SOS- In over my head

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

2y

Quote from @Account Closed:

I’ve posted multiple questions about this duplex we are (potentially) about to close on. I am in over my head and need more advice.

Cut and run. Why are you dealing with this character? I do't know him personally, but I can provide more insight if you want to DM me.

I’ll be honest… before this post I thought this was always the kind of stuff that happened. We bought our personal house with cash so it was super easy. I always hear people talking about the work involved in buying investment properties so I just thought this was normal.

You shouldn't have to put up with all of that. I 've posted a couple of deals that give you an idea of how we teach things should be done.

How To Analyze If A Flip Will Cash Flow - The Numbers That Work

https://www.biggerpockets.com/forums/311/topics/1073200-how-...

Subject To – Why You Need Money To Buy Using "Subject To" (SubTo) - Safely, Legally

https://www.biggerpockets.com/forums/311/topics/1141313-subj...

I'd be happy to go over these with you or anyone with an interest.

0 Reply

Mark Cruse

Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes

2y

Not sure of your level of experience but I would only advise an experienced investor to proceed with this and that even depends. To take this the way it is there could be an extensive negotiation on price. If the investor is desperate enough they will fold and you could end up with tons of incredible equity and cash flow. However, if you dont have experience in hard core renovation and navigating all the pandemonium associated with it, you can find yourself on the losing end big time. This property is already marked as a problem under the permitting authority. They will go up and down this with a fine tooth comb finding more and more stuff. Suppose you get it and it takes months to work through it all; can you cover the holding costs? Supposed that firewall is jacked up and done backwards; can you handle tearing everything apart, putting it back and have inspection after inspection for months? What if the entire plumbing has to be over hauled which could mean tearing up floors and walls? I mean the list can go on and on and I have seen those scenarios and dozens more. Once you have short money, feckless individuals and chaos its difficult to get positive results unless very skilled in that arena. I wish you luck but if you are not highly skilled in renovation with some elements of project management, without question, RUNNNNNNNN...................

1 Reply

Account Closed

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

2y

Quote from @Katherine Roberts:

I’ve posted multiple questions about this duplex we are (potentially) about to close on.

What concerns me, among all the other things you mention is "The inspector noticed that the water barely flows through the pipes". Having old plumbing that has been doctored over will cause that problem. It could need an entire plumbing upgrade. (Rusted pipes) And the sewer should be scoped. That could be a hidden problem.

You should check to see if the power box is 200amp and that the wires are copper and that the connections are good.

There is a check-list we provide our students before we let them go and buy a property like this.

0 Reply

Katherine Roberts

OP

Member since 2023 · 59 posts · 17 votes

2y

Quote from @Mark Cruse:

Not sure of your level of experience but I would only advise an experienced investor to proceed with this and that even depends. To take this the way it is there could be an extensive negotiation on price. If the investor is desperate enough they will fold and you could end up with tons of incredible equity and cash flow. However, if you dont have experience in hard core renovation and navigating all the pandemonium associated with it, you can find yourself on the losing end big time. This property is already marked as a problem under the permitting authority. They will go up and down this with a fine tooth comb finding more and more stuff. Suppose you get it and it takes months to work through it all; can you cover the holding costs? Supposed that firewall is jacked up and done backwards; can you handle tearing everything apart, putting it back and have inspection after inspection for months? What if the entire plumbing has to be over hauled which could mean tearing up floors and walls? I mean the list can go on and on and I have seen those scenarios and dozens more. Once you have short money, feckless individuals and chaos its difficult to get positive results unless very skilled in that arena. I wish you luck but if you are not highly skilled in renovation with some elements of project management, without question, RUNNNNNNNN...................

My level of experience is none lol

1 Reply

Katherine Roberts

OP

Member since 2023 · 59 posts · 17 votes

2y

Quote from @Account Closed:

Quote from @Katherine Roberts:

I’ve posted multiple questions about this duplex we are (potentially) about to close on.

What concerns me, among all the other things you mention is "The inspector noticed that the water barely flows through the pipes". Having old plumbing that has been doctored over will cause that problem. It could need an entire plumbing upgrade. (Rusted pipes) And the sewer should be scoped. That could be a hidden problem.

You should check to see if the power box is 200amp and that the wires are copper and that the connections are good.

There is a check-list we provide our students before we let them go and buy a property like this.

They had all the plumbing replaced. That’s what concerns me.

0 Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

2y

@Katherine Roberts

from what you've posted it doesn't sound like your realtor is doing a very good job managing the process or giving you advice. i'm sorry all of this happened so close to closing, that is very stressful.

0 Reply

Account Closed

Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes

2y

Quote from @Katherine Roberts:

Quote from @Account Closed:

Quote from @Katherine Roberts:

I’ve posted multiple questions about this duplex we are (potentially) about to close on.

What concerns me, among all the other things you mention is "The inspector noticed that the water barely flows through the pipes". Having old plumbing that has been doctored over will cause that problem. It could need an entire plumbing upgrade. (Rusted pipes) And the sewer should be scoped. That could be a hidden problem.

You should check to see if the power box is 200amp and that the wires are copper and that the connections are good.

There is a check-list we provide our students before we let them go and buy a property like this.

They had all the plumbing replaced. That’s what concerns me.

If the plumbing is new, it's a venting problem. Not enough air flow to release suction of the water. Or, maybe they said it was redone but . . .
Did they get a permit signed off?

0 Reply

Tim Hall

Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 462 posts · 237 votes

2y

@Katherine Roberts here’s my advice, don’t close on it. You’re out a few thousand dollars but you’re going to be out more if you do close on it, so don’t.

0 Reply

Christie Gahan

Investor · Hillsboro, OR · Member since 2016 · 304 posts · 153 votes

2y

Quote from @Katherine Roberts:

Quote from @Jeff Dawson:

I skimmed through other peoples post and not sure if anyone mentioned this but here's something to think about. If you do end up closing regardless of what all is fixed, not fixed, price reduction, etc. and it turns into a nightmare one of two things could happen: you'll burn yourself out and walk away from ever touching RE again or you'll learn a ton and be a better investor for it. We've all heard countless stories from both sides and ultimately it's your choice. If it was my first purchase I would have walked away without a doubt and looked for those kind of deals after gaining some traction and experience. Best of luck!

I think we’re going to walk away. I have 3 children under 3, and run another business. I was hoping to find something relatively simple for right now and this seemed like it fit the bill until we got under contract.

You have 3 kids under 3!!!! Good Grief! How stressful do you want your life to be? Get out of this and get your money back too. You just got a free semester of your real estate MBA. Be happy with that you learned and go on.

"When a man shows you who he really is, Believe him." I think you know enough about the seller and his realtor. This is not someone you want to work with. If you feel cranky, go to the realtors broker and complain. The comment about closing with out the permits being closed or getting the CO is unprofessional to me. I think it creates liability issues that there Broker will not be happy about.

Do you have your own realtor? Did I miss that ? Maybe look for a new one. I have a good relationship with my realtor. He would have been solving some of these problems before I heard about them. Your realtor should be running interference for you. Good Luck.

1 Reply

Matthew Paul

Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes

2y

If this is a conversion to 2 units , it should have separate electric meters , each unit have its own hvac , The plumbing should be separate with sub meters . If its not set up like this its a house with an in law apt .

As far as the rest of the issues , dont settle unless its done .

0 Reply

Corby GoadeBusiness Member

Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

2y

Quote from @Katherine Roberts:

I've posted multiple questions about this duplex we are (potentially) about to close on. I am in over my head and need more advice. The duplex was a SFH converted to a duplex. They listed it while the plumbing wasn't finished. We were supposed to close on Monday but the permits are still open. They were supposed to put a firewall in the attic on Monday and we had more inspections Tuesday. When we got there Tuesday, they were still doing the firewall and there was a hole in the ceiling from where they fell through. There were 4 other noticeable ceiling patch jobs and the drywall in between the units was popped out slightly. A toilet was also cracked and leaking. All of this happened since we went under contract. The inspector noticed that the water barely flows through the pipes when multiple things are running on both sides. My realtor told the listing agent everything we found and she drove over to be at the inspection, and then the buyer showed up. Lol

They were supposed to add ventilation to the crawl space, grade the front yard, remove an old brick post and cement slab, add flashings to the roof, and more but he didn’t do any of it (we were supposed to close Monday- he’s had over a month and has gone out of town).

We told the listing agent that we would not proceed if the water pressure wasn’t fixed yesterday and then this morning they requested that we go ahead and close with the open permits and the promise that he’d complete the job. We told them absolutely not and I started to get concerned. We haven’t even gotten the appraisal. And there’s no certificate of occupancy yet??? The listing agent has lied multiple times about different things, and there are multiple red flags that have popped up. I did some digging and it turns out the seller (he’s a flipper) has been sued at least twice for not paying people back (a contractor and someone for a home loan). And he refused to give me the names for his contractors.

This is our first purchase and I feel like this is just chaos. I really don’t even want to close on it anymore. I feel like he probably cut corners, he’s run out of money, and he’s doing shoddy work to try and get things done. Does anyone have any advice?

Oh my gosh. How experienced is your realtor? Honestly, you shouldn't even be having these conversations, your realtor should be proactively mitigating these problems and just keeping you posted.

I'd have a meeting asap with your realtor AND their broker and make sure you have a solid plan in place. Given what you've posted here, you have all kinds of leverage and you should be using it.

0 Reply

Katherine Roberts

OP

Member since 2023 · 59 posts · 17 votes

2y

Quote from @Katherine Roberts:

I've posted multiple questions about this duplex we are (potentially) about to close on. I am in over my head and need more advice. The duplex was a SFH converted to a duplex. They listed it while the plumbing wasn't finished. We were supposed to close on Monday but the permits are still open. They were supposed to put a firewall in the attic on Monday and we had more inspections Tuesday. When we got there Tuesday, they were still doing the firewall and there was a hole in the ceiling from where they fell through. There were 4 other noticeable ceiling patch jobs and the drywall in between the units was popped out slightly. A toilet was also cracked and leaking. All of this happened since we went under contract. The inspector noticed that the water barely flows through the pipes when multiple things are running on both sides. My realtor told the listing agent everything we found and she drove over to be at the inspection, and then the buyer showed up. Lol

They were supposed to add ventilation to the crawl space, grade the front yard, remove an old brick post and cement slab, add flashings to the roof, and more but he didn’t do any of it (we were supposed to close Monday- he’s had over a month and has gone out of town).

We told the listing agent that we would not proceed if the water pressure wasn’t fixed yesterday and then this morning they requested that we go ahead and close with the open permits and the promise that he’d complete the job. We told them absolutely not and I started to get concerned. We haven’t even gotten the appraisal. And there’s no certificate of occupancy yet??? The listing agent has lied multiple times about different things, and there are multiple red flags that have popped up. I did some digging and it turns out the seller (he’s a flipper) has been sued at least twice for not paying people back (a contractor and someone for a home loan). And he refused to give me the names for his contractors.

This is our first purchase and I feel like this is just chaos. I really don’t even want to close on it anymore. I feel like he probably cut corners, he’s run out of money, and he’s doing shoddy work to try and get things done. Does anyone have any advice?

Update for anyone who is curious:
We just cancelled the contract. Our contract gave the seller 5 days after closing to complete any unfinished work (which would’ve been yesterday), and they hadn’t finished everything. We’re able to get our earnest money back. We will be looking into a realtor who specializes in investments. Thank you all so much for the feedback. I’m so glad that this is not how most real estate transactions go.

We decided to cancel instead of negotiating due to some more information we found out.
All the wood for the framing was untreated, including what was directly in contact with the CMU. The sills were not anchored in and the ground was sloped towards the crawl space. There were some other issues that also contributed to our decision, but these really left us concerned with what we couldn’t see.

We’ve learned alot from this experience and hopefully our next closing will be much smoother. Thanks again for all of your help.

3 Reply

David M.

Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes

2y

@Katherine Roberts

Thanks for the update. I would add that you don't necesarily need a realtor that specializes in investments. Think more closely of what you really need/want from an agent. Just somebody that you work well with and is available and able to help you with transactions. Also, it can sometimes be a conflict of interest if you are working with an agent/investor.

Good luck.

0 Reply

Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

2y

I’m less binary than some of the other commenters.

Based on what you’ve shared, I’d hire an inspector, and treat this like a new day 1 offer. I’d come to the table with a comprehensive list of what the property in “finished” condition looks like. I’d then decide whether you want the seller to handle the project to get you from where the property is today, and where it needs to be tomorrow.

If you want to just do it, take out the repairs cost from the purchase price, along with a “margin” of 30-50%. Your time and the risk you assume is valuable.

If you want them to do it, then you can make your offer contingent upon this work being completed as specified.

Podcast Guest on Show #223

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Matthew Mellon

Rental Property Investor · Hopewell, VA · Member since 2017 · 21 posts · 7 votes

2y

Run away form this. No deal is better than a bad deal.

0 Reply

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

2y

No deal is perfect. These are not major issues. Have them fix them and BUY THE PROPERTY. Analysis paralysis is lethal and will hold you back from becoming financially free through REI.

GO FOR IT!!!!!!!! Scared $ Don't Make No $.

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SOS- In over my head

SOS- In over my head

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