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Missed Property #3 – Out of State Landlord

May 19, 2012

I had an out of state landlord approach me about possibly buying one or two of his properties. Val and I met him at our current primary as he rents his old primary home in our neighborhood. He was just in town to check on his properties and visit some family. He lives in California and owns 13 properties in the Dallas area. It sounds like he wants to start investing in CA.  

We exchanged business cards and a week later he was calling me.  He provided me with 2 addresses. One I somewhat like, but the other one is in an area I don’t really like. It is also over 2,000 square feet and just won’t make a great rental in my mind. The one I like is a standard 3-2-2 about 1,500 square feet. It’s in an area that I have wanted to own a rental. The only problem is he is not motivated to sell. It sounds like he is preparing to 1031 Exchange into some properties in CA, but he is not in a hurry. I went ahead and made an offer. I reminded him I can close quickly and get the sale done whether the house was occupied or vacant. He is not a deferred maintenance landlord. He uses a local property manager, and keeps his properties in above average shape.

My first offer was all cash. I wanted to start him off low and then let him walk me up, but this is when I like to convert over to owner financing. I reminded him – “I am an investor too and just like you – I have to make my money when I buy.” The problem is he could just as easily wait for a vacancy and list the properties and take his time getting top retail dollar. I need sellers that need out. It was obvious he and I could just not come to an agreement. I think this was just a fifty something year old landlord who ran into a buyer of rental properties and he just had to see if he could dump one off. I would probably do the same.

Ultimately his motivation to sell was just not there, but it’s still great to get these calls. Ideally he will be calling me back with an urgency to sell someday. Here are the numbers on this one:

Sale price: 130k (initial number he threw out – he had to start somewhere)

Tax value: 130k

ARV: 130-140k

My first offer:  $80k cash

Currently rented at: $1,295

 

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