Well it finally happened. The triplex that we made an offer on in the beginning of July (!) when it was still warm in the cuse closed. So basically we opened escrow on probably the hottest day of the year and closed on the coldest. Yay seasons and the slow buying process. This was a bit of a tough deal but we just had to wait it out and get through every roadblock as it came along.
- Financing fell through
We went with our credit union for financing and made it almost to the finish line before things fell apart there. In the final review in under writing they discovered that the lot is zoned R1 but obviously there is a 3 family house on the lot. There is a main house that is probably converted from a single family into a duplex (flats upper and lower) plus a carriage house that has a 2 car garage with a 2br/1ba unit over it. The town confirmed that it was grandfathered in and no zoning issues but the bank would not fund since if the house were to be significantly destroyed we would only be able to put a SFH back in its place. For the purchase price, we felt personally ok with this since we would have some interesting options on a scraped lot. It is 1/3 of an acre in the central part of the village so location is good and lot is huge. We could possible sub-divide and build 2 SFH to replace it but hopefully it will not come to that any time soon.
We were able to find another lender that was comfortable lending on the property and worked through them to complete the deal.
- Out of pocket repairs
Our inspector is pretty thorough so we felt we had a good handle on the repairs that are going to need to be done post-closing but the appraiser for the new lender required some fixes prior to signing off on the appraisal. The owner refused to actually get the work done or give us a credit which was not super helpful. I am not sure why he would do this since it sounded like they really needed to close in order to retire down to sunny Florida. They were kind of obstructive the entire time and it doesn’t feel like there was a better offer on the table that they were trying to switch to but in the end we paid for the repairs out of pocket and get things handled
|$430||Pre-close projects total|
|$130||plumber inspection of hot water heater|
This was the first house we bought that came with tenants in place. I had previously never heard of this term but we needed to get estoppels signed by all the tenants and the owner. This basically just certifies that that are paying X amount of rent every month and their deposit is Y. I guess in the future we should have this taken care of really early in the process in case the stated rents are not the actual rents but we were clueless on that one and will definitely include in our process going forward. The owner was again fairly unhelpful here and our team had to do a lot of legwork to make this happen.
- Driveway encroachment
The driveway in front of the carriage house is apparently too close to the neighbors year. It isn’t an issue with the town but our closing attorney wanted to get a signed doc from the neighbor that they did not have an issue with it prior to closing. Once a gain the owner was resistant to doing anything and we had to handle.
Overall it was a ton of work for everyone involved and I haven’t even seen the building in person yet. Going to head there in January to assess everything and prioritize projects for me network of contractors that we use locally. The numbers work so hopefully this will be a nice addition to the portfolio as we try to scale up and make a living out of real estate investing.