All Forum Posts by: Alexander Wardell

@Bryan O. 

Yes we closed. My attorney withheld the $2,600 from the seller at closing until either side can prove he collected deposit/last months rent in the amount of one months rent for each unit or not. Honestly I was not willing to pass up this deal on the grounds of the seller/listing agent being untruthful because anything they could have hid from us was researched and uncovered. I am not trying to deal with the conflict of each tenant moving out in the future and not paying last months because they were under the impression they had already paid, or wanting their deposit back. 

The purchase price was our absolute max price and although $2,600 is not a lot in the big picture, I would have had serious doubts if the purchase price was increased by the same amount. All the units are TAW on a month to month agreement, which I will be duplicating with my own agreement. As for the rents, I am increasing two of the units ($50 a month for one unit, and $100 a month for the other) to make all three units the same so the $50 lower rent is not a game changer but it does add to the dishonesty of the seller. 

We closed on a three family on the 4th and everything we received from the seller had stated he collected last month's rent from each unit, so we show up to the closing with the understanding that $2,600 would be deducted from the purchase price. Once the seller views the HUD he declares that he never collected last months rent and he only had the tenants pay first months rent and move in.

My closing attorney challenges him saying the info we received from his realtor had stated each unit paid last months rent upon moving in. This disclosure was not signed by the seller and the listing agent took responsibility for the “error”. RED FLAG went up and after talking with our attorney we decided to withhold $2,600 from the seller until we can get to the bottom of the problem.

Rewind two week I had requested the tenants to complete estoppel agreements, but the listing agent said none of the tenants spoke English and the seller lives out of state, so this would be impossible. I translated the document for him and he then said they all have trust issues. I see a trend. Since the closing I have had conversations with all three unit, in English, and they all completed the original estoppel agreement and stated they paid a double payment upon moving in, and the amount thy said to have paid matched the numbers on the “mistake” on the document provided by the listing agent. My attorney is working on the issue and I should hear back today about what course of action we will take moving froward.

I know tenants can lie to get the upper hand, but all three units said the something and the numbers all match. The previous owners TAW agreement with the units are awful (missing dates, unreadable etc) and they have all paid cash in the past so the paper trail is limited to hand written receipts over the past 3-5 years.

What does everyone else think? Solving this problem doesn’t not put more money in my pocket but it can take money out of my pocket.

Oh and the one unit was paying $50 dollars less than was disclosed (verified with receipts from previous owner to tenant) so honesty is not prevalent with the seller agent combo. 

@Erik Pfundstein Thanks! Its located in New Bedford.

@Johnny Pineyro

Thanks! 

Based on the current rents and expenses, which I expect will change after some modification, the property will cash flow about $525 a month, with a NOI of $21,560, and a cash on cash of 10.8%. Since we paid cash for the property the numbers by the time we refinance will more than likely change but this my most conservative calculation based on the time frame and amount we expect to refinance.

Until that time comes we will cash flow $1,620 a month after all operating expenses and interest payments on our private loan are paid. We will use this income over the next 3 or so months without a mortgage to pay for the repairs that need to be made. 

@William Joseph

This is very interesting scenario! If I were in your shoes I would attempt to contact the seller and at the same time contact the local law enforcement agency. Obviously you are not the legal owner of these firearms and I would wash my hands with them completely. If the police come and take control of both the ammo and firearms you can always contact the seller, or someone in charge of their estate since they are in assisted living and notify them of where the firearms are now located. 

Good Luck! 

@Corben Briggs

Good luck! Hopefully you are able to get one under your belt soon. 

As of today, I officially own my first investment property! Back in July my good friend of mine had turned me on to BiggerPockets, and I have been hooked ever since. I immediately began listening to ALL the podcasts, watching the webinars, reading the books, and all the other things newbie investors do when they start out. I did the typical path of showing interest in wholesaling and all the awesome low money techniques, but I quickly realized I needed to take another route. After months of obsessing over anything I could get my hands on regarding real estate investing I decided to make the plunge!

Obviously its not that simple, and anyone who has purchased a property knows the get a loan, find a house, buy a house, manage the tenants is much more complicated than you can imagine. I was fortunate enough to have a good friend of mine show just as much interest in real estate investing so we formed an LLC and went to work. We found an amazing realtor (through BP) and she gave us referrals for just about every person we needed to make this happen. We were able to get a private loan for the property through family and after MANY awful showings, really heroin den and all, we found a three family in a great area, for the right price, and in great condition.

We put an offer in based on comps, and repairs needed, which was about 30k under the original asking price. I had been watching the property drop in price over a month so now it was only 16k over our offer. They countered with the listing price, really did not move a penny, so we again countered with our original offer thinking this is not going to work and we had already moved on in our minds. They decided to move on the price and we came to an agreement at 1k below our absolute highest allowable offer which was a win in our book. We did the inspection, and all the other fun stuff that goes along with the due diligence period. Everything went smooth and we were able to close 12 days sooner than the original closing date which was great! There were some last-minute issues with the title but our RE attorney was great and resolved the issue in time for the early closing.

Yesterday on the 3rd, I went to sign the paperwork with the property insurance agency at which time I was told they put the wrong address on the quote and after making the correction the premium went from $2,600 to $3,900 annually. This obviously did not go over well with me, and since it was now 18 hours before the closing, I had no insurance lined up. I called my realtor and like everything else she knew a guy who can make it happen, and he did! He showed up to the closing and we signed the documents with 10 mins to spare! There is always a last-minute scramble, but you will make it happen if you really want it. We now have a great cash flowing 3 family that will jump start our business and we have BiggerPockets to thank for it.

For those out there who are feeling overwhelmed or think this can never happen for them, you are wrong! It can happen, but you need to make it happen, no one is going to do it for you!

Thanks for reading this far into my little story and I wish everyone a successful year! 

As of today, I officially own my first investment property! Back in July my good friend of mine had turned me on to BiggerPockets, and I have been hooked ever since. I immediately began listening to ALL the podcasts, watching the webinars, reading the books, and all the other things newbie investors do when they start out. I did the typical path of showing interest in wholesaling and all the awesome low money techniques, but I quickly realized I needed to take another route. After months of obsessing over anything I could get my hands on regarding real estate investing I decided to make the plunge!

Obviously its not that simple, and anyone who has purchased a property knows the get a loan, find a house, buy a house, manage the tenants is much more complicated than you can imagine. I was fortunate enough to have a good friend of mine show just as much interest in real estate investing so we formed an LLC and went to work. We found an amazing realtor (through BP) and she gave us referrals for just about every person we needed to make this happen. We were able to get a private loan for the property through family and after MANY awful showings, really heroin den and all, we found a three family in a great area, for the right price, and in great condition.

We put an offer in based on comps, and repairs needed, which was about 30k under the original asking price. I had been watching the property drop in price over a month so now it was only 16k over our offer. They countered with the listing price, really did not move a penny, so we again countered with our original offer thinking this is not going to work and we had already moved on in our minds. They decided to move on the price and we came to an agreement at 1k below our absolute highest allowable offer which was a win in our book. We did the inspection, and all the other fun stuff that goes along with the due diligence period. Everything went smooth and we were able to close 12 days sooner than the original closing date which was great! There were some last-minute issues with the title but our RE attorney was great and resolved the issue in time for the early closing.

Yesterday on the 3rd, I went to sign the paperwork with the property insurance agency at which time I was told they put the wrong address on the quote and after making the correction the premium went from $2,600 to $3,900 annually. This obviously did not go over well with me, and since it was now 18 hours before the closing, I had no insurance lined up. I called my realtor and like everything else she knew a guy who can make it happen, and he did! He showed up to the closing and we signed the documents with 10 mins to spare! There is always a last-minute scramble, but you will make it happen if you really want it. We now have a great cash flowing 3 family that will jump start our business and we have BiggerPockets to thank for it.

For those out there who are feeling overwhelmed or think this can never happen for them, you are wrong! It can happen, but you need to make it happen, no one is going to do it for you!

Thanks for reading this far into my little story and I wish everyone a successful year! 

@David Abarca 

Do you have anyone that might be willing to be a cosigner? I am guessing you are not meeting the income to debt ratio requirements? Other than having your income meet that required amount ( maybe 20% more than your personal expenses), I do not know of any other options. 

Good luck!

@Chris Allen No problem at all. I'm no expert but I have learned a couple of things. Not that money grows on trees but you can always check out the local library and see if they have any of the books you want to read. If you really like them you can buy to keep but FREE has always been good for me.