Rental Property Investor · Seattle, WA · Member since 2019 · 10 posts · 2 votes
Hello everyone! My husband and I are new investors and are currently looking for our first property. I found a triplex that cash flows, however the seller is requiring proof of funds and that an offer be made before they will allow us to go inside the occupied units. Is this typical or should I consider this a red flag? The property does need some work, but is livable, and the unoccupied unit is currently being renovated.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Rebecca Alexander this is pretty standard. Just making an offer go see inside is pretty nice. A lot of times you need an accepted offer before you see the inside
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Rebecca Alexander this is pretty standard. Just making an offer go see inside is pretty nice. A lot of times you need an accepted offer before you see the inside
Rental Property Investor · Seattle, WA · Member since 2019 · 10 posts · 2 votes
7y
@Caleb Heimsoth thanks for your response! The property manager that I am interviewing seemed a bit concerned that they were requiring this, so I thought I'd check.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
Originally posted by @Account Closed:
@Caleb Heimsoth thanks for your response! The property manager that I am interviewing seemed a bit concerned that they were requiring this, so I thought I'd check.
What I said is typically for when a property is occupied. If it’s vacant, you should be able to see inside before making an offer. This likely varies some on the market
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @Account Closed:
Hello everyone! My husband and I are new investors and are currently looking for our first property. I found a triplex that cash flows, however the seller is requiring proof of funds and that an offer be made before they will allow us to go inside the occupied units. Is this typical or should I consider this a red flag? The property does need some work, but is livable, and the unoccupied unit is currently being renovated.
Thanks for your help!
He just doesn't want to deal with low ball offers and people who in the end can't buy. I always ask for proof of ability to close before I drive over to show a property - the difference is that I'm selling by owner financing so I set the rules. The amount of time and distraction it saves is worth doing.
Sellers, Investors and Real Estate Agents who drop everything to go show a property with no proof of ability to close don't value their time properly. It isn't personal, he just wants to be sure he's dealing with an actual potential buyer. Not everyone who calls is able to close.
For proof of funds I need a photo or copy of a current account that has the amount necessary to do the deal. They can blank out the account number, but I need to see the bottom line. If they simply send a letter that says it's a "Proof of Funds" letter but don't provide the verified account balance, then it isn't really proof at all.
Rental Property Investor · Seattle, WA · Member since 2019 · 10 posts · 2 votes
7y
@Mike M. Thanks for your thorough explanation! Completely makes sense, and I have no problem doing both. That's what contingencies are for!
I guess my main concern would be if I make too high an offer, then find a lot of things that need to be fixed when I get inside. I assume I would just negotiate at that point?
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @Account Closed:
@Mike M. Thanks for your thorough explanation! Completely makes sense, and I have no problem doing both. That's what contingencies are for!
I guess my main concern would be if I make too high an offer, then find a lot of things that need to be fixed when I get inside. I assume I would just negotiate at that point?
Sure. Always include contingencies. In a small multi unit, one of my contingencies would be seeing inside each unit and the lease agreement with each tenant and a rent roll plus a bunch of other documentation. Also a lot of people overlook having the sewer scoped in a small multi and I think that's a mistake considering how expensive sewers are to fix when they fail.
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
Originally posted by @Account Closed:
@Caleb Heimsoth thanks for your response! The property manager that I am interviewing seemed a bit concerned that they were requiring this, so I thought I'd check.
Are you working with a realtor? If not I recommend getting one The submit offer and proof you can buy it isn’t out of the ordinary. Actually, I prefer it, gives me more leverage when I come back and say let’s drop the price because there is XYZ and ABC that needs to be done to the property, and then have the price dropped accordingly. Even if you have a accepted offer you can back out if you don’t like anything about it during the inspection period. I backed out of a property because during inspection I found some issues and they wouldn’t adjust the price so I pulled my earnest money and withdrew the offer.
My average is 10 offers for every one accepted and of the one accepted only 1/3 I will take to closing. So 30 offers for 1 closed property.
Rental Property Investor · Seattle, WA · Member since 2019 · 10 posts · 2 votes
7y
@Eric C. I appreciate your comments. I just wasn't sure if it weakened my position at all to change my offer later. This will be the first property I've made an offer on, so I'm trying to stay dispassionate and just give it a shot. If it doesn't happen, there are always more properties!
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
Originally posted by @Account Closed:
@Eric C. I appreciate your comments. I just wasn't sure if it weakened my position at all to change my offer later. This will be the first property I've made an offer on, so I'm trying to stay dispassionate and just give it a shot. If it doesn't happen, there are always more properties!
Making offers are free. Just make sure the numbers work and most importantly the property works for your level of investing. Don’t buy in a place you wouldn’t go after dark. Or a place that you call the police to get a feel for the place and they tell you not to go there.
Rental Property Investor · Clarksville, TN · Member since 2018 · 21 posts · 8 votes
7y
@Rebecca Alexander clearly stated contingencies on the P&S agreement will get you out of the contract if you go "under contract (Appraisal and inspection period)." If any come back not to your liking you can renegotiate or both parties can walk.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
7y
@Account Closed Very typical in competitive markets for sellers to require a pre qual to view occupied units of a multi family. They want to make sure they are inconveniencing tenants for people who can actually purchase if they like what they see as opposed to dreamers who are just kicking tires.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@Account Closed there are lots of flaky people out there. Many "investors" are just tire kickers who have never done a deal and will never do a deal. Many of them don't even have money to do a deal.
Showing occupied properties is a major disruption for tenants. I have had tenants move out during the selling process because they were sick of the parade of people. Most likely the landlord doesn't want to disrupt current cash flow while they work to sell the property.
As long as your offer has a "get out free" contingency for inspection, there is no risk on your part. I would drive by and walk around the property. Outside condition is a good indicator of inside condition. Make sure the numbers work and go for it.
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
7y
@Account Closed not a red flag, astute seller. Make the offer, subject to getting in, you can always adjust up or down a bit . I will not even send more then a few emails on props unless I see a POF
Rental Property Investor · Seattle, WA · Member since 2019 · 10 posts · 2 votes
7y
@Bob Prisco what would you consider 'proof of funds?' We will be using the HELOC from our primary residence for the down payment. Do I need to withdraw from the HELOC and deposit it in my bank account? Or is the HELOC good enough?
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
7y
@Account Closed a bank statement , ,,,,,, I only deal with cash buyers, but I am sure a statement showing the down payment and a pre approval letter from your bank will work
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Account Closed Welcome to BP!
Yes, some Sellers do require this so that they can weed out the unserious buyers fairly quickly, so you shouldn't consider this a red flag at all.
Now, you probably want to ensure that you do your Due Diligence on the property after you get it under contract to make sure that the numbers you used during your analysis actually match.