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2nd deal under contract, turning into another learning experience
Well it's been a week since I closed on my first deal, and I am now moving on to deal number two.
A little background. This was actually the first call off my marketing that I sent out in Feb. Out of state owner of a house that is paid off. There are back taxes owed and had to be redeemed by April 25. Owner called me and told me she didn't want the house and was just going to let it go, I offered to pay the back taxes of $11,500 and give her $1000. She agreed and then told me that there were squatters living there. Turns out it was her stepson but they didn't have a lease and he has never paid any rent. I asked her if he would let me see the house she said she would call to let them know who I was and that I would be stopping by. Well I went over a couple days later knocked on the door no answer, so I left a note on the door explaining who I was and to give me a call.
After a week and no response I called my lawyer, he had the seller give me a limited power of attorney to evict the stepson. We served him with a 10 day notice to leave the property this was on Feb 28. Ten days go by he is still there, now the redemption date is coming up in less than a month. I go over to see if I can talk him into leaving and find that he now has a giant pitbull chained to the front porch. There was no way I was knocking on that front door.
At this point I didn't think it was worth any more of my time and money. I would have to then go to court and put money out and I have yet to see what the inside of this house looks like. Since this would have been my first deal I just wasn't ready to deal with the headache so I just kind of forgot about it.
Then in May I got a call form the seller and find out that the Tax redemption date has been moved back to Sept. So I told her ok lets try this again, I send her the option contract and tell her to sign and send back. I go over to the house and leave a note saying that I will give him some money if he leaves, call me asap. Well again nothing from him, so I tell the lawyer lets move ahead with the eviction. I fork out $700 to get the ball rolling, but then I don't get the contract back when she said it would be there, then try calling her and can't get a hold of her. WORD OF ADVICE don't put out any money until you have a signed contract.
Then I get a call from the mother of the guy living in the house saying she just got my letter saying I would give him some money. Turns out he is in jail since April 29 and what is going on with the house. At this point we have a court date set for the next day, I still don't have my option agreement signed and I haven't seen this house. The mother says I can come over that day and look at it, so I do and to my surprise it's not as bad as I thought it would be. I talk to the mom and she tells me she is trying to get the house cleared out but doesn't have any money, I tell her I might be able to help with some moving costs. So the next day we go to court and I was going to ask the judge to give them 30 days to clear out, again I still don't know if I even have a deal. My lawyer gets an extension until June 27.
Here I am thinking I just paid to evict this guy for the owner, but then she finally called me and said she will send out the signed agreement right away, what a relief. So got the option agreement and then ordered title for it. Went over to the house on Friday to take measurements, I was looking to have the house listed this past Monday. Talked to the mother of the guy in the house and asked her when she plans to have everything out, she says she is working on it, but everything costs too much she says. I then tell her I would like a key for a lock box so I can show the house, she doesn't want do that. She will come over and let anyone in that wants to see it. I told her let me think about it.
So today I decided not to list it until they are out, I called her again today and said that I will give them $500 for moving costs but they have to be out by next week June 26, the day before our next court date if they are out I can just have the case dismissed.
I know that she is trying to stall me and that we will have to go to court, the son doesn't get out of jail until July 22 and she is trying to make me wait until he gets out and can deal with this himself.
I am trying to be a nice guy about this but I now feel they are trying to play me. Hopefully this will be resolved soon and I can get his house sold.
I'm sorry this post is so long, but I wanted to give people who are wanting to get into wholesaling a look into what a deal can look like. Yes you can make good money doing this but it does take money to make deals happen. Also be prepared for anything and everything, no two deals are the same.
I will update as the deal progresses.
The gurus dont tell you about this part do they!
Thank you for sharing! Wow, what a piece of work. I am interested in seeing how this progresses... Thank You!
Wow this deal sounds crazy looking forward to the update thanks for sharing
Can you tell us what area this is in and what type of deal this is? Thx!
Ben Kahle
The house is in St. Charles, IL and it is a 5 room 2 bd 1bath house.
I optioned the property. I gave a $1 deposit, I am going to assign the option to my end buyer.
Matt Whiteside Good post and story, unfortunately these situations aren't very uncommon. Often times sellers will agree to a wholesale price because they have a problem, the biggest problems is often tenants, even if it is family.
You've handled it perfectly so far, offering $ to get out is exactly what I would have done. Sometimes you need to be harsh with people though. If she keeps on stalling I would, in a nice way, tell her that the offer for $500 is off the table if you have to go to court and she'll be forced to move everything out with no help.
If you start to get the feeling that she isn't playing you then I would try and find a way to take care of her problem, just like you did with the current owner. I'm sure she doesn't want to deal with her criminal son's issues so try and take away some of that burden from her. Offer to help arrange movers, find a storage unit, pay for a truck, ect.
You'll have a lot easier time selling a vacant property that you can show yourself then you will with a property full of stuff that your buyer will need to evict. Not to mention the smack the mother might talk to your buyers about you or the property.
I wouldn't have bothered with the eviction until after I closed on the property or until I had the deal sold. It's up to the buyer to deal with possession issues. "Cash for keys" is usually enough to get a squatter/non-paying tenant out. Good luck!
Matt Whiteside One other thing I just thought of, have your title company do a quick title search before you give the tenants mother any money. You don't want some lien or issue to come up during the closing process if you've already paid this person.
You will obviously make quite a bit more money by having the tenants belongings out of the house when trying to sell it so the eviction and hassle is worth the reward.
Matt good luck on this deal
Heck it sounds like late night drama movie / show
Braden C.
I started off thinking she was being truthful but the more I hear from her the less I believe her. I did tell her the $500 is good if she is out by the 26th because on the 27th we go to court and we will go down that road instead.
I thought the same thing about her talking smack to my potential buyers trying to stall the sale.
I also did have my title company order a search I should have that back today or tomorrow. No more money out of pocket until I am sure I can close this deal.
Belinda Lopez
Have you had to do that before? I would think a buyer would not want to have to deal with having to get rid of a squatter.
Originally posted by Matt Whiteside:
Belinda Lopez
Have you had to do that before? I would think a buyer would not want to have to deal with having to get rid of a squatter.
On the contrary, auction buyers and others do this every month. It's a pretty straight forward process - at least here in Texas. Your state may be different so check with an attorney who does evictions. Remember that legal ownership is different than 'possession' of the property. Even if you legally own a property, anyone in possession of the property also has certain rights. This protects tenants and heirs as you just can't show up after buying a property at auction or from a landlord owner and kick out anyone there. They have to be evicted according to local laws but most will take the cash for keys offer and get out.
Update: I offered the mother of the squatter $500 to move everything out and hand me the keys if she could be out before today. She said she would, then she calls me on Monday and says the people who were going to help her backed out, and she needs the money to get a truck and a storage space. I told her that I was not going to hand her $500 before she did anything. I guess that wasn't what she wanted to hear, so she hung up on me. I tried calling her a couple times, didn't return my call.
So here we are today, just got back from court. The judge did grant me possession, however, he did give her another 2 weeks to get everything out. Wasn't too happy about that, but oh well.
Matt Whiteside, you certainly experienced plenty of roadblocks with this deal. I'd guess that most people would have given up early on in this process. Great job getting the deal done!
Could you describe how/where you got the knowledge to navigate this complicated deal? Did you spend countless hours on BP researching the forums? Did you ask for advice from BP members, real time while navigating the deal? Did you take a wholesaling course/have a mentor that guided you?
Thanks, and great job!
Not sure if i missed it but, for me personally, getting a house for $12.5k i'd gladly go thru the hassle. Though I would have bought before I worried about evicting.
Andrew K. to answer you question of where did I get my knowledge to do this deal. I have spent many hours here on Bigger Pockets reading all the great advice, but also I have read a ton of books on real estate investing as well. I never wanted to spend thousands of $$$ on guru programs, and most books give you just enough info to get you started and leave out so much. You really need to do a deal to really learn how things are done.
It's been awhile since I updated this post, a lot happened with this property. I will try to give a brief rundown of how things transpired.
Mother of squatter dragged me into court 5 times even after they were evicted, they tried everything just to be pains in the A. Finally the judge put an end to it.
Got the house listed and had interest, buyer backed out then found another, the problem was now the county came out to respond to a code violation, it was determined that there was no septic system on the property. Guess who made that call, that's right the squatter. The house was now condemned until the septic was dealt with. Buyer backed out two day's before the taxes needed to be redeemed. Tried calling and writing to the lien holder seeing if he would extend the redemption time, never responded. Deal gone, or so I thought.
There were two lots next door to the property that were being auctioned off by the county, called the company that was handling the auction found out that nobody bid on them. They were still available for $500, so I sent them a check and got the deed in 90 days.
Also got a call from the tax lien investor last week and asked if I was interested in the property. I said let me think about it, called the county and asked about the septic and what was needed there and what kind of space would be needed. Found out that the lot that the house sits on is 40x100 my two lots are 80x100 and that they didn't think there was room on the 40x100 lot to put in a septic and have it be far enough away from the well. So it looks like the tax lien investor is kind of stuck with out my lots. There is no way he can fix up that house and sell it with out buying my land.
So I am going to call them back and see what we can do, I knew buying those lots would lead them to call me, hopefully I can still make some good money on this nightmare of property.
I will let you all know how it finally ends.