Post-hurricane Opportunities
I'm pretty sure I'm going to hell for not being able to stop thinking about this, but here I go, anyway.
Down here, the entire state has been ravaged by two hurricanes, and a third's on its way. It seems like this would be a fantastic time to help some folks out of their homes, since many are damaged or destroyed. Might be a prime time to purchase waterfront/oceanfront, too!
If you or your family were affected, as mine was (power just came back on!), please don't take offense - I'm just curious whether I'm right, that this IS an excellent RE opportunity.
- Mandi
Misfortune is nothing more than opportunity in disguise. If you are thinking of moving, let me know :-D
Quote:
On 2004-09-10 18:41, bnorton wrote:
Misfortune is nothing more than opportunity in disguise. If you are thinking of moving, let me know :-D
Thanks! I suppose it's no different than dealing in foreclosures, but when you see 90 year old men sleeping in their cars because their house has no roof, running water, or electricity, it just makes you feel guilty.
Anyone looking for coastal property in the panhandle (Destin, Pensacola) should definitely keep an eye on Ivan!
I am a bit concerned that the rash of storms will cause a market downturn, though. Appreciation here is generally at least 15% annually, and in South Florida it's been closer to 30%, so I'm wondering whether a correction's in order...due to a mass exodus of retirees who've decided the AZ desert's more desirable than their swamped trailers!
[addsig]
If you can get that 90 yo out of his situation, and into a better one, and make money doing it, what is there to feel guilty about?
I think This is a good topic to talk about, and, I have been thinking a lot about this subject lately(buying from people who are down and out or dont know any better). all over my town we have signs that say "we buy houses for cash" and "I will buy your home in 2 weeks any condition". now I know these signs are in every city in america and have been for a while but latelty I have found them spray painted "SCAM" over them and circles with lines through them. you and I both know why that is, because people are calling these numbers thinking they will sell there house quick for a decent price, and the guy on the other line says "I'll buy your house for 50 percent of what its worth, or 80 percent". and now the guy who called is mad because he was misled into thinking he would sell his home quick. I know the sign does not say "I will buy your house at full price", but the offers these guys make is a joke in the market I live in where homes are selling like crazy for full price. so I am wondering where ethics and deceit come in to play in this game of rei. excluding bankers and lawyers who are full of greed and deceit, what is someones obligation to tell the truth that he knows and that the buyer may not.. ie " I will buy your house and pay off your 40k mortgage, but then I am going to turn around and sell it for 150k". I know I will catch a lot of flack for this question being posted, but I am really wondering what some of you think about this. My father in law has a friend who went over to his neighbors house (a 80 year old lady) and looked at her riding lawnmower that was broke. he looked at it and found out it only needed a 5 dollar fan belt to run again. he did not tell the old lady this and offered her 50 dollars for it and she took it. after the 5 dollar repair the mower was worth a thousand dollars. is that a good investment for the guy and to bad for the lady not knowing to go get it checked, or shame on him for taking advantage of her?
Dlitedan,
I think it is a matter of disclosure. I make it clear to my sellers that I am going to make a profit on their home. But then I also take the time to learn about their needs. When I do a deal, I make sure their needs are met. With regard to your lawnmower example, the answer lies with the old lady. Is she happy with the transaction, or does she feel she was ripped off?
I think that it is pretty obvious that your father in laws friend is a loser. There is no gray area in that situation, if you think he did nothing wrong then you are on one side of the fence and if you think he is a loser you are on the other. You either have a set of ethical standards that you do business by day in day out or your ethics are based on a sliding scale of what you can get away with.
I have been considering this situation as well. I live in Pensacola FL. How do you go about approaching people after this and is there a certain amount of time to wait before I should even try? I mean I know I can help some of these people.. I can close on a house that qualifies in 30 days or less. I just don't want to approach people and offend them. Any advice you all may have would be most helpful. Thanks
I'm wondering about the timing issue, too, but what I've decided is - the sooner the better. If I don't ask now, someone else will.
We took a family trip down A1A in St. Augustine and the surrounding areas yesterday, and the damage to the beach houses was considerable. Some of them are on the verge of collapse, and a few have already done so. I can only imagine what the damage is like in Brevard and farther south. Most of these houses are weekly rentals, and their owners are either out-of-state or just absentee; my guess would be that many of them don't know the extent of the damage to their houses yet.
I plan on contacting the owners of the ones without roofs that haven't yet put up tarps or made any effort to clean up, and work from there. We're taking another trip today to identify a few specific properties.
I don't want to offend anyone, either, but I think we do that on a daily basis in this business - it all depends on the person we're dealing with. As long as we're honest and have good intentions, that's the best we can do. We can't control other people's feelings.
Took me 5 years of therapy to learn that!
- Mandi
There is nothing wrong with asking or offering an amount that you think will work for yourself. As far as making offers on the recently distressed properties in Fl, you could be the answer to the prayers of some of the people down there that just want to move away. Just do your best to make it win-win situation for all involved and I would think that will help to make it an ethical decision on your part too!!!
all very good responses so let me say this. rehabinator, yes I think my father in laws friend is a loser, but how is what he did different from some of the purchases in rei? that guy made a huge percentage of a profit because the lady didnt know any better, are you telling me people in this buisness dont make huge percenatges of profits from buying homes from people who dont know any better? I know for a fact they do because I read about them on this site all the time. So why is it ok for rei people to do it but not the lawnmower guy? why not the next time some of you go and make a offer on a house instead of making the offer so you profit 20k how about make the offer higher and only profit 10k or 15k? I tell that story of the lawnmower because I knew some of you would take the bait and say that the guy was unethical, but I guess when it comes to houses and you its a different story. oh and to answer the question about is the lady happy to get rid of it? I think if I called her and asked she would say yes, but then if I tell her what the part cost to be fixed and what its really worth? no, I think she would be upset. happy investing.
She might surprise you with her answer if you disclose how much the part cost. Again, I do my deals with full disclosure. I don't know why people make the decisions they make. I certainly don't think I would make the same decision. But their decisions are what they are, and when made with full disclosure, the transaction is both ethical and moral.
P.S. I am glad I didn't fall into your trap
Quote:
On 2004-09-12 10:26, bnorton wrote:
Now with respect to the lawnmower, had the guy told her what is wrong, and how to fix it, would she have done it, or was she just ready to get rid of it? We don't know what conversation actually took place.
Actually I'm pretty sure we do know the answer. The question was based on not telling her. That is exactly the difference here. One person is unethical, they take advantage of her. Another person would be ethical in their dealings by explaining to her that all it needs is a simple part, then asking her, "Knowing this do you still want to sell it to me?" If the answer is yes then that is a ethical transaction where nobody has been taken advantage of. The unethical person would not reveal what they believe is hidden information because they believe they are taking advantage of her and if she knew what they knew they would lose the opportunity to take advantage of her.
Quote:
I think my father in laws friend is a loser, but how is what he did different from some of the purchases in rei?
There is no difference. The key being "SOME" which is my point, "SOME" people are ethical or they are not.
Quote:are you telling me people in this buisness dont make huge percenatges of profits from buying homes from people who dont know any better?
You will have to define better what "Not knowing any better is" I've never ran into anybody that didn't have at least a ball park idea of what their house was worth. Most of the time they actually think it is worth much more than it is. The case of walking up to somebody living in a $200,000 house and offering them $100,000 for it and them jumping at the offer because they think it was worth $29,000 has never happend to me.
The offers I personally make are ethical and based on the house being in really lousy condition and the amount of money it will take to fix it up,not tricking somebody into selling it for a low price because they don't know. The majority of these sellers have had it on the market for months and months and realize that there is a problem and that they aren't going to find a sucker to pay them $50,000 more than it is worth just to get them out of the trouble they are in.
By the time I'm done they know they are getting a deal, because I show them hard figures of work needed and comps of houses that sold and their conditions, they understand exactly how I come up with my figures, based on actually disclosing to them that I intend to make a profit.
Amen to the Rehabinator.
I'm hoping to buy my first rehab this week, but it's from a wholesaler. I plan on using that approach with the "regular" sellers in the future, though.
Set up my toll-free number today, so I can start advertising this weekend in some of the hurricane areas. I'm going to try to market to insurance agents, too.
- Mandi
Quote:
On 2004-09-13 00:20, dlitedan wrote: why not the next time some of you go and make a offer on a house instead of making the offer so you profit 20k how about make the offer higher and only profit 10k or 15k?
Because that is not enough to CYA (cover your asset). There are a million things that could go wrong (I had a water main break this week) and when you assume responsibility for someones problems (if they're in BK or forclosure you are almost guaranteed to have serious problems on the property) you need to be able to cover yourself when little surprises pop up, like the cleanup bill I have for over $5000 to turn a quazi landfill into a decent piece of property. how would I have known there would be fourty 10 ton dump truck loads? That my friend is why we don't buy a property for only a $10k expected profit. I would be in forclosure if I did that. I decided this week that on a standard house I need at least $2k for surprise expences beyond what my educated calculations tell me. If you want to buy for 10 or 15k profit go right ahead and call me when you are in forclosure and I'll come and buy your property from you for what you should have paid in the first place. Happy investing to you.
Josh
[addsig]
Remember Old Potter from "It's a Wonderful Life". He was offering $.50 on the dollar cash for shares during the great depression. He's a "good businessman" and is always there to make the best of his "opportunities" in other people's crises.
Or even remember the Carpetbaggers in the Ante-bellum South. Surely they were great businessmen in their right.
But how will history remember you? Got rich buying land at deep discounts from Floridian hurricane victims. It won't be flattering.
[addsig]
Aside from my RE work I run a construction company (2 more months til the sale is finalized
I never try to be the cheapest. I frequently preface my bids with a verbal "we are not the cheapest and work for the discriminating owner that wants to have a great job done and doesn't mind paying a little more to get it done." ON the days that I personally have to labor because our other 5 workers are busy I don't like to make less than $400 per day. There are those that will work for $100-$200 per day. I feel that with disclosure whatever I charge is honest as it is up front and their choice to have the work done or not.
The real question is " how much profit is acceptable?" 10K is not enough to tempt me on a rehab, I am looking for 30K and up. Barring limited or diminished capacity the seller has other options, I frequently explain those to them. Ultimately most people prefer quick sales for less money than one involving a lot of hassle and uncertainty.
I have explaiined many times how a project could be done by the home owner for a few thousand doing it themselves and they still prefer to pay me $10,000 to do the work no hassle to them.
Selling or buying RE is like gasoline, a wide discrepancy in price and ultimately your choice or theirs on where to sell and for how much...
The lawnmower was unethical, I have never done anything like that and it would not make sleep come easy....
[addsig]
As someone whose house was damaged in the last hurricane - here is my 2 cents. I think you need to wait at least a month before going in. People whose property was damaged and even those who werent, are traumatized. Most of us cannot reach our insurance companies and such. Going in and taking advantage of those folks is just wrong.
Now for the guy who had the strategy to look for the houses without tarps and no cleanup - that willnot always work. It took me 2 weeks to get a tarp up as tarps were scarce and the same timeframe for cleanup of trees and such as everyone was busy helping older folks like my Grandma get squared away. If anyone had approached me about buying my property I would have told them where to go.
Yes, the hurricane created a buying opportunity but please have some consideration for how these folks feel.
As to the lawnmower guy, he could have given the old lady a fair price and still made out great. The fact that he chose to take such deep advantage of her shows who he really is.
"the same hammer that shatters the glass forges the steel"
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[ Edited by linlin on Date 09/25/2004 ]