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Should Closing Date be Postponed in this Case?

Nir

Nir

0
REIN Member
Joined
Dec 5, 2007
Messages
2,880
Hi,

I have an accepted offer to purchase a 4-plex. Initially the seller`s RE agent mentioned all units are being occupied. However, I only received 3 tenant acknowledgments today and found out from him that one apartment is vacant.

If I knew one unit is vacant I would not agree to close end of this month but rather end of next month in order to allow enough time to find a new tenant. Should I ask to postpone closing day by one month? does it complicate things financing-wise or not really?
(I do not even have to purchase as I did not waive conditions yet.)

THANKS.
 
well, I guess asking for a price reduction makes more sense. also, some investors even prefer having vacancy so they can look for a better tenant or higher rent.
 
I agree look for a reduction in price (any reason to bring down the price).
But you might find that if you have to find your own tenant, that the tenant you find is the good one and the other three you will want out. DO NOT HAVE THE VENDOR FIND THE TENANT, I let the vendor fill a vacancy and I had to evict them with in two weeks of possession.
 
What`s in the contract?

Did you agree to buy the property fully tenanted at $x/mo and have the seller sign off on it?

Do you have it in writing the property would be fully leased for your possession?

Did you agree to assume all leases on the property and within those leases is a provision for a tenant to vacate?

If all you were told is that the property is occupied at the time of offer and you didn`t put anything in the contract to say that you get possession with that exact occupancy you aren`t going to have any leverage to make adjustments on a firm deal.
 
QUOTE (RedlineBrett @ Oct 7 2009, 10:16 AM) What`s in the contract?

Did you agree to buy the property fully tenanted at $x/mo and have the seller sign off on it?

Do you have it in writing the property would be fully leased for your possession?

Did you agree to assume all leases on the property and within those leases is a provision for a tenant to vacate?

If all you were told is that the property is occupied at the time of offer and you didn`t put anything in the contract to say that you get possession with that exact occupancy you aren`t going to have any leverage to make adjustments on a firm deal.


Schedule A does mentioned "the seller represents and warrants to the best of the seller`s knowledge and belief that the current actual rents are.." and then specified the current rent for each unit, including the one that is vacant(!) Thoughts? Thanks.
 
QUOTE (investmart @ Oct 7 2009, 12:09 PM) Schedule A does mentioned "the seller represents and warrants to the best of the seller`s knowledge and belief that the current actual rents are.." and then specified the current rent for each unit, including the one that is vacant(!) Thoughts? Thanks.

Pretty ambiguous... It`s pretty obvious you`re posturing and trying to turn the crank on the seller.

If I were your realtor I`d tell you not to make mountains out of molehills and perform on the contract you signed. Fighting over little things like this tends to cause much more harm than good.

If it went to court I don`t think you`d win and were I the seller I`d test your resolve and threaten to keep your deposit and sue you if I can`t sell for the same price to someone else.
 
When I bought my tri-plex, I put on condition for vacant posession. The apartment was rented to the " wrong" people and below market. I took possession, did some renovations, and re rented for for above market...So unless the tenants are paying market rent or above...its your call.

Ask for a reduction in purchase price to compensate...2 months rent worth + some $ for admin.
 
QUOTE (RedlineBrett @ Oct 7 2009, 12:36 PM) Pretty ambiguous... It`s pretty obvious you`re posturing and trying to turn the crank on the seller.

If I were your realtor I`d tell you not to make mountains out of molehills and perform on the contract you signed. Fighting over little things like this tends to cause much more harm than good.

If it went to court I don`t think you`d win and were I the seller I`d test your resolve and threaten to keep your deposit and sue you if I can`t sell for the same price to someone else.

Yes, a small lie but still a lie. I need to learn how not to be upset when people lie. a bit more challenging for me I guess. thanks Brett, good feedback.
 
You could have permision from the seller to show the vacant unit yourself and have the tenant move in on closing day.
 
Thanks Gary. closing is end of this month and i just found about it yesterday. would you also ask to postpone the closing day by one month? I`m not sure as I also see disadvantages to doing that, like another month of bad tenant and property management.
 
QUOTE (investmart @ Oct 7 2009, 09:01 PM) Thanks Gary. closing is end of this month and i just found about it yesterday. would you also ask to postpone the closing day by one month? I`m not sure as I also see disadvantages to doing that, like another month of bad tenant and property management.


You won`t be able to extend the closing date unless you have a viable reason the vendors lawyer could not argue with. It has to be something they want or that you mutually agree with. I suspect the vendor really doesn`t care at this point, so if you can push the issue of not being informed about the vacant apartment and its in writting, then the vendor is in breach of contract...not you.
 
In the grand scheme of things, this vacancy should have little impact. Take the opportunity to freshen up and renovate the unit. If its located in a REIN Top Town ten, this will likely be the only time in YEARS you will have this opportunity...

Note cash flow should not be affected either, because, with a little luck and some hard work, you should have the property rented for December, when probably your first mortgage payment comes out...see Don`s 97 Tips book, Tip 82

QUOTE (investmart @ Oct 6 2009, 10:38 PM) Hi,

I have an accepted offer to purchase a 4-plex. Initially the seller`s RE agent mentioned all units are being occupied. However, I only received 3 tenant acknowledgments today and found out from him that one apartment is vacant.

If I knew one unit is vacant I would not agree to close end of this month but rather end of next month in order to allow enough time to find a new tenant. Should I ask to postpone closing day by one month? does it complicate things financing-wise or not really?
(I do not even have to purchase as I did not waive conditions yet.)

THANKS.
 
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