Mentor VS average deal

Mentor VS average deal

Erie, PA · Member since 2017 · 25 posts · 2 votes

Hey BP - 

I'm really struggling with a potential deal I have going right now and need some opinions. I will try to make the story as short as possible. Quick background on me: I have 5 units total (I am house hacking a flat and have a triplex) so I am hardly what you would call a seasoned investor. Anyways, I found a flat on Craigslist (I'm in Erie, PA) which advertised seller financing which intrigued me. I reached out to the seller and set up an appointment to view the property. Afterwards, we sat down at a local McDonald's to talk turkey. We talked for about 2 hours and I quickly realized this guy would be a PERFECT mentor. He was very gracious with his time and answered all of my questions and he even revealed that he was previously a board member of the local apartment association (of Northwestern PA). I was so stoked to meet and talk with him. Towards the end, I told him that I wanted to pursue the property. He basically told me what he would do for me (finance it at 6.5%) and I would need the typical down payment. He walked thru the numbers with me to show me it cash flowed. It felt like he didn't even give me the opportunity to negotiate the terms (I'm def. okay with the interest rate but the property is overpriced for the neighborhood). 

I understand he is a professional and obviously very good at what he does. I also understand that it COULD cash flow, if it was a perfect world (needs a lot of work/repairs), so it might not necessarily be a BAD deal for me. BUT today I go to get the inspection, and there are a ton of issues AND I find a few holes in his story (for example, he said the tenants pay the water bill - talked to the tenant, not true). To be honest, if he doesn't work with me on the inspection items, there's no way I would do the deal normally. I will say this tho, he has ALREADY provided an immense amount of value to me (for example he gave me the addendums he uses in his lease and some of the strategies he uses to maximize his profits) and much more.  He has even said that he would be open to throwing me deals in the future. I've only known him for a week but he's already helped me take care of a situation that I have not dealt with before (tenant in prison). 

My question to BP is - This is a guy who could be HUGE for me as I am so early on in my investing career. Is it worth it to take on a less than average deal in order to maintain a good relationship with this guy? Should I risk losing his friendship/mentorship because I back out of an average deal? 

Hope this isn't a dumb question, just really need some help! 

0Reply
73 views

Most Popular Reply

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y

It's usually not much of a deal if it is advertised with SF.  Let another sucker bite on this one.

 My best ones have been reluctantly suggested by me, later becoming the sellers idea as they learned more about the benefits of being the bank.

Like 'buying' an advertised rent to own, be extremely vigilant here.

See this reply in the discussion

31 Replies

Jump to latestLatest
  • Erie, PA · Member since 2017 · 25 posts · 2 votes
    8y
    Originally posted by @Linda S.:

    @Chris Wakley,

    We had a similar situation, where we were looking to buy some seller financed houses from a guy who was selling off, literately 100 properties, and he was very nice, knowledgeable and we thought he could be a great  resource too... turns out, his idea of "turnkey" and ours were very different.. and his houses were heavily overpriced!     

    Business is business. People are only looking out for themselves, so if he's willing to owner finance, it's because he knows he can get more money and do less work-- vs. the MLS where the market will push the price down to account for the repairs needed. Of course he's pushing it as a great buy.. he wants it off his hands, no one sells a house b/c it was easy money and wasn't stress... He might be nice, but he isn't doing you any favors... so I wouldn't do the deal. He's also already lied to you about who pays the water, so IMO I definitely wouldn't trust him.

    Great points Linda. I really liked what you said "no one sells a house b/c it was easy money and wasn't stress." Maybe in all his experience he knows that this place will soon start being a money pit... Thanks for the response!

  • Erie, PA · Member since 2017 · 25 posts · 2 votes
    8y
    Originally posted by @Steve Vaughan:

    It's usually not much of a deal if it is advertised with SF.  Let another sucker bite on this one.

     My best ones have been reluctantly suggested by me, later becoming the sellers idea as they learned more about the benefits of being the bank.

    Like 'buying' an advertised rent to own, be extremely vigilant here.

    Interesting. I've always thought of SF as one of the fastest way to grow my portfolio. One thing I've learned from this post tho is that I should be even more careful on a SF deal than a conventional MLS one (like my other two).

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y
    Originally posted by @Chris Wakley:
    Originally posted by @Steve Vaughan:

    It's usually not much of a deal if it is advertised with SF.  Let another sucker bite on this one.

     My best ones have been reluctantly suggested by me, later becoming the sellers idea as they learned more about the benefits of being the bank.

    Like 'buying' an advertised rent to own, be extremely vigilant here.

    Interesting. I've always thought of SF as one of the fastest way to grow my portfolio. One thing I've learned from this post tho is that I should be even more careful on a SF deal than a conventional MLS one (like my other two).

     I've done a lot of SF deals, but they weren't advertised that way.  Its a great way to grow when done right with the right seller.

    There are also multiple ways to do SF. Some good like a note and deed of trust/mortgage OR some like Land Contracts where you own nothing. Which is this?

  • Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    8y

    Why aren't you negotiating?

    if you're forced to take his deal or nothing, then walk.

    if you're feeling some kind of social pressure to take a deal you don't want for ANY reason but especially if you think he will only help you because he's making money on you, WALK

    sounds like you just don't want to rock the boat which I understand, but that's a bad habit to get into. Rather, negotiate and fight for a better position for yourself ALWAYS and you'll find people respond well.

    tell this guy your thoughts, straight up. He's doing seller financing, that's valuable, he's teaching you, that's valuable, but it's not worth buying a bad deal, so negotiate a bit and find common ground. If the guy won't budge, maybe he's not the epic mentor you think he is, or maybe he has ulterior motives, or maybe he didn't buy it at a good deal either and he's not someone you want to learn much from anyway.

  • Erie, PA · Member since 2017 · 25 posts · 2 votes
    8y
    Originally posted by @Alexander Felice:

    Why aren't you negotiating?

    if you're forced to take his deal or nothing, then walk.

    if you're feeling some kind of social pressure to take a deal you don't want for ANY reason but especially if you think he will only help you because he's making money on you, WALK

    sounds like you just don't want to rock the boat which I understand, but that's a bad habit to get into. Rather, negotiate and fight for a better position for yourself ALWAYS and you'll find people respond well.

    tell this guy your thoughts, straight up. He's doing seller financing, that's valuable, he's teaching you, that's valuable, but it's not worth buying a bad deal, so negotiate a bit and find common ground. If the guy won't budge, maybe he's not the epic mentor you think he is, or maybe he has ulterior motives, or maybe he didn't buy it at a good deal either and he's not someone you want to learn much from anyway.

    Hey Alexander, thank you for the comment, I enjoyed reading it.  To answer your question, it felt like he didn't give me the chance to negotiate. We sat down at a local McDonalds (with me and a buddy that I want to hire as my property manager) and at the end of the conversation, he basically told me what his terms were and pulled out the pen. At that point, after we had talked for about two hours, I really just would've felt awkward haggling right there. I don't know, negotiations are my weakness. 

  • Erie, PA · Member since 2017 · 25 posts · 2 votes
    8y
    Originally posted by @Steve Vaughan:
    Originally posted by @Chris Wakley:
    Originally posted by @Steve Vaughan:

    It's usually not much of a deal if it is advertised with SF.  Let another sucker bite on this one.

     My best ones have been reluctantly suggested by me, later becoming the sellers idea as they learned more about the benefits of being the bank.

    Like 'buying' an advertised rent to own, be extremely vigilant here.

    Interesting. I've always thought of SF as one of the fastest way to grow my portfolio. One thing I've learned from this post tho is that I should be even more careful on a SF deal than a conventional MLS one (like my other two).

     I've done a lot of SF deals, but they weren't advertised that way.  Its a great way to grow when done right with the right seller.

    There are also multiple ways to do SF. Some good like a note and deed of trust/mortgage OR some like Land Contracts where you own nothing. Which is this?

    The former. Note and deed  

Join the conversationCreate a free account to reply, vote on answers and follow this thread.