Found a gem while driving for dollars, what do I do next?

[Elisa Ting]

Hi! I was driving for dollars today in a neighborhood in the Bay Area that is pretty expensive and well kept so when I saw the shape this property was in, I was shocked. I did some research and found that a man in his 80s lives in the property by himself. He has children but it looks like they're all out of state. What's your advice in how I should approach this situation? I'm interested in reaching out to see if he's willing to sell but I want to navigate that conversation carefully and know what to offer him so that it's a fair deal for both parties. Any advice is greatly appreciated!! Thank you in advance!

[Henry Clark]

Learn everything you can about the person before approaching them.  I personally have always approached the kids first in this particular situation (old person), then approached the person.  Look out on your city/county GIS tax map and get all of that info.  Then google and search out the kids.

I wouldn't bring up a number.  Let them know you will call back in a week.  Let the Kids "sell" the idea to their parent.  Give them the solutions below.

Offer them a "Solution".  If it fits your objectives.  What I am about to say is not necessarily to your benefit, but to theirs.  Why are you different from the other 30 people who have asked about the house.  You are offering Solutions.

1.  For them, it is best to sell the property after he passes away.  Stepped up basis.  He does not have to pay taxes on the increase in value.  Keep in mind the "VALUE Solution" you are offering them.  Example:  Built for $200,000 back in 1960.  Worth $1,500,000 today.  Your saving them taxes on$1,300,000 of gain.  Depending on their taxes, your offering them about a $260,000 cash savings.

2.  Sure he and they want an exit strategy.  Give them one.

3.  Buy the property and rent to him.

4. Buy the property and he moves.  Or don't know your life or his, you House hack with him.  

5.  Manage the property with an option to buy.  Put some money and a document in place, so you have first right of refusal at a known price.  Maintenance Solution.

6. If he goes to the Rest home in any scenario and he still owns the property.  You manage and rent out, until he passes, if they are waiting for the stepped up basis.  Management Solution.

7.  Seller financing, with a fixed interest percentage, they can't get on the market (Solution).  Say 4 or 5%.  They should not want to go to the stock market with these funds.

If you can put a business plan together, this becomes your business plan.  Identify elderly members who they and their family's need a solution.  This becomes a cookie cutter business model for you.

Why should they pick you to do business with, versus 30 other people that have talked to them?  Offer them a Solution.

Start small and Make Your Big Mistakes Early.