Last week I closed the fastest deal of my life, in just three days! That is not to say that this was a goal of mine but here is how the story unfolded.
I met a new client named Ken who was an extremely savvy technology professional who was in a 1031 exchange and needed to close within 30 days. He had pointed out a property or two that he liked and one of them looked promising. It was a fully renovated duplex on the Oakland-Berkeley border.
I generally like to go in the direction that my clients are already headed so when Ken pointed out this property to me I immediately jumped on board, got us into contract and the inspection process underway. As the already-fast escrow unfolded we got bogged down with the lender who could not quite move fast enough. On top of that challenge, we learned that the duplex had a defective “non-livable” unit that was turning out to be an even bigger problem that the Berkeley building department was not willing to overlook.
After consulting with many professionals, I decided that I could not in good faith recommend that Ken go through with the purchase of a duplex in Berkeley that was marketed as a triplex for over one million dollars. This amounted to about $500k per unit, and while the rents were high and the property had been substantially upgraded, the value simply was not there and I needed a solution for my client ASAP.
I pride myself in being a hard worker, diligent and tenacious. I’m a creative thinker and when I get pointed in a direction there is no stopping me. That said, when I made the final decision that we needed a better solution, I went to work. I quickly found a property with seller financing, which allowed us to avoid the perils of Wells Fargo underwriting. We benefited from having Dick Thompson from CBRE as the listing broker, a true seasoned professional who made the whole thing feasible.
The final twist was the exchange company. They had originally communicated to me that we needed to close by the end of the month. It turned out that the 180 day time period actually ended 3 days sooner which meant we had three days to close this deal! I did not know if it was even possible to close that fast but I immediately consulted with my AAA title officer, Julie Massy at Old Republic, and she worked her magic to get the title report in time. The next step was getting the Seller to agree to move fast so we upped the price by $15k and lo and behold we had the makings of the fastest close in history.
In the end I was able to help my client buy an outstanding six-unit apartment building in west Oakland, with a 6% cap rate, in a rapidly appreciating market. We bought the building for $940k or $148k per unit with estimated gross income of $9000/mo. Compare this to $1.03m or $500k/unit and $7800/mo for the Berkeley duplex and I think we did exceptionally well in an almost impossible timeline.
That is the story of the three day close and how I saved my client $350+ per unit!