All Forum Posts by: Jack Forester

I'm in the due diligence period on a property in Augusta, GA.  It has the current owner's house, a 1 bed/1 bath house, and a duplex, all on one tax parcel.   It's zoned R-2, which is two-family housing.  I called zoning and they confirmed, due to the age of the buildings, it's deemed "Legal, non-conforming".  I'm attempting to get that in writing.

Is there anything else I need to do to make sure I can legally rent this after purchase?

Thanks!

As a homeowner trying to sell his house (before I got into rentals) in 2011, I agreed to a lease purchase option. We agreed that $500 of the rent would go into an account to be used or a down payment, if they bought the house, with a specific purchase date a year out. As the year approached, they moved forward with the purchase and appraisal. The property did not appraise for the agreed purchase price (property prices had continued to decline over that year in my area). They had also found a newly constructed house for the same price, which is what they wanted to purchase, so they broke the contract,even after we agreed to the lower price.

We then sold to house to a new buyer.

The real estate agency that wrote the lease option sued them for the commission,but since the house was sold, the realtor had gotten their commission, so the case was thrown out.

The lease option people then sued me, demanding the $6k set aside for their down payment (even though it clearly stated that it was only available as a down payment, if they purchased our house. We hired an attorney to defend against this frivolous lawsuit and $4k in legal fees later, we won (it was ruled that the contract was clear), and we countered for legal fees. This cost $2k in legal fees, and they countered with a deal for $2k.

Having drug out for almost a year and ready to be done, we accepted.

So, the plaintiff was out $2k for a portion of our legal fees, plus their legal fees. We were out $4k for our legal fees and a year of not being able to get a loan for any property because we were named in a lawsuit. The lawyers made $6k on my side and probably the same on the plaintiff's side. All over the $6k in money towards the purchase.

Could I have refunded the money that they thought they were owed and avoided all this? Yes, but I'm not one to back down when I know I'm right.

Lesson learned? No matter how right you are, anyone can sue anyone, and the lawyers always win.

What is your experience with these?  Do you offer money towards a down payment, or how are your lease options written?

The kitchen and bath was usable, so I didn't think that would be a such of an issue to the appraiser. I was just trying to figure out what would kill the loan. In the end, the owner was not motivated to sell.  He was happy holding it with the $30k loan he took out to buy the property from the estate of the prior owner.  Sounds like his plan is to do a long slow flip using the handyman who is living in the property. 

The house in Dahlonega with no floor coverings, also has no appliances in the kitchen, needs a new roof, roof decking, shower surrounds, deck railing, and paint. Comps for non-distressed houses were $104k. He's won't go below $100k,  so I walked. 

Augusta is where my son is going to college. I've found a quad down there that I'm now under contract on.  It's in good shape and will cash flow. It was a case of a distressed buyer looking to move. 

Thanks, guys! 

Can you get a conventional loan on a house with no floor coverings?  We found a fix-n-rent house, but it has no floor coverings (just plywood).  The current guy seems to have run out of money.  Can you get a conventional loan on a house with no floor coverings or do I need to be prepared to go another route?   Quicken Loans said if the contract has "Escrow for repairs", it will kill the loan.   Local bank said they *might* consider escrowing funds from me or the seller for the repairs, before they close the loan. 

What do you guys normally do?

I thought in the podcast @Amanda Han said, if you have documentation proving you communicated with a real estate agent before the trip and had an itinerary to look at properties before you began the trip, then the trip is deductible. The example was appointments on Friday and Monday, which allowed for travel on Thursday, appointments on Friday, downtime on the weekend, and more appointments on Monday, traveling home on Tuesday. 

Is this all wrong? 

I didn't make any offer, so I don't know their lower limit. 

And will probably need a new roof soon, if I remember correctly

@Malik Welsh, it has some soft spots in the floor, soffits look to have some rot, and while the pictures look good, it's hard to show. One of the occupied ones is wall to wall boxes, so it makes it hard to really know what is underneath. At a lower entry point it could be worth it.