Posted by JoeB(Atlanta) on March 02, 2000 at 06:49:50:
Hi Doone, here are some answers…
"Getting property inspected."
You as the Buyer would normally pay for an inspection. In Atlanta, it costs about $250. Around here our city inspectors are too busy to do a side job, but I wouldn’t want to use them. They’re not as good as some of the high-quality home inspectors (you’ll need to ask other investors who the GOOD home inspectors are though).
"I found an atty. to work with. I questioned him on how much he charged for these deals."
In Atlanta, the closing attorneys charge around $450. Extra $150 for a title exam, extra $100-200 for title insur (varies w/value of home). The attorney’s fee includes the review/opinion of title exam/defects and help in curing defects and drawing up of all notes, deeds, mortgages and settlement statement. I would HIGHLY recommend you find a good CRE atty (ask local investors or club) and allow him/her to do all this stuff, so you don’t make a mistake w/these CRITICAL documents. As we got more experienced, we now draw up our own notes/mortgages and are pretty good at reading title and curing it.
“Do you get paperwork showing that the title is clear?” YES, and title insurance too!!!
Oh, yes. The atty. mentioned writing up my own (title, deed - what’s the difference?). How would I find out how to do this?"
Don’t want to try this, until you’re more experienced. But, Bronchick may have some examples of Quit Claim Deed, Warranty Deed, Notes and Sec. Deed/Mortgage on his site: www.legalwiz.com.
"Title insurance - do I need this if I’m just flipping?"
We don’t buy it if we’re just assigning our contract, but if we’re doing a double/simultaneous close then we DO buy it.
“Am I missing anything? When we go to closing, is my buyer’s financing instution, hard money or otherwise, going to understand why my buyer is buying from me when I don’t actually own the property? Has anyone had problems with this? And when I sign paperwork with seller, where does the money for them come from if I’m not actually getting a mortgage?”
If you’re buyer is NOT getting a hard-money loan, then yes we have run into problems w/lenders not understanding and not liking (and even killing a flip or two) the flipping concept (there has been a lot of high-publicity flipping fraud lately and it’s scared bankers). It doesn’t seem to matter whether we do a simo close or assignment w/these lenders. If you have a good atty he/she MAY be able to sweet-talk the lender into it…but before you get too concerned, this only happens about 25% of the time w/us, when hard money is not used.
Yes, the money to purchase comes from your Buyer’s loan. If you’re doing a simo closing, then have your atty close in escrow w/you and your seller, then your Buyer walks in and closes on the purchase. That way you don’t have to bring funds.
Hope this helps,