Christian Real Estate Professionals : Using Groupon Power to Purchase Real Estate

I think it shows a lot of creativity.  My only question would be if they don't sell, that those who "bought" would not have to go through with the sale at the higher price--a contingency.  If all the units sold, everyone would benefit, so why not?

I get Groupon offers everyday, but never for real estate!  Perhaps this will be the next trend for REO's!

It's creative, but I'm skeptical of it catching on.  But hey, strange things happen in real estate all the time :)

Who knows? The times they are a changing-right? Never, say never.

A group discount off of "list price" ? I don't know your market, but how would that price compare to a single buyer negotiated offer ?

Melville

Interesting, since it would show up in soooo many emails!    and can be targeted!

Brad - That is an interesting concept.  It might work, if people are using their IRA funds, or cash for the purchase, but if they need financing it could get really messy.   Also, not sure where all the closing costs are going to be in the picture.  Melville makes a good point, that is not even a 5% discount, and in today's market a lot of buyers are doing better than that.

One other issue that can create a problem.  If there are multiple names on the contract - what happens when one of them needs their money out?  Does their unit have to be sold, do all the units have to be sold, do the other owners have to buy them out???   Sounds like a couple of lawyers could be busy.

Brad I find this interesting, how many people has any one sold over time properties site unseen? If I had to be generous in my 15 + years I have maybe sold three properties like that. Most people need to see the property as well as the neighborhood, so I am skeptical that this will be the wave of the future, but what do I know, I am just a struggling Beverly Hills Realtor:)))

Is this a fad, a trend, or will it become a standard in the home purchase and selling process?

Regular price: $260,000 – $270,000 per duplex ($130,000-$135,000 per door)
“Groupon” price: $249,900 – $259,000 based on a minimum purchase of ten duplexes (20 doors)

It sounds like a gimmick to me but to each their own.  IMHO a good real estate agent can negotiate a much better deal for a buyer than an $11,000 discount for buying 20 units. I don't think $200K off $5.18M is so great. I've been able to negotiate $200K off a listing asking price of $1.6M for only one unit and only one buyer.

This is the first time I've ever seen anyone try this approach, wondering if it will fly or die?  

Guess I might have to register just to follow the story and give an update on 9/13.  I got some advice from Jay Thompson over on Facebook, he says he wouldn't touch it with a ten foot pole.  Now I'm just more curious than anything.

BTW - I have contacted the person heading this up, he's from the Valley Peninsula Real Estate Investing group. I'm waiting to hear back from him to see exactly how this whole thing will play out?  (This could end up one way or the other being a great story or even "breaking news")

stay tuned....

Hi, Brad - The group purchase seems a viable cash investment strategy to me, providing the details of closing and managment can be cleanly worked out. Individual LLCs are often set up by a small of people to purchase investment real estate. But I agree with others here, that there would need to be a much better discount negotiated before I'd buy in.

I guess for some folks, a possible $11,000 dollar savings might just be enough to bite the bait, especially if they're already interested in the property?  It will be interesting to see how this plays out...

Great feedback everyone, thank you.

Real Estate Investment Trusts faded dramatically in popularity about a decade ago.  This sounds even less certain.  I'm dubious...but intrigued.  I'll be following this.

What Mitchell said.. just doesn't sound like that much of a discount being offered for that large of sale when you combine all of the units..  You will probably have more answers after the scheduled meeting.

I have not seen a groupon deal in my area.  It does seem interesting...its the type of market where you have to be creative.

It's different. I will catch someone's eye. But I think it boils down to how much  you will spend on the ad. Will it get you more exposure? Yes. Does the cost justify it? Maybe

My advise...Don't give up your day job and save your money. Groupon has been around a while....are they just grasping for money on their way down? So they are going to try Real Estate...Why does something about it not seem ethical or right?

Brad - I don't know about getting enough people together to do this though it sounds interesting.

Interesting concept, but you'd need a property manager and there would be other expenses.

I agree with Mitchell #10. It doesn't seem like that good of a deal on the surface. When I think of Groupon, I'm thinking of a savings of 50% - a really good deal. A deal that is too good to pass up. So, perhaps they are just using the "Groupon" term to make it sound interesting & generate attention? Thanks for sharing.

I never would have considered groupon for selling a home.  Perhaps the problem..... other people are and are being far more creative than I.  New challenges I am sure.... but what a concept.

Hi Brad - Good post, I'm not too far away from you over in Napa.... and I've actually heard of agents promoting themselves on Groupon offering a few hundred dollars from their commission (I believe it was a client who brought it to our attention).  I thought it seems really shady because our client then expected us to do the same thing otherwise they would go with the other agent.  Different situation - I know - but I approach the topic with a skeptical point a view, and I'm extremely interested to see how it pans out. Good luck to you!

Brad,  I would sell bu auction before I would use Groupon.  That said, I only recently learned about Groupon. 

I take part in daily Groupon emails, and some of the deals are really good. That is a very interesting take on Groupon. Just a way to reach more buyers? Maybe a group of investors?

I wonder if it would work for a developer who has a large inventory that needs to be sold....hmmm...interesting concept. Please  keep us posted.

Brad - I've used groupon discounts but I've never heard of anyone doing it with real estate before ..... it will be interesting to see if they get their 20 doors sold.

I too was invited to one of these recently.  Frankly, the discount didn't "wow" me and i wondered if as an experienced buyer, might I be able to negotiate better terms.

I'll be curious to see how it all plays out.

Thanks for sharing this.

Well this seems like an interesting concept in theory but would it work in life!? I also wonder about the financing aspect of it! 

There was a real estate company that did a Groupon and pulled it. Some question about legality. I would be sure that it's run by attorneys.

My advice...Go find an agent that is familiar with this subdivision, and ask them to pull comps. Even if comps aren't available (i.e. not enough recent sales), shoot the seller an offer that is substantially lower than what Groupon is offering.  See what they come back with, and you'll have a better feel as to whether the Groupon deal is really a deal.

Like many others, I love some of the deals I get with Groupon from local restaurants and other service-based companies.  Personally, I think you'll find out that they've bitten off more than they can chew when it comes to real estate investments.  But, I've been wrong before.

I have a feeling that Jay's advice might be spot-on, but you never know until you try!

I'm not sure what type of input you are asking for? Surely you realize that they are using the word "groupon" as a play on words, which has nothing to do with the groupon discount website. As far as the deal, put a pencil to it and if it makes sense it is a good deal and if it does not, it is not. Make sense?

What an interesting concept and if a builder where doing this and could use bulk sales to create instant money, then why the heck not try it.

Interesting sounds like a way for the builder to move a lot of inventory. a different form of Bulk Sales.

Brad,

I'll be following this. 

Brad-how is this different than real estate investing groups that pool their funds to buy property?  Just adding the name "Groupon" to it would make me think of a 50% discount not 5%.  There are a huge range of legal complications that would come into play.  Are these properties in an HOA association which limits the number of units that can be owned by one enitity.  What about lease restrictions on the number of units that could be rented in the community?  How would the group purchase effect FHA or VA mortgages for buyers looking to purchase in the neighborhood?  Lots of questions and it will be interesting to see what answers you come up with.

Brad,

Getting a group of people to stay like minded and all agree on buying a block of properties is worse than herding cats. I don't place much faith in this catching on, I do however believe our industry is being changed by all the current foreclosures and shortsales. 

-Brent

Brad, I heard Groupon discontinue catering to real estate brokerages/agents, not really sure what reason. .. but I do think the concept is intriguing and I'm not being short-sighted about it. .

Brad, I'm not familiar with Groupon. I've seen investors pooling their resources, but through Limited Partnerships and LLC's. I think there is more to it than a bunch of people getting together and buying a property.

Interesting concept but not sure how it'll work in practicality. Sitting on the sidelines watching ...

You have to love in inititive and new way of thinking.  I hate the term thinking outside the box, but I think this one has done it.  Very interesting concept

Very interesting Brad!  I had no idea Groupon was now into real estate.  I have to say I'm intrigued!

Raised in this arena but never have boughten homes with such a low discount.  I have had people walk into Dad's office and in trouble with the court and sell the property for the outstanding water bill, and utilities.  Quick Title Search, fast driveby and SOLD.  10 Acres of farm land worth $10K an acre.  Desperate farmer walks in and says 10 acres for $10K - SOLD.

That's not a deal Brad.  I look at carrying costs, what is the marketing currently doing, where is it heading this spring, what is the PLA vs others that are selling similar in the area.  You want an opinion and I will say ... this is not a deal.  I can understand stopping people from investors buying and renting these out  but if that happens, what happens to the resale value for your units?

It's a numbers game and logic.  No emotion.

Here's my word of caution:  a builder got $384 PLA per square foot on an awesome home here in Chicago.  Another resale of a new home that is three years old closed out at $212 PLA per square foot. Both of these homes were within 3 blocks of each other.  Same median.  No external obsolescence. 

That builder still has room to spare and I am not being cut throat here.  I am talking business.  Look at that PLA and look at others similar that have closed.  Bottom is ... if others go into rentals .... what does that do to the neighborhood on resale?  Kind of like having a high rental factor in a condo building. 

This is the first time I have heard of this.  Would be interested in any post action reviews you or your readers find out.  Thanks for the post.

I'm also hearing about this for the first time. I'd be interested in hearing about a real-life scenario. Has any AR member participated?

I like the 'outside the box' thinking! Obviously a lot of details need ironed out but it seems it cold work. I would certainly encourage a buyer to try and negotiate a better deal than what is being offered.

Great subject for conversation. Who the hell really knows. Sounds far fetched for me.

NEWS UPDATE: This Just In....

Dani just responded to my email with the following message, and I just spoke with him on the phone. He was very professional and extremely passionate about this idea and concept. This is becoming a pretty exciting story, I'm looking forward to watching it unfold and then sharing the "Breaking News" with all of you.

Date: 9/09/2011

Subject: RE: Groupon Real Estate Investment Opportunity

Brad,

Thank you for reaching out.

Let me explain it in a nutshell, we have incorporated two simple concepts into this deal:

First we went to the builder and asked for a discount for buying in bulk. Simple buying power, which he agreed if we bring buyers to buy 10 duplexes.

Second, since we establish long term relations with our buyers, we have incorporated a "rent safety net", this means that if you buy in this pool and want to join the safety net we will collect all the rents into a one pool and divide it proportionality to each owner. This means if you end up w/ a vacancy you will not "suffer" 100% loss of rent for the vacancy period. There is some complexity to this concept as down-payments, actual rents, and ongoing expenses are not equal - but we were able to create a plan that will provide you with your share of the collective rent.

Keep in mind:
A. You don't have to join the "rent pool"
B. The investor owns the property out-right.
C. The properties, area, and builder's quality all work out and make perfect investment sense. Our pre-negations and "pool" concepts are just built in on the top to make it a better investment.

Hope I was able to answers your questions and establish some more clarity/transparency to the idea.

I too get skeptical about ideas such as this one. Mostly because there are sleazy people out there. But I have been assisting investors to invest since 2004 and if there is one theme I can personally attest to is that all through the years I have worked and continued to explore ways to improve the program/s for the investors so they get a better deal.

Thanks,

Dani
650-440-5544

Groupon have some very good coupons another website that is use is retailmenot.

I can honestly say I have never heard of such a thing.  I of course have heard of Groupon, but never even put a thought to listing a property for sale there.

Brad, thank you for putting this post. 

I agree with many of the comments here.  

This deals requires experience & creativity to establish a better investment position for every investor.  

Years of experience have taught me that investors want to get better deals and when it comes to rentals the number one concern is vacancy. There are other concerns as well but vacancy has always topped the charts. 

I, and the teams I work with, always try to find ways to make such opportunities better and safer for investors. 

Dani 

www.simplydoit.net 

dani@simplydoit.net

650-440-5544

OH MY!  This seems crazy to me.  I am sure it wont be the last of crazy real estate transactions.

Interesting post on Groupon.

I use them for local coupons so this is interesting how to apply it to real estate.

This is a very interesting discussion. I had never thought of this concept, but on first blush it looks like a concept that might work.

Brad , have any of your listings sold?

These aren't my listings, they are properties being marketed and sold using the Groupon concept.

Interesting twist, investigating.