Posted by Mark - MO on June 19, 2001 at 13:56:52:
Thanks! If you know of anyone in the Columbia area, or have any info on REI groups, etc. around there I’d love to get any info you don’t mind passing on. Springfield looks to be a fair distance away, but I guess you never know where you might end up! It sounds like Missouri has been treating you well, and that’s great news to my ears!
Read at your own risk … - Posted by Merle E Woolley
Posted by Merle E Woolley on June 18, 2001 at 18:10:07:
Not sure if you will learn anything from this ? but at least you might find it interesting.
The story actually begins several years ago. Can?t say exactly when as those records are in storage. We had six houses on hand and didn?t seem to be getting any calls at all.
One of the houses was on one of the busiest streets in town. We were wanting $2,000 down on each house, but reaching the point of ?must get someone in them.?
We bought a sheet of plywood and painted it with the brightest yellow paint we could find. Using black paint, we painted something like ?$500 Down, By Owner and our phone number.? We mounted the sign on the fence facing this busy street.
The phone literally rang and rang and rang. We had contracts on all six houses by the end of the 2nd day. (to clarify, these were L/O?s)
One of our buyers, a truck driver, called 5 years later to tell us he was paying us off and buying another house. He was making about $8,000 profit which would get him into the next house. We congratulated him and waited for the closing date.
Two days before closing, he called again. Turned down for his loan. Would we buy the house and do our contract with him? Discussed and agreed to the terms. He told his Realtor to go ahead with everything.
During the conversation with him, we learned that this was a ?4-sales? closing. His buyer was selling their house (#1) and buying his(#2). He was buying #3 and the people selling to him were moving to Georgia(#4).
Two hours before closing, the buyers of #1 were turned down on their loan. Mass panic set in. Phones were hot, people getting mad.
Our truck driver called to let us know about the problem.
We knew a possible answer. We went to look at house #1 ? would work for us. Called the seller, explained our formula for buying houses. Would it work for them?
We bought houses #1 and #3 in the chain.
Our truck driver called in July 1998. He is retiring for medical reasons, Has a friend to take over his contract (we let them do that). He needs a smaller, less expensive house ? which we didn?t have.
He moves, new buyer moves in. He found a house which we could buy for him in early 1999 and is still there. (That transaction led to our meeting a Realtor who specializes in HUD foreclosures and we have bought several of those thru him.)
Completely unrelated to all that is another story. We assumed an FHA loan on a house. Took a nice pickup truck for a down and our buyer assumed the loan. She later lost it in foreclosure. We bought it on the courthouse steps.
Sold it again. Our buyer got a loan, we carried a second(don?t often do that).
This buyer sold and paid us off. They moved to Florida and bought a house. Nine months later decided they were coming back to Missouri. The have been calling for several months waiting for us to buy the ?right? house.
Last week, the folks who took over the contract from our truck driver called to let us know they had bought another house and wondered if we wanted the house back or should they list with a Realtor.
I called the people who moved back from Florida and sent them by the house. Perfect for them!!
So, we ?bought? the house (using our standard purchase formula) and sold (L/O) to these people at market value. By the way, we have been the legal titleholder all along. Our purchase was really a formality. We simply bought their equity in their option to purchase.
Hope there is something educational for you in all this ? not sure what it would be ? but, it seemed like such an unusual sequence of events.
Have a GREAT day ? TODAY!
Merle
P. S. If the doctor would tell me my knee is OK for golf, I wouldn’t have time to write of this foolishness.
Re: Read at your own risk … - Posted by Valerie
Posted by Valerie on June 21, 2001 at 11:46:03:
I was wondering what your “standard purchase formula” is??
I looked through the posts a couple of times and couldn’t figure it out. I’m a newbie still looking for ideas.
Thanks,
Valerie
Remembered another part of the story … - Posted by Merle E Woolley
Posted by Merle E Woolley on June 19, 2001 at 08:04:51:
Guess the memory is getting too full to recall everything at one time.
The first house sold to the truck driver … interesting how we happened to buy it. The answering machine message from a man said he sitting at the houe waiting for me to come by. He had no phone and was leaving for Washington state as soon as he talked to me about the house.
Quite frankly, I would not normally go look at a house without first qualifying the seller on the phone. But, in this case, made an exception.
Sure enough, the man and his wife were sitting in lawn chairs in the garage with the door open. (This was about 3 hours after he left the message.) They had a coversion/van/camper in the driveway.
They were missionaries based in Washington in a very rural area … no phones, etc. They had rented the house when they left Missouri. Now the renters were gone. They came back to sell the house, saw our ad and called. Then sat down to wait for us.
Explained our formula for buying and that we would have to get an appraisal (that tells you it was several years ago)to determine exactly what we would pay.
Then, they made an unheard of request. “Can we sign the papers with the amount left blank until you get the appraisal? That way we can start back to Washington right away.”
We told them we could do that, but recommended, as an intelligent move for them, that we do this at a ttile company. They didn’t really have to worry about us cheating them, but it just made good sense to do this as right as we could.
We set it up for them to call the next day as they travelled so we could tell them of the appraised value. We did that an everything was OK with them.
A few days later, we closed and the title company sent them their money.
Haven’t done any more like that. Kind of makes you wonder … doesn’t it? After all, they were missonaries. Do you suppose there was more involved than a simple sale and purchase of a house?
Hope you enjoyed the story and remember to …
Have a GREAT day … TODAY!!
Merle
Re: Read at your own risk … - Posted by Ronald * Starr
Posted by Ronald * Starr on June 18, 2001 at 20:12:09:
Merle E. Woolley---------
When you heal up more, perhaps you can carry a notebook computer when you’re on the course. Then you write while waiting for other players to get their balls out of the woods.
I think your post shows the virtues of being creative, being honest so others want to come back and get other people back and what can be done if you don’t spend too much time on the golf course.
Good Investing and Good Story-tellingRon Starr*
Re: Read at your own risk … - Posted by Dee-Texas
Posted by Dee-Texas on June 18, 2001 at 19:09:14:
Thanks Merle,
I hope that your knee heals quickly but in the mean time…I love ANYTHING that you write. You are easy to understand…could you please give examples in amounts in the chain of sales?
Thanks,
Dee-Texas
Re: Read at your own risk … - Posted by Mark - MO
Posted by Mark - MO on June 18, 2001 at 19:06:48:
What a great story! Thanks for posting it. I am new to this news group, and soon I will be new to the Missouri area. I am moving to Columbia, and wondered if you were anywhere near there. I have done some investing in the Washington DC area, but will be starting full time once we move. If you are anywhere near Columbia I would love to talk! If not, good luck with what sounds like a very bright future!
Mark
Re: Read at your own risk … - Posted by Randy JoinerGA
Posted by Randy JoinerGA on June 18, 2001 at 18:27:45:
Hope your knee doesn’t get any better anytime soon!! Just kidding of course Merle, but my oh my, what a neat story…Usuns newbies can use all of them we can gets!! Thanks …and by the way…if you are not playing golf tomorrow…
Re: Read at your own risk … - Posted by Merle E Woolley
Posted by Merle E Woolley on June 21, 2001 at 12:44:24:
We have always used a set formula for buying. This has changed a few imes depending on the circumstances at the time. We do not negotiate o haggleover price. We simply tellthe seller what we will pay and either it will work for them or not.
In the beginning (1985), we paid 85% of the appraised value. 80% of appraisal in cash with the seller carrying the other 5% in a note.
As our volume increased and our monthly cash flow from payments grew, we began paying the 85% in cash to the seller.
Until recently, that has been our “formula.” However, we no longer use appraisals. We actually tell the seller what their property is worth on the market and base our price on that. Not sure if it is the way we do it or what, but they accept our prices as realistic.
In an effort to “slow down,” we now pay 80% of he market value. Obviously, that eliminates many of the sellers. We have, however, been buying HUD foreclosures and property on the courthouse steps. By checking these out, you find an occasional bargain.
Recently mailed 81 cards to landlords listed in the daily legal paper as having filed rent possession suits. Had 9 calls so far. One has 17 houses he wants to sell. One of them sold for $105,000 in 1995. Today, the market in this area has dropped because of new construction. It will go back up in a couple of years. Told him it was probably about $85,000 today and we might pay $68,000. He wants us to look at it.
Of course, the real winner if do buy it will be our buyer. They will probably make about $20,000 in a couple of years.
We just believe that we should not take advantage of those who might be less knowledgable about negotiating. We ceratinly cannot pay markt value and "mark it up"several thousand dollars to an “uneducated” buyer. That doesn’t seem fair either.
Hope this helps,
Merle
Re: Read at your own risk … - Posted by Merle E Woolley
Posted by Merle E Woolley on June 19, 2001 at 08:17:58:
Thanks for your kind words. I don’t remember all the details of the transactions and most of the files are stored away.
This last transaction … the buyer/seller wanted $4,000 cash for his “option equity.” He owed us about $57,000. That is what we paid for it in 1994. Today it should have a value in the mid 80’s … except that a whole subdivision of brand new houses are just a block away. These new houses sell in the mid 80’s. That has lowered the value of the existing homes.
That simply means to us that we wait a few years and the value will be back.
We priced the house to the new buy at $75,900 with $2,500 down and $737.74 PITI. Our original loan balance of $38,000 gives us a total payment of $365.
We did nothing to the house. They took it “as is.”
For $4,000, we increased our receivable $16,400 and our monthly cash flow $112. Our cash flow for the past several years has been about $240.
Sure like the idea of cash when you buy, cash when you sell (L/O), cash every month, and cash at some future date when they pay in full.
Merle
Re: Read at your own risk … - Posted by Merle E Woolley
Posted by Merle E Woolley on June 19, 2001 at 08:19:14:
Thanks, Mark …
We are in the Springfield area.