Finding our 1st property wasn’t easy.
In fact, it took us about ____ months of day to day work.
But, it’s been a fun journey.
In today’s post we’re going to talk about the process, what worked, what didn’t work, and what we’ll do different/better next time.
How did we find the property?
Playing on Zillow one night, I was learning how to navigate through the site better and found the “other listings” which are properties in foreclosure or FSBO (For Sale By Owner) when one property caught my eye.
It was going to auction.
It was also down the street from my daughter so I called her to get whatever information I could. She didn’t know them, but said they’ve had a moving pod in front of their house for months and then added, “there’s definitely a problem”.
Aha! That’s what I needed to hear.
I kept my eye on the property when I noticed the scheduled auction for this property was postponed.
Not knowing much about how the auction process works, I started researching and asking questions.
Weeks, maybe even months, went by and the moving pod was still there and it was still showing “postponed” on the website.
I learned later it was due to an investor group purchasing their property, but they backed out right before the close of escrow.
What were the first steps?
Finding the courage and motivation.
At first I wasn’t totally sure what to do because I’ve never done anything like this before, but I knew from all my education in real estate that this would be a perfect SubTo opportunity.
However, it was the motivation of having to walk away from my long time W-2 job/career that gave me the courage I needed to put my education to practice. I always hear about knocking on doors and just having a conversation to find out what they need.
What is the problem that’s going on and how can I help or help them find a solution to what their situation is.
It’s about building the relationship and letting them know that you’re not just an investor there to low ball and get their house, but really let them know that you want to know what’s going on and you want to help and that you’re willing to work with them, no matter what the outcome is, to get them out of this situation.
What happened next?
During one of our Saturday morning walks, I got the courage up to tell my husband, “let’s go visit the grandkids and then on our way out, I want to stop at that house whose auction date is postponed -and knock on the door”.
This was the first weekend after taking leave from my W-2 job so I definitely had some motivation and I felt like I had nothing to lose.
After visiting with the grandkids, we drove to the other end of the block to the house and I knocked at the door.
For some reason, I really didn’t have any fear.
It was just a conversation, right.
I waited a little bit but no one came to the door, so I went back to the car to write a note to leave on the door. (No, I didn’t have one already made up. This is how new I was to all this.)
But then I heard Tom call me and I turned around to see an elderly gentleman had come out and was standing in front of the house so I went back and introduced myself.
I simply told him we were visiting our daughter who lives up the street (true) and noticed the moving pod in front of your house for a while (also true).
I also let him know that we really like the neighborhood and are looking at houses in the area (true again) and I was just wondering if they were planning on moving.
He said they were planning on moving. Yay!
He told me he owned the house with his son.
Their names are both on the title, however, he would prefer I talk to his son. Great!
I wrote my name and number on the back of a Costco receipt (no fancy business card here) and asked him to please let him know to call or text me.
We hadn’t been driving back more than 10 minutes when I got the text!
Yes, they are planning on moving and said they are available to talk about it. It was already late in the afternoon and we were on the highway back home, which I explained, so I asked if it was okay to come back tomorrow, Sunday, around 10am.
If they had said no, I would have made a U-turn on the freeway if I had to, but luckily they said yes!
The next day we met and had a really great conversation.
We let them explain what’s been happening, how they fell out of escrow actually twice, and where they wanted to go once they sell their house.
It was a fact finding mission accomplished.
Were there any red flags that you can now see?
Not so much red flags on anything that they did because they were just in a situation that they couldn’t get out of and that first meeting was just about collecting data. However, I would just say to either be sure to neatly write everything down or record the conversation (let them know first) so you can go back and track the dates, any specific numbers or issues, and what was discussed starting from day one. That first encounter, they made the comment that they needed $250k in order to buy land in Alpine. I needed to understand they meant literally this is what they will need from us in order to move forward. It was a learning experience for me to take everything they say literally! And then I should have made it clear, at that point, that we wouldn’t be able to promise anything until we dug deeper into their situation. However, we definitely want to help them out of foreclosure and, if we decide we want to work together, we would need to confirm what they owe the bank, get quotes, and then we can definitely see what we can do to get them closer to moving to Alpine. If at that point they said, no matter what they need $250k, then that would have been the red flag and we could have taken a minute to step back and gracefully back out of the potential deal so as to not waste anyone’s time. I would still tell them that we’re here to help, if they get to that point where they can use our help, to call us.
What did you learn from this recent deal?
I learned so much from doing this deal. Probably more than I can explain in words, but one thing I can say is that to actually go to the process is the game changer. You can read and show up to trainings and webinars and listen to other people doing these amazing SubTo deals using creative finance and you think wow that’s so awesome! But until you actually go through it and ask a lot of questions and more clarity, then you really won’t fully understand everything that you’re learning about. It’s that “learn by doing” attitude and method that really opens your eyes and teaches you everything that you need to know. The biggest take away from my experience is truly just do it! Do your due diligence, seek out mentors, and network. Find your team that will help you grow and learn. You’re going to make mistakes and have to do some damage control, but as long as you’re asking questions and not assuming, then your mistakes are going to be fixable and it’ll be the best learning experience you could ask for.
What will I do differently next time?
Over communicate. Even though I felt like I was communicating a lot and being very transparent with everything I was doing, I needed to share a spreadsheet document with them that visibly showed every date that something was done, what was done, and any note that would provide explanation. I needed to better educate them on the process as to what we were doing, how that could affect our outcome, as well as any benefits or value that our deal was going to bring us. This is not an everyday thing so it is your job, it was our job, to make sure they not just knew what was going on, but understood it. Educate them on how the deal works and how the money is coming and going, what you’re bringing to the table to get them out of foreclosure, and how that’s going to affect the potential outcome. Just remember, especially if SubTo and creative finance is new to you, you are educating them as much as you are learning the process yourself. Learn-by-doing and then educate your homeowners so there’s no misunderstanding.
What will you do the same?
I will continue to knock on doors and build a relationship just as I did before. I’m not afraid to talk to people and ask questions to find out what is going on and figuring out how we can possibly help. Even if I don’t know the answer, I know how to reach out to our team to get it. I will do everything I can to help no matter what the outcome. I will leave the lines of communication open on both sides and reach out to the experts as I did before. Trust me, there could have been major mistakes that cost us thousands of dollars, but luckily I had an expert on my team who caught me before I made the mistake. Phew!
How are you implementing what you learned in the next deal?
I will have better systems in place whether it be spreadsheets or trackers or anything where it’s in an ongoing document that can be shared between us and the homeowner. Whether they want to track it or not, it will be made available so every time we do anything such as contact the owner, get a quote, talk to their lender, etc., we will add it to the ongoing spreadsheet when we did it, who we talked to, when, what, and why. We will also include a basic spreadsheet with numerical data that includes the “potential” sell price along with all the costs to get their home ready to sell. I feel having those systems in place will educate the homeowner on what is going on in real time in order to get to a positive end result. So… build a positive and honest relationship with your homeowner, educate them in your process, reminding them of the benefits, be grateful for the opportunity, and get your systems, spreadsheets and trackers in place so there’s never something that you have to remember or try to find in an email that was said or done. Everything is right there at your fingertips.
Recently, I came across a property that caught my eye.
How did you get started in real estate?