Ken,

Less than a year ago, I was approached by a total stranger who told me " I heard through the grapevine that you buy houses and I would like you to buy my house'. Long story short, I ended up buying his house at wholesale, rehabbed it, and now it is rented out at 1,000/month.

Lighting has struck again and in the same neighborhood too ! Last Monday, I got a text from someone I had met 5 years ago and he had kept my number stored in his phone. He has a house that he bought for his aging sister just 2 years ago and now that sister has been moved to a nursing home. According to him, the house needs work and in about 3 hours I am going to see the inside of the house and make the determination if this house is worth pursuing. His asking price is $60K which he thinks is a real bargain price. I am the one that determines what a bargain price is,...not the seller,...LOL.

Just wanted to give you a heads-up my next adventure in FSBO housing wonderland. One thing I need to find out soon is if he owes any money on the house which can create complications if he has no equity in the house. At this writing, I would like to assume he paid cash for the house since he was buying it for his own sister. I hope this is the case.

Talk to you later after I have toured the house for the first time. I may need to consult with you if I decide to make a low-ball offer.

Nice job Roy- getting your name out there. So often, investors make themselves into secret agents. Where it might not be a good idea to flaunt wealth, it is awesome idea to get the message out there that you are the one that can get deals done.

Ray N PA,

5 years ago, I had vacancy at a rental house and this man and his elderly sister showed up to check my house out. They determined my house (2/1) was too small for the sister, so they left never to be heard from again. Last Monday, I got a text from this man and he had to refresh my memory on how he got my number.

Before I ever look at or discuss a purchase with anyone, I find out everything I can. I look up the name. I look up to see if mortgages or judgments I see how long they've owned the property and if they have refinanced. I look up civil cases, mainly for divorces. I look up criminal records.

Nicole,

In years past, I would look at 20 houses for sale and from that, I would make a 'short list' of 5 houses/sellers I may want to make an offer on. Doing background research is very important but until I have a truly motivated seller, doing background research can be a waste of time.

I will meet the seller in about an hour and I hope to be able to determine if he is a 'truly motivated seller' and not someone who just wants me to reimburse him for a house that he over-paid for 2 years ago. I see that a lot!

The nice words are ..."house that he bought 2 years ago..."

Yep, he still has it listed on Zillow and he has dropped his asking price a little,...that is a sign of 'being motivated'.

If you want to see his Zillow Ad, google this address: 806 Tidmore Bend Road, Gadsden, AL 35901. Listed for $59,000 and it has been listed for 16 days too.

The pics don't look bad, but it does say "pics are from 3 years ago." I wonder if sister had dogs or loser boyfriend who tore the place up?

Sid,

I have toured the house (it was trashed, entire living room ceiling is on the verge of collapsing) and I have had a talk with the owner that did not go very well. I accidentally pissed him off by being 'more than honest' with him in trying to explain to him why the house he paid $58,000 cash for 2 years ago, is not worth that today. It was not even worth $58K two years ago and now (according only to Zillow estimates) it is worth $100 -$125K.

The seller here was bull-headed, stubborn as a mule, and he is also a naive idiot for believing 100% in the ARV that Zillow said his house would be worth,...assuming someone is willing to spend $30-40K in fixing all of the problems it has. Living room ceiling was just the tip of the iceberg. What I said that irritated him was: Zillow is the worst place in the world in getting ARVs/estimates of what any house will be worth in the future. That pretty much ended our conversation.

The seller here will take $50K cash today for the house and not a penny less. The seller kept pressing me for my best cash offer and I would not tell him anything since my highest low ball offer would only have pissed him off even more than my comment about Zillow's computer algorithms that spit out bogus market values and estimated rents also. There are people who actually believe this garbage about what Zillow says their house is worth!

Ken,

I do the same research as Nicole but not on every house I look at. Whatever is #1 on my short list, that is where I begin to do research. And without a motivated seller, nothing else really matters much.

Ken,

I was just being honest with the man and it backfired on me. It has happened before. This seller lives in another city 250 miles from here and he does not know the market here like I do. I have other houses in this same C neighborhood and trashed houses like his sell for $30-$40K. After $30K in repairs, his house may re-sell for $75K on a good day, but not for $100-$125K that Zillow has led him to believe.

Who knows? He may call me back in 6 months when he finally realizes that no one will pay $50,000 cash for a house that has been trashed by a family of squatters. His sister had already been moved to a nursing home 6 months earlier and with him being 250 miles away, a family of squatters moved in and lived there rent free for 6 months!! The stench of urine was in every room since there was no running water to flush a toilet with. And there were several 5 gallon buckets inside the house and you know what those were used for.

Ken,

Your reply is difficult to read. Can you start using some paragraphs?

Obviously, your methodical approach to this situation is different than mine is. This seller here is stubborn and bullheaded and can't seem to get a grip on the reality of this house being worth less now than what he paid for it 2 years ago. |And when he realized I was not going to reimburse him, he got irritated and walked off. I can't deal with people like this.

KEN - The 10/7/22 8:21PM post is EXCELLENT - obtain the facts before hand - conduct a walk through - get the seller at ease - lighten the conversation while probing the seller to confirm the facts - provide a fix for his problem.

Years ago I worked with a guy who sold farm equipment - he had a strategy very similar to yours - smooooooooooth.

PG,

I prefer to get my facts straight from the horse's mouth which is usually the person who bought the house and whose name is on the Deed. I did that yesterday. Now, if that person has died, a courthouse records search is done to locate the next of kin.

Roy, you are normally a "Buy and Hold" landlord like us. We care what a house may eventually be worth, of course, but not *really*. Only what the cash flow will be after we fix it up. However, if getting it to a good rentable state will cost too much money, as it sounds with this house, forget it.

Getting too old to take on massive dump projects these days. Takes too long, too frustrating with supply chain issues, cost of materials, cost of labor...all for $1200 a month?

WMH,

I could not have said that any better than you just did. Thank-you. All for $1,200/month? In your neighborhood yes, but in this C hood this house would rent for only $850/month.

To me, this house is worth $30K because it has Central Heat/Air, metal roof, vinyl siding, original hardwood floors and it is located in a good C hood. That is the good news. The bad news is something you see and smell as you walk through the front door.

WMH,

In Class C hoods, a min. 2% rent to value ratio is what keeps my enthusiasm in check. To achieve this, I have to buy the house at rock bottom wholesale and not the owner's asking price which is usually over priced retail.