How long does it take on average to close a real estate deal?

Question

How long do you usually take to close a deal from beginning to end?

1 - Finding and underwriting the deal (Are you email lists of brokers who mail you deals every now and then and if so what makes a deal worth pursuing does the broker send the property’s financials you just plug into excel and if it looks good you tour the property and how)

2 - Touring the property (How long do you take to tour the property maybe a week and what do you look for, damages, do you speak to tenants to assess them or ask what they pay in rent, do you look at any improvements that may need to be made?)

3 - Financing the property (Did you have to get a preapproval to know how much you could borrow and what properties you could afford before you started browsing deals?,

Do you send your lender your underwriting, do you form the LLC’s to take title to the property and financing etc, Discussing interest rates and nonrecourse/recourse loans,

How long does it take to fully complete the financing and receive the funds and how much closing time does the seller give you and can you extend that time if the financing for example is taking a while to close?)

4 - Closing (After all paperwork is done and entities are formed and loan proceeds are received etc and you’ve bought the property and exchanged keys.

How do you tell your tenants your the new owner and they should pay you rent or you perhaps increase it and you want them to perhaps pay by cash, cheque or an online portal, How would you fire the existing property manager if they were doing a bad job and you wanted to get a new one or negotiate fees etc?)

Please state what is required for each process and how long reasonable each take and how long in total it would take me to buy a deal perhaps maybe 1-3 months.

Sorry for the long post. Please do your best to answer each question or tag someone who does please.

Dave Spooner · Answer

Account Closed I'll provide my experience. I am mostly focused on unoccupied properties, so it does change timelines, expectations, restrictions, etc. a bit.

1. Because these properties are unoccupied, financials are not really relevant. I focus on the rent I expect in the area and the listed price. I apply a price range I think is appropriate and a target maximum I can make work with my intended financial outcomes. If the listed price is close or it's been on the market a while, I'll reach out. I reach out to a pretty large number of properties. I do have a realtor that sends me suggested deals as well. I'm always looking, so no real way to put a timeframe on this piece of it.

2. Touring the property is the first thing I do if I'm interested. I put a ball-park estimate as to what I think it will take to repair. If I'm interested, I'll bring my contractor in to take a look. I do this all within a week.

3. I have pre-approval and a relationship with a lender, so I understand what my price range is. That process is very quick - you should have your buying power in as little as one day. I've used the 203k loan and conventional. Getting funding on 203k takes some time (minimum 45 days). Conventional can move much quicker. Everything seems to be slower with COVID though...

4. 45 days seems pretty reasonable to me, 60 should be more than enough. 30 is pretty tight. In my experience, the seller has always been willing to adjust closing times and due diligence periods as long as you're making a concerted effort to move the deal forward.

Again, I'm always looking for deals so if you're fresh into the market, it's hard to say how long it will take. From first contact to close, I'd say 2-3 months sounds about right. 1 month would be incredibly fast. If it's taking longer than 3 months, it's likely either by design or you might need to find a faster banker!

How long does it take on average to close a real estate deal?

1 Reply