How Do I CYA With This 12 Unit?
Looked at a 12 unit today. Owner lives out of state and has a tenant that is the property mgr for free rent. She basically does not know much about any tenant since they did not screen or even take applications. etc etc Building is ok but nothing like the way it was advertised on MLS. Has septic that does not appear to be right, building has no fire alarm, extinghuishers or smoke dects. etc. Basically the owner does not care just wants the monthly checks etc. He claims everything is up to code etc. But with multi-family in Louisiana there is no disclosure form from the seller to give. I am sure this guy is hiding something with this building. 380K asking with $5350 in rent and $9,500 annual expenses. How do I make sure this guy discloses everything such as if he knows the septic is not in code etc. etc. Can I make him sign some type of disclosure anyway and see how he response to that? Just want to CYA so I dont buy into a mess.
With using tenant as prop mgr for free rent what kind of liablity is there ? Do I have to pay employee taxes on her etc. etc.[ Edited by Slidell on Date 07/01/2005 ]
If there is not a disclosure for your state then you have to do your inspections. A septic tank inspeciton and get a building inspector out and write contingencies in your contract as excape clauses.
No matter where a seller lives they may or maynot disclosure everything you . If there is any costly repairs you can ask the seller fix them at his expense or reimburse at close of escorw. make sure the attorney or escrow company get both signatures on that change.
You also want to see his schedules C and also his rent rolls , lease agreements, expense log,
I hope this helps!!!
[ Edited by NancyChadwick on Date 07/10/2005 ]
From what you are writing it would be hard to get this guy disclose everything. probably he himself does not know much. This is like a foreclosed property i bought from the bank. You might have to check out everything and then put some contingency . But on the other hand it might be a plus for you fro bargaing the price. As it is the price seems attractive, except the expenses seem low, which explains poor condition of the property.
The units will be offered to tenants with a lease-purchase option. Tenant will lease for 24 months and purchase property at the end of that term.
Thanks.
I want to be able to see the income stream during the lease period and then the revenue from the subsequent sale.