1) Your cash offer is not a ticket to a bigger discount, or to low ball an offer. This is mostly a valuable leverage tool against potential competing offers who are financing, and require bank approval before purchase. Sellers would/might often take a slightly lower offer of cash vs. financing in this situation. The seller gets the cash either way after closing, whether it is your cash in a briefcase, or a check from a bank. It's just less hassle and red tape and potential problems when considering cash vs. financing.

2) Title company

3) After you purchase a house. If your current auto insurer provides, yes, potential savings....shop around. Larger deductible means more savings yes, but for your case I would leave this up to a professional.

4) No idea...Foreclosures where I am are handled through local auctions and you can go get the auction information etc. at the county tax office. I dont know a ton about it, but I would have to assume most sites like that are like Zillow, which mostly lists houses and values according to tax values (at least in my state).

I would always go to a Realtor to buy since it costs you nothing (or very little) and you have a professional negotiator and someone who knows the process. Any decent Realtor should be able to help you with any foreclosure on the market.

fwiw, I am a Realtor, so I'm a little biased

On a positive note, the wife put a rental into our rental house (which had been vacant since last August due to my lazyness). I was super proud of her taking the initiative and making it happen.

On a negative note, I had to go into the crawl space and fix some pipes from my improper winterization job. The pipe burst right next to the sign that was hanging from it. The sign read "hot water drain valve". Oooops. Found the one for the cold water side, never thought to look for one on the hot water side.

Are closing costs in the $3.5k - $4.5k range typical for a $80k-160k 30y Conventional loan? These costs should be included in the COCR calculation, correct?

The prepaid expenses (hazard insurance / taxes) should not be included in COCR calculation, since these are standard expenses which will occur annually, correct?

Getting close to finally taking the leap on a duplex!!!

Hi Guys-

Have a real estate situation I'd like some preliminary advice on.

I currently own my own condo which is paid off. I live in said condo with my girlfriend.

Girlfriend's father is getting ready to move into a managed care facility, and wants to sell us his home.

His home is a ~100 year old two story house. The top floor is divided into two apartments, both of which are occupied by renters who have been there for 5+ years. We'd have the bottom floor/basement.

Essentially he is making us an offer we can't refuse, and we are planning on selling the condo.

My questions -

Is there a certain type of loan we need to get because the house is a rental property?

What % should we be shooting for as far as a down payment? If paying off the balance in full immediately is an option, should we consider that?

Should our first call be to a banker, lawyer, or real estate pro?

Is it complicated or unadvisable to co-own a house as an unmarried couple?

I should note that both GF and I are interested in owning income property in the future...does that change anything wrt how we structure the loan, or what type of loan we get?

that's it for now, thanks for any info!

The house is going to be your primary residence, so you aren't restricted in the type of loan you get. You'll probably just get a conventional loan. You will want to pay at least 20% down. I'm assuming that won't be an issue since you are selling the condo. I probably would not pay off the house in full. Interest rates are ridiculously low right now. You will never again be able to borrow this cheaply. I would consider purchasing a rental property with extra cash (or just renting out the condo instead). I normally wouldn't think of purchasing a condo for investment. But, you already own it, so it may make sense to rent it out if you don't need the money.

If you are selling the condo, you will have to list it with a real estate agent. I've never been in the situation of buying a house without a real estate agent, so I'm not sure how to proceed with the sale of your GF's father's house.

It's not complicated to co-own a house if you're not married. Whether it is advisable or not depends on your long term plans. I can tell you that my wife and I bought our house before we got married. Lots of other people do it. If it's right for you is a question that only you can answer.

My father in law always sends me investment ideas, it's just what he thinks about all day. Recently he proposed buying up houses in US Cities that were hard hit by the recession to rent out/hold to sell later. As seen on some sites, there are homes on sale in some cities for 2k-30k that use to be sold for much more. Lots of the cheapest ones are in foreclosure.

Some are managed by a local real estate company and have tenants living in them already. They claim returns of 15-18% on our money on a yearly basis.

Does this usually sound like a bad or good idea? Seems low risk to me but I do not know the pitfalls of buying properties like this. Any general advice/things to look for would be appreciated.

As stevepra said, since this will be your primary residence you will be fine. My one question is if you wish to invest in income properties in the future why would you be looking to sell the condo you already own? You would have to pay a realtor on the sale and then would be paying closing costs on a new purchase down the road. Owning your condo free-and-clear would be a great opportunity to "practice" being a landlord to see if this is something you really do wish to pursue in the future without taking on any additional risk since you already own the property.

This is EXACTLY what im going/am currently trying to do. Not only are the claims of those returns fesible, but my main focus concerns what these homes will be worth in 5-10 years. They are such a bargain right now if you pursue aggressive buying strategies, you can retire in 5-8 years from now.

The market is starting to climb back up as I write so dont eff around. Once life stops kicking me in the balls every 5 ****ing seconds and I can get some oxygen, im going to start buying as many as I can handle.

Also, stake monster, I know who you are. I used to be a CR member. PM me and ill tell you who I am. (you know me...trust me. lol!) I know what you can do at the poker table bro. You have about 10x's the cognitive ability needed to make this happen for yourself. Like anything worth getting in life though: 1) Swallow your fear. 2) Ignore the haters. 3) Have the courage to step up and go after what you want. For me, failing at something is hilarous man...lifes short. Not even trying though is unacceptable.

Good luck and God speed.

thanks for the info guys.

We've thought about holding on to the condo and renting it, but the condo association fees are very high relative to other places in the area, and I've had issues in the past dealing with the association. It would probably still be somewhat profitable, but we're ready to gtfo and move on

I'm not trying to talk you out of this. I'm just telling you of my experiences. I looked into offers like this. I found a couple of things wrong with all of the ones I looked at. A lot of them were in bad neighborhoods that I would not feel comfortable bringing my son with me if I need to go there to fix something. Other houses needed a lot more work than the person selling it put in the ad. Other houses were older and those cost more to maintain. I spent a lot of time looking and gave up. I looked into newer neighborhoods (built in last 10 years) and found that I could get houses where:
A. I don't mind bringing my son.
B. The houses are newer and the maintenance costs are going to be lower.
C. I still get 15-20% cash on cash return.

The first problem is that they are more expensive. Instead of paying $40k, we are paying $100k and mortgaging them. The second problem is that there is a ton of money going into real estate investment right now. Prices are rising and houses in good shape are not on the market long.

Then it may be worth the money to just be rid of the place. If you have had problems with the HOA, then you are more likely to have problems in the future. Tenants are usually not as good at following the HOA rules as owners are.

Thanks for sharing steve and "not trying to talk me out of it." Lol! Thanks for sharing though, really. But im a glass half full kinda dude...

So what? Fix em.
Hirer property management.
Offer them less money.
Offer them less money and hirer property management.
You realize this is awesome and increases the value of the homes YOU own.
Not in my vocabulary. If I have to look at 30-50 ****holes every 3 months to find one gem, that equates to making 4 excellent real estate deals per year. 4 deals per year for 5 years equals 20 properties worth around $2 million.

My grandmother bought my aunt out of a house they inherited for $40k. She has excellent credit, liquid cash, etc. but the credit union she does all her banking with said they wouldn't even consider a loan. She has enough cash to pay for the buy-out but is wondering if there are any lenders out there who would give her a loan for this? The house is rented out now and has been reserved for rental during the peak season (it's in a retirement community) and will offer a 7%-12% ROI depending on how many months it stays occupied.

Fixing things costs money and time. While you are fixing things, you still have carrying costs, especially if the properties are mortgaged. All of that lowers your returns.

Property management takes 10% off the top, lowering your returns.

The negotiation process can take time. If this is what you are focusing your life on, then by all means, go ahead. I have a job and a family, so this is a part time venture. I have to limit my offers to the properties that have a reasonable shot at getting accepted at a price that I want. You have to factor in how much time you can spend.

It's awesome for the properties that I own. It sucks for the properties that I want to buy (and the properties that you want to buy). Since I'm trying to accumulate property, the price I pay is more important than the price on the properties I own. Hopefully you have the funds to pay cash. You are competing against people who pay cash and have a lot more experience than you.

Keep us posted on your progress when life stops kicking you in the balls