All Forum Posts by: Matt Holmer

In my neck of the woods, liability for the inspector is typically limited to the amount actually paid for the inspection.  However, in the event of a willful and wanton act, there might be some more liability, but that certainly goes beyond negligence.

With respect to the disclosure, what does the actual document say? Again, around here, sellers do not have to disclosure information that they reasonably believe to be remedied.  So, if there used to be water in the basement, but you had the drain tiles replaced, you do not have to disclosure it.  

Make sure you review the actual document and then look at the applicable disclosure statute.  In Illinois for example, you can recover attorney's fees, but you only have 1 year to file a claim from the date of closing/possession, whichever is earlier.  That is significantly shorter then say a negligent misrepresentation claim.

I get these types of call on at least a weekly basis.  Your best bet is to call a real estate attorney and ask for a consultation.  The fee, if any, should be minimal.

This is why our leases say that deposits will never be used for rent during the lease.  They can apply when they move out though.

Does he have documentation showing the application of the deposits to the unpaid rent?  To me, it sounds like he commingled the deposit funds and lost track of them.

Thank you everyone for the information and advise. Yesterday HUD countered my offer and a bid was accepted. Based upon the advice of this thread, I had a foundation inspection lined up a couple hours after acceptance. The inspection found MAJOR issues, that would have required three walls to be rebuilt and another required bracing. The quick estimate was $25,000. Based on the extensive cost, we backed out of the sale before having any money invested.

Thanks again BP!

Thank you everyone.  Good idea on having the inspection lined up so if the bid it accepted it can be completed within the two day period.  

I have a question for those experience investors who have purchased from HUD.

I've been looking at a few properties with a realtor who I have never worked with before. He has experience with REO, HUD, etc. He has said that after an offer is accepted, if we had a inspection that reveals a major issue (i.e. foundation, plumbing) that it is possible for an investor to get his/her earnest money back.

Is that the case? I've read the HUD purchase contract and I am not seeing a provision for investors having the EM refunded.

Thank you for any thoughts that you care to share! 

unless things have changed, every member of my national guard unit that was deployed while having a written lease/mortgage was e titled to BAH payments. The government does not want your family evicted or foreclosed upon while one is deployed.

@Javier Gil

Look up the "Due on Sale Clause" for information regarding transferring the property to an LLC while you have a mortgage in your personal name. Basically, the bank could call the loan due, but many investors here say it rarely happens.

Another option that a lot of people use is to have a high limit landlord insurance policy and an additional umbrella liability policy. 

One additional thing to keep in mind is the ability to collect on a judgment if things go south.

The single guy with a stable, high paying income will be much easier to garnish then the small business owner with a lot of unverified income.

Also, due to child visitation modification being a pain, the single guy might stick around longer.

@David Jenulis

Welcome! 

There is a pretty good contingent of QC investors on this site.  If you're ever looking for abstracting/real estate attorney services, please feel free to send me a PM.

All the best!

With the type of houses I am looking for in my area (3BD/1BA, approximately $70,000 all in purchase price) I am looking for at least 12% cash on cash return and a minimum of $150/month cash flow.  This is with 20% down, 30 year financing.

When I run my numbers, I consider the follow:  

5% Maintenance (The property should be completely fixed up)

8% Vacancy (Average 1 month over my portfolio)

10% PM

10% or $100/mo CapEx (whatever is greater)

Now, if I was buying from a turnkey company pre-rehab (rehab and purchase price in one), I would at least look for some equity built into the deal because I know it will sit vacant for some time while the property is being rehabbed.