All Forum Posts by: Nathan Burnett

As stated in the original post: The contract does not explicitly state that "this contract will be deemed void if closing does not occur by closing date." It actually doesn't explicitly state anything about what happens if the closing date passes.

After speaking to a local attorney, he stated that even after an “expired” closing date, if there is intent to continue, the contract still applies even if the contract requires both parties to sign an addendum in writing, which this contract did. The reason for that, he states, is because if you’re taken to court, a judge would most likely rule on the fact that you continued to pursue a purchase agreement after the expiration date.

Seth is correct in stating that the seller could sue the buyer for the cost they incurred, agent fees, and if they sell for lower, then the buyer could have to cover the difference if awarded in court. According to the attorney, with little to no EMD in the deal, the buyer, if sued, could get away with little fees incurred to go through the process/court. During the time of litigation, the property can't be sold or marketed for sale until a judgement is made, which could take up to or more than a year if it were to get dragged out. In the case where a seller is out to sell the property quickly, it wouldn't be in their best interest to go through with all of that and would most likely sign a termination or release from the contract and take the next best offer.

In our case we are the buyers. This property (that was out of state), we got under contract without seeing (besides agent-sent pictures and an inspection report). It ended up having major structural issues that the inspector we chose (and who was highly rated) didn’t even mention In his report. We found this out on the final walk through that we did in person, our first time seeing the property with our own eyes. The seller blatantly lied on the seller disclosure (obvious cover up attempts were noted). The seller also left the place absolutely trashed. In this case, we had the right to go back to the seller and hold them responsible for providing false information on the seller disclosure and condition of the property if we had wanted.

At the end of the day, we ended up receiving a Termination of Contract from the agent the following day after the walk through... WITHOUT even having told them we were not happy with the walk through. We believe they tried to take advantage of us as out of state investors until we flew in to do a final walk through in person, noticed the issues and knew that these issues weren’t on our inspection report or seller disclosure. The agents had been pressing us to close, ignored phone calls and texts, and even turned the power off immediately before we did our walk through. They had been completely shady throughout the whole buying process and it was a dual agency with the sellers interest above ours, but that’s a whole other story. So, we believe they presumed we were going to attempt to get out of the contract after seeing the property first hand and didn’t want any conflict by sending over the termination of contract without us asking for it. They were correct!

Lessons learned:

1. Build yourself a trustworthy team in the area you’re looking to invest in. We made the mistake of assuming this agent was on our team. Don’t assume.

2. Inspection reports will not reveal 100% of issues, which we understand. However, even HUGE “in-your-face” issues may not make it into the report. Hire a good inspector who knows what you’re looking for.

3. Contracts apparently have a lot more wiggle room than the black and white printed on the paper. Make sure you know your local/state laws and talk to an attorney if you’re unsure.

New investors (especially out of state) we hope you take notes and learn from this as we have. 

@Tom Gimer If No, what might be the appropriate action to take, do or say? Thanks. 

Hey All! Would like to get your input regarding the validity of a purchase contract..

Scenario: Closing date has come and gone, because the buyer's lender took longer to process the loan than expected. The buyer and seller have RE agents representing them. Per contract, all extensions/addendum etc. etc. must be in writing and signed off on by both parties. Verbally, everyone has been under the impression that we would extend closing for the sake of getting the deal done. However, there was never a written or signed extension to contract presented by the RE agents for signature. There is no earnest money in the deal.

Question: Does the fact that closing did not occur (and has not yet occurred) on or before closing date mean that the original contract is now null and void/expired, etc?

The contract does not explicitly state that "this contract will be deemed void if closing does not occur by closing date." It actually doesn't explicitly state anything about what happens if the closing date passes. 

Any one have any experience with situations like this?

Thanks!

@Cameron Dye Tough to say. I don't look in that market for multiple reasons haha. It really just depends on what kind of investments do you wanna make or what your goal is. Choose your markets wisely is all I can say. 

@Cameron Dye First, in my own opinion, be careful in who you listen to in NWA. That market has taking off and is now no longer a market for smart investors. There's a lot of over paying on properties and the rents aren't high enough to make a good ROI. Most "investors" there, are banking on appreciation but as you can see right now and across the country a plateau or even decrease in home prices. The best advice I can give you is to really communicate with lenders, contractors, property managers, etc to establish a spreadsheet of cost that it really takes when purchasing a property. BP teaches you a lot of stuff and you can guess all you want of how much things cost to put in the calculators here, but from the hard lessons I've learned over the past year and a half going through multiple contracts on properties, what it truly cost to close is another thing. Also, if you need some connections to build a team in that area, PM me. I can send you some names and numbers.

One other thing, if you didn't go to a community college in FS, consider NWACC to save some money until you have to go to UofA. The same professor teach at NWACC with the same curriculum for a third of the cost. Good luck. 

#WooPig

Originally posted by @Ike Hobbs:

Talk to Mark Canton. He's in Seattle area I think but his firm does a ton with investors. He's on BP as well but I'm not able to tag him for some reason. 

I just spoke with Mark. He was very helpful and informative with answering questions about private lending and tax strategies. If you're in Seattle or the surrounding area and need help, be sure to give him a call. Let him know that you found him on BP! Here's his info:

Company Name: Hunt Jackson CPAs

Business Address 1: 4123 California Ave SW # 101

Hi! Also being a newbie investor, what I’ve definitely learned so far is to stick to your Math! The numbers won’t lie to you, regardless of value. Research the rent rates, exspenses, taxes, cost of insurance etc etc and put it all into the BP calculators. Start by putting in what the seller wants the purchase price to be and you’ll see what that price generates for you, as far as cash flow, CAP rates and ROI go. Then start to decrease that purchase price until you hit the numbers you are looking for (whether that be 12% ROI, $200 cashflow/unit or whatever you’re goals are for the property). There is no right or wrong answer when asking “how much ROI or cashflow (or whatever) is enough to make it a good deal?” It’s highly subjective and it all depends on what YOU think is enough for YOU, depending on your goals. So some of the best advice I was given is to set your goals and minimum criteria up front, for what you define as a “good deal.” Then stick to those numbers, on any deal! The math won’t lie, or care about who believes the value is higher or lower. Plus, when you stick to math and leave emotion aside, it’s much easier to present offers. Some will get rejected, but maybe some won’t. And you’ll be sure you’re getting the deals you want and know the math on! Check out the BP webinars, Brandon Turner has great info on finding good deals and running the numbers. Anyways, hope it helps! Good luck! Nate

Hey BP!

Wondering if anyone has used private money lenders for ONLY the down payment on a SFH buy and hold? New to RE investing, have a great opportunity to purchase first SFH. Ran the numbers on BP rental calculator and cashflow/ROI look good! In addition, this market is on the upswing, and home values are increasing steadily (so in addition to solid cashflow, potential appreciation looks good). Offered less than market value by a long shot, secured the contract!

So, back to the original question, what strategies or approaches have BP members used for securing private money lending for a down payment (knowing refinance will produce ability to pull out that down payment in equity in a short amount of time, to pay off private lenders quickly)? Or is it better to shoot for the stars and find a private money lender to front the full purchase price?

Thanks! 

Nate