My Crazy Second Deal is Pending

[Mark Smith]

I never noticed this Investor Deal Diaries section! Time to make use of it!

I currently own one duplex, and my fiance and I have been looking for another multifamily to purchase and move into together with her 5 year old son.  Finally!  On October 17th, THE house hit the market, and we were ready to jump.  We got in to see the house that afternoon, so quickly that the listing agent didn't even have keys to the place.  The sellers had been "leaving the door open" for contractors, so we could basically walk right in.

We really liked the house.  It is 4 bedrooms each unit, has a nice back yard, and a lot of off street parking.  The location is great, and it is freshly renovated.  PUMPED!  The one thing we are nervous about is that it is a flip.  Also, when we looked in the basement there was a little bit of water (the sump pump wasn't running as the utilities were off), and there was a considerable amount of rust on the bottom portion of the boiler and two water heaters; all of which didn't look old at all otherwise.

Soon after that we put in an offer.  We found out from the listing agent that they were supposed to have 4 showings that day (a Friday), and at least 6 that weekend.  I was nervous we'd be in a multiple offer situation.  We put in our offer on a Friday and gave them two days to make a decision, so I thought for sure they would take the weekend to see if they received any other offers.  To my surprise, they counter offered that afternoon at only $4,000 more than we offered.  My agent responded that if we were to accept their counter offer they would cancel all other showings, to which they agreed, and we were under contract!

We had our inspection on 10/27, and it was bad...really bad.  First we found out there was mold in the attic and basement, approximately $4,500 to clean up.  Then the inspector told us that there had been about 14" of standing water in the basement at one time...WHAT?!  Sure enough, there was a distinct water line on all of the walls of the basement and everything else down there, which we now know is why the boiler and water heaters had rust on them.  They recommended we have the basement sealed up and have work done to keep it dry to the tune of $15k-$20k.  AND, they recommended the furnace and water heaters be replaced; approximately $6k-$7k.  We were really upset to have to give the seller this inspection report because we knew the deal would fall apart.  Oh, the icing on the cake: there was a fire in the basement!  The subfloor was all black/charred.  The inspector said it was all cosmetic, nothing structural, and they had made the proper repairs.  But I just had to laugh since it was just piling up.

The following Tuesday my agent tells me he spoke with the listing agent.  The sellers agreed to make repairs!  We were floored, and again, really pumped.

Today (11/1), I get an e-mail from the sellers.  This is strange to begin with since all communication is typically through the agents or attorneys.  He wants me to give him a call so he can talk to me about the work he's done, so I call him.  He lets me know that he put in an additional sump pump on the other end of the basement, replaced the gas valves in the boiler and water heaters, is having the mold taken care of, and has fixed a few other odds and ends.  So at this point my only major concern is the boiler and water heaters.  I was hoping for replacement, not repairs.  So tomorrow I'm headed to the property to look at the boiler to see if the water was high enough to damage the electronics or any other parts of the unit, and I'm planning to have a local heating company come out to inspect the unit.

So this deal has already been crazy and stressful, but that's real estate.  Who knows what tomorrow will bring!