Pulling out, the rhythm method?

So we pulled out today.

[Welcome to our first blog]

Yup. Just went and pulled out well before the climax of the deal.

[Are Brandon and David monitoring these blogs? Do I need to attach a rating?]

No more foreplay, straight to the deal...

Jo (my wife), Monty (our hound) and I are really into Berwyn, IL, thanks to the miracle that is John Warren — realtor, investor, sweat equitor and guru (oh and pausing opera star).

We have three, three units that are about to be doing really well (the rain in the region has flooded the utility room basement in one today, par example, c’est la vie). And we were in for another. 

This other was lovely. I like purpose built 3-flats, not hacked together 3 flats (although we do have one of those, issues for sure). This one is on a wide lot and has a lot (pun intentioned) of cashflowtential. Okay, the floor in basement is all rucked up, burst pipes and other dampy stuff, but it has a nice attic that could be duplexed and the kitchens are lovely and there are two living spaces on each two bedroomed floor. It’s of an age but mainly in a charming way. It will rent like toilet paper at Woodstock, easy peasy, lemon squeezy.

We put in a cash offer above asking (I know, I know, but it was a bank owned foreclosure) and got accepted. We were back in the UK at the time for Easter when John (our realtor, keep up) texted us and I think my response was ‘great! Oh shit!’

Then it started to pan out. (Since this is still a live property and there are real people involved I’ll keep this vague). Warning signs started flashing dimly at first. There was a bit of pain around the signing of the contract, the other side was finicky and then unresponsive. We got back home and immediately did some more due diligence. We got a contractor to inspect the strange floor issues. We got them to price up the attic conversion. I got my main spark (trans: most trusted electrician) to give me a detailed breakdown. I ran the numbers again.

Our lawyers meanwhile were also having issues getting proper responses from the sellers and their bank (they that owned it). They finally signed the contract but didn’t move the closing date or reset the 5-day pull out period. They asked for more earnest money (just weird). 

And here’s the thing I still loved the property and it still kind of worked on the spreadsheet, if I half closed my eyes. My mortgage guy was already doing the work getting our DNA and great grandmother’s livestock records. 

BUT...

It just didn’t really feel right. 

It didn’t smell right.

And if I applied the worst case numbers into the spreadsheet, not the wish fulfilment ones: in other words the highest rehab cost, the median to low rents on rentometer, the .25 higher interest rates on the mortgage, the fact that we’d have to pick up most of the closing costs, it made no sense whatsoever. 

So when the general contractor confirmed what I suspected that the loft conversion that was going to make this a sweeeeet deal was going to be, with compliance, twice what I thought, I took that deep breath and decided that the strong play now was to withdraw before conception, or the five day period expired.

It feels bad. 

Of course it does. 

Your realtor, your lawyer, your mortgage guy and all the contractors who have helped so far for nothing to get you to this stage are all out of pocket in terms of their time, but if you are up front and honest and straight about it, they genuinely would rather you lived to fight another day than burn yourself on a bad deal.

So, the point of this piece is simply to help you have the courage to decide when to walk away and that no-one will care remotely as much as you think they might.

It makes it easier on a foreclosure when the bank involved is often states away and has no emotion at all attached to the deal. But in essence you are still being fair if you realize that it is not right for you in your situation at the time. 

Information is queen. 

You found out more. You decided it wasn’t a good thing. For you. Others will come along and make it work for them, but they are not you. So it’s not a deal lost, or a bridge burnt. It’s a bullet dogged and a new opportunity to come that will be better.

Have the courage to pull out.

No one who matters will care. In fact they might even respect you more for it.

Once you’ve had a shower.