All Forum Posts by: Jason Phu
Jason Phu has started 4 posts and replied 25 times.
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Tom Gimer:
@Jason Phu That's essentially the situation I imagined and trust me, things can go sideways fast. Once you give a seller occupant what they need, the urgency disappears completely. And if their credit is trashed and they fail to qualify for a new place, then what?
It could be a very long time before you obtain possession of that property and getting it could cost you thousand$ in legal fees, damages, etc. Yes, things could also work out perfectly but that's a gamble.
Good luck.
Thanks for the scenario, and that is true. I am inquiring on their default amount with the bank, if the balance is alarming, my choice is to withdraw from the transaction.
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Tom Gimer:
Whenever this comes up I ask the buyer why close now? Why not just extend the settlement date and wait?
Then I share a few rentback horror stories and they usually come to their senses.
In this case, the seller is in default of their mortgage payment, they want to close early to get some money in their bank to show for the next rental, and the staying back 20 days is to prepare for the move and looking for the place to rent.
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Samuel Coronado:
I just backed out of deal partly because of this and partly for other reasons related to the septic. It always gives me cause for concern because there is not a lot of recourse if they damage the property after closing. They've made tens of thousands and sometimes hundreds of thousands after a sale. They can hit a monthly rate on a hotel if they need. haha
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Samuel Coronado:
I just backed out of deal partly because of this and partly for other reasons related to the septic. It always gives me cause for concern because there is not a lot of recourse if they damage the property after closing. They've made tens of thousands and sometimes hundreds of thousands after a sale. They can hit a monthly rate on a hotel if they need. haha
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
very strong protection indeed! For sure sellers don't want to mess up with such conditions! Thank you very much!
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Thanks for all your inputs and advises! So what the seller want is that closing in 10 days after acceptance. At closing day, part of the full cash purchase amount in escrow (~700K) will pay the default amount (pending) they owe the bank, 20K will go to their own account to help them find the next rental place. They will stay for 20 days after close of escrow. The remaining balance will be kept in escrow and pay out when they vacant the property. I offer them to stay 20 days for free, but charge rent if they stay longer after that. Should I find out about the default amount they owe the bank before going to escrow? Thanks
Post: Cash purchase, seller want to stay back after closing
- Los Angeles, CA
- Posts 25
- Votes 8
Hi Everyone,
the seller is asking a quick closing on a cash purchase, and want to stay back after closing for another 30 days. As a buyer, what should I do to make sure everything is going right in this situation? I don't want to give all my money and can't get them out if they wouldn't leave afterward. Anyone encounter this situation before? should I move forward with this kind of transaction and does it sound alarming?
Post: cash flow or appreciations (in California)
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Allan C.:
@Jason Phu you haven't provided sufficient info so you're going to get a lot of incomplete responses. Also, cash flow by buying a property unleveraged is a meaningless metric. Lastly, as mentioned above, ADUs often do not add value on a SFH in CA.
One factor that you didn't mention is property tax basis. That is by far the biggest impact when buying CA real estate, so have you factored that cost into your NOI comparison?
Also, do you want all of your eggs in one basket or do you want to diversify your risk? Generally I’d prefer to purchase 2 properties instead of one, but it also depends on what your goals are for portfolio size.
Yes. Tax has been factored into the number, but I'm not convinced about
"ADUs often do not add value on a SFH in CA." It may not be obvious now, but I believe it will soon down the road when SB9 is applied
Post: cash flow or appreciations (in California)
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Jon Schwartz:
ADUs aren't perfect, but they're still an amazing investment in Los Angeles, especially for homebuyers or homeowners looking to get started.
in CA, houses have larger lot with ADU potential or houses that have ADU always attract more buyers, in some cases people are willing to pay more for those properties.
Post: cash flow or appreciations (in California)
- Los Angeles, CA
- Posts 25
- Votes 8
Quote from @Andrew Lax:
Quote from @Jason Phu:
Quote from @Andrew Lax:
If it doesn't cash flow it's speculation.
at a certain point, I agree with you. But it also depends on the market. CA is mostly appreciation, that's why housing price in CA is so crazy.
Buying on speculation at the top of the market would probably not be my go to plan ....
10 years ago with the market conditions and low rates maybe. but not now.
If it doesnt throw off 10% ROI I would think long and hard ...
Not saying there are not deals out there that make sense ..
Just be careful relying on appreciation only...
I am an old dog and seen many lay to waste thinking this train will keep rolling forever
just be careful buying on a hypothetical appreciation number - markets dont run forever
Great point!! Thanks