Stacie Meeker wrote:Kelly,
As long as I've been in the Real Estate Industry I've heard from other investors that same exact thing. No one will pay xx.xx for that property. I often times have had visions of showing the HUD statement to that person so that they'd look at me and say...."I am sorry, but I really didn't think anyone would buy it at that price" and then somehow they would miraculously come to me and offer to pay more on a future deal. But that has never happened.
What I've learned is that no matter what your perspective may be on price, repair costs and ARV, there will always be someone who doesn't agree with you. It all depends on their level of risk taking. Some investors will pay a higher premium for the same property because they have a different logic when it comes to what they think is a deal.
For example, Hedge Funds are out there buying up multiple properties at a higher premium. The reason they can pay more is that they have the financial power to do so. They look at future values as an indicator rather than just Sold Comps today. They also look at an income value approach vs ARV. So let's say there's an ARV of 100K. The asking price is $90K. But the property is rented and the rents coming in are $1100.00/month. The repairs are minimal. So a REHAB or Fix and Flip Investor would laugh at you. But a long-term buy and hold investor may take a closer look. Even though they are paying $90K today, the $1100.00 per month return on their investment might be worth it to them. Especially if you can prove that the tenants are taking care of the property and are on time with rents. Heck, I'm happy with late paying tenants as long as they pay the late fees. That type of tenant is actually increasing my annual income. It all depends on the way in which this game we call investing makes sense to them.
I had a property for sale recently. An investor low balled it big time. I seriously wanted to shout at her and say...are you nuts? There is a deal here at the price I'm asking! Are you blind? I knew it was a deal. And someone else did too and paid my full ask. If you truly have an opportunity, someone will buy it. It might just take a little longer.
And you know I'm one of your A buyers now, right? Because even though I wholesale properties, I also buy them for myself too.
P.S. One of the things you can do is to actually speak to some of the investors on this board. Ask them what makes them comfortable with a deal. You might find out something that you never thought about. I had a townhouse for sale. I didn't understand it at the time, but they didn't want to buy a townhouse vs a single family dwelling. I thought as long as the numbers were there, what did it matter. It did matter to some. They had their reasons such as lack of control of the neighbors beside you. Or they just simply have their minds made up that they don't want that type of a property. We all get comfortable with what works for us. So hang in there. I understand how you feel. Just keep in the back of your mind, if one won't, but one will!!
Loved everything you said to Kelly. I am a new investor in the DFW area and looking for my first fix and flip property. Would love to hear about any interesting deals heading your way! You can reach me at mrs.sonjahunter@gmail.com Thanks!
