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Mortgage Offer, Accept?

Home Real Estate Investing Mortgage Offer, Accept?

  • Zaphod Zaphod 
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    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016

    Yes, Im leaving and joining a couple of my old co-residents in Kentucky. Should be lots of fun.

    Moving to Kentucky, gonna drink a lot of bourbon…

    CordMcNally CordMcNally 
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    Status: Physician
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    Joined: 01/03/2017
    Moving to Kentucky, gonna drink a lot of bourbon…

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    Kind of sounds like a parody song…”movin’ to the country, gonna eat a lot of peaches…”

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #196724 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 817
    Joined: 11/21/2017

    I don’t think I would bother signing anything for 2%.
    5% would be a minimum for me. But maybe it is different in your region. 10% is standard in my area.

    If it has been in the market for only 1 week, I wouldn’t be in a rush. But maybe you have price/local factors that compell you.

    If you own it outright (no mortgage), I would be cautious of exchanging contracts with a small deposit because there is more likely to be a problem. What I worry about is not relisting but the counterparty being crooks or vexatious. I spoke to someone recently who sold an option on a property, with a small option value but high face value, where the buyer and the buyer’s lawyer were crooks. They managed to get tittle of the property changed with only the option documents signed and secured a mortgage on the property. The owner had to spend years getting it through court to get the mortgage bank to change tittle back to him.

    Even a dispute over a loss of deposit could mean a significant delay in relisting and can be more of a headache than being a long distance landlord.

    Have you thought about keeping it ? If it is in a resource dependent state, you could wait for the next resources boom before selling.

    I actually quite like the process of selling. The wait is actually enjoyable if you view it a certain way. If being a landlord is not the end of the world then that gives you the space to take a risk and wait for a good offer. From my limited experience, the most motivated buyer for the place will usually look at it in the first 2 weeks. But they will want another look. Ideally, they will offer close to asking and have a serious deposit. I generally take that offer in week 3-4. I actually have not had any places that I had to take off the market, but I guess that’s the fear. Maybe I’ve just been lucky.

    #196736 Reply
    Liked by Zaphod
    White.Beard.Doc White.Beard.Doc 
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    Status: Physician
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    Joined: 02/06/2016

    I once rented one of my high end rental properties to a famous NBA player.  He was a pain in the ass, but he did pay the big bucks and didn’t argue about the rent with his 7 figure annual salary.

    But caution is advised in this type of transaction.  Most of these young athletes don’t come from money and have no idea how to manage it.  Generally speaking, a majority of them end up broke despite the megabucks they get paid.

    #196770 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016

    I once rented one of my high end rental properties to a famous NBA player.  He was a pain in the ass, but he did pay the big bucks and didn’t argue about the rent with his 7 figure annual salary.

    But caution is advised in this type of transaction.  Most of these young athletes don’t come from money and have no idea how to manage it.  Generally speaking, a majority of them end up broke despite the megabucks they get paid.

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    Indeed, my worry is qualifying for the loan and making it through closing.

    #196777 Reply
    White.Beard.Doc White.Beard.Doc 
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    Status: Physician
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    Indeed, my worry is qualifying for the loan and making it through closing.

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    Then run a credit check and ask for a bank letter to lay out his finances.

    Does he have the cash for a downpayment with a bank letter certifying it?  Can he let you run a credit score?

    Given the long timeline to closing, you have to do your due diligence.  If you act a bit like a bank, and check his income, assets, cash position and credit score, then you have a good idea what you are getting into.

    In multiple bid situations, it is not uncommon to do a wallet biopsy on the various buyers.  It isn’t that the highest offer is always the best offer, it is the ability of the buyer to perform in getting to the closing table.

    #196802 Reply
    Liked by Zaphod
    Molar Mechanic Molar Mechanic 
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    Status: Dentist, Small Business Owner
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    Joined: 10/29/2017

    Saw this and thought of you.

     

    #197986 Reply
    White.Beard.Doc White.Beard.Doc 
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    Joined: 02/06/2016

    Zaphod, I am curious, what did you decide to do with this offer on your property?

    #197987 Reply
    Liked by Zaphod, portlandia, Tim
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016

    Zaphod, I am curious, what did you decide to do with this offer on your property?

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    I just waited since they had indicated they would be more sure this week. They did another showing this weekend and then made a totally normal offer and apparently everything is in order and a quick closing is likely (they all say this ofc).

    We had a couple people that wanted to be called in case we had an offer but they didnt return the call, and frankly they should have made an offer it they felt that way. Not my problem.

    So I ended up accepting a standard deal from the same guy. Not too bad, now I can pretend I have a super fancy house an NBA player wants when really he’s just being really smart and buying a reasonable house in his home town just in case he’s traded, etc…good for him. I only care that we close on time.

    White.Beard.Doc White.Beard.Doc 
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    Status: Physician
    Posts: 748
    Joined: 02/06/2016

    Congratulations on selling your home so quickly.  And best of luck with the big move.

    When I rented to the NBA player and he got traded, he paid over 10k in early termination fees.  It worked out ok for me.

    #198363 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016

    Thanks, its pretty awesome to be out of our concern so quickly. Average time on the market here is supposedly 76 days, but maybe something has changed, it definitely seemed different than what I was used to. Nothing wrong with getting lucky, was bound to happen I guess.

    #198365 Reply
    q-school q-school 
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    Status: Physician
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    Joined: 05/07/2017

    may i change the subject a little?  will your practice change much in kentucky from where you are now?  if so, how do you prepare and are you planning on buying a house in KY?  sorry if covered before, i’m too lazy to read each post.  🙂

    best of luck to you.

    congrats on being brave enough to make a change.

     

     

    #198366 Reply
    Liked by Zaphod
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5647
    Joined: 01/12/2016
    Disability Insurance

    may i change the subject a little?  will your practice change much in kentucky from where you are now?  if so, how do you prepare and are you planning on buying a house in KY?  sorry if covered before, i’m too lazy to read each post.  🙂

    best of luck to you.

    congrats on being brave enough to make a change.

     

     

    Click to expand…

    Its going to change dramatically. Its going to be almost solely reconstructive and hospital based. Not something I would do on my own or if I wasnt joining two former co-residents, it will make the transition smoother and less pressure. How to prepare…can only read right now. I suspect we’ll reverse roles a bit from residency and I’ll basically just be their shadows and try to expose myself to as much volume as possible until I get it all back. Luckily theres quite a bit of transitive stuff, but lots I’d like to basically assist with for a while. Plan is really to just work a lot and help a lot until I get more comfortable.

    As for housing…well, I did what we always say not to do and did purchase a home. I do understand people that say more rural areas dont have much for rent. Yes, there were some places for rent, but most were where you wouldnt want to live and there were literally 4 options in the area we wanted to be in (that half of town). 2 were way bigger houses with way too much in rent, one was an old dump, and one was an apartment that was new/nice but after adding garage, pets, etc…wasnt exactly a deal.

    So at last minute (3 wks ago) I decided to just buy something, everythings done except closing since I wont arrive until next week. We just bought a 1500 sq ft house in the best school districts, right where everything is, etc…and hopefully we live in it a while (longer the better as its dirt cheap). Whole plan was we get something in a desirable neighborhood that if we liked the area we will keep for a rental (same thing I did here, keeping for now), or if we dont and leave its so cheap we should not have to bring anything to the table to leave. It was 180 so ends up being very reasonable. A little risky, but measured. Now there is ample storage in a 2 car garage, room, and place for dog to get out with no neighbors and such on all sides.

    We’ll see how ‘brave’ or stupid I was. Im just excited to work with people I trust and enjoy so thoroughly. Not as much about learning how systems are annoying and such.

    #198379 Reply
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2338
    Joined: 05/07/2017

    may i change the subject a little?  will your practice change much in kentucky from where you are now?  if so, how do you prepare and are you planning on buying a house in KY?  sorry if covered before, i’m too lazy to read each post.  🙂

    best of luck to you.

    congrats on being brave enough to make a change.

     

     

    Click to expand…

    Its going to change dramatically. Its going to be almost solely reconstructive and hospital based. Not something I would do on my own or if I wasnt joining two former co-residents, it will make the transition smoother and less pressure. How to prepare…can only read right now. I suspect we’ll reverse roles a bit from residency and I’ll basically just be their shadows and try to expose myself to as much volume as possible until I get it all back. Luckily theres quite a bit of transitive stuff, but lots I’d like to basically assist with for a while. Plan is really to just work a lot and help a lot until I get more comfortable.

    As for housing…well, I did what we always say not to do and did purchase a home. I do understand people that say more rural areas dont have much for rent. Yes, there were some places for rent, but most were where you wouldnt want to live and there were literally 4 options in the area we wanted to be in (that half of town). 2 were way bigger houses with way too much in rent, one was an old dump, and one was an apartment that was new/nice but after adding garage, pets, etc…wasnt exactly a deal.

    So at last minute (3 wks ago) I decided to just buy something, everythings done except closing since I wont arrive until next week. We just bought a 1500 sq ft house in the best school districts, right where everything is, etc…and hopefully we live in it a while (longer the better as its dirt cheap). Whole plan was we get something in a desirable neighborhood that if we liked the area we will keep for a rental (same thing I did here, keeping for now), or if we dont and leave its so cheap we should not have to bring anything to the table to leave. It was 180 so ends up being very reasonable. A little risky, but measured. Now there is ample storage in a 2 car garage, room, and place for dog to get out with no neighbors and such on all sides.

    We’ll see how ‘brave’ or stupid I was. Im just excited to work with people I trust and enjoy so thoroughly. Not as much about learning how systems are annoying and such.

    Click to expand…

    it’s hard to know what goes into professional satisfaction over the course of a career.

    as i’ve said many times, we always buy a house.  i think it’s great that you found one to call home right away.  it’s nice when you have people you know in a practice.

    best wishes!  i’m sure you will be great.

    #198406 Reply
    Liked by Zaphod
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2203
    Joined: 08/01/2016

    Best wishes Zaphod on your move.

    #198553 Reply
    Liked by Zaphod

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