Investor · Los angeles, CA · Member since 2019 · 19 posts · 0 votes
I offer on a property in cleveland zipcode 44120 on 118th st, with a real estate agent from realtor.com
The seller agent accept the offer, but on the purchase agreement, there is no seller information, only the listing agent phone and email. My agent send an inspector, which i paid $350. but they said the tenant doesn't want people to be inside the house due to covid and doesn't allow picture and video. So they did a very fast and simple inspection without picture and video. I am from Los angeles area, I have never seen the house and have never visit cleveland. I need advise. thanks..
This would raise a few red flags for me. I understand the COVID concern, but there’s ways to mitigate it. For example, the tenant could leave during the inspection. In the end, my level of risk comfort would never allow anything less than a standard inspection with a thorough report, pictures included. The pictures go a long way in identifying issues with the property.
I’ve never visited any of my properties in person since I’m in CA. That makes the independent inspection critical to me. For me, a purchase agreement must have an inspection contingency. And if the seller is unable to provide full access to the inspector, then they’re not allowing me to sign off on that contingency. Some investors may feel differently based on their experience or risk tolerance.
This would raise a few red flags for me. I understand the COVID concern, but there’s ways to mitigate it. For example, the tenant could leave during the inspection. In the end, my level of risk comfort would never allow anything less than a standard inspection with a thorough report, pictures included. The pictures go a long way in identifying issues with the property.
I’ve never visited any of my properties in person since I’m in CA. That makes the independent inspection critical to me. For me, a purchase agreement must have an inspection contingency. And if the seller is unable to provide full access to the inspector, then they’re not allowing me to sign off on that contingency. Some investors may feel differently based on their experience or risk tolerance.
I got a inspection report, the report have no picture at all. All it has is check box such as, public water supply, no water leakage. public sewer, no roof leakage, no water moisture on floor and ceiling, no mold, no structural damage, no current fire damage, no termines, no electrical problem, no plumbing problem, no lead based paint, no water wells, not located in flood area, no drainage problem, no coding violation, not a historical building, no fee associate with building, no boundary agreement, no dispute, no boundary changes, no share drive way, no party wall.
Box checked unknown, such as central heating, central AC, sump pump, fireplace, lawn sprinkler, water softener, security system, central vacuum.
No physical condition existing on the property.
I did research online that this property belongs to husband and wife. But only the wife sign the purchase agreement..
I have talk to this inspector, he said everything looks good. But something don't sound right. A 1917 house, more than 100 years old, have no problem at all?
Would this be a good enough inspection report? or I should pay another inspector for another report?
You definitely need to review the leases prior to closing. They’ll be your tenants at closing, so you need to see what terms you both need to follow. It’s also part of the due diligence that the lease verifies the rent amount and length. You should also request the tenant ledger for the last few months. This will verify rent payments and make sure the tenants have been paying on time.
Great tip about the lease prior closing. I ask the agent, she said the tenant is month to month, therefore no lease. Does that mean I have to have it or no deal?
Even if they’re month to month there should be some kind of previous lease, but at least if they’re not good tenants you can kick them out next month. You should probably get them to sign a paper stating what their lease terms are and that they are month to month. The inspection would worry me greatly! Some inspectors can be worthless, and not pay attention to things. Have you seen pictures of the house? Can the realtor go in and get a video for you? That old of a house is going to have problems somewhere, I don’t care what any inspector says.
I totally agree with you. That inspector report bothers me too. At this point, I don't really care if I get the house or not, it has red flags. I have mention it all to my real estate agent. I am going to change to another real estate agent that is more knowledgable about investing and will do better job for me in getting the house inspected. Not kept on saying this house is a great investment and I should go ahead and buy the house.
At this point there is no lease.. should I forget about this investment? I am not able to get the tenant to sign a new lease since I am not the owner. I was afraid that once I purchase this property and tenant refuse to pay the rent or refuse to sign a new lease. Then I have to spend bunch of money to evict the tenant. Please help ....
At this point there is no lease.. should I forget about this investment? I am not able to get the tenant to sign a new lease since I am not the owner. I was afraid that once I purchase this property and tenant refuse to pay the rent or refuse to sign a new lease. Then I have to spend bunch of money to evict the tenant. Please help ....
While I don't think there is some conspiracy going on here to defraud you, what you're dealing with is simple. You've got yourself a low income rental property with a couple jerkoff tenants in there. There are a ton of low income rental properties in Cleveland with jerkoff tenants in there. Jerkoff tenants are very common in the low income space. Dime a dozen. Many of these properties can be purchased with more information than this one in particular. So if you don't feel comfortable, I'd say you should probably move on to another one where you can gather yourself more information so you can make a more informed decision.
In addition it should be noted that Realtor.com is not where one goes to find themselves an agent who's familiar with rental properties.
@James Lin James.............PLEASE do not close on this property. Based on the multitude of red flags that you have told us about.....common sense says to run from this. An inspection report with no pictures? No lease agreements? Tenants not letting inspectors inside? I will also guess that on Realtor.com there are not a lot if any pictures of the inside of the property? These are signs of tenants that are probably difficult to work with....and that may be a BIG reason why the owners are selling.
Thank you all for your advise. It is my first out of state investment and I am learning while I try to invest. Special thanks to Bob Collett from biggerpockets in helping me thru this process of identifying all the problem with this particular investment. I email the agent that I would not continue the purchase without lease and rental payment ledger. She told me that there is no lease and she couldn't get the ledger. At this point I have lost This is what she email me
"I can not get rent history. The husband who is recently deceased Took care of the financials of the family Properties But The tenants is calling me directly I just got off the phone with one of the tenants i called the Tenants I am not suppose to call the sellers tenants. I WANTED ANSWERS FOR YOU__DIRECTLY The tenants have been paying rent at 118th property for 20 Years--2nd Floor21 Years--1St Floor WOW You talk about super long term good paying tenants I applause them. They deserve to continue as is.
I knew they were good tenants with long term paying rent history. The tenant I just got off phone with said the owner passed away Do you want that type of well paying long term tenants. Both Units in 118th property is family. I think you want those tenants??Tenants living at property paying rent all those long years speaks for themselves FOR SURE I could be a good property manager with those tenants for you I Like super long term tenants."
"No such records exit On this particular Property3325 East 118th St Property Just extremely long term tenants Over 20 years Both units Most 2- Family's do not have those records. I will send you a release if a release is needed. Stating that you are not interested in buying Property. Because I am not be able to provide the type of records and information you are requesting for this property. Owner is recently deceased that could have provided your requested information. Thanks"
My question is , what she said that most multi family in cleveland don't have lease and ledger.. is that true?
Friendly advice, take the release and get out of this deal. It sounds like there is a lot of uncertainty and problems going on and that address is in a distressed area which will most likely continue to be problematic for you without having a proper team in place to help. Treat this as a learning experience and move on.
But to your question, the vast majority of small time landlords aren't going to be able to provide accurate records for small properties like this. It's easy enough to estimate expenses, rents, etc when there are only 1-4 units in question.
So in the future purchase of rental unit, I can't expect the current owner to provide me with lease and ledger. Just plunge in , inherit the tenant, and take the chance on whether tenant pays or not?
So in the future purchase of rental unit, I can't expect the current owner to provide me with lease and ledger. Just plunge in , inherit the tenant, and take the chance on whether tenant pays or not?
It's impossible to say with 100% certainty. Generally speaking, if the property is stabilized and performing well, they will typically have a lease and maybe even a ledger. If there are no leases or any type of documentation in place it's fair to assume that there is a problem with the property's current performance and management.
Due to covid many tenant occupied investment properties will not allow showings without a purchase offer with an inspection contingency. Once the offer is accepted, you are required to perform your inspection in 5-10 days. The listing agent should get you or your repesentatives in the house for inspections. Your realtor.com agent should have also recommended a good inspector, cost would be around 350-450.00 Seller upon request should be able to provide a ledger accounting and lease. If you do not recieve these documents assume that you will be doing an eviction. Do not feel to bad about loosing the investment opportunity. I just turned down representation of a property on that street.