How to manage off market purchases

[Wayne Yahnke]

Ive got a hot lead on a property in my market. This will be the first time I've purchased off market if it goes through. Does anyone have a system in place that they use to check things out when making an off market purchase? 

Do you have contracts you sign once you agree on a price?

Purchase and sale agreements?

Do you bother with a home inspection?

This is a duplex and it is currently rented. The rents work for my numbers.

Do you/can you have the tenants move out? 

I have so many questions.

[Neil Schoepp]

@Wayne Yahnke

Congrats. Hard work does eventually pay off.

Buying off Market or off the MLS looks very similar now that you identified the deal. You need to negotiate the price then sign the P&S agreement. The P&S is state specific and should be written up by your attorney. Make sure he is a REAL ESTATE attorney. This is a good time to find one that will also be able to handle evictions in the future. Pay per eviction not per hour.

Home inspections are always a good idea. It's another set of eyes on the deal. In addition, I always bring in a septic specialist they will look at the tank, field and lines. A septic system can run you anywhere from 4K to 40K+ not a surprise I am willing to risk.

As far as tenants go. If there are leases in place you must adhere to that lease. If there are no leases in place then they are month to month and you can give them notice that you will not be renewing their lease. Of course there is a legal way of doing this and it varies by jurisdiction but in general you give written notice 30 days in advance.  You do not have to give a reason. But if they are clean and pay on time why get rid of them. Screen them like anyone else and have them sign your lease.

Make sure you find out about security deposits. Did the clients pay the owner a deposit and if so when and how much. Confirm this with the clients so there are no surprises when they move.

One more thing i will throw out there is that when you are underwriting the numbers make sure to account for capex and property management. Yes even if you will be self-managing. One day you may choose not to or be unable to self manage.