He Appealed to My Greed

Posted on December 23, 2013 by

A few months back, one of our rental properties went vacant.  It’s a nice three-bedroom, two-bath home with a fenced yard.  After a bit of paint and clean up, we stuck a For Rent sign on the lawn.

Over the course of two weeks, we received several great applications.  One application stood out above all the others.  The applicants had been on their jobs for years, they had solid references, they had the move-in funds ready to go, and they kept their current residence immaculate.  They would make PERFECT tenants!

Shortly before I called these ideal tenants to give them the good news that they got the house, I got a call from someone who wanted to buy the property.  They explained that their credit stunk, but they had $10,000 to put down.

Their $10,000 down payment got my attention and put the brakes on everything.  A thorough background check revealed that the prospective buyers didn’t pay their bills or maintain their current residence well.

Over coffee, the potential buyers explained that they had just inherited $20,000, had always wanted their own home, loved the house we had on the market, and buying it – if we gave them owner financing – would be a dream come true.

So what would you do in this case?  On one hand, you have great tenants who have a history of paying on time and taking great care of their property.  On the other, you have folks who don’t pay on time, take less than great care of their property – but they have $10,000 to put down!

Sadly, the people with $10,000 appealed to my greed.  I know what you’re thinking: Boy, is Bill ever in for a train wreck!

The buyer’s first payment was five days late.  Their second payment bounced.  Their third payment was twenty-five days late.  To top things off, the yard wasn’t being cut and the house looked trashy.

In the end, we had to take the house back and spend $7,000 to rehab it – AGAIN!  Then it took two months to find good tenants.  All tolled, going with the $10,000 down buyers COST us $2,000!  Worse still, Kim gave me THAT look.  If you’re a husband, you know exactly what look I’m talking about.

I’d love to tell you that this was the first time I’ve made this mistake – but it’s not.  I’d love to tell you that I’ll never make this mistake again – but something tells me that I probably will!

Greed is awful and it causes you to make some really stupid decisions.  When you’re faced with a choice like I had, please try to make a better, wiser decision!

Bill & Kim CookBill & Kim Cook are a husband and wife real estate investing team. They live in Adairsville, Georgia and have been investing in real estate since 1995. They specialize in buying single-family homes, mobile homes and mobile home parks. They also run North Georgia REIA and teach folks how to successfully invest in real estate.

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