Let’s imagine the average single family homes in your city rents for three to four thousand dollars a month.
So why would you pay $30 Million for 4 of your neighbors houses?
Because you have a $19 Billion dollar net worth, you have one of the highest profiles of any technology entrepreneur and you certainly do not want a publicity seeking developer to come in and buy your neighbors houses.
According to an article in the San Jose Mercury News, Mark Zuckerberg, Facebook CEO, has bought four of his neighbors homes and is now leasing them back to the previous owners. From an investors point of view, his purchase was terrible. But he didn’t by these homes for an investment – according to the article, he bought them in order to retain some level of privacy.
You can read the article at http://www.mercurynews.com/business/ci_24285169/zuckerberg-buys-four-houses-near-his-palo-alto
You certainly don’t pay this type of a price when you are looking for a good ROI. But that is what makes our business so interesting. Remember, not every decision people make is because they are looking for a good ROI.
We as investors forget that when people are buying their own home, it can be very emotional. Mr. Zuckerberg has extended that to the homes nearby as well.
Each month in 2013 I have been reminded of why I enjoy this business. You can meet a wide variety of people and I am always surprised at the reasons people get excited when buying one of our homes. Sometimes it is because of a big back yard. Other times it can be the size of the home, or where it is located. I still enjoy selling a home to the first time home buyer who is thrilled to have a place that they can call “their own”.
If you are out there trying to find your next home to fix and flip, remember that you need something that your buyers will appreciate. Know your audience and who you will be selling the home to. Know the amenities that they want and will appreciate. Not all of us will be lucky and have a billionaire move in next door and pay too much for our home. All of us can put in some hard work, make repairs to a property, then market and sell a property for a profit.
Don’t plan on getting lucky. Make your plan to know your market, stick to your numbers, and do great work.
Let me know if there is anything I can do to help your business,
Washington REIA Network, President
P.S. I hope I see you at WREIA on Oct. 21st, this coming Monday night. We will be talking about “Flipping Houses in 2014 For A Six Figure Income”