All Forum Posts by: Eric Lin

What's the lowest GreatSchools rating you will accept for properties? All the books I read say to "buy homes where the best schools are", but is that like a 6+ on GreatSchools? Or a 8+? And will you buy a property if say the high school is 7+, but elementary school is only 2+?

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@Kristyn Grimes thanks, we will look into professional legal help!

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Here is the language of the contract.

"Close of Escrow shall be within ten (10) days following SELLER'S oral or written notification to
BUYER and Escrow Holder that the home will be certified for occupancy by the City/County, currently estimated to
be on or about 8/26/2020. BUYER acknowledges that said date is an estimate only and that the actual date for Close
of Escrow may vary from the date stated. Should Escrow fail to close in a timely manner through no fault of
BUYER, SELLER shall promptly remit to Escrow all funds received by SELLER and shall order all Deposits
remitted by BUYER to SELLER or Escrow, to be refunded to BUYER within fifteen (15) days after the estimated
closing date specified in this Purchase Agreement, or any mutually agreed upon extended closing date."

I guess the question then is, what is considered "a timely manner". It's now close to 40 days, that certainly seems like it exceeds it?

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Asking for a friend...

A friend of mine is under contract to purchase a (new construction) property. The down payment is 40,000. They were scheduled to close August 31st, but the seller has been unable to get a permit from the city that allows residents to move in. There's no end in sight, and my friend would now like to pursue other options. Part of the reason is that she's paying 4k+/month in rent, which seems very unfair. She has to pay month by month because the seller can't get this permit. Can she get her deposit back? Her real estate agent says no, but of course it's in the best interest of the real estate agent for her to go through with the purchase.

Thanks!

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Originally posted by @Jennifer T.:

Before closing, have the tenant and seller sign an estoppel agreement so everyone is on the same page as to what the rent and security deposit is. At closing, the seller will have to turn over the tenant's security deposit to you plus whatever the pro-rated rent is. For example, what if the seller says "They don't have a security deposit, they used it for July's rent last year when they were laid off." But the tenant says, "Yes, of course I have a security deposit that is still fully intact." An estoppel agreement protects from situations like that.

You can and should have the tenant sign a new lease with yourself, because the contract will now be with you. BUT, you cannot have different terms if the current lease is still in effect. However, if the current lease is in a month-to-month status, then you can make changes to it, but will need to give appropriate notice after closing. Usually a 30-Day notice for an amendment to a lease, but check your local laws.

You're right. You have no way of knowing the condition of the house when the tenant moved in. But it really doesn't matter. Because you know the condition of the house NOW and that is what you are already buying. For a security deposit with an inherited tenant, I will only subtract for NEW damage that happened after I bought it. I'd suggest taking pictures so you have evidence of the current condition around the time you are buying it.

I personally don't run background checks on inherited tenants. They're already living there anyway and, even if there was something in their background I didn't want, I couldn't make them move over that unless it was already a month-to-month lease. But I've seen other people on BP who feel differently.

I don't have a lot of experience with inherited tenants. But the experience I have had is I "100% would never have rented to any of them, if I'd done the original vetting", lol. I could also see it being a situation where it works out fine. It becomes more problematic, if you will also be raising the rent when you are able to. Which you should do! I'm not saying that. But it can understandably cause hard feelings on the tenant side. For an inherited tenant, I will put the new rent at slightly below market rate if I want to keep them. Basically, make it cheaper for them to just stay, but without my feeling like I'm subsidizing an almost stranger's rent!

Thanks Jennifer! This was immensely helpful and detailed. Cheers

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I'm purchasing a property with an existing tenant who has expressed a desire to stay. I'm very new to this; how does this work?

- Do they sign a new lease with me or does their existing one transfer? If the existing one transfers, can I still increase the rents? Their rent is currently below market price.
- How is the pre-inspection done. Since they have a lot of stuff in the house already, it's hard to determine accurately the state of the house which will be needed when they move out.
- Should I still run the background check and everything on them/process them as a regular applicant? They're a family of four children so I prefer to not uproot them.

Does anyone have experience with keeping a tenant after purchasing a property? Recommend or no, and for what reasons?

Thanks!

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Originally posted by @Kevin Phillips:

Eric,

The lenders are correct that if you are an occupying resident that you will get the lower rate, however lying regarding your intent to occupy is mortgage fraud. While most people will not question you occupying the property if payments are made on time, when you apply for another loan this will be found out. Your honesty regarding what the property is meant for is very smart.

If you have any questions feel free to reach out. My contact information will be located below.

Kevin Phillips

Thanks Kevin!

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So I just recently purchased my first investment property, and during the process, the mortgage lender was trying to nudge me into getting the loan as a secondary residence (stuff like: "You'll get a lower rate, you can provide a lower down payment, you just need to stay there for 14(?) days out of the year, no one will care once the first year has passed, etc").

My parents always taught me to not do anything that I wouldn't feel comfortable explaining, so I declined and just went with an investment loan for 25% down and a much higher rate. I didn't feel comfortable lying about the purpose of the home since I have no intention of staying there and purely plan to use it for investment.

Well, I'm currently under contract to purchase my second property, and a second lender has said the exact same thing to me ("are you sure you don't want to make this a secondary residence?") after I made it explicitly clear this is investment only! Am I missing something and this is like a "well known secret in real estate that no one explicitly talks about" or am I just meeting two shady lenders?

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All Forum Posts by: Eric Lin

Eric Lin has started 4 posts and replied 8 times.

Post: What's your school minimum?

Post: Can I get my deposit back? (Seller can't close)

Post: Can I get my deposit back? (Seller can't close)

Post: Can I get my deposit back? (Seller can't close)

Post: Should I allow existing tenant to stay/how does it work?

Post: Should I allow existing tenant to stay/how does it work?

Post: What type of Conventional Loan to get (investment vs secondary)?

Post: What type of Conventional Loan to get (investment vs secondary)?