Stubborn Horses

Some colleagues of mine and I had an interesting experience with a client this week.  Back in October, I was approached by a gentleman who had heavily researched real estate as an investment tool and wanted to shop for a multi unit property as an owner occupant.  After viewing a few properties his interest cooled.

He recounted the story of how the real estate agents he had worked with in the SLC area had not served him well or were mostly incompetent.  He recognized my experience and knowledge in the field and was drawn to that to help him invest.  However, his desire to live in SLC, a market in which I am not that familiar, was important to him.

So, as the end of the tax credit came in April he asked me to show him some homes in Salt Lake.  I referred him to a superstar friend of mine and agent who I knew would serve him well.  They viewed many properties, placed one under contract, had that one fall out due to maintenance problems, and then found a sweetheart deal in Suguarhouse.

This property in Sugarhouse ranked in the top five of the best deals in that area for the last year.  Nevertheless, my client started running the numbers, and then more numbers, and yet even more numbers until he convinced himself that the rate of return on his investment was equivalent to his Reward Checking account.  Now, from the angle he was looking, perhaps that was true...I can't know for certain.  But, what I do know is that the perspective he was looking at did not include amortization, tax deductions, tax credits, appreciation, rent increases, and other aspects of the investment property.  After many many hours of scouring the market to find the right deal, he ultimately threw it away because he couldn't be certain is was "good enough".

This kind of behavior is aggravating from an agent's perspective but should be even more aggravating from the client's perspective.  What he has done is set a precedent for not moving forward.  He will never achieve his goals unless he takes the plunge and purchases that first investment property.  No deal will be perfect enough for this guy.

You can lead a horse to water but you can't make him drink.  This old saying is even more bewildering when you find out that the same horse begged you to take him to water beforehand.