Posted by Charles Hauder on December 23, 1998 at 16:35:00:
I would agree with earlier posts, find out what he needs / wants. I would also add what Ron LeGrand and I think some others have said, give him multiple offers.
Show him you are flexible to try meet his needs as well as make the deal work for you.
Good Luck,
Charles
72yr will sell duplex, How to structure Deal??? - Posted by Adam (BatPro)
Posted by Adam (BatPro) on December 21, 1998 at 22:41:03:
I found a duplex that was advertised for rent. I called and the guy (72 year old man - lives alone) said he would sell the place to me but he wants to continue to live there.
He built the place in 1987.
He gets $650/month rent. The place top quality and is in mint condition.
2 bed/1.5 bath/garage/full basement each side. Located in nice area.
I suspect FMV will be $110,000 +
I want to purchase it to live in half for about a year and then the present owner will live in half until he goes to a nursering home.
I only have about $2000 for down payment.
What would be a good deal structure to offer him so he and I could benefit.
He said he is going to ask his banker what it is worth or have it appraised and he said we could go down from there.
Adam
Re: 72yr will sell duplex, How to structure - Posted by phil fernandez
Posted by phil fernandez on December 22, 1998 at 07:37:36:
Bat,
One thing we don’t know, is there a mortgage presently on the duplex and if there is one how old is the mortgage, what is the interest rate and monthly payment?
If the mortgage has been seasoned for a good number of years, I’d consider doing some type of a wrap where you can take advantage of a good chunk of the mortage payment going toward the principle. This will build up your equity faster, especially if you refinance the deal later, you will have a nice chunk of equity for the downpayment.
You also might want to let the seller stay as a tenant for say 5 years and call it prepaid rent. $650 x 60 months = $39,000. A fast way to build up equity.
Also you could give the seller a life estate rent free. In exchange for this the seller would have to discount his price substantially.
Sounds like your seller might be more interested in peace of mind more than the money. He might not need more than your $2,000. Your $2,000 would show him your committment to the deal.
Talk to the seller and find out exactly what his needs are.
Phil has a wonderful approach to this. - Posted by Harvey Carroll, Jr.
Posted by Harvey Carroll, Jr. on December 23, 1998 at 20:09:06:
Just ensure that the payments can be made by you. Do an amortization schedule and see what you Principal, Interest, Taxes and Insurance payments will be and keep in mind operating/maintanance cost… I am not sure about the life estate, I know a lady that live to be over 100 years old… Set a date that you both are comfortable with and let him know that it is an investment and you can not be responsible for his healthcare, but may enjoy his company while you are neighbors… Do a lot of thinking “what if”…
Virtually no mortgage - Posted by Adam
Posted by Adam on December 22, 1998 at 14:40:21:
The owner said he has kept a VERY small balance left on the mortgage and he said he could easily pay it off before closing.
The estimated FMV is $155,000.
The seller is open to suggestions on how I might purchase the place. The duplex is in a great location and has a nice lot. It gets $650 rent but since he wants to live in the other unit until he goes to an manor house I don’t know how I could benefit on this deal. He is not really worried about he price. So I know there most be a good way to profit on this one.
He told me that 6 people called that wanted to buy off of his for rent sign. I think he really likes me so he would probably give me the first offer.
Adam
Re: Virtually no mortgage - Posted by Reif
Posted by Reif on December 22, 1998 at 21:21:34:
I’m just a new guy, but here’s what I think some of the veterans would say:
What does the seller NEED?
It’s tough to make a deal enticing to the seller if it doesn’t meet his needs.
He’s older - is he just tired of landlording? Or does he want a big chunk of money to give to his grandkids?
The answer will guide you towards wha the proper deal is.
The $2000 you have should not be a problem if the man is willing to be even a little flexible with all that equity.
You could easily get a 50% loan (I would think) to cover some of his cash needs.
Find out what the seller needs - then create the framework.
Reif