A Tale of Hope Amidst Real Estate Turmoil: Unearthing Hidden Gems (pt 1)
A Tale of Hope Amidst Real Estate Turmoil: Unearthing Hidden Gems
Guest post by Carla Jones @itscarlajones
Amidst the turbulent times of the real estate market, this story serves as a reminder that even in the toughest conditions, valuable opportunities persist, though they demand finesse.
Part 1: The Acquisition
Right before the onset of the Covid chaos in the housing market, I managed to secure an incredible deal, capitalizing on historically low-interest rates. It was a weird time – you had sellers parting with considerably below average homes for up to almost 30% more than what it’s actual value was. Yet, buyers were willing to give up their firstborn and their entire net worth for a house that they likely would have otherwise passed on. Regardless, the allure of those low-interest rates had buyers foaming at the mouth, so sellers got their way. However, my timing for seeking out a family home could not have been more serendipitous.
Allow me to rewind: In 2019, I got pregnant with my daughter, I gained a whopping 80 pounds (scary times). My focus was twofold – shedding this weight and, equally important, escaping the dilapidated landscape of Hollywood, California, which had transformed into a war-torn, homeless-ridden zone due to the ravages of Covid. The pandemic had ruthlessly impacted Hollywood and many other parts of Los Angeles. My fiancé, Artem and I were resolute that we did not want to raise our daughter amidst this turmoil. Artem, a Los Angeles-based apartment developer, recognized the opportune moment and urged me that if there ever was a time to buy it was NOW.
His instructions were precise, 1200 sqft homes in the valley on large lots of at least 6,000 sqft or more. His rationale was simple – “he would never live in someone else's home as a developer.” Proceeded to tell me he “didn’t care if he sounded like a diva” and that he “did not work this hard to not have a custom home at this stage in his life.” He knew there was much value to capitalize on if we got a home off market, outside of a bidding war, no competition, and one we could build to create equity.
During this time, we had enlisted a job position for a cold caller from Mexico. We knew we could get someone who spoke perfect English and Spanish for a much cheaper price than what was being solicited in the states for American wages. We made listings on various job boards, craigslist (https://geo.craigslist.org/iso/mx) and even a residential beach community in Rosarito facebook page. When we received the resume of this potential hire, we know we found a gem. He was bilingual and his English was arguably better than most native speakers. We formulated an easy, effective script for him and by the first day he was producing leads. “Hi, My name is Marco, I’m calling about your house @ _________. Would you consider selling it for the right price?” With an average of about 2 leads per day, 5 days a week, he exceeded his value. If the homeowner expressed interest, he would forward them to me as a “qualified” lead. With an eight-hour daily schedule on a multi-line dialer, he quickly exhausted available leads.
Circling back to my weight gain,I juggled two significant endeavors while embracing new motherhood. To top it off, all the gyms were shut down.
At this point, I couldn’t prioritize what was “more important.” Was I to focus on weight loss or to go home hunting for my lead generator in Mexico? I struck up a brilliant little plan for myself. For the first 6 months of my daughter's life, I lived in the strictest parameters of time blocking. Thankfully, Artem gifted me a night nurse for the first 2 months of my daughter's life. That amazing woman sleep trained my baby perfectly. I had a 2-month-old sleeping through the night and sleeping in until almost 9 am, all the way until she was about 1 years old. Now because of this perfect set up I had, I would wake up at 5:30 am, 5 days a week to do my first round of fasted cardio, finish, come home, and prepare myself for the day. At around 11 am, it was time for my daughter’s first nap and that meant my second round of fasted cardio. I was running a calorie deficit at this time so a 300-calorie meal at 7 am set me up perfectly for a second round of fasted cardio at that time.
However, this second round was spent pushing a stroller, power walking through some of the most sought-after neighborhoods in the valley. I would spend 3 hours walking while my daughter napped in her stroller, jotting down the specific addresses of all the homes that met the criteria my fiancé gave me. I’d come home and input all those addresses into a google sheets file. By the end of the 6th month, not only had I acquired a list of 3,000 addresses stretching from the very beginning of Studio City to the tip of Encino, all north of the 101 freeway. I had also lost the 80 pounds by month 4. I was hitting some serious strides and knew I was building momentum. With addresses in hand, I proceeded to extract potential homeowners' contact numbers and before I knew it. We used IDIdata.com to ge the number. My cold caller was dialing away.
I went to several meetings, meeting with homeowners who were keen on the above retail price for their home. However, adherence to specific criteria was paramount – market value based on existing square footage, was the objective.
One day, amidst this process, a lead materialized. A gentleman, we’ll call him Jon, was interested in more information. I called Jon and we ended up chatting for almost 2 hours. He agreed to meet with me and show me his house, so that same week I met him. Upon meeting, Jon and I chatted for another 2 hours. Jon is in his 80s and shared many parallels with my grandfather. Served in Vietnam, had many kids and grandkids, and overall lived quite an interesting life. He said to me “Carla, I’m not ready to sell yet, I have a daughter, and what if she wants it?” Mind you, this home was not his primary residence, and he didn’t even have a tenant in it. Jon's words and actions diverged; although he expressed reluctance to sell, his vacant property indicated otherwise. Nothing a little consistent follow-up couldn’t fix.
For the following 5 months after, every other week, I would call him on Thursday mornings and see how he is. Mainly building a friendly relationship with him. I asked prior, firstly, if I could follow up with him, he agreed. Secondly, what time was typically better for him, and he said Thursday morning because he was surprisingly still running a construction company. To be quite honest with you, in that fifth month, I questioned if my efforts were going anywhere or if I was pursuing something that was not even realistic. I had always called him, he never called me and one day I saw Jon’s incoming call. My first thought was maybe he’s calling to tell me his daughter wanted the house, and he was sorry. I was wrong.
Answering the call, Jon stated, "Carla, I'm ready to sell, and I'd like to meet your fiancé." Swiftly coordinating a meeting, the three of us convened, Artem effortlessly clicked with Jon. An initial ballpark figure of $1.1 million was agreed upon, but when pen met paper, Jon declared, "Make it $1.2 million, and consider it yours – I'll sign today." Recognizing the extraordinary nature of this opportunity – a property north of the 101 freeway, nestled in a picturesque neighborhood – Artem and I knew it was still a deal at $1.2 million, because he was going to add a lot of square feet to the property. This was ever so slightly above its current market value at the time but it’s important to note – during this time, the real estate forecasts were quite accurate. The predictions and the market behavior were aligned. At this particular time, which was December of 2020, we were seeing home values going up and up, quickly. Therefore, signatures were exchanged, opening escrow the same day. We closed Escrow beginning of January 2021 and not even a full three months later in mid-March, the estimated market value became $1.350 million. It ended up being a deal, people could not believe in the year 2021, we purchased a home in the neighborhood we did for the price we got or the interest rate we locked on. It was an extraordinary feat, even to us.
Part 2: The Build, coming soon!