02 Jul INVESTORS’ CORNER: We solve problems
In the Charlotte area, it’s hard to drive around for very long without seeing a “We Buy Houses” sign by the roadside. I’ve been known to place a few of them up myself. It would be equally accurate, however, if not nearly so effective; if these signs instead read “We Solve House Problems”.
One of the first lessons my Mentor taught me when I began Investing in Real Estate at the ripe old age of 27 was “We do not look for houses- we look for motivated Sellers who happen to own houses.
Every house I’ve ever purchased as an investment, dear reader; represented a major problem in the life of the Seller(s). By purchasing the house using a transaction structure custom-tailored to solve their problem, I was able to buy at a price and/or terms that only a truly motivated Seller would offer. At the same time, I solved what was in most cases the most emotionally draining problem in the Seller’s life. Oftentimes, I took the problem that was literally keeping them awake at night, and removed it from their life permanently. Did I benefit from the transaction? OF course! But, only if they benefitted more.
I bought a house from an estate last year. It had sat on the market with a realtor at a good price for over a year. Offers came in, but the house never closed. The reason why? There were 5 heirs, and each of them literally hated at minimum one of the other 4, usually more than 1. They wouldn’t talk. They wouldn’t agree. I had to negotiate with 5 different personalities, identify the psychological “hot button” that each needed “pressed” to be induced to sell, and close the property in a manner wherein they were never at any time all together in the same room, lest blood be spilled. At times I felt like a therapist at best, a babysitter at worst.
In many cases, the condition of the property itself is the problem. Once a house falls into disrepair, if the Seller cannot afford to fix it, the repairs multiply exponentially over time. Left untended for too long, many houses are fit for no more than the bulldozer. I like to step in well before that point and create a win-win transaction that benefits all parties involved.
Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at lou@MetrolinaREIA.org. For more information, visit www.MetrolinaREIA.org.