I have several questions regarding probate process for small multifamily (4-plex in this case) that is listed with an agent. The property is in Los Angeles, is over 100 yrs old and has 60+ yrs of deferred maintenance, is fully occupied, and is subject to rent control. With my assumptions on the current rents being collected and me needing to finance the property, I would have to offer below asking price to make the numbers work with current tenants in place. The plan is to fully upgrade the units as the tenants move out and raise the rents to market level or find the way how to turn them with cash for keys or some other ways.
1) Are there any legal obstacles why the offer below asking price could not be accepted?
2) When typically can I get access to the information to complete my due diligence (rent roll, etc.)
3) What are typical contingencies that probate sales do not accept in compare with regular sales.
I appreciate all input.
The subject property needs to sell for 90% of the referee's "Opinion of Value." Is the immediate street/neighborhood a detriment to the price? What are the repairs that you think that are necessary?
Do your own BPO (brokers price opinion) if possible with your agent. Also get a FMV of the subject property from your agent thru the MLS or info from a title company.
Remember that your bidding with other bidders which may be why your below offer is not being accepted.
The agent will continue to list, market and expose the property up until the attorney is getting the court date for resale of the property.
You may want to get your own appraisal, a home inspection, termite inspection or whatever due diligence is necessary on your part.
The court confirmation sale is just like an auction. Should you be the successful bidder there are no contingencies. Therefore the offer is not subject to appraisal; not subject to lender approval, termite or other inspections. Your due diligence on the property should be done before the hearing.
If you can't close after your 10% deposit is accepted (the winning bidder) you'll forfeit your money..
Thank you for the input. The property needs a complete refurbishing, I estimate 75K to 100K to bring it to the price of the adjacent compatible properties. But of course it is LA where bidding wars and high prices are the norm regardless of the condition of the property.
@Ilva Kibare you also have to remember that it’s rent control, you have to “persuade” the current tenants to leave so you can do all the remodeling you want to do, and charge more rent. People are not easily swayed to leave, even cash for keys is getting more extreme.
That's right. I did consider that and just acquired rent info - ~$450/month /unit in the area where market rents are $1400 for refurbished unit or ~$800-900 for one with similar conditions. This kills my numbers considering rent control issues.
I will start another thread to see what tactics are most profitable out there to overcome rent control obstacles besides annual increase of mandate 3% or so max.
Unless the tenants do something wrong in order for you to evict them a common strategy is a cash for keys deal. I have heard numbers around 25,000 to get a tenant to leave. @IIva Kibare
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