All Forum Posts by: David L.

Some investors / flippers of very inexpensive vacant land do self-close, where the cost to close with a title company (most often requiring that you purchase title insurance, which comes with a minimum cost just for issuing a policy) approaches or exceeds the monetary value of the land. 

For example, there are investors who will buy desert parcels for $500 or less and flip them for a few thousand dollars. In that case, the math doesn't support paying a couple thousand dollars in fixed fees to a title company. 

In those cases, the investor would know how,  and have the necessary access, to do their own title history search on the property. Or they could hire a title abstractor to do that search for them at a nominal cost. Title abstractors are the people who actually do the title research in the courthouse records for a title/closing company. Some are for-hire independent contractors, whose services an investor could enlist directly, typically for a relatively minimal cost. (suggested search term: "title abstractor [County] west virginia")

Then, if all was clear with the seller's title to the property, a valid deed needs to be drawn up. First, the investor would want to determine what they call the type of deed that is applicable to this purchase in West Virginia. As someone else replied above, you don't want a quitclaim deed (because that provides no assurance to the buyer that the seller actually even has title to the property, leaving the buyer with no legal recourse if things go south). You want what's generically called a warranty deed, only some states call it different things. For instance, in Virginia I believe it's called a bargain and sale deed. You might try googling "warranty deed West Virginia", and then look for some legal blog posts that discuss the specifics of warranty deeds in West Virginia, and whether in fact that's what they're called there, before then going back to the search results (maybe modifying to "sample warranty deed West Virginia") to find a template of the document from a reputable source. 

You'd then need to get the legal description correct when filing out the deed. Assuming that the exact same parcel (no more, no less) sold previously, and you have a copy of the prior deed from the title search that your abstractor did for you, you could copy the legal description from the prior deed, word for word (diligently).

Then you'd need the seller to execute the deed in a way that is consistent with West Virginia law. In any state where I've bought and sold property, this meant the deed needed a wet signature, witnessed by at least a notary. I've not come across a state personally that would allow Docusigned or scanned electronic copies of a deed. Some states, such as Florida, require that you have two witnesses and a notary for signing a deed. There are also typically nuanced requirements for what the first page or cover sheet of the deed needs to look like (e.g., at least a x by y inches box in the top right corner left blank for use by the courthouse staff who will actually record the deed).

Once you have a proper deed document, ready for the seller to sign, you'd need a way for them to sign it before you give them the money (again, with the correct number and typeof witnesses/notary). Some investors will find a mobile notary that is willing to hand over a check to the seller, on the buyer's behalf, once the seller has signed the deed. The buyer sends the check and a return addressed envelope to the notary (not the seller), and the seller sends the executed deed back to the buyer. 

Lastly, you need to get the deed properly recorded at the courthouse. If this will likely be your only, or one of very few, times that you're doing that, then recording in person might be the most practical. If the county is very old school, it's possible that recording the deed in person might be the only option anyway. Many counties do allow for e-recording of deeds though (search: "record deed [County] West Virginia"), but I think there might be only one service that does this, and it might require a subscription. 

Mechanically speaking, that whole process is what a title company provides, and it definitely simplifies things (and generally provides better assurance of a good outcome) to use a title company whenever possibly. 

If it's important to be able to resell the property in the (near or distant) future, having a title insurance policy is obviously a huge benefit of using a title company, as well. 

@Fulton Recepcion

Can you share a little more detail about what you would be bringing to the table?

For instance, do you already own a property free and clear, or with a large amount of equity, and need 100% financing on improvement costs? If so, there would be lenders for that. 

Do you have a lot of experience at improving properties, and have an off-market deal with a good margin of return between ARV and a conservative estimate of the total cost to acquire and renovate the property? If so, it would probably be difficult to find a lender who would fund 100% of that deal, as debt (with their only return being interest). But you might find someone willing to fund fix-and-flips as an equity partner, where they bring the money and you bring the deal and execution of the rehab.

If you don't have a solid deal, experience, or down payment and some amount of working capital, that's where it will be extremely difficult to find a lender or partner. 

The first investment property is the hardest one to get, so congrats!

I don't claim to be an expert, and haven't retired off of REI returns yet either. I have a small portfolio of rentals (5) and a non-trivial but not huge amount invested in a fund and a couple of notes, for passive income.

First thought I had in reading your post was: would you be able to substantially improve your returns from your current garden apartment by switching to a Mid Term Rental strategy?

Meaning, do your condo docs allow you to rent on 3 month leases? And if so, is the market rent for 3-month furnished units at that location worth the additional expenses of:

1. Furnishing the unit -- mostly a one-time or at least long-lasting investment

2. Higher property management fee -- you'd have to check, but possibly as high as 15%, rather than the 9% you're paying now

3. Paying all utilities yourself, including internet -- possibly mitigated if any portion of the utilities (such as water/sewer or gas) are already covered in your condo fees

It doesn't make sense for every property, but a garden style apt in a convenient location might pencil out nicely for mid-term, so it's at least worth checking.

Putting that aside, my concern with syndications right now, more than ever, would be in finding one that's exceptionally well run, with a stable pool of assets. A lot of people overpaid for large multifamily over the past 3 years or so, banking on the following, in perpetuity: fast rent growth, historically low interest rates on capital, and historically low cap rates (property values, if and when they resell).

Any of them that are holding assets that are cashflow negative right now must be sweating, and even if they're at least marginally cashflow positive, if they only locked in their institutional financing on their properties on 5 year terms, they're likely about to enter a world of pain when they try to refinance over the next 2 to 3 years. 

I'm not saying there are literally no syndicators worth investing with right now. I'm just thinking I would be extremely cautious and exercise extreme due diligence if I personally went that route right now.

If you acquired more properties yourself, directly, are you comfortable with renovations? For instance, if you stayed in the NoVA area, does your property manager have access to reliable contractors who charge reasonable prices?

If so, I don't know the NoVA market conditions very well, but in many areas this is a great moment to pick up a property that needs substantial renovations, whether on MLS or by connecting with wholesalers.

Hopefully others will have more specific advice in response to your questions.

@Adam Catrambone, if you're selling a park, as opposed to a mobile home, I am also interested in what you're selling.

 Thanks for the reply, Rick.  I found it odd, too.  The only thing I could figure might have happened is that the syndicator's purchase of the 70-80% of the units would have been based purely on cap rate, as a commercial deal, and rents seem to have appreciated pretty well at the complex in the last 5 years (25% by one metric) while market forces in general and rates for borrowing capital, in particular, seem to have driven cap rates considerably lower / prices higher, from what I gather (although, I'm not a syndicator currently, on either the GP or LP side, so I really don't know what I'm talking about in this regard).  

Meanwhile, the relatively scarce individually-owned units are still priced relative to non-commercial RE market forces, including, among a variety of other factors, a lack of traditional financing options for the individual units (because of the predominant non-owner-occupied / single-corporate-owner circumstances within the complex).  So single-unit values have appreciated a little bit over the past few years, but quite possibly haven't kept pace with the run up in commercial valuations.  Again, I don't know if this theory holds water or not, but it's all I could come up with.

Also, the unit I got under contract was a FSBO and was not on MLS, so it seems to me that the brand new out-of-town buyer of the majority of the complex might not have had visibility to this unit being available for sale...maybe. Then again, another individual unit in the complex just came up for sale in the past 24 hours, this time on the MLS, at a price that also appears very good relative to rental comps, and again considerably lower than the syndicator's average price per unit, so I'm not sure what to think.

Multi-family investors, I put a single condo unit under contract to buy, within a 200+ unit complex that has about 80% of the units owned by an LLC, which they operate as apartments. Days after securing the contract on my unit I found out the corporate-owned units were all just sold; transaction closed and now part of public record.

Based on the average price per unit that the new corporate buyer just paid in acquiring the majority of the rest of the complex, I should theoretically have significant instant equity on my unit, as soon as I close.

So my questions are:

• It seems like a no-brainer to me that the managers/representatives of the entity that just acquired the majority of the condo/apartment complex ought to be interested in adding another unit to their holdings (same complex / same building as their own units).  Am I overlooking anything that might cause them to feel otherwise?  They already have onsite management and would appear to be subject to any local/state requirements that apply to operating an apartment complex of the applicable size.
• Assuming they would be interested in owning additional units in the same complex they just acquired, is there any reason why they generally wouldn't be willing to pay the equivalent price per unit that they just paid a month ago for the rest of the complex?
• If I decide to keep (BRRR) the unit that I have under contract, rather than flip it, are there any particular pitfalls I need to be mindful of, owning a unit in a condo complex that has a single majority owner like this? For example, if they presumably want to make improvements to their new investment, improving common areas, etc., can they / are they likely to force through a special assessment that will apply to all owners, through the HOA board that I'm sure they'll control?

Out of curiosity, did you ever happen to sell any property that's located in Florida, while living in Germany as a non-US citizen?  I've been told by the Florida title company that most of the documentation (possibly all documentation to buy a property) don't require a US notary, but the Seller's execution of the deed and owner's affidavit do. Last thing I would want is to pay this Seller his money only to find out down the road that I don't have clear title, but if I knew for a fact that signing at the embassy/consulate wasn't needed, that would definitely simplify things a little bit.

Aside from that, though, like I mentioned above, the other issue I'm dealing with is that when closing docs were already sent to the Seller (with a pre-paid return courier label) he claimed that he didn't receive them, despite tracking info indicating otherwise.  This Seller needs some hand-holding and adult supervision that I can't provide from thousands of miles away.

Thanks for the response, Kai.  I realize that the actual closing won't be processed in Germany, and actually Florida won't even recognize the German notary for signature authentication (but instead require the non-US-citizen Seller go to a US Embassy or consulate for notarization), but I'm having some issues with the Seller and am hoping to find a local professional that could work with the US title company already working on the deal, to ensure there's not an issue with language barrier, competency, identity theft, etc. 

Just to provide a little more detail, the Seller had already signed my purchase and sale agreement and returned it to me along with a handwritten note (in English), committing to sell me the property at a specific price.  We went to escrow, title company sent him the closing docs, FedEx tracking shows they were delivered over 2 weeks ago.  When I called a few days ago to ask whether there were any issues preventing him from executing the deed / closing docs at the closest US Consulate (as we'd discussed previously), he denied having ever received the closing docs, and much worse, now denies having ever signed and returned the sale agreement to me in the first place, and is asking for a large price increase. 

His English seems much better than my German, and I think he's just playing games / gotten cold feet, but if I'm going to salvage the deal, I think I need to take the language barrier, and this "I didn't receive that; don't know what you're talking about" game, off the table.  I want an unbiased, local third party that can verify whether there's truly been some misunderstanding (e.g. he's senile, and/or someone intercepted his mail and forged the sale agreement), and barring those unlikely scenarios, might explain to the Seller the significance of having an executed agreement. 

You confirmed what I thought I was seeing online, that in Germany the notary, is probably what I'm looking for.  It is a weird situation, so hopefully one will be able to help.

Hello, I am trying to close a deal on a property that is located in the USA, but the Seller is a German citizen, living in St. Leon-Rot Germany.  Ideally, I think that the local German equivalent of a title company might be best, but I have no idea what the RE closing process in Germany is so I don't know whether they have such a thing, or if all closings are done by attorneys.

Bottom line, the seller has no access to a computer, and there's some language barrier, so I'm looking for someone local to the Seller to help me and the US title company by hand-delivering documents and probably assisting with translating on a conference call or two, for a fixed fee (not an agent's commission).

Any suggestions for something like this?  Have tried searching online a bit but haven't found what I'm looking for, yet.