Hi, I have a deal under contract. It is two units on almost three acres. The first unit is a 1-bedroom house (could be converted to 2 bd) and garage rented for $850. The second is a 3/2 mobile home, which rents for $750. Purchase Agreement is for $145k FHA loan w/ 3.5% down. We have done inspections and everything is clean with both properties minus about $2k in repairs. The property will have about an 11% cap rate and cash flow $520/mo.
We have run into a few problems with the 3/2 mobile home not getting a Certificate of Occupancy because permits were not pulled in '02 when a new mobile home replaced the old one. The city is willing to work with me and won't charge me anything for the permits, but I have to have the mobile inspected by them, which I am not worried about. Both units also need brand new septic systems, which the seller will replace.
My question is...should I wait the few months for the seller to take care of all of these issues and make sure that it is done right before I purchase, or should I offer him a low-ball cash offer to walk away and then get a HELOC on the property to purchase my next investment. If I pay cash I won't have access to the downpayment $$$ for the next property that I want to purchase, so I would NEED the HELOC. Our state offers great low financing options for the two septic systems so I wouldn't be worried about those.
Any thoughts and insights would be greatly appreciated. Thanks in advance for your consideration!
I will make the contract subject to repair before coe at fair market price. You low ball he will find other buyers.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing