Due Diligence and Investment Advice
January 24, 2010
Strong investor mentors and a well rounded network of fellow investors is a great way to improve investment results for buyers. For example, I had a discussion with an investor in a small residential property that she is intending to buy with seller financing. However, she would prefer not to close until March 2011 because she is displacing another payment she carries at that point in time.
The seller is motivated, but not very sophisticated.
After hearing all the points, several suggestions to meet the investors needs:
- First, delay by offering a sales contract that included several items including completing the survey and appraisal (selected by the investor). With some work, she should be able to identify a surveyor and an appraiser that will require more time to complete their work. Through this effort, I’ve suggested the closing can be pushed into mid to possibly late March.
- Second,offer 5% down in cash and the first 6 months mortgage payment into escrow with the final down payment into escrow and closing at 6 months.
- Third, deposit the cash in escrow at the offer with the investor’s lawyer. The cash in escrow will act as a strong enticement to cause the seller to accept the offer.
The point of all of this is that the deal is a matter of understanding the seller’s needs and motivations, cash constraints and imagination (this is part of the value of having the right lawyer).
Blake Ratcliff
The Residential Real Estate Guy
