I sit back. And I think and I say, Hey, this is actually what we face a lot of the time. In real estate, we face sad situations where we buy properties, not because we’re trying to lowball people and just take a giant profit. But because this house needed $100,000 of work and needed a ton of work before we could even get it livable or sellable on the open market, it was going to need a lot more.
So I went back to the office, I drove back and I was actually a little sad about the situation that was there. And that people live like that. And I wish I could help them I hope the guys doing good don’t know much about. We’ll get to the end later about what ended up happening the property.
But I hope that guys, all right, so I drive back to office and I say, well, with $100,000 of rehab, I can’t buy a house for 415 or 410. Like the guy wanted, the seller was asking and sell for 500,000. If it needs $100,000, I’m gonna be upside down plus, I need to make profit. Plus there’s a bunch of other costs in there, like closing costs and all that.
So I sit there and I say, look, with my new numbers, I’m actually going to need to be in the low three hundreds, just like that other buyer, the white old man with the gray hair, he told me I need to be lower. So reluctantly, I feel like it’s gonna be a tough conversation because the seller thinks he’s, you know, he thinks he has a gem here.
So I eventually call the seller I make my offer. And guess what he says? No, he’s like, look, no, I have other people. I have three other offers at 415 Way better offers in your low $300,000 offer.
And I was like, There’s no way that someone’s gonna buy this house at that price. I’m sure they’re just trying to lock you up and they’re gonna renegotiate you down later. Also, I asked him while I was on the call, if I said, Did you know The house was in that bad of condition? Guess what the seller now is like, Yeah, well, the guy’s disgusting.
And he didn’t tell me, bro, I’m like, You should have told me man, you should have told me. But look, sellers are liars and buyers are to it. It’s just unfortunate how it goes. I’m not a liar. Because I’m about to call Michael. I just went to see his house. Terrible, terrible condition. I just sent him a text message about the photos from the property. Just show him that, you know, I saw it, it’s a lot worse.
We’re gonna have this discussion. He just wants an offer. I’m not just wanting to make a quick offer and get off the phone. I’m trying to figure out how we can structure a deal in this house is bad.
Okay, I’m gonna call them. And this is the kind of guy that’s gonna try and get your offer out to you immediately. I’m gonna try my best to not just make my offer immediately.
Let’s see how I do. I can talk a big game. But this guy this guy’s a freakin bull. Hey, Michael, how are you? Good. Thanks.
How you doing?
You know, it’s a good day. It was a it was quite the property got there. Once I got down there and saw it.
I’m pretty hesitant to make my cash offer just because I know it’s a lot, probably a lot lower than what we initially discussed, just without me seeing it. But it seems like you want a cash offer? 1031 exchange.
So okay, yeah, you know, because again, I want to I’m exploring options on this one. Because yeah, I think if I were just to come at you with a cash offer, it would I wouldn’t want to offend you in this one after looking.
Tell me what the cash offers. You’re not gonna send me. Okay. So for a cost to buy a house 304.
I’m secure, Sam. That’s what I’m thinking after running the numbers you got for ad is the after repair value of what I think I can sell this for if I fix it, the landscaping, do a complete rehab on the house.
I have my hard money costs. And I think it would take six months in total to rehab and list and since I’m, you know, I have connections with agents, I don’t pay to list my properties.
I just had to pay for a buyer’s agent. So I got closing costs a $5,000 rehab, after everything’s said and done, I’d make about 47k, you know, 304? Is that something you’re open to? Or is that completely like not something you’re not interested in?
Oh, it’s not even close. Okay, then then we kind of explore the different options of like the terms, you know, where I basically go in there, and I can make you payments, fix up the property, and it would be cheaper than me getting hard money, right? And then I list it and sell it when it’s ready.
That’s a potential option, or we partner on it. And we figure out, you know, how much money I bring to it if we split it, or if I do the whole thing, how much you would walk away with? And would we split the profit above what we give you, you know, those are the options that I can see at the modeling the best option?
I mean, I would consider some sort of seller financing potentially, you know, initial numbers 304. I mean, I’ve got offers at 410 cash. So for me to carry it for a year, I’d have to be at least 450 to make it to make sense in which I understand completely. But the thing is everybody it didn’t work out. He didn’t accept my offer.
So then I said this, I’m not done. The story is still getting juicy. I said to him, hey, look, I’m gonna follow up with you. Because I don’t think that offer will go through.
He said, Hey, better yet, I will call you and I’ll let you know if it closes. So he said it’s closing next week. I’ll text you. I get a text the following week. He said just got paid, got a closed and I said well, what price did you sell? And by that he says for 15. I was shocked said there’s absolutely no way someone bought it for 415 and is going to resell it and be able to make money.
There are definitely noobs there. They don’t know what they’re doing. He said I don’t know how they’re gonna do it. But I got paid. So I said hey, do you mind give me the information of the buyer. I’d like to talk to him because I sell properties too if he’s buying property Isn’t that crazy price?
I’d like to sell them some properties to he gave me the information the buyer, I gave him a call, and I talked to a guy named Scott said, Scott, how did you do it? How is this possible that you beat my by offer my cash offer by almost like $100,000?
How did you do it? He said this, he said, I have a relationship with a hedge fund that pays a lot for properties that meet specific criteria. What I’m going to do is buy this house, clean it up, get it ready, and then I’m going to sell it to them.
Now, wait, right here, even if you were to do that, in my mind, I ran the numbers, it’s like, even if you were to do it, buy it, hold the property and then sell it to the hedge fund.
How are you going to make money even if they pay like 440, you’re gonna have to buy it, wait two months, clean it up, it’s probably going to cost at least 20 30k. Where’s your money. I didn’t say to this to the guy, but I thought this.
But anyway, it’s up to him. He can do whatever he wants. But I was just shocked that someone bought it and paid that much. Because there’s just no room, there’s no spread, we’ll see what happens. I think we should do a follow up video to see if the guy made any money I can call.
But basically what I wanted to say to everybody is I tried to turn a situation that went from not being very interesting. And the guy saying he wanted too much to go to see that it was in way worse condition. And then finding a buyer that’s willing to pay way more in this going to see this house before I made a cash offer.
I was able to go meet a new buyer through this situation, I was able to kind of work on my skills of being able to negotiate and walk and I met another buyer at the house.
Anyway, there’s a lot of things that I learned. But one of the things that I want to let everybody know that if you are talking to a landlord that doesn’t live in the same state and hasn’t seen the property in a while and they want to sell their house, you should go see the property because 90% of time the tenant that lives there has not been taking care of it and has neglected it and the landlord doesn’t know this is what they call out of state absentee owners, they do not live in the property.
They’re absentee owners of their out of state. So that’s what these are. So if you run into any of these and they want to sell the house, go and see the property. So what started as a simple property visit transformed into a story of twists and turns and seeing house with poop and meeting new buyers.
It was absolutely crazy. It taught me again that in real estate, every challenge can lead to new opportunities. Thank you for joining me on this rollercoaster of a ride story and if you enjoyed the content, please like subscribe and hit the bell icon for more content like this.
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