All Forum Posts by: Jacobus Rex

Hello!

I'm buying a house from sellers post-foreclosure during the redemption phase.  We're scheduled to close tomorrow. We've got the settlement statement from the title agent. We've arranged for funds to pay for the property. We're ready to go. 

Today, less than 24 hours before scheduled close, the seller's broker/agent calls and says that the seller has to bring $4300+ to the closing to cover all their costs to redeem the property, with penalties, closing fees, commissions, etc.   The broker says that the seller can't come up with any of the $4300 and then asked us to come up with $2000 to put towards those costs.

This is Sunday, just before closing. So we're getting totally queasy about this. . . like ok this means "walk away!" We let the broker know that; the broker backed off and said, "Ok, no, we're going to get this done. Just show up and fulfil the terms of the deal for the agreed upon price. "  So, we're going to go ahead with the purchase. 

My question:  Does this kind of stuff really happen? This is after the settlement statements are issued by title agency and it has nothing to do with something being out of order with the property that would cause the buyer to delay.   Does anyone have experience dealing with this? 

Thanks, 

Jim

Thanks for your responses.  I have had a 'no pets' policy but I'd allow it.  One tenant was allergic to cats so it wasn't really an option. I realize the root of it is to just seal up everything. But really, why won't they eat the bait?  I'm real familiar with the green Tomcat baits and the DCon baits, and peanut butter, and wood traps and plastic traps, and the bait boxes. . .and the droppings. 
In my own house, if I detect a mouse, you place a trap with delicious peanut butter. And. . . .You catch a mouse. You reset it; you might catch another.  The point is you catch them.  Why on earth don't they take the bait in the rental, ever???? I'd like to know. I can't blame all my tenants. Not every one is a slob. 

@Ernie Olmeda Yes, run the numbers. Analyze different options. e.g. the fellow above talks of passive investing for multi-family syndication. Don't know if you need to be accredited. That's a factor, perhaps. Another scenario might be to rent that house and take on some debt to allow you to get into 3rd SFR. Or perhaps you could sell this one and leverage into a small multi-family. Running the numbers. . . that's the exercise you/we need for everything. Jim

@David Flores   I have no direct experience but I know these guys are totally right. You read about it in the news.   It's been literally going on for well over a hundred years. I wonder if you could even look at it with based on 50% occupancy.  Anything permanent there seems an exposure unless the short term returns are massive.
One example: @40 years ago my wife's husband moved down to Houston, from OH, to work for Kroger foods. He got into a house for 30 cents on the dollar because he was coming in there while oil was bust. It was a beautiful brick house.. . previously owned by an oil/gas worker.

@Louie Jhan Centeno Maglaque 

Louie, don't you need to include your repair costs before renting?  Looks like you're going to do at least $5,000 in repairs/updates. And what is your vacancy time before renting. You'll have a holding cost to consider.  At least figure a month for that. Though you're not doing alot, you're doing plenty if you're going to do the work yourself. Seems like you need to have $10,000 available aside from closing costs and the down payment. 
The monthly cashflow looks pretty thin. Some people do this. But they'd better have some reserves available after acquisition costs because you can get bitten by the unforeseen.  Yes, people go into it with only $100 a month cashflow. But I will say, based on my personal experience, that can bite you down the road a year when your first tenant, even though they passed credit and background checks, moves out, leaving the place a disaster zone that the damage deposit doesn't nearly cover. And my experience is with a place that has several hundred in cash flow.  

Aside from cash reserves, you need to lower your offer price to improve your margin.
My .02.  
Thanks, 
Jim

Hi, 

SFR in Minneapolis. Tenants have complained of mice, three different times over 5-6 years. I've had local well-known pest control company there three different times, at least. Still in the last year tenant complained of droppings. He wasn't afraid to go after them. He set lots of traps with peanut butter and cheese and the gel stuff such as the Tomcat brand. He caught one mouse. Still saw droppings. This person had very good hygiene. The house was clean. As in the past, these buggers wouldn't take that bait.
QUESTION:  How is it possible they wouldn't take the bait?  Consistently over years.  Once in the house why wouldn't they take the bait.   Frustrated. 

@Matt Hildebrand

Yes, that would work. In this case we started with charcoal to heat it up. . .then got a clue that was a dumb idea due to probable proximity to the gas line and switched to a space heater. Then we dug carefully to make sure we weren't hitting the gas line. 
It was labor intensive but it worked out fine. I guess I'd have to hold of the jack hammer for the same reason I'd avoid the charcoal: Gotta be super careful near gas line. 
Finished and sold that flip about three months ago. Made a decent profit. 

@Bob Daniels

You make some powerful points.  Seems though, it'd be actually nice if we would transcend the points on business sense to some higher principles than 'profit'.  Yes, the illegals are far less risk than sex offenders. How about: "They're illegals and therefore I just can't rent to them." And you basically achieve that by @Nathan Hall method of diligent, strong application standards.
 But who says you have to rent to a sex offender? I say those types should be pointed in the direction of some segregated public housing. . .which idea of course would probably be considered discriminatory to even suggest. But, in their case, they have absolutely brought that upon themselves.   I know what I'm saying runs contrary to many local laws and ordinances. I don't think it runs contrary to common sense and a sense of justice, however. 

@Leo Rodriguez

Leo! Where have you been?  There are tens of millions of people who receive 'refunds' from the Federal government that greatly exceed any tax they've paid. Because they have children and make less than a certain amount, they essentially receive a transfer payment from the government to support their family.

@Joe Scaparra  @Nathan Gesner
You're both right, as are others taking position on this issue. But really, do any greater principles other than 'Business' get any real consideration?  We're a sad lot of people if that's all there is to it.   I haven't the slightest doubt that the illegals are generally excellent tenants for the reasons mentioned; but also for the reason that they are honest people who don't feel entitled to anything. Is it really wrong and not tolerated for discussion if I say that, since I can't really identify that they're legal, and since illegal immigrants shouldn't be here, I can't and won't rent to them. For Pete's sake, they have broken our laws that help maintain and ordered entry into our country!  Having said that, I will agree with everyone who said that you can find far worse tenants; there are a lot of low-life lying and 'entitled' people out there. . .they pass background and credit checks yet they cause you a ton of pain, including pocketbook pain. While I think it is wrong to rent to illegals, the alternative is often worse. A frustrating situation it is.