How I purchase my First Apartment complex with no money down Part3

 Happy Thursday BP.

I am back at it with part 3 of How I purchased my First Multi Family property with no money down. 

After putting down the 60K non refundable deposit. We are finally in our Due Diligence period. I am working very hard to raise capital and get the property inspected. At this time we selected a property management company to mange the property. We walked each unit and all the buildings. 

After we had each unit inspected we just found that the previous property management company did not do a great job with maintaining of the property. Other than that everything else looked very good. 

A couple days later I was on a board with an potential investor. It was the holiday. I received a call from the broker and he said the property had a grease fire. I said alright, when can I take a look at the damage. We schedule a time a couple days later. 

My thought process was once the broker told me about the grease fire was wonderful. I was happy because I knew the insurance company would kick in and we would be able to get the unit renovated.

Once I got to the property the owner and broker was there. I walked in side and everything was black. The fire only affected the kitchen and no one was hurt thank goodness. The tenant had rental insurance which was wonderful! I had to make sure the owner would sign an addendum to having all rights/ decision left to us. Which they did a couple days later. As we all know insurance companies are so exciting to work with during this type of process. It took us 4 weeks to negotiate with the insurance company. We finally got them to approve the price to rehab the unit. Meanwhile the owner thought it would be nice to pay a company with out our approval 15k+ to clean the unit out. The united needed to be clean because the city already sent us letters, and we have a court date with the city to ensure this unit is rentable. We had to negotiate with the seller because of their actions they took with not notifying us they they paid a company to clean the unit. 

When you put hard money down for EMD. Be careful, this will limit your chances of negotiating with the seller. Everything went very smoothly unit we had to get the roofs looked addressed. The roofs were old, older than we thought. The seller stated to us the roofs were 2012 which I am not a roofing inspector but could tell it was a lot older than 2012.

We had our roofer go and take a look at the roofs. After a couple of hours the roofer noticed there was hail damage and will get me a report. 
While I am waiting for the report. It is always good to make sure you have a wonderful sponsor when starting out. The team I partnered with is wonderful. Brandon, a member of the team has great knowledge in the construction/ insurance side of real estate and pulled up the hail damage report on the property. We confirmed there was 2 hail storms during the previous ownership of the property. The owners did nothing about it. This is what separates an operator from another operator. If you're thinking about passively investing its important to interview the team. 

We get the report and submitted it to the current owners. At first they did not want to submit a claim because they wanted their insurance record to be clean. After multiple emails and phone calls we got them to submit a claim. After a couple weeks we kept following up to find out when the adjuster will be going to the property to check on the roofs. We get an email from the adjuster and seller saying there is no hail damage. We then respond back asking for proof. The email they sent had no proof at all of no hail damage. They could not answer our question. We made the adjuster go back out with our roofer to check the roofs out. Come to find out the roofer did not go on the roofs the first time. They apologized to us and said there is hail damage. The next day we got that email and was super excited for our investors. We got new roofs on the buildings. 

Meanwhile all this was taking place. I was able to get the roofer who was an accredited person to invest in the deal. I was very excited. Stay with me as next Thursday I will finished this all the way to closing. 

Enjoy a wonderful week BP.