Thursday, July 22, 2010

Investing 101: The Importance of Being Patient

Photo Source: Motivated Photos

"Good things come to those who wait."

Recently, I missed out on an opportunity. Yet, this opportunity may not have been the best opportunity for me. But, in the spur of the moment I felt it was an opportunity. Now, looking back - I know I made the right decision.

I got a call from a couple who were moving out of the area due to a job transfer. They told me they needed to sell their home quick. It was a 3 bedroom, 2 bath home in one of my favorite parks.

Naturally, I went out to take a look at the home. It was in fairly good condition on the outside - it had curb appeal, a definite plus. Though, the inside needed some work. I'm not talking major repairs but it did need some work to get it up to par for a qualified buyer.

(Note: In my experience, the types of buyers that high end parks tend to attract are those who are looking for homes to be fixed up. I rarely sell "as-is" and have to visualize myself as a prospective homeowner when going to inspect these homes).

The type of work that was needed included floor work (there were mixed vinyl patterns in the living room and the kitchen) and cabinet work (the cabinets were really worn down and needed either a paint job and/or finishing).

Regarding the floor work, the owners had taken up the original carpet which was in the living room and pulled it up - they had laid their own vinyl. And, in the kitchen they had laid their own vinyl as well (a different pattern) which did not really match all together. But, in the hallway they had tiled it very nicely and had planned to tile the kitchen as well. Problem is, they had to leave due to the job transfer.

So, going into this home with the perception of a prospective homeowner I knew it would need floor work. I really don't like when homeowners change the make up of the home and tear out the existing floor surface such as carpet as in some cases when it's been laid over with vinyl - it just does not match. Though, my preference is with my own homeowner type mentality. I understand it's their home, I guess some have different tastes than others.

To make a long story short, since the home needed some floor work and cabinet work plus a good cleaning (there were many people living in the home, a good professional cleaning is needed in these cases) I would not be able to meet the seller's asking price of 14k. I knew it was priced well for a homeowner, it was a solid home - it just had some cosmetic issues. Though, I knew if I were to do a Lonnie deal with this one - I could only offer it for 24k. So going with Lonnie's 50% formula, I knew the most I could have in this deal (including doing the floor work, cleaning, holding costs, cabinet work, etc) based on those numbers was 12k.

I offered 10k. But, the sellers declined. They told me it was a really good deal but the lowest they could go was 13k. Then, they reiterated how it was a solid home - they had lived in the home for over 10 years. These were long term type owners - my favorite kind.

But, the numbers just did not work out. My gut feeling told me, you cannot overpay for this home - it's a solid home but it still needs work. And, I know the types of buyers I work with for these types of parks want things in pristine condition. Plus, this home was in the smallest category of mobile homes - I'm used to buying the larger homes, not the smaller ones. And, I've done it for much less than this in better condition.

So, I walked away. Even though, I had a small voice inside of me saying "Maybe you can make this work, the issues may not be so bad," I remember one thing a wise investor once told me - "Don't force a deal. If you can't make the numbers work, don't do it. There are so many other homes out there."

And, guess what? This saying is so true because this week I got a call from a seller I've been working with for a long time. I was supposed to buy this particular one a month ago but there were title issues. And, we were waiting to get these title issues taken care. Well, the paperwork got rejected and returned and they had to file for it again (which was really frustrating) so I kind of just pushed this one out of my head for awhile. But, it turns out the paperwork is finally being processed and the seller is making arrangements to start moving out of the home. So, once the title is clear - I can buy it. And, this one does not need any work at all - it's my favorite kind of home (the largest one) in one of my favorite parks.

So, the lesson that I learned here is to be patient. Things will come. Success does not happen overnight. My most successful deals are those that I have really put a lot of time and energy into. And, at the end of the day - closing good deals are worth the time and effort.

I'm going to leave you here with a video here from Gary Vaynerchuk that inspired this post.

Happy investing!

p.s. Feel free to leave comments on any post either here and/or my Facebook Page. Comments are always welcome, thanks for reading!

Video Link


Shae said...

All I can say is...AMEN! Great deal, Rachel and patience most definitely pays :-)

Matt Rosen said...

Well said Rachel! What you said "dont force the deal" makes so much sense. I really wish there were mobile homes out on the rock i live on:)

Scott Costello said...

Patience is something you have to practice for sure. Must of us probably have to make the mistake of forcing a few deals before it finally clicks that we can't. Great post Rachel

Mobile Home Gurl said...

(Shae) Thanks, Shae! It definitely is worth it to wait it out and be patient. I was going over this deal in my head trying to second guess myself because I was thinking I didn't want to pass on this just for a few thousand dollars but I knew I had to be rational about it - sometimes I've had to block out the emotions as it can be dangerous especially when it comes to investing and evaluating deals!

(Matt) It's a good piece of advice that I still keep in mind when evaluating deals. If it's not going to work, it's not going to work. And, I really have to remember that - sometimes it's just the emotions that can get in the way. Oh, maybe we should ship some mobile homes your way and then you can have the 1st mobile home community out there! (lol!)

(Scott) That's a good point Scott, it is good to practice patience. I've forced deals before and it really made things harder for me. Going into them, I knew it would be tough to make it work. And, I guess I was right. I've learned that the better deals are the ones that are smoother and I know will work.

Thanks everyone for stopping by and for sharing your thoughts!