July 26, 2011
The One That Got Away
We all have our 'fish stories', even if we've never dropped a line in the water. It may be a former boyfriend/girlfriend, a job prospect, or a business opportunity that came and went and we blew our chance. Let me tell you about the one that got away from me earlier this month.
We had the chance to purchase a property in western Washington from a national bank that was selling some of its lower-dollar assets. This particular property had a junky single-wide mobile home on it, as well as a huge pile of old tires and a whole lot of other garbage littering the 2+ acre site. Despite all this, the property is located in a strong area, where even the lowest-dollar properties generate fairly high sales prices.
My partner and I discussed it, and agreed there was simply too much we didn't know about the property; whether the septic was still good, whether the well water was free of contaminants, etc. We also didn't have a good grasp on how much it would cost to clear the property of the single-wide and the other debris.
So, instead of buying the property ourselves, we brokered it to one of our buying partners. Our buying partner asked me to contact a local Realtor and figure out what the property should be listed for, etc. The agent tracked down all the necessary information, including cost to remove the debris, how much similar properties were selling for, etc. He then suggested the property be listed for...wait for it...$85,000 more than our buying partner just paid for it. (Mind you, I could have done all this BEFORE I decided to pass on the purchase of the property.)
The Realtor also suggested offering a concession for the removal of the mobile home and the debris, rather than having our buying partner do it. Within a week, our buying partner had an all-cash offer that was going to net them...wait for it...$75,000 in a matter of about two months. AAAARRGGGHHHHHHHHH!!!!!
I had the cash in hand to buy this property. I had enough supporting data to tell me my purchase price was a good deal. I had a good feel for the area since my in-laws live within a few miles of it. What I didn't have was the guts to go for it. And now I have another fish story about the one that got away.
The moral of the story here is a simple one: There is no such thing as a risk-free deal. You can, however, limit your risks by doing your due diligence. If everything passes your pre-defined risk criteria, you simply must pull the trigger. I didn't, my buying partner did, and just one of us will be $75,000 richer this time next month.
Oh well - I'll be ready for the next fish, this time with a bigger net!
Make it a great week,
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