Recouping money spent on getting a L/O ready to sell

General Real Estate Investing
1

I have a L/O deal signed up with keys in hand. I’m gonna need to spend maybe around $500-1,000 to get it in “ready to sell” condition. Carpet cleaned, a few minor handyman fixes, bathroom sink refinished, etc. Seller is paying to get the interior painted which is costing her $1,800 out of her pocket, after that she’s tapped out.

My question is what is the most logical way to go about recouping these expenses when the T/B cashes me (and the seller) out? The seller is getting a big chunk of cash at settlement so I have no problem telling her it’s coming out of her proceeds. But what’s the best way to make sure I get it?

Should I just have her sign a note (0% interest/$0 pmt)? If so, should I record it as a 2nd lien?

Should I file a mechanic’s lien?

Write it in the contract?

Or am I just being petty here and should eat these minor costs, seeing how I’m gonna make anywhere from $30-40K in net profits on this deal?

Any ideas appreciated.

Thanks.

2

You will recoup those costs from your option money. Or if that doesn’t satisfy you then raise the price of the home by 1500 and get it on the back end.

3

In this particular situation I would have had the seller spend her $1,800 on the fixes, carpet, and paid for the paint. Than have your T/B do the painting in exchange for getting to pick their colors. You could have had everything done and saved the money on the professional painters.

But since that’s all water under the bridge. Jesmar is right on about collecting it from the T/B, upfront if at all possible. If not, then I would rather add it to the rent than the backend. You never know if they will exercise so it’s better to get the money now.

You can also get the seller to reduce the price by that amount, assuming you’re not buying for the mortgage balance.