Delayed Closing - Good way to start renovating before closing?

Question

I know the answer as I am typing the question, but thought it might be worth tossing out to more seasoned flippers then me....Trying to get a couple of my guys into our next flip prior to closing on it. The target home is not being lived in; trying to figure out a way to get the seller (FSBO) to allow us access to the house to begin work before we actually close on it. Combination of factors led to this, we finished a flip early, had a bit of delay in my private lenders access to funds, appraisal delay, yada yada yada. We have a pre-approval, and I am not concerned about getting the deal financed. I hate to use cash, but if push comes to shove we could just buy it.

Anyone ever come up with an elegant or easy way to do this?

Aaron McGinnis · Answer

Don't do that. Ever. If you don't close for any reason, you are screwed.

Daren H. · Answer

Would you buy and put your big shiny rims on the Cadillac Escalade still sitting on the dealership before you buy it? Same rules apply here in my opinion :)

Neil Metzger · Answer

@Bill Gulley, i like the idea of using our GC license and setting up a quick contract. That is simple and pretty easy to set up with a collaborative seller, which we have here

@Jessica Zolotorofe, sounds like a good approach if we were talking about a longer delay, but good to know about that as an option, I never would have thought to explore that possibility.

The short answer on not closing now is that I have a private lender partnering on this deal (mostly the rehab budget) that is assisting someone on their end with a traditional purchase of the property (Traditional Lender). If this was purely my deal, I would have already done it. I am trying to get to the point where I am closing on & selling 1 house per month; the only way I can reach that goal is to work with a group of private money lenders. I hate going back to my partner on this and telling her that we need to restructure our deal. So long story short, better to eat the labor costs I have for a couple weeks and chalk it up to the cost of trying to aggressively scale the business.

Bill Gulley · Answer

The place could also burn down, you could be blamed, stay out of the house until you own it.

Otherwise, use a general contractor's contract to do work for the owner, if something does go wrong you'll have a lien. But, in this case, just stay out until you own it. :)

Paul Ewing · Answer

NOOOOOO!!!!!!

Rick Pozos · Answer

YOu have gotten good advice above. With that in mind, if I am on a short time line or like you that has guys ready to go, do some outside work. Have all your trees trimmed, grass layed, bushes trimmed, caulk the outside of the house if it needs to get painted, maybe even replace rotten wood on the outside(facia boards, soffit), place gutters, etc. I would not spend much in materials just incase something happens that you dont close. If you end up not buying the house, the guys are going to get paid either way, right? You might as well put them to work.

I personally would not do anything inside unless it is to get the crap out of the house that the sellers left behind. All you have to do is ask the seller. If they are really detached from the house anyway, they will not care.

John Weidner · Answer

if your ready to GO - Close early then. What's the hold up

Otherwise I don't know any attorney on sellers side who would allow what your requesting

David D Painter · Answer

I usually get access to my houses early simply by asking.  I have never had a seller refuse but on HUDs I don't even ask.  Normally I use that access to measure and order supplies but don't have anything done or delivered until after closing.  In 2012 I did actually do an entire interior repaint prior to closing because of a time crunch as I was leaving in a matter of days for 5 months.  I am a painter so I could have been out $200 in supplies and 3 days labor. No big deal. My market is smaller and people often leave keys in their cars and doors unlocked even when they are gone. Good luck!

Delayed Closing - Good way to start renovating before closing?

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