The Down And Dirty Truth About The "Home Run" Deals You See On BP

[Benjamin Riehle]

I recently read a post on BP about a multi-family investor who was building wealth and making great returns investing in multi-family apartment complexes (cannot find the post, but if I do I will share it in the comments). As I scrolled through the comment section I saw multiple posts about how the type of deal described was too good to be true. Reading these comments made me grimace as I thought of Henry Ford's quote, "Whether you think you can or whether you think you can't, you're right.” 

It is very hard for anyone who has not been involved in a "Home Run" deal to understand you can make $100,000, $1,000,000 or more in a real estate deal that takes "No Work". It is too good to be true. That deal does not exist. There is just no way you can make that kind of money... 

On the other hand, professional real estate investors who have been involved in "Home Run" deals realize they do exist. Our eyes have been opened and we realize that if we put ourselves in the right place at the right time those deals appear. The mentality of the investors who know "Home Run" deals exist is completely different compared to the person who has convinced themself "Home Run" deals are impossible. 

Additionally, investors who have experienced "Home Run" deals understand they are very few and far between. They realize the only way to experience them consistently is to perform a substantial amount of work, always putting themselves in a position to capitalize when opportunity presents itself. 

"Home Run" deals are very, very, rare . The difference is the individual who does not think they exist is not looking under every rock and in every crevice to find them, while the investors who know they are out there make sure to leave no stone unturned in their hunt for the next "Home Run". As a result the deals just seem to fall in the lap of the investor and appear too good to be true. What is not seen is the amount of work and the number of deals that fall through before the "Home Run" finally happens. 

So far this week, I have looked at an off market flip that on the surface has the potential to net $50,000-$60,000 in 3-4 months, a 96 unit complex that could easily produce $500,000-$750,000 after capital improvements and stabilization over a 8-9 month timeline and worked on structuring a one acre parking-lot acquisition in the heart of Downtown Tucson that has major development potential. I am not telling you this to brag, the reality is it is very unlikely for any of the deals to work out. The numbers and comps have to check out, the sellers have to sign the LOI, Title has to come back clear, the list goes on and on. The key, is that myself and investors who have had "Home Run" deals are willing to put in the work, follow-up with the prospects, make the extra call, send out one more mailing to have a shot at the next deal, all while the naysayers are claiming "that type of deal is impossible."

I am not saying it is easy, I am in no way saying it does not require a ridiculous amount of work, but I am saying it is possible. And hopefully for the few people that read this post, it helps one or two of them take that extra step in their hunt for the next "Home Run".

Good luck and happy hunting!

[Jay Hinrichs]

seems like the harder one works the luckier one gets... and sometimes its just plain luck

as a case study here is my Luckiest deal ever.

bought home at trustee sale for 125k... drive up knock on door lady living in it had a mess in side 3 kids that were developmentally disabled house was bad... I am thinking how am I going to evict these folks.. this is bad. 

so then she tells me the septic leach system is on the lot in back and not on this lot.. GREAT I think I have a major issue.

I ask her who owns the lot in back she says she does its 4 acres.. I think OK lets see if we can work this out.

She also has no debt on the 4 acres.. I do a little work at the county and it looks like this could be brought into the urban growth boundary.. so I think well I will try to swap her the house for the lot.. and just hold the lot for years to come until something happens .. give her an easement for the septic system.. then i dont have to do an ugly eviction. 

( her kids by the way made her put debt on the home then blew the money this is quite common in this scenario)

I made her go to her attorney ( most wholesalers about now are cringing I am sure) but we came to a price of 250k for the lot.. so I needed to cut her another check for 125k cash and would deed her the home and I would end up with 4 acres to land bank.. ( anyone who knows me knows cash flow is ok for me but I dont need it per se made way more money in appreciation )... So we do the deal she gets the home back free and clear I get the land and she gets 125k large in addition.. ( PS she lost the home because she signed up for one of those foreclosure rescue scammers that just took her 1k and let the house go to sale .

WEll not 2 months later I get a letter big developer out of Seattle is doing a land assemblage and wants to buy my dirt.

Bottom line is we arrived at a price of 985k for the 4 acres and closed 45 days later for all cash.. nice 720k CASH pay day for us...  TOTAL LUCK  and or maybe doing the right thing for the poor lady and being in a position to do this deal and being a creative thinker...  so the harder I worked to come up with a win win and not displace this lady .... lady luck smiled upon us.. 

end of story I sat down with that lady and told her.. DO NOT LET YOUR KIDS talk you into borrowing on your home again. its free and clear you have 125k in addition.. my competition would have kicked her out without even talking with her and never got this deal.