Neighbor Wants Me To Buy
Hope this is the right place to post, if not I apologize.
My neighbor who is a 87 yr young woman and her husband of 91 asked me to buy their second property. They own it out right and have been using it for storage the last 7 yr. It’s full of stuff and not sure what it all is. They live right next door to it and both places are getting run down. Both need roofs and paint. Don’t have the funds right now, I just bought a REO and moved into it. The couples also don’t have any money for the repair and that is why she wants me to buy. She talked to a realtor and doesn’t like any part of the process that is needed to sell a home. Not that there is much of one. Maybe she just didn’t like the realtor, who knows, anyway, she just wants their roof fixed and more income. They are great neighbors and wonderful people. How can I help them and myself with out anyone getting hurt?
Home values in the area are 350 to 425. Rents are 1800 to 2400. I bought my house in this neighbor hood for 360. The REOs have made the market values. I’m in calif, san jose area. She got a bid for the roofs, both of them. 18k, I’m pretty sure I can find a better deal.
All are 3/2 2car built in the 50s 1350 sf.
Any help would be appreciated. Thank you for taking the time to read and hopefully answering this post.
A great deal depends on your relationship with this couple and your motivation in this deal.
One option. assuming that they have no debt on either house (and there are others): Take out a reverse mortgage on the house they live in. Use the cash to fix up the vacant house and to give them a small monthly supplemental income. Since reverse mortgages are somewhat clunky to apply for you may need to help them with the process.
Now you have the vacant house repaired, find a tenant give the old people additional income.
Along the way you might want to put both houses into a trust so they are protected against catastrophic health care or other unexpected costs.
Now we come to the issue of motivation. Assuming for the moment that both houses are of equal value you now have two houses: one fully levered and one debt free. You could get your compensation in many ways from a partnership in the rental income to being the inheritor of both houses (i.e. they get the income while they are alive, you get the houses when they die.) Depending on how bad you need cash now the later option might be construed as being the most "charitable".
Thanks for the quick responses, this site is the best.
I agree that the numbers do not work considering all the repairs. I was wondering if we can transfer title or find a way for me to get aloan on one of the properties, do the repairs and then sell one. Both properties are free and clear. There is a existing fixer 3 doors down, bank owned asking price 330k. Maybe ask for a percentage of the final sale for my efforts. I know I don’t need a license to sell but do I need one to get paid?
The couple have a daughter that live out of state and is all for selling and we all trust each other very much. Also if and when the couple pass or need to sell their primary home I hope to be the first person their daughter calls.
Again thank you for any and all response, you guys are great.
would the be willing to do a JV?
Say they give you 50% for fixing it up and renting or selling it.
Thanks again guys.
I’m going over to have lunch with them and also call and talk to their daughter with them. Times are hard right now for everyone and at this moment in my life my bills are paid and ive been blessed to still have a job even if it is part time. With so much going on in the world right now I fell like I have luxury problems. Anyway HELOC was brought up once already and they said they didn’t qualify, either way ive decided to see if the daughter can help with some of the repair money, and then just be of service. Ive called and have gotten a couple of out of work friends that are willing to help out. And even a couple that are working and willing to help on the weekend. These folks need a hand and I think ill help with one of mine, ill let you guys know what happens, and again thank you for everything.
Msumsky,
I apologize for borrowing this thread, but you mentioned that you pay 7% on the private money you use. How do you pay such low rates for hard money? I have always found the hard money guyst charge upwards of 14% and multiple points.
Whom do you use and are they national?
JS.
Hello guys, and again thank you for all your post.
We ended up getting the daughter to assist in some of the fund s for the roof and paint and had the couple take a small heloc for the remainder. The roofs and paint should all be done by this weekend and everyone is happy. The daughter is very grateful for are efforts and assured me that when the time came sell I would be he first to get the call. Again thank you all for all your help and great creative way to buy property.
By the way I to have a couple of private loans, ones at 6 ½ % and the other at 7, fully amortized @ 30 yrs with balloons at 5 yr and at 7 yrs.
CJMAZUR believe it or not I found these people volunteering at the senior’s center. Whets that saying I read here? If they trust you they’ll do business you? Great line. It seems a lot of the elderly are willing to buy first and seconds right now. Most want that monthly income.
Thanks all.
6.5 is way better than 3% in a CD..
Congrats.
Along the way you might want to put both houses into a trust so they are protected against catastrophic health care or other unexpected costs.
Now we come to the issue of motivation. Assuming for the moment that both houses are of equal value you now have two houses: one fully levered and one debt free. You could get your compensation in many ways from a partnership in the rental income to being the inheritor of both houses (i.e. they get the income while they are alive,
They are the most in demand. And very easily rentable/sellable
I have a 3/2 duplex (not a split up house) and it is harder to fill. I guess this popular opinion is for houses.
Yep, by far highest demand for sale and rent. Highest demand means highest price, both rent and sale.
Yes, this is typically a slower time of the year around here....
how do you attract the sellers this time of year. i am a loss. thank you for your help.
can you share with me how you locate these sellers that are everywhere? i also am having a problem. you can send me a pm. thank you for your advise and help.