Losing the Investors' Scramble

There was a day in December last year when it was 7 degrees. Two Saturdays ago, it was -22 degrees (Imagine opening a freezer and realizing that it’s 22 degrees warmer in the FREEZER than outside). It was the coldest I’d ever experienced, and my fingers were messed up for four days after being outside to shovel snow after just 47 seconds. Today it’s gonna be 17 degrees, and then it’s the 30’s, 40s, and 50s for the remainder of the season. This has definitely been the best winter I’ve been through, with a total of just 2 sub-zero days. As much as I’d love to celebrate the warmer weather, there’s a disadvantage I hadn’t anticipated. Because of this unusually warm season, I’m competing with more investors for the same properties.

In normal winters, there aren’t as many investors willing to trudge through the snow and cold to view properties. But this winter has been very different, and my competition has been fierce. There have been at least 4 properties that have slipped through my fingers because someone beat me to it. Just yesterday I went to look at a newly listed property with REA (real estate agent) John’s wife, Karen:

Beautiful

I usually hate carpet, but they did a good job here

They laid the polyurethane on way too thick, and that made all the wood look nice but sticky. I'd either strip and re-finish the cabinet doors, or just get new doors.

The bathroom, missing a shower and a floor

A good tile job will make this bathroom look amazing

This was a one-family going for $30,000 in a nice area. It basically needed a new bathroom, new cabinet doors, and thorough carpet cleaning. The repairs would have cost about $5,000 total and, with an estimated assessed value of $63,000, I could have cleared an EASY $20,000 in profits and $200 a month with the rental income. I told her to make the offer and started driving home. Approximately two minutes into my drive, I get a call from Karen telling me that they’ve already accepted an offer. I tried to hide my frustration but couldn’t help it. Yet another property slips through my fingers! As I complained about my misfortune, I had a thought:

Me: Hey, quick question for you. Let’s say I put an offer on a property without seeing it, and the offer is accepted. Am I able to back out of the deal should I find the repairs were more costly than I thought?

Karen: Absolutely. All contracts are contingent on your lawyer’s approval. So you can go in with your contractor, do the numbers and back out if it’s not what you want. Your lawyer will simply cancel the contract and that’s that.

Me: Cool.

Karen: Just remember not to put in an offer that’s contingent on a home inspection or anything like that. You want your offer to be accepted first, and a seller will be looking at several offers at the same time. The one that looks likes the least amount of hassle and priced well will most likely be chosen.


Karen’s advice is good, and that’s what I’m gonna do from now on. By the time I do my due diligence, someone else is just gonna come in and scoop the property up. So let’s end that bullshit. The second I see a place that comes on the market, I’m gonna run the numbers. If the numbers work I put in a offer right then and there. And the offer will be a good one. If I know the numbers are good and the area is nice, I’ll simply offer the asking price… maybe a little more. I’ll make up the potential loss with the rents during the refinance process. Then I'll do a walk-through with Handyman Alfonso and, if his estimate is good, I'll move forward. If not, Marvin Wassle will cancel the contract and I'll move on.

You know, it’s the end of February already. When this year started, I was sure I’d have a property by now. So I’ll take off the gloves and get very aggressive from now on. Hopefully this new strategy leads to better results, because I’m getting aggravated. No sex. Working two jobs. No new property. Something’s got to give…

P.S.: To add to my bad luck, Potential Property #3 is no longer available. Once the owner saw that there was a serious offer, she decided to work it out with the mortgage holder and refinance. I feel used...