First Offer/Purchase - Letter of Intent ?

Question

Hello, I am an aspiring real estate investor looking for my first deal. I have real estate license as well, but currently only use for referral deals, as I have never been a "realtor". I found a tri-plex I like which is off market- coming on the market in a couple days. I had a chance to build some rapport with the broker/property manager who will be listing it in the next few days. I am still waiting on the financials from him and he was going to give me a list price as well. I have the gross rents. I already have done research on comps and a basic market analysis and have a price I am comfortable with.

I have pre-approval for lending and wanted to know if I should write a basic LOI? What is my best strategy here. Does anyone have a very basic LOI idea?  What strategy should I use for the commission process? I could represent myself and have my broker help me  with the PSA or I could have the selling broker give me a referral fee?

Michael Lee · Answer

Hello Rick!  the first thing I wanted to say that rental houses that are considered residential for lending people are usually terrible investments with a couple times they are legitimit.  One of the is "house hacking" that helps get your foot in the door of investing with a low down payment that requires you to live in one of the units usually for only one year.  The more units the better.  Unless you directly hire someone you will not owe any commission.  A letter of Intent usually is just a short purchase agreement that covers the basics of a deal like the address, the price, any length of time you need to close, physical condition, any repairs that either party is responsible for and your acquisition payment that you intend on using.  It covers all of the important items.  You should only acquire can appraisal is letter of intent is an accepted and a contact is done and an earnest money fee is being held by a third party you can trust.  Hopefully, you are looking in a popular area that is in high demand.  I have spent many hours on learning and SFH's success stories and failures are about 50/50 and I think the success is very involved with luck.  Any occupation being considered 0% to 100% with nothing in between is too risky.  If I had a choice I'd pick apartment complexes that are the only way to go and not let i unit of occupation mean success or failure.  You should be looking at an area you know and how to come up with a price to offer.  Best wishes!