All Forum Posts by: Dru Steeby

@Elizabeth Colegrove thank you!!!

@Benjamin Timmins , the seller pays most of the closing costs. The items that I was responsible for paying were:

Loan Origination Fee
Appraisal
Flood Certification
Mortgage Survey
Up front Mortgage Insurance (FHA, rolled into the loan)
1 year of homeowners insurance
Real Estate Taxes (because it is so close to Summer taxes due)
Title Services and Lender's title insurance
Government Recording Charges

Also paid for a home inspection, but that is not part of closing and is not required by the title company or the bank. 

@Brandon Turner , thank you! The house was listed on the MLS as a single family house. Initially I was looking for a SFH and planned to rent a room out to a friend. That deal fell apart and after listening to the podcast and getting advice from Biggerpockets users I decided to pursue an owner-occupied duplex. It happened this one was on my radar because I was looking for a SFH previously. The owner was looking to sell quickly to get money for his restaurant.

@Joshua Dorkin , thanks! I'm really looking forward to getting started as an REI. The podcast has given me LOADs of information that helped me out, gave me inspiration, and even connected me with some locals who were successful. Can't thank you guys enough.

Yesterday I went through my first ever closing process on a duplex that I will be owner-occupying! 

I had to go through some crazy things to get to closing, both my buyers agent and mortgage banker said this was one of the more interesting transactions that they've done, my buyers agent even went as far as saying "If every transaction were this difficult, I would not be in the business". Well, we reached the end of the road yesterday, but here are some of the things I had to deal with:

1.) Signed agreement on 4/17/14 to close on 5/27/14.
2.) Appraiser could not get into house initially because of miscommunication with landlord. 
3.) Home inspection went over smoothly, roof was in bad shape, got $2,200 toward closing costs.
4.) Bank alerts title company that there might be an issue with the title, title company says "No, everything is okay".
5.) One week before closing, the bank learns that the property was transferred from an LLC to the sellers person less than 180 days ago, this means the property falls under flipping rules and needs a second appraisal. Closing is delayed the first time.
6.) Second appraiser also has problems getting into the property.
Second appraisal comes back 1.5 weeks later with no issues.
7.) Bank sends all the paperwork to the title company, title company says that there is an issue with the title, specifically the property was not quit claim deeded from the LLC correctly. Bank says "we told you so".
8.) Correct quit claim deed now needs to be filed with the county before proceeding. One of the executive members of the LLC now lives in Greece, papers have to be sent via FedEx for him to sign and return. Closing delayed a second time.
9.) Quit Claim deed comes back and is filed correctly with the county. 
10.) Title company loses power on Thursday and Friday because of a rain storm. Closing delayed over the weekend.
11.) We finally close the property on 6/24. I am finally a homeowner!!!

Details:
Purchase price $69,000, 2.2k seller credit towards closing costs
One 2-bed 1-bath unit and One 1-bed 1-bath unit, shared basement. 
Rents total are $1400/mo ($800 and $600), I will be occupying the $800 side. I will handle the business by charging myself rent and calculating cash flow from that, simulating as if I were fully renting the property. By my estimates I will be cash flowing about $300/mo.
I financed with FHA at 3.5% down and got a rate of 3.75%. Property appraised for $75,000, with upfront MIP I'm starting at about 90% LTV.

Thanks for reading, advice is appreciated!!!

@Max Himmel welcome to the site! I'm closing on my first property on Monday, it's just east of Ypsilanti. If you want to chat I'd be glad to! I just spent 6 months looking  at properties in the AA/ypsi area.

@Mark Bookhagen is that normal in student rental locations? I've lived in Ann Arbor for 6 years now, each year at a new apartment building, and none of the property management companies required any information about the parents. I doubt they even checked to see if I was actually in school. After I graduated they did want to see a source of income, but that's when I moved to non student housing. 

I'd imagine getting into AA student housing is very tough as it's expensive and you have a lot of competition, but with that comes a huge customer base that isn't going to go away anytime soon. Someone has to get that federal loan "candy" money that the government is handing out, right? :)

@Brie Schmidt and @Jon Holdman 

 Thank you both for the advice and insight! I will heed it wisely!

@Brie Schmidt awesome, thats the answer I was looking for, thank you! I'm assuming that most people use the depreciation deduction that would cover most of this "left over" money?

That being said, do you think it's better to spend the money on *something* rather than let it sit and get taxed? 

Hi BiggerPockets,

I have a question about taxes that I can't seem to find the answer for on google. In my breakdown of my rental property I put away 5% for CapEx and 8% for maintenance. If I do not use this money in a particular given month it stays in those accounts and is saved for a time when it is needed. My question is this: "If I don't use those funds in a particular year, can I subtract them from my taxable income or do they need to be taxed as such?"

Example, say my rental income is $1000/mo before expenses, I'd be putting away $50/mo for CapEx and $80/mo for maintenance. If I don't have any maintenance issues the whole year (I'm dreaming, I know) and don't have to spend any CapEx money, I'd have a total of $1560 sitting in my account waiting to get spent at the end of the year. Can I deduct that or are they taxed?

Thank you!

I'm currently under contract for a duplex that I plan on occupying half of when I finally close. We were set to close on May 27th but issue #1 came up. We resolved that issue (we thought) and were all set to close again when issue #2 arised. A bit of backstory:

1.) Current owners bought the property from HUD under their LLC
2.) Current owners quit claim deeded the property from the LLC to their person
3.) Current owners are selling the house to me. Because of the proximity of the transfer of the property from LLC to person, it qualifies as a flipping house and the bank requires two appraisals. Listing side failed to notify bank of this and this was issue #1, getting a second appraisal on the property.
4.) It takes a little more than a week to get the second appraisal done (free of charge to me, thank god) and we're all set for closing
5.) Title company says that they are not able to continue with closing on the house because the quit claim deed was not filed properly. The solution to this is to refile the quit claim deed with all members of the LLC signing. Biggest problem is that one lives in Greece now.

So here I am sitting under contract on a property waiting to get the FedEXed papers back from greece so I can finally close on my first property. 

Just wanted to rant a little bit. On the upside, I have one less month that I have to pay both a mortgage payment and rent payment for my apartment.

Anyone else have some crazy and/or weird closing situations like this?