let’s talk : OUR MOST RECENT CLOSE AND ALL THAT IT ENTAILED
Good morning!
Last weekend was super exciting because we closed on another property in Binghamton! Let’s talk about what that entailed.
So, as we do, let’s talk Real Estate, let’s talk WHAT DO WE NEED TO DO PRE, DURING & POST CLOSE FOR OUR NEW RENTALS …
DEAL OVERVIEW
We were approached about this property by one of our tenants! She had informed us that her family member might be looking to sell their property so I told her to give them my contact information. He gave us a call, told us he was looking to sell but he was not sure when. Nonetheless he let us tour his property in the event we were interested.
We have what we have titled a, property supervisor, in the area for local coverage. He is truly our BOTG (boots on the ground). While we really self-manage the properties virtually from NYC (i.e. handle all rentals, maintenance requests, acquisitions, book keeping, etc) our property supervisor is there in the event we need to have a physical presence at a property for any reason. SO we had our BOTG drive over with a list of questions and picture requests so that we could gain better insight. After his site visit he gave us his feedback and sent us an awesome report. Once we saw his write-up, we knew we were ready to make an offer. Now, this property was never listed on the MLS. All negotiation was done between us and the owner. He gave us his starting price of what he would have listed it for, and we went from there. Once we agreed upon a price, we signed the purchase contract and our goal was to close in 30 days. This would be a cash deal making that timeframe a bit more doable.
This is a single family, 3 bed, 2 bath home with a huge backyard.
PRE-CLOSE
Once everyone signed the contract we scheduled the home inspection. I, myself, went up to Binghamton for the inspection so that I could see the property with my own eyes and truly learn about the bones of the home. If you have not attended a home inspection, I highly recommend you do so, it was so insightful. Our contract stated that we had 14 days to have the inspection done and walk away from the deal, if necessary. Once we received the report, we reviewed it as a group, and although there were items in the house that needed to be fixed, we decided we were not going to try and negotiate the seller down any further.
Now that the inspection was over with we knew 100% we were ready to close this deal, so we reached out to our insurance agent and had him start putting together a few quotes for us. We picked the one that made the most sense for our situation and signed it such that it would go into affect the day of closing which was still TBD.
The last thing we were waiting on was the title insurance (always recommend) and a breakdown of the closing costs. Once that was all settled, our attorneys helped determine a close date and the travel arrangements were made! I was heading back up to Binghamton.
By the way, as I mentioned, this was a cash deal, so it worked a bit differently. As the buyer, we essentially acted as “the bank” for the deal. We had to travel up there with checks cut to all parties; the seller, the seller’s attorney, our attorney, the clerk’s office, the title insurance company, and the city water bill. This part was really hard for me to wrap my head around at first. When we received a copy of the closing statement I thought – why the heck would I write the seller attorney’s check?! We did so because we were the only ones bringing money to the table as there was no bank. So, we wrote all of the checks and were credited the amount out of the total balance that we owed the seller. Let me know if you have any questions on this! Another option people have when closing cash deals is to wire the funds to the attorney or title company ahead of time and have them cut the checks. In this case it was cheaper for us to bring certified checks (3 out of the 6 checks we brought were required to be certified) BECAUSE our wire fee is $35 and our certified check fee is $8 per check. We only had to bring 3 certified checks (aka $24 worth) so there is $11 in savings right there… hey, every bit counts! Let me know if you have any questions on how this works!
Anyways, now that ALL of that was settled, I was en route to Binghamton!
CLOSING TIME
The closing was scheduled for 1:30 p.m. on a Friday. I hopped on bus at 8 a.m. that morning from NYC. Got into Binghamton around 11:45 a.m. Uber-ed over to the property for a final walkthrough to see that the house was… TRASHED. Not from a structural perspective but there was physical trash everywhere and the furniture had not been removed. Now, we had decided to not nickel and dime the seller after the inspection report revealed some work we were going to have to do on the house BUT having to pick up someone else’s trash and remove all of the furniture left behind after not negotiating any work on the inspection report findings… this aggravated me. We had scheduled an open house for renter’s the next morning – we could not show the house like this! I finished up the walkthrough and headed back downtown to the closing. On my way there I emailed our attorney and gave him a heads up that I was going to bring this to light at the closing table. We agreed on a deduction in the elevator ride up and immediately walked into the meeting room. The seller offered a $50 credit which was later negotiated into $200 (still probably not enough) but we took it and 30 minutes later the property was officially ours! Yay!
POST-CLOSE
Now that closing was over with, I had to head back to the property to get the final gas and electric readings as we had to transfer the utility service over into our name. I SHOULD HAVE done this while I was at the final walkthrough but to be honest, I had no clue that I could call in the reading myself. I was under the impression that I had to wait for a professional to come out and do the reading with me, so I had this scheduled for later that afternoon. After calling in the meter readings it was time to wait for my husband and one of my business partners, KF, to get into town so the repair work could begin!
…They got stuck in traffic and that night ended up being a wash but we did find a super cool bar spot up there so not a total loss of a night!
We woke up super early the next day and headed to Home Depot.
Our goal was to get the following done in one day, in addition to our scheduled Open House at 11 a.m.
– Clean out leftover furniture
– Deep clean home
– Deep clean fridge (yes this is a separate line item because the fridge was that bad)
– Clean up backyard (full of dog poo and way too many Dunkin cups)
– Remove the pool that was left behind
– Replace backyard steps
– Repair back deck staircase
– Re-concrete front steps
– Repair siding on the front of the house
– Add downspout to the left side of the home
– Install handrail going down to the basement
– Install carbon monoxide detectors in every bedroom
– Caulk any foundation cracks in the basement – they are not dangerous do not worry
– FIND TENANTS FOR THE NEW PLACE
Turns out, I was overly ambitious and unrealtiisc with this honey do list…
What actually happened was that we completed maybe half of that list. We were able to..
– Deep clean home
– Deep clean fridge (yes this is a separate line item because the fridge was that bad)
– Clean up backyard (full of dog poo and way too many Dunkin cups)
– Remove the pool that was left behind
– Repair backyard steps
– Install handrail going down to the basement
– Caulk any foundation cracks in the basement – they are not dangerous do not worry
– FIND TENANTS FOR THE NEW PLACE
The BIGGEST excitement of it all was that we FOUND NEW TENANTS and the lease was signed last night. New tenants will be moving in at the end of the month and we could not be more excited!
SO, WHAT NOW?!
Finish the repairs, get the new tenants in and operate business as usual!
WHY AM I SHARING THIS ALL WITH YOU GUYS?!
Because recently I have received a lot of questions on how the process works so I wanted to share EXACTLY what happens once you sign a purchase agreement – details & all! It is easy to get so lost and have no clue what the next steps are as a new investor (trust me, still navigating how this all works) so even if this helps just one person on here, I will call that a win! And for those of you that are seasoned investors on here, thank you for bearing with my LONG story this week!
Feel free to comment on the blog post HERE and let us know what YOU think!
Happy Wednesday!
Erin
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