Investor · Boise ID · Member since 2014 · 113 posts · 25 votes
Hi Guys looking for some advice here. I have found the perfect house for me its a serious fixer in my neighborhood that has been vacant now for 4 or 5 months. The lady who owns it is older (80ish) and has a business manager running things for her. So far there is little to no work going on at the place and this house needs everything its basically gutted it's killing me seeing this house sit like this. If I could buy it. I'd have it fixed up and a tenant in there in 6 weeks or less. I have talked to both the business manager and owner and told them I'd love to buy and have shown them a seller financing scenario that I think would be perfect for the owner. No tenants trash or termites and she would be getting a steady monthly income. I would love to hear how you would approach this situation. How you would structure the sale to suit the owners needs.
The problem in your deal is probably the owner financing. A lot of people are very uneasy about these arrangements. They want the money now, not over the next 10 years from now.They also don't want to worry about you missing payments or having to foreclose.
@Dustin S. Dustin, your ambition is fantastic to see. However, the problem I see lies in your question. You're asking how to structure the off-market sale to suit the owner's needs. What you're lacking, is a true understanding of what the owner's needs really are (at least that I see in the post).
I would contact the owner if you can, and simply ask her what her problems are. You simply cannot solve someone's problem if you haven't identified it.
Let me know your thoughts, I'd love to brainstorm with you!
@Kenneth Reimer I do see your point and I have talked to the owner she doesn't have any problems at least in her mind other than maybe an empty house. From what I can tell she is wealthy, doesn't need money she owns the house free and clear. Here are what I see as potential problems is
1. she is older 80ish and at some point will pass on the property to her heirs that may not want a property, might not be good at handling finances or may have multiple heirs that may squabble over her assets.
2. Headaches from what I can tell she doesn't employ a professional property manager just a business manager not sure how hands on she is. The home is empty got to worry about uninvited guests. Lack of income no being a real problem for her.
3. Contractors/Handymen in order to get it rented she has to fix the place up the business manager showed me around and the place is basically gutted and there's a big hole in the wall where a drunk driver hit the place.
both the business manager and owner live about 30 minutes away
The problem in your deal is probably the owner financing. A lot of people are very uneasy about these arrangements. They want the money now, not over the next 10 years from now.They also don't want to worry about you missing payments or having to foreclose.
How did she react to your seller financing proposal? If she really doesn't need the income, maybe dig a little deeper into why she is keeping the property.
As said above, before you can structure a deal that suits the owners needs, you need to have a clear definition of what those needs are.
You probably want to come in with a cash offer so she can just be done with it. BUT, and this is a big one, she may have an emotional attachment to the place. In our city theres a place in a multimillion dollar neighborhood that sits empty (and heated I might add) but the old lady will never sell it because it reminds her of her parents. To my knowledge she hasn't stepped foot in it for over 10 years. maybe just build a rapport with her and tell her that if something happens, you'll be there with cash in hand. Or wait until it does pass to the heirs and offer them the deal.
@Dustin S. I don't think your analysis of her situation is off-based at all. What I believe is the best strategy, is understand what her perception of her problems are. A person's perception is their reality. Her perception of her situation may be very far off of what you or I might see, but that is the reality in which she'll make decisions.
If she doesn't think she has any problems, then she either does not see them, or they aren't big enough for her to worry about. I would ask very situational based questions. For instance, "what happens if your children don't want to own this down the road," or "how will you handle managing the contractors when you have construction going on at the property?" While these may be extremely uncomfortable to ask, they will be taken well if you are truly genuine in trying to help her. However, if you find that she really doesn't think she has any problems at all, then you simply cannot help her. If you are to have any involvement with this piece of real estate, you need to find out how it will be a win-win situation.
@Dustin S. sounds like you have scoped out a good opportunity, and I have come across these cases many times before. I cant agree more with @Kenneth Reimer and by approaching the vendor as a solution to THEIR problem is always the first & best way in..
However - if they don't want to sell, they just wont. (right now).....
What has worked for me in the past is by handwriting a card or letter to every person you have consulted about this property that states your immediate interest if they ever consider selling with your contact details, business card etc. Tell them to keep it in a safe place as this could be worth a potentially hassle free sale in the future - "if they ever consider" you will be the first person they remember to contact and your in.
Keep beating the streets man and move to the next. :)
@Anthony Gayden@Jason Dale so as far as coming in with all cash with the help of a hard money lender that is an option I just don't think that would persuade her not to mention hard money lenders are expensive and I'm not looking to flip this. If I did go that rout I'd have to put permeate financing on it as soon as I completed my rehab
@Billy Mclachlan I actually have sent her a hand written letter but I do like the way you think. I do think I could expand on the letter I sent her and may wait a couple of week and send her another one.
@Dustin S. good man, send her another one and every other property on the street but make sure you don't fixate to this particular property, its easy to do.
@Abi Wegman so I did not present my financing proposal in person and not even to her I taped a letter to the door for the business manager. Who I know did read it and left me a voice mail thanking me for some of the contacts for different trades he asked about when I did speak with him in person. When I do send her another letter I will include another proposal.
@Billy Mclachlan I've been looking. I have done big mailing campaigns in the past and have had very poor luck with them. What does work well for me is very targeted mailing basically is see a house that looks like it needs some work and pull tax records on it. If its non owner occupied I send a letter right away and in a lot of cases try and look up their phone number and call. I have gotten very good response rates this way and feel its a much better use of my time.
@Kenneth Reimer so my contact with the owner has been fairly limited. She seemed somewhat candid on the phone so I didn't want to pry to much into her personal life. I also don't want to bug her too much. I know I hate when I have someone calling me all the time. I think meeting her business manager in person helped establish some report with him. I may try and rely on that and keep up some on going communication with him. I will still send the owner another letter but will give it a couple of weeks. It just bugs me that that home is empty and could be rented out for $2200 or $2300/ month.
@Dustin S. I hear you brother, a huge wasted opportunity would drive me mad as well. However, I think we just have to shrug our shoulders and know that we're all going to do some pretty crazy stuff when we're older!
I think you're doing everything right. Maybe ease up on feeling bad. The guy/gal who doesn't feel bad and stays in front of the deal might be you out of it. Just maintain a respectful approach and try to convey as well as you can that you're genuine in trying to help her (when you can identify she has a problem).
@Kenneth Reimer Is her business manager arranging to keep up with maintenance with the property? eg Is there unsightly debris? Is it harboring rodents? Any safety issues? Maybe the building is not secured, allowing kids and homeless folks access?
If any of these did exist and the community were to hold the owner (biz mgr) accountable, there could likely be many code violations issued by the local township -- Then maybe there would be some motivation on the owners part to sell the property.
It is a shame when financially capable owners allow a property to exist in shambles. It brings down the whole community.
Dustin Salmon Did you ask the business manager if a cash offer would make a difference? I'm thinking if I'm 80 and want less hassle in life that a cash offer is simple and gets rid of a hassle (the old property). A seller financing deal adds a monthly "to-do" (i.e. making sure you pay) to her life. We should all be so lucky to get to that point in our lives and she might be there.
I will say this, if you put an objectively attractive cash offer on the table and the response is still the same you can surmise there's an emotional attachment or some other non-fiscal reason she doesn't want to sell.
People buy and sell property for different reasons.
Not everyone with an empty house is looking to sell. Sometimes people have empty houses just because they have multiple properties and don't have time to visit them all. The property could also have sentimental value and no price will convince her to sell.
It could also be a tax shelter.
All you can do is ask: "are you looking to sell your home?" They say no, you move on. You can always ask again down the road, but if she's not looking to sell she's not looking to sell.
I will ask if cash would make a difference not ideal for me but I'm sure I can get someone to give me a bridge loan and make it work. If needed I could come up with 50% of purchase price and repairs.
I have been in a similar situation in the past and the best advice I can give you is the 2P's -- Patience and Persistence! In my experience as long as the seller knows you are interested at a fair price, you have have to wait and let them get sick of dealing with the negative cash flow and hassle of trying to managing the property. That's the patience part.
As far as the persistence part, I'd send them a yellow-letter or postcard every 90 days or so, reminding them that they could call you at any moment and take the 'problem' off their hands.