All Forum Posts by: Burt L.

I have a worn 6-plex under contract that is next to a lot where 14 new townhomes are being built. Next to that is a lot with 20 townhomes that are probably 25 years old.

The lot the six plex sits on is the same size as the the 14 units under construction, each 19,000 sq ft. All my buyers are residential landlords and wouldn't be able to look past the current use of the property and wouldn't see any value beyond the cash flows of the six units. Rents are sky-high and seemingly ever-increasing currently as is widely known.

The deal as a straight six units is good, but not great. The lot is zoned to allow three stories high construction, as is being built next door. How can I show that there is value beyond the value of the current cash flows, as buyers wont acknowledge it has any greater value unless I can show them. This property was formerly a 6,000 ft single family that was legally divided into 6 apartments, each with exterior access.

Unfortunately, the lot next door didn't sell at a price that was attractive on its own relative to the price of this operating property so the lot value alone isn't a convincing figure. 

I can see buyers complaining that the deal isn't good enough, while knowing the future value isn't quantifiable right now, but will be happy to put that value "in the back-pocket" for the future.

How can I present this deal in a better light that gives it additional value for how properties are being developed in the immediate vicinity? As a wholesaler I find sometimes the biggest issue is identifying the value of a higher and better use and convincing buyers. I seem to have had good luck at this in dividing duplexes, etc into individual townhomes, but these units are also vertically stacked so don't qualify as townhomes and would have to be done as condos, which is a much more demanding and costly process.

I try not to give away identifiable value, but haven't been able to quantify any identifiable value other than to simply say a developer will likely want to buy this and scrape it someday - but that doesn't translate to current value for my residential landlord buyers as their formulas are steadfast.

I will certainly inquire about how I can write a contract with "an additional minority interest who might yet be identified by a court".

Otherwise, I have to negotiate separately with the sister after the probate court has ordered the title percentages be "corrected" to where they probably should have been 18 years ago if a timely probate had been filed. Although the siblings have strong, long-lived differences - at that point they will both benefit from a higher price for the property after the legal work has been done and the sister could hold out for a ridiculous price and I cant do much with 75% the interest in the property. A partition action essentially requires it be sold on the courthouse steps to the highest bidder.

My experience is that the longer a property goes without being under a fully binding contract, the more the price keeps going up. I will be thanked for my help, but will hear'" we still  need to get more for the property" after the title/probate  matter has been cleared and the sister is not bound to the initial contract with the other 75% ownership.

I have been working with a couple who own a duplex with the father/father in law who died 18 years ago and it was never probated. 20 years ago the husband and father in law bought the duplex as tenants in common with each owning half. 2 years later the father in law died, having two daughters and no other heirs. Thus half of the deceased fathers half of the property would go to each of the daughters, leaving the married couple with 75% ownership, and the other sister with 25%.

After having a trusted attorney research the situation, I learned that since three years have passed that its too late to probate the property (there was no probate at all) but that an abbreviated process called a "Petition for Heirship" is undertaken. In this process the sister/wife who lives in the property with the husband files petition with the probate court (not a formal probate) sends letters to each of the heirs stating in this case that each will receive 25% ownership and if there is objection then a formal hearing is held. If no objection then the court enters an order that each sister receive 25% ownership and sends the order to the recorders office, which changes ownership in  the records. This all sounds quite streamlined, unless there is objection.

I would like to put the property under contract, and have offered to pay the legal costs which are about $1,500 if no objection from the other sister who lives out of state. Unfortunately, I cant put the part of the property that the out of state sister owns under contract, as she's not on title yet, and has proven to be contentious with the resident couple, but she has stated that she agrees she will ultimately own 25% of the duplex. /

Its been suggested I put in the contract that "Closing will be 30 days after Court/Attorney approval".

This is fine, but I don't have agreement from the final 25% ownership of the property. My concern is that after the process is completed, the price wanted for the property will immediately increase dramatically if I don't have agreement beforehand. Its seems that I can only enter into agreement to purchase 75% of the property, unless I enter into agreement with the contentious sister now, who the married couple want to leave out of this and just want her to sign off on the court petition without further involvement or being notified of anything else now.

How can I put  myself in the best position to obtain the final 25% ? The price I put in the contract will be for entire purchase amount, which the other sibling will receive a prorated 25% of. I may have to increase her compensation for the final 25%, but the 75% ownership purchase price will be locked in. I need to have some language about the final 25% in the contract but wont have the signature of the other, non-resident sister.

This is an odd one, as there is no Personal Representative that can legally bind the other sister. The property is very poor condition in a good area and worth rehabbing.

Here's a better response - been having a funky day:

If we assume this is legal and avoid RESPA conversations - how could I do this rather than "can I do this"?

Title co attorneys review and allow this so I would prefer not to make judgments on what's legal or not. If we have already made it as far as "this can be done" on the greater decision tree, how could I do it?

Didn't want to go down this road in the thread, especially not so early. But I've done it or seen it done hundreds of times. 

Looks like the death-knell for this threads inputs. 

I've been working on an off-market duplex deal and the owners long-time broker wants to use a specific title company that I know wont double close with an end-buyers money. Off course, I don't want to have to use flash cash at a cost of about 5K for it.

The seller is in a retirement home and the sellers spouse is deceased so there is a financial manager with power of attorney. The broker says they sold another property recently through this title company and so don't want to use another title company, though I am paying for th-e title insurance if closed at one of the companies I've used.

It would seem that that the only documents any title company would need are the power of attorney, and something equivalent to a death certificate, that was provided to the first title company - I'm not certain about document requirements though.

I've been told that I will be receiving a counter-offer with no changes to the price, but only to the terms which includes the specific title company. My buyer funds through a lender, so I don't know if the B-C can be closed at a more friendly title company, and transferred to the sellers title company. If there weren't a lender involved, that part would probably be easier.

I keep getting stuck in these requirements of a specific title company - and specific closer - whenever a broker is involved. Any suggestions on how to proceed would be much appreciated.

Things are looking positive on getting the contract as the owner is starting to appreciate the higher net price to him. I will go over and buy my way in the doors after the contract comes back. Even if I'm not allowed in, I'm sure they will be happy to tell me what the unit needs for repairs, as we are speaking. Interesting how I didn't think of that, yet I've done on a couple of occasions before where there was no management company involved.  I must have been developing a mental block due to the property manager myself. Once it under contract, I don't think the seller would be put off.  Great to have the support on the forum!

I have made an offer to an owner of a duplex that is 10K higher and has no real estate commissions involved. His property manager is also a realtor and brought an offer than will net him 25K less than my offer is. A buyer of mine who has bought 25 properties from me would like to purchase it, but the owner is afraid of taking an offer as his property manager controls access to the property and the owner lives out of state.

There is no listing agreement between the property manager and the owner, but he has just received one from the property manager and wanted to speak with me before signing that. The buyer the property manager has brought owns another duplex on the same street and the manager also manages property for that owner and would then continue to manage the same property and so would get a commission without interrupting the property management fees. I'm not sure if this gives off a poor odor or not, to others.

The owner says he doesn't know how he can accept my offer as he cant provide access without involving and upsetting his property manager, but he would like to net the 25K more from my offer.

How could I approach this, and gain access to the property for the walkthrough? The managers buyer hasn't been in the property either, yet. I've told the seller, that If I don't perform, the other buyer wont necessarily go away and he could still pursue that plan. My buyer has only declined to purchase one of the 26 properties I have had under contract and offered him.

It seems that the manager is effectively preventing the owner from getting a better price for his property. I just need to gain access for a walkthrough. Would you have any suggestions on how to approach the situation?

I have a property under contract to double-close, and a buyer who has already bought 20 properties from me. The seller didn't want to use my title company and insisted the same title company be used that he bought the property at 7 years ago, although he lives out of state and has never visited the rental property itself.

I did my first double-close at this title company five years ago and called and the same escrow officer and manager are still there and said they would be happy to do it. So I agreed to use the sellers title company. Now I realize the seller is going to insist that the same escrow officer that he bought the property from in 2009, who works in a different office be used and that he knows personally from so much time on the phone together. Apparently, it was under contract with another wholesaler 2 months ago, with this same escrow officer, and it didn't close. It may be that that wholesaler couldn't find a buyer, or the escrow agent disclosed that it was being double closed- I don't know.

I asked the manager I've worked with if he could transfer the file, and he said he spoke with the manager of the other office, who said "he would take care of it". Regardless, I expect the seller to  have a large fit tomorrow and threaten to cancel the deal if his escrow officer isn't used. I only agreed to use his title company and not a specific title officer. His escrow officer has been out of the country on vacation, and then sick, and will be back tomorrow to work, to the countersigned contract that was faxed to her six days ago, with a 14 day close, and now has expired dates on it. The seller has just been letting it sit at her fax machine, waiting for the escrow officer he is comfortable with to return.

The conversation between the manager at that office and the escrow officer will be awkward, I'm sure and she wont be happy, will relay that the file has been taken from her, and he will call me and be very angry, threatening to cancel the deal. I've worked with very few confrontational sellers, but this fellow is different.

I suspect I'm going to end up with his escrow agent, but if that agent discloses that its being double-closed, (BC side funds the AB purchase) the deal may then fall through. It wasn't an easy deal to get under contract in the first place.

Would you have any suggestions on how to work this through? One sure does get comfortable at the title company they are used to working with, confident that the escrow officer wont do or say the wrong thing on double closes.  Conversely, this escrow agent probably wants to get paid this time too. Apologies for the long post.

I have had a long-term wholesaling relationship with my strongest buyer, selling him twenty or so houses. He had approached me about his getting "out of the process" and having me help him acquire deals of other wholesalers as well as my deals. He asked me to make a written proposal for my doing MLS comps to screen deals, evaluate repairs, do the contracting with a power of attorney, titlework process, get the sewer lines checked, and finally meet an appraiser at the property with the best MLS comparable sales, as I have on the properties he has bought from me. I do not hold a brokers license, intentionally, but am a registered assistant.

I wasn't wild about this as it takes time away from my business and help my competitors get a very good buyer though I cant find nearly enough properties for this buyer. As things are slower I said I would do the entire process for $4k from conception to closing and submitted a detailed plan of how it would be done.

Prior to this being completed, I had said three properties of other wholesalers looked worth taking to the next level of investigation and should I begin that investigation?

Instead, he has had other persons work the deals and wants to pay me for my time of running the comps, and has said that he has come to trust my skills in evaluating deals, especially as the appraised values come back nicely. He had a property manager who was licensed and used to use her for comps but they had a falling out and she doesn't do that anymore. I would be foolish to just sell my time for running comps and this has turned nightmarish. Additionally, I rent a house from him that I had wholesaled to him a couple years ago though I am on a lease with it.

This is really disappointing. He is a very good buyer and I had come to bring him my deals first. How might I proceed on this? I need to remember this is still business - after you have worked with someone for so long and formalities are no longer necessary its easy to forget that. I really regret providing a process-map of how everything is done, so he could break it up and sub it out to others on his property-management team. I don't plan to sell my time for doing comps for others wholesale deals as its more about recognizing value and avoiding costly mistakes on costly acquisitions. He didn't like my price on doing the whole process and wants to pay me for my time on these three property analyses, and beyond.