Here we are, day 22… I’ve gotten ONE response from Citi a couple days ago indicating they would make our loan a priority, but as usual, false promises…haven’t heard a word.
Recently, Steve and I created a joint checking and savings account with a local credit union to keep our earnings from our investment property. For now, rent will be deposited in the savings, and 10% of rent will be deposited in the checking account to build our maintenance funds.
So why did we chose a credit union as opposed to a bigger bank like Citi or BoA? I’ll just get into a couple points. Credit unions tend to want to work with you more…meaning, because they’re smaller, their best interest is keeping you happy. Credit unions are also non-profit organizations, so they usually charge less banking fees you would normally see from bigger banks. Because they want to keep you as a customer, credit unions are generally more flexible when it comes to getting loans. As a result, we decided to start building a relationship with a credit union hoping that future business transactions will be smooth. You can google for more pros and cons of credit unions. Here’s one for starters.
With the brief time I have had with this credit union, I can say their customer service has been very good. They were very responsive and appeared to be ‘honest’. Because we’re having such bad luck with Citi, I asked our credit union how fast they can get us an approved mortgage loan. The rep had to quote 30 days as a minimum, so we don’t really save any time there. So why do I call them ‘honest’? The reason why this credit union appeared ‘honest’ is because the rep suggested I stick it through with Citi since we’re so far along with them. If a business wants your business, who tells their customer to continue using the competitor?! Hopefully one that looks out for your best interest! So at this point in time, we’re going to stick it through with Citi…
As far as the property goes, we’ve had a couple of updates since my last post. We did ask the sellers questions to address some issues we noticed that could potentially hurt our bottom line for our real estate investment.
We were debating if we should keep or lift the contingencies; if the contingencies are lifted, we lose our good faith deposit if we back out. With issues that could hurt our bottom line, we weren’t sure if we wanted to lift the contingencies in case we wanted to back out if the seller’s response are unfavorable. We asked the sellers: Why is the front unit vacant? Does the gas furnace and water heater systems work? What is the reason for the odd patch work on the roof ?
Issue 1: Why is the front unit vacant? Why aren’t the sellers looking to rent it? I, being the logical and not that poetic guy Steve puts me out there to be in his snowball effect post, suggested the landlords are just lazy. The reason I say this is because they took a good portion of rent off the current tenants for being groundskeeper…and I’ve also been told owners do not reside in Sacramento. That indicated to me owners never wanted to come out unless they needed to.
So funny story, what was Steve’s thoughts on why the front unit is vacant?
Deaths on the property need to be disclosed within the last three years, but since the house was built in the 1940s, that’s a lot of years of death unaccounted for. Steve thought if there was a haunting, we would never get the front unit rented! Steve wouldn’t even step foot in the house if there was a haunting. I may get poetic sometimes, but ghosts? C’mon Stevie Wonder… man up.
Alright, back onto the subject at hand…the reason why the front unit is vacant is because the sellers’ daughter moved out of state. They had originally bought the duplex for her to live in, and now that she’s gone, they’re looking to sell ASAP. Win for us!
Issue 2 & 3: If you can recall from the post on inspection, we weren’t sure about the gas furnace, hot water system, and the roof. They were disconnected and we couldn’t test the units. However, sellers did confirm the gas furnace and hot water systems are still operational and that PG&E disconnected the front unit due to vacancy. The roof was repaired by the seller, so…I’m not sure how that’s going to hold up over time. We will probably get a professional roofer to take a look and do some preventative maintenance work when we get some cash flow.
We did request an extension to the loan contingency period, but sellers decided it will not be necessary. Contingencies are removed and we’re locked in for this ride. There’s no turning back!