Q: I've been offered an opportunity to invest in a "blind pool" real estate syndicate. What is such a syndicate?
A: It is one that is not commited to purchase any particular property. In other words, the manager of the syndicate may invest in any real estate he thinks wise, unless prohibited by the syndicate agreement. This type of syndicate is also called a "non-specified fund" syndicate, as opposed to a "specified fund" syndicate in which the property to be purchased has already been selected.
Q: I'm looking at land zoned for agricultural uses in Fauquier County, Virginia. The seller and I have agreed that I'll pay 3 percent down on the purchase price and he'll take back a purchase money mortgage to be paid over 15 years at 8 1/2 percent interest. He'll give a land contract. I'm not sure what a land contract is. Should I buy with this kind of contract?
A: If you buy the land using a land contract (also called a contract for deed), the seller retains title to the land. You will receive title only after you've paid the full purchase price (including interest) and complied with all other provisions of the land contract. Almost certainly, the land contract will contain a clause providing that if you default in your payments or breach any provisions of the land contract, the seller can keep all payments you've made, and you lose your right to receive title.
In additon, if you fail to record the land contract, an unscrupulous seller can mortgage or deed the property to an innocent third party. If the deed is recorded, your rights are extinguished. If the mortgage is recorded, your rights become subject to the mortgage. Of course, you have an action against the seller for breach of contract. But recovery against such an unscrupulous person in doubtful.
Some people buy land this way. You should know the integrity of your seller, get the advice and assistance of a good real estate attorney, assess your risks, and decide whether you want to take them.
Q: I'm interested in buying land in West Virginia for a weekend retreat. I recently saw an advertisement offering West Virginia land about four hourss from Washington. It sounded too good to be true. I'm going to telephone the real estate broker who advertised the land before I make a trip to look at it. What can I ask him to help me evaluate whether or not to make the trip and later, perhaps purchase the land.
A: Before you telephone the broker, get a good area map so you can accurately locate the land. Then buy one of the topographic maps sold by the U.S. Geological Survey (sales office in the District of Columbia, Reston and Arlington, Virginia). You want the map with a 7 1/2 minute scale (one inch equals two thousand feet) and 10 to 20-foot contour lines. With this map, carefully check the topography of the land. This will give you a preliminary, rough idea of what sort of land you'r buying. (As I suggest below, you'll have to "walk" or "tour" the land to get a final, firm idea.)
When you telephone the broker, ask him these questions:
What easements or other encroachments are there on the land?
Is the seller willing to convey title by a general warranty deed? If not, what kind of a deed will he used to convey title?
Can you get title insurance? What are the exceptions and conditions? How much is the premium? Will the seller pay it?
Is there a survey of the land* How old is it? How detailed is it? Can he send you a copy?
Is there guaranteed access to the land at all times?
Do the mineral rights go with the land?
If any other questions apply because of the peculiarities of this land, ask them as well. Of course, don't buy the land without personally "walking" or "touring" it. This will let you know what you're buying and how it may be used.
Q: I ownand rent out five dwelling in a good neighbourhood in Virginia. They have steadily increased in value over the past five years and provided some income. I have additional funds to invest and have considerable equity in the rental houses but am unsure about a future course of action. Would you advise buying more rental houses or diversifying into another form of real estate investment.
A: To a considerable degree, the answer to your question depends on your expertise and the type of property with which you feel most comfortable. You can achieve a certain amount of diverification by investing in houses in different neighborhoods. If you want to get more diversification and continue in the rental-residential investment field, you might consider apartments. As a beginning, you might invest in apartments of up to 20 units. If you choose wisely and rent them with the tenants paying utilities, your return on equilty should be greater than on single-family dwellings, and with slightly less trouble and work, normally.
Earl Snyder is an appraiser and realtor. He answers questions only in this column. His address: 14909 Kalmia Dr., Laurel, Md. 20810