All Forum Posts by: Austin Hughes

Originally posted by @Marvin McTaw:

 Yep, as 99% of other investors would have as well. That's why I had to stick out from the pack! Trying to be a problem solver instead of just another fish in the sea.

@Account Closed I try to share the ideas that I come up with, because other investors on here have helped me out with numerous ideas and thoughts that have helped with my business.

@Dana Whicker Thank ya sir!

Congrats on being creative is one of the best compliments in my book. Much appreciated.

@Joe Moore @Marvin McTaw

Lease options, owner financing, and promissory notes are out of the question with her. I did think of these first. She said multiple times, "NOTHING CREATIVE." I assume she had gotten these standard offers before from others, because I didn't even mention any of the above before she told me she wouldn't do any of them.

I agree that typically I should be getting paid for helping someone market their property, but in this case, that would be asking for too much. She should have some incentive if I don't exercise the option to purchase. Without any benefits to her, she wouldn't consider it. Me getting paid from her income is just like a lease option, and she was clear about not doing that.

That's why I had to get really out of the box on this one.

Thanks for the feedback guys.

She had to think about it, but she said she would consider it if I could express everything in writing, as I did above. After a cold rejection of the lower price, she was very receptive to this offer! I think this is your classic Win-Win situation.

I recently went over the analysis of a very unique property with a fellow investor who is very intelligent and has helped me out with numbers. It is a combination of a small hotel and some houses that are all on the same lot. It is very unique.

After talking it over with my investor friend, we realized that while it was well under the tax appraisal, the price was just too high for the amount of risk involved.

The reason the property was so risky, is because it is all short term tenants with NO SIGNED LEASES. (Even though some people have been living there for 9 years.) It is currently positively cash flowing, but barely any. This is because the vacancy rate is 40%.

While I have a bunch of great ideas in my head of how to get it filled quickly, there is no way to eliminate the risk that it won't work....or is there?!

I went back to the seller, and she was absolutely firm on the price. Instead of parting ways, I thought of a creative solution.

In a nutshell, this is what I offered: 1. I get an exclusive option for three months to purchase the property at your asking price (which cash flows very well if it isn't more than 10% vacant.) 2. I will market for tenants to increase your income during that time. 3. If my methods prove to be effective, and I get it rented out fully, I will purchase the property.

Now my only risk is the minimal expenditures I will have for marketing! If they don't work out as well as planned, she will at least have more exposure and tenants, and I won't have lost much. If it works out, then I've got a heck of a cash cow at a discount, and it is already cash flowing from day one.

This is the offer that I sent to the seller. (address has been changed.)

While the property has potential, the current risk is too great for me to purchase it at any price above $200,000. However, if some of these risks could be minimized, I am comfortable paying any price up to what you are asking, at $265,000.

For the property at 1212 Hughes Street, the terms of my proposal are these:

• I will have the exclusive option to purchase the property within 2, 3, or 4 months. (Whichever length of time we agree upon.)
• If I exercise the option, I will purchase the property for $250,000, $257,500, or $265,000. (Whatever price we agree upon.)
• During the period of which I have the option to purchase the property, I will be doing two things:
  • Marketing for new tenants at increased rentalrates to raise the income of the property.
  • Forming a partnership with investor(s) to purchase the property.
• During this time period, you will still be the owner of the property and pay for typical repairs, as the property manager sees fit. (I will not request a remodel or extensive work. Only what is needed to make the units livable.)
• All extra income generated through my marketing efforts during this time will go to you, as the owner of the property. I will receive no benefits from the increased rents unless I exercise my option to purchase and become the owner.
• The property manager will not have to change his current routine or job, except for handling increased traffic of new tenants.

This plan is beneficial to both of us, because it allows me to minimize the risk involved with purchasing the property, while you enjoy increased rents for a few months. This option period also allows time for the property to generate extra cash flow, making it more attractive to other investors who will pay you the agreed upon price, and allow you to get out from under the debt owed on it.

Get back to me when you feel the time is right.

Thanks,

Austin Hughes

What do y'all think? Let me know.

I was scouring this for some advice, and in lieu of a complete topic change on this thread, I created my own "script" for these recently divorced sellers.

I used SlyBroadcast.com to send out these messages straight to their voicemails. Here's what it said (with a light-hearted tone):

"Hey, my name is Austin. We don't know each other, ha, but I'm a real estate investor here in Lubbock. I was looking at some properties on the county website, and yours caught my eye. I know it isn't up for sale, but if you're open to having a conversation about selling it, give me a shout. My number is (806) XXX-XXXX. Take care!"

Side note: my tone was very upbeat during this message. Delivery is key!

Side note #2: I recently got a local area code, so the Lubbock-ites accept me as one of their own. (I'm from Houston) haha

I'd be interested to find this out too.

I've never heard the bank state their maximum price. I have seen a bank pay above market value for properties at auction by out bidding investors...silly bank.

@Nick Baird

Families in Frenship ISD seem to be good money managers! (Not a lot of foreclosures) Haha, only seen a handful of deals over there, but that's the go-to for young families. Definitely a good part of town.

I'm new myself! (under 1 year)  So I'm also hiking up that steep learning curve.

A good piece of advice that I got...focus on finding good deals, and let that be where your "focus" is. Now you might start out going to open houses over there and seeing what the standard is while getting familiar with the prices, so you can spot a good one when you see it. That would be wise. Of course with full time work, you don't have the luxury of a bunch of leisure time to prance around and go from house to house.

Very nice!

Lubbock is a great place to invest. Did you know we recently got voted one of the best cities to have a job in America?! Crazy huh...balances out the #1 worst place for weather hahah.