Our Top Tips On What You Should Do When Closing Goes Sideways The SFR Show

Sometimes closing on a deal is not so straightforward. Michael shares a nightmare closing scenario and we discuss how to mitigate struggles like these to stay on schedule, saving time and money.
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Transcript
 
Emil:
Everyone, welcome back for another weekend wisdom edition of the remote real estate investor. My name is Emil Shour. And today I've got with me,
 
Tom:
Tom Schneider,
 
Michael:
and Michael Albaum.
 
Emil:
And we're going to be talking about what happens when your closing goes sideways. So Michael recently had a refi on a triplex he owns and had some some challenges arise. And we're gonna just put them in the hot seat, learn what happened and learn how he deals with it. So you guys can get some tips and takeaways in case this ever happens to you down the road. So let's hop into this one.
 
Alright, Michael said, set the stage for us. What what happened on this refi on your triplex.
 
Michael:
All right. Step back in time with me to December of 2020. So that's what I started this whole process. And my wife actually found this awesome lender out in the Midwest, they could land on this property that I owned inside of an LLC. And I was like, great, this is awesome. So we got the ball rolling. He got a couple different quotes. For me. He was a mortgage broker. That's what he did he so he wasn't the lender specifically. So he found a lender that was going to work. We said, Great, we got the ball rolling, we got the application process started.
 
And then they said, Oh, you're doing some rehab work. So they went out for the appraisal, that's when they learned learned, quote, unquote, about the rehab work. And I was like, I told you about the rehab work. And they said, Oh, well, we can't we have to go back and do another appraisal once the work is done. So keep us posted. I'm like, oh my god. So that slowed things down to start, then we were supposed to close. And they said, Oh, you filled out some paperwork wrong. Yeah.
 
Tom:
Did you get charged for like a chip chart trip charge for the appraisal? appraisal.
 
Michael:
So I got a second charge for the appraisal, which they didn't tell me about until the closing statement showed it. It was only a couple 100 bucks. But I was I was still a bit frustrated, because they didn't like tell me that. And I should have assumed like, of course somebody has to travel to go do these things. But also at the same time, it seems a bit frustrating that they said oh, here's the price for the appraisal when they quoted it to me. And then the final amount being taken out at the closing is different, because they charged more for the appraisal example back second time, which they should have done because they knew about the construction. So that was a bit frustrating.
 
Tom:
Was the construction like really significant.
 
Michael:
It was a total remodel of a unit of the biggest unit in the in the triplex so fairly.
 
Tom:
King unit.
 
Michael:
Yeah. Yeah. So yeah. So then they tell me Oh, by the way, I know we're pretty close to closing, but you filled out some paperwork wrong. So on my statement of information to the Secretary of State of California, I put that the LLC was member managed. But when I initially filed and made the LLC, I put that it was manager managed. So those two documents didn't align. So they said, Oh, you got it, you got to change this. And I was like, all right. We should we're done about this earlier, but whatever. So I did that and filed an amendment with the Secretary of State, it really wasn't a big deal, like 25 bucks to do to do it all online. Good to go. Great.
 
So now fast forward, the closing has already been delayed. They finally got through the re inspection of the property, as well. And they say, oh, by the way, this same issue happened in Alaska, where the property is, is physically. So you need to update that as well with the the secretary of state or change the operating agreement. I was like, why didn't you bring this up when you were