How far should you go for a deal?

Question

Hey guys and gals. I am pretty new to wholesaling and have come across a distressed owner who is under a reverse mortgage.. I have never heard or dealt with something like this until now. this owner wants to get out of this home but in order to do so must pay off the remaining balance of 68k. This could be a great wholesale deal potentially but my question is how far do you go to get a deal? I know that we are problem solvers and should help provide solutions but I am not sure if I am going too far. I know that at least with wholesaling people will let you purchase their home if they like and trust you, I am great with people so it isn't too hard for me to befriend someone. Real estate is a people business and I realize that. However in this instance she is needing help finding a new car, new furniture, a new house to move into, and needs to be driven everywhere because she doesn't have a car. She has been through a lot and lost her husband, parents and parents in law in a matter of 5 years. She has nothing left here and wants to move back to her hometown. I empathize and truly feel like we are a great solution for her and can help her achieve a better life so she doesn't die in her current house alone, and depressed. However I have a hard time separating the emotional side of things from the numbers/deal. When do you draw the line and say this deal isn't worth the effort? Is there no line and I should just do my very best, and if that's not good enough just say I tried my best? Would love some advice  and experiences some of you have been through to get a deal.

Caleb Heimsoth · Answer

yeah this lady is a tire kicker.  She can’t afford her home but wants an 18k new car and new furniture?  I think that tells you all you need to know.

Caleb Heimsoth · Answer

@Michael Guzik a couple things.  If the house is worth 120k as is, then she has another option besides you. Sell on the open market.  Get 120k, probably 10ishk in selling costs, pay off the mortgage and walk with the difference.  So your statement about her having only one option (sell to you) is wrong.

What is included in a 10k repair bill?  That basically gets you a roof repair, paint and carpet, depending on size of house.  If any bathrooms or kitchens or anything needs to be updated it’ll be minimum 20k.

Not sure how an owner finance would work here.  If you’re assigning contracts I don’t think you personally could hold the note, and she could technically do a wrap I guess but then she could always get in trouble with her own lender, so that’s not advisable here I’d assume.

This could work as a flip but I would really question those rehab numbers if I was a flipper.

Rick Pozos · Answer

NOt every situation can be a deal for you. I have had to walk away from great potential deals because people were getting rediculous. 18k car for someone in a bad spot is waaaaay crazy. Beggars cant be choosy. I am very compassionate, but sometimes Ihave to lay down the law. "You are in a bad situation. I can help you, but you are going to have to make some sacrifices. One of them is going to be that you will have to get $XX.00 for your house. That will NOT be enought to get an $18k car. You will probably have to get a 7k or 8k car. When you get set up in your new town, you can trade up later in time. This is what I can do for you. YOU will have to do some work and help yourself out of the situation that you are in. I did not get you here and I am not going to get you out. I can help you with your real estate situation, but thats it. I am not a car dealer, I am not a realtor, I am not an Uber driver. Do you want to sell the house for 90k or not??"

The really crazy part is that I have had people NOT take my offer that would get them some money and me some money and then not do anything and lose the house. WHY!!!  I think people get scared and end up not do anything. They want others to do everything for them. Sorry, I can help you but you have to make the decision to help yourself.

Nicole A. · Answer

You need to move on. There must be a line drawn somewhere. While you're there to help, you're not there to support her entire life. She can't expect you to just magically hand over all she needs in life and make everything peachy. I know you feel bad for her, but you've done your part with getting her out of this house.

Will Pritchett · Answer

I admire your humanity @Michael Guzik.  My best deal was one where I gave people options and some weren't to sell to me - such as MLS.  They came back a few months later and sold to me because I'd rent back to them but they got their equity out.  I think you might want to let her cool off a bit and follow up later.  I agree that she seems demanding at this point, and therefore isn't truly motivated yet.  But you can sleep well at night knowing you tried to help her.  Just my two cents.

Best of luck,

Will

Ned J. · Answer

She wants a 18k car...ok..... the price you pay for the house is 18 k less and you will buy the car for her....same with the furniture. You will provide EVERYTHING she wants with dollar to dollar discount on the house.

YOU decide what your bottom dollar price you will pay for the property and not a penny more and she can accept that value in any way she wants....but not a dollar more

People are financial morons....and we wonder why these type of people are in the position they are in now? because they are financial idiots

She will string you along and take advantage of you as long as you let her.....unless this deal is smoking good, you need to cut her loose

Michael Guzik · Answer

@Nicole A. It really is! We can make money on this deal, I guess it's just a matter of is the money worth all the effort and stress? We haven't gotten her out of the house yet so that's why I asked the question because I don't know if I should just give up.

@Caleb Heimsoth I appreciate your insight that's the answer I was seeking from my original question thanks!

Michael Guzik · Answer

@Elizabeth Wilson Thanks for that I really do try my best. Wholesalers and especially investors in general have such a bad reputation so I really try to go above and beyond. The numbers work out A okay but I am just concerned if I am wise by using my time to help her when I could be pursuing other deals.... She wants to move to a small town here in Texas and believe me I have called the only agents in the area. I had to call each of them several times and leave multiple voicemails to even get a response. I finally got a call back and there is one rental home in the whole town available... Thank God our seller loves it and wants it.. The trouble is before the move she is wanting a car. She was wanting an $18,000 Honda Civic and because she would be netting less than that through this deal she wanted 10k more than we can pay. I searched and found several nice, reasonable cars for around 10k and told her that we can't raise our price but we can help her stretch the money we give as much as possible. After the car now she wants to get her furniture re-upholstered and that will cost 10k too. I told her that she could get a brand new set of furniture for less than half of that and am now helping her search for a new set within a reasonable price range. I just don't know if this is even worth it anymore and am wondering if I'm the only person who deals with crazy stuff like this?!?!

How far should you go for a deal?

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