Looking back on when I started out in this business, I admit that I got lucky. Too many times I have heard about someone new who got involved with someone who used them or worse, stole from them. Sadly, it happens. Someone see’s an infomercial and decides to get into real estate investing. Then they meet someone who appears to know what they are doing and… You get the idea.
When I started out in 1999 I was out knocking on foreclosure doors when I met someone I thought I could trust, John C. (he asked I not use his last name)
I was walking out of an abandoned house when John pulled up and got out of his truck. He introduced himself and told me he was looking to buy houses and asked if I did the same. Since I didn’t have money to buy a house without getting financing, I flipped contracts. In other words, I would contract with a homeowner to buy their house and would assign the contract to an investor who could close fast and pay cash to buy. The investor would pay me an assignment fee. This is one area that new investors get taken advantage of by the non-trustworthy. They would be promised a $10,000 fee, for example and by the time the deal closed, the newbie would be lucky if they got $500.
John told me to bring my deals to him before shopping them to anyone else. (How many times have we heard that?)
Soon after, I contracted a house that was in foreclosure and called John. He went out and looked at the house and agreed to pay me $5,000+ for the deal as long as the payoff wasn’t higher than we expected.
Two days later, I went from excited to deflated when the payoff came in. It was nearly $20,000 higher than expected. I never made that mistake again by not asking the homeowner if they had filed bankruptcy in the last seven years. It turns out that the homeowner had filed over a year ago and was behind 14 payments, not 6 as I had estimated. John told me he couldn’t do the deal and the house would likely go to the auction.
A few days later, I was at the auction when I saw John wave at me to come over. He was bidding on a property at the time but, told me to find him during the lunch break because he had something for me in his truck.
I found him during the break and we walked out to his truck. He leaned in, moved some things around and turned around to me and handed me a check for $500. I was baffled (happy as well) and asked him what it was for. He told me that he went back to that house and ended up buying it.
I didn’t understand why he had done that since the house had such little equity. He told me that he heard a new Tollway was going to be built soon near the house and the value should go up quickly after it is completed. So, he looked at the deal again and decided to use it as a rental until it appreciated enough for him to sell it.
John didn’t have to give me anything for that. When we got the payoff from the bank, the contract was voided. The only way I would have known that he ended up buying the house is if I would have checked the tax records months after that and even then, what difference would it have made? He wouldn’t have owed me anything and that’s that.
But…John did buy the house and he told me he wouldn’t have found it if it weren’t for me and that’s why he gave me the $500. I haven’t met too many investors since then who would do the same thing if they were in a similar situation. John C. proved to be a very trustworthy person and the result of him doing what he did was I went to him with the next thirteen contracts I got. Every one of them went smoothly and both of us benefited.
As I said before, I got lucky when I started out because, I met someone who was trustworthy, John C. and it paid off.
Photo Credit: Joe Nangle
Article Author:
Jim WatkinsJim has written 39 articles for us.
Visit Jim's Website: http://www.dfwmentor.com
Jim has become a specialist in the PreForeclosure field and teaches investment real estate with Foreclosure Listing Service, Inc. in Addison, Texas.
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