All Forum Posts by: Gabriel DeVita

Hello All,

I'm working on closing my first rental property and everything was going according to plan until the termite inspection revealed prior damage and higher than normal wood moisture content in the crawlspace. It's a 800 sqft 2/1 here in the upstate of SC. Purchase Price was $72k.

The report reads as follows:

Infestation 4- Excessive moisture conditions; wood moisture 23% in left and right front quadrant; 20% center. There was dead air space at the front due to no foundation ventilation.

Damage- the front sill and sub floor, the center beam, damage under some old plumbing at the rear center; tube scarring on numerous floor joists. Powder post beetle holes in substructure.

My question is this, what to do now? Should I ask for a reduction in price or just walk away?  Thank you in advance for your help!

Well played sir!!!

@Jamie Turner My Agent has a $3000 minimum commission which means any deal under $100k will create a shortage. Often times the seller will pick up the difference, but in this case they did not... 

@Andrew Postell thank you for your quick response!!! I suppose these things were bound to happen to a rookie. That being said, I will error on the side of over-estimation moving forward, and will certainly be more selective with my second property. Thanks again!

My first property is officially under contract. It's a small 2/1 here in the Upstate of South Carolina. The purchase price was $72k and I agreed to pay closing costs, which I assumed would be $3-4k... Boy was I wrong.... The estimate I just received was for $7,414!!! Here is the breakdown:

A. ORIGINATION CHARGES $1,391

0.48 % of Loan Amount (Points) $276

Doc Prep Fee $200

Processing Fees $495

Underwriting Fees $420

B. SERVICES YOU CANNOT SHOP FOR $731

Appraisal Fee $650

Credit Report $75

Flood Certification $6

C. SERVICES YOU CAN SHOP FOR $1,145

Title - Abstract or Title Search Fee $225

Title - Courier Fee $25

Title - Escrow Fee $450

Title - Lender's Title Insurance $245

Title - Title Commitment Fee $150

Title - Wire Fee $50

D. TOTAL LAON COSTS (A+B+C) $3,267

E. TAXES AND OTHER GOVERNMENT FEES $45

Recording Fees and Other Taxes $45

Transfer Taxes

F. PREPAIDS $1,108

Homeowner's Insurance Premium (12 months) $900

Mortgage Insurance Premium ( months)

Prepaid Interest ($9.47 per day for 22 days @6%) $208

Property Taxes ( months)

G. INITIAL ESCROW PAYMENT AT CLOSING $1,173

Homeowner's Insurance $75.00 per month for 10 mo. $750

Mortgage Insurance per month for mo.

Property Taxes $141.15 per month for 3 mo. $423

H. OTHER $1,965

Administration Fees $500

Home Inspection Fee (optional) $375

Pest Inspection Fee (Termite) $100

Real Estate Agent Commission $840

Title - Owner's Title Insurance (optional) $150

I. TOTAL OTHER COSTS (E+F+G+H) $4,291

J. TOTAL CLOSING COSTS $7,414

Calculating Cash to Close

Total Closing Costs (J) $7,414

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

Down Payment/Funds from Borrower $14,400

Deposit -$500

Funds for Borrower $0

Seller Credits $0

Adjustments and Other Credits $0

Estimated Cash to Close $21,314

So that's an out of pocket cost of $21,314 to buy a $72k property??? Does this seem right to you seasoned investors???

Thank you in advance for all your help!!!

@Mason Snyder you are not alone... I have been running into the same problem when analyzing deals.... The only offset I've found is buying well below market value, which of course is a challenge in its own right (especially in the Upstate). Best of luck!

@John Hovanec I would like to stay below $150k as capital preservation is going to be key....

@John Hovanec my intent was to invest around the Greer/Taylors area, but have found that to be quite challenging. I did manage to get a 2/1 under contract, but it is certainly slim pickings for someone new to the game... This being said, I have considered moving into the Easley/Powdersville/Piedmont area as well. I thought about Spartanburg as well, but rents seem low as do property values... Any thoughts?

@John Hovanec...Glad to be here!!!