Closing Delayed

It takes a ton of people to actually buy or sell a property.  There are the obvious (buyer and seller, real estate agents, etc) and the not too surprising (title insurance personnel who actually manage the closing docs) but there are a bunch of others you may not consider, and it is worth keeping them in mind.

First of all are the local tax authorities, especially if you live in a state with a property tax.  The buyer and seller each pay a portion of the property tax, for the portion of the fiscal year when the property was owned by each party.  Of course, only one person actually pays the tax, so the other party reimburses for the amount owed.

This usually works out fine, but if you manage to close near a tax due date, things get weirder.  The title company needs to contact the taxing agency and find out how much the tax is and whether it has been paid.   When buying or selling you really need to look over the HUD very carefully and double check everything.  Make sure you understand each line item. Once when we bought a property 2 days after the new fiscal year started, the title company inadvertently tried to get us to reimburse the seller for almost a year of property tax because they assumed the tax had been paid (it wasn't).  Most recently, we were charged with a reimbursement of tax, which turned out to be legitimate, but the title company assumed the tax wasn't paid, and was going to make the seller pay it at closing.  Something like this can hold up the whole process and the last thing you want to do is wire money for a closing and then get stuck at the table when someone notices an error.

Another factor to consider, and this is what just delayed our most recent closing is the home owners association, if you are buying a condo or townhouse (or any other property that has an HOA).  A lot of these properties have special assessments which must be paid at closing by the buyer or the seller.  In this case, the HOA has an assessment but we don't know the details. The title insurance company has been all over the HOA (really the management company that does the processing for the HOA) and even paid an extra fee for expedited service.  Unfortunately the HOA did not respond in a timely manner and the closing is now delayed two days. This means the HUD will need to be redone (for the taxes) and we are up against a wall in terms of our contract with the seller.  Keeping our fingers crossed for closing on Wed.

Hubby quitting work to invest full time in real estate!

Well, we learned a big lesson about flipping properties about a week ago (late on blogging because I was out of town for a family emergency).  The second place we were trying to buy for 75K went to someone else.  Here is how it all unfolded:
- Hubby got the bid in on Wed night.  Bid 75K and had and inspection contingency.
- Handyman went over early Thurs morning and said the place looked great.
- Realtor called or emailed around 10:30 Thursday saying that the bank had to officially break a prior agreement.
- Hubby crazy busy at day job all day. Finally called realtor back on the drive home.  Told him to drop the inspection contingency.
- Hubby thought about it some more and called realtor back and told him to offer full price.
- Learned first thing on Friday morning that the place went to someone else.  Someone offered full price with no contingencies on Thursday afternoon.

This was a real bummer because if Hubby had been working full-time on flipping he could have reacted sooner and we would have had the place.  Essentially a potential missed opportunity for an easy 30K. Bottom line, when something hot comes up, investors are all over it very quickly and we need to be able to react quickly and aggressively.  Giving the banks full price with no contingencies, whenever possible, is the way to go!  Obviously we don't want to lose money, but sometime you have to take a bit of a risk.

Hubby decided that the time was right to bite the bullet and leave his full time job.  He is away right now but plans to quit as soon as he returns.

Hubby also negotiated a weekly salary of $1250 with the handyman (we will buy all materials and hubby will work with him for half days, at least).  We feel this is reasonable ($250 per day), especially because we won't necessarily be able to keep him employed non-stop.  I think it is a little high, but we'll see how it works out. As long as we can make money, it won't matter too much.

On the rentals front, 5 out of 7 have paid for April (except one that owes $50, but we are pretty close anyway on those 5).  Another unit is on a payment plan of $350 per week until they get caught up and the first two payments have been received with no problem.  The 7th is not looking so good. They were on a payment plan, but blew it.  They were supposed to pay $700 while we were gone (they called to tell US that this money was coming) but when my son showed up to collect, only $300 was forthcoming (and this was after my son had to drive him to the ATM). They have to pay all past and current rent, late penalties, check bouncing penalties, and legal fees by April 23rd or we will take them to court to start eviction proceedings.

Yet another purchase

Hubby found a great deal on a house from an online service that sends him emails daily (I think his realtor set this up).  It is very close and was listed for $79,000.  He asked me to go look at the property because he was going to be very busy. The usual realtor wasn't available, so another member of his "team" met us there (hubby ended up leaving work early to see the place).  It is in really great shape, and in a really nice area.  Lots of cosmetic stuff, and the mechanicals need to be replaced (furnace, hot water heater, etc.).  Our HVAC guy came over to see it later and said he could easily install central air (it is a rancher and the floor of the main level is exposed in the basement). Central air will instantly add $10,000 in value.  There is some dispute about how much it will sell for when finished.  I think it could go for nearly $150,000.  The realtor said the absolute lowest was probably $125,000.

Hubby bid $75,000.  The listing was weird.  It was originally listed for 75, but then taken on the market and relisted at $79,000.  They want a cash deal, and a very quick closing date. We may end up closing on both properties in one day!  Luckily both will be pretty quick turn-arounds and hubby can quit his job for good to keep the business running (that was our goal all along).

Not much happening on the rental front.  One severely behind unit is now on a $350 per week payment plan from now to the end of May to catch up. I am doubtful.  The other unit that is majorly in arrears had a 2nd eviction notice posted last week.  They will probably be out by the end of April.  Early in the month, we have rents from 4 out of 7 units.  A fifth unit and the first $350 payment are supposed to be collected on Friday. Keeping my fingers crossed!