Yeah, I was thinking that too. But then…if the “cloud” is recorded against the property, rather than the property owner, then it may work. I figure, no other contracts would hold water if he didn’t hold the title, and since my contract would be contingent upon him getting title in his name then, if worded properly, my contract would become legally binding as soon as the transfer of title occurs.
Sounds good to me…but I guess I should consult an attorney…
I think I have found my very first wholesale deal. All the numbers look great: the AFV of the house is $375k - $450k (depending on whether or not the basement is converted into a seperate rental unit). There is a $10k balance on the mortgage. The disabled-veteran seller wants $135k to retire to the country. I even have an investor chomping-at-the-bit and ready to pay $150k cash…and he can settle on Monday. One teensy-eensy problem: the seller is not actually the owner.
This guy is the only heir of the property owner, his mom, who died in testate three years ago. If it matters, he lives in the property (in Washington, D.C.) and pays the mortgage that his mom took out about 6 years ago. The mother also had property in Virginia when she died, the title for which the son had no problem transferring into his name in just a matter of days. But I happen to know that D.C. is a horse of a different color. There is always red tape.
My question is this: Has anyone had a similar situation in D.C.? How long should it take a title attorney to sort this out? Is there any way to expedite things?
Posted by michaela-ATL on January 15, 2003 at 19:09:31:
JB,
that sounds like a deal, that might make good auction potential. Try to secure financing, so, that you can buy it yourself first. If you have to get hard money.
Then contact all investors, that you can find. Maybe go to your local Reia group and make up a flyer.
And then invite them all at the same time and start the bidding at 150k. You might be surprised, what you can make.
Don’t sell at 150k. If you can buy it, do it then sell for a much larger amount. If your AFV is correct, depending on how much the repairing cost is, you can sell for at least 250k. Opportunities like this don’t knock on your door everyday, if not every century. Take advantage of it. Get the contract drawn up right away man.
Posted by michaela-ATL on January 15, 2003 at 15:07:33:
JB,
congratulations! sounds as if you’ve gotten yourself a great deal. Hope you don’t, yet, have a contract with the rehabber, it sounds as if you’re giving it away too cheap. You can make more than 15k on this, but maybe for the first one it’s not too bad
I’ve done a number of probate deals. I usually include the cost for the probate into my offer, meaning, i’ll pay for probate. That way i can chose
the attorney and keep controll of the deal. Since it takes a few months, you don’t want the seller to get wise and sell for a higher value to someone else in the meantime.
If DC is similar to Atlanta, then it should take you 1 1/2 to 2 months, if this is the only heir and there’s no question about it. They have to advertise for 4 weeks in the legal paper and then there’s the standard time, that it takes for the attorney to make up the docs etc. My probate costs me usually $ 500-1000.
I’m not giving legal advise here, just talking from my experience.
Posted by IB (NJ) on January 15, 2003 at 10:22:11:
I believe this is a probate issue. I think you’re going to need a probate attorney to take the property through the probate process and make the seller the rightful owner. You may want to consider choosing and paying for the attorney. Make sure you record the contract to protect all the work you’re going to do. You might also want to search the archives for probate. I believe Krisitine-CA handles a lot of these. She may be able to give you some advice.
The property is in need of a total gut-job; it’s a mess. Needs new plumbing, new roof and there is a porch and an attached garage that need to be reconstructed. I think it will need 100k - 125k put into it…at least. If listed on the MLS, I could get about 175k, I would think…but certainly not 250k in it’s present condition.
Anyway, I will be getting this property under contract tomorrow. Thanks so much for your advice!
Thanks for your response…I’ve been a fly on the wall at this site for some time now, and I really value your opinions and advice! Well, I guess I really value everyone’s opinions and advice…but, being a woman too, you really inspire me! You truly know your stuff!! Thanks again!
IB, thanks so much for your response! I do hope that Kristine will be able to give me a little more info. Question for you though: what is the process for recording the contract? Where would I do that?
Sorry about calling you a man. Being able to get a deal this good should qualify you as a woman, not a girl anymore. How long have you been doing this? You’re really amazing you know that?
You never really know how much it would take to fix this house unless you’re really experienced. If you’re not, you may want to talk with a few investors after securing the contract. Try and advertise on minority newspapers to get the minority investors. Due to language barrier, they’re less likely to get the best deals so they’re willing to pay more and get less compare to the so called experienced “American” investors.
Talk to them all and sell to the best buyer. Good luck.
Posted by michaela-ATL on January 15, 2003 at 19:03:55:
JB,
thanks for the nice words.
Keep this in mind: If someone can afford a 400k house, then their privacy is usually more important than getting some extra rental income. Having a tenant in the house would be considered a negative for a lot of people in that price bracket.
Subsequently, don’t base any of your figures on adding an apartment.
Re: Kristine-CA, are you out there? - Posted by IB (NJ)
Posted by IB (NJ) on January 15, 2003 at 11:43:34:
You would record it at the same place where deeds are recorded I believe (county Recorder’s office - but don’t quote me on that because I’ve never done it). But I’m just realizing that your contract may not hold water if the ‘seller’ is not the rightful owner. So you may want to consult an atty, on how you would protect yourself in this case.
This is actually my very first deal. I can’t take all the credit though. My newbie partner (dear ol’ Dad…who IS a man, by the way) is actually the one who found the deal. And all of you guys here certainly deserve some credit too. I have spent many a day on this site just absorbing as much information as I could – all the while passing it all along to my dad.
As for my experience with repair costs, I am somewhat of a newbie real estate agent as well. I got my license a few years ago at the age of 24 and sold a few houses, then I moved to ATL for a couple years. Now I am back in DC, I’ve got my license reinstated, I’m selling houses here and there. And wanting to focus on investing. I guess I said all that to say that I have some limited knowledge of repair costs. I mean, I wouldn’t know how much a lesser job would cost, but I do know that to totally gut a house (and believe me, this house needs it) of this size would take about 100k. But you are right…I may be well-advised to check with some rehabbers. The minority newspaper idea is a good one. Thanks!!
Thanks again for the advice. As for the rental units, they are very common in D.C. in the Capitol Hill area. These are attached row houses, so a homebuyer can only expect a modicum of privacy to begin with. I do get your point, but in this area, that is simply what the comps indicate that those types of properties will bring in. They are in heavy demand…because of the very fact that they are in heavy demand…they sell very easily here. Matter of fact, the investor that I was planning to flip the property to has done several of those conversions with great returns. That is why I pulled the comps for both property-types; I wanted to give him an idea of what he might expect in that particular square block for both a single family, and a house with rental. But I do thank you for your advice. If the house were a detached single family in another neighborhood, or in the suburbs, a rental could definitely be a negative!
