In September of 2012, I officially moved from Australia to the US to pursue my dream of becoming a successful full time property investor.
I touched down in Missouri and during the next six months I was very busy exploring the various opportunities the Kansas City market had to offer. It was during this time that I fell in love with a particular block of College Avenue.
the block i wanted to buy
The block consisted of 25 two bedroom, one bathroom homes. These simple properties were apparently made by the same manufacturer and the only thing that differentiated them from each other was the exterior paint. The house sited on the west side of College Ave.
At the back of his lot was a park that included a bike trail as well as a basketball court. Although the street was not located in the nicest part of Kansas City, I found it very manageable and rated it as a C class neighborhood.
I pictured myself buying and holding entire blocks of these cookie-cutter homes and going door to door on the first of each month to collect the rent, all in one clean sweep.
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However I was very busy working on other projects and had most of my personal funds tied up elsewhere. The opportunity to buy my first property on College Avenue came when a local wholesaler offered me a deal.
my first home there
I decided it was worth the shot and reached out to my good friend and fellow investor from Europe. I offered him a joint venture because I knew he had always wanted to enter the US real estate market.
The bulk property was greatly depleted and a complete interior and exterior overhaul was required. The only two things in this house that are in good condition are the roof and the foundation.
The property was offered for $15,000, which in my opinion was a fair price for the area and the condition it was in, yet wanting to make sure there was a large enough margin of safety, I decided to test the waters with a low ball. Decided to offer $5,000. As you can imagine – the offer was not accepted.
After a few weeks, the wholesaler’s closing date was approaching and he was under pressure to perform and close the deal. We exchanged two phone calls with me advising him that the best I could do was throw $500 toward the property.
To my surprise he came back and said, “We have a deal, if you can stop by tomorrow”.
I closed the next day and had every intention of completing the renovation within a couple of weeks. Unfortunately, this did not work out as I had higher priority commitments on other projects in which I was a participant. I also found it unfair and selfish to take renewal staff from these deals and send them to work on my personal investments. ,
Three long months had passed and the “ugly house” was still sitting empty and without repairs. My friend and JV partner had another potential deal in the works and inquired if I could sell the property.
I agreed, as my circumstances had changed and I had bigger dreams than owning a block on College Avenue. was more than the price we paid.
What are you saying?
I have never attempted to sell an unrepaired property in my real estate career, and this was definitely a first.
At the same time I wanted to sell this property, all the marketing efforts done by our group were targeted only to investors who were interested in buying renovated turnkey rentals. Listing the property through our normal marketing channels and offering it to existing investors would be contrary to our brand and company values.
In my opinion, real estate is a numbers game and I firmly believe that if you work those numbers daily, doors will open and eventually you will get what you want. My personal assistant and I had no choice but to relentlessly list this “Ugly House” on Craigslist, Postlets, Facebook Groups, LinkedIn and…. We even tried selling it to my mom (haha).
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Six weeks after being ridiculed and laughed at by other investors for advertising such an “ugly house” and lowering the initial listing price of $12,000. We got a call from a gentleman answering one of our Craigslist ads, saying he knew the area well and had seen the prices come down. He wanted to know if someone could meet him on the property right away, as he called us over to stand right in front of the house.
At first I was very skeptical because ten days ago, I had a gentleman’s agreement with a person who guaranteed immediate closure of the property, but to my misfortune, he proved to be non-genuine and the deal fell through.
I decided to question the potential buyer whether he was really genuine and how quickly he could perform. He told me that he grew up on an alley around the corner, and that his mother’s long-standing wish was for him to become a full-time real estate investor.
Do I think you can’t go against a mother?
I drove to the property and after driving for two minutes let him in… He said, “I’ll take it!”.
As the saying goes “one man’s trash is another man’s gold”.
I tried to reply but am lost for words. It took me a good ten seconds to remember the name and contact details of my trusted title companies. After providing the details to the buyer, he immediately called the title company and arranged once again to close the next day at 10 a.m. To my surprise the investor showed up at the closing with a certified check for $10,000 and the deal was done. within ten minutes.
This was by far the most unusual buyer/deal I have ever been involved with.
conclusion:
Keep your head down, and don’t pay too much attention to the negativity that others throw your way. Work hard, work smart and be persistent by committing to the numbers.
your time will come.
Note by BigPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
