When Investing in Real Estate, Time is On Your Side

A few weeks ago I wrote an article on the error of rushing into a deal. Indeed, it’s not advisable to charge head first into an investment with no real direction or game plan. But there are situations when time can make the difference between getting a deal or losing it.

Over the last week I’ve been on the losing and winning end of the clock.

Last Thursday I got a call from one of the REO agents I work with. She told me about a property within one of my farm areas that perfectly fit my criteria. It “just came on the market” and the asking price was within throwing distance of my likely offer. As soon as we hung up the phone, I headed out to see the house.

The property was exactly what I look for. Right area. Right resale range. Just the right amount of construction. It took me 10 minutes to know I wanted to make an offer. Next I went to the agent’s office and wrote up the contract. I gave her my check and started making calls to plan out the construction. It was a done deal…in my head.

This week I got a phone call from the agent. “We lost the house,” she said. Apparently there was another offer submitted a few days before. The bank accepted. The deal was gone. Damn!

But then there’s also the deal I saw 3 weeks ago.

This place is the perfect rental. The neighborhood is primarily tenant occupied, but the quality of the tenants is strong. I manage 2 properties on the same street and both residents have 2 years of strong payment history. I know I can rent a decent house in this area within a week.

The property I looked at was not in good condition. It was in great condition. The current owner completely renovated the house within the last 3 years. The roof, windows, electrical system and heating system were all new. The kitchen, bathrooms and flooring had also been updated and upgraded. The property owner even added a half bathroom on the first floor because he thought his tenants would appreciate the amenity.

Most rental properties in this area do not look like this house. The investor over improved. And of course, the property had an over improved price tag.

At the end of the day, business is business. My offer was $20,000 less than his asking price, and it was $10,000 less than one of my competitors. But he still accepted my offer.

How can this be? It’s because I offered more than cash. I offered him time.

The seller was moving to Arizona. In fact, his relocation had already begun. His wife and children were living half way across the country. He couldn’t move on with his life until this investment was dealt with. And last Friday, when we signed the agreement of sale, I helped him do that.

Real estate investing is a fun and exciting business. It’s full of ups and downs. There are times to proceed with caution and times to rush in. The key is knowing when to brake and when to step on the gas.