First off, thank you! Your writing is enlightening and generous.
I've been outright rejected or quoted exorbitant "FU" prices for several vacant lots and teardowns. Granted, I'm in Brooklyn, where "FU" is practically a morning greeting.
Do you have any advice on how to overcome initial rejection and start a conversation?
For instance, if the landowner doesn't own the corner restaurant, and you call them only to receive a flat 'no' and a side of 'go screw yourself,' what would you do?
Yeah - you are playing in the big leagues there in Brooklyn. It’s tough!
Hearing no is part of the game and it’s a numbers game. A lot of rejection. But remember - only takes one good site every couple years to be doing very, very well!
Two ideas - one is connect with a good buyer’s broker. They can pound the pavement for you and get in touch with you when there’s someone open to discuss. You’ll pay them a fee if they find something, but usually worth it if they do.
Another idea is look in a less competitive area. Is there anything 30-60 min away that might be easier to find something?
What are the most time consuming steps of that 12 months of DD? Do you kick everything off at the same time, or is it a bit more sequenced than that? If the latter, I'd love to hear a general order of operations for how you approach it.
I’m trying to keep it as low as possible. I remind the seller that more earnest money isn’t what keeps me tied to the deal - it’s the hundreds of thousands I’m about to spend in predevelopment costs that does. I shoot for no more than $25,000 - and often get it accepted at much less.
And yes, it’s held at title company.
But to be clear, earnest money is not deposited until AFTER a purchase agreement is signed.
Great post, Sean. As an alternative to a non-binding LOI and a purchase agreement, do you ever use an option to purchase agreement (e.g. maybe with 6-12mth option term, w/ or w/o LOI)? Wondering how often you get pushback on a non-binding LOI from people who don’t want to tie up the land during that diligence period without some consideration.
Typically, we are only in the LOI stage briefly. Once we agree on the basic terms, I’m pushing to get the purchase agreement signed. I want legal control of the land before I’m spending a ton of money on predevelopment.
I think the option works similarly - although I’m not positive on legalities. Any lawyers out there want to weigh in?
Hi Sean,
First off, thank you! Your writing is enlightening and generous.
I've been outright rejected or quoted exorbitant "FU" prices for several vacant lots and teardowns. Granted, I'm in Brooklyn, where "FU" is practically a morning greeting.
Do you have any advice on how to overcome initial rejection and start a conversation?
For instance, if the landowner doesn't own the corner restaurant, and you call them only to receive a flat 'no' and a side of 'go screw yourself,' what would you do?
Thanks again! -Andrew
Thank you for the compliment!
Yeah - you are playing in the big leagues there in Brooklyn. It’s tough!
Hearing no is part of the game and it’s a numbers game. A lot of rejection. But remember - only takes one good site every couple years to be doing very, very well!
Two ideas - one is connect with a good buyer’s broker. They can pound the pavement for you and get in touch with you when there’s someone open to discuss. You’ll pay them a fee if they find something, but usually worth it if they do.
Another idea is look in a less competitive area. Is there anything 30-60 min away that might be easier to find something?
ty!
What are the most time consuming steps of that 12 months of DD? Do you kick everything off at the same time, or is it a bit more sequenced than that? If the latter, I'd love to hear a general order of operations for how you approach it.
It’s all sequential! We’ll be covering it all week to week as we continue here!
Hi Sean, do you have a rule of thumb on the amount of earnest money? Is it typically held by escrow until you clear the contingencies?
I’m trying to keep it as low as possible. I remind the seller that more earnest money isn’t what keeps me tied to the deal - it’s the hundreds of thousands I’m about to spend in predevelopment costs that does. I shoot for no more than $25,000 - and often get it accepted at much less.
And yes, it’s held at title company.
But to be clear, earnest money is not deposited until AFTER a purchase agreement is signed.
That's a lot less earnest money than I would have guessed! Thanks for sharing!
Great post, Sean. As an alternative to a non-binding LOI and a purchase agreement, do you ever use an option to purchase agreement (e.g. maybe with 6-12mth option term, w/ or w/o LOI)? Wondering how often you get pushback on a non-binding LOI from people who don’t want to tie up the land during that diligence period without some consideration.
Great question.
Typically, we are only in the LOI stage briefly. Once we agree on the basic terms, I’m pushing to get the purchase agreement signed. I want legal control of the land before I’m spending a ton of money on predevelopment.
I think the option works similarly - although I’m not positive on legalities. Any lawyers out there want to weigh in?