Quick Tip for Choosing Your Closing Day
We closed on two real estate investment properties this month. One was a mixed use commercial and residential property that is going to be our new office and home. The other is another investment property going into our rent to own program.
One closing was a complete nightmare. We were all set to take our team through the property to get work started but didn’t have access yet. The funds were delayed and nobody could get in touch with the lenders lawyer.
The other was almost as smooth as closings can be – there was only one little last minute glitch over insurance. It was quickly resolved with a phone call.
There were small things we could have done to make both go smoothly but the big difference between the two closings was primarily the date of closing.
Why Your Choosing Your Closing Day is Important
The nightmare closing was the day after a long weekend. Lots of the people involved were on holidays (insurance broker, our lawyer and our main lender). The people who were helping those on vacation weren’t familiar with our file and there were questions and issues. Plus, because it was a commercial property, the lender had their own lawyer. That lawyer was still in holiday mode that day and didn’t return calls for hours and hours.
In the end, the closing and possession was delayed by 5 hours. Maybe not a big deal on the surface but we had lined up three different trades to meet us there to get work started. Some of our trades are really busy and we book them a week in advance just for quotes! That delay could have messed up our entire schedule.
The other closing was middle of the week on a normal week. Everyone except our main lawyer was around. Everything progressed with just one small bump (the insurance binder wasn’t sent to the lender – quickly fixed with a phone call to the right person at the insurance office).
So our quick tip for you today is when you’re selecting a closing date try to avoid Mondays, Fridays and days after a holiday. There are things that come up on closing day as everything gets processed and filed. You want to minimize the likelihood that people are on holidays or “mentally” on holiday.
August and December are also the two worst months for vacation time. If you need to close in these months and around holidays make sure you know who is going to be around to work with you. You may even want to have a back up plan. Don’t leave this stuff to the last minute because it could bite you.
Generally we like Wednesday or Thursday closings- and not closings during the week after a long weekend (the short weeks). Sometimes to get the deal we want we have to close on days we would not normally pick (which is what led us to close on our property August 2nd right after the long weekend and one we closed on December 31st, 2010). But those closings often have a bumpy ride.
Just a quick little tip to help your deals flow through a little smoother. In a future article, we’ll talk about the pro’s and con’s of when to close date-wise (i.e., on the 1st, 15th, 30th) on investment properties to maximize your return and minimize your cash outlay!
Published August 23, 2011