There is one lady that has been to one of my field trips and bless her, she reminds me a little bit of me when I started in my investing career because of her insatiable desire to learn this business. In addition, she is an excellent planner. Poor thing, here she is trying to plan a rehab deal so everything goes smoothly. I had to say to her, “No matter how well you prepare, SOMETHING is going to BITE YOU IN THE BUTT”. And that happened to me this week.
I lost count on how many deals I’ve done, but one thing I know for sure, every deal is different. Sure, I went over budget, and yes, I’m a little late with my 6 month high interest loan, and of course the contractors just don’t “get it” when it comes to timing, but this event came to me from left field. There was a defect in the title.
What? Well, even though I bought it as a foreclosure, the defect happened 4 transactions ago. It appears, that in 2002, the property was deeded to a mother and son, joint tenant in common. But when the lady sold the house, she was the only person that signed on the deed. The son didn’t sign.
This was a new one for me. What are my alternate strategies? Can I rent the property out to the new buyer? What about the underlying high interest loan? What does this Title Insurance really mean? And, even worse, the title insurance was limited to what I paid for the property, what about all the improvements I made? Lost? Here we are just days away from closing, and I replaced a perfectly good air conditioner because the buyer wanted one and NOW I get this news? There was more life on that old A/C and would be perfectly fine for renters if that was the path.
This proves my point. There will ALWAYS be something that bites you in the butt when you do a real estate deal.
All panic aside, the attorneys at the title office was able to find a death certificate of the son, and that cleared up the title. I tell you, this business is not for the faint of heart. Of course next week I’ll be happier seeing my bank balance grow!