18 Townhomes Help!
Good afternoon. We have made an offer on a group of (broken) townhouses. The seller has countered, we countered, he countered. Our offers were on seperate real estate contracts as each one is seperately deeded. The seller is saying all we need is a letter of intent. The title company said we are doing it correctly on the real estate forms. The ball is now in our court and he is waiting on a reply from us. Can someone shed some light on this. He just wants a letter of intent. Title co. says use forms. If we come to terms on price, I understand 30 days for inspections etc is normal for commercial. Thanks in advance for helping. Lisa T
So you've been filling out 18 seperate P & S agreements on each of these counter-offers? He's more right than the title co.
Fill out one P & S contract for the aggregate price. Where the contract asks for the description of the property write in "see attachment" and, on a seperate piece of paper list the legal description of each of the units.
A letter of Intent will also work but you're going to need another step where you go from general agreement to specific terms. The P & S allows you to skip that step.
I wouldn't use a letter of intent since it's not binding on anybody. Do the one agreement with an addendum thing.
Am I right in assuming that your intent is to purchase the 18 townhomes and sell them individually to make a great profit?
If you are holding them for long term rentals as one unit, then what I'll say is irrelevant. But this happened to me:
I bought 24 units in an 88 unit townhouse development near Tucson, AZ. Great properties, great price. They are all individual deeds and taxes and utilities. We setup to meet with the tenants (they were being run as a rental complex) and offer to sell them well below market value, pay their closing costs, and keep their mortgage payments less than they were paying for rent (including taxes, ins, and PMI at no money down). We had so much interest from the tenants and some of my investor customers, that these 24 units were going to be all sold in 45 days, netting me a bundle.
Then the letter came from the Arizona Department of Real Estate. Evidently the fact that the property had been subdivided when it was built in '96 was not enough. Since they had remained with a single owner and the subdivision public report had not been completed in the last 2 years, we had to refile a public report before being able to sell them individually. The report is 95% complete after 5 months (there are a lot of holdups), and it will take at least 3-4 months after I file it to get approval. Fortunately they have skyrocketed in value and I have a buyer who wants my 24 and the other 64 units to hold for 10 years. I'll pass along the public report to him and make a decent wage, but none of my investors or tenants will be able to own these great properties, and I could have lost a lot of money if they had not gone up 15% in value in 5 months.
If you are looking to subdivide, contact an attourney, or at least the TX department of real estate in your county and speak with a subdivision specialist to discuss your plans.
As for your question, you should probably creat a master agreement that names each of the properties and an overall price. If your loans are going to be per property, the lender might want individual title insurance policies and separate purchase contracts, but the master contract can dictate that.
Good luck! 8-)
[addsig]
Can someone tell me why I've been spelling attorney "attourney" all day?
Thanks for all the replies and help. We first filled out 4 properties per contract (1-4 Tx contract). Then everything has been back and forth on the phone. Because of distance. We are doing the contract now with the addendum. Thanks again. Lisa