A Niche List Buyer Brings Me a "Smoking" Deal
My buddy Elijah contacted me about a potential deal in the Los Angeles area. Elijah lives in Arizona. He had spoken about his niche, fire damaged properties, and an accountant remembered Elijah's name when one of his client's homes was damaged by a structural fire. The accountant called Elijah, told him the situation, then Elijah called me because we met when I spoke for Bigger Pockets at an event they put on many years ago in Colorado. Networking.
This house was severely damaged.
. 3 Way Wholesale fee. $31,044.78
don't think of this business as a brandable type of endeavor. Once escrow closes, the relationship with that seller is done. Everything they know/knew about you is done. They get their check and go on with their life. They don't tell their friends. They don't tell their neighbors. They get their cash and go spend it forgetting all about you and your business. It's a sad story, but it's the reality of what we do.
However, every once in a while a seller calls back and raises his/her/their hand with another house for sale. For that sole reason, I always try to treat sellers with respect and give them a fair deal. Don't get me wrong, I will take the lion's share of the deal if it's on the table and no one else is grabbing.
I bought a decent house off a seller in February 2016; A 3 bed, 2 bath 1,176 Sq/Ft ,1955 built house on a 7,400 sq/ft lot with a detached 2 car garage in a working class neighborhood. In my opinion, it is about the perfect rental house a single family house investor could own.
Normally, I keep track of what I call Multiple Property Owners, or MPO. I clean them out of my lists and send them special marketing pieces with the anticipation of buying their entire estate. It has happened before. I also like to keep track of who owns what that way when I buy one property off a seller, I can keep working on them to get the another shot at anything else they might want to sell. No guarantees I'll get another bite at the apple, but I want to be sure my name is in the hat if there is an opportunity.
This all leads me up to this month's deal of the month. I had a couple other wholesale deals, but this month's stands out because it was from a past client. She called and informed me that I bought her other house and now she wanted to sell another one. Unfortunately, it was an unspectacular negotiation. The wife called me up and said I bought their other house a year ago and they wanted to know if I was interested in another one. I got the address and ran some quick comps while I had her talking on the phone. I comped the house at $250K. I made her an offer of $160K. She said she'd talk to her husband and get back to me. Two days later she called back and said they were hoping for more. They were thinking $200K. We negotiated back and forth and settled on $178,900.
I did a small rehab; 5 new ceiling fans (there is no A/C), new kitchen lights, new kitchen faucet, new exterior light, and then raised the tenant's rent from $900 to $1,300. The house isn't in great shape and it doesn't have a garage. I was originally going to flip it, but I decided to sell off some other properties in areas I don't want to own in order to keep this one in a neighborhood I do want to own in. Just another play in upgrading the portfolio.
Please leave any questions or comments below.