My First Investment Deal – Don’t Let Fear Stop You

My First Investment Deal - Don't Let Fear Stop You

Because I have been investing for a long time, many new investors assume I’ve always known how to buy and sell investment real estate. Absolutely not true. No one is less experienced than I was starting out, but I had an absolute goal and I was willing to work hard to achieve it.

Let me tell you about my very first deal:

Jim and I knew we had to let people know that we wanted to buy houses if we were ever going to find deals to purchase. So, we began a little bit of very inexpensive marketing to get the phone to ring – walked neighborhoods putting out flyers, had magnetic signs on our car doors, put an ad in the local Nickel Paper (a three line ad was only $265 for a year). I had questionnaires printed out and stacked by the phone so, if a seller did call, I’d remember which questions to ask.

Like most new investors, I was terrified. Because I didn’t know what I was doing, I really didn’t want sellers to say “yes” to my offers, so I always made very low offers. Investor ignorance is not always a bad thing.

Almost the very first call was a woman calling from out of state. Back at that time, our phone had caller ID and it said the call was coming from “US Gov’t. Baltimore, MD”. I was convinced I was being arrested for doing something illegal, but quickly rationalized with myself that I couldn’t have done anything seriously wrong by that point, so I answered the phone.

The woman’s voice said, “do you buy houses?” What? The government already knew I was buying houses?!?

As it turned out, her son lived near us and had taken down our phone number from the magnets on my car doors while I was parked at our local grocery store. The condo she was selling was actually in our neighborhood, and she was calling all the way from Baltimore, MD! This was so weird.

Anyway, it was vacant and had been on the market with a real estate agent for a year. I asked for the property details and promised to call her back. After doing my due diligence, I called and offered 65 cents on the dollar. She said, “Honey, I’ve owned this condo for six years and I still owe more on it than that!” I told her that I totally understood, that I was not going to be her best offer but that I was one solution, and she was welcome to call back anytime if she had more questions during her selling process.

I was so relieved that she didn’t take my offer. That night, she called back…

She asked, “if we did the deal, how it would take place?” I explained it to her, told her we would close with our attorney, and that she would have to write a check for the difference between what I was offering and what she still owed. She thanked me and hung up.

The next day, she called back and accepted my offer.

I had never even seen the inside of the property and was scared to death. Later that day I met her son at the property to check it out. It was immaculate – all new carpets and paint, all appliances including washer and dryer, a 2 story living area with a 2 story stone fireplace, an upstairs office area that overlooked the living area below. It was amazing. Because it was my very first deal and the seller actually paid to have me take it off her hands, I took this as a sign that I was heading down the right investment path!

Morals of this story?

  • Don’t think you need to know everything before you start investing. You really learn what you need to know while you’re investing.
  • Don’t think for the seller. Many assume that, if the seller owes too much, they won’t accept your low offer. Not true! Many sellers pay to sell. If their need to sell is great enough, they write a check at closing.
  • Don’t let fear stop you. No one knows what they’re doing at first, in any job, but surround yourself with people who do know the business so you always have somewhere to turn for answers.
  • Always be a resource for the seller. Most sellers need help. Offer it to them. You are forming relationships that will lead to great referrals. Be willing to help, even if you aren’t the one they sell to.

Do you have a story you’d like to share here? We’d love to hear it!

This post has 6 Comments | Would you like to leave a comment?

6 Comments

  1. Hi Daryl:
    There is ABSOLUTELY NO reason to know the seller’s equity position. That doesn’t impact what you can offer AT ALL. What you need to know is the true value of the property; cost of repairs; how much you can pay for it.

    If they owe more than you can offer, that is a situation they have to deal with, not you. If you want to stay in business, you can only offer what your numbers work out to. Many people accept offers far less than they owe and find ways to pay to sell. Don’t ever think for the seller or “assume” you understand their position or what they can do about it.

    Focus only on your own realities and, if it works for both parties, you have a deal. If it doesn’t work, you part as friends and move on to your next offer.

    Thanks for adding to the conversation!

  2. I seem to find sellers who want top dollar for their property and I haven’t perfected my method for communicating how I determined my offer price or giving them multiple price options for different types of acquisition. So I find myself getting stuck on purchase price despite the other benefits I can offer like a quick close.

    Knowing the seller’s equity in the property can influence my purchase options but sometimes they get defensive asking such ‘personal’ questions about their mortgage. I can get around that a little by looking up the deed purchase price and mortgage lien, but that involves some assuming because it isn’t the whole picture.

    I like open ended questions like these to reveal some history. I’ll be adding them to my list!
    How have you tried to sell it to this point?
    What feedback have you gotten when you’ve tried to sell?

  3. Hi Daryl:
    I actually no longer have the questionnaire. My main focus now is getting property information and doing a little bit of bonding on the phone as I set up an appointment to see the property.

    And your personal questionnaire will depend upon what you’re looking for and what you’re hoping to do with the property.

    But the main questions I go for now are:
    address
    condition of the property
    what do you think repairs will cost?
    why are you selling?
    why did you call me?
    how have you tried to sell it to this point?
    what feedback have you gotten when you’ve tried to sell?
    when can I come out and look at your property?

    I hope this helps. What do you ask and how is it working for you?

  4. Hi Karen,
    Would you mind sharing the questionnaire you used when initially talking with a seller? I find that I always think of good questions after I’m off the phone. I’ve started a list of questions myself but I’m sure it could use some help.

  5. Thanks so much, Poonam!

  6. An awesome article and advice Karen!✅

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