People don’t want to buy a problem. I am inheriting the problem which is why people will sell low.– Beau Holis
The “$10k House” Deal with Beau Hollis
Imagine making a flippant offer and having the buyer say “yes!” That’s exactly what happened to Beau Hollis when he offered $10k for an occupied rental property.
In this episode of Behind the Deal, we will learn how Beau got the lead, made the offer, and how he is handling a difficult tenant situation with tact and professionalism.
Read the Full Show Notes Below…
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Beau Hollis is an investor, entrepreneur, mentor, and frequent guest here on the Carrot Cast. He is known as “The House Buying Guy” and has seen his fair share of deals – both good and bad. In this episode of Behind the Deal, we talked about dealing with tenants, why people will choose to sell for a low price, and how Beau calculates his risk when buying a property.
When the lead came in, they learned that the property was owned by two investment partners who were in the process of liquidating their shared assets.
This was the last property they owned together and were both eager to sell and walk away. The house was a 3/2, in decent shape, with tenants currently occupying the space.
As the property was in a part of town that is heavy with rental homes. Beau made the offer of $10k, not thinking they would accept, but rather it would be a starting point. Without any counteroffers, the seller quickly accepted $10k in exchange for a fast closing.
Immediately upon closing, Beau reached out to the tenant. There was some misinformation provided about what they were paying, the condition of the property, and who was actually living there. Long story short, the tenant wasn’t going to pay, so Beau immediately began the eviction process with his attorney.
While this process isn’t fun, it will only cost Beau about $1k to remove the tenants, plus the delay in flipping the property.
Why People Sell at a Discount
People sell for less than a property is worth when they are going through something. Maybe a partnership is dissolving, the tenants are trouble, or there are other debts that need to be paid.
While some may say that making a low offer to someone in this situation is unethical, what they don’t understand is that people are paying for a solution to their problem. Maybe there is an eviction, repairs, or another problem they don’t have the time or money to deal with.
In many cases, it can be much easier to pass the problem onto someone else and simply walk away.
Calculating the Risk
For Beau, he has made the decision that $10k is what he can offer for a property in his market and still make a profit. Of course, this number will vary greatly depending on where you are buying. It is through years of experience and knowledge of his local market that Beau has settled on this number. In the case of this house.
He will likely be able to flip it, making about $20k. With a little fixing up, it could be even more.
Tips That Actually Work: Adding Testimonials
We talk about testimonials a lot here at Carrot, which is why we now offer a great feature for our member sites called testimonial blocks. Using this tool makes it easy to add video, photos, and headlines to your testimonials.
You should always include a headline on your testimonials that disarms an objection a seller may have. This will help increase conversions and close more deals.
Tune in every other Thursday for more Behind the Deal Episodes live on Facebook!