Would you buy? No clear title..

Question

Is there ever a situation where a deal is so good you would buy it without a clear title?

Heres the situation- $50k duplex, needs $5k repairs, $1400 rent, ARV $90K+. Cash purchase.

Foreclosure and the units towards the front "land lock" the units for sale. Also, the sewage comes from an offsite pump station not owned by the complex. Legal proceedings are currently taking place to square everything up, but the process is moving extremely slow. I spoke to one attorney involved and he thinks they will eventually get it straight but there is no clear time table. Does the price justify all the issues?? ARV is based on having clear title.

Spencer Rossie · Answer

Account Closed

Spencer Rossie · Answer

@Nick L. That would be ideal! But the owner is being extremely standoffish..though I haven't made that exact offer to him. He's being or has been foreclosed on 16+ properties so he's not the friendliest or most responsive person at the moment.

Purchasing them together wouldn't be an option (that I could come up with). The pump station is owned outright by the person being foreclosed on and the duplex is owned by the bank.

Nick L. · Answer

@Spencer Rossie

Could you purchase the pump station together with the foreclosure property? That way you would get an extra play from being a monopoly provider to the other owners.

Spencer Rossie · Answer

@Nick L.

Spencer Rossie · Answer

Good question..the pump station is owned by the individual being foreclosed on (he owns it outright). I have spoke to him and tried working a deal to pay a monthly charge for use of the pump station but he declined. It's a very strange situation. His brother owns a few units and a small business that the pump station services as well and according to the city he cannot legally just "turn off" the pump station. I would like to contact the other cash buyers who have been purchasing them, BUT I will without a doubt be in a multiple offer situation with one or more of them so I'm not sure how much information they would be willing to offer me or if it could hurt me on pricing letting them know there is more competition.

Gilbert Dominguez · Answer

There are just too many better things you can do with $50K. I would pass on this one.

Nick L. · Answer

@Spencer Rossie

The land locking situation is easily resolved - most or maybe all jurisdictions allow an "easement by necessity". Contact your city and/or attorney.

Who owns the pump station? Can you work out a deal with them? And how confident can you be that they will be around for the long term to honor the deal?

Are there other properties nearby that also depend on the pump station? It might be worth contacting other owners to see how they have resolved the problem.