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November 2017

Always Go Into The Deal With Zero Expectation

You Just Never Know What A Seller Will Do


This call came in early in the month. The seller said she had a house her and her brother bought for their father to enjoy during his retirement years. He was gone now, and they had rented the house for a while, but it was time to move on. I pulled title and saw they purchased the house for $181,500 back in 2005. That's some top of the last market pricing right there. I comped the house and came up with $145,000. If I were the type of person who makes up seller stories, I expect I would imagine the conversation would go something like this:


Me: Well, based on the market, the best I can do is $91,700.

Seller: $91,700?!! That's half of what we paid. I'm not selling for that low ball price.
Me: Yeah, it's not ideal, but it is the best I can do. You really deserve to get all that you can out of this house. If you can make that work, please let me know.

Seller: <Click>

Me: ....


But I'm not the type of person who makes up stories in my head thinking I know what someone else will or won't do. I don't really care what other people want. I like to say that I want a Ferrari parked in my garage, but every morning when I open the door, there sits my beat to shit 10 year old Toyota pick-up truck, and guess what? I get in, turn the key and happily drive it off towards the next deal. What we want and what we get are rarely the same thing.


So, how the conversation went was more like this:


Me: Well, based on the market, the best I can do is $91,700.
Seller: $91,700? That sounds reasonable. I need to contact my brother who is the co-owner and I'll get back to you.
Me: I emailed my offer over to her in one sentence: "My cash offer is $91,700. If you can make that work, please let me know ASAP."

Six hours later I received a response: "We accept your offer. Let me know if you need any documents from me."


My private lender wired $95,000 to escrow and seven days later I closed on the property. I then sent a notice of rent change to the tenants and raised their rent to $1,000/month. Those are pretty good numbers according to some people I talk with. I just can't understand why people here in California think they need to look all the way over on the other side of the Rocky Mountains to find 12% deals? I'm not even sure why they look anywhere out of state. Makes no sense when they haven't looked in their own back yard first.


What kind of deals are you looking at and what is your criteria for a buy and hold property? Please don't forget to share the link to the site with those you think may benefit and leave any comments down below.

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