All Forum Posts by: Quandra Adams

My offer was accepted on a duplex and I recently asked for the current rental agreement for the current tenants. There seems to be red flags all over the place and I will not enter in the actual contract or send any DD money until/unless this is resolved but since this my first time land-lording & buying a property I am here to find out what I can do while I am still able to negotiate a few things. Yes, I know I'd have to honor the existing agreement but if the owner wants to sale I am asking for them to tweak it and get the tenants to agree. Here are the details.

- A very sketchy looking agreement. A year lease at that. I know an owner can write up their contract in anyway they like and this one looks like they threw it together just because I asked to see it. I also really think the owner knows the tenants personally but I could be wrong. The agreement has to be the longer traditional forms we are used to seeing but I's rather have one because it includes provisions that protect both the landlord (me) and the tenants. I am going to ask them to have the tenants sign one.

- A business entity is listed as the tenant. Not even sure where to go with this lol. 

- Application. I am going to ask to see one but I am willing bet there isn't one. This limits my ability to see if they are employed, any information on prior rental history, criminal history etc.

I planned to ask the owner to get them to sign a month to month and tell them that my intention is not to put them out after each month (which it isn't) but in case things go bad I do not want to endure it for a year. I also want actual names on the agreement of ppl who will live there and will be responsible for the rental.

I know they can tell me to kick rocks and not give me ish' but they seem really motivated to sell so what else can I ask for to vet the current tenants, get more information on them or something to make this a little more secure for me?

@Mike McCarthy, I thought about negotiating but I honestly thought I would have found and solidified a deal by the end of my lease. Which is June 30th. So I never said anything. I will talk to her though. According to her, I am the best tenant ever (she has literally told me this). Never late in 5 years, never any major concerns at the property or anything. So I may have some negotiating power but she also does not have to budge. Those are great ideas though! thanks. 

@Wayne Brooks, not sure why they would have any trouble getting it. The DD period has expired and I am not nor will I ask for it back. It's theirs and rightfully so.  

@Mike McCarthy, I started to add all the finer points but realized that it may not matter to the situation but okay, I'll bite. 

First off, I was sticking with the decision to buy this property for all the wrong reasons. A rookie at it's finest, I know. 

1- the numbers looked really great but the property needed some work before I can rent it at an amount for the numbers to work. Every contractor I had on the hook backed out for timing reasons or the job was too small. Some of them even said they just didn't want to deal with the 203K paperwork for such a low amount. The owner's own contractor even backed out. 

2- My rent where I am currently living will increase significantly (by $250) in about 2 months. Just to be clear, my landlord hadn't raised the rent in 5 years. I don't see anything wrong with her increasing it now. 

My point is that I found myself rationalizing buying the property because I needed to make a decision quickly even though there are water issues that came up in the inspection. Many of which the owner would not fix. I still went forward thinking the contractor(s) would stick with me. 

I even told the seller that I would back out before DD expired if I can't get a contractor to fill out the bid paperwork by expiration. They sent me their guy's info. He gave me a quote and I sent him the 203K paperwork. He said he would have it by the time I needed it. He didn't.  By the time I was finally able to contact him it was pass DD period and he said he didn't want to fill out all the paperwork. Wasn't even a lot paperwork. Not only did I look at the paperwork but I offered to fill in what I could so he didn't have to. Anyway, I should have backed out when my gut told me to. There was a point where I was explaining to him that if I couldn't get the paperwork filled out that I would have to walk because I wouldn't buy the property without the repairs getting done. I didn't see anything wrong with telling him that. Do you? I thought he needed to know the severity of my situation. A day or so later, my agent contacted me and told me that the contractor talked to the seller or the seller's agent telling them he WAS NOT going to do the work. I called him and asked about it since he told me he would. He said he told them no such thing and that he didn't know what was going on. 

This was the same day as dd would expire. At that point, I had even signed my termination agreement within the dd period and had my agent ready to send it by 5pm. And I should have went through with it and trusted my gut. All the signs were there but all I kept thinking about was my rent increase, how good the numbers look, and that the contractor was willing to do the work. He didn't. lol. 

Is any of this their problem. Nope.

Do I expect any of my money back. Nope

I just want them to sign the papers so I can move on. This is my first shot at investing and I should have walked when my gut told me to. All I was asking BB forum for was what happens if they never sign or if they can do that. Notice I didn't ask any money back or anything.

Lessons learned. 

I'm pass my DD period and im okay with that. I am fine with having to lose my dd and earnest money. That's the cost of wanting to invest in real estate. My agent sent the termination paperwork and called the agent but they are not answering. What happens if they never sign? Can they do that? What options do I have. 

I will be doing a 203K Limited FHA loan (no structural changes). I have the inspection reports, the list of what I need done/repaired, and the renovation bid paperwork. I will need the bids sooner rather than later and I expect to start the work within 3-4 weeks. Please let me know what else you would need from me.

@Ken Nyczaj, How do you find landlords going through or that have gone through evictions?

@Christopher Phillips, so my agent should have asked for more in closing costs? I say that because I was trying to pay as little out of pocket and put as much into the loan since the renter would be helping me pay those costs. My agent estimated the 4200 for closing but that's a huge diff in the estimate here. 

thank you for helping

@Christopher Phillips, yes see them below.

A. Origination Charges $995

% of Loan Amount (Points)

APPLICATION FEE $995

B. Services You Cannot Shop For= $2,504 

APPRAISAL $575 

CREDIT REPORT FEE $75 

FHA UPFRONT MIP $1,522

FLOOD CERTIFICATION FEE $7 

IRS TRANSCRIPT FEE $20 

TITLE – BINDER $15 

TITLE – ENDORSEMENTS (LENDERS) $40 

TITLE – LENDERS TITLE INSURANCE $250

C. Services You Can Shop For =$950 

TITLE – SETTLEMENT SERVICE $950 

E. Taxes and Other Government Fees = $90 

Recording Fees and Other Taxes $90 

Transfer Taxes

F. Prepaids $953 

Homeowner's Insurance Premium (12 months) $780 

Mortgage Insurance Premium (months) 

Prepaid Interest ($11.51 per day for 15 days @ 4.750%) $173 

Property Taxes (months)

G. Initial Escrow Payment at Closing = $995 

Homeowner's Insurance $65.00 per month for 2 mo. $130 

Mortgage Insurance per month 

Property Taxes $96.08 per month for 9 mo. $865

H. Other $36

TITLE – OWNER'S TITLE INSURANCE (OPTIONAL) $36

I. TOTAL OTHER COSTS (E + F + G + H) $2,074

J. TOTAL CLOSING COSTS $6,523 D + I $6,523 

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Estimated Closing Costs $6,523 (Includes $4,449 in Loan Costs + $2,074 in Other Costs - $0 in Lender Credits.)

Closing Costs Financed (Paid from your Loan Amount) $0 

Down Payment/Funds from Borrower $1,633 

Deposit -$200 

Funds for Borrower $0 

Seller Credits -$4,200 

Adjustments and Other Credits $0

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Estimated Cash to Close $3,756 Includes Closing Costs.

@Christopher Phillips, per FHA requirements- 3.5%. I am not sure if that's going to apply to the 90100 or 88,467. Here are some of the figures from the lender disclosure agreement.

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SALE PRICE $90,100 

Loan Amount $88,467 

Interest Rate 4.750%

DD- 200

Earnest- 200

This is for a purchase. @Jeff Dulla