Buyers

I once read this old joke. I’ll paraphrase:

An entrepreneur and his friend are walking down the street. The entrepreneur says, “Look, there’s a dollar lying on the ground!” To which his friend responds, “That’s impossible! If it were a REAL dollar, someone would have picked it up by now…”

The entrepreneur’s wealth grew by $1.00 that day.

I think I was on a plane when I first read this. I put my iPad down for a minute, thought about it, and just laughed. It’s so simple, but there’s an implication in this little joke that so many successful people understand and so many others fall victim to time and again.

The implication is PERSPECTIVE.

Perspective creates millionaires while others who saw the same thing passed on by. Doubt is natural in human nature. New investors seem to think they’ll need to find the deal that no one else knows about. They think that successful people only become successful because they were given the inside scoop and access to a deal that no one else knew about. This does happen of course, but there’s another way to find success where others haven’t.

Have a different point of view (perspective) and apply it. Wealth can be derived from this form of creativity.

The book Think and Grow Rich (Habstritt and Hill) tells this story, which I will again paraphrase (and butcher).

Around 1890 a store clerk paid $500 for a large kettle, a huge wooden spoon to stir the contents of the kettle, and a slip of paper with writing scratched on it. $500 was a huge sum of money in that time. In fact, it was the clerk’s entire life savings paid to a doctor who sold him the three items. The doctor was thrilled! He ran from the store with a smile spread across his face, knowing he just made one heck of a deal.

The slip of paper was a recipe. One that was missing one ingredient which only the store clerk possessed… PERSPECTIVE. With these three things combined with the clerk’s secret ingredient, he created Coca-Cola…

 

My perspective hasn’t yet given me one of the most powerful brands ever to exist on the planet, however I’ve been able to succeed in single-family real estate during the worst market downturn in at least 30 years. We started in 2008 when every other real estate investor was either hanging on by a thread or running for the hills.

I also built my business almost exclusively by buying properties listed on the MLS for everyone to see. My perspective allowed me to spot deals time and again by purchasing what many others had already passed over.

Here’s a specific example… I’m currently developing a student housing community one block from Missouri State University.

I purchased two houses side by side. The first was on the MLS for approximately 3 months. It was on a major street and they were asking a premium price. They were in the middle of a week-long negotiation with a buyer who didn’t want to give them their full asking price. While the other buyer nitpicked the details I swooped in and stole a bargain by giving the seller full asking price and a few other terms they wanted.

Next, I shifted my attention to the neighbor. The house on the corner. Quick research showed me it had been listed 6 months prior. The listing had expired and they rented it to some students. I made them an offer and they got all but $3,000 of what they were asking for months and no one was willing to give them.

So now I’ve paid WAY too much for these two houses, at least by everyone else’s PERSPECTIVE.

Unknown to most, including the sellers, the two properties were zoned appropriately for apartments. The few that knew this still weren’t willing to pay the sellers’ asking prices because the two houses were nice. Way too nice, and too expensive, to justify knocking them down and building apartments.

So if they’re on a busy street and are too expensive to make sense as rentals or flips, and they’re too nice or too expensive to build apartments, then I’ve overpaid. And surely this was a bad deal.

Wrong. I’m keeping the two houses and remodeling them into student specific homes. Since the houses are on a corner, I’m building a duplex behind them which will face the adjoining street. By buying these two houses I was able to purchase a duplex lot, worth approximately $75,000 just one block from campus.

My PERSPECTIVE allowed me to see the $75,000 discount on purchasing both of these homes.

Your secret ingredient doesn’t need to be as “outside the box” as this specific example. Here’s some great ways to apply your perspective to see the deal in what others may pass on by:

  • Can you increase square footage by going up, down, or doing an addition?
  • Can you turn a 2 bedroom home into a 3 bedroom home?
  • Can you add a bathroom?
  • Can you re-design dysfunctional space?
  • Is the property currently operating at its “highest and best use?”
  • Is there a specific market you can attract such as senior housing, handicap accessible, student housing, etc.

 

Don’t walk past the dollar. Someone will pick it up. Why not you??

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