Timing to Close on a Property?

Question

Hello all,

I currently live in Atlanta, GA, looking to move to Birmingham, AL this summer when my lease is up and buy a duplex to live in half using an FHA loan for my first property. I've done the research and found out that for an FHA loan you have to take residence of the property within 60 days of closing. For my specific situation that means closing couldn't be any earlier than April 16th.

My question is, how long does the closing process take? I found a duplex I'm really interested in in Birmingham, but I feel like it might be too early to schedule a visit to check it out and potentially put an offer on it. Some sources I've found seem to think closing could take 30-60 days, especially using an FHA loan, and 60 days back from my earliest closing date is February 15th, so maybe it isn't too early to schedule a visit? I haven't yet applied to different mortgage companies to get pre-approved, because again I'm not sure if it's too early or not.

As you can probably tell I'm a little anxious to get started and taking action, but I don't want to jump the gun and screw up timing (mortgage pre-approval expires and I have to reapply, find a home run property but the seller wants to close sooner than April 16th so I lose it, etc). What do you think is the best timing for me to do of all of this, given my constraints?

Thanks in advance for your help!

Josh Hooper · Answer

@Katherine Nally Hey and congrats on taking your next steps. I'm actually an agent and investor in Atlanta. I have spent a lot of time and actually own most of my investment properties in Birmingham (I lived their for 8 years). I have bought all of them while living in Atlanta.

To specifically answer your questions...closing date is a just a term in a contract. You can certainly set your closing date out to be 60 days from now. We just did a deal with a 15 day close and another with a 72 day close all in the same week.

Do you have an agent in Birmingham? You could do a lot by having them give you virtual tours and even FaceTiming while they do walkthroughs. Or of course, you can just head over I20 and go see a bunch in a weekend. If I were you, I would be of the position that I need to be in a hurry to find a property with your timeline. Start putting in offers and get the right one under contract. If it takes you two weeks to find the property, then you set a 60 day close and voila.

Taking two weeks to find the property could happen, but it's definitely shorter than the norm. Jump in and take action and feel free to reach out to me for referrals, questions or to talk about the Birmingham market.

William Glass · Answer

@Katherine Nally

@Cassi Justiz is right. Get pre-approved now and start looking at properties. Most people don't typically get the first property they put an offer on and online pictures can be deceiving. Look at properties on the weekend. Get pre-approved so you know what you can afford and what numbers look like so you can assess if a property is a good deal.

Don't worry about telling your employer yet. You have many other hurdles to go through first. It is good you have started thinking of possibilities with them, but communicating with them and worrying about timelines for a non-existent deal is premature.

You are headed in the right direction though! My first property was an FHA duplex in Fort Myers. One step at a time and make sure you know your numbers. Good luck!

Cassi Justiz · Answer

I would start looking now and putting in offers. Go ahead and get pre-approved from the mortgage company so there aren't any surprises. They may have to do another credit pull later, but you definitely want to know what you can qualify for. A lot more people start looking for houses and trying to move in the Spring, so the market traditionally gets more competitive. If you find a smoking hot deal, literally the worst case scenario is that you have to pay to get out of your lease early and/or pay out the last few months of your lease while you don't live there.  That would be painful for those few months, but then you have a cash flowing duplex FOREVER!

If you tell your landlord that you are planning to move well in advance, they may even work with you on it. People generally prefer to have vacancies at the end of spring/beginning of summer rather than late summer or fall.

Account Closed · Answer

I'd seriously reconsider this. Buy the most units you can, especially with an FHA loan because it is a hell of an opportunity. Hire a manager for now if you need to.

Account Closed · Answer

and by the way, from the time I put in an offer to the time I closed was 60 or so days. I also bought sight unseen in a different state.

Account Closed · Answer

You're too focused on the small details. Go find a deal. With that said, why not a fourplex (as it is the biggest you can go with FHA)?

Katherine Nally · Answer

@Erik Matthew I’m not choosing a fourplex because I know that it doesn’t really matter what your first deal is, the first deal is about learning.

My plan is to find a duplex that is a good deal and learn with one tenant and 2 units to upkeep. I know myself and working full time, going to grad school, and managing 3 tenants/4 units all at the same time without any experience would be too overwhelming. I’ll start with a duplex, focus on learning everything I can, and branch out from there after a year or 2.

Theresa Harris · Answer

Others have given great advice.  The only thing I'd add is being pre-approved means when you find a great deal you can move quickly on it.

William Glass · Answer

@Katherine Nally so funny! I grew up in Birmingham. Good luck and I'm sure you'll figure it out.

Katherine Nally · Answer

@William Glass Thanks for the input! Since I am currently long distance looking at properties is a bit complicated, but you're right, I'll start looking when I can.

I grew up in Cape Coral, small world!

Timing to Close on a Property?

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