All Forum Posts by: Shawn Devoid

To me, this sounds completely unethical and even though you are "in the deal", you probably won't make much, if any money AND most importantly, you have a lot of financial liability with little control. The question you have to ask yourself is, how much do you value your reputation? The only way to do it ethically ( and perhaps, legally) is to partner up with investor #2 and have some kind of Joint Venture paperwork drawn up. Then, investor #1 is lending money to your joint venture. I sure wouldn't do it for 12%, maybe anywhere from 30-50%. Plus, you would need to be "involved", for it to work at all; your private lender trusts you, not some random lady at an REI meeting. Depending on your market, maybe this could still work. You really need to know your market and run all the numbers. In many areas, the deals are too thin for three investors. Plus, does investor #2 have a proven track record?

To me, this sounds completely unethical and even though you are "in the deal", you probably won't make much, if any money AND most importantly, you have a lot of financial liability with little control. The question you have to ask yourself is, how much do you value your reputation? The only way to do it ethically ( and perhaps, legally) is to partner up with investor #2 and have some kind of Joint Venture paperwork drawn up. Then, investor #1 is lending money to your joint venture. I sure wouldn't do it for 12%, maybe anywhere from 30-50%. Plus, you would need to be "involved", for it to work at all; your private lender trusts you, not some random lady at an REI meeting. Depending on your market, maybe this could still work. You really need to know your market and run all the numbers. In many areas, the deals are too thin for three investors.

Hi @Rohan Attravanam.  I know you've received a lot of feedback, but I don't think you made a mistake by accepting the owner's clause or not putting in your own new clause in the contingency.  I believe your only mistakes was not fully understanding:

-the motivation behind the clause 

-the ramifications of the clause

-the seller's viewpoint

-the inspection period clause

I hope I can explain it in a way you'll understand.  The owner didn't want to lose rent if the deal went south (as it did), so he requested a clause to protect his interests (rent and deposit).  If you added a clause to the contingency stating you'd get the rent money back if the deal fell through, for whatever reason, it would essentially nullify the original clause.  In my humble opinion, the seller was reasonable asking for lost rent, but the deposit is never really "his" to begin with, so I wouldn't have agreed to pay the deposit, should the deal fall through.

I'm not familiar with Florida real estate purchase agreements, but some states require sellers to disclose known deficiencies with the major systems of the property.  This does not relieve you of doing your due-diligence, but should give you an idea of the cost of the needed repairs.  If this disclosure is not furnished, you should ask the seller about plumbing, roof, HVAC, etc.  I'm assuming the repairs needed were big ticket items such as these, not nickel and dime minor repairs.  You might have saved yourself (and the owner) a lot of time and money by asking these questions.

Finally, I appreciate your courage putting your experience up here for us.  I don't see it as a failure, I see it as a lesson.  As far as financial lessons go, I think you got off pretty cheap!  I hope you won't let this one lesson keep you from continuing in your real estate endeavors.  My advice is, if you know you're going to invest in Tampa real estate, get ahold of all the forms they use locally.  Your agent (maybe a new one) should be able to furnish these for you.  The big title companies in town are also a good resource.  They usually have a lot of free educational information on their website and can answer pretty much any contract question you may have.  Best of luck!

Thank you for replying @JT Smith.  I started looking at those particular neighborhoods right before you answered, so your reply was very timely!  Sorry it's taken me so long to reply.  I tried to reply before, but it was very glitchy on my iPad & I got frustrated...

Thanks for your confirmation @Joe Norman.  I appreciate your insight.

I just wanted to thank everyone for posting; definitely got some laughs!

You answered all my questions- and quickly!  Thank you @Anthony Angotti!

Thanks @Anthony Angotti.  I'll do that!

Thanks @Devin Woods.  Tha's how I felt about Baltimore when I lived there- your comment really helped me put it into perspective.

I can't wait to visit Pittsburgh and drive the neighborhoods and hopefully meet up with some investors, but until then, I'm trying to get a feel for landlording in and around the 'burgh.  I'm hoping some of you will be willing to share your stories from the trenches.  I've been trying to research the general character of all the neighborhoods, as well as the numbers, but I have a feeling that even after I get there and drive around, I'll still have a lot questions that only experience can answer!  

Thanks in advance!