Investor · Pittsburgh, PA · Member since 2016 · 9 posts · 2 votes
Dear Bigger Pockets community,
The Situation: I have contacted an out of town property owner in Pennsylvania who is willing to give the property away if I take on the back taxes. Even with a rehab the ARV would be low (15-20k). I have contacted all taxing authorities and determined there is 3200 tax owed on the property which we are willing to pay, and a minor sewage lien.
As there is no money being transferred here I was hoping to do the closing myself. I am aware every REI and his dog is against this strategy. However here me out: I have completed law school (in Australia) and had some experience writing and examining deeds before. I have been wanting to do a closing on my own for the experience and get a greater understanding
I have written a deed that is compliant with all Allegheny county regulations on the website and am planning to drive to the sellers hometown and sign the deed in the presence of a notary.
Wholesaler · Bogota, NJ · Member since 2016 · 128 posts · 64 votes
10y
Other than making a typo, screwing something up, and needing to take months of your life to correct it? No. LOL
Its not engineering a defense system. It can be done by a lay person. I've done it before. But for $150 bucks I'm sure you can find a title company to draft one for you. I'd have questions about the rest of your deal.
Also, each county has its own rules on which stamps, affidavits, and other documents might be needed to record the deed. Leave one of these out, and you'll get rejected at recording. You can call up the recorders office and ask what they require. One thing you have going for you: you're not paying for the property, so the owner can't exactly dupe you out of money!
Wholesaler · Bogota, NJ · Member since 2016 · 128 posts · 64 votes
10y
Other than making a typo, screwing something up, and needing to take months of your life to correct it? No. LOL
Its not engineering a defense system. It can be done by a lay person. I've done it before. But for $150 bucks I'm sure you can find a title company to draft one for you. I'd have questions about the rest of your deal.
Also, each county has its own rules on which stamps, affidavits, and other documents might be needed to record the deed. Leave one of these out, and you'll get rejected at recording. You can call up the recorders office and ask what they require. One thing you have going for you: you're not paying for the property, so the owner can't exactly dupe you out of money!
Investor · Pittsburgh, PA · Member since 2016 · 9 posts · 2 votes
10y
@Bill Devola The rest of the deal: we do buy and holds on low ARV rentals for specific agencies who pay the rent for tenants disabled and lower socioeconomic tenants. Based on previous experience (purchased an identical house across the street from a sheriffs sale) we determine we can pay the back taxes and rehab for under 10k and rent for 650 a month. A lot of people have problems with this business model, however it works well for us.
Investor · Downingtown, PA · Member since 2015 · 17 posts · 6 votes
10y
@Jamie Lennox I do not recommend proceeding without a title search and would recommend using a title company to assist with the closing. The title costs will be minimal compared to the headache you will go through if you missed a lien or some other encumbrance, missed the required margin requirement on the deed, etc. You may be just fine, but for me, the additional costs are worth the security and peace of mind.
Investor · Pittsburgh, PA · Member since 2016 · 9 posts · 2 votes
10y
James Freeman Hey James, yea I have decided to go with a closing company as we have with all other transactions. I am glad I spent the time preparing the deed and doing and a title search to learn more about the process. However it really is not a cost effective use of time. Thanks for the advice.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
10y
A different viewpoint maybe ...
For that low of a price, six months or so of rent gets you to break even (assuming no repairs, longer of course if it requires repairs) - so even if you missed some big mortgage, you just let the property go then. And it will take a few months more to foreclose. So you can make money even if the title still has encumbrances after closing.
The place where you will have a challenge is the transfer tax statement document. The PA Dept of Revenue wants their 1%, and the county wants their cut of transfer tax. Your purchase price is not zero, but the sum total of all liens paid off at closing. Somehow you will want proof of that amount just in case the PA Dept of Revenue audits the transaction; going through a title company will help you to have proof, because the PA Dept of Revenue will use the tax assessed value multiplied by the leveling factor for that area to impute the property value amount upon which transfer taxes are expected. And it sounds like you are buying for a lot less than that imputed value.