We Have Officially Purchased Rental Property #3

As Ice Cube said

Today Was a Good Day

I thought we were going to get this deal done before our Europe vacation, but the sellers lawyer was moving at a snails pace. So, I said sorry guys we are closing when I get back.

Then the deal almost didn’t happen! Why? Well we… The seller and I began to bicker over a 1k repair that needed to be done.

We finally came to an agreement, which amounted to me saying I will walk unless you play my way. He caved like a cheap Walmart picnic table.

Then something else happened….

Now, this is an all cash deal and for the life of me the seller’s lawyer didn’t understand that, in cash deals there is no credits after closing, but reduction in purchase prices.

 

Seller’s Lawyer says

Our client offered a $1000 credit for repairs, keeping the purchase price at $30000. Can we close it under those terms?

I say to my lawyer

Susan,

I don’t get it.

This is a cash deal, why are they offering a credit instead of a deduction from the purchase price. Is their attorney aware of this or am I missing something?

My lawyer says to me

That was my thought and what I had sent her this morning. It makes no sense to give the credit. Just waiting to hear back

 

We literally had to convince the sellers attorney to reduce the purchase price.. this took 24 hours..

 

Thankfully, the seller’s lawyer caught on. Here is the closing Statement

PURCHASE PRICE $29,000.00

City or Village Tax $1438.54 38 days 149.77

County and Town Tax $804.91 222 days @2.21 490.62

School Taxes$

TOTAL AMOUNT DUE SELLER $29,640.39

CREDITS TO PURCHASER

Amount Paid Down $
TOTAL CREDIT TO PURCHASER $
$29,640.39

Balance due on closing $29,640.39

Total $29,640.39

BUYER EXPENSES

Record Deed 185.00
Attorney Fees 350.00
Title Insurance 303.00
Wire Fee 25.00

Total $863.00

NET DUE FROM BUYER $30,503.39

 

I will talk about rents and actually repair costs as we move along, this blog post is getting long already. In closing, my lawyer worked for 30 days on this for a grand total of $350 bucks. She’s a rockstar, I need to buy her lunch one day.

 

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31 comments

  • Canadianbudgetbinder /

    Wow, good for you 3 propoerties. This property is super cheap I wish we could find them that cheap around here in Ontario but I yet to find any. Maybe I'm looking in all the wrong places or I'm a dreamer. Once we pay off this house we will save to putchase a rental home. We want to make sure we have some sort of backing before we jump into a second home. Good for you. I look forward to reading your next post. Cheers Mr.CBB

  • Congratulations on your purchase!

    You're giving me the rental itch again. It's been a while. And there are so many homes available here…

    Look forward to hearing more about this project.

    "You win some, you lose some. But you live, you live to fight another day."
    My recent post Find Personal Finance Jedi Masters On Money Crashers

  • URFinanceSimple /

    I'm curious, how long until you pay off the house?Also, we had to look 400+ miles from our primary residence to find this property. If properties are expensive in your area, look abroad or in cheaper areas.

  • URFinanceSimple /

    Thanks Dave! But as I suspect you know, rental properties can be a nightmare! I have a few of those nightmare posts in the queue.

  • Canadianbudgetbinder /

    We bought the house in mid 2009 for $265,000 and it will be paid in the next year.. How do you handle maitenance issues and rental issues from so far away? Do you hire someone? Mr.CBB

  • URFinanceSimple /

    Congratulations on getting your home paid off!We have a property manager who handles all the hassle of maintenance. He costs us 10% gross rents per month, but he is worth much more than that. You don't save much by not having a property manager to delegate things too.

  • Canadianbudgetbinder /

    Thanks, we've been able to save by being frugal but most of all the past couple years using the budget we designed… we save so much.. everyone should be budgeting! Mr.CBB

  • URFinanceSimple /

    Ohhhh! You said the B word. I think you meant to say.”Everyone should be using a spending plan”

  • addvodka /

    Wow, that's pretty cool – congrats on your property! You should post pictures!

  • ZillaMane /

    That's awesome that you acquired your 3rd rental property! I'm right behind you with 2 rental properties and have been looking to find #3. I also agree the way to go is paying cash and leaving any lenders out of the equation…you have become my new motivation to see if I can keep up with you with on rental properties…as I see (from reading your blogs) our goals are somewhat aligned…more so when it comes to aquiring residual income thru rental properties.

    I'm glad that I came across your blog. It's kind of refreshing to find someone a little closer to my demographic to follow rather than the older generation that I've been subscribed to. Good job on your website and blogs.

  • URFinanceSimple /

    Thank you for the well wishes.. but, I only buy in cash to remove the equity via a HELOC to steam roll the next deal. In 30 days, I will take the money out this property and buy another one. Why? Well the HELOC cost me 130/month and I bring in 900/month in rent. Eventually, I can't take out any more HELOCs and will have to pay with my own money again (like the first property). But, I'm using leverage until I get to that date.

  • Congrats with the purchase. Could the unwillingness be related to the realtor commission? Even on $1K reduction he would be loosing $50?
    My recent post May 2012 update ($190,700 +$2000 or +3,0%).

  • URFinanceSimple /

    No their is no realtors involved, also I doubt he would give up 29k because of 50 dollar commission. That's just silly. The reluctance is because, his lawyer forgot this was a cash closing and their aren't any credits at closing for cash closings.

  • Hahaha…love the gusto! I'm happy it worked out for you. That's my dream purchase someday in terms of adding properties to my eventual portfolio!
    My recent post Hello! My Name is Jen and I am a Reformed Spendaholic…

  • Regina /

    LOL It's so funny that you've begin your article with a quote from IceCube:) By the way, the rap music has got so many truth in the lyrics.
    My recent post Rodern auf der Donau

  • Good news! Congratulations!
    My recent post Value of Teams

  • Tanya /

    Congratulations on your 3rd property! "He caved like a cheap Walmart picnic table." – That's my new favorite quote for today 🙂

  • URFinanceSimple /

    Well… you know, it was actually a good day. hahah.. I love that song too 🙂

  • URFinanceSimple /

    Hahahahh… well he did cave, quick fast in an hurry. I should have pushed him a little more on it.

  • URFinanceSimple /

    Thank you.. now it's times to find responsible tenants.. (the hard part)

  • Don't get greedy:)

    Great job!
    My recent post Mushroom Magic

  • URFinanceSimple /

    Hahah… all is fair in love and real estate. Dr. Dean!

  • Nate /

    Very cool! I just closed on my second property as well. Question: does your property manager lease your units for you as well? Love the blog!!

  • what_what /

    I don’t get the issue……the HUD has to work out regardless, correct? So purchase price is 30k, there are different fee’s involved (taxes, transfer stamps, what not), then the numbers in a column are added up and you determine what you have to bring to the table.

    If these figure were multiplied by 10,maybe the owner doesn’t want the neighbors to know what the house really went for, so keeps the official sale price a certain figure, then reduces the amount owed via a credit at closing.

    i have no idea what i am talking about, but math is math and the HUD has to agree so 30k with a 1k credit or a 29k sale price to me seems like splitting hairs. either the HUD is correct or not.

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  • try180 /

    Great stuff, keep up the good work 🙂

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  • URFinanceSimple /

    Thank you! Do you have any rental properties?

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