In June 2001, I had contracted to buy a duplex in a low-income area of town for $100,000 as one of two replacement properties in a 1031 Starker Exchange. After further personal examination of the property’s condition, I consulted with my agent, Jerry, to apprise him of what I’d found. He then “officially” advised me to get out of the deal.
I stalled the procedure for awhile and insisted on additional repairs prior to closing, most of which were done. The desperate seller then responded by contacting me through an attorney who advised me that the seller could successfully sue me for performance.
I then consulted an attorney for advice. He advised me that the court system here in California probably wouldn’t force someone to purchase a property against his will.
I thought about it some more, and then I decided to go ahead with the purchase. We closed on time. The terms were: 80% 1st trust deed, 10% down payment and a 10% seller carryback @ 8% over seven years.
I really didn’t want that property at that time, but I decided to make the best of it. Well, to make a long story short, I’m very glad I did. Today, this duplex is our most profitable property. The payments are: $709/month (PITI)+ $74/month for the seller second, for about $785 a month.
The rents are $735 and $635 a month for a total of $1,370. After factoring in expenses for maintenance, management, vacancy, etc., there is a nice cash flow each month. My wife and I have done a lot of cosmetic improvements ourselves and we manage it. I am very grateful to the people that contribute to this website, and I encourage others to go there. Thanks again.