Duplex Distress
I've been renting from my cousins that own a duplex together. One cousin wants out and to sell to my wife and I. The other wants to remain in the other side. The tax roll say $300k, but it needs a roof and other "fix-its". He'll owner finance but my wife refuses to buy unless we get cash back at closing to fund the neccessary repairs. HELP! There is a first and and a second on the property. The first is owned by my cousins and the second is owned by one cousin and his wife (our neighbors). The first is at about $60k and the second is at about $95k. It's already agreed that the second isn't going to come into the picture, thus the owner finance to to the non-occupying cousin. But, he needs his cut of the profits. Can we say "holy complex deal, Batman?"
Forget the cousin talk. Just think of them as owner1 and owner2.
I am a little confused, but then I get confused easily.
1) are both owners on title?
2) are both owners willing to sell you the property?
3) does one of the owners want to remain as your tenant?
4) who owns the first? you say the owners, but it very rare for someone to make a loan to themselves.
5) is the second assumable?
thanks
Brenda
Okay, owner #1 lives in the other half with his wife. Owner #2 lives out of town (we rent his half). Owner #2 is our seller. Owner #1 isn't even in the deal, we're buying owner #2's position. We plan on renting the place out after we move. Our purchase price will be 150k, less the estimates for the repairs, that's the amount we need cash back at closing. Owner #1's wife is sorta mean and they are teetering on the big "D", however, he has expressed the he wants to rent from us in the event the split occurs. We don't qualify for a 300k loan or else we'd go conventional and forego the complications.
Well, she's been pretty nice to us and they are very quiet folks. She's already agreed that the first isn't any of her business but the second is, and she's not interested (so she says) in selling. Thus, they aren't really selling to us but the deal is; we are buying a position of ownership. We've been good neighbors for the last two years and have discussed on numerous occasions doing improvements. My real question is: How do I write up the owner finance deal and get enough money to cover the repairs/improvements at closing?
I am with Brenda on this one in that there seem to be some points that are not clear. From what you are saying I am assuming that the duplex is one undivided parcel. The part about the first and second are the most confusing. I am not sure what you mean that these are "owned" by your cousins and their families. Do you mean that these loans are held by an outside party and one set of cousins is paying on the first and the other set is paying on the second? If you are coming up with a down payment can they reduce the amount to cover the repairs?
Although you did not ask for this, you might consider not doing this transaction. With tenants-in-common I am pretty sure you can't sell your share of ownership without consent of your co-owners (while you are alive!). If one party wants to sell and the other doesn't the court is likely to force a sale.
You might post some clarification. We may be able to offer you better help.
Regards,
Ed[ Edited by edmeyer on Date 06/21/2004 ]
Robb,
Glad to meet you.
You asked me to look at your post, so I need something cleared up.
You say the property is worth $300K but you can purchase the property for $150K is this correct?
John $Cash$ Locke
cjmazur,
When you say "our purchase price will be" are you in this deal or are you speaking for this poster as I asked him to clarify?
John $Cash$ Locke
cjmuzar,
The reason I asked him to clarify is because I see market value at $300K he can purchase for $150K, yet he says "We don't qualify for a 300k loan or else we'd go conventional and forego the complications."
My thoughts are why does he need to qualify for a $300K loan, when all he needs is $150K plus some rehab money, this is why I asked to make sure I understood correctly.
John $Cash$ Locke
PS: Two other posters besides myself were not clear on what he wanted to accomplish, but I guess you had it figured out, should have known you would.
[ Edited by JohnLocke on Date 06/21/2004 ]
Thanks for all the help, I'm going to explore more about getting the financing together. Conventional loans aren't going to do the job, there's too much rehab involved, I need private investor to loan us the $150k. You all have been a great resource and I look forward to future posts/advice.