I had an interesting call from my farm tenant a couple weeks ago who said that there was a note in the her mailbox which she assumed was for me. It read “I want to buy your house, please call Ms. Thomas”… Me being the ever inquisitive investor, I promptly called Ms. Thomas. Turns out she was in the bidding process when I originally bought the farm, but I had my bid in first. She wanted the house in an effort to move closer to town, problem was I wasn’t necessarily selling! She told me that she could pay cash, she had it in a savings account. We got to talking in greater detail and she told me that she was living in a 3 bedroom 2 bath house in the country. I asked what she planned to do with that? She said..”eventually sell it, I guess”? I told her I would give it some thought and get back to her.
I thought about the opportunity for a few days and a lightbulb went off in my head. What if I traded her, my house and 2 acres close to town for her house and 20 acres outside of town. Her house is in a less desirable location so it seemed like a relatively even deal. She was going to have to sell it anyway, and where it was located, it may have taken months to unload. So, cautiously I threw the offer on the table. Unbelievably, she was all for it! She told me that her house and 20 acres is way too much for a 70 year old women to maintain on her own. She reiterated that she wanted to be close to town and closer to her sister. So, the ball was in my court. Keep in mind, I hadn’t even seen the place yet.
I made the 25 mile drive to see her house and was pleasantly surprised. The structure itself is in great shape, but the land would be a huge on-going project. I like projects, just not sure if I have the skill to be able to turn this into something of greater value. It has a pond and is heavily wooded, but the trees are very immature and have years before they could be harvested. Mature pine trees can have significant value for their pulp or to make 2 X4’s out of. This property had young pines, along with a lot of cedars, maples and cherry trees, which had little value. So, the deal was left in my hands.
I called the bank where I have my farm loan, and spoke to my loan officer/friend. It’s always good to have a friend in the banking industry, BTW. He provided me with the banks blessing that this could work out if I chose to proceed with the deal. As a business associate and more importantly a friend, he gave me a bit of advice. He said this may look fair on paper, and maybe it really is; but be aware of someone on her side not thinking the deal was equal. That last thing I want to be seen as, is someone who took advantage of a little ole lady. Up until that point I was dreaming of what I could do with the land, but then, like a slap in the face, reality set in. I can’t do it, even if it is a totally fair deal, which I thought it was BTW. My reputation and integrity were more important, the sad thing is I believe in my heart of hearts that I would be helping her out. I know she couldn’t sell her house in a timely period and get what she needed. Plus the fact that she wouldn’t have had to use her capital, which she might need later in life.
So the decision was made, I had to let the deal go. I hate it for the both of us, but I couldn’t let the perceived un-balance of the deal to be fodder for my reputation and conscience. To this day, she is still contacting me to buy my place, even if she has to pay cash. At this point I have decided to keep the house, I love it and think it has a great future value.
Do you think I made the right decision?