Silly question from a newbie.. - Posted by Peter


#1

Hey all. Ive been reading for a few months now and im ready for my first deal… I happened to have one fall into my lap. Its a run down house that needs a lot of work. After rehab I stand to make 20K on the deal. I am meeting with someone tomorrow regarding financing, but I dont think it will be a problem. My issue is, Me and the Owner (who lives out of town) have an agreement, but I would MUCH rather get him to sign some paperwork to guarantee this deal goes through. I havnt had a chance to get with a lawyer (My lawyer is out of town for the holidays)… are there any “generalized” forms/contracts I could use just to atleast hold our agreement we have made? I keep reading to carry paperwork with me… What sort of forms/contracts should I be using? Anything you can point me to/send me will be very much appreciated. I look forward to your replies… If im going about it the wrong way, please correct me :slight_smile:

Thanks in advance… GREAT SITE!


#2

You actually have NOTHNG until you get it in writing.

Real Estate contracts, agreements, etc. MUST be in writing to be valid/enforceable.

So, if you take the owner’s word, do the rehab and he says GOODBYE…you just did the work for him.

Wait and get it n writing.


#3

GOOD QUESTION

I can assist you but first need more details about the property.
Does the owner own property free and clear?
If so Land Contract may be the way to go…
So create a Land Contract/Lease Option Agreement and Record the Agreement @ the Tax Recorders office
Hope this helps


#4

Be careful …

Congrats, and you sound excited. Now a few words of caution.

You didn’t say what area you’re in. Regulations are more lax in rural areas, and much more stringent in developed urban areas where I operate.

I partnered with a real estate agent in my 1st deal, a rehab and flip, where I was the money partner. He found a 125K property asking 70K. Wow, and I jumped on it. I depended on him to know the in’s and outs of the deal. In this, he was partly successful. What did I learn??

These days, if I was to attempt something similar, I would first pull the building plans. I would further check if there are any code violations, particularly if bought as is.

My partner and I wasn’t aware that houses with septic tanks in this town are required to be hook up with the town sewers when property changed hands. So we had to spend a little under $1,000 that we haven’t planned on. In rehabs, a thousand here and a thousand there adds up.

And I mentioned building plans earlier. Unbeknownst to us, the seller was handy, did extensive renovations himself, and the contractor we hired found a load bearing wall removed. Further investigation found the furnace and hot water tank was moved from its original location to make room for a hot tub.

In order to set things right, i.e. up to code, we had to bring things back to the building plan. The hot tub was removed. This added considerably to our the rehab cost.

Around here, checking the building plans, and checking for code violations cost nothing except a couple of hours of your time. At least you can go into the deal with your eyes open and adjust the deal accordingly.