First Deal, Need Advice
I'm attempting to do my first deal and I'm looking for advice. An elderly grandmother has become to old to live in her house. The gentleman that told me about the deal said she wants to be out of the house by december. She owns the house free and clear, it's worth about 40k,she is willing to accepy 20k. Granddaughter is working and wants to buy the house but couldn't qualify for a loan. I figure i'll do a lease option with her to cash out in a year. My question is, how can I get more of the equity up front.....like at closing!? Thanks
I would first find out what the seller plans to do with that $20k. Maybe she would rather have it in montly payments so that she can live on them.
If not owner financed, how do you plan to pay for the property?
I don't want to get too complicated here but there are a lot of ways to access the equity in the property. One way would be to put the property into a title holding trust and have the seller assign you 50% interest in the trust (1/2 the equity). Then you buy the property from the trust at $40k and you get a bank loan for $40k, or whatever you can. You may need to come up with a down payment to use for a day.
Out of the proceeds that goes to the trust, 50% comes back to you and the other 50% goes to the seller, netting her the $20k she wanted and getting you a chunk of the equity.
From there you can lease/option the property or do with as you please. I would personally not owner finance to the granddaughter as she will likely cause problems when she finds out that you're buying the place for $20k but selling it to her at $40-$50k! Maybe you can assist the granddaughter in finding another house??
I hope I haven't lost you, but don't feel bad if I did. I'd personally concentrate on the owner financing as this is by far the best way to finance your properties.
GOOD LUCK
Frogger, once the seller puts the property in the trust and assigns 50% ownership to buyer, does the 40k check that is cut go directly to he trust? Can the trust direct the funds to go to anyone it chooses through letter of direction to title co? What info/docs would the title co need to cut the checks to the individuals instead of directlly to the trust?
thanks.
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frogger,
I was going to use hard money to purchase the property. (credit horrible!) I did have concerned about grandaughters reaction when I sell the property to her at nice profit. Thank you for your advice.
CA
If you going to lease option or land contract the property ask for a large downpayment. I would suggest getting own buyer, granddaughter would not be a good choice.
Lori
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Thank youf t everyone for the advice. I'm anxious to sell to the grandaughter for two reasons. One, she wants the house and will take care of it and two, the house is only a one bedroom in not the nicest part of town. I figure trying to sell a one bedroom house will be difficult.