Investing 101: When I Became a Motivated Seller
We’ve all heard the saying, “Find a motivated seller when it comes to buying real estate.” But what happens when YOU become a motivated seller?
Or even worse, you don’t realize you should sell. Instead, you continue to hold a property…bleeding out money every month.
It happened to me. And I should have known when to cut my losses.
(Note: When it comes to investing in real estate, it’s important to have more than one plan just in case things don’t work out. I talk more about it here.)
Expect the Unexpected
You may remember awhile back I talked about surviving a natural disaster and how to get through it. Well, it happened to me: I experienced a flood. And it was not pretty.
Three of my properties were affected. One was a total loss. Luckily, I found another real estate investor who saw potential in that one to take it off my hands! Though, I still had two more to deal with.
Know When to Cut Your Losses
It took me awhile to realize the damage done was too much for me to handle. This was definitely beyond what I had done in the past.
But I held on to the other two properties…thinking I could do it. It would be a good learning experience. Or so I thought.
The more I met with contractors and received estimates on the work needed, I realized this was going to cost a lot of money. And a lot of time.
But I still thought I could handle it. Until issues came up with other properties. And I soon had more empty homes than filled ones.
(Note: I won’t get into the details here but let’s just say a few residents skipped out on me. And I was stuck paying lot rent on multiple properties. Ack!!)
So I made the decision to sell one of the other properties from the flood: the two bedroom. And found a nice family for it who paid me cash.
Now I just had one more left to deal with. Though, I still thought I could handle it. And I continued to bleed out money with this home sitting empty every month while I dealt with other problem properties.
The Property From the Flood
With other properties needing work (but not as much as the one I had left from the flood!), it took me awhile to get to them. I really had to spread my money out since I now hire contractors to do all the work.
(Note: In the beginning, I did most of the work myself. But as my real estate business grew, I started hiring contractors. I talk more about my experience hiring and working with contractors here.)
As I worked on the other properties and kept the one from the flood sitting around empty, I began to realize I was in over my head. I went back to the flooded property (which I did some work on after the flood). And took a look around. Adding up all the fix-up costs again, I made the decision to sell.
With the proceeds of the sale, I figured I could use the money to fix up one of the other homes (in better condition). And speed up the process to get it ready on the market.
Finding a Buyer
So I started marketing the property hard…doing all that I could. The park even allowed me to post up flyers in the office and around the mailboxes. Calls started coming in.
To save time, I took pictures of the inside (as well as the outside). Anyone interested would have to look at the inside pictures before I took the time to show it.
Here are a few pictures of the inside to give you an idea of how much work was needed:
(Note: As you can see, the home needed a lot more than paint and carpet…definitely out of my scope of experience and beyond my comfort level.)
People who were interested before seeing the inside pictures became uninterested the moment they saw them. Then there were those who were interested and wanted to make offers.
Taking Offers
The first offer came in really low. An investor offered 1/3 of what I was asking. So I decided to keep marketing. Glad I did.
To make a long story short, I had to lower my initial price just a little bit to attract more buyers. I learned this technique from another real estate agent awhile back.
Get people interested enough and you may get multiple offers. The key is to get their attention. And lowering the price usually does.
The next offer came from a family who seemed interested. But the problem was they couldn’t commit.
The parents saw the house with their son. They wanted to buy it for their son and his family. But his wife was at work when they saw the home.
After viewing the property, both parents told me they were probably going to buy it. Though, they wanted the son’s wife to look at it before they made a decision. So we scheduled to meet again over the weekend.
Though I kept marketing it. And scheduled any other interested buyers to see it 1/2 hour after this family would see it over the weekend. Still had to save money on time (and gas!) just in case things didn’t work out.
When the Buyers Backed Out
One day before I was scheduled to show it again to this potential buyer and their family, they changed their mind. Told me the home was more than they could handle. And they were on their way.
Imagine if I didn’t continue to market the property? What would have been my plan then? I’d be back at square one.
Good thing I did.
Finding a Buyer
The day I was scheduled to show the home, I had three other families interested. Two were not so serious. But one was.
Received a full price offer. So I tied it up. Collected a deposit. And got the paperwork ready to close on the home.
Closing the Deal
Took a few days to close the deal due to scheduling, but I got it done. And I had the money to fix up the other property in cash. But even more important, I no longer had to pay lot rent on an empty home that needed more work than I could handle.
And the best part? The park didn’t make me pay a month extra of lot rent.
This was done at the end of the month with less than a 30 days notice. And the buyer was planning to move the home out of the park. But the park manager was cool about it.
(Note: This is why it’s so important to take the time to build relationships. Real estate is a people business.)
After the move (which the buyer used my mover to get a good deal), I made sure the lot was left in good condition. And all items were taken from the lot. They were. And that was that.
(Note: Picture of the lot after the home was moved.)
Lesson Learned
After this experience, I’ve learned that it’s important to cut my losses…early. There are things that I can do. And there are things that I cannot do.
I shouldn’t take on projects as learning experiences when I could be spending my time on projects that I know I can do. Lesson learned.
Hope this story helps you in your own real estate investing career. Happy investing!
p.s. Just in case you missed it, I wrote a new article on “10 Steps to Making Money in Mobile Home Investing.” Thanks for reading!