Advice on Tired Landlord sellers who are offended by the standard 70%-Repair-fee formula.

[Dave Slaughter]

I have been marketing less than a year to absentee owners.This past week’s mailing resulted in a few leads that are holding 5-20 other properties than the one I landed on with my list.I have had a great response rate this week, 14%.

When I got a couple of these landlords on the phone in talking with them and being very honest that I was looking for properties at wholesale, they opened up with their story of their real estate investing career and talked about wanting to cash out all together or sell one or two of their properties. I felt like I did a great job at building rapport with these investors.

Problem I am having is that while there is some motivation they are not receptive to the ARV*70% - Repair- my fee= MAO formula.I tweak the numbers from 70%-80% and my fee schedule from $10k-5k depending on amount of the ARV.I get the impression that they have been approached with numbers like this before and feel that the offer is "stealing" the property.

Most of their properties I have seen look really nice and well-kept and most have good tenants in place.

I also recognize that these are not truly motivated sellers but they do have some degree of wanting to sell some of their properties, just at higher margins than I would like.

So the question is: Should I just give these sellers an offer and stick to the formula and move on if rejected. Or is it worth looking at skinnier deals with these folks and grooming a longer term relationship for possible future deals? I know there is something to work with here but I am just not recognizing it right away.

Thanks in advance for your advice.

[Ed B.]

Dave,

I cringed a bit when I read that you told the owners you were looking for wholesale deals. I think that's being a bit too honest. Of course you're looking for that, but I don't see how it helps your cause to be so blatant about it. No, honesty is not always the best policy, and this is one situation where it's probably not good to be "that" honest. You are looking for a particular situation, and you don't need an adjective to describe it. The seller doesn't care what you call it, as long as you solve their problem. Focus on finding the problem and then solving. Just because a landlord says he thinks about cashing out sometime doesn't necessarily mean he's ready to do it right now. That's fine if you want to set up a contact now for a possible future purchase, but you could be waiting a long time.

If most of these properties look really nice and have good tenants, where is the motivation for them to sell? You're wasting your time with these sellers, unless the effort they're spending to keep these properties and tenants is just not something they want to continue. Absentee landlord does not automatically mean "motivated seller." It only indicates a possibility. Until you find more motivated sellers, you're not going to have any better luck in having them accept your formula-based offers. And considering accepting thinner profit margins is understandable, but is probably not a good idea. Sadly, I'm afraid you are discovering that this can be an extremely difficult business to be in. As I and many others have discovered. I wish I could be more helpful, but I just don't have the skills and knowledge that some others may have.