It all started with real estate ads As you can imagine, Tom was not very happy with his living arrangement. So, he started to read newspapers and online ads, only this time, he wasn't looking for smaller apartments, lower rents or cheap apartments for sale. He was interested in finding older houses, which could be turned around, subdivided and renovated into multiple apartments. In realtor slang, we call this a fixer-upper. It is a property that requires maintenance work like redecoration, reconstruction or redesigning. He was also on the quest for larger residential lots with permits for developing residential buildings; simply put, land with the potential for building multiple apartments on it. The unwritten rules of the real estate business! Tom was aware of the unwritten rule in the real estate business: the bigger the real estate, the harder it sells. And vice versa. He followed some simple logic here: land lots with residential building permits and potential require substantial financial investment. Older houses with large square footage are also extremely hard to sell. Why? Because they also require substantial financial investment. And all of these are hard to sell. Especially in a really slow market, which is the state that real estate is in now, after the global economic slump. Tom frequently checked local Real Estate Property Listings to find out how long certain real estate properties had been listed. He also knew the second unwritten rule in the real estate business: the longer the property is listed or advertised, the more the owners are willing to negotiate its price and terms of payment. Tom knew that owners who did not get an offer on their properties for a longer period of time (three, four months, even longer) would be eager to sell those properties sooner rather than later. The real estate business is unsteady and time works against both owners and realtors, and that is their soft spot, something that Tom had learned from reading lots of news about the real estate business. So, he made a list of few fixer-uppers and other property opportunities that could be turned into multiple residential apartments. He decided to visit the properties in person and see if which one of these would help him turn his idea into a reality. Property Samba's first important premise: Finding the property Tom drove to a nice neighborhood where he had found a big, older house, a typical fixer-upper, which had been on the market for over four months. He made an appointment with the seller and was happy to see him standing in the doorway. The first thing that caught Tom's attention was the size of the house. It was a three-story high, square-shaped house. The house was in good condition, however, given its age, it needed renovation. Tom didn't reveal his plans to the owner immediately. He wanted to hear the owner's story first. The owners told Tom that since their children had graduated from college and moved away from home, they didn't need all that space. They wanted a smaller living apartment, however, due to the recession, they had had a really hard time finding serious buyers. The couple could not move out until they got the money that would finance a new apartment. Tom explained that he considered himself a serious buyer, but, instead of money, he was willing to offer them an idea. Since this was an old house with large square footage, the chances were really slim that someone would pay the owners the full price they were asking for this real estate property. They would either have to sell the house below its market price and its actual value, or continue to live there and pile on more debts, since the house was in desperate need of renovation. But Tom offered them something better, a really interesting offer that was hard to refuse! |
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