So, the seller of the triplex who had dropped $60,000 off his price on the phone called me the day after Christmas and again a day later. He really, really wanted to get rid of the property.
So, I figured out what I would be comfortable offering (which was around $108,000), then Skyped with Bill Twyford, who advised me to start at $120,000. The seller had the triplex on the market for $250,000. I got on the phone with the seller (nervous as all get out) and explained that I was embarassed to make this low offer, but the property wouldn't cash flow at $190,000 (which was what he told me earlier was the best he would do). He told me to just tell him the number, so I did. He told me I was a little off. For once, I actually remembered the negotiating tactic of he who speaks first loses... and I shut up and let the seller tell me how much I was off.
He said "$10,000."
So I said "You'll take $130,000?"
He said, "Yes."
So, I told him I had to think about it and would get back to him. I got off the phone, did the happy dance and called back a while later to accept the offer. I called up my fabulous real estate agent to write the offer on the 28th and we had it all signed and sealed up on the 29th.
Meanwhile, I started calling people on my buyers list... people that I was sure could perform. Well, long story short, I spent a few days working with someone who I greatly respect and he couldn't come up with the money and was kind enough to tell me that I could shop it.
So I called Michael Jake to talk to him about it... Now I gotta say that I feel extremely blessed to have access to Bill & Dwan Twyford and to Michael Jake. They are a giant help!
Michael told me how to pitch the deal at the IRR meeting the next night since it has both equity for a flipper (between $60,000 and $90,000) or is an excellent rental property which will cash flow some $1,200 a month. So, I called up my sister to watch the kids, made up my flyer just before the meeting - yeah, it was very badly organized... I put in the numbers, but forgot to put in the property address. I printed 25 flyers, thinking that would be plenty.
I have to admit that the IRR meeting was almost perfectly designed to sell a property. Brad and Andy were talking about getting past your fears of wholesaling and went through the 9 deals they had wholesaled last month. When I got up there with a property, which I must say is an excellent deal, I got mobbed. Literally. They had to restructure the meeting because so many people were running up to the front to get my flyer. Not only did I run out, I took approximately 8 other emails who were interested. And, one lady called me before she left the meeting because it was too crowded for her to get through. Trust me when I say that this was not what I was expecting.
I emailed the flyer to everyone when I got home Tuesday night and called back the lady who had called me first. Wednesday, the calls started pouring in. I showed the property to 4 people between 4:00 and 5:00 Wednesday afternoon & had a call from someone else who wanted to see it after I already accepted the first guy's deposit to assign the contract. Obviously, I had to tell him it was gone.
Now, the guy who I accepted is going through a hard money lender, so has to wait a week to close. The other people there could close faster. I called a Denver investor friend of mine and Bill Twyford (unfortunately after the fact) and got excellent advice to always accept the guy with cash first. Put the other guy in 2nd position.
Still, I feel as if I gave a newer investor a chance to get a great deal. It helped that I talked to the hard money firm he's going through before he ever did, so they're pretty forthcoming about whether they can fund the deal. At this point, it looks like a "slam-dunk." All they're waiting for is the buyer's list of repairs.
Which, of course, I helped with. I sent the buyer some contractor resources, including a roofer who had already given an estimate for necessary repairs.
My realtor told me to make sure the money commitment is firm by tomorrow in order to let the guy keep the deal. One of the excellent new clients he got from my showings really wants it - and they have cash.
So far, this has been a win for a number of people.
1. The seller who is getting rid of a property he doesn't want & getting a profit out of it.
2. The seller's realtor who is getting a commission.
3. My realtor who is getting a commission and a few new investor clients (Did I mention that he's the best investor realtor in Denver?)
4. Me - I'm getting a $20,000 assignment fee.
5. My buyer who is getting a property for $150,000 + $22,000 in repairs that will be worth $262,000 (10% CAP rate on NOI) when it's all fixed up and rented out.
6. The hard money lender who is getting points and interest.
7. The title company who is getting their fees.
8. However many contractors the buyer uses to fix up the property.
9. Some section 8 renters who will get a fixed up place to live in a decent area.
Well, to be fair, the last 2 haven't gotten any benefit yet... but they will.
This is a pretty cool business. The property must close by the end of next week, so I'll let you know what happens between now and then.
Until next time...