All Forum Posts by: Sharad M.

Matt-

Thanks a lot for the detailed response. It makes a lot of sense now.

I am going to call a few banks and understand the process and requirement.

Thanks again!

Hello all,

So after the inspection on a 4-plex, we sent the following response to the seller:

1) Repair/replace main plumbing waste line that is backing up and leaking in the basement.
2) Replace water heater that is beyond its normal life expectancy.
3) Replace the furnace in the basement that is not functional
4) All work to be done by a licensed contractor.
5) $2500 for a roof allowance since roof life is expected to be about 2 years.

The seller came back with the following response:

1) Seller will rod main drain although it was done 2 months ago.
2) Roof is not leaking and does not constitute a "defect"
3) Old water heater does not constitute a "defect"
4) Furnace does work. Pilot was just out and does not constitute a "defect"

I think the biggest issue at this point is the drainage, which we will ask to be checked by a licensed contractor.

But assuming the furnace works, water heater is certainly past its life expectancy. If the seller doesn't agree to replace it, can we back out of the contract if we wanted to?

As for roof, its not leaking, but the inspector said it will need some work in 2-5 years, so that's why we asked for the $2,500 allowance.

I am new to real estate investing, so I am not sure how to proceed from here. How do you guys deal with these situations? Thanks!

Matt-You make a very valid point about interest rate and the fee involved.

John-You are right that I didn't consider the loan being under $50k.

Brian-I thought the agent will be paid by the seller and not by the buyer. At least that's what happens in IL. I am a new investor, so I could be wrong. But hey, you live and learn.

You have all made very valid points. I had contacted a few local banks about refi and they said they will be able to do a refi after 6-12 mos, but it doesn't hurt to just confirm with the banks about the procedure.

In case the bank says they won't do a loan under $50k, then what are my options? The properties I am looking at are all under $50k, so can I buy say 3 properties for $20k each for a total of $60k, and then take my properties to a bank and have them do a blanket loan of some sort? Is that something that's possible?

Thanks again for all the great replies. They are much appreciated. I can't tell you guys how fortunate I am to have come across this website.

Thanks Matt and Steve for responses. Yes, the seller and I are both going without an agent. I will put 7 days inspection contingency in the contact. I am making a cash offer and then doing a cash out refinance after 6-12 months depending on the bank. Do you guys see anything wrong with that plan?

I have looked at the comps of the property and I am getting it below market, should I still get an appraisal done? I am planning to hold the property for a very long term.

Thanks!

Hello all-

I am just trying to find out how many of you had a formal/informal mentor when you first started out? Or you were someone who read a lots and lots of books and spent time on forums like these to bridge the gap? I feel like I am learning a lot from reading books and spending time on this forum, and I am confused whether I need a mentor or not.

Thanks in advance for all the responses.

Thanks again for all the responses. Many thanks to Dustin for sending the P.A.

Another questions about this deal, if there are no realtors involved in the deal, where do you deposit the earnest money? Isn't it supposed to go in an escrow account?

Steve, thanks for the reply.

The reason why I wanted to use a realtor was to have someone represent me in case something went wrong. I am still new to RE investing, so thought it would be helpful to have an experienced person on my side. And I just assumed that my agent will be paid by seller. I don't want to pay a $1k commission on a $20k house.

Should I just use an attorney instead or don't need an attorney either? Dustin here on BP has been kind enough to offer to send me the IN purchase agreement.

Thanks again for the reply.

Thanks Dustin, I just accepted your request and sent you my info via message. Please let me know if you don't receive my contact info.

The question about the second part is if it's normal for the buyer to pay the commission to the broker. If the selling price is $20k, the commission will be $500 @ 2.5%, does that mean I will have the buyer will have to another $500 so that the broker gets at least $1000 in commission?

Hello all,

I am looking to buy a property in Indiana. My first question is where can I find the IN Purchase Agreement online? Is that something I have to buy or can I download for free from a website?

My other question is, can I use a self created purchase agreement with the seller or do I need to use the IN purchase agreement that is commonly used for residential properties.

The reason I ask is because I looking to buy a house FSBO and I want to use an agent to represent me, but the agent just sent me the offer letter. And along with offer letter he sent me "Buyer's Exclusive Agency Contract" and in that it says that:

Commission: In consideration for the services to be performed by Broker, Buyer agrees to pay Broker a commission of $1,000 or $2.5% of the total purchase price; however, the total commission paid to Broker shall not be less than $1,000. In the event Seller pays a commission under a listing agreement and Broker, with the consent of buyer, is to receive any portion thereof, that portion shall be credited against Buyer's financial obligations to Broker.

The offer is for less than $20,000. Can you guys provide some guidance on this one. Thanks in advance!

I don't know much about CA, but here in IN, if during an inspection the city finds out that there are tenants living in an illegal unit, the unit must be vacated immediately. But as long as the unit is not in basement or attic, there shouldn't be a huge issue making them legal. Not sure about the cost though.

Taxes will go up on the property once additional units are made legal.