtually invisible. Next the interior pictures showed three feet of "stuff" thru out the house. I am not exaggerating, I mean three feet throughout the entire home, all floors. The home was also listed as an inheritance with a motivated seller. My curiosity got the best of me and I sent an email to the seller to get more information. I was in the middle of looking at two other deals and realized a few days later that I had not heard back from the seller.
I got more curious and used google earth's street view to scan the entire street and I was able to find the house number. I did some Zillowing and such and also took a look at the County Auditors site to learn more about the property. The current owner held the deed free and clear.
Friends, now I was EXCITED !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The 17k house was worth at 75k everyplace I looked. The comps in the area upheld the numbers. Now I wanted to know more, but I had to travel out of town for my real job. Fate took care of me, While I was sitting in the middle of Texas nowhere (long story) with no bars on my cell phone, it rang. It was an assigner who had the contract for the home. Because of poor cell reception, I could only set up a date to look at the house and not much more. When I got back to town, I went to give it a once over.
Now friends, listening to Dean was critical here, when I got to the house I actually met the owner and before I even went in, we had talked over 45 minutes about everything, BUT the house. I knew he wanted to move fast, I knew that he wanted to leave Ohio and go to Florida, I knew he had no family in Ohio, I knew he wanted nothing to do with the house, and I knew that only one other person had even looked at it in 3 weeks.
Finally I ventured into the house and had the experience of a life time. Friends, I have been a construction inspector for 20 years, I have climbed up sanitary sewers, been in the worst of the worst, with this house my standards changed, it was the worst of the worst!!
The first two things that I saw were first the "stuff" every square inch of every foot of the house was filled with useless junk, old clothes, mattresses, everything you could think of. There were paths thru the house to walk about. Second, NICOTINE, it was literally dripping from the ceiling in big brown drops. I actually told the seller I decided to take a good look at the outside first, just to give myself a chance to clear my head and think. I had driven the neighborhood an new it was very nice and also that the outside of the house was nice (thank you google earth for giving me a head start on the looking) so my walk around on the outside was only to think. I got my head on straight and went back in, looking at the mess from an investors standpoint.
After looking around I decided that the stuff was just that, and about 500 to a company would get the house cleared out just fine. The nicotine could be sealed, primed and painted for about 1k at most. The only thing left was the bathroom, just a wreck and needed to be gutted, about 2k or so. With other things I figured a rehab budget of about 6k by the time I was done.
So now I had a 17k house plus 6k rehab in front of me. 23k that would sell for 75k. A great deal in itself, but I was hoping for a better deal. I called the assigner and told him about problems I saw and that I could never invest 17k in the home. I gave him a detailed list of every single item I saw. Granted some of it was petty, but it was accurate and verifiable. He indicated that he had never heard these things were wrong and that his local bird dog had never said anything like this. I simply said that he could verify the entire list himself. He also asked what I would pay for the house, again I told him I really did not want to get into the project, and he continued to press, taking the gamble I said, I might consider half of the 17k. Talk about silence on the phone. Well he thanked me and hung up.
I figured the deal was dead, but two days later I got an email, short and to the point. "How about 12k?" Now the wording of it caught my eye "how about" not bottom line, not lowest, just "how about". I decided to go for it and emailed back 9k bottom line, cash, close anytime the seller wants. BUT I need an answer in two days. Well a few hours later I got my answer, "sold".
So now I have a 75k home for 9k plus about 6k in rehab. Yes I am grinning, because I and thinking about the profit form this one. Even if I sell it for 50-60k who could ever complain about this one.
One other point I wanted to mention, I said at the beginning that this home was an assignment deal. I found out after the deal was set that the assigner got 3k for the deal. (the 3k was paid out of the 9k I offered) Even doing just the assignment a quick 3k is a sweet deal for them also. You can make money doing assignments!
Friends, I think there were a few key factors to this deal that made it happen for me.
1) DOING IT!! not sitting back and thinking about it
2) Google Earth was a major asset to let me find the property and get some research done. So many people are only listing the street name in order for you to be forced to call them.
3) TALKING to the owner, and I mean just talking.
4) Keeping a clear head when I walked in, taking the time to see thru the mess and look at the house.
5) Not being afraid to go low on the offer, the worst case is they counter or say no, there is always another deal to be made.
Sorry for the long post, but I wanted to set forward the whole deal for you. I am happy with it to say the least and I do not think it is unique at all. I have another property right now I looked at weeks ago and decided against because the price was high, but I noticed the house is now being listed four times a day and the seller called me last night and asked me to make an offer. I will post that one if it comes to be.
Don't be afraid to act !!!
David
All I can say is.........Go David Go! Continued success..........Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Thanks Lubertha,
I would be lying if I said I did not have a nice big grin on my face about this one.
David
Great Job David!!!
I am very motivated by your deal to go out there and get some deal going ...but one question - Did you have to sign any form other that purchase and sale with assigner for him to get paid 3k? I am working on deal that I may have to assign and was wondering what you used that made it happen for assigner to get paid ..or if you could list the forms you used to finished this deal..so it can be clear for me ...
Thanks David , I will look forward to hear the next deal while I am working on mines and hopelly I will get to post.
For this deal there were basically two forms. The sales contract and the assignment contract.
The sales contract was between the seller and the assigner, basically just a standard real estate sales contract, nothing special. I also signed an assignment contract between myself and the assigner. Both contracts went to my title company and the just said "no problem", btw this was in Ohio. The assigner was from out of state.
If you have any other questions, feel free to ask.
David
i can feel your excitement in your writing!!!! way to go david!!!awesome deal. and yes we need to get off the couch to make these deals a reality and not just TALK!!!! those things you listed are right on the $$$$$$$$ i think you handled that deal like a pro.i am sure you will have many more deals in the future by the sounds of your actions !! great job david !!!LOTS OF INSPIRATION!!!!!!!
Click Here For homepage www.jaysthilaire.com
need to sell ? http://www.jayhousebuyers.com
Need me to FINANCE a home ? http://www.jaysrenttoown.com
CHECK OUT MY JOURNAL http://www.deangraziosi.com/real-estate-forums/investing-journals/20063/...
Well David, I guess when all is said and done, you will be grinning straight to the bank. Well done, congrats, another in the bag. God Bless.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
that is an inspiring story.thanks for sharing that with us.what a great deal i would not complain about one like that.grinning all the way to the bank.
bruce
Hi everybody,
dscvdvr great job of sharing and even better of,And/or assigns! Thanks.
Invest in yourself!
David, great job on exaiming the property & getting a great deal on it. My question is when you estimate the cost of what needs to be repaired on the property, inside or out how do you know that your calculations are correct. Since you have experience in that field perhaps you can share when it comes to totally up the costs, do you go to Home Depot to find out these answers, etc.
Thanks David & keep pressin' on!
John A.
I want to thank everyone for their support. I think the best thing out of all of this is not actually the money potential, but the fact that I can see taking my future back and having direct control over it. I am hoping that by next year, this will be my full time job and that I can make a future not having to worry about employers and job markets.
David
John,
When it comes to pricing rehab, I probably have an unfair advantage.
About 20 years ago I was a residential contractor building and remodeling homes.
For the last 20 years or so, I have been a commercial construction inspector, handling projects such as hospitals, arenas, and commercial buildings from an inspection stand point, which has allowed me to "stay in the loop"
My partner in another business I have is also a siding and roofing contractor which allows me to stay up on current pricing so I also buy him lunch to go look at properties with me.
So my technique is basically look at an issue and come up with a price in my head, very unscientific, but I am usually really close. If I am in doubt I get a friend from the industry to give me an opinion.
My suggestion for someone who might not be familiar with construction costs would not be to initially get estimates on a property you might not even buy. Sooner or later you will burn out your resources, as contractors will not want to waste time doing estimate after estimate on work they never get. If it was me, I would make some calls and set a deal up with either a home inspector who knows construction, or a contractor and tell them what you are doing. That you want a second set of eyes and their help looking at properties. Work out a price with them and get their help. In todays market for construction, I suspect it would not be hard to find some help for minimal money. After all, its only a hour or two for them now and then and few extra dollars without having to get dirty.
Just my opinion,
David
Thank you David for this post. It is very encouraging and shows that making low offers can only benefit us. Like you said all they can do is counter or say no, there are more deals out there. Continued success.
Hi,
I think,I understand your deal. Basically the deal...Was an cosignment.
Thanks again for,Sharing!
Invest in yourself!
Rosefield,
I am not sure what a cosignment is to tell you the truth.
In this case the seller and the assigner (who could be someone from the DG family) made contact. The assigner locked up the deal and then went in search of a buyer to assign the contract to. Thats where I came in as the buyer. The assigner made no secret that, that was their role. The only thing I did not know until the deal was done, was how much the assigning fee was. It did not really matter since the fee was part of the purchase price and not something "extra" on the deal. To me it did not matter if to was $30 or $3000. I knew what I wanted to invest in the house, set my limit and decided that if they took the deal they did, if not there are hundreds more in the wings.
Congrads on your deal. I'll keep that TIP you gave in mind when I actually do land my first deal.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
David, I'm currently looking at properties out of state & using an agent in that area, that's why I asked that question, maybe you would know somewhere online on how to estimate rehabs based on today's products, on how much it would cost to repair something on the property. Maybe that's something Dean can create for us to use, if that's ever possible. A hardware store would be cheaper if you bring in the list of repairs that need to be done on that property, they should have an idea on how much something would cost these days instead of having to find a construction worker? I'll try it that way to see how that works, or maybe I'm not just seeing the full picture on why you would have to take a construction worker with you to see the property.
Thanks bud for your input,
John A
John,
You bring up a great point and reading my post I was typing too late at night. I agree that many repair estimates can be gotten from places like Home Depot, but the problem I have seen is in something like a bathroom or kitchen. Many people would go to a big box store for a price on a tub, vanity, and sink, but not think to get pricing on the drywall work that might be needed. The green board for the surround or the tile work if one wanted to do something like that. I think people who do not have rehab experience do not get accurate pricing for things that are more costly for labor then materials.
For example, top me putting in a vanity, most of the cost is in the materials, since it is a pretty simple install.
Repairing a the walls in the same bathroom, might only need drywall and green board, but installing is properly can take a good bit of labor.
Some of the people at the big box home stores are very good and can help with things like that, but so many are not. They know what they sell, but not necessarily how to get it installed. Some things are easy, replacement windows are usually an "installed" price, but others can have so much hidden labor behind them.
My personal choice would be to have someone with me for an afternoon, go thru several houses and get rough estimates as I go. In my area at least I have lost several great deals over only a few hours delay. I would still recommend a contractor for help, not necessarily a construction worker. Most construction workers actually have little knowledge of costs involved, it is the contractors that really know what is going on. Even with as long as I have been in construction, I still appreciate the advice of a knowledgeable contractor.
I hope that this makes more sense, and again, its only my opinion.
David
David, congratulations on the deal!
I'm sure the assigner was not expecting to have to go lower on his price! I'm assuming he had the house locked up at 14K plus 3K for him for a total of 17K.
So when you came in at 9K, he had to renegotiate with the seller and get a new contract at 6K!
You put the squeeze on the assigner, having never met him. Did you really think he could convince the seller to sell for 6K?
David, congratulations on the deal!
I'm sure the assigner was not expecting to have to go lower on his price! I'm assuming he had the house locked up at 14K plus 3K for him for a total of 17K.
So when you came in at 9K, he had to renegotiate with the seller and get a new contract at 6K!
You put the squeeze on the assigner, having never met him. Did you really think he could convince the seller to sell for 6K?
WOW!
Great Story,
Congratulations!
Angela
Good job david that is a way of going head on.Thanks for posting that story makes me happy for you. I realize that sometimes you just have to push farder to see how far one would go accept to get things done that really open up my mind in a different way to give a price low. Thanks again and hope you have more success.
Mike,
The price reduction was an interesting gamble, especially since at that time, I did not know how much the assigner was getting. A few things came into play though and I will try to pass them on, in no particular order:
First, I actually convinced myself I did not want the property, that is my approach on every one now, as it has been said here and in the books, talk yourself out of every property you can, the ones that remain, you buy. For this one, I was at the point that I did not want it and I think my not caring came across in my voice to the assigner, a true take it or leave it.
Next came the single biggest thing I took to heart from Dean, that being listening and finding out what makes people tick, what they need.
From my talk with the seller when I looked at the property, I knew he just wanted to move to Florida and at one point he mentioned he just needed money to move. In the seller I saw little financial desires. I also assumed since he had done NOTHING to prep the house, it had little value to him. If he invested just a little time and money to clean it out, he could have greatly increased the price.
From my many talks with the assigner I learned several things, They were being pressured by the seller to get it sold. That they were having no luck even getting people to look at it. They had told me one other person had looked at it and passed. They also played the card that another person will be looking at it this week. Again I had already decided that I really did not want it, that there were many more deals out there, and if I took it, it would be one heck of a bargain. When the assigner called me back, I had already moved on looking for other homes. But again, LISTENING to him talk, I truly sensed they were in a bind to sell it. Also keep in mind that in my earlier discussions with the assigner, it seemed that their local agent was not really conveying the true problems with the property, I can not speak to why, but it was a fact.
Thru all this, I did not really look at it from the point of if the assigner could renegotiate with the seller, I looked at it that both the assigner and the seller were very motivated. When the assigner countered at 12k I considered very quickly countering at a higher price then my initial 9k, but decided to take my original approach. I told the assigner that I was very sorry, but the house was just not worth more then 9k to me and that I understood if they wanted to find another buyer. I did also mention though that my offer was immediate close and that I wanted no escape clauses in the contract other that a clean title. I had already done my homework and felt confident in the deal. The rest is history, a few hours later that called back and we signed the paperwork.
I hope this answers your question.
David
Thanks again to everyone for their support,
I know I am still very new to this and that I have and will make mistakes. I am sure many of the veterans have different approaches to things, but one of the great things about this site is the fact that people are open minded and are very accepting to different approaches. It is nice to know you can look for information and ideas without being buried in criticism like one would be other places.
I have said in a different thread though, what I have felt my single biggest mistake to date was and I still believe it.
I failed to get of my butt and take action sooner!!!!!
I truly feel that right now I am still working my day job, because I did not take action sooner. For now I smile and consider it a bit of payback and a learning experience. But I will say this, people at work have commented how much better a mood I seem to be in on a day to day basis
)))) I feel like the cat that caught the mouse.
Friends, ACT!!!, if you only wait for the perfect deal, you will wait a long time.
It may sound crazy, but I look back many times to watching the world poker tour on tv. To seeing the best players not play the two sure cards in their hands, but taking the game to the others around the table. It might not be the best way to look at it, but in many ways I look at real estate much like Texas Hold'em and to date nobody has won the millions just watching it on TV.
David
Thank you, David, for putting fingers to the keyboard and typing out what happened with that deal. It's a really good posting, and for me brought up a lot of great points. How you saw beyond the dripping nicotine stains and "stuff" everywhere is inspiring. It's a good lesson.
Nancy D.
Help feed the hungry - www.freerice.com
This is true for RE..."The best way to learn this business is to do this business." - John Addision, co-chief executive officer, Primerica
Aerialist's Journal - Because Life Is a Circus
http://www.deangraziosi.com/real-estate-forums/investing-journals/18857/...
Congrats! It is so good you saw thru all of the bad and could see what the outcome will be in the end. Let us know when you close and when you start getting this place fixed up to put on market.
Jeremy
This train, Dreams will not be thwarted
This train, Faith will be rewarded
Big wheel roll through fields where sunlight streams
Meet me in the Land Of Hope And Dreams
Bruce Springsteen
Thanks David and others for motivating me to get off of my butt and take some action. I received Deans books in April and will work on my buyers list. This is my first response on the site. I keep reading and learning and I'm gaining confidence to take action! Can't wait to receive the edge kit I ordered.
I need all the help I can get. I'm out of work (southern NJ), but now I can focus on REI. I'm gonna do it!
Mark K
"If you don't try, you,ve already failed! - BARM pg 114
"One success can wipe out thousands of failures." - BARM pg 118
I will try to track this deal thru the process for you.
My plans for this one are immediately after closing to try and re-fi it for 20 to 30k or more if I can pull it off. I would then like to use some of the money to rehab this house and use the rest to buy more properties
If I can't pull money out of it, I am confident I can, but just in case, I will get the rehab done and get it on the market.
Right now I have no interest in holding rentals, I would prefer just to sell discounted and build my cash base.
I have been squeezing my initial funds from friends, 401ks and such and would like to be able to use my own money to buy with. For these under 10k houses, cash does give significant buying power.
Either case, I will keep everyone up to date on the process for this one.
Tomorrow I meet the title agent to sign the final papers.
David
Good job David. Build up that cash and buy more.
BRE #01956371
Good job. I admire your perseverence and your Action! Congratulations on a great deal and thanks for sharing the details with us.
All the Best in Life!
Scott
Great job. Sounds like you played your hand just right. I am in Rhode Island and let me tell you, the market has bottomed out and is just on the verge of pulling up again. The sales have doubled from a year ago this month! I'm getting off my butt right now. Thanks for the inspiration David!
Paul
Paul M Plage
Hope Hill Properties, LLC