Advice as a back up offer for a rental in Los Angeles

5 Replies

 Hello BP,

I need some advice, I am trying to make an offer for a 4BR, 2BA 1834sq (730K ARV) home in a suburbs of Los Angeles. It's a for sale by owner with no agents involved, the owners told me that the their previous offer was from another investor for a shade under 700K which my guess could be about 680-690K but the offer might not fall through. They are looking for someone to step in and become the back up offer. I am wondering what the next logical steps should be? I am thinking about getting a hard money loan to close out the deal much quicker but it doesn't seem too wise if the owners are willing to take a mortgage offer. Has anyone been in this situation before that can offer some advice?

FSBO :- unprofessional and emotional seller. These are typically difficult to deal with and knowledgeable on RE sales process to boot. If you make a backup offer, make it several 1000 below asking, if not 10% even. Try to find DOM (days-on-market) as he will get more desperate the longer it runs. In your offer, INSIST seller to deliver clear title at COE.

Hello Bryan,

Is the seller willing to offer even a small commission to an agent? It is best to have someone guide you through the process to make sure everything goes as planned and you close appropriately on the house. I wouldn't get a hard money loan if you can get a regular loan from a bank. You will get a better interest rate if you buy the home with the loan instead of refinancing after you close. Is the seller in a rush to sell?

@Bryan Pham in my opinion I would contact a title company to make sure it has a clean title. I would find an escrow company that can handle the escrow portion. I think I would need to know more about the financials. How much are they requiring you to put as a down payment. If it is a for sale by owner, what is the interest rate that they are charging you? Who is drawing up the paperwork. I have done this before and the seller drew up the paperwork, we used his escrow, and my arrangement was 10% down payment and 5% interest rate amortized over 30 years. The financial portion that I am interest in is at the rate you are going to get it will it cash flow as well. Have you analyzed this property, because if you have maybe you can add the worksheet or numbers so that everyone can help you on it.

Curtis

@Jeff B. That is a very good point. Thank for for this feedback, Jeff!

@Kiersten Vance The seller seems really stern on not using a real estate agent and in a rush to close as soon as possible with cash. I discussed the topic of using a conventional loan but that seems to make him even more reluctant.

@Curtis Harvey I am definitely going to check the title of the property to see if has a clean title. If we were to do a conventional loan, I would do a full 20% down payment, the interest would be 4.6% and the paperwork is drawn up by the seller's brother. Yes I have analyzed the property would make more sense as a rental than a flip. I considered both options. Thank you for all the feedback, Curtis!