Off Market Properties

There’s a lot more than just the price when making an offer on an investment property. We’re here to protect your interests!

Ever really look at all the pages of a standard purchase agreement? They seem to be page after page of fine print! Most of the agreement language is to protect both the buyer & seller from taking advantage of each other.

When buying an investment property, there’s even more issues that should be addressed in the agreement.

A typical offer process works like this:

• We assist you in analyzing what offer amount will result in meeting your purchase metrics.
• We discuss an Earnest Money Deposit amount, Due Diligence Period length, targeted inspection and closing dates, and any lease, rent ledger, etc. documents that should be reviewed as part of your due diligence, the commitment for key(s) transfer, and an introduction letter from the seller to any tenants. Some common due diligence documents to be included in a purchase agreement for an investment property:
• Title policy review, recommend you hire an attorney for this.
• Any recent city inspections and rental-related license.
• A review of any Seller’s Disclosure related documents.
• SEV vs Taxable Value and Homestead vs nonHomestead millage rates should all be reviewed.
• If a condominium: any HOA, master deed & bylaws information.
• If multi-unit: most recent Profit & Loss with copies of any and all supporting bills, potentially most recent tax return if applicable.

If the property has tenants:

• Leases for each occupied unit
• Corresponding Rent Ledger(s)
• Verification of Security Deposit amount(s)
• If Section 8 involved, copy of HAP contract to determine what rent amount & utilities tenant responsible for versus landlord.

NOTE: due to federal privacy laws, tenant ID(s) and Social Security Number(s) are not shared at this time, but they are transferred on the day of the purchase closing.

• We review the legally required Michigan Seller’s Disclosure with you to identify any potential issues.
• We create a purchase agreement for you to sign.
• We deliver your signed offer to the seller (or their agent) and wait for a response.
• Any counter-offer from the seller is reviewed with you for your response.
• This back and forth continues until an amount and terms are agreed upon and both parties sign the purchase agreement.

NOTE: Many investors want to see a property before they make an offer, as is typically done for owner-occupied properties. To minimize tenant intrusions, utility issues, etc., investment properties are not shown until a purchase agreement has been negotiated and signed.

We want to help you with making sure there are no potential roadblocks preventing you from acquiring the investment property you select to buy.

Before we can move forward on making offers, we want to make sure you’re ready to do so. So, we require you provide us one of the following:

• An acceptable bank or financial statement showing the necessary funds to pay cash for a property.
• An acceptable financing pre-approval letter from a lender.
  (If you need assistance with obtaining a pre-approval letter, we can refer you to our trusted lenders, just let us know!)

Planning on putting your investment in an LLC?
We’ll need acceptable proof of the LLC before creating your offer.
(If you need assistance with creating an LLC for maximum asset protection, we can refer you to one of our trusted attorneys that won’t charge you an exorbitant amount to do so.)

We only have time to work with serious investors, so we require a small financial commitment.

We require a commitment of $500 to confirm you are serious about purchasing an Off-Market investment property. The funds are credited back to you on the purchase of an investment property through us within 90 days, so there’s really no cost to you if you’re serious.

Please click on this link to view a sample of our Retainer Agreement.

Once you’re ready to move forward, please click here to complete our online form with:

• Your target purchase goals.
• If no questions, signing our Retainer Agreement.
• Directions on sending us funds.

Investment properties are rarely shown before a purchase agreement is signed and the walk-thru is done concurrently with the formal inspection.

Once a purchase agreement is fully executed, a date & time are scheduled for the showing and formal inspection.

We highly recommend using a certified inspector that will also employ a video camera to inspect the sewer line as it can be a very costly repair if a problem is found after your purchase.

This is also a good time to evaluate the marketing condition of the property to determine what needs to be done to maximize the amount of rent.

NOTE: if multi-unit property, there is often a challenge arranging access for all units in a single visit. We will do our best to coordinate as quickly as possible.

The inspection and evaluation should be used to create a Scope of Work (SOW) that can be used for obtaining contractor bids, to estimate the cost of any repairs and improvements.

There’s typically a lot more paperwork to review and other issues to investigate with investment properties. We’re here to help!

It’s not uncommon for the seller of an investment property to have not visited their property in several months, if not years. Because of this, you can’t really rely on them to communicate the condition of the property or know everything that’s going on with it.

Concurrent with any inspection and evaluation, the due diligence requested documents can be acquired from the seller, city, county, etc., for review.

This is a critical time to make sure the documents support what was represented by the seller, double-check ROI calculations and make sure there are no surprises.

The municipality of the property should also be contacted to confirm if there are any outstanding tickets, open permits, etc.

If any challenges are found, the Due Diligence Period may be extended with the seller’s agreement or the purchase agreement may also be cancelled.

Home insurance is a bit different for investment properties and you should rarely buy without title insurance!

It’s not uncommon for sellers of off-market properties to state the property will be transferred by Quit Claim Deed only.

We do NOT recommend this unless you are a seasoned investor that understands the inherent risks and you have an attorney review a title search before proceeding.

We recommend only closing with an acceptable title policy that ensures you will be the only owner of record.

You’ll also need to obtain landlord and/or vacant liability and fire insurance for the property.
(We offer referrals to obtain both of these insurances.)

A lot more goes on at the purchase of an investment property than a regular home closing.

If you are financing the purchase, your lender will also need to “Clear to Close” your loan.

A closing package can then be emailed for your review. If you’re not local, we’ll need to arrange how to get you a closing package for your notarized signatures and subsequent return.

Funds will have to be wired to the title company.

If the property has tenants, their ID(s) and SSN(s) are transferred to you.

The seller should be required to sign reps & warranties to guarantee accuracy of all seller provided documents.

We also recommend getting a letter from the seller introducing you as the new owner, to avoid tenants claiming they don’t now who their new landlord is.

Finally, you’ll want keys and access codes for the property.

Congratulations, you’re an investment property owner, now what?

Besides figuring out how you’re going to arrange and store all the documents from this process, you’ll need to do a few more things:

• You may need to transfer electricity, gas and water to your name and address. If a multi-family, you’ll also need to transfer any lawn & snow services, security systems, etc.
• You’ll need to contact any tenants if you plan to manage the property yourself. They may claim ignorance of the property sale and demand proof you are the new owner.
• You have 45 days from the date of purchase to file the Michigan Property Transfer Affidavit with the local municipality. We highly recommend getting a timestamped received copy from the city as they do occasionally misplace them. We can handle this for you if you’re not local.

Hiring us to manage the property avoids all these hassles!