Never Underestimate the Knowledge Inside a Gated Community

Now that real estate investing is entering a new era or cycle, I’ve been challenged to think of other ways to make money in real estate investing.  When I started in real estate investing, neighborhoods were filled with abandoned homes.  Prices plummeted and I was able to pick up a property, make it livable and then sell it to some young family that never thought they would be able live the American dream of owning their own home. 

Fast forward 4 years and the real estate investing opportunities have changed. I know of many areas where hedge funds are buying up properties, paying higher than market demand and changing our business model.  So that bears the question – How can I make money?

Then, suddenly, an associate approached me with a sweetheart wholesale deal in an air-park community in Florida.  This is an affluent neighborhood where you can fly to Miami for lunch and come home, land your plane, park it in your hangar and jump in your pool.  Nice.

This was an interesting deal – the property was built in the 80?s and was in sore need for updating.  As I analyzed the area, the property and the comps, I realized one big difference between the comps on this house versus the other houses were  that the more affluent houses had a guest cottage.  My thoughts – BUILD A GUEST HOUSE on that property and increase it’s value by $500,000.  

Needless to say I was very interested in this possibility.  I started searching for funding and so did my associate.  To get an idea of what a small world we live in, I made one phone call to a wholesaler I knew looking for funding, as as I described the property, he said “Wait a minute, my father’s best friend lives in that community”.  That evening I got the scoop on what was going on with that house, the history, the drama behind the family’s problems.  This nice man even knew that some kids offered her money for the house…this is when it get’s interesting…

He said “Well, these kids made an offer on the house and they didn’t close in time, so the lady refused to give them their deposit back.”  Woah!  That was a big red flag.  The house wasn’t under contract.

We tried to get in touch with the wholesaler asking for a copy of the contract and this guy just disappeared.  I got a call the next day from my contact in the community – he told me he had heard that some couple placed an offer on that very same house.

What a big waste of my time.

1. Always make sure the property is under contract.

1. 2. It’s easy to find someone in a gated community to talk to you about anybody.
   

So why would these guys still try to wholesale the property that was no longer under contract?  What do you think?