All Forum Posts by: Winston Covington

Good morning Thu. Let’s begin with the basic considerations.,,

1. Location…which property is in the better area ? Stronger and more diverse economy, job and population growth, home affordability, better rated schools, lowest crime and 5 year growth plan ?

2. What are your long term investment goals ?  Positive cash flow, appreciation or a combination of the two ?

3. How do these properties compare financially with the true cost of ownership ?  Make sure to compare your true principal, interest, property tax and insurance payments. * Note * The cost of a good landlord Insurance policy had had steep increases lately.

4. What is the condition of the property  ? Have you had inspections covering everything from the roof to the foundation 
And everything in between ? What are your Cap X expenses ?

5. Have you interviewed local property managers to see what a fair rental amount should be ?  Have you found a good  property manager in the area that you’re comfortable with ?

I’m sure that other Investors with BP can add a lot more to this list but it will give you a good start.

Good luck.

Jane, I wouldn't let it go as the  Sellers are acting in bad faith. I would at the very least, take them to small claims court. It's inexpensive to file, Attorneys are not allowed ( it's known as the " People's Court " and you can normally get a court date within 30 days of filing.  Give it a shot as I feel that  you have a strong chance of  winning.

Hi Jane, the California Real Estate purchase agreement gives timeframes  for the Buyer’s inspections and due diligence. We also have timeframes for the Seller’s disclosures with time given to the Buyer for their review.

If the Buyer isn’t comfortable with the inspections and disclosures, they can request additional time to investigate the situation.

If the Buyer finds that the repairs are excessive or information in the disclosures are unacceptable, they can cancel the agreement within the allotted time specified in the contract and receive a refund on their escrow deposit minus any escrow or title fees incurred.

I would recommend that an experienced Real Estate Attorney review your purchase contract and hopefully help you cancel this deal and get your deposit back.

* Note * In California, the Buyer’s review time is extended if additional disclosures are provided by the Sellers beyond the allotted time in the contract. 

Good evening Byron, your question is an  interesting one. Personally, It’s the total positive cash flow that matters most. Bigger #’s doesn’t equal better cash flow. My retirement goal is to have 10 nice B grade homes in good neighborhoods with great schools paid for free and clear. That along with my primary residence being free and clear will provide a great retirement and allow my wife and I to pursue our “ Bucket List “ and enjoy a comfortable lifestyle. It will also provide us a chance to share our blessings with our Church, Community and favorite Charities.  :-)

There are several reasons as why deals cancel. Buyers get remorse over the terms and conditions of the contract. Physical inspections and disclosures reveal more repairs than were expected. Appraisals come in low or interest rates rise to a point where the #’s don’t fit as planned. Loan approvals come with conditions that can’t be met and Buyers run short of  cash. The list of why deals go bad is a long one but sometimes, the Seller is just a pain in the butt and it’s best to walk away.

Anthony, always remember the first 3 rules of real estate…Location, Location and Location ! Stay clear of this property.

Explore your multi- family opportunities and if you find some good ones…sell and do a 1031 exchange. As always, do your homework up front..speak to your lender, CPA and a good Property Manager before making any decisions. Good luck.

Do a realistic income and expense projection as if the property was already rehabbed and fully rented at market rents. Then look for a partner that shares your long term hold goals and make it happen. Good luck.