Money talks, but in-homes reveal
Once upon a time, in land far, far away, Ashley and I bought a property in the township of Villanow — well it feels far away. But it’s really only about a 45-minute drive. Now, if you’re asking yourself where in the world Villanow is, many people share that sentiment when I bring it up.
Villanow is located in Walker County, Georgia on the other side of the Johns Mountain National Wildlife Reserve from Calhoun. It’s where Ashley grew up, it’s where she and I owned our first home, and it’s the area of some of our very first deals.
One of those investments was located on Tom White Road.
Tom White was a 2-bedroom, 2-bath, singlewide mobile home on over an acre of land. The seller had inherited the property, which needed some major repairs. The seller didn’t want to fix it and just wanted to sell.
We bought the land and home for a whopping $7,500 in 2012.
Now, Ashley and I were in the middle of another rehab when we decided to offer this house for sale as a handy man special with owner financing. We had a buyer offer us $4,000 down, and they were willing to take the property in as-is condition and fix it up.
All we had done on the house was cut the grass. So, the idea of getting over half of our investment back so quickly was very appealing. So much so that we went ahead with the deal without doing proper due diligence on our buyer. I’ll get to that in a second. First, let me tell you about the deal structure.
We decided to do a lease option with the buyer. They would rent the property from us for a year to establish a payment history. And we sold them an option to buy the house for $45,000 with owner financing after a timely payment history had been established. They paid us a nonrefundable option consideration of $4,000 and agreed to fix the house as further consideration for this option.
We signed the paperwork, got the cash and the buyer went to work on the house. We thought everything was going to be great. That was until they stopped working on the house.
You see, they got the house just this side of livable and moved in. The power was on and the plumbing worked, but there were still big holes in the subfloor.
On top of that, they brought all kinds of junk to the property.
It pained me to own a property where someone was living in that condition. But I couldn’t do anything. They had not violated our lease, and I had not set strong parameters as to what needed to be done on the house in our agreement.
I’ll just bet that if I had done an in-home interview, I would have seen that my and their ideas of “fixed up” were very different. But instead, I let the thought of a quick buck cloud my judgement and didn’t do my due diligence on them like I should have.
Doing an in-home interview is one of the most crucial parts of our application process. The application tells you if people have a steady job and things of that nature. But the in-home really lets you gauge how the tenant is going to treat your property. Because whatever condition their current property is in is what yours will be in if they’re allowed to move in.
Also, while I do the in-home, I introduce what we call the four jobs of a tenant to the applicants. (Briefly, those jobs are: Take care of the house, pay on time, be easy to work with and be a good neighbor.) But I don’t just introduce these jobs. I evaluate whether I feel the applicants can do them. If they can’t, they don’t get the house.
I’m often surprised at how good people look on paper. Some who even have thousands of dollars to put down, but when you go into their house it’s gross on the inside with lots of deferred maintenance and neglect.
It is true that money talks. But an in-home interview reveals what you need to know when making a tenant selection.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.