A Few Great Trades of Days Gone By
… And how you can learn to find them.
In my trade room, I have told my “roomies” of many great deals over the years. Now I want to share a few select ones with you here and then chat with you about how you can learn to find these deals yourself. Don’t miss this.
I was hooked! 28 years or so ago, I saw an ad for a 1973 Yellow Mercury Cougar XR7 Convertible with a V-8 Cleveland 351 in it for just $300 cash. I called. It turns out the man was getting a divorce and his wife was getting everything by Friday and he said to me: “There is no way I am going to let this b**** take this car too!” He showed me the papers for a brand new stereo that cost him $300 just last month. I pulled out my $300 cash… handed it to him and in tears he signed the title. I drove that car all over creation for a year and put 10K miles on it, even taking it bar hopping in the Florida Keys before I sold it for a steal to another person for $1,500. But hey, I made a lot of money on that trade. That was my first best trade ever.
Jump forward to over 15 years ago. I found an abandoned property with a house on it in the middle of freaking nowhere. I went to the town hall to find the owner and then tried to track him down like a detective. He was a hermit and a recluse at 87 years old and I offered him $15,000 cash. I wrote a note and left it in his mailbox! Weeks later he called me and said: “Make it $18,000 and it’s yours!” I bought that place and it was worth $100K at the time with not a stich of work done to it. The neighbors hated me ever since. After fixing it up I made a fortune on it.
You see, the “Killer Trade” is all about the power of being in the right place with cash at the right time. Once upon a time I got a phone call from a desperate lady. She was young and her mom had just died. She was kinda freaked out, broke and did not know what the heck to do. “Would you be interested in buying the house?” was the question. “I don’t know”, I said, “maybe”. As an investor I, of course, would need to get it at a good deal.
“It needs a ton of work” she said. “The place is a horrible mess.”
Upon driving out to meet her and see the property I can say this…
Most investors would run from such a thing. It was so ugly and so bad! A total hell hole…but I smelled money.
Now I do want a good deal… but sadly… I also have a heart! I do not want to rake someone over the coals too badly. It’s a mix of fairness in my heart and also fairness to me so I don’t get screwed. I am absolutely sure I could have done better and really pressed her badly but I did not want to hurt someone. She was desperate, yes. She was broke, in pain mentally and emotionally over the death of her mom and overwhelmed with what to do and just needed money to flee to another state and start a new life.
She asked for $7K. I knew I could have done this for $3K or so but we settled on $5K cash!
She was happy and I told her I would take care of everything. I helped her with all the paperwork and made it quick, easy and painless. She wanted a few days to rummage and find things of sentimental value and leave the rest for me. I said no problem.
I paid, we signed and she grabbed the money and split. I was now the proud owner of a piece of garbage house with a tiny yard. I called in my guys.
They got to work and hauled 10 truckloads of crap away.
A few weeks later, and $4K in materials and many thousands in labor, I had the place all cleaned up. The roof was fixed, the place was painted. All with new cheap Home Depot 99 cents per square foot hardwood flooring, every little broken thing is fixed, every light bulb replaced. The cleaning lady spent 8 hours and charged me $125. The yard was mowed, the place raked, a few bags of mulch were spread… the deck was painted and on and on and on.
I sold it for a big gain. When all was said and done I ended up with about $25K in profits. To make matters even better I held the note! Yes, I became the bank and I got 12% on top off all of this; the power of knowing. Knowledge is definitely power. This was just one trade among countless thousands of trades I have made in my lifetime.
How can this possibly get any better than this?
The man I sold it to defaulted on purpose and called me to tell me. I tried like heck to stop him! I have a heart (a major problem, but I must live with myself).
“My wife man…. she left me! She stole my kids! She moved to Alabama. I got to go!” “OK… OK…” I said. “Stay as long as you want for free. And he did until February of last year.
So now I had a house free. I mean zero cost. I moved in and I fixed it up and I sold it for $39,000 cash.
I have bought and sold more than 25 houses. I watched and helped my mother trade some of those over the years. She just freaking stole them. I mean flat out theft. I have seen her steal places for $3,000 and sell them for $30K.
I think the very, very best I ever saw was when she bought a super clean double wide mobile home in a family park near a beach once for $11K. She placed 1K cash into it. She listed it for $50K and sold it about 2 months later for $44K.
Tell me if this is not a great list of trades? I am not even scratching the surface here.
OK. How can you find them and partake?
Rule #1 You must have cash! Cash is king! You want to take advantage of an extreme situation; Someone dies, someone gets so old they go into an old folks home and cannot pay the mortgage…. someone has a stalker, stalking them badly and are afraid for their very lives and needs to leave town immediately in the night. Someone’s mom dies and they are flat broke and need seed money. Someone is getting a divorce and about to get royally screwed. You must have cash!
Rule #2 You must know a deal when you see a deal! How? Let a hundred deals pass by directly under your nose. As time goes by you will realize what a deal it was. Yes, you will weep and cry and moan and groan and possibly want to jump off a bridge at what a killer deal it was and you could not pull the trigger. As time goes on you will wise up and get smarter.
Rule #3 Study! Learn. What is a deal? How do I know? You must hunt for it and track the value of many, many things or at least the stuff you want to buy. So if cars or real estate is the thing you want to specialize in you must truly learn your market. If antiques, furniture or books is your hobby to make extra cash, you have to learn all you can and this does not happen by being on TV or wasting time.
Rule #4 Make offers, make lots of crazy offers. Offer 50 cents on the dollar if you are unsure. Don’t be embarrassed. If I can get crazies asking me for free money every week, you can ask for 50% off!
“But I don’t want them to be insulted and get mad!” So what? All they can do is say no or get slightly mad at you. Then you can say: “Look… I am at a loss here. I don’t really know what this is worth. It might be worth what you’re asking but honestly I don’t know and honestly I am kinda stretching it and this is all I can afford. If I have to pay more I might not be able to pay my bills. I mean I got a little more but not much…” or whatever you need to say to justify insulting them with your lowball offer.
Rule #5 Great trades go fast. Act quickly or the deal is gone. If you do not lock it up it’s gone! I once made a deal, shook hands for $7K to buy a house and pen and paper were in hand… they were seated at the table. I did not have the cash with me… honest to God and as God is my witness I said… “I’ll be right back!” I raced home and in 15 minutes I got back and they had a horrible look on their face. I said “What? What is wrong?”
“We don’t know how to say this to you but we sold it to the lady down the street. She came by when you left and we told her. She handed us $7,500 and we took it.” I was cut to the very heart! The deal vanished just like that!
Rule # 6 Don’t be too greedy! I once offered $8K cash for a place and I knew I was way under and I could see the owners were highly insulted. I justified this by saying “Ah… I’ve got too many homes right now, if I get it I get it. If I don’t, I don’t.” Guess what? I did not! Another person came in just 2 days later with $10K and swiped it right out from under me and that was that. If you seriously sense that you have made a mistake then go to the seller or call and start talking. Be open and be honest and say: “I’m sorry if I offended you, I sense you were not happy with my offer, what can I do? How can we make this work? What are you really looking to get?” …and negotiate. Let them state a price and see if you can meet it. One time and just to make a deal I had to find a family another home! I’m not kidding. The guy was being evicted from this one place and he needed another and to make the deal happen I actually had to locate him another home; buy his for X price and throw in a minivan to sweeten the deal and I found them a new home. They used the money as down payment; his parents made up the difference and held the note to their very own son! Let them try and get paid! I saw the guy’s record and knew that was not for me. So, with a little work and $9K in value, I snagged a house and I sold it for $47,500 8 months later.
Remember that you make your money when you buy and you realize your gains when you sell. Don’t be too fast to take the gain unless you really need the fast money. 50% in a week or two could possibly be better than 150% in a month or two but only you can make that choice.
I hope this helps. Let me know if you want more stories like this one.