Greg,
Agreed. My opinion is that since he had stated intention to live there he could follow through and still get the deal since he seemed to want both the deal and his clear conscience. Needing a home is a big factor also.
One of the factors here is the investors need to recognize that he has value in the deal and is not trying to take advantage. I agree fully with what you said about the lady who questioned your effort put into the deal you mentioned. This lady has probably never asked the manager of her local grocery store to explain why is he so bold as to ask for a higher mark up than you did on the house it took so much effort to land to resell.
As investor we need to have a good understanding of the value we bring to the deal. We add value with the good terms we offer upon sale. The market value of anything is exactly what it says, the “market value”. How much can this item bring in an “arms length transaction” (not between friends or family, just one stranger negotiating with another stranger).
If somebody has a home on the market for $10k for 4 months and has had no action, it can be assumed the market value is less than $10k. If you come along and offer $4k and they take it. The market value is arguably $4k. The $10k figure was imaginary and the $4k was real enough to close the deal.
The investor is not stealing the $6k profit as they would probably have no better luck getting $10k in cash than the first person. If they held it long enough they might. Or maybe they could add value by improvements. But holding or improving the home is adding value in itself.
It really is easier to just answer people’s questions honestly. You bring value by being there to purchase when they need to sell of sell when they need to buy. You are taking your chances in an open market just like the rest of humanity does when they haggle over a luxury car in Paris or a goat’s head in the Sudan. There is nothing to hide or feel guilty about and no need to misrepresent your intentions.
Value in real estate and in mobiles can be figured in price and/or terms. When you ad terms and help someone get a home they couldn’t otherwise get into, you are adding value.
I Know folks who are great mechanics and know what they are looking at when they see it. They have spent much time learing the trade and when they see an old corvette, they know how much time, money and effort it will take to fix and re-sell.
When I see the same car I can picture it cherried out in my mind but I know if I put it in my yard it is going to stay there for a long time in the same shape it is in now. They add the value with knolwedge, skill, labor and hard earned money wisely invested. If I need a car I go to them. If they need a house, they come to me. I don’t question them on their value as people and/or demean them for having skills I didn’t take the time to develop.
I am with Greg on the open honesty issue. I also would ad that we are of value as investors big or small. The market determines the value and it is a truly level playing field where we can all choose to obtain the right knowledge to do well in the world. It is just hard for us sometimes when we have gotten our money in little paychecks to see ourselves as deserving to get it in bigger chunks.
My last payday for a flip of a doublewide was $13.5k. If I got to do once a month (and Iam trying to work up to that) I would be a very happy dude. Deal is that home was my only successful one so far this year and I have spent lots of that money on looking for the next one. I added the value by buying right from a motivated seller and selling to someone who got financing on the home so obviously she could prove the value to somebody else (a private lender). I bought for market value and sold for market value and kept the $13k difference. Cool!