Best Way to Buyout Family Members on Property - Posted by Cole

Real Estate Investing Duplexes
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Posted by Michael Morrongiello on December 26, 2005 at 19:03:43:

Cole:
Your situation is ideal for the property sellers to SELL to you and to also elect to temporarily finance you (via a seller financed instrument(s))… they can then obtain cash through the conversion of the seller financed “paper” and its sale.

As for the current title situation - if your grandparents passed away, it will depend on how LEGAL title to the property was held and whether their estate had to be probated or not? If so, then the executor or executrix of their estate should have executed a DEED on behalf of the estate to your Mother/Uncle # 1 and Uncle # 2 so that they would have legal vested title. At some point the title situation to the property must be determined, BEFORE it can be conveyed to you and by whom.

Using some very rough #'s - If the property is truly worth $265K+ and will support that value, then your Mother / Uncle # 1 and Uncle # 2 can sell to you the home for somewhere around $167K and also finance you over 360 months @ 7.5% - payable $1,167.69 per month in P & I payments. They would carry a Purchase money 1st lien Mortgage & Note specifying these repayment terms.

The 2nd step to this process would be their sale of the $167K Mortgage & Note to convert it into a $150K +/- cash sum (Sunvest would most certainly have interest in such a 1st lien Mortgage Note).

Now when the “dust settles” YOU will have LEGAL title and ownership of the home. Your Mother / Uncle # 1 will have received the $50K and Uncle # 2 will have recieved his $100K in cash.

Regarding the septic system, more light and details would be need to be provided surrounding this.

You will also be obligated to make the future installment payments under the Mortgage Note. Whether you choose to rent out the home to your family or use it, or resell it later on is all your choice.

This can be “tweaked” upon receipt of more details. ope this helps

Best to your success,
Michael Morrongiello
www.sunvestinc.com
Author of the Unity of Real Estate & “paper” study course

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Best Way to Buyout Family Members on Property - Posted by Cole

Posted by Cole on December 26, 2005 at 18:50:29:

I am looking for some advice on how to best structure a buyout on a beach house currently owned by my mother and two uncles.

Here is the situation:
Family owned beach house(duplex) with appraisal at $265K for the whole house.

Mom/Uncle # 1 owns 50% of the duplex (50/50)
Uncle # 2 owns the other 50% of the duplex

Mom/Uncle # 1 agreed to sell me their interest in the duplex for a total of $50K (my mother is gifting me her $50K interest).

Uncle # 2 agreed to sell me his interest in the duplex for $100K.

So I need to come up with $150K to purchase the whole duplex. The house is owned free and clear by my mom and both uncles. Uncle # 1 is looking for the $50K now, Uncle #2 is open to taking some $ down and taking back a mortgage on the balance.

Issues:

  • Duplex will not pass title V septic
  • Deed is still in my grandparents name. They passed away in 1995 and my mom and uncles never changed the deed.

Questions:

  • What would be the best way to structure the financing on this purchase? I have 725 FICO score.
  • Will a bank loan me $150K on the duplex given the appraised value of $265K and will they check for Title V?
  • What is the best way to get the deed into my name (i.e. directly from my grandparents to my name, or from my grandparents to my mom and uncles names, and then to my name?)

I plan of letting my mother live on one side of the duplex, and keeping the other side for my use and my family’s use for now and the future for a few years, and then selling the whole duplex after 2 years for a good profit.

Suggestions, imput and feedback is greatly appreciated.

Thanks.
Cole