Hey BP,
I successfully closed on a deal yesterday (12/28/17). I figured I would attempt to go into the details from start to finish for the sake of what I hope is a good read for you. I also want to share in case anyone wants to give feedback. I found this lead in Allegheny County Pennsylvania public records and searched probate cases. Found a property held within an estate that was a three story building with 5 residential units between the second and third story and two commercial spaces on the first floor. I found info on both the executrix and the probate attorney. I sent the executrix a letter, found a number for her and left a voicemail and then made direct contact with her probate attorney advising of my interest to purchase the property if there was a need to liquidate that asset. A week later I received a call back from the executrix. After a few days of speaking and report building we scheduled for a viewing/walkthrough of the property. I didn't live in the area so I sent my mother to look at the property for me as she lives in this area and she took photos of the property.
We agreed to go under contract for $80k initially. After failing to market the contract for a good profit I went back to the seller with concerns from those whom had viewed the property and managed to negotiate down to $50k, then an inspection was done, Found some foundation issues which was a huge deal. Used this to negotiate down to $30k. After this drop in the acquisition price with myself and the seller I was able to find a buyer for $65k. In this county of PA I wasn't legally able to do an assignment but a release agreement with a charge of a release fee to the buyer would have been the equivalent alternate. Considering the spread that I would be making I chose to go with a double closing to avoid there being any issues with upsetting my buyer over my profit.
I ended up using transaction funding for the closing of my first deal between myself and the seller otherwise known as my "A-B" contract. I found a company that charged 1.5% of the loan amount or $750, whichever is greater so I paid them $750.00. I however had to pay for title insurance and mortgage origination fee with the title company due to getting this loan for my AB, collectively I ended up paying over $1500.00 for the loan, then there was the other closing costs as well. Out of the $35k spread had these deductions taken out of closing, I walked away with $29k once the "B-C" deal closed. Now in this deal I ended up doing partial seller financing with my buyer on the BC deal. I received the $14k at closing and have a note with myself and the buyer for a short term interest only loan. Giving the buyer 30 days to pay the principal amount without any interest. After that time he'd be charged interest only payments monthly and the principal will come due after 4 months. The reason for this option was due to the seller needing more time to pull their money out of their 401k.
There were a lot of moving parts to this deal that I couldn't really type down but this is the main info on how this deal was developed and ultimately closed. As for the time it took for this deal to reach the closing table.... I first found the lead in mid to late August of 2017.. Made contact with the seller by September and started the negotiation process, Placed seller under contract in late October, renegotiated on the deal multiple times with the seller after receiving feedback from potential buyers post their walk through, reached final agreement in mid December on purchase price of $30k with $1.5k earnest money being given to escrow out the asking price. Placed buyer under contract for $65k with $3k non refundable earnest money given to escrow and instructed the title agent to take half of my deposit from my BC and place that in the AB to satisfy the earnest money deposit for the $1.5k. Deal was funded and closed on 12/28/2017. I learned a great deal in this deal just like I have in my others before. Look forward to closing more in 2018. I hope everyone has a prosperous New Year.
