Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
Hello everybody,
Yesterday I found a property on craigslist Cleveland, a 8 unit (6 apt. and 2 store front) for only $95k. Building is rented out (month to month) and I can buy this house with my own money, but there is a snag.
Property has back taxes $12k and a pending tax lien, the owner will retire, he has more properties in Cleveland, but this is the only with back taxes.
The back taxes are not my problem, it´s the tax lien. I have no experience with. So please advice me, what should I do?
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
Don't confuse cheap with good. Cleveland is a depressed area with MANY bad neighborhoods. Obviously, the current owner couldn't make money with this property, otherwise it wouldn't have a tax lien. You need to determine why the owner was losing money on this property. Is it in a gang infested slum? Is it filled with non-paying crackers? Is there any demand for the store fronts? How much deferred maintenance is there? Are there any city fees or fines pending? Unpaid utility bills? Who pays the utilities - the landlord or the tenant? Etc, etc, etc!
You also forgot to mention the most important thing - the rents? What are the actual and potential rents?
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
16y
Originally posted by Uwe Siegert:
...
Total variant direction: How long should be the time for the response of an offer? I wait now since 10/01/2009.
-Uwe
Uwe,
When you create your offer, one of the terms of the offer should set a deadline for response or acceptance of the offer. The deadlines I use depend on who is receiving the offer; for a regular homeowner, I use 3 to 5 days. For REO, it depends on the lender and the listing agent; some will respond faster so I keep those shorter, whereas others need even more time.
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
Thanks Steve, I see I must relearn many things that different is in the US.
The Broker of the seller told me yesterday the seller need 2 weeks respite.
Does that normal? Or he will wait for an offer from another buyer.
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
Steve,
Thanks again. I reply to your thoughts:
1. I dont know the word "leveraging", but the owner has the offer on his table. The broker tolds me the propertie is 6-7 months on market and the ask price was decreased from $119k to now $95k. And I bid $87k, so the owner has a little trouble, thats fact.
2. Not really.
3. No, the last 1.5 years profit and loss shows maintenance investments of $3,9k. The property manager works since 12 years for the owner and the properties was allways 96% occupied. Important is, a big bank is next door and MC Donalds, Burger King and a middle Shopping Mall one block away. The next house behind the propertie was demolished from the city in August and is now for sale, $2k. Today the tenants share the off street parking on the banks propertie, for the future I guess to use this propertie behind the house.
4. I have no funding and I have no EMD given on the offer, only he accept the offer a become an EMD. The broker and the owner knows about my nationality.
Steve can you send me an example for an correct offer? What you used? Thanks.
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
... and here is the news:
Owner rejected my offer of $87k, he will accept $91k (only 62,7k Euro).
I would scarf up on it. The propertie bring in over $1,5k NOI every month, only 6 years and the purchase price + back taxes ($12k) is back in my pocket. Thats a really good deal for me and if I accepted his price, thats my first propertie in the US then :).
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
I accepted today the counteroffer from the owner and wire to the broker 1% ($910) EMD.
Can anyone tell me, with how much closing costs I must calculate for this deal? Its an Warranty Deed, the closing shall be in January 2010 from my side.
Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
16y
I would have negotiated the seller to pay for the title insurance. Especially since you accepted his counter offer for a higher price. That could have been offset by him paying the $900 for a title insurance policy.
Uwe, if the $900 includes the escrow company fees and the title insurance, the price is fine. You said it includes the deed, so I am assuming that means it includes drawing up the deed and recording it.
It is "normal" for the buyer to pay for his own title insurance and his portion of the escrow fees, and for all of the recording fees. It's all negotable, if you want to try to get the seller to pay it next time. Maybe you can, maybe you can't. It doesn't hurt to ask.
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
Now I have a little trouble, I must obtain the EIN for the company (business checking account), but without a SSN I can´t.
I hope I can fix the problem quickly.
Lincoln, NE · Member since 2008 · 249 posts · 46 votes
16y
Uwe,
I see you're inesting a lot of time and work into this deal. All deals require a lot of time and consideration....and I see you're very determined. Good luck !
Keep us updated !
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
Thanks for the wishes Ana, I go straightforward here, the is a special deal, my first in the US ( and I hope not the last :) ).
To explain the IRS, obtain EIN as Foreigner:
I can not obtain online. I can only apply per fax, this need 4-7 days, but in this case I need no ITIN.
ITIN I must apply 2011 at the tax return.
Yes, more or less. Normally, the day that it is recorded is when you take possession of the property. Once it closes, the escrow company will send the new deed with a courrier and they will record it at the county recorder's office.
If it closes in the morning, it should record that same afternoon. If it closes late in the day, it won't record until the next day.
After it funds and after the documents are all signed and the new deed is issued, legally, it is yours. I hope you already have the insurance in place and paid for. My agent will issue the new policy and have it take effect the day of closing: the policy is in place during the escrow period and just needs to be dated.
There may be something quirky about Ohio law, so if you get differing advice from someone who invests in Ohio, they would know better than I do.
Property Manager · Dublin, OH · Member since 2009 · 1k+ posts · 291 votes
16y
You mean the title insurance or the insurance for the propertie?
The title insurance manage the title company, the propertie insurance I must apply when I´m in Ohio.
One week ahead of closing I fly to Cleveland.
Real Estate Investor · Las Vegas, NV · Member since 2009 · 180 posts · 8 votes
16y
some times you have to forget about appreciation, numbers pulled out of than air, as far as I'm concerned, becuase you still have to find a buyer that is willing to cashflow. I think its impossible to get full value for real estate. Unless theres something wrong with your buyer. Mainly because I think everyone knows now NOT to pay retail for automobiles and real estate. So if the property has a cashflow, 1600 like UWE said earlier, more if he can lower maintanence I would gladly buy that property. Be happy with the cashflow and amortization. I think of appreciation as an added bonus.
But thats me, I'm young, I want monthly cashflow to get out of my job. Cashflow does that, appreciation does not