All Forum Posts by: Dan Borecki

Thanks Michaela!

That's a great point that they are not in a good spot with the lost rental income, etc. I absolutely agree that I am in the spot of power and I also agree that I should be able to pull out of the deal without penalty, but that would be probably the worst case scenario because I'm still only a renter and don't look forward to having to keep paying rent to somebody else and also having to spend the time again of finding a new place and then again dealing with all of the inspections and the financing & closing process, etc. Fortunately I am still on a year lease that started on 9/1, which I had signed back in May.

As part of my negotiation I had already negotiated that they cover my closing costs of $8,500 which was the max that I can get back at closing with the FHA loan and I also am having them fix some issues prior to the closing date that I identified in my inspections. They are supposedly in the process of removing the knob & tube electric work that is mainly in part of the 2nd unit (same unit that tenants aren't vacating), fixing some slow draining plumbing in 1st unit bathroom, and getting rid of mice that seem to be throughout the apartment (I also negotiated a 1 year maintenance contract for a pest control company).

Any other suggestions on things I could try to negotiate with the sellers outside of closing costs which I'm already having them pay?

Hi Everybody,

I'm in the process of closing on my first multi-family investment (3 units) right outside of Boston, MA which I'll be an owner-occupant and I'm hitting a snag. I was just hoping I could get some input and advice on how to proceed based on your experiences.

I was set to close by 9/20/13 at the latest, which is the date that my loan's rate lock expires. It's an FHA mortgage and since my interest rate was locked the rates have gone up. One of the things that I negotiated within the P&S agreement was to have all of the units delivered vacant (the tenants were all on month-to-month leases & not quality of tenant I want), however I was just notified by my attorney that 1 of the 3 units won't be out before the closing date. Here is what the seller's attorney wrote mine:

"The 2nd floor tenant has not left yet. We terminated her tenancy over a month ago and when she didn't vacate we began summary process. The original hearing date was today but this week she filed discovery which automatically delays the case for two weeks. So we are presently scheduled for September 19. I spoke with her today and she is actively pursuing housing, however, the reality is that even if she finds a place today it won’t likely be for sooner than 10/1.

While not completely out of the question, it is highly unlikely that she will be out by our original closing date of the 20th. I told her to keep me informed and to let me know immediately when she finds something.

Unfortunately, even if we proceed ahead and prevail on our eviction on the 19th, it is not as though we can just move her out. We have to wait for the execution from the court and there are delay tactics tenants can employ to buy more time. I am hopeful that she finds something and we can just make an agreement for judgment wherein she leaves by 10/1."

Have any of you dealt with this before? I know Massachusetts has a reputation of being tougher to deal with removing tenants, so I'm concerned about this dragging out much further than 10/1. Any suggestions on how to proceed? How far back can lenders extend the rate lock? And what are my best options to work this out with the seller if they aren't able to get the tenant out any time soon?

Thank you!

Dan

Thanks for all of the tips/info @Mehran K. . I think we have a lot in common in the knowledge gathering. I'm looking to do the same thing as you where I can systematize everything an have check lists for each stage of the process. I have it on my list to read the book emyth which is based around that concept.

I'm going to have to look into how to find wholesalers...I'm sure that would be a great way to find some discount properties.

I really like the Psychology of Achievement. I've listened to that one multiple times. I also really like the Master Strategies for Higher Achievement, Eat that Frog and his goals setting programs. His books the power of self confidence and No Excuses were really good book by him as well.

@Mike Hurney - Thanks for the encouragement!

So great news regarding that 3 family property that I talked about above where I pulled out of negotiations after the owners wouldn't come to where I needed them to....

I'm so glad I just pulled out of the deal and didn't cave and accept their original rebuttal of my offer which was to only cover $7,500 of the closing costs.

After the property went back on the market and within only a few days it was under agreement with someone else. Then after about a week I saw on the MLS it came back on the market again. I had already done a very thorough inspection as well as had a plumber, electrician and mason out to look at everything closely, so I am confident in my calculations of what needs to be done to make things work. So with that in mind I figured what the heck I might as well try again and throw out the same offer I had before since the owners are probably starting to get frustrated. So I had my agent call up the selling agent who also works in his office and she told him that the owners were now willing to do the knob & tube wiring removal (which was the biggest sticking point since it was going to cost about $5K according to the estimate I receive during my inspection and it would hinder me from getting home insurance). So I put in my offer in and actually added that they need to fix some backed up plumbing. My original offer had that they needed to take care of a mice problem that the building has and then at the suggestion of my RE attorney, we added a 1 year maintenance clause for the mice, as well as asking for $8,500 back at closing to cover my closing costs. The next day they accepted everything in my offer, which was much better terms for me. So now I just am in the P&S stage and then we'll have to get it to appraise at the market value to get the FHA loan.

Another great part of this negotiation was involving the mortgage broker & the FHA loan.... since I had pulled out of the deal 3 ago, the mortgage rates went up from around 3.75% to 3.85% and because of that I was going to have to pay an additional $6K for the down payment (5% rather than the 3.5%) in order to meet the FHA thresholds. That was devastating news, so my agent called up and did some negotiating with the mortgage broker and she agreed to honor the 3.75% rate. So that is so huge since if she didn't agree to that I wouldn't be able to do the deal since I was banking on that $6K to do all of the other repairs that are going to be necessary on the property.

So long story short I'm getting pretty excited and really looking forward to having this deal closing so I can get started on all of the renovations to bring up the value of the rents!

Thanks Mehran Kamari!

That's awesome that you mentioned Brian Tracy as a big help in your life....I've read/listened to a ton of his books as well. Last week I was just reading his book "No Excuses! The power of self discipline" and I also this weekend was reading his book "Maximum Achievement: Strategies and Skills That Will Unlock Your Hidden Powers to Succeed". I like how he doesn't have a lot of fluff in his materials.

I was checking out your profile and your ambitions are very impressive. How did you find the 4 properties that you bought this year? Right now I'm looking to find a 3 to 4 unit multi-family investment that I can owner occupy and I'm trying to come up with ways outside of the MLS since there's not much currently being listed and everything that is listed is priced too high for my criteria right now. It sounds like you're in a very similar situation as me with having a big time constraint because of the 9 to 5 job, so I'm interested to hear what are your most effective and time effective ways of going about finding deals? I've been reading a bunch on RE investing and they all have a lot of different ways of finding deals between direct mail, networking through REI clubs, RE agents/brokers/lawyers/accountants/etc, court-related like foreclosures and owner issues, driving neighborhoods, etc. I'm sure these all work great in their own way but just wondering what you'd suggest I focus the most of my efforts.

Thank you Joshua! I really love this forum and I'm so glad that you created it and that I was lucky enough to discover it!

haha thanks! yes I completely agree, very long intro. I got a little carried away there! Figured I would just lay it all out there so if anything resonated with anybody I could meet more people.

I actually have read the Compound Effect, that's a great book. I've ready it at least 5+ times. Have you read "The Slight Edge" by Jeff Olsen? That's also another great book with the same concept and apparently Jeff Olsen was a mentor of Darren Hardy even though Darren Hardy seems to mention Jim Rohn a lot more through Compound Effect.

I guess what you're saying on the predicament we're having is probably the case for most people so we just have to get started on taking action wherever we are at. I was at your spot with the not saving and I kept waiting forever to save, but actually I'm realizing now that you can invest in multi-family with only 3.5% down using FHA financing, so really if you get a place for around $400K it will only cost you around $15K as a down payment. So basically I wish I started taking action 2 years ago before the market started blowing up like it is now.

Hi Everybody,

After being introduced to this website by my roommate about a month ago, I have been surfing around the site picking up a lot of great knowledge and today I finally created an account, so I wanted to take a moment to introduce myself to this amazing BiggerPockets community!

About me:

I currently live in a suburb just on the outskirts of Boston, MA. I graduated from UMass Amherst in 2005 with a double major in Accounting & Economics and then subsequently obtained a master’s degree in Accounting (also from UMass). I spent my first 4 years out of college working for a big 4 public accounting company, primarily auditing Commercial Real Estate companies. I then left the auditing world to try my hand as a RE agent doing rentals at my good friend’s brokerage and in the meantime got my CPA license. I was doing well and really enjoyed the freedom and flexibility of being an agent, but was presented with a great opportunity in an accounting / financial reporting role at an institutional investing real estate company by my former counselor at the big 4 company that I couldn't pass up. I don’t regret my decision at all since it has been an invaluable learning experience, as owning my own successful investing company is my ultimate goal and what better place to learn than from the inside of one!

I’m really big into personal growth & development and on my 1.5 hours of daily round-trip commuting time I’m always reading something either about Real Estate, business, or some sort of self-improvement book. I've been out of school for about 8 years now and in the meantime of all of this learning on the job and out of work, I've been really working hard at trying to save up to make a down payment on a house.

With all that said, it’s been way too easy for me to get caught up in the paralysis by analysis phase and I’m finally now at a point in my life where I feel that I’m more than ready to get out there and take some massive action investing in Real Estate. So this summer I have finally got my nose out of the books for a bit and have been in the hunt for a 3 to 4 unit multi-family investment property that I can initially owner-occupy, build up some equity and then eventually move out of and get some cash flow from.

Having a full-time job it’s been a challenge to find the time to balance work and investing, but I've been fortunate that my company gives us ½ day Fridays in the summer, so I've been taking Fridays off to go house hunting with my friend who is a new RE agent, but is already a successful multi-family owner. Fortunately, my girlfriend is also really into looking at houses, so she's also been scouring the net as well and sending me listings that she finds interesting.

It took a lot of time and effort to find a good deal, but a few weeks ago I put my first offer in on a house that from the outside seemed like a great deal, but $650 later after going through the whole due diligence process (inspector, mason, plumber, and electrician – all found on the website Angie’s List which I highly recommend!) I found a ton of things in the short term that were going to be a big expense for me that I wouldn't be able to bear if ever want to do another investment after my first one, so I tried to re-negotiate, but the owners wouldn't come down enough on the price to a place that I felt comfortable in taking on the risk, so I retracted my offer and I’m back to the drawing board.

Despite the cost, the whole process was a really great learning experience and I’m excited to take all of the things that I learned from this deal into the next one. I can’t express enough how much taking action has really enhanced what I’ve been learning in books, as I can now compare my experiences in the real world to what is being taught in the books.

Anyway, that’s enough about me! I’m really looking forward to getting to know all of you guys on here in this great community, exchanging ideas, learning from all of your experiences, as well as sharing my own. I would love to do some networking and hopefully build some connections in the greater Boston area with any of you who are also motivated and would be interested in sharing ideas, as well as potentially even doing some deals sometime in the near future.

Thanks for your time!

Dan