Author Topic: realtor buying up properties in neighborhood  (Read 697 times)

uniwelder

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realtor buying up properties in neighborhood
« on: October 21, 2020, 08:24:41 AM »
A house my wife and I are looking at is also of interest to a realtor that has been buying any available properties in a set of two street blocks.  He currently owns about half of them, mostly purchased within the last 5 years or so.  They're older houses, some he's renting out and some have since been knocked down.  The house we're interested in has been vacant for the past 8 years, as it was one of the owner's (now deceased) childhood home and didn't want to part with it, but the surviving wife is now looking to sell.  It has not yet gone on the market, but since I know the caretaker, we're being offered to look at it.  The realtor had also been in contact over the past few years, offering to buy the property, and the owner is leaning in that direction.

The most likely scenario seems to be the realtor will offer more than what we are willing to pay.  For us, this is a small single family home that is rentable as-is, but definitely needs updates (built in the 40's) if it will be rented long term.  From the realtor's perspective, it fits in a strategy of owning a continuous set of properties to later build an apartment complex or townhouses.  I suppose we will offer a fair price and that will at least set a floor so the owner doesn't take a lowball offer when selling to the realtor.

Does anyone have advice or insight?  The owner probably won't get taken advantage of--- I get the impression she's still sharp mentally and will have a competing offer from us.  If it seems we're not likely to buy the property, I'd at least like the owner to use whatever leverage she can in this situation.  And if sentimental value is a concern, make her aware the house is likely to be bulldozed in the next few years.

cool7hand

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Re: realtor buying up properties in neighborhood
« Reply #1 on: October 21, 2020, 08:29:25 AM »
Why don't you find out what you can about the owner, find some way to connect about common ground (such as family, commitment to the community, etc.), and write a letter to the owner about what the realtor is doing and how you'll love the home in a way renters won't?

uniwelder

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Re: realtor buying up properties in neighborhood
« Reply #2 on: October 21, 2020, 09:07:14 AM »
We'll be walking through (at this point we've just peeked through the windows) the house tomorrow with the care-taker as the owner lives away from the area.  I printed out a map from the city GIS that has the other properties highlighted and notations about which have been knocked down, so it can be passed on.  It may end up that she doesn't really care what happens with the house--- it might have only been sentimental to her husband.  Eventually, I'll likely talk with the owner, but right now its still preliminary.

We own two other houses near the caretaker, so he let us know about this opportunity as he likes us as landlords and the way we take care of the homes.  We'd be renting this house out as well and I believe the owner knows that.  I wonder down the line, when the realtor is pushing for development, will we continue to put money (maintenance, new windows, roof, etc) into the house?  If we did buy it, we may end up selling to the realtor eventually.  I don't want to give false hope.  After tomorrow, I think there should be more clarity, but I'd like to be prepared going into it.

SndcxxJ

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Re: realtor buying up properties in neighborhood
« Reply #3 on: October 22, 2020, 07:27:38 AM »
If you end up with this new property would you be adjacent to some of the realtor's properties?  If so, how does that realtor keep up their properties?  How is the area generally, does it need capital to being it up from say a C neighborhood to a B neighborhood?
If the realtor is doing a good job of improving the neighborhood, and this property fits your criteria, then offer the best price you can given that the area might be on the upswing because of investor improvements.  Interest in the area is good for future prospects.
You can always appeal to the seller on a personal level as you've indicated.  Writing a letter is common, the map of knocked down houses is a great idea.  If you can think of a personal gift that that be given at the same time as the contract is presented it might trigger a reciprocity bias.

uniwelder

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Re: realtor buying up properties in neighborhood
« Reply #4 on: October 22, 2020, 08:40:41 AM »
If you end up with this new property would you be adjacent to some of the realtor's properties?  If so, how does that realtor keep up their properties?  How is the area generally, does it need capital to being it up from say a C neighborhood to a B neighborhood?
If the realtor is doing a good job of improving the neighborhood, and this property fits your criteria, then offer the best price you can given that the area might be on the upswing because of investor improvements.  Interest in the area is good for future prospects.
You can always appeal to the seller on a personal level as you've indicated.  Writing a letter is common, the map of knocked down houses is a great idea.  If you can think of a personal gift that that be given at the same time as the contract is presented it might trigger a reciprocity bias.

For context, this area is less than ten minutes walk to a university, but just at the edge of where students typically live.  They are mostly older 2-3 bedroom homes on decent size lots.  I suppose B neighborhood?  I think the area has upside potential and I've liked renting the two houses we own around it.

This property is sandwiched on three sides with others he owns, so its strategic for him to have it.  Some of the properties are vacant, some rented but with no improvements/maintenance, and some bulldozed.  On one site he had bulldozed a small house and put up two others in its place.  I think the overall idea is to create more dense housing (apartment building, townhouses, etc), whether that be for students (if the university expands) or professionals.  The houses that are still standing right now will probably be demolished once he gets ownership of enough surrounding properties to build.

The realtor isn't improving the area right now, but once he does, I imagine prices will go up.  I don't really like the idea of buying a rental for the sake of price appreciation, but perhaps we should think about upping our ceiling on what we would offer.  Thanks for the input.

waltworks

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Re: realtor buying up properties in neighborhood
« Reply #5 on: October 22, 2020, 11:04:27 AM »
Would the city actually allow this person to build apartment buildings, though? Typically even if you buy up all the properties that's a hard sell to the city/county for a variety of reasons.

-W

lilbenny34

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Re: realtor buying up properties in neighborhood
« Reply #6 on: October 22, 2020, 11:42:39 AM »
Uniwelder,

Interesting proposition. I'm not sure I would want to own a rental on a block that is being monopolized by one person. That person can really affect your rental and will have a lot of power over you. Sounds like the realtor has a deeper pocket than you too, so it may be hard to get the property at all.

Like others have said, write a personalized letter (not sure the current owners care judging by their abandoning of the property, they most likely just want the most $$$). Throw the best offer you can and cross your fingers it gets accepted. I wouldn't become too attached to this property.

Best of luck!

uniwelder

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Re: realtor buying up properties in neighborhood
« Reply #7 on: October 22, 2020, 11:57:27 AM »
 
Would the city actually allow this person to build apartment buildings, though? Typically even if you buy up all the properties that's a hard sell to the city/county for a variety of reasons.

-W

This is mostly a college town and these properties are within walking distance to the university.  The university plans to expand, but enrollment hasn't quite increased as quickly--- a chicken/egg thing I suppose.  A few years ago, another apartment complex went up about the same distance away--- four buildings with 16 units each (plus parking) that cover about the same amount of land area as each of these blocks.  It was pretty tastefully done and doesn't seem all that obscene in an otherwise suburban setting.

I'm hoping he sticks with townhouses so it attracts more a mix of the regular population.  Also, if he needs the whole block for apartments, it may take too long to buy the remaining properties.  Townhouses means that just a couple of adjoining properties will suffice and can be done piecemeal. 

uniwelder

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Re: realtor buying up properties in neighborhood
« Reply #8 on: October 22, 2020, 12:11:21 PM »
Uniwelder,

Interesting proposition. I'm not sure I would want to own a rental on a block that is being monopolized by one person. That person can really affect your rental and will have a lot of power over you. Sounds like the realtor has a deeper pocket than you too, so it may be hard to get the property at all.

Like others have said, write a personalized letter (not sure the current owners care judging by their abandoning of the property, they most likely just want the most $$$). Throw the best offer you can and cross your fingers it gets accepted. I wouldn't become too attached to this property.

Best of luck!

Yes, as you said, this is my wife's biggest concern and thinks this house may bring a lot of headaches if we purchase it.  I'm not sure the owner cares about the property on a personal level--- it had sentimental value to her husband (the lawn was meticulously maintained the past 8 years, heat turned on in the winter, water/electric still running) but now that he's deceased, she may just want the highest offer.  As everyone keeps recommending, I'll write a personal letter with the offer we submit, just in case.

uniwelder

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Re: realtor buying up properties in neighborhood
« Reply #9 on: October 22, 2020, 04:44:21 PM »
We met up with the caretaker and got a look inside the house.  Its been very well maintained, though outdated.  I gave him the map and we discussed the various properties, but he seemed to already be aware of most of them and potential plans for apartment buildings.  He's highly in favor of us buying the house to stem the tide of student encroachment and says the amount we'd offer seems very fair.  However, he was discouraging us from contacting the seller directly and says he would update us with the owner's intentions.  It seems she is in no rush to sell and it may be several months before anything else will happen.  In the meantime, there are family members who may clear out some personal items from inside and then the rest will be donated.

We do have the owner's address from the property records, but I'm hesitant to send a letter.  I'm going to take the caretaker's word that he'll be advocating on our behalf.  Thanks for the advice everyone.  I'll update when anything new comes up.