ALWAYS Submit an Offer!
It was right there!! And I coulda/woulda/shoulda had it, but now I don't. The deal came across my desk first, and my gut had all the number's right, but I dragged my feet, and I NEVER SUBMITTED AN OFFER.
My friend/realtor tossed me this property thinking I'd be interested, and I was. It was an estate sale, which had 10 units spread over 3 properties, and she gave me the rent roll. I had good initiative to start, and within a day I had a verbal offer, $377,000. I didn't even have the pro-forma with maintenance, management, or an accurate insurance quote. But I knew I was conservative enough estimates, and I viewed the properties that day. I got the rent roll, expense reports, and insurance quotes and only ended up smiling bigger. My "max figure" on the place rose to 517,000, and I felt confident I'd have awesome cash flow even if I had to come that high.
The seller's decided to order an appraisal though, and said they wouldn't consider anything until it came back. Okay, no big deal, I can wait. I had lots of wiggle room, and sat in waiting, ready to throw my offer in there! I probably asked the listing agent 3 times a week for 3 weeks before all 10 appraisals finally came back. At $686,000.
Oh my lanta, what terrible news! My first multi-family property, my diamond in the rough, which was going to make me a ton of money, is worth too much! Granted, that's probably because I got too excited, but still! I was immediately and deeply disheartened, because I figured they wouldn't entertain even my top figure.
The perfect setup was falling apart. The listing agent was negative about entertaining anything that wasn't reasonably close, and I ended up NEVER SUBMITTING AN OFFER. I asked for the appraisals, looked at them, and thought to myself how they weren't that accurate, and I NEVER SUBMITTED AN OFFER. I had those appraisals for TEN FULL DAYS! I fully intended to submit an offer eventually, telling the listing agent I would any day now, but I NEVER SUBMITTED AN OFFER. My max number stayed at $517,000, and would have made me 1000/mo cash flow (100 per door), close to 9% cap rate, and 15% Cash on Cash, BUT I NEVER SUBMITTED THAT OFFER.
Well someone else DID SUBMIT AN OFFER, and the property is under contract now for $420,000. See ya around Money, take it easy, Great Cash Flow. Nice to have never met you.
I'll put in a back-up offer, and it'll be high enough that I hope the seller's manage to wiggle out (because hopefully they can't sleep at night knowing it's out there), but I'm not optimistic about my chances.
Lesson Learned. No matter what, ALWAYS SUBMIT AN OFFER! And be quick about it!
Comments (3)
Thanks for posting this, Christopher. Yes, it's SO important to always submit an offer... this is a lesson you'll always remember; kind of like the real estate investor's version of the fisherman's "one that got away". This same rule applies beyond offers to many other aspects of investor: you never know unless you ask... for a discount from an overpriced contractor, for interest from a buyer, for seller financing, for a loan, for terms... you name it. Always ask.
Kent Clothier, over 8 years ago
I like the story - it's a good reminder and very true.
Here's the Silver Lining.... "the deal of a lifetime comes along every day if you're looking for it." - me
Just ask anyone who's done this long enough.
Here's another quote I try to live by - and I get the impression you may too.
"Don't wait for opportunity to knock. Install cameras at the ends of your street, a motion sensor at your driveway and a large sliding glass front door so you can rush to meet it in the street." - me
David Miner, over 8 years ago
Love the philosophy. I think I will incorporate that into my life. In regards to the OP, I had to agree. If you never submit the offer, you never will know the answer. I find it amazing when people say they never will do an owner financing deal and when you submit the offer, they at least consider it.
Account Closed, over 8 years ago