NEED HELP....QUICK
A condo went on the market yesterday in a very hot rental market. My intention is to rent this out as well. After some quick calculations it would cash flow for around 300-350 a month (assuming I get it fully rented of course). This includes the HOA fee and property taxes. I have a feeling this property will go quickly and I want to get it under contract soon. My thoughts are that I get it under contract before everyone else, and then do my due diligence. One fear however is later finding out that it wasn't such a good deal after all. What are some contingencies that I could write into the contract that might let me get out down the road. Inspection contingencies probably won't fly because its a condo and the maintenance is taken care of. I've been in these condos and they are well kept, and nice. Any thoughts on how I could protect myself just in case?
I always include
1. Subject to buyer getting favorable financing terms. Property meets appraised value.
2. Termite infestation report. (seller pays)
3. Home Inspection (Buyer pays) with 15 days. My father is a Contractor and does my inspections. this gives me access to the property and about 2 weeks to reach a conclusion.
You can add more but these give me pretty good lead way to back out if the deal does not look good.
I guess you're concerned about a clear title? You already know the sales price and this is what you are using to base your calculations right? Just put in a clause saying subject to clear title, (maybe a better way would be to say subject to your ability to obtain title insurance since a title company won't let you insure a burdened title) then have a title company do a search and get insurance. Then you know the title is clear.
This is going to be a student rental as it is near a college. What are your thoughts on saying, subject to finding tenants for next term - or something along those lines? I am drawn to this property because it is fairly cheap, almost maintenance free, and will cash flow even with the HOA payment. Assuming I can fill it with 4 students.
You're on the right track with some sort of contingency for your being able to get a lease with acceptable terms by X date. If you go that route, I would also include a provision allowing you to show the property prior to closing upon reasonable notice to the seller. I would add, however, that you should check the condo docs & regs to make sure it wouldn't be a violation for 4 unrelated people to occupy 1 condo. That goes for zoning, too.