Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
My searches were so specific in Vegas where every house is almost identical. Less than 10 years old, stucco,siding, tile roof, 2+ car garage, 1800-2400sf at the lowest cost per sf (usually $55-$70). Using that criteria I walked away from probably 5 deals while closing on 15. The walk was usually over missing appliances, a few thousand worth of ac repairs, or something else stupid. I regret every single one of those 5. Each one is worth $100-$200k more 5-10 years later. Nothing like losing $500k-$1million over a max of $20k in “problems”. Don’t lose dollars haggling Over pennies.
Time cures almost all mistakes. In 10 years a 5% price difference just won’t matter. Just a having a tenant solves most problems. I’d rather have a $800 problem in an occupied home than a $400 problem in a vacant home. You forget people are paying $400/week or more to live there.
Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
6y
Everyone will tell you to run the numbers and don’t compromise on your criteria. If it doesn’t work, then walk away. This is true. However, many especially in a sellers market as we continue to experience in many cities/ markets, will adjust the inputs to reflect a good deal. Don’t feel pressured. Tactical patience is a great strategy or key attribute for the savvy investor. Good luck and happy hunting.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
My searches were so specific in Vegas where every house is almost identical. Less than 10 years old, stucco,siding, tile roof, 2+ car garage, 1800-2400sf at the lowest cost per sf (usually $55-$70). Using that criteria I walked away from probably 5 deals while closing on 15. The walk was usually over missing appliances, a few thousand worth of ac repairs, or something else stupid. I regret every single one of those 5. Each one is worth $100-$200k more 5-10 years later. Nothing like losing $500k-$1million over a max of $20k in “problems”. Don’t lose dollars haggling Over pennies.
Time cures almost all mistakes. In 10 years a 5% price difference just won’t matter. Just a having a tenant solves most problems. I’d rather have a $800 problem in an occupied home than a $400 problem in a vacant home. You forget people are paying $400/week or more to live there.
Specialist · PA · Member since 2016 · 143 posts · 71 votes
6y
We walked away from one last year and I'm glad that we did. I came into the deal after it was under contract. We planned to lend on it then decided to JV on it. I missed was running numbers, assuming other partner already ran it. On top of that the seller fudged expenses as well. Everything was coming up high, even insurance quote came high.
What really ticked me off was when seller emailed by partner about low oil in the building over the weekend before settlement. She didn't wanted to fill-up in middle of cold winter. We were closing in 2-3 days on Tuesday. I emailed her a copies of cashier checks that I had ready and offered to pay for oil at closing if she presents the oil delivery receipts. In my email, I told her and her lawyer that we have not settled yet, it's still her building and she need to get the oil delivered.
It was a commercial property and we later found out her occupancy numbers were also fudged. We got actual numbers few hours before closing. I called off the settlement within few hours of reevaluating the numbers. We did not settle indeed. I lost few thousands and my partner lost much more. That property is still not sold till date. It was never a good deal. No regrets.
Rental Property Investor · Member since 2019 · 304 posts · 462 votes
6y
I have never regretted walking away from a deal. Sure, there were situations where the market value rose significantly in a short period of time, but that is what markets do. Until we have an accurate and reliable method of forecasting the market, you have to just chalk it up to luck. On the other hand, I have closed on deals that I wish I had walked away from. The good news is that those bad deals were great learning experiences. Everything happens for a reason.
Rental Property Investor · Phoenix, AZ · Member since 2019 · 146 posts · 77 votes
6y
@Account Closed I would say that having the strength to walk away says a lot about the type of investor you are. Inexperienced investors will get emotionally involved and find ways to try to make the deal work even when they know they probably shouldn't. You're right that you can get caught up in that woulda, coulda, shoulda, world but what happened if you closed and things went south quickly. On the flip side you'd be telling yourself "I knew I should have walked!" It's not always easy to walk away from a deal but trust your analysis skills and intuition. I'm sure there's a good reason you walked. Put it behind you and move onto the next one!
Rental Property Investor · Denver, CO · Member since 2019 · 24 posts · 13 votes
6y
@Bill Brandt This is the sort of response I hoped for when I posted the question. There are times and reasons to look back with regret and in this case the numbers it appears the numbers support that.
As the one person who has responded on the “Gee, I wish I did that.” side of things, I like how you quantified the result of the decision.
Rental Property Investor · Denver, CO · Member since 2019 · 24 posts · 13 votes
6y
@Dennis Cosgrave I agree everything happens fo a reason. And because most deals fall through sometime between lusting and closing....I generally don’t regret. Since there’s always opportunity somewhere it should feel right on all levels.
Rental Property Investor · Denver, CO · Member since 2019 · 24 posts · 13 votes
6y
@Dallon Schultz I agree it is a matter of conviction. To take the phrase from the NBA - trust the process. All any of us can do is make the best decision possible with the information we’ve gathered and trust. That’s half the fun, right?
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
6y
@Account Closed, keep in mind that unless you have endless financing there is an opportunity lost when you buy a deal. So settling for a mediocre deal just to make it work may limit your ability to buy a good deal later due to lack of funds.
Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6y
If you're walking away from a deal because you realize your numbers were way off...the seller lied about something...or you find something about the area, etc. during DD...you should always feel okay walking away.
Even if another investor comes along, fixes it up, and sells it for $50k more than what you calculated ARV is...you don't know what budget they put into the house...or any other factor. Just look to your next deal.
--------
If all those check out and you simply backed out because of cold feet...then you'll likely regret that because no one likes to give into fear. (nor will admit to it)
Rental Property Investor · Member since 2020 · 4 posts · 2 votes
6y
@Bryan Mitchell as a new investor, I’m interested in hearing more about how people in a seller’s market make a deal “look” good but really it isn’t. Could you expand on that?
Accountant · Baltimore, MD · Member since 2016 · 74 posts · 29 votes
6y
@Eric Ritvo I just walked from one about 6-8 weeks ago. Seller was emotionally involved and was insulted by my offer. We negotiated back and forth but I wasn't willing to go full ask due to comps and condition. She got a better offer. Good for her. A few weeks later another one in the same complex came on market, I jumped on it and I just closed the other day. Way better deal. Good for me.
First one was worth the process though because it's an HOA complex and I got to see all the docs. So when I went for #2, I already knew their rules and financial condition so I could jump in with both feet.
Rental Property Investor · King of Prussia, PA · Member since 2019 · 17 posts · 8 votes
6y
@Eric Ritvo
Like with all my big purchases (cars, tools, vacations, houses, boats, RVs, etc.) I run the numbers. If it doesn't work for me, but it a great deal, too bad for me.
Just because you cannot do it now or if it's close to working but not quite, it's not worth hanging yourself out there. Another good deal will present itself and chances are, it will be better than the last one.
Your resources are, what they are.
Extending yourself never makes you more money. You always end up making less.
That's been my experience. Get back to analyzing and getting that next deal lined up. Good luck.
Rental Property Investor · Dallas, TX · Member since 2017 · 64 posts · 73 votes
6y
Totally depends on where you are in your journey. I'm on my 4th investment property, but 1st BRRRR. For a seasoned investor this deal would be an absolute strikeout and disappointment. For a pretty new investor like myself, the learning experience is invaluable and I know what to look out for moving forward.
Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
6y
@Scott Winkelmann, a few ways the adjust the deal to make it more appealing:
1. Pro Forma- they estimate future rents at the top of the market
2. Down payment. Putting more money down to make it cash flow in accordance with your criteria.
3. Underestimate Rehab costs. Thinking you can do the work yourself, underestimating contractors fees, not doing an inspection to know that it not just cosmetic, and so on.
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Account Closed I think it's often scary. That's why it's important to be very clear about what your criteria is. If something meets your guidelines it's a go and if it doesn't.. it doesn't. That way emotions can't get in the way.
Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes
6y
No worries, friends. @Eric Ritvo It is on Maui, where alas the tourists are banned for the foreseeable future. I was able to long-term rent it for a bit prior to selling it last week for basically what I paid for it.
To quote the late, great Kenny Rogers, "You got to know when to hold 'em, know when to fold 'em."