There are many ways to find real estate deals today – the MLS, driving for dollars, direct mail campaigns, wholesalers, and more!
And then there’s the often neglected…word of mouth. People don’t realize the power of sharing what they do and how they do it with everyone around them. I didn’t believe it could happen either. Who would’ve thought that we could buy a property simply by telling an employee that we buy properties. Crazy!
A year and a half ago, I got promoted at my job and was placed at a new location with a new team. It turned out that this team was absolutely awesome. I started developing great relationships with individuals on my team. Soon, I shared with everyone my real estate journey. They all knew I househacked. They all knew I loved to DIY. And they all knew that I was trying to pursue financial freedom through real estate.
Then, one day, one of my employees, Kevin, and I started talking about his property that he was living in at that time. It belonged to his uncle who had recently passed and his cousin was in charge of selling the estate. He explained that his other uncle was supposed to purchase the property but was having trouble getting his loan approved. The property was off market and of course would be sold for much less than retail price.
A couple months later, I asked whether or not his other uncle closed on the property. He hadn’t. And then a few months later, I asked again. It still hadn’t closed.
At some point, I suggested to Kevin that he should purchase the property himself with a FHA loan and househack. However, he wasn’t interested. He had other endeavors and pursuits and didn’t want to bother with a purchase of a property. And then, Kevin would occasionally joke around by telling me to buy the property instead. However, I would just laugh it off since, at that time, my wife and I was busy fixing up our duplex and couldn’t even consider buying another property. Besides, I just assumed that his other uncle would eventually come around and figure out how to buy the property.
After several conversations like this over the next several months, it became apparent to me that this other uncle wasn’t going to be able to close. I then started to seriously consider the prospect of buying the property instead. After much thought, I asked Kevin whether or not his family would consider selling the property to me with some provisions.
First, I didn’t want to put 25% down for an investment property. In order to bypass this, I asked whether or not Kevin would go 50/50 with me on the note and title so that we’d be able to get a 5% down owner occupied conventional loan since he would live there. Eventually, we would refinance out into my name.
Second, I asked whether or not Kevin would help me manage the property since I planned on renting out rooms on the first floor to long-term tenants and rooms in the basement on airbnb. In return, I would let him live for free.
Surprisingly, he agreed to the terms except that he would still pay for his portion of rent and for internet. More on this later!
Eventually, after almost a year of trying to close on the property, the uncle’s loan fell through and the property became available! We went under contract on 6/1/20. We closed today on 7/30/20.
The reason why I wrote this blog post is for two reasons –
1) To illustrate the power of telling everybody about your real estate journey. You never know what will come out of the conversations. I never thought that I would ever acquire a property through word of mouth and through casual conversation.
2) To illustrate the power of meaningful and sincere relationships. Kevin is my go-to guy at work. Without him, I cannot do anything. He is the reason why I can manage my team effectively. We’ve built a strong rapport and trusting relationship over the last year and a half. We’ve built a strong friendship as well. Because of this, he chose to do me a huge favor by going 50/50 with me on the title and note so I could get the property. To be clear, he didn’t really benefit much from this deal. Remember earlier how he said he would still pay for rent. Crazy! He could totally live there for free since the property is technically 50% his. But no, he doesn’t consider this his property. This property will eventually be mine entirely once we refinance. He LITERALLY did all this so I could get the property instead of someone else. He did this out of the goodness of his heart. Not because of anything else but because he is a great friend.
I encourage everyone reading this, especially those who are just starting out in real estate like me, to start telling people about your journey. What are your goals? What are your interests? What’s your focus? You never know what will come out of these seemingly casual conversations you have with those who have similar pursuits.
Also, instead of pursuing great deals, pursue great relationships! Whether it be with your coworkers, contractors, lenders, fellow real estate investors, or partners, focus on building great relationships! Then, I believe the deals will follow!
Isn't Gee So Lovely 