Rental Property Investor · Shippensburg, PA · Member since 2019 · 18 posts · 8 votes
There's a specific off-market duplex in my area that I'd like to buy. I've been hitting the owners with direct mail for a few months now. I was considering sending them a few offers without even seeing the inside of the property, but I'd like to find out some more information before doing so. Would I be overstepping my bounds to ask the current tenants about the house and owner? As an investor, would it irritate you if someone was interviewing your tenants about your property?
Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
5y
@Noah Dunlap Yes, that would irritate me. This seems to be crossing a line. I know people are shocked to hear this, but many real estate investors like the properties they own and do not want to sell them for 40% of what they’re worth. Maybe they don’t even want to sell for 100%, but people that send letters don’t offer 100%.
Rental Property Investor · Albuquerque, NM · Member since 2020 · 53 posts · 32 votes
5y
@Noah Dunlap
I feel you answered your own question when you said off market, and no response from the owner. I would start to look for another place. If it was meant to be, the owner will get back to you.
Rental Property Investor · Shippensburg, PA · Member since 2019 · 18 posts · 8 votes
5y
@ThomasRoy Penland I've heard way too many stories on the podcast of persistence eventually landing people properties, to give up already. I'm not big on trying one lousy piece of mail, admit defeat and move on. I understand that I may not get this property, but it won't be because I didn't exhaust all of my options. If I give up the first time something doesn't work my chances of financial independence are pretty slim.
@ThomasRoy Penland I've heard way too many stories on the podcast of persistence eventually landing people properties, to give up already. I'm not big on trying one lousy piece of mail, admit defeat and move on. I understand that I may not get this property, but it won't be because I didn't exhaust all of my options. If I give up the first time something doesn't work my chances of financial independence are pretty slim.
Unfortunately the current market is probably much different when those guys got those deals. Right now EVERYONE is a real estate investor or a wholesaler, and they are insanely aggressive trying to find off-market deals.
If your market is anything like the rest of the country, those owners have probably gotten hundreds of calls, texts and letters about selling. If they aren't motivated, they'd be idiots to sell offmarket.
Even if you offer them what a licensed appraiser says is 100% of market value, prices are going up so fast that those comps are likely all already outdated and too low. Plus "100% of market value" even when corrected is still likely too low, since so many people are willing to pay ridiculous prices right now, no contingencies. The market is borderline reckless at the moment.
Plus, if they do sell after owning a long time, they will face a big tax hit, and they probably like the income of having a rental. Theoretically they could put that cash into a 1031 but with the market so overheated, where will they find something worth buying?
My advice, if you already explained in your letters that you are not a wholesaler or other huckster, do not call or further harass them. Maybe send them one more letter saying you really look forward to hearing from them but won't bother them anymore, and to contact you if they ever change their mind. Just hearing you won't harass them anymore might be enough to endear them to you... If you are really really crazy, you could include that you'd pay something like 115% of appraised value, you pay all closing costs, no contingencies after an initial walkthru...
Anyway that's my advice as someone who owns duplexes (and SFH) in an extremely hot area. Everything's out of control and unfortunately just really bad timing for a legit buyer.
Rental Property Investor · Shippensburg, PA · Member since 2019 · 18 posts · 8 votes
5y
@Nicky Reader thank you for sharing your insight and explaining it in a very clear way. It really makes a lot of sense. Do you suggest I sit on my cash until prices come back down (while risking interest rates climbing) or find a property to invest it in?
@Nicky Reader thank you for sharing your insight and explaining it in a very clear way. It really makes a lot of sense. Do you suggest I sit on my cash until prices come back down (while risking interest rates climbing) or find a property to invest it in?
I would plan as if you have to wait, but keep hunting, networking and studying your local market. Be ready to pounce if a deal does appear that fits your needs. Eventually things will cool off, rising interest rates are a double edged sword.... it means everyone does pay more in financing but it also reduces the upward pressure on pricing and will make more distressed deals appear for various reasons. Right now i am more worried about inflation if these low borrowing costs continue, vs finding good deals in my market..