Sad story. The seller got cancer, cannot work, and needs to liquidate assets. Anyway, he is willing to sell me his duplex with a great view of Downtown LA at a decent discount.
- I am planning to live in one unit and rent the other out.
- I am planning on putting 20% down (3.5% FHA if this property will pass FHA muster...but I'm not sure it will).
What are my next steps?
If you are that unsure of what to do, I'd contact a local real estate agent. That's their whole job ;)
Thanks, @Scott Trench . In that case, would the seller have to pay more commission?
Yes. But even if the seller asks to pass that along to me, I'd be happy to pay that price to rest easy knowing that I didn't undertake my first real estate transaction totally blindly and with no training. There are quite a few documents as part of this transaction, and a lot of individuals you'll likely need to work with (lender, inspector, FHA appraiser, contractors, sewer guy, etc etc).
It sounds like you are getting a good deal in Los Angeles, CA. If that's the case, the nominal fee that a real estate agent charges will be well worth it to have both parties sleep well at night knowing that the transaction followed the correct process legally and fairly.
I would have been in totally over my head on my first transaction without a realtor, perhaps especially in LA. I think that you might be missing the forest for a tree (tree being the agents commission) on this deal. You will likely have no idea what is going on without a professional to help you.
I've stocked this post with plenty of keywords to attract real estate agents and investors from Los Angeles, California - perhaps some of those folks will weigh in over the next few days.
Thanks, @Scott Trench . I am already working with an agent I found through BP. I was just curious if the process is different/could be streamlined for a non-listed property.
Logan A. is dead on. You really should work with an agent. Negotiate with the agent as you are bringing the deal and they could represent both sides. I sold a home last your to my tenants in an off market deal, and I was able to get my long time agent to do the deal for 2%.
#2. Due diligence. I think some of the best decisions in my investing careers are the deals I didn't do. Make sure it is what you think it is. Get an inspection to confirm that the building conditions are acceptable. That the property is ACTUALLY theirs (title search) and that it is unencumbered. Confirm the income, expenses and rents are what you expect them to be. That the tenant under lease has been paying on time and isn't insane. You usually do this in 14 - 30 days depending on what you negotiated. It goes quick.
#3. Loan. Start the loan process and ride it through to the finish.Yu have an advantage as an accountant in that you might have your finances in more order (although the cobblers barefoot kids...).
There is more, but my kids just walked into the office... =)
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