Seller financing deal closing time
Investor · Johns Creek, GA · Member since 2017 · 463 posts · 488 votes
How fast can a seller financing 50 lots mobile home park deal close?
If the deal is seller financed your probably only constrained by your longest inspection lead time and completion. Probably a Phase 1. If you really pushed, and had someone that could do the phase 1 quick, I would say 15 - 20 days.
Strictly on the financing side, it only takes a few days to produce the owner financing papers. You do not 'need' an appraisal, or Phase 1, or even title work. I am not saying you should not have these things, but in an owner financed deal you would not be 'required' to have them. Many inspection type reports are required by the Title Insurance Company and the Lenders.
So Mike M said to do things right- but 'right' is not the same for every deal and everyone. The property will dictate much of what you want prior to closing. The more experience you have in the age of properties, and the things that might be issues- probably the faster you can close a deal comfortable on your side as the buyer.
Remember, many in this business either do our own due diligence or have staff that does it for us. We have sort of a template of what gets done and we can even overlap the processes for the right deal if closing quick is important. If the preliminary offsite checks go well, and for the most part we probably know this in the first day or two, we can do the onsite and offsite parts concurrently. For someone doing their first deal, or even someone that is experienced but wants to really take their time and do the inspections linear the process will take much longer. When we are trying to push dates quick, we have already called our Phase 1 people and other inspectors for items we do not do ourselves prior to even getting the contract submitted. We are nailing these people down on times so we know how to write the dates into the contract.
If speed is important things can move very quickly... if it is not- take your time, be careful and you will be less likely to miss something and be... surprised... down the road. Quick closings are a bit stressful to say the least. They also require a lot of time and money out the door quickly, and it might be wasted if that Phase 1 comes back with issues and the deal crashes. You will have money into all the rest of the things needed to close- and you will only get experience out of the deal... There is more money and time at risk in a deal that must close quick.
How fast can a seller financing 50 lots mobile home park deal close?
Too many unknowns to know.
On a good day I'd say 30 to 60 days minimum to do things right.
If the deal is seller financed your probably only constrained by your longest inspection lead time and completion. Probably a Phase 1. If you really pushed, and had someone that could do the phase 1 quick, I would say 15 - 20 days.
Strictly on the financing side, it only takes a few days to produce the owner financing papers. You do not 'need' an appraisal, or Phase 1, or even title work. I am not saying you should not have these things, but in an owner financed deal you would not be 'required' to have them. Many inspection type reports are required by the Title Insurance Company and the Lenders.
So Mike M said to do things right- but 'right' is not the same for every deal and everyone. The property will dictate much of what you want prior to closing. The more experience you have in the age of properties, and the things that might be issues- probably the faster you can close a deal comfortable on your side as the buyer.
Remember, many in this business either do our own due diligence or have staff that does it for us. We have sort of a template of what gets done and we can even overlap the processes for the right deal if closing quick is important. If the preliminary offsite checks go well, and for the most part we probably know this in the first day or two, we can do the onsite and offsite parts concurrently. For someone doing their first deal, or even someone that is experienced but wants to really take their time and do the inspections linear the process will take much longer. When we are trying to push dates quick, we have already called our Phase 1 people and other inspectors for items we do not do ourselves prior to even getting the contract submitted. We are nailing these people down on times so we know how to write the dates into the contract.
If speed is important things can move very quickly... if it is not- take your time, be careful and you will be less likely to miss something and be... surprised... down the road. Quick closings are a bit stressful to say the least. They also require a lot of time and money out the door quickly, and it might be wasted if that Phase 1 comes back with issues and the deal crashes. You will have money into all the rest of the things needed to close- and you will only get experience out of the deal... There is more money and time at risk in a deal that must close quick.
When would you ever consider skipping a Phase 1 or other on site inspections? Is there a time when you feel the deal is good enough that you just need to close quickly and get it done?
So Chase that is a good question and it really depends on so many things. Maybe the property was closed just a few years ago and the seller can provide you with a Phase 1 they just had completed. Maybe you have enough history you do not need one, like it was farm land, and then became a MHP. You might have an abstract that shows enough history your comfortable purchasing without a Phase 1 in place. Maybe it is a park in the middle of a city, in the middle of residentual land and it was all farmland prior to being zoned into single or multi family. You might forgo things like- sewer inspections if you are buying a park that was built with PVC lines, or even if you go the other direction and it is all Orangeburg and you know the park is a deal because it is failing. Maybe you have contact with the plumber that has done 100% of the work on the park since it was new, and you know through that person the park does not have sewer issues. If the deal is master meter electric and your play is to put in power poles and individually meter the park, you can forgo electric inspections. You might be confident enough in your valuation skills to forgo an appraisal. To be clear- I walked away from a 100% owner financed deal- zero down- 20 CAP because of walk-through inspection issues. And there are deals that would be 2 CAPS I would put under contract and buy without blinking an eye.
Each deal stands on its own. History, location, the play your making on the park and your experience level all play into your comfort level in pulling that trigger...
So- would I buy without all of the inspections in place- yes. Have I bought without all the inspections in place- yes.
Do I advocate 'you' buy without all of the possible inspections in place- no.
But if the question is- when would I- Jim- forgo some of the possible inspections- well- the list is out there for sure and has been acted on, or, not acted on depending on how you look at things.
@Jim Johnson thank you Jim for your thorough answer. I was considering closing more quickly to incentivize the seller to agree to seller financing. So how many days did it take for your fastest closing?
Well- first the complexity of the deal should really dictate the speed in which you would close.
I think the fastest deal I closed was probably 8 days- Friday under contract- Friday the following week closing.
That was a very straight forward property. There was a ton of upside and I was able to really see the issues off the bat during the first walk-through. Remember- I have a lot of years of experience in writing contracts, due diligence, home rehabs and in understanding infrastructure. So I can really grasp the full scope of work and how to manage it very quickly.
To make a deal great it must pass on all levels. Location, condition, economics, accessibility, future assessment.
Do not do a deal because you can- do it because it is right. Make a list of all the problems and if your comfortable with everything- pull the trigger. A goal should not be how many deals someone will do in a year- a goal should be only to do great deals. One bad deal can take years to get out from under.