I've been browsing Bigger Pockets for about a year now absorbing as much knowledge as I can gather. I've learned to analyze deals, the investing process, and I'm just jumping in! I've just closed on my first deal, a 1,650 sq/ft Duplex in Arlington TX. In total, this deal took almost 4 1/2 months from offer acceptance to close and let me tell you, this was doozy.
It started back in early December when I toured this duplex. It looked exactly like what I've read an investor dreams of. A messy 1980's non-updated home with a perfect foundation and roof, just waiting to be prettied up! I also noticed that the deal was listed at a crazy low price of 157,000. For this area that is unheard of. Knowing that this deal would get pounced on by investors from all over, I made the decision to bid well over the asking price (but still within profitable range thank to analysis from the Bigger Pockets calculators) at 170,000. A few days later i get a call from my agent and guess what! We didn't win...
So I kept searching for the perfect house hack to start my investing career. About 2 weeks go by and I get a call from my agent. "Hi Alex, do you remember the Arlington duplex that we tried for? Well apparently their buyer backed out without doing any inspections or providing any reasoning. They want to know if you're still interested in the property?" FINALLY I was going to go under contact for my first investment property! I told her absolutely and immediately went home to start my due diligence.
I ordered an inspection and set a date. Everything went even better than expected. The inspector said the foundation was as flat as you could ask for, the only problem with the roof was a single missing shingle, and that in general this place was in extraordinary shape for it's age. With this great bit of news I got in contact with my lender and began to set up an appraisal of the property.
This is when things got tricky. A day or two later we get a call from the title company. "Hi Alex, we just wanted to let you know that while doing the title search on this property, we did find that there is a lien from the IRS in the amount of 1.2 million dollars." ONE POINT TWO MILLION! "We are going to get in contact with the IRS to resolve this lien and will let you know as soon as we have an update."
I put a halt to the appraisal as I didn't want to spend money on appraising a home that wouldn't even be released by the IRS. I was essentially in a waiting game to hear back in hopes that this deal wasn't sunk. That is when January rolled around... If we all remember the wonderful times that our government was having back in January, you remember that the IRS (and the rest of the government) decided to shut down for the longest government shutdown in our nation's history. FANTASTIC
Fast forward almost a month and the government still hasn't opened back up. We agree to sign an extension for another month to wait on the government to open back up and to hear back from the IRS. About a week after that, the government finally opened back up and we had hope again. The problem now is that our request for the lien to be released is in a big stack of back logged work that the IRS has to do now after their month long hiatus. So we wait. And 3 weeks later, we decide to sign another extension for yet another month. So now our extension is going into the end of March.
About a week after that we get an email from the IRS saying that they are releasing the lien and sending the paperwork to the county. Hooray! Now we just needed to wait a week or two and we're good to go! I went ahead spent the money to have an appraisal done since we would be good to close. The house appraised for 10k more than what I was under contact for! That was great news!
Fast forward a week and a half when we check in with the county for the update on the title. Not only is the 1.2 million dollar lien still applied against the house, NOW THERE IS ANOTHER LIEN FOR 46,000 AS WELL. When we ask the title company what happened and why they told me I was good to close, their response was "Well that is what our contact from the IRS told us." So we objected to the Title commitment to try to cover my earnest money and give us a "safety net" for another 15 days.
So now I am in this deal for a little over a grand between the inspections and appraisals. I know that this house is worth more than I'm paying for it. And I'm sitting here being stuck with yet another lien against the property.
The seller is insisting that there is no lien and is getting aggravated that we still haven't closed. He insists that he has cleared the debt to the IRS. We arranged for an extension, but he did not want to do a full month. We extended to the 15th of April and the seller made sure to add a note on the extension "If you do not close on or before this date, your earnest money will be forfeited to the seller." (Pretty petty if you ask me since this is how a contact works anyways.)
We waited for about 5 days and then we got a message from the title company that the county has released the 1.2 million dollar lien! but the $46,000 lien was still applied... They asked the IRS contact about this and he replied saying that he has send in the release of this lien to be recorded by the county. We call the county and they said that the IRS mails all of these document and that it could take 7-14 days for this to be recorded. Definitely too long for us to close in 10 days on the 15th.
We get back with the seller and he reluctantly agrees to sign yet another extension to the 30th of April. Again adding his clause that i would forfeit the earnest money if we did not close.
So a week goes by and the title company still has no updates from the county. I decide to call the county records clerk myself to see if I can get any information. A lady answers and says that usually they can't look up records for people, but she wan't busy so she would help. She did manage to find the release of the 1.2 million lien but saw no release of the other lien for 46k.
At the start of the next week I call the county clerk again and a different lady answers who basically says "We don't look things up for people here. You can go online and look." So I keep trying to look online for another week with no avail. On the 20th, I get an email from my lender asking for an update and saying that this is essentially the last day that we can start this process and still close on the 30th. (10 days because my loan term had expired and we would have to rework my loan).
At this point I'm panicking thinking I'm about to lose this deal after almost 4 months on the hook. I decide to try calling the county one last time. I got the same lady that helped me the first time and she actually remembered my previous call. She looked into the records and said "Yes I see a release of the 46k lean right here. It looks like it recorded a week and a half ago." I said "Really? I've been checking the records and haven't seen anything!" She says "Well it should be there. I can give you the file number if you'd like." I then asked "If i search for this file number, will I be able to find it online?" She said yes so I searched it and found no results... I asked her again to confirm that this was indeed there and she replies with "Weird, maybe it's not updating to the website but we do have the file here. If you want to come down to the office and request it we can provide this for you" That was all I needed to hear!
I hung up and immediately called the title company. I asked "Have you had any update on the liens against this property" and the title clerk replies "We have been checking online everyday and there have been no updates" to which I shouted back enthusiastically "They do have it! I just talked to them and they have it in the office. Here is the document number. Can you get this done?" She said she would call the county immediately.
I then call my lender and let her know what is going on, but her office was closed by this time so she didn't answer. I left a message and sent an email. The next morning I give the lender a call again and she answers I told her what happened and she told me that because of the time that had passed, they would not be able to close on the 30th. The best that they could do was the 2nd. So I get with my agent to draft up one last extension to send over.
I didn't hear much for the rest of the day, then late that afternoon I got a call from my lender that they are going to work hard and think that they can get me to close on the 30th so I wouldn't need another extension. Finally something worked out in my favor!
The lenders ended up staying up until 8pm the night before my close trying to finish my file and get me my final closing disclosure. The next day I went in and signed all the papers. I AM FINALLY A HOME OWNER!!!!!
From an IRS shutdown to multiple liens to 4 different extensions. This deal was a wild ride to say the lease. I can't count how many times I thought this deal was about to fall apart, but I persisted through and am now the proud owner of my first duplex! Now to remove the inherited tenants, get in there, and start my renovations!
