Life Estate For Sale??? What Is This?
In my local papers I have found several listings that read as follows:
Life Estate: 82 year old woman's life rights in a 2 bedroom house. $20,000. 918-###-####
or
Life Estate for sale. $11,900
918-###-####
What exactly are these?
Very basic RE law is that RE can be divided many ways...including right to possess the RE for a certain person's lifetime.
Kinda like a time share, where an apt or beach house might have many different owners who had right to possess @ different times of the year.
A Life Estate is just what it sounds like...the owner of it has the personal right to live there and control the RE during her life...then it goes to the remaindermen who own the rest of the title.
Now, what's her LE worth? Well, how long's it likely to be if she's in her '80's?
Maybe a good bit, if all her forebearers lived to 100+, maybe very little if she's the only one who's ever lived as long as she has.
Suggest you ought to follow up and talk to the people, look at the title, find out who owns remaninder after her death, look at all the angles until you fully understand the deal.
Let's say you did buy her LE for $5,000, then rented the RE for $500 per month, and the person lived for 5 years...how long would it take you to profit from the deal? And how much total profit could you take out of her LE?
So if it looked like the seller might live for a few years, it could be a very profitable deal for you.