Details and Questions on my 2nd REI Purchase

[Andrew Merritt]

Hey All, I'm about a week and a half out on the closing of my 2nd REI purchase in Summerville, SC. Here are the details of the deal:

First, I'd like to thank @Jeffrey Stasz for his help with this. We were skeptical of the low asking price and thought there may be something major wrong with the house. Jeffrey came out and gave a thorough look at the foundation, attic, and entire house and put our minds at ease. Thanks a lot Jeffrey.

Property Details: 2629 sqft, 4 bed, 2.5 bath on about .45 acres built in 1985 (sun room addition not counted as it was done w/o a license.  This would bring sqft up over 3k as it is heated/cooled).  We are planning on moving into this house and renting out our current house.

Purchase Price: $220k cash, buyer pays closing costs, seller gave no disclosures and will make no repairs.  Owner is very sick senior and his kids are selling the property for him.  I offered cash to beat out financed offers as I thought they would want a quick close.  Our initial offer was $200k, but final and best went up to $220k as there a $225 financed offer and another cash offer we were competing against.  The house will appraise for $275k-$300k as is, so I feel like we got a good deal on it even if we went $20k over our initial offer.  We will be doing delayed financing on this property as $220k left us with not much money.  We will finance 70-80% to allow for updates/repairs and other investing.  

What it needs: The most pressing need is a new roof.  The house was built in '85 and it appears to be the original roof.  My termite guy went out to do the CL100 yesterday and found minor termite damage so that will need to get addressed.  He said the owners obviously tried to hide the fact that there were termites (more on that below).  We will also need to put in a fence for our dogs.  Other than that, it's pretty much move in ready.  Kitchen needs to be redone with new appliances and probably a new layout, carpets need to be replaced, walls need to be stripped of wall paper and painted.  I'm planning on learning how to do as much of this as I can to save costs and so I can learn.  Should be a fun project.  Our inspector will be there today and we will go through the whole house to see if there are any other major issues.  Our contract has a due diligence clause in it, so we can still back out if anything huge comes up.

Current Home Info: 1970 sqft, 15 year mortgage (about 13.5 years left) at 3.375%, monthly payment of $1,241 (will go up a couple hundred due to SC taxes raising for non-primary residencies).  I'm expecting to get about $1,800 per month in rent.

Questions: 

Is there any way we could get the sellers to pay for the termite bonding/treatment, especially considering that they tried to hide them?  There is not a whole lot of damage, just about 2' in one corner of the garage.  The owner (or his kids) brushed off the termite tunnels and sprayed w/ a home termite spray, but the house was never fully treated.  It will cost $1,600 to get treated and I'd like for the sellers to cover this if possible.

I'm considering installing solar panels, but not sure if it would work well with this property due to a large number of trees.  Does anyone have any experience getting the cost of a new roof rolled in w/ the installation of solar panels?  I've talked to a couple of solar panel companies in the past about putting them on our current residence, and they said we could.  With the US and SC tax breaks adding up to 55%, that would save a whole lot on the roof.  I'm not sure if it's actually allowed to work that way though.  Also, does anyone have a recommendation for a solar panel installation company in Summerville?  

With regards to our current house that we're going to rent out, when can I start deducting expenses for it in order to get it ready for renting.  For example, my termite guy just came by yesterday to do his annual checkup and I paid for that.  Will I get to deduct that even though it's not rented yet?  We're probably going to be bringing some appliances over to the new house.  Can I buy replacements for the rental now (assuming I find anything on a good sale around the holidays) or do I have to wait until we move out or even list the rental?  We'll also need to get the carpets replaced upstairs, when would that have to be done in order to get that counted as a rental expense.

Thanks for all of your help.  I'll answer questions and update w/ the inspector report as necessary.