Buy A QuadPlex with NO seller's disclosure

26 Replies

I'm looking to buy a quad/four plex on the market in Austin TX. The property will be purchased at 750K, but I will only place 5K into the deal at the end of closing and etc. I'm slightly worried about the "As Is" terms and the seller NOT providing a Seller Disclosure. Is there any advice about this deal I need to know. I'm know it will be hard to find out "why" the seller does not want to disclose any information, but besides a home inspection is a good option for me. Do you think I should leave the deal alone due to no seller's disclosure? 

Sent Respectfully 

If it's an REO, or similar (inheritance, etc) you never get a disclosure. If a long term owner, investigate thoroughly, they could just be risk adverse.

Four unit dwellings do not require sellers disclosure so any seller completing a sellers disclosure is just opening themselves up for more lability in the sale. Many sellers of these units are not able to complete an SD because they have never been to the property (out of state or otherwise absentee owners). 


How on earth are you only putting $5k into this deal? 

@Sean Byrd  I did not have a seller's disclosure with my fourplex and I haven't had any issues in the past year. I also waived my inspection clause and just accepted the risk after looking through it myself. Put some unexpected repairs into your budget and get as much information from the existing tenants and the home inspector. You can also look up any permits pulled for the property on travis CAD online. 

There is no upside to the seller providing a disclosure. If they know about a problem, why disclose it? If they don't think there are any problems, what is the upside of saying there are no problems? There could be a problem they don't know and then they become liable. 

I don't trust disclosures anyways, because owners lie on them all the time. Get an inspection or take your chances without one. I look at major items like roof, foundation, HVAC and main sewer line. That is where your large expenses are, so if those items are fine, everything else can be addressed for little money. 

It is best to get an inspection, but often "as-is" listings will not offer any concession for problems found during inspection. Your choice is walk away or do the deal. Prior to making your offer, you should be able to visually assess the condition.

A seller's disclosure is just a nicety. Most people aren't going to tell you about the flash flood damage if they fixed it. In general, it's just a piece of paper that most people wouldn't want to spend the money to sue over later and as most said, much less common on more doors and irrelevant on REO/flips/etc. Do your own due diligence with your home inspection team and the paper would never matter, but yeah, as other said, how are you holding a 750k quad in Austin with 5k - something seems off. As-is just means do your due diligence really well.

@Sean Byrd , echoing the choir here. I cannot speak to whether they are required to provide any disclosures, as noted, but I would not be overly concerned about lack of disclosures.  People lie, don't know of issues, or generally are just oblivious to their property in general.  

Even if they provided disclosures, there are many things that would not require disclosure (i.e. hasn't been an issue yet) but may be an imminent issue.  Basically, do a thorough inspection to understand what you are buying and go from there.

Originally posted by @Wayne Brooks :

If it's an REO, or similar (inheritance, etc) you never get a disclosure. If a long term owner, investigate thoroughly, they could just be risk adverse.

Thank you, makes a lot of sense. I would avoid the risk also and especially since multi units do not require the SD. Thank you for your assistance. I greatly appreciate the assistance. 

In my experience working with both sellers and buyers, seller property disclosures are about as useful as the average "general home inspection."  They may bring something to light that you didn't know of, and they may jog the memory of the seller when filling the form out, but they may not.

While the law in my state states:

“where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.”

There are a ton of things that the seller forgets or "forgets" about, didn't inspect, or willfully tries to not disclose.  Your inspections are the real test of what you're willing to take.  My inspector is an actual general contractor with experience in all aspects of the buildings, including the roof.  While he still kicks it back to a specialist when dealing with clients, he tells me exactly what we're looking at as far as costs and difficulty to repair / replace.  

You should be able to get estoppels from the tenants and, honestly, the tenants love to tell people about ALL the issues the property may have!

Originally posted by @Stephen Stokes :

Four unit dwellings do not require sellers disclosure so any seller completing a sellers disclosure is just opening themselves up for more lability in the sale. Many sellers of these units are not able to complete an SD because they have never been to the property (out of state or otherwise absentee owners). 


How on earth are you only putting $5k into this deal? 

VA Lending, seller concession and real estate agent rebate program. All of these will cover my closing cost and pre paid expenses.

@Sean Byrd best of luck. Sounds like you will be deep in the hole every month. Betting on appreciation only at entry price that high is a tough one. What is the cap rate on that property? I am guessing it has to be sub 3%

@Sean Byrd

I think that a non disclosure, especially on an as-is sale, is a bonus.

No worries about what was hidden or just not disclosed.

Right then, it's your due diligence plan that protects your butt!

This day and age we tend to "think" that the seller has some actual duty to tell you the very reason he needs to sell, when in reality, most want to make a profit on that sale like you want to make on your purchase!

I am buying my 1st 4-plex soon. I know the area, and I know a great deal about construction and remodeling. I will include in my expenses, the prices paid for quality professionals to walk the property. I don't expect the experience to be a cup of coffee or a steak dinner, but a genuine professional opinion on the property with cost numbers for repairs and renovations.

Not so worried that my due diligence may cost me a bit more than a SFR or a turn-key property. Like my first brake job, I watched it done once. Then I asked questions and bought tools.

I would rather pay now than pay more later.

So, I would not run from someone that says they will not tell all of the defects. I love building and remodeling. I am loving the fact that soon my investments will allow me to buy good lots and build homes for the A-class buyers!

I have a long way to go. I welcome the challenges, and bumps that come so I can learn more.

Use conservative numbers in your estimates.

Have a plan for when the sky really does fall.

If you have none that can advise cheaper, buy some professional help, and perhaps use some of these people when you need the remodeling done!

Yes, I have the skill, tools, ability, and knowledge to build homes and multiple family buildings.

I can do it all myself, and operate all of the large machines to do the heavy work.

I have decided that I can do better when I have assistance.

Good luck in finding a partner or group that can mitigate those issues you may have before the sale!

If the owner didn’t live in the property in Nevada (IE a rental.) they simply check a box saying they didn’t live there and therefore don’t have any knowledge to disclose. I just sold a seasonal cabin in MN and I checked a box saying I wasn’t giving a disclosure. I listed a reason as I live 1300 miles away and hadn’t spent 2 days per year there for the last 20 years so how would I know the exact condition. It’s never been a factor to me. 

@Sean Byrd I don't provide disclosures when I sell my property. Not because I'm trying to hide anything but I've never lived inside the property and don't remember a lot of the details as to when improvements were done 10-15 years ago.

More importantly from the seller's point of view: What's the upside in doing so in a hot market like this? 

Somebody will likely buy it regardless and it will have little to no impact on the price. 

I just purchased a 4 unit property which clearly had massive foundation damage which cost an extra $40,000 to fix. We are literally rebuilding half of the foundation. We had a seller disclosure which clearly stated no known issues of structural repair need everything is great blah blah blah. On every seller disclosure I have ever read I have not once seen a seller disclose a negative issue. I wouldn't worry about the fact that they aren't giving one. If anything I would be happy because that means they don't want to lie on the paper. Just do proper due diligence like you should for any purchase and have a good GC walk the property with you to tell you any red flags that pop up. Yeah some inspectors are good but they don't tell you cost needed or how to repair issues. Pay a good GC to walk the property and tell you a firm repair budget.

@Sean Byrd

Should you pass up as good deal over this? No. I don’t know about your state, however, in North Carolina, the seller has the option to check no representation so it doesn’t do much good anyways.

Always get your inspections done, you shouldn’t rely on the sellers word anyways! Good luck!

Originally posted by @Stephen Stokes :

@Sean Byrd best of luck. Sounds like you will be deep in the hole every month. Betting on appreciation only at entry price that high is a tough one. What is the cap rate on that property? I am guessing it has to be sub 3%

Yes I will be in the whole each month but this will be my primary residence, I will actually live here. Plus I'm a veteran with disability and pay zero property tax for my primary residence, this helps my numbers big time. So basically 2k per month for my expenses, PITI and some expense are paid for from the rented units, plus rents can be increased by at least 300USD each. (Yes Sir Appreciation play) My next second (vacation home) will be a cash flow play, already have the property lined up. 850K with 8.6K in monthly rentals

@Dan Maciejewski . That has been my experience too. Tenants are often the best source of information. I try to tag along on the property inspection. While waiting for the inspector to do his thing I chat with the tenant. “How do you like living here?” You will be amazed what people will share.