Question on Apartment Building Purchase - Posted by Eric

Real Estate Investing
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Posted by Eric on November 08, 1998 at 09:50:23:

Phil,

Thanks for the input. The closing date was suggested by my buyer’s agent, who is excellent with respect to her attention to me, but clearly is more attuned to SFH than to rental properties. Maybe I’ll see if I can delay the closing until the 1st of 2nd of December.

Thanks for the input

Eric

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Question on Apartment Building Purchase - Posted by Eric

Posted by Eric on November 07, 1998 at 22:30:24:

I am scheduled to close on a ten-unit apartment building on the 30th of this month, and chose this day given the general advice of closing at month’s end so as to avoid paying upfront interest charges.

What is the best way to try to insure a smooth transition for the rents due to me the following day, since I assume that the buyer will not want to instruct his tenants to begin sending the rents to me until the purchase actually closes?
Under the best of circumstances (tenants are instructed to hold checks until notified of the outcome on closing day?), do I need to assume that at least a few of these checks may arrive 1-2 weeks late, especially if the former owner is less than diligent about forwarding errant checks to me.

Eric

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Re: Question on Apartment Building Purchase - Posted by Darren (MA)

Posted by Darren (MA) on November 09, 1998 at 06:39:08:

I usually close a day or two after the 5th. That way, I get the rents at closing (prorated, of course, for the 5 days) AND my first mortgage payment isn’t due until the month AFTER the current one. So I collect the rents again. So essentially, I’ve collected the rents 3 times before I make my first mortgage payment.

And it’s really no big deal if you have to pay the interest up front at closing for closing on the 5th. Have the seller pay them. That’s what I’ve always done.

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Re: Question on Apartment Building Purchase - Posted by phil fernandez

Posted by phil fernandez on November 08, 1998 at 07:40:31:

Eric,

I do just the opposite and close either on the 1st or 2nd of the month. Two advantages by doing this.

One you will get credited for all of the December rents, so you know you have them and get off to a good start.

And two, the December rents become a credit that will reduce your cash out of pocket at closing.