Investor · Stuart, FL · Member since 2017 · 44 posts · 6 votes
Hello BP, new investor here attempting to buy my first investment property. I have recently looked at half of a duplex (vacant) to owner occupy with my agent and everything seems great except the seller will not allow me to see the other half unless I make an offer and we agree on a price. There is a tenant in the other side right now and she claims that she does not want to disturb the tenant and only wants serious buyers. Does this make sense to anyone because it seems absurd to me. I am not an investor living in another part of the county for example and everyone is well aware of this. I really like the property and the numbers work for me. Does anyone have advice? My gut tells me to move on but I really like the place.
Totally reasonable. I'd do the same thing. Except I might not even show you the vacant one.
Nothing wrong with him showing you the vacant one and then waiting until there's an actual contract in place or at least it appears that you guys are going to be able to come to an agreement on price shows you the other one and disturb the tenant.
Especially if the units have the same layout. What do you need to look at that can't be accomplished by pictures until you go under contract? The fact there is someone living in their **** at least a sure you that it's not a total massive down unit.
When I buy a place I don't even bother setting up an appointment to view until I have it under contract. I might drive-by and kind of walk the property but I don't even want to waste my own time viewing until I know I've come to an agreement on price and terms with the seller
You're over thinking this dude.
Make an OFFER based on the other unit being acceptable. If accepted you can view. If you don't like what you seen, bail on the deal.
It's not like if you make an offer and they accept and you view the unit and it's a shiit show you have to buy it.
I'm saying this as someone that's trying to help: you're not going to be able to buy in this market unless you add just a tiny bit of risk to your process (not that this deal even requires risk. Just an offer)
I've bought large buildings without seeing more than a few units. They're full. I'm not buying this place to live in personally. So I let the rent roll tell me what I'm buying and what someone is willing to pay based on what they're like
@Paul Tibok Your realtor should know Florida's real estate regulations. They should advise you to include an inspection contingency and possibly a financing contingency if you are financing. If the property is in bad shape, your lender will not let you finance it through them. Invariably, there are at least 10 ways out of a contract for a buyer and your Realtor should be able to point those outs for you.
If you don't have a Realtor, get one on your first deal until you are comfortable. A realtor is not needed if the property is priced properly and represented truthfully by a fully transparent seller. I have not come across such a scenario yet.
Thanks guys, this is a bit off topic but anyone still paying attention to this post knows the scenario already. My mortgage gal just informed me that I can go USDA. I am owner occupying one side so I have the option to go FHA, 5% Conventional, or USDA. Any opinions?
I was in the same situation awhile back. The seller only allowed me to view two of three units. I was able to see the third unit once we had agreed on a price and had a contract. It was a private seller, so I explained the situation to my attorney. This was my first investment property purchase, so I was naturally scared. The location and property appealed to me (sounds familiar...), which was also apart of what I shared with my attorney (you can never imagine what you stand to gain when you are open to someone that can truly help you). My wife & I decided to offer what we thought was fair, assuming we needed to fix the 3rd unit right after purchase. Attorney made sure our concerns were well taken care of in the contract (i.e. walk, if inspection falls significantly short). Turns out the third unit was in a bad shape (but still occupied) compared to the others. We decided to go ahead, knowing we offered what we thought was right. We still own the property three years later. Turns out it was a legit fear, but one that did not impact us in anyway. There will always be some risk you are undertaking.....just make sure it is something you can leave with. Good luck!!!
Paul Tibok Totally agree with Cory here. If you like the place, make the offer and put some language like price "subject to side B being in substantially the same condition as side A". Then do your inspections as always. If you get in there during inspection and it's trashed, you can get out of the contract or renegotiate it. Anything can be handled by contract and then use the "out" language that you require if something isn't up to par.
Your agent should have definitely explained all this to you and more. Sounds like you may be working with the wrong agent in my opinion. Like everyone else said, its pretty normal to not bug tenants until an offer is accepted. Also, should have some sort of due diligence period to get inspections and your interior visual inspection done as well. If the property is not to your liking it's common to back out and receive your EMD back within due diligence.
Your agent should have definitely explained all of this to you from day 1 if not before you even started.
If the property is THAT good of a deal, my advice would be to make an offer, obviously contingent on seeing the other unit. But before doing that, you have to ask yourself, "What's my plan for this other unit?" Meaning, are you wanting this unit vacant at closing or do you plan on keeping the same tenant? Also, make the assumption that the unit needs a major rehab and let that reflect in your offer. Then, once you submit your offer, DO NOT negotiate on your initial price before getting inside. Remember, make sure your offer is low enough to cover the worst case scenario in regards to rehab costs. Good luck to you!
This is a little annoying but absolutely fine. Just make sure that you have a contingency clause with your offer. Something along the lines of offer is contingent upon inspection of second unit to ensure it meets the buyers expectations. Or some verbiage similar. Then if you don't like it don't go through with contract. Make sure your deposit is in escrow so that it's not cashed.
Sounds fair to me. I got a duplex under contract without seeing the other side. He doesn't want to disturb the tenants. BUT it doesn't mean he is not hiding something! Best of luck!
Assume the worst on the side you don't get to see (basically say "I will make you an offer but I have to assume that it's going to cost me 60k to get the other side into shape")
Let the seller know that you'll have to assume a 60k rehab is needed on the other side and you'll need that plus 9 months of holding costs off the purchase price, or he can play ball and let you see both units.
Thanks guys, this is a bit off topic but anyone still paying attention to this post knows the scenario already. My mortgage gal just informed me that I can go USDA. I am owner occupying one side so I have the option to go FHA, 5% Conventional, or USDA. Any opinions?
Depends on your goals. All are reasonable options. Do you want to put as little down as possible and flip ASAP, or are you hoping to buy and hold and build equity, or something else? Everyone has a different endgame. Get with an agent that will sit down and work with you, explain all the ins and outs of the purchase, AND sit down with a lender who will explain the ins and outs of the mortgage options.
When you get the right team around you, this doesn't have to be difficult. It can take a bit to get everyone on the same page. Once you, your lender, and your Realtor are all speaking the same language, you'll work through deals efficiently and benefit everyone.
You can not see the other side yet - coz they have not had money to fix that up also. They need your money for that.
What is on the other side? Start with the cockroach infestation, then the Hell's Angel Tenants, and the BBQ pit in the lounge where they roast pig on Sundays, plus the months of piled up garbage shoveled in to one room to keep the place clean ... Got the picture?
This same thing happened to me a few weeks back. The tenant in one of the units was unaware of the showing and refused to let us enter. I had no issue with that. I did however have an issue with the exterminator waiting outside who approached as my realtor and I reached the door. Apparently, they didn't want him inside either. Red flag?
If you really like the place, do the dance and get under contract and if you do not like it then get our of the contract as part of the inspection.
He may be protecting his tenant. Running a lot of people though a tenant occupied property is tough. They have no interest in the transaction, unlike owner occupied homes for sale.
Thank you everyone for your feedback, very helpful it took a big weight off my shoulders. Can anyone reply as to what exactly the contingencies or clause should state to me before I submit this offer? This is my first property so I just want to triple check before I sign anything! Thank you in advance
You don't really need specific contingencies. Your offer should include an option period. That's in nearly every state's standard contract. During the option period, you can terminate for any reason or no reason at all.
Durinng the option period, you can do your inspections, and you can then either do nothing, in which case the contract moves forward unchanged; or you can revise your offer/request repairs/whatever, in which case the seller can agree or decline (in which case you probably terminate your offer); or you can simply terminate your offer if you've decided it's not a fit for you.
@Paul Tibok I do not see anything shady with this at all. Think if you were the seller, would you want to disturb a tenant every time someone had passing interest?
I don't think is a deal breaker. I bought my duplex kind of the same situation and I'm happy with it. Just make the offer if the numbers work for you. eventually it has to pass inspection on both side, and if not, so, no deal. You should we aware of who your potential tenant will be though, you should meet him/her/them, and see who they are. What I did, in my case, I went by one day and chat with the tenant, and actually got more info on the property that the seller did not mention, which help me to get the price down. So, I hope this is helpful and no too late.
Well if they will only let you see half the unit can you pay half the price.!;) To me it's kind of like going to see a 2 story house but your not allowed to go upstairs cuz grandma is taking a nap. (YIKES) I agree with the other post in that you should make an offer based on your liking the unit you did see and factor in the worst case scenario of the other unit and when you put in your offer tell that to whoever. I don't think someone is breaking down the door to buy a place your not allowed to see the whole enchilada. Also the FHA loan would be a good thing if your just starting out, this way you've got a home and someone is helping off set cost and when your ready to move on then your ready to move on to your next purchase. I believe that small multi units are a great way to get your feet wet in re investing and a great way to build your portfolio and a duplex isn't biting off more than one could chew especially if your living on site. I wish you the best of luck always
Totally right Melissa, that's how I got myself started and got my juices going in REI. House Hacking as Ben would say ;)) is the best way to get yourself started. Something many people don't know too, if you are a fellow Veteran, you can buy your first house with the VA loan, zero or almost zero out of your pocket. You could get, up to a 4 units property, a 4plex, live in one, and rent the rest, and live there for free, until you are ready to move on to your next property. That's how I'm doing it, and it worked fine for me. I hope that help.