First L/O Deal Questions
I have an owner who moved to another city and is now paying two mortgages. He had to move while he was renovating his house. He will accept my L/O plan (I plan to sub-lease and transfer the option). Here's the stats:
FMV before repairs: ~135k
Repairs: ~3k
FMV after repairs:~160k
Local rent value: 900/mo.
His PITI: 937/mo
I plan to offer him 135k and 900/mo and I'll do the repairs. Questions:
1. Should the house be inspected before I do the deal? The house is in the middle of partial renovation, of sorts. Doesn't he have to have the house inspected anyway for someone to buy it in its partially deconstructed state? Is it fair to charge him with inspection costs?
2. Can I conduct a title search without paying a title company $350 to do it? Can I go down to the recorder's office (or where-ever) and do it myself?
3. He's has a $25k lien against the property. I don't know what this lien is for, whether he bought a car or it was just to pay for the house. Does it matter what the lien was for and must it be paid before someone (my tenant) can buy the house? If it must be paid, how do I ensure the owner pays the lien when my tenant buys the property?
Thanks all.
I'd be very grateful for any reponse here. Thanks.
Thanks for responding King.
Amount financed: $117k
Payoff Amount: $110k
I don't know 'yet' what the $25k lien is for but I'm assuming he used it to pay for the house (I will find out though). This logic explains my offer of $135k; that and local values suggest something around that price.
orbeco,
I have a very similar deal that I am rehabbing right now. I can only try to help by telling you what I do on each and every deal I do:
1. I always hire a reputable inspection company to perform a home inspection. The little money I spend on this is well worth it to have all the info in front of me and a company that is on the hook if the condition turns out to be other than the report.
2. I always get a prelim. Also, in my contract I am very explicit to spell out that the Seller is responsible for any liens at time of closing and it even gives a specific timeframe he has to clear the lien and what happens if he does not clear the lien.
3. Remember that you may ask the Seller to incur any/all costs associated with the agreement. Although, I feel if I am getting the deal I want, I don't quibble about paying for the home inspection or the prelim.
Lots of luck with your deal.
Dave
[addsig]