HELP! Need Advice on First Deal

[Jal Singh]

Hello everyone, I’m looking for some advice here. I’m working on my first deal, which will be an SFR income property. Everything was going along smoothly, until just before we were scheduled to close I was told that it would be delayed a couple of weeks for the seller to obtain the Foreclosure Due Process Certificate which was required by the title company. Not a big deal. But now I’m told there is another delay of 45 days to clear the title and obtain the title insurance (actually 45 days was the original number, the listing agent is working with a different title company that can do it in 21 days). This property was picked up by the seller at a tax auction in September 2013. When a property is purchased this way, the previous mortgage and any tax liens should be wiped clean, but I still have a bad feeling about this. Again, I’m a newbie and this is my first deal, so I think the bad feeling I have is just fear, which is why I’m looking for some BP community opinions and guidance!

Here are the numbers for the property, located in metro Detroit area (Ferndale):

* 3 bedroom/1 bath
* Rent: $800

* Insurance: $29
* Taxes: $104
* Vacancy (10%): $80
* Reserves (25%): $200
* Commercial Loan Payment: $160

* Cash Flow: $227

* Out of pocket expenses: Down payment ($8,400), Plumbing/Misc ($1,500)

The numbers are good, but are the numbers “great”? Is it worth the risk here? I’m not sure what other problems could arise from this. I also have to consider the extra time it takes to close, since I’m losing on opportunity cost. I have already invested time and a little money (inspection costs) on this property, but I realize things happen and I'm not necessarily going to hold on just because of that.

The options I’m looking at are: 1) Ask for concessions due to the delay, 2) Wait and take the risk, 3) Walk away and look for another deal

What do you guys think? Thanks in advance!