Once in awhile, we get a really good email that is from someone who isn’t happy with what we said. I say once in awhile because we don’t get very many emails from people that aren’t happy with us (thank goodness!), and when we do it’s usually something very random and useless to us like “This is annoying content – I’m unsubscribing”. Okay then!
Yesterday though, we received an email from someone who was a bit upset with my article on Monday called “The Motivated Seller You Don’t Want to Buy From“. My first reaction was to write him and apologize profusely. I don’t want to offend or hurt anyone with my articles! And, I feel really bad when I do. Then, I thought about it and reread my article. I will share my response to him below… first, here’s our reader’s email:
Hi there Julie,
I do really enjoy reading your articles but, I was a bit hurt by this one. I am new to investing in real estate and I feel that flipping is a great way to get some start up capital for larger buy-rent-hold properties. I am in the construction industry myself and run my own business. When I reno a home I do it as if I were moving in. I also do it in up and coming neighbourhoods I pick a unloved home and make it lovable again. I guess all I am saying is that not all of us FLIPPERS are shady characters. I love doing what I do and I am very good at it. It is like anything out there…some people are good at what they do(and do a good job) and others, you are right are just in it for the cash and dont care how they do it. Anyhow I do love your articles and hope you keep up the fantastic writing!
So…here’s my response:
First of all, thank you for writing me and sharing your concerns. After I reread what I wrote, I have to admit that I did use a pretty wide brush to paint all “Flippers” as the same. That was definitely an error on my part. Not every property that gets fixed up and flipped will be done with lack of care and concern for quality.
What I should have made clear was to say that if there are things on the surface that look poorly done – then it’s nearly guaranteed that the things you CAN’T see are even worse. When the finishings and the work you CAN see is high quality, then the things you can’t see (like plumbing and electrical work) are more likely to have been done well.
If I was looking to buy a place to live in myself, I would be pleased to buy a home from someone who has done a buy, fix and flip, if the work was done well. When buying a property from someone who is passionate about the job they are doing (which, clearly you are!) and who is not going to cut corners to make a bigger profit, a renovated home can be better than a brand new home! Renovated homes can often be little gems full of character in fantastic areas that are established. And, they often sit on larger lots than new homes do!
My point was not to say that you should never buy from a flipper, nor was it to say that every flipper will do a crappy job on a renovation – my point was to say that a flipper is not likely to be the motivated seller a real estate investor is looking for.
As a real estate investor, you will find the best opportunities buried within problems. Motivated sellers have problems. They are motivated because of their situation – and that situation is an opportunity for you to solve their problem and make a better deal because of it.
There are plenty of reasons someone might be motivated to sell their house: sickness, job loss, divorce, moving, and even too much debt, among other reasons. In these situations, you will find a motivated seller that NEEDS to sell, and will sell at a lower price just to solve their problem (or will give you better terms on the deal whether it be seller financing or longer due diligence periods etc.).
In MOST cases, someone who has purchased a property to fix and flip it, is not motivated for the reasons you want as an investor. They will NOT accept a lower price because they have costs to recover and profits to make. It doesn’t mean every fix it and flip it house is going to be a money pit – like the Toronto triplex we bought has been. It just means that as a real estate investor looking to maximize cashflow (which means minimizing the purchase price and then maximizing the rent and minimizing expenses each month), buying from a flipper is the least likely to produce the best deal. It also can result in buying a problematic property, if you aren’t careful.
I hope that makes sense – and I do apologize because I really did sensationalize the drama we went through with the triplex and blamed it on the flipper, and the poor quality of work he did. That did take away from the point of the article.
Thanks again for your email Blair. Your point was a very important one, and I am sure you weren’t the only one that I offended with the article – you were just the only one kind enough to point out my generalization. So, thank you! And thanks for continuing to be a Rev N You with Real Estate subscriber
. We’re happy to have you as a reader.
Get Our Real Estate Investing Newsletter
Learn the secrets to becoming a millionaire real estate investor…in your spare time. Get the Rev N You with Real Estate Starter Tips Guide free when you sign up for our complimentary Rev N You with Real Estate e-zine.