Turning a bad lead into a network win

Sometimes deals fall through. In fact, most of the time they fall through or aren't the right deal. That's what happened with the potential flip close to my in-laws house. The man that owned it had set in his mind that he was going to get $160K or more for this house, but my max offer would be $110 if I was going to make a profit (I leave plenty of room for screw ups in the calcs for the first flip). Rather than make an uncomfortable situation even worse and give my low ball offer, I took note of how well we were hitting it off and showed further interest in his life, career, and background. I found he was a lawyer that does some real estate work, and used to own a title company in town before selling a couple years ago. We chatted for about an hour at his property and I discussed my life as well as my goals with investing. I also said I felt I could not even give him an offer due to how far off my max was from his asking. "Out of respect for you" is how I think I began that statement. 

I didn't want to give up there though. I had hatched a creative idea a few days before meeting him in case he would not want to take the low offer. I felt pretty brilliant here so pay attention and maybe it can be a creative solution for you someday. Basically, I offered to partner with him on his own property. Me and all members of the family that would want to help would do all of the labor for him to flip the house. We would do all of the floor replacement, remodeling, repairs, repainting, landscaping, and updating all the bathrooms and the kitchen for little to no labor cost to him. In return he would fund all materials needed and any professional contractor work needing to be done. This would have been a win-win for everyone. We would win because of the experience flipping a home with none of the cots to us other than time and effort. He would win because he could increase the value of his home by $40-50K while only investing $15-20K in materials with free labor. 

Unfortunately, it was clear he didn't believe the horribly outdated home needed any work further than new flooring. I mentioned the outside decades old style country blue paint, the landscaping mess, the disgusting counter tops, the falling apart fence, and many more items either in bad shape or bad style. He was still adamant it only needed new floors though so it didn't seem worth it to him. He was just too stubborn so I took my losses and thanked him for his time, then offered to help him out with anything he may need around his vacant property. Because of the care I took in developing our relationship at the beginning of the meeting he offered to help me out for any future real estate work I may need relating to his legal or title work specialties. In return I told him think of me if you know anyone who needs to sell their house quickly. He happily agreed and we parted ways. 

The moral of the story of my first serious lead is this: Always build your network. Its almost as important for a newbie looking for his first deal to maintain contacts and avoid bridge burning, than it is to risk angering sellers with low-ball offers. Its also important to remember that this is only one deal, and in the scheme of things you should be looking for more all the time because quality lies in the quantity. (I think Gary Keller says that in The Millionare Real Estate Investor). Additionally, Driving for dollars, writing down target addresses, finding owner phone numbers, and calling to ask if they want to sell, is much cheaper, more efficient, and more effective than a direct mail campaign for me. I'm 1 for 1 so far with that strategy. LOL.

On to the next Deal!