How We Found A Buyer For A Very Rural Property

Mike DeHaan: [0:00] What is going on, guys? Welcome to today's collecting keys Friday focus. If this is your first time to these Friday episodes on these ones, we kinda do a little bit of a deep dive into a deal that we have done recently so you can kinda hear how we got the deal, what the details of it looked like, so you can hopefully be a better investor and close more deals for yourself in the future. If you're unfamiliar with me, my name is Mike DeHaan. You can find me on Instagram at Mike underscore invest. And I have been the host of this show for over three years now, which is pretty crazy. And we run a full time real estate investing business called Backyard Home Buyers. We have a lending business that we do hard money loans and co lending for anyone that wants to participate in hard money lending, doesn't have a ton of cash. And we also run a community called Scale, which is our real estate community for people that want to grow real estate investing, wholesaling, and flipping businesses, and just be around other people that are doing the same thing. So if any of those interest you, hit me up at Mike Skor Invest on Instagram, and I would love to chat with you more. So for this episode today, we are going to be talking about a deal that we actually just signed a couple of days ago. And if you follow me on Instagram, you might even have seen me post a little clip about this one. It was a a little reel that I made about, like, negative things that people say about real estate investors, then it had a video of a pretty crazy little hoarder house that one of my guys walked through. And this was a I feel this is a good deal to talk about for the show because it was a pretty challenging one to get together just with some of the logistics that were involved. And so first off, this lead came from direct mail.

Mike DeHaan: [1:38] That's where 90% of our deals come from is from direct mail that we send out at a massive level every single month. And the thing with this one that made it particularly challenging, well, I guess there's a couple of thing. First off, it was a pretty rural property. And I don't mean, like, rural, like, it was a single home out in the sticks, but it was out in, like, a smaller town just outside of the Spokane area of about 30,000 people. So it was out a little ways. The property had been abandoned for quite a long time, so we knew that it would be a pretty large project, which immediately shrinks our buyer pool quite a bit. The sellers were not local, and they were only going to give us one shot to walk the property because they did not want to have to come back into town again to, you know, give us access or things like that. And they were also not willing to give us any sort of keys or access to the house because they were worried about squatters and things like that with it being an abandoned rural property. And then also to the way that the transaction kind of had to go, there was some logistical challenges around title and things like that. And so, basically, the biggest things is there was going to be a large rental, which makes it hard, one time access, and kind of an unknown timeline, which also reduces your buyers as well because you didn't know how long it was gonna take for us to overcome kind of the title issues.

Mike DeHaan: [2:55] And so you need to have a pretty specific person, and you need to be able to be pretty flexible with the seller and be efficient with your offer and everything else. And so how this deal kinda came together is the call came in, and my rep did a very, very good job of kind of gathering a lot of this initial information on the first call so we knew some of the challenge that we were gonna face. Also too, because it was rural and the fact that we knew it was abandoned, it was going to need a lot of work, we prepared the seller very early for the fact that our offer was going to be significantly lower than what they see on Zillow or anything that they would find on the tax assessor's website. And that's super important because what you don't want is to spend all your time doing this, driving hours and hours away to go and lock this property, and then have the seller still with the expectation that they're gonna be getting retail price for what's obviously going to be a problem property. And so what that conversation looked like is my guy was literally like, okay. That sounds great. Just so you know, the property has been abandoned for as long as you say. And just with the location and the fact that we are going to be flipping this house and there is going to be, you know, a we are going to be selling it on the market. We expect some challenges selling it. We are probably going to be quite a bit lower than what you're gonna see online.

Mike DeHaan: [4:06] Is that okay with you? And she just said, yes. That's fine. I understand that. We don't have to give a hard offer, but we are setting the expectation that it is going to be a lower offer price, and that's fine. Then we can at least have a productive conversation as we go. K? And that way, we're not wasting as much time and then just, like, setting expectations incorrectly from the start. So we had that. And then from there, she made it very, very clear that they were only going to be in town for this one weekend, and that they did not want to come in again, and that we were only gonna give us one walk through on the property. When it's a fixer upper that's as big as this one, it gets more tricky because you can always try to have, you know, say things like, well, we're gonna need to have a an HVAC guy. We'll look at our foundation guy, things like that. We figured we would just broach that challenge if it came up, but our initial intention was to basically make an offer that would be so low, right, or such a good deal that it didn't necessarily matter if there were some questions that would come up, and we were instead just working with the seller to try and make sure that we could get the deal done in just that one walk through. So as soon as we knew that bit of information, what we did is we started reaching out to the largest renovators in town, many of which are our direct competition, and just sort of like teeing up their interest on this property. Now where this gets interesting is as soon as you do that, you're kinda showing your cards.

Mike DeHaan: [5:23] Right? What you're doing is you are telling them about this lead that you have. You're verifying that they're highly motivated. They know it's a distressed property. Theoretically, these people could now go behind our back, try to find the seller, and snakes out of the deal. This is where your brand and reputation is so important. Because if you are an established player in your market, people know that you're legit, people wanna do more business with you, they're probably not gonna do that. There is this culture with off market real estate, especially wholesaling and flipping, that if you're one of the big people in town, people generally want to have a collaborative mindset with you because the understanding is that if they help you make money, you will help them make money, and it becomes a very symbiotic relationship. Right? And so that's what we were counting on. And we went around, and we were able to find one of the large renovators that said, hey. I'm looking for a big project right now. It's been relatively slow. The timeline on this one will be perfect because we're currently in December, and we're gonna be able to get this one up and listed in April, which is the hot buying market here in Spokane. And so what they did is he actually went to the property with my sales rep.

Mike DeHaan: [6:24] They were able to do the full walk through. And as you can imagine, the property was significantly worse than they're expecting. You go look at that video on Instagram, you'll see what I mean. It was pretty nuts. My guy who has walked hundreds and hundreds of properties said that this was by far the worst one that he's ever seen. And we're talking no water, no electricity, stuff everywhere, dead animals in there. Like, everything that could possibly be an issue with this house existed. And it was, like, kinda hard to figure out what to do, and even the seller was a little bit shocked with the condition of it because they hadn't been there for, we heard, over ten years. This must have been abandoned, and no one had been inside. And so what we did, once you walked through it, we tee up the seller of the fact that our offer was going to be extremely low. That's what we saw. They kind of understood. And then our sales rep worked with the buyer slash rehabber that he brought down, figured out what the rehabber was going to pay. Basically, he said, like, give me your highest and best offer on this. I'm just gonna go and try and get it low lower than that. So he did a reverse wholesale. We got the buyer's number, which was lower than we thought we're gonna be able to get it for. But then our guy with his, you know, strong sales skills and negotiating skills was able to go and get a price that allowed us to make $12,500 on this assignment fee for this house. We got the buyer assigned before we actually had the contract signed. So that way what we can't do is go and make this low offer and then end up, you know, completely in trouble because our buyer decides they changed their mind.

Mike DeHaan: [7:49] So we got him assigned. We got that officially, like, locked in. Before we went and got the contract, once we got the contract signed, we put all of it into escrow, got earnest money in, and we're good to go. And this thing is just gonna be contingent on the title situation that we have to figure out too. But the initial paperwork has actually looked pretty good, and my hope is that we should be able to close this thing sometime in mid January. And so big lessons here. You have rural properties, respect your time, and make sure that you are setting full expectations about your low offer and kinda what to expect out the out of the situation with the seller before you waste your time going out there. Number two, if you have one that you know is gonna be hard to sell, don't be afraid to lean into the relationships with strong buyers and be willing to show them your hands a little bit. Know, try to reverse wholesale. Try to figure out where they're at. Bring them out at the same time so that you don't have to do, like, the we need to bring an inspector out or I need to bring out my partner sort of conversations, which just take more time. Be efficient with these. Loop in that good buyer, and then trust that they're gonna do you well. And if they don't, they scare you over, blast them. Right?

Mike DeHaan: [8:52] Put them out on social media. Let them know everyone know they're dirt bags. That'll honestly teach a lot of people a lesson if you do that. Okay? And, you know, if you're gonna be in this business for the long term, one deal isn't gonna make or break you. Sure. It sucks, but it's part of the game. Okay? So be prepared to do that, but don't be afraid to loop in your buyer a little bit early on. And then lastly, as you are kind of approaching these ones that have these situations where the seller is a little bit tricky on, right, Only doing one walk through. You know, they are gonna have expectations around title, things like that. It's the different challenges. A big part of this game is willing to be flexible to the seller's demands or requirements even if they do feel a little bit silly. And so I know it can be frustrating, and you can try to battle to have things done your way. Most often, it's gonna be better for you to just be like, okay. That's fine. We can, you know, work with that, and then you be the flexible one. If you're willing to do that and kind of overcome your pride or the inefficiencies that come with it, then I promise you will make more money overall. So, anyways, hopefully, that's interesting for you. If you have any questions or anything about that deal or the show or you have other things that you would like to hear on the show going into 2025, please hit me up at Mike underscore Invest on Instagram.

Mike DeHaan: [10:00] And besides that, guys, share this with other real estate friends that you know. It's the best thing that helps us continue to grow and keeps us excited to make content for all of you guys listening out there. So thanks for listening, everybody, and we'll talk to you guys next time.