Are These Real Estate Investors?

[Don Konipol]

Are These Real Estate Investors?

In 1978 I purchased my first real estate investment property. Since then, I have observed human behavior in just about all its forms. Here are some of the types of “wanna be” investors who never seem to be able to “pull the trigger:”

The Organizer – This individual can’t seem to ever get fully organized - and until they do they can’t possibly make a purchase transaction. They can’t review the “hot” deal their broker just sent them because they’re too busy categorizing emails in color coded category’; they can’t attend the on line networking session because they need to switch over to a more detailed CRM system; they can’t visit the property going up for auction because their scheduled weekly garage cleaning is running overtime…..

The Educator – This person never feels they have enough knowledge, experience or education to properly evaluate an investment. As a result they’re forever attending seminars, workshops, classes provided by various real estate organizations; they’ve read every book ever written about real estate twice; they believe that they could be worth $1 billion now if only they had chosen real estate as their college major instead of medieval literature; but soon as they study for their real estate license in all 50 states they’ll be ready to begin.

The Guru Junkie – I met this person while I was the designated provider of financing for a guru – back about 30 years ago. After the introductory BS, she literally RAN to the back of the room to be the first to sign up for the Guru’s “mentorship” program. After plucking down $10K she didn’t have, I ran into her 3 months later at a Real Estate Investment Club. She said she had “ditched” that particular Guru - partial refund – and now was being mentored by a “local, hands on guru”. In our discussion I mentioned how much these mentorships resembled multi level marketing, a comparison she disagreed with completely. At the meeting 2 months later I ran into her again; she was no longer working the guru programs, in fact she was out of real estate altogether. She was only at the meeting because she was offering an exclusive business opportunity with unlimited potential, and asked if she could buy breakfast and explain the “opportunity”. I told her that if this was Amway I wasn’t interested. She assured me it wasn’t. We went to breakfast. It was Amway.

The Title Researcher – This “character’ apparently doesn’t know about, or doesn’t believe in title insurance. When a great deal comes up, and everybody else is looking at comps, evaluating cap rates, checking leases, this guy is researching arcane chain of title links trying to find an overlooked heir from 1934, or a long abandoned mineral lease. When he does find a minor item, no title insurance policy, bonded attorney opinion, or warranty is going to satisfy him. He wants title cleared BEFORE he commits his time to “due diligence”. Of course by then I or someone else not living in outer space has already purchased, repositioned and resold the subject property. With title insurance.

The Low Baller – I will define this person by an example from my property brokering days 40 years ago. Andy (LO BALL) Ho was a guy who passed around the office from broker to broker, making dozens of offers on dozens of properties all so low in offering price that they could never be accepted. So what we did was we’d direct Lo Ball Ho to a property that was over priced where we wanted to “shock” the seller into (hopefully) getting a grip on reality. This work well for a period of time until one day, shockingly, a Lo Ball Ho offer was accepted! When told of the acceptance, Lo Ball immediately withdrew the offer, explaining that anyone who accepted an offer that low had to be hiding something very negative! 

The Shotgunner – This character will make an offer on anything, at any price, as long as it’s subject to a 90 day due diligence period with his $200 earnest money fully refundable. Of course what he’s doing is creating a book of private “listings”, tying them up at a specific price for 90 days, and only closing if he can flip the contract for a higher price to an end buyer. Come to think of it this is the exact technique now taught as “wholesaling” by numerous Gurus.

MMM – With inflation this is now 5MMM. Originally stood for MAKE ME A MILLIONAIRE. This is a seller whose asking price is based on something other than market value – such as I want to sell and retire with a million (now 5 million) dollars. But, the price could be based on anything, so long as there is NO rationality to it. The basis could be the price their sister in law sold her house for 3,000 miles away; the amount of principal, interest, taxes, insurance, and repairs they put in (known as “make me whole”), an amount that makes clear they are not to be trifled with (“I won’t give it away!”), or my all time favorite, an amount equal to what they “would have made’ had they invested in Apple stock in 1986 instead of purchasing their home.