I’m fairly new at REI though I’ve been actively prospecting and looking at property for two months now. Yesterday, a deal basically fell on my lap. An wholesaler in North Carolina has agreed to sell a property to me for $27k needing about $3500 in repairs.
Comps came in at $50-55K and realtor comfirmed rent could yield $450-$500. We have a verbal agreement on price and I intend to arrange financing for a quick closing via a rehab loan.
However, this being my first deal and not being 100% prepared, I now have to scramble to find an attorney that can write out the contract for me as I don’t understand everything that’s on it.
Can someone briefly explain to me how to compose a letter of intent so I can fax to the seller? Does this create a binding a agreement if I attach earnest money check of $100? Or is binding agreement only possible with contract? In essence, I am trying to tie up the property ASAP while I get an attorney to properly complete a contract.
Also, do both my attorney and seller’s attorney need to be present at closing and what costs is the seller responsible for during the closing process?
I’m sorry to ask what I’m sure are very basic questions. I would do more research, but I feel that time is of the essence and I need to move quickly before seller backs out or perhaps finds a cash buyer. This is a solid deal.
Order a contract for www.uslegalforms.com. Print it out and get it signed.
That’s what I did. It will be a MS WORD doc so you can type in the stipulations. You are buying it as is right? Put contingent upon inspection and buyer obtaining financing.
I would get an"Option to purchase"contract,contact investors,show property,mark it up 1ok,get purchase agreement with buyer for the amount,order title search,if everythings clear on title then double close on it.
did you think of lease option this way you have control with a monthly cost freeing up your money to rehab the place. now what is your plans after reb quick sell or hold. option for two years. have rights to resell, lease out . now if your holding make up your loan market info for the loan company’s. find a loan place that will give you a high loan to value. some low as 70% , 100%, to 125%. ask if that base on apraisel. that what you want. get that top money pay the owner the rest is profit. now you cost of loan % intrest. taxes. make you a 5% profit each month. or more it according what you could rent it for.
Heres what i would do(i know everyone has different opinions,but heres mine) I would not buy this place to be a rental,are you ready to be a landlord? Do you have back up money for repairs and payments if your t/b does not pay? Unless you have plenty of capital then i would strongly reccommend that you consider this wisely.The comps that you pulled tells me that this is kind of a low income neighborhood and that means that you may have trouble on collecting.I would get an "option to purchsae or a purchase contract"and tie it up for about 60 days,then I would call investors(We buy houses ads) then tell them to make an offer or just add like 10k to your price.Then i would either assign it or double close on it,thats just my opinion.
Thanks everyone for your reply. I do intend to hold onto the property as a lease/option. The reason it is priced so low is because it is a 2 bed/1 bath, but in a nice little rental neighborhood in Rocky Mount, NC.
My intention is to use hard money to fund the property and cover my rehab costs. I would then refinance out of the hard money and cash out some of the equity (about $10K) for use on later deals or just apply for HELOC since I expect about 30% or more equity once it’s fixed up.
An investor that works the area has told me I could get $550 on a lease/option and about $475 straight rent. While I don’t want to get into rentals right away, I feel I can take the risk since I earn a high income on my current advertising profession and could shoulder payments if I had vacany/non-payment issues.
A few things to consider - a verbal agreement isn’t worth the paper it’s written on - get it in writing. A letter of intent is just that, a letter. A contract is a promise for a promise -you promise to buy and they promise to sell.
Why would you have to go to an attorney to have a contract written? As the buyer you should consider getting a real estate agent to represent you. It won’t cost you anything (the seller pays commissions) and the real estate brokerage assumes most of the legal responsibilities. As to who pays what costs, this is usually a matter of local custom and should be a negotiable item. I don’t see how you can “tie up” the property without an agreed upon contract to purchase. A good agent should be able to find a number of ways out of the purchase agreement if something turns up that you don’t like (i.e. bad roof, faulty foundation, etc.).
Leave the agent out of this! Download a purchase contract from somewhere and get it filled out(fill in the blanks).If you totally want to screw this up then bring an agent in and it will be.The seller is not gonna want to pay a commission and keep it at the same price!
I live in NC.What pet is your deal in?. Earnest money does not guarantee you the deal until you are in contract but it may tie up the property. Why not get a real estate agent. They only get 3-4 % and since you don’t know the laws here they can handle it. Sometimes doing it all youself is not the answer.