Answer to those calling you vulture stealing houses from Grandma!
Do you hesitate to answer when someone asks you what you do for a living?
Do you hang your head when the naysayers label your industry as a bunch of vultures preying on the innocent, trying to steal houses from little old grannies?
The media has painted a negative picture of our business because of the discounts we receive and the profits we make... And yes, because of the actions of a few selfish individuals that do steal and cheat and make a bad name for the rest of us.
What most people don't take into account is the fact that we "vultures" are a necessary part of the real estate industry.
Who but us investors will buy the blighted property and restore it to livable condition?
If not for us investors, many, if not most of the distressed properties would end up in foreclosure or worse.
More families would end up in bankruptcy, more vacancies would remain vacancies. More people would barely tread water above financial dismay with no solution in site.
Our business model as real estate investors is to be professional problem solvers. That is why we are not vultures trying to rob homeowners of their equity.
As an example, years ago, I was at a code enforcement hearing waiting for my turn to discuss a property I had bought with liens that I was there to negotiate. (Btw, if I could ever give you a tip that has made me literally hundreds of thousands of dollars, I have never gone to a code hearing that I didn't walk away with at least one deal. I call it my personal home shopping network)
This lady was sitting before the board listening to the officer reading down the list of violations along with the amounts owed, and his recommendation to the board.
"This, this and this is wrong with the property," said the officer.
"DO WHAT??!!!" was her response.
"The lien amount is 70k," continued the officer.
"DO WHAT??!!" She hollered.
"We recommend the city foreclose on the balance."
"DO WHAT??!!" She kept on escalating.
She looked like she was going to jump over her podium, climb over the desk and eat the officer whole.
Of course the board went with the officers recommendation and gave her a 30 day notice that they were going to foreclose on these violations should they not be resolved between now and then.
Now I had seen the pictures of the property and the violations that they had shown on the projection screen, and the property wasn't that bad. It was a solid block home and the only things needed were a roof leak, a broken window, a shed in the back that needed either repaired or removed, and a back porch that either needed repaired or removed.
The problem was the property was her mothers who had passed away and she didn't have the money to probate the property, let alone do the repairs. So she didn't actually own the property.
I stepped out of the room and followed her in the foyer, where I saw her break down in tears. The strong combative facade was down, she had been in shock and now reality was sinking in. She was going to lose the house.
I introduced myself to her and let her know that I felt I could help her. I asked her a simple question, "forget the liens and the judgements, forget all the other stuff, what do you need for yourself?"
"Oh, I don't need much." She replied. "My son is living in the house, if I could get him enough for a down payment for a rent to own, I think that would be fine."
"How much would you want for a down payment?" I asked.
"Maybe $5000?" She asked.
"I think I can do that." "Let's meet up tomorrow and we'll sign contract," I said.
That night I didn't sleep well. I knew that with this specific code enforcement was that after fixing the property, the rule of thumb was that they would reduce the lien to 10%. I knew that I would be able to get the liens down to about 7k. I was starting to feel kind of guilty.
By the next morning I determined that I needed to have a heart to heart with her.
"Listen," I told her. "I need you to understand that I intend to fix the property and then negotiate the liens and will get them reduced." "I'm going to make a truck load of money and if you want you probably could do it too."
"No sir, you're able to do something that I can't do," she replied. "I'm done with this hous." "If you do what you've promised to do, you can make whatever you make."
"Ok," I replied. "Let's sign this contract."
Long story short, we were able to repair all the violations. Because Florida is a homestead state, we were able to do a "mini probate," which took less than 30 days. We did what we promised and we still made a tremendous profit.
Now, consider the alternative. Had I nor another investor not gone to her, she would have definitely lost the house. The city would have bulldozed the place and there would have been a cost the city would have incurred and would not collect since it was against a dead person that had no other assets.
We fixed it, saved the city additional costs and brought the house to a place that is now a good property and tax base for them. We gave the owner exactly what she asked for and saved her costs and the embarrassment, along with helping her son find a place that worked perfectly for him.
We as investors have a currency, problem solving. We exchange our currency of problem solving in exchange for equity. That's a fair deal!!