I had heard from a real estate broker friend of mine about a ranch house fresh on the market on a street/route I sometime do my daily run on. So I decided to run past it and saw it was in great condition. As I’m running by, the owner happens to pull up and we chatted. She asked if I wanted to see the place, so I took the nickel tour.
One thing I’ve been trying to remember is to always find out as much as possible about the seller’s situation. It turns out she and her husband are currently having a bigger house built and needed to sell the ranch within 60 days.
I knew this ranch house has a fair market value around $111,000 to $112,000. And this one could command it from the condition. I just decided to hit them cold as I stood out on their driveway. “What would be your rock bottom price to take it off your hands today?” They responded they really needed all of it and couldn’t seller finance because of funds needed for the new house. I politely thanked them for their time and finished my run.
I faxed an offer of $97,000 to them. Their agent said they weren’t going to even counter because it was fresh on the market and they had 60 days. Call it gut feel, but I just knew they wanted to have the sale of this ranch behind them.
I responded, “OK…but if they can see their way to sell at $98,000, I’ll sign the papers now, and this will be behind them. And then I did the old sit back and wait. I was anxious because I knew they would probably get a better offer IF they really were going to wait out the 60 days. I was playing strictly off a hunch and held off any more calling as not to appear over anxious. It paid off.
The Realtor called me the next day and said they had a counter. We went back and forth a couple of times and I started gently wedging in the information that I am a real estate investor for buying places to rent out and even though their property was nice, my numbers have to crunch. Then I sat back and waited…
They called again, and I then knew the hook was set. To get a positive cash flow, I knew I could only go to about $94K on the financing. We negotiated to $101,200. I’ll end up putting in around $10K from equity in another property. So I’ll put in $10K at the start of closing and 32 minutes later have a property with a positive cash flow and instant equity of about $10K. 100% return in about 32 minutes worth of work.
The moral is even if the deal looks like there’s no room, it can’t hurt to ask. Also, putting money down into deals is not a bad thing as long as the numbers crunch and you can pick up some instant equity with the stroke of a pen. Nothing wrong with “no money down” deals per se, but don’t let that blind you. You just might be able to double your money in 32 minutes worth of closing!